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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(MARK ONE)
[X] REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR (G) OF THE SECURITIES
EXCHANGE ACT OF 1934 OR
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____ TO _____
COMMISSION FILE NUMBER _________
BROCKER TECHNOLOGY GROUP LTD.
(Exact Name of Registrant as specified in its charter)
Alberta, Canada
(Jurisdiction of incorporation or organization)
2150 Scotia One, 10060 Jasper Avenue, Edmonton, Alberta T5J 3R8
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Class Name of Exchange
None
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: None
Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report:
As of December 28, 1999, 15,122,467 shares of no par value Common Stock
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[ ] Yes [X] No
Indicate by check mark which financial statement item the registrant has elected
to follow:
[X] Item 17 [ ] Item 18
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Brocker Technology Group Ltd.,
an Alberta corporation
Index to Form 20-F Registration Statement
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Page
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General Introduction 3
Part I
1. Description of Business 4
2. Description of Property 12
3. Legal Proceedings 12
4. Control of Registrant 13
5. Nature of Trading Market 13
6. Exchange of Controls and Other Limitations Affecting Security Holders 13
7. Taxation 14
8. Selected Historical Consolidated Consolidated Financial Information and Other Data 14
9. Management's Discussion and Analysis of Financial Condition and Results of Operations 15
9A. Quantitative and Qualitative Disclosures About Market Risk 23
10. Management 24
11. Compensation of Directors and Officers 25
12. Options to Purchase Securities from Registrant or Subsidiaries 25
13. Interest of Management in Certain Transactions 27
Part II
14. Description of Securities to be Registered 28
Part III
15. Default Upon Senior Securities 30
16. Changes in Securities and Changes in Securities for Registered Securities 30
Part IV
17. Financial Statements 31
18. Financial Statements 32
19. Financial Statements and Exhibits 32
19(a)Index to Financial Statements F-1 through F-78
Financial Statements
19(b)Index to Exhibits E-1 through E-752
Exhibits
Signatures 37
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GENERAL INTRODUCTION
This Registration Statement on Form 20-F ("Form 20-F") specifies certain
forward-looking statements of us within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Forward-looking statements are statements that estimate the happening of future
events that are not based on historical fact. Forward-looking statements may be
identified by the use of forward-looking terminology, such as "may", "shall",
"will", "could", "expect", "estimate", "anticipate", "predict", "probable",
"possible", "should", "continue", or similar terms, variations of those terms or
the negative of those terms. The forward-looking statements specified in this
Form 20-F have been compiled by us on the basis of assumptions made by us and
considered by us to be reasonable. Our future operating results, however, are
impossible to predict and no representation, guaranty, or warranty is to be
inferred from those forward-looking statements. All information regarding our
expected future financial situation, results of operations, cash flows,
financing plans, business strategy, budgets, projected costs and capital
expenditures, competitive situations, growth opportunities, plans and our
objectives for future operations are forward-looking statements. Those
forward-looking statements are inherently uncertain, and our actual future
results and trends may differ materially depending on a variety of factors.
Factors that may affect our plans or results include, without limitation, sales
to customers, actions by competitors, fluctuations in the prices of raw
materials, foreign currency exchange rates, and political and economic
instability in our markets.
The assumptions used for purposes of the forward-looking statements specified in
this Form 20-F represent estimates of future events and are subject to
uncertainty as to possible changes in economic, legislative, industry, and other
circumstances. As a result, the identification and interpretation of data and
other information and their use in developing and selecting assumptions from and
among reasonable alternatives require the exercise of judgment. To the extent
that the assumed events do not occur, the outcome may vary substantially from
anticipated or projected results, and, accordingly, we express no opinion
regarding the achievability of those forward-looking statements. In addition,
those forward-looking statements have been compiled as of the date of this Form
20-F and should be evaluated with consideration of any changes occurring after
the date of this Form 20-F. We can't give any assurance that any of the
assumptions relating to those forward-looking statements are accurate.
We maintain our books and records in Canadian Dollars while our subsidiaries
maintain their books and records in New Zealand or Australian Dollars, as
appropriate, which are then reconciled to Canadian Dollars. Except as otherwise
specified in this Form 20-F, all monetary amounts specified in this Form 20-F
have been presented in Canadian Dollars. We have prepared our consolidated
financial statements contained in this Form 20-F in accordance with generally
accepted accounting principles in Canada. See "Report of Independent Auditors"
and "Consolidated Financial Statements." All information should be considered in
conjunction with our consolidated financial statements and the notes contained
elsewhere in this Form 20-F.
We were incorporated pursuant to the laws of Alberta, Canada, and certain of our
officers and directors reside outside of the United States. In addition, the
majority of our assets are located outside of the United States, in Canada,
Australia and New Zealand. As a result, it may be difficult for investors to
effect service of process within the United States against us or those officers
and directors or to enforce in the United States any court judgments obtained
against us or those officers and directors and predicated upon the civil
liability provisions of the federal securities laws of the United States. Also,
as a substantial portion of our assets are located outside of the United States
and Canada, any judgment obtained in the United States against us may not be
collectible within the United States or Canada. Canadian courts may enforce
judgments of United States courts in civil matters subject to certain conditions
and exceptions. Also, it may be difficult for investors to obtain and enforce
judgments of Canadian courts based upon the federal securities laws of the
United States.
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ITEM 1. DESCRIPTION OF BUSINESS
Our Background. Brocker Technology Group Ltd., is an Alberta corporation
("Company") and was incorporated on November 23, 1993, as Brocker Investments
Ltd. On December 3, 1998, the Company changed its name to Brocker Technology
Group Ltd. The Company has been listed for trading on the Toronto Stock Exchange
since February 28, 1998. From August 9, 1994 until February 28, 1998, the
Company's shares were listed for trading on the Alberta Stock Exchange.
Overview of Our Industry. The products and services of our subsidiaries are sold
to the Information Technology and Telecommunications ("IT&T") industry in both
Australia and New Zealand. We believe that the IT&T industry is one of the
fastest growing industries in Australia and New Zealand. In Australia, the IT&T
industry's total revenues in 1998 were approximately AU$34 billion, which ranks
it as Australia's third largest industry. In New Zealand, the IT&T industry's
total revenues in 1998 were approximately NZ$6.6 billion, which represents
approximately seven percent (7%) of New Zealand's Gross Domestic Product. The
IT&T industry provides solutions to customers' computer software and hardware
problems, in addition to solutions to customers' telecommunications problems.
IT&T industry products include computer hardware, such as computer network
servers and desktop computers and software, such as Microsoft Windows and Office
products. Telecommunication products include telephone systems, voice mail
systems, cellular phone systems and facsimile systems.
Our Business. We are a provider of technology-related products and services to
the IT&T industries of New Zealand, Australia and North America. Our principal
business activities include (i) the development and sale of technology products,
technology-related services and telecommunications products and services, (ii)
distribution of technology and telecommunications products developed and
manufactured by third parties in New Zealand and Australia. We are currently
developing intellectual property for use in electronic commerce ("e-commerce")
in order to provide Internet based products and services. We believe that
changes in the economic and business environments of the Australian and New
Zealand markets and the rapid evolution and adoption of the Internet and
Internet technologies should enable us to reduce our reliance on the physical
distribution of third party products and increase our development and sale of
e-commerce products. We are investing in hardware, software and training to
build the infrastructure to accommodate the development and growth of our
business.
Our Internet Enterprise Suite. We are developing the Internet Enterprise Suite
("IE Suite"), an Internet based e-commerce system designed to meet the needs of
medium to large corporations. The IE Suite centralizes all functions of sales
and marketing. The IE Suite supports electronic transactions between the
corporation and its customers while storing the customers' profiles and product
preferences into a secure database. The IE Suite will allow sales and marketing
professionals to remotely access sales and marketing information, including
product information, inventory data, account information and product orders. We
anticipate that the IE Suite will encompass a number of the software products
and applications that have been produced by our operating groups.
Our Operating Groups. From our inception in November 1993, we have been
acquiring and managing businesses in the IT&T industries of New Zealand,
Australia and North America. We actively manage the individual businesses within
these operating groups by two wholly-owned holding corporations, Brocker
Technology Group (NZ) Limited (formerly Brocker Investments (NZ) Limited)
("Brocker NZ") and Brocker Investments (Australia) Proprietary Limited ("Brocker
Australia"). We have concentrated our technology-related business services in
distinct operating groups composed of the Intellectual Property Sales Group, the
Application Development and Services Group, the Professional Services Group and
the Distribution Services Group. The operating groups utilize our centralized
business infrastructure for distribution and logistics, finance, human resource
and marketing functions.
Our Distribution Services Group includes SealCorp Computer Products Limited
("SealCorp New Zealand"), SealCorp Telecommunications Group Limited ("STG"),
1World Systems Limited (formerly Microchannel Limited) ("1World") and SealCorp
Australia Proprietary Limited ("SealCorp Australia"). Our Intellectual Property
Sales Group is responsible for the sales and marketing of our intellectual
property products, with such products available as Supersession, Full 360
Degrees Feedback, Powerphone, Bloodhound and products developed by Image Craft
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Limited ("Imagecraft"). Our Application Development and Services Group includes
Industrial Communications Service Limited ("ICS"), Powercall Technologies
Limited ("Powercall"), Highway Technologies Limited ("Highway Technologies") and
Tech Support Limited ("Tech Support"). Our Professional Services Group includes
EasyPC Computer Rentals Limited ("EasyPC"), Pritech Corporation Limited and
Pritech Australia Proprietary Limited (collectively "Pritech"), Brocker
Financial Limited ("Brocker Financial") and Inprise New Zealand.
SealCorp New Zealand. SealCorp New Zealand was incorporated in 1987. SealCorp
New Zealand markets and distributes major brand computer software, computer
peripherals and computer hardware in New Zealand. SealCorp New Zealand has 25
employees.
SealCorp New Zealand's offices are located in Auckland, Wellington and
Christchurch. The Auckland premises, occupied in October, 1998, provides our
distribution partners with a distribution center, in addition to seminar and
training facilities for client presentations. The Wellington office is located
in Central Wellington and provides easy access to all parts of the central
region of New Zealand. The Christchurch office is located in the central
business district of the southern region of New Zealand.
SealCorp New Zealand is comprised of three operating business units, Channels
Technology Group, Vertical Markets Group and the Integration Solutions Group.
The Channels Technology Group markets Acer, Canon, Compaq, Connectix, Digital
Networks, Exbyte and Symantec products to computer resellers and retail chains
and outlets. Those products are generally used by small to medium-sized
enterprises, small office, and home office customers.
The Vertical Markets Group provides software to specialized markets and
consultants who promote software, hardware and peripherals using various
distributors. This software is generally used by imaging, multi media,
publishing and computer-aided design companies, application developers and
programmers. The brands marketed are Agfa, Autodesk, Dantz, NEC, PK Electronics
and Quark.
SealCorp's Integration Solutions Group resulted from the acquisition in October,
1995, of Technicom, a networking and communication corporation. This group
provides software to the government and free enterprise markets. The brands
provided by this group are Digi, Hitachi, IBM, Intel, IT Director, Lotus, NCD,
Novell and Shiva. This software is generally used by remote access, groupware,
enterprise and operation system solutions technology.
STG. STG supplies cellular mobile phones, cellular phone accessories, radio
pagers and other telecommunications products in New Zealand. STG provides
distribution and purchasing operations for Telecom New Zealand, in addition to
supplying cellular handsets to Telecom New Zealand for its consumers. This
business with Telecom New Zealand is secured by a contract that is intended to
eliminate, as much as possible, usual business risks, such as bad debts and
inventory obsolescence. These risks remain with Telecom New Zealand, which is
the largest telecommunications carrier and market leader in all aspects of
telecommunication in New Zealand. STG is New Zealand's largest
telecommunications distributor and supplies cellular products from Ericsson,
Motorola, Nokia and Philips. STG has recently introduced an e-commerce business
which enables customers to place orders and obtain product information on the
Internet.
1World. 1World is the only distributor in New Zealand and the Pacific Islands
for Computer Associate's products, including the accounting software ACCPAC.
Since its introduction into the New Zealand financial software market in 1989,
ACCPAC has won a several industry awards. ACCPAC is distributed by specialized,
certified consultants. 1World offers qualified installer training, sales and
technical support, and marketing services. ACCPAC was one of the first financial
softwares available to organizations enabling them to automate their accounting
processes. Using continuing product development, ACCPAC has remained current
with industry developments and has developed strategic alliances to increase its
market presence. 1World acquired the distribution rights to Australia in January
1999, based on its prior performance in New Zealand and it has a complete sales
and support system to service Australia.
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SealCorp Australia. SealCorp Australia was incorporated in January 1992,
following the growth of SealCorp New Zealand. SealCorp Australia has 30
employees and has offices in Sydney, Melbourne and Brisbane. The Sydney Office
is located in North Ryde Sydney's North Shore, in an industrial area surrounded
by technology companies. This office provides sales, marketing, administration
and physical distribution for Australia. SealCorp's Melbourne office is
centrally located at 101 Collins St., in the IBM Building in South Gate, on the
banks of the Yarra River. The Brisbane office is located at 10 Hudson Road,
Albion, Queensland.
SealCorp Australia acquired Sourceware, a large national distributor of computer
software and peripherals, in April, 1996. Sourceware had operated since 1983,
and we believe that it has a reputation for superior technical support.
Sourceware merged its operations into SealCorp Australia, which resulted an
increased market presence and a strategic relationship with IBM.
In September 1996, we acquired The Great Escape Company ("TGE"), a computer
distribution and service company. This company was merged into SealCorp
Australia in January, 1997. TGE was the only distributor of Wyse products in
Australia. TGE also distributes products for other major vendors, including OKI,
Dataproducts, Link, and Specialix. With this acquisition, SealCorp Australia
acquired the resources required to service its products. SealCorp Australia
provides nation-wide warranty and repair facilities in Australia and is the Wyse
warranty agent and parts supplier for Australia. SealCorp Australia is also an
approved service center for OKI products and a servicer of third party products.
As a result of the consolidation of Sourceware and TGE with SealCorp Australia.
SealCorp Australia can now offer complete computer networking solutions for
distributors using relationships with vendors such as Novell, IBM, Lotus, WYSE,
OKI and Digi International. SealCorp Australia provides marketing and consulting
services for internetworking, remote access, multi-user connectivity, e-commerce
and Integrated Services Digital Network.
Early in 1998, we purchased 1World, a provider of remote computer access
technologies to graphic computer designer. The graphic designer market is
currently dominated by Apple computer resellers and we believe is best serviced
by distributors such as 1World. The relationships 1World brought to SealCorp
Australia are 4Sight, Sagem, Hermstedt, Harmonixs, Ascend, Shiva, Eicon, Netcomm
and Dlink. Early in 1999, ACCPAC software was added to this group. 1World is
operated as a separate sales division of SealCorp Australia and concentrates on
graphics design, agency and branch office communications and accounting
solutions.
In February 1999, we purchased certain assets of Q*Soft Australia Proprietary
Limited based in Brisbane, Queensland ("Q*Soft") and a leading distributor of
technology products. We believe that the acquisition of those assets now enables
SealCorp Australia to be a significant distributor with considerable geographic
coverage in Australia. Q*Soft concentrates on reseller distribution by service
agreements and is operated as a separate sales division of SealCorp Australia.
ICS. ICS was established in 1978, as a provider of special communications
systems and for the repair of electronic equipment. Now a wholly owned
subsidiary of the Company, ICS operates in two distinct areas.
ICS has standard telecommunications products marketed using the INDCOM name.
Whenever a customer has a requirement that is not adequately satisfied by
standard equipment, ICS modifies existing products or designs new products to
satisfy that requirement. ICS concentrates on product development using the
latest computer based design systems. Production is either performed by
specialist companies or the customer assists in establishing its production,
with ICS receiving royalties from that production.
With the introduction of cellular in New Zealand, ICS targeted the service of
cellular telephones. ICS is the largest independent service center for cellular
telephones. Certified to ISO9001 (the International Organization for
Standardization Certification that ICS has satisfied the global standards for
its industry), we actively manage processes to ensure continuous improvement of
service and delivery. After market repair is performed for cellular
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products developed by Motorola, Ericsson and Nokia. ICS has contracts with
Vodafone and Telecom to provide service to customers of their networks.
Our technical staff has significant experience with radio, cellular and
communications systems. Training of new and existing staff in new products is an
important aspect of our philosophy. The latest test equipment that has been
certified by the cellular phone manufacturers is used to ensure repairs satisfy
the strict standards of those manufacturers. All repaired products undergo
quality assurance tests before being returned to the customer.
Powercall. Powercall was formed to provide voice mail services. The emergence of
Computer Telephony Integration (CTI) enabled Powercall to improve its voicemail
services and products. The emergence of CTI has enabled us to become involved in
software development and software solutions for our customers. Powercall
concentrates on 3 aspects of operations, (1) CTI development; (2) automated
services with automated voice, fax and information applications; and (3) live
operator services. A combination of technological development and service allows
us to provide a comprehensive range of solutions and services which can be
customized according to each customer's individual requirements.
We concentrate on the development and delivery of CTI solutions, utilizing our
core products. Utilizing 5 years of design and development, specifically in the
area of CTI, these solutions combine the latest hardware with our intellectual
property. Our products allow our customers to manage and deliver information in
an effective manner. CTI solutions are designed to integrate fully with
computers and provide a complete communication system. Those solutions allow
delivery of all telephony requirements, such as how incoming calls are handled,
while reducing ongoing costs. Private Automatic Branch Exchange System ("PABX")
is a telephone system suitable for medium to large offices and capable of
handling thousands of extensions. In some situations, use of our CTI system will
replace the PABX system entirely. Our CTI solutions provide a business with
automated business processes which ensure that the customer's products and
services are completely integrated into our CTI solution.
In contrast to most other CTI solutions, our CTI solution is capable of
operating independently of (1) proprietary, expensive PABX technology; (2) other
types of PABX communication systems; and (3) specialist programmers, engineers
or technicians. Our CTI services include (1) standard voice mail; (2)
interactive television voting; (3) call accounting and credit management; and
(4) a complete and innovative information and booking service designed for the
tourism industry.
In addition to the automated services, our CTI services offer customers live
operator services with inbound and outbound telephone calls throughout New
Zealand. In addition to voice, facsimile and information services, we are
capable of managing the financial aspects of our customers' businesses involving
payment by check, credit card, telephone transactions and Internet payment
methodologies.
Powercall employs more than 55 persons in its five locations to deliver live
operator services, providing numerous services for various customers
simultaneously, utilizing our technology. These services include (1) sales
automation, such as appointment generation, telephone sales, etc.; (2)
information review utilizing Virtual NZ and customer surveys; and (3) direct
mail follow-up.
Image Craft. Image Craft specializes in the development of graphics software and
services. The major products which it distributes are (1) Pictrix, a digital
printing system (Pictrix is exclusively licensed to Hanimex in Australia and New
Zealand and enables the user to scan, import, manipulate and copy images to any
digital media and print these images in a variety of formats and allows for the
transmission of images via the Internet and intranet); and (2) Bluescreen, a
method which enables an image to be inserted into a background. Our Image Craft
services include (1) maintenance of a system for online storage and retrieval of
digital images; (2) digital watermark software; (3) software development; and
(4) creation of different products and services, including mass marketing
systems.
Highway Technologies. Highway Technologies is in the business of developing and
managing solutions for highway management. One example is an electronic system
for collecting road user charges for heavy vehicles to
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establish whether a new system for collecting road user charges can improve
economic efficiency. We believe that technology will become increasingly
important in managing road and highway networks in the future. We believe
Highway Technologies' newly developed Global Position Satellite-based technology
is capable of bringing highway management, operation and funding into the 21st
century. We own 20% of Highway Technologies.
Easy PC. EasyPC is a provider of innovative solutions for the financial
management and control of computer related products. Specializing in the leasing
and rental of IBM-compatible and Macintosh computers, printers and peripherals,
we believe that Easy-PC has become a leader with a reputation for exceptional
personal service, new approaches to off-balance sheet use of equipment, and
advanced asset management systems. We believe that Easy PC makes it easy for
business, government and domestic customers to access new and fast-changing
technology at affordable prices, without the risks associated with a purchase.
Easy PC is an authorized dealer in Compaq, Digital, Hewlett-Packard, Microsoft,
Lotus and WordPerfect products. Easy PC is the first rental company in New
Zealand authorized to supply leading software with Easy PC's rental equipment.
Pritech. We believe that Pritech is a leader in information management,
including software development, implementation and business intelligence,
particularly for the Intranet. The services and products that Pritech provides
include contract management, sales tracking, service management, project
communications, workflow management and human relations management. Incorporated
in 1988, Pritech has been providing consulting services and software development
for information management, especially project management. Pritech has worked
with more than 300 organizations, including major corporations and central and
regional governments. We believe that Pritech is unique, being the first New
Zealand corporation to employ Certified Lotus Notes Professionals and Certified
Lotus Notes Instructors. Pritech has been appointed as New Zealand's first Lotus
Notes Premium Partner, indicating Pritech's significant experience and
investment in Lotus's technology. We believe that Pritech has a significant
market share and provides quite profitable consulting services. Pritech has
offices in Auckland, Wellington, Sydney and Melbourne and employs a staff of 34
persons.
Inprise New Zealand. Inprise New Zealand is the exclusive distributor of the
Inprise products in New Zealand. Inprise New Zealand consults and provides
training for various businesses, using software applications developed by
Inprise Corporation. We believe that Inprise New Zealand is uniquely situated to
take advantage of future business information development, because we have
significant experience in providing similar services and products to a
significant number of different types of businesses, including banking, finance,
manufacturing, science, engineering and government.
Brocker Financial. Brocker Financial was incorporated in January 1999 and
concentrates on providing financial consulting services to large corporations
and governments. The three main areas of its business are (1) providing advice
for technically complex financial projects; (2) representing Internet businesses
active in the securities trading and financial services markets in New Zealand,
Australia and South East Asia; and (3) developing specialized financial software
for liabilities management.
Tech Support. Tech Support was established in October 1996, and provides
technical support for computer systems, with a concentration on small to medium
businesses and education providers. Tech Support supports commercial customers
and relies on professional and specialized consultants, which are independent
contractors, which have the skills to provide specific technical requirements,
including Microsoft NT, Novell Netware, and Lotus Notes.
Products and Services
Supercession. Supercession is an Enterprise Resource Planning (ERP) software
system designed to improve business processes or replace aging business systems.
ERP provides "back-office" functions, such as order management, financial
management, warehousing, distribution production, quality control, asset
management and
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human resources management and "front-office" functions, such as sales force and
marketing automation, electronic commerce and supply chain systems. ERP is often
referred to as the entire "value chain" of a business, from prospect and
customer management through order fulfillment and delivery. For medium to large
businesses, Supercession establishes the initial ERP system, including
e-commerce capabilities, a web server, a database for gathering and storing
information and an object-based Common Object Request Broker Architecture
(CORBA) server which automates many common network programming tasks.
Full 360 Feedback. Full 360 Feedback is Internet based software providing
businesses with a management tool for their employees, as well as client
relations assessment. Feedback is electronically provided by those persons with
whom an employee regularly interacts. These people may include colleagues,
peers, managers, supervisors, suppliers and customers. The information received
can be analyzed to provide employees an understanding of their strengths and
areas for development. The information gathered from clients can be used for
market research and product development.
CMobile. CMobile is a service designed to improve operations of a mobile sales
force or contractor. The computer hardware is a Graphical User Interface touch
screen handheld device with communications links to clients, home offices and
suppliers. The software enables a sales force or mobile contractor to utilize
Internet based services for all aspects of business.
Pritech Extended Email Repository (PEER). PEER provides a method by which
selected incoming and outgoing correspondence is stored making the information
available to persons that could benefit by sharing that information. PEER stores
e-mail and facsimile information by client or supplier and other designated
categories. PEER is used with Lotus Notes, a software program developed by Lotus
Development Corporation, which is designed to manage information between
numerous persons.
Powerphone. PowerPhone combines a business' computer and telephone for improved
customer contact management. PowerPhone uses caller identification to
automatically show (i) the person calling; (ii) complete details of the person's
most contact with the business; (iii) a list of all previous contacts, including
emails and (iv) a prompt for new contact details. PowerPhone extends the
management capabilities of Microsoft Outlook, a Microsoft Office management
program, by allowing all network users to access information stored in the
database. The software component of Powerphone can be downloaded and licensed
via the Internet. ReMote, a remote version of Powerphone, will be available as a
free download on our website.
Bloodhound. Bloodhound is a computer-telephony integration (software which
integrates the computer with a telephone system) service that combines and
automates the duties of a receptionist, secretary and personal assistant.
Bloodhound processes voice and facsimile messages which are received on the same
telephone number into electronic messages through a unified inbox integrated
with a business' existing email system. Voice and facsimile messages can be
delivered to a business at any location as an email attachment. Bloodhound
allows prioritization of calls and can notify a business when new messages are
received.
Network Marketing. Network Marketing is software that combines technology with
the traditional business practices of the network or multi level marketing
industry. Network Marketing software provides electronic messaging, facsimile
and prospecting functions designed specifically for the requirements of
individual distributors within a multi level marketing organization. The
software allows a distributor to deliver information and voice or data messages
to prospects outside of the organization or numerous persons within the
organization.
Cine Line. Cine Line is an e-commerce system which provides online credit card
verification and transaction processing for movie ticket purchases. Cine Line
provides real time scheduling and booking information as a free service to the
moviegoer.
Blue Screen Imaging. Blue Screen Imaging is a digital imaging system utilizing
specialized software which allows the use of digital images (usually a person)
and then the integration of the image into an established photographic template.
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Pictrix. Pictrix is digital imaging software designed for the photographic
retailers. The software allows for the capture, manipulation and output of
photographic images. Pictrix features includes repair and reproduction of old
images, production of image templates, screen savers, T-shirts and other
photographic retail products.
Imageline. Imageline is a secure Internet based image library, which allows
customers to create their own secure library of images, stored remotely, with
online access offering extensive cataloguing and search features. Large image
libraries can be compiled for download, use and sale.
NZ Online. NZ Online is an Internet Service Provider with inexpensive access
charges to the Internet and low service offerings to customers. NZ Online was
built to support customer activities for ImageCraft and is marketed to a limited
number of subscribers.
Fixed Cellular Terminals (FCT). FCT is software designed as an alternative
method of providing telephone services when a conventional wireline telephone is
unavailable, nonexistent or too expensive. FCT uses a cellular telephone network
to provide telephone services to rural communities without the high cost
infrastructure of wired based telephone systems.
Multi-Path Alarm Communicator. The Multi-Path Alarm Communicator allows high
speed reporting of an alarm status to a security monitoring company, through a
wireline telephone or a cellular network. The status of the wireline and
cellular networks are continuously monitored and any irregularities can be
reported to the monitoring company using the alternative network.
Vehicle Systems. Vehicle System is an integrated computer system comprising
three sub-systems, the (i) vehicle data collection unit, (ii) cellular telephone
network, and (iii) central computer and application software. Vehicle System
provides a business the ability to track its vehicles, store the gathered
information and transmit the data via a commercial cellular telephone network to
the central computer for analysis.
Smart Comms. Smart Comms is a short range (50m - 250m) radio frequency wireless
data system suitable for transmitting messages using an existing small broadcast
data protocol format. Smart Comms can be used for security monitoring of
buildings.
Stock Trak. Stock Trak is a short range (25mm - 500mm) radio frequency
identification product suitable for tag device applications. Stock Trak is
designed for use by agricultural businesses for livestock identification and
information tracking. The electronic data tag provides compliance with proposed
European Union animal health regulations governing the origin, production and
transport of animals.
Sales and Marketing
Our objective is to establish and maintain leadership in the e-commerce sales
and marketing information systems market. Our strategy incorporates (i)
targeting large multi-national customers in a comprehensive number of
industries; (ii) maintaining and extending technology leadership; (iii)
strategic global alignment; (iv) exploiting Intranets and the Internet; (v)
expanding global sales capabilities; and (vi) advertising and marketing.
Targeting Large Multi-National Customers in a Broad Range of Industries. We have
designed products to satisfy the requirements of multi-national businesses that
use different distribution methods. Our products and services are intended to be
used on a global basis, provide shared, up-to-date information for field sales,
telemarketing, telesales, marketing, as well as third party resellers. We will
continue to improve our product development, sales and marketing activities, to
expand acceptance of our products and services.
Maintaining and Extending Technology Leadership. Our products and services
utilize advanced technology
10
<PAGE>
information. Our software products are designed to be specifically designed to
satisfy a business' requirements while maintaining the ability to improve our
products and services.
Strategic Global Alignment. We will promote widespread acceptance of our
products and services by the establishment of relationships with leading
technology providers and distributors. We anticipate developing technology and
marketing relationships with other businesses in order for us to concentrate on
developing e-commerce products and information systems software.
Exploiting Intranets and the Internet. Our products and services have been
designed to expand the accessibility of information through the use of intranets
and the Internet as a global, low-cost, virtual private network. We believe that
the Internet will enable an entire business information base, currently
available only to users connected over a local area network or wide area
network, to be available without geographic limitation for the low cost of a
local Internet connection. This capability will allow businesses to use informed
sales professionals without the expense of physical offices or private leased
telephone lines. We plan to continue to exploit the Internet, we believe that
the Internet will allow customers to access comprehensive information that will
recommend and deliver customized products, goods and services directly to them
on a worldwide basis.
Expanding Global Sales Capabilities. We intend to expand our global sales
capabilities by increasing the size of our direct sales division in major
markets and continuing to recruit distributors in other selected markets.
Specifically, we plan to expand our direct sales and marketing activities in
North America, Europe, Asia and Latin America.
Advertising and Marketing. We will launch a comprehensive advertising campaign
to introduce our products and services to businesses.
Competition
The market for IT&T products in both Australia and New Zealand is significantly
competitive and we expect competition to continue to increase significantly. Our
subsidiaries compete with many other providers of IT&T products and services. We
have significant competition from other developers of software-related products,
in addition to other providers of telecommunications products. Although we have
diversified our operations by the acquisition of numerous businesses with
different IT&T related services and products, we still have significant
competition, which may result in current and future providers of similar
products and services competing on the basis of price, which could result in a
reduction of our revenues.
On a global basis, we have competition from major software companies who have
developed "back office" software applications, such as JD Edwards, Baan, Oracle
and PeopleSoft. In this competitive global situation, we believe that we have
managed to be a significant competitor in communications and e-commerce. We
believe the IT&T industry is shifting to more customized products at lower
prices, a better understanding of customer requirements, products and services
designed and developed to satisfy those requirements, and improved customer
support.
We believe that our software products and services allow businesses to use
customer information systems, product information systems, competitive
information systems and decision support systems on a global basis. We have
designed our products and services to provide support for interdependent
distribution channels, including direct field sales, telesales, telemarketing,
distribution, retail and Internet-based sales.
The market for our products is significantly competitive, subject to rapid
change and is significantly affected by new product introductions and other
activities of industry participants. Our products and services are targeted at
the emerging market for sales and marketing information systems. We have
competition from customers' internal development efforts, custom system
integration products, in addition to other software providers that offer a
variety of products and services designed for this market.
11
<PAGE>
ITEM 2. DESCRIPTION OF PROPERTY
The following table specifies the descriptions of our properties.
<TABLE>
<CAPTION>
====================================================================================================
Property Description
- ----------------------------------------------------------------------------------------------------
<S> <C>
2150 Scotia One, 10060 Jasper Avenue This leased property is our main office.
Edmonton, Alberta, Canada T5J 3R8
- ----------------------------------------------------------------------------------------------------
Brocker Technology Park This property is our main New Zealand
17 Kahika Road, Beachhaven, location housing SealCorp New Zealand, STG,
Auckland, New Zealand Easy PC, Inprise, 1 World, Brocker Financial
and Tech Support.
- ----------------------------------------------------------------------------------------------------
4 Bond Street, Grey Lynn This leased property houses Pritech's
Auckland, New Zealand Auckland office, in addition to being sub-let
to other tenants.
- ----------------------------------------------------------------------------------------------------
14 Putiki Street, Grey Lynn, This leased property, formerly housing some
Auckland, New Zealand of STG's inventory, is now sublet to a
picture framing company.
- ----------------------------------------------------------------------------------------------------
Level 3, PSA House, 11 Aurora Terrace, This leased property houses the Wellington
Wellington, New Zealand offices of SealCorp New Zealand, Easy PC and
Pritech.
- ----------------------------------------------------------------------------------------------------
2nd Floor, Office No. 10 This leased property houses SealCorp New
Victoria Business Center, Christchurch Zealand's Christchurch office.
- ----------------------------------------------------------------------------------------------------
Unit 2, 343 Church Street This leased property houses the office of ICS.
Penrose, Auckland, New Zealand
- ----------------------------------------------------------------------------------------------------
Level 2, 25 Dundonald Street, Newton, This leased property houses the call center
Auckland, New Zealand operations of PowerCall.
- ----------------------------------------------------------------------------------------------------
Unit 5, Macquairie View Estate, 112 Talavera Road, This leased property houses the Sydney
North Ryde, Sydney, New South Wales, Australia operations of SealCorp Australia.
- ----------------------------------------------------------------------------------------------------
Level 8, 48 Hunter Street, Sydney, This leased property houses the Sydney
New South Wales, Australia operations of Pritech Australia.
- ----------------------------------------------------------------------------------------------------
Suites 306, 307 and 317, Level 3, 60 City Road, This leased property houses the Melbourne
South Bank, Melbourne, Victoria, Australia office of SealCorp Australia and Pritech
Australia.
- ----------------------------------------------------------------------------------------------------
Unit 8, 10 Hudson Road, Albion, This leased property houses the Queensland
Queensland, Australia operations of Sealcorp Australia.
====================================================================================================
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
None of our companies nor any of their directors, officers and key personnel are
subject to any litigation, administrative or criminal action which is or has
been material to our operations or financial condition, nor are any of our
companies or their directors, officers or key personnel aware of any such
litigation or pending action.
12
<PAGE>
ITEM 4. CONTROL OF REGISTRANT
The following table furnishes information as to the beneficial ownership of the
outstanding shares of our common stock held by (i) each person known by us to
beneficially own more than 10% of the outstanding shares of our common stock and
(ii) all the directors and officers of our companies as a group.
<TABLE>
<CAPTION>
TITLE OF CLASS NAME AND ADDRESS NUMBER OWNED PERCENTAGE OF CLASS
-------------- ---------------- ------------ -------------------
<S> <C> <C> <C>
Common Stock Michael Ridgway, President, Director 3,360,948 22.2%
Auckland, New Zealand
Common Stock Directors and Officers as a group 4,075,456 26.9%
</TABLE>
Changes in Control. We are not aware of any arrangements which may result in
"changes in control" as that term is defined by the provisions of Item 403(c) of
Regulation S-B.
ITEM 5. NATURE OF TRADING MARKET
Shares of the Company's common stock have been listed and posted for trading on
the Toronto Stock Exchange (trading symbol BKI) since February 28, 1998. As of
December 27, 1999, 15 holders of record in the United States held 3,488,031
shares of the Company's common stock or 23.44% of the outstanding shares as of
that date. Prior to the listing on the Toronto Stock Exchange, shares of the
Company's common stock were listed for trading on the Alberta Stock Exchange.
The following table specifies the reported high and low sales or closing prices
of the Company's common stock on the Toronto Stock Exchange and Alberta Stock
Exchange for the periods indicated.
================================================================================
Period High Low
- --------------------------------------------------------------------------------
October 1, 1999 - December 26, 1999 $10.00 $2.60
July 1, 1999 - September 30, 1999 $3.75 $1.41
April 1, 1999 - June 30, 1999 $1.52 $1.00
January 1, 1999 - March 31, 1999 $1.60 $1.20
October 1, 1998 - December 31, 1998 $1.55 $1.15
July 1, 1998 - September 30, 1998 $1.47 $1.23
April 1, 1998 - June 30, 1998 $1.75 $1.28
================================================================================
ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
There are no governmental laws, decrees or regulations in Canada relating to
restrictions on the export or import of capital. However, the remittances of
interest, dividends or other payments to nonresident holders of our securities
are subject to withholding tax.
There are no limitations in the laws of Canada or in our charter or any other
constituent documents limiting the right of foreign persons to hold or vote our
securities. The Investment Canada Act (the "IC Act") governs the acquisition,
directly or indirectly, by non-Canadians of control of existing Canadian
businesses and the establishment by non-Canadians of new Canadian businesses.
Pursuant to the IC Act, subject to certain exceptions, a non-Canadian proposing
to acquire direct control of a Canadian business which has gross assets equal to
or in excess of CDN$5 million must first file an application for review with
Investment Canada, the federal agency responsible for administering the IC Act,
and receive approval for such investment from the federal Minister (the
"Minister") responsible for the IC Act. Approval is granted when it is
demonstrated, to the Minister's satisfaction, that the
13
<PAGE>
proposed investment is or probably will be of net benefit to Canada. When the
non-Canadian has the status of a North American Free Trade Agreement ("NAFTA")
investor (essentially, any national or government entity of the United States of
America or Mexico or any entity or other prescribed form of business
organization which is controlled by any such national or government entity) for
purposes of the IC Act or when the Canadian business is already controlled by a
NAFTA investor, that dollar requirement is increased to CDN$150 million in 1992
"constant dollars" (as that term is defined in the IC Act), subject to certain
exceptions. When the gross assets of the Canadian business being acquired are
less than the applicable minimum, the non-Canadian person must file a notice
with Investment Canada, either prior to or within 30 days following the closing
of the acquisition. Acquisitions subject to notice filing pursuant to the IC Act
are, subject to certain exceptions, not subject to the review and approval
process pursuant to the IC Act. There are no other restrictions, pursuant to
Canadian law or pursuant to our charter or other constituent documents, on the
ability of foreign residents to hold or vote our securities. There are no
restrictions, pursuant to Canadian law, on the distribution of dividends or
other distributions to shareholders residing in the United States.
ITEM 7. TAXATION
Capital Gains
A non-resident of Canada is not subject to tax pursuant to the Income Tax Act of
Canada ("ITA") in accordance with a capital gain realized upon the disposition
of a share of a public corporation, unless such share represents "taxable
Canadian property" to the holder thereof. Our common stock is listed on a
prescribed exchange and, therefore, will be taxable Canadian property to a
non-resident holder if, at any time during the period 5 years immediately
preceding the disposition, the non-resident holder, non-arms length persons, or
the non-resident, together with all such persons, owned not less than 25% of the
issued shares of any class of our capital stock. In the situation of a
non-resident holder to whom shares of our common stock represent taxable
Canadian property and who is residing in the United States, no Canadian taxes
will be payable on a capital gain realized on such shares, because of the
Canada-United States Tax Treaty ("Treaty"), unless the value of such shares is
derived from real property or natural resources situated in Canada. However, in
such event, certain transitional relief pursuant to the Treaty may be available.
In certain circumstances, the Treaty allows Canada to tax former residents on
gains from the disposition of taxable Canadian property, when such property was
owned at the time of their departure from Canada or was received in substitution
therefor in a transaction that is tax-free pursuant to Canadian law.
Withholding
Generally, cash dividends paid by Canadian corporations to non-Canadian resident
shareholders are subject to a Canadian withholding tax of 25%. However, pursuant
to Article X (2) of the Treaty, dividends paid to a resident of the United
States are only subject to a 15% Canadian withholding tax. Moreover, if the
United States resident owns 10% or more of the voting shares of the Canadian
corporation paying the dividends, the Canadian withholding tax is reduced to
10%. In addition to a dividend withholding, interest paid to the United States
resident is subject to a 15% Canadian withholding tax, pursuant to Article XI
(2) of the Treaty.
ITEM 8. SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION AND OTHER DATA
Summary Financial Information
The summary financial information set forth below is derived from the more
detailed consolidated financial statements and notes thereto appearing elsewhere
in this Form 20-F. We maintain our books and records in Canadian Dollars while
our subsidiaries maintain their books and records in New Zealand or Australian
Dollars, as appropriate, which are then reconciled to Canadian Dollars. We have
prepared our consolidated financial statements contained in this Form 20-F in
accordance with generally accepted accounting principles in Canada. See
14
<PAGE>
"Report of Independent Auditors" and "Consolidated Financial Statements". All
information should be considered in conjunction with our consolidated financial
statements and the notes contained elsewhere in this Form 20-F.
Year Ended March 31
(in thousands, except per share data)
<TABLE>
<CAPTION>
=====================================================================================================================
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue $133,303 $70,811 $50,110 $22,932 $3,931
Gross Profit $17,691 $14,401 $9,099 $5,489 $814
Net Income $514 $797 $838 $323 ($146)
Net Income Per Share $.03 $.06 $.06 $.04 $.02
=====================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
=====================================================================================================================
Balance Sheet Data 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Assets $50,687 $32,499 $19,926 $11,725 $8,223
Long Term Debt $2,284 $881 $115 $111 $1,080
Total Liabilities $44,018 $26,657 $14,042 $7,123 $7,382
Shareholders' Equity $6,669 $5,842 $5,884 $4,602 $841
=====================================================================================================================
</TABLE>
Exchange Rate
The following table sets forth the exchange rate for one Canadian Dollar
expressed in terms of one United States Dollar for the past four years ending
December 31, 1998.
Year Ended December 31
================================================================================
Year's High Year's Low Year's Average Year's Close
- --------------------------------------------------------------------------------
1998 $1.57 $1.40 $1.48 $1.53
1997 $1.43 $1.33 $1.38 $1.42
1996 $1.38 $1.33 $1.36 $1.36
1995 $1.42 $1.32 $1.37 $1.36
================================================================================
The exchange rates are based on monthly averages published by the Federal
Reserve for the noon buying rate in New York City for cable transfers and
foreign currencies as certified for customs purposes by the Federal Reserve Bank
of New York. As of December 27, 1999, the exchange rate was 1.46 Canadian
Dollars for one U.S. Dollar.
Dividends
To date, we have paid no dividends and we have no current plans to pay dividends
for shares of our common stock in the future.
ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
We maintain our books and records in Canadian Dollars while our subsidiaries
maintain their books and records in New Zealand or Australian Dollars, as
appropriate, which are then reconciled to Canadian Dollars. Except as otherwise
specified in this Form 20-F, all monetary amounts specified in this Form 20-F
have been presented in Canadian Dollars. We have prepared our consolidated
financial statements contained in this Form 20-F in accordance with generally
accepted accounting principles in Canada. See "Report of Independent Auditors"
and "Consolidated Financial Statements." All information should be considered in
conjunction with our consolidated
15
<PAGE>
financial statements and the notes contained elsewhere in this Form 20-F.
Significant differences between generally accepted accounting principles in
Canada and in the United States are disclosed in Item 17.
COMPARISON OF THREE MONTH PERIOD ENDED SEPTEMBER 30, 1999, TO THE THREE MONTH
PERIOD ENDED JUNE 30, 1999
Liquidity and Capital Resources. Our total assets declined approximately 4% to
$54.4 million from $56.8 million during the three-month period ended September
30, 1999. The decrease in total assets can be attributed to our efforts to
improve cash receipts by collecting funds owed to us, thereby reducing our
accounts receivables. Our accounts receivable for the period ended September 30,
1999 were reduced by $7.5 million compared to the three-month period ended June
30, 1999, although this reduction was offset by $4 million increase in
inventories. The increase in inventory is attributable to increases in inventory
held in Australia, and cellular products held in New Zealand to accommodate the
increase in demand.
Our total current liabilities decreased approximately 6% to $44.9 million for
the three-month period ended September 30, 1999, compared to $47.9 million for
the three-month period ended June 30, 1999. The decrease in current liabilities
is due the introduction of cash from improved financing negotiated during the
periods, and the effect of increased cash receipts from the reduction in
accounts receivable. The additional cash flow generated was used to reduce trade
creditors.
Results of Operations. Our gross sales increased approximately 4.4% to $37.9
million for the three-month period ended September 30, 1999, compared to $36.3
million for the three-month period ended June 30, 1999. For the three-month
period ended September 30, 1999, revenues in New Zealand decreased by
approximately 9% to $23.0 million, from $25.3 million for the three-month period
ended June 30, 1999. Sealcorp revenues continued to feel the effects of the
competitive environment and our customers' Y2K concerns. However, the small
decline in New Zealand revenues was offset by a significant increase in
Australian revenues, where we continue to experience excellent growth in both
distribution of technology products and providing professional services to
customers. Australian revenues for the three-month period ended September 30,
1999 increased approximately 35% to $14.9 million, compared to $11.0 million for
the three-month period ended June 30, 1999.
Our gross profit, which had been $4.6 million for the three-month period ended
June 30, 1999, increased approximately 9.2% to $5.0 million for the three-month
period ended September 30, 1999. The increase in gross profit is the result of
the overall profit margin on sales increasing from approximately 12.6% for the
three-month period ended June 30, 1999 to approximately 13.2% for the
three-month period ended September 30, 1999, which can be largely attributed to
the impact of higher profit margin on sales from professional services and
improved profit margin on technology distribution in Australia.
Our net profit after tax decreased to a loss of $182,789 for the three-month
period ended September 30, 1999 from a profit of $34,877 for the three-month
period ended June 30, 1999. The decrease in net profit is attributed to
increased operating expenses, which rose from $4.4 million for the three-month
period ended June 30, 1999 to $5.2 million for the three-month period ended
September 30, 1999. The increased operating expenses were predominantly in our
application and design areas in combination with an unexpected loss in Sealcorp
New Zealand of $788,000 due to reduced revenues as discussed above.
COMPARISON OF THREE MONTH PERIOD ENDED JUNE 30, 1999, TO THE YEAR ENDED MARCH
31, 1999
Liquidity and Capital Resources. Our total assets increased approximately 12% to
$56.8 million from $50.7 million during the three-month period ended June 30,
1999. The increase in total assets can be attributed to the increase in accounts
receivable of Sealcorp Australia of $4.3 million, an increase of 52%, combined
with an increase of $2.8 million in accounts receivable for the New Zealand
companies. The increase in Australian accounts receivable is due to the growth
in revenue, while the increase in New Zealand accounts receivable can be
attributed
16
<PAGE>
to increased revenue late in the three-month period ended June 30, 1999. Our
collections of accounts receivable in New Zealand have improved, resulting in an
increase in total assets of $1.8 million.
Our total current liabilities increased approximately 15% to $ 47.9 million for
three-month period ended June 30, 1999 compared to $41.7 million for three-month
period ended June 30, 1998. The increase in current liabilities is due to the
increase in the accounts payable of Sealcorp Australia, resulting from the
requirement to maintain more inventory to accommodate the increased sales.
Results of Operations. Our gross sales increased approximately 8% to $36.3
million in the three-month period ended June 30, 1999, compared to $32.6 million
in the three month period ended June 30, 1998. Our revenues in New Zealand and
Australia were approximately $25.3 million and $11.0 million for the three-month
period ended June 30, 1999, compared with $28.1 million and $4.5 million for the
three month period ended June 30, 1998, in New Zealand and Australia,
respectively.
Our revenues from New Zealand computer distribution operations decreased, in
comparison, due to a significantly competitive market and the impact of
businesses curtailing expansion due to Y2K concerns. The decrease in New Zealand
revenues was more than offset by (1) a growth in our Australian revenues, (2)
the results of our acquisition of Q*Soft in February 1999, (3) the growth in the
Australian economy and (4) the increase in sales by Sealcorp Australia.
Our gross profit was maintained at 12.6% for the three-month period ended June
30, 1999, in comparison to 13.1% for the three-month period ended June 30, 1998.
Our net profit after tax decreased to $34,877 in the three-month period ended
June 30, 1999, from $329,703 in three month period ended June 30, 1998. The
decrease in net profit is attributed to increases in interest expense and other
operating expenses, predominantly in our application and design areas in
combined with a loss in Sealcorp New Zealand due reduced revenues.
COMPARISON OF YEAR ENDED MARCH 31, 1999, TO YEAR ENDED MARCH 31, 1998
Liquidity and Capital Resources. Our total assets increased approximately 56% to
$50.7 million during the fiscal year ended March 31, 1999 from $32.5 million
during the fiscal year ended March 31, 1998. Our total current assets increased
approximately 55% to $41.4 million from $26.6 million. The increase in current
assets resulted from (1) the 64% increase in our accounts receivable to
approximately $23 million and (2) a 58% increase in our inventories to
approximately $15.2 million. The increases in our accounts receivable and
inventories correspond favorably with increased sales, with our revenue
increasing 88% in fiscal year ended March 31, 1999, compared to the previous
year.
Our current liabilities have increased from $25.8 million in the fiscal year
ended March 31, 1998 to $41.7 million in the fiscal year ended March 31, 1999,
an increase of $15.9 million or 62%. The major components of this increase are
(i) $1,189,000 of our current liabilities had no corresponding amount in 1998
because a number of companies were either formed or acquired during the fiscal
year ended March 31, 1999, (ii) current liabilities for Sealcorp Australia rose
to $6,281,000, and increase of 200% compared to the fiscal year ended March 31,
1998, which matched the 93% increase in Sealcorp Australia's value of products
and services sold, (iii) Sealcorp Australia negotiated extended credit terms
with key suppliers, due to the need to carry higher levels of stock in a rapidly
expanding market, (iv) the current liabilities of STG increased 32% to
$5,639,000, compared to the fiscal year ended March 31, 1998, which was again
due to the rapid growth in this business where the value of products sold
increased 92% from 1998 to 1999, and (v) the general increase in business
activity of all business units together with our extension of credit terms to
despite increasing cash flow requirements.
The increase in our long term debt from $881,070 to $2.2 million results from
Brocker NZ's purchase of new premises in Auckland, New Zealand on October 1,
1998. The purchase price of NZ$3.4 million was financed by a
17
<PAGE>
mortgage of
NZ$3.045 million. As of March 31, 1999, the outstanding balance of that mortgage
was approximately NZ$2.9 million. The new premises have allowed the
consolidation of our operating businesses to one location and provides ample
space for continued growth.
The rental finance liability was eliminated from our balance sheet. Easy PC is
an intermediary between its customers and an independent finance corporation,
which arranges financing for the purchase of equipment by Easy PC's customers.
During March 1999, Easy PC renegotiated its financing arrangement with the
independent finance corporation, to ensure that all significant risks of
recourse from the individual finance agreements were transferred to the
independent finance corporation. The result of this renegotiation was to enable
the Company, in accordance with generally accepted accounting principles, to
treat these liabilities as off-balance sheet transactions. Due to such
renegotiation, the Company's complete risk of recourse is now limited to
approximately $167,000.
The amount of our working capital decreased from $810,699 in 1999 to $330,247
with a significant increase in our current liabilities. We completed a fully
subscribed private placement of 1,000,000 units, consisting of one share of our
common stock and one non-transferable warrant entitling the holder to purchase
one share of our common stock, to raise proceeds of $1,070,000 which introduced
additional equity to increase our working capital. We have continued to receive
cash from operations, and we anticipate being able to fund current operations
and capital expenditures with existing cash and short term financial
arrangements. We anticipate that additional funds will be required to sell and
market our intellectual property products on a global basis.
Results of Operations. For the fiscal year ending March 31, 1999, our revenue
increased our gross sales increased approximately 88.3% from $70.8 million in
fiscal year ending March 31, 1998 to approximately $133.3 million in fiscal year
ending March 31, 1999. Our New Zealand based revenues spurred by the growth in
the mobile telephone marketplace increased to $109.8 million in fiscal year
ending March 31, 1999, which comprised more than 82% of our total revenues. Our
Australian revenues increased approximately 73% from approximately $13.5 million
in fiscal year ending March 31, 1998 to $23.4 million in fiscal year ending
March 31, 1999.
Our gross profit increased to approximately $17.7 million, an increase of 22.8%
over the fiscal year ending March 31, 1998. The increased gross profit business
in absolute terms is a result of increased operations. The decreased gross
profit percentage is a result of the size of the telecommunications distribution
business and the extremely low business risk of this business.
The increase in our depreciation and amortization expense at $2,010,703 is
because the increase in our assets and the increased information technology
depreciation following the implementation of the software systems developed by
PeopleSoft. Our net interest expense increased to approximately $1.4 million
which was a result of (1) the financing of our new premises in Auckland, New
Zealand, and (2) the increase in interest payments for the increased borrowings
during the period.
Our other expenses accounted for approximately $7 million, a 66.7% increase.
This is due to our acquisitions of PowerCall, ImageCraft, Easy PC, Pritech and 1
World. Our product and development expenses also increased over the year
resulting from our emphasis on the development of e-commerce and information
management in software products.
Our net earnings of $514,814 were reduced by 35.4% compared to the previous
year. The primary reason for the decrease in net earnings is that we invested
significantly in product development, specifically, the development of
e-commerce and information management software products. Accordingly, earnings
per share were reduced similarly to $.03 per share.
Acquisitions. On May 15, 1998, Brocker NZ acquired Pritech for initial cash
consideration of NZ$265,620. The purchase price was determined to be an amount
equal to the net profit earned by Pritech for the fiscal year ended September
30, 1998, multiplied by 4. Additional consideration, however, is only payable
based on the cash received by Pritech for the fiscal years ending September 30,
1999 to 2000. Therefore, any additional purchase price must be
18
<PAGE>
subsequently earned by Pritech, during that period, before such additional
purchase price is payable. Any additional purchase price will be paid by the
issuance by the Company of shares of the Company's common stock.
On June 16, 1998, Brocker NZ acquired 1World for initial cash consideration of
NZ$103,750. The maximum purchase price was determined to be an amount equal to
the net profit earned by 1World for the fiscal year ended March 3, 1999,
multiplied by 4. Additional consideration, however, is only payable based on the
cash received by 1 World for the fiscal years ending September 30, 2000 to 2001.
Therefore, any additional purchase must be subsequently earned by 1 World,
during that period, before any such purchase price is payable. Any additional
purchase price will be paid by the issuance by the Company of shares of the
Company's common stock.
On February 8, 1999, SealCorp Australia acquired the net assets of Q*Soft for a
cash consideration of AU$150,000.
COMPARISON OF YEAR ENDED MARCH 31, 1998 TO YEAR ENDED MARCH 31, 1997
Liquidity and Capital Resources. During the comparison period, our total assets
increased approximately 59% from $17 million at March 31, 1997 to $27 million at
March 31, 1998. The majority of that amount is represented by accounts
receivable, which increased approximately 56% from $8.9 million at March 31,
1997 to $13.9 million at March 31, 1998. This increase was primarily due to the
significant increase in our sales in the latter months of the fiscal year ended
March 31, 1998, compared to the same period in the prior year. The other
increase was in our inventory, which increased from $6.1 million to $9.7 million
during the comparison period, an increase of approximately 58%. Our increased
inventory was required because of more turnover anticipated for the first
quarter of the new year, a significant increase from the comparable period in
the previous year.
Our liabilities increased from approximately $13.9 million to $25.8 million
during the comparison period, which was primarily a result of a 60% increase in
our accounts payable (from $10.9 million to $17.4 million) and was comparable to
the increase in our inventory (increased by approximately 58%). The inclusion of
$1.0 million in liabilities results from our rental finance liability (which
totaled $1.9 million), whereas the offsetting asset entry of $1.9 million was
included in capital assets. Including the entry in capital assets, as opposed to
current assets, which affects the funds specified as our working capital, was
required pursuant to relevant accounting standards.
In addition, our current asset financing facility increased from $1.0 million to
$5.8 million during the comparison period to finance our working capital
requirements. We were required to replace financing provided by a financial
institution that was withdrawing from the New Zealand market. We negotiated new
financing on more favorable terms and conditions with a decreased interest rate
and an increased credit limit.
Our working capital decreased from $3.1 million at March 31, 1997 to $1.3
million at March 31, 1998, a reduction of approximately 58%. Although our assets
increased significantly, there was an even greater increase in our liabilities,
an increase of approximately 85%. The increase in our liabilities principally
relates to the increase in our accounts payable referred to above. We recognize
that, to continue our growth, additional funds were required for our working
capital.
Our total assets increased from $19.9 million to $32.5 million, or an increase
of approximately 63%. Our balance sheet specifies an increase in capital assets
of $2.5 million to $3.7 million during the comparison period, an increase of
approximately 213%. However, $1.9 million of this amount relates to the
off-setting rental finance liability referred to above. The $1.9 million entry
resulted in an actual net increase in capital assets of $2.5 million, the
majority of which was invested in computer hardware as part of the information
services upgrade completed by us during the fiscal year ended March 31, 1998.
Results of Operations. We experienced a significant increase in revenues, with
sales for the fiscal year ended March 31, 1998 totaling $70.8 million, an
increase of approximately 41.3% over the $50.1 million achieved in the previous
year. Sales in our Australian operations increased by approximately 14% for the
fiscal year ended March 31,1998, compared to sales achieved in the fiscal year
ended March 31, 1997. In our New Zealand operations,
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<PAGE>
where the majority of our revenue is earned, sales increased 50% from $38
million to $57 million. Decreased per unit sales prices for computer hardware
were offset by increased volumes and additional sales, in addition to revenue
from services such as consulting and training activities.
Our gross profit increased from $9.1 million to $14.4 million during the
comparison period (an increase of approximately 58.3%) and our gross profit as a
percentage of our sales increased from 18.2% in the previous year to 20.3% in
the fiscal year ended March 31, 1998. The increase was achieved in spite of
declining gross profit percentages industry-wide in the computer distribution
business. Our increased gross profit percentage is attributable to our
acquisition strategy of expanding computer distribution and develop additional
sales using relationships with suppliers and customers. As we continued to
invest in companies in associated segments of the technology business, our
emphasis was on operations with increased gross profit percentages.
The increase in our depreciation and amortization expense (an increase from $0.4
million to $1.7 million) is a result of the inclusion of depreciation associated
with assets financed using a recourse arrangement with an independent finance
company for one of our acquisitions during the fiscal year ended March 31, 1998
(Easy PC Ltd.). That increased depreciation is $0.8 million, with $0.2 million
included in our net interest expense amount. These amounts are off-set by a
comparable in our revenue of $1.0 million. Our balance sheet was also affected
by the total recourse debt of $1.9 million included in our liabilities, with a
comparable figure included in our capital assets. The potential defaults were
not considered significant, considering the risk of 421 individual contracts and
the minimal losses experienced. We experienced 7 defaults with the total write
offs totaling $7,000 during the fiscal year ended March 31, 1998.
Our interest expenses increased amount from $0.2 million to $0.7 million, as a
consequence of (1) our increased working capital requirements to support
increased borrowings, as a result of increased revenue, and (2) the treatment of
Easy PC Ltd., as specified above. Our other expenses, including salaries,
commissions and other operating expenses increased by approximately 48%.
Our net income of $0.80 million decreased from the $0.84 million achieved in the
prior comparison year, a decrease of 4.9%. Although our net income was less than
our anticipated net income, we believe that the strategies implemented by us
during the fiscal year ending March 31, 1998, should ensure results from our
acquisitions and activities in fiscal year ended March 31, 1999 and subsequent
years. Our first quarter results for the fiscal year ended March 31, 1999
supports this belief, with our net income increasing from $4,085 to $329,703 for
the comparable period. Earnings per share at $0.06 per share were at the same as
last year, which was a continuation of the continual increase in earnings per
share for the years 1994 to 1997.
Acquisitions. At the outset of the fiscal year ended March 31, 1998, we
completed the acquisition of ICS, a company with revenue from the servicing of
telecommunications equipment. ICS also has opportunities for the design and
development of cellular based telecommunications products. ICS has sales in the
Australian telecommunications market and we anticipate increasing the number of
our global customers.
A similar business existed in Powercall (acquired by us in May 1997) where
revenue was earned from call center operations, with product development
concentrated on computer telephony integration.
We identified the rental and leasing of computer equipment as a complementary to
our primary technology. In July 1997, we completed the acquisition of Easy PC, a
company specializing in full service rental and leasing operations for computer
equipment.
With our intent to establish a larger international market for some of our
products, we have identified various acquisition opportunities of start-up
operations. The acquisition of Image Craft was determined to be an opportunity
for us to enhance Image Craft's digital imaging products and the services that
had been established in New Zealand, and promote these products and services
internationally. Subsequent to our acquisition of Image Craft, a new operation
has been established in Australia and we are negotiating opportunities in North
America.
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<PAGE>
At the conclusion of the fiscal year ended March 31, 1998, we completed 2
acquisitions (Pritech and Microchannel Ltd.) which provided us with additional
opportunities in distribution of products, in addition to project management,
consulting and training services, based upon Lotus products. These acquisitions,
also, provide additional international marketing and distribution opportunities.
Our presence in Australia has increased from an initial sales office and
distribution operation for SealCorp Australia to include the distribution
operations from the various companies which we have acquired, including
Sourceware, TGE and 1World. Although there was a $0.4 million loss for fiscal
year ending March 31, 1998, the second half of the year was profitable. Based on
the results for the first quarter of fiscal year ending March 31, 1999, we
believe that our Australian operations will be profitable.
COMPARISON OF YEAR ENDED MARCH 31, 1997 TO YEAR ENDED MARCH 31, 1996
Liquidity and Capital Resources. Our total assets increased by approximately 70%
from $11.7 million to $19.9 million, with net assets increasing approximately
31% from $4.6 million to $6 million. With profit increasing by approximately
159%, there was an improvement of the return on assets. Our earnings per share
increased, as a result of the increase in profitably during the fiscal year
ended March 31, 1997, which were 8.1 cents per share for that fiscal year,
compared with just 3.2 cents per share in the preceding fiscal year.
Results of Operations. Our total revenue in the fiscal year ended March 31,
1997, more than doubled to $50,109,139, an increase of 118% compared to the
$22,888,482 achieved in the prior fiscal year. The increase in revenue was due
both to growth in our businesses in Australia and New Zealand, in addition to
additional revenue from acquisitions during the period, most notably Sourceware
and TGE in Australia. Sales by SealCorp New Zealand and SealCorp Australia
continued to increase from the distribution of computer software and hardware,
in addition to Wireless Technology Group. The strategy of centralizing the
various service functions, such as finance, administration and distribution,
provided cost efficiencies, effectively reducing our overhead costs, from 21% of
total revenues in the fiscal year ending March 31,1996, to 16% in the fiscal
year ending March 31,1997 year. While our revenues increased by 119%, our net
income after tax increased by 159%, from $323,351 in the fiscal year ended March
31, 1996 to reach $837,650. As a result, the net income on sales increased from
1.4% to 1.7% during the comparison period.
Acquisitions. During the fiscal year ended March 31, 1997, we considered a
number of acquisitions; however, few acquisition candidates were able to satisfy
our acquisition criteria. Our due diligence and planning prior to acquisition
resulted in profitable post-acquisition operations. For example, the Number One
Software Company was combined with SealCorp New Zealand and within a year, sales
revenue had more than tripled using existing staff within SealCorp New Zealand.
We assessed our ability to utilize the resources of the acquisition candidate,
identified how best to use the existing resources to increase profitability,
retain key staff, eliminate duplication and enhance customer service. We have
significant investments in computer distribution businesses, and enhanced our
investments with the acquisition of Sourceware, a major supplier of IBM software
in Australia. Sourceware has been consolidated into SealCorp Australia. The
acquisition of Sourceware provides us access to a relationship with IBM.
SealCorp New Zealand and SealCorp Australia have distribution rights in the New
Zealand and Australia for IBM and Lotus software.
In addition, we acquired the assets of TGE, the exclusive distributor of Wyse
Technology products, which include monitors and technology, such as Network
Centric computing. TGE has a separate repair and service facility which has been
enhanced to enable sophisticated configuration services for IBM's computer
servers. We also acquired assets to form Northmark Technologies Limited, a
regional dealer in computer products, located in Whangarei, New Zealand.
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Year 2000 Compliance
We have attempted to resolve the Year 2000 issue by our review of potential
exposures within each business. Our main application software has been confirmed
as Year 2000 compliant and we do not have any reliance on older mainframe based
applications, about which most concern exists for potential Year 2000 issues.
In order to ascertain our state of readiness for Year 2000 compliance, we have
undertaken a review of our potential Year 2000 exposures. All of our software,
hardware and communications have been analyzed by reviewing all relevant product
and service manuals, contacting vendors and conducting online research of
relevant vendor websites. Our primary software, which was developed by
PeopleSoft and is Microsoft Windows-based, has been confirmed as Year 2000
compliant. Also, all of our computer hardware has been confirmed as Year 2000
compliant subsequent to our review of the various vendor and supplier websites
regarding our systems. For our other software, we have contacted the providers
of that software, reviewed the relevant manuals and reviewed vendor websites to
ensure Year 2000 compliance.
For non-information technology systems ("non-IT"), systems that depend on
computer clocks or date calculation and operations, including fire detection,
heating, venting, and air conditioning systems and other electronic control
systems, we have reviewed the relevant manuals and contacted the various
suppliers of those systems to ascertain the Year 2000 readiness of those
systems.
For critical systems and when confirmation of Year 2000 compliance was not
available from a vendor, we have conducted tests to evaluate operation after the
calendar changes to 1st January 2000. When a test identified possible problems,
our software and or hardware has been upgraded or we have put new processes in
place.
Third-Party Year 2000 Compliance Risks. Although we have received assurances
from third parties regarding Year 2000 compliance with our non-IT systems, we
cannot be certain that a business interruption may not occur as the result of a
Year 2000 issue concerning our non-IT systems. We believe that the most
significant Year 2000 risk to our continued operations is our dependence on
third party suppliers and vendors. While we have ascertained from the various
third party suppliers and vendors the Year 2000 readiness of the various
hardware and software systems supplied to us by them, we can give no assurance
that an interruption will not occur in our business as the result of some
unforeseen Year 2000 issue.
Year 2000 Risks to Our Subsidiaries. We have undertaken a review process has
been undertaken for our subsidiaries involved in software product development to
confirm that products and services which have been designed and manufactured by
these subsidiaries do not contain any internal clock facilities and, as such,
cannot themselves cause any Year 2000 date problems. Our subsidiaries not
involved in product development have reviewed product manuals and vendor
websites to ensure Year 2000 compliance. The issue of Year 2000 readiness for
our subsidiaries that are involved in the distribution of third-party hardware
and software systems will ultimately be the responsibility of the manufacturers
of that hardware and software. Consequently, our subsidiaries, such as Q*Soft,
have asked all vendors for all Year 2000 information about all of their
products. Q*Soft's website provides links to the vendors' websites which
specifically address the Year 2000 issues for all of the products distributed by
Q*Soft. Easy PC supplies all equipment and software with the latest Year 2000
updates from manufacturers. Easy PC supplies only quality equipment from
manufacturers who have ensured us that all of their products are Year 2000
compliant. Easy PC's website also contains links to its suppliers' websites
where specific Year 2000 issues are addressed regarding the specific products
supplied to Easy PC. For other products supplied by third parties which do
contain an internal clock facility, the manufacturers of those products have
confirmed to us Year 2000 compliance. We have undertaken a review process with
other suppliers and major customers to ensure they are obtaining adequate Year
2000 compliance.
Australian and New Zealand Year 2000 Disclosure Laws. The Year 2000 Information
Disclosure Bill was introduced and subsequently passed by Australia's Federal
Parliament. Modeled after the United States Year 2000 Information Disclosure
Act, which was passed in 1998 and which became known as the Good Samaritan Law,
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Australia's bill provides limited liability protection to entities and persons
making Year 2000 disclosure statements. Disclosure statements must be clearly
identified as such and made in good faith to be protected by the bill. In March,
1999, the legislature of New Zealand introduced the Year 2000 Information
Disclosure Bill which is modeled after the Australian legislation and limits the
legal liability of entities who disclose information about their preparation for
Year 2000 readiness. The legislation reduces the liability for making incorrect
but honestly intended statements while not reducing the liability for making
reckless or dishonest statements. As a result of the Year 2000 Disclosure
Legislation, in both Australia and New Zealand, we have undertaken to inform all
of our customers about specific Year 2000 readiness for our products and to
provide information from vendors and suppliers regarding product Year 2000
readiness for their products.
In a worst case scenario, our primary operations could be adversely affected by
non-compliance of banks, communications providers, utilities, common carriers,
our suppliers and vendors, potential customers and other sources known and
unknown to us. We cannot reasonably estimate the ultimate impact of Year 2000
issues. Many Year 2000 issues may not be readily apparent when they first occur,
but instead imperceptibly degrade technology systems and corrupt information
stored in computerized databases, in some situations before January 1, 2000.
ITEM 9A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Potential Risks and Uncertainties
General and Economic Risk. Our New Zealand operations represent the major
geographical component of our business. Last year New Zealand operations
contributed approximately 80.9% of our turnover and, accordingly, represents one
of the major considerations in terms of future uncertainties. Our operations
have not been detrimentally influenced by the Asian financial situation. Despite
the media focus on negative issues, we believe the underlying fear of the Asian
financial situation significantly impacting the New Zealand economy may have
been over emphasized. For example, New Zealand's export earnings are up on last
year. New markets have been developed for exports, and New Zealand has become an
attractive tourism destination to other nationalities.
We believe the continued acceptance of technology-based products, including
computers and cellular telephones, has indicated no sign of declining to the
point of impacting us.
Industry and Market Risk. The computer industry has experienced decreasing
prices as technological developments continue to evolve and the margins on
products decrease. Recognizing this trend some time ago, we embarked on a
program to increase the products we distribute, in addition to the traditional
personal computer hardware and software that previously formed the majority of
our business.
Currency and Exchange Rate Risk. We hedge normal trading arrangements when
possible, by purchasing using the currency of sale. For example, New Zealand
operations purchase in New Zealand Dollars, even for goods supplied from
Australia or Asia. Major suppliers to SealCorp and STG use this practice.
However, for some vendors this is not always possible and, in those situations
of significant risk, we purchase foreign currency risk insurance, particularly
where purchases are made to satisfy specific sales contracts.
Apart from trading arrangements, our key currency exposures relate to the
geographic location of the assets of our operations in New Zealand, Australia
and Canada. During recent times, fluctuations in exchange rates have adversely
impacted the value of our assets when denominated in Canadian Dollars.
We have occasionally used a very limited number of forward exchange contracts
and currency options to hedge purchases of inventory in foreign currencies. Our
exchange rate commitments are intended to minimize the exposure to exchange rate
movement risk on the cost of our products and on the price we are able to sell
those products to our customers. We do not use foreign exchange instruments for
trading or any other purpose.
The only risk inherent in using forward contracts is the potential that the New
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Zealand Dollar will move favorable against the foreign currency that has been
hedged. This is an opportunity cost, which is mitigated by the certainty of
pricing that results from the hedge, which is of course the purpose of the
transaction, to remove the downside risk.
No forward exchange contracts have been entered into during the current
financial year. During the fiscal year ended March 31, 1999, the average value
of these forward contracts amounted to NZ$1,232,000 and were entered as a hedge
against New Zealand purchases made in Australian dollars. Since then the
majority of our major suppliers have changed from invoicing in their home
currency, to invoicing in New Zealand Dollars. This should eliminate our
exchange risk on the transactions and, therefore, eliminates the need for
foreign exchange hedging.
ITEM 10. MANAGEMENT
Our Directors and Officers
Michael B. Ridgway of Auckland, New Zealand has been both our Chief Executive
Officer of the Company and a member of our Board of Directors since December
1994. Prior to 1994, Mr. Ridgway was the Managing Director of SealCorp Computer
Products Limited (which is now a subsidiary of the Company) since 1987 when he
founded SealCorp. SealCorp was sold to us in 1994 and is now the main trading
subsidiary.
Richard Justice of Auckland, New Zealand has been both our Chief Financial
Officer and a member of our Board of Directors since September 1997. Prior to be
appointed Chief Financial Officer, Mr. Justice was the Financial Controller of
SealCorp Computer Products Limited since 1993. Mr. Justice has held various
management positions with distribution corporations prior to establishing Abacus
Management Services Limited, a consultancy corporation. Mr. Justice completed
his Masters of Business Administration from Auckland University in 1990 and has
been a licensed accountant in New Zealand since 1979.
Casey J. O'Byrne of Edmonton, Alberta has been our Chairman of the Board since
November 1998 and has been a member of our Board of Directors since our
incorporation in November 1993. Mr. O'Byrne is a lawyer and has been practicing
with the firm of Tarrabain O'Byrne & Company in Edmonton, Alberta since 1990.
Mr. O'Byrne has been practicing law in Alberta, Canada since he graduated from
the University of Cambrensis School of Law in the United Kingdom in 1984.
Andrew J. Chamberlain, of Edmonton, Alberta is our Corporate Secretary since
being appointed in November 1998 and was elected to our Board of Directors on
December 14, 1999. Mr. Chamberlain is a lawyer and has been practicing with the
firm of Chamberlain-Hutchinson in Edmonton, Alberta since 1997. Prior to 1997,
Mr. Chamberlain practiced law in Alberta, Canada with Davies & Co. since he
graduated from the University of Alberta School of Law in 1984.
Julia A.E. Clarkson of Allston, Massachusetts has been a member of our Board of
Directors since October 1998, and has been a member of Retail Startup CC, LLC,
an operator of retail dry cleaning outlets in Newton, Massachusetts since July
1998. Ms. Clarkson completed her Masters of Business Administration from Harvard
University in 1998. From 1994 to 1996, Ms. Clarkson was a consultant for Mercer
Consulting (formerly Corporate Decisions Inc.). From 1992 to 1994, Ms. Clarkson
was a financial analyst in the New York investment banking division of Morgan
Stanley.
Daniel Hachey of Toronto, Ontario has been a member of our Board of Directors
since January 1998. Mr. Hachey is the Vice-President and director of Corporate
Finance of HSBC James Capel Canada Inc. Prior to holding this position, he was
Senior Vice President and director of Midland Walwyn Capital Inc.
Mike O'Brien is our General Manager of Distribution Services. Mr. O'Brien's
experience has grown rapidly with the new cellular distribution channel during
the last 3 years. Mr. O'Brien has a strong technical background developed over 8
years with Telecom and more recently, 6 years consulting in London to the
finance and communication industries in project design, implementation and
coordination.
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Roger Carter is our General Manager of Application Development and Services. Mr.
Carter started ICS in 1978 after 7 years working for Pye Telecom. In 1994, Mr.
Carter purchased the interests of the minority shareholders and changed the
direction of ICS to concentrate on wholesale service and product design and
manufacture, particularly for the export market. We acquired ICS in 1997.
Stephen Hassall is our General Manager Professional Services. Mr. Hassall joined
us in 1995 as General Manager of SealCorp Computer Products Limited. In October
1998, Mr. Hassall was appointed our General Manager Marketing and Client
Services. From 1987 to 1995, Mr. Hassall held several senior sales and marketing
positions in the financial markets industry of New Zealand and Australia.
Richard MacLean is our General Manager of Intellectual Property Sales. Mr.
MacLean has worked for several companies during the last decade in sales,
marketing and technical roles in the IT&T industries of New Zealand and
Australia.
Hal Linstrom is our Chief Operating Officer. Mr. Linstrom was appointed to the
new role of Chief Operating Officer effective October 1, 1998. Previously, Mr.
Linstrom was our General Manager of Mergers and Acquisitions, completing twelve
acquisitions during four years. Mr. Linstrom had previously worked in various
sales and marketing management positions and has held General Management
positions in private companies.
Key staff of subsidiary companies
Chris Spring is the General Manager of SealCorp Australia. Mr. Spring joined
SealCorp Australia from OKI Australia, where he held the position of General
Manager Sales and Marketing. Mr. Spring has 10 years industry experience in
Australia.
David Corlett is the General Manager of Pritech Corporation Ltd. Mr. Corlett has
had more than twenty-five years local and international experience in the
Information Systems Industry. Mr. Cortlett has worked with several leading
software companies implementing manufacturing, distribution and financial
systems. Mr. Cortlett's background experience includes reviewing organizational
requirements, new systems installation to satisfy the requirements of the
manufacturing, distribution, service, rental and financial operations. Mr.
Cortlett has also conducted a number of studies defining requirements and
installing systems for a diverse range of applications.
Nick Lyttle is the General Manager of Powercall. Upon completing his degree as a
Veterinary Surgeon and engaging in several years of successful private practice,
Mr. Lyttle became the Managing Director of Christchurch based Canterbury Voice
Mail and, in addition, now manages Powercall in Auckland. Both these companies
specialized in advanced IVR solutions and CTI development serving a significant
number of customers throughout New Zealand.
ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS.
For the last completed financial year, the aggregate cash compensation,
including bonuses, of all our directors and executive officers specified above
was $519,356. The aggregate set aside by us to provide pension, retirement or
similar benefits to those directors and officers was approximately ten percent
(10%) of the aggregate cash compensation of the executive officers as a group.
ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES
Incentive Stock Options
As of December 27, 1999, the following options to purchase our securities were
outstanding:
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<TABLE>
<CAPTION>
====================================================================================================================================
Name of Optionee Balance of Outstanding Exercise Price Expiration of Option
Shares Subject to Option
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Michael Ridgeway* 30,000 $1.90 November 20, 2002
Richard Justice* 118,000 $1.41 July 2, 2004
Casey O'Byrne* 145,000 $1.18 January 12, 2001
Casey O'Byrne* 57,000 $1.31 January 12, 2001
Daniel Hachey* 50,000 $1.99 January 26, 2003
Hal Linstrom* 70,000 $1.90 November 20, 2002
Hal Linstrom* 50,000 $1.41 July 2, 2004
Steve Hassall* 70,000 $1.90 November 20, 2002
Steve Hassall* 50,000 $1.41 July 2, 2004
Mike O'Brien 50,000 $1.41 July 2, 2004
Chris Spring 31,000 $1.41 July 2, 2004
Richard MacLean* 31,000 $1.41 July 2, 2004
Roger Carter 16,000 $1.41 July 2, 2004
Julia Clarkson* 50,000 $1.50 November 30, 2003
M. O'Brien 70,000 $1.90 November 20, 2002
Gillian Morgan 20,000 $1.90 November 20, 2002
Nigel Guthrie 20,000 $1.90 November 20, 2002
Chris Spring 50,000 $1.90 November 20, 2002
Josephine James 15,000 $1.90 November 20, 2002
Annie Larsen 15,000 $1.18 January 12, 2001
Lori Mitchell 15,000 $1.18 January 12, 2001
Gillian Morgan 25,000 $1.18 January 12, 2001
Richard Preston 15,000 $1.18 January 12, 2001
Officers and Directors as a Group 721,000 $1.18 - $1.99 January 12, 2001 - July 2, 2004
====================================================================================================================================
</TABLE>
* Directors and/or officers of the Company
Share Purchase Warrants
As of December 27, 1999, the following warrants of the Company were outstanding,
entitling the holder thereof to purchase one common share for each warrant
exercised:
================================================================================
Number of Warrants Outstanding Exercise Price Expiration Date
- --------------------------------------------------------------------------------
1,000,000 $1.25 January 16, 2002
486,000 $3.15 June 15, 2001
================================================================================
We have issued 1,800,000 special warrants, each of which is exchangeable for a
unit, each unit consisting of one common share and one half share purchase
warrant. Two half share purchase warrants shall, together, entitle the holder to
purchase one additional common share at a price of $3.15 per share if exercised
by June 15, 2001.
Other than disclosed in this 20-F, no treasury shares or other securities of the
Company are now the subject of any transaction, sale or option agreement.
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ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS.
Conflicts of Interest
One or more of our directors or officers may also serve as directors or officers
of other companies engaged in similar business ventures. Accordingly, business
opportunities may be offered to a director or officer involved with us and other
companies. As a result, there may be situations which involve a conflict of
interest. Our directors and officers will at all times use their best efforts to
act in our best interests. Any interested director would be required to declare
the nature and extent of his or her interest and would not be entitled to vote
at meetings of directors which evoke any such conflict.
Our Secretary and director, Andrew Chamberlain, is also a director of Loma Oil &
Gas Limited, an Alberta corporation ("Loma Oil"), and Interex Minerals Limited,
an Alberta corporation, both of which are reporting companies on the Alberta
Stock Exchange.
None of our other officers or directors of the Company are officers or directors
of other reporting corporations.
Related Party Transactions
1. Brocker New Zealand entered into a loan agreement with Highway Technologies
Limited for a maximum of One Million Five Hundred Thousand ($1,500,000) New
Zealand Dollars. Interest is payable on these funds at thirty percent (30%)
per annum. As of March 31, 1998, the amount advanced to Highway
Technologies Limited was $327,151in New Zealand Dollars (approximately
$255,700 in Canadian Dollars).
2. During the fiscal year ended March 31, 1996, we provided an interest-free
short term loan characterized as an advance to Michael Ridgeway, our Chief
Executive Officer. The balance outstanding on this loan at March 31, 1996
was $136,256.
3. In March 31, 1997, we provided an interest-free loan characterized as an
advance to Michael Ridgeway, our Chief Executive Officer. The balance
outstanding at March 31, 1997 was $71,390.
4. During the fiscal year ended March 31, 1998, we provided an interest-free
loan characterized as an advance to Michael Ridgeway, our Chief Executive
Officer. The balance outstanding at March 31, 1998 was $5,778.
5. During the fiscal year ended March 31, 1999, we provided an interest-free
short term advance to Michael Ridgeway, our Chief Executive Officer. The
balance outstanding at March 31, 1999 was $4,663.
6. We loaned $94,817 to Michael Ridgeway, our Chief Executive Officer.
Interest on this loan accrues at 9.94% per annum and this loan is unsecured
and is payable upon demand.
7. We loaned $130,000 to Casey O'Byrne, our Chairman of the Board. Interest on
this loan accrues at 5% per annum and the loan is unsecured and is payable
by December 21, 2002.
8. Our Directors have exercised certain stock options. The funds required to
exercise these options have been lent to those directors by Brocker New
Zealand. As of March 31, 1999, the amount outstanding on these loans was
the aggregate amount of $749,375. The current market value of the shares of
common stock held as security for these loans is in excess of $1.6 million
dollars. Interest is charged on the outstanding balance at 7.5% per annum.
The loan to each director is repayable on demand or within thirty (30) days
of the individual ceases to be our employee or one of our subsidiaries. The
beneficial ownership of such shares are held as security for the loan, and
we retain the right to either sell or cancel such shares to settle
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<PAGE>
any outstanding loan amounts. Employees may not sell or transfer such
shares prior to the settlement of any amounts outstanding.
9. Directors of our various subsidiaries have advances owing as of March 31,
1999 totaling $193,124. In all situations, these directors were
shareholders of the subsidiary prior to acquisition by Brocker New Zealand.
The amounts outstanding will be repaid as the acquisitions are settled. No
interest is charged on the amounts outstanding and the balances are
included in other receivables.
10. Michael Ridgeway was issued 860,755 shares of our Series A Preferred Stock
and warrants to purchase 148,500 shares of our no par value common stock at
a price of $1.10 per share in consideration of the settlement of the
indebtedness to Mr. Ridgeway in the amount of $920,889.34 New Zealand
Dollars which is equal to approximately $860,755.62 Canadian Dollars. The
indebtedness resulted from our purchase from Mr. Ridgeway and another party
of the shares of common stock of SealCorp Computer Products Ltd. for a
total price of $2,750,000 New Zealand Dollars which is equal to
approximately $2,667,500 Canadian Dollars.
PART II
ITEM 14. DESCRIPTION OF SECURITIES TO BE REGISTERED
Common Stock
Our Articles of Incorporation authorize us to issue an unlimited number of
shares of common stock without nominal or par value, and 15,122,467 shares of
such common stock are issued and outstanding as of December 27, 1999. The
holders of the shares of our common stock are entitled to dividends as and when
declared by our Board of Directors, to one vote per share at meetings of our
shareholders, and, upon liquidation, to receive such assets as are distributable
to the holders of such shares.
Escrowed Shares
We have outstanding 946,817 shares of our common stock held in escrow, which
shares are subject to the terms of the following issued and escrow arrangements:
(a) Pursuant to an Escrow Agreement dated March 31, 1997 (the "ICS Escrow
Agreement"), a total of 760,500 shares of our common stock have been
deposited in escrow with Montreal Trust Company of Canada. The ICS Escrow
Agreement provides that such shares may be released at the rate of one
share for each $1.65 of cash generated by or from Industrial Communications
Service Ltd., subject to a maximum of one-third of such shares being
released each year. To date there have been no releases pursuant to the ICS
Escrow Agreement.
(b) Pursuant to an Escrow Agreement dated April 1, 1997, the shares of our
common stock purchased pursuant to the acquisition of the shares of common
stock of Powercall are to be deposited in escrow. As of September 29, 1999,
there are 186,317 shares of our common stock deposited in escrow to be
released based on the cumulative cash generated by Powercall, using the
share price at March 31, 1998.
(c) Pursuant to an Escrow Agreement dated December 24, 1997, the shares to be
issued pursuant to the acquisition of NZ Online (currently Image Craft) are
to be deposited in escrow. Once deposited, such shares are to be released
based on cash generated by NZ Online for the years ended March 31, 1999 and
March 31, 2000, using the share price as at March 31, 1998.
28
<PAGE>
Pooled Shares
There are no shares of our no par value common stock are held in trust or
pooled.
Shares Reserved for Issuance
We have reserved an aggregate of 5,249,000 shares of our common stock for
issuance as follows:
a. 1,000,000 shares of our common stock have been reserved for issuance
in connection with the exercise of warrants included in units sold
pursuant to a private placement at a price of $1.00 per unit for
720,000 units and a price of $1.25 per unit for 280,000 units, each
unit consisting of one share of our common stock and one
non-transferable warrant entitling the holder to purchase one share of
our common stock, exercisable for a period of 2 1/2 years at a price
of $1.25 per share. In compliance with the requirements of the Toronto
Stock Exchange, Richard Justice, an "insider" who was not allowed to
participate in the private placement at a discount, purchased the
280,000 units at $1.25 per unit.
b. 1,063,000 shares of our common stock have been reserved for issuance
in connection with the exercise of stock options (see "Options to
Purchase Securities" specified at Item 12 of this Form 20-F).
c. A total of 3,186,000 common shares have been reserved for issuance in
connection with a private placement of special warrants completed on
December 15, 1999. We have issued 1,800,000 special warrants, each of
which may be exchanged, at no additional costs, into one unit, each
unit to consist of one common share and one half share purchase
warrant. Two half share purchase warrants together will entitle the
holder to purchase one additional common share at a price of $3.15 per
share, expiring June 15, 2001; if these half share purchase warrants
are fully exercised this would result in an additional 900,000 common
shares being issued. Pursuant to this private placement, as agents'
compensation, we also issued share purchase warrants to purchase an
additional 486,000 common shares at $3.15 per share, exercisable for a
period of 18 months.
Other Securities Subject to Hold Restrictions
Pursuant to a private placement approved by the Toronto Stock Exchange on July
6, 1999, we issued 720,000 units at a price of $1.00 per unit and 280,000 units
at $1.25 per unit, each unit consisting of one share of our common stock and one
non-transferable warrant entitling the holder to purchase one additional share
of our common stock, exercisable for a period of 2 1/2 years at a price of $1.25
per share until January 16, 2002. These securities are subject to a holding
period requirement which expires on July 16, 2000. To date, none of these
warrants have been exercised.
Pursuant to a private placement completed on December 15, 1999, we issued
1,800,000 special warrants exchangeable for units consisting of common shares
and half share purchase warrants. We have agreed to make reasonable commercial
efforts to file a prospectus to qualify the distribution of common shares and
half share purchase warrants issuable upon the exercise of the share purchase
warrants, in which case such common shares and share purchase warrants would be
issued without any hold restrictions. However, if any of the special warrants
are exercised before we receive a receipt for a qualifying prospectus, or if no
such receipt is issued, then the securities will be subject to a holding period
requirement which expires on December 15, 2000. To date, none of these special
warrants have been exercised.
There are no issued shares of our common stock subject to any holding period
requirement, other than as disclosed above.
29
<PAGE>
Preferred Stock
Our Articles of Incorporation authorize us to issue an unlimited number of
shares of preferred stock none of which are issued and outstanding as of
September 29, 1999. Our directors may authorize the issuance of additional
shares of such preferred stock in one or more series, and may determine at the
time of issuance the designation, rights, privileges, restrictions and
conditions relating to such shares. To date one series of our preferred stock
has been authorized as follows:
The holders of shares of our Series A preferred stock are entitled to a
cumulative preferred dividend of 6.5% per annum of the specified capital of that
preferred stock ($1.00 per share) to be paid annually on September 1 of each
year, and upon our liquidation to receive the stated capital thereof together
with any accrued but unpaid dividends in priority to our common stock and other
series of preferred stock ranking junior to Series A, but shall not be entitled
to participate further in any such liquidation.
At our election, our Series A preferred stock may be redeemed at any time by us
for a redemption amount equal to $1.10 per share plus the amount of accrued but
unpaid dividends (representing a 10% redemption premium).
The Series A preferred stock may, at the holders option, be convertible into
shares of our common stock at any time until March 31, 2001. The conversion
price was $2.00 per common share until March 31, 1999, and for each of the 2
years thereafter is equal to the market price calculated as at the beginning of
each year. The market price is to be the average trading price for the 20
trading days prior to April 1 of each such year. For the period from April 1,
1999 to March 31, 2000, the conversion price is $1.30 per share.
If we fail to make two consecutive annual dividend payments, the holders of
shares of our Series A preferred stock, as a class, shall have the right to
elect a majority of our directors.
The holders of shares of our Series A preferred stock shall have the right to
approve, by special resolution:
(a) any change to the rights of the holders of shares of our Series A preferred
stock,
(b) the creation of a series of preferred stock having rights superior to those
of our Series A preferred stock, and
(c) the creation of a series of preferred stock having rights equal to our
Series A preferred stock, unless we receive net proceeds from the issuance
of such shares equal to at least 110% of the liquidation preference of such
shares.
Except as described above or as otherwise prescribed by the Alberta Business
Corporations Act, the holders of shares of our Series A preferred stock are not
entitled to receive notice of, or vote at, any meeting of our shareholders.
PART III
ITEM 15. DEFAULT UPON SENIOR SECURITIES
We are not in default upon any senior securities or indebtedness.
ITEM 16. CHANGES IN SECURITIES AND CHANGES IN SECURITIES FOR REGISTERED
SECURITIES
Not applicable.
30
<PAGE>
ITEM 17. FINANCIAL STATEMENTS
We maintain our books and records in Canadian Dollars while our subsidiaries
maintain their books and records in New Zealand or Australian Dollars, as
appropriate, which are then reconciled to Canadian Dollars.
Reconciliation to Generally Accepted Accounting Principles in the United States.
We have prepared our consolidated financial statements contained in this Form
20-F in accordance with generally accepted accounting principles in Canada.
These principles differ in the following material respects from generally
accepted accounting principles in the United States as summarized below.
Earnings Per Share (EPS). Paragraph 11 of SFAS 128 states the calculation of EPS
should take into effect all dilutive common shares outstanding in the period.
The calculation of EPS contained in our financial statements contemplates all
dilutive common shares outstanding, and additionally does not include the
conversion of any common shares that would result in an anti-dilutive effect,
such as the conversion of share options where the exercise price exceeded the
market value as of March 31, 1999.
The calculation of EPS includes all shares issued but held in escrow. The
calculation of EPS does not include the common shares that would be released in
respect of earn-outs for the year ended March 31, 1999 because the number of
common shares to be released cannot be reliably estimated as the earn-out
conditions for releasing the shares are dependent on unknown future earnings.
The calculation of EPS has also been adjusted to use the Treasury Stock Method
as required by SFAS No. 128, Paragraph 17.
The inclusion of these "potential" escrow shares, and treasury Stock method,
results in a fully diluted EPS of $0.0355 for the fiscal year ended March 31,
1999, compared to an EPS of $0.03 as reported in our financial statements below.
Research and Development Expenditures. SFAS No. 86 specifies that costs incurred
internally in creating a computer software product shall be charged to expense
when incurred as research and development until technological feasibility has
been established for the product.
Technological feasibility is established upon completion of a detail program
design or, in its absence, completion of a working model.
Thereafter, all software production costs shall be capitalized and subsequently
reported at the lower of unamortized cost or net realizable value.
Capitalized costs are amortized based on current and future revenue for each
product with an annual minimum equal to the straight-line amortization over the
remaining estimated economic life of the product.
Using SFAS No. 86, as described, our results would be adjusted for the write-off
of deferred costs as follows:
=====================================================
Period Deferred Costs
-----------------------------------------------------
March 31, 1998 $490,513.00
March 31, 1999 $761,855.00
=====================================================
Fair Value of Escrowed Shares. The 760,500 common shares held in escrow were
issued at $1.65 per share. These escrowed common shares will be released if and
when earn-out targets for the acquisitions described in the financial statements
below are met. While the shares are in escrow, there are no accounting entries
completed.
31
<PAGE>
When the escrowed shares are released, the entry is to debit Goodwill and credit
Share Capital.
For clarification purposes, the following escrowed shares could be potentially
released, represented at the fair value of shares as at March 31, 1999. The fair
value has been calculated pursuant to SFAS 128, Paragraph 47.
====================================
Company Shares Fair Value
------------------------------------
Powercall 511,512 $721,232
1World 555,505 $783,262
ICS 760,500 $1,072,305
Easy PC 16,785 $23,667
====================================
Loans to Officers and Directors. Loans to our directors are included in the
Balance Sheet as other receivables. As of March 31, 1999, loans to our directors
amounted to $749,375.
<PAGE>
BROCKER TECHNOLGY GROUP LTD
FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999
F-1
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
CONSOLIDATED BALANCE SHEETS (in Canadian Dollars)
AS AT SEPTEMBER 30, 1999
AND FOR YEAR ENDED MARCH 31, 1999 30-Sep-99 31-Mar-99
$ $
ASSETS (unaudited) (audited)
Current Assets
Cash 194,753 --
Accounts receivable 21,401,823 22,909,294
Other receivables 1,798,862 1,435,235
Inventories 20,236,470 15,276,865
Prepaid expenses and deposits 1,056,381 917,009
Income taxes recoverable 643,366 554,538
Deferred tax asset 314,162 310,270
----------- -----------
45,645,817 41,403,211
Deferred Development Costs 1,144,474 1,252,368
Capital Assets 5,255,550 5,551,068
Investment in Associated Company 678,128 604,433
Goodwill 1,635,115 1,876,325
----------- -----------
54,359,084 50,687,405
=========== ===========
LIABILITIES
Current Liabilities
Bank Overdraft -- 55,433
Accounts payable 35,761,670 36,648,724
Accrued liabilities 1,939,153 1,596,241
Finance facility 7,028,684 3,213,122
Rental finance liability -- --
Current portion of long-term debt 198,353 220,028
----------- -----------
44,927,860 41,733,548
Long -Term Debt 2,070,224 2,284,578
----------- -----------
46,998,084 44,018,126
SHAREHOLDERS' EQUITY
Share Capital 6,906,721 5,761,721
Foreign Currency Translation Reserve (1,104,541) (799,084)
Retained Earnings 1,558,820 1,706,732
----------- -----------
7,361,000 6,669,369
----------- -----------
54,359,084 50,687,495
=========== ===========
Signed on behalf of the Board
..................................... .................................
Director Director
F-2
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
CONSOLIDATED STATEMENT OF EARNINGS (in Canadian Dollars)
FOR THE THREE MONTHS ENDED SEPTEMBER 30,1999
AND FOR YEAR ENDED MARCH 31, 1999
30-Sep-99 31-Mar-99
$ $
(unaudited) (audited)
Revenue 37,912,777 133,302,640
Cost of Goods Sold 32,919,442 115,611,548
----------- -----------
Gross Margin 4,993,335 17,691,092
Operating Expenses
Depreciation and amortisation 400,457 2,010,703
Net interest expense 266,500 1,409,187
Salaries and commissions 2,932,424 6,348,910
Other operating expenses 1,620,167 7,043,157
----------- -----------
Total operating expenses 5,219,548 16,811,957
----------- -----------
Operating Income (226,213) 879,135
Equity accounted losses of associated company 24,065 91,330
----------- -----------
Income before Income Tax Provision (250,278) 787,805
Income Tax Provision (67,489) 272,991
----------- -----------
Net Earnings for the period (182,789) 514,814
=========== ===========
F-3
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (in Canadian Dollars)
FOR THE THREE MONTHS ENDED SEPTEMBER 30,1999
AND FOR YEAR ENDED MARCH 31, 1999
30-Sep-99 31-Mar-99
$ $
(unaudited) (audited)
Retained Earnings, Beginning of the period 1,741,609 1,355,240
Net Earnings for the period (182,789) 514,814
Discount on redemption of preferred shares -- --
Preferred dividends paid -- (163,322)
---------- ----------
Retained Earnings, End of the period 1,558,820 1,706,732
========== ==========
BROCKER TECHNOLOGY GROUP LTD
MOVEMENTS IN FOREIGN CURRENCY TRANSLATION RESERVE (in Canadian Dollars)
FOR THE THREE MONTHS ENDED SEPTEMBER 30,1999
AND FOR YEAR ENDED MARCH 31, 1999
30-Sep-99 31-Mar-99
$ $
(unaudited) (audited)
Beginning of the period (833,042) (881,364)
Difference arising on the translation
of foreign operations (271,499) 82,280
---------- ----------
End of the period (1,104,541) (799,084)
========== ==========
F-4
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
CONSOLIDATED CASH FLOW STATEMENTS (in Canadian Dollars)
FOR THE THREE MONTHS ENDED SEPTEMBER 30,1999
AND FOR YEAR ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
30-Sep-99 31-Mar-99
$ $
(unaudited) (audited)
<S> <C> <C>
Cash flows from operating activities
Receipts from customers 44,007,734 124,528,860
Payments to suppliers and employees (44,315,574) (119,790,928)
Interest paid (266,500) (1,338,547)
Taxation refund (paid) 39,422 (417,742)
------------ ------------
Cash flows from operating activities (534,918) 2,981,643
Cash flows from investing activities
Proceeds from sale of capital assets -- 51,597
Purchase of capital assets (343,636) (4,673,881)
Investment in associated company (62,783) (428,440)
Acquisition of subsidiaries (33,831) (412,556)
------------ ------------
Cash flows from investing activities (440,250) (5,463,280)
Cash flows from financing activities
Proceeds from share options exercised -- 29,500
Proceeds from the issue of share capital 1,145,000 --
Proceeds from mortgage finance raised -- 2,428,692
Repayment of mortgage principle (105,736) (70,745)
Payment of dividend on preferred shares -- (163,322)
------------ ------------
Cash flows from financing activities 1,039,264 2,224,125
------------ ------------
Net Increase in cash equivalents 64,096 (257,512)
Cash at the beginning of the period 129,160 205,365
Translation of cash equivalents to reporting currency 1,497 (3,286)
------------ ------------
Cash (Overdraft) at the End of the period 194,753 (55,433)
============ ============
</TABLE>
F-5
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,1999
1 BASIS OF PRESENTATION
Brocker Technology Group Ltd, the Company, was incorporated under the
Business Corporation Act (Alberta) on November 25, 1993, and obtained its
listing on the Alberta Stock Exchange on April 14, 1994.
On February 28, 1998 the Company transferred its listing to the Toronto
Stock Exchange.
These financial statements have been prepared in accordance with the
generally accepted accounting principles of Canada.
2 SIGNIFICANT ACCOUNTING POLICIES
a) Principles of Consolidation
The consolidated financial statements include the financial statements of
the Company and all of its subsidiary companies since the dates of their
acquisition. Its wholly owned subsidiaries, all of which are consolidated
using the purchase method, are as follows:
Brocker Investments (Australia) Pty Limited
Brocker Technology Group (NZ) Limited
Easy PC Computer Rentals Limited
Image Craft Australia Pty Limited
Image Craft Limited (formerly NZ Online Limited)
Industrial Communications Service Limited
Northmark Technologies Limited
Photo Magic Limited
Powercall Technologies Limited
Pritech Australia Pty Limited
Pritech Corporation Limited
Sealcorp Australia Pty Limited (formerly TGE Pty Limited)
Sealcorp Computer Products Limited
Sealcorp Telecommunications Group Limited
Tech Support Limited
1World Systems Limited (formerly Microchannel Limited)
During the 1998 Brocker Technology Group(NZ) Ltd took a 20% founding
shareholding in Highway Technologies Limited. This investment has been
recorded using the equity method.
During 1999 Industrial Communications Service Limited took a 40%
shareholding in Eftpos Corporation Limited. The results of this company are
not material to the Group.
F-6
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
b) Goodwill
The excess of cost over the fair value of identifiable net assets of
subsidiaries acquired is recorded as goodwill and is amortised on a
straight-line basis over its estimated useful life, considered to be five
to ten years. On an ongoing basis, management reviews the valuation and
amortisation of goodwill taking into consideration any events and
circumstances which might have impaired the fair value.
Where an acquisition price is contingent on a future event or events, no
goodwill is recognised until the final acquisition price can be reasonably
determined.
c) Foreign Currency
Foreign currency transactions are recorded at the exchange rates in effect
at the date of settlement. Monetary assets and liabilities arising from
trading are translated at closing rates. Gains and losses due to currency
fluctuations on these items are included in the statement of earnings.
The financial statements of foreign operations are translated to Canadian
dollars using weighted average exchange rates for the period for items
included in the statement of earnings, period end rates for assets and
liabilities included in the balance sheet and historical rates for equity
transactions. The cumulative translation adjustment represents the deferred
foreign exchange gain or loss on the translation of the financial
statements.
d) Inventories
Inventories principally comprise finished goods and are carried at the
lower of cost and net realisable value. Cost is determined on a weighted
average or first in first out basis.
e) Capital Assets
Capital assets are recorded at cost. Depreciation is calculated on a
declining balance basis (except for leasehold improvements where a straight
line basis is used) using the following rates:
Land 0%
Buildings 2%
Office equipment 20%
Vehicles 20 and 26%
Furniture and fixtures 20%
Computer hardware 20 to 30%
Computer software 30 - 40%
Plant and Equipment 20 - 26%
Leasehold improvements 1 to 4 years
Computer hardware held for rental 2 to 3 years
f) Revenue recognition
The Company earns substantially all of its revenue for the sale and
delivery of products to its customers. Revenue is recorded when the
products are shipped to customers.
F-7
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
g) Research and development expenditures
Research costs, other than capital expenditures, are expensed as incurred.
Development costs are expensed as incurred unless they meet the criteria
under generally accepted accounting principles for deferral and
amortisation. Deferred development costs are amortised over the life of the
developed product, currently a maximum of three years.
h) Deferred Income Taxes
The Company follows the deferral method of income tax allocation such that
deferred income taxes are recognised when income and expense items are
reported for income tax purposes in years different from those in which
they are recorded for financial reporting purposes.
i) Use of estimates
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
3 ACQUISITIONS
During the three months to September 30, 1999 Brocker Technology Group (NZ)
Limited acquired the net assets of Tech Support Limited for a total cash
consideration of NZ$45,000. Tech Support Limited offers technical support
and advise to a wide range of customers in Auckland, New Zealand.
No additional amounts are payable in respect to this acquisition. The
purchase price may, however, be reduced in the event certain warranties
made be the Vendors do not eventuate.
The acquisition has been accounted for using the purchase method. Net
assets acquired and consideration paid are as follows:
Net current assets 37,470
Capital assets 9,555
Net current liabilities (22,822)
Goodwill attributed 9,628
--------
Consideration paid 33,831
4 CAPITAL ASSETS
During the 1998 Brocker Technology Group (NZ) Limited have acquired new
premises in Auckland, New Zealand. The $2.6M purchase price of this
property has been settled by way of mortgage finance of $2,292,000.
F-8
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,1999
5 DEFERRED DEVELOPMENT COSTS
As at September 30, 1999 development costs of $1,144,474 had been
capitalised. These costs principally relate to the development of software
applications.
6 INVESTMENT IN ASSOCIATED COMPANY
During 1998 Brocker Technology Group (NZ) Limited took a 20% founding
shareholding in Highway Technologies Limited. This Company has developed
new technology capable of providing transport and highway management,
operation and funding solutions.
In addition to the investment, Brocker Technology Group (NZ) Limited has
entered an agreement to loan Highway Technologies Limited funds during the
Company's establishment phase up to a maximum of NZ$1.5M. Interest is
payable on these funds at 30% per annum. As at September 30, 1999 amounts
advanced to Highway Technologies Limited amounted to NZ$963,172
7 INDEBTEDNESS
(a) The components of indebtedness are follows
Mortgage finance liability 2,139,237
Less current portion (184,821)
----------
1,954,416
Capital lease obligations payable in New Zealand dollars,
with interest rates ranging from 6.6% to 14.5% per annum,
collateralised by related assets, payable over 1 to 3 years. 76,715
Less current portion (13,532)
----------
63,183
An unsecured term liability repayable in NZ$ 52,625
----------
2,070,224
==========
(b) Since the year end Sealcorp Computer Products Limited, Sealcorp
Telecommunications Group Limited and Sealcorp Australia Pty Limited (all
subsidiaries of the Company) have successfully renegotiated their financing
arrangements. A new NZ$20M financing facility, secured by a registered
first debenture over the assets and undertakings of these companies,
replaces the previous facility, of similar terms, which was terminated
during the period.
F-9
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999
8 SHARE CAPITAL
Authorised
Unlimited number of common shares
Unlimited number of Preferred Shares
10,000,000 Series A Preferred Shares 6 1/2% cumulative
Issued and outstanding 1999
$
Common shares 5,339,125
Series A Preferred 1,609,365
Less: Share issue costs (41,769)
----------
6,906,721
As at September 30, 1999 there were 1,583,875 shares are being held in
escrow pursuant to Escrow Agreements which provide for the release of such
shares on a performance basis.
F-10
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 1999
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
CONSOLIDATED BALANCE SHEETS (in Canadian Dollars)
AS AT JUNE 30, 1999 AND FOR YEAR
ENDED MARCH 31, 1999 30-Jun-99 31-Mar-99
$ $
ASSETS (unaudited) (audited)
Current Assets
Cash 129,160 --
Accounts receivable 28,923,319 22,909,294
Other receivables 1,277,619 1,435,235
Inventories 15,860,523 15,276,865
Prepaid expenses and deposits 924,449 917,009
Income taxes recoverable 332,249 554,538
Deferred tax asset 310,270 310,270
---------- ----------
47,757,589 41,403,211
Deferred Development Costs 1,322,410 1,252,368
Capital Assets 5,230,026 5,551,068
Investment in Associated Company 655,730 604,433
Goodwill 1,797,700 1,876,325
---------- ----------
56,763,455 50,687,405
========== ===========
LIABILITIES
Current Liabilities
Bank Overdraft -- 55,433
Accounts payable 42,877,778 36,648,724
Accrued liabilities 4,776,391 1,596,241
Rental finance liability -- --
Financing facility -- 3,213,122
Current portion of long-term debt 198,061 220,028
---------- ----------
47,852,230 41,733,548
Long-Term Debt 2,240,937 2,284,578
----------- -----------
50,093,167 44,018,126
SHAREHOLDERS' EQUITY
Share Capital 5,761,721 5,761,721
Foreign Currency Translation Reserve (833,042) (799,084)
Retained Earnings 1,741,609 1,706,732
----------- -----------
6,670,288 6,669,369
----------- -----------
56,763,455 50,687,495
=========== ===========
Signed on behalf of the Board
- ---------------------- ----------------------
Director Director
F-11
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
CONSOLIDATED STATEMENT OF EARNINGS (in Canadian Dollars)
FOR THE THREE MONTHS ENDED JUNE 30,1999
AND FOR YEAR ENDED MARCH 31, 1999
30-Jun-99 31-Mar-99
$ $
(unaudited) (audited)
Revenue 36,320,354 133,302,640
Cost of Goods Sold 31,747,893 115,611,548
----------- -----------
Gross Margin 4,572,461 17,691,092
Operating Expenses
Depreciation and amortisation 365,218 2,010,703
Net interest expense 277,847 1,409,187
Salaries and commissions 2,018,039 6,348,910
Other operating expenses 1,764,386 7,043,157
----------- -----------
Total operating expenses 4,425,490 16,811,957
----------- -----------
Operating Income 146,971 879,135
Equity accounted losses of associated company 21,655 91,330
----------- -----------
Income before Income Tax Provision 125,316 787,805
Income Tax Provision 90,439 272,991
----------- -----------
Net Earnings for the period 34,877 514,814
=========== ===========
F-12
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (in Canadian Dollars)
FOR THE THREE MONTHS ENDED JUNE 30,1999
AND FOR YEAR ENDED MARCH 31, 1999
30-Jun-99 31-Mar-99
$ $
(unaudited) (audited)
Retained Earnings, Beginning of the period 1,706,732 1,355,240
Net Earnings for the period 34,877 514,814
Discount on redemption of preferred shares -- --
Preferred dividends paid -- (163,322)
---------- ----------
Retained Earnings, End of the period 1,741,609 1,706,732
========== ==========
BROCKER TECHNOLOGY GROUP LTD
MOVEMENTS IN FOREIGN CURRENCY TRANSLATION RESERVE (in Canadian Dollars)
FOR THE THREE MONTHS ENDED JUNE 30,1999
AND FOR YEAR ENDED MARCH 31, 1999
30-Jun-99 31-Mar-99
$ $
(unaudited) (audited)
Beginning of the period (799,084) (881,364)
Difference arising on the translation
of foreign operations (33,958) 82,280
-------- --------
End of the period (833,042) (799,084)
======== ========
F-13
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
CONSOLIDATED CASH FLOW STATEMENTS (in Canadian Dollars)
FOR THE THREE MONTHS ENDED JUNE 30,1999
AND FOR YEAR ENDED MARCH 31, 1999
30-Jun-99 31-Mar-99
$ $
(unaudited) (audited)
Cash flows from operating activities
Receipts from customers 30,291,817 124,528,860
Payments to suppliers and employees (29,479,531) (119,790,928)
Interest paid (277,847) (1,338,547)
Taxation paid (194,700) (417,742)
------------ ------------
Cash flows from operating activities 339,739 2,981,643
Cash flows from investing activities
Proceeds from sale of capital assets -- 51,597
Purchase of capital assets (53,342) (4,673,881)
Investment in associated company (84,315) (428,440)
Purchase of subsidiaries -- (412,556)
------------ ------------
Cash flows from investing activities (137,657) (5,463,280)
Cash flows from operating activities
Proceeds from share options exercised 29,500
Proceeds from mortgage finance raised 2,428,692
Repayment of mortgage principle (18,531) (70,745)
Payment of dividend on preferred shares (163,322)
------------ ------------
Cash flows from operating activities (18,531) 2,224,125
------------ ------------
Net Increase in cash equivalents 183,551 (257,512)
Cash at the beginning of the year (55,433) 205,365
translation of cash equivalents
to reporting currency 1,042 (3,286)
------------ ------------
Cash at the End of the period 129,160 (55,433)
============ ============
F-14
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 1999
1 BASIS OF PRESENTATION
Brocker Technology Group, Ltd., the Company, was incorporated under the
Business Corporation Act (Alberta) on November 25, 1993, and obtained its
listing on the Alberta Stock Exchange on April 14, 1994.
On February 28, 1998 the Company transferred its listing to the Toronto
Stock Exchange.
These financial statements have been prepared in accordance with the
generally accepted accounting principles of Canada.
2 SIGNIFICANT ACCOUNTING POLICIES
a) Principles of Consolidation
The consolidated financial statements include the financial statements of
the Company and all of its subsidiary companies since the dates of their
acquisition. Its wholly owned subsidiaries, all of which are consolidated
using the purchase method, are as follows:
Brocker Investments (Australia) Pty Limited
Brocker Technology Group (NZ) Limited
Easy PC Computer Rentals Limited
Image Craft Australia Pty Limited
Image Craft Limited (formerly NZ Online Limited)
Industrial Communications Service Limited
Northmark Technologies Limited
Photomagic Limited
Powercall Technologies Limited
Pritech Australia Pty Limited
Pritech Corporation Limited
Sealcorp Australia Pty Limited (formerly TGE Pty Limited)
Sealcorp Computer Products Limited
Sealcorp Technologies Group Limited
1World Systems Limited (formerly Microchannel Limited)
During the 1998 Brocker Technology Group Ltd took a 20% founding
shareholding in Highway Technologies Limited. This investment has been
recorded using the equity method.
b) Goodwill
The excess of cost over the fair value of identifiable net assets of
subsidiaries acquired is recorded as goodwill and is amortised on a
straight-line basis over its estimated useful life, considered to be five
to ten years. On an ongoing basis, management reviews the valuation and
amortisation of goodwill taking into consideration any events and
circumstances which might have impaired the fair value.
Where an acquisition price is contingent on a future event or events, no
goodwill is recognised until the final acquisition price can be reasonably
determined.
F-15
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 1999
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
c) Foreign Currency
Foreign currency transactions are recorded at the exchange rates in effect
at the date of settlement. Monetary assets and liabilities arising from
trading are translated at closing rates. Gains and losses due to currency
fluctuations on these items are included in the statement of earnings.
The financial statements of foreign operations are translated to Canadian
dollars using weighted average exchange rates for the period for items
included in the statement of earnings, period end rates for assets and
liabilities included in the balance sheet and historical rates for equity
transactions. The cumulative translation adjustment represents the deferred
foreign exchange gain or loss on the translation of the financial
statements.
d) Inventories
Inventories principally comprise finished goods and are carried at the
lower of cost and net realisable value. Cost is determined on a weighted
average or first in first out basis.
e) Capital Assets
Capital assets are recorded at cost. Depreciation is calculated on a
declining balance basis (except for leasehold improvements where a straight
line basis is used) using the following rates:
Land 0%
Buildings 2%
Office equipment 20%
Vehicles 20 and 26%
Furniture and fixtures 20%
Computer hardware 20 to 30%
Computer software 30 - 40%
Plant and Equipment 20 - 26%
Leasehold improvements 1 to 4 years
Computer hardware held for rental 2 to 3 years
f) Revenue recognition
The Company earns substantially all of its revenue for the sale and
delivery of products to its customers. Revenue is recorded when the
products are shipped to customers.
g) Research and development expenditures
Research costs, other than capital expenditures, are expensed as incurred.
Development costs are expensed as incurred unless they meet the criteria
under generally accepted accounting principles for deferral and
amortisation. Deferred development costs are amortised over the life of the
developed product, currently a maximum of three years.
h) Deferred Income Taxes
The Company follows the deferral method of income tax allocation such that
deferred income taxes are recognised when income and expense items are
reported for income tax purposes in years different from those in which
they are recorded for financial reporting purposes.
F-16
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 1999
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
i) Use of estimates
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
3 ACQUISITIONS
There were no acquistions during this three month periood
4 CAPITAL ASSETS
During the 1998 Brocker Investments (NZ) Limited have acquired new premises
in Auckland, New Zealand. The $2.6M purchase price of this property has
been settled by way of mortgage finance of $2,292,000.
5 DEFERRED DEVELOPMENT COSTS
As at June 30, 1999 development costs of $1,322,410 had been capitalised.
These costs principally relate to the development of software applications.
6 INVESTMENT IN ASSOCIATED COMPANY
During 1998 Brocker Investments (NZ) Limited took a 20% founding
shareholding in Highway Technologies Limited. This Company has developed
new technology capable of providing transport and highway management,
operation and funding solutions.
In addition to the investment, Brocker Investments (NZ) Limited has entered
an agreement to loan Highway Technologies Limited funds during the
Company's establishment phase up to a maximum of NZ$1.5m. Interest is
payable on these funds at 30% per annum. As at March 31, 1998 amounts
advanced to Highway Technologies Limited amounted to NZ$931,000
F-17
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 1999
7 INDEBTEDNESS
(a) The components of indebtedness are follows
Mortgage finance liability 2,296,640
Less current portion (183,352)
-----------------
2,113,288
Capital lease obligations payable in New
Zealand dollars, with interest rates ranging
from 6.6% to 14.5% per annum,
collateralised by related assets, payable
over 1 to 3 years. 87,842
Less current portion (14,709)
-----------------
73,133
An unsecured term liability repayable in NZ$ 54,516
-----------------
2,240,937
=================
(b) Since the year end Sealcorp Computer Products Limited, Sealcorp
Telecommunications Group Limited and Sealcorp Australia Pty Limited (all
subsidiaries of the Company) have entered into a new A$16 financing
facility agreement secured by a registered first debenture over the assets
and undertakings of all Group companies. This facility replaces the
previous facility, of similar terms, which expired during the period.
8 SHARE CAPITAL
Authorised
Unlimited number of common shares
Unlimited number of Preferred Shares
10,000,000 Series A Preferred Shares 6 1/2% cumulative
Issued and outstanding 1999
$
Common shares 3,353,490
Series A Preferred 2,450,000
Less: Share issue costs (41,769)
-------------
5,761,721
As at June 30, 1999+ 963,602 shares are being held in escrow pursuant to
Escrow Agreements which provide for the release of such shares on a
performance basis.
F-18
<PAGE>
Auditors' report to the shareholders
We have audited the consolidated balance sheets of Brocker Technology Group Ltd
as at March 31, 1999 and 1998 and the consolidated statements of earnings,
retained earnings and cash flows for the YEARS then ended. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at March 31, 1999
and 1998 and the results of its operations and the changes in its cash flows
cash flows for the YEARS then ended in accordance with generally accepted
accounting principles.
Chartered Accountants
/s/ KMPG Auckland, New Zealand
August 18, 1999
F-19
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
CONSOLIDATED BALANCE SHEETS (in Canadian Dollars)
AS AT MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
Note 1999 1998
$ $
<S> <C> <C> <C>
ASSETS
Current Assets
Cash -- 205,365
Accounts receivable 22,909,294 13,915,450
Other receivables 11 1,435,325 1,636,758
Inventories 15,276,865 9,673,446
Prepaid expenses and deposits 917,009 538,610
Income taxes recoverable 554,538 403,334
Deferred tax asset 310,270 214,231
------------ ------------
41,403,301 26,587,194
Deferred Development Costs 5 1,252,368 490,513
Capital Assets 4 5,551,068 3,679,572
Investment in Associated Company 6 604,433 263,113
Goodwill (Net of accumulated amortisation 1,876,325 1,478,779
of $1,036,327; 1998 $779,583) ------------ ------------
$ 50,687,495 $ 32,499,171
============ ============
LIABILITIES
Current Liabilities
Bank Overdraft 55,433 --
Accounts payable 36,648,724 17,422,333
Accrued liabilities 1,596,241 1,387,512
Rental finance liability 7&8 -- 1,094,464
Financing facility 8 3,213,122 5,827,883
Current portion of long-term debt 8 220,028 44,303
------------ ------------
41,733,548 25,776,495
Long -Term Debt 8 2,284,578 881,070
------------ ------------
44,018,126 26,657,565
------------ ------------
SHAREHOLDERS' EQUITY
Share Capital 9 5,761,721 5,367,730
Foreign Currency Translation Reserve (799,084) (881,364)
Retained Earnings 1,706,732 1,355,240
------------ ------------
6,669,369 5,841,606
------------ ------------
$ 50,687,495 $ 32,499,171
============ ============
Deferred Development Costs 5
Investment in Associated Company 6
Commitments 16
Contingencies 17
Subsequent Events 18
</TABLE>
F-20
<PAGE>
Signed on behalf of the Board
/s/ Michael Ridgway /s/ Richard Justice
- --------------------------------- ---------------------------------------
Director Director
Date: August 18, 1999
F-21
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
CONSOLIDATED STATEMENT OF EARNINGS (in Canadian Dollars)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
Note 1999 1998
$ $
<S> <C> <C> <C>
Revenue
Sales 133,302,640 70,811,220
Cost of Goods Sold 115,611,548 56,410,370
------------ ------------
Gross Margin 17,691,092 14,400,850
------------ ------------
Operating Expenses
Depreciation and amortisation 2,010,703 1,692,585
Net interest expense 1,409,187 668,845
Salaries and commissions 6,348,910 6,431,431
Other operating expenses 7,043,157 4,225,153
------------ ------------
Total operating expenses 16,811,957 13,018,014
------------ ------------
Operating Income 879,135 1,382,836
Equity accounted losses of associated company 6 91,330 79,953
------------ ------------
Income before Income Tax Provision 787,805 1,302,883
Income Tax Provision 10 272,991 506,067
------------ ------------
Net Earnings for the year $ 514,814 $ 796,816
============ ============
Earnings Per Common Share 9 (d) $ 0.03 $ 0.06
============ ============
</TABLE>
F-22
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (in Canadian Dollars)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
1999 1998
$ $
Retained Earnings, Beginning of the year 1,355,240 703,424
Net Earnings for the year 514,814 796,816
Discount on redemption of preferred shares -- 50,000
Preferred dividends paid (163,322) (195,000)
----------- -----------
Retained Earnings, End of the year $ 1,706,732 $ 1,355,240
=========== ===========
F-23
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
MOVEMENTS IN FOREIGN CURRENCY TRANSLATION RESERVE (in Canadian Dollars)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
1999 1998
$ $
Beginning of the year (881,364) (82,609)
Difference arising on the translation of
foreign operations 82,280 (798,755)
--------- ---------
End of the year $(799,084) $(881,364)
========= =========
F-24
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
CONSOLIDATED CASH FLOW STATEMENTS (in Canadian Dollars)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
Note 1999 1998
$ $
<S> <C> <C> <C>
Cash flows from operating activities
Receipts from customers 124,528,860 62,560,393
Payments to suppliers and employees (119,790,928) (59,656,639)
Interest paid (1,338,547) (463,756)
Taxation paid (417,742) (970,979)
------------- -------------
Cash flows from operating activities 14 2,981,643 1,469,019
Cash flows from investing activities
Proceeds from the sale of capital assets 51,597 56,814
Purchase of capital assets (4,673,881) (1,045,119)
Investment in associated company (428,440) (343,066)
Purchase of subsidiaries (412,566) (523,181)
------------- -------------
Cash flows from investing activities (5,463,290) (1,854,552)
Cash flows from financing activities
Proceeds from share options exercised 29,500 130,900
Proceeds from share warrants exercised -- 495,000
Proceeds from mortgage finance raised 2,428,692 --
Redemption of preferred shares -- (543,049)
Repayment of mortgage finance (70,745) --
Payment of dividend on preferred shares (163,322) (195,000)
------------- -------------
Cash flows from financing activities 2,224,125 (112,149)
------------- -------------
Net decrease in cash equivalents (257,522) (497,682)
Cash at Beginning of the year 205,365 602,233
Translation of cash equivalents to
reporting currency (3,286) 100,814
------------- -------------
Cash/(Overdraft) at End of the year $ (55,433) 205,365
============= =============
</TABLE>
F-25
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
1. BASIS OF PRESENTATION
Brocker Technology Group Ltd, the Company, was incorporated under the
Business Corporation Act (Alberta) on November 25, 1993, and obtained its
listing on the Alberta Stock Exchange on April 14, 1994.
On February 28, 1998 the Company transferred its listing to the Toronto
Stock Exchange.
These financial statements have been prepared in accordance with the
generally accepted accounting principles of Canada.
Brocker Technology Group Limited has chosen to adopt the changes to the
accounting standards, regarding reporting of Cash Flow Statements, in these
financial statements. The prior period has been restated on a comparable
basis.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Principles of Consolidation
The consolidated financial statements include the financial statements
of the Company and all of its subsidiary companies since the dates of
their acquisition. Its wholly owned subsidiaries, all of which are
consolidated using the purchase method, are as follows:
Brocker Technology Group (NZ) Limited
(formerly Brocker Investments (NZ) Limited)
Brocker Investments (Australia) Pty Limited
Sealcorp Computer Products Limited
Sealcorp Telecommunications Group Limited
Sealcorp Australia Pty Limited
Easy PC Computer Rentals Limited
Image Craft Limited
Image Craft Australia Pty Limited (formerly Parilott Pty Limited)
Industrial Communications Service Limited
Photo Magic Limited
Powercall Technologies Limited
Pritech Corporation Limited
Pritech Australia Pty Limited
Northmark Technologies Limited
1 World Systems Limited (formerly Microchannel Limited)
During 1998 Brocker Technology Group Ltd took a 20% founding
shareholding in Highway Technologies Limited. This investment has been
recorded using the equity method.
b) Goodwill
The excess of cost over the fair value of identifiable net assets of
subsidiaries acquired is recorded as goodwill and is amortised on a
straight-line basis over its estimated useful life, considered to be
five to ten YEARS. On an ongoing basis, management reviews the
valuation and amortisation of goodwill taking into consideration any
events and circumstances which might have impaired the fair value.
Where an acquisition price is contingent on a future event or events,
no additional goodwill is recognised until the final acquisition price
can be reasonably determined.
F-26
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
c) Foreign Currency
Foreign currency transactions are recorded at the exchange rates in
effect at the date of settlement. Monetary assets and liabilities
arising from trading are translated at closing rates. Gains and losses
due to currency fluctuations on these items are included in the
statement of earnings.
The financial statements of foreign operations are translated to
Canadian dollars using weighted average exchange rates for the year
for items included in the statement of earnings, year end rates for
assets and liabilities included in the balance sheet and historical
rates for equity transactions. The cumulative translation adjustment
represents the deferred foreign exchange gain or loss on the
translation of the financial statements.
The following rates were used in the preparation of the financial
statements:
----------------------------------------------------------------------
New Zealand dollar Average rate Rate at March 31
----------------------------------------------------------------------
1999 0.7862 0.7976
----------------------------------------------------------------------
1998 0.8833 0.7816
----------------------------------------------------------------------
----------------------------------------------------------------------
Australian dollar Average rate Rate at March 31
----------------------------------------------------------------------
1999 0.9318 0.9455
----------------------------------------------------------------------
1998 1.0055 0.9408
----------------------------------------------------------------------
d) Inventories
Inventories principally comprise finished goods and are carried at the
lower of cost and net realisable value. Cost is determined on a
weighted average or first in first out basis.
e) Capital Assets
Capital assets are recorded at cost. Depreciation is calculated on a
declining balance basis (except for leasehold improvements where a
straight line basis is used) using the following rates:
Land 0%
Buildings 2%
Office equipment 20%
Vehicles 20 and 26%
Furniture and fixtures 20%
Computer hardware 20 to 30%
Computer software 30 to 40%
Plant and Equipment 20 to 26%
Leasehold improvements 1 to 4 years
Computer hardware held for rental 2 to 3 years
f) Revenue recognition
The Company earns substantially all of its revenue from the sale and
delivery of products to its customers. Revenue is recorded when the
products are shipped to customers.
F-27
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
g) Research and development expenditures
Research costs, other than capital expenditures, are expensed as
incurred. Development costs are expensed as incurred unless they meet
the criteria under generally accepted accounting principles for
deferral and amortisation. Deferred development costs are amortised
over the expected life of the developed product, currently a maximum
of three years.
h) Deferred Income Taxes
The Company follows the deferral method of income tax allocation such
that deferred income taxes are recognised when income and expense
items are reported for income tax purposes in YEARS different from
those in which they are recorded for financial reporting purposes.
i) Earnings Per Share
Earnings per share have been calculated based on the weighted average
number of common shares outstanding. The fully diluted earnings per
share have been calculated based on the assumption that all vested
options would have been exercised.
In both cases, common shares to be issued, or held in escrow, in
respect of the settlement of earn-out consideration in relation to
acquisitions are only taken into account in the calculation of
earnings per share once the number of shares can be reasonably
determined.
j) Use of estimates
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from
those estimates.
F-28
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
3. ACQUISITIONS
1999 Aquisitions
Pritech Corporation Limited
On May 15, 1998 Brocker Technology Group (NZ) Limited acquired Pritech
Corporation Limited for an initial cash consideration of NZ$265,620.
Pritech Corporation Limited is principally involved with software
consultation and knowledge management. Pritech is a Lotus Premium Partner
whose target market is enterprise and government customers in New Zealand
and Australia.
The maximum purchase price payable is based on the profit earned by the
company for the year ended September 30, 1998 at a four times multiple.
Additional consideration, however, is only payable based on the cash earned
by the company for the YEARS ended September 30, 1999 to 2000, being the
earn out period. That is the maximum price must be subsequently earned by
the company, during the earn out period, before it is payable.
Any additional consideration will be satisfied by the issue of common
shares which will be held in escrow until the earn out criteria are met.
This acquisition was accounted for using the purchase method. Net assets
acquired and consideration paid were as follows:
1999
$
Net current assets 472,515
Capital assets 51,987
Net current liabilities (316,893)
Goodwill attributed --
--------
Consideration paid 207,609
Additional future consideration will be added to goodwill when it
becomes determinable.
1 World Systems Limited (formerly Microchannel Limited)
On June 16, 1998 Brocker Technology Group (NZ) Limited acquired 1 World
Systems Limited for an initial consideration of NZ$103,750. 1 World Systems
Limited is principally involved with the distribution, implementation and
support of accounting software.
The maximum purchase price payable is based on the profit earned by the
company for the year ended March 31, 1999 at a four times multiple.
Additional consideration, however, is only payable based on the cash earned
by the company for the YEARS ended March 31, 2000 to 2001, being the earn
out period. That is the maximum price must be subsequently earned by the
company, during the earn out period, before it is payable.
Any additional consideration will be satisfied by the issue of common
shares which will be held in escrow until the earn out criteria are met.
This acquisition was accounted for using the purchase method. Net assets
acquired and consideration paid were as follows:
1999
$
Net current assets 281,790
Capital assets 43,341
Net current liabilities (182,365)
Term liabilities (61,675)
Goodwill attributed --
--------
Consideration paid 81,091
Additional future consideration will be added to goodwill when it becomes
determinable.
F-29
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
3. ACQUISITIONS (Continued)
QSoft Pty Limited
On February 8, 1999 Sealcorp Australia acquired the net assets of QSoft Pty
Limited for a cash consideration of AUD$150,000. QSoft is a Software
Distribution company based in Brisbane Australia.
The net assets acquired were valued at their fair value, and as a result no
goodwill arose on acquisition.
Motorola Service Contract
During March 1999 Industrial Communications Service Limited acquired the
net assets of a division of Hart Candy in order to fulfil the requirements
of the Motorola Service contract awarded to the company.
This acquisition was accounted for using the purchase method. Net assets
acquired and consideration paid were as follows:
1999
$
Net current assets 8,774
Capital assets 55,677
Net current liabilities (16,595)
Goodwill attributed 47,856
--------
Consideration paid 95,712
1998 Acquisitions
Powercall Technologies Limited
On May 10, 1997 Brocker Technology Group (NZ) Limited acquired the net
assets of Powercall Limited and Powercall Services Limited for an initial
cash consideration of NZ$4,948 and 27,440 common shares. Powercall
Technologies Limited is principally involved with the design and
development of telecommunication systems.
Total purchase price of the entity is based on the lesser of a four times
multiple of the cumulative cash earned by the company for the YEARS ended
March 31, 1998 to 2001 or a twelve times multiple of the profit for the
year ended March 31, 2001. The purchase price is limited to a maximum of
NZ$20m. An additional one year is then allowed for this price to be earned
out by the company. That is the maximum price must be subsequently earned
by the company, during the earn out period, before it is payable.
Any additional consideration will be satisfied by the issue of common
shares which will be held in escrow until the earn out criteria are met.
This acquisition was accounted for using the purchase method. Net assets
acquired and consideration paid were as follows:
1998
$
Capital assets 180,582
Net current liabilities (124,556)
Goodwill attributed 7,535
----------
Consideration paid 63,561
On November 30, 1998 an additional 98,416 shares were issued in relation to
the acquisition of Powercall, with an attributable value of $172,228.
Additional future consideration will be added to goodwill when it becomes
determinable.
F-30
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
3. ACQUISITIONS (Continued)
Easy PC Computer Rentals Limited
On July 10, 1997 Brocker Technology Group (NZ) Limited acquired Easy
PC Computer Rentals Limited for an initial cash consideration of
NZ$71,183 and 8,128 common shares. In addition an advance on the final
price was paid to the previous shareholders of NZ$150,000. This amount
is repayable to the Company based on the earn out details below, and
is included within prepaid expenses and deposits. Easy PC Computer
Rentals Limited is involved in the rental of computer equipment.
The maximum purchase price payable is based on the profit earned by
the company for the year ended March 31, 1998 at a four times
multiple. Additional consideration, however, is only payable based on
the cash earned by the company for the years ended March 31, 1999 to
2000, being the earn out period. That is the maximum price must be
subsequently earned by the company, during the earn out period, before
it is payable.
Any additional consideration will be satisfied by the issue of common
shares which will be held in escrow until the earn out criteria are
met.
This acquisition was accounted for using the purchase method. Net
assets acquired and consideration paid were as follows:
1998
$
Capital assets 248,576
Rental assets, externally financed (Note 7) 1,452,174
Rental finance liability (Note 7) (1,452,174)
Net current liabilities (253,602)
Goodwill attributed 73,846
------------
Consideration paid 68,820
On December 31, 1998 an additional 94,782 shares were issued in
relation to the acquisition of Easy-PC Computer Rentals Limited,
with an attributable value of $165,869.
Additional future consideration will be added to goodwill when it
becomes determinable.
Image Craft Limited
On December 24, 1997 Brocker Technology Group (NZ) Limited acquired Image
Craft Limited and its subsidiary company Parrilott Pty Limited for an
initial cash consideration of NZ$500,000.
Image Craft Limited and Parrilott Pty Limited are principally involved in
the design and implementation of image processing and storage equipment for
the photographic industry.
This acquisition was accounted for using the purchase method. Net assets
acquired and consideration paid were as follows:
1998
$
Net current assets 65,648
Capital assets 278,372
Goodwill attributed 46,780
--------
Consideration paid 390,800
The maximum purchase price payable was to be based on the profit
earned by the company for the year ended March 31, 1998 at a four
times multiple. However, during the current year an additional
consideration of NZ$159,036 was accrued in relation to the final
settlement.
F-31
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
4. CAPITAL ASSETS
1999
------------------------------------------
Accumulated Net Book
Cost Depreciation Value
Land (Note 8a) 622,128 -- 622,128
Buildings (Note 8a) 2,684,411 37,860 2,646,551
Office equipment
- - leased 72,260 31,036 41,224
- - non-leased 368,147 184,704 183,443
Vehicles
- - leased 105,285 69,380 35,905
- - non-leased 107,222 45,302 61,920
Furniture and fixtures
- - leased 37,456 8,317 29,139
- - non-leased 464,038 172,221 291,817
Computer hardware
- - non-leased 1,750,998 901,607 849,391
- - held for rental 830,688 369,218 461,470
Computer software 156,292 88,467 67,825
Plant and Equipment 316,838 161,297 155,541
Leasehold improvements 147,402 42,688 104,714
------------------------------------------
$7,663,165 $2,112,097 $5,551,068
==========================================
F-32
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
4. CAPITAL ASSETS (Continued)
1998
------------------------------------------
Accumulated Net Book
Cost Depreciation Value
Office equipment
- - leased 29,598 14,039 15,559
- - non-leased 218,228 82,476 135,752
Vehicles
- - leased 69,718 24,871 44,847
- - non-leased 138,823 74,633 64,190
Furniture and fixtures
- - leased 35,598 4,041 31,557
- - non-leased 349,516 118,955 230,561
Computer hardware
- - leased 15,659 2,349 13,310
- - non-leased 1,243,415 562,767 680,648
- - held for rental 360,951 75,233 285,718
Computer software 119,265 52,745 66,520
Plant and Equipment 247,240 150,947 96,293
Leasehold improvements 126,156 26,851 99,305
------------------------------------------
2,954,167 1,189,907 1,764,260
Computer hardware held for rental,
externally financed (Note 7) 2,786,167 870,855 1,915,312
------------------------------------------
$5,740,334 $2,060,762 $3,679,572
==========================================
5. DEFERRED DEVELOPMENT COSTS
1999 1998
$ $
Development costs deferred as at March 31, 521,428 --
Development costs deferred during the year 883,295 521,428
---------- ----------
1,404,723 521,428
Amortised as at March 31, (152,355) (30,915)
---------- -----------
Development costs deferred as at March, 31 1,252,368 490,513
========== ==========
Development costs deferred principally relate to the development of
software applications.
Management has reviewed the status of the projects to which deferred
development costs relate and are satisfied that the recovery of such costs
is reasonably assured. However the eventual recovery of these costs is
ultimately dependent on actual sales volumes being achieved in subsequent
periods and as such recovery is not certain.
F-33
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
6. INVESTMENTS
INVESTMENT IN ASSOCIATED COMPANY
During 1998 Brocker Technology Group (NZ) Limited took a 20% founding
shareholding in Highway Technologies Limited. This company has developed
new technology capable of providing transport and highway management,
operation and funding solutions. The Board of Highway Technologies Limited
has identified other sources of revenue in order to reduce the amount owing
to Brocker Technology Group Limited. These sources include the provision of
financial and technical consulting services to parties external to the
Group.
In addition to the investment, Brocker Technology Group (NZ) Limited has
entered an agreement to loan Highway Technologies Limited funds during the
company's establishment phase up to a maximum of NZ$1.5m. Interest is
payable on these funds at 30% per annum. As at March 31, 1999 amounts
advanced to Highway Technologies Limited amounted to NZ$820,220
(NZ$327,151, 1998). No interest has been accrued on the loan for the
current year (NZ$60,735, 1998).
1999 1998
Carrying value of investment $ $
Initial cost of investment 87,366 87,366
Amounts owing from associate 689,523 255,700
Equity accounted losses to date (172,456) (79,953)
--------- ---------
604,433 263,113
========= =======
The financial position of Highway
Technologies Limited as at
March 31, 1999 is represented
as follows:
Net Current Assets* 3,718
Net Current Liabilities (including amounts
owing to Brocker Technology Group Limited
of ($789,045, inclusive of accrued interest) (803,523)
--------
Net Liabilities (799,805)
========
* All research and development expenditure has been expensed.
Management has assessed the recoverability of the funding loan to Highway
Technologies Limited, which is ultimately dependent on the future revenue
stream of the software technology under development and the revenue stream
from consultancy services, and are satisfied on the basis of the current
status of the projects concerned that no impairment provision is required
as at March 31, 1999. Management will continue to assess the need for an
impairment provision in light of the actual revenues generated.
OTHER INVESTMENTS
During 1999 Industrial Communications Service Limited, a subsidiary of
Brocker Technology Group (NZ) Limited, took a 40% shareholding in Eftpos
Corporation Limited for a consideration of NZ$5,000. Eftpos Corporation
Limited is a manufacturer of mobile electronic payment devices utilising
cellular technology.
Industrial Communications Service Limited has an obligation to acquire an
additional 20% shareholding for a consideration of NZ$85,000 in the event
profit targets, for the year ended 31 October 1999, are achieved.
The results of this company for the year ended March 31, 1999 are not
material to the Group.
F-34
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
7. RENTAL FINANCE LIABILITY
Easy PC Computer Rentals Limited, a subsidiary of Brocker Technology Group
(NZ) Limited, acts as an intermediary between an independent finance
company, which arranges finance for the purchase of equipment, and its
customers.
During March 1999 Easy PC Computer Rentals Limited renegotiated its Rental
Recourse Dealer Deed, with the independent finance company, to ensure that
all significant risk of recourse from the individual finance agreements was
transferred to the independent finance company. The result of this
renegotiation was to enable the company, in accordance with generally
accepted accounting principles, to treat these as off-balance sheet
arrangements.
Due to the renegotiation the Group risk of recourse is limited to $167,245.
Included within the financial statements is revenue of $910,550
($1,075,944, 1998) in relation to income earned on these leases during the
year up to the date of the renegotiation with a corresponding depreciation
expense of $736,995 ($870,855, 1998) and interest charges of $173,555
($205,089, 1998).
F-35
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
8. INDEBTEDNESS
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
a) Long Term Debt $ $
Mortgage finance liability, payable in New Zealand 2,357,142 --
Dollars, with a current interest rate of 6.73%, collateralised
by land and buildings situated at 17 Kahika Road,
Beachaven, Auckland, payable over 10 Years
Less: Current portion (183,352) --
----------- ----------
2,173,790 --
Rental finance liability, payable in New Zealand
dollars, with an interest rate of 16.1% per
annum (Note 7) -- 1,915,312
Less: Current portion -- (1,094,464)
----------- ----------
Rental finance liability payable over 1 year -- 820,848
Capital lease obligations payable in New
Zealand dollars, with interest rates ranging from
6.6% to 14.5% per annum, collateralised by related
assets, payable over 1 to 3 years 91,632 49,813
Less: Current portion (36,676) (44,303)
----------- ----------
Capital lease obligations payable over 1 year 54,956 5,510
Unsecured Term Liability, repayable in NZ$ 55,832 54,712
----------- ----------
$ 2,284,578 $ 881,070
=========== ==========
</TABLE>
The total interest expense for the year in relation to long term debt, was
$258,957 ($207,048, 1998).
Capital lease obligations are repayable as follows:
2000 36,676
2001 36,821
2002 18,135
------
91,632
======
b) Mortgage Finance Liability $2,357,142 $ --
========== ==========
On October 1, 1998 Brocker Technology Group (NZ) Limited purchased new
premises in Auckland, New Zealand. The purchase price of NZ$3,400,000 was
financed by mortgage finance of NZ$3,045,000. As at March 31, 1999 the
amount remaining outstanding was $NZ 2,955,293, and is repayable as
follows:
F-36
<PAGE>
1999
NZ$
In less than 1 year 229,880
1 to 2 years 245,837
2 to 3 years 262,902
3 to 4 years 281,152
4 to 5 year 300,668
5 years and over 1,634,854
---------
2,955,293
=========
F-37
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
8. INDEBTEDNESS (Continued)
c) Financing Facility $3,213,122 $5,827,883
========== ==========
Sealcorp Computer Products Limited, Sealcorp Telecommunications Group
Limited and Sealcorp Australia Pty Limited (all subsidiaries of the
Company) have entered into a financing facility agreement secured by a
registered first debenture over the assets and undertakings of all Group
companies. As at March 31, 1999 $3,213,122 ($5,827,883, 1998) was
outstanding under this AUD$ 16.0m facility (approximately C$15.0m).
Interest rates on financing facilities have ranged from 9.95% to 13.43%
during the year.
As discussed in Note 18, subsequent to year end a new facility has been
negotiated.
9. SHARE CAPITAL
a) Authorised
Unlimited number of common shares
Unlimited number of Preferred Shares
10,000,000 Series A Preferred Shares
6 1/2% cumulative
Issued and outstanding 1999 1998
$ $
Common shares 3,353,490 2,959,499
Series A Preferred 2,450,000 2,450,000
Less: Share issue costs (41,769) (41,769)
----------- -----------
$ 5,761,721 $ 5,367,730
=========== ===========
As at March 31, 1999 963,602 shares were being held in escrow pursuant to
Escrow Agreements which provide for the release of such shares on a
performance basis. In the prior year 760,500 shares were held in escrow.
F-38
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
9. SHARE CAPITAL (Continued)
b) Share Transactions
<TABLE>
<CAPTION>
1999 1998
Common Shares Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares outstanding - at March 31, 11,704,554 4,214,324 10,315,486 2,262,460
Issue of shares for acquisition of
Industrial Communications (Note (i)) -- -- 760,500 1,254,825
Issue of shares for acquisition of
Powercall Technologies Limited (Note (ii)) 284,733 498,283 27,440 54,880
Issue of shares for acquisition of Easy PC
Computer Rentals Limited (Note (iii)) 111,567 195,258 8,128 16,259
Exercise of share warrants 25,000 29,500 450,000 495,000
Exercise of stock options -- -- 143,000 130,900
---------------------------------------------------------
Shares issued - at March 31, 1998
12,125,854 4,937,365 11,704,545 4,214,324
Acquisition shares held in escrow (Note(i)
and (iii)) (963,602) (1,583,875) (760,500) (1,254,825
---------------------------------------------------------
Shares outstanding - at March 31, 11,162,252 $3,353,490 10,944,045 $ 2,959,499
=========================================================
</TABLE>
(i) During 1998 share script was issued in respect of the acquisition of
Industrial Communications Service Limited. These shares (760,500) are
currently held in escrow and are only released as earn-out provisions
are achieved. These will be issued at $1.65 per share but as at March
31, 1999 no earn-out amounts have been determined, resulting in a
prescribed value of nil.
(ii) During the year shares were issued, at $1.75, in relation to the
acquisition of Powercall Technologies Limited in respect to earn-out
targets that were achieved. (Note 3).
As at March 31, 1999 186,317 of these shares were being held in
escrow.
(iii) Also during the year additional shares were issued, at $1.75 in
relation to the acquisition of Easy PC Computer Rentals Limited in
respect to earn-out targets that were achieved. (Note 3)
As at March 31, 1999 16,785 of these shares were being held in escrow.
F-39
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
9. SHARE CAPITAL (Continued)
<TABLE>
<CAPTION>
1999 1998
Preferred Shares Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Series A shares outstanding at March 31, 2,450,000 2,450,000 3,043,049 3,043,049
Redeemed at $1.00 -- -- (593,049) (593,049)
----------------------------------------------------------
Series A shares outstanding at March 31, 2,450,000 $ 2,450,000 2,450,000 $ 2,450,000
==========================================================
</TABLE>
In 1995 the Company acquired Brocker Investment (NZ) Limited and a
liability was established in the accounts for the purchase
consideration. In 1996 the liability was satisfied by the issuance of
Series A preferred shares.
No transactions, involving Preferred Shares, were conducted during the
year. During 1998 593,049 shares were redeemed at $1.00 per share.
During the year a dividend was paid at 6.5% of preferred shares
outstanding at September 30, 1998.
Any holder of preferred shares may convert their shares to fully paid
common shares at the following conversion prices, which are dependent
upon when the date of notice to convert is received by the Company:
- --------------------------------------------------------------------------------
Date notice received Conversion rate
- --------------------------------------------------------------------------------
After March 31, 1998 and on or before Market value of common shares at
March 31, 2000 April 1, 1998 ($1.75)
- --------------------------------------------------------------------------------
After March 31, 2000 and Market value of common shares at
on or before March 31, 2001 April 1, 2000
- --------------------------------------------------------------------------------
F-40
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
9.9 SHARE CAPITAL (Continued)
c) Unexercised Options
There are a total of 889,000 outstanding and unexercised stock options
(934,000, 1998).
Options held by the Directors of the Company (287,000, 1998) are as
follows:
----------------------------------------------------------------
Number of options Exercise price Expiry date
----------------------------------------------------------------
57,000 $1.31 November 1, 2001
----------------------------------------------------------------
100,000 $1.50 November 30, 2003
----------------------------------------------------------------
150,000 $1.18 November 1, 2001
----------------------------------------------------------------
30,000 $1.90 November 1, 2002
----------------------------------------------------------------
50,000 $1.99 January 26, 2003
----------------------------------------------------------------
Options are held by employees of the Group as follows (647,000 -
1998):
----------------------------------------------------------------------
Number of options Exercise price Expiry date
----------------------------------------------------------------------
12,000 $0.30 December 31, 1999
----------------------------------------------------------------------
135,000 $1.18 November 1, 2001
----------------------------------------------------------------------
20,000 $1.52 April 17, 2000
----------------------------------------------------------------------
335,000 $1.90 November 1, 2002
----------------------------------------------------------------------
d) Earnings Per Common Share
Earnings per share has been calculated on the basis of the weighted
average number of common shares outstanding for the year. Net income
has been adjusted for dividends paid on preferred shares of $163,322
($195,000, 1998).
1999 1998
- --------------------------------------------------------------------------------
Weighted average number of shares 11,012,887 10,516,318
Net income attributable to shareholders after
deduction of preference dividends 351,492 $601,816
Basic earnings per share $0.03 $0.06
- --------------------------------------------------------------------------------
For the current, and previous, financial year the effect on earnings
per share of the exercise of outstanding options and conversion of
preferred shares, for the calculation of fully diluted earnings per
share, is anti-dilutive.
F-41
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
10. INCOME TAX
1999 1998
$ $
Expected income tax expense
calculated at the Statutory Rate
on Earnings before Taxation 346,635 583,691
Adjusted for the tax effect of:
Amortisation of goodwill 114,487 95,497
Canadian parent Company losses not
available for offset with foreign income -- 14,784
Adjustment for foreign tax rates (109,765) (203,896)
Other (78,366) 15,991
-------- --------
Income tax expense 272,991 506,067
======== ========
Total income tax expense is made up of:
Current taxation 180,380 648,116
Deferred taxation 92,611 (142,049)
-------- --------
272,991 506,067
======== ========
11. RELATED PARTY TRANSACTIONS
a) During the year, the Group provided an interest free short-term advance to
the Chief Executive Officer of the Company. The balance outstanding at
March 31, 1999 was $4,663 ($5,778, 1998). This balance is included in other
receivables.
The Chief Executive Officer has also borrowed $26,371 from the Group.
Interest is currently charged on this amount at 6.5% and the loan is
unsecured and is repayable on demand. The maximum amount outstanding during
the year in respect of this loan was $94,817, and interest charged amounted
to $7,725.
b) The Chief Executive Officer of the Company, as at March 31, 1999, held
923,453 (1,148,453, 1998) preferred shares on which a dividend of $60,783
was paid during the year.
c) Directors of the Company have exercised stock options. The funds required
to exercise these options have been loaned to the Directors by Brocker
Technology Group (NZ) Limited.
As at March 31, 1999 the amount outstanding was $749,375 ($715,801, 1998).
The current market value of the shares, held as security over these loans
is in excess of $1.6m. Interest of $16,692 was charged during the year.
This balance is included in other receivables. The maximum amount
outstanding during the year in respect of these loans was $749,375.
The loan to each Director is repayable on demand or within 30 days of the
individual ceasing to be a Director of the Company or one of its
subsidiaries. The beneficial ownership of the shares are held as security
over the loan, and the Company retains the right to either sell or cancel
the shares to settle any outstanding amounts and the employee may not sell
or transfer the shares prior to settlement of the amounts outstanding.
F-42
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
11.9 RELATED PARTY TRANSACTIONS
a) Directors, of various subsidiary companies, have advances owing to the
Group as at March 31, 1999 totalling $193,124, including the
NZ$150,000 advance referred to in Note 3. In all cases these Directors
were shareholders of the subsidiary prior to acquisition by Brocker
Technology Group (NZ) Limited. No interest is charged on the amounts
outstanding and the balance is included in other receivables.
b) A number of Group companies transact business with each other on a
regular basis. These transactions are entered into on normal
commercial terms and are eliminated on consolidation. See Note 13 for
Intersegment revenues.
Unless otherwise stated the maximum amount outstanding during the year was
the higher of the balance at March 31, 1999 or March 31, 1998.
12. EMPLOYEE SHARE OWNERSHIP PLAN
In November 1996 the Company established a plan to enable a number of
senior management employees to acquire stock options in the Company.
Brocker Technology Group (NZ) Limited has provided financial assistance to
some of these employees to exercise the options offered.
The loan to each employee is repayable on demand or within 30 days of the
individual ceasing to be an employee of the Company or one of its
subsidiaries. The beneficial ownership of the shares are held as security
over the loan, and the Company retains the right to either sell or cancel
the shares to settle any outstanding amounts and the employee may not sell
or transfer the shares prior to settlement of the amounts outstanding.
As at March 31, 1999 the amounts outstanding in respect of these shares
amounted to $84,297 ($130,855, 1998) and is included within other
receivables. Interest of $13,729 was charged on these loans during the
year. The current market value of the shares held as security is in excess
of $600,000.
The maximum amount outstanding during the year was $130,855.
F-43
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
13. SEGMENTED OPERATIONS
The Group operates in two geographical segments, New Zealand and Australia.
The Canadian operations shown relate to administrative items only.
<TABLE>
<CAPTION>
1999 ($) Canada New Zealand Australia Total
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales -- 109,887,630 23,415,010 133,302,640
- --------------------------------------------------------------------------------------------------------------------
Intersegment revenue -- 18,058 (18,058) --
- --------------------------------------------------------------------------------------------------------------------
Net profit/(loss) -- 204,103 310,711 514,814
- --------------------------------------------------------------------------------------------------------------------
Depreciation and amortisation -- 1,894,449 116,254 2,010,703
- --------------------------------------------------------------------------------------------------------------------
Net interest expense -- 1,270,935 138,252 1,409,187
- --------------------------------------------------------------------------------------------------------------------
Identifiable assets -- 41,417,762 9,269,733 50,687,495
- --------------------------------------------------------------------------------------------------------------------
Capital asset expenditure -- 4,439,113 324,768 4,673,881
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
1998 ($) Canada New Zealand Australia Total
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales -- 57,281,846 13,529,374 70,811,220
- --------------------------------------------------------------------------------------------------------------------
Intersegment revenue -- -- -- --
- --------------------------------------------------------------------------------------------------------------------
Net profit/(loss) (33,001) 1,208,407 (378,590) 796,816
- --------------------------------------------------------------------------------------------------------------------
Depreciation and amortisation -- 1,629,985 62,600 1,692,585
- --------------------------------------------------------------------------------------------------------------------
Net interest expense -- 584,070 84,775 668,845
- --------------------------------------------------------------------------------------------------------------------
Identifiable assets -- 29,923,977 2,575,194 32,499,171
- --------------------------------------------------------------------------------------------------------------------
Capital asset expenditure -- 1,007,960 37,159 1,045,119
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The Group principally operates in four industry segments, being the
divisions by which the Group is managed, as follows:
o Distribution and sale of computer and telecommunications hardware
and software ("Sales and Distribution");
o Technical support and services for the Technology Industry
("Technical Services");
o Software application design and development ("Application
Development"); and
o Provision of professional consulting services ("Professional
Services").
The corporate services operation shown relates to the Group's
administrative functions in New Zealand, Australia, and Canada.
<TABLE>
<CAPTION>
Sales & Technical Application Professional Corporate
1999 ($) Distribution Services Development Services Services Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales 124,995,192 2,661,745 2,124,378 3,519,855 1,470 133,302,640
- ----------------------------------------------------------------------------------------------------------------------------------
Intersegment revenue 465,306 (38,691) (62,525) (364,090) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net profit/(loss) 3,137,297 54,278 (407,056) (65,010) (2,204,695) 514,814
- ----------------------------------------------------------------------------------------------------------------------------------
Depreciation and amortisation 1,257,971 82,843 330,630 37,252 302,007 2,010,703
- ----------------------------------------------------------------------------------------------------------------------------------
Net interest expense 1,206,905 33,225 126,465 8,651 33,941 1,409,187
- ----------------------------------------------------------------------------------------------------------------------------------
Identifiable assets 49,731,409 532,667 189,390 1,100,084 (866,055) 50,687,495
- ----------------------------------------------------------------------------------------------------------------------------------
Capital asset expenditure 835,810 185,184 170,388 170,388 3,355,565 4,673,881
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-44
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
13. SEGMENTED OPERATIONS (Continued)
<TABLE>
<CAPTION>
Sales & Technical Application Professional Corporate
1998 ($) Distribution Services Development Services Services Total
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales 67,856,803 2,331,371 623,046 -- -- 70,811,220
- ---------------------------------------------------------------------------------------------------------------------------------
Intersegment revenue 178,283 (12,632) (165,651) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net profit/(loss) 2,555,089 (28,671) 96,344 -- (1,825,946) 796,816
- ---------------------------------------------------------------------------------------------------------------------------------
Depreciation and amortisation 1,470,999 90,513 87,274 -- 43,799 1,692,585
- ---------------------------------------------------------------------------------------------------------------------------------
Net interest expense 540,396 70,030 2,541 -- 55,878 668,845
- ---------------------------------------------------------------------------------------------------------------------------------
Identifiable assets 33,281,993 441,775 306,213 -- (1,530,810) 32,499,171
- ---------------------------------------------------------------------------------------------------------------------------------
Capital asset expenditure 598,923 66,128 250,293 -- 129,775 1,045,119
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
During 1999 the group conducted business with a single customer that
accounted for revenue of $23,792,150. This revenue was generated in New
Zealand by the Distribution Services segment. There were no such customers
during the 1998 year.
14. NOTES TO CASH FLOWS STATEMENT
a) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and balances with
banks, and investments in money market instruments. Cash and cash
equivalents included in the cash flow statement are comprised solely
of balances with banks.
b) Reconciliation of net profit and cash flow from operating activities
<TABLE>
<CAPTION>
1999 1998
$ $
<S> <C> <C> <C>
Net Earnings for the year Note 514,814 796,816
Add/(Less) non cash items:
Depreciation and amortisation 1,273,748 821,730
Depreciation on rental finance liability 7 736,955 870,855
Interest on rental finance liability 7 173,555 205,089
Income on rental finance liability 7 (910,550) (1,075,944)
Loss of associated company 91,330 79,953
Loss on sale of fixed assets 78,808 17,550
Deferred taxation 92,611 154,132
Unrealised exchange (gain)/loss (22,665) 46,558
Impact of changes in working capital items:
Increase in accounts receivable and prepayments (8,913,357) (8,565,305)
Increase in taxation receivable (456,569) (983,360)
Increase in inventories (5,448,644) (4,577,815)
Increase in accounts payable and accrued liabilities 15,771,607 13,678,760
----------- -----------
Net cash flow from operating activities 2,981,643 1,469,019
=========== ===========
</TABLE>
F-45
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
15. FINANCIAL INSTRUMENTS
Currency Risk
The nature of activities and management policies with respect to financial
instruments are as follows:
i) Currency
The Group uses a very limited number of forward exchange contracts and
currency options to hedge purchases of inventory in foreign
currencies. The Group's exchange rate commitments are intended to
minimise the exposure to exchange rate movement risk on the cost of
the Group's products and on the price it is able to sell those
products to its customers. The Group does not use foreign exchange
instruments for trading or any other purpose.
No forward exchange contracts were entered into during the current
financial year. During the previous financial year the average value
of these contracts amounted to $1,232,000 and were entered as a hedge
against New Zealand purchases made in Australian dollars.
ii) Concentration of credit risk
In the normal course of business, the Group incurs credit risk from
trade debtors and transactions with financial institutions. The Group
has a credit policy which is used to manage the risk. As part of this
policy, limits on exposure with counterparties have been set and are
monitored on a regular basis. Anticipated bad debt losses have been
provided for in the allowance for doubtful accounts.
The Group has no significant concentrations of credit risk. The Group
does not consider that they require any collateral or security to
support financial instruments due to the quality of financial
institutions and trade debtors.
i) Interest Rate Risk
The Group has adopted a policy of ensuring that its exposure to
changes in interest rates is on a floating rate basis.
iv) Fair Values
The fair values of the Group's cash accounts and other receivables,
bank, indebtedness, accounts payable, accrued liabilities and lease
obligations approximate their carrying values given their short term
nature. The carrying value of the demand debenture and capital leases,
as disclosed in note 8, also approximate their fair value as do
amounts owing by shareholders.
16. COMMITMENTS
a) Brocker Technology Group (NZ) Limited has entered into a number of
acquisitions where the final acquisition price is dependent on the
occurrence of future events. This contingent purchase price is
calculated based on cash flow earned for a given period, and is
settled by way of shares issued but held in escrow.
Shares are released from escrow based on cash flows, as defined with
each party, earned by the subsidiary over a varying number of years
following acquisition, being the "earn-out" period.
F-46
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
16. COMMITMENTS (Continued)
As at March 31, 1999 the following earn-outs were in existence.
Subsidiary Acquisition price and earn-out
provisions
-----------------------------------------------------------------
Industrial Communications
Service Limited Maximum purchase price
established and shares issued
and held in escrow (refer Note
9)
Earn-out based on defined cash
flow earned in financial years
ended March 31, 1998 - 1999
-----------------------------------------------------------------
Powercall Technologies Limited Shares to be held in escrow
based on the lessor of four
times the cumulative cash flow
earned for the years ended
March 31, 1998 to 2001 or
twelve times profit for the
year ended March 31, 2001,
limited to NZ$20m. Earn-out
based on defined cash flow
earned in financial years
ended March 31, 1998 - 2002
(Note 3).
-----------------------------------------------------------------
Easy PC Computer Rentals Limited Shares to be held in escrow
based on cash flow earned for
the year ended March 31, 1998.
Earn-out based on defined cash
flow earned in financial years
ended March 31, 1999 - 2000
(Note 3).
-----------------------------------------------------------------
Pritech Corporation Limited Shares to be held in escrow
based on cash flow earned for
the year ended September 30,
1998. Earn-out based on
defined cash flow earned in
financial years ended
September 30, 1999 - 2000
(Note 3).
-----------------------------------------------------------------
1 World Systems Limited Shares to be held in escrow
based on cash flow earned for
the year ended March 31, 1999.
Earn-out based on defined cash
flow earned in financial years
ended March 31, 2001 - 2002
(Note 3).
-----------------------------------------------------------------
b) Industrial Communications Service Limited has an obligation to acquire
an additional 20% shareholding of Eftpos Corporation Limited for a
consideration of NZ$85,000 in the event that profit targets, for the
year ended 31 October 1999, are achieved.
F-47
<PAGE>
c) Group companies operate from leased premises and have other
obligations under operating leases requiring annual repayments as
follows:
2000 $467,652
2001 $382,624
2002 $309,829
2003 $150,140
Thereafter --
F-48
<PAGE>
BROCKER TECHNOLOGY GROUP LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
17. CONTINGENT LIABILITIES
In the general course of business disputes may arise with customers and
other third parties. The Directors consider adequate provision has been
made for all such instances.
18. SUBSEQUENT EVENTS
a) Subsequent to the year end, the company has successfully renegotiated
its financing arrangements with the National Bank of New Zealand. This
increased NZ$20m facility provides the Group's New Zealand and
Australian operations greater access to funds at a lower net cost.
This facility will be secured over the Group's assets.
b) Also subsequent to year end the Group acquired Tech Support Limited.
No cash consideration has been paid, to date, the maximum of which is
limited to NZ$45,000.
c) Also subsequent to March 31, 1999 the Company completed a fully
subscribed private placement of 1,000,000 units to raise proceeds of
$1,070,000. Each unit is comprised of one common share and one
non-transferable share purchase warrant entitling the purchase of one
additional common share at a price of $1.25 until January 16, 2002.
19. UNCERTAINTY DUE TO YEAR 2000 ISSUE
The year 2000 Issue arises because many computerised systems use two digits
rather that four to identify a year. Date-sensitive systems may recognise
the year 2000 as 1900 or as some other date, resulting in errors when
information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000 Issue
may be experienced before, on or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant system failures which could affect the
Company's ability to conduct normal business operations. It is not possible
to be certain that all aspects of the Year 2000 Issue affecting the
Company, including those related to the efforts of customers, suppliers or
other third parties, will be fully resolved.
F-49
<PAGE>
[LETTERHEAD OF KPMG]
AUDITORS' REPORT TO THE SHAREHOLDERS
We have audited the consolidated balance sheets of Brocker Investments Ltd
as at March 31, 1998 and 1997 and the consolidated statements of earnings,
retained earnings and changes in financial position for the years then ended.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the company as at March 31,
1998 and 1997 and the results of its operations and the changes in its financial
position for the years then ended in accordance with generally accepted
accounting principles.
Chartered Accountants
/s/ KPMG.
Auckland, New Zealand
August 18, 1998
F-50
<PAGE>
BROCKER INVESTMENTS LTD
CONSOLIDATED BALANCE SHEETS (in Canadian Dollars)
AS AT MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
Note 1998 1997
$ $
<S> <C> <C> <C>
ASSETS
Current Assets
Cash 205,365 602,233
Accounts receivable 13,915,450 8,917,099
Other receivables 11 1,636,758 1,114,562
Inventories 9,673,446 6,120,143
Deferred development costs 5 490,513 --
Prepaid expenses and deposits 538,610 197,664
Income taxes recoverable 403,334 --
Deferred tax asset 214,231 72,182
--------------------------------------
27,077,707 17,023,883
Capital Assets 4 3,679,572 1,174,875
Investment in Associated Company 6 263,113 --
Goodwill (Net of accumulated
amortisation of $779,583; 1997 $576,476) 1,478,779 1,727,742
--------------------------------------
$ 32,499,171 $ 19,926,500
======================================
LIABILITIES
Current Liabilities
Accounts payable 17,422,333 10,907,853
Accrued liabilities 1,387,512 1,297,283
Rental finance liability 7&8 1,094,464 --
Financing facility 8 5,827,883 998,485
Income taxes payable -- 73,959
Indebtedness 8 -- 552,047
Current portion of long-term debt 8 44,303 97,313
--------------------------------------
25,776,495 13,926,940
Long -Term Debt 8 881,070 115,005
--------------------------------------
26,657,565 14,041,945
--------------------------------------
SHAREHOLDERS' EQUITY
Share Capital 9 5,367,730 5,263,740
Foreign Currency Translation Reserve (881,364) (82,609)
Retained Earnings 1,355,240 703,424
--------------------------------------
5,841,606 5,884,555
--------------------------------------
$ 32,499,171 $ 19,926,500
======================================
Commitments 16
Contingencies 17
Subsequent Events 18
Signed on behalf of the Board
</TABLE>
F-51
<PAGE>
BROCKER INVESTMENTS LTD
CONSOLIDATED STATEMENT OF EARNINGS (in Canadian Dollars)
FOR THE YEARS ENDED MARCH 31,1998 AND 1997
<TABLE>
<CAPTION>
Note 1998 1997
$ $
<S> <C> <C> <C>
REVENUE
Sales 70,811,220 50,109,539
Cost of Goods Sold 56,410,370 41,010,489
----------------------------------
Gross Margin 14,400,850 9,099,050
----------------------------------
Operating Expenses
Depreciation and amortisation 1,692,585 429,875
Net interest expense 668,845 161,764
Salaries and commissions 6,431,431 4,307,111
Other operating expenses 4,225,153 2,890,862
----------------------------------
Total operating expenses 13,018,014 7,789,612
----------------------------------
Operating Income 1,382,836 1,309,438
Equity accounted losses of associated company 6 79,953 --
----------------------------------
Income before Income Tax Provision 1,302,883 1,309,438
Income Tax Provision 10 506,067 471,788
----------------------------------
Net Earnings for the year $ 796,816 $ 837,650
----------------------------------
Earnings Per Common Share 9 $ 0.06 $ 0.06
==================================
</TABLE>
F-52
<PAGE>
BROCKER INVESTMENTS LTD
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (in Canadian Dollars)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
Note 1998 1997
$ $
Retained Earnings, Beginning of the year 703,424 164,362
Net Earnings for the year 796,816 837,650
Discount on redemption of preferred shares 9 50,000 (50,000)
Preferred dividends paid (195,000) (248,588)
---------------------------
Retained Earnings, End of the year $ 1,355,240 $ 703,424
===========================
MOVEMENTS IN FOREIGN CURRENCY TRANSLATION RESERVE (in Canadian Dollars)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
1998 1997
$ $
Beginning of the year (82,609) (104,830)
Difference arising on the translation
of foreign operations (798,755) 22,221
-------------------------
End of the year
$(881,364) $ (82,609)
==========================
F-53
<PAGE>
BROCKER INVESTMENTS LTD
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION (in Canadian Dollars)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
Note 1998 1997
$ $
<S> <C> <C> <C>
CASH PROVIDED FROM (USED IN)
Operating Activities
Net profit for the year 796,816 $ 837,650
----------------------------------
Items not affecting cash
Depreciation and amortisation 1,692,585 429,875
Interest on rental finance 205,089 --
Equity accounted loss of associate 79,953 --
Deferred tax (142,049) (17,161)
Loss on sale of capital assets 23,994 73,280
Unrealised foreign exchange gain (46,558) (88,144)
----------------------------------
1,813,014 397,850
Net change in non-cash components of working capital 14 781,545 (471,039)
----------------------------------
3,391,375 764,461
----------------------------------
INVESTING ACTIVITIES
Translation adjustment (798,755) 22,221
Purchase of net assets and goodwill by acquisition
(including cash overdrafts of $97,174 and
rental lease liabilities of $1,452,174 in 1998) 3 (523,181) (956,407)
Increase in rental assets, externally financed (1,646,925) --
Purchase of capital assets (673,137) (512,465)
Investment in associated company (343,066) --
Proceeds from sale of capital assets 56,814 69,229
----------------------------------
(3,928,250) (1,377,422)
----------------------------------
FINANCING ACTIVITIES
Proceeds from issuance of share capital 625,900 899,123
Issue of shares for acquisitions 71,139 322,537
Amount owing in relation to purchase of Industrial
Communications Service Limited (398,710) 398,710
Redemption of preferred shares (593,049) (500,000)
Premium on redemption of preferred shares 50,000 (50,000)
Dividends paid (195,000) (248,588)
Increase in rental finance liability 7 694,862 --
Decrease in other long-term debt (107,793) 65,256
----------------------------------
147,349 887,038
----------------------------------
Increase/(Decrease) in Cash (389,526) 274,077
Cash at Beginning of the year* 594,891 320,814
----------------------------------
Cash at End of the year* $ 205,365 $ 594,891
==================================
</TABLE>
*In 1997 cash includes cash less bank indebtedness, net of amounts acquired in
the purchase of Industrial Communications Service Limited.
F-54
<PAGE>
BROCKER INVESTMENTS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
1. BASIS OF PRESENTATION
Brocker Investments Ltd, the Company, was incorporated under the Business
Corporation Act (Alberta) on November 25, 1993, and obtained its listing on
the Alberta Stock Exchange on April 14, 1994.
On February 28, 1998 the Company transferred its listing to the Toronto
Stock Exchange.
These financial statements have been prepared in accordance with the
generally accepted accounting principles of Canada.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Principles of Consolidation
The consolidated financial statements include the financial statements
of the Company and all of its subsidiary companies since the dates of
their acquisition. Its wholly owned subsidiaries, all of which are
consolidated using the purchase method, are as follows:
Brocker Investments (NZ) Limited
Brocker Investments (Australia) Pty Limited
Sealcorp Computer Products Limited
Sealcorp Technologies Group Limited
Sealcorp Australia Pty Limited (formerly TGE Pty Limited)
Easy PC Computer Rentals Limited
Image Craft Limited (formerly NZ Online Limited)
Industrial Communications Service Limited
Parrilott Pty Limited
Powercall Technologies Limited
Northmark Technologies Limited
During the year Brocker Investments Ltd took a 20% founding
shareholding in Highway Technologies Limited. This investment has been
recorded using the equity method.
b) Goodwill
The excess of cost over the fair value of identifiable net assets of
subsidiaries acquired is recorded as goodwill and is amortised on a
straight-line basis over its estimated useful life, considered to be
five to ten years. On an ongoing basis, management reviews the
valuation and amortisation of goodwill taking into consideration any
events and circumstances which might have impaired the fair value.
Where an acquisition price is contingent on a future event or events,
no goodwill is recognised until the final acquisition price can be
reasonably determined.
c) Foreign Currency
Foreign currency transactions are recorded at the exchange rates in
effect at the date of settlement. Monetary assets and liabilities
arising from trading are translated at closing rates. Gains and losses
due to currency fluctuations on these items are included in the
statement of earnings.
The financial statements of foreign operations are translated to
Canadian dollars using weighted average exchange rates for the year
for items included in the statement of earnings, year end rates for
assets and liabilities included in the balance sheet and historical
rates for equity transactions. The cumulative translation adjustment
represents the deferred foreign exchange gain or loss on the
translation of the financial statements.
F-55
<PAGE>
BROCKER INVESTMENTS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
The following rates were used in the preparation of the financial
statements:
New Zealand dollar Average rate Rate at March 31
1998 0.8833 0.7816
1997 0.9338 0.9490
Australian dollar Average rate Rate at March 31
1998 1.0055 0.9408
1997 1.0680 1.0736
d) Inventories
Inventories principally comprise finished goods and are carried at the
lower of cost and net realisable value. Cost is determined on a
weighted average or first in first out basis.
e) Capital Assets
Capital assets are recorded at cost. Depreciation is calculated on a
declining balance basis (except for leasehold improvements where a
straight line basis is used) using the following rates:
Office equipment 20%
Vehicles 20 and 26%
Furniture and fixtures 20%
Computer hardware 20%
Computer software 40%
Plant and Equipment 20 - 26%
Leasehold improvements Period of lease
Computer hardware held for rental Period of lease
f) Revenue recognition
The Company earns substantially all of its revenue for the sale and
delivery of products to its customers. Revenue is recorded when the
products are shipped to customers.
g) Research and development expenditures
Research costs, other than capital expenditures, are expensed as
incurred. Development costs are expensed as incurred unless they meet
the criteria under generally accepted accounting principles for
deferral and amortisation. Deferred development costs are amortised
over the life of the developed product, currently a maximum of 3
years.
h) Deferred Income Taxes
The Company follows the deferral method of income tax allocation such
that deferred income taxes are recognised when income and expense
items are reported for income tax purposes in years different from
those in which they are recorded for financial reporting purposes.
i) Earnings Per Share
Earnings per share have been calculated based on the weighted average
number of common shares outstanding. The fully diluted earnings per
share have been calculated based on the assumption that all vested
options would have been exercised.
Common shares to be issued, or held in escrow, in respect of the
settlement of earn-out consideration in relation to acquisitions are
only taken into account in the calculation of earnings per share once
the number of shares can be reasonably determined.
j) Use of estimates
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from
those estimates.
F-56
<PAGE>
BROCKER INVESTMENTS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
3. ACQUISITIONS
Powercall Technologies Limited
On May 10, 1997 Brocker Investments (NZ) Limited acquired the net assets of
Powercall Limited and Powercall Services Limited for an initial cash
consideration of NZ$4,948 and 27,440 common shares. Powercall Technologies
Limited is principally involved with the design and development of
telecommunication systems.
Total purchase price of the entity is based on the lesser of a four times
multiple of the cumulative cash earned by the company for the years ended
March 31, 1998 to 2001 or a twelve times multiple of the profit for the
year ended March 31, 2001. The purchase price is limited to a maximum of
NZ$20m. An additional one year is then allowed for this price to be earned
out by the company. That is the maximum price must be subsequently earned
by the company, during the earn out period, before it is payable.
Any additional consideration will be satisfied by the issue of common
shares which will be held in escrow until the end of the earn out period.
This acquisition was accounted for using the purchase method. Net assets
acquired and consideration paid were as follows:
$
Capital assets 180,582
Net current liabilities (124,556)
Goodwill attributed 7,535
----------
Consideration paid 63,561
Additional future consideration will be added to goodwill when it becomes
determinable.
Easy PC Computer Rentals Limited
On July 10, 1997 Brocker Investments (NZ) Limited acquired Easy PC Computer
Rentals Limited for an initial cash consideration of NZ$71,183 and 8,128
common shares. In addition an advance on the final price was paid to the
previous shareholders of NZ$150,000. This amount is repayable to the
company based on the earn out details below, and is included within prepaid
expenses and deposits. Easy PC Computer Rentals Limited is involved in the
rental of computer equipment.
The maximum purchase price payable is based on the profit earned by the
company for the year ended March 31, 1998 at a four times multiple.
Additional consideration, however, is only payable based on the cash earned
by the company for the years ended March 31, 1999 to 2000, being the earn
out period. That is the maximum price must be subsequently earned by the
company, during the earn out period, before it is payable.
Any additional consideration will be satisfied by the issue of common
shares which will be held in escrow until the end of the earn out period.
This acquisition was accounted for using the purchase method. Net assets
acquired and consideration paid were as follows:
$
Capital assets 248,576
Rental assets, externally financed (Note 7) 1,452,174
Rental finance liability (Note 7) (1,452,174)
Net current liabilities (253,602)
Goodwill attributed 73,846
----------
Consideration paid 68,820
Additional future consideration will be added to goodwill when it becomes
determinable.
F-57
<PAGE>
BROCKER INVESTMENTS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
3. ACQUISITIONS (continued)
Image Craft Limited (formerly New Zealand On-line Limited)
On December 24, 1997 Brocker Investments (NZ) Limited acquired Image Craft
Limited and its subsidiary company Parrilott Pty Limited for an initial
cash consideration of NZ$500,000.
Image Craft Limited and Parrilott Pty Limited are principally involved in
the design and implementation of image processing and storage equipment for
the photographic industry.
The maximum purchase price payable is based on the profit earned by the
company for the year ended March 31, 1998 at a four times multiple.
Additional consideration, however, is only payable based on the cash earned
by the company for the years ended March 31, 1999 to 2000, being the earn
out period. That is the maximum price must be subsequently earned by the
company, during the earn out period, before it is payable.
Any additional consideration will be satisfied by the issue of common
shares which will be held in escrow until the end of the earn out period.
This acquisition was accounted for using the purchase method. Net assets
acquired and consideration paid were as follows:
$
Net current assets 65,648
Capital assets 278,372
Goodwill attributed 46,780
--------
Consideration paid 390,800
Additional future consideration will be added to goodwill when it becomes
determinable.
1997 Acquisitions
The principal acquisition during 1997 was the purchase, on March 31, 1997,
of Industrial Communications Service Limited by Brocker Investments (NZ)
Limited for an initial cash consideration of NZ$387,998 and 195,477 common
shares.
Industrial Communications Service Limited is involved in the servicing of
telecommunication related equipment and the design and implementation of
cellular based telecommunication solutions.
The maximum purchase price payable is NZ$2,084,998. Additional
consideration, however, is only payable based on the cash earned by the
company for the years ended March 31, 1998 to 1999, being the earn out
period. That is any additional consideration must be subsequently earned by
the company, during the earn out period, before it is payable.
All additional consideration will be satisfied by the issue of common
shares which are held in escrow until the end of the earn out period. The
company has not achieved, in the current financial year, a level of
profitability that warrants the release of any shares currently held in
escrow.
This acquisition was accounted for using the purchase method. Net assets
acquired and consideration paid were as follows:
$
Net current assets 399,083
Capital assets 322,164
Goodwill attributed --
-------
Consideration paid 721,247
Additional future consideration will be added to goodwill when it becomes
determinable.
F-58
<PAGE>
BROCKER INVESTMENTS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
4. CAPITAL ASSETS
1998
Cost Accumulated Net Book
Depreciation Value
<S> <C> <C> <C>
Office equipment
- leased 29,598 14,039 15,559
- non-leased 218,228 82,476 135,752
Vehicles
- leased 69,718 24,871 44,847
- non-leased 138,823 74,633 64,190
Furniture and fixtures
- leased 35,598 4,041 31,557
- non-leased 349,516 118,955 230,561
Computer hardware
- leased 15,659 2,349 13,310
- non-leased 1,243,415 562,767 680,648
- held for rental 360,951 75,233 285,718
Computer software 119,265 52,745 66,520
Plant and Equipment 247,240 150,947 96,293
Leasehold improvements 126,156 26,851 99,305
------------------------------------------------------
2,954,167 1,189,907 1,764,260
Computer hardware held for rental, externally
financed (Note 7) 2,786,167 870,855 1,915,312
------------------------------------------------------
$5,740,334 $2,060,762 $3,679,572
======================================================
</TABLE>
<TABLE>
<CAPTION>
1997
Cost Accumulated Net Book
Depreciation Value
<S> <C> <C> <C>
Office equipment
- leased 21,822 10,593 11,229
- non-leased 204,195 59,289 144,906
Vehicles
- leased 213,783 81,997 131,786
- non-leased 111,543 39,368 72,175
Furniture and fixtures
- leased -- -- --
- non-leased 347,710 96,214 251,496
Computer hardware
- leased 3,628 689 2,939
- non-leased 682,022 299,220 382,802
Computer software 66,199 30,828 35,371
Plant and Equipment 257,947 152,204 105,743
Leasehold improvements 53,054 16,626 36,428
$1,961,903 $ 787,028 $1,174,875
------------------------------------------------------
$1,961,903 $787,028 $1,174,875
======================================================
</TABLE>
F-59
<PAGE>
BROCKER INVESTMENTS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
5. DEFERRED DEVELOPMENT COSTS
1998 1997
$ $
Development costs deferred during the year 521,428 --
Amortised as at March 31, 1998 (30,915) --
-------------------------
490,513 --
=========================
Development costs deferred principally relate to the development of
software applications.
6. INVESTMENT IN ASSOCIATED COMPANY
During the year Brocker Investments (NZ) Limited took a 20% founding
shareholding in Highway Technologies Limited. This Company has developed
new technology capable of providing transport and highway management,
operation and funding solutions.
1998 1997
$ $
Carrying value of investment
Cost of investment 87,366 --
Equity accounted losses (79,953) --
=========================
7,413 --
Amounts owing from associate
In addition to the investment, Brocker Investments (NZ) Limited has entered
an agreement to loan Highway Technologies Limited funds during the
Company's establishment phase up to a maximum of NZ$1.5m. Interest is
payable on these funds at 30% per annum. As at March 31, 1998 amounts
advanced to Highway Technologies Limited amounted to NZ$327,151.
Amounts owing from associate
(Canadian dollars) 255,700 --
-------------------------
263,113 --
7. RENTAL FINANCE LIABILITY
Easy PC Computer Rentals Limited, a subsidiary of Brocker Investments (NZ)
Limited, acts as an intermediary between an independent finance company,
which arranges finance for the purchase of equipment, and its customers.
Under the finance agreements entered the finance company has recourse back
to Easy PC Computer Rentals Limited for any defaulting customers.
As at March 31, 1998 the total potential recourse was $1,915,312 spread
over some 421 individual contracts. The level of defaults during this
financial year was 7 contracts amounting to $7,000. Included within revenue
is $1,075,944 in relation to income earned on these leases in the period
since acquisition with a corresponding depreciation expense of $870,855 and
interest charges of $205,089.
Although the Directors do not consider this level of default to represent a
substantial commercial risk the potential liability has been included
within the consolidated balance sheet, matched by a corresponding capital
asset, in accordance with generally accepted accounting principles.
F-60
<PAGE>
BROCKER INVESTMENTS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
8. INDEBTEDNESS
1998 1997
$ $
<S> <C> <C>
a) Long Term Debt
Rental finance liability, payable in New Zealand
dollars, with an interest rate of 16.1% per
annum (Note 7). 1,915,312 --
Less: Current portion (1,094,464) --
----------------------------
Rental finance liability payable over 1 year 820,848 --
Capital lease obligations payable in New Zealand dollars, with
interest rates ranging from 6.6% to 14.5% per annum,
collateralised by related
assets, payable over 1 to 3 years.
49,813 145,888
Less: Current portion (44,303) (97,313)
----------------------------
Capital lease obligations payable over 1 year 5,510 48,575
Unsecured Term Liability, repayable in NZ$ 54,712 66,430
----------------------------
$ 881,070 $ 115,005
============================
The total interest expense for the year in relation to long term debt was
$207,048 ($4,989, 1997).
Capital lease obligations are repayable as follows:
1998 44,303
1999 4,875
2000 635
-------
49,813
<S> <C> <C>
b) Bank Indebtedness, unsecured $ -- $ 552,047
=============================
On acquisition of Industrial Communications Limited the Group
assumed the liabilities of that Company. This debt was settled
shortly after March 31, 1997.
<S> <C> <C>
c) Financing Facility $5,827,883 $ 988,485
=============================
Sealcorp Computer Products Limited, Sealcorp Telecommunications
Group Limited and Sealcorp Australia Pty Limited (all
subsidiaries of the Company) have entered into a financing
facility agreement secured by a registered first debenture over
the assets and undertakings of all Group companies except for
Image Craft Limited and Parrilott Pty Limited. As at March 31,
1998 $5,827,883 ($998,485, 1997) was outstanding under this
NZ$11.5m facility (approximately C$9.0m). Interest rates on this
facility have ranged from 11.72% to 13.43%, during the year.
As discussed in Note 18, subsequent to year end a new facility is
being negotiated.
</TABLE>
F-61
<PAGE>
BROCKER INVESTMENTS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
9. SHARE CAPITAL
a) Authorised
Unlimited number of common shares
Unlimited number of Preferred Shares
10,000,000 Series A Preferred Shares 6 1/2% cumulative
<TABLE>
<CAPTION>
1998 1997
$ $
<S> <C> <C>
Issued and outstanding
Common shares 2,959,499 2,262,460
Series A Preferred 2,450,000 3,043,049
Less: Share issue costs (41,769) (41,769)
----------------------------
$5,367,730 $5,263,740
============================
</TABLE>
As at March 31, 1998 760,500 shares were being held in escrow pursuant to
Escrow Agreements which provide for the release of such shares on a
performance basis. In the prior year 5,383,000 shares were held in escrow.
b) Share Transactions
<TABLE>
<CAPTION>
1998 1997
Common Shares Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares outstanding - at March 31, 1997 10,315,477 2,262,460 8,741,000 1,040,800
Issue of shares for acquisition of
Industrial Communications (Note (i)) 760,500 1,254,825 195,477 322,537
Issue of shares for acquisition of
Powercall Limited (Note (ii)) 27,440 54,880 -- --
Issue of shares for acquisition of Easy PC
Computer Rentals Limited (Note (ii)) 8,128 16,259 -- --
Issue of shares in settlement of PCS
acquisition (Note (iii)) -- -- 220,000 204,423
Exercise of share warrants 450,000 495,000 -- --
Exercise of stock options 143,000 130,900 1,159,000 694,700
---------------------------------------------------------
Shares issued - at March 31, 1998
11,704,545 4,214,324 10,315,477 2,262,460
Acquisition shares held in escrow (Note(i)) (760,500) (1,254,825) -- --
---------------------------------------------------------
Shares outstanding - at March 31, 1998 10,944,045 $ 2,959,499 10,315,477 $ 2,262,460
=========================================================
</TABLE>
(i) During the year share script was issued in respect of the acquisition of
Industrial Communications Service Limited. These shares are currently
held in escrow and are only released as earn-out provisions are
achieved. These will be issued at $1.65 per share but as at March 31,
1998 no earn-out targets have been met, resulting in a prescribed value
of nil.
(ii) Also during the year the Company acquired Easy PC Computer Rentals
Limited and the net assets of Powercall Limited with part of the first
tranche of the acquisition price being settled by shares.
(iii) During 1997 the Company completed the settlement of the acquisition of
Personal Computer Systems Limited, with the issuance of 220,000 common
shares.
<TABLE>
<CAPTION>
1998 1997
Preferred Shares Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Series A shares outstanding at
March 31, 1997 3,043,049 3,043,049 3,543,049 3,543,049
Redeemed at $1.00 (593,049) (593,049) (500,000) (500,000)
-----------------------------------------------------------
Series A shares outstanding at
March 31,1998 2,450,000 $ 2,450,000 3,043,049 $ 3,043,049
==========================================================
</TABLE>
In 1995 the Company acquired Brocker Investment (NZ) Limited and a
liability was established in the accounts for the purchase consideration.
In 1996 the liability was satisfied by the issuance of Series A preferred
shares.
F-62
<PAGE>
BROCKER INVESTMENTS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
9. SHARE CAPITAL (continued)
During the year 593,049 of these shares were redeemed at $1.00 per
share. The rate of any premium on redemption, and the redemption
itself, is at the discretion of the Company. It was agreed by the
preferred shareholders that a premium paid on redemption during 1997
of $50,000 should be clawed back. This was performed by reducing the
cash paid on redemption during 1998 by the same $50,000. This
adjustment has been credited directly against the retained earnings of
the Company.
Also during the year a dividend was paid at 7.5% of preferred shares
outstanding at September 30, 1997. The current dividend rate is 6.5%,
cumulative.
Any holder of preferred shares may convert their shares to fully paid
common shares at the following conversion prices, which are dependent
upon when the date of notice to convert is received by the Company:
<TABLE>
<CAPTION>
<S> <C>
Date notice received Conversion rate
After March 31, 1998 and on or before March 31, 2000 Market value of common shares at April 1, 1998
After March 31, 2000 and on or before March 31, 2001 Market value of common shares at April 1, 2000
</TABLE>
c) Unexercised Options
There are a total of 287,000 outstanding and unexercised stock options
(350,000, 1997); held by the Directors of the Company as follows:
Number of options Exercise price Expiry date
57,000 $1.31 November 1, 2001
150,000 $1.18 November 1, 2001
30,000 $1.90 November 1, 2002
50,000 $1.99 January 26, 2003
An additional 647,000 unexercised stock options (262,000 - 1997) are
held by employees of the Group as follows:
Number of options Exercise price Expiry date
12,000 $0.30 December 31, 1999
250,000 $1.18 November 1, 2001
335,000 $1.90 November 1, 2002
50,000 $1.99 January 26, 2003
d) Outstanding Warrants
There are no (450,000, 1997) outstanding warrants at March 31, 1998.
All warrants existing at March 31, 1997 having been exercised at
$1.10.
e) Earnings Per Common Share
Earnings per share has been calculated on the basis of the weighted
average number of common shares outstanding for the year. Net income
has been adjusted for dividends paid on preferred shares of $195,000
($248,588, 1997).
1998 1997
Weighted average number of shares 10,516,318 9,425,583
Net income attributable to shareholders
after deduction of preference dividends $601,816 $589,062
Basic earnings per share $0.06 $0.06
For the current financial year the effect on earnings per share of the
exercise of outstanding options and conversion of preferred shares,
for the calculation of fully diluted earnings per share, is
anti-dilutive.
F-63
<PAGE>
BROCKER INVESTMENTS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
10. INCOME TAX
1998 1997
$ $
Expected income tax expense calculated at the
Statutory Rate on Earnings before Taxation 583,691 580,081
Adjusted for the tax effect of:
Amortisation of goodwill 95,497 88,239
Canadian parent Company losses not
available for offset with foreign income 14,784 --
Adjustment for foreign tax rates (203,896) (162,140)
Other 15,991 (34,392)
---------------------
Income tax expense 506,067 471,788
=====================
Total income tax expense is made up of:
Current taxation 648,116 488,949
Deferred taxation (142,049) (17,161)
---------------------
506,067 471,788
=====================
11. RELATED PARTY TRANSACTIONS
a) During the year, the Group provided an interest free short-term
advance to the Chief Executive Officer of the Company. The
balance outstanding at March 31 1998 was $5,778 ($71,390,1997).
This balance is included in other receivables.
The Chief Executive Officer has also borrowed $94,817 from the
Group. Interest is currently charged on this amount at 9.94% and
the loan is unsecured and is repayable on demand. The maximum
amount outstanding during the year in respect of this loan was
$94,817, and interest charged amounted to $233.
b) The Chief Executive Officer of the Company, as at March 31, 1998,
held 1,148,453 (1,344,153, 1997) preferred shares. During the
year 195,700 of these shares were redeemed and settled by cash of
$173,614 and a dividend of $86,134 paid.
c) Directors of the Company have exercised stock options. The funds
required to exercise these options have been loaned to the
Directors by Brocker Investments (NZ) Limited.
As at March 31, 1998 the amount outstanding was $715,801
($691,698, 1997). The current market value of the shares, held as
security over these loans is in excess of $1.3m. Interest of
$22,263 was charged during the year. This balance is included in
other receivables. The maximum amount outstanding during the year
in respect of these loans was $715,801.
The loan to each Director is repayable on demand or within 30
days of the individual ceasing to be an employee of the Company
or one of its subsidiaries. The beneficial ownership of the
shares are held as security over the loan, and the Company
retains the right to either sell or cancel the shares to settle
any outstanding amounts and the employee may not sell or transfer
the shares prior to settlement of the amounts outstanding.
e) Directors, of various subsidiary companies, have advances owing
as at March 31, 1998 totaling $105,412. In all cases these
Directors were shareholders of the subsidiary prior to
acquisition by Brocker Investments (NZ) Limited. The amounts
outstanding will be repaid as the acquisitions are settled. No
interest is charged on the amounts outstanding and the balance is
included in other receivables.
f) A number of Group companies transact business with each other on
a regular basis. These transactions are entered into on normal
commercial terms and are eliminated on consolidation.
Unless otherwise stated the maximum amount outstanding during the year
was the higher of the balance at March 31, 1998 or March 31, 1997.
F-64
<PAGE>
BROCKER INVESTMENTS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
12. EMPLOYEE SHARE OWNERSHIP PLAN
In November 1996 the Company established a scheme, approved by the
Stock Exchange, to enable a number of senior management employees to
acquire stock options in the Company. Brocker Investments (NZ) Limited
has provided financial assistance to some of these employees to
exercise the options offered.
The loan to each employee is repayable on demand or within 30 days of
the individual ceasing to be an employee of the Company or one of its
subsidiaries. The beneficial ownership of the shares are held as
security over the loan, and the Company retains the right to either
sell or cancel the shares to settle any outstanding amounts and the
employee may not sell or transfer the shares prior to settlement of
the amounts outstanding.
As at March 31, 1998 the amounts outstanding in respect of these
shares amounted to $130,855 ($391,243, 1997) and is included within
other receivables. Interest of $17,794 was charged on these loans
during the year. The current market value of the shares held as
security is in excess of $470,000.
The maximum amount outstanding during the year was $391,243.
13. SEGMENTED OPERATIONS
The Group operates in two geographical segments, New Zealand and
Australia. The Canadian operations shown relate to administrative
items only.
<TABLE>
<CAPTION>
1998 Canada New Zealand Australia Total
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales -- 57,281,846 13,529,374 70,811,220
- --------------------------------------------------------------------------------------------------------------------
Net profit/(loss) (33,001) 1,208,407 (378,590) 796,816
- --------------------------------------------------------------------------------------------------------------------
Depreciation and amortisation -- 1,629,985 62,600 1,692,585
- --------------------------------------------------------------------------------------------------------------------
Identifiable assets 4,239,487 25,684,490 2,575,194 32,499,171
- --------------------------------------------------------------------------------------------------------------------
1997 Canada New Zealand Australia Total
- --------------------------------------------------------------------------------------------------------------------
Sales -- 38,237,323 11,872,216 50,109,539
- --------------------------------------------------------------------------------------------------------------------
Net profit/(loss) (82,606) 1,118,195 (197,939) 837,650
- --------------------------------------------------------------------------------------------------------------------
Depreciation and amortisation -- 381,447 48,428 429,875
- --------------------------------------------------------------------------------------------------------------------
Identifiable assets 30,662 14,500,039 5,395,799 19,926,500
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The Group operates in three industry segments, being the distribution and sale
of computer hardware and software, technical support and services and software
application design and development. The corporate services operation shown
relate to the Group's administrative functions in Canada and New Zealand.
<TABLE>
<CAPTION>
1998 Sales & Technical Application Corporate Inter-Company
Distribution Services development Services Total
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales 72,356,139 2,331,371 623,046 -- (4,499,336) 70,811,220
- ---------------------------------------------------------------------------------------------------------------------------------
Net profit/(loss) 2,555,089 (28,671) 96,344 (1,825,946) -- 796,816
- ---------------------------------------------------------------------------------------------------------------------------------
Depreciation and
amortisation 1,470,999 90,513 87,274 43,799 -- 1,692,585
- ---------------------------------------------------------------------------------------------------------------------------------
Identified Assets 33,281,993 441,775 306,213 (1,530,810) -- 32,499,171
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Group operated solely in the sales and distribution industry in the prior
year.
F-65
<PAGE>
BROCKER INVESTMENTS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
14. NET CHANGE IN NON-CASH COMPONENTS OF WORKING CAPITAL
The net decrease in non-cash working capital consists of the
following:
1998 1997
Net Change Net Change
Accounts receivable (4,870,544) (3,422,827)
Other receivables (624,903) (941,719)
Inventory (3,508,527) (1,741,292)
Prepaid expenses (336,650) (69,503)
Deferred development costs (514,857) --
Indebtedness (537,841) --
Financing facility 4,890,255 998,485
Accounts payable 6,664,528 4,695,303
Accrued liabilities 91,366 220,737
Income taxes payable (471,278) (210,223)
-----------------------------
Total $ 781,549 $ (471,039)
=============================
15. FINANCIAL INSTRUMENTS
Currency Risk
The nature of activities and management policies with respect to
financial instruments are as follows:
i) Currency
The Group uses a very limited number of forward exchange
contracts and currency options to hedge purchases of inventory in
foreign currencies. The Group's exchange rate commitments are
intended to minimise the exposure to exchange rate movement risk
on the cost of the Group's products and on the price it is able
to sell those products to its customers. The Group does not use
foreign exchange instruments for trading or any other purpose.
During the current financial year the average value of these
contracts amounted to $1,232,000 and were entered as a hedge
against New Zealand purchases made in Australian dollars.
ii) Concentration of credit risk
In the normal course of business, the Group incurs credit risk
from trade debtors and transactions with financial institutions.
The Group has a credit policy which is used to manage the risk.
As part of this policy, limits on exposure with counterparties
have been set and are monitored on a regular basis. Anticipated
bad debt losses have been provided for in the allowance for
doubtful accounts.
The Group has no significant concentrations of credit risk. The
Group does not consider that they require any collateral or
security to support financial instruments due to the quality of
financial institutions and trade debtors.
iii) Fair values
The fair values of the Group's cash accounts and other
receivables, bank, indebtedness, accounts payable, accrued
liabilities and lease obligations approximate their carrying
values given their short term nature. The carrying value of the
demand debenture and capital leases, as disclosed in note 8, also
approximate their fair value as do amounts owing by shareholders.
16. COMMITMENTS
a) As at March 31, 1998 Brocker Investments (NZ) Limited had entered
into an unconditional agreement to purchase new premises in
Auckland, New Zealand. The balance owing for settlement, due
September 30, 1998, is $2,508,936. As at March 31, 1998 deposits
of $148,504 had been paid and are included within prepaid
expenses and deposits.
b) BrockerInvestments (NZ) Limited has entered into a number of
acquisitions where the final acquisition price is dependent on
the occurrence of future events. This contingent purchase price
is calculated based on cash flow earned for a given period, and
is settled by way of shares issued but held in escrow.
F-66
<PAGE>
16. COMMITMENTS (continued)
Shares are released from escrow based on cash flows, as defined
with each party, earned by the subsidiary over a varying number
of years following acquisition, being the "earn-out" period.
As at March 31, 1998 the following earn-outs were in existence.
Subsidiary Acquisition price and earn
-out provisions
-----------------------------------------------------------------
Industrial Communications Service Limited Maximum
purchase price established and
shares issued and held in
escrow (refer Note 9).
Earn-out based on defined cash
flow earned in financial years
ended March 31, 1998 - 1999
(Note 3).
-----------------------------------------------------------------
Powercall Technologies Limited Shares to be held in escrow
based on the lessor of four
times the cumulative cash flow
earned for the years ended
March 31, 1998 to 2001 or
twelve times profit for the
year ended March 31, 2001,
limited to NZ$20m. Earn-out
based on defined cash flow
earned in financial years
ended March 31, 1998 - 2002
(Note 3).
-----------------------------------------------------------------
Easy PC Computer Rentals Limited Shares to be held in escrow
based on cash flow earned for
the year ended March 31, 1998.
Earn-out based on defined cash
flow earned in financial years
ended March 31, 1999 - 2000
-----------------------------------------------------------------
Image Craft Limited Shares to be held in escrow
based on cash flow earned for
the year ended March 31, 1998.
Earn-out based on defined cash
flow earned in financial years
ended March 31, 1999 - 2000
(Note 3).
-----------------------------------------------------------------
c) Group companies operate from leased premises and have other
obligations under operating leases requiring annual repayments as
follows:
1999 $548,629
2000 $384,658
2001 $280,120
2002 $216,120
2003 $145,085
Thereafter --
17. CONTINGENT LIABILITIES
In the general course of business disputes may arise with customers
and other third parties. The Directors consider adequate provision has
been made for all such instances.
18. SUBSEQUENT EVENTS
a) Subsequent to the year end, the company has been informed by the
financial institution with provides the Group's New Zealand and
Australian financing facilities that it is withdrawing from the
New Zealand market. The company is in discussion with a new
financial institution in respect of its New Zealand operations
and has received outline proposals that are currently before the
institution's credit committee for approval. The Management
anticipates that this formal approval will be received shortly.
The existing finance company is not withdrawing from the
Australian market and therefore wishes to continue to finance the
Group's Australian operation.
b) Also subsequent to year end the Group acquired Pritech
Corporation Limited and Microchannel Limited. Initial cash
consideration paid for these acquisitions has been NZ$265,620.
The final acquisition price of these companies is based on the
future earnings of these entities.
F-67
<PAGE>
[LETTERHEAD OF KPMG]
Consolidated Financial Statements
Brocker Investments Ltd.
For the Period Ended March 31, 1997
Auditors' Report To The Shareholders
We have audited the consolidated balance sheet of Brocker Investments Ltd
as at March 31, 1997, and the consolidated statements of earnings, retained
earnings and changes in financial position for the year then ended. The
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we paln and perform an audit to obtain
reasonable assurance whether the financial statements are free of materal
misstatement. An audit also includes assessing the accounting principles used
and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluatring the overall financial presentation.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the company, as at March 31,
1997 and the results of its operations and the changes in its financial position
for the year then ended in accordance with generally accepted accounting
principles.
/s/ KPMG
Chartered Accountants
Auckland, New Zealand
August 8, 1997
F-68
<PAGE>
Brocker Investments Ltd.
Consolidated Balance Sheet (in Canadian Dollars)
As at March 31, 1997, with Comparative Figures for 1996
<TABLE>
<CAPTION>
Note 1997 1996
$ $
<S> <C> <C> <C>
Assets
Current Assets
Cash 602,233 320,814
Accounts receivable 8,917,099 5,088,236
Other receivables 7,8 1,114,562 187,425
Inventories 6,120,143 3,633,796
Prepaid expenses 197,644 122,734
----------- -----------
16,951,701 9,353,005
Deferred Tax Asset 6 72,182 55,021
Capital Assets 3 1,174,875 682,517
Goodwill (Net of accumulated
amortization of $576,476;
1996 $434,506) 1,727,742 1,634,551
----------- -----------
19,926,500 11,725,094
=========== ===========
Liabilities
Current Liabilities
Bank Indebtedness 4 552,047 --
Financing Facility 4 998,485 --
Accounts payable 10,907,853 6,094,528
Accrued liabilities 1,297,283 572,793
Income taxes payable 6 73,959 309,099
Current portion of long-term debt 4 97,313 35,098
----------- -----------
13,926,940 7,011,518
Long -Term Debt 4 115,005 111,964
----------- -----------
14,041,945 7,123,482
=========== ===========
Shareholders' Equity
Share Capital 5 5,263,740 4,542,080
Foreign Currency Translation Reserve (82,609) (104,830)
Retained Earnings 703,424 164,362
----------- -----------
5,884,555 4,601,612
----------- -----------
19,926,500 11,725,094
=========== ===========
</TABLE>
Signed on behalf of the Board
/s/
................................... Director
/s/
................................... Director
F-69
<PAGE>
Brocker Investments Ltd.
Consolidated Statement of Earnings (in Canadian Dollars)
For the Year Ended March 31, 1997, with Comparative Figures for 1996
<TABLE>
<CAPTION>
Note 1997 1996
$ $
<S> <C> <C> <C>
Revenue
Sales 50,037,850 22,888,482
Other 71,689 43,332
----------- -----------
50,109,539 22,931,814
Cost of Goods Sold 41,010,489 17,443,040
----------- -----------
Gross Margin 9,099,050 5,488,774
=========== ===========
Operating Expenses
Bad debts 331,534 135,493
Consulting fees 387,145 327,273
Depreciation and amortisation 429,875 364,546
Marketing 128,462 111,890
Motor vehicle 130,033 81,309
Office and other administartion expenses 1,125,733 604,341
Professional fees 166,341 164,416
Rental and operating lease costs 402,755 233,652
Salaries and commissions 4,307,111 2,495,748
Telephone 362,806 225,769
----------- -----------
7,771,795 4,744,437
----------- -----------
Operating Earnings 1,327,255 744,337
=========== ===========
Other Income (Expense)
Interest expense (143,947) (161,689)
Realized foreign exchange gain 37,986 --
Unrealized foreign exchange gain 88,144 (8,557)
----------- -----------
(17,817) (170,246)
----------- -----------
Earnings before Income Tax 1,309,438 574,091
Income Tax Provision 6 (471,788) (250,740)
----------- -----------
Net Earnings 837,650 323,351
=========== ===========
Earnings Per Common Share -- Basic 5 0.09 0.04
----------- -----------
-- Fully Diluted 5 0.07 0.03
----------- -----------
</TABLE>
F-70
<PAGE>
Brocker Investments Ltd.
Consolidated Statement of Retained Earnings (in Canadian Dollars)
For the Year Ended March 31, 1997, with Comparative Figures for 1996
Note 1997 1996
$ $
Retained Earnings, beginning of the year 164,362 (158,989)
Net Earnings 837,650 323,351
Premium on redemption of preferred shares 5 (50,000) --
Preferred share--Dividends paid (248,588) --
-------- --------
Retained Earnings, nnd of the year 703,424 164,362
======== ========
F-71
<PAGE>
Brocker Investments Ltd
Consolidated Statements of Changes in Financial Position (in Canadian Dollars)
For the Years Ended March 31, 1997, with comparative figures for 1996
<TABLE>
<CAPTION>
Note 1997 1996
$ $
<S> <C> <C> <C>
Cash Provided From (Used in)
Operating Activities
Net profit for the year 837,650 323,351
---------- ----------
Items not affecting cash
Depreciation and amortisation 429,875 364,546
Deferred tax (17,161) (55,021)
Loss on sale 73,280 --
Unrealised foreign exchange gain (88,144) --
---------- ----------
397,850 309,525
========== ==========
Net change in non-cash components of working capital 10 (471,039) (2,303,436)
---------- ----------
Investing Activities
Cumulative translation adjustment 22,221 (115,425)
Purchase of net assets of ICS (1996-PCS) (721,247) (367,037)
Purchase of fixed assets (512,465) --
Proceeds from sale of fixed assets 69,229 16,428
Purchase of intangible assets (235,160) --
---------- ----------
(1,377,422) (466,034)
Financing Activities
Proceeds from issuance of share capital 399,123 3,353,050
Issue of shares on purchase of ICS 322,537 --
Amounts owing in relation to purchase of ICS 398,710 --
Premium on redemption of preferred shares (50,000) --
Dividends paid (248,588) --
Increase in long-term debt 65,256 (1,025,788)
---------- ----------
887,038 2,527,262
========== ==========
(Decrease) in Cash 274,077 390,668
Cash at Beginning of the Year** 320,814 (69,854)
---------- ----------
Cash at End of the Year* 594,891 320,814
========== ==========
</TABLE>
* The net assets of ICS include capital assets of $322,164, inventories of
$745,055 and working capital of ($345,972).
** Cash includes cash less bank indebtedness, net amounts aquired in the
purchase of ICS.
F-72
<PAGE>
Brocker Investments Ltd.
Notes to Consolidated Financial Statements
For the Year Ended March 31, 1997
1 BASIS OF PRESENTATION
Brocker Investments Ltd. was incorporated under the Business Corporation
Act (Alberta) on November 25, 1993, and obtained its listing on the Alberta
Stock Exchange on April 14, 1994.
2 SIGNIFICANT ACCOUNTING POLICIES
a) Principles of Consolidation
The consolidated financial statements include the financial statements of
the Company and all of its subsidiary companies since the dates of their
acquisition. Its wholly owned subsidiaries, all of which are consolidated
using the purchase method, are as follows:
Country of Incorporation
Brocker Investments (NZ) Limited New Zealand
Brocker Investments (Australia) Pty Limited Australia
Sealcorp Computer Products Limited New Zealand
Sealcorp Pty Limited (formerly TGE Pty Limited) Australia
Industrial Communications Service Limited New Zealand
Northmark Technologies Limited New Zealand
During the year Personal Computer Systems (1993) was amalgamated with
Sealcorp Products Limited. The Australian branch operations of Sealcorp
Computer Products Limited were merged with TGE Pty Limited as at 28
February 1997.
TGE Pty Limited acquired the operations of The Great Escape Computer
Company Pty Limited on 28 August 1996, and WYSE Technology Support Pty
Limited on 1 September 1996. Brocker Investments (Australia) Pty Limited is
the holding company of TGE, and is non operating.
b) Goodwill
The excess of cost over the fair value of identifiable net assets of
subsidiaries acquired is recorded as goodwill and is amortised on a
straight-line basis over its estimated useful life, considered to be
ten years. On an ongoing basis, management reviews the valuation and
amortisation of goodwill taking into consideration any events and
circumstances which might have impaired the fair value.
Where an acquisition price is contingent on a future event or events, no
goodwill is recognised until the final acquisition price can be
determined beyond any reasonable doubt.
c) Foreign Currency
Foreign currency transactions are recorded at the exchange rates in effect
at the date of settlement. Monetary assets and liabilities arising from
trading transactions or overseas borrowings are translated at closing
rates. Gains and losses due to currency fluctuations on these items are
included in the statement of earnings.
The financial statements of foreign operations are converted to Canadian
dollars using weighted average exchange rates for the year for items
included in the statement of earnings, year end rates for assets and
liabilities included in the balance sheet and historical rates for equity
transactions. The cumulative translation adjustment represents the deferred
foreign exchange gain on the translation of the accounts.
d) Inventories
Inventories are carried at the lower of cost and net realisable value. Cost
is determined on a weighted average basis.
F-73
<PAGE>
Brocker Investments Ltd.
Notes to Consolidated Financial Statements (Continued)
For the Year Ended March 31, 1997
e) Capital Assets
Capital assets are recorded at cost. Depreciation is calculated on a
declining balance (except for leasehold improvements where a straight
line basis is used) basis using the following rates:
Office equipment 20%
Vehicles 20 and 26%
Furniture and fixtures 20%
Computer hardware 20%
Computer software 40%
Plant and Equipment 20 - 26%
Leasehold improvements Period of Lease
3 Capital Assets
1997 1996
Cost Accumulated Net Book Net Book
Depreciation Value Value
Office equipment
- -- leased 21,822 10,593 11,229 4,780
- -- non-leased 204,195 59,289 144,906 47,812
Vehicles
- -- leased 213,783 81,997 131,786 98,124
- -- non-leased 111,543 39,368 72,175 57,385
Furniture and fixtures 347,710 96,214 251,496 154,389
Computer harware
- -- leased 3,628 689 2,939
- -- non-leased 682,022 299,220 382,802 278,216
Computer software 66,199 30,828 35,371 5,596
Plant and Equipment 257,947 152,204 105,743 --
Leasehold improvemenets 53,054 16,626 36,428 36,215
--------- --------- --------- ---------
1,961,903 787,028 1,174,875 682,517
--------- --------- --------- ---------
4 Indebtedness
Long Term Debt 1997 1996
Capital Leases are repayable as follows: $ $
Year ending March 31
1997 -- 35,098
1998 101,484 38,784
1999 38,134 12,139
2000 11,259 --
--------- ---------
Total minimum lease payments 150,877 86,021
Less amount representing interest
(at rates ranging from 6.6% to 14.46% per annum) 4,989 2,787
--------- ---------
Present value of net minimum lease payment 145,888 83,234
Less current portion 97,313 35,098
--------- ---------
48,575 48,136
Unsecured Term Liability 66,430 63,828
--------- ---------
115,005 111,964
--------- ---------
Bank Indebtedness, unsecured 552,047 --
--------- ---------
On acquision of Industrial Communications Limited the group assumed the
liabilities of that Company. This debt was settled shortly after March 31,
1997.
F-74
<PAGE>
Brocker Investments Ltd.
Notes to Consolidated Financial Statements (Continued)
For the Year Ended March 31, 1997
4 Indebtedness (continued)
1997 1996
$ $
Financing Facility 998,485 --
--------- ---------
Sealcorp Computer Products Limited (a "subsidiary" of Brocker Investments
(NZ) Limited) has entered into a financing facility agreement dated 27
March 1995 secured by a registered first debenture over the assets and
undertakings of Sealcorp Computer Products Limited. As at March 31, 1997
$998,485 was outstanding under the NZ$4m facility.
5 Share Capital
a) Authorised
Unlimited number of common shares
Unlimited number of Preferred Shares
10,000,000 Series A Preferred Shares
7 1/2% cumulative, redeemable at $1.10 per share
Issued and outstanding $ $
1997 1996
10,315,477 common shares 2,262,460 1,040,800
3,043,094 Series A Preferred 3,043,094 3,543,094
Less: Share issue costs (41,814) (41,814)
---------- ----------
5,263,740 4,542,080
---------- ----------
As at March 31, 1997 5,383,000 (6,083,000, 1996) shares were being held in
escrow whereby written consent of the Chief of Securities Administration of
the Alberta Securities Exchange is required before the release of shares.
b) Share Transactions
Common Shares Shares Amount
Shares outstanding - at March 31, 1996 8,741,000 1,040,800
Issue of shares in settlement of
PCS acquisition 220,000 204,423
Issue of shares for acquisition of
Industrial Communications (Note 12) 195,477 322,537
Exercise of stock options 1,159,000 694,700
---------- ----------
Shares outstanding - at March 31, 1997 10,315,477 $2,262,460
---------- ----------
During year end the company completed the settlement of the
acquisition of Personal Computer Systems Limited, a computer
distributer in New Zealand which distributes Apple Macintosh software.
This transactions included the issuance of Brocker Investments Ltd
stock, in May 1996, to Messrs Cowle and Brawm, each receiving 200,000
and 20,000 shares respectively.
Preferred Shares Shares Amount
Series A shares outstanding at 31 March 1996 3,543,094 3,543,094
Redeemed at $1.10 (500,000) (500,000)
----------- -----------
Series A shares outstanding at March 31, 1997 3,043,094 $ 3,543,094
----------- -----------
In 1995 the Company acquired Brocker Investments (NZ) Limited and a
liability was established in the accounts for the purchase
consideration. In 1996 the liability was satisfied by the issuance of
Series A preferred shares.
During the year 500,000 of these shares were redeemed at $1.10 per
share. The premium paid on this redemption of $50,000 has been charged
directly against the retained earnings of the Company.
F-75
<PAGE>
Brocker Investments Ltd.
Notes to Consolidated Financial Statements (Continued)
For the Year Ended March 31, 1997
c) Unexercised Options
There are a total of 375,000 outstanding and unexercised stock options
(864,000, 1995); held by the directors of the company, 43,000 with an
exercise price of $0.50 each, expiring on December 21, 1999, 275,000
with an exercise price of $1.18 each, expiring on November 8, 2001 and
57,000 with an exercise price of $1.31 each, expiring on November 8,
2001.
An additional 252,000 unexercise stock options are held by employees
of the Group, 12,000 with an exercise price of $0.30 each, expiring on
December 21, 1999 and 240,000 with an exercise price of $1.18 each,
expiring on November 8, 2001.
d) Outstanding Warrants
There are 450,000 (til, 1996) outstanding warrants at $1.10 per share,
expiring March 31, 1998.
e) Earnings Per Common Share
Earnings per share was calculated on the basis of the weighted average
number of common shares outstanding for the year which amounted to
9,425,583. On a fully diluted basis the number of common share
equivalents was calculated to be 11,392,477.
6. Income Tax
Income Tax Expense
$ $
1997 1996
Expected income tax expense
calculated at the Statutory Rate
on Earnings before Taxation 580,081 254,321
Adjusted for the tax effect of:
Amortisation of goodwill 88,239 86,160
Recognition of tax losses not
previously recognis -- (24,497)
Adjustment for foreign tax rates (162,140) (85,860)
Other (34,392) 20,616
-------- --------
Income tax expense 471,788 305,740
-------- --------
Total income tax expense is made up of:
Current taxation 488,949 305,761
Deferred taxation (17,161) (55,021)
-------- --------
471,788 250,740
-------- --------
7. RELATED PARTY TRANSACTIONS
During the year, the company provided an interest free short-term advance
to the Managing Director of Brocker Investments (NZ) Limited. The balance
outstanding at March 31, 1997 was $71,390 ($132,256 - 1996). This balance
is included in other receivables.
Stock options were exercised during the year by the Managing Director of
Brocker Investments (NZ) Limited. The funds required to exercise these
options were by Brocker Investments (NZ) Limited. As at 31 March 1997 the
amount outstanding was $246,328 and included in other receivables. Interest
is charged on this outstanding amount at 7.5% per annum.
8. EMPLOYEE SHARE OWNERSHIP PLAN
In November 1996 the Company established a plan, approved by the Alberta
Stock Exchange, to enable a number of senior management employees to
receive stock options in the Company. Brocker Investments (NZ) Limited has
provided financial assistance to some of these employees to exercise the
options offered. Interest is applied on these loans at the prevailing
market rates, and will be settled by way of agreed salary deductions.
The loan to each employee is repayable by April 1, 1998 or within 30 days
of the individual ceasing to be an employee of the Company or of its
subsidiaries. The beneficial ownership of the shares are held as security
over the loan, the Company retains the right to either sell or cancel the
shares to settle any outstanding amounts due from the employees and the
employee may not sell or transfer the shares prior to settlement of the
amounts outstanding.
As at March 31, 1997 the amounts outstanding in respect of these shares
amounted to $836,613 and is included within other receivables.
F-76
<PAGE>
Brocker Investments Ltd.
Notes to Consolidated Financial Statements (Continued)
For the Year Ended March 31, 1997
9. SEGMENTED OPERATIONS
The company operates in one industry segment, being the sale of computer
harware and software, and in two geographical segments, New Zealand and
Australia. The Canadian operations shown relate to administrative items
only.
<TABLE>
<CAPTION>
1997 Canada New Zealand Australia Total
<S> <C> <C> <C> <C>
Sales -- 38,165,634 11,872,216 50,037,850
Net profit/(loss) (82,606) 1,118,195 (197,939) 837,650
Depreciation and amortisation -- 381,447 48,428 429,875
Identifiable assets 30,662 14,500,039 5,395,799 19,926,500
<CAPTION>
1996 Canada New Zealand Australia Total
<S> <C> <C> <C> <C>
Sales -- 19,267,724 3,620,758 22,888,482
Net profit/(loss) 55,307 290,658 (22,614) 323,351
Depreciation and amortisation -- 348,797 15,749 364,546
Identifiable assets 883,765 10,092,103 749,226 11,725,094
</TABLE>
10. Net Change in Non-cash Components of Working Capital
The net decrease in non-cash working capital consists of the following:
1997 1998
Net Change Net Change
Accounts receivable (3,422,827) (2,424,269)
Other receivables (941,719) 920,868
Inventory (1,741,292) (1,514,471)
Prepaid expenses (69,503) (122,734)
Financing facility 998,485 --
Accounts payable 4,695,303 1,042,442
Accrued liabilities 220,737 (443,480)
Income taxes payable (210,223) 238,208
------------ -----------
Total $ (471,039) $(2,303,436)
------------ -----------
11. Financial Instruments
Currency and Interest Rate Risk
The nature of activities and management policies with respect to financial
instruments are as follows:
i) Currency
The company undertakes transaction denominated in foreign currencies
from time to time and exposures in foreign currency arise resulting
from these activities. No forward contracts or ofther foreign exchange
instruments are currently used, to hedge against these exposures, by
the company.
ii) Interest rate
The company has long-term fixed rate borrowings which are used to fund
ongoing activities. It is the company's policy to ensure interest rate
exposure is minimised, debentures are set at a fixed rate of 10.75%.
There are no financial instruments utilised with regard to interest
rate exposure.
iii) Concentration of credit risk
In the normal course of business, the company incurs credit risk from
trade debtors and transactions with financial institutions. The
company has a credit policy which is used to manage the risk. As part
of this policy, limits on exposure with counterparties have been set
and are monitored on a regular basis.
The company has no significant concentrations of credit risk. The
company does not consider that they require any collateral or security
to support financial instruments due to the quality of financial
institutions and trade debtors.
F-77
<PAGE>
Brocker Investments Ltd.
Notes to Consolidated Financial Statements (Continued)
For the Year Ended March 31, 1997
iv) Fair values
The fair values of the group's cash accounts and receivables, bank,
indebtedness, accounts payable and accrued liabilities approximate
their carrying values given their short term nature. The carrying
value of the demand debenture and Capital leases, as disclosed in note
4, are approximate to their fair value.
12. Commitments
The company has entered into the folowing agreements as at 31 March 1997:
Brocker Investments (NZ) Limited acquired Industrial Communications
Services Limited as at March 31, 1997. As at 31 March 1997 195,477 common
shares had been issued in partial settlement of the acquisition price. The
final acquisition price, which will be settled by way of the issue of
shares, is dependent of certain performance targets being achieved over the
next two financial periods. The maximum number of additional shares that
could be issued in settlement is 760,500.
Subsequent to year end, the group acquired EasyPC and Power Call Limited.
The acquisition price of these companies is based on their future earnings.
F-78
<PAGE>
ITEM 18. FINANCIAL STATEMENTS
Not applicable.
ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS
(a) Index to Financial Statements Page
Unaudited Financial Statements for Three Months
Ended September 30, 1999 F-1
Unaudited Consolidated Balance Sheets as at
September 30, 1999 F-2
Unaudited Consolidated Statement of Earnings
For the Three Months Ended September 30, 1999 F-3
Unaudited Consolidated Statements of Retained Earnings
For the Three Months Ended September 30, 1999 F-4
Unaudited Consolidated Cash Flows Statements
For the Three Months Ended September 30, 1999 F-5
Notes to Consolidated Financial Statements
For the Three Months Ended September 30, 1999 F-6 through F-10
Unaudited Consolidated Balance Sheets as at
June 30, 1999 F-11
Unaudited Consolidated Statement of Earnings
For the Three Months Ended June 30, 1999 F-12
Unaudited Consolidated Statements of Retained Earnings
For the Three Months Ended June 30, 1999 F-13
Unaudited Consolidated Cash Flows Statements
For the Three Months Ended June 30, 1999 F-14
Notes to Consolidated Financial Statements
For the Three Months Ended June 30, 1999 F-15 through F-18
32
<PAGE>
Independent Auditor's Report F-19
Audited Consolidated Balance Sheets for Fiscal Years
Ending March 31, 1999 and March 31, 1998 F-20 through F-21
Audited Consolidated Statements of Earnings for Fiscal
Years Ending March 31, 1999 and March 31, 1998 F-22
Audited Consolidated Statements of Retained Earnings
For Fiscal Years Ending March 31, 1999
and March 31, 1998 F-23
Movements in Foreign Currency Translation Reserve
For the Fiscal Years Ending March 31, 1999 and
March 31, 1998 F-24
Audited Consolidated Statements of Cash Flows For Fiscal
Years Ending March 31, 1999 and March 31, 1998 F-25
Notes to Consolidated Financial Statements For Fiscal
Years Ending March 31, 1999 and March 31, 1998 F-26 through F-49
Independent Auditor's Report F-50
Audited Consolidated Balance Sheets for Fiscal Years
Ending March 31, 1998 and March 31, 1997 F-51
Audited Consolidated Statements of Earnings for Fiscal
Years Ending March 31, 1998 and March 31, 1997 F-52
Audited Consolidated Statements of Retained Earnings
For Fiscal Years Ending March 31, 1998 F-53
and March 31, 1997
Audited Consolidated Statements of Changes in Financial
Position For Fiscal Years Ending March 31, 1998 and
March 31, 1997 F-54
Notes to Consolidated Financial Statements For Fiscal
Years Ending March 31, 1998 and March 31, 1997 F-55 through F-67
Independent Auditor's Report F-68
Audited Consolidated Balance Sheets as at
March 31, 1997, with comparative figures for 1996 F-69
Audited Consolidated Statements of Earnings as at
March 31, 1997, with comparative figures for 1996 F-70
Audited Consolidated Statements of Retained Earnings
as at March 31, 1997, with comparative figures for 1996 F-71
33
<PAGE>
Audited Consolidated Statements of Changes in Financial
Position For the Years Ending March 31, 1997, with
comparative figures for 1996 F-72
Notes to Consolidated Financial Statements For
Year Ended March 31, 1997 F-73 through F-78
(b) Index to Exhibits
3(i) Restated Articles of Incorporation dated E-1 through E-9
November 16, 1998
3(ii).1 Bylaws dated November 25, 1993 E-10 through E-60
3(ii).2 Amendment to Bylaws dated October 23, 1998 E-61
10.1 Brocker Investments (NZ) Ltd. acquisition of
Industrial Communications Service Ltd. ("ICS")
(March 31, 1997) E-62 through E-116
10.2 Brocker Investments (NZ) Ltd. acquisition of
Powercall Technologies Ltd. (May 16, 1997), and
earn-out projections E-117 through E-153
10.3 Brocker Investments (NZ) Ltd. acquisition of Easy
PC Computer Rentals Limited (July 10, 1997), and
earn-out projections E-154 through E-201
34
<PAGE>
10.4 Brocker Investments (NZ) Ltd. acquisition of Image
Craft Ltd. (formerly New Zealand On-Line Ltd.)
(December 24, 1997) E-202 through E-315
10.5 Brocker Investments (NZ) Ltd. acquisition of
Pritech Corporation Limited (March 31, 1998) E-316 through E-408
10.6 Brocker Investments (NZ) Ltd. acquisition of
Microchannel Limited, undated (Note: Heads of
Agreement dated February 13, 1998) E-409 through E-474
10.7 Agreement for Sale and Purchase of Shares of
Personal Computer Systems (1993) Limited (January
25, 1995), including Deed of Variation and
Memorandum of Agreement, dated November 24, 1995 E-475 through E-537
10.8 Share Purchase Agreement between Genetics Limited,
Mike J. Duff, Casey J. O'Byrne, Lionel A.
Singleton, Damen Ng, Roger N. Gimby and Brocker
Investments Limited, dated November 10, 1994 E-538 through E-544
10.9 Share Exchange Agreement between Talgarth Limited,
Edgewell Limited, Classic Portraits and Design Ltd.
and Brocker Investments, dated August 31, 1994
(including board minutes) E-545 through E-568
10.10 Share Sale Agreement between Edgewell Limited and
Talgarth Limited, Mike J. Duff, Casey J. O'Byrne,
Lionel A. Singleton, Damen Ng and Roger N. Gimby,
dated November 10, 1994 (including board minutes) E-569 through E-579
10.11 Agreement for Purchase and Sale of Shares between
Brocker Investments Ltd. and 621202 Alberta Ltd.,
dated March 14, 1995 E-580 through E-603
10.12 Agreement between The Number One Software Company
Limited ("NOSCL") and Brocker Investments (NZ)
Limited, dated March 31, 1995 E-604 through E-618
10.13 Agreement for Sale and Purchase of Shares between
John Richard Campbell and Robyn Lorna Campbell and
Brocker Investments (NZ) Limited, dated March 31,
1995 E-619 through E-654
10.14 Agreement for Sale and Purchase of Shares between
Michael Brian Ridgway and Brocker Investments (NZ)
Limited for the Purchase of 32,999 Shares in
Sealcorp Computer Products Limited, dated December
20, 1994 E-655 through E-664
10.15 Salaried Employment Contract between Powercall
Technologies Limited and Evan James Read, dated
April 1, 1997 E-665 through E-675
35
<PAGE>
10.16 Salaried Employment Contract between Powercall
Technologies Limited and Gregory Hunt, dated May
10, 1997 E-676 through E-687
10.17 Salaried Employment Contract between Powercall
Technologies Limited and Michael Gerard Duncraft,
dated April 1, 1997 E-688 through E-678
10.18 Salaried Employment Contract between Easy PC
Computer Rentals Limited and Jon Hugh Barker, dated
July 1, 1997 E-679 through E-707
10.19 Employment Contract between Pritech Corporation
Limited and David William Corlett, dated April 1,
1998 E-708 through E-721
10.20 Employment Contract between Pritech Corporation
Limited and David John Cooke, dated April 1, 1998 E-722 through E-735
10.21 Employment Contract between Pritech Corporation
Limited and Gary Spencer Elmes, dated April 1, 1998 E-736 through E-749
10.22 Consulting Services Agreement between Brocker
Investments Ltd. and Des O'Kell, dated December 13,
1996 E-750 through E-752
21. Chart of Company's Subsidiaries.
36
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant certifies that it satisfies all of the requirements for
filing a Registration Statement on Form 20-F and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the city of Auckland, New Zealand on December 29, 1999.
Brocker Technology Group Ltd.,
an Alberta corporation
By: /s/ MICHAEL B. RIDGEWAY
-----------------------
Michael B. Ridgeway
Its: President
37
BUSINESS CORPORATIONS ACT
ALBERTA CONSUMER AND CORPORATE AFFAIRS
RESTATED ARTICLES OF INCORPORATION
1. NAME OF CORPORATION:
BROCKER TECHNOLOGY GROUP LTD.
2. CORPORATE ACCESS NO.
20587683
3. THE CLASSES, AND ANY MAXIMUM NUMBER OF SHARES THAT THE
CORPORATION IS AUTHORIZED TO ISSUE:
3.1 Capital
The Corporation is authorized to issue two classes of shares, namely an
unlimited number of Preferred Shares without nominal or par value (herein
referred to as the "Preferred Shares") and an unlimited number of Common
Shares (herein referred to as the "Common Shares").
3.2 Common Shares
The holders of Common Shares shall be entitled:
a. to vote at all meetings of shareholders, except meetings at which only
holders of a specified class of shares are entitled to vote, and on
every poll taken at every such meeting, or adjourned meeting, every
holder of Common Shares shall be entitled to one vote in respect of
each Common Share held; and
b. subject to the rights of the holders of Preferred Shares, to receive
the remaining property of the Corporation upon a dissolution; and
c. subject to the rights to dividends of the holders of Preferred Shares,
to receive all other dividends declared by the Corporation.
3.3 Preferred Shares
The Preferred Shares as a class shall carry and be subject to the following
rights, privileges, restrictions and conditions:
a. Directors' Rights to Issue in One or More Series
The Preferred Shares may at any time or from time to time be issued in one
or more series, each series to consist of such number of shares as may
before the issue thereof be determined by the
E-1
<PAGE>
Directors by resolution; the Directors of the Company may (subject as
hereinafter provided) by resolution fix, from time to time before the issue
thereof the designation, rights, privileges, restrictions and conditions
attaching to the shares of such series including, without limiting the
generality of the foregoing (1) the issue price, (2) the rate, amount or
method of calculation of dividends and whether the same are subject to
change of dividends and whether the same are subject to change or
adjustment, (3) whether such dividends shall be cumulative, non-cumulative
or partly cumulative, (4) the dates, manner and currencies of payments of
dividends and the dates from which dividends shall accrue, (5) the
redemption and/or purchase prices and terms and conditions of redemption
and/or purchase, with or without provision for sinking or similar funds,
(6) conversion and/or exchange and/or reclassification rights, (7) the
voting rights if any, and/or (8) other provisions, the whole subject to the
following provisions and to the issue of Certificate(s) of Amendment
setting forth such designations, rights, privileges, restrictions and
conditions attaching to the shares of each series.
b. Ranking of Preferred Shares
The Preferred Shares shall be entitled to preference over the Common Shares
of the Corporation and over any other shares ranking junior to the
Preferred Shares with respect to payment of dividends and distribution of
assets in the event of liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or any other distribution of
the assets of the Corporation among its shareholders for the purpose of
winding up its affairs and may also be given such other preferences not
inconsistent with paragraphs (a) and (b) hereof over the Common Shares of
the Corporation and over any other shares ranking junior to the Preferred
Shares as may be determined in the case of each series of Preferred Shares
authorized to be issued.
c. Amendment with Approval of Holders of Preferred Shares
The rights, privileges, restrictions and conditions attaching to the
Preferred Shares as a class may be repealed, altered, modified, amended or
amplified by Certificate(s) of Amendment, but in each case with the
approval of the holders of Preferred Shares (only as a class but not as
individual series) given as hereinafter specified.
d. Approval of Holders of Preferred Shares
Subject to the provisions of the Alberta Business Corporations Act, any
consent or approval given by the holders of Preferred Shares as a class
shall be deemed to have been sufficiently given if it shall have been given
in writing by the holders of at least sixty-six and two-thirds (66 2/3%)
percent of the outstanding Preferred Shares or by a resolution passed at a
meeting of holders of Preferred Shares duly called and held upon not less
than fifteen days' notice at which the holders of at least a majority of
the outstanding Preferred Shares are present or are represented by proxy
and carried by the affirmative vote of not less than sixty-six and
two-thirds percent of the votes cast at such meetings, in addition to any
other consent or approval required by the Alberta Business Corporations
Act. If at any such meeting the holders of a majority of the outstanding
Preferred Shares are not present or represented by proxy within one-half
hour after the time appointed for such meeting, then the meeting shall be
adjourned to such date not less than fifteen days thereafter and to such
time and place as may be designated by the Chairman, and not less than ten
days' written notice shall be given of such adjourned meeting. At such
adjourned meeting the holders of the Preferred Shares present or
represented by proxy may transact the business for which the meeting was
originally convened and a resolution passed thereat by the affirmative vote
of not less than sixty-six and two-thirds (66
E-2
<PAGE>
2.3%) percent of the votes cast at such meeting shall constitute the
consent or approval of the holders of Preferred Shares. On every poll taken
at every such meeting, every holder of Preferred Shares shall be entitled
to one vote in respect of each such share held. Subject to the foregoing,
the formalities to be observed in respect of the giving or waiving or
notice of any such meeting and the conduct thereof shall be those from time
to time prescribed in the By-laws of the Corporation with respect to
meetings of shareholders. Any consent or approval given by the holders of
Preferred Shares of a series as a class shall be deemed to have been
sufficiently given if given in the same manner as provided herein regarding
holders of Preferred Shares as a class.
3.4 Series A Preferred Shares
The first series of Preferred Shares is designated as "Series A Preferred
Shares" and consists of 10,000,000 Series A Preferred Shares.
(a) DIVIDENDS
(i) The holders of the Series A Preferred Shares shall be entitled to
receive and the Corporation shall pay thereon as and when declared by
the board of directors out of the moneys of the Corporation properly
applicable to the payment of dividends, fixed cumulative preferential
cash dividends at the rate of six and one-half (6.5%) per annum, on
the amounts from time to time determined to be the stated capital
thereof payable annually on the first day of September in each year,
the first such payment to fall due on September 1, 1996. The amount of
dividends payable on the first payment date or for any other period
less than a full year shall be prorated on the basis of 360 days per
year. Such dividends shall accrue from such date or dates as may in
the case of each issue be determined by the board of directors of the
Corporation or in case no date be so determined then from the date of
allotment. Cheques of the Corporation payable at par at any branch in
Canada of the Corporation's bankers for the time being shall be issued
in respect of such dividends. If on any dividend payment date the
dividend payable on such date is not paid in full on all of the Series
A Preferred Shares then issued and outstanding, such dividend or the
unpaid part thereof shall be paid on a subsequent date or dates
determined by the board of directors of the Corporation on which the
Corporation shall have sufficient moneys properly applicable to the
payment of the same. Accumulated dividends that are not paid when due
shall bear interest at the rate of six and one-half (6.5%) percent per
annum, calculated annually from the payment due date (after taking
into account any permitted postponement thereof, not in advance. The
holders of the Series A Preferred Shares shall not be entitled to any
dividends other than or in excess of the cash dividends hereinbefore
provided for.
(ii) Provided that the Corporation has monies available for proper
application to the payment of dividends, the Corporation may postpone
the due date for payment of any dividend payable to the holders of
Series A Preferred Shares for a grace period not exceeding sixty (60)
days.
(iii) The record date for determining holders of Series A Preferred Shares
entitled to receive a dividend payment shall be as at the close of
business on the last day of the month preceding the month in which the
due date for the dividend payment falls (after giVing effect to any
permitted postponement thereof).
(iv) No dividends shall at any time be declared or, having been declared,
be paid on or set apart
E-3
<PAGE>
for the Common Shares or any of them or any other shares of the
Corporation junior to the Series A Preferred Shares unless all
dividends up to and including the dividend payable for the last
completed annual period on the Series A Preferred Shares then issued
and outstanding shall have been declared and set apart or paid or
provided for at the date of such declaration or payment or setting
apart.
(v) If the Corporation either:
(A) fails to make a dividend payment within thirty (30) days of its
due date, after taking into account the sixty day grace period;
or
(B) becomes insolvent or makes an assignment or proposal for the
benefit of its creditors, or a bankruptcy petition or receiving
order is filed or made against the Corporation, or a receiver of
the Corporation or any part of its property is appointed, or the
Corporation commits any act of bankruptcy, or the Corporation
otherwise becomes subject to the provisions of the Bankruptcy Act
or any other Act for the benefit of its creditors;
(either of which such acts is herein referred to as an "Act of
Default") the holders of Series A Preferred Shares may, upon a
resolution of the holders of Series A Preferred Shares passed by
a majority of not less than fifty one (51 %) percent, declare any
accrued but unpaid dividends immediately payable and may initiate
proceedings to enforce payment of the same, subject to the
condition that the Corporation shall not be obligated to make any
dividend payment except out of moneys properly applicable to such
purpose. Upon the curing of any Act of Default, by payment of a
dividend or otherwise, that Act of Default shall no longer be
outstanding and shall not give rise to any rights hereunder.
(b) REDEMPTION BY THE CORPORATION
(i) "Redemption Amount" means, in respect of the Series A Preferred Shares
of the Corporation, the sum of One Dollar and Ten Cents ($1.10) per
share together with all accrued but unpaid preferential dividends
thereon (which for such purpose shall be calculated as if such
dividends were accruing up to the date of such redemption).
(ii) The Series A Preferred Shares or any number of them shall, subject to
compliance with the law, be subject to purchase or redemption at their
Redemption Amount at any time by resolution passed by a majority in
number of the directors of the Corporation without consent of the
holders thereof provided that the Corporation redeems not less than
ten (10%) percent of the then outstanding number of Series A Preferred
Shares. Any such redemption shall be made on a pro rata basis among
the holders of Series A Preferred Shares, except as otherwise provided
for herein.
(iii) In any case of a purchase or redemption of Series A Preferred Shares
by the Corporation, the Corporation shall, at least sixty (60) days
and not more than ninety (90) days before the date specified for
purchase or redemption, mail to each holder from whom the directors
have determined to purchase or redeem such Series A Preferred Shares,
a notice in writing of the Corporation's intention to purchase or
redeem. Such notice shall be mailed postage prepaid, to the last
address shown on the share register of the Corporation for such
holder, or delivered personally to the holder to whom it is addressed,
and the notice shall state the number of such Series A Preferred
Shares being purchased or redeemed, the Redemption Amount, the day on
or after which the holder may effect purchase or redemption, and the
place in Alberta at which the said shares may be tendered against
payment of the Redemption Amount, provided that the accidental failure
to give any such notice to one(a)
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or more of such holders shall not affect the validity of such
redemption. On or after the date so specified for purchase or
redemption, the Corporation shall pay or cause to be paid to the order
of the registered holders of the Series A Preferred Shares to be
purchased or redeemed, the Redemption Amount on surrender of the share
certificate(s) for the Series A Preferred Shares being purchased or
redeemed and the certificate(s) for such shares shall thereupon be
cancelled and be deemed to be redeemed. If part only of the Series A
Preferred Shares represented by any certificate be purchased or
redeemed, a new certificate for the balance shall be issued at no cost
to the registered holders. From and after the date specified in any
such notice, the holders of the Series A Preferred Shares called for
purchase or redemption shall cease to be entitled to dividends and the
holders thereof shall not be entitled to exercise any right as
shareholders with respect to such Series A Preferred Shares, provided
however, that if payment of the Redemption Amount be not made upon
presentation of certificates in accordance with the foregoing
provisions, the rights of the holders shall remain unaffected. Should
the holders of any Series A Preferred Shares so called for purchase or
redemption fail to present the certificate(s) representing such Series
A Preferred Shares on the date specified for purchase or redemption,
the Corporation shall have the right to deposit the Redemption Amount
of such Series A Preferred Shares to a special account in any branch
of any bank, to be paid without interest to or to the order of the
holders of such Series A Preferred Shares called for purchase or
redemption, upon presentation and surrender at such branch or office
of the certificate(s) representing the same and a receipt for the
Redemption Amount, and upon such deposit being made the Series A
Preferred Shares in respect whereof such deposit shall have been made
shall be deemed to be purchased or redeemed and the rights of the
holders thereof after such deposit shall be limited to receiving
without interest their proportionate part of the total Redemption
Amount so deposited against presentation and surrender of the said
certificates held by them and receipts for the Redemption Amount paid
to them respectively.
(c) REDEMPTION BY SHAREHOLDERS
The Series A Preferred Shares shall not be redeemable by or at the
option of the holders thereof
(d) REDEMPTION BY MUTUAL CONSENT
Upon the mutual consent of the Corporation and any holder of Series A
Preferred Shares, the Series A Preferred Shares of such holder (or any
portion thereof as determined by mutual consent) may be purchased or
redeemed by the Corporation for an amount equal to the stated capital
thereof together with all accrued but unpaid preferential dividends
thereon (which for such purpose shall be calculated as if such
dividends were accruing up to the date of such redemption. In such
event, the date of redemption and the redemption procedures shall be
as determined by the Series A Preferred Shares.
(e) REPAYMENT OF CAPITAL
On the winding-up, liquidation or dissolution of the Corporation or
upon the happening of any other event giving rise to a distribution of
the Corporation's assets, other than by way of dividend amongst its
shareholders, for the purposes of winding-up its affairs (any such
occurrence is hereafter called "Winding-up") the holders of Series A
Preferred Shares shall be entitled to receive the stated capital of
their outstanding Series A Preferred Shares together with any accrued
but unpaid dividends thereon in priority to any distribution to the
holders of Common Shares or shares of any class or series ranking
junior to the Series A Preferred Shares. After payment to the holders
of the Series A Preferred Shares of the amount so payable to them they
shall not be entitled to share in any further distribution of the
property or assets of the Corporation.
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(f) VOTING RIGHTS
(i) Except as provided for by the Business Corporations Act or as
otherwise provided for herein, the holders of Series A Preferred
Shares shall have no right to receive notice of or vote at any meeting
of the Shareholders of the Corporation.
(ii) Except with the approval by way of a special resolution of the holders
of Series A Preferred Shares, the Corporation shall not:
(A) amend or repeal any of the preferences or rights of the holders
of Series A Preferred Shares;
(B) create any series of Preferred Shares having rights or privileges
superior to the rights or privileges attached to the Series A
Preferred Shares with respect to dividends or repayment of
capital; or
(C) create and issue any series of Preferred Shares having rights or
privileges equal to the rights and privileges attached to the
Series A Preferred Shares with respect to dividends or repayment
of capital unless the Corporation receives in consideration
therefor (after deduction of all share issue costs) equal to or
greater than One Hundred Ten (110%) percent of the liquidation
preference of such shares.
(iii) If the Corporation shall fail to pay two (2) consecutive annual
cumulative preferential dividends on the Series A Preferred Shares on
the date on which the same should be paid, whether or not there are
any moneys of the Corporation properly applicable to the payment of
dividends, then so long as two annual dividend payments of the Series
A Preferred Shares ) remain in arrears the holders of the Series A
Preferred Shares shall be entitled to receive notice of all meetings
of the shareholders of the Corporation and shall be entitled, voting
separately as a class, to elect a majority of the total number of the
directors of the Corporation but shall not be entitled to otherwise
vote at such meeting. Nothing herein contained shall be deemed to
restrict the right of the Corporation from time to time to increase or
decrease the number of its directors.
Notwithstanding anything contained in the Articles or by-laws of the
Corporation, the term of office of all persons who may be directors of
the Corporation at any time when the right to elect a majority of the
directors shall accrue to the holders of the Series A Preferred Shares
as herein provided by reason of dividends on the Series A Preferred
Shares being in arrears, or who may be appointed as directors if such
right shall have accrued and before a meeting of shareholders shall
have been held, shall terminate upon the election of new directors at
the next annual meeting of shareholders or at a general meeting of
shareholder which may be held for the purpose of electing directors at
any time after the accrual of such right to elect a majority of the
directors, and such general meeting shall be called by the directors
of the Corporation upon the written request of the holders of record
of at least ten (10%) percent of the outstanding Series A Preferred
Shares and in default of the calling of such general meeting by the
directors within twenty-one (21) days after the making of such request
it may be called by any holder of record of Series A Preferred Shares.
Any vacancy occurring among members of the Board elected to represent
the holders of Series A Preferred Shares in accordance with the
foregoing provisions of this clause may be filled by the Board with
consent and approval of the remaining director or directors elected to
represent the holders of Series A Preferred Shares to fill the vacancy
or vacancies. Whether or not such vacancies are so filled by the
Board, the holders of record of at least ten (10%) percent of the
outstanding Series A Preferred Shares shall have the right to require
the directors of the Corporation to call a meeting of the holders of
Series A Preferred
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Shares for the propose of filling the vacancies or replacing all or
any of the persons filling such vacancies who have been appointed by
the directors when there is no director in office who has been elected
to represent the holders of Series A Preferred Shares and the
provisions of the last preceding sub-clause shall apply in respect of
the calling of such meeting.
Notwithstanding anything contained in the articles or by-laws of the
Corporation, (i) upon any termination of the right of the holders of
the Series A Preferred Shares to elect a majority of the directors as
provided in this clause, the term of office of the directors elected
to represent the holders of Series A Preferred Shares shall terminate
upon the election of new directors at the next annual meeting of
shareholders or at a general meeting of shareholders which may be held
for the purpose of electing directors after such termination.
(g) CONVERSION RIGHTS
(i) "Current Market Price" per Common Share of the Corporation at any date
shall be the weighted average price per share at which the Common
Shares of the Corporation have traded, for a period of 20 consecutive
trading days before such date (including trading days on which no
trades of Common Shares of the Corporation were made) on The Alberta
Stock Exchange, or, if the Common Shares are not listed thereon, on
such stock exchange which the Common Shares are listed as may be
selected for such purpose by the directors or, if the Common Shares
are not listed on any stock exchange, then on the over-the-counter
market, and if there is no over-the-counter market, the Current Market
Price thereof shall be determined by the board of directors, acting
reasonably, which determination shall be conclusive. The weighted
average price shall be determined by dividing the aggregate sale price
of all Common Shares sold on the said exchange or market, as the case
may be, during the 20 consecutive trading days as specified in this
clause by the total number of Common Shares so sold.
(ii) Any holder of Series A Preferred Shares may at any time on or before
March 31, 2001, elect to have his Series A Preferred Shares, or any of
them, converted into fully paid Common Shares of the Corporation as
the same shall be constituted at the time of receipt by the
Corporation of a Notice to Convert (as herein defined) upon the terms
and conditions hereinafter provided.
(iii) Any Series A Preferred Shares which are the subject of an election to
convert to Common Shares shall be converted to the number of Common
Shares that is obtained when the amount of One Dollar ($1.00) per
Series A Preferred Share is divided by the Conversion Price of the
Common Shares (as herein defined). Fractional shares shall not be
issued, instead the Conversion Price of any such fraction of a Common
Share shall be paid in money.
(iv) "Conversion Price" means, in respect of the Common Shares of the
Corporation:
(A) Two Dollars ($2.00) per Common Share if Notice to Convert is
received by the Corporation on or before March 31, 1999;
(B) The Current Market Price as at April 1, 1999, if Notice to
Convert is received by the Corporation after March 31,1999 and on
or before March 31,2000; and
(C) The Current Market Price as at April 1, 2000, if Notice to
Convert is received by the Corporation after March 31, 2000 and
on or before March 31, 2001.
(v) The conversion privilege herein provided for may only be exercised by
notice in writing
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("Notice to Convert") delivered to the Corporation at its registered
office accompanied by the certificate(s) for Series A Preferred Shares
in respect of which the holder thereof desires to exercise such right
of conversion and such notice shall be signed by the person registered
on the books of the Corporation as the holder of the Series A
Preferred Shares in respect of which such right is being exercised or
by his duly authorized attorney, and shall specify the number of
Series A Preferred Shares which the holder desires to have converted.
Upon the receipt of such notice, the Corporation shall issue
certificates for Common Shares at the applicable conversion rate
herein prescribed and in accordance with the provisions hereof to the
registered holder of the Series A Preferred Shares represented by the
certificates accompanying such notice. If less than all the Series A
Preferred Shares represented by any certificate are to be converted,
the holder shall be entitled to receive a new certificate representing
the Series A Preferred Shares comprised in the original certificate
which are not to be converted.
(vi) Upon conversion of any Series A Preferred Shares the Corporation shall
pay any accumulated or unpaid dividends on the Series A Preferred
Shares certificates which are surrendered for conversion and
thereafter such holder shall cease to have any rights as a holder of
Series A Preferred Shares, except for any Series A Preferred Shares
not redeemed by such holder.
(vii)In the case of any Series A Preferred Shares which may be called for
redemption, notwithstanding anything herein contained, the right of
conversion thereof shall cease and terminate at the close of business
on the third (3rd) day prior to the date fixed for redemption,
provided however, that if the Corporation shall fail to redeem such
Series A Preferred Shares in accordance with the notice of redemption
the right of conversion shall thereupon be restored and continue as
before.
(viii) If the Corporation shall subdivide its Common Shares into a greater
number of shares or shall issue in exchange for such Common Shares a
greater number of Common Shares, then in such case from and after the
effective date of such subdivision or exchange of shares the
Conversion Price shall be decreased in proportion to the increase in
the' number of outstanding Common Shares resulting from such
subdivision or exchange; and if the Corporation shall reduce the
number of Common Shares by combination or consolidation of shares or
shall issue in exchange for its outstanding Common Shares a smaller
number of Common Shares, then in each case from and after the
effective date for such combination, consolidation or exchange of
shares the Conversion Price shall be increased in proportion to the
decrease in the number of the outstanding Common Shares resulting from
such combination, consolidation or exchange of shares.
(ix) If the Corporation shall declare and pay a stock dividend upon the
Common Shares or a dividend payable at the option of the respective
holders either in Common Shares or cash, then in each such case from
and after the payment date of such dividend the Conversion Price shall
be decreased in proportion to the increase in the number of
outstanding Common Shares resulting from such dividend.
(x) Nothing herein contained shall affect or restrict the right of the
Corporation to increase the number of its Common Shares in accordance
with the provisions of the Business Corporation Act (Alberta) and to
issue such shares from time to time.
4. RESTRICTIONS ON SHARE TRANSFERS (IF ANY):
None.
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5. NUMBER, OR MINIMUM AND MAXIMUM NUMBER OF DIRECTORS THAT THE CORPORATION MAY
HAVE:
The Corporation shall have a minimum of three (3) and a maximum of nine (9)
Directors.
6. IF THE CORPORATION IS RESTRICTED FROM CARRYING ON A CERTAIN BUSINESS, OR
RESTRICTED TO CARRYING ON A CERTAIN BUSINESS, SPECIFY THE RESTRICTION(S):
There are no restrictions placed on the business of the Corporation.
7. OTHER RULES OR PROVISIONS (IF ANY):
(a) The Directors may, between Annual General Meetings, appoint one or
more additional Directors of the Corporation to serve until the next
Annual General Meeting but the number or additional Directors shall
not at any time exceed one-third (1/3) of the number of Directors who
held office at the expiration of the last Annual Meeting of the
Corporation.
(b) A Director or Directors of the Corporation may be elected or appointed
for terms expiring not later than the close of the third Annual
Meeting of Shareholders following the election.
(c) The Corporation has a lien on a share registered in the name of a
Shareholder or his legal representative for a debt of that Shareholder
to the Corporation.
(d) Meetings of shareholders may be held as the Board of Directors may
determine at any place within or outside the Province of Alberta.
8. DATE SIGNATURE TITLE
Nov 16/98 /s/ ILLEGIBLE Director
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INDEX
BY-LAW NO. 1
DIVISION PAGE NO.
One INTERPRETATION 1
Two BORROWING, BANKING AND SECURITIES 3
2.01 Borrowing Power 3
2.02 Delegation 4
2.03 Banking Arrangements 4
2.04 Custody of Securities 5
2.05 Evidence of Voting Rights 5
Three EXECUTION OF INSTRUMENTS 6
3.01 6
3.02 Corporate Seal 6
3.03 Cheques, Drafts and Notes 6
Four DIRECTORS 6
4.01 Number 6
4.02 Election and Term 7
4.03 Removal of Directors 8
4.04 Qualification 8
4.05 Consent 9
4.06 Vacation of Office 10
4.07 Committee of Directors 10
4.08 Transaction of Business 10
4.09 Advisory Committee 10
4.10 Procedure 11
4.13 Remuneration and Expenses 11
4.12 Vacancies 11
4.13 Action by the Board 12
Five MEETING OF DIRECTORS 12
5.01 Place of Meeting 12
5.02 Notice of Meeting 12
5.03 Adjourned Meeting 14
5.04 Calling of Meeting 14
5.05 Regular Meetings 14
5.06 Chairman 14
5.07 Quorum 15
5.08 Half Albertan Representation at Meetings 15
5.09 Voting 15
5.10 Meeting by Telephone 16
5.11 Resolution in Lieu of Meeting 16
5.12 Amendments to the Act 16
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DIVISION PAGE NO.
Six PROTECTION OF DIRECTORS, OFFICERS AND OTHERS 17
6.01 Conflict of Interest 17
6.02 Limitation of Liability 17
6.03 Indemnity 19
6.04 Insurance 19
Seven OFFICERS 20
7.01 Election or Appointment 20
7.02 Chairman of the Board 20
7.03 Managing Director 21
7.04 President 21
7.05 Vice-President 21
7.06 Secretary 21
7.07 Treasurer 22
7.08 General Manager or Manager 22
7.09 Powers and Duties of Other Officers 23
7.10 Variation of Powers and Duties 23
7.11 Vacancies 23
7.12 Remuneration and Removal 23
7.13 Agents and Attorneys 23
7.14 Conflict of Interest 24
7.15 Fidelity Bonds 24
Eight SHAREHOLDERS' MEETINGS 24
8.01 Annual Meetings 24
8.02 Submission of Contracts or Transactions
to Shareholders for Approval 25
8.03 Special Meetings 25
8.04 Place of Meetings 25
8.05 Record Date for Notice 26
8.06 Notice of Meetings 26
8.07 Right to Vote 27
8.08 List of Shareholders Entitled to Vote 27
8.09 Meetings without Notice 28
8.10 Waiver of Notice 29
8.11 Chairman, Secretary and Scrutineers 29
8.12 Persons Entitled to be Present 29
8.13 Quorum 30
8.14 Participation in Meeting by Telephone 30
8.15 Proxyholders and Representatives 30
8.16 Time for Deposit of Proxies 31
8.17 Joint Shareholders 32
8.18 Votes to Govern 32
8.19 Show of Hands 32
8.20 Ballots
8.21 Adjournment 33
8.22 Resolution in Lieu of a Meeting 33
8.23 Only One Shareholder 34
Nine SHARES 34
9.01 Allotment and Issuance 34
9.02 Commissions 34
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DIVISION PAGE NO.
9.03 Non-Recognition of Trusts 35
9.04 Certificates 35
9.05 Replacement of Share Certificates 36
9.06 Joint Holders 36
Ten TRANSFER OF SECURITIES 36
10.01 Registration of Transfer 36
10.02 Transfer Agents and Registrars 37
10.03 Securities Registers 37
10.04 Deceased Shareholders 38
10.05 Lien for Indebtedness 38
Eleven DIVIDENDS AND RIGHTS 39
11.01 Dividends 39
11.02 Dividend Cheques 39
11.03 Non-Receipt of Cheques 39
11.04 Unclaimed Dividends 40
11.05 Record Date for Dividends and Rights 40
Twelve INFORMATION AVAILABLE TO SHARSHOLDERS 40
12.01 Restrictions on Availability 40
12.02 Inspection of Records by Shareholders 41
12.03 Registered office and Separate Records Office 41
Thirteen NOTICES 41
13.01 Method of Giving Notices 41
13.02 Notice to Joint Shareholders 42
13.03 Persons Entitled by Death or Operation of Law 42
13.04 Non-Receipt of Notices 42
13.05 Omissions and Errors 43
13.06 Signature on Notices 43
13.07 Waiver of Notice 43
Fourteen DIVISIONS 44
14.01 Divisions 44
Fifteen MISCELLANEOUS
15.01 Financial Year 45
15.02 Directors to Require Surrender of
Share Certificates 45
15.03 Financial Assistance to Shareholders,
Employees and Others 45
15.04 Severability 47
15.05 Shareholders' Approval to Amend By-law #1 47
15.06 Effective Date 47
15.07 Continuation 48
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BY-LAW NUMBER 1
A by-law relating generally to the conduct of the business and affairs of
(hereinafter called the "Corporation").
BE IT ENACTED AND IT IS HEREBY ENACTED as a by-law of the Corporation as
follows:
INTERPRETATION
1.01 In this by-law and all other by-laws of the Corporation, unless the context
otherwise specifies or requires:
(a) "Act" means the Business Corporations Act of Alberta, and the Regulations
made thereunder, as from tine to time amended and every statute that may be
substituted therefor and, in the case of such amendment or substitution,
any references in the by-laws of the Corporation to provisions of the Act
shall be read as references to the amended or substituted provisions
therefor in the amendment or new statute or statutes;
(b) "appoint" includes "elect" and vice versa;
(c) "articles" means the original or re-stated articles of incorporation,
articles of amendment, articles of amalgamation, articles of continuance,
articles of reorganization, articles of arrangement, articles of
dissolution, articles of revival and includes an amendment to any of them;
(d) "auditor" means that person or those persons whose function it is to
examine at the request of the board of directors or otherwise, the
financial accounts and general financial
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affairs of the Corporation in order to verify the accuracy thereof;
(e) "board" means the board of directors of the Corporation;
(f) "by-laws" means this by-law and and and all other by-laws of the
corporation from time to time in force and effect;
(g) "meeting of shareholders" includes any annual or other general meeting of
shareholders and a special meeting of shareholders;
(h) "non-business day" means Saturday, Sunday and any other day that is a
holiday as defined in the Interpretation Act of Alberta;
(i) "Regulations" means the Regulations under the Act as published or from time
to time amended and every Regulation that may be substituted therefor and,
in the case of such substitution, any references in the by-laws of the
corporation to provisions of the Regulations shall be read as references to
the substituted provisions therefor in the new Regulations;
(j) "resident Albertan" means an individual who is ordinarily resident in
Alberta or, if not ordinarily resident in Alberta, is a member of a class
of persons prescribed by Regulations and, in any case,
(i) is a Canadian citizen, or
(ii) has been lawfully admitted to Canada for permanent residence;
(k) "signing officer" means, in relation to any instrument, any person
authorized to sign the same on behalf of the
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Corporation by virtue of Section 3.01 of this by-law or by a resolution
passed pursuant thereto; and
(1) "special meeting of shareholders" includes a meeting of any class or
classes of shareholders.
Save as aforesaid, all terms which are contained in this by-law or any
other by-laws of the Corporation and which are defined in the Act or the
Regulations shall have the meanings given to such terms in the Act or the
Regulations. Words importing the singular number only shall include the plural
and vice versa; words importing the masculine shall include the feminine and
neuter genders; and the word "person" shall include an individual, partnership,
association, body corporate, corporation, company, syndicate, trustee, executor,
administrator and legal representative and any number of aggregate of persons.
The headings used in this by-law or any other by-laws are inserted for
reference purposes only and are not to be considered or taken into account in
construing the terms or provisions thereof or to be deemed in any way to
clarify, modify or explain the effect of any such terms or provisions.
BORROWING, BANKING AND SECURITIES
2.01 Borrowing Power
Without limiting the borrowing powers of the Corporation as set forth in
the Act, but subject to the articles and any unanimous shareholder agreement,
the board may from time to time on behalf of the Corporations without
authorization of the shareholders:
(a) borrow money upon the credit of the Corporation;
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(b) issue, reissue, sell or pledge bonds, debentures, notes or other evidences
of indebtedness or guarantee of the Corporation, whether secured or
unsecured;
(c) to the extent permitted by the Act, give a guarantee on behalf of the
Corporation to secure the obligation of any person; and
(d) mortgage, hypothecate, pledge or otherwise create a security interest in
all or any currently owned or subsequently acquired real or personal,
moveable or immovable, property of the Corporation including book debts,
rights, powers, franchises, and undertakings, to secure any such bonds,
debentures, notes or other evidences of indebtedness or guarantee or any
other present or future indebtedness, liability or obligation of the
Corporation.
Nothing in this section limits or restricts the borrowing of money by the
Corporation on bills of exchange or promissory notes made, drawn, accepted or
endorsed by or on behalf of the Corporation.
2.02 Delegation
The board may from time to time delegate to a committee of directors, a
director or an officer of the Corporation or any other person as may be
designated by the board all or any of the powers conferred on the board by the
preceding section of this by-law or by the Act to such extent and in such manner
as the board may determine at the time of each such delegation.
2.03 Banking Arrangements
The banking business of the Corporation including, without limitation, the
borrowing of money and the giving of
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-5-
security therefor, shall be transacted with such banks, trust companies or other
bodies corporate or organizations as may from time to time be designated by or
under the authority of the board. Such banking business or any part thereof
shall be transacted under such agreements, instructions and delegations of
powers as the board may from time to time prescribe or authorize.
2.04 Custody of Securities
All shares and securities owned by the Corporation shall be lodged (in the
name of the Corporation) with a chartered bank or a trust company or in a safety
deposit box or, if so authorized by resolution of the board, with such other
depositories or in such other manner as may be determined from time to time by
the board. All share certificates, bonds, debentures, notes or other obligations
belonging to the Corporation may be held in the name of a nominee or nominees of
the Corporation (and if held in the names of more than one (l) nominee shall be
held in the names of the nominees jointly with the right of survivorship) and
shall be endorsed in blank with endorsement guaranteed in order to enable
transfer to be completed and registration to be effected.
2.05 Evidence of Voting Rights
The signing officers of the Corporation may execute and deliver instruments
of proxy and arrange for the issuance of voting certificates or other evidence
of the right to exercise the voting rights attaching to any securities held by
the Corporation. Such instruments, certificates or other evidence shall be in
favour of such person or persons as may be determined by the person signing or
arranging for them. In addition, the board may direct the manner in which and
the person or persons by whom any particular voting rights or class of voting
rights may or shall be exercised.
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EXECUTION OF INSTRUMENTS
3.01 Deeds, transfers, assignments, contracts, obligations, certificates and
other instruments may be signed on behalf of the Corporation by that person or
those persons who may be authorized by the board from time to time. In addition,
the board may from time to time direct the manner in which any particular
instrument or class of instruments may or shall be signed. Any signing officer
may affix the corporate seal to any instrument requiring the same, but no
instrument is invalid merely because the corporate seal is not affixed thereto.
3.02 Corporate Seal
Until changed by the board, the corporate seal of the Corporation shall be
in the form impressed hereon
(C/S)
3.03 Cheques, Drafts and Notes
All cheques, drafts or orders for the payment of money and all notes and
acceptances and bills of exchange shall be signed by such officer or officers or
person or persons, whether or not officers of the Corporation, and in such
manner as the board may from time to time designate by resolution.
DIRECTORS
4.01 Number
The number of directors shall be the number as is fixed by the articles, or
where the articles specify a variable number, the number shall consist of such
number of directors as is not less than the minimum nor more than the maximum
number of
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directors specified in the articles and shall be determined from time to time
within such limits by resolution of the shareholders.
4.02 Election and Term
Subject to the articles or a unanimous shareholder agreement or as
otherwise provided for herein, the election of directors shall take place at
each annual general meeting of the shareholders and all the directors then in
office, unless elected for a longer period of tine, shall retire but, if
qualified, shall be eligible for re-election. The number of directors to be
elected at any such meeting shall, subject to the articles or an unanimous
shareholders agreement, be the number of directors then in office, or the number
of directors whose terms of office expire at the meeting, as the case may be,
except if cumulative voting is not required by the articles and the articles
otherwise permit, the shareholders may resolve to elect some other number of
directors. Where the shareholders adopt an amendment to the articles to increase
the number or minimum number of directors, the shareholders may, at the meeting
at which they adopt the amendment, elect the additional number of directors
authorized by the amendment. Such amendment shall on the issue of a certificate
of amendment of the articles be deemed to be valid as of the date the
shareholders adopt the amendment. If an election of directors is not held at the
proper time, the incumbent directors shall continue in office until their
successors are elected. If the articles provide for cumulative voting, each
director elected by shareholders (but not directors elected or appointed by
creditors or employees) ceases to hold office at the annual meeting and every
shareholder entitled to vote at an election of directors has the right to cast
votes for the directors to be elected equal to the number of votes attached to
the shares held by him multiplied by the number of directors he is entitled to
vote for, and he may cast all such votes in favour of one candidate or
distribute them among the candidates in such manner as he sees fit. If he has
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voted for more than one candidate without specifying a distribution among such
candidates, he shall be deemed to have divided his votes equally among the
candidates for whom he voted.
4.03 Removal of Directors
Subject to the Act, the shareholders may by ordinary resolution passed at a
special meeting, remove any or all directors from office, except a director
elected by employees or creditors pursuant to the articles or a unanimous
shareholder agreement and the vacancy created by such removal may be filled at
the same meeting, failing which it may be filled by the board. Provided,
however, that if the articles provide for cumulative voting, no directors shall
be removed pursuant to this Section where the votes cast against the resolution
for his removal would, if cumulatively voted at an election of a full board, be
sufficient to elect one or more directors.
4.04 Qualification
The following persons are disqualified from being a director of the
Corporation:
(a) anyone who is less than eighteen (18) years of age;
(b) anyone who:
(i) is a dependent adult as defined in The Dependent Adults Act of
Alberta or is the subject of a certificate of incapacity under
that Act;
(ii) is a formal patient as defined in the Mental Health Act of
Alberta;
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(iii) is a subject of an order under the Mentally Incapacitated Persons
Act of Alberta appointing a committee of his person or estate or
both;
(iv) has been found to be a person of unsound mind elsewhere than in
the Province of Alberta;
(c) a person who is not an individual; or
(d) a person who has the status of a bankrupt.
Subject to the Act and Section 5.12 hereof, at least one--half (1/2) of the
directors shall be resident Albertans. A director need not be a shareholder.
4.05 Consent
No election or appointment of a person as director shall be effective
unless:
(a) he was present at the meeting when he was elected or appointed and did not
refuse to act as a director, or
(b) if he was not present at the meeting when he was elected or appointed:
(i) he consents in writing to act as a director before his election or
appointment or within ten (10) days thereafter, or
(ii) he acts as a director pursuant to the election or appointment.
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4.06 Vacation of Office
A director ceases to hold office when he dies; he is removed from office by
the shareholders or by creditors who elected him, as the case may be; he ceases
to be qualified for election as a director; or his written resignation is sent
or delivered to the Corporation, or, if a time is specified in such resignation,
at that time so specified, whichever is later.
4.07 Committee of Directors
The directors may appoint from among their number a managing director, who
must be a resident Albertan, or a committee of directors, however designated,
and subject to Section 1.10 hereof of the Act may delegate to the managing
director or such committee any of the powers of the directors. Subject to the
Act and Section 5.12 hereof, at least one-half (1/2) of the members of such
committee shall be resident Albertans. A committee may be comprised of one
director.
4.08 Transaction of Business
Subject to the provisions of these by-laws relating to participation by
telephone, the powers of a committee of directors may be exercised by a meeting
at which a quorum is present or by resolution in writing signed by all the
members of such committee who would have been entitled to vote on that
resolution at a meeting of the committee. Any such resolution in writing shall
be effective for all purposes at such time as the resolution states regardless
of when the resolution is signed. Meetings of such committees may be held at any
place in or outside Canada and may be called by any one (1) member of the
committee giving notice in accordance with Section 5.02 hereof.
4.09 Advisory Committees
The board may, from time to time, appoint such other
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committees as it may deem advisable, but the functions of any such other
committee shall be advisory only.
4.10 Procedure
Unless otherwise determined herein or by the board, each committee shall
have the power to fix its quorum at not less than a majority of its members, to
elect its chairman and to regulate its procedure.
4.11 Remuneration and Expenses
Subject to any unanimous shareholder agreement, the directors shall be paid
such remuneration for their services as the board may from time to time
determine. The directors shall also be entitled to be reimbursed for travelling
and other expenses properly incurred by them in attending meetings of the board
or any committee thereof. Nothing herein contained shall preclude any director
from serving the Corporation in any other capacity and receiving remuneration
therefor.
4.12 Vacancies
Subject to the Act, a quorum of the board may fill a vacancy in the board,
except a vacancy resulting from an increase in the minimum number of directors
or from a failure of the shareholders to elect the minimum number of directors.
If the vacancy has arisen from a failure of the shareholders to elect the
minimum number of directors or from an increase in the minimum number of
directors, the board shall forthwith call a special meeting of the shareholders
to fill the vacancy. If the board fails to call such a meeting within fourteen
(14) days of the director's position becoming vacant, or if there are no such
directors then in office, any shareholder may call the meeting.
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4.13 Action by the Board
Subject to any unanimous shareholder agreement, the board shall manage the
business and affairs of the Corporation Where there is a vacancy in the board,
the remaining directors may exercise all the powers of the board so long as a
quorum remains in office. Where the Corporation has only one director, that
director may constitute a meeting.
MEETING OF DIRECTORS
5.01 Place of Meeting
Meetings of the Board may be held at any place within or outside the
province of Alberta.
5.02 Notice of Meeting
Notice of the time and place of each meeting of the board shall be given by
the persons as provided for in Section 5.04 hereof and in the manner provided
for in Section 13.01 hereof to each director not less than twenty-four (24)
hours before the time when the meeting is to be held. Notice shall be effected
when it is personally delivered or when it is delivered to the latest address of
the director as shown in the records of the Corporation or in the last notice
filed pursuant to section 101 or 108 of the Act. Provided always, that should
personal delivery be attempted and be unsuccessful, notice of the delivery to an
address of record shall, nevertheless, be effected. A notice of a meeting of
directors need not specify the purpose of or the business to be transacted at
the meeting except where the Act requires such purpose or business to be
specified, or any proposal to:
(a) submit to the shareholders any question or matter requiring approval of the
shareholders;
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(b) fill a vacancy among the directors or in the office of the auditor;
(c) issue securities:
(d) declare dividends;
(e) purchase, redeem or otherwise acquire shares issued by the Corporation;
(f) pay a commission for the sale of shares;
(g) approve a management proxy circular;
(h) approve any annual financial statements;
(i) adopt, amend or repeal by-laws;
(j) approve a take--over bid circular or directors' circular;
(k) demand or accept the resignation of or make the appointment of any officer
or officers; or
(l) call a meeting of shareholders.
Provided, however, that a director may in any manner, waive notice of a
meeting and attendance of a director at a meeting of directors shall constitute
a waiver of notice of the meeting except where a director attends a meeting for
the express purpose of objecting to the transaction of any business on the
grounds that the meeting is not lawfully called.
For the first meeting of the board of directors to be held immediately
following an election of directors or for a meeting of the board of directors at
which a director is to be appointed to fill a vacancy in the board, no notice of
such
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meeting shall be necessary to the newly elected or appointed director or
directors in order to legally constitute the meeting, provided that a quorum of
directors is present.
5.03 Adjourned Meeting
Notice of an adjourned meeting of the board is not required if the time and
place of the adjourned meeting is announced at the original meeting.
5.04 Calling of the Meeting
Meetings of the board shall be held and called from time to time at such
time and in such place as the board, the chairman of the board, the managing
director, the president or any two (2) directors may determine. Should more than
one of the above named call a meeting at or for substantially the same time,
there shall be held only one meeting and such meeting shall occur at the time
and place determined by, in order of priority, the board, the chairman or the
president.
5.05 Regular Meetings
The board may appoint a day or days in any month or months for regular
meetings of the board at a place and hour to be named. A copy of any resolution
of the board fixing the place and time of such regular meetings shall be sent to
each director forthwith after being passed, and forthwith to each director
subsequently elected or appointed, but no other notice shall be required for any
such regular meeting except where the Act, this by-law or any other by-law
requires the purpose thereof or the business to be transacted thereat to be
specified.
5.06 Chairman
The chairman of any meeting of the board shall be the
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first mentioned of such of the following officers as have been appointed and who
is a director and is present at the meeting: chairman of the board, managing
director or president. If no such officer is present, the directors present
shall choose one of their number to be chairman.
5.07 Quorum
Subject to the following section, the quorum for the transaction of
business at any meeting of the board shall consist of a majority of directors
holding office or such greater number of directors as the board may from time to
time determine.
5.08 Half Albertan Representation at Meetings
Subject to the Act and Section 5.12 hereof, the board shall not transact
business at a meeting, other than filling a vacancy in the board, unless at
least half of the directors present are resident Albertans, except where:
(a) a resident Alberta director who is unable to be present approves in writing
or by telephone or other telecommunication facilities the business
transacted at the meeting; and
(b) the number of resident Albertan directors present at the meeting, together
with any resident Albertan director who gives his approval under clause
(a), totals at least half of the directors present at the meeting.
5.09 Voting
Subject to any unanimous shareholders' agreement, questions arising at any
meeting of the board of directors shall be decided by a majority of votes, the
chairman of the meeting
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shall be entitled to vote and there shall be no second or casting vote in the
event of an equality of votes.
5.10 Meeting by Telephone
A director may participate in a meeting of the board or of a committee of
the board by means of such telephone or other communication facilities as permit
all persons participating in the meeting to hear each other, and a director
participating in such meeting by such means is deemed to be present at the
meeting.
5.11 Resolution in Lieu of Meeting
Notwithstanding any of the foregoing provisions of this by--law, a
resolution in writing signed by all of the directors entitled to vote on that
resolution at a meeting of the directors or a committee or directors, if any, is
as valid as if it had been passed at a meeting of the directors or the committee
of the directors, if any. Any such resolution in writing is effective for all
purposes at such time as the resolution states regardless of when the resolution
is signed.
5.12 Amendments to the Act
It is hereby affirmed that the intention of Sections 4.04, 4.07 and 5.08
hereof as they relate to Albertan representation are to comply with the minimum
requirements of the Act and in the event that such minimum requirements shall be
amended, deleted and replaced such that no, or a lesser requirement with respect
to Albertan representation is implemented than as in force at present sections
4.04, 4.07 and 5.08 hereof shall be automatically and correspondingly amended,
deleted or replaced.
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PROTECTION OF DIRECTORS, OFFICERS AND OTHERS
6.01 Conflict of Interest
A director or officer shall not be disqualified by his office, or be
required to vacate his office, by reason only that he is a party to, or is a
director or officer or has a material interest in any person who is a party to,
a material contract or proposed material contract with the Corporation or a
subsidiary thereof. Such a director or officer shall, however, disclose the
nature and extent of his interest in the contract at the time and in the manner
provided by the Act. Subject to the provisions of the Act, a director shall not
by reason only of his office be accountable to the Corporation or its
shareholders for any profit or gain realized from such a contract or
transaction, and such contract or transaction shall not be void or voidable by
reason only of the director's interest therein, provided that, the required
declaration and disclosure of interest is properly made, the contract or
transaction is approved by the directors or shareholders, if necessary, and it
is fair and reasonable to the Corporation at the time it was approved and, if
required by the Act, the director refrains from voting as a director on the
contract or transaction at the directors' meeting at which the contract is
authorized or approved by the directors, except attendance for the purpose of
being counted in the quorum.
6.02 Limitation of Liability
Every director and officer of the Corporation in exercising his powers and
discharging his duties shall act honestly and in good faith with a view to the
best interests of the Corporation and exercise the care, diligence and skill
that a reasonably prudent person would exercise in comparable circumstances.
Subject to the foregoing, no director or officer for the time being of the
Corporation shall be liable for the acts, receipts, neglects or defaults of any
other director or
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officer or employee or for joining in any receipt or act of conformity, or for
any loss, damage or expense happening to the Corporation through the
insufficiency or deficiency of title to any property acquired by the Corporation
or for or on behalf of the Corporation or for the insufficiency or deficiency of
any security in or upon which any of the monies of or belonging to the
Corporation shall be placed out or invested or for any loss, conversion,
misapplication or misappropriation of or any damage resulting from any dealings
with any monies, securities or other assets belonging to the Corporation or for
any loss or damage arising from the bankruptcy, insolvency or tortious acts of
any person with whom any of the monies, securities or effects of the Corporation
shall be deposited, or for any loss occasioned by any error of judgment or
oversight on his part, or for any other loss, damage or misfortune whatever
which may happen in the execution of the duties of his respective office or
trust or in relation thereto; provided that nothing herein shall relieve any
director or officer from the duty to act in accordance with the Act and the
Regulations thereunder or from liability for any breach thereof. The directors
for the time being of the Corporation shall not be under any duty or
responsibility in respect of any contract, act or transaction whether or not
made, done or entered into in the name or on behalf of the Corporation, except
such as shall have been submitted to and authorized or approved by the board of
directors.
No act or proceeding of any director or officer or the board shall be
deemed invalid or ineffective by reason of the subsequent ascertainment of any
irregularity in regard to such act or proceeding or the qualification of such
director or officer or board.
Directors may rely upon the accuracy of any statement or report prepared by
the Corporation's auditors, internal accountants or other responsible officials
and shall not be held responsible or liable for any loss or damage resulting
from the
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paying of any dividends or otherwise acting upon such statement or report.
6.03 Indemnity
Subject to Section 119 of the Act, the Corporation shall indemnify a
director or officer, a former director and officer, or a person who acts or
acted at the Corporation's request as a director or officer of a body corporate
of which the Corporation is or was a shareholder or creditor (or a person who
undertakes or has undertaken any liability on behalf of the Corporation or any
such body corporate), and his heirs, executors, administrators and other legal
representatives, from and against,
(a) any liability and all costs, charges and expenses that he sustains or
incurs in respect of any action, suit or proceeding that is proposed or
commenced against him for or in respect of anything done or permitted by
him in respect of the execution of the duties of his office; and
(b) all other costs, charges and expenses that he sustains or incurs in respect
of the affairs of the Corporation,
except where such liability relates to his failure to act honestly and in
good faith with a view to the best interests of the Corporation.
The Corporation shall also indemnify such persons in such other
circumstances as the Act permits or requires. Nothing in this Section shall
limit the right of any person entitled to indemnity to claim indemnity apart
from the provisions of this Section.
6.04 Insurance
Subject to the Act, the Corporation may purchase and
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maintain insurance for the benefit of any person referred to in the preceding
section against any liability incurred by him in his capacity as a director or
officer of the Corporation or of any body corporate where he acts or acted in
that capacity at the Corporation's request.
OFFICERS
7.01 Election or Appointment
Subject to any unanimous shareholder agreement, the board may, from time to
time, appointment a chairman of the board, a president, one or more
vice-presidents, a secretary, a treasurer, a secretary-treasurer and such other
officers as the board may determine, including one or more assistants to any of
the officers so appointed. The board may specify the duties of and, in
accordance with this by-law and subject to the provisions of the Act, delegate
to such officers powers to manage the business and affairs of the Corporation.
Except for a managing director and a chairman of the board who must be
directors, an officer may, but need not be, a director and one person may hold
more than one office.
7.02 Chairman of the Board
The chairman of the board shall, when present, preside at all meetings of
the board, committees of directors and, in the absence of the president, at all
meetings of shareholders.
If no managing director is appointed, the board may assign to the chairman
of the board any of the powers and duties that, by any provision of this by-law,
are assigned to the managing director; and he shall, subject to the provisions
of the Act, have such other powers and duties as the board may specify. During
the absence or disability of the chairman of the board, his duties shall be
performed and his powers exercised by the managing director, if any, or by the
president.
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7.03 Managing Director
The managing director, if any, shall have, subject to the authority of the
board, general supervision of the business and affairs of the Corporation; and
he shall, subject to the provisions of the Act, have such other powers and
duties as the board may specify.
7.04 President
The president shall be the chief executive officer of the Corporation and,
subject to the authority of the board and the managing director, if any, shall
have such other powers and duties as the board may specify. During the absence
or disability of the managing director, or if no managing director has been
appointed, the president shall also have the powers and duties of that office;
provided, however, that unless he is a director he shall not preside as chairman
at any meeting of directors or a committee of directors.
7.05 Vice-President
During the absence or disability of the president, his duties shall be
performed and his powers exercised by the vice-president or, if there are more
than one, by the vice-president designated from time to time by the board;
provided, however, that a vice-president who is not a director shall not preside
as chairman at any meeting of directors or of a committee of directors. A
vice-president shall have such other powers and duties as the board may
prescribe.
7.06 Secretary
The secretary shall attend and be the secretary of all the meetings of the
board, shareholders and committees of the board and shall enter or cause to be
entered in records kept for
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that purpose, minutes of all proceedings thereat; he shall give or cause to be
given, as and when instructed, all notices to shareholders, directors, officers,
auditors and members of the committees of the board; he shall be the custodian
of the stamp or mechanical device generally used for affixing the corporate seal
of the Corporation and of all books, papers, records, documents and instruments
belonging to the Corporation, except when some other officer or agent has been
appointed for that purpose; and he shall have such other powers and duties as
the board or the president may specify.
7.07 Treasurer
The treasurer shall keep proper accounting records in compliance with the
Act and shall be responsible for the deposit of money, the safekeeping of
securities and the disbursement of funds of the Corporation; he shall render to
the board whenever required an account of all his transactions, and he shall
have such other powers and duties as the board or the president may specify.
7.08 General Manager or Manager
If elected or appointed, the general manager shall have, subject to the
authority of the board, the managing director, if any, and the president, full
power to manage and direct the business and affairs of the Corporation (except
such matters and duties as by law must be transacted or performed by the board
of directors and/or by the shareholders) and to employ and discharge agents and
employees of the Corporation and may delegate to him or them any lessor
authority. A general manager or manager shall conform to all lawful orders given
to him by the board and shall at all reasonable times give to the directors or
any of them all information they may require regarding the affairs of the
Corporation. Any agent or employee appointed by a general manager or manager
shall be subject to discharge by the board.
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7.09 Powers and Duties of Other Officers
The powers and duties of all other officers shall be such as the terms of
their engagement call for or as the board, the managing director or the
president may specify. Any of the powers and duties of an officer to whom an
assistant has been appointed may be exercised and performed by such assistant,
unless the board or the president otherwise directs.
7.10 Variation of Powers and Duties
The board may from time to time and subject to the provisions of the Act,
vary, add to or limit the powers and duties of any officer.
7.11 Vacancies
If the office of any officer of the Corporation shall be or become vacant
by reason of death, resignation, disqualification or otherwise, the directors by
resolution shall, in the case of the president or the secretary, and may, in the
case of any other office, appoint a person to fill such vacancy.
7.12 Remuneration and Removal
The remuneration of all officers appointed by the board of directors shall
be determined from time to time by resolution of the board of directors. The
fact that any officer or employee is a director or a shareholder of the
Corporation shall not disqualify him from receiving such remuneration as may be
determined. All officers, in the absence of agreement to the contrary, shall be
subject to removal by resolution of the board of directors at any time, with or
without cause.
7.13 Agents and Attorneys
The Corporation, by or under the authority of the board,
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shall have power from time to time to appoint agents or attorneys for the
Corporation in or outside Canada with such powers (including the power to
sub-delegate) of management, administration or otherwise as may be thought fit.
7.14 Conflict of Interest
An officer shall disclose his interest in any material contract or proposed
material contracts with the Corporation in accordance with Section 6.01 hereof.
7.15 Fidelity Bonds
The board may require such officers, employees and agents of the
corporation as the board deems advisable to furnish bonds for the faithful
discharge of their powers and duties, in such forms and with such surety as the
board may from time to time determine, provided always that the cost of any and
all such bonds shall be at the expense of the Corporation.
SHAREHOLDERS' MEETINGS
8.01 Annual Meetings
Subject to the Act, the annual meeting of shareholders shall be held at
such time and on such day in each year and, subject to Section 8.04 hereof, at
such place or places as the board, the chairman of the board, the managing
director or the president may from time to time determine, for the purpose of
considering the financial statements and reports required by the Act to be
placed before the annual meeting, electing directors, appointing an auditor if
required by the Act or the articles, and for the transaction of such other
business as may properly be brought before the meeting.
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8.02 Submission of Contracts or Transactions to Shareholders for Approval
The board, in their discretion, may submit any contract, act or transaction
for approval, verification or confirmation at any annual meeting of the
shareholders or at any special meeting of the shareholders called for the
purpose of considering the same and any contract, act or transaction that shall
be approved, ratified or confirmed by resolution passed by a majority of votes
cast at any such meeting (unless any different or additional requirement is
imposed by the Act or by the articles or any other by-law) shall be as valid and
as binding upon the Corporation and upon all the shareholders as though it had
been approved, ratified and/or confirmed by every shareholder of the
Corporation.
8.03 Special Meetings
The board, the chairman of the board, the managing director or the
president shall have the power to call a special meeting of shareholders at any
time. Holders of not less than five (5%) per cent of the issued shares of the
Corporation that carry the right to vote at a meeting sought to be held may
requisition the directors to call a meeting of the shareholders for the purposes
stated in the requisition. The requisition shall state the business to be
transacted at the meeting and shall be sent to each director and to the
registered office of the Corporation. Subject to Section 137(3) of the Act, upon
receipt of the requisition, the directors shall call a meeting of the
shareholders to transact the business stated in the requisition. If the
directors do not within twenty-one (21) days after receiving the requisition
call a meeting, any shareholder who signed the requisition may call the meeting.
8.04 Place of Meetings
Meetings of shareholders shall be held at any place within the Province of
Alberta as the directors may by resolution
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determine or, if all the shareholders entitled to vote at the meetings so agree
or if the articles so provide, outside Alberta.
8.05 Record Date for Notice
The board may fix in advance a date, preceding the date of any meeting of
the shareholders by not more than fifty (50) days and not less than twenty-one
(21) days, as a record date for the determination of shareholders entitled to
notice of the meeting. If no record date is fixed, the record date for the
determination of the shareholders entitled to receive notice of the meeting
shall be the close of business on the date immediately preceding the day on
which the notice is given or, if no notice is given, the day on which the
meeting is held.
8.06 Notice of Meetings
Notice of the time and place of each meeting of shareholders shall be sent
not less than twenty-one (21) and not more than fifty (50) days before the
meeting to each shareholder entitled to vote at the meeting, each director and
the auditor, if any, of the Corporation. Such notice may be sent by mail
addressed to, or may be delivered personally to, the shareholder at his latest
address as shown in the records of the Corporation or its transfer agent, to the
director, at his latest address as shown in the records of the Corporation or in
the last notice filed pursuant to Section 101 or 108 of the Act, or to the
auditor, at his most recent address as shown in the records of the Corporation.
A notice of meeting of shareholders sent by mail to a shareholder, director or
auditor in accordance with the above is deemed to be given and received on the
day on which it was deposited in the mail. A notice of a meeting is not required
to be sent to the shareholders who are not registered on the record of the
Corporation or its transfer agent on the record date as determined according to
Section 8.05 hereof. Notice of a meeting of shareholders at which special
business is to be transacted
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shall state the nature of such business in sufficient detail to permit the
shareholder to form a reasoned judgment thereon and shall state the text of any
special resolution to be submitted to the meeting. If the Corporation sends a
notice or document to a shareholder and the notice or document is returned on
two (2) consecutive occasions, the Corporation is not required to send any
further notices or documents to the shareholder until he informs the Corporation
in writing of his new address.
8.07 The Right to Vote
Subject to the provisions of the Act as to authorized representatives of
any other body corporate, at any meeting of the shareholders in respect of which
the Corporation has prepared the list referred to in Section 8.08 hereof, every
person who is named in such list shall be entitled to vote the shares shown
thereon opposite his name except to the extent that such person has transferred
any of his shares after the record date set pursuant to Section 8.05 hereof and
the transferee, upon producing properly endorsed certificates evidencing such
shares or otherwise establishing that he owns such shares, demands at any time
before the meeting that his name be included to vote the transferred shares at
the meeting. In the absence of a list prepared as aforesaid in respect of a
meeting of the shareholders, every person shall be entitled to vote at the
meeting who at the close of business on the record date or if no record date is
set, at the close of business on the date preceding the date notice is sent, is
entered in the securities register as the holder of one or more shares carrying
the right to vote at such meeting.
8.08 List of Shareholders Entitled to Vote
In the event the Corporation has greater than fifteen (15) shareholders
entitled to vote at a meeting, for every meeting of shareholders, the
Corporation shall prepare a list of shareholders entitled to receive notice of
the meeting arranged in
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alphabetical order and showing the number of shares held by each shareholder. If
a record date for the meeting is fixed pursuant to Section 8.05 hereof by the
board, the shareholders listed shall be those registered at the close of
business on the record date. If no record date is fixed by the board, the
shareholders listed shall be those listed at the close of business on the last
business day immediately preceding the day of which notice of a meeting is
given, or where no such notice is given, the day on which the meeting is held.
The list shall be available for examination by any shareholder during usual
business hours at the registered office of the Corporation or at the place where
the securities register is kept and at the place where the meeting is held.
8.09 Meetings Without Notice
A meeting of shareholders may be held without notice at any time and place
permitted by the Act:
(a) if all the shareholders entitled to vote thereat are present in person or
represented by proxy or if those not present or represented by proxy waive
notice of or otherwise consent to such meeting being held; and
(b) if, in accordance with the Act, the auditors and the directors are required
to attend and are present or waive notice of or otherwise consent to such
meeting being held.
At such meetings any business may be transacted which the Corporation may
transact at a meeting of shareholders. If the meeting is held at a place outside
Canada, the shareholders not present or represented by proxy, but who have
waived notice of or otherwise consented to such meeting, shall also be deemed to
have consented to a meeting being held at such place.
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8.10 Waiver of Notice
A shareholder and any other person entitled to attend a meeting of
shareholders may in any manner waive notice of a meeting of shareholders and
attendance of any such person at a meeting of shareholders shall constitute a
waiver of notice of the meeting except where such person attends a meeting for
the express purpose of objecting to the transaction of any business on the
grounds that the meeting is not lawfully called.
8.11 Chairman, Secretary and Scrutineers
The president or, in his absence, the chairman of the board, if such an
officer has been elected or appointed and is present, otherwise a vice-president
who is a shareholder of the Corporation shall be chairman of any meeting of the
shareholders. If no such officer is present within fifteen (15) minutes from the
time fixed for holding the meeting, the persons present and entitled to vote
shall choose one of their number to be chairman. If the secretary of the
Corporation is absent, the chairman shall appoint some person, who need not be a
shareholder, to act as secretary of the meeting. If desired, one or more
scrutineers, who need not be shareholders, may be appointed by a resolution or
by the chairman with the consent of the meeting.
8.12 Persons Entitled to be Present
The only persons entitled to be present at a meeting of shareholders shall
be those entitled to vote thereat, the directors and auditors of the Corporation
and others who, although not entitled to vote, are entitled or required under
any provision of the Act or the articles or the by-laws to be present at the
meeting. Any other person may be admitted only on the invitation of the chairman
of the meeting or with the consent of the meeting.
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8.13 Quorum
Subject to the Act and Section 8.23 hereof, a quorum for the transaction of
business at any meeting of shareholders shall consist of at least one (1) or
more persons, present or represented by proxy in accordance with Section 8.15
hereof as long as the holder or holders of ten percent of the shares entitled to
vote at the meeting are present in person or represented by proxy. If a quorum
is present at the opening of any meeting of shareholders, the shareholders
present or represented may proceed with the business of the meeting
notwithstanding that a quorum is not present throughout the meeting. If a quorum
is not present at the opening of the meeting of shareholders, the shareholders
present or represented may adjourn the meeting to a fixed time and place but may
not transact any other business.
8.14 Participation in Meeting by Telephone
A shareholder or any other person entitled to attend a meeting of
shareholders may participate in the meeting by means of telephone or other
telecommunication facilities that permit all persons participating in the
meeting to hear each other and a person participating in such meeting by those
means is deemed to be present at the meeting.
8.15 Proxyholders and Representatives
Votes at meetings of the shareholders may be given either personally or by
proxy; or, in the case of a shareholder who is a body corporate or association,
by an individual authorized by a resolution of the board of directors or
governing body of the body corporate or association to represent it at meetings
of shareholders of the Corporation, upon producing a certified copy of such
resolution or otherwise establishing his authority to vote to the satisfaction
of the secretary or the chairman.
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A proxy shall be executed by the shareholder or his attorney authorized in
writing and is valid only at the meeting in respect to which it is given or any
adjournment of that meeting. A person appointed by proxy need not be a
shareholder.
Subject to the regulations, a proxy may be in the following form:
The undersigned shareholder of ___________________________ hereby appoints
________________ of __________________, failing him,
___________________________, as the nominee of the undersigned to attend
and act for the undersigned on behalf of the undersigned at the
_____________ meeting of the shareholders of the said Corporation to be
held on the ___ day of _______________, 19 ____, and any adjournment or
adjournments thereof.
DATED this _________day of _______________, 19 -
_________________________
Signature of Shareholder
8.16 Time for Deposit of Proxies
The board may specify in a notice calling a meeting of the shareholders a
time, preceding the time of such meeting by not more than forty-eight (48) hours
exclusive of non-business days, before which time proxies to be used at such
meeting must be deposited. A proxy shall be acted upon only if, prior to the
time so specified, it shall have been deposited with the Corporation or any
agent thereof specified in such notice or if no such time having been specified
by such notice, it has been received by the secretary of the corporation or by
the chairman of the meeting or any adjournment thereof prior to the time of
voting.
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8.17 Joint shareholders
It two or more persons hold shares jointly, any one of them present in
person or duly represented at a meeting of shareholders may, in the absence of
the other or others, vote the shares; but if two or more of those persons are
present in person or represented and vote, they shall vote as one the shares
jointly held by them or in the event of disagreement, the party first named
shall be entitled to vote the shares.
8.18 Votes to Govern
Except as otherwise required by the Act, all questions proposed for the
consideration of shareholders at a meeting of shareholders shall be determined
by a majority of the votes cast and in the event of an equality of votes at any
meeting of shareholders either by show of hands or upon a ballot, there shall be
no second or casting vote.
8.19 Show of Hands
Subject to the Act, any question at a meeting of shareholders shall be
decided by a show of hands, unless a ballot thereon is required or demanded as
hereinafter provided. Upon a show of hands every person who is present and
entitled to vote shall have one vote, whenever a vote by show of hands shall
have been taken upon a question unless a ballot thereon is so required or
demanded, a declaration by the chairman of the meeting that the vote upon the
question has been carried or carried by a particular majority or not carried and
entry to that effect in the minutes of the meeting shall be prima facie evidence
of the fact without proof of the number of the votes required in favour of or
against any resolution or other proceeding in respect to this question and the
result of the votes so taken shall be the decision of shareholders on the said
question.
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8.20 Ballots
On any question proposed for consideration at a meeting of shareholders, a
shareholder, proxyholder or other person entitled to vote may demand or the
chairman may require that a ballot be taken either before or upon the
declaration of the result of any vote by show of hands. If a ballot is demanded
on the election of a chairman or on a question of adjournment, it shall be taken
forthwith without an adjournment. A ballot demanded or required on any other
question shall be taken in such manner as the chairman shall direct. A demand or
requirement for a ballot may be withdrawn at any time prior to the taking of the
ballot. If a ballot is taken each person present shall be entitled, in respect
to the shares that he is entitled to vote at the meeting upon the question, to
the number of votes as provided for by the articles or, in the absence of such
provision in the articles, to one vote to each share he is entitled to vote,
except as herein otherwise provided. The result of the ballot so taken shall be
the decision of the shareholders upon the question.
8.21 Adjournment
The chairman at a meeting of shareholders may, with the consent of the
meeting and subject to such conditions as the meeting may decide, adjourn the
meeting from time to time and from place to place. If a meeting of shareholders
is adjourned for less than thirty (30) days, it shall not be necessary to give
notice of the adjourned meeting, other than by announcement at the time of the
adjournment. Subject to the Act, if a meeting of shareholders is adjourned by
one or more adjournments for an aggregate of thirty (30) days or more, notice of
the adjourned meeting shall be given in the same manner as a notice for an
original meeting.
8.22 Resolution in Lieu of Meeting
A resolution in writing signed by all shareholders
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entitled to vote on that resolution at a meeting of shareholders is as valid as
if it had been passed at a meeting of shareholders; and a resolution in writing
dealing with all matters required to be dealt with at a meeting of the
shareholders, and signed by all the shareholders entitled to vote at such
meeting, satisfies all the requirements of the Act relating to meetings of
shareholders. A copy of every such resolution in writing shall be kept with the
minutes of the meeting of the shareholders. Any such resolution in writing is
effective for all purposes at such time as the resolution states regardless of
when the resolution is signed.
8.23 Only One Shareholder is the Title
Where the Corporation has only one shareholder or only one holder of any
class or series of shares, the shareholder present in person or duly represented
constitutes a meeting, and all other provisions of these by-laws are applicable
to a single shareholder corporation shall be deemed to be amended, where
applicable.
SHARES
9.01 Allotment and Issuance
Subject to Section 25 of the Act, the articles and any unanimous
shareholder agreement, the board may front time to time allot or grant options
to purchase whole or any part of the authorized and unissued shares of the
Corporation at such times and to such persons and for such consideration as the
board may determine, provided that no share shall be issued until it is fully
paid as provided by the Act.
9.02 Commissions
The board may from time to time authorize the Corporation to pay a
reasonable commission to any person in consideration of his purchasing or
agreeing to purchase shares of
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the Corporation from the Corporation or from any other person, or procuring or
agreeing to procure purchasers for shares of the Corporation, provided that a
sale of such shares and payment of any such commissions shall not violate any
applicable provisions of the Securities Act, R.S.A. 1981, Chapter S-6.1 and any
amendments thereto or Regulations thereunder.
9.03 Non-Recognition of Trusts
Subject to the Act, a Corporation may treat the registered holder of any
share as the person exclusively entitled to vote, to receive notices, to receive
any dividend or other payments in respect of the share, and otherwise to
exercise all the rights and powers of an owner of the share.
9.04 Certificates
Every holder of one or more shares of the Corporation shall be entitled, at
his option, to a share certificate, or to a non-transferable written
acknowledgement of his right to obtain a share certificate, stating the number
and class or series of shares held by him as shown on the securities register.
Share certificates and acknowledgements of a shareholder's right to a share
certificate, respectively, shall be in such form as the board shall from time to
time approve. Any share certificate shall be signed in accordance with Section
3.01 hereof and need not be under the corporate seal. The signatures of the
signing officers may be printed or mechanically reproduced in facsimile upon
share certificates and every such facsimile signatures shall for all purposes be
deemed to be the signature of the officer whose signature it reproduces and
shall be binding upon the Corporation. A share certificate executed as aforesaid
shall be valid notwithstanding that one or both of the officers whose facsimile
signature appears thereon no longer holds office at the date of issue of the
certificate.
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9.05 Replacement of Share Certificates
The board or any officer or agent designated by the board may in its or his
discretion direct the issue of a new share certificate or such other certificate
in lieu of and upon cancellation of a certificate that has been mutilated or in
substitution for a certificate claiming to have been lost, destroyed or
wrongfully taken on payment of such reasonable fee and upon such terms as to
indemnity, reimbursement of expenses and evidence of loss and of title as the
board may from time to time prescribe, whether generally or in, any particular
case.
9.06 Joint Holders
If two or more persons are registered as joint holders of any share, the
Corporation shall not be bound to issue more than one certificate in respect
thereof, and delivery of such certificate to one of such persons shall be
sufficient to all of them. Any one of such persons may give effectual receipts
for the certificate issued in respect thereof or for any dividend, return of
capital or such other money payable or warranted issuable in respect of such
share.
TRANSFER OF SECURITIES
10.01 Registration of Transfer
Subject to the Act and any unanimous shareholders agreement, no transfer of
a share shall be registered in a securities register except upon presentation of
the certificate representing such share with an endorsement which complies with
the Act made thereon or delivered therewith duly executed by an appropriate
person as provided by the Act, together with such reasonable assurance that the
endorsement is genuine and effective as the board may from time to time
prescribe, upon payment of all applicable taxes and any reasonable fees
prescribed by the board,
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upon compliance with such restrictions on transfer as are authorized by the
articles and upon satisfaction of any lien referred to in Section 10.05 hereof.
10.02 Transfer Agents and Registrars
The board may from time to time by resolution appoint or remove one or more
transfer agents registered under the Trust Companies Act of the Province of
Alberta to maintain a central securities register or registers and one or more
branch transfer agents to maintain a branch securities register or registers. A
transfer agent or branch transfer agent so appointed may be designated as such
or may be designated as a registrar, according to his functions, and a person
may be appointed and designated with the functions of both registrar and
transfer agent or branch transfer agent. The board may provide for the
registration of transfers of securities by and in the offices of such transfer
agent, or branch transfer agents or registrars. In the event of any such
appointment in respect of any of the shares of the Corporation, all share
certificates issued by the Corporation in respect of those shares shall be
countersigned by or on behalf of one of the said transfer agents, branch
transfer agents or registrars, if any, as the case may be.
10.03 Securities' Registers
A central securities register of the Corporation shall be kept at the
designated records office of the Corporation, if any, otherwise the registered
office of the Corporation, or at an office or offices of a company or companies
registered under the Trust Companies Act of the Province of Alberta, as may from
time to time be designated by resolution of the board of directors to act as the
Corporation's transfer agent or agents, to record the shares and other
securities issued by the Corporation in registered form, showing with respect to
each class or series of shares and other securities:
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(a) the names, alphabetically arranged, and the latest known address of
each person who is or has been a holder;
(b) the number of shares or other securities held by each holder; and
(c} the date and particulars of the issue and transfer of each share or
other security.
Branch securities register or registers may be kept either in or outside
Alberta at such office or offices of the Corporation as the directors may
determine, or at the office or offices of such other person or persons or
companies as may from time to time be designated by resolution of the directors
to act as the Corporation's branch transfer agent or agents. A branch securities
register shall contain particulars of securities issued or transferred at that
branch. Particulars of each issue or transfer of a security registered in a
branch securities register shall also be kept in the corresponding central
securities register.
10.04 Deceased shareholders
In the event of the death of a holder, or of one of the joint holders, of
any share, the Corporation shall not be required to make any entry in the
securities register in respect thereof or make any dividend or any other
payments in respect thereof except upon production of all such documents as may
be required by law and upon compliance with the reasonable requirements of the
Corporation and its transfer agents.
10.05 Lien for Indebtedness
If the articles provide that the Corporation shall have a lien on shares
registered in the name of a shareholder indebted to the Corporation for any
unpaid amount owing on a share issued
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by the Corporation on the date the Corporation was continued under the Act, such
lien may be enforced, subject to the articles, by the sale of the shares thereby
affected or by any other action, suit, remedy or proceeding authorized or
permitted by law or by equity and, pending such enforcement, the Corporation may
refuse to register a transfer of the whole or any part of such shares.
DIVIDENDS AND RIGHTS
11.01 Dividends
Subject to the Act, the board may from time to time declare dividends
payable to the shareholders according to their respective rights and interests
in the Corporation. Dividends may be paid in money or property or by issuing
fully paid shares of the Corporation.
11.02 Dividend Cheques
A dividend payable in money shall be paid by cheque to the order of each
registered holder of shares of the class or series in respect of which it has
been declared, and mailed by prepaid ordinary mail to such registered holder at
his address recorded in the Corporation's security register or registers unless
such holder otherwise directs. In the case of joint holders, the cheque shall,
unless such joint holders otherwise direct, be made payable to the order of all
such joint holders and mailed to them at their recorded address. The mailing of
such cheque as aforesaid, unless the same is not paid on due presentation, shall
satisfy and discharge the liability for the dividend to the extent of the sum
represented thereby plus the amount of any tax which the Corporation is required
to and does withhold.
11.03 Non-Receipt of Cheques
In the event of non-receipt of any dividend cheque by
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the person to whom it is sent as aforesaid, the Corporation shall issue to such
person a replacement cheque for a like amount on such terms as to indemnity,
reimbursement of expenses and evidence of non-receipt and of title as the board
may from time to time prescribe, whether generally or in any particular case.
11.04 Unclaimed Dividends
Any dividend unclaimed for a period of three (3) years from the date on
which the same has been declared to be payable shall be forfeited and shall
revert to the Corporation.
11.05 Record Date for Dividends and Rights
The board may fix in advance a date, preceding by not more than fifty (50)
days the date for the payment of any dividend, as a record date for the
determination of the persons entitled to receive payment of such dividend,
provided that such notice of any record date is given, not less than seven (7)
days before such record date, by newspaper advertisement in the manner provided
in the Act. Where no record date is fixed in advance as aforesaid, the record
date for the determination of the persons entitled to receive payment of any
dividends shall be at the close of business on the day which the resolution
relating to such dividend is passed by the board.
INFORMATION AVAILABLE TO SHAREHOLDERS
12.01 Restrictions on Availability
Except as provided by the Act, no shareholder shall be entitled to obtain
information respecting any details or conduct of the Corporation's business
which in the opinion of the directors would not be expedient or in the interests
of the Corporation to communicate to the public.
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12.02 Inspection of Records by Shareholders
The directors may from time to time, subject to rights conferred by the
Act, determine whether and to what extent and at what time and place and under
what conditions or regulations the documents, books and registers and accounting
records of the Corporation or any of them shall be open to the inspection of
shareholders and no shareholder shall have any right to inspect any document or
book or register or account record of the Corporation except as conferred by
statute or authorized by the board of directors or by a resolution of the
shareholders.
12.03 Registered Office and Separate Records Office
Until changed in accordance with the Act, the registered office of the
Corporation shall be at a place within Alberta specified in the notice
prescribed for by Section 19(2) of the Act and at such location therein as the
board may from time to time determine. The records office will be at such
location, if any, as the board may from time to time determine.
NOTICES
13.01 Method of Giving Notices
Any notice or other document required by the Act, the regulations, the
articles or the by-laws to be sent to any shareholder or director or to the
auditors shall be delivered personally or sent by prepaid mail or by telegram or
cable or telex to any such shareholder at his latest address as shown in the
records of the Corporation or its transfer agent and to any such director at his
latest address as shown in the records of the Corporation or in the last notice
filed under Section 101 or 108 of the Act, and to the auditor at his business
address. A notice shall be deemed to have been given and received when it is
delivered personally to any such person or to his address as
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aforesaid; a notice mailed shall be deemed to have been given when deposited in
a post office or public letter box; and a notice sent by any means of
transmitted or recorded communication shall be deemed to have been given when
dispatched or delivered to the appropriate communication company or agency or
its representative for dispatch. The secretary may change or cause to be changed
the recorded address of any shareholder, director, officer, auditor or member of
a committee of the board in accordance with any information believed by him to
be reliable.
13.02 Notice to Joint Shareholders
if two (2) or more persons are registered as joint holders of any share,
any notice may be addressed to all of such joint holders but notice addressed to
one of such persons shall be sufficient notice to all of them.
13.03 Persons Entitled by Death or Operation of Law
Every person who, by operation of law, transfer, death of a shareholder or
any other means whatsoever, shall become entitled to any share, shall be bound
by every notice in respect of such share which shall have been duly given to the
shareholder from whom he derives his title to such share prior to his name and
address being entered on the securities register (whether such notice was given
before or after the happening of the event upon which he became so entitled) and
prior to his furnishing to the Corporation the proof of authority or evidence of
entitlement prescribed by the Act.
13.04 Non-Receipt of Notices
If a notice or document is sent to a shareholder by prepaid mail in
accordance with Section 13.01 hereof and the notice or document is returned on
two (2) consecutive occasions, it shall not be necessary to send any further
notice or document
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to the shareholder until he informs the Corporation in writing of his new
address; provided, always, that the return of a notice of a shareholders'
meeting mailed to a shareholder in accordance with Section 13.01 of this by-law
shall be deemed to be received by the shareholder on the date deposited in the
mail notwithstanding the return of notice.
13.05 Omissions and Errors
The accidental omission to give any notice to any shareholder, director,
officer, auditor or member of a committee of the board or the non-receipt of any
notice by any such person or any error in any notice not effecting the substance
thereof shall not invalidate any action taken at any meeting held pursuant to
such notice or otherwise founded thereon.
13.06 Signature on Notices
Unless otherwise specifically provided, the signature of any director or
officer of the Corporation to any notice or document to be given by the
Corporation may be written, stamped, typewritten or printed or partly written,
stamped, typewritten or printed.
13.07 Waiver of Notice
Any shareholder, proxyholder, or other person entitled to attend a meeting
of shareholders, director, officer, auditor or member of a committee of the
board may at any time waive any notice, or waive or abridge the time for any
notice, required to be given to him under the Act, the regulations thereunder,
the articles, the by-laws or otherwise and such waiver or abridgement, whether
given before or after the meeting or other event of which notice is required to
be given, shall cure any default in the giving or in the time of such notice, as
the case may be. Any such waiver or abridgement shall be in writing except a
waiver of
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notice of a meeting of shareholders or of the board or a committee of the board
which may be given in any manner.
DIVISIONS
14.01 Divisions
The board may cause the business and operations of the Corporation or any
part thereof to be divided into one or more divisions upon such basis, including
without limitation, types of business or operations, geographical territories,
product lines, or goods or services provided, as may be considered appropriate
in each case. In connection with any such division, the board or, subject to any
direction by the board, the president, may authorize from time to time, upon
such basis as may be considered appropriate in each case:
(a) Subdivision and consolidation - the further division of the business and
operations of any such division into sub-units and the consolidation of the
business and operations of any such divisions and sub-units;
(b) Name - the designation of any such division or sub-unit by and the carrying
on of the business and operations of, any such division or sub-unit under,
the name other than the name of the Corporation, provided that the
Corporation shall set out its name in legible characters in all places
required by law; and
(c) Officers - the appointment of officers for any such division or sub-unit,
the determination of their powers and duties, and the removal of any such
officers so appointed, provided that any such officer shall not, as such,
be officers of the Corporation.
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MISCELLANEOUS
15.01 Financial Year
The board shall determine the financial year of the Corporation from time
to time.
15.02 Directors to Require Surrender of Share Certificates
The directors in office when a Certificate of continuance is issued under
the Act are hereby authorized to require the shareholders of the Corporation to
surrender their share certificates, or such of their share certificates as the
directors may determine, for the purpose of cancelling the share certificates
and replacing them with new share certificates that comply with Section 45 of
the Act, in particular, replacing existing share certificates with share
certificates that are not negotiable securities under the Act. The directors in
office shall act by resolution under this section and shall in their discretion
decide the manner in which they shall require the surrender of the existing
share certificates and a time in which the shareholders must comply with the
requirement and the form or forms of the share certificates to be issued in
place of the existing share certificates. The directors may take such
proceedings as they deem necessary to compel any shareholder to comply with a
requirement to surrender his share certificate or certificates pursuant to this
Section. Notwithstanding any other provision of this by-law, but subject to the
Act, the directors may refuse to register the transfer of shares represented by
a share certificate that is not then surrendered pursuant to a requirement under
this section.
15.03 Financial Assistance to Shareholders, Employees and Others
The Corporation may give financial assistance by means
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of a loan, guarantee or otherwise:
(a) to any person in the ordinary course of business if the lending of money is
part of the ordinary business of the Corporation;
(b) to any person on account of expenditures incurred or to be incurred on
behalf of the Corporation;
(c) to a holding body corporate if the Corporation is a wholly owned subsidiary
of the holding body corporate;
(d) to a subsidiary body corporate of the Corporation; or
(e) to employees of the Corporation or any of its affiliates:
(i) to enable or assist them to purchase or erect living accommodations
for their own occupation; or
(ii) in accordance with the plan for the purchase of shares of the
Corporation or any of its affiliates to be held by a trustee;
and, subject to the Act:
(a) to a shareholder or director of the Corporation or of an affiliated
corporation;
(b) to an associate of a shareholder as defined by Section 1(c) of the Act or
of a director of the Corporation or of an affiliated corporation; or
(c) to any person for the purpose of or in connection with a purchase of a
share issued or to be issued by the Corporation or an affiliated
corporation.
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15.04 Severability
The invalidity or unenforceability of any provision of this by-law shall
not affect the validity or unenforceability of the remaining provisions of this
by-law.
15.05 Shareholders Approval to Amend By-law Number 1
Unless the articles, any other by-law or a unanimous shareholders'
agreement otherwise provide, the directors may, by resolution, make, amend or
repeal this by-law. The directors shall submit any amendment or a repeal of any
provision of this by-law, made pursuant to this Section, to the shareholders at
the next meeting of the shareholders, and the shareholders may, by ordinary
resolution, confirm, reject or amend the amendment or the repeal. An amendment
or a repeal of any provision of this by-law is effective from the date of the
resolution of the directors as made hereunder until it is confirmed, confirmed
as amended, or rejected by the shareholders or until it ceases to be effective,
and, if the amendment is confirmed, it shall continue in effect in the form in
which it was so confirmed. If an amendment or repeat of this by-law is rejected
by the shareholders or if the directors do not submit an amendment or a repeal
of this by-law to the shareholders as required hereunder, the amendment or
repeal ceases to be effective and no subsequent resolutions of the directors to
amend or repeal any provisions of this by-law having substantially the same
purpose or effect is effective until it is confirmed or confirmed as amended by
the shareholders. A shareholder entitled to vote at an annual meeting of the
shareholders may in accordance with Section 131 of the Act make a proposal to
amend or repeal any provision of this by-law.
15.06 Effective Date
This by-law shall come into force upon the issuance of
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the Certificate of Incorporation, continuance or amalgamation as the case may
be, under the Act.
15.07 Continuation
Notwithstanding that the articles of the Corporation under the Companies
Act of Alberta are repealed as of the coming into force of this by-law, such
repeal shall not affect the previous operation of any provision of the articles
so repealed or affect the validity of any act done or right, privilege,
obligation or liability acquired or incurred under, where the validity of any
contract or agreement made pursuant to, any such provision of the articles prior
to its repeal. All officers and persons acting under the articles so repealed
shall continue to act as if appointed under the provisions of this by-law and
all resolutions of the shareholders or board passed under the repealed articles
shall continue to be valid acts of the Corporation.
CONFIRMED by the shareholders in accordance with the Act this 25th day of
November , 1993
-------------------
SECRETARY
ROGER N. GIMBY
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<PAGE>
-49-
the Certificate of Incorporation, continuance or amalgaination as the case may
be, under the Act.
15.07 Continuation
Notwithstanding that the articles of the Corporation under the Companies
Act of Alberta are repealed as of the coming into force of this by-law, such
repeal shall not affect the previous operation of any provision of the articles
so repealed or affect the validity of any act done or right, privilege,
obligation or liability acquired or incurred under, where the Validity of any
contract or agreement made pursuant to, any such provision of the articles prior
to its repeal. All officers and persons acting under the articles so repealed
shall Continue to act as if appointed under the provisions of this by-law and
all resolutions of the shareholders or board passed under the repealed articles
shal1 continue to be valid acts of the Corporation.
CONFIRMED by the shareholders in accordance with the Act this day of
NOVEMBER, 1993
/s/ ROGER N. GIMBY
------------------
SECRETARY
ROGER N. GIMBY
E-60
By-law No. 1 of Brocker Investments Ltd. (the "Corporation") be and is hereby
amended by the following immediately after Section 4.02 of the said By-law:
AMENDMENT TO BY-LAWS
"4.02A Additional Directors
If the Articles, so provide, the directors may, between annual meetings
of shareholders, appoint one or more additional directors of the
Corporation to serve until the next annual meeting of shareholders, but
the number of additional directors shall not at any time exceed one-third
(1/3) of the number of directors who held office at the expiration of the
last annual meeting of the Corporation."
APPROVED BY THE BOARD OF DIRECTORS this 9 day of September, 1998.
/s/ [ILLEGIBLE]
----------------
Signature
RATIFIED BY THE SHAREHOLDERS OF THE CORPORATION this 23 day of October, 1998.
/s/ [ILLEGIBLE]
----------------
Signature
E-61
================================================================================
AGREEMENT FOR SALE
AND PURCHASE OF SHARES
Parties
RH CARTER and RH AND GM CARTER
FAMILY TRUST
BROCKER INVESTMENTS (N.Z.) LIMITED
Relating to Industrial Communications Service
Limited
LOWNDES JORDAN
BARRISTERS & SOLICITORS
================================================================================
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<PAGE>
AGREEMENT dated _______________________ 1997
PARTIES
1. The persons whose names addresses and descriptions are set out in
Schedule 2 (jointly and severally referred to as the Vendors)
2. BROCKER INVESTMENTS (N.Z.) LIMITED at Auckland (Purchaser), a subsidiary
of Brocker Investments Limited a company incorporated under the laws of
Alberta, Canada (BKI)
INTRODUCTION
A. The Vendors are the holders of the Shares together with all rights
attaching to the Shares.
B. The Vendors has agreed to sell to the Purchaser and the Purchaser has
agreed to purchase from the Vendors all the Shares for the Consideration
and upon the terms and conditions contained in this Agreement.
TERMS
1. Interpretation
1.1 Defined Terms: In this Agreement the following terms shall have the
meanings specified:
Accounts each and every part of the financial statements of
the Company being the full balance sheet and profit
and loss accounts for the financial years to 31
March 1996 together with trading figures for the
period ended 31 January 1997 copies of which have
been provided to the Purchaser.
Associated Person has the meaning given in section OD7(l) of the
Income Tax Act 1994.
Business Day a day (other than a Saturday or Sunday) on which
registered banks are open for business.
Business Records all books of account, accounts, records, files,
data, databases, certificates or other evidence of
title to assets and information howsoever recorded
or stored relating to or required for the business
of the Company or pertaining to its affairs.
Cashflow shall have the meaning ascribed to that term in the
Escrow Agreement.
2
Charge includes option, right to acquire, lien, pledge,
mortgage, assignment, charge, security interest,
bailment, or encumbrance or adverse interest of any
nature whether legal or equitable and no matter how
arising.
Company Industrial Communications Service Limited, a company
incorporated under the Companies Act 1955 as a
private company limited by shares and reregistered
under the Companies Act 1993 under No. AK 183068
having its registered office at Auckland and having
its capital divided into 200,000 ordinary shares
each of which rank pari passu in all respects and
which have been issued and allotted and are paid up.
Completion completion by the parties of the sale and purchase
of the Shares as provided in clause 5.
Completion Date the actual date of Completion being 31 March 1997 or
7 days after the conditions referred to in clause 9
have been satisfied or waived by the party entitled
to waive the same (whichever is the later) or such
other date as may be agreed upon by the parties.
Consideration the sum of $2,084,998 subject to adjustment as
provided in clause 3.3.
Constitution the Memorandum and Articles of Association of the
Company or its Constitution, as the case may be.
Costs includes any and all costs (on a solicitor and own
client basis), expenses, damages, penalties,
interest, compensation, and awards.
Disclosure Letter the letter of disclosure referred to as such, signed
by the Vendors and dated and delivered to the
Purchaser the same date as this Agreement.
Escrow Agreement the Escrow Agreement in the form annexed as Annexure
B and entitled Form C to be entered into by BKI, the
Vendors and the Trustee.
Exchange Rate $NZl.00 = $CAD0.9295.
GST Act the Goods and Services Tax Act 1985.
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3
GST Goods and Services Tax levied under the GST Act.
Intellectual
Property includes confidential information, trade secrets,
drawings, designs, techniques, programmes,
processes, logos, copyrights, trade or service
marks, patents, registered designs, and other
information and rights capable of being protected
under New Zealand or other laws relating to
intellectual property no matter how recorded or
stored and any applications for same.
Interest Rate the cost of the funds rate for the Purchaser
provided that it shall not be less than the ANZ
Index Lending Rate plus 2% and not more than 14.5%.
Last Accounting Date 31 March 1996.
Penalty Rate the ANZ Index Lending Rate plus 8%.
Premises the land and buildings at Unit 2, 343 Church Street,
Penrose together with all other land and buildings
owned, occupied or used by the Company.
Proceedings includes proceedings, claims, demands, actions,
conferences, mediations, conciliations, compromises,
arbitrations, hearings or appeals arising out of,
preliminary to or in connection with any dispute or
alleged dispute.
Related Company a related company as defined in section 158 of the
Companies Act 1955 or section 5 to 8 of the
Companies Act 1993, as the case may be.
RH and GM Carter the trust created by Roger Henry Carter and Glenda
Family Trust Margaret Carter by Deed dated 21 April 1995.
Shares those shares in the capital of the Company being
acquired by the Purchaser pursuant to this Agreement
as set out in Schedule 1.
Shareholders' Loans the current and term advances to the Company
specified in Schedule 1.
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4
Statutory Books the Company's Constitution, and its Certificate of
Incorporation, Directors' and Members' minute book,
Register of Members, Register of Directors and
Secretaries, Interests Register, Register of Charges
and Seal Register (if any).
Strike Price in respect of the BKI shares to be issued pursuant
to this Agreement is $CAD1.65 per share.
Subsidiary (a) a subsidiary as defined in section 158 of the
Companies Act 1955 or sections 5 to 8 of the
Companies Act 1993; or
(b) an "in-substance subsidiary" as defined in
Statement of Standard Accounting Practice No 8
issued by the New Zealand Society of
Accountants.
Taxation all forms of taxation (including without limitation
capital gains tax, income tax, surtax, estate duty,
stamp duty, rates, GST, PAYE, withholding tax,
provisional tax, duties, customs and other import or
export duties and all other statutory, fiscal,
central or local government or municipal
impositions, duties and levies) and all
re-assessments, penalties, charges, costs and
interest relating to such taxation for
non-compliance or otherwise.
Trustee the trustee approved by the Alberta Stock Exchange
to hold BKI shares pursuant to the Escrow Agreement.
Warranties the representations, warranties, and undertakings of
the Vendors set out in Schedule 2.
1.2 General Interpretation: In the interpretation of this Agreement, unless
the context otherwise requires:
1.2.1 References to the parties include their respective executors,
administrators, successors and permitted assigns;
1.2.2 References to persons include individuals, partnerships, firms,
associations, corporations and unincorporated bodies of persons,
government or semi-government or local body or municipal bodies,
and agencies or political subdivisions of them in any case whether
having separate legal personality or not;
1.2.3 Words in the singular shall include the plural and vice versa;
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5
1.2.4 Words importing one gender shall include the other genders;
1.2.5 Any obligation not to do anything includes an obligation not to
suffer, permit or cause that thing to be done;
1.2.6 Headings have been inserted for convenience only and shall not
affect the construction of this Agreement;
1.2.7 Reference to a statute includes all statutes amending,
consolidating or replacing the statute referred to and includes
all subsidiary or delegated legislation or exercises of authority
under such statute or legislation;
1.2.8 References to clauses, schedules and annexures shall be construed
as references to the same in this Agreement;
1.2.9 References to money are references to New Zealand currency.
1.3 Joint and Several: The covenants herein expressed or implied shall bind
all persons executing this Agreement and any two or greater number of
them jointly and each of them severally.
1.4 Time of the Essence: Time shall be of the essence of this Agreement both
as to dates and periods.
1.5 Precedence of Documents: If there is any conflict between the provisions
of this Agreement and the Escrow Agreement, the provisions of this
Agreement shall prevail.
2. Agreement for Sale and Purchase
2.1 Sale and Purchase: The Vendors agree to sell and the Purchaser agrees to
purchase the Shares and the Shareholders' Loans for the Consideration.
3. Consideration and Payment
3.1 Satisfaction of Consideration: The Consideration shall be paid or
satisfied by the Purchaser as follows:
3.1.1 Deposit: By payment of a deposit of $387,998 in cash on the
Completion Date;
3.1.2 Share Exchange: The balance of $1,697,000 (subject to adjustment
as provided in clause 3.3) by way of the issue and allotment to
the Vendors free from all Charges in the proportions referred to
in the 3rd column of Schedule 2 of 955,977 fully paid ordinary
shares in the capital of BKI (based on the Strike Price converted
to $NZ at the Exchange Rate) ranking in all respects pari passu
with the existing ordinary shares in the capital of BKI as
provided in clauses 3.2 and 3.3.
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6
3.2 Issue of Shares: The Purchaser shall procure the issue of BKI shares
pursuant to clause 3.1.2 on the following basis:
3.2.1 195,477 BKI shares shall be issued on the Completion Date by BKI
to the Trustee to be held in escrow pursuant to the Escrow
Agreement but not subject to earn out conditions and released to
the Vendors on 31 March 1998.
3.2.2 760,500 BKI shares (Earnout Shares) shall be issued on the
Completion Date to the Trustee to be held in escrow pursuant to
the Escrow Agreement and subject to the earn out and escrow
conditions specified in clause 3.3 and in the Escrow Agreement, to
be released to the Vendors as provided in clause 3.2.3.
3.2.3 The shares referred to in clause 3.2.2 shall be released in 3
tranches on 31 March 1998 (a maximum of 123,182 shares), 31 March
1999 (a maximum of 318,659 shares) and 31 March 2000 (a maximum of
318,659 shares).
3.3 Escrow and Earn Out Provisions: The BKI shares referred to in clause 3.2
shall be held by the Trustee subject to the following conditions:
3.3.1 The Earnout Shares shall only be released to the Vendors if the
Company produces sufficient cumulative Cashflow in the financial
years ending on 31 March 1998 and 31 March 1999 (Earnout Period).
3.3.2 For the purposes of this clause 3.3 the parties anticipate that
the Company will produce cumulative Cashflow of not less than $NZ
1,350,000 (Earn Out Cashflow) in the Earnout Period. It is agreed
that the Consideration shall be reduced on the basis of a $NZ 1.00
reduction for each $NZ 1.00 by which the cumulative Cashflow of
the Company falls short of the Earn Out Cashflow over the Earnout
Period.
3.3.3 Subject to clause 3.2.3 the BKI shares to be released on each of
the dates specified in that clause shall not exceeding in value
(based on the Strike Price converted to $NZ at the Exchange rate)
the cumulative Cashflow of the Company during the Earnout Period
or the portion of the Earnout Period which has elapsed by such
date.
3.3.4 Final Adjustment of Acquisition Price: To the extent that the Earn
Out Cashflow is not achieved in the Earnout Period then the
Consideration shall be reduced on the basis provided in clause
3.3.2 and the corresponding number of BKI shares held in escrow
shall be cancelled.
3.4 Any dividends declared in respect of BKI shares held in escrow pursuant
to clause 3.2 or 3.3 shall be held in trust by the Trustee. Such
dividends declared in respect of shares which are released to the Vendors
shall be paid to the Vendors when the shares are released. Any dividends
held in trust by the Trustee in respect of BKI shares which are cancelled
will be forfeited to BKI on the date of cancellation.
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7
3.5 Apportioning of Consideration: The Consideration shall be apportioned
amongst the Vendors (if more than one) as nearly as may be in proportion
to their respective holdings of the Shares however the Purchaser shall
have no responsibility for such apportionment and the Vendors's
solicitors' receipt shall be sufficient discharge of the Purchaser's
obligations in respect of satisfaction of the Consideration.
3.6 Interest: The payment provided in clause 3.1.2 shall bear interest at the
Interest Rate which shall be paid in full by the Purchaser to the Vendor
on 31 March 1998. If either of the payments provided in clauses 3.1.1 or
3.1.2 are not paid on the due date for payment they shall bear interest
at the Penalty Rate from the due date for payment to the date of actual
payment.
4. Vendors' Obligations on or before Completion
4.1 On or before Completion the Vendors shall:
4.1.1 Release of Liability to Associated Persons: Except in respect of
the Shareholder Loans, procure that the Company is released
unconditionally from all liability and obligations whatsoever
(whether actual or contingent) to the Vendors or any Associated
Person of the Vendors. If such release is not or cannot properly
be provided on or before Completion then the Vendors will
indemnify the Company and the Purchaser from and against all Costs
and Proceedings in respect of such liability and obligations
provided that liabilities and obligations incurred in respect of
normal trade purchases or transactions on usual commercial terms
for payment and performance shall not be required to be so
released;
4.1.2 Access to Premises and Business: Ensure that the Purchaser and its
representatives have full access to the Premises, the Statutory
Books and the Business Records from the date of this Agreement and
will be given promptly all information they may reasonably require
concerning the business or affairs of the Company;
4.1.3 Filing of Satisfactions of Charges: File memoranda of satisfaction
with the Registrar of Companies, the High Court Chattels Register
or the Land Transfer Office or the Motor Vehicles Security
Register (as appropriate) in respect of all Charges registered
against the property of the Company where those Charges have been
released;
4.1.4 Service Agreement: Procure the execution by the Company of an
employment contract for a term of 3 years with Roger Carter as
General Manager of the Company in the form annexed as Annexure A.
4.1.5 Personal Assets: Procure that all motor vehicles (Toyota Starlet
and two Peugeots) are removed from the Company asset register by
the Completion Date.
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8
4.1.6 Building Improvements: Procure that all building assets of the
Company which appear in the Company asset register are vested in
the lessor of the Premises by the Completion Date.
5. Completion
5.1 Completion shall take place on the Completion Date at the offices of the
Vendors's solicitors Mason Lawrie and Stainton at 2.15 p.m. or at such
other time or place as the parties shall agree at which time the
Purchaser shall be entitled to the possession of the business conducted
by the Company and the Vendors will hand to the Purchaser:
5.1.1 Share Transfers: Transfers of the Shares to the Purchaser and/or
its nominee duly executed by the Vendors in registrable form;
5.1.2 Share Certificates: The share certificates (if any) for the Shares
or if none have been issued a statutory declaration by an officer
of the Company to such effect;
5.1.3 Shareholders' Loans: Absolute assignments in favour of the
Purchaser of the Shareholders' Loans;
5.1.4 Pre-emptive Rights Waivers: A waiver signed by all the
shareholders of the Company whereby they waive all rights of
pre-emption conferred on them by the Constitution or otherwise in
respect of the transfer of all or any of the Shares;
5.1.5 Directors' Resolutions: Evidence of the passing of effective
resolutions of the Directors of the Company approving the transfer
of the Shares and directing that upon presentation of the same
duly executed the name of the Purchaser and/or its nominee (as the
case may be) be entered in the Register of Members of the Company
in respect of the Shares.
5.1.6 Shareholders' Resolutions: Evidence of the passing of effective
shareholders' resolutions appointing Michael Ridgway as a director
of the Company in addition to Roger Carter.
5.1.7 Releases of Charges over Shares: Unconditional releases of any
Charges over any of the Shares;
5.1.8 Resignations: Resignations in writing of Glenda Margaret Carter as
a director of the Company and acknowledgement from her in a form
acceptable to the Purchaser that the Company has no liability
(whether monetary or otherwise) to her whether by way of fees,
salary, reimbursement for expenditure, compensation or otherwise
and that they have no claims of any nature whatsoever against the
Company;
5.1.9 Company Records: The Statutory Books, the Business Records and the
common seal(s) of the Company or if there is no common seal, a
certificate from a director confirming that;
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9
5.1.10 Pre-conditions: Evidence satisfactory to the Purchaser that the
Vendors has fulfilled its obligations under clause 4;
and against compliance with the above provisions the Purchaser shall pay
or satisfy the Consideration as specified in clause 3.1.1.
6. Default at Completion
6.1 Default by Vendors: Without prejudice to clause 8, if any of the
provisions of clauses 4 or 5 are not fully complied with on Completion,
the Purchaser may (in addition to and without prejudice to all other
rights or remedies available to the Purchaser under this Agreement or
otherwise) at the Purchaser's option:
6.1.1 Rescind: Rescind this Agreement; or
6.1.2 Completion: Effect Completion so far as practicable having regard
to the defaults which have occurred (without releasing the Vendors
from liability to comply as soon as possible with the Vendors's
obligations under clauses 4 and 5); or
6.1.3 Delay Completion: Fix a new date for Completion not being more
than 28 days after the Completion Date) and in that case the
Vendors shall pay to the Purchaser interest at the Interest Rate
on the Consideration payable on the Completion Date from the date
on which Completion was due until Completion takes place. If
Completion does not take place other than by reason of a default
by the Purchaser then such payment shall not be refundable to the
Vendors;
6.2 Default by Purchaser: Subject to clause 3.6, if from any cause whatsoever
save the default of the Vendors any portion of the Consideration is not
paid upon the due date for payment the Purchaser shall pay to the Vendors
interest at the Interest Rate on the portion of the Consideration so
unpaid from the due date for payment until payment, without prejudice to
any of the Vendors's rights or remedies.
7. Warranties
7.1 Vendors Warranties: The Vendors and each of them jointly and severally
represent, warrant and undertake to the Purchaser in terms of the
Warranties and it is agreed that:
7.1.1 Investigations not to affect Warranties: Except as disclosed in
Schedule 3 and/or the Disclosure Letter, the Warranties shall not
be modified, qualified or discharged or in any way affected by any
investigation made by the Purchaser into the affairs of the
Company;
7.1.2 Separate and Independent: Each of the Warranties shall be separate
and independent and save as expressly otherwise provided shall not
be limited by reference to any other of the Warranties or any
other provision of this Agreement.
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10
7.2 Reliance on Warranties: The Vendors acknowledge that the Purchaser has
entered into this Agreement in reliance (among other things) on the
Warranties.
7.3 Vendors' Covenants: The Vendors and each of them jointly and severally
warrant, represent and undertake to the Purchaser and also as a separate
covenant to the Company:
7.3.1 Indemnity: That the Vendors and each of them jointly and severally
will keep the Purchaser and the Company fully indemnified against
all and any depletion in or reduction in the value of the Shares
or any of the assets of the Purchaser or the Company and all
Proceedings and Costs reasonably suffered or incurred by the
Purchaser or the Company as a result of or in relation to any
breach or non-fulfilment of any of the Warranties and all Costs
incurred in making, defending or compromising any Proceedings in
relation to facts or matters which are or would if proved or might
constitute such a breach or non-fulfilment; and
7.3.2 No Representations Made: That no promise or representation has
been made to them in connection with any of the Warranties or the
Disclosure Letter in respect of which the Company or any of the
directors or employees of the Company might be liable; and
7.3.3 No Breach of Warranties Prior to Completion: That they will
procure that (except only as may be necessary to give effect to
this Agreement) neither they nor the Company shall do, allow or
procure any act or omission before Completion which would
constitute a breach of any of the Warranties if they were given at
any time prior to or on Completion or which would make any of the
Warranties inaccurate or misleading if they were so given; and
7.3.4 Disclosure of Change in Circumstances: That they will forthwith
disclose in writing to the Purchaser any matter or thing which may
arise or become known to them or any of them after the date of
this Agreement and prior to Completion which is inconsistent with
any of the Warranties or which might render any of them inaccurate
or misleading when given at Completion or which might be material
to be known by a purchaser for value of the Shares or which might
have a material adverse effect on the value of the Shares or any
of the assets of the Company.
7.4 Warranty Limitations: Notwithstanding any other provisions of this
Agreement, the warranties are made and given subject to the provisions of
Schedule 3.
8. Rights of Rescission
8.1 Rescission for Breach: Without prejudice to clause 6, if on or prior to
Completion it should be found that:
8.1.1 Unfulfilled Obligations: Any obligation of the Vendors contained
in this Agreement is or will on Completion be unfulfilled; or
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11
8.1.2 Breach of Warranties: Any Warranty is or may at Completion be
inaccurate or misleading;
then the Purchaser may, without prejudice to any other rights available
to it under clause 8.2 of this Agreement, by notice in writing to the
Vendors, rescind this Agreement.
8.2 Effect of Rescission under Clause 8.1: Rescission of this Agreement under
clause 8.1 shall not extinguish any right of the Purchaser to damages or
compensation to the extent of the audit costs and the rental review costs
incurred by the Purchaser.
8.3 Rescission for Matters other than Default: If on or prior to Completion:
8.3.1 Destruction of Assets: Any asset of the Company shall be destroyed
or damaged to an extent which in the opinion of the Purchaser
materially and adversely affects the Company or the carrying on of
the business of the Company; or
8.3.2 Material Adverse Change: Any other event shall occur which affects
or is likely to affect adversely to a material degree the Company
or the financial position, business, assets or profitability of
the Company or the value of the Shares to the Purchaser,
the Purchaser shall be entitled by notice in writing to the Vendors to
rescind this Agreement, but the occurrence of such an event shall not
give rise to any right to damages or compensation except where the
Vendors has failed to give notice of such event as required by clause
7.3.4.
9. Conditions
9.1 This Agreement is conditional upon:
9.1.1 Charge Holders' Consent: All debenture holders or other Charge
holders having Charges over the Shares or any assets of the
Company (where the failure to obtain any approval might constitute
an event of default under such Charge) approving the transfer of
the Shares to the Purchaser and agreeing to release such Charges
on terms satisfactory to the Vendors and the Purchaser; and
9.1.2 Asset Lessor's Consent: Consent being given by the lessor of any
assets leased by or on hire or conditional purchase to the Company
to the transfer of the Shares to the Purchaser where the failure
to obtain such consent might constitute an event of default under
such lease or hire or conditional purchase agreement; and
9.1.3 Licensor's Consent: Consent being given by the licensors specified
in Schedule 4 to the transfer of the Shares; and
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9.1.4 Government or Regulatory Consents: Consent being given by any New
Zealand or Canadian government or regulatory body whose consent is
required to enable completion of this Agreement; and
9.1.5 Material Contractors' Consent: Consent being given by the other
party or parties to any agreement under which the Company enjoys
any material benefit where without such consent such agreement
might be terminated, which agreements include without limitation
those specified in the Schedule 4; and
9.1.6 Landlord's Consent: The lessor of the Premises consenting to the
transfer of the Shares to the Purchaser; and
9.1.7 The approval of the Alberta Stock Exchange.
9.1.8 The approval of the board of directors of the Purchaser.
9.2 Fulfilment of Conditions: Each of the parties shall do all acts and
things reasonably necessary to procure the fulfilment of the conditions
set out in clause 9.1.
9.3 Benefit of Conditions: The Vendors acknowledges that the conditions
contained in clauses 9.1.1 to 9.1.8 have been inserted solely for the
protection of the Purchaser and accordingly the Purchaser may waive any
of such conditions and in such event this Agreement shall remain binding
on the parties.
9.4 Failure of Conditions: Should:
9.4.1 Not Satisfied: Any of the conditions set out in clause 9.1 not be
fulfilled or waived (as the case may be) by 7 April 1997 or such
later date as may be agreed by the parties; or
9.4.2 Unreasonable Conditions: Any consent or approval required in terms
of the conditions set out in clause 9.1 be granted on terms not
reasonably acceptable to any affected party;
then this Agreement shall be voidable by notice in writing and this
Agreement shall then be at an end and the parties shall not have any
further rights or obligations except that the Vendors will repay any
deposit.
10. Non Competition
10.1 Non-Competition: In consideration of the Purchaser entering into this
Agreement and as a condition precedent the Vendors and each of them
acknowledge that the value of the goodwill of the business of the Company
upon which the Consideration has been assessed is dependent upon and has
been calculated on the basis that they will not carry on a business the
same as or in substantial competition with that at present carried on by
the Company in opposition to the Company after Completion for the period
specified below and accordingly the
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Vendors and each of them jointly and severally covenant and agree with
the Purchaser that:
10.1.1 Business: They will not during a period which is the greater of 1
years from the Completion Date or 1 year from the date of
termination of the Service Agreement of Roger Carter provided for
in clause 4.1.4 at any place in New Zealand (except as a servant
of the Company or the Purchaser) or except with the prior written
consent of the Purchaser be directly or indirectly engaged or
connected or interested in either on their own account or as a
partner with or as an employee of any other person or as a
shareholder, director, officer, consultant, adviser or employee of
any person (other than as holder of not more than 5% of the shares
in the capital of any public company if and only so long as such
shares are listed on any official stock exchange) or directly or
indirectly assist financially any such business; and
10.1.2 Orders: They will not on their own account or for any person,
enterprise, firm, trust, joint venture or syndicate solicit orders
for such business otherwise than for the benefit of the Company
from any person, firm or company who at the Completion Date was or
had previously been a customer of the Company; and
10.1.3 Employees: They will not on the Vendors' own account or for any
person, enterprise, firm, trust, joint venture or syndicate entice
or attempt to entice away from the Company or the Purchaser any
employee of the Company or the Purchaser.
10.2 Provisions with respect to Covenants: Each of the covenants contained in
clause 10.1 shall:
10.2.1 Separate and Severable: Be separate and severable and to the
extent that any such provision is unenforceable by reason of its
period, scope or area being held by a court of competent
jurisdiction to be unreasonable, then such provision shall be
limited to the maximum period, scope or area which such court
considers reasonable and shall be enforceable on those terms:
10.2.2 Benefit of Purchaser and Assigns: Be given for the benefit of and
be enforceable by the Purchaser and the Purchaser's successors and
assigns.
11. Limitation of Trustee Liability
11.1 Notwithstanding any other provision of this Agreement but subject to
clause 11.2 the liability of the trustees of the R H and G M Carter
Family Trust (Trust) shall not be construed as unlimited personal
obligations but shall be limited to a liability to pay the money and
perform and observe the provisions of this Agreement out of and to the
extent of the assets of the R H and G M Carter Family Trust or such
additional assets as would have been held by them as such Trustees in the
normal course of the administration of the Trust but for their default.
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11.2 Clause 11.1 shall in no respect limit the personal liability of Roger
Henry Carter.
12. Arbitration
12.1 If any dispute or difference shall arise between any of the parties in
any way arising out of or in connection with this Agreement such dispute
or difference shall be referred to the arbitration of a single arbitrator
if the parties can agree upon one or otherwise of two arbitrators one to
be appointed by the Vendors and one by the Purchaser or an umpire to be
appointed by the two arbitrators prior to entering into consideration of
the matter and any such reference shall be a submission to arbitration
within the meaning of the Arbitration Act 1908 and its amendments.
13. General
13.1 Non-Merger: The warranties, indemnities, representations and undertakings
set out in this Agreement shall notwithstanding any rule of law to the
contrary not merge in the instruments of transfer executed pursuant to
this Agreement but shall remain in full force and effect and enforceable
to the fullest extent.
13.2 No Announcement: The parties agree that (except as may be required by law
or by the requirements of the Alberta Stock Exchange) they will not make
any announcement or disclosures as to the subject matter of this
Agreement except in a form and manner and at such time as all parties may
agree.
13.3 Notices: Any notice to be given pursuant to this Agreement shall be given
in accordance with and subject to the following provisions of this clause
14.3:
13.3.1 In Writing: All notices shall be in writing signed by a duly
authorised officer of the party giving the notice or by the
party's solicitor;]
13.3.2 Delivery: Without prejudice to any other sufficient mode of
delivery, a notice may be sent by hand, prepaid post, telex or
facsimile to the address or number (in the case of telex or
facsimile) of the intended recipient last advised to the sender in
accordance with this clause. The initial addresses and numbers of
the parties are:
Vendors c/o Mason Lawrie & Stainton
Barristers and Solicitors
PO Box 989
AUCKLAND 1
Facsimile: 307 2093
Purchaser 4 Bond Street
Grey Lynn
AUCKLAND
Facsimile: 376 7891
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13.3.3 Notice by Hand: Subject to clause 13.3.6, a notice delivered by
hand shall be received on delivery;
13.3.4 Notice by Post: Subject to clause 13.3.6, a notice sent by prepaid
post shall be deemed to be received 3 days after being posted;
13.3.5 Notice by Telex or Facsimile: Subject to clause 13.3.6, a notice
sent by telex or facsimile shall be deemed to be received at the
time of transmission where a transmission report or answerback
code produced by the sender's machine indicates successful
transmission;
13.3.6 Receipt Outside Business Hours: Any notice received or deemed to
be received pursuant to clauses 13.3.3, 13.3.4 or 13.3.5 after
5.00 pm (recipient's time) on a Business Day in the recipient's
city or on a day which is not a Business Day in the recipient's
city shall be deemed to be received at 9.00 am (recipient's time)
on the next Business Day in the recipient's city;
13.3.7 Proof of Delivery: In proving delivery of a notice, it shall be
sufficient:
(a) By Hand: In the case of a notice by hand, to provide
evidence that the notice was delivered to the address of
the recipient and no acknowledgement from the recipient
shall be necessary;
(b) By Post: In the case of a notice by post, to provide
evidence that the notice was correctly addressed and posted
in a prepaid envelope;
(c) By Telex or Facsimile: In the case of a notice by telex or
facsimile, to provide the transmission report produced by
the sender's machine showing a successful transmission to
the correct number of the recipient and to have telephoned
the recipient to confirm receipt of a legible copy of such
notice.
13.4 Applicable Law and Jurisdiction: This Agreement shall be governed by and
construed and interpreted in accordance with the laws of New Zealand and
the parties irrevocably submit to the exclusive jurisdiction of the New
Zealand courts.
13.5 Further Assurance: The parties will do all things including without
limitation the execution of documents as shall be necessary to give full
effect to this Agreement.
13.6 Entire Agreement: This Agreement including all schedules, annexures and
exhibits to it, and any documents incorporated by express reference forms
the entire agreement between the parties relating to its subject matter
and supersedes all prior agreements and understandings between the
parties with respect to that subject matter. If there is any conflict
between the terms of this document and any other document forming part of
this Agreement, the terms set out in this document shall prevail.
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13.7 Variation: This Agreement may only be varied by an express written
agreement executed by all the parties or by persons duly authorised in
writing on their respective behalf.
13.8 Costs: Each party shall bear their own costs of and incidental to the
preparation, completion and implementation of this Agreement.
13.9 Waiver: No failure to exercise and no delay in exercising on the part of
the Purchaser any right under this Agreement shall operate as a waiver of
that right nor shall any single or partial exercise of any right preclude
any other or further exercise of such right or the exercise of any other
right. Any such waiver unless otherwise expressly agreed in writing,
shall only apply in respect of the particular circumstances for which it
is given.
13.10 Counterparts: This Agreement may be signed in any number of counterparts,
all of which when taken together constitute one and the same instrument.
Any party may enter into this Agreement by executing any such
counterpart. The parties will co-operate to circulate all counterparts to
each other for the purposes of having all counterparts executed by all
parties as soon as practicable following Completion.
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EXECUTED by the parties.
SIGNED by ) /s/ R H Carter
ROGER HENRY CARTER ) -----------------------
in the presence of: ) R H Carter
[ILLEGIBLE]
- ------------------------- Witness's Signature
- ------------------------- Name
GRANT W SMITH
SOLICITOR
AUCKLAND
- ------------------------- Occupation
- ------------------------- Address
SIGNED by the Trustees of the ) /s/ R H Carter
RH AND GM CARTER FAMILY ) -----------------------
TRUST in the presence of: ) R H Carter
)
) /s/ G M Carter
) -----------------------
) G M Carter
)
) /s/ H B Chellew
) -----------------------
) H B Chellew
[ILLEGIBLE]
- ------------------------- Witness's Signature
- ------------------------- Name
GRANT W SMITH
SOLICITOR
AUCKLAND
- ------------------------- Occupation
- ------------------------- Address
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18
SIGNED for BROCKER (N.Z.) ) Signature /s/ Hal Linstrom
INVESTMENTS LIMITED ) -----------------------
by: )
) Name Hal Linstrom
) -----------------------
) Director/Officer
Signature
-----------------------
Name -----------------------
Director
(C) Lowndes Jordan
Auckland 1997
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SCHEDULE 1
<TABLE>
<CAPTION>
Vendors' Shareholdings
Shareholders No. of Ordinary Shares % of shares in Purchaser
to be allotted (clause 3.1.4)
<S> <C> <C>
Roger Henry Carter 39,200 19.60%
R H and G M Carter 160,800 80.40%
Family Trust
Shareholders' Loans Amount of Loan
Shareholder
R H Carter current account $ 113,570.03
R H Carter term loan $ 77,311.00
R H and G M Carter $ 169,442.26
Family Trust
G M Carter $ 187,756.57
</TABLE>
The forgoing loan balances are subject to verification and amendment if
necessary following audit by KPMG.
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SCHEDULE 2
Warranties (clause 7.1)
1. General
1.1 Disclosure Letter: All information contained or referred to in the
Disclosure Letter is true complete and accurate in all respects
and the Vendors are not aware of any other fact or matter which
renders or might upon its disclosure render any such information
misleading.
1.2 Agreement: The provisions of the recitals to this Agreement,
clause 1.1 of this Agreement and all information contained in the
Schedules and Annexures to this Agreement are complete and]
correct in all respects.
1.3 Information Supplied: All written information which has been given
or authorised to be given by any of the Vendors or the Directors
or Secretary or any of the officials of the Company or by any of
the officials of the Company or by any professional advisers of
the Vendors or the Company to the Purchaser or to any of its
directors officials agents or professional advisers in the course
of the negotiations leading to this Agreement was when given and
will at Completion be true complete and accurate in all respects
and the Vendors are not aware of any other fact or matter which
renders or might upon its disclosure render any such information
misleading.
1.4 All Necessary Disclosures Made: All the facts and circumstances
relating to the Shares and to the assets, business and affairs of
the Company material for disclosure to an intending purchaser of
the Shares have been disclosed to the Purchaser or its advisers in
writing and any such facts arising prior to Completion will
forthwith be disclosed in writing to the Purchaser or its
advisers.
1.5 Constitution: The Constitution of the Company to be handed to the
Purchaser pursuant to clause 5.1.8 of this Agreement will be an
accurate copy or originals, if available, of the documents in
force at Completion and will have annexed a copy of every
resolution required to be annexed by the Companies Act 1955 or the
Companies Act 1993, as the case may be.
2. Shares
2.1 Shares: The Shares constitute the whole of the issued and allotted
share capital of the Company and they are and will be on
Completion held by the Vendors in the Vendors' own right.
2.2 Encumbrances: There is not any and will not at Completion be any
Charge on, over or affecting the Shares and there is no agreement
or commitment to give or create any such Charge and no demand has
been made by any person claiming to be entitled to any such
Charge.
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2.3 No Subsidiaries: The Company never has had and does not have and
will not prior to Completion without the prior written consent of
the Purchaser create or acquire any Subsidiary or any shares in
any other company other than the Company's Subsidiaries.
2.4 No Increase in Capital: The Company has not since the Last
Accounting Date and will not pending Completion increase its share
capital or subdivide, amalgamate, or consolidate the Shares or any
of them nor has it or will it agree to do so.
2.5 No Decrease in Capital: The Company has not at any time repaid or
agreed to repay or redeem or buy back or repurchase any shares of
any class of its share capital or otherwise reduced or agreed to
reduce its issued share capital or any class of its share capital
and has not at any time amalgamated or agreed to amalgamate with
any other company.
2.6 No Related Companies: The Company has no Related Companies.
2.7 No Change of Capital Structure or Name: The Vendors will not
permit to be passed before Completion any resolution by the
Company:
2.7.1 Altering its share capital;
2.7.2 Altering the rights or obligations attaching to any of the
Shares;
2.7.3 Changing its name;
2.7.4 Altering its Constitution.
3. Accounts
3.1 Books of Account: All the Business Records and Statutory Books are
in the Company's possession or under its control and have been
fully and correctly completed and will pending Completion continue
to be so completed and there are and will pending Completion be no
material inaccuracies or discrepancies of any kind contained or
reflected in any of them. They give and reflect and at Completion
will give and reflect a true and fair view of the financial,
contractual and trading position of the Company and of its plant
and machinery, fixed and current assets and liabilities (actual
and contingent), debtors and creditors, work in progress and
stock.
3.2 Retention of Records: The Company holds and will on Completion
have in its possession all books of account and other records
which it is bound by law to retain in its possession either
indefinitely or for a particular period or periods of time.
3.3 Accounts:
3.3.1 True and Fair View: The Accounts are complete and accurate
and give and reflect and will at Completion give and
reflect a true and fair view of the Company, its activities
and its financial status in all respects.
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3.3.2 Comply with Statute: The Accounts comply with all
applicable requirements of the Companies Act 1955, the
Companies Act 1993 and the Financial Reporting Act 1993, as
the case may be.
3.3.3 GAAP: The Accounts have been prepared in accordance with
generally accepted accounting practice as that term is
defined in the Financial Reporting Act 1993 and to the
extent consistent with such generally accepted accounting
practice on a basis consistent with that adopted for
preceding accounting periods.
3.3.4 No Unusual or Extraordinary Items: The Accounts are not
affected by any unusual extraordinary exceptional or
non-recurring items or by any other factor rendering the
results set out in the Accounts (or any of them) unusually
better or worse than they (or any of them) might otherwise
be or have been.
3.3.5 Financial Position: The Accounts properly reflect the
financial position of the Company as at the Last Accounting
Date and of its results for the accounting period ending on
that date.
3.3.6 Full Disclosure: The Accounts fully disclose all the assets
and liabilities (whether ascertained, contingent, deferred
or otherwise and whether or not quantified or disputed) of
the Company as at the Last Accounting Date and make full
provision and/or reserve for all such liabilities.
3.3.7 Provisions for Losses: The Accounts make full provision for
any foreseeable losses which may arise on Completion and/or
on realisation of stock and/or on completion of any
existing or proposed contract.
3.3.8 Provision for Bad Debts: The Accounts make adequate
provision for all bad and doubtful debts of the Company and
for depreciation of the fixed assets of the Company having
regard to their original cost and estimated useful life.
3.3.9 Financial Commitments: The Accounts fully disclose all
financial commitments in existence as at the Last
Accounting Date.
3.4 Period Between Agreement and Completion: From the Last Accounting
Date to Completion:
3.4.1 Conduct of Business: The Company has carried on and will
carry on its business in an efficient normal and proper
manner so that the financial standing and position of the
Company as at Completion will not have deteriorated
materially from that disclosed in the Accounts;
3.4.2 Liabilities: The Company has not incurred and will not
incur any liability (whether contingent or otherwise) and
has not made any payments except in the normal and ordinary
course of business;
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23
3.4.3 Disposals: The Company has not disposed of and will not
dispose of any material portion of its undertaking or any
material part of its fixed assets or any of its goodwill;
3.4.4 Acquisitions: The Company has not acquired any assets of a
capital nature and will not acquire any assets of a capital
nature exceeding $3,000 in value without the Purchaser's
prior consent;
3.4.5 Revaluations: The Company has not revalued upwards and will
not revalue upwards any of its assets;
3.4.6 Capital Investments: The Company has not entered into and
will not enter into any material capital investment or
commitment in excess of $3,000 in aggregate or any major
transaction as that term is defined in section 129(2) of
the Companies Act 1993;
3.4.7 Dividends: The Company has not declared, paid or made and
will not declare, pay or make any dividend, bonus or
similar distribution;
3.4.8 Insurance: The Company has kept and will keep effectively
insured to the full insurable amounts all assets and
undertaking of the Company against all normal insurance
risks including reasonable loss of profits insurance;
3.4.9 Terms of Trade: The Company has not made or permitted and
will not make or permit any change to any of its product
lines or to the terms or conditions of any agency held by
the Company or to the selling prices or terms and
conditions of sale of any products or services of the
Company;
3.4.10 Turnover: The Company has attained a turnover no less than
that for the corresponding period in the previous financial
year;
3.4.11 Deposits: The Company has deposited and will deposit all
amounts received by it to the credit of its bank account
and such amounts appear in the appropriate books of
account;
3.4.12 Debts: The Company has paid and will continue to pay all
its debts as they fell or fall due.
3.5 Non-Disclosure of Liabilities: If it is discovered before or after
Completion that the Company was liable at the Completion Date
(whether contingently or otherwise) to any person in respect of
the Company prior to the Completion Date except in the ordinary
course of business which liability has not been fully disclosed to
the Purchaser then without prejudice to any other rights of the
Purchaser, the Vendors and each of them jointly and severally will
immediately upon demand by the Purchaser pay to the Purchaser or
as directed by the Purchaser the amount of each such liability
after deducting from each such liability any saving to the Company
in Taxation as a result of such liability. For the purposes of
this clause:
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24
3.5.1 The word "liability" shall include liability for or in
respect of Taxation or any re-assessment thereof which the
Company may be required to pay in respect of any period
prior to the Completion Date and which has not been so
fully disclosed and any amount whatsoever (including all
Costs in connection therewith) arising out of any
occurrence or happening which shall have taken place prior
to the Completion Date;
3.5.2 Provision of any amount by way of note to the Accounts
shall not be deemed to be provision of that amount in the
Accounts.
4. Stock
4.1 Valuation: The methods of valuing stock and work in progress as at
the Last Accounting Date (which included a physical stocktaking)
were the same as those adopted for the 3 immediately preceding
financial years and all redundant and obsolete stock was wholly
written off all slow moving stock was written down appropriately
and the value attributed to the remaining stock did not exceed the
lower of direct cost or net realisable value.
4.2 Changes to Stock Since Last Accounting Date: The stock on hand at
Completion will comprise the stock as at the Last Accounting Date
less stock sold and with the addition of stock bought in the
ordinary course of business since that date and no stock currently
held other than that written off or written down in the Accounts
or which are service spares, is slow moving, out of date or
fashion, redundant or obsolete or which will not realise its book
value within 12 months of the Completion Date.
5. GST
5.1 Registration: The Company is registered for the purposes of the
GST Act and:
5.1.1 Not a Member of a Group: The Company has not at any time
been a member of a Group or been treated as a member of a
Group for such purposes and no application for it to be so
treated has at any time been or pending Completion will be
made and no act or transaction has been or pending
Completion will be effected in consequence whereof the
Company is or may be held liable for any GST chargeable
against some other company except the Company's
Subsidiaries;
5.1.2 Compliance with GST Act: The Company has complied and
pending Completion will comply in all respects with the GST
Act legislation;
5.1.3 Maintenance of Records: The Company has given obtained made
and maintained and pending Completion will give, obtain,
make and maintain complete correct and up to date invoices,
records and other documents appropriate or requisite for
the purposes of the GST Act;
5.1.4 No Arrears: The Company is not and will not pending
Completion be in arrears with any payment or returns under
the GST Act or liable to any
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25
abnormal or non-routine payment or any forfeiture or
penalty or to the operation of any penal provision and
where payment is not yet due or receivable has provided for
such payment;
5.1.5 All Supplies Taxable: All supplies made and to be made
pending Completion by the Company are taxable supplies and
the Company is not and will not pending Completion be
denied credit for any input tax.
6. Taxation
6.1 Returns Made: All forms, notices, elections, computations,
payments (including, without limitation, any fines or penalties)
and returns which should be made by the Company for any Taxation
purpose have and will at Completion have been made and are and
will be up-to-date, correct and on a proper basis and none of them
is now or will at Completion be the subject of any dispute with
the Inland Revenue Department or any other Taxation collection
agency. In particular the returns in relation to provisional
Taxation will not give rise to any assessment, adjustment or
set-off (including any claim for interest on unpaid Taxation) by
the Inland Revenue Department.
6.2 Provision in Accounts: Full provision and reserves were made in
the Accounts in respect of all Taxation liabilities to or for
which the Company was at the Last Accounting Date or at any time
since may have become or may become liable to be assessed or
charged or to pay. Provision of any amount by way of a notice to
the Accounts shall not be a provision for the purposes of this
paragraph.
6.3 No Non-commercial Transactions: The Company has not at any time
entered into a transaction or series of transactions containing
steps inserted without any commercial or business purpose apart
from the obtaining of a Taxation or stamp duty advantage.
6.4 Debtors Recorded Appropriately: All amounts included in the
Accounts or (in the case of an amount arising after the date of
the Accounts) in the books of the Company as due from Debtors
represent amounts actually invoiced by the Company to such debtors
not earlier than 3 months prior to the Last Accounting Date (or in
the case of an amount arising after the date of the Accounts not
earlier than 3 months prior to the date on which it was recorded
in the books of the Company) and no part of such amounts still
outstanding has been released on terms that any debtor pays less
than the full book value of its debt or has been written off or
has proved to any extent irrecoverable or is now regarded as
irrecoverable or has been compromised on any terms.
7. Loans
7.1 No Undisclosed Loans: The aggregate amount appearing in the
Accounts as being outstanding in respect of loans owing by the
Company was at the Last Accounting Date the aggregate of all loans
or financial accommodation of whatever nature from any source so
outstanding.
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7.2 Loans Within Corporate Powers: Such aggregate did not (and the
amount outstanding in respect of loans owing by the Company does
not and will not at Completion) exceed any limitation on the
Company's borrowing contained in its Constitution or in any loan
offer, facility letter, debenture or other deed or document
executed by it or, in the case of borrowings on overdraft, its
overdraft facilities.
7.3 Loans from Directors or Shareholders: All amounts outstanding and
appearing in the books of the Company as loan accounts or as due
to directors or shareholders wholly represent money or money's
worth paid or transferred to the Company as the case may be or
remuneration accrued due and payable for services rendered and
(save for such remuneration) no part thereof has been provided
directly or indirectly out of the assets of the Company.
7.4 No Repayments: The Company has not repaid and pending Completion
except as provided in clause 3.1.3 of the attached Agreement will
not repay any loans or other financial accommodation in whole or
in part nor has it by reason of any default by it in any of its
obligations become bound or liable to be called upon to repay
prematurely any loans or borrowed moneys and pending Completion no
such default will occur.
8. Liabilities and Commitments
8.1 No Capital Commitments: Since the Last Accounting Date the Company
has not except in the ordinary course of business made any capital
expenditure or incurred any capital commitments nor has it
disposed of or realised any substantial capital assets or any
interest in such assets and has no outstanding capital commitment
and pending Completion no capital commitments nor disposals of
capital assets or land or any estate or interest in such assets or
land will be undertaken by the Company without the prior written
consent of the Purchaser.
8.2 No Guarantees: The Company is not and will not prior to Completion
become a party to any contract of guarantee or indemnity.
8.3 No Material Contracts: The Company has not entered into and will
not enter into any material contract (including the granting of
options to purchase or Charges over all or any of the Company's
assets) except in the normal and ordinary course of business and
that the Company has not and will not become a party to any
unusual, abnormal or onerous contract or agreement whatsoever.
8.4 No Long Term Contracts: The Company is not and will not on
Completion be a party to any contract of service or supply which
cannot be terminated by not more than 1 month's notice without
giving rise to any claim for damages or compensation.
8.5 No Commitments since Last Accounting Date: The Company has not
since the Last Accounting Date been and will not at Completion be
a party to any contract, commitment or arrangement of any nature
except such as have been entered into in the normal and ordinary
course of trading and are capable of being wholly satisfied
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<PAGE>
27
or performed within 3 months from Completion or of being
terminated within such period without cost to the Company.
8.6 No Arrangements: The Company is not and will not on Completion be
a party to any joint venture, partnership, syndicate or other
consortium arrangement.
8.7 No Agents: No person is authorised to act as agent for the Company
or otherwise to bind the Company other than the directors of the
Company acting as a board and the Company has not appointed any
agents, distributors or managers in respect of any of its products
or services in any part of the world.
8.8 No Default under Agreements: The Company is not now, nor pending
Completion will it become, in default under any agreement to which
it is or may become a party or in respect of any other obligations
binding upon it an no event has occurred which would enable any
third party to terminate any contract or any benefit enjoyed by
the Company.
9. Employees
9.1 Full Disclosure of Terms: Full disclosure in writing of the
current rate of remuneration, fees and expenses payable to each
officer and employee of or consultant to the Company and the terms
of such employment or consultancy (including obligations in
respect of any directors' or officers' keyman or indemnity
insurance) have been made to the Purchaser in writing and no such
officer or employee or consultant has given notice or is under
notice of dismissal or termination of employment of any
consultancy agreement.
9.2 No Amounts Due: No amounts are due to or in respect of any former
officer or employee or consultant and there are outstanding no
arrears of salary, wages, fees, holiday pay or other remuneration.
9.3 No Industrial Disputes: The Company is not involved in any
industrial or trade dispute or any dispute with any trade union or
organisation or body of employees.
9.4 No Changes: No change has been made in the terms of employment or
consultancy by the Company of any person who was employed at the
Last Accounting Date and pending Completion the Company will not
without the Purchaser's prior written consent engage any new
employee or consultant.
9.5 No Other Payments: No moneys other than in respect of remuneration
or emoluments of employment or fees are payable to or for the
benefit of any director or officer of the Company.
9.6 No Profit Sharing: The Company is not and will not prior to
Completion become a party to any agreement with any director,
officer, employee or consultant of the Company under which any
such person is entitled to a share of profits of the Company or to
any bonus calculated on profits or to participate in any share
incentive scheme or share option scheme or similar arrangement and
that no pensions, retiring allowances or other benefits are or
will be payable by the
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Company to any director, officer or employee of the Company during
such person's employment or consultancy.
9.7 No Schemes: There are not now and will not on Completion be in
existence any retirement, death or disability benefit schemes for
directors or employees or any obligations to or in respect of any
present or past directors or employees with regard to retirement,
redundancy, death, sickness or disability pursuant to which the
Company is or may become liable to make any payments.
9.8 No Breaches of Contract: Since the Last Accounting Date no
liability has been incurred or payment made by the Company for
breach of any contract (whether express or implied) of service,
for redundancy or for compensation for loss of office or wrongful
dismissal or in respect of retirement, death, sickness or
disability and no gratuitous payment has been made or will prior
to Completion be made or promised by the Company to or in respect
of any director or employee.
9.9 No Liability for Leave Payments: The Company is not and will not
at Completion be under any liability to any person in respect of
long service leave or accrued annual leave.
9.10 Compliance with Legislation: The Premises and operation of the
business of the Company and the terms on which the employees of
the Company were recruited and are employed comply and will at
Completion comply with the Employment Contracts Act 1991, the
Equal Pay Act 1972, the Human Rights Act 1993, the New Zealand
Bill of Rights Act 1990, the Wages Protection Act 1983, the
Holidays Act 1981, the Health and Safety in Employment Act 1992
and all applicable legislation governing employment and safety of
employees.
10. Statutory Obligations
10.1 Holding of Licences: The Company holds and will on Completion be
in possession of all current licences (including import licences
and concessions, if any) consents, authorities and permits from or
issued by any Governmental Department, municipal or local body or
other authority whether in respect of the Premises, plant,
machinery, buildings or other assets of the business or otherwise
necessary or required to enable it to carry on its business fully
and effectively and that the Company has not had notice that any
such licences, consents, authorities or permits are being or are
likely to be withdrawn or in any manner qualified whether by
reason of the sale of the Shares or otherwise howsoever.
10.2 No Requisitions: There has not since the Last Accounting Date been
and will not on Completion be any unsatisfied requisitions by or
dispute with any local body health authority, government or ad hoc
authority or other body or official or authority having competent
jurisdiction affecting or relating to any of the Premises, plant,
machinery, buildings or other assets of the business, or the
employment of staff by the Company.
10.3 No Illegal Trade Practices: The Company is not, has not been and
will not pending Completion be a party to any agreement,
arrangement, understanding or practice
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which is contrary to the provisions of the Commerce Act 1986, or
the Fair Trading Act 1986, or the Consumer Guarantees Act 1993, or
the Privacy Act 1993.
10.4 No Breach of Statute: The Company has not committed any breach
which was unremedied at the Last Accounting Date of any statutory
provision, order, bylaw or regulation (in every case whether
applicable in New Zealand or elsewhere) binding on or applicable
to it with regard to the formation and operation of the Company,
the carrying on of the business of the Company or any other matter
relating to the Company and that the Company has not since such
date and will not prior to Completion commit any such breach.
10.5 All Documents Stamped: All documents which in any way affect the
right, title or interest of the Company in or to any of its
property, undertaking or assets or to which the Company is a party
and which attract stamp duty have been duly stamped and no
liability to pay stamp duty will arise as a result of Completion
by virtue of any previous transfer of any property, undertaking or
assets to the Company in particular but without limitation under
section 13(4) of the Stamp and Cheque Duties Act 1971.
10.6 Compliance with Companies Act: The Company has complied with and
will up to Completion comply with all the requirements of the
Companies Act 1955 or the Companies Act 1993 (whichever is
applicable) and any Act or Acts amending the same in relation to
the filing of all documents required to be filed with the
Registrar of Companies and otherwise howsoever.
10.7 All Registers Complete: The entries in the Register of Members,
Register of Directors and Secretaries, Interests Register,
Register of Charges and Register of Directors' Shareholdings of
the Company are correct and that such registers have been properly
kept.
11. Properties and Assets
11.1 Leasehold Premises: The Premises are held upon lease terms which
have been fully disclosed to the Purchaser.
11.2 Title and Compliance: The Company had on the Last Accounting Date
and will on Completion have sole title to and possession and
control of all the freehold and leasehold properties used or
occupied by it free from all leases, tenancies or Charges and each
of the said properties complies and will on Completion comply with
the local body code or ordinances affecting the same and with all
other statutory, local body and other regulations and
requirements.
11.3 All Premises Included: The Premises comprise all the freehold and
leasehold land and premises owned, used or occupied by the Company
and all the estate interest right and title whatsoever of the
Company in, under, over or in respect of any such land or
premises.
11.4 Compliance with Statutes: The Company has complied with all
provisions of the Building Act 1991, Resource Management Act 1991
and all other legislation (including regulations, bylaws,
ordinances, codes of practice, circulars and
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guidance notes made thereunder) relating to building, planning or
environmental matters and dealing with (but without limitation)
waste, contaminated land, discharges to land or ground and surface
water or sewers, emissions to air, noise, dangerous, hazardous or
toxic substances and materials, nuisance or health and safety and
there are no actions, claims or proceedings (whether actual or
potential) existing in relation to such matters nor is likely to
arise any liability in relation to such matters.
11.5 Compliance with Leases: The Company has paid all rent that may be
payable and has performed and observed all covenants (whether in
relation to freehold or leasehold land) conditions, agreements,
statutory requirements, planning or building or resource consent,
bylaws, orders and regulations affecting the Premises or any
business carried on the Premises and no notice of any breach of
any such matter has been received nor is the Vendors aware of any
such breach having occurred.
11.6 No Defects: No structural, drainage or other material defects have
appeared in respect of or affected the buildings and structures on
or comprising the Premises or any parts thereof and all such
buildings are in good and substantial repair and condition and
none has been constructed, maintained, altered or repaired using
materials containing any deleterious building material and none of
the Premises has been affected by flooding or subsidence.
11.7 No Other Matter: There is no other matter of which the Vendors are
or ought to be aware on reasonable enquiry and which adversely
affects the value of any of the Premises or casts any doubt on the
right or title of the Company to those Premises or its use of
those Premises for its business which should be revealed to a
Purchaser of the Shares of the Company or other person entering
into this Agreement.
11.8 Plant and Machinery: The Company's plant and machinery (including
fixed plant and machinery) and all equipment furniture and
vehicles are in good repair and condition (fair wear and tear
excepted) and in satisfactory working order and none of it is
surplus to the Company's requirements.
11.9 Debts Recoverable: The amount of all debts due or recorded in the
Accounts or the books of the Company as being due to the Company
as at Completion (less the amount of any provision or reserve made
in the Accounts or the books of the Company in respect of any
particular debts) will be good and collectable in full in the
ordinary course of business and in any event not later than 3
months after Completion and none of the said debts is or will at
Completion be subject to any counterclaim or set-off except to the
extent of any such provision or reserve.
11.10 Debtors Recovery: Should any of the debtors of the Company as at
the Completion fail to satisfy its liability to the Company in
full within 3 months from the Completion Date and the aggregate
amount due to such debtors exceed $5,000, the Vendors will
immediately upon demand by the Purchaser pay to the Purchaser (or
the Purchaser may deduct from the Consideration) the amount of
such excess amount. Following payment of such amount the Purchaser
shall be entitled to an assignment of the benefit of such excess
debts.
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11.11 Changes Since the Last Accounting Date: Since the last accounting
date:
11.11.1 No Write-Offs or Write-Downs: None of the assets of the
Company have been written off or written down nor has
there been any agreement for the release of any person
under liability to the Company;
11.11.2 Cash: The Company has neither disbursed nor received any
cash except in the ordinary course of its business and
amounts received by the Company have been deposited with
its bankers and appear in the appropriate books of
account;
11.11.3 Depletion in Assets: There has been no depletion in the
net assets of the Company and they have not been
materially diminished by the negligent, wrongful or
fraudulent act of any person;
11.11.4 GAAP: Everything which should according to generally
accepted accounting practices (as defined in the Financial
Reporting Act 1993) have been written up or recorded in
the Statutory Books and financial records of the Company
with respect to the assets of the Company (including the
Premises), has been written up and recorded;
11.11.5 Compliance with Notices: There have been no notices,
claims or demands served on the Company in respect of any
of its assets (including the Premises) which have not been
fully complied with.
12. Intellectual Property
12.1 All Intellectual Property Included: The Consideration for the
Shares is assessed on the basis that all licences and all
Intellectual Property or other similar rights relating to the
business of or used by the Company, if any, which are at present
owned solely and beneficially by the Company and that all of such
rights shall remain the property of the Company as the case may be
to the intent that the Company shall be the sole unencumbered and
undisputed owner of all such things as at Completion.
12.2 No Intellectual Property Agreements: The Company has not entered
into any agreement or arrangement for the provision of technical
information or assistance or granting rights in respect of any
patents, trade marks or registered designs or copyright and that
to the best of the Vendors's knowledge and belief the operations
of the Company do not infringe any patent or other intellectual
property right of any kind vested in any other party.
12.3 Disclosure of Intellectual Property: Full details of all
Intellectual Property owned or used by the Company have been given
to the Purchaser and no person has been authorised to make any use
whatsoever of any Intellectual Property owned by the Company and
the Company has not disclosed (except in the ordinary course of
its business) any of its know-how, trade secrets, technical
processes, confidential information, Intellectual Property or
lists of customers or suppliers to any other person.
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12.4 Use of Names: The Company is entitled to use its trade names in
those parts of the world in which it currently conducts its
business or its products are sold to its customers and no person
has been authorised to make any use whatsoever of either such name
and the use of such names by the Company does not infringe the
rights of any other person or entitle any other person to a claim
against the Company and neither name is being used claimed opposed
or attacked by any other person.
12.5 Name: The Company has not consented to and will not before
Completion consent to the adoption of a similar name by any other
company or person.
12.6 Intellectual Property Not Disputed: The Intellectual Property
rights of the Company have not been and will not at Completion be
challenged or disputed by any third party and the Vendors are not
aware of any facts or circumstances which might entitle a third
party to challenge the Company's ownership or use of the
Intellectual Property used in the business.
13. Commercial Matters
13.1 All Actions Indemnified: There is no cause of action in respect of
which the Company is not fully indemnified which could and might
be used for the purpose of commencing proceedings either civil or
criminal.
13.2 No Legal Proceedings: The Company is not engaged in any
Proceedings whatsoever nor are any Proceedings of any kind being
taken against it nor are the Vendors aware of any Proceedings
against the Company pending or threatened.
13.3 No Breaches of Contract: The Company is not and will not on
Completion be in breach of any contract, commitment or arrangement
of any nature whatsoever to which it is now or will then be a
party and is not and will not on Completion be a party to any
contract, commitment or arrangement which may be unenforceable by
the Company by reason of the transaction being voidable at the
instance of any other party or ultra vires, void or illegal.
13.4 Insurance: Full details of all insurance policies maintained by
the Company have been supplied to the Purchaser and all such
insurances are now in force and all premiums due have been paid
and pending Completion the Company shall not permit any of its
insurances to lapse or do or omit to do anything the doing or
omission of which would make any such policy of insurance void or
voidable or would or might result in an increase in the rate of
premiums and no claims are outstanding and nothing has occurred to
give rise to any such claim.
13.5 No Notice from Lenders to Repay: The Company has not received
notice (whether formal or informal) from any lenders of money to
the Company requiring repayment or intimating the enforcement by
such lenders of any security which they may hold over any assets
of the Company and the Vendors are not aware of any circumstances
likely to give rise to any such notice being given or which would
enable any such notice to be given.
13.6 Effect of Acquisition of Shares: The Vendors have no reason to
believe that as a result of the proposed acquisition of the Shares
by the Purchaser:
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13.6.1 No Cessation of Supplies: Any supplier of the Company will
cease supplying the Company or may substantially reduce its
supplies to the Company or alter the terms on which it
supplies the Company; or
13.6.2 No Cessation of Custom: Any customer of the Company will
terminate any contract with the Company or cease or
materially reduce its business with it; or
13.6.3 No Notice of Termination of Employment: Any officer or
senior employee of the Company will give notice of
termination of his or her employment with the Company; or
13.6.4 No Termination of Contracts: Any of the licences, consents,
approvals, agreements or contracts currently granted to or
entered into by the Company required in connection with the
carrying on of its business in the manner in which it has
been carried on at any time during the 2 years prior to the
date hereof will be withdrawn, cancelled or be capable of
termination.
13.7 Arm's Length Supplies: All supplies of goods or services to the
Company are purchased by the Company direct from manufacturers or
suppliers on an arm's length basis and no commissions or similar
payments are made to the Vendors or any other intermediaries in
respect of such supplies.
13.8 No Outstanding Offers: No offer, tender or the like given or made
by the Company and still outstanding is capable of giving rise to
a contract merely by any unilateral act of a third party.
13.9 No Liabilities: The Company does not have and at Completion will
not have any outstanding debts, liabilities, contracts or
engagements, guarantees, undertakings or liabilities (including
contingent liabilities) other than liabilities implied by statute
or disclosed in the Accounts or incurred in the ordinary and
proper course of its trading business.
13.10 Continuance of Name: The Company does not and pending Completion
will not use on its letterheads, brochures, sales literature,
books, Premises or vehicles or otherwise carry on its business
under any name other than its corporate name.
13.11 Electronic Storage: The Company has not and will not pending
Completion have any of its records, systems, controls, data or
information recorded, stored, maintained, operated or otherwise
dependent upon or held by any means (including any electronic,
mechanical or photographic process whether computerised or not)
which (including all means of access thereto and therefrom) are
not under the exclusive ownership and direct control of the
Company. There has been no breach of any service or maintenance
contract relevant to any such electronic, mechanical or
photographic process or equipment whereby any person or body
providing services or maintenance thereunder may have the right to
terminate such service or maintenance contract.
13.12 Transactions with Associated Persons: The Vendors and their
Associated Persons have not entered into and will not prior to
Completion enter into any loan,
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borrowing, agreement or other arrangement with or on behalf of the
Company (other than as employee of the Company on terms fully
disclosed to the Purchaser) and are not and will not at Completion
be interested, whether directly or indirectly, in or have any
Charge over any of the assets of the Company.
14. Corporate Matters
14.1 Share Capital: There is not now outstanding and will not be
outstanding at Completion in respect of the Company any option or
agreement under which any person has or may in any circumstances
have or acquire the right to subscribe for or purchase any share
or loan capital of the Company or to convert any stock or share or
security into share capital or into share capital of a different
class.
14.2 Attorneys: The Company has not given any power of attorney or any
other authority (express, implied or ostensible) which is still
outstanding or effective to any person to enter into any contract
or commitment or do anything on its behalf (other than any
authority of employees to enter into routine trading contracts in
the normal course of their duties) nor will it do so prior to
Completion.
14.3 Officers: Since the Last Accounting Date no appointments or
removals of any officers of the Company have been made.
14.4 Ultra Vires Contracts: To the best of the Vendors' knowledge and
belief none of the activities or contracts or rights of the
Company is ultra vires, unauthorised, invalid or unenforceable or
in breach of any contract or covenant.
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SCHEDULE 3
(clause 7.4)
1. Warranty Limitations: Notwithstanding any other provisions of this
Agreement, the Vendors shall not be liable in respect of any Proceedings
or Costs for breach of any of the Warranties or other breach of this
Agreement:
1.1 Notice: Unless, promptly after the Purchaser becomes aware or ought to
have become aware of any breach, they shall have received from the
Purchaser written notice containing full details of the relevant
Proceedings including, if practicable, the matter or default which gives
rise to the Proceedings, the breach that results and the amount claimed
in respect of the Proceedings:
1.1.1 Other than Taxation: In the case of any of the Warranties other
than Warranties in relation to Taxation], within a period of 2
years after Completion; or
1.1.2 Taxation: In the case of any of the Warranties in relation to
Taxation, within a period ending the earlier of the date 7 years
after Completion and the date falling six weeks after the date on
which any relevant statutory limitation period in the jurisdiction
relevant to the Taxation Proceedings shall expire;
and (unless the relevant Proceedings shall have been withdrawn or
satisfied) action in a court of competent jurisdiction in respect of such
breach shall have been commenced within 1 year after receipt of such
notice;
1.2 Aggregate of Warranties to Exceed Specified Amount: Unless the aggregate
amount of the liability of the Vendors for all such Costs and Proceedings
exceeds $5,000;
1.3 Limit for Single Proceedings: Unless, in respect of any single breach of
any of the Warranties, the amount of the liability of the Vendors such
Costs and Proceedings in respect of such breach exceeds $1,000;
1.4 Exclusion where Covered by Insurance: If and to the extent that (after
taking account of related costs and any normal excess in such policy)
recovery is made by the Purchaser or the Company under any policy of
insurance effected by or for the benefit of the Company in respect of any
of the subject matters of such Proceedings;
1.5 Exclusion where Recovery under Another Agreement: If and to the extent
that those Proceedings or Costs occasioned thereby has been recovered
under any other agreement entered into between the parties and vice
versa;
1.6 Provisions Made in Account: If and to the extent that proper provision or
allowance therefor has been made in the Accounts;
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1.7 Subsequent Changes: If and to the extent that such Proceedings and any
Costs in connection therewith arise or is increased as a result of:
1.7.1 Any alteration in rates of Taxation after the date of this
Agreement with retrospective effect or the withdrawal after the
date of this Agreement of any published extra-statutory concession
or the alteration after that date of any published statement of
practice of the relevant revenue authority; or
1.7.2 The passing of, or any change in, any legislation after the date
of this Agreement; or
1.7.3 Any change in accounting policy or practice of the Company after
Completion including any changes in methods or practices in
relation to stock valuation;
1.7.4 Any voluntary act or omission or transaction of the Purchaser or
the Company after Completion otherwise than in the ordinary course
of the Company's business as carried on at the date of this
Agreement including (without limitation):
(a) The payment of any unusual or abnormal dividend by the
Company;
(b) A change of the date up to which the Company makes up its
Statutory Books;
(c) The cessation of any business carried on by the Company;
1.8 Liability Disclosed: If and to the extent the facts, matters or
circumstances giving rise to the breach are referred to in the Disclosure
Letter or any document disclosed with the Disclosure Letter or in any
document disclosed to the Purchaser or any officer of or professional
adviser to the Purchaser in relation to this Agreement or the matters
contemplated herein or in the Accounts;
1.9 Utilisation of Taxation Relief: In the case of a Proceedings arising in
connection with a payment of Taxation, if and to the extent that such
payment could have been avoided by the utilisation of trading losses or
other reliefs from Taxation (other than trading losses, or other reliefs
arising after the Last Accounting Date) available to the Company;
1.10 Over Provision in Accounts: If and to the extent that there is any over
provision in respect of any matter included in the Accounts;
1.11 Publicly Available Information: If and to the extent that such matters
giving rise to the Proceedings would be disclosed by a search of any
publicly available register or database including without limitation at
the Companies Office, the Land Transfer Office, the High Court Chattels
Registry, the Motor Vehicle Securities Registry, the offices of the
relevant local authority, or any patent office or trade mark registry
(whether in New Zealand or elsewhere);
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1.12 Pursuant to Agreement: If and to the extent that such matter giving rise
to the Proceedings properly fails to be done in implementing the terms of
this Agreement;
2. Limitations Separate and Independent: For the avoidance of doubt each of
the above paragraphs of this Schedule shall be construed as being
separate and independent and none of them shall be construed as limiting
the effect of any other.
3. Recovery from Third Party: If the Vendors pays an amount pursuant to a
Proceedings in respect of breach of any of the Warranties and the Company
or the Purchaser has a right of reimbursement against any person other
than the Company in respect of or relating to those Proceedings, the
Company or the Purchaser shall (subject to the Company or the Purchaser,
as the case may be, being indemnified to its reasonable satisfaction by
the Vendors against all reasonable Costs) take all reasonable steps or
proceedings to enforce such right. If the Purchaser subsequently recovers
such reimbursement from such third party, the Purchaser shall forthwith
repay to the Vendors such part of the amount paid by the Vendors by way
of damages for breach of that Warranty as equals the amount of the which
is so recovered by the Purchaser in respect of the facts, matters or
circumstances giving rise to the breach of that Warranty (after taking
account of the Costs of recovery and (if appropriate) any Taxation
arising solely as a result of the recovery).
4. Conduct of Proceedings by Vendors: The Purchaser shall give and shall
procure that the Company shall give, to the Vendors full facilities to
investigate any Proceedings and the extent of possible liability under
the Warranties and at the request of the Vendors shall (subject to the
Purchaser being indemnified as to any reasonable Costs which may be
incurred thereby) allow it at its own expense to participate in, or have
the conduct of (as the Vendors may elect), all proceedings of whatsoever
nature against the relevant third party arising out of, or in connection
with such Proceedings or dispute, in the name of the Company or the
Purchaser as it may consider necessary in order to mitigate any
Proceedings or Costs arising under this Agreement. Neither the Purchaser
nor the Company shall accept or pay or compromise any such liability or
Proceedings as is referred to above without the Vendors either consenting
to such action or having a reasonable opportunity to resist the same.
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SCHEDULE 4
(clauses 9.1.4 and 9.1.6)
No Licensors and Contractors consents to transfer of shares are required.
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ANNEXURES
A: Service Agreement (clause 4.1.4)
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DRAFT
April 3, 1997
INDUSTRIAL COMMUNICATIONS SERVICE LTD
a subsidiary of
BROCKER INVESTMENTS (NZ) LIMITED
SALARIED EMPLOYMENT CONTRACT
NAME: Roger Carter
--------------------------------------------
POSITION: General Manager
--------------------------------------------
RESPONSIBLE TO: ICS Board
--------------------------------------------
LOCATED AT: 2/343 Church St, Penrose
--------------------------------------------
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INDUSTRIAL COMMUNICATIONS SERVICE LTD
SALARIED EMPLOYMENT CONTRACT
BETWEEN: INDUSTRIAL COMMUNICATIONS SERVICE LTD
--------------------------------------------
AND ROGER CARTER
--------------------------------------------
COMMENCEMENT
OF EMPLOYMENT: 1st May 1978
--------------------------------------------
The terms and conditions contained herein supersede and replace any terms and
conditions of employment that may have applied prior to the coming into force of
this contract.
1. DUTIES/RESPONSIBILITIES
A copy of your job description as attached outlines your duties and
responsibilities of your position. Because of the changing nature of the
business, other duties will be included as agreed between the parties from time
to time. It is expected that those duties will be performed in accordance with
the instructions of the Company and that you will devote all of your normal
working hours and best endeavour to performing these duties outlined in a manner
which will promote the interest of the company.
2. HOURS OF WORK
2.1 Your hours of work are a minimum of 40 per week to be worked on 5 days of
the week Monday to Friday inclusive, between the hours of 8 am to 5.30 pm. Your
hours of work and any conditions relating to them may be varied by mutual
agreement.
2.2 The Company may require you to work more than 40 hours per week to fulfil
the responsibilities of your position. Payment for such time worked in excess of
the weekly hours have been included in your salary package.
You may be required to work on Saturday or Sunday as required from time to
time by the Company.
2.3 Rest periods and meal breaks may be taken at your discretion, of up to 1
hour per day.
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3. REMUNERATION
(a) Total package is $115,000 OTE per annum.
(i) Your base salary is $60,000 per annum.
Your base salary will be reviewed annually.
(ii) Variable Component - Where you reach your budgeted targets approved
by the company, you will receive the agreed commission on a quarterly
basis (refer BONUS)
or
(iii) Motor Vehicle Allowance - You shall be paid an annual Motor Vehicle
Allowance of $12,000 gross per annum
[with company fuelcard provided]
(b) Expenses - Expenses incurred by yourself while performing our business
shall be reimbursed according to the Company Expenses Policy.
(c) Medical Insurance - You are invited to take advantage of the
Brocker/Southern Cross Group Scheme.
4. PAYMENT OF REMUNERATION
(a) Base salary will be paid each Wednesday, direct into the bank account of
your choice.
(b) Your variable component shall be paid on the 20th of the month due, or the
following Wednesday thereafter. Such payment shall be made by direct credit
to the bank of your choice.
(c) The vehicle allowance shall be paid weekly, included with your salary
payment, and paid by direct credit as above.
(d) No deduction shall be made from your salary without your consent, except
for time lost through sickness or default or accident to yourself, unless
required by law.
(e) The Company will provide you with a statement of your earnings and
deductions for a pay period at your request or where there is any change to
your salary payments.
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5. BONUS
The bonus will be paid quarterly, no later than 30th of the month after the end
of the quarter. It will be paid direct to the nominated bank account. One half
will be related to BKI profit, the other to ICS profit. Bonus will be calculated
on a straight line basis between these points.
Base Target
BKI $0 $TBA
ICS $0.5m $0.85m
Where the maximum is not achieved in any quarter, it is carried forward until
paid out or the end of the financial year is reached. No bonus will be carried
forward to a new financial year.
6. STATUTORY HOLIDAYS
(a) Public holidays shall be granted and observed in accordance with the
provisions of the Holidays Act 1981.
(b) Any time worked on a statutory holiday that has been authorised by your
manager shall be taken in lieu on a day that is mutually agreed upon and
credited to your annual holiday accumulation.
7. ANNUAL HOLIDAYS
(a) Annual holidays are provided in accordance with the provisions of the
Holidays Act 1981 and its amendments.
(b) At the completion of 12 months current continuous employment, you shall be
entitled to an annual holiday of 3 weeks. Where your employment is
terminated at the end of a period of employment which is less than one
year, the Company shall pay you an amount equal to 6% of your gross taxable
earnings, minus any holiday pay you have already received. Requests for
annual leave must be submitted for approval at least 30 days in advance.
(c) Service Holiday - Where you have completed 5 years current continuous
service you shall become entitled to an annual holiday of 4 weeks instead
of the 3 weeks provided for in (b) above.
8. SICK LEAVE AND DOMESTIC LEAVE
(a) After completing 6 months current continuous service you shall be entitled
to sick pay of 7 days for the following 12 month period and for each
subsequent year of service thereafter.
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Sick pay shall be accumulative to up to 21 days.
(b) The company may, at its discretion, require you to provide a medical
certificate for any sick leave or domestic leave absence. You shall be
required to provide a medical certificate where you are absent for more
than 2 days for sick leave or domestic leave absence.
(c) You shall ensure notice is given to us that you are sick or taking domestic
leave, not later than one hour prior to your normal commencing time and you
shall notify us as soon as possible when a return to work is likely.
(d) The Company shall also have the right to require you to produce
additionally, a medical certificate at our expense, from a doctor nominated
by ourselves.
(e) Domestic Leave - Where you have any unused sick leave entitlement, leave of
up to 7 days per year shall be granted where you find it essential to stay
at home in an emergency in the event of illness of a dependant child or
spouse's illness or dependant parent or maternity confinement. Such leave
shall be treated as though it was due to your own sickness and this shall
be set off against your own sick leave entitlement.
(f) Sick leave and domestic leave will not be paid on a day on which a holiday
is being observed.
(g) Your manager may at their discretion grant additional sick leave or
domestic leave with/without pay where special circumstances exist.
9. BEREAVEMENT LEAVE
(a) In the event of the death of any of your immediate family, ie your spouse
or defacto partner, child, stepchild, parent, brother, sister,
mother-in-law, father-in-law, brother-in-law, sister-in-law, grandparent,
or grandchild, the Company shall allow paid leave up to a maximum period of
3 days on each occasion. The Company may, at our discretion, ask you for
confirmation of the bereavement.
(b) The company may at its discretion, grant additional leave without pay where
the Company consider special circumstances exist.
10. SPECIAL HOLIDAYS CLAUSE
Note that the entitlements in Clauses 7 and 8 are inclusive of and not in
addition to the entitlements for Special Leave provided in Section 30 (A) of the
Holidays Act 1981 and amendments.
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DRAFT
11. UNPAID LEAVE
Where you need to be away from work for personal reasons the company may grant
limited time off work without pay. Such leave must be authorised by the company
in advance. Please make a request for such leave as far ahead of the intended
date as possible and talk to your manager regarding the circumstances for the
leave. Such approved leave must be recorded on an official leave application
form.
12. PARENTAL LEAVE
Parental Leave shall be granted in accordance with the provisions of the
Parental Leave and Employment Protection Act 1987 and its amendments.
13. JURY SERVICE
(a) Where you are obliged to undertake jury service, the difference between the
fees (excluding reimbursing payments) paid by the Court and your salary
shall be made up by ourselves provided:
(i) That you produce the Court expenses voucher to us.
(ii) That you return to work immediately on any day that you are not
actually serving on a jury.
(b) These payments shall be made for up to a maximum of 5 days in respect of
each separate period of jury service.
(c) You must advise us on the first normal work day after notification of jury
service is received.
14. TUITION LEAVE
(a) Where, with the Company's prior written approval, you attend any
job-related course during working hours, you shall be allowed paid time
off. Where you pass all the necessary requirements and complete the course,
the company may reimburse you for the cost of tuition and examination fees.
(b) Where you initiate and take tuition leave at your own request and where you
terminate your own employment within 12 months of having the tuition fees
or examination fees paid on your behalf, you shall reimburse the Company
for fees outlaid on a pro rata basis.
15. TERMINATION OF EMPLOYMENT
(a) Notification - Employment may be terminated with 1 months notice by either
party or where the employment is terminated by either party without notice
1 months pay shall be paid or forfeited in lieu of notice. This provision
shall not prevent us from summarily terminating the employment in the case
of serious misconduct and/or serious breach of contract.
(b) Deductions -
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<PAGE>
DRAFT
(i) Where company issued gear or property is lost, or in our opinion
wilfully damaged it will be treated as a default by yourself and the
Company shall have the right to recover from you the cost of
repairing or replacing any such items.
(ii) Where employment is terminated by either party and the effective last
day of duty is prior to the normal pay period end date, the Company
shall be entitled to deduct or recover such salary paid in advance.
(c) Redundancy -
(i) In the event that your position becomes surplus to the needs of the
Company, you shall be given notice of termination in accordance with
the provisions of subclause 14(a).
(ii) Redundancy compensation shall be calculated on the basis of four
weeks pay for the first year of service with the Company and two
weeks pay for each subsequent year of service. For the purposes of
this clause, a week's pay shall be 1/52 of your annual salary.
(iii) No redundancy compensation shall be payable in any situation where
the termination of your employment arises as a result of the sale or
transfer of the whole or part of the Company's business if the person
acquiring the business or part being sold or transferred has offered
you employment in the business or part being sold or transferred and
the conditions of employment offered to you by the person acquiring
the business or the part of the business being sold or transferred
are similar to, or more favourable than, those provided for by this
contract, or are otherwise acceptable to you.
16. RESTRAINT OF TRADE
(a) In order to protect the employer's proprietary interests, for one year
after the termination of this contract you shall not engage to work for or
on behalf of an organisation in direct competition with this Company, nor
establish your own business in competition with this Company. Nor shall you
solicit in competition with the Company the custom of any person who has at
any time during the period of your employment by the Company been a
customer of the Company or who will become a customer of the Company as a
result of any tender, negotiations, arrangements or proceedings made or
taking place at the date of such termination.
(b) Consideration for this restraint is included in the remuneration package
provided in clause 3 of this contract.
(c) It is acknowledged that in view of your position with the Company and your
direct association with the customers of the Company during your
employment, the restraint provided for in subclause (a) is fair and
reasonable and does not inhibit your ability to earn a reasonable living.
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<PAGE>
DRAFT
17. CONFIDENTIALITY
Any trade, professional or other like information of a confidential nature
gained by the employee during the course of employment shall not without the
specific authority of the employer, be passed on to any person who would be in a
position to use such information to the detriment of the employer. Nor must it
be used for personal gain. Any secrecy agreement entered into by the company
with a third party whether prior or after starting employment is binding on all
employees. This condition is also binding after the termination of the
employment contract.
18. PERSONAL GRIEVANCE/DISPUTES
The Company consider it desirable that any dispute over the interpretation,
application or operation of this contract or any grievance of any employee be
resolved as quickly as possible, at the place of work, between ourselves.
Personal grievances and disputes shall be as defined under the Employment
Contracts Act 1991. Personal Grievance procedures shall be in accordance with
the First Schedule of the Employment Contracts Act 1991. Disputes procedures
shall be in accordance with the Second Schedule of the Employment Contracts Act
1991.
19. VARIATIONS
Any of the terms and conditions contained in this contract may be varied by
mutual agreement.
20. OTHER PROVISIONS
(a) I agree to abide by all Company Policies as may from time to time be in
operation.
(b) I agree to work a reasonable number of hours in excess of my weekly hours
as may be required by the Company.
(c) I agree, in the event of termination of my employment to the deduction from
my final pay for any unreturned company property, or other debt owing to
the company, whatsoever it may be.
(d) I agree, during the period of my employment or at any time thereafter, not
to disclose to any unauthorised person or company, or otherwise make use
of, any confidential or secret information related to or obtained as a
result of my employment with the Company including, without limiting the
generality of processes, customer lists, formulae, designs, new products,
finances or relating to know-how, inventions, improvements or other matters
connected with the products or services manufactured, marketed, provided or
obtained by the Company.
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<PAGE>
DRAFT
21. DECLARATION
I (full name) ______________________________________ declare that I have read
and understand the conditions of employment detailed above and accept them
fully. I further declare that I have read (or had explained to me to my
satisfaction) the House Rules and accept them.
Signed:________________________________ Date: _______________________
Signed:________________________________ Date: _______________________
FOR AND ON BEHALF OF
INDUSTRIAL COMMUNICATIONS SERVICE LTD
Enclosed: Job Description
House Rules
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<PAGE>
B: Form of Escrow Agreement (clause 1.1)
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<PAGE>
FORM C
ESCROW AGREEMENT
(PERFORMANCE ESCROW AGREEMENT)
THIS AGREEMENT made in triplicate this 31st day of March, 1997.
AMONG:
BROCKER INVESTMENTS LTD. a corporation incorporated pursuant to the
laws of the Province of Alberta,
(hereinafter called the "Issuer")
OF THE FIRST PART
-and-
MONTREAL TRUST COMPANY OF CANADA, a body corporate duly authorized to
carry on business in the Province of Alberta,
(hereinafter called the "Trustee")
OF THE SECOND PART
-and-
ROGER HENRY CARTER and ROGER HENRY CARTER, LINDA MARGARET CARTER AND
HENRY BERNARD CHELLEW AS TRUSTEES OF RH AND GM CARTER FAMILY TRUST,
both of Auckland, New Zealand
(hereinafter called the "Security Holders")
OF THE THIRD PART
WHEREAS the Security Holders and the Issuer entered into an agreement dated
the 31st day of March, 1997 whereby the Security Holders agreed to sell certain
property to the Issuer, the consideration for such property being at least in
part the allotment of securities in the Issuer to the Security Holders, the
property and the number of securities and the names of the Security Holders
presently owning or about to receive such securities being respectively and more
particularly described in Schedule "A" attached to and forming part of this
agreement.
AND WHEREAS the Trustee has agreed to undertake and perform its duties
according to the terms and conditions thereof;
NOW THEREFORE THIS AGREEMENT WITNESSETH that, in consideration of the sum
of ONE DOLLAR ($1) paid by the parties to each other, receipt of this sum being
acknowledged by each of the parties, the Security Holders covenant and agree
with the Issuer and with the Trustee, and the Issuer and the Trustee covenant
and agree each with the other and with the Security Holders as follows:
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<PAGE>
-2-
1. Where used in this Agreement, or in any amendment or supplement hereto,
unless the context otherwise requires, the following words and phrases shall
have the following ascribed to them below:
(a) "Cash Flow" means net income derived from the property, as shown on
the audited financial statements as verified by the Issuer's auditors,
adjusted for the following add-backs:
(i) depreciation;
(ii) depletion;
(iii) deferred taxes;
(iv) amortization of goodwill;
(v) amortization of research and development costs.
2. The Security Holders hereby place and deposit in escrow with the Trustee
those of his securities in the Issuer which are represented by the certificates
described in Schedule "A" and the Trustee hereby acknowledges receipt of the
certificate. The Security Holders agree to deposit in escrow any further
certificates representing securities in the Issuer which he may receive as a
stock dividend on securities hereby escrowed, and to deliver to the Trustee
immediately on receipt thereof the certificates for any such further securities
and any replacement certificates which may at any time be issued for any
escrowed securities.
3. The Parties hereby agree that, subject to the provisions of paragraph 6
herein, the securities and the beneficial ownership of or any interest in them
and the certificates representing them (including any replacement securities or
certificates) shall not be sold, assigned, hypothecated, alienated, released
from escrow, transferred within escrow, or otherwise in any manner dealt with,
without the written consent of The Alberta Stock Exchange (hereinafter referred
to as the "Exchange") given to the Trustee or except as may be required by
reason of the death or bankruptcy of any Security Holder, in which cases the
Trustee shall hold the said certificates subject to this Agreement, for whatever
person, or company shall be legally entitled to become the registered owner
thereof.
4. The Security Holders directs the Trustee to retain their respective
securities and the certificates (including any replacement securities or
certificates) representing them and not to do or cause anything to be done to
release them from escrow or to allow any transfer, hypothecation or alienation
thereof, without the written consent of the Exchange. The Trustee accepts the
responsibilities placed on it by the agreement and agrees to perform them in
accordance with the terms of this Agreement and the written consents, orders or
directions of the Exchange.
5. Any Security Holder applying to the Exchange for a consent for a transfer
within escrow shall, before applying, give reasonable notice in writing of his
intention to the Issuer and the Trustee.
6. (a) The Exchange will consent to the release from escrow of one share for
each $1.65 (Canadian) of Cash Flow generated by or from the property.
(b) Any release from escrow under this paragraph 6 shall be made pursuant
to a written application on behalf of the Issuer or the Security
Holders, which application shall be accompanied by evidence of the
Cash Flow received in a form satisfactory to the Exchange. Application
for release may only be made once per year and may only relate to Cash
Flow received in the last preceding fiscal year or the fiscal years of
the Issuer since the last release from escrow pursuant to this
Agreement, whichever is greater. All shares released
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<PAGE>
-3-
from escrow shall, unless otherwise directed by the Exchange, be
distributed pro-rata to all Security Holders.
(c) Notwithstanding subparagraph (b) above, the maximum number of shares
to be released from escrow in any year to a Security Holder shall be
one third of the original number of shares held in escrow on behalf of
such Security Holder.
7. A release from escrow of all or part of the escrowed securities shall
terminate this Agreement only in respect to those securities so released. For
greater certainty, this paragraph does not apply to securities transferred
within escrow.
8. If a dividend is declared while the Escrowed Shares or any of them continue
to be held in escrow under this Agreement, then the dividend or the Escrowed
Shares shall be past to the trustee, who shall hold the dividend in escrow or
the same terms as the Escrowed Shares, divided to be subject to release or
return to the Corporation in the same manner as the Escrowed Shares to which the
divided is attributed.
9. If the Issuer is wound up and any securities remain in escrow under this
Agreement at the time when a distribution of assets to holders of securities is
made by the liquidator, the Security Holders shall assign their right to receive
that part of the distribution which is attributable to the escrowed securities
to the Trustee, for the benefit of, and in trust for the persons and companies
who are then holders of free securities in the Issuer rateably in proportion to
their holdings except that this section shall nor apply to those of the escrowed
securities which are or would be entitled to be released pursuant to paragraph 6
but have not yet been so released.
10. (a) In the event that the Issuer has lost, alienated or has not obtained a
good and marketable title to, or has abandoned or discontinued
development of, a substantial portion or all of the aforesaid property
which was or formed part of the consideration for which the aforesaid
securities were issued, or that a substantial portion or all of the
said property has become of little or no value, the issuer shall
declare the occurrence of that event, with full particulars thereof,
to the Exchange by a resolution of its directors, and those Security
Holders who are directors from time to time hereby agree to cause such
resolution to be passed and certified to the satisfaction of the
Exchange.
(b) The Security Holders agree with the Issuer and the Trustee that in the
event of any such loss, alienation, failure to acquire title, or of
such abandonment or discontinuance of development or diminution of
value, the securities held in escrow shall not be cancelled or
released from escrow, in whole or in part, except with the consent of
the Exchange.
(c) The Exchange may, in its sole discretion, having regard to the number
and value of the securities issued for the property, the value of the
property as ultimately established and such other circumstances as it
may consider relevant, determine the number of securities to be
cancelled or released and shall communicate its decision in writing to
the Trustee. If the Exchange determines that less than all of the
securities then held in escrow shall be cancelled or released, the
securities to be cancelled or released shall be taken rateably from
the escrowed security holdings of the Security Holders, unless the
Exchange otherwise directs or the Security Holders, with the consent
of the Exchange, otherwise agree in writing;
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<PAGE>
-4-
(d) On receipt by the Trustee of a determination to cancel, the Security
Holders shall tender the required number of escrowed securities to the
Issuer by way of gift for cancellation and, the
Issuer shall thereupon take the necessary action, by way of reduction
or capital or otherwise, to cancel them, and the certificates for
these securities shall be delivered up for cancellation by the
Issuer's transfer agent;
(e) The Security Holders undertake and agree to vote and cause to be voted
its securities in a manner consistent with the terms, conditions and
intent of this Agreement in relation to the aforesaid gifting back of
securities for cancellation.
(f) In the case of a natural resource issuer, the Exchange may, in its
sole discretion, permit the substitution of natural resource
properties for those properties set forth in Schedule "A" in
calculating the amount of deferred expenses in paragraph 6.
11. Notwithstanding paragraphs 6 and 10, any shares remaining in escrow 3 months
after the third anniversary of the date of this Agreement, unless otherwise
exempted in writing by the Exchange, shall be cancelled by the Trustee within 6
months of the said third anniversary.
12. All voting rights attached to the escrowed securities shall at all times be
exercised by the respective registered holders thereof.
13. The Security Holders hereby agree to and do hereby release and indemnify and
save harmless the Trustee from and against all claims, suits, demands, costs,
damages and expenses which may be occasioned by reason of the Trustee's
compliance in good faith with the terms hereof.
14. The Issuer hereby acknowledges the terms and conditions of this Agreement
and agrees to take all reasonable steps to facilitate its performance and to pay
the Trustee's proper charges for its services as Trustee of this escrow.
15. If the Trustee should wish to resign, it shall give at least 6 months'
notice to the Issuer which may, with the written consent of the Exchange, by
writing appoint another trustee in its place and such appointment shall be
binding on the Security Holders, and the new Trustee shall assume and be bound
by the obligations of the Trustee hereunder.
16. The covenants of the Security Holders with the Issuer in this Agreement are
made with the Issuer both in its own right and as trustee for the holders from
time to time of free securities in the Issuer, and may be enforced not only by
the Issuer but also by any holder of free securities.
17. This Agreement may be executed in several parts of the same form and the
parts as so executed shall together constitute one original agreement, and the
parts, if more than one, shall be read together and construed as if all the
signing parties hereto had executed one copy of this Agreement.
18. Wherever the singular or masculine is used, the same shall be construed to
include the plural or feminine or neuter where the context so requires.
19. This Agreement shall enure to the benefit of and be binding on the Parties
to this Agreement and each of their heirs, executors, administrators, successors
and assigns.
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<PAGE>
-5-
IN WITNESS WHEREOF the Issuer, the Trustee and the Security Holder have
caused their respective corporate seals or hands to be hereto affixed.
BROCKER INVESTMENTS LTD.
Per: __________________________________
MONTREAL TRUST COMPANY OF CANADA
Per: __________________________________
SIGNED, SEALED AND DELIVERED )
in the presence of: )
)
)
- ------------------------------------- )--------------------------------------
WITNESS )ROGER HENRY CARTER
ROGER HENRY CARTER, LINDA MARGARET
CARTER AND HENRY BERNARD CHELLEW AS
TRUSTEES OF RH AND GM CARTER FAMILY
TRUST
Per: __________________________________
E-115
<PAGE>
SCHEDULE "A"
to agreement dated the 31st day of March, 1997, and made among BROCKER
INVESTMENTS LTD, (therein called the "Issuer"), MONTREAL TRUST COMPANY OF
CANADA, (therein called the "Trustee"), and some Security Holders of the Issuer
(therein called the "Security Holders").
<TABLE>
<CAPTION>
CERTIFICATE
NAME OF NUMBER OF NUMBER OF
SECURITY TYPE OF SECURITIES SECURITIES
HOLDER SECURITIES ESCROWED ESCROWED
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Roger Henry Carter Common Shares 149,058 as provided by the
transfer agent
Roger Henry Carter,
Linda Margaret Carter,
Henry Bernard Chellew
as trustees of RH and GM
Carter Family Trust Common Shares 611,442 as provided by the
transfer agent
</TABLE>
DESCRIPTION OF PROPERTY
Shares of Industrial Communications Service Ltd.
E-116
AGREEMENT FOR SALE
AND PURCHASE OF BUSINESS
Parties
POWERCALL LIMITED
THE SHAREHOLDERS OF POWERCALL
LIMITED
THE DIRECTORS OF POWERCALL LIMITED
BROCKER INVESTMENTS (N.Z.) LIMITED
BROCKER INVESTMENTS LIMITED
Relating to Purchase of Powercall Business
LOWNDES JORDAN
BARRISTERS & SOLICITORS
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<PAGE>
PARTIES
1. POWERCALL LIMITED at Auckland (Powercall).
2. The persons specified in Item 1 of Schedule 1 (Shareholders).
3. The persons specified in Item 2 of Schedule 1 (Directors).
4. BROCKER INVESTMENTS (N.Z.) LIMITED at Auckland (BKINZ).
5. BROCKER INVESTMENTS LIMITED, a company incorporated under the laws of
Alberta, Canada (BKI).
INTRODUCTION
A. The Shareholders are the holders of all of the shares in Powercall.
B. The Directors are directors and employees of Powercall.
C. The Shareholders have agreed to sell to Powercall Technologies Limited
(PTL), a wholly owned subsidiary of BKINZ, and BKINZ has agreed to procure
the purchase by PTL from the Shareholders, all of the existing business
previously owned by Powercall as a going concern for the Consideration and
upon the terms and conditions contained in this Agreement.
D. The Directors will enter into employment contracts with PTL on the terms
set out in the contracts annexed to this Agreement.
TERMS
1. Interpretation
1.1 Defined Terms: In this Agreement the following terms shall have the
meanings specified:
Accounts all accounts of Powercall and of any
related parties supplied to BKINZ prior
to execution of this Agreement.
Business Day a day (other than a Saturday or Sunday)
on which registered banks are open for
business.
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<PAGE>
2
Business Records all books of account, accounts, records,
files, data, databases, certificates or
other evidence of title to assets and
information howsoever recorded or stored
relating to or required for the
Business.
Business all of the existing businesses prior to
the date of this Agreement owned and
operated by Powercall including the
Software, the Fixed Assets and the
Current Assets.
Cashflow has the meaning provided in the Escrow
Agreement.
Charge includes option, right to acquire, lien;
pledge, mortgage, assignment, charge,
security interest, bailment, or
encumbrance or adverse interest of any
nature whether legal or equitable and no
matter how arising.
Completion completion by the parties of the sale
and purchase as provided in clause 5.
Completion Date the actual date of Completion being 16
May 1997 or 7 days after the conditions
referred to in clause 9 have been
satisfied or waived by the party
entitled to waive the same (whichever is
the later) or such other date as may be
agreed upon by the parties.
Consideration the sum of $85,213.80, the Goodwill
Value and the value of the Liabilities,
provided that in no circumstances shall
the Goodwill Value exceed the Maximum
Goodwill Value.
Costs includes any and all costs (on a
solicitor and own client basis),
expenses, damages, penalties, interest,
compensation, and awards.
Current Assets all current assets specified in Annexure
E.
Disclosure Letter the letter of disclosure referred to as
such, signed by the Shareholders and
dated and delivered to BKINZ prior to
the signing of this Agreement.
Escrow Agreement the Escrow Agreement in the form annexed
as Annexure B to be entered into by BKI,
the Shareholders and Montreal Trust
Company of Canada as trustee.
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<PAGE>
Exchange Rate the average between the Westpac buy and
sell rates for the exchange of $NZ to
$CAD, at the close of business on the
date specified in this Agreement or
where a date is not specified, on the
last bank Business Day prior to the date
of the relevant transaction.
Fixed Assets all computer hardware and office fixed
assets prior to this date Agreement
owned by Powercall.
Goodwill Value the value subject to adjustment as
provided in clause 3.3 and 3.4
calculated by applying a multiple of 4
to the audited NPAT of PTL for the 4
Years from 1 April 1997 to 31 March 2001
in accordance with the example
spreadsheet annexed as Annexure C and
for the purposes of clauses 3.2 and 3.3
shall be the value so calculated for the
relevant Year or Years.
GST Act the Goods and Services Tax Act 1985.
GST Goods and Services Tax levied under the
GST Act.
Intellectual Property includes confidential information, trade
secrets, drawings, designs, techniques,
programmes, processes, logos,
copyrights, trade or service marks,
patents, registered designs, and other
information and rights capable of being
protected under New Zealand or other
laws relating to intellectual property
no matter how recorded or stored and any
applications for same.
Liabilities all current and term liabilities of
Powercall as specified Annexure D.
Maximum Goodwill $20 million.
Value
NPAT net profit after taxation calculated in
accordance with Generally Accepted
Accounting Principles subject to the
Software development costs being treated
in accordance with the letter from KPMG
attached as Annexure F.
Penalty Rate the Westpac Indicator Lending Rate plus
4%.
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<PAGE>
Premises the land and buildings Level 2, 11 Huron
Street, Takapuna and Level 2, 25
Dundonald Street, Newton.
Proceedings includes proceedings, claims, demands,
actions, conferences, mediations,
conciliations, compromises,
arbitrations, hearings or appeals
arising out of, preliminary to or in
connection with any dispute or alleged
dispute.
PTL Powercall Technologies Limited, a
company to be incorporated under the
Companies Act 1993 as a wholly owned
subsidiary of BKINZ.
Software all rights to the Powercall software
developed by Powercall and Powercall
Services Limited.
Strike Price in respect of the BKI shares to be
issued pursuant to this Agreement is the
average sale price for BKI shares on the
Alberta Stock Exchange over a period of
5 trading days prior to the date
specified in this Agreement for
determining a price for BKI shares, or
where a date is not specified, over 5
trading days prior to the applicable
date of settlement.
Warranties the representations, warranties, and
undertakings of Powercall, the Directors
and the Shareholders set out in Schedule
2.
Year a financial year commencing on 1 April
and terminating on 31 March in the next
succeeding year.
1.2 General Interpretation: In the interpretation of this Agreement,
unless the context otherwise requires:
1.2.1 References to the parties include their respective
executors, administrators, successors and permitted assigns;
1.2.2 References to persons include individuals, partnerships,
firms, associations, corporations and unincorporated bodies
of persons, government or semi-government or local body or
municipal bodies, and agencies or political subdivisions of
them in any case whether having separate legal personality
or not;
1.2.3 Words in the singular shall include the plural and vice
versa;
1.2.4 Words importing one gender shall include the other genders;
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<PAGE>
1.2.5 Any obligation not to do anything includes an obligation not
to suffer, permit or cause that thing to be done;
1.2.6 Headings have been inserted for convenience only and shall
not affect the construction of this Agreement;
1.2.7 Reference to a statute includes all statutes amending,
consolidating or replacing the statute referred to and
includes all subsidiary or delegated legislation or
exercises of authority under such statute or legislation;
1.2.8 References to clauses, schedules and annexures shall be
construed as references to the same in this Agreement;
1.2.9 References to money unless otherwise specified are
references to New Zealand currency.
1.3 Joint and Several: Unless otherwise provided, the covenants herein
expressed or implied shall bind all persons executing this Agreement
and any two or greater number of them jointly and each of them
severally.
1.4 Time of the Essence: Time shall be of the essence of this Agreement
both as to dates and periods.
1.5 Precedence of Documents: If there is any conflict between the
provisions of this Agreement and the Escrow Agreement, the provisions
of this Agreement shall prevail.
2. Agreement for Sale and Purchase
2.1 Sale and Purchase: The Shareholders agree to sell and the BKINZ agrees
to procure PTL to purchase the Business for the Consideration.
2.2 Accrual Rules: The Consideration is the lowest price the parties would
have agreed upon at the date of this Agreement for the sale and
purchase of the Business and is consequently the core acquisition
price pursuant to Section OB1(c) of the Income Tax Act 1994.
2.3 Going Concern: The parties agree that the supply made pursuant to this
Agreement is the supply of a going concern under section 11(1)(c) of
the GST Act on which GST is chargeable at zero per cent.
2.4 Ratification: As soon as practicable after incorporation of PTL, BKINZ
shall procure PTL to ratify this Agreement.
3. Consideration and Payment
3.1 Satisfaction of Consideration: The Consideration shall be paid or
satisfied by the Purchaser as follows:
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<PAGE>
3.1.1 Deposit: By payment of a deposit on the Completion Date of
$85,213.80 which shall comprise cash of $28,120.55 and BKI
shares to a value of $57,093.25 based on the Strike Price on
4 April 1997 converted to $NZ at the Exchange Rate as at 3
April 1997. The BKI shares will be issued to the Trustee
under the Escrow Agreement and held in escrow until the
first anniversary of the Completion Date at which time they
shall be released to the Shareholders.
3.1.2 Share Exchange: The Goodwill Value (subject to adjustment as
provided in clauses 3.3 and 3.4) shall be paid in the manner
provided in clauses 3.2 to 3.4 by way of the issue and
allotment to the Shareholders free from all Charges of fully
paid ordinary shares in the capital of BKI ranking in all
respects pari passu with the existing ordinary shares in the
capital of BKI.
3.1.3 Assumption of Liabilities: PTL shall on the Completion Date
assume responsibility for all Liabilities and subject to the
rights of PTL to a set off in respect of any Warranty claim
under clause 7, PTL will keep Powercall, the Shareholders
and the Directors fully indemnified against all Liabilities
but only in respect of those Liabilities and to the extent
of the value of those Liabilities specified in Annexure D.
3.2 Issue of Shares into Escrow: BKI shall issue shares pursuant to clause
3.1 (Earnout Shares). The Earnout Shares shall be:
3.2.1 Issued in 4 separate tranches within 66 Business Days of 31
March 1998, 1999, 2000 and 2001 (Issue Dates).
3.2.2 Issued in numbers which have a value (based on the Strike
Price converted to $NZ at the Exchange Rate) equal to the
Goodwill Value calculated for the Year which ended on the
Issue Date less the value recalculated at the same Strike
Price of any BKI shares issued on prior Issue Dates.
3.2.3 Issued initially to the Trustee to be held in escrow for a
minimum period of 12 months pursuant to the Escrow Agreement
and subject to the earn out and escrow conditions specified
in clause 3.3 and in the Escrow Agreement.
3.3 Escrow and Earn Out Provisions: The Earnout Shares shall be held by
the Trustee subject to the following conditions:
3.3.1 The Earnout Shares shall only be released to the
Shareholders if PTL produces sufficient cumulative Cashflow
between 1 April 1998 and the Years ending on 31 March 1999,
31 March 2000, 31 March 2001 and 31 March 2002 (Earnout
Period).
3.3.2 Earnout Shares shall be released to the Shareholders in 4
tranches within 66 Business Days following 31 March 1999, 31
March 2000, 31 March 2001 and 31 March 2002 (Release Dates).
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3.3.3 The Earnout Shares to be released on each of the Release
Dates shall not exceed in value (based on the Strike Price
converted to $NZ at the Exchange Rate) the cumulative
Cashflow of PTL between 1 April 1997 and the end of the Year
which terminated 12 months before the relevant Release Date
multiplied by 4, less the value recalculated at the same
Strike Price of any BKI shares released on a prior Release
Date.
3.4 Final Adjustment of Acquisition Price: Within the period of 66
Business Days following on 31 March 2002 there shall be a final
calculation of the Goodwill Value and adjustment of the Consideration
as follows:
3.4.1 The Goodwill Value shall be the lesser of:
(a) 4x the cumulative Cashflow for the four Years ending
on 31 March 2001; and
(b) The Maximum Goodwill Value; and
(c) 12x the NPAT for the Year ended 31 March 2001.
3.4.2 If the Goodwill Value calculated pursuant to clause 3.4.1
exceeds the recalculated value as at 31 March 2002 of the
BKI shares which have been released from escrow pursuant to
clause 3.3 then BKI shall issue to the Shareholder BKI
shares (based on the Strike Price converted to $NZ at the
Exchange Rate) of a value equal to such excess. If the
Goodwill Value calculated pursuant to clause 3.4.1 is less
than the recalculated value as at 31 March 2002 of the BKI
shares which have been released from escrow pursuant to
clause 3.3 then any remaining Earnout Shares held in escrow
shall be cancelled.
3.5 Dividends on Earnout Shares: Any dividends declared in respect of
Earnout Shares held in escrow pursuant to clauses 3.2 or 3.3 shall be
held in trust by the Trustee. Such dividends declared in respect of
shares which are released to the Shareholders shall be paid to the
Shareholders when the shares are released. Any dividends held in trust
by the Trustee in respect of BKI shares which are cancelled will be
forfeited to BKI on the date of cancellation.
3.6 Allocation of Consideration: The Consideration shall be apportioned
between the Shareholders in the percentages specified in Item 1 of
Schedule 1.
4. Pre-Completion Obligations
4.1 Pre-Completion: Between the date of this Agreement and Completion:
4.1.1 Preserve Business: Powercall, the Directors and the
Shareholders shall conduct the Business in an efficient and
businesslike manner and shall not do anything to prejudice
the goodwill of the Business.
4.1.2 Sale of Assets: Powercall and the Shareholders shall not
without the prior consent in writing of BKINZ dispose of any
of the Fixed Assets.
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4.1.3 Expenditure: Powercall and the Shareholders shall not
without the consent of BKINZ incur any capital or general
expenditure in relation to the Business exceeding in
aggregate $3,000.
4.1.4 Access to Premises and Business: Powercall and the
Shareholders shall ensure that BKINZ and its representatives
have full access to the Premises and the Business Records
and will be given promptly all information they may
reasonably require concerning the Business or affairs of
Powercall.
4.1.5 Insurance: Powercall and the Shareholders shall keep all of
the Fixed Assets fully insured against all usual risks
insured against by parties engaged in the activities
comprising the Business. Powercall shall immediately notify
its insurers of the interest of PTL in the Fixed Assets
pursuant to this Agreement. Powercall shall provide details
of all insurance policies including copies thereof to BKINZ
as soon as possible after the signing of this Agreement.
4.1.6 Liabilities: Powercall and the Directors shall ensure that
PTL and BKINZ do not, without their prior written consent,
unless specifically provided for in this Agreement, become
responsible for any of the Liabilities or obligations of
Powercall or the Shareholders.
4.2 By Completion: On or before Completion Powercall and the Shareholders
shall:
4.2.1 Benefit of Business: Take all steps reasonably required to
enable PTL to obtain the full benefit of the Business and in
particular any licenses, contracts or rights possessed by
Powercall or the Shareholders in relation to the Business.
4.2.2 Service Agreement: Procure the execution of employment
contracts by each of the Directors for terms of 5 years (in
the case of Nick Lyttle as General Manager of PTL) in the
form annexed as Annexure A.
4.3 Employees:
4.3.1 Forthwith after the execution of this Agreement but subject
to the Privacy Act 1993 Powercall shall provide to BKINZ the
particulars of employment for those employees who are
engaged in the Business who have indicated a willingness to
be employed by PTL and who PTL has agreed with Powercall are
necessary for the ongoing staffing of the Business.
4.3.2 Such employees shall be offered employment contracts with
PTL on the standard form employment contract utilised by
BKINZ to take effect from the Completion Date but providing
for substantially the same benefits as those employees
currently enjoy.
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4.3.3 Notwithstanding clauses 4.3.1 and 4.3.2 it is acknowledged
and agreed that PTL, BKINZ and BKI shall have no liability
or responsibility in respect of the wages, emoluments,
holiday pay, superannuation, redundancy or any other Costs
in respect of Powercall's employees except to the extent
that they are included in the Liabilities. Powercall, the
Directors and the Shareholders agree to indemnify PTL upon
demand against any such liability arising in respect of any
period prior to the Completion Date.
5. Completion
5.1 Possession: Possession of the Business shall be given and taken on 1
April 1997 as at which date all outgoings and incomings of the
Business shall be apportioned.
5.2 Risk: Risk in the Fixed Assets shall remain with Powercall until the
Completion Date.
5.3 Insurance: Powercall and the Shareholders shall keep all of the Fixed
Assets fully insured until the Settlement Date against all usual risks
insured against by parties engaged in the activities comprising the
Business. Powercall shall immediately notify its insurers of the
interest of PTL in the Fixed Assets pursuant to this Agreement.
Powercall shall provide details of all insurance policies including
copies thereof to BKINZ as soon as possible after the date of this
Agreement.
5.4 Completion: Completion shall take place on the Completion Date at 2.15
p.m. or at such other time as the parties shall agree and Shareholders
will hand to PTL:
5.4.1 Title Documents: All documents of title relating to the
Software and the Fixed Assets and all documents and Accounts
evidencing the Current Assets and Powercall's right to
collect the Current Assets.
5.4.2 Transfers: All transfers and assignments of all leases,
licenses, permits, grants, concessions and approvals and all
consents necessary to enable PTL to obtain the full benefit
of the Business;
5.4.3 Assignment: An absolute assignment of all Current Assets and
evidence satisfactory to BKINZ that all debtors of the
Shareholders comprised within the Current Assets have been
notified in writing of such assignment.
5.4.4 Releases of Charges over Assets: Unconditional releases of
any Charges over any of the assets comprised in the
Business;
5.4.5 Powercall's Records: All Business Records relating to the
Business;
5.4.6 Pre-conditions: Evidence satisfactory to BKINZ that the
Shareholders have fulfilled their obligations under clause
4;
and against compliance with the above provisions PTL shall pay or
satisfy the Consideration as specified in clause 3.1.1.
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5.5 Damage or Destruction of Assets: If any of the Fixed Assets are lost,
damaged or destroyed prior to the Completion Date PTL may at its
option either:
5.5.1 Purchase Assets: Purchase such damaged or destroyed asset or
assets together with all rights under the Shareholders'
relevant insurance policy; or
5.5.2 Reject Assets: Reject any of such assets in which case the
Consideration shall be reduced by an amount being the
replacement value of such asset or assets as determined by
agreement between the Shareholders and BKINZ. Failing
agreement within 5 Business Days following Completion, the
replacement value shall be determined by KPMG who shall act
as experts and not an arbitrators and accordingly the
Arbitration Act 1908 shall not apply.
6. Default at Completion
6.1 Default by the Shareholders : Without prejudice to clause 8, if any of
the provisions of clauses 4 or 5 are not fully complied with on
Completion, PTL may (in addition to and without prejudice to all other
rights or remedies available to PTL under this Agreement or otherwise)
at PTL's option:
6.1.1 Rescind: Rescind this Agreement; or
6.1.2 Completion: Effect Completion so far as practicable having
regard to the defaults which have occurred (without
releasing the Shareholders from liability to comply as soon
as possible with the Shareholders' obligations under clauses
4 and 5); or
6.1.3 Delay Completion: Fix a new date for Completion not being
more than 20 Business Days after the Completion Date) and in
that case the Shareholders shall pay to PTL interest at the
Interest Rate on the Consideration payable on the Completion
Date from the date on which Completion was due until
Completion takes place. If Completion does not take place
other than by reason of a default by PTL then such payment
shall not be refundable to the Shareholders.
6.2 Default by Purchaser: If from any cause whatsoever save the default of
the Shareholders any portion of the Consideration is not paid upon the
due date for payment PTL shall pay to the Shareholders interest at the
Interest Rate on the portion of the Consideration so unpaid from the
due date for payment until payment, without prejudice to any of the
Shareholders' rights or remedies.
7. Warranties and Indemnities
7.1 Powercall's, Directors' and Shareholders' Warranties: Powercall, the
Directors and the Shareholders and each of them jointly and severally
represent, warrant and undertake to PTL and BKINZ in terms of the
Warranties and it is agreed that:
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7.1.1 Investigations not to affect Warranties: Except as disclosed
in Schedule 3 and/or the Disclosure Letter, the Warranties
shall not be modified, qualified or discharged or in any way
affected by any investigation made by BKINZ into the affairs
of Powercall;
7.1.2 Separate and Independent: Each of the Warranties shall be
separate and independent and save as expressly otherwise
provided shall not be limited by reference to any other of
the Warranties or any other provision of this Agreement.
7.2 Reliance on Warranties: Powercall, the Directors and the Shareholders
acknowledge that PTL and BKINZ have entered into this Agreement in
reliance (among other things) on the Warranties.
7.3 Powercall's, Directors' and Shareholders' Covenants: Powercall, the
Directors and the Shareholders and each of them jointly and severally
warrant, represent and undertake to BKINZ and also as a separate
covenant to PTL:
7.3.1 Indemnity: That Powercall, the Directors and the
Shareholders and each of them jointly and severally will
keep the PTL and BKINZ fully indemnified against all and any
depletion in or reduction in the value of the Business or
any of the assets of Business acquired by PTL and all
Proceedings and Costs reasonably suffered or incurred by PTL
or BKINZ as a result of or in relation to any breach or
non-fulfilment of any of the Warranties and all Costs
incurred in making, defending or compromising any
Proceedings in relation to facts or matters which are or
would if proved or might, constitute such a breach or
non-fulfilment; and
7.3.2 No Breach of Warranties Prior to Completion: That they will
procure that (except only as may be necessary to give effect
to this Agreement) they shall not allow or procure any act
or omission before Completion which would constitute a
breach of any of the Warranties if they were given at any
time prior to or on Completion or which would make any of
the Warranties inaccurate or misleading if they were so
given; and
7.3.3 Disclosure of Change in Circumstances: That they will
forthwith disclose in writing to BKINZ any matter or thing
which may arise or become known to them or any of them after
the date of this Agreement and prior to Completion which is
inconsistent with any of the Warranties or which might
render any of them inaccurate or misleading when given at
Completion or which might be material to be known by a
purchaser for value of the Business or which might have a
material adverse effect on the value of the Business or any
of the assets of the Business.
7.4 Directors' Employment: Powercall, the Directors and the Shareholders
each acknowledge that BKINZ, BKI and PTL have entered into this
Agreement upon the expectation that each of the Directors will
continue to be employed on a full time basis in the Business for the
term of the employment contracts referred to in clause 4.2.2. Should
any of such contracts be terminated for any reason prior to the end of
their 5 year terms other than through the default of PTL or as a
consequence
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of the death or permanent disability of a Director, and as a
consequence PTL, BKINZ or BKI suffer any losses or incur any Costs
then Powercall, the Directors and the Shareholders shall be jointly
and severally liable to reimburse such losses or Costs and PTL, BKI
and BKINZ shall be entitled to adjust the Consideration according
and/or set off any such amount against any payment due to the
Shareholders under this Agreement.
7.5 Warranty Limitations: Notwithstanding any other provisions of this
Agreement, the Warranties are made and given subject to the provisions
of Schedule 3.
8. Rights of Rescission
8.1 Rescission for Breach: Without prejudice to clause 6, if on or prior
to Completion it should be found that:
8.1.1 Unfulfilled Obligations: Any obligation of Powercall, the
Directors or the Shareholders contained in this Agreement is
or will on Completion be unfulfilled; or
8.1.2 Breach of Warranties: Any Warranty is or may at Completion
be inaccurate or misleading;
then the PTL may, without prejudice to any other rights available to
it under clause 8.2 of this Agreement, by notice in writing to the
Shareholders, rescind this Agreement.
8.2 Effect of Rescission: Rescission of this Agreement under clause 8.1
shall not extinguish any right of PTL or BKINZ to damages or
compensation.
8.3 Rescission for Matters other than Default: If on or prior to
Completion:
8.3.1 Destruction of Assets: Any asset of the Business shall be
destroyed or damaged to an extent which in the opinion of
the BKINZ materially and adversely affects the Business; or
8.3.2 Material Adverse Change: Any other event shall occur which
affects or is likely to affect adversely to a material
degree the Business or the financial position, assets or
profitability of the Business;
PTL and BKINZ shall be entitled by notice in writing to the
Shareholders to rescind this Agreement, but the occurrence of such an
event shall not give rise to any right to damages or compensation
except where Powercall, the Directors or the Shareholders have failed
to give notice of such event as required by clause 7.3.3.
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9. Conditions
9.1 This Agreement is conditional upon:
9.1.1 Government or Regulatory Consents: Consent being given by
any New Zealand or Canadian government or regulatory body
whose consent is required to enable Completion of this
Agreement; and
9.1.2 Stock Exchange Consent: The approval of the Alberta Stock
Exchange.
9.1.3 Board Consent: The approval of the board of directors of
BKINZ and of BKI.
9.2 Fulfilment of Conditions: Each of the parties shall do all acts and
things reasonably necessary to procure the fulfilment of the
conditions set out in clause 9.1.
9.3 Benefit of Conditions: The Shareholders acknowledge that the
conditions contained in clauses 9.1.1 to 9.1.3 have been inserted
solely for the protection of PTL and BKINZ and accordingly PTL or
BKINZ may waive any of such conditions and in such event this
Agreement shall remain binding on the parties.
9.4 Failure of Conditions: Should:
9.4.1 Not Satisfied: Any of the conditions set out in clause 9.1
not be fulfilled or waived (as the case may be) by 16 May
1997 or such later date as may be agreed by the parties; or
9.4.2 Unreasonable Conditions: Any consent or approval required in
terms of the conditions set out in clause 9.1 be granted on
terms not reasonably acceptable to any affected party;
then this Agreement shall be voidable by notice in writing and this
Agreement shall then be at an end and the parties shall not have any
further rights or obligations except that the Shareholders will repay
any deposit paid.
10. Non Competition
10.1 Non-Competition: In consideration of PTL, BKINZ and BKI entering into
this Agreement and as a condition precedent, Powercall, the Directors
and the Shareholders and each of them acknowledge that the
Consideration is dependent upon and has been calculated on the basis
that they will not carry on a business the same as or in substantial
competition with the Business in opposition to PTL in the field of
development, marketing, production and servicing of software for the
operation of telephone systems in conjunction with computer systems
after Completion for the period specified below and accordingly
Powercall, the Directors and the Shareholders and each of them jointly
and severally covenant and agree with PTL, BKINZ and BKI that:
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10.1.1 Business: They will not during a period which is the greater
of 1 year from the Completion Date or 1 year from the date
of termination of the Service Agreement of the last of the
Directors to be employed by PTL at any place in New Zealand
(except as a servant of PTL or BKINZ) or except with the
prior written consent of BKINZ be directly or indirectly
engaged or connected or interested in, either on their own
account or as a partner with or as an employee of any other
person or as a shareholder, director, officer, consultant,
adviser or employee of any person (other than as holder of
not more than 5% of the shares in the capital of any
company whose shares are listed on any official stock
exchange) or directly or indirectly assist financially any
such business; and
10.1.2 Orders: They will not on their own account or for any
person, enterprise, firm, trust, joint venture or syndicate
solicit orders for such business otherwise than for the
benefit of PTL or BKINZ from any person, firm or company who
at the Completion Date was or had previously been a customer
of the Business; and
10.1.3 Employees: They will not on account of Powercall, the
Directors or the Shareholders or for any person, enterprise,
firm, trust, joint venture or syndicate entice or attempt to
entice away from the PTL or the BKINZ any employee of PTL or
BKINZ.
10.2 Provisions with respect to Covenants: Each of the covenants contained
in clause 10.1 shall:
10.2.1 Separate and Severable: Be separate and severable and to the
extent that any such provision is unenforceable by reason of
its period, scope or area being held by a court of competent
jurisdiction to be unreasonable, then such provision shall
be limited to the maximum period, scope or area which such
court considers reasonable and shall be enforceable on those
terms;
10.2.2 Benefit of Purchaser and Assigns: Be given for the benefit
of and be enforceable by PTL and BKINZ and their successors
and assigns.
11. Option to Purchase
11.1 the Shareholders' Option: Should BKINZ determine at any time following
Completion that any of the assets acquired from the Shareholders
pursuant to this Agreement are no longer required, then BKINZ will
procure PTL to offer to the Shareholders a first right to purchase
such assets at their fair market value (to be determined in the event
of a dispute between the parties by KPMG). Such right to purchase
shall be exercised by the Shareholders giving written notice to PTL
within 10 Business Days of receipt of notice of such right being
available.
11.2 PTL's Rights: Should the Shareholders fail to exercise their rights
under clause 11.1 within the 10 Business Day period then PTL shall be
free to sell such assets without restriction.
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12. Arbitration
12.1 Submission: If any dispute or difference shall arise between any of
the parties in any way arising out of or in connection with this
Agreement such dispute or difference shall be referred to the
arbitration of a single arbitrator if the parties can agree upon one
or otherwise of two arbitrators one to be appointed by the
Shareholders and one by the Purchaser or an umpire to be appointed by
the two arbitrators prior to entering into consideration of the matter
and any such reference shall be a submission to arbitration within the
meaning of the Arbitration Act 1908 and its amendments.
13. General
13.1 Non-Merger: The Warranties, indemnities, representations and
undertakings set out in this Agreement shall notwithstanding any rule
of law to the contrary not merge in the instruments of transfer
executed pursuant to this Agreement but shall remain in full force and
effect and enforceable to the fullest extent.
13.2 No Announcement: The parties agree that (except as may be required by
law or by the requirements of the Alberta Stock Exchange) they will
not make any announcement or disclosures as to the subject matter of
this Agreement except in a form and manner and at such time as all
parties may agree.
13.3 Notices: Any notice to be given pursuant to this Agreement shall be
given in accordance with and subject to the following provisions of
this clause 13.3:
13.3.1 In Writing: All notices shall be in writing signed by a duly
authorised officer of the party giving the notice or by the
party's solicitor;
13.3.2 Delivery: Without prejudice to any other sufficient mode of
delivery, a notice may be sent by hand, prepaid post, telex
or facsimile to the address or number (in the case of telex
or facsimile) of the intended recipient last advised to the
sender in accordance with this clause. The initial addresses
and numbers of the parties are:
Powercall and Shareholders: c/o Schnauer & Co
Barristers and Solicitors
P 0 Box 31 272
AUCKLAND 1
Facsimile: (09) 486 0175
PTL and BKINZ: 4 Bond Street
Grey Lynn
AUCKLAND
Facsimile: (09) 376 7891
13.3.3 Notice by Hand: Subject to clause 13.3.6, a notice delivered
by hand shall be received on delivery;
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13.3.4 Notice by Post: Subject to clause 13.3.6, a notice sent by
prepaid post shall be deemed to be received 3 days after
being posted;
13.3.5 Notice by Telex or Facsimile: Subject to clause 13.3.6, a
notice sent by telex or facsimile shall be deemed to be
received at the time of transmission where a transmission
report or answerback code produced by the sender's machine
indicates successful transmission;
13.3.6 Receipt Outside Business Hours: Any notice received or
deemed to be received pursuant to clauses 13.3.3, 13.3.4 or
13.3.5 after 5.00 pm (recipient's time) on a Business Day in
the recipient's city or on a day which is not a Business Day
in the recipient's city shall be deemed to be received at
9.00 am (recipient's time) on the next Business Day in the
recipient's city;
13.3.7 Proof of Delivery: In proving delivery of a notice, it shall
be sufficient:
(a) By Hand: in the case of a notice by hand, to provide
evidence that the notice was delivered to the address
of the recipient and no acknowledgement from the
recipient shall be necessary;
(b) By Post: In the case of a notice by post, to provide
evidence that the notice was correctly addressed and
posted in a prepaid envelope;
(c) By Telex or Facsimile: In the case of a notice by telex
or facsimile, to provide the transmission report
produced by the sender's machine showing a successful
transmission to the correct number of the recipient and
to have telephoned the recipient to confirm receipt of
a legible copy of such notice.
13.4 Applicable Law and Jurisdiction: This Agreement shall be governed by
and construed and interpreted in accordance with the laws of New
Zealand and the parties irrevocably submit to the exclusive
jurisdiction of the New Zealand courts.
13.5 Further Assurance: The parties will do all things including without
limitation the execution of documents as shall be necessary to give
full effect to this Agreement.
13.6 Entire Agreement: This Agreement including all schedules, annexures
and exhibits to it, and any documents incorporated by express
reference forms the entire agreement between the parties relating to
its subject matter and supersedes all prior agreements and
understandings between the parties with respect to that subject
matter. If there is any conflict between the terms of this document
and any other document forming part of this Agreement, the terms set
out in this document shall prevail.
13.7 Variation: This Agreement may only be varied by an express written
agreement executed by all the parties or by persons duly authorised in
writing on their respective behalf.
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13.8 Costs: Each party shall bear their own Costs of and incidental to the
preparation, Completion and implementation of this Agreement.
13.9 Waiver: No failure to exercise and no delay in exercising on the part
of the Purchaser any right under this Agreement shall operate as a
waiver of that right nor shall any single or partial exercise of any
right preclude any other or further exercise of such right or the
exercise of any other right. Any such waiver unless otherwise
expressly agreed in writing, shall only apply in respect of the
particular circumstances for which it is given.
13.10 Counterparts: This Agreement may be signed in any number of
counterparts, all of which when taken together constitute one and the
same instrument. Any party may enter into this Agreement by executing
any such counterpart. The parties will co-operate to circulate all
counterparts to each other for the purposes of having all counterparts
executed by all parties as soon as practicable following Completion.
13.11 Guarantee: BKINZ and BKI jointly and severally guarantee the
performance by PTL of its obligations under clauses 2. 3. 5, 6, 9 and
11 of this Agreement.
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<PAGE>
EXECUTED by the parties.
SIGNED by POWERCALL )
LIMITED ) Signature /s/ Evan Read
------------------------------
Name Evan Read
------------------------------
Director
Signature /s/ Nick Lyttle
------------------------------
Name Nick Lyttle
------------------------------
Director
SIGNED by )
) Signature /s/ Nick Lyttle
) ------------------------------
as trustees of the N & N LYTTLE ) Name Nick Lyttle
FAMILY TRUST ) ------------------------------
Signature /s/ Nell Lyttle
------------------------------
Name Nell Lyttle
------------------------------
SIGNED by )
) Signature /s/ Evan Read
) ------------------------------
as trustees of the READ ) Name Evan James Read
DEWHIRST FAMILY TRUST ) ------------------------------
Signature /s/ Nancy Dewhirst
------------------------------
Name Nancy Dewhirst
------------------------------
SIGNED by )
) Signature /s/ Michael Duncraft
) ------------------------------
as trustees of the DUNCRAFT ) Name Michael Duncraft
FAMILY TRUST ) ------------------------------
Signature /s/ Nick Lyttle
------------------------------
Name Nick Lyttle
------------------------------
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<PAGE>
SIGNED by ) /s/ G L Hunt
GREGORY LEIGH HUNT ) ------------------------------
in the presence of: ) G L Hunt
/s/ Michael Duncraft Witness's Signature
- -------------------------------------
Micheal Duncraft Name
- -------------------------------------
Manager Occupation
- -------------------------------------
313 Lake Rd Address
- -------------------------------------
SIGNED by ) /s/ N G Lyttle
NICHOLAS GARFIELD ) ------------------------------
LYTTLE in the presence of: ) N G Lyttle
/s/ Evan Read Witness's Signature
- -------------------------------------
Evan James Read Name
- -------------------------------------
[ILLEGIBLE] Occupation
- -------------------------------------
Auckland Address
- -------------------------------------
SIGNED by EVAN JAMES READ ) /s/ E J Read
in the presence of: ) ------------------------------
) E J Read
/s/ Nick Lyttle Witness's Signature
- -------------------------------------
Nick Lyttle Name
- -------------------------------------
Manager Occupation
- -------------------------------------
9 Temyson Ave Address
- -------------------------------------
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<PAGE>
SIGNED by ) /s/ M G Duncraft
MICHAEL GERARD ) ------------------------------
DUNCRAFT in the presence of: ) M G Duncraft
/s/ Greg Hunt Witness's Signature
- -------------------------------------
Greg Hunt Name
- -------------------------------------
Sales + Marketing MNGR Occupation
- -------------------------------------
13 Mayburn Ave, [ILLEGIBLE] Address
- -------------------------------------
SIGNED by ) /s/ G L Hunt
GREGORY LEIGH HUNT ) ------------------------------
in the presence of: ) G L Hunt
/s/ Nick Lyttle Witness's Signature
- -------------------------------------
Nick Lyttle Name
- -------------------------------------
Manager Occupation
- -------------------------------------
9 Temyson Ave Address
- -------------------------------------
SIGNED for BROCKER (N.Z.) )
INVESTMENTS LIMITED ) Signature /s/ Hal Linstrom
by: ) -------------------------------
Name Hal Linstrom
-------------------------------
Officer
Signature
-------------------------------
Name
-------------------------------
Director
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<PAGE>
SIGNED for BROCKER )
INVESTMENTS LIMITED ) Signature /s/ Hal Linstrom
by: ) -------------------------------
Name Hal Linstrom
-------------------------------
Officer
Signature /s/ Michael Ridgwam
-------------------------------
Name Michael Ridgwam
-------------------------------
Director
(c) Lowndew Jordan
Auckland 1997
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<PAGE>
SCHEDULE 1
Item 1. Shareholders
1.1 _____________________________________________________________
as trustees of the N & N Lyttle Family Trust created by Trust Deed
dated Address: 9 Tennyson Avenue, Takapuna Percentage of
Consideration: 30%
1.2 _____________________________________________________________
as trustees of the Read Dewhirst Family Trust created by Trust Deed
dated Address: 8A Northumberland Avenue, Takapuna Percentage of
Consideration: 30%
1.3 _____________________________________________________________
as trustees of the Duncraft Family Trust created by Trust Deed dated
Address: 313 Lake Road, Takapuna Percentage of Consideration: 30%
1.4 _____________________________________________________________
Gregory Hunt
Address: 13 Mewburn Avenue, Mt Eden
Percentage of Consideration: 10%
Item 2. Directors
Name Address
Nicholas Lyttle 9 Tennyson Avenue, Takapuna
Evan Read 8A Northumberland Avenue, Takapuna
Michael Duncraft 313 Lake Road, Takapuna
Gregory Hunt 13 Mewburn Avenue, Mt Eden
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<PAGE>
SCHEDULE 2
Warranties (Clause 7.1)
1. General
1.1 Disclosure Letter: All information contained or referred to in the
Disclosure Letter is true complete and accurate in all respects and
Powercall, the Shareholders and the Directors are not aware of any
other fact or matter which renders or might upon its disclosure render
any such information misleading.
1.2 Agreement: The provisions of the recitals to this Agreement, clause
1.1 of this Agreement and all information contained in the Schedules
and Annexures to this Agreement are complete and correct in all
respects.
1.3 Information Supplied: All written information which has been given or
authorised to be given by any of Powercall, the Directors, the
Shareholders or any of the officials of Powercall or by any
professional advisers of Powercall or the Shareholders to PTL, BKINZ
or to any of their directors, employees, agents or professional
advisers in the course of the negotiations leading to this Agreement
was when given and will at Completion be true complete and accurate in
all respects and Powercall, the Directors and the Shareholders are not
aware of any other fact or matter which renders or might upon its
disclosure render any such information misleading.
1.4 All Necessary Disclosures Made: All the facts and circumstances
relating to the Business, the assets and affairs of Powercall, the
Directors and Shareholders material for disclosure to an intending
purchaser of the Business have been disclosed to BKINZ or its advisers
in writing and any such facts arising prior to Completion will
forthwith be disclosed in writing to BKINZ or its advisers.
2. Powercall
2.1 Encumbrances: There is not any and will not at Completion be any
Charge on, over or affecting the Businesses and there is no agreement
or commitment to give or create any such Charge and no demand has been
made by any person claiming to be entitled to any such Charge.
2.2 Records: All the Business Records have been fully and correctly
completed and will pending Completion continue to be so completed and
there are and will pending Completion be no material inaccuracies or
discrepancies of any kind contained or reflected in any of them. They
give and reflect and at Completion will give and reflect a true and
fair view of the financial, contractual and trading position of the
Business and of the Fixed Assets and the Liabilities.
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<PAGE>
2.3 Accounts:
2.3.1 True and Fair View: The Accounts are complete and accurate
and give and reflect and will at Completion give and reflect
a true and fair view of Powercall, its activities and
financial status in all respects.
2.3.2 Comply with Statute: The Accounts comply with all applicable
requirements of the Companies Act 1955, the Companies Act
1993 and the Financial Reporting Act 1993, as the case may
be.
2.3.3 GAAP: The Accounts have been prepared in accordance with
generally accepted accounting practice as that term is
defined in the Financial Reporting Act 1993 and to the
extent consistent with such generally accepted accounting
practice on a basis consistent with that adopted for
preceding accounting periods.
2.3.4 No Unusual or Extraordinary Items: The Accounts are not
affected by any unusual extraordinary exceptional or
non-recurring items or by any other factor rendering the
results set out in the Accounts (or any of them) unusually
better or worse than they (or any of them) might otherwise
be or have been.
2.3.5 Full Disclosure: The Accounts fully disclose all the assets
and Liabilities (whether ascertained, contingent, deferred
or otherwise and whether or not quantified or disputed) of
Powercall and make full provision and/or reserve for all
such Liabilities.
2.4 No Actions: As at the Completion Date there will be no actions, suits,
Proceedings, requisitions, requirements or arbitrations pending or
outstanding or (to the knowledge of Powercall, the Directors and the
Shareholders) threatened against Powercall in relation to or affecting
the Business, any of the Fixed Assets or the Software, or the
Liabilities.
2.5 Compliance with Law: As at the Completion Date the Shareholders
lawfully carrying on the Business in all its aspects and Powercall,
the Directors and the Shareholders are not at such date aware of any
impediment to PTL lawfully carrying on the Business immediately
following Completion.
3. Statutory Obligations
3.1 Employment and Safety: The Premises and operation of the Business
complies and will at Completion comply with the Health and Safety in
Employment Act 1992 and all applicable legislation governing
employment and safety of employees.
3.2 Holding of Licences: The Shareholders hold and will on Completion be
in possession of all current licences (including import licences and
concessions, if any) consents, authorities and permits from or issued
by any Governmental Department, municipal or local body or other
authority whether in respect of the Premises, plant, machinery,
buildings or other assets of the Business or otherwise necessary or
required to enable them to carry on the Business fully and effectively
E-141
<PAGE>
and that the Shareholders and Powercall has not had notice that any
such licences, consents, authorities or permits are being or are
likely to be withdrawn or in any manner qualified whether by reason of
the sale of the Business or otherwise howsoever.
3.3 Utilities: All Charges for local authority rates, electric power, gas
and water supplied to the Business will be paid up to the Completion
Date.
3.4 Building Works: Where Powercall has done or caused or permitted to be
done in the Premises any works for which a permit or building consent
was required by law, such permit or consent was obtained for those
works and they were completed in compliance with that permit or
consent and, where appropriate, a code compliance certificate was
issued for those works.
3.5 Building Act: All obligations imposed on Powercall under the Building
Act 1991 shall be fully complied with at the Completion Date.
3.6 No Requisitions: There will not on Completion be any unsatisfied
requisitions by or dispute with any local body health authority,
government or ad hoc authority or other body or official or authority
having competent jurisdiction affecting or relating to any of the
Premises, plant, machinery, buildings or other assets of the Business.
3.7 All Documents Stamped: All documents which in any way affect the
right, title or interest of Powercall and the Shareholders in or to
any of the property or assets to be transferred to PTL and which
attract stamp duty have been duly stamped.
4. Properties and Assets
4.1 Title: As at Completion all assets comprised within the Business will
be unencumbered property of the Shareholders and on the Completion
Date exclusive title to them will pass to PTL free of all Charges.
4.2 Assets: The plant, equipment, and assets comprised in the Fixed Assets
will at the Completion Date be in good working order and condition.
4.3 No Defects: No structural, drainage or other material defects affect
any of the buildings and structures on or comprising the Premises.
4.4 Leasehold Premises: The Premises are held upon lease terms which have
been fully disclosed to PTL.
4.5 Compliance with Leases: Powercall and the Shareholders have paid all
rent that may be payable and has performed and observed all covenants
(whether in relation to freehold or leasehold land) conditions,
agreements, statutory requirements, planning or building or resource
consent, bylaws, orders and regulations affecting the Premises or any
business carried on the Premises and no notice of any breach of any
such matter has been received nor are the Shareholders aware of any
such breach having occurred.
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<PAGE>
4.6 Debts: The Shareholders and Powercall will pay and discharge all debts
and Liabilities incurred or arising prior to the close of business on
the Completion Date except for the Liabilities and shall indemnify PTL
and BKINZ in respect of any Costs and Proceedings relating thereto.
4.7 Compliance with Statutes: Powercall has complied with all provisions
of the Building Act 1991, Resource Management Act 1991 and all other
legislation (including regulations, bylaws, ordinances, codes of
practice, circulars and guidance notes made thereunder) relating to
building, planning or environmental matters and dealing with (but
without limitation) waste, contaminated land, discharges to land or
ground and surface water or sewers, emissions to air, noise,
dangerous, hazardous or toxic substances and materials, nuisance or
health and safety and there are no actions, claims or Proceedings
(whether actual or potential) existing in relation to such matters nor
is likely to arise any liability in relation to such matters.
4.8 No Other Matter: There is no other matter of which Powercall or the
Shareholders are or ought to be aware on reasonable enquiry and which
adversely affects the value of any of the Premises or casts any doubt
on the right or title of Powercall and the Shareholders to those
Premises or its use of those Premises for the Business which should be
revealed to a purchaser of the Business or other person entering into
this Agreement.
4.9 Compliance with Notices: There have been no notices, claims or demands
served on Powercall in respect of any of its assets (including the
Premises) which have not been fully complied with.
4.10 Current Assets: All assets included within the Current Assets are:
4.10.1 Assets owned by the Shareholders and are transferable by way
of absolute assignment to PTL on Completion.
4.10.2 In respect of debts, are amounts actually invoiced by
Powercall to such debtors not earlier than 3 months prior to
Completion and no part of such amounts still outstanding
have been released upon terms that any debtor pays less than
the fair value of the debt or have been written off or have
been compromised on any terms.
4.10.3 Collectible in full within 66 Business Days of Completion
failing which such Current Assets shall be repurchased at
their full value by the Shareholders forthwith upon receipt
of written demand from PTL following expiry of such period.
5. Intellectual Property
5.1 All Intellectual Property Included: The Consideration for the Business
is assessed on the basis that all licences and all Intellectual
Property or other similar rights relating to the Business of or used
by Powercall, if any, are at present owned solely and beneficially by
the Shareholders and that all of such rights shall be
E-143
<PAGE>
transferred to PTL on Completion to the intent that PTL shall be the
sole unencumbered and undisputed owner of all such things as at
Completion.
5.2 No Intellectual Property Agreements: Powercall, the Directors and the
Shareholders have not entered into any agreement or arrangement for
the provision of technical information or assistance or granting
rights in respect of any patents, trade marks or registered designs or
copyright and to the best of Powercall's, the Directors' and the
Shareholders' knowledge and belief the operations of Powercall do not
infringe any patent or other Intellectual Property right of any kind
vested in any other party.
5.3 Disclosure of Intellectual Property: Full details of all Intellectual
Property owned or used by Powercall have been given to BKINZ and no
person has been authorised to make any use whatsoever of any
Intellectual Property owned by Powercall or the Shareholders and
Powercall, the Directors and the Shareholders have not disclosed
(except in the ordinary course of the operation of the Business prior
to Completion) any of the know-how, trade secrets, technical
processes, confidential information, Intellectual Property or lists of
customers or suppliers which relate to the Business to any other
person.
5.4 Use of Names: Powercall and the Shareholders are entitled to use its
trade names in those parts of the world in which they currently
conduct the Business or in which its products are sold to its
customers and no person has been authorised to make any use whatsoever
of such names and the use of such names by Powercall does not infringe
the rights of any other person and none of the names is being used
claimed, opposed or attacked by any other person.
5.5 Name: Powercall and the Shareholders have not consented to and will
not before Completion consent to the adoption of a similar names to
those of Powercall by any other company or person.
5.6 Intellectual Property Not Disputed: The Intellectual Property rights
of Powercall and the Shareholders have not been and will not at
Completion be challenged or disputed by any third party and Powercall,
the Directors and the Shareholders are not aware of any facts or
circumstances which might entitle a third party to challenge Powercall
and the Shareholders ownership or use of the Intellectual Property
used in the Business.
6. Commercial Matters
6.1 Insurance: Full details of all insurance policies maintained by
Powercall have been supplied to BKINZ and all such insurances are now
in force and all premiums due have been paid and pending Completion
the Shareholders shall not permit any of its insurances to lapse or do
or omit to do anything the doing or omission of which would make any
such policy of insurance void or voidable or would or might result in
an increase in the rate of premiums and no claims are outstanding and
nothing has occurred to give rise to any such claim.
E-144
<PAGE>
6.2 Effect of Acquisition of Businesses: Powercall, the Directors and the
Shareholders have no reason to believe that as a result of the
proposed acquisition of the Business by PTL:
6.2.1 No Cessation of Supplies: Any supplier of Powercall will
cease supplying PTL or may substantially reduce its supplies
to the Business or alter the terms on which it supplies to
the Business; or
6.2.2 No Cessation of Custom: Any customer of the Business will
terminate any contract relating to the Business or cease or
materially reduce its custom with the Business; or
6.2.3 No Termination of Contracts: Any of the licences, consents,
approvals, agreements or contracts currently granted to or
entered into by Powercall required to be transferred to PTL
to enable it to carry on the Business in the manner in which
it has been carried on at any time during the 2 years prior
to the date of this Agreement will be withdrawn, cancelled
or be capable of termination as a consequence of such
transfer.
7. Employment:
7.1 Employees: Powercall shall be solely liable for all entitlements of
employees of the Business and PTL shall have no obligation to such
employees except as provided in clauses 4.2.2 and 4.3 of the annexed
Agreement.
7.2 Full Disclosure of Terms: Full disclosure in writing of the current
rate of remuneration, fees and expenses payable to each employee of or
consultant to Powercall and the terms of such employment or
consultancy have been made to BKINZ in writing and no employee or
consultant has given notice or is under notice of dismissal or
termination of employment of any consultancy agreement.
7.3 No Amounts Due: There are no outstanding arrears of salary, wages,
fees, holiday pay or other remuneration nor any accrued holiday, long
service, annual leave or other employment related entitlements in
respect of any employees of the Business other than those included in
the accruals which comprise part of the Liabilities.
7.4 No Schemes: There are not now and will not on Completion be in
existence any retirement, death or disability benefit schemes for
employees of the Business or any obligations to or in respect of any
present or past employees with regard to retirement, redundancy,
death, sickness or disability pursuant to which PTL may become liable
to make any payments.
E-145
<PAGE>
SCHEDULE 3
(Clause 7.4)
1. Warranty Limitations: Notwithstanding any other provisions of this
Agreement, none of Powercall, the Directors or the Shareholders shall be
liable in respect of any Proceedings or Costs for breach of any of the
Warranties or other breach of this Agreement:
1.1 Notice: Unless, promptly after BKINZ becomes aware or ought to have
become aware of any breach, they shall have received from BKINZ
written notice containing full details of the relevant Proceedings
within a period of 2 years after Completion and (unless the relevant
Proceedings shall have been withdrawn or satisfied) action in a court
of competent jurisdiction in respect of such breach shall have been
commenced within 1 year after receipt of such notice;
1.2 Aggregate of Warranties to Exceed Specified Amount: Unless the
aggregate amount of the liability of Powercall, the Directors and the
Shareholders for all such Costs and Proceedings exceeds $3,000;
1.3 Limit for Single Proceedings: Unless, in respect of any single breach
of any of the Warranties, the amount of the liability of Powercall,
the Directors and the Shareholders for such Costs and Proceedings in
respect of such breach exceeds $1,000;
1.4 Exclusion where Covered by Insurance: If and to the extent that (after
taking account of related Costs and any normal excess in such policy)
recovery is made by PTL under any policy of insurance effected by or
for the benefit of the PTL in respect of any of the subject matters of
such Proceedings;
1.5 Exclusion where Recovery under Another Agreement: If and to the extent
that those Proceedings or Costs occasioned thereby has been recovered
under any other agreement entered into between the parties and vice
versa;
1.6 Subsequent Changes: If and to the extent that such Proceedings and any
Costs in connection therewith arise or is increased as a result of:
1.6.1 Any alteration in rates of taxation after the date of this
Agreement with retrospective effect or the withdrawal after
the date of this Agreement of any published extra-statutory
concession or the alteration after that date of any
published statement of practice of the relevant revenue
authority; or
1.6.2 The passing of, or any change in, any legislation after the
date of this Agreement.
1.7 Liability Disclosed: If and to the extent the facts, matters or
circumstances giving rise to the breach are referred to in the
Disclosure Letter or any document disclosed with the Disclosure Letter
or in any document disclosed to BKINZ or
E-146
<PAGE>
any officer of or professional adviser to BKINZ in relation to this
Agreement or the matters contemplated herein or in the Accounts and
BKINZ confirms its acceptance of such facts, matters and
circumstances;
1.8 Pursuant to Agreement: If and to the extent that such matter giving
rise to the Proceedings properly falls to be done in implementing the
terms of this Agreement;
2. Limitations Separate and Independent: For the avoidance of doubt each of
the above paragraphs of this Schedule shall be construed as being separate
and independent and none of them shall be construed as limiting the effect
of any other.
3. Recovery from Third Party: If Powercall or the Shareholders pay an amount
pursuant to a Proceedings in respect of breach of any of the Warranties and
PTL has a right of reimbursement against any person other than Powercall or
the Shareholders in respect of or relating to those Proceedings, PTL shall
(subject to PTL, being indemnified to its reasonable satisfaction against
all reasonable Costs) take all reasonable steps or Proceedings to enforce
such right. If PTL subsequently recovers such reimbursement from such third
party, PTL shall forthwith repay to the Shareholders such part of the
amount paid by Powercall or the Shareholders by way of damages for breach
of that Warranty as equals the amount of the which is so recovered by PTL
in respect of the facts, matters or circumstances giving rise to the breach
of that Warranty (after taking account of the Costs of recovery).
E-147
<PAGE>
ANNEXURES
A: Service Agreement (clause 4.2.2)
E-148
<PAGE>
Private & Confidential
Nick Lyttle
Powercall Ltd
P.O. Box 108 136
Symonds St
AUCKLAND
14 September 1998
Dear Nick
Earn-out calculation schedule
Enclosed please find the earn out calculation for the year ended 31 March 1998
with respect to Powercall Limited.
I understand that you have reviewed this schedule, and discussed the
calculations with Brocker Investments (NZ) Limited.
With your signed acceptance, on behalf of the shareholders of Powercall Limited,
we will instruct our solicitor to issue the share script to escrow. Please sign
and return a copy of this letter so we may initiate these instructions.
Yours faithfully
/s/ Mike Ridgway
Mike Ridgway
Chief Executive Officer
- --------------------------------------------------------------------------------
For and on behalf of the shareholders of Powercall Limited
/s/ Nick Lyttle /s/ Nell Lyttle Date 21/9/98
- --------------------------------------------------------------------------------
Nick Lyttle & Nell Lyttle as Trustees
of the N&N Lyttle Family Trust.
/s/ Evan Read /s/ Nancy Dewhirst Date 12/10/98
- --------------------------------------------------------------------------------
Evan James Read and Nancy Dewhirst Trustees
of the Read Family Trust
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<PAGE>
/s/ Michael Duncraft /s/ Wendy Duncraft Date 16/9/98
- --------------------------------------------------------------------------------
Michael Duncraft and Wendy Duncraft as Trustees
of the Read Duncraft Family Trust.
/s/ Gregory Hunt Date 16/9/98
- ----------------------- -----------------------
Gregory Hunt
cc: Hal Linstrom, Brocker Investments
Andrew Chamberlain, Chamberlain Hutchison
E-150
<PAGE>
BROCKER
INVESTMENTS
POWERCALL LIMITED
ACQUISITION VALUATION AND SHARE ISSUE CALCULATION
AS AT 31 MARCH 1998
1 Purchase price
Made up of following components:
Initial cash consideration
Goodwill value
2 Goodwill Value
The lesser of:
Four (4) times cumulative Net Profit after Tax for the 4 years ended 31
March 1998 - 2001. Twelve (12) times the Net profit after Tax for the year
ended 31 March 2001 Twenty Million dollars (NZ$20m)
3 Consideration paid to date
Initial cash on settlement of 4,948
Initial shares on settlement 27,440 57,093
--------------
62,041
4 Goodwill calculation For the year ended March 31, 1998
NZ$
Net income 239,882
Tax charge (80,503)
--------------
159,379
x4 637,516
-------
5 Escrow shares to be issued
Shares to be issued and held in escrow equalling the goodwill value
As at31 March 1998
Exchange rate (NZ:CAD) 0.7816
Share Price (strike) c$ 1.75
Shares to be issued 284,733
-------
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<PAGE>
BROCKER
INVESTMENTS
POWERCALL LIMITED
ACQUISITION VALUATION AND SHARE ISSUE CALCULATION
AS AT 31 MARCH 1998
6 Escrow shares to be released
First release to be 5 June 1998 (66 days from March 1998)
Based on cummulative cash flow earned for the year ended 31 March 1998 (as
defined in Escrow Agreement)
<TABLE>
<CAPTION>
March 1998 March 1999 March 2000 March 2001 TOTAL
<S> <C> <C> <C> <C> <C>
Net profit after tax 159,379 159,379
Add back:
Depreciation 49,701 49,701
Depletion -
Deferred tax 11,273 11,273
Goodwill amortisation -
Research and development -
amortisation
------- -------
220,353 220,353
Shares to be released from escrow 98,416
-------
7 Revalution of shares previously
issued
No NZ$ NZ$/Share
Shares issued to date 27,440 $57,093 $2.08
Share price at March 31, 1998 $2.24
Revalution of Escrow shares
-------
Total shares to release 98,416
-------
</TABLE>
E-152
<PAGE>
BROCKER
INVESTMENTS
POWERCALL LIMITED
ACQUISITION VALUATION AND SHARE ISSUE CALCULATION
AS AT 31 MARCH 1998
8 Summary
NZ$
Total purchase price currently:
Cash 62,041
Goodwill value 637,516
------------
699,557
Paid to date
Cash 62,041
Goodwill value
To release shares of value ($NZ) 220,353
-------------
Total consideration paid and
released 282,394
-------------
To be potentially released in future $ 417,163
=============
9 Conclusion
Goodwill value 637,516
Shares to issue to escrow ------- 284,733
Shares to release from escrow ------- 98,416
-------
E-153
================================================================================
AGREEMENT FOR SALE
AND PURCHASE OF SHARES
Parties
THE SHAREHOLDERS OF EASY PC
COMPUTER RENTALS LIMITED
BROCKER INVESTMENTS (N.Z.) LIMITED
Relating to Easy PC Computer Rentals Limited
LOWNDES JORDAN
BARRISTERS & SOLICITORS
================================================================================
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<PAGE>
AGREEMENT dated 10th July 1997
PARTIES
1. The parties specified in Item 1 of Schedule 1 (Vendors)
2. BROCKER INVESTMENTS (N.Z.) LIMITED at Auckland (Purchaser), a subsidiary
of Brocker Investments Limited a company incorporated under the laws of
Alberta, Canada (BKI)
INTRODUCTION
A. The Vendors are the holder of the Shares together with all rights
attaching to the Shares.
B. The Vendors have agreed to sell to the Purchaser and the Purchaser has
agreed to purchase from the Vendors all of the Shares for the
Consideration and upon the terms and conditions contained in this
Agreement.
TERMS
1. Interpretation
1.1 Defined Terms: In this Agreement the following terms shall have
the meanings specified:
Accounts each and every part of the financial
statements of the Company which have
been provided by the Vendors to the
Purchaser copies of which are annexed as
Annexure 1.
Asset Value the sum of $388,000 adjusted pursuant to
clause 3.1.2.
Associated Person has the meaning given in section 0D7(1)
of the Income Tax Act 1994.
Barker Jonathan Hugh Barker
Business Day a day (other than a Saturday or Sunday)
on which registered banks are open for
business.
Business Records all books of account, accounts, records,
files, data, databases, certificates or
other evidence of title to assets and
information howsoever recorded or stored
relating to or required for the business
of the Company or pertaining to its
affairs.
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<PAGE>
2
Cashflow shall have the meaning ascribed to that
term in the Escrow Agreement.
Charge includes option, right to acquire, lien,
pledge, mortgage, assignment, charge,
security interest, bailment, or
encumbrance or adverse interest of any
nature whether legal or equitable and no
matter how arising.
Company Easy PC Computer Rentals Limited, a
company incorporated under the Companies
Act 1955 as a private company limited by
shares under No. WN 547870 having its
registered office at Wellington and
having its capital divided into 60,000
ordinary shares each of which rank pari
passu in all respects and which have
been issued and are paid up and 15,850
non-voting shares each of which rank
pari passu in all other respects with
the ordinary shares and which have been
issued and are paid up.
Completion completion by the parties of the sale
and purchase of the Shares as provided
in clause 5.
Completion Date the actual date of Completion being 16
July 1997 or 7 days after the conditions
referred to in clause 9 have been
satisfied or waived by the party
entitled to waive the same (whichever is
the later) or such other date as may be
agreed upon by the parties.
Consideration the sum of $88,050, the Asset Value and
the Goodwill Value subject to adjustment
as provided in clause 3.3.
Constitution the Memorandum and Articles of
Association of the Company or its
Constitution, as the case may be.
Costs includes any and all costs (on a
solicitor and own client basis),
expenses, damages, penalties, interest,
compensation, and awards.
Disclosure Letter the letter of disclosure referred to as
such, signed by the Vendors and dated
and delivered to the Purchaser the same
date as this Agreement.
Escrow Agreement the Escrow Agreement in the form annexed
as Annexure 3 and entitled Form C to be
entered into by BKI, the Vendors and the
Trustee.
E-156
<PAGE>
3
Exchange Rate the average between the Westpac buy and
sell rates for the exchange of $NZ to
$CAD, at the close of business on the
date specified in this Agreement or
where a date is not specified, on the
last bank Business Day prior to the date
of the relevant transaction.
Goodwill Value the value calculated by applying a
multiple of 4 to the actual audited NPAT
of the Company for the Year ending on 31
March 1998 calculated on the basis that
an allowance is made for income tax at
the rate of 33 %.
GST Act the Goods and Services Tax Act 1985.
GST Goods and Services Tax levied under the
GST Act.
Intellectual Property includes confidential information, trade
secrets, drawings, designs, techniques,
programmes, processes, logos,
copyrights, trade or service marks,
patents, registered designs, and other
information and rights capable of being
protected under New Zealand or other
laws relating to intellectual property
no matter how recorded or stored and any
applications for same. Interest Rate the
cost of funds rate for the BKI Group.
Last Accounting Date 31 March 1997.
NPAT the net profit after income tax
calculated in accordance with generally
accepted accounting principals.
Penalty Rate the Westpac Indicator Lending Rate plus
8 %.
Premises the premises at 11 Gundry Street,
Newton, Auckland and at Level 3, AMP
Chambers, 187 Featherstone Street,
Wellington together with all other land
and buildings owned, occupied or used by
the Company. Proceedings includes
proceedings, claims, demands, actions,
conferences, mediations, conciliations,
compromises, arbitrations, hearings or
appeals arising out of, preliminary to
or in connection with any dispute or
alleged dispute.
Proceedings includes proceedings, claims, demands,
actions, conferences, mediations,
conciliations, compromises,
arbitrations, hearings or appeals
arising out of, preliminary to or in
connection with any dispute or alleged
dispute.
E-157
<PAGE>
4
Related Company a related company as defined in section
158 of the Companies Act 1955 or section
5 to 8 of the Companies Act 1993, as the
case may be.
Shares all of the existing issued shares in the
capital of the Company being acquired by
the Purchaser pursuant to this
Agreement.
Statutory Books the Company's Constitution, and its
Certificate of Incorporation, Directors'
and Members' minute book, Register of
Members, Register of Directors and
Secretaries, Interests Register,
Register of Charges and Seal Register
(if any).
Strike Price in respect of the BKI shares to be
issued pursuant to this Agreement is the
last sale price for BKI shares on the
Alberta Stock Exchange on the relevant
date.
Subsidiary a subsidiary as defined in sections 5 to
8 of the Companies Act 1993.
Taxation all forms of taxation (including without
limitation capital gains tax, income
tax, surtax, estate duty, stamp duty,
rates, GST, PAYE, withholding tax,
provisional tax, duties, customs and
other import or export duties and all
other statutory, fiscal, central or
local government or municipal
impositions, duties and levies) and all
re-assessments, penalties, Charges,
Costs and interest relating to such
taxation for non-compliance or
otherwise.
Trustee the trustee approved by the Alberta
Stock Exchange to hold BKI shares
pursuant to the Escrow Agreement.
Warranties the representations, warranties, and
undertakings of the Vendors set out in
Schedule 2.
Year a financial year from 1 April to 31
March in the next year.
1.2 General Interpretation: In the interpretation of this Agreement,
unless the context otherwise requires:
1.2.1 References to the parties include their respective
executors, administrators, successors and permitted
assigns;
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1.2.2 References to persons include individuals, partnerships,
firms, associations, corporations and unincorporated bodies
of persons, government or semi-government or local body or
municipal bodies, and agencies or political subdivisions of
them in any case whether having separate legal personality
or not;
1.2.3 Words in the singular shall include the plural and vice
versa;
1.2.4 Words importing one gender shall include the other genders;
1.2.5 Any obligation not to do anything includes an obligation
not to suffer, permit or cause that thing to be done;
1.2.6 Headings have been inserted for convenience only and shall
not affect the construction of this Agreement;
1.2.7 Reference to a statute includes all statutes amending,
consolidating or replacing the statute referred to and
includes all subsidiary or delegated legislation or
exercises of authority under such statute or legislation;
1.2.8 References to clauses, schedules and annexures shall be
construed as references to the same in this Agreement;
1.2.9 References to money are references to New Zealand currency.
1.3 Joint and Several: The covenants herein expressed or implied shall
bind all persons executing this Agreement and any two or greater
number of them jointly and each of them severally.
1.4 Time of the Essence: Time shall be of the essence of this
Agreement both as to dates and periods.
1.5 Precedence of Documents: If there is any conflict between the
provisions of this Agreement and the Escrow Agreement, the
provisions of this Agreement shall prevail.
2. Agreement for Sale and Purchase
2.1 Sale and Purchase: The Vendors agree to sell and the Purchaser
agrees to purchase the Shares for the Consideration.
2.2 Accrual Rules: The Consideration is the lowest price the parties
would have agreed upon at the date of this Agreement for the sale
and purchase of the Shares and is consequently the core
acquisition price pursuant to Section OB1(c) of the Income Tax Act
1994.
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3. Consideration and Payment
3.1 Satisfaction of Consideration: The Consideration shall be paid or
satisfied by the Purchaser as follows:
3.1.1 Deposit: By payment of a deposit on the Completion Date of
the sum of $88,050 by way of:
(a) A cash payment of $71,183.00 allocated to the
Vendors in accordance with clause 3.5;
(b) The balance of $16,867 by way of the issue of BKI
shares based on Strike Price converted to NZ$ at the
Exchange Rate as at 24 April 1997. Such shares shall
be issued by BKI to the Trustee to be held in escrow
pursuant to the Escrow Agreement but not subject to
earn out conditions and released to the Vendors
pursuant to clause 3.5 on 31 March 1998.
3.1.2 Asset Value: The sum of $150,000 shall be paid in cash to
Barker on the Completion Date subject to the following:
(a) If requested by Barker, the Purchaser shall may
interest on the moneys payable under this clause
3.1.2 (as adjusted) at the minimum rates specified
from time to time under the Fringe Benefit Tax
regulations;
(b) The sum of $150,000 shall be subject to adjustment
following disposal of all assets specified in
Annexure 4 utilising the following formula:
AV = 150,000 x RV
------------
388,000
Where:
AV is the adjusted Asset Value; and
RV is the net value realised by the Company upon
the termination of the leases for such assets
and the disposal of the residual interests of
the Company.
(c) If the sum calculated pursuant to paragraph (b) is
less than $150,000 then the amount of the deficiency
shall be refunded upon demand by Barker to the
Purchaser. The Purchaser shall have the right to set
off any such amount against any Consideration
payable under clause 3.2.
(d) If the sum calculated pursuant to paragraph (b)
exceeds $150,000 then the Purchaser shall procure
that excess amount is paid to Barker.
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3.1.3 Share Exchange: The balance being the Goodwill Value
(subject to adjustment as provided in clause 3.3) shall be
paid in the manner provided in clauses 3.2 and 3.3 by way
of the issue and allotment to the Vendors free from all
Charges of fully paid ordinary shares in the capital of BKI
ranking in all respects pari passu with the existing
ordinary shares in the capital of BKI.
3.2 Issue of Shares: The Purchaser shall procure the issue by BKI of
the shares pursuant to clause 3.1.3 (Earnout Shares). The Earnout
Shares shall be:
3.2.1 Issued in one tranche by 30 June 1998.
3.2.2 Issued in numbers which have a value (based on the Strike
Price converted to $NZ at the Exchange Rate as at 31 March
1998) equal to the Goodwill Value calculated for the Year
which ended on 31 March 1998.
3.2.3 Issued initially to the Trustee to be held in escrow
pursuant to the Escrow Agreement and subject to the earn
out and escrow conditions specified in clause 3.3 and in
the Escrow Agreement.
3.3 Escrow and Earn Out Provisions: The Earnout Shares shall be held
by the Trustee subject to the following conditions:
3.3.1 The Earnout Shares shall only be released to the Vendors if
the Company produces sufficient cumulative Cashflow between
1 April 1997 and the Years ending on 31 March 1998, 31
March 1999 and 31 March 2000 (Earnout Period).
3.3.2 Earnout Shares shall be released to the Vendors in 3
tranches on 30 June 1998, 30 June 1999 and 30 June 2000
(Release Dates).
3.3.3 The Earnout Shares to be released on each of the Release
Dates shall not exceed in value (based on the Strike Price
converted to $NZ at the Exchange Rate as at 31 March 1998)
the cumulative Cashflow of the Company between 1 April 1997
and the end of the Year prior to the relevant Release Date.
3.3.4 Final Adjustment of Acquisition Price:
(a) It is agreed that the Goodwill Value shall be
reduced on the basis of a $NZ 1.00 reduction for
each $NZ 1.00 by which the cumulative Cashflow of
the Company over the Earnout Period falls short of
the Goodwill Value calculated initially according to
the formula provided in clause 1.1.
(b) Prior to 30 June 2000 there shall be a final
calculation of the Goodwill Value based on the
cumulative Cashflow for the three Years ending on 31
March 2000.
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(c) The Goodwill Value and the Consideration shall then
be adjusted accordingly. Any Earnout Shares which
are not required to be released to the Vendors
following such final calculation shall be cancelled.
3.4 Dividends on Earnout Shares: Any dividends declared in respect of
Earnout Shares held in escrow pursuant to clauses 3.2 or 3.3 shall
be held in trust by the Trustee. Such dividends declared in
respect of shares which are released to the Vendors shall be paid
to the Vendors when the shares are released. Any dividends held in
trust by the Trustee in respect of BKI shares which are cancelled
will be forfeited to BKI on the date of cancellation.
3.5 Apportioning of Consideration: The Consideration shall be
apportioned amongst the Vendors in the proportions specified in
Item 2 of Schedule 1 however the Purchaser shall have no
responsibility for the apportionment of the cash portion of the
Consideration and the Vendors' solicitors' receipt shall be
sufficient discharge of the Purchaser's obligations in respect of
satisfaction of this amount.
4. Parties' Obligations on or before Completion
4.1 Vendors' Obligations: On or before Completion the Vendors shall:
4.1.1 Release of Liability to Associated Persons: Procure that
the Company is released unconditionally from all liability
and obligations whatsoever (whether actual or contingent)
to the Vendors or any Associated Persons of the Vendors. If
such release is not or cannot properly be provided on or
before Completion then the Vendors will indemnify the
Company and the Purchaser from and against all Costs and
Proceedings in respect of such liability and obligations
provided that liabilities and obligations incurred in
respect of normal trade purchases or transactions on usual
commercial terms for payment and performance shall not be
required to be so released;
4.1.2 Access to Premises and Business: Ensure that the Purchaser
and its representatives have full access to the Premises,
the Statutory Books and the Business Records from the date
of this Agreement and will be given promptly all
information they may reasonably require concerning the
business or affairs of the Company;
4.1.3 Filing of Satisfactions of Charges: File memoranda of
satisfaction with the Registrar of Companies, the High
Court Chattels Register or the Land Transfer Office or the
Motor Vehicles Security Register (as appropriate) in
respect of all Charges registered against the property of
the Company except those Charges which are specified in
Item 2 of Schedule 4.
4.1.4 Service Agreement: Procure the execution by the Company of
an employment contract for a term of 3 years with Barker as
General Manager of the Company in the form annexed as
Annexure 2.
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4.1.5 Personal Assets: Procure that all assets owned by the
Company but principally employed for the personal use of
Barker are sold and removed from the Company asset register
by the Completion Date.
4.1.6 Consultation: Consult with the Purchaser in relation to all
matters which materially affect the Company or its
operations including items of capital expenditure and
general expenses above $3000 or falling outside the
ordinary course of business of the Company.
4.2 Purchaser's Obligations: The Purchaser shall use best endeavours
to obtain a release of all of the Company's existing directors and
Steven Robert Andoe of all personal liabilities which may arise
after Completion in relation to personal guarantees (as specified
in Item 3 of Schedule 4) provided by them in respect of
obligations of the Company. Should any such releases not be
procured then the Purchaser shall indemnify such directors in
respect of all Costs and Proceedings which arise in relation to
their personal guarantees for acts or omissions of the Company
after Completion.
5. Completion
5.1 Completion shall take place on the Completion Date at the offices
of the Vendors' solicitors Mason Laurie & Stainton at 2.15 p.m. or
at such other time or place as the parties shall agree at which
time the Purchaser shall be entitled to the possession of the
business conducted by the Company and the Vendors will hand to the
Purchaser:
5.1.1 Share Transfers: Transfers of the Shares to the Purchaser
and/or its nominee duly executed by the Vendors in
registrable form;
5.1.2 Share Certificates: The share certificates (if any) for the
Shares or if none have been issued a statutory declaration
by an officer of the Company to such effect;
5.1.3 Pre-emptive Rights Waivers: A waiver signed by all the
Vendors whereby they waive all rights of pre-emption
conferred on them by the Constitution or otherwise in
respect of the transfer of all or any of the Shares;
5.1.4 Directors' Resolutions: Evidence of the passing of
effective resolutions of the Directors of the Company
approving the transfer of the Shares and directing that
upon presentation of the same duly executed the name of the
Purchaser and/or its nominee (as the case may be) be
entered in the Register of Members of the Company in
respect of the Shares.
5.1.5 Shareholders' Resolutions: Evidence of the passing of
effective shareholders' resolutions appointing Michael
Ridgway as a director of the Company in addition to Jon
Barker.
5.1.6 Releases of Charges over Shares: Unconditional releases of
any Charges over any of the Shares;
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5.1.7 Company Records: The Statutory Books, the Business Records
and the common seal(s) of the Company or if there is no
common seal, a certificate from a director confirming that;
5.1.8 Pre-conditions: Evidence satisfactory to the Purchaser that
the Vendors has fulfilled its obligations under clause 4;
and against compliance with the above provisions the Purchaser
shall pay or satisfy the deposit as specified in clause 3.1.1.
6. Default at Completion
6.1 Default by Vendors: Without prejudice to clause 8, if any of the
provisions of clauses 4 or 5 are not fully complied with on
Completion, the Purchaser may (in addition to and without
prejudice to all other rights or remedies available to the
Purchaser under this Agreement or otherwise) at the Purchaser's
option:
6.1.1 Rescind: Rescind this Agreement; or
6.1.2 Completion: Effect Completion so far as practicable having
regard to the defaults which have occurred (without
releasing the Vendors from liability to comply as soon as
possible with the Vendors' obligations under clauses 4 and
5); or
6.1.3 Delay Completion: Fix a new date for Completion not being
more than 28 days after the Completion Date) and in that
case the Vendors shall pay to the Purchaser interest at the
Interest Rate on the Consideration payable on the
Completion Date from the date on which Completion was due
until Completion takes place. If Completion does not take
place other than by reason of a default by the Purchaser
then such payment shall not be refundable to the Vendors;
6.2 Default by Purchaser: Subject to clause 3.6, if from any cause
whatsoever save the default of the Vendors any portion of the
Consideration is not paid upon the due date for payment the
Purchaser shall pay to the Vendors interest at the Interest Rate
on the portion of the Consideration so unpaid from the due date
for payment until payment, without prejudice to any of the
Vendors' rights or remedies.
7. Warranties
7.1 Barker's Warranties: Barker warrants and undertakes to the
Purchaser in terms of the Warranties and it is agreed that:
7.1.1 Investigations not to affect Warranties: Except as
disclosed in Schedule 3 and/or the Disclosure Letter, the
Warranties shall not be modified, qualified or discharged
or in any way affected by any investigation made by the
Purchaser into the affairs of the Company;
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7.1.2 Separate and Independent: Each of the Warranties shall be
separate and independent and save as expressly otherwise
provided shall not be limited by reference to any other of
the Warranties or any other provision of this Agreement.
7.2 Reliance on Warranties: The Vendors acknowledge that the Purchaser
has entered into this Agreement in reliance (among other things)
on the Warranties.
7.3 Barker's Covenants: Barker warrants, represents and undertakes to
the Purchaser and also as a separate covenant to the Company:
7.3.1 Indemnity: That Barker will keep the Purchaser and the
Company fully indemnified against all and any depletion in
or reduction in the value of the Shares or any of the
assets of the Purchaser or the Company and all Proceedings
and Costs reasonably suffered or incurred by the Purchaser
or the Company as a result of or in relation to any breach
or non-fulfilment of any of the Warranties and all Costs
incurred in making, defending or compromising any
Proceedings in relation to facts or matters which are or
would if proved or might constitute such a breach or
non-fulfilment; and
7.3.2 No Representations Made: That no promise or representation
has been made to them in connection with any of the
Warranties or the Disclosure Letter in respect of which the
Company or any of the directors or employees of the Company
might be liable; and
7.3.3 No Breach of Warranties Prior to Completion: That Barker
will procure that (except only as may be necessary to give
effect to this Agreement) neither he nor the Company shall
do, allow or procure any act or omission before Completion
which would constitute a breach of any of the Warranties if
they were given at any time prior to or on Completion or
which would make any of the Warranties inaccurate or
misleading if they were so given; and
7.3.4 Disclosure of Change in Circumstances: Barker will
forthwith disclose in writing to the Purchaser any matter
or thing which may arise or become known to him after the
date of this Agreement and prior to Completion which is
inconsistent with any of the Warranties or which might
render any of them inaccurate or misleading when given at
Completion or which might be material to be known by a
purchaser for value of the Shares or which might have a
material adverse effect on the value of the Shares or any
of the assets of the Company.
7.4 Warranty Limitations: Notwithstanding any other provisions of this
Agreement, the warranties are made and given subject to the
provisions of Schedule 3.
8. Rights of Rescission
8.1 Rescission for Breach: Without prejudice to clause 6, if on or
prior to Completion it should be found that:
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8.1.1 Unfulfilled Obligations : Any obligation of the Vendors
contained in this Agreement is or will on Completion be
unfulfilled; or
8.1.2 Breach of Warranties : Any Warranty is or may at Completion
be inaccurate or misleading;
then the Purchaser may, without prejudice to any other rights
available to it under clause 8.2 of this Agreement, by notice in
writing to the Vendors, rescind this Agreement.
8.2 Effect of Rescission under Clause 8.1: Rescission of this
Agreement under clause 8.1 shall not extinguish any right of the
Purchaser to damages or compensation to the extent of the audit
Costs incurred by the Purchaser.
8.3 Rescission for Matters other than Default: If on or prior to
Completion:
8.3.1 Destruction of Assets: Any asset of the Company shall be
destroyed or damaged to an extent which in the opinion of
the Purchaser materially and adversely affects the Company
or the carrying on of the business of the Company; or
8.3.2 Material Adverse Change: Any other event shall occur which
affects or is likely to affect adversely to a material
degree the Company or the financial position, business,
assets or profitability of the Company or the value of the
Shares to the Purchaser,
the Purchaser shall be entitled by notice in writing to the Vendors
to rescind this Agreement, but the occurrence of such an event
shall not give rise to any right to damages or compensation except
where Barker has failed to give notice of such event as required by
clause 7.3.4.
9. Conditions
9.1 This Agreement is conditional upon:
9.1.1 Charge Holders' Consent: All debenture holders or other
Charge holders having Charges over the Shares or any assets
of the Company (where the failure to obtain any approval
might constitute an event of default under such Charge)
approving the transfer of the Shares to the Purchaser and
agreeing to release such Charges on terms satisfactory to
the Vendors and the Purchaser; and
9.1.2 Asset Lessor's Consent: Consent being given by the lessor
of any assets leased by or on hire or conditional purchase
to the Company to the transfer of the Shares to the
Purchaser where the failure to obtain such consent might
constitute an event of default under such lease or hire or
conditional purchase agreement; and
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9.1.3 Government or Regulatory Consents: Consent being given by
any New Zealand or Canadian government or regulatory body
whose consent is required to enable Completion of this
Agreement; and
9.1.4 Material Contractors' Consent: Consent being given by the
other party or parties to any agreement under which the
Company enjoys any material benefit where without such
consent such agreement might be terminated, which
agreements include without limitation those specified in
Item 1, Schedule 4; and
9.1.5 Landlord's Consent: The lessor of the Premises consenting
to the transfer of the Shares to the Purchaser; and
9.1.6 Stock Exchange Approval: The approval of the Alberta Stock
Exchange.
9.1.7 Board Approval: The approval of the board of directors of
the Purchaser and of BKI.
9.2 Fulfilment of Conditions: Each of the parties shall do all acts
and things reasonably necessary to procure the fulfilment of the
conditions set out in clause 9.1
9.3 Benefit of Conditions: The Vendors acknowledge that the conditions
contained in clauses 9.1.1 to 9.1.7 have been inserted solely for
the protection of the Purchaser and accordingly the Purchaser may
waive any of such conditions and in such event this Agreement
shall remain binding on the parties.
9.4 Failure of Conditions: Should:
9.4.1 Not Satisfied: Any of the conditions set out in clause 9.1
not be fulfilled or waived (as the case may be) by 16 July
1997 or such later date as may be agreed by the parties; or
9.4.2 Unreasonable Conditions: Any consent or approval required
in terms of the conditions set out in clause 9.1 be granted
on terms not reasonably acceptable to any affected party;
then this Agreement shall be voidable by notice in writing and
this Agreement shall then be at an end and the parties shall not
have any further rights or obligations except that the Vendors
will repay any deposit.
10. Non Competition
10.1 Non-Competition: In consideration of the Purchaser entering into
this Agreement and as a condition precedent the Vendors and each
of them acknowledge that the value of the Goodwill Value is
dependent upon and the Purchaser has agreed to pay the Goodwill
Value on the basis that Barker will not carry on a business the
same as or in substantial competition with that at present carried
on by the Company in opposition to the Company after Completion
for
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the period specified below and accordingly Barker covenants and
agrees with the Purchaser that:
10.1.1 Business: He will not during a period of 1 year from the
date of termination of his Service Agreement provided for
in clause 4.1.4 at any place in New Zealand (except as a
servant of the Company or the Purchaser) or except with the
prior written consent of the Purchaser be directly or
indirectly engaged or connected or interested in either on
their own account or as a partner with or as an employee of
any other person or as a shareholder, director, officer,
consultant, adviser or employee of any person (other than
as holder of not more than 5 % of the shares in the capital
of any public company if and only so long as such shares
are listed on any official stock exchange) or directly or
indirectly assist financially any such business; and
10.1.2 Orders: He will not on his own account or for any person,
enterprise, firm, trust, joint venture or syndicate solicit
orders for such business otherwise than for the benefit of
the Company from any person, firm or company who at the
Completion Date was or had previously been a customer of
the Company; and
10.1.3 Employees: He will not on his own account or for any
person, enterprise, firm, trust, joint venture or syndicate
entice or attempt to entice away from the Company or the
Purchaser any employee of the Company or the Purchaser.
10.2 Provisions with respect to Covenants: Each of the covenants
contained in clause 10.1 shall:
10.2.1 Separate and Severable: Be separate and severable and to
the extent that any such provision is unenforceable by
reason of its period, scope or area being held by a court
of competent jurisdiction to be unreasonable, then such
provision shall be limited to the maximum period, scope or
area which such court considers reasonable and shall be
enforceable on those terms;
10.2.2 Benefit of Purchaser and Assigns: Be given for the benefit
of and be enforceable by the Purchaser and the Purchaser's
successors and assigns.
11. Post Completion Obligations
11.1 Loan: The Purchaser shall provide to the Company for marketing
purposes an interest free loan of $50,000 following Completion.
Such loan shall be repayable as to $25,000 on 31 March 1999 and as
to the balance of $25,000 on 31 March 2000.
11.2 Working Capital: The Purchaser shall not unreasonably refuse to
provide funding to the Company for working capital during the
Earnout Period if it is required as a consequence of customer
sales demand. The Company will be
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required to pay interest to the Purchaser on all working capital
advances for the Year ending 31 March 1998 at the Interest Rate.
12. Arbitration
12.1 If any dispute or difference shall arise between any of the
parties in any way arising out of or in connection with this
Agreement such dispute or difference shall be referred to the
arbitration pursuant to the Arbitration Act 1996.
13. General
13.1 Non-Merger: The warranties, indemnities, representations and
undertakings set out in this Agreement shall notwithstanding any
rule of law to the contrary not merge in the instruments of
transfer executed pursuant to this Agreement but shall remain in
full force and effect and enforceable to the fullest extent.
13.2 No Announcement: The parties agree that (except as may be required
by law or by the requirements of the Alberta Stock Exchange) they
will not make any announcement or disclosures as to the subject
matter of this Agreement except in a form and manner and at such
time as all parties may agree.
13.3 Notices: Any notice to be given pursuant to this Agreement shall
be given in accordance with and subject to the following
provisions of this clause 13.3:
13.3.1 In Writing: All notices shall be in writing signed by a
duly authorised officer of the party giving the notice or
by the party's solicitor:
13.3.2 Delivery: Without prejudice to any other sufficient mode of
delivery, a notice may be sent by hand, prepaid post. telex
or facsimile to the address or number (in the case of telex
or facsimile) of the intended recipient last advised to the
sender in accordance with this clause. The initial
addresses and numbers of the parties are:
Vendors c/o Mason Laurie & Stainton
Barristers and Solicitors
P 0 Box 989
AUCKLAND 1
Facsimile: 307 2093
Purchaser 4 Bond Street
Grey Lynn
AUCKLAND
Facsimile: 376 7891
13.3.3 Notice by Hand: Subject to clause 13.3.6, a notice
delivered by hand shall be received on delivery;
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13.3.4 Notice by Post: Subject to clause 13.3.6, a notice sent by
prepaid post shall be deemed to be received 3 days after
being posted;
13.3.5 Notice by Telex or Facsimile: Subject to clause 13.3.6, a
notice sent by telex or facsimile shall be deemed to be
received at the time of transmission where a transmission
report or answerback code produced by the sender's machine
indicates successful transmission;
13.3.6 Receipt Outside Business Hours: Any notice received or
deemed to be received pursuant to clauses 13.3.3, 13.3.4 or
13.3.5 after 5.00 pm (recipient's time) on a Business Day
in the recipient's city or on a day which is not a Business
Day in the recipient's city shall be deemed to be received
at 9.00 am (recipient's time) on the next Business Day in
the recipient's city;
13.3.7 Proof of Delivery: In proving delivery of a notice, it
shall be sufficient:
(a) By Hand: In the case of a notice by hand, to provide
evidence that the notice was delivered to the
address of the recipient and no acknowledgement from
the recipient shall be necessary;
(b) By Post: In the case of a notice by post, to provide
evidence that the notice was correctly addressed and
posted in a prepaid envelope;
(c) By Telex or Facsimile: In the case of a notice by
telex or facsimile, to provide the transmission
report produced by the sender's machine showing a
successful transmission to the correct number of the
recipient and to have telephoned the recipient to
confirm receipt of a legible copy of such notice.
13.4 Applicable Law and Jurisdiction: This Agreement shall be governed
by and construed and interpreted in accordance with the laws of
New Zealand and the parties irrevocably submit to the exclusive
jurisdiction of the New Zealand courts.
13.5 Further Assurance: The parties will do all things including
without limitation the execution of documents as shall be
necessary to give full effect to this Agreement.
13.6 Entire Agreement: This Agreement including all schedules,
annexures and exhibits to it, and any documents incorporated by
express reference forms the entire agreement between the parties
relating to its subject matter and supersedes all prior agreements
and understandings between the parties with respect to that
subject matter. If there is any conflict between the terms of this
document and any other document forming part of this Agreement,
the terms set out in this document shall prevail.
13.7 Variation: This Agreement may only be varied by an express written
agreement executed by all the parties or by persons duly
authorised in writing on their respective behalf.
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13.8 Costs: Each party shall bear their own costs of and incidental to
the preparation, Completion and implementation of this Agreement.
13.9 Waiver: No failure to exercise and no delay in exercising on the
part of the Purchaser any right under this Agreement shall operate
as a waiver of that right nor shall any single or partial exercise
of any right preclude any other or further exercise of such right
or the exercise of any other right. Any such waiver unless
otherwise expressly agreed in writing, shall only apply in respect
of the particular circumstances for which it is given.
13.10 Counterparts: This Agreement may be signed in any number of
counterparts, all of which when taken together constitute one and
the same instrument. Any party may enter into this Agreement by
executing any such counterpart. The parties will co-operate to
circulate all counterparts to each other for the purposes of
having all counterparts executed by all parties as soon as
practicable following Completion.
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EXECUTED by the parties.
SIGNED by )/s/ J. H. BARKER
JONATHAN HUGH BARKER )--------------------------------
)J H Barker
SIGNED by )/s/ J. H. BARKER
JONATHAN HUGH BARKER )--------------------------------
as duly authorised agent for )M Dobson per duly authorised
MOIRA DOBSON )agent J H Barker
SIGNED by )
JONATHAN HUGH BARKER )/s/ J. H. BARKER
as duly authorised agent for )--------------------------------
RILEY THORPE ASSOCIATES )Riley Thorpe Associates per duly
authorised agent J H Barker
SIGNED by )/s/ J. H. BARKER
JONATHAN HUGH BARKER )--------------------------------
as duly authorised agent for )M Laverty per duly authorised
MICK LAVERTY )agent J H Barker
SIGNED by )
JONATHAN HUGH BARKER )/s/ J. H. BARKER
as duly authorised agent for )--------------------------------
CLAIRE PHILIPSON )C Phillipson per duly authorised
agent J H Barker
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SIGNED by )/s/ J. H. BARKER
JONATHAN HUGH BARKER )--------------------------------
as duly authorised agent for )G Andoe and J Andoe per duly
GEOFF ANDOE and JO ANDOE )authorised agent J H Barker
Witness to all of the above signatures
/s/ ILLEGIBLE Witness's Signature
- ------------------------------------------
/s/ ILLEGIBLE Name
- ------------------------------------------
/s/ ILLEGIBLE Occupation
- ------------------------------------------
/s/ ILLEGIBLE Address
- ------------------------------------------
SIGNED for BROCKER (N.Z.) )Signature /s/ HAL LINSTROM
INVESTMENTS LIMITED by: ) ----------------------
)Name Hal Linstrom
) ----------------------
Director/Officer
Signature
----------------------
Name
----------------------
Director
(C) Lowndes Jordan
Auckland 1997
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SCHEDULE 1
Item 1.
Shareholders Class A Class B Shareholdings
Shares Shares
Jonathan Hugh Barker 49,696 13,958 63,654
Moira Dobson 6,503 702 7,205
Riley Thorpe Associates 1,301 140 1,441
Mick Laverty 800 570 1,370
Claire Philipson 1,000 200 1,200
Geoff Andoe and Jo Andoe 700 280 980
(jointly)
Total 60,000 15,850 75,850
Item 2.
Shareholders Share of Cash Value of Deposit Value of
Deposit Shares to be Goodwill Value
(clause 3.5) Issued Shares
(Clause 3.5) (Clauses 3.1.3 and
3.5)
Jonathan Hugh Barker 31,827.00 0 83.92%
Moira Dobson 23,250.24 9,964.00 9.50%
Riley Thorpe 4,650.05 1,993.00 1.90%
Associates
Mick Laverty 4,420.93 1,895.00 1.81%
Claire Philipson 3,872.35 1,660.00 1.58%
Geoff Andoe and Jo 3,162.42 1,355.00 1.29%
Andoe (jointly)
Total 71,183.00 16,867.00 100%
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SCHEDULE 2
Warranties (clause 7.1)
1. General
1. 1 Disclosure Letter: All information contained or referred to in
the Disclosure Letter is true complete and accurate in all
respects and Barker is not aware of any other fact or matter which
renders or might upon its disclosure render any such information
misleading.
1.2 Agreement: The provisions of the recitals to this Agreement,
clause 1.1 of this Agreement and all information contained in the
Schedules and Annexures to this Agreement are complete and correct
in all respects.
1.3 Information Supplied: All written information which has been given
or authorised to be given by Barker or any of the directors or
secretary or any of the officials of the Company or by any
professional advisers of the Vendors or the Company to the
Purchaser or to any of its directors officials agents or
professional advisers in the course of the negotiations leading to
this Agreement was when given and will at Completion be true
complete and accurate in all respects and Barker is not aware of
any other fact or matter which renders or might upon its
disclosure render any such information misleading.
1.4 All Necessary Disclosures Made: All the facts and circumstances
relating to the Shares and to the assets, business and affairs of
the Company material for disclosure to an intending purchaser of
the Shares have been disclosed to the Purchaser or its advisers in
writing and any such facts arising prior to Completion will
forthwith be disclosed in writing to the Purchaser or its
advisers.
1.5 Constitution: The Constitution of the Company to be handed to the
Purchaser pursuant to this Agreement will be an accurate copy or
originals, if available, of the documents in force at Completion
and will have annexed a copy of every resolution required to be
annexed by the Companies Act 1955 or the Companies Act 1993, as
the case may be.
2. Shares
2.1 Shares: The Shares constitute the whole of the issued and allotted
share capital of the Company and they are and will be on
Completion held by the Vendors in the Vendors' own right.
2.2 Encumbrances: There is not any and will not at Completion be any
Charge on, over or affecting the Shares and there is no agreement
or commitment to give or create any such Charge and no demand has
been made by any person claiming to be entitled to any such
Charge.
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2.3 No Subsidiaries: The Company never has had and does not have and
will not prior to Completion without the prior written consent of
the Purchaser create or acquire any Subsidiary or any shares in
any other company other than the Company's Subsidiaries.
2.4 No Increase in Capital: The Company has not since the Last
Accounting Date and will not pending Completion increase its share
capital or subdivide, amalgamate, or consolidate the Shares or any
of them nor has it or will it agree to do so.
2.5 No Decrease in Capital: The Company has not at any time repaid or
agreed to repay or redeem or buy back or repurchase any shares of
any class of its share capital or otherwise reduced or agreed to
reduce its issued share capital or any class of its share capital
and has not at any time amalgamated or agreed to amalgamate with
any other company.
2.6 No Related Companies: The Company has no Related Companies.
2.7 No Change of Capital Structure or Name: Barker will not permit to
be passed before Completion any resolution by the Company:
2.7.1 Altering its share capital;
2.7.2 Altering the rights or obligations attaching to any of the
Shares:
2.7.3 Changing its name;
2.7.4 Altering its Constitution.
3. Accounts
3.1 Books of Account: All the Business Records and Statutory Books are
in the Company's possession or under its control and have been
fully and correctly completed and will pending Completion continue
to be so completed and there are and will pending Completion be no
material inaccuracies or discrepancies of any kind contained or
reflected in any of them. They give and reflect and at Completion
will give and reflect a true and fair view of the financial,
contractual and trading position of the Company and of its plant
and machinery, fixed and current assets and liabilities (actual
and contingent), debtors and creditors, work in progress and
stock.
3.2 Retention of Records: The Company holds and will on Completion
have in its possession all books of Account and other records
which it is bound by law to retain in its possession either
indefinitely or for a particular period or periods of time.
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3.3 Accounts:
3.3.1 True and Fair View: The Accounts are complete and accurate
and give and reflect and will at Completion give and
reflect a true and fair view of the Company, its activities
and its financial status in all respects.
3.3.2 Comply with Statute: The Accounts comply with all
applicable requirements of the Companies Act 1955, the
Companies Act 1993 and the Financial Reporting Act 1993, as
the case may be.
3.3.3 GAAP: The Accounts have been prepared in accordance with
generally accepted accounting practice as that term is
defined in the Financial Reporting Act 1993 and to the
extent consistent with such generally accepted accounting
practice on a basis consistent with that adopted for
preceding accounting periods.
3.3.4 No Unusual or Extraordinary Items: The Accounts are not
affected by any unusual extraordinary exceptional or
non-recurring items or by any other factor rendering the
results set out in the Accounts (or any of them) unusually
better or worse than they (or any of them) might otherwise
be or have been.
3.3.5 Financial Position: The Accounts properly reflect the
financial position of the Company as at the Last Accounting
Date and of its results for the accounting period ending on
that date.
3.3.6 Full Disclosure: The Accounts fully disclose all the assets
and liabilities (whether ascertained, contingent, deferred
or otherwise and whether or not quantified or disputed) of
the Company as at the Last Accounting Date and make full
provision and/or reserve for all such liabilities.
3.3.7 Provisions for Losses: The Accounts make full provision for
any foreseeable losses which may arise on Completion and/or
on realisation of stock and/or on Completion of any
existing or proposed contract.
3.3.8 Provision for Bad Debts: The Accounts make adequate
provision for all bad and doubtful debts of the Company and
for depreciation of the fixed assets of the Company having
regard to their original cost and estimated useful life.
3.3.9 Financial Commitments: The Accounts fully disclose all
financial commitments in existence as at the Last
Accounting Date.
3.4 Period Between Agreement and Completion: From the Last Accounting
Date to Completion:
3.4.1 Conduct of Business: The Company has carried on and will
carry on its business in an efficient normal and proper
manner so that the financial standing and position of the
Company as at Completion will not have deteriorated
materially from that disclosed in the Accounts:
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3.4.2 Liabilities: The Company has not incurred and will not
incur any liability (whether contingent or otherwise) and
has not made any payments except in the normal and ordinary
course of business;
3.4.3 Disposals: The Company has not disposed of and will not
dispose of any material portion of its undertaking or any
material part of its fixed assets or any of its goodwill;
3.4.4 Acquisitions: The Company has not acquired any assets of a
capital nature and will not acquire any assets of a capital
nature exceeding $3,000 in value without the Purchaser's
prior consent;
3.4.5 Revaluations: The Company has not revalued upwards and will
not revalue upwards any of its assets;
3.4.6 Capital Investments: The Company has not entered into and
will not enter into any material capital investment or
commitment in excess of $3,000 in aggregate or any major
transaction as that term is defined in section 129(2) of
the Companies Act 1993;
3.4.7 Dividends: The Company has not declared, paid or made and
will not declare, pay or make any dividend, bonus or
similar distribution;
3.4.8 Insurance: The Company has kept and will keep effectively
insured to the full insurable amounts all assets and
undertaking of the Company against all normal insurance
risks including reasonable loss of profits insurance;
3.4.9 Terms of Trade: The Company has not made or permitted and
will not make or permit any change to any of its product
lines or to the terms or conditions of any agency held by
the Company or to the selling prices or terms and
conditions of sale of any products or services of the
Company;
3.4.10 Turnover:The Company has attained a turnover no less than
that for the corresponding period in the previous financial
year:
3.4.11 Deposits: The Company has deposited and will deposit all
amounts received by it to the credit of its bank account
and such amounts appear in the appropriate books of
Account;
3.4.12 Debts: The Company has paid and will continue to pay all
its debts as they fell or fall due.
3.5 Non-Disclosure of Liabilities: If it is discovered before or after
Completion that the Company was liable at the Completion Date
(whether contingently or otherwise) to any person in respect of
the Company prior to the Completion Date except in the ordinary
course of business which liability has not been fully disclosed to
the Purchaser then without prejudice to any other rights of the
Purchaser, Barker will immediately upon demand by the Purchaser
pay to the Purchaser or as directed by the Purchaser the amount of
each such liability after deducting from each such liability any
saving to the Company in Taxation as a result of such liability.
For the purposes of this clause:
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3.5.1 The word "liability" shall include liability for or in
respect of Taxation or any re-assessment thereof which the
Company may be required to pay in respect of any period
prior to the Completion Date and which has not been so
fully disclosed and any amount whatsoever (including all
Costs in connection therewith) arising out of any
occurrence or happening which shall have taken place prior
to the Completion Date;
3.5.2 Provision of any amount by way of note to the Accounts
shall not be deemed to be provision of that amount in the
Accounts.
4. Stock
4.1 Valuation: The methods of valuing stock and work in progress as at
the Last Accounting Date (which included a physical stocktaking)
were the same as those adopted for the 3 immediately preceding
financial years and all redundant and obsolete stock was wholly
written off all slow moving stock was written down appropriately
and the value attributed to the remaining stock did not exceed the
lower of direct cost or net realisable value.
4.2 Changes to Stock Since Last Accounting Date: The stock on hand at
Completion will comprise the stock as at the Last Accounting Date
less stock sold and with the addition of stock bought in the
ordinary course of business since that date and no stock currently
held other than that written off or written down in the Accounts
or which are service spares, is slow moving, out of date or
fashion, redundant or obsolete or which will not realise its book
value within 12 months of the Completion Date.
5. GST
5.1 Registration: The Company is registered for the purposes of the
GST Act and:
5.1.1 Not a Member of a Group: The Company has not at any time
been a member of a Group or been treated as a member of a
Group for such purposes and no application for it to be so
treated has at any time been or pending Completion will be
made and no act or transaction has been or pending
Completion will be effected in consequence whereof the
Company is or may be held liable for any GST chargeable
against some other company except the Company's
Subsidiaries;
5.1.2 Compliance with GST Act: The Company has complied and
pending Completion will comply in all respects with the GST
Act legislation;
5.1.3 Maintenance of Records: The Company has given obtained made
and maintained and pending Completion will give, obtain,
make and maintain complete correct and up to date invoices,
records and other documents appropriate or requisite for
the purposes of the GST Act;
5.1.4 No Arrears: The Company is not and will not pending
Completion be in arrears with any payment or returns under
the GST Act or liable to any
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abnormal or non-routine payment or any forfeiture or
penalty or to the operation of any penal provision and
where payment is not yet due or receivable has provided for
such payment;
5.1.5 All Supplies Taxable: All supplies made and to be made
pending Completion by the Company are taxable supplies and
the Company is not and will not pending Completion be
denied credit for any input tax.
6. Taxation
6.1 Returns Made: All forms, notices, elections, computations,
payments (including, without limitation, any fines or penalties)
and returns which should be made by the Company for any Taxation
purpose have and will at Completion have been made and are and
will be up-to-date, correct and on a proper basis and none of them
is now or will at Completion be the subject of any dispute with
the Inland Revenue Department or any other Taxation collection
agency. In particular the returns in relation to provisional
Taxation will not give rise to any assessment, adjustment or
set-off (including any claim for interest on unpaid Taxation) by
the Inland Revenue Department.
6.2 Provision in Accounts: Full provision and reserves were made in
the Accounts in respect of all Taxation liabilities to or for
which the Company was at the Last Accounting Date or at any time
since may have become or may become liable to be assessed or
charged or to pay. Provision of any amount by way of a notice to
the Accounts shall not be a provision for the purposes of this
paragraph.
6.3 No Non-commercial Transactions: The Company has not at any time
entered into a transaction or series of transactions containing
steps inserted without any commercial or business purpose apart
from the obtaining of a Taxation or stamp duty advantage.
6.4 Debtors Recorded Appropriately: All amounts included in the
Accounts or (in the case of an amount arising after the date of
the Accounts) in the books of the Company as due from Debtors
represent amounts actually invoiced by the Company to such debtors
not earlier than 3 months prior to the Last Accounting Date (or in
the case of an amount arising after the date of the Accounts not
earlier than 3 months prior to the date on which it was recorded
in the books of the Company) and no part of such amounts still
outstanding has been released on terms that any debtor pays less
than the full book value of its debt or has been written off or
has proved to any extent irrecoverable or is now regarded as
irrecoverable or has been compromised on any terms.
7. Loans
7.1 No Undisclosed Loans: The aggregate amount appearing in the
Accounts as being outstanding in respect of loans owing by the
Company was at the Last Accounting Date the aggregate of all loans
or financial accommodation of whatever nature from any source so
outstanding.
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7.2 Loans Within Corporate Powers: Such aggregate did not (and the
amount outstanding in respect of loans owing by the Company does
not and will not at Completion) exceed any limitation on the
Company's borrowing contained in its Constitution or in any loan
offer, facility letter, debenture or other deed or document
executed by it or, in the case of borrowings on overdraft, its
overdraft facilities.
7.3 Loans from Directors or Shareholders: All amounts outstanding and
appearing in the books of the Company as loan accounts or as due
to directors or shareholders wholly represent money or money's
worth paid or transferred to the Company as the case may be or
remuneration accrued due and payable for services rendered and
(save for such remuneration) no part thereof has been provided
directly or indirectly out of the assets of the Company.
7.4 No Repayments: The Company has not repaid and pending Completion
will not repay any loans or other financial accommodation in whole
or in part nor has it by reason of any default by it in any of its
obligations become bound or liable to be called upon to repay
prematurely any loans or borrowed moneys and pending Completion no
such default will occur.
8. Liabilities and Commitments
8.1 No Capital Commitments: Since the Last Accounting Date the Company
has not except in the ordinary course of business made any capital
expenditure or incurred any capital commitments nor has it
disposed of or realised any substantial capital assets or any
interest in such assets and has no outstanding capital commitment
and pending Completion no capital commitments nor disposals of
capital assets or land or any estate or interest in such assets or
land will be undertaken by the Company without the prior written
consent of the Purchaser.
8.2 No Guarantees: The Company is not and will not prior to Completion
become a party to any contract of guarantee or indemnity.
8.3 No Material Contracts: The Company has not entered into and will
not enter into any material contract (including the granting of
options to purchase or Charges over all or any of the Company's
assets) except in the normal and ordinary course of business and
that the Company has not and will not become a party to any
unusual, abnormal or onerous contract or agreement whatsoever.
8.4 No Long Term Contracts: The Company is not and will not on
Completion be a party to any contract of service or supply which
cannot be terminated by not more than 1 month's notice without
giving rise to any claim for damages or compensation.
8.5 No Commitments since Last Accounting Date: The Company has not
since the Last Accounting Date been and will not at Completion be
a party to any contract, commitment or arrangement of any nature
except such as have been entered into in the normal and ordinary
course of trading and are capable of being wholly
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satisfied or performed within 3 months from Completion or of being
terminated within such period without cost to the Company.
8.6 No Arrangements: The Company is not and will not on Completion be
a party to any joint venture, partnership, syndicate or other
consortium arrangement.
8.7 No Agents: No person is authorised to act as agent for the Company
or otherwise to bind the Company other than the directors of the
Company acting as a board and the Company has not appointed any
agents, distributors or managers in respect of any of its products
or services in any part of the world.
8.8 No Default under Agreements: The Company is not now, nor pending
Completion will it become, in default under any agreement to which
it is or may become a party or in respect of any other obligations
binding upon it an no event has occurred which would enable any
third party to terminate any contract or any benefit enjoyed by
the Company.
9. Employees
9.1 Full Disclosure of Terms: Full disclosure in writing of the
current rate of remuneration, fees and expenses payable to each
officer and employee of or consultant to the Company and the terms
of such employment or consultancy (including obligations in
respect of any directors' or officers' keyman or indemnity
insurance) have been made to the Purchaser in writing and no such
officer or employee or consultant has given notice or is under
notice of dismissal or termination of employment of any
consultancy agreement.
9.2 No Amounts Due: No amounts are due to or in respect of any former
officer or employee or consultant and there are outstanding no
arrears of salary, wages, fees, holiday pay or other remuneration.
9.3 No Industrial Disputes: The Company is not involved in any
industrial or trade dispute or any dispute with any trade union or
organisation or body of employees.
9.4 No Changes: No change has been made in the terms of employment or
consultancy by the Company of any person who was employed at the
Last Accounting Date and pending Completion the Company will not
without the Purchaser's prior written consent engage any new
employee or consultant.
9.5 No Other Payments: No moneys other than in respect of remuneration
or emoluments of employment or fees are payable to or for the
benefit of any director or officer of the Company.
9.6 No Profit Sharing: The Company is not and will not prior `to
Completion become a party to any agreement with any director,
officer, employee or consultant of the Company under which any
such person is entitled to a share of profits of the Company or to
any bonus calculated on profits or to participate in any share
incentive scheme or share option scheme or similar arrangement and
that no pensions, retiring allowances or other benefits are or
will be payable by
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the Company to any director, officer or employee of the Company
during such person's employment or consultancy.
9.7 No Schemes: There are not now and will not on Completion be in
existence any retirement, death or disability benefit schemes for
directors or employees or any obligations to or in respect of any
present or past directors or employees with regard to retirement,
redundancy, death, sickness or disability pursuant to which the
Company is or may become liable to make any payments.
9.8 No Breaches of Contract: Since the Last Accounting Date no
liability has been incurred or payment made by the Company for
breach of any contract (whether express or implied) of service,
for redundancy or for compensation for loss of office or wrongful
dismissal or in respect of retirement, death, sickness or
disability and no gratuitous payment has been made or will prior
to Completion be made or promised by the Company to or in respect
of any director or employee.
9.9 No Liability for Leave Payments: The Company is not and will not
at Completion be under any liability to any person in respect of
long service leave or accrued annual leave.
9.10 Compliance with Legislation: The Premises and operation of the
business of the Company and the terms on which the employees of
the Company were recruited and are employed comply and will at
Completion comply with the Employment Contracts Act 1991, the
Equal Pay Act 1972, the Human Rights Act 1993, the New Zealand
Bill of Rights Act 1990, the Wages Protection Act 1983, the
Holidays Act 1981, the Health and Safety in Employment Act 1992
and all applicable legislation governing employment and safety of
employees.
10. Statutory Obligations
10.1 Holding of Licences: The Company holds and will on Completion be
in possession of all current licences (including import licences
and concessions, if any) consents, authorities and permits from or
issued by any Governmental Department, municipal or local body or
other authority whether in respect of the Premises, plant,
machinery, buildings or other assets of the business or otherwise
necessary or required to enable it to carry on its business fully
and effectively and that the Company has not had notice that any
such licences, consents, authorities or permits are being or are
likely to be withdrawn or in any manner qualified whether by
reason of the sale of the Shares or otherwise howsoever.
10.2 No Requisitions: There has not since the Last Accounting Date been
and will not on Completion be any unsatisfied requisitions by or
dispute with any local body health authority, government or ad hoc
authority or other body or official or authority having competent
jurisdiction affecting or relating to any of the Premises, plant,
machinery, buildings or other assets of the business, or the
employment of staff by the Company.
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10.3 No Illegal Trade Practices: The Company is not, has not been and
will not pending Completion be a party to any agreement,
arrangement, understanding or practice which is contrary to the
provisions of the Commerce Act 1986. or the Fair Trading Act 1986,
or the Consumer Guarantees Act 1993, or the Privacy Act 1993.
10.4 No Breach of Statute: The Company has not committed any breach
which was unremedied at the Last Accounting Date of any statutory
provision, order, bylaw or regulation (in every case whether
applicable in New Zealand or elsewhere) binding on or applicable
to it with regard to the formation and operation of the Company,
the carrying on of the business of the Company or any other matter
relating to the Company and that the Company has not since such
date and will not prior to Completion commit any such breach.
10.5 All Documents Stamped: All documents which in any way affect the
right, title or interest of the Company in or to any of its
property, undertaking or assets or to which the Company is a party
and which attract stamp duty have been duly stamped and no
liability to pay stamp duty will arise as a result of Completion
by virtue of any previous transfer of any property, undertaking or
assets to the Company in particular but without limitation under
section 13(4) of the Stamp and Cheque Duties Act 1971.
10.6 Compliance with Companies Act: The Company has complied with and
will up to Completion comply with all the requirements of the
Companies Act 1955 or the Companies Act 1993 (whichever is
applicable) and any Act or Acts amending the same in relation to
the filing of all documents required to be filed with the
Registrar of Companies and otherwise howsoever.
10.7 All Registers Complete: The entries in the Register of Members,
Register of Directors and Secretaries, Interests Register,
Register of Charges and Register of Directors' Shareholdings of
the Company are correct and that such registers have been properly
kept.
11. Properties and Assets
11.1 Leasehold Premises: The Premises are held upon lease terms which
have been fully disclosed to the Purchaser.
11.2 Title and Compliance: The Company had on the Last Accounting Date
and will on Completion have sole title to and possession and
control of all the freehold and leasehold properties used or
occupied by it free from all leases, tenancies or Charges and each
of the said properties complies and will on Completion comply with
the local body code or ordinances affecting the same and with all
other statutory, local body and other regulations and
requirements.
11.3 All Premises Included: The Premises comprise all the freehold and
leasehold land and premises owned, used or occupied by the Company
and all the estate interest right and title whatsoever of the
Company in, under, over or in respect of any such land or
premises.
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11.4 Compliance with Statutes: The Company has complied with all
provisions of the Building Act 1991, Resource Management Act 1991
and all other legislation (including regulations, bylaws,
ordinances, codes of practice, circulars and guidance notes made
thereunder) relating to building, planning or environmental
matters and dealing with (but without limitation) waste,
contaminated land, discharges to land or ground and surface water
or sewers, emissions to air, noise, dangerous, hazardous or toxic
substances and materials, nuisance or health and safety and there
are no actions, claims or proceedings (whether actual or
potential) existing in relation to such matters nor is likely to
arise any liability in relation to such matters.
11.5 Compliance with Leases: The Company has paid all rent that may be
payable and has performed and observed all covenants (whether in
relation to freehold or leasehold land) conditions, agreements,
statutory requirements, planning or building or resource consent,
bylaws, orders and regulations affecting the Premises or any
business carried on the Premises and no notice of any breach of
any such matter has been received nor is the Vendors aware of any
such breach having occurred.
11.6 No Defects: No structural, drainage or other material defects have
appeared in respect of or affected the buildings and structures on
or comprising the Premises or any parts thereof and all such
buildings are in good and substantial repair and condition and
none has been constructed, maintained, altered or repaired using
materials containing any deleterious building material and none of
the Premises has been affected by flooding or subsidence.
11.7 No Other Matter: There is no other matter of which the Vendors are
or ought to be aware on reasonable enquiry and which adversely
affects the value of any of the Premises or casts any doubt on the
right or title of the Company to those Premises or its use of
those Premises for its business which should be revealed to a
Purchaser of the Shares of the Company or other person entering
into this Agreement.
11.8 Plant and Machinery: The Company's plant and machinery (including
fixed plant and machinery) and all equipment furniture and
vehicles are in good repair and condition (fair wear and tear
excepted) and in satisfactory working order and none of it is
surplus to the Company's requirements.
11.9 Debts Recoverable: The amount of all debts due or recorded in the
Accounts or the books of the Company as being due to the Company
as at Completion (less the amount of any provision or reserve made
in the Accounts or the books of the Company in respect of any
particular debts) will be good and collectable in full in the
ordinary course of business and in any event not later than 3
months after Completion and none of the said debts is or will at
Completion be subject to any counterclaim or set-off except to the
extent of any such provision or reserve.
11.10 Debtors Recovery: Should any of the debtors of the Company as at
the Completion fail to satisfy its liability to the Company in
full within 3 months from the Completion Date and the aggregate
amount due to such debtors exceeds $3,000, the Vendors will
immediately upon demand by the Purchaser pay to the Purchaser (or
the Purchaser may deduct from the Consideration) the amount of
E-185
<PAGE>
32
such excess amount. Following payment of such amount the Purchaser
shall be entitled to an assignment of the benefit of such excess
debts.
11.11 Changes Since the Last Accounting Date: Since the Last Accounting
Date:
11.11.1 NoWrite-Offs or Write-Downs: None of the assets of the
Company have been written off or written down nor has
there been any agreement for the release of any person
under liability to the Company:
11.11.2 Cash: The Company has neither disbursed nor received any
cash except in the ordinary course of its business and
amounts received by the Company have been deposited with
its bankers and appear in the appropriate books of
Account;
11.11.3 Depletion in Assets: There has been no depletion in the
net assets of the Company and they have not been
materially diminished by the negligent, wrongful or
fraudulent act of any person;
11.11.4 GAAP: Everything which should according to generally
accepted accounting practices (as defined in the
Financial Reporting Act 1993) have been written up or
recorded in the Statutory Books and financial records of
the Company with respect to the asset of the Company
(including the Premises), has been written up and
recorded;
11.11.5 Compliance with Notices: There have been no notices,
claims or demands served on the Company in respect of any
of its assets (including the Premises) which have not
been fully complied with. 12. Intellectual Property
12.1 All Intellectual Property Included: The Consideration for the
Shares is assessed on the basis that all licences and all
Intellectual Property or other similar rights relating to the
business of or used by the Company, if any, which are at present
owned solely and beneficially by the Company and that all of such
rights shall remain the property of the Company as the case may be
to the intent that the Company shall be the sole unencumbered and
undisputed owner of all such things as at Completion.
12.2 No Intellectual Property Agreements: The Company has not entered
into any agreement or arrangement for the provision of technical
information or assistance or granting rights in respect of any
patents, trade marks or registered designs or copyright and that
to the best of Barker's knowledge and belief the operations of the
Company do not infringe any patent or other intellectual property
right of any kind vested in any other party.
12.3 Disclosure of Intellectual Property: Full details of all
Intellectual Property owned or used by the Company have been given
to the Purchaser and no person has been authorised to make any use
whatsoever of any lntellectual Property owned by the Company and
the Company has not disclosed (except in the ordinary course of
its business) any of its know-how, trade secrets, technical
E-186
<PAGE>
33
processes, confidential information, Intellectual Property or
lists of customers or suppliers to any other person.
12.4 Use of Names: The Company is entitled to use its trade names in
those parts of the world in which it currently conducts its
business or its products are sold to its customers and no person
has been authorised to make any use whatsoever of either such name
and the use of such names by the Company does not infringe the
rights of any other person or entitle any other person to a claim
against the Company and neither name is being used claimed opposed
or attacked by any other person.
12.5 Name: The Company has not consented to and will not before
Completion consent to the adoption of a similar name by any other
company or person.
12.6 Intellectual Property Not Disputed: The Intellectual Property
rights of the Company have not been and will not at Completion be
challenged or disputed by any third party and the Vendors are not
aware of any facts or circumstances which might entitle a third
party to challenge the Company's ownership or use of the
Intellectual Property used in the business.
13. Commercial Matters
13.1 All Actions Indemnified: There is no cause of action in respect of
which the Company is not fully indemnified which could and might
be used for the purpose of commencing proceedings either civil or
criminal.
13.2 No Legal Proceedings: The Company is not engaged in any
Proceedings whatsoever nor are any Proceedings of any kind being
taken against it nor is Barker aware of any Proceedings against
the Company pending or threatened.
13.3 No Breaches of Contract: The Company is not and will not on
Completion be in breach of any contract, commitment or arrangement
of any nature whatsoever to which it is now or will then be a
party and is not and will not on Completion be a party to any
contract, commitment or arrangement which may be unenforceable by
the Company by reason of the transaction being voidable at the
instance of any other party or ultra vires, void or illegal.
13.4 Insurance: Full details of all insurance policies maintained by
the Company have been supplied to the Purchaser and all such
insurances are now in force and all premiums due have been paid
and pending Completion the Company shall not permit any of its
insurances to lapse or do or omit to do anything the doing or
omission of which would make any such policy of insurance void or
voidable or would or might result in an increase in the rate of
premiums and no claims are outstanding and nothing has occurred to
give rise to any such claim.
13.5 No Notice from Lenders to Repay: The Company has not received
notice (whether formal or informal) from any lenders of money to
the Company requiring repayment or intimating the enforcement by
such lenders of any security which they may hold over any assets
of the Company and Barker is not
E-187
<PAGE>
34
aware of any circumstances likely to give rise to any such notice
being given or which would enable any such notice to be given.
13.6 Effect of Acquisition of Shares: Barker has no reason to believe
that as a result of the proposed acquisition of the Shares by the
Purchaser:
13.6.1 No Cessation of Supplies: Any supplier of the Company will
cease supplying the Company or may substantially reduce its
supplies to the Company or alter the terms on which it
supplies the Company; or
13.6.2 No Cessation of Custom: Any customer of the Company will
terminate any contract with the Company or cease or
materially reduce its business with it; or
13.6.3 No Notice of Termination of Employment: Any officer or
senior employee of the Company will give notice of
termination of his or her employment with the Company; or
13.6.4 No Termination of Contracts: Any of the licences, consents,
approvals, agreements or contracts currently granted to or
entered into by the Company required in connection with the
carrying on of its business in the manner in which it has
been carried on at any time during the 2 years prior to the
date hereof will be withdrawn, cancelled or be capable of
termination.
13.7 Arm's Length Supplies: All supplies of goods or services to the
Company are purchased by the Company direct from manufacturers or
suppliers on an arm's length basis and no commissions or similar
payments are made to the Vendors or any other intermediaries in
respect of such supplies.
13.8 No Outstanding Offers: No offer, tender or the like given or made
by the Company and still outstanding is capable of giving rise to
a contract merely by any unilateral act of a third party.
13.9 No Liabilities: The Company does not have and at Completion will
not have any outstanding debts, liabilities, contracts or
engagements, guarantees, undertakings or liabilities (including
contingent liabilities) other than liabilities implied by statute
or disclosed in the Accounts or incurred in the ordinary and
proper course of its trading business.
13.10 Continuance of Name: The Company does not and pending Completion
will not use on its letterheads, brochures, sales literature,
books, Premises or vehicles or otherwise carry on its business
under any name other than its corporate name.
13.11 Electronic Storage: The Company has not and will not pending
Completion have any of its records, systems, controls, data or
information recorded, stored, maintained, operated or otherwise
dependent upon or held by any means (including any electronic,
mechanical or photographic process whether computerised or not)
which (including all means of access thereto and therefrom) are
not under the exclusive ownership and direct control of the
Company. There has been no breach of any service or maintenance
contract relevant to any such
E-188
<PAGE>
35
electronic, mechanical or photographic process or equipment
whereby any person or body providing services or maintenance
thereunder may have the right to terminate such service or
maintenance contract.
13.12 Transactions with Associated Persons: The Vendors and their
Associated Persons have not entered into and will not prior to
Completion enter into any loan, borrowing, agreement or other
arrangement with or on behalf of the Company (other than as
employee of the Company on terms fully disclosed to the Purchaser)
and are not and will not at Completion be interested, whether
directly or indirectly, in or have any Charge over any of the
assets of the Company.
14. Corporate Matters
14.1 Share Capital: There is not now outstanding and will not be
outstanding at Completion in respect of the Company any option or
agreement under which any person has or may in any circumstances
have or acquire the right to subscribe for or purchase any share
or loan capital of the Company or to convert any stock or share or
security into share capital or into share capital of a different
class.
14.2 Attorneys: The Company has not given any power of attorney or any
other authority (express, implied or ostensible) which is still
outstanding or effective to any person to enter into any contract
or commitment or do anything on its behalf (other than any
authority of employees to enter into routine trading contracts in
the normal course of their duties) nor will it do so prior to
Completion.
14.3 Officers: Since the Last Accounting Date no appointments or
removals of any officers of the Company have been made.
14.4 Ultra Vires Contracts: To the best of Barker's knowledge and
belief none of the activities or contracts or rights of the
Company is ultra vires, unauthorised, invalid or unenforceable or
in breach of any contract or covenant.
E-189
<PAGE>
36
SCHEDULE 3
(clause 7.4)
1. Warranty Limitations: Notwithstanding any other provisions of this
Agreement, Barker shall not be liable in respect of any Proceedings or
Costs for breach of any of the Warranties or other breach of this
Agreement:
1.1 Notice: Unless, promptly after the Purchaser becomes aware or ought to
have become aware of any breach, they shall have received from the
Purchaser written notice containing full details of the relevant
Proceedings including, if practicable, the matter or default which gives
rise to the Proceedings, the breach that results and the amount claimed
in respect of the Proceedings:
1.1.1 Other than Taxation: In the case of any of the Warranties other
than Warranties in relation to Taxation, within a period of 2
years after Completion; or
1.1.2 Taxation: In the case of any of the Warranties in relation to
Taxation, within a period ending the earlier of the date 7 years
after Completion and the date falling six weeks after the date on
which any relevant statutory limitation period in the jurisdiction
relevant to the Taxation Proceedings shall expire;
and (unless the relevant Proceedings shall have been withdrawn or
satisfied) action in a court of competent jurisdiction in respect of such
breach shall have been commenced within 1 year after receipt of such
notice;
1.2 Aggregate of Warranties to Exceed Specified Amount: Unless the aggregate
amount of the liability of Barker for all such Costs and Proceedings
exceeds $5,000;
1.3 Limit for Single Proceedings: Unless, in respect of any single breach of
any of the Warranties, the amount of the liability of Barker for such
Costs and Proceedings in respect of such breach exceeds $1,000;
1.4 Exclusion where Covered by Insurance: If and to the extent that (after
taking account of related Costs and any normal excess in such policy)
recovery is made by the Purchaser or the Company under any policy of
insurance effected by or for the benefit of the Company in respect of any
of the subject matters of such Proceedings;
1.5 Exclusion where Recovery under Another Agreement: If and to the extent
that those Proceedings or Costs occasioned thereby has been recovered
under any other agreement entered into between the parties and vice
versa;
1.6 Provisions Made in Account: If and to the extent that proper provision or
allowance therefor has been made in the Accounts;
E-190
<PAGE>
37
1.7 Subsequent Changes: If and to the extent that such Proceedings and any
Costs in connection therewith arise or is increased as a result of:
1.7.1 Any alteration in rates of Taxation after the date of this
Agreement with retrospective effect or the withdrawal after the
date of this Agreement of any published extra-statutory concession
or the alteration after that date of any published statement of
practice of the relevant revenue authority; or
1.7.2 The passing of, or any change in, any legislation after the date
of this Agreement; or
1.7.3 Any change in accounting policy or practice of the Company after
Completion including any changes in methods or practices in
relation to stock valuation;
1.7.4 Any voluntary act or omission or transaction of the Purchaser or
the Company after Completion otherwise than in the ordinary course
of the Company's business as carried on at the date of this
Agreement including (without limitation):
(a) The payment of any unusual or abnormal--dividend by the
Company;
(b) A change of the date up to which the Company makes up its
Statutory Books;
(c) The cessation of any business carried on by the Company;
1.8 Liability Disclosed: If and to the extent the facts, matters or
circumstances giving rise to the breach are referred to in the Disclosure
Letter or any document disclosed with the Disclosure Letter or in any
document disclosed to the Purchaser or any officer of or professional
adviser to the Purchaser in relation to this Agreement or the matters
contemplated herein or in the Accounts where such liabilities are
accepted by the Purchaser by written notice to Barker;
1.9 Utilisation of Taxation Relief: In the case of a Proceedings arising in
connection with a payment of Taxation, if and to the extent that such
payment could have been avoided by the utilisation of trading losses or
other reliefs from Taxation (other than trading losses, or other reliefs
arising after the Last Accounting Date) available to the Company;
1.10 Over Provision in Accounts: If and to the extent that there is any over
provision in respect of any matter included in the Accounts;
1.11 Pursuant to Agreement: If and to the extent that such matter giving rise
to the Proceedings properly falls to be done in implementing the terms of
this Agreement;
E-191
<PAGE>
38
2. Limitations Separate and Independent: For the avoidance of doubt each of
the above paragraphs of this Schedule shall be construed as being
separate and independent and none of them shall be construed as limiting
the effect of any other.
3. Recovery from Third Party: If Barker pays an amount pursuant to a
Proceedings in respect of breach of any of the Warranties and the Company
or the Purchaser has a right of reimbursement against any person other
than the Company in respect of or relating to those Proceedings, the
Company or the Purchaser shall (subject to the Company or the Purchaser,
as the case may be, being indemnified to its reasonable satisfaction by
Barker against all reasonable Costs) take all reasonable steps or
proceedings to enforce such right. If the Purchaser subsequently recovers
such reimbursement from such third party, the Purchaser shall forthwith
repay to Barker such part of the amount paid by Barker by way of damages
for breach of that Warranty as equals the amount of the which is so
recovered by the Purchaser in respect of the facts, matters or
circumstances giving rise to the breach of that Warranty (after taking
account of the Costs of recovery and (if appropriate) any Taxation
arising solely as a result of the recovery).
4. Conduct of Proceedings by Barker: The Purchaser shall give and shall
procure that the Company shall give, to Barker full facilities to
investigate any Proceedings and the extent of possible liability under
the Warranties and at the request of Barker shall (subject to the
Purchaser being indemnified as to any reasonable Costs which may be
incurred thereby) allow Barker at his own expense to participate in, or
have the conduct of (as Barker may elect), all proceedings of whatsoever
nature against the relevant third party arising out of, or in connection
with such Proceedings or dispute, in the name of the Company or the
Purchaser as it may consider necessary in order to mitigate any
Proceedings or Costs arising under this Agreement. Neither the Purchaser
nor the Company shall accept or pay or compromise any such liability or
Proceedings as is referred to above without Barker either consenting to
such action or having a reasonable opportunity to resist the same.
E-192
<PAGE>
39
SCHEDULE 4
(clauses 9.1.4 and 9.1.6)
Item 1. Consents (clause 9.1.5)
o Quatorze Holdings Limited (Auckland premises landlord)
o AMP (Wellington premises landlord)
o Bank of New Zealand (Debentureholder)
0 Equipment Finance Limited (Chargeholder)
Item 2. Charges (clause 4.1.3)
o Bank of New Zealand debenture dated 31 October 1996
registered on 28 November 1996.
o Equipment Finance Limited Instrument by Way of Security
dated 5 December 1995 registered on 11 December 1995.
Item 3. Guarantees (clause 4.2)
o Quatorze Holdings Limited (Auckland premises landlord)
o AMP (Wellington premises landlord)
o Bank of New Zealand (Debentureholder)
o Equipment Finance Limited (Chargeholder)
E-193
<PAGE>
40
ANNEXURES
1. Accounts (clause 1.1)
2. Service Agreement (clause 4.1.4)
3. Form of Escrow Agreement (clause 1.1)
4. Assets Schedule (clause 3.1.2)
E-194
<PAGE>
[LOGO]
BROKER
INVESTMENTS
Private & Confidential
Jon Barker
Easy PC Computer Rentals Limited
17 Kahika Road
Beachhaven
AUCKLAND
14 September 1998
Dear Jon
Earn-out calculation schedule
Enclosed please find the earn out calculation for the year ended 31 March 1998
with respect to Easy PC Computer Rentals Limited.
I understand that you have reviewed this schedule and the calculations with
Brocker Investments (NZ) Limited.
With your signed acceptance, on behalf of the shareholders of Easy PC Computer
Rentals Limited, we will instruct our solicitor to issue the share script to
escrow. Please sign and return a copy of this letter so we may initaite these
instructions.
Yours faithfully
/s/ Mike Ridgway
Mike Ridgway
Chief Executive Officer
- --------------------------------------------------------------------------------
For and on behalf of the share holders of Easy PC Computer Rentals Limited
/s/ J. H. BARKER Date 28/11/98
- ------------------------------ ------------
Moira Dobson
Signed by JOHNATHAN HUGH BARKER
as duly authorised agent for MORIA DOBSON
/s/ J. H. BARKER Date 28/11/98
- ------------------------------ ------------
Michael Laverty
Signed by JOHNATHAN HUGH BARKER
as duly authorised agent for MICHAEL LAVERTY
E-195
<PAGE>
/s/ J. H. BARKER Date 28/11/98
- ------------------------------ ------------
Riley Theorpe Associates
Signed by JOHNATHAN HUGH BARKER
as duly authorised agent for RILEY THORPE ASSCOIATES
/s/ C. A. PHILIPSON Date 28/11/98
- ------------------------------ ------------
Claire Philipson
/s/ J. H. BARKER Date 28/11/98
- ------------------------------ ------------
Michael Laverty
Signed by JOHNATHAN HUGH BARKER
as duly authorised agent for MICHAEL LAVERTY
/s/ J. H. BARKER Date 28/11/98
- ------------------------------ ------------
Geoff Andoe and Jo Andoe
Signed by JOHNATHAN HUGH BARKER
as duly authorised agent for GEOFF and JO ANDOE
CC: Hal Linstrom, Brocker Investments
Andrew Chamberlain, Chamberlain Hutchison
E-196
<PAGE>
[LOGO]
BROCKER
INVESTMENTS
EASY PC COMPUTER RENTALS LIMITED
ACQUISITION VALUATION AND SHARE ISSUE CALCULATION
AS AT 30 JUNE 1998
1 Purchase price
Made up of following components:
Initial cash consideration
Asset value
Goodwill value
2 Goodwill
Four times multiple of net audited profit after tax @33% for the year
ended 31 March 1998.
3 Asset value
Established as $388,000 as at 30 June 1997. This value must be realised
in residual sales.
4 Consideration paid to date
Initial cash on settlement of 71,183
Initial shares on settlement 8,128 16,867
------------
88,050
Advance on settlement 150,000
(to be clawed-back or increased subject to asset value being earned)
5 Goodwill calculation
NZ$
Net income 93,216
Tax @33% (30,761)
--------
62,455
-------
x4 249,819
-------
6 Escrow shares to be issued
Shares to be issued and held in escrow equalling the goodwill value
As at 31 March 1998
Exchange rate (NZ:CAD) 0.7816
Share Price (strike) c$ 1.75
-------
Shares to be issued 111,576
-------
E-197
<PAGE>
[LOGO]
BROCKER
INVESTMENTS
EASY PC COMPUTER RENTALS LIMITED
ACQUISITION VALUATION AND SHARE ISSUE CALCULATION
AS AT 3O JUNE 1998
7 Escrow shares to be released
First release to be 30 June 1998
Based on cumulative cash flow earned for the year ended 31 March 1998 (as
defined in Escrow Agreement)
<TABLE>
<CAPTION>
March 1998 March 1999 March 2000 TOTAL
<S> <C> <C>
Net profit after tax 62,455 62,455
0
Add back: 0
Depreciation 145,865 145,865
Depletion -- 0
Deferred tax -- 0
Interest allowance (Marketting) 3,917 3,917
Goodwill amortisation -- 0
Research and development amortisation -- 0
Remuneration increase adjustment -- 0
----------- -----------
212,237 212,237
-----------
Shares to be released from escrow 94,791
-----------
</TABLE>
8 Summary
NZ$
Total purchase price currently:
Cash 88,050
Asset value 150,000
Goodwill value 249,819
-----------
487,869
Paid to date
Cash 88,050
Asset value 150,000
Goodwill value
To release shares 212,237
Total consideration paid and
released 450,287
-----------
To be potentially released in future $ 37,582
===========
E-198
<PAGE>
[LOGO]
BROCKER
INVESTMENTS
EASY PC COMPUTER RENTALS LIMITED
ACQUISITION VALUATION AND SHARE ISSUE CALCULATION
AS AT 30 JUNE 1998
- --------------------------------------------------------------------------------
9 Conclusion
--------
Goodwill value 249,819
-------- -------
Shares to issue to escrow 111,576
------- ------
Shares to release from escrow 94,791
------
As escrow release is based on cumulative cash flows until 31 March 2000,
what happens to shares released from escrow if Easy PC generates losses
for next two years.
E-199
<PAGE>
Sale and Purchase Agreement
Between:
Communicorp Holdings Ltd; trading as "ComputerLand Northland"
and
Northmark Technologies Limited "Northmark"
And
Brocker Investments (NZ) Limited
Dated: Friday, 20 November 1998
- --------------------------------------------------------------------------------
ComputerLand Northland wish to acquire some of the business assets of Northmark
and its shareholders wish to sell these company assets, subject to necessary
approvals and due diligence review, and due consideration being passed.
This document outlines the understanding which exists between the parties.
The assets acquired will be valued as the net cost of:
1. Stock On Hand at valuation on the date of acquisition and in saleable
condition with a reduction in price for the following items.
Winframe 1.7nfr special @ zero dollars
Model TH1536-4 4Gb HP Dat tape drive @ $1,000.00
DEC Hinote 562 & Carry Case @ $2,000.00
HPL 3952 Laserjet 5N printer @ $1,699.00
(approx value as at 20/11/98 $25,000.00)
2. Trade Debtors (less Trade Creditors) (approx value as at 20/11/98
$41,000.00)
The assets and business of Northmark are to be sold as a going concern,
therefore GST, if any, will be zero rated.
The consideration to be paid by Computerland is total of 1 and 2 above less a
deposit of $500.00 paid on acceptance of this agreement.
90 day terms will be provided for settlement of this transaction.
Timing of the transaction is 24th November 1998. Ownership of any assets will
not transfer to ComputerLand Northland until payment has been received in full
by Brocker Investments (NZ) Limited.
Any debtor accounts which prove uncollectable after 90 days for date of sale
will be resold to Northmark, however ComputerLand Northland will work actively
in a
E-200
<PAGE>
timely manner to ensure that all trading account amounts outstanding are duly
collected.
Each party warrants to the best of their knowledge the information being relied
upon is fair and accurate.
This agreement is contingent upon the approval of the Board of Brocker
Investments (NZ) Limited by 5:00pm 23 November, 1998 otherwise this clause is
waived.
ComputerLand NorthLand will interview all current Northmark employees with a
view to offering employment to as many of said employees as ComputerLand
Northland feels able to given the prospective volume of business available to
ComputerLand and the skills of the individuals.
Both Parties will keep this information confidential. A press announcement will
occur once the heads of agreement is signed, however there will not be general
disclosure, until the formal contract is signed.
The parties agree with the terms and conditions, by their respective signatures,
/s/ ILLEGIBLE ILLEGIBLE
- -------------------------------------------
For and behalf of Communicorp Holdings Ltd.
Director
/s/ ILLEGIBLE
- -------------------------------------------
For and behalf of Brocker Investments (NZ) Limited
Director
Friday, 20 November 1998
E-201
Disclosure Letter
To: Brocker Investments (NZ) Limited at Auckland
And To: Brocker Investments Limited at Alberta, Canada
Dated: the _____ day of December 1997
Sale and purchase of shares in New Zealand Online Limited
1. We refer to the Agreement for Sale and Purchase of Shares ("the
Agreement") in relation to New Zealand OnLine Limited ("the Company")
dated the same date as this letter to be executed by Laurence John Ryan
and M & H Trustee Services Limited as vendor, Richard Lyell Tyree,
Brocker Investments (NZ) Limited at Auckland as purchaser, and Brocker
Investments Limited at Alberta, Canada as BKI, relating to the sale and
purchase of all the Shares ("Shares") in the Company. In particular we
refer to clause 7 of the Agreement and the Warranties set out in the
Agreement ("the Warranties"). This is the Disclosure Letter referred to
in the Agreement ("this Letter").
2. Words and expressions which are defined in the Agreement shall have the
same meaning in this Letter, unless the context otherwise requires.
3. Pursuant to the Agreement, we write this Letter:
(a) to disclose information constituting exceptions to and
qualifications of the Warranties, and
(b) to provide particulars of matters referred to relating to the
subject matter of the Agreement.
4. Note that:
(a) references to clauses, schedules and appendices stated in this
Letter are references to clauses, schedules and appendices in the
Agreement;
(b) warranty references stated in this Letter are reference to
Warranties in Schedule 1 of the Agreement;
[INIT]
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<PAGE>
2
(c) disclosure in this Letter of a matter under one Warranty shall be
disclosure under all other clauses and Warranties in the Agreement
under which the matter might be relevant;
(d) this Letter comprises 8 pages (exclusive of attachments); and
(e) Attached to and forming part of this Letter is the Information
Memorandum prepared by Brocker Investments (NZ) Limited during
their due diligence review of the Company. In the event of there
being any discrepancy or inconsistency between information in the
Information Memorandum, and in this Letter, the information in
this Letter shall prevail.
Yours faithfully
- -------------------------
Laurence John Ryan
Signed for and on behalf of
M & H Trustee Services Limited per:
- -------------------------
M F Malloy
- -------------------------
J M Goodwin
Part 1
General disclosures
The following are disclosures made on a general basis:
Parrilott Pty Limited ("Parrilott")
Attached to this Letter is two pages of search extract for this Australian
company (ACN 078 712 099, incorporated in New South Wales on 28 May 1997). This
company was a shelf
[INIT]
E-203
<PAGE>
3
company acquired for the purpose of receiving Australian dollar payments for
products sold, and remitting moneys to New Zealand. Parrilott has a bank account
and its assets as at 30 September 1997 are referred to in the Financial
Statements in respect of Parrilott. Tyree will resign as a director and
secretary with effect Completion as will the current Australian resident
director Malcolm Phillip Bersten. The Purchaser will have to nominate
replacement directors and secretary. Any Statutory Books will be held by Mr
Bersten. There will be few. Any Business Records will be held by Tyree, at
Completion. Parrilott has no insurance cover. It has furnished no taxation
returns, other than its first "nil" sales tax returns.
Refer to part 2 for further specific disclosures concerning Parrilott.
Part 2
Specific disclosures
The following are specific disclosures relating to one or more of the Warranties
detailed in Schedule 2 of the Agreement. The numbering used below conforms with
the numbered Warranties in Schedule 2.
1.3 During the course of the Purchaser's due diligence enquiries and
discussions with Richard Tyree, certain sales and financial projections
for the Company were developed by the Purchaser. Certain estimates of
prospective sales of Pictrix and Pictrix junior units, after discussion
with Richard Tyree. These were estimates only, and Richard Tyree on
behalf of the Vendors provided the information in that discussion in good
faith using his best considered assessment of factors relevant to such
projections at the time. The estimated time frame for such projected
sales may well prove to have been under-estimated.
2.3 By agreement with the Purchaser on or before Completion, the shares in
Parrilott Pty Limited will be transferred to the Company and Parrilott
Pty Limited will thereupon become a fully owned Subsidiary of the
Company.
2.6 The Vendor or parties related to the Vendor own shares in the following
companies:
Ciga Finance Limited, International Telecommunications Specialists
Limited, Ciga Computers Limited and Advanced Communications Group
Limited.
The Company has no shareholding in any of these companies and is not
intended to do so. These companies will not form part of the transaction
contemplated by the Agreement. The Information Memorandum also refers to
PhotoDigital Solutions Limited. That company is incorporated. Its shares
are half owned by Richard Tyree
[INIT]
E-204
<PAGE>
4
and Terry Rimmer. That proposal will not now proceed. It will be up to
the Purchaser and the Company to determine whether or not any arrangement
in time is entered into with Terry Rimmer to market Company products to
the photographic industry in Australia or elsewhere.
3.1 The Business Records of the Company are very informal and only a very
light system of record keeping has been maintained. In no sense are they
fulsome records. Not all Statutory Books are completed. For example the
Company does not maintain a minute book, a register of members or a
directors interests register. The register of assets of the Company has
been reviewed by the Purchaser. There are some assets of the Company not
on the register and there are some items on the register which should no
longer be there. The Purchaser has details of such items.
No provisioning is made in the Business Records for any contingent
liability of the Company.
3.3.4 Although relative to the period since 30 September 1997, the Company has
expensed certain moneys, disclosed to KPMG on behalf of the Purchaser,
other than in the normal course of business, best described as drawings,
loan repayments and reimbursements. These items are not yet dealt with in
the books. Whatever adjustments will be necessary to the financial
statements of the Company to account for these items should be made at
the year end 31 March 1998.
3.3.8 No provision is made for bad or doubtful debts of the Company.
3.4.4 The Company has acquired assets of a capital nature exceeding $3,000.00
in value, but only in the ordinary course of business.
3.4.7 Refer to the text under 3.3.4 above.
3.4.8 The Company has no loss of profits insurance cover.
3.4.9 The Company is always changing its software product lines and its selling
prices and terms and conditions of sale.
4.1 (a) The Company has only be trading seventeen months, and a period of
three preceding financial years is not pertinent.
(b) The Company has only included one item of work in progress in the
books - KPMG/the Purchaser has been advised of details relating to
computers delivered by the Company but not invoiced-out.
(c) The Company may have slow moving, out of date or fashion,
redundant or obsolete stock to the extent that the value life span
of a hardware product can be extremely brief.
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5
(d) The assessment of stock value undertaken in the preparation of the
accounts of the Company for the period ending 30 September 1997
was a fuller assessment of value than that undertaken for the
accounts of the Company for the period ending 31 March 1997.
5.3 There is a difference between GST paid, and what is reported in the
current financial statements of the Company as being payable. David
Dolbel the Company's accountant is investigating the difference. As at
end September 1997 $30,000.00 was reported as being payable although the
Company has only paid $12,000.00 odd. Completion of the transaction
contemplated by the Agreement will take place before this resolved and
this will be something for the Purchaser and the Company to complete and
account for.
6.1 The fringe benefit tax payable by the Company reported in the financial
statements is understated. Richard Tyree on behalf of the Company ceased
filing FBT returns in approximately June 1997. Richard Tyree had
previously given to David Dolbel the FBT records for the end of year
accounting purposes. However when the Company accounting records were
returned from David Dolbel's office, they didn't include the FBT
material. The difference has arisen from the difficulty in calculating
the fringe benefit tax payable in respect of one of the rented motor
vehicles. IRD has issued a penalty bill for the sum of $238.17 and this
is to be paid prior to Completion. The reconciliation of the FBT for the
Company will have to be dealt with post-Completion by the
Company/Purchaser to the Company's account.
No tax returns have been filed in respect of the period commencing 1
April 1997, and no tax paid.
6.3 No provision for tax has been made in either of the year end 31 March
1997 accounts, or in the 30 September 1997 accounts of the Company.
6.5 A number of debtors of the Company have extended payment terms. Some
debtors are more than three months old.
7.4 A number of repayments have occurred subsequent to the 30 September 1997
accounts:
(a) in the 30/9/97 balance sheet of Parrilott Pty Limited, the loan to
International Telecommunications of $100.00 and the shareholders
loan of $452.00 have both been repaid. Of the loan from NZ OnLine
Limited of $42,681.00, the sum of $40,421.00 has been repaid to
the Company.
(b) In the 30/9/97 balance sheet of the Company, the loan to Ciga of
$1,434.00, and to International Telecommunications Specialists
Limited of $3,165.00, have been repaid.
8.3 The Company is a party to maintenance contracts with Viko and the Sky
Tower which
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6
may be regarded as onerous. Certain provisions in the System Development
Agreement with Hanimex referred to in 8.4 below may be regarded as
unusual or onerous.
8.4 The Company is a party to a software licensing agreement with Laurence
John Ryan and M & H Trustee Services Limited dated the 15th day of
September 1997. The Company is also party to a System Development
Agreement dated the 15th day of September 1997 with Hanimex (NZ) Limited.
The Company is also party to a Memorandum of Understanding with Hanimex
(NZ) Limited dated 30 July 1997 (copy attached).
8.7 Refer to the Hanimex (NZ) Limited Systems Development Agreement referred
to under heading 8.4 above.
8.8 There is no insurance in place of the type contemplated and required by
clause 6.6 of the System Development Agreement with Hanimex (NZ) Limited
dated 15 September 1997.
If Completion is effected without first obtaining the prior written
approval of Hanimex (NZ) Limited under the Systems Development Agreement,
that will constitute an Event of Default under clause 7 of the Systems
Development Agreement, giving Hanimex certain exercisable rights as
detailed in that Agreement. Similarly, under the Lease of the company's
premises with Chamko Holdings Limited dated 11 June 1996, the sale of the
Shares will constitute a change in the effective management or control of
the Company and will be deemed to be an assignment of the Lease requiring
lessor consent, which if not obtained prior to Completion will constitute
a default under the Lease. There may be similar requirements for other
party consent under the company motor vehicle leasing arrangements, the
Equipment Finance Limited financing arrangement and the Melco NZ Limited
arrangement.
9.8 The Company has received a claim from Steve Hawken, an employee who left
the Company's employment in September 1997, for redundancy of $6,795.61.
This claim is presently unresolved and is being resisted by the Company.
Steve Hawken was prior to his employment with the Company an employee of
initially Richard Tyree, and then subsequently Ciga Computers Limited.
9.4 Details of salary increases and new employees have been provided in
facsimile transmissions to the Purchaser. They are not repeated in this
Letter for brevity reasons.
9.9 There is leave due to certain employees of the Company as advised in
facsimile transmissions to the Purchaser. Details of which are not
repeated in this letter for brevity reasons.
11.6 There may well be structural, drainage or other material defects
affecting the building
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7
and structures on or comprising the Premises, however the Vendor has no
actual knowledge of any thing of that nature. The standard repair and
condition of the building is generally speaking consistent with its age
and use. The building may have been constructed maintained, altered or
repaired using materials containing any deleterious building material.
The Premises may have been effected by flooding or subsidence, but the
Vendor has no actual knowledge of same.
11.7 There are significant pieces of real estate in the vicinity of the
Premises which apparently are or are about to be placed on the market for
sale. The Vendor has no actual knowledge of any sale or development
proposals which might affect the Premises, but continues to rely upon the
continuation of the term of years provided to the Company under the Lease
of the Premises.
12.1 (a) Hanimex Proprietary Limited owns 50% of the intellectual property
in the software known as "Badge". The arrangement with Hanimex is
a verbal arrangement.
(b) The licence with Hanimex (NZ) Limited and the licence with the
Vendor relating to software and intellectual property matters,
referred to under Warranty 8.4 above contains certain rights and
obligations relating to Intellectual Property generally and
specifically, as does the earlier Hanimex agreement referred to in
8.4 above.
(c) The only intellectual property rights of the Company are those
defined as Intellectual Property, and the rights licensed to the
Company by the Sam Montegue Trust under the Software Licensing
Agreement.
12.4 The Company uses two names in its trading, New Zealand OnLine, and
Digital Scanning Services.
13.7 (a) Richard Tyree's sister Frances Louard cleans for the Company in
return for payment of $100.00 per month.
(b) A motor vehicle is leased to the Company by Ciga Finance Limited
for a monthly rental of $650.00 including GST.
13.12 From time to time in the past, International Telecommunications
Specialists Limited has provided loan funds to the Company. All such loan
moneys have been repaid. No money is owing by the Company to
International Telecommunications Specialist Limited at the date of this
Letter.
14.1 (a) On or about the date of incorporation of the Company in 1996,
Richard Tyree had an arrangement with Tim Steele and Robert
Meister that those two gentlemen would each acquire a 25%
shareholding in the Company. Tim Steele and Robert Meister lent to
Richard Tyree (not the Company) the sum of
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8
$25,000.00 each. No shares were transferred to Tim Steele or
Robert Meister by Richard Tyree. No formal agreement to sell was
signed. The proposal did not proceed. Richard Tyree has since
repaid Tim Steele. He is yet to repay Robert Meister. The Company
has no liability to either of those two individuals.
(b) In April 1997 or thereabouts, the Company entered into an
arrangement whereby up to 25% of the share capital of the Company
was to be transferred to Asia Pacific Holdings Limited, and the
Company would take up to 25% for the shares in the capital of that
Company. The two managing directors of those two companies,
Richard Tyree and David Rhodes decided to terminate that
arrangement and instead, Richard Tyree and/or The Sam Montegue
Trust entered into an alternate arrangement and incorporated a
company Advanced Communications Group Limited, to conduct business
on behalf of the proposed joint venture parties. The Company was
not and is not involved in Advanced Communications Limited, nor
does Asia Pacific Holdings Limited have any current entitlement to
shares in the Company.
Attached:
copy Hanimex Memorandum of Understanding
copy Information Memorandum
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<PAGE>
NZ OnLine Limited
-----------------
Information Memorandum
----------------------
Prepared for:
Brocker Investments (NZ) Ltd
[INIT]
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<PAGE>
1. Preface
This document identifies all relevant issues that have been discussed during the
process of the purchase of the shares in NZ OnLine Limited by Brocker
Investments Limited.
2. Company shareholding
All 1200 shares in the company are unencumbered and owned by Laurence John Ryan
and M & H Trustee Services Limited (jointly) as Trustees of the Sam Montegue
Family Trust.
2.1. Subsidiaries & Associates
Parrilott Pty Ltd - Australian Trading Company
To become a wholly owned subsidiary upon acquisition by BKI
2.2. Related Companies
See 2.1 above
Ciga Finance Ltd -- Rents the Toyota Car to the Company
Share Capital - $1000, 1 share to Judge Ryan, 999 shares
Richard Tyree Trading
International Telecommunications Specialists Ltd Trading
- 50/50--RT& wife
Ciga Computers Limited - renamed now dormant Not trading
- Kirkliston Investments Ltd Share Capital - $1000, 1 share
to Judge Ryan, 999 shares Richard Tyree
Advanced Communications Group Ltd Does not
trade
- 50% owned by RT and 50% by David Rhodes.
PhotoDigital Solutions
- to market NZOL products to photographic
industry in Australia & R.0.W.
- 50/50 (RT & Terry Rimmer)
3. Suppliers
3.1. Major Suppliers
Sealcorp Computer Products in NZ and Australia
Renaissance in NZ
Tech Pacific in Australia
Melco in NZ
Printed 04/12/97 This document is confidential to Page 2 of 6
Brocker Investments (NZ) Ltd
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3.2. Current Invoices
An amount of $1170.00 is in dispute by Gilmours.
3.3. Australian stock acquired from Hanimex
Parrilott Pty Limited, the Australian subsidiary of New Zealand OnLine Limited
Stock, has acquired touch screen monitors which are to be incorporated into yet
to be developed product, to be called Pictrix Junior Pharmacy, and has acquired
scanners which are to be sold in the normal course of trading. The total value
of these products is $AUD5O,000 and is recorded in the balance sheet of New
Zealand OnLine Limited as stock.
3.4.
3.4.2 The company has expensed monies since 30/9197 as disclosed to KPMG
that are not part of the normal couse of business, these can best
be described as drawings, loan repayments and reimbursements which
would be offset against loan advances etc.
3.5 The company entered into an arrangement where up to 25% of the
capital of the firm was to be swapped for 25% in another firm.
This deal lapsed at the end of March/April. Richard Tyree has a
personal obligation to pay $15,000 to Asia Pacific Holdings
Limited. This is not a liability to the firm.
3.6 GST differs in the accounts with what has been paid to the Tax
department. This metIer is still awaiting resolution by the
accountant.
3.7 Clause 6.4. These is a doubtful debt of $900.00 and that there are
also debtors beyond 90 days.
3.8 The company is in a long term contact of supply see System
Developement agreement between Tyree, Hanimex (NZ) Ltd and NZOL
signed 15/9/97 and will be entering into a similar contract with
Hanimex Pty Limited by December 1997.
3.9 Clause 9.9. There is as at 30/9/97 6 days of leave due to
employees of NZOL.
4. Customers
4.1. NZ based customers
1? Hanimax NZ & Aust
o Bluescreen
o Pictrix
o e-mail
o ISP
o software development
o reseller of hardware
Obligations under a full contract signed 15/09/97 to provide various services as
described in the System Development Agreement.
1? Viko NZ
o Pictrix Bureau
To maintain their bureau network. A royalty that is charged for data bought in
form the Pictrix network/annual
Printed 04/12/97 This document is confidential to Page 3 of 6
Brocker Investments (NZ) Ltd
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maintenance agreement. This is formalised in a letter between the parties.
1? Prism Reproductions Ltd NZ
o Imaging
No formal agreements - supply on purchase order on an as required basis.
1? Gilmours (Foodstuffs) NZ
o Imaging
Proposal and acceptance letters exist between parties. Terms of trade are
described in a proposal and accepted by letter agreement.
1? CSA Action(ad agency) NZ
o Imaging
No formal agreements -- supply on purchase order on an as required basis.
I? Rotorua Museum NZ
o Imaging
Informal and ad-hoc work load.
5. Staff
5.1. Current staff
See fax attached dated Nov 19th, 1997.
6. Employment Contracts
There are no formal employment contracts in existence.
6.1. Redundancy
No specific provisions for redundancy exist however Richard Tyree believes there
is an obligation, to pay redundancy in the event this occurs.
6.2. Holiday Pay
No specific holiday pay provisions exist as the company closes down over the
Christmas/New Year period for 3 weeks.
Pay increases are scheduled for the New Year - effective 1 January 1997.
6.3. Special Employment related Issues
Steve Hawken - amount in dispute $6795.61 - unresolved.
Company has offered employment to Gary Baildon as of 5 January 1998.
7. Premises
7.1. Lease
Printed 04/12/97 This document is confidential to Page 4 of 6
Brocker Investments (NZ) Ltd
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Auckland - the company has a lease on the premises at 29 Enfield St in Mt Eden.
There is a rent review annually. The lease expires 9 June 1998, however the
company has a right of renewal for a further 2 year period.
8. Vehicles
8.1. Current Needs
The company has a finance lease on a vehicle (Honda Finance) as well as a rental
agreement (Ciga Finance Limited) on another vehicle. The lease is for a 3 year
period commencing December 1996. The company has a lease to own agreement (with
Equipment Finance Limited) for a drum scanner which commenced 27/9/96 and is for
a 3 years.
9. Financial
9.1. Personal guarantees
o Melco NZ Ltd -- for trading account.
o Company Motor vehicle leasing company.
o Building Lease to Landlord.
o Equipment Finance Limited
9.2. GST
The company's GST position is inaccurately overstated in the set of accounts as
at 19/11/97 and the Fringe benefit is understated - probably.
9.3. Tax
No provision has been made for company taxation.
9.4. Investments
Deleted
9.5. Intellectual Property
See schedule to be provided by Richard Tyree.
9.6. Arm's Length Supplies
Family member is responsible for cleaning contract with company.
12.1 The company only owns 50% of the software known as "Badge"
12.2 See licensing agreement 15/9/97 between Laurence John Ryan,
MH Trustee Services Limited and NZOL referred to as the
software Licencing agreement.
Printed 04/12/97 This document is confidential to Page 5 of 6
Brocker Investments (NZ) Ltd
[INIT]
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<PAGE>
Printed 04/12/97 This document is confidential to Page 6 of 6
Brocker Investments (NZ) Ltd
[INIT]
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<PAGE>
MEMORANDUM OF
UNDERSTANDING
Parties
HANIMEX (N.Z.) LIMITED
NEW ZEALAND ONLINE LIMITED
R.L. TYREE
[INIT]
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<PAGE>
MEMORANDUM OF UNDERSTANDING dated 30 July 1996
PARTIES
1. HANIMEX (N.Z.) LIMITED at Auckland (Hanimex)
2. NEW ZEALAND ONLINE LIMITED at Auckland (Online)
3. RICHARD LYELL TYREE of Auckland, Company Director (Tyree)
INTRODUCTION
A. The parties have identified certain business opportunities which require
a number of inputs in order to develop them further and to assess their
commercial viability.
B. The parties are able to contribute a range of complementary inputs into
the furtherance of such opportunities with the objective of promoting
their own individual business objectives.
C. It has been agreed that the parties will work together to establish and
maintain an exclusive relationship for the development of their mutual
interests with the intention that further terms and conditions will be
negotiated in relation to the development of any significant business
opportunities within the general principles set out in this Memorandum.
TERMS
1. Interpretation
1.1 In the interpretation of this Agreement, unless the context otherwise
requires:
1.1.1 References to the parties include their respective executors,
administrators, successors and permitted assigns:
1.1.2 Any obligation not to do anything includes an obligation not to
suffer, permit or cause that thing to be done.
1.2 The covenants herein expressed or implied shall bind all persons
executing this Agreement and any two or greater number of them jointly
and each of them severally.
2. Parties Contributions
2.1 Tyree has established expertise in the field of software development and
engineering with particular reference to image management and transfer
technology. Tyree wishes to utilise these skills in the development and
promotion of new businesses and services which could have commercial
application across a wide range of industry sectors and imaging
applications.
[INIT]
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2
2.2 Online has been established to develop and promote comprehensive business
and service solutions utilising photographic imaging technology (Business
Solutions) for different industry sectors drawing upon the inputs of a
range of service and product suppliers including the expertise of Tyree.
It is the intention of Online to provide:
o Access to software which is developed to cater for the specific
needs of particular industry sectors.
o Complete Business Solution packages based on the software
developed for a special industry sector including all necessary
software, software support, software upgrades and software
communication equipment, and (if required) hardware and financing
to enable marketing of a turnkey package.
2.3 Hanimex wishes to promote and further its interests in the supply of a
range of inputs which will be required by Online in the development and
promotion of new Business Solutions. In particular Hanimex has the
ability to provide.
o Access to commercial photographic facilities and a nationwide
retail photographic processing chain.
o The trade supply of photographic imaging technology including
hardware and consumables.
o Marketing and sales assistance and advice.
2.4 The parties agree that there are potential benefits for each of them in
working together in the development of new Business Solutions. It is the
intention of the parties to seek the exclusive but separate support of
the other parties to this Memorandum in the areas in which they have the
ability to supply appropriate skills, capital, services and products.
3 Exclusive Supply
3.1 Upon execution of this Memorandum Hanimex shall pay to Online the sum of
$50,000 exclusive of GST) in consideration of the covenants of Online
specified in clause 3.2.
3.2 Until otherwise agreed between the parties Online and Tyree for the
consideration provided by Hanimex specified in clause 3.1 shall.
3.2.1 Work with Hanimex in respect of all Business Solutions or
prospective Business Solutions; and
3.2.2 Source exclusively from Hanimex all inputs which Hanimex can
supply in relation to the Business Solutions as contemplated in
clause 2.3 and
[INIT]
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3
3.2.3 Not approach any other parties nor seek their involvement or input
into the development and/or promotion of any Business Solutions
where Hanimex is able to provide such inputs.
4. Industry Agreements
4.1 The parties intend to mutually consult and be involved in the development
of business plans for the development of new Business Solutions. It is
contemplated that such plans will identify a number of industry sectors
and potentially commercially viable imaging applications which can be
jointly exploited.
4.2 Following completion of a business plan for any specific industry
Business Solution if the parties agree that such plan is viable then the
parties will negotiate in good faith to define their respective inputs to
such Business Solution. The parties may then determine if it is prudent
to cater into a formal agreement for the development, promotion and
ongoing servicing of the particular Business Solution. It is the
intention of the parties that any such formal agreement will include
provision for and/or reflect the following principles:
o The promotion of the best commercial interest of each of the
parties recognising the different skills and resources which they
can each contribute
o Online and\or Tyree will develop the software.
o Specific provisions for determining ownership and rights of access
to and use of the software developed.
o Online will receive an income on the granting of access rights to
customers for software in respect of which it has Ownership
rights.
o Online will source exclusively from Hanimex all photographic
imaging hardware and related consumables which Hanimex can
reasonably supply
o Online will promote and supply a turnkey package inclusive of a
licence to use the software developed, and the exclusive ongoing
sourcing to all hardware and consumables from Hanimex where
Hanimex is able to supply.
o Online will provide ongoing support and development of the
software systems as required.
o Hanimex will provide ongoing hardware support for hardware
supplied by it.
[INIT]
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4
5. Nature of Relationship
5.1 The parties pursuant to this Memorandum undertake to work together in
their mutual best interest to explore the development of future potential
business opportunities. Some opportunities have been identified at the
date of signing of this Memorandum but it is anticipated that more
opportunities will arise in the future. It is not possible in this
Memorandum to provide for all eventualities. The future commitment of the
parties is to work together and negotiate in good faith but if agreement
can not be reached in relation to any specific Business Solution then the
parties will be free to pursue their interests in relation to those
Business Solutions independently.
5.2 Should the relationship of the parties be terminated for any reason then:
5.2.1 Any existing industry agreements which have been entered into
pursuant to clause 4.2 shall continue in force for their full term
without any alteration to their terms and conditions except as
mutually agreed by the parties, and
5.2.2 The parties will negotiate in good faith their respective rights
in relation to any Business Solutions or potential Business
Solutions (other than those already covered by an existing
industry agreement) into which any party has provided inputs with
the purpose of resolving an equitable basis upon which to
recognise the value of those inputs and the apportionment of any
future benefits which may arise. Until agreement has been reached
any such rights shall be deemed to be jointly held by the parties
and no party shall be entitled to utilise those rights without the
consent of the others.
5.3 Nothing contained in this Memorandum shall be deemed or construed to
constitute any party a partner, agent or representative of any of the
other parties or to create any trust or commerical partnership.
5.4 No party shall have the authority to act for or incur any obligation on
behalf of any other party except as specifically provided for in writing.
6 Confidentiality
6.1 No party shall without the prior written consent of the others disclose
or permit to be disclosed to any third party any Confidential Information
relating to this Memorandum or the proposed business opportunities or
technology which is the subject of this Memorandum.
EXECUTED by the parties.
[INIT]
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<PAGE>
5
SIGNED for and on behalf of )
HANIMEX (N.Z.) LIMITED by ) /s/ [ILLEGIBLE]
-----------------------------------
SIGNED for and on behalf of )
NEW ZEALAND ONLINE )
LIMITED by ) /s/ R L TYREE
-----------------------------------
SIGNED by )
RICHARD LYELL TYREE )
) /s/ R L TYREE
-----------------------------------
R L Tyree
(C) Lowndes Jordan
Auckland 1996
[INIT]
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<PAGE>
================================================================================
STORICAL COMPANY EXTRACT 8/12/1997 14:58 PAGE: 1
8 712 099 PARRILOTT PTY. LIMITED
================================================================================
Section 1274B
This extract has been prepared by the Australian Securities Commission from
information it obtained, by using a data [ILLEGIBLE], from the national
database. If you believe that this extract contains any error or omission please
advise the A.S.C. promptly.
The information Division of the Australian Securities Commission is certified
under the Australian Quality Standard AS 3901 International Standard ISO 9001).
- -----------------------------COMPANY IDENTIFICATION-----------------------------
Docimage No
--------------
Australian Company Number 078 712 099
Current Company Name PARRILOTT PTY. LIMITED
Incorporated in NEW SOUTH WALES
Registration Date 28/05/1997
Principal Activity SHELF COMPANY
- -----------------------------CURRENT COMPANY DETAILS----------------------------
Period from 28/05/1997
Name PARRILOTT PTY. LIMITED
Name Start 28/05/1997
Type AUSTRALIAN PROPRIETARY COMPANY 012 701 791
Status REGISTERED
Class LIMITED BY SHARES
Subclass PROPRIETARY COMPANY
- --------------------------------COMPANY ADDRESSES-------------------------------
Type CURRENT REGISTERED OFFICE 011 744 791
Start Date 09/06/1997
Address LVL 18 55 MARKET ST SYDNEY NSW 2000
Type PREVIOUS REGISTERED OPFFICE 012 701 791
Start Date 28/05/1997 To 08/16/1997
Address GROUND FL 21-23 GROSVENOR ST NEUTRAL BAY NSW 2089
- -----------------------------COMPANY OFFICE HOLDERS-----------------------------
[ILLEGIBLE]: A date or address shown as UNKNOWN has not been updated since the
ASC took over the records in 1991. For details, order the appropriate historical
state or territory documents, available in microfiche or paper format.
Role CURRENT DIRECTOR 012 239 264
Appointed 29/15/1997
Name RICHARD LYELL TYREE
Born 07/16/1948 AUCKLAND NEW ZEALAND
Address 37 FERRY PDE HERALD ISLAND NEW ZEALAND
Role CURRENT DIRECTOR 012-239 264
Appointed 29/05/1997
Name MALCOLM PHILLIP BERSTEN
Born 15/01/1956 SYDNEY NSW
Address 44 ETON RD LINFIELD NSW 2070
Role PREVIOUS DIRECTOR 011 754 418
Appointed 28/15/1997 Ceased 29/05/1997
/s/ R L TYREE
E-222
<PAGE>
================================================================================
STORICAL COMPANY EXTRACT 8/12/1997 14:58 PAGE: 2
8 712 099 PARRILOTT PTY. LIMITED
================================================================================
Docimage No
--------------
Name ROSS ALEXANDER DALGLEISH
Born 27/02/1948 HOBART TAS
Address GROUND FL 2 1-23 GROSVENOR ST NEUTRAL BAY NSW 2089
Role CURRENT SECRETARY 012 239264
Appointed 29/05/1997
Name RICHARD LYELL TYREE.
Born 07/06/1948 AUCKLAND NEW ZEALAND
Address 37 FERRY PDE HERALD ISLAND NEW ZEALAND
Role CURRENT SECRETARY 012 239 264
Appointed 29/05/1997
Name MALCOLM PHILLIP BERSTEN
Born 15/O1/1956 SYDNEY NSW
Address 44 ETON RD LINFIELD NSW 2070
Role PREVIOUS SECRETARY 011 754 418
Appointed 28/05/1997 Ceased 29/05/1997
Name ROSS ALEXANDER DALGLEISH
Born 27/02/1948 HOBART TAS
Address GROUND FL 2 1-23 GROSVENOR ST NEUTRAL BAY NSW 2089
- ----------------------------------SHARE DETAILS---------------------------------
Share details are not provided if;
a) The company is not limited by shares: or
b) The company has been registered less than 18 months and the first Annual
Return has not been lodged. Note that other documents pertaining in Share
Structure may be ordered via DOCIMAGE.
- -------------------------------REGISTERED CHARGES-------------------------------
There are no current charges recorded in the ASC's Australian Register of
Charges for this corporation.
NOTES:
* This extract may not contain all charges registered prior to the start of
the Corporations Law. Please check STATE/TERRITORY records held by the
ASC.
* This extract may not contain provisional charges which lapsed prior to
1991.
* [ILLEGIBLE] details of provisional charges deleted after 1991, order the
relevant DOCIMAGE documents. These details will NOT appear in a Charges
Extract.
* For details on the amounts and property relating to charges, or details
of documents for Satisfactions, Assignments or Changes, print a CHARGES
EXTRACT.
- -----------------------------ASC DOCUMENTS RECEIVED-----------------------------
NOTES:
* Documents already listed under Registered Charges are not repeated here.
* Data from Documents with no Date Processed are not included in this
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[INIT]
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<PAGE>
CERTIFICATE OF NON-REVOCATION
I ALFRED DAVID HARFORD of Auckland, in New Zealand, Solicitor HEREBY CERTIFY
that:
1. BY Deed dated the 21st day of December 1997 LAURENCE JOHN RYAN appointed
me his Attorney.
2. AT the date hereof I have not received any notice or information of the
revocation of that appointment by the death of the said LAURENCE JOHN
RYAN or otherwise.
DATED at Auckland this 24th of December 1997
/s/ [ILLEGIBLE]
- -----------------
E-224
<PAGE>
"A"
This is the copy charge created by Brockes Investments (NZ) Ltd dated 24
December 1997 referred to in the attached Certificate of Tax Executor
/s/ [ILLEGIBLE]
---------------
[ILLEGIBLE]
Secretary
24/12/97
- --------------------------------------------------------------------------------
DATED the 24 day of December 1997
---------------------------------
BROCKER INVESTMENTS (NZ) LIMITED
("Mortgagor")
LAURENCE JOHN RYAN
and
M & H TRUSTEE SERVICES LIMITED
("Mortgagee")
---------------------------------
ALL OBLIGATIONS MORTGAGE
OVER ALL THE SHARES IN
NEW ZEALAND ONLINE LIMITED
---------------------------------
---------------------------------
MALLOY GOODWYN HARFORD
SOLICITORS
AUKLAND
- --------------------------------------------------------------------------------
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2
Contents
Page No
Recitals
1. Interpretation 3
2. Security 7
3. Payment 8
4. Covenants 9
5. Mortgagee may remedy breach 11
6. Representations and warranties 11
7. Enforcement events 12
8. Mortgagee's powers on enforcement of security 14
9. Protection of persons dealing with mortgagee 15
10. Power of attorney 15
11. Dividends and voting 16
12. Set-Off 17
13. Notices 17
14. Costs and expenses 18
15. Partial invalidity 19
16. Waivers and remedies 19
17. Release 19
18. No merger 19
19. Consideration 19
20. Certificates, approval and consents 20
21. Governing law and jurisdiction 20
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4
(a) New Zealand OnLine Limited;
(b) Laurence John Ryan;
(c) M&J-I Trustee Services Limited;
(d) Richard Lyell Tyree.
"Rights" means:
(a) bonus shares, debentures or other securities;
(b) options or rights to take up shares, debentures or other
securities;
(c) dividends, distributions, or returns of capital or other moneys;
and
(d) other rights, moneys or securities of any nature (including,
without limitation, rights moneys or securities arising from
consolidation or subdivision of capital, redemption or conversion
of shares, reduction of capital, liquidation or a scheme
arrangement),
at any time (whether now or in the future) attributable to or arising
from the Shares.
"Secured Moneys" means all moneys (if any) (of whatever nature) which the
Mortgagor (whether alone or with any other person) presently is, or at
any time prior to the Mortgagor fulfilling its obligations under the
Relevant Clauses of the Share Sale Agreement becomes, actually or
contingently liable to pay to the Mortgagee (whether alone or with any
other person) under this Deed and in any other Relevant Document.
"Secured Obligations" means all obligations of the Mortgagor (whether
present or future) contained or implied in this Deed, and in any other
Relevant Document.
"Share Sale Agreement" means the Agreement for Sale and Purchase of
Shares dated even date with this Deed made between the Mortgagee as
Vendor and the Mortgagor as Purchaser in connection with all the Shares
in the Company;
"Shares" means the 1,200 Ordinary Shares in the Company divided into
three classes consisting of 600 A Shares, 300 B Shares and 300 C Shares.
"Transfer" means, with respect to the Shares or Rights, a transfer (or
such number of separate transfers as the Mortgagee may require) of the
shares or Rights duly executed by the Mortgagor (or in the case of any
share legally owned by any trustee for the Mortgagor, duly executed by
that person) with the name of the transferee, date and consideration left
blank, but otherwise, if appropriate, in proper from for registration by
the Company.
1.2 References: Except to the extent that the context otherwise requires, any
reference it this deed to:
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7
(b) Unless the context otherwise requires:
(i) words denoting the singular number also include the plural
and vice versa and words denoting any gender include all
genders; and
(ii) words denoting individuals include companies and other
corporations and vice versa.
(c) References to any legislation or to any provision of any
legislation shall be deemed to be references to that legislation
or provision as amended, re-enacted or substituted from time to
time and, unless otherwise stated, to New Zealand legislation,
and, unless the context otherwise requires, shall also include any
statutory instruments issued under any such legislation or
provision.
(d) References to any document (however described), including any
Relevant Document, shall include references to that document as
modified, novated, supplemented, varied or replaced from time to
time.
(e) Anything which may be done at any time may also be done from time
to time.
2. SECURITY
2.1 Mortgage over Shares: The Mortgagor hereby assigns to the Mortgagee by
way of mortgage all of the Mortgagor's right, title and interest (present
and future, legal and equitable) in the Shares, and the Rights
attributable to or arising from the Shares, as security for the
performance and observance by the Mortgagor of all the Secured
Obligations and for the payment of the Secured Moneys.
2.2 Other Securities: The Secured Moneys shall include all moneys owing by
the Mortgagor to the Mortgagee notwithstanding that those moneys or any
part thereof may be expressed to be secured by or charged against any
other security held by the Mortgagee and notwithstanding that any other
arrangement or agreement may not express any moneys referred to therein
as being intended to be secured by this deed. Nothing contained in this
deed shall discharge, abate or prejudice any other security at any time
held by the Mortgagee for payment of any part of the Secured Moneys.
2.3 Further Assurances: The Mortgagor shall execute and deliver to the
Mortgagee all such transfers, assignments, securities, instruments, and
other deeds or documents, and shall do all things, as may be necessary or
as the Mortgagee may require to:
(a) perfect the Mortgagor's title to the Mortgaged Property or any
part thereof; or
(b) perfect the security intended to be created by this deed; or
(c) transfer to or vest in the Mortgagee (or any purchaser from the
Mortgagee) the Mortgaged Property or any part thereof or
(d) facilitate the realization of the Mortgaged Property or any part
thereof; or
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8
(e) exercise all or any of the rights, powers and remedies conferred
on the Mortgagee; or
(f) secure to the Mortgagee the full benefit of the provisions of this
deed.
4 Completion of Documents: The Mortgagee may fill in any blanks in this
deed or any Transfer and complete in favour of the Mortgagee, or anyone
purchasing under the powers given by this deed, any Transfer or any other
document executed by or on behalf of the Mortgagor.
5 Notice to Company: The Mortgagee may at any time give notice to the
Company of the existence of this deed and of the mortgages created by
this deed.
6 Mortgagee May Register: The Mortgagee may at any time, whether before or
after the occurrence of an Enforcement Event, and without prejudice to
any of its other rights, powers and remedies under this deed, cause
itself to be registered as the holder of any of the Shares, or Rights
attributable to or arising from any Shares, in order to hold those Shares
or Rights as mortgagee in terms of this deed, and for that purpose may
present any Transfer to the Company for registration
7 Section 80A(2) Property Law Act 1952: For the purposes of section 80A(2)
of the Property Law Act 1952 only, and without prejudice to the
restriction contained in clause 4.1(b), the maximum amount up to which
the Secured Moneys shall rank in priority to any subsequent security
given over any part of the Mortgaged Property is, subject only to the
overriding provisions of any deed of priority hereafter executed by the
Mortgagee in respect of a particular subsequent securityholder, the
Priority Amount.
PAYMENT
1 Payment of Secured Moneys: The Mortgagor shall duly and punctually pay
the Secured Moneys to the Mortgagee in the manner and at the times agreed
upon between the Mortgagor and the Mortgagee or, failing agreement, upon
demand.
2 Time for Payment: Except to the extent otherwise provided in any relevant
Agreement, each part of the Secured Moneys shall be paid to the Mortgagee
no later than midday on its due date for payment or, where that date is
not a day on which registered banks are open for business in the place
for payment (a "bank business day"), on the immediately preceding bank
business day. Any payment received later than midday on any day shall be
deemed to have been made on the next following bank business day.
3 Payments to be Free and Clear: Each part of the Secured Moneys shall be
paid:
(a) free and clear of any restriction or condition;
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10
the business and affairs of the Company, and whenever requested
supply and make available so far as the same are known to the
Mortgagor, or, so far as it is within the power of the Mortgagor,
arrange for the Company to supply and make available, to that
chartered accountant all information required by that chartered
accountant relating to the business and affairs of the Company;
(k) Registration of Transfers: if the Mortgagee presents to the
Company for registration any transfer of any Mortgaged Property,
take all steps available to the Mortgagor to procure registration
of that transfer by the Company; and
(l) Liens: not permit any lien or similar right in favour of the
Company to arise or exist over any Mortgaged Property.
4.2 Accounts and Information for Mortgagee: The Mortgagor shall:
(a) Notice of Proceedings: promptly give notice to the Mortgagee of
the service of any notice adversely affecting the Mortgaged
Property or any material part thereof, or the commencement of any
proceedings adversely affecting the Mortgaged Property or any
material part thereof;
(b) Details of Rights: promptly upon becoming aware of the existence
of any Rights attributable to or arising from any of the Shares
(other than shares which are for the time being listed on the New
Zealand Stock Exchange), provide to the Mortgagee full details of
those Rights;
(c) Notices: deliver to the Mortgagee a copy of any notice of meeting
or other notice sent to shareholders of the Company, and a copy of
any resolution passed by the shareholders of the Company;
(d) Notify Enforcement Events:
(i) promptly upon becoming aware of the same notify the
Mortgagee of the occurrence of any event which is, or which
with the passing of time or the giving of notice or both
would become, and Enforcement Event;
(ii) at any time at the request of the Mortgagee promptly
provide to the Mortgagee a certificate signed by the
Mortgagor that, except as previously notified in writing to
the Mortgagee, no such event has occurred.
4.3 Mortgagee May Retain Certificates: The Mortgagee shall be entitled to
retain and hold all share certificates, documents of title and Transfers
deposited with the Mortgagee in accordance with this deed until such time
as the Mortgagee execute is obliged by this deed to deliver to the
Mortgagor a final release of this deed.
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11
5. MORTGAGEE MAY REMEDY BREACH
5.1 Mortgagee May Remedy Breach: Whenever the Mortgagor fails to observe or
perform any of the Mortgagor's obligations under this deed, the
Mortgagee, without prejudice to its other rights, powers and remedies,
shall be entitled, but not obliged, to pay all moneys and do all things
which it deems necessary or desirable to remedy any such default or
otherwise protect the security created by this deed.
5.2 Reimbursement of Moneys Expended: The Mortgagor shall pay to the
Mortgagee upon demand any money expended by the Mortgagee under clause
5.1 (including all legal costs as between solicitor and client and goods
and services and similar taxes thereon).
6. REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties: The Mortgagor represents and warrants
that:
(a) Valid Obligations: this deed and each other Relevant Document to
which the Mortgagor is expressed to be a party constitute the
legal, valid and binding obligations of the Mortgagor, enforceable
in accordance with their respective terms;
(b) Effective Mortgage: the security created by this deed is an
effective first ranking mortgage over the Mortgaged property;
(c) Title: subject to the Mortgagee having provided such to the
Mortgagor on completion of the Mortgagor's purchase of the Shares
from the Mortgagee, under the Shares Sale Agreement the Mortgagor
is the beneficial owner of, and has good title to, the Shares, and
the Shares are free of all securities;
(d) No Laws Violated: neither the execution and delivery of this deed
or any other Relevant Document, nor the exercise of any right or
the performance or observance of any obligation under any of them,
nor any transaction contemplated thereby, will:
(i) violate or contravene any law to which the Mortgagor is
subject; or
(ii) conflict with, or result in the breach of, any agreement,
document, arrangement, obligation or duty to which the
Mortgagor is expressed to be a party or by which the
Mortgagor or any of the Mortgagor's assets may be bound and
which is not within the Mortgagee's knowledge at the date
of execution of this Deed; or
(iii) create, or result in the creation or imposition of, any
security on any part of the Mortgagor's assets other than
the security created by this deed or any other Relevant
Document; or
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12
(iv) result in the acceleration of any of the Mortgagor's
indebtedness, or anything which constitutes (or which, with
the passing of time or the giving of notice or both, would
constitute) an event of default, cancellation event,
prepayment event or similar event (whatever called) under
any agreement relating to its indebtedness;
(e) Authorisations:
(i) all internal corporate authorisations required by the
Mortgagor in connection with the entry into, execution or
performance by the Mortgagor and the validity and
enforceability of this Deed and each other Relevant
Document to which the Mortgagor is expressed to be a party,
and the transactions contemplated by these documents have
been obtained or effected and are in full force and effect
and there are no qualifications or limitations affecting
those authorisations which have not been notified by the
Mortgagee
(ii) no revocation or modification of or proceeding respecting,
any such authorisation has been made or threatened or is
pending or current;
(iii) there has been no default in compliance with any such
authorisation.
6.2 Repetition: The representations and warranties contained in clause 6.1
(other than the representation and warranty contained in clause 6.1(b)
shall be deemed to be repeated by the Mortgagor on the first day of each
month during the term of this deed by reference to the facts and
circumstances existing on each such date.
7. ENFORCEMENT EVENTS
7.1 The security created by this deed shall become enforceable if any of the
following events occurs:
(a) Non-Payment the Mortgagor fails to pay any part of the Secured
moneys on the due date for payment thereof or within 2 business
days of its due date where non payment on its due date has arisen
solely by reason of a technical, computer or similar error outside
the control of the Mortgagor; or
(b) Breach of clauses 4.1(a), 4.1(b) or 4.1(c) the Mortgagor commits
any breach of the provisions of clauses 4.1(a), 4.1(b) or 4.1(c);
or
(c) Other Breach: the Mortgagor or any Relevant Person commits any
material breach of, or omits to observe any covenant under, this
Deed (other than those referred to in clauses 7.1(a) and 7.1(b))
or any other Relevant Document and the Mortgagor has not remedied
that breach within 30 days of its receipt of a written notice from
the Mortgagee requiring that breach to be remedied; or
(d) Cessation of Business: any Relevant Person ceases or threatens to
cease to carry on all or substantially all of its business or
operations (except for the
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13
purpose of and followed by an amalgamation or solvent
reconstruction on terms previously approved in writing by the
Mortgagee); or
(e) Dissolution: an application or an order is made, or a resolution
is passed or proposed, for the dissolution of the Mortgagor or any
Relevant Person (except for the purpose of and followed by an
amalgamation or solvent reconstruction on terms previously
approved in writing by the Mortgagee); or
(f) Receiver, etc. an encumbrancer takes possession or a liquidator,
provisional liquidator, trustee, receiver, receiver and manager,
inspector appointed under any companies or securities legislation,
or similar officer, is appointed in respect of any Relevant Person
or the whole or any part of its assets, or application is made for
the appointment of any of the officials referred to in this
clause; or
(g) Corporations (Investigation and Management) Act 1989: any step is
taken to appoint or with a view to appointing a statutory manager
(including the making of any recommendation in that regard by the
Securities Commission) under the Corporations (Investigation and
Management) Act 1989 in respect of any Relevant Person, or any
Relevant Person, or any associated person (as that term is defined
in that Act) of any Relevant Person is declared at risk pursuant
to the provisions of that Act.
(h) Distress or Judgment: a distress, attachment or other execution is
levied or enforced upon or commenced against any of the assets of
the Mortgagor or any Relevant Person and is not discharged or
stayed with 14 days, or a judgment is obtained against the
Mortgagor or any Relevant Person and is not satisfied, stayed or
discharged within 14 days; or
(i) Insolvency the Mortgagor or any Relevant Person is unable to pay
its debts when due, or is deemed or presumed unable to pay its
debts under any law, oi enters into dealings with any of its
creditors with a view to avoiding or in expectation of insolvency,
or makes a general assignment or an arrangement of composition
with or for the benefit of any of its creditors, or stops or
threatens to stop payments generally.
(j) Material Adverse Effect: any other event or series of events,
whether related or not, occurs, or circumstances arise or exist,
which have a material adverse effect on the ability of the
Mortgagor or any Relevant Person to materially comply with all or
any of its obligations under the Relevant Documents; or
(k) Invalidity of Relevant Documents
(i) any material provision of any Relevant Document:
(aa) ceases to have effect in whole or in part, otherwise
than ir accordance with its terms or as permitted by
the Relevant Documents, or by performance; or
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14
(bb) is or becomes void, voidable, illegal, invalid or
unenforceable (other than by reason only of a party
waiving any of its rights), or of limited force and
effect, or the performance of any such provision
becomes illegal; or
(ii) the Mortgagor or any Relevant Person or any person on its
behalf alleges or claims that any event described in
sub-paragraph (i) has occurred; or
(l) Change of Control: there occurs any change in the ownership of the
shares in Brocker Investments (NZ) Limited; or
(m) Steps Relating to Company: a resolution is passed or proposed or
any other step of any nature is taken:
(i) to alter the Constitution of the Company, or to alter the
rights, privileges or conditions attaching to any Mortgaged
Property, in such a manner as might in the reasonable
opinion of the Mortgagee detrimentally affect the interests
of the Mortgagee; or
(ii) to increase or reduce the capital of the Company; or
(iii) to obtain the approval of shareholders of the Company to a
disposal of assets by the Company if that approval is
required pursuant to the Constitution of the Company, or
the listing requirements of any stock exchange, or all
relevant laws; or
(iv) to sanction any compromise or arrangement between the
Company and its members or creditors; or
(v) to compulsorily acquire any shares in the Company; or
(n) Abnormal Distribution: the Company declares, pays or makes any
dividend or other distribution to its shareholders if, in the
opinion of the Mortgagee, an effect of that dividend or other
distribution is or will be to materially and adversely affect the
value of the Shares.
8. MORTGAGEE'S POWERS ON ENFORCEMENT OF SECURITY
8.1 Powers: At any time after the occurrence of an Enforcement Event the
Mortgagee may (without it being necessary to appoint any receiver under
this deed or give any prior notice to the Mortgagor, and without
prejudice to any other rights, powers or remedies it may have under this
deed or by law):
(a) declare the whole of the Secured Moneys to be due and payable,
whereupon they shall immediately become due and payable; and
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(b) sell or dispose of the Mortgaged Property or any part thereof free
from adverse interests by public auction or private contract on
such reasonable terms as the Mortgagee thinks fits but for not
less than the audited net asset value (to be certified by the
Mortgagee's Accountants in accordance with New Zealand generally
accepted accounting principles) of the Company at the time of sale
and the Mortgagee may buy in or rescind or vary any contract for
sale and may resell.
8.2 Enforcement by Mortgagee: The power of sale and other rights, powers and
remedies conferred upon the Mortgagee by this deed or by law may be
exercised or enforced by the Mortgagee, or by any authorised person on
behalf of the Mortgagee.
9. PROTECTION OF PERSONS DEALING WITH MORTGAGEE
9.1 No purchaser or other person dealing with the Mortgagee, or with any
agent or attorney of the Mortgagee, shall be concerned to enquire whether
the security created by this deed has become enforceable, or whether the
powers which the Mortgagee or that agent or attorney is purporting to
exercise have become exercisable, or as to the necessity for or the
expediency of the stipulations or conditions subject to which any sale,
disposal, calling in, collection or conversion of any moneys or assets,
or to see to the application of any money paid to the Mortgagee or that
agent or attorney.
10. POWER OF ATTORNEY
10.1 Attorney: For the purpose of enabling the Mortgagee to obtain the full
benefit of this deed the Mortgagor hereby irrevocably appoints the
Mortgagee, and any assignee of the Mortgagee's rights under this deed:
(a) to be the attorney of the Mortgagor, at any time after the
occurrence of an Enforcement Event, to do anything which the
Mortgagor agrees to do under the provisions of this deed or which
in the opinion of the Mortgagee or the attorney is reasonably
necessary or expedient to give effect to any right, power or
remedy conferred upon the Mortgagee by this deed or by law or
otherwise;
(b) to be the attorney of the Mortgagor, at any time after the
occurrence of an Enforcement Event:
(i) to receive from the Company dividends, bonuses,
distributions, and other moneys, which may at any time be
payable or paid in respect of any Mortgaged Property;
(ii) to sign any transfer of, and to transfer, any Mortgaged
Property to any persons either on a sale thereof or to hold
the same for the Mortgagee or otherwise;
(iii) to appoint any person nominated by the Mortgagee as the
Mortgagor's proxy or other representative of the Mortgagor
with power to vote at any meeting of the Company;
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16
(iv) to attend and vote at any meeting of the Company;
(v) to sign any resolution, entry or memorandum pursuant to
section 362 of the Companies Act 1955 or section 122 of the
Companies Act 1993, in such manner and for such purpose as
the Mortgagee may from time to time direct;
(vi) to commence, prosecute, settle and compromise actions or
proceedings relating to any Mortgaged property; and
(vii) to exercise any other rights, powers or remedies which the
Mortgagor may have as the holder or owner of the Shares or
as the owner or beneficiary of any Rights mortgaged under
this deed.
10.2 Authority to Company: The production of this deed by the Mortgagee shall
be sufficient authority for the Company to recognise the Mortgagee, or
any assignee as entitled to exercise all of the powers referred to in
clause 10.1, and as between the Mortgagee, or any assignee on the one
hand, and the Company on the other hand, the Company shall not be bound
or entitled to enquire if any Enforcement Event has occurred or if any of
the powers referred to in clause 10.1 have become exercisable.
10.3 Delegation and Conflict: Any attorney appointed pursuant to clause 10.1
may:
(a) delegate its powers (including this power of delegation) to any
person for any period, and revoke a delegation; and
(b) exercise or concur in exercising its powers even if the attorney
has a conflict of duty in exercising those powers or has a direct
or personal interest in the means or result of that exercise of
powers.
10.4 Ratification: The Mortgagor hereby ratifies anything lawfully done by an
attorney appointed pursuant to clause 10.1 or any delegate in accordance
with this clause 10.
11. DIVIDENDS AND VOTING
11.1 Mortgagor Entitled: Until an Enforcement Event occurs and when an
Enforcement Event ceases or is remedied to the satisfaction of the
Mortgagee, the Mortgagor shall be entitled:
(a) to receive all dividends paid in respect of the Shares; and
(b) to exercise all rights of voting in respect of the Shares,
and, if the Mortgagee is registered as holder of the Shares the Mortgagee
shall, until an Enforcement Event occurs, account to the Mortgagor for
dividends received in respect of the Shares, and at the request and
expense of the Mortgagor execute a form of proxy in a form acceptable to
the Mortgagee to enable the Mortgagor or the Mortgagor's nominee to vote
at meetings of the Company. The Mortgagee shall,
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17
without prejudice to its other rights, powers and remedies, be entitled
to revoke any such proxy forthwith upon the occurrence of an Enforcement
Event.
11.2 Liability of Mortgagee: If the Mortgagee is registered as the holder of
the Shares, the Mortgagee shall not unless it sees fit be obliged to
enforce payment of any dividends or other payments in respect of those
shares, to vote at any meeting of shareholders of the Company or any
class thereof, or to take any other steps which the holder of the Shares
may be entitled to tale, and the Mortgagee shall not be under any
liability whatsoever to the Mortgagor by reason of the Mortgagee having
failed to do, or having done, any of those things.
12. SET-OFF
12.1 The Mortgagor authorises the Mortgagee if an Enforcement Event is
subsisting to apply (without any prior notice or demand) any moneys then
due and payable by the Mortgagee to the Mortgagor in or towards
satisfaction of the Secured Moneys. For the purposes of this clause the
Mortgagee shall not be obliged to exercise any of its rights under this
clause, which shall be without prejudice and in addition to any other
rights under the Relevant Documents and any right to set-off combination
of accounts, lien or other right to which it is at any time otherwise
entitled (whether by law, contract or otherwise).
13. NOTICES
13.1 In Writing: Each notice or other communication to be given or made to
either party under this deed shall:
(a) Writing: be given or made in writing by facsimile or letter and be
signed by the sender, or in the case of the Mortgagee, by an
authorised person or the sender;
(b) Address: be given or made to that party at the address or
facsimile number, and (in the case of the Mortgagee) marked for
the attention of the person (if any), from time to time designated
by the Mortgagee to the Mortgagor for the purposes of this deed;
and
(c) Deemed Delivery: not be effective until received by that party,
and any such communication or notice shall be deemed to be
received by that party:
(i) (if given or made by letter) when left at the address of
that party or 5 working days (in the place of intended
receipt) after being put in the post (by airmail if to
another count), postage prepaid, and addressed to that
party at that address; or
(ii) (if given or made by facsimile) upon production of a
transmission report by the machine from which the facsimile
was sent which indicates that the facsimile was sent in its
entirety to the facsimile number of the recipient,
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18
provided that any notice or communication received or
deemed received after 5pm on a working day in the place to
which it is sent, or on a day which is not a working day in
that place, shall be deemed not to have been received until
the next working day in that place.
13.2 Initial Address and Numbers: The initial facsimile number, address and
person (if any) so designated by each party, are set out below:
(a) The Mortgagor
Brocker Investments (NZ) Limited
4 Bond Street
Grey Lynn
P0 Box 99222
Newmarket
Auckland
New Zealand
Facsimile: (09) 376 7891
Attention: The Chief Executive Officer
(b) The Mortgagee
Laurence John Ryan and M & H Trustee Services Limited
C/- Malloy Goodwin Harford
Solicitors
Level 5
Connell Wagner Building
Cnr Kent and Crowhurst Streets
Newmarket
P 0 Box 9892
Auckland
Facsimile: (09) 523 3974
Attention: Alfred Harford
14. COSTS AND EXPENSES
14.1 Costs and Expenses: The Mortgagor shall pay to the Mortgagee upon demand
all reasonable costs and expenses on a full indemnity basis (including
reasonable legal fees and goods and services and similar taxes thereon)
incurred by the Mortgagee in connection with:
(a) the successful enforcement of, any rights under this deed, or in
successfully recovering the Secured Moneys; and
E-238
<PAGE>
20
20. CERTIFICATES, APPROVAL AND CONSENTS
20.1 Certificate: The certificate of the Mortgagee as to any amount or fact
which might reasonably be expected to be within the Mortgagee's knowledge
shall be prima facie evidence of that amount or fact.
20.2 Consents: The Mortgagee may give or withhold an approval or consent,
conditionally or unconditionally, and at the discretion of the Mortgagee,
but not unreasonably.
21. GOVERNING LAW AND JURISDICTION
21.1 This deed shall be governed by and construed in accordance with the laws
of New Zealand, and the parties hereby submit to the non-exclusive
jurisdiction of the Courts of New Zealand.
EXECUTION AS A DEED
SIGNED by BROCKER INVESTMENTS (NZ) LIMITED
by its two directors
/s/ RICHARD JOHN JUSTICE
- -----------------------------
Richard John Justice
/s/ MICHAEL BRIAN RIDGWAY
- -----------------------------
Michael Brian Ridgway
E-239
<PAGE>
2) Fixed Assets
Refer attached schedule.
The depreciation rate for two major items of plant, the Juke Box and the
Drum Scanner have been changed from the IRD rates of 40% to 15%. This was
done to reflect the projected ecomonic and technological life of the
items as advised by the directors.
[INIT]
E-240
<PAGE>
AGREEMENT FOR SALE
AND PURCHASE OF SHARES
Parties
TILE SHAREHOLDERS OF NEW ZEALAND ONLINE
LIMITED
R L TYREE
BROCKER INVESTMENTS (N.Z.) LIMITED
BROCKER INVESTMENTS LIMITED
Relating to New Zealand Online Limited
E-241
<PAGE>
NZ ONLINE LIMITED
Depreciation Schedule for the Period Ended 30 September 1997
<TABLE>
<CAPTION>
deprec.
proceeds value Deprec. ccum. deprec.
on 1 Apr. rate depre value
p'chs. Cost disposal 1997 d.v. 30-Sep-97 30-Sep-97
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FURNITURE
Mc Greals Aug-96 403 355 18.00 32 80 323
Blue star Sep-96 226 202 18.00 18 42 184
Hawkes Nov-96 436 403 18.00 36 69 367
Blue star Jan-97 637 608 18.00 55 83 554
additions:
4 drawer filing cabinets *2 Apr-97 600 0 12.00 36 36 564
4 drawer criterion unit Apr-97 300 0 12.00 18 18 282
criteron desk & return Apr-97 700 0 12.00 42 42 658
Damba chairs *5 Apr-97 1000 0 15.00 75 75 925
Graphic One chair Apr-97 200 0 15.00 15 15 185
Office chair Apr-97 200 0 15.00 15 15 185
Bookshelf - large Apr-97 50 0 15.00 4 4 46
Bookcase white Apr-97 50 0 15.00 4 4 46
Bluestar desks *5 Apr-97 2000 0 12.00 120 120 1880
Black leather desk Apr-97 200 0 12.00 12 12 188
bookshelves - unpainted *5 Apr-97 200 0 15.00 15 15 185
grey drawer cabinet unit Apr-97 500 0 12.00 30 30 470
whiteboards *3 Apr-97 200 0 15.00 15 15 185
noticeboard Apr-97 50 0 15.00 4 4 46
rubbish bins *5 Apr-97 50 0 15.00 4 4 46
dexion shelving units *2 Apr-97 1000 0 15.00 75 75 925
metal shelving units *3 Apr-97 500 0 15.00 23 23 278
wooden shelf unit Apr-97 10 0 15.00 1 1 9
wooden work bench Apr-97 150 0 15.00 11 11 139
TV arm extension Apr-97 200 0 15.00 15 15 185
Miscellaneous office equipment Apr-97 700 0 15.00 53 53 648
text books Apr-97 500 0 9.50 24 24 476
filing cabinet May-97 813 0 15.00 61 61 752
Sundry Furniture Jun-97 996 0 15.00 75 75 922
-----------------------------------------------------------------------------------
12671 1569 409 886 1019 11652
-----------------------------------------------------------------------------------
BUILDING FIT OUT
Paint/plaster - Robinson Jul-96 2533 2316 11.40 132 349 2184
Partitions - Meister Aug-96 14000 12656 14.40 911 2255 11745
Sundry - Hawker Aug-96 182 168 11.40 10 23 159
Wiring - Connector Aug-96 855 790 11.40 45 110 745
Electrics - Electrix Sep-96 2809 2622 11.40 149 336 2473
Windows - tinting Sep-96 890 831 11.40 47 107 783
Sundry - Tyree Oct-96 1849 1744 11.40 99 205 1644
Partitions - Brace Nov-96 447 420 14.40 30 57 590
Cables - Connector Nov-96 76 72 11.40 4 8 68
Blinds - Weathermaster Nov-96 414 394 11.40 22 42 372
Partitions - Meister Feb-97 856 835 14.40 60 81 775
Cables - Connector Feb-97 102 100 11.40 6 8 94
additions:
-------- -------- --------------------------------
26013 22950 1317 3580 21433
-------- -------- --------------------------------
</TABLE>
[INIT]
E-242
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMPUTER EQUIPMENT
Comtech Jul-96 635 406 48.00 98 326 309
Bus. Systems Aug-96 235 160 48.00 38 114 121
Origo Aug-96 861 585 48.00 141 416 445
Comtech Aug-96 70 48 48.00 11 34 36
Newtech Sep-96 360 259 48.00 62 163 197
Comtech Sep-96 270 194 48.00 47 122 148
Page one Sep-96 250 180 48.00 43 113 137
Bus. Systems Sep-96 2773 1997 48.00 479 1256 1517
Beta Comp. Sep-96 2501 1801 48.00 432 1132 1369
Beta Comp. Sep-96 40 29 48.00 7 18 22
Jukebox - Monaco Sep-96 25831 18598 15.00 1395 8628 17203
additions:
Pentium 200 Apr-97 8000 0 40.00 1600 1600 6400
Pentium 166 Apr-97 5000 0 40.00 1000 1000 4000
Acer Pentium 90 Apr-97 5000 0 40.00 1000 1000 4000
Data General Pentium 90 Apr-97 5000 0 40.00 1000 1000 4000
Data General 486 DX2 66 Apr-97 3000 0 40.00 600 600 2400
Advance 486 DX2 66 Apr-97 3000 0 40.00 600 600 2400
Advance 486 DX2 40 Apr-97 2000 0 40.00 400 400 1600
Solster H.D. Apr-97 500 0 40.00 100 100 400
Syquest 270Mb Apr-97 1000 0 40.00 200 200 800
Beta 486DX Apr-97 5000 0 40.00 1000 1000 4000
Modem dynalink 1414vc sn:129365 Apr-97 300 0 40.00 60 60 240
Modem dynalink 1414vc sn:114957 Apr-97 300 0 40.00 60 60 240
D-link de890tc Hub sn Apr-97 500 0 40.00 100 100 400
D-link de950 print se Apr-97 500 0 40.00 100 100 400
D-link 816TP 16 port Apr-97 1000 0 40.00 200 200 800
Acer 486DX266 sn:4921 Apr-97 3500 0 40.00 700 700 2800
Acer 486DX266 sn:fcci Apr-97 4500 0 40.00 900 900 3600
HP laserjet 4p sn:nlb Apr-97 1800 0 40.00 360 360 1440
HP laserjet 4plus sn: Apr-97 3000 0 40.00 600 600 2400
Beta 486 DX 33 sn:94t Apr-97 2000 0 40.00 400 400 1600
Advance 486DX66 sn:99 Apr-97 2000 0 40.00 400 400 1600
Advance 486DX66 sn:48 Apr-97 4000 0 40.00 800 800 3200
HP Scanjet 3C sn:vs00 Apr-97 1800 0 40.00 360 360 1440
Advance 486DX40 4Mb.s Apr-97 2000 0 40.00 400 400 1600
Advance 486DX40 4Mb s Apr-97 2000 0 40.00 400 400 1600
Advance 486DX2 66 4Mb Apr-97 2500 0 40.00 500 500 2000
Advance 486DX2 66 8Mb Apr-97 2500 0 40.00 500 500 2000
Advance 486DX40 4Mb.s Apr-97 2000 0 40.00 400 400 1600
Beta 386DX40 4Mb. Sn: Apr-97 2000 0 40.00 400 400 1600
DG 486SX33 4Mb. sn:48 Apr-97 2000 0 40.00 400 400 1600
DG 486SX2 66 8Mb. sn: Apr-97 3000 0 40.00 600 600 2400
386DX40 4Mb 120HD Apr-97 2000 0 40.00 400 400 1600
AST 485SX 8Mb. Laptop Apr-97 105000 0 40.00 2100 2100 8400
TRL 14" svga sn:hc002 Apr-97 350 0 40.00 70 70 280
Advance 14" svga sn:h Apr-97 350 0 40.00 70 70 280
DG 14" svga sn:m156LO Apr-97 350 0 40.00 70 70 280
DG 14" svga sn:m156LO Apr-97 350 0 40.00 70 70 280
Topfly 14" svga sn:40 Apr-97 350 0 40.00 70 70 280
Advance 14" svga sn:h Apr-97 350 0 40.00 70 70 280
Etc 14" svga sn:94100 Apr-97 350 0 40.00 70 70 280
Scan 12"amber sn:hc08 Apr-97 100 0 40.00 20 20 80
</TABLE>
[INIT]
E-243
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
KGN 14"svga sn:cad135 Apr-97 350 0 40.00 70 70 280
Advance 14" svga sn:h Apr-97 350 0 40.00 70 70 280
KGN 14"svga sn:ks2838 Apr-97 350 0 40.00 70 70 280
KGN 14"svga sn:cad135 Apr-97 350 0 40.00 70 70 280
BMVDU sn:0194625 Apr-97 50 0 40.00 10 10 40
Taxan 12' mono sn:w71 Apr-97 50 0 40.00 10 10 40
Altos terminal sn:01Q Apr-97 500 0 40.00 100 100 400
Altos terminal sn:01Q Apr-97 500 0 40.00 100 100 400
Epson colour 720 DPI Apr-97 800 0 40.00 160 160 640
HP 540 deskjet printe Apr-97 400 0 40.00 80 80 320
HP 540 deskjet printe Apr-97 400 0 40.00 80 80 320
HP laserjet 4L printe Apr-97 800 0 40.00 160 160 640
Toshiba dot matrix 15 Apr-97 250 0 40.00 50 50 200
Citizen GSX140 printe Apr-97 100 0 40.00 20 20 80
Dianpon A4 scanner sn Apr-97 70000 0 40.00 5250 5250 64750
Sony CD ROM burner Apr-97 1800 0 40.00 360 360 1440
Wellfleet router sn:A Apr-97 5000 0 40.00 1000 1000 4000
Wellfleet router sn:A Apr-97 5000 0 40.00 1000 1000 4000
Philips 30P PABX phon Apr-97 3000 0 40.00 600 600 2400
Telephone hand sets Apr-97 500 0 40.00 100 100 400
Key phones * 2 Apr-97 1000 0 40.00 200 200 800
Data outlets/panel Apr-97 2000 0 40.00 400 400 1600
Kodak photo CD player Apr-97 1000 0 40.00 200 200 800
Kodak portable photoC Apr-97 1000 0 40.00 200 200 800
Microtek flatbed scan Apr-97 1500 0 40.00 300 300 1200
Toshiba video recorde Apr-97 200 0 40.00 40 40 160
Hitachi camcorder Apr-97 500 0 40.00 100 100 400
Miscellaneous softwar Apr-97 10000 0 40.00 2000 2000 8000
Miscellaneous cables, Apr-97 2000 0 40.00 400 400 1600
Scanner HP4C 1255 0 40.00 251 251 1004
GL620 Computer 5135 0 40.00 856 856 4279
Cheque 365 Aug-97 1174 40.00 78 78 1095
Cheque 394 Sep-97 815 40.00 27 27 788
Cheque 389 Sep-97 540 40.00 18 18 522
Haminex Digital Camera Sep-97 20208 40.00 674 674 19534
Sundry Equipment Sep-97 829 40.00 28 28 801
Hardware Sep-97 446 40.00 15 15 431
----------------------------------------------------------------------------------
269727 0 24257 3590 37049 46618 223109
-----------------------------------------------------------------------------------
MOTOR VECHICLE
1995 Toyota Corolla GL s/w Apr-97 9000 0 26.00 585 585 8415
disposals
-------- -------- --------------------------------
TOTAL FIXED ASSETS $316,411 $48,775 $40,037 $51,802 $264,609
-------- -------- --------------------------------
</TABLE>
[INIT]
E-244
<PAGE>
AGREEMENT dated 24th December 1997
PARTIES
1. LAURENCE JOHN RYAN of Whangarei, District Court Judge and M&H TRUSTEE
SERVICES LIMITED at Auckland (Vendors).
2. RICHARD LYELL TYREE of Auckland, Company Director (Tyree).
3. BROCKER INVESTMENTS (N.Z.) LIMITED at Auckland (Purchaser).
4. BROCKER INVESTMENTS LIMITED a company incorporated under the laws of
Alberta, Canada (BKI)
INTRODUCTION
A. The Vendors are the holders of the Shares together with all rights
attaching to the Shares.
B. The Vendors have agreed to sell to the Purchaser and the Purchaser has
agreed to purchase from the Vendors all of the Shares for the
Consideration and upon the terms and conditions contained in this
Agreement which records the agreement of the parties made on 28 November
1997.
C. Tyree has agreed to guarantee the obligations of the Vendors under this
Agreement.
D. BKI has agreed to guarantee the obligations of the Purchaser under this
Agreement.
TERMS
1. Interpretation
1.1 Defined Terms: In this Agreement the following terms shall have the
meanings specified:
Accounting Discrepancies any discrepancies in accounting
practice revealed by the KPMG audit as
at the Last Accounting Date which are
not deemed by the New Zealand
Institute of Chartered Accountants to
be the accepted accounting practices.
Associated Person has the meaning given in section
0D7(l) of the Income Tax Act 1994.
Business Day a day (other than a Saturday or
Sunday) on which registered banks are
open for business in Auckland.
Business Records all books of account, Financial
Statements, records, files, data,
databases, certificates or other
evidence of title to assets and
information howsoever recorded or
stored relating to or required for the
business of the Company or pertaining
to its affairs.
[INIT] 2
E-245
<PAGE>
Cashflow net income of the Company after tax
and before interest, as shown in the
audited financial statements as
verified by KPMG, adjusted for the
following add-backs:
(i) depreciation
(ii) depletion
(iii) deferred taxes
(iv) amortisation of goodwill
(v) amortisation of research and
development costs.
Charge includes option, right to acquire,
lien, pledge, mortgage, assignment,
charge, security interest, bailment,
or encumbrance or adverse interest of
any nature whether legal or equitable
and no matter how arising but
excluding claims of suppliers of goods
subject to retention of title
provisions supplied in the normal
course of business.
Company New Zealand Online Limited, a company
incorporated under the Companies Act
1993 under No. AK/816483 having its
registered office at Auckland and
having its capital divided into 600
fully paid up ordinary A shares (A
Shares), 300 fully paid up ordinary B
shares (B Shares) and 300 fully paid
up ordinary C shares (C Shares).
Completion Completion by the parties of the sale
and purchase of the Shares as provided
in clause 5.
Completion Date the actual date of Completion being 24
December 1997 or such later date as
the parties may agree in writing.
Consideration the sum of the $500,000 and the Earn
Out Sum subject to adjustment as
provided in clauses 2.4 and 3.4.
Constitution the Constitution of the Company.
Costs Includes any and all costs (on a
solicitor and own client basis),
expenses, damages, penalties,
interest, compensation, and awards.
Disclosure Letter the letter from the Vendor to the
Purchaser intended to be dated the
same date as this Agreement (the final
pre-signature draft attached as
Annexure 6) disclosing information
constituting exceptions to the
Warranties and further particulars
relevant to this Agreement.
[INIT] 3
E-246
<PAGE>
Disclosure Any disclosure contained the
Disclosure Letter and the Due
Diligence Information.
Due Diligence Information The information, particulars and
documentation provided to the
Purchaser by the Vendors or their
representatives and advisors in the
course of the Purchaser's due
diligence enquiries in relation to the
Company.
Earn Out Sum the value calculated by applying a
multiple of 4 to the actual audited
Cashflow of the Company for the Year
ending on 31 March 1998 calculated on
the basis that an allowance is made
for income tax at the rate of 33%.
Employment Contract the agreement referred to in clause
4.1.5.
Escrow Agreement the Escrow Agreement in the form
annexed as Annexure 3 to be entered
into by BKI, the Vendors, the
Purchaser and the Trustee.
Exchange Rate the average between the Westpac Trust
buy and sell rates for the exchange of
$NZ to $CAD, at the close of business
on the date specified in this
Agreement or where a date is not
specified, on the last Business Day
prior to the date of the relevant
transaction.
Financial Statements each and every part of the financial
statements of the Company which have
been provided by the Vendors to the
Purchaser copies of which are annexed
as Annexure 1.
GST Act the Goods and Services Tax Act 1985.
GST Goods and Services Tax levied under
the GST Act.
Intellectual Property all confidential information, trade
secrets, drawings, designs,
techniques, programmes, processes,
logos, copyrights, trade or service
marks, patents, registered designs and
other information and rights capable
of being protected under New Zealand
or other laws relating to intellectual
property no matter how recorded or
stored and any applications for same
in the following software:
[INIT] 4
E-247
<PAGE>
o Imageline
o Opac - museum kiosk and web
software
o Badge - world swimming champs
security badge creation software
(50% ownership - Hanimex Pty
Limited owns the other 50%)
o Invoice2 - invoice generating
programme
o Watermark - image water marking
software
o Cashbook32 - cash flow programme
o Skycam - FlashPic (blue screen)
software
(together with all enhancements and
upgrades of this software) but all
other software is excluded, including
the following software:
o Pictrix pharmacy unit
o fotoline
o TravelLine
o SpeedCam
o CatCD
o Realty Pro
o Bureau Management Software (BMS)
Interest Rate the cost of funds rate for the BKI
Group.
Last Accounting Date 30 September 1997.
Penalty Rate The Westpac Trust Indicator Lending
Rate plus 8%.
Premises the premises at 29 Enfield Street, Mt
Eden, Auckland.
Proceedings Includes proceedings, claims, demands,
actions, conferences, mediations,
conciliations, compromises,
arbitrations, hearings or appeals
arising out of, preliminary to or in
connection with any dispute or alleged
dispute.
[INIT] 5
E-248
<PAGE>
Related Company a related company as defined section
2(3) of the Companies Act 1993.
Shares all of the existing issued shares in
the capital of the Company being
acquired by the Purchaser pursuant to
this Agreement.
Statutory Books the Company's Constitution, and its
Certificate of Incorporation,
Directors' and Members' minute book,
Register of Members, Register of
Directors and Secretaries, Interests
Register, Register of Charges and Seal
Register (if any).
Strike Price in respect of the BKI shares to be
issued pursuant to this Agreement is
the last sale price for BKI shares on
the Toronto Stock Exchange on 31 March
1998.
Subsidiary a subsidiary as defined in sections 5
to 8 of the Companies Act 1993.
Taxation all forms of taxation (including
without limitation capital gains tax,
income tax, surtax, estate duty, stamp
duty, rates, GST, PAYE, withholding
tax, provisional tax, duties, customs
and other import or export duties and
all other statutory, fiscal, central
or local government or municipal
impositions, duties and levies) and
all re-assessments, penalties,
Charges, Costs and interest relating
to such taxation for non-compliance or
otherwise.
Trustee Montreal Trust Company of Canada, or
such other trustee approved by the
Alberta Stock Exchange to hold BKI
shares pursuant to the Escrow
Agreement.
Warranties the representations, warranties, and
undertakings of the Vendors set out in
Schedule 1.
Year a financial year from 1 April to 31
March in the next year.
1.2 General Interpretation: In the interpretation of this Agreement, unless
the context otherwise requires:
1.2.1 References to the parties include their respective executors,
administrators, successors and permitted assigns;
1.2.2 Words in the singular shall include the plural and vice versa;
1.2.3 Words importing one gender shall include the other genders;
[INIT] 6
E-249
<PAGE>
1.2.4 Any obligation not to do anything includes an obligation not to
suffer, permit or cause that thing to be done;
1.2.5 Headings have been inserted for convenience only and shall not
affect the construction of this Agreement;
1.2.6 Reference to a statute includes all statutes amending,
consolidating or replacing the statute referred to and includes
all subsidiary or delegated legislation or exercises of authority
under such statute or legislation;
1.2.7 References to clauses, schedules and annexures shall be construed
as references to the same in this Agreement;
1.2.8 References to money are references to New Zealand currency.
1.3 Joint and Several: The covenants herein expressed or implied shall bind
all persons by whom they are given and any two or greater number of them
jointly and each of them severally.
1.4 Time of the Essence: Time shall be of the essence of this Agreement both
as to dates and periods.
1.5 Precedence of Documents: If there is any conflict between the provisions
of this Agreement and the Escrow Agreement or the provisions of this
Agreement and the Employment Contract, the provisions of this Agreement
shall prevail in each case.
2. Agreement for Sale and Purchase
2.1 Sale and Purchase: The Vendors agree to sell and the Purchaser agrees to
purchase the Shares for the Consideration.
2.2 Accrual Rules: The Consideration is the lowest price the parties would
have agreed upon at the date of this Agreement for the sale and purchase
of the Shares and is consequently the core acquisition price pursuant to
Section OB1(c) of the Income Tax Act 1994.
2.3 Audit: The Purchaser shall be entitled at its cost to appoint KPMG to
audit the Financial Statements and the financial statements for the
Company for the Year ended 31 March 1997 and for each Year of the Earn
Out Period (as defined in clause 3.3.1). Such audit shall be conducted by
KPMG adopting New Zealand GAAP which shall be applied consistently over
the various audit periods.
2.4 Consideration Adjustment:
2.4.1 The Purchaser shall have the right to adjust the Earn Out Sum if
the KPMG audits as at 31 March 1997 or for the Years of the Earn
Out Period reveal any Accounting Discrepancies in the calculation
of the Earn Out Sum or if there are any adjustments made to the
salary paid by the Company to Tyree which affect the Cashflow.
[INIT] 7
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<PAGE>
2.4.2 The Vendors shall be provided with a copy of the KPMG audit report
and working papers and a period of 10 Business Days following
receipt of such report to review their contents.
3. Consideration and Payment
3.1 Satisfaction of Consideration: The Consideration shall be paid or
satisfied by the Purchaser as follows:
3.1.1 $500,000: $500,000 shall be paid in cash on the Completion Date as
follows:
(a) An amount equivalent to the total of the Vendors current
account advances to the Company and the advances of the
Vendors secured by the registered first debenture shall be
paid by the Purchaser to the Company and the parties shall
procure the Company contemporaneously to effect repayment
of such advances; and
(b) Any balance shall be payable in cash to the Vendors.
3.1.2 Earn Out Sum: The Earn Out Sum (subject to adjustment as provided
in clauses 2.4 and 3.4) shall be paid in the manner provided in
clauses 3.2 and 3.3 by way of the issue and allotment to the
Vendors free from all Charges of fully paid ordinary shares in the
capital of BKI ranking in all respects pari passu with the
existing ordinary shares in the capital of BKI.
3.2 Issue of Shares: BKI shall issue the shares pursuant to clause 3.1.2
(Earnout Shares). The Earnout Shares shall be:
3.2.1 Issued in one tranche by 30 June 1998.
3.2.2 Issued in numbers which have a value (based on the Strike Price
converted to $NZ at the Exchange Rate as at 31 March 1998) equal
to the Earn Out Sum calculated for the Year which ended on 31
March 1998.
3.2.3 Issued initially to the Trustee to be held in escrow pursuant to
the Escrow Agreement and subject to the earn out and escrow
conditions specified in clause 3.3 and in the Escrow Agreement.
3.3 Escrow and Earn Out Provisions: The Earnout Shares shall be held by the
Trustee subject to the following conditions:
3.3.1 The Earnout Shares shall only be released to the Vendors if the
Company produces sufficient cumulative Cashflow between 1 April
1998 and the Years ending on 31 March 1999 and 31 March 2000
(Earnout Period).
3.3.2 Earnout Shares shall be released to the Vendors in 2 tranches on
30 June 1999 and 30 June 2000 (Release Dates).
3.3.3 The Earnout Shares to be released on each of the Release Dates
shall not exceed in value (based on the Strike Price converted to
$NZ at the Exchange Rate as at
[INIT] 8
E-251
<PAGE>
31 March 1998) the cumulative Cashflow of the Company between 1
April 1998 and the end of the Year prior to the relevant Release
Date.
3.4 Final Adjustment of Acquisition Price:
3.4.1 It is agreed that the Earn Out Sum shall be reduced on the basis
of a $NZ 1.00 reduction for each $NZ 1.00 by which the cumulative
Cashflow of the Company over the Earnout Period falls short of the
Earn Out Sum calculated initially according to the formula
provided in clause 1.1.
3.4.2 Prior to 30 June 2000 there shall be a final calculation of the
Earn Out Sum based on the cumulative Cashflow for the two Years
ending on 31 March 2000.
3.4.3 The Earn Out Sum and the Consideration shall then be adjusted
accordingly. Any Earnout Shares which are not required to be
released to the Vendors following such final calculation shall be
cancelled.
3.5 Dividends on Earnout Shares: Any dividends declared or bonus or rights
entitlements issued in respect of Earnout Shares held in escrow pursuant
to clauses 3.2 or 3.3 shall be issued to and held in trust by the
Trustee. Such dividends declared or entitlements in respect of shares
which are released to the Vendors shall be paid or applied to the Vendors
when the shares are released. Any dividends or entitlements held in trust
by the Trustee in respect of BKI shares which are cancelled will be
forfeited to BKI on the date of cancellation.
4. Parties' Obligations on or before Completion
4.1 Vendors' Obligations: On or before Completion the Vendors shall:
4.1.1 Deliver to the Purchaser the Disclosure Letter unaltered and
signed by the Vendors.
4.1.2 Access to Premises and Business: Ensure that the Purchaser and its
representatives have full access to the Premises, the Statutory
Books and the Business Records from the date of this Agreement and
will be given promptly all information they may reasonably require
concerning the business or affairs of the Company;
4.1.3 Filing of Satisfactions of Charges: File memoranda of satisfaction
with the Registrar of Companies with respect to the debenture
granted by the Company to the Vendors.
4.1.4 Service Agreement: Procure the execution by the Company of an
employment contract with Tyree in the form annexed as Annexure 2.
4.1.5 Personal Assets: Procure that all assets owned by the Company but
principally employed for the personal use of Tyree are sold and
removed from the Company asset register by the Completion Date.
[INIT] 9
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<PAGE>
4.1.6 Consultation: Consult with the Purchaser in relation to all
matters which materially affect the Company or its operations
including items of capital expenditure and general expenses above
$3000 or falling outside the ordinary course of business of the
Company.
4.1.7 Related Companies: Procure that at no cost to the Company all of
the issued shares in Parrilott Pty Limited have been transferred
to the Company.
4.1.8 Licence Agreement: Procure that the existing licence agreement
between the Trust and the Company is amended upon the terms of the
Variation Agreement attached to this Agreement, comprising item 4
of Schedule 4.
4.1.9 Hanimex and Vendor Agreements: Procure that the agreements between
Hanimex (N.Z.) Limited and the Company and the Vendors and the
Company are amended on the terms of the Hanimex Variation
Agreement and Variation of the Software Licensing Agreement
attached to this Agreement comprising item 5 of Schedule 4.
4.1.10 Solvency Certificate: Provide a director's certificate stating as
at Completion that the Company:
(a) is able to pay its debts as they become due in the normal
course of business;
(b) is not (to the director's knowledge) engaged in business in
a manner or degree likely to create a substantial risk of
loss to the Company's creditors; and
(c) has not incurred any obligation without the director
believing on reasonable grounds that the Company would be
able to perform the obligation when it is required to do
so.
4.2 Purchaser's Obligations: The Purchaser shall use best endeavours
(including the giving of its own guarantors support) to obtain a release
of all of the Company's existing directors of all personal liabilities
which may arise after Completion in relation to personal guarantees (as
specified in Item 3 of Schedule 4) provided by them in respect of
obligations of the Company. Should any such releases not be procured then
the Purchaser shall indemnify such directors in respect of all Costs and
Proceedings which arise in relation to their personal guarantees for acts
or omissions of the Company after Completion.
5. Completion
5.1 Initial Settlement: Completion shall take place on the Completion Date at
the offices of the Company at 2.15 p.m. or at such other time or place as
the parties shall agree at which time the Purchaser shall be entitled to
the possession of the business conducted by the Company and the Vendors
will hand to the Purchaser:
5.1.1 Share Transfers: Transfers of the Shares to the Purchaser duly
executed by the Vendors in registrable form;
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5.1.2 Share Certificates: The share certificates (if any) for the Shares
or if none have been issued a statutory declaration by an officer
of the Company to such effect;
5.1.3 Pre-emptive Rights Waivers: A waiver signed by all the Vendors
whereby they waive all rights of pre-emption conferred on them by
the Constitution or otherwise in respect of the transfer of all or
any of the Shares;
5.1.4 Directors' Resolutions: Evidence of the passing of effective
resolutions of the Directors of the Company to register the
transfer of the Shares into the name of the Purchaser and in the
Register of Members of the Company in respect of the Shares.
5.1.5 Shareholders' Resolutions: Evidence of the passing of effective
shareholders' resolutions appointing Michael Ridgway as a director
of the Company in addition to Tyree.
5.1.6 Releases of Charges over Shares: Unconditional releases of any
Charges over any of the Shares;
5.1.7 Company Records: The Statutory Books and the Business Records of
the Company that exist;
5.1.8 Pre-conditions: Evidence satisfactory to the Purchaser that the
Vendors have fulfilled their obligations under clause 4;
and against compliance with the above provisions the Purchaser shall pay
or satisfy the payment of the $500,000 pursuant to clause 3.1.1, and
shall hand to the Vendors the following documents:
5.1.9 An executed directors certificate of Brocker Investments (NZ)
Limited in the form presented to the Purchaser by the Vendor's
solicitors;
5.1.10 The executed Mortgage of Shares ("Mortgage of Shares") from the
Purchaser as Mortgagor to the Vendors as Security Holder in the
form attached to this Agreement as item 6 of Schedule 4; and
5.1.11 The original share certificates relating to all the Shares along
with a certified copy of the Share Register of the Company
certified by a director as complete, noting the Purchaser as
holder of the Shares.
5.2 Security: Pending completion of the full settlement of the Consideration
pursuant to clause 2.4 and 3, including the release of all shares
entitled to be released to the Purchaser under the Escrow Agreement, the
Purchaser shall provide security to the Vendors by way of a mortgage over
the Shares in the form attached.
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5.3 Intellectual Property
In this clause 5.3 the following terms shall have the meanings specified:
Wider Intellectual Property all intellectual property rights (of
whatever form) held by an Owner and
whether existing at the date of this
Agreement or later created, developed
or otherwise owned (but excluding the
Intellectual Property and the Realty
Pro software)
IP Item an item (of whatever kind or form) in
which an Owner holds Wider
Intellectual Property
Owner Tyree or the Vendors (in their
capacity as trustees of Sam Montegue
Family Trust) or any Associated Person
of Tyree
Proposal A document fairly describing the
identity, function and commercial
significance of a Wider Intellectual
Right and any IP Items utilising that
Wider Intellectual Property Right
5.3.1 Intellectual Property relating to the Business: The parties
acknowledge and confirm that all intellectual property (of
whatever form) in any future enhancements or upgrades of the
Intellectual Property will be the property of the Company and
Tyree hereby assigns and will procure the assignment by each Owner
of all future copyright in that intellectual property (to the
extent owned by Tyree and each Owner) to the Company, effective
from the date that the relevant copyright comes into existence.
Subject to, and without limiting the balance of this clause 5.3,
the parties acknowledge that all intellectual property rights in
the Wider Intellectual Property and each IP Item are held by, and
will remain held by, their relevant Owner.
5.3.2 Proposal: Tyree and the Vendors must ensure that prior to an Owner
selling, licensing, gifting or otherwise disposing of any Wider
Intellectual Property
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Right or IP Item the Owner provides the Company with a Proposal
for that Wider Intellectual Property Right or IP Item.
5.3.3 IP Item Option: Tyree and the Vendors hereby grant an option (and
will procure the like granting of an option by all Owners) to the
Company in respect of all the Wider Intellectual Property Rights
and IP Items contained in a Proposal to take an exclusive
irrevocable, perpetual world-wide licence to use, market, sell and
maintain (including the right to develop enhancements and upgrades
of those Wider Intellectual Property Rights and the IP Items) for
a royalty of 7.5% (plus GST, if any) of the amount received by the
Company for the sale or licence of those IP Items and Wider
Intellectual Property Rights ("the Option").
5.3.4 Right of First Refusal: If the Company fails to exercise the
Option within 30 days of its receipt of the Proposal, then the
Owner will be free to offer the Proposal to others but before
entering into any unconditional arrangement with anyone (other
than the Company), the Owner must first offer back the Proposal to
the Company on terms no less favourable.
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6. Default
6.1 Default by Vendors: Without prejudice to clause 8, if any of the
provisions of clauses 4 or 5 are not fully complied with on Completion,
the Purchaser may (in addition to and without prejudice to all other
rights or remedies available to the Purchaser under this Agreement or
otherwise) at the Purchaser's option:
6.1.1 Rescind: Rescind this Agreement; or
6.1.2 Completion: Effect Completion so far as practicable having regard
to the defaults which have occurred (without releasing the Vendors
from liability to comply as soon as possible with the Vendors'
obligations under clauses 4 and 5).
6.2 Default by Purchaser: If from any cause whatsoever except default of the
Vendors
6.2.1 Interest: any portion of the Consideration is not paid upon the
due date for payment the Purchaser shall pay to the Vendors
interest, calculated at the Penalty Rate on the portion of the
Consideration so unpaid from the due date for payment until
payment.
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6.2.2 Other Action: the Purchaser and/or BKI shall be in default under
this Agreement (Default) then the Vendor may
(a) Sue the Purchaser for specific performance; or
(b) Cancel this agreement (but only for a Default of clause 3
or 5.1.9 to 5.1.11) and sue the Purchaser for damages;
(c) Exercise its rights under the Mortgage of Shares;
(d) Sue the Purchaser for damages.
7. Warranties
7.1 Vendors' and Tyree's Warranties: The Vendors and Tyree warrant and
undertake to the Purchaser in terms of the Warranties and it is agreed
that:
7.1.1 Parrilott Pty Limited: The Warranties shall be given in respect of
Parrilott Pty Limited as well as in respect of the Company. For
such purposes the term Shares shall be deemed to refer to all of
the issued shares in Parrilott Pty Limited.
7.1.2 Separate and Independent: Each of the Warranties shall be separate
and independent and save as expressly otherwise provided shall not
be limited by reference to any other of the Warranties or any
other provision of this Agreement.
7.1.3 Reliance on Warranties: The Vendors and Tyree acknowledge that the
Purchaser has entered into this Agreement in reliance (among other
things) on the Warranties.
7.2 Vendors' and Tyree's Covenants: The Vendors and Tyree warrant, represent
and undertake to the Purchaser and also as a separate covenant to the
Company:
7.2.1 Indemnity: That they will keep the Purchaser and the Company fully
indemnified against all and any depletion in or reduction in the
value of the Shares or any of the assets of the Company and all
Proceedings and Costs reasonably suffered or incurred by the
Purchaser or the Company as a result of or in relation to any
breach or non-fulfilment of any of the Warranties and all Costs
incurred in making, defending or compromising any Proceedings in
relation to facts or matters which are a breach or non-fulfilment;
and
7.2.2 No Representations Made: That no promise or representation has
been made to them in connection with any of the Warranties or the
Disclosure Letter in respect of which the Company or any of the
directors or employees of the Company might be liable; and
7.2.3 No Breach of Warranties Prior to Completion: That the Vendors and
Tyree will, so far as they are able, procure that (except only as
may be necessary to give effect to this Agreement) neither they
nor the Company shall do, allow or
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procure any act or omission before Completion which would
constitute a breach of any of the Warranties if they were given at
any time prior to or on Completion or which would make any of the
Warranties inaccurate or misleading if they were so given; and
7.2.4 Disclosure of Change in Circumstances: Tyree will forthwith
disclose in writing to the Purchaser any matter or thing which may
arise or become known to him after the date of this Agreement and
prior to Completion which is inconsistent with any of the
Warranties or which might render any of them inaccurate or
misleading when given at Completion or which might be material to
be known by a purchaser for value of the Shares or which might
have a material adverse effect on the value of the Shares or any
of the assets of the Company.
7.3 Warranty Limitations: Notwithstanding any other provisions of this
Agreement, the Warranties are made and given subject to the provisions of
Schedule 3 and clause 7.6.
7.4 Purchaser Warranties to Vendors:
7.4.1 The Purchaser has the legal right and power to:
(a) enter into this Agreement; and
(b) purchase the Shares from the Vendors on the terms provided
in this Agreement; and
(c) enter into the Escrow Agreement the Mortgage of Shares and
all documentation contemplated by this Agreement (Relevant
Documents).
7.4.2 The execution, delivery and performance of this Agreement and the
Relevant Documents by the Purchaser has been duly authorised by
all necessary corporate action on its part and each of them is
valid, binding and enforceable against the Purchaser in accordance
with its terms.
7.4.3 The Purchaser will not cause the Company to give any financial
assistance to any person for the purpose of, or in connection
with, the purchase of the Shares, it being acknowledged that this
warranty does not apply to the Employment Contract or the
replacement by the Purchaser of an amount of shareholders advances
to the Company that is equal to the Vendor's current shareholder
advances to the Company and the replacement of the Vendor's
debenture by the Purchasers debenture.
7.5 BKI Warranties to Vendors:
7.5.1 BKI is a company duly incorporated and organised, validly existing
and in good standing under the laws of Alberta, Canada.
7.5.2 The execution, delivery and performance of this Agreement and the
Relevant Documents by BKI has been duly authorised by all
necessary corporate action
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on its part and each of them is valid, binding and enforceable
against BKI in accordance with its terms.
7.6 Disclosure Letter
7.6.1 The Warranties are subject to and shall be qualified by the terms
and matters disclosed in the Disclosure Letter.
7.6.2 The Purchaser shall not be entitled to claim that any fact gives
rise to any claim against the Vendors under the Warranties or
otherwise under this Agreement if it has been fully and fairly
disclosed in the Disclosure Letter or the Due Diligence
Information.
7.6.3 The Purchaser shall not be entitled to claim that any fact causes
any of the Disclosures to be untrue, incorrect, misleading or not
fully and fairly disclosed in the Disclosure Letter if true and
correct information concerning such factors is fully and fairly
disclosed in the Due Diligence Information.
8. Rights of Rescission
8.1 Rescission for Breach: Without prejudice to clause 6, if on or prior to
Completion it should be found that:
8.1.1 Unfulfilled Obligations: Any obligation of the Vendors contained
in this Agreement is or will on Completion be unfulfilled; or
8.1.2 Breach of Warranties: Any Warranty is or may at Completion be
inaccurate or misleading;
then the Purchaser may, without prejudice to any other rights available
to it under clause 8.2 of this Agreement, by notice in writing to the
Vendors, rescind this Agreement.
8.2 Effect of Rescission: Rescission of this Agreement under clause 8.1 shall
not extinguish any right of the Purchaser to damages or compensation.
8.3 Rescission for Matters other than Default: If on or prior to Completion:
8.3.1 Destruction of Assets: Any asset of the Company shall be destroyed
or damaged to an extent which in the opinion of the Purchaser
materially and adversely affects the Company or the carrying on of
the business of the Company; or
8.3.2 Material Adverse Change: Any other event shall occur which affects
or is likely to affect adversely to a material degree the Company
or the financial position, business, assets or profitability of
the Company or the value of the Shares to the Purchaser,
the Purchaser shall be entitled by notice in writing to the Vendors to
rescind this Agreement, but the occurrence of such an event shall not
give rise to any right to
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damages or compensation except where Tyree has failed to give notice of
such event as required by clause 7.2.4.
9. Conditions
9.1 This Agreement is conditional upon:
9.1.2 Government or Regulatory Consents: Consent being given by any
Canadian government or regulatory body whose consent is required
to enable Completion of this Agreement; and
9.1.6 Stock Exchange Approval: The approval of the Alberta Stock
Exchange; and
9.2 Fulfilment of Conditions: Each of the parties shall do all acts and
things reasonably necessary to procure the fulfilment of the conditions
set out in clause 9.1.
9.3 Failure of Conditions: Should:
9.3.1 Not Satisfied: Any of the conditions set out in clause 9.1 not be
fulfilled or waived (as the case may be) by the Completion Date or
such later date as may be agreed by the parties; or
9.3.2 Unreasonable Conditions: Any consent or approval required in terms
of the conditions set out in clause 9.1 be granted on terms not
reasonably acceptable to any affected party;
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then this Agreement shall be voidable by notice in writing and upon issue
of such notice this Agreement shall then be at an end and the parties
shall not have any further rights or obligations except that the Vendors
will repay any deposit or part payment of the Consideration.
10. Non Competition
10.1 Non-Competition: In consideration of the Purchaser entering into this
Agreement and as a condition precedent the Vendors and each of them
acknowledge that the value of the Earn Out Sum is dependent upon and the
Purchaser has agreed to pay the Earn Out Sum on the basis that the Tyree
or any Associated Person of Tyree will not carry on a business the same
as or in substantial competition with that at present carried on by the
Company being the cutting and implementation of computer codes (but not
the conceptualisation, design and specification of the processes and
programmes for software applications, other than in respect of
enhancements and upgrades of the existing products sold by or licensed to
the Company), marketing and sale of digital imaging and
telecommunications software applications owned by or licensed to the
Company now (or licensed in the future by Tyree or any Associated Person
of Tyree) (Business) in opposition to the Company after Completion for
the period specified below and accordingly the Tyree jointly and
severally covenants and agrees with the Purchaser that neither:
10.1.1 Business: Tyree nor any Associated Person of Tyree will during the
3 years following Completion at any place in New Zealand or
Australia be directly or indirectly engaged or connected or
interested in a Business either on their own account or as a
partner with or as an employee of any other person or as a
shareholder, director, officer, consultant, adviser or employee of
any person or directly or indirectly assist financially any such
Business except:
(a) as a servant of the Company, the Purchaser or a Subsidiary
of the Purchaser; or
(b) with the prior written consent of the Purchaser; or
(c) as holder of not more than 5% of the shares in the capital
of any public company if and only so long as such shares
are listed on any official stock exchange; and
10.1.2 Orders: Tyree nor any Associated Person of Tyree will during the 3
years following Completion on their own account or for any person,
enterprise, firm, trust, joint venture or syndicate solicit orders
for such Business otherwise than for the benefit of the Company
from any person, firm or company who at the Completion Date was or
had previously been a customer of the Company; and
10.1.3 Employees: Tyree nor any Associated Person of Tyree will during
the 3 years following Completion on their own account or for any
person, enterprise, firm, trust, joint venture or syndicate entice
or attempt to entice away from the Company or the Purchaser any
employee of the Company or of the Purchaser or of any Subsidiary
of the Purchaser.
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10.2 Provisions with respect to Covenants: Each of the covenants contained in
clause 10.1 shall:
10.2.1 Separate and Severable: Be separate and severable and to the
extent that any such provision is unenforceable by reason of its
period, scope or area being held by a court of competent
jurisdiction to be unreasonable, then such provision shall be
limited to the maximum period, scope or area which such court
considers reasonable and shall be enforceable on those terms;
10.2.2 Benefit of Purchaser and Assigns: Be given for the benefit of and
be enforceable by the Purchaser and the Purchaser's successors and
assigns.
11. Post Completion Management of the Company
11.1 Main Operating Objectives: The parties acknowledge that post-Completion
their main objective with the Company is to ensure that the Company
maximises (subject to prudent and reasonable financial constraints) its
marketing and sales opportunities which become available in order to
maximise Cash Flow and the provisions of this Agreement shall be read and
construed subject to this clause 11.
11.2 Conduct of the Purchaser: The Purchaser will exercise all voting rights
and other powers of control available to it in relation to the Company in
its capacity as shareholder and director appointor to ensure that:
11.2.1 The Company complies with the provisions of its Constitution
(except to the extent that they are inconsistent with this clause
11) where applicable, and with this Agreement; and
11.2.2 The Company and the parties achieve their objective detailed in
clause 11.1.
11.3 Term of these Arrangements: The arrangements provided for in clause 11
shall continue in full force and effect until the earlier of:
11.3.1 The date Vendor and Purchaser unanimously agreeing in writing that
they should be terminated or
11.3.2 The date all Earn Out shares are released to the Purchaser.
11.4 Board Representation: The Company shall have a board of two directors
which shall comprise:
11.4.1 Tyree, or at his election Tyree's nominee, and
11.4.2 One representative appointed by the Purchaser (the Purchaser
having the power to replace such representative). The Purchaser's
appointment for the purpose of this clause 11.4.2 shall initially
be Michael Ridgway
11.4.3 Each director shall have one vote and the chairman of Directors
shall not have a casting vote.
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11.5 Purchaser to Procure Representation: The Purchaser undertakes to take all
steps and actions as shall be necessary to ensure that the Vendor retains
and continues to enjoy on an ongoing basis the representation described
in clause 11.4.
11.6 Strategic Planning: The Purchaser shall ensure that at all times during
the term of these arrangements that Tyree on behalf of the Vendor is
integrally involved in the strategic planning process of the Company.
Such involvement shall include without limitation participation in all
meetings with executives of the Company or shareholder representatives
concerning business or financial strategy or planning and involvement in
all debt structuring decisions and all licensing, marketing and sales
strategy and implementation concerning the Company.
11.7 Decisions of Key Matters: Without limiting the ambit of clause 11.6
decisions concerning the following matters shall only be made by the
board if assented to by Tyree on behalf of the Vendor:
11.7.1 Business activity by the Company which falls outside the existing
business areas of the Company;
11.7.2 All changes in borrowing facilities or capital structure of the
Company;
11.7.3 The dividend policy of the Company;
11.7.4 The appointment to the board of the directors of the Company of
any alternate representative or representatives of the Purchaser
(such consent to such appointment not to be unreasonably
withheld);
11.7.5 Any expenditure by the Company in excess of $5,000.00 per item
where not previously approved in the budgets;
11.7.6 Any transaction between the Company and any shareholder or
Related Company thereof;
11.7.7 The formation of any Subsidiary;
11.7.8 Budgets developed in accordance with clause 11.8;
11.7.9 Adoption of any new accounting policies (or changes to existing
policies and the approval of year end financial accounts with the
Company);
11.7.10 Any other action impacting upon the constitutional structure of
the Company, but subject to clause 11.12.2;
11.8 Budgets: The Purchaser shall procure that the Company shall have budget
proposals prepared in respect of the Company at least 30 days before the
end of each financial year of the Company. The budget shall contain
details of planned expenditure and the proposed financing of that
expenditure. The board of the Company shall endorse or amend those budget
proposals so that they are in a form that the board is prepared to adopt
no later than 10 days prior to the beginning of the next financial year
of the
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Company. The budget may later be amended only be resolution of the Board
and in any case, only with the consent of Tyree.
11.9 Approval of Acquisitions and Divestments: All major acquisitions and
divestments of the Company must be previously approved by Tyree.
11.10 Accounting and Information and Management Systems:
11.10.1 Auditors: The Purchaser shall procure the audit of the financial
statements of the company in respect of each financial year. KPMG
shall be the auditor.
11.10.2 Preparation of Accounts: The Purchaser shall procure that
financial accounts for the Company are prepared in respect of
each financial year and shall be prepared:
(a) In accordance with all application New Zealand legislation;
(b) In accordance with accounting principles, standards and
practice generally accepted in New Zealand at the time that
such accounts are completed; and
(c) In a manner consistent with the preparation of the
financial accounts of the Company prior to Completion,
so as to give a true and fair view of the state of affairs of the
Company at the relevant date and of the profits and losses for
the period to which such accounts relate. Such accounts shall be
provided to Tyree without delay.
11.10.3 Monthly Financial Statements. The Purchaser shall procure that
within 20 days after the end of each month the statement of the
Company's income and expenditure for that month and year to date
is prepared to the extent practicable in accordance with the
standards referred to in clause 11.10.2. Such accounts shall be
provided to Tyree without delay.
11.10.4 Other information: In addition to the above matters, the
Purchaser shall provide to the Vendor or any of them all
information provided from time to time as may be reasonably
requested by the Vendors.
11.11 Further Issues or Transfer of Shares: No new shares or other convertible
securities in the Company shall be issued to a party other than the
Purchaser without the consent of the Vendors. The consent of the Vendors
shall also be required to any transfer of shares or other convertible
securities, such consents shall not be unreasonably withheld but may be
granted on terms which include the requirements for the proposed
transferee to enter into a deed of covenant to observe the terms of the
arrangements provided in this clause 11. In the event of any of the
Shares or other convertible securities being transferred by the Purchaser
post-Completion and while the arrangements provided for in this clause 11
continue in full force and effect, such transfer shall not affect and
shall be without prejudice to the continuing liability and obligations of
the Purchaser under this clause 11.
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11.12 Governing Document:
11.12.1 In the case of any conflict or inconsistency between on the one
hand, the terms and provisions of any other agreement or
contractual document between the parties relating to, or
affecting the business or affairs of the Company and on the other
hand, the terms and provisions of this clause 11, the terms and
provisions of this clause 11 as may be applicable shall prevail.
11.12.2 If there is any conflict or inconsistency between the terms and
the provisions of this clause 11 and the Constitution for the
time being of the Company, the terms and provisions of this
clause 11 shall prevail, but Tyree will not veto a change to the
Constitution of the Company.
11.13 Purchaser Default: If during the term of these arrangements there is a
material breach of these arrangements by the Purchaser then;
a) the Vendors shall have an option to repurchase the Shares
at the net asset value of the Company at the time of the
breach. The net asset value shall be determined by KPMG;
b) the Purchaser covenants to keep the Vendors and Tyree fully
indemnified against all and any depletion in the Earn Out
Sum or the Earnout Shares and any other loss or damage
which they or either of them may suffer as a result of the
material breach by the Purchaser of its obligations under
these clause 11 arrangements.
12. Arbitration
12.1 Submission: If any dispute or difference shall arise between any of the
parties in any way arising out of or in connection with this Agreement
such dispute or difference shall be referred to the arbitration pursuant
to the Arbitration Act 1996.
13. General
13.1 Non-Merger: The warranties, indemnities, representations and undertakings
set out in this Agreement and the Purchaser's obligations in clause 11
shall notwithstanding any rule of law to the contrary not merge in the
instruments of transfer executed pursuant to this Agreement but shall
remain in full force and effect and enforceable to the fullest extent.
13.2 No Announcement: The parties agree that (except as may be required by law
or by the requirements of the principal stock exchange on which BKI's
common shares are listed and posted for trading they will not make any
announcement or disclosures as to the subject matter of this Agreement
except in a form and manner and at such time as all parties may agree.
13.3 Notices: Any notice to be given pursuant to this Agreement shall be given
in accordance with and subject to the following provisions of this clause
13.3;
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13.3.1 In Writing: Notices shall be in writing signed by a duly
authorised officer of the party giving the notice or by the
party's solicitor;
13.3.2 Delivery: Without prejudice to any other sufficient mode of
delivery, a notice may be sent by hand, prepaid post, telex or
facsimile to the address or number (in the case of telex or
facsimile) of the intended recipient last advised to the sender
in accordance with this clause. The initial addresses and numbers
of the parties are:
(a) Vendors c/o Malloy Goodwin Harford
Barristers and Solicitors
P 0 Box 9892
Newmarket
AUCKLAND I
Facsimile: 523 3974
(b) Purchaser 4 Bond Street
Grey Lynn
AUCKLAND
Facsimile: 376 7891
13.3.3 Notice by Hand: Subject to clause 13.3.6, a notice delivered by
hand shall be received on delivery;
13.3.4 Notice by Post: Subject to clause 13.3.6, a notice sent by
prepaid post shall be deemed to be received 3 days after being
posted;
13.3.5 Notice by Telex or Facsimile: Subject to clause 13.3.6, a notice
sent by telex or facsimile shall be deemed to be received at the
time of transmission where a transmission report or answerback
code produced by the sender's machine indicates successful
transmission;
13.3.6 Receipt Outside Business Hours: Any notice received or deemed to
be received pursuant to clauses 13.3.3, 13.3.4 or 13.3.5 after
5.00 p.m. (recipient's time) on a Business Day in the recipient's
city or on a day which is not a Business Day in the recipient's
city shall be deemed to be received at 9.00 a.m. (recipient's
time) on the next Business Day in the recipient's city;
13.3.7 Proof of Delivery: In proving delivery of a notice, it shall be
sufficient:
13.3.8 By Hand: In the case of a notice by hand, to provide evidence
that the notice was delivered to the address of the recipient and
no acknowledgement from the recipient shall be necessary;
13.3.9 By Post: In the case of a notice by post, to provide evidence
that the notice was correctly addressed and posted in a prepaid
envelope;
13.3.10 By Telex or Facsimile: In the case of a notice by telex or
facsimile, to provide the transmission report produced by the
sender's machine showing a successful
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transmission to the correct number of the recipient and to have
telephoned the recipient to confirm receipt of a legible copy of
such notice.
13.4 Applicable Law and Jurisdiction: This Agreement shall be governed by and
construed and interpreted in accordance with the laws of New Zealand and
the parties irrevocably submit to the exclusive jurisdiction of the New
Zealand courts.
13.5 Further Assurance: The parties will do all things including without
limitation the execution of documents as shall be necessary to give full
effect to this Agreement.
13.6 Entire Agreement: This Agreement including all schedules, annexures and
exhibits to it, and any documents incorporated by express reference forms
the entire agreement between the parties relating to its subject matter
and supersedes all prior agreements and understandings between the
parties with respect to that subject matter. If there is any conflict
between the terms of this document and any other document forming part of
this Agreement, the terms set out in this document shall prevail.
13.7 Variation: This Agreement may only be varied by an express written
agreement executed by all the parties or by persons duly authorised in
writing on their respective behalf
13.8 Costs: Each party shall bear their own costs of and incidental to the
preparation, Completion and implementation of this Agreement.
13.9 Waiver: No failure to exercise and no delay in exercising on the part of
any party any right under this Agreement shall operate as a waiver of
that right. No single or partial exercise of any right shall preclude any
other or further exercise of such right or the exercise of any other
right. Any such waiver unless otherwise expressly agreed in writing,
shall only apply in respect of the particular circumstances for which it
is given.
13.10 Counterparts: This Agreement may be signed in any number of counterparts,
all of which when taken together constitute one and the same instrument.
Any party may enter into this Agreement by executing any such
counterpart. The parties will cooperate to circulate all counterparts to
each other for the purposes of having all counterparts executed by all
parties as soon as practicable following Completion.
13.11 Execution:
13.11.1 The execution of a facsimile copy of this Agreement and its
transmission by facsimile to all of the parties or their
solicitors shall be sufficient to constitute a legal contract and
satisfy the requirements of section 2 of the Contracts
Enforcement Act 1956.
13.11.2 If any party requires the original signed facsimile copy shall be
delivered to that party within 5 Business Days of request being
made. If the original is not delivered any party which accepts a
facsimile copy may in any proceeding produce the facsimile copy.
In such case no party may object to such copy being produced as
an original and all parties shall be deemed to have waived any
law of evidence or other requirement that an original be produced
as evidence of the existence or contents of the original.
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13.11.3 Each party shall only become bound by this Agreement when it has
been executed by or on behalf of such party.
14. Limitation of Liability of Trustee
14.1 The parties acknowledge that Laurence John Ryan of Whangarei, District
Court Judge and M & H Trustee Services Limited at Auckland (Trustees)
have signed this Agreement in their capacity as trustees pursuant to a
Deed of Trust dated 26 January 1996 known as the Sam Montegue Family
Trust (Trust).
14.2 The Trustees together with their executors, administrators or personal
successors shall be under no personal liability under this Agreement. The
liability of each Trustee shall at all times and for all purposes be
limited to the net value of the assets for the time being of the Trust
together with such amount as is equivalent to the net value of the assets
that the Trust would have had except for the wilful neglect or default of
such Trustee.
14.3 The obligations of each Trustee under this Agreement shall end when such
Trustee ceases to be a trustee of the Trust and there shall be no right
of action against either Trustee in respect of any matter arising under
this Agreement after the date the Trustee ceases to be a trustee of the
Trust except any claim arising from the wilful neglect or default of such
Trustee.
15 BKI Guarantee
15.1 In consideration of the Vendors agreeing to enter into this Agreement BKI
unconditionally and irrevocably:
15.1.1 Guarantees by way of continuing obligation to the Vendors, as
primary obligor and not merely as a surety, the due performance by
the Purchaser of all its obligations and liabilities under this
Agreement; and
15.1.2 Indemnifies the Vendors against any loss or damage which they may
suffer as a direct or indirect result of the breach by the
Purchaser of any of its obligations and liabilities under this
Agreement.
15.2 The obligations of BKI under this guarantee will not be discharged,
released or otherwise affected by any delay, grant of time, release,
compromise, forbearance (whether partial or otherwise) or other
indulgence granted by the Vendors to the Purchaser or any other person or
by the Vendors exercising or refraining from exercising any rights
against the Purchaser. The rights of the Vendors under this guarantee are
cumulative and are not exclusive of any rights provided by law and are to
remain in full force until the discharge by the Purchaser of all its
obligations under this Agreement.
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EXECUTED by the parties. L.J. Ryan by his Attorney
[ILLEGIBLE]
SIGNED by )
LAURENCE JOHN RYAN )
Witness: [ILLEGIBLE] ) /s/ [ILLEGIBLE]
[ILLEGIBLE] ------------------------------
Auckland L J Ryan
Solicitor
SIGNED for M & H TRUSTEE )Signature /s/ JM GOODWIN
SERVICES LIMITED ) ------------------------------
by its director Joseph Michael )Name JM Goodwin
Goodwin in the presence of: ) ------------------------------
Witness: [ILLEGIBLE] Director
[ILLEGIBLE]
Auckland
Solicitor )Signature
) ------------------------------
)Name
) ------------------------------
Director
SIGNED by ) /s/ R L TYREE
RICHARD LYELL TYREE ) ------------------------------
) R L Tyree
SIGNED for BROCKER (N.Z.) )Signature /s/ MICHAEL RIDGWAY
INVESTMENTS LIMITED ) ------------------------------
by: )Name MICHAEL RIDGWAY
) ------------------------------
Director
)Signature /s/ RICHARD JUSTICE
) ------------------------------
)Name RICHARD JUSTICE
) ------------------------------
Director
SIGNED for BROCKER )Signature /s/ MICHAEL RIDGWAY
INVESTMENTS LIMITED ) ------------------------------
by: )Name MICHAEL RIDGWAY
) ------------------------------
Director
)Signature /s/ RICHARD JUSTICE
) ------------------------------
)Name RICHARD JUSTICE
) ------------------------------
Director
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SCHEDULE 1
Warranties (clause 7.1)
1. General
1.1 Disclosure Letter: All information contained or referred to in the
Disclosure Letter is true complete and accurate in all respects. The
Vendors and Tyree are not aware of any other fact or matter which renders
or might upon its disclosure render any such information misleading.
1.2 Agreement: The provisions of the recitals to this Agreement, clause 1.1
of this Agreement and all information contained in the Schedules and
Annexures to this Agreement are complete and correct in all respects.
1.3 Information Supplied: To the best of the knowledge of Tyree and the
Vendors all information contained in any written documentation or
communication supplied by or on behalf of Tyree or the Vendors to the
Purchaser in the course of the Purchaser's due diligence investigation or
in discussions or negotiations leading to the signing of this Agreement,
including advice, answers to questions, information, books and papers
given or shown to the Purchaser and/or any of its employees or
representatives by or on behalf of the Vendors or Tyree is accurate and
not misleading in its context whether by omission or otherwise. The
Vendors and Tyree are not aware of any fact or matter not disclosed to
the Purchaser which renders any such information untrue, incorrect or
misleading.
1.4 All Necessary Disclosures Made: All the facts and circumstances relating
to the Shares and to the assets, business and affairs of the Company
material for disclosure to an intending purchaser of the Shares have been
fully and fairly disclosed to the Purchaser or its advisers. Any such
material facts arising prior to Completion will forthwith be disclosed in
writing to the Purchaser or its advisers.
1.5 Constitution: The Constitution of the Company to be handed to the
Purchaser will be an accurate copy or an original, if available, of the
document in force at Completion and will have annexed a copy of every
resolution required to be annexed by the Companies Act 1993.
2. Shares
2.1 Shares: The Shares constitute the whole of the issued and allotted share
capital of the Company and they are and will be on Completion held by the
Vendors in the Vendors' own right.
2.2 Encumbrances: There is not any and will not at Completion be any Charge
on, over or affecting the Shares. There is no agreement or commitment to
give or create any such Charge and no demand has been made by any person
claiming to be entitled to any such Charge.
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2.3 No Subsidiaries: The Company never has had and does not have and will not
prior to Completion without the prior written consent of the Purchaser
create or acquire any Subsidiary or any shares in any other company.
2.4 No Increase in Capital: The Company has not since the Last Accounting
Date and will not pending Completion increase its share capital or
subdivide, amalgamate, or consolidate the Shares or any of them.
2.5 No Decrease in Capital: The Company has not at any time:
2.5.1 Repaid or agreed to repay or redeem or buy back or repurchase any
shares of any class of its share capital or otherwise reduced or
agreed to reduce its issued share capital or any class of its
share capital
2.5.2 Amalgamated or agreed to amalgamate with any other company.
2.6 No Related Companies: The Company has no Related Companies.
2.7 No Change of Capital Structure or Name: Tyree will not permit to be
passed before Completion any resolution by the Company:
2.7.1 Altering its share capital;
2.7.2 Altering the rights or obligations attaching to any of the Shares;
2.7.3 Changing its name;
2.7.4 Altering its Constitution.
3. Financial Statements
3.1 Books of Account: All the Business Records and Statutory Books are in the
Company's possession or under its control and have been fully and
correctly completed and will pending Completion continue to be so
completed.
There are and will pending Completion be no material inaccuracies or
discrepancies of any kind contained or reflected in any of them. They
give and reflect and at Completion will give and reflect a true and fair
view of the financial, contractual and trading position of the Company
and of its plant and machinery, fixed and current assets and liabilities
(actual and contingent), debtors and creditors, work in progress and
stock.
3.2 Retention of Records: The Company holds and will on Completion have in
its possession all books of Account and other records which it is bound
by law to retain in its possession either indefinitely or for a
particular period or periods of time.
3.3 Financial Statements:
3.3.1 True and Fair View: The Financial Statements are complete and
accurate and give and reflect and will at Completion give and
reflect a true and fair view of the Company, its activities and
its financial status in all respects.
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3.3.2 Comply with Statute: The Financial Statements comply with all
applicable requirements of the Companies Act 1993 and the
Financial Reporting Act 1993.
3.3.3 GAAP: The Financial Statements have been prepared in accordance
with generally accepted accounting practice as that term is
defined in the Financial Reporting Act 1993 and to the extent
consistent with such generally accepted accounting practice on a
basis consistent with that adopted for preceding accounting
periods.
3.3.4 No Unusual or Extraordinary Items: The Financial Statements are
not affected by any unusual extraordinary exceptional or
non-recurring items or by any other factor rendering the results
set out in the Financial Statements (or any of them) unusually
better or worse than they (or any of them) might otherwise be or
have been.
3.3.5 Financial Position: The Financial Statements properly reflect the
financial position of the Company as at the Last Accounting Date
and of its results for the accounting period ending on that date.
3.3.6 Full Disclosure: The Financial Statements fully disclose all the
assets and liabilities (whether ascertained, contingent, deferred
or otherwise and whether or not quantified or disputed) of the
Company as at the Last Accounting Date and make full provision
and/or reserve for all such liabilities.
3.3.7 Provisions for Losses: The Financial Statements make full
provision for any foreseeable losses which may arise on Completion
and/or on realisation of stock and/or on Completion of any
existing or proposed contract.
3.3.8 Provision for Bad Debts: The Financial Statements make adequate
provision for all bad and doubtful debts of the Company and for
depreciation of the fixed assets of the Company having regard to
their original cost and estimated useful life.
3.3.9 Financial Commitments: The Financial Statements fully disclose all
financial commitments in existence as at the Last Accounting Date.
3.4 Period Between Agreement and Completion: From the Last Accounting Date to
Completion:
3.4.1 Conduct of Business: The Company has carried on and will carry on
its business in an efficient normal and proper manner so that the
financial standing and position of the Company as at Completion
will not have deteriorated materially from that disclosed in the
Financial Statements;
3.4.2 Liabilities: The Company has not incurred and will not incur any
liability (whether contingent or otherwise) and has not made any
payments except in the normal and ordinary course of business;
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3.4.3 Disposals: The Company has not disposed of and will not dispose of
any material portion of its undertaking or any material part of
its fixed assets or any of its goodwill;
3.4.4 Acquisitions: The Company has not acquired any assets of a capital
nature and will not acquire any assets of a capital nature
exceeding $3,000 in value without the Purchaser's prior consent;
3.4.5 Revaluations: The Company has not revalued upwards and will not
revalue upwards any of its assets;
3.4.6 Capital Investments: The Company has not entered into and will not
enter into any material capital investment or commitment in excess
of $3,000 in aggregate or any major transaction as that term is
defined in section 129(2) of the Companies Act 1993;
3.4.7 Dividends: The Company has not declared, paid or made and will not
declare, pay or make any dividend, bonus or similar distribution;
3.4.8 Insurance: The Company has kept and will keep effectively insured
to the full insurable amounts all assets and undertaking of the
Company against all normal insurance risks including reasonable
loss of profits insurance;
3.4.9 Terms of Trade: The Company has not made or permitted and will not
make or permit any change to any of its product lines or to the
terms or conditions of any agency held by the Company or to the
selling prices or terms and conditions of sale of any products or
services of the Company;
3.4.10 Turnover: The Company has attained a turnover no less than that
for the corresponding period in the previous financial year;
3.4.11 Deposits: The Company has deposited and will deposit all amounts
received by it to the credit of its bank account and such amounts
appear in the appropriate books of Account;
3.4.12 Debts: The Company has paid and will continue to pay all its debts
as they fell or fall due.
3.5 Non-Disclosure of Liabilities: If it is discovered before or after
Completion that the Company had a liability at the Completion Date
(whether contingently or otherwise) to any person prior to the Completion
Date except in the ordinary course of business which liability has not
been fully disclosed to the Purchaser, then without prejudice to any
other rights of the Purchaser, Tyree will immediately upon demand by the
Purchaser, pay to the Purchaser the amount of each such liability after
deducting from each such liability any saving to the Company in Taxation
as a result of such liability. For the purposes of this clause:
3.5.1 The word liability shall include liability for or in respect of
Taxation or any reassessment of Taxation which the Company may be
required to pay in respect of any period prior to the Completion
Date and which has not been so fully
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disclosed and any amount whatsoever (including all Costs in
connection therewith) arising out of any occurrence or happening
which shall have taken place prior to the Completion Date;
3.5.2 Provision of any amount by way of note to the Financial Statements
shall not be deemed to be provision of that amount in the
Financial Statements.
4. Stock
4.1 Valuation: The methods of valuing stock and work in progress as at the
Last Accounting Date (which included a physical stocktaking) were the
same as those adopted for the 3 immediately preceding financial years.
All redundant and obsolete stock was wholly written off, all slow moving
stock was written down appropriately and the value attributed to the
remaining stock did not exceed the lower of direct cost or net realisable
value.
4.2 Changes to Stock Since Last Accounting Date: The stock on hand at
Completion will comprise the stock as at the Last Accounting Date less
stock sold and with the addition of stock bought in the ordinary course
of business since that date. No stock currently held other than that
written off or written down in the Financial Statements or which are
service spares, is slow moving, out of date or fashion, redundant or
obsolete or which will not realise its book value within 12 months of the
Completion Date.
5. GST
5.1 Registration: The Company is registered for the purposes of the GST Act.
5.2 Not a Member of a Group: The Company has not at any time been a member of
a Group or been treated as a member of a Group for GST purposes. No
application for it to be so treated has at any time been or pending
Completion will be made. No act or transaction has been or pending
Completion will be effected which will result in the Company being held
liable for any GST chargeable against some other company.
5.3 Compliance with GST Act: The Company has complied and pending Completion
will comply in all respects with the GST Act legislation.
5.4 Maintenance of Records: The Company has given obtained made and
maintained and pending Completion will give, obtain, make and maintain
complete correct and up to date invoices, records and other documents
appropriate or requisite for the purposes of the GST Act.
5.5 No Arrears: The Company is not and will not pending Completion be in
arrears with any payment or returns under the GST Act or liable to any
abnormal or non-routine payment or any forfeiture or penalty or to the
operation of any penal provision and where payment is not yet due or
receivable has provided for such payment;
5.6 All Supplies Taxable: All supplies made and to be made pending Completion
by the Company are taxable supplies and the Company is not and will not
pending Completion be denied credit for any input tax.
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6. Taxation
6.1 Returns Made: All forms, notices, elections, computations, payments
(including, without limitation, any fines or penalties) and returns which
should be made by the Company for any Taxation purpose have and will at
Completion have been made and are and will be up-to-date, correct and on
a proper basis and none of them is now the subject of any dispute with
the Inland Revenue Department or any other Taxation collection agency. In
particular the returns in relation to provisional Taxation will not give
rise to any assessment, adjustment or set-off (including any claim for
interest on unpaid Taxation) by the Inland Revenue Department.
6.2 No Knowledge of Dispute: There is no fact known to the Vendors or Tyree
after making due enquiry which might be the occasion of any dispute with
the Inland Revenue Department or any other Taxation collection agency or
a claim for Taxation in respect of any period prior to the Completion
Date which is not provided for in the financial statements for the
Company as at the Last Accounting Date.
6.3 Provision in Financial Statements: Full provision and reserves were made
in the Financial Statements in respect of all Taxation liabilities to or
for which the Company was at the Last Accounting Date or at any time
since may have become or may become liable to be assessed or charged or
to pay. Provision of any amount by way of a notice to the Financial
Statements shall not be a provision for the purposes of this paragraph.
6.4 No Non-commercial Transactions: The Company has not at any time entered
into a transaction or series of transactions containing steps inserted
without any commercial or business purpose apart from the obtaining of a
Taxation or stamp duty advantage.
6.5 Debtors Recorded Appropriately: All amounts included in the Financial
Statements or (in the case of an amount arising after the date of the
Financial Statements) in the books of the Company as due from Debtors
represent amounts actually invoiced by the Company to such debtors not
earlier than 3 months prior to the Last Accounting Date (or in the case
of an amount arising after the date of the Financial Statements not
earlier than 3 months prior to the date on which it was recorded in the
books of the Company). No part of such amounts still outstanding has been
released on terms that any debtor pays less than the full book value of
its debt or has been written off or has proved to any extent
irrecoverable or is now regarded as irrecoverable or has been compromised
on any terms.
7. Loans
7.1 No Undisclosed Loans: The aggregate amount appearing in the Financial
Statements as being outstanding in respect of loans owing by the Company
was at the Last Accounting Date the aggregate of all loans or financial
accommodation of whatever nature from any source so outstanding.
7.2 Loans Within Corporate Powers: Such aggregate did not (and the amount
outstanding in respect of loans owing by the Company does not and will
not at Completion) exceed any limitation on the Company's borrowing
contained in its Constitution or in any loan offer, facility letter,
debenture or other deed or document executed by it or, in the case of
borrowings on overdraft, its overdraft facilities.
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7.3 Loans from Directors or Shareholders: All amounts outstanding and
appearing in the books of the Company as loan accounts or as due to
directors or shareholders wholly represent money or money's worth paid or
transferred to the Company as the case may be or remuneration accrued due
and payable for services rendered and (save for such remuneration) no
part thereof has been provided directly or indirectly out of the assets
of the Company.
7.4 No Repayments: The Company has not repaid and pending Completion will not
repay any loans or other financial accommodation in whole or in part nor
has it by reason of any default by it in any of its obligations become
bound or liable to be called upon to repay prematurely any loans or
borrowed moneys and pending Completion no such default will occur.
8. Liabilities and Commitments
8.1 No Capital Commitments: Since the Last Accounting Date the Company has
not except in the ordinary course of business made any capital
expenditure or incurred any capital commitments nor has it disposed of or
realised any substantial capital assets or any interest in such assets.
The Company has no outstanding capital commitment and pending Completion
no capital commitments or disposals of capital assets or land or any
estate or interest in such assets or land will be undertaken by the
Company without the prior written consent of the Purchaser.
8.2 No Guarantees: The Company is not and will not prior to Completion become
a party to any contract of guarantee or indemnity.
8.3 No Material Contracts: The Company has not entered into and will not
enter into any material contract (including the granting of options to
purchase or Charges over all or any of the Company's assets) except in
the normal and ordinary course of business. The Company has not and will
not become a party to any unusual, abnormal or onerous contract or
agreement whatsoever except as disclosed to the Purchaser or as approved
by the Purchaser.
8.4 No Long Term Contracts: The Company is not and will not on Completion be
a party to any contract of service or supply which cannot be terminated
by not more than 1 month's notice without giving rise to any claim for
damages or compensation.
8.5 No Commitments since Last Accounting Date: The Company has not since the
Last Accounting Date been and will not at Completion be a party to any
contract, commitment or arrangement of any nature except such as have
been entered into in the normal and ordinary course of trading and are
capable of being wholly satisfied or performed within 3 months from
Completion or of being terminated within such period without cost to the
Company.
8.6 No Arrangements: The Company is not and will not on Completion be a party
to any joint venture, partnership, syndicate or other consortium
arrangement.
8.7 No Agents: No person is authorised to act as agent for the Company or
otherwise to bind the Company other than the directors of the Company
acting as a board. The Company has not appointed any agents, distributors
or managers in respect of any of its products or services in any part of
the world.
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8.8 No Default under Agreements: The Company is not now, nor pending
Completion will it become, in default under any agreement to which it is
or may become a party or in respect of any other obligations binding upon
it. No event has occurred which would enable any third party to terminate
any contract or any benefit enjoyed by the Company.
9. Employees
9.1 Full Disclosure of Terms: Full disclosure in writing of the current rate
of remuneration, fees and expenses payable to each officer and employee
of or consultant to the Company and the terms of such employment or
consultancy (including obligations in respect of any directors' or
officers' keyman or indemnity insurance) have been made to the Purchaser
in writing. No such officer or employee or consultant has given notice or
is under notice of dismissal or termination of employment of any
consultancy agreement.
9.2 No Amounts Due: No amounts are due to or in respect of any former officer
or employee or consultant and there are no outstanding arrears of salary,
wages, fees, holiday pay or other remuneration.
9.3 No Industrial Disputes: The Company is not involved in any industrial or
trade dispute or any dispute with any trade union or organisation or body
of employees.
9.4 No Changes: No change has been made in the terms of employment or
consultancy by the Company of any person who was employed at the Last
Accounting Date. Pending Completion the Company will not without the
Purchaser's prior written consent engage any new employee or consultant.
9.5 No Other Payments: No moneys other than in respect of remuneration or
emoluments of employment or fees are payable to or for the benefit of any
director or officer of the Company.
9.6 No Profit Sharing: The Company is not and will not prior to Completion
become a party to any agreement with any director, officer, employee or
consultant of the Company under which any such person is entitled to a
share of profits of the Company or to any bonus calculated on profits or
to participate in any share incentive scheme or share option scheme or
similar arrangement. No pensions, retiring allowances or other benefits
are or will be payable by the Company to any director, officer or
employee of the Company during such person's employment or consultancy.
9.7 No Schemes: There are not now and will not on Completion be in existence
any retirement, death or disability benefit schemes for directors or
employees or any obligations to or in respect of any present or past
directors or employees with regard to retirement, redundancy, death,
sickness or disability pursuant to which the Company is or may become
liable to make any payments.
9.8 No Breaches of Contract: Since the Last Accounting Date no liability has
been incurred or payment made by the Company for breach of any contract
(whether express or implied) of service, for redundancy or for
compensation for loss of office or wrongful dismissal or in respect of
retirement, death, sickness or disability. No gratuitous payment has been
made or will prior to Completion be made or promised by the Company to or
in respect of any director or employee.
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9.9 No Liability for Leave Payments: The Company is not and will not at
Completion be under any liability to any person in respect of long
service leave or accrued annual leave.
9.10 Compliance with Legislation: The Premises and operation of the business
of the Company and the terms on which the employees of the Company were
recruited and are employed to the extent that they are required to comply
and will to that extent at Completion comply with the Employment
Contracts Act 1991, the Equal Pay Act 1972, the Human Rights Act 1993,
the New Zealand Bill of Rights Act 1990, the Wages Protection Act 1983,
the Holidays Act 1981, the Health and Safety in Employment Act 1992 and
all applicable legislation governing employment and safety of employees.
10. Statutory Obligations
10.1 Holding of Licences: The Company holds and will on Completion be in
possession of all current licences (including import licences and
concessions, if any) consents, authorities and permits from or issued by
any Governmental Department, municipal or local body or other authority
whether in respect of the Premises, plant, machinery, buildings or other
assets of the business or otherwise necessary or required to enable it to
carry on its business fully and effectively. The Company has not had
notice that any such licences, consents, authorities or permits are being
or are likely to be withdrawn or in any manner qualified whether by
reason of the sale of the Shares or otherwise howsoever.
10.2 No Requisitions: There has not since the Last Accounting Date been and
will not on Completion be any unsatisfied requisitions by or dispute with
any local body health authority, government or ad hoc authority or other
body or official or authority having competent jurisdiction affecting or
relating to any of the Premises, plant, machinery, buildings or other
assets of the business, or the employment of staff by the Company.
10.3 No Illegal Trade Practices: The Company is not, has not been and will not
pending Completion be a party to any agreement, arrangement,
understanding or practice which is contrary to the provisions of the
Commerce Act 1986, the Fair Trading Act 1986, the Consumer Guarantees Act
1993, or the Privacy Act 1993.
10.4 No Breach of Statute: The Company has not committed any breach which was
unremedied at the Last Accounting Date of any statutory provision, order,
bylaw or regulation (in every case whether applicable in New Zealand or
elsewhere) binding on or applicable to it with regard to the formation
and operation of the Company, the carrying on of the business of the
Company or any other matter relating to the Company. The Company has not
since such date and will not prior to Completion commit any such breach.
10.5 All Documents Stamped: All documents which in any way affect the right,
title or interest of the Company in or to any of its property,
undertaking or assets or to which the Company is a party and which
attract stamp duty have been duly stamped. No liability to pay stamp duty
will arise as a result of Completion by virtue of any previous transfer
of any property, undertaking or assets to the Company in particular but
without limitation under section 13(4) of the Stamp and Cheque Duties Act
1971.
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10.6 Compliance with Companies Act: The Company has complied with and will up
to Completion comply with all the requirements of the Companies Act 1993
including all requirements for filing of documents with the Registrar of
Companies.
10.7 All Registers Complete: The entries in the Register of Members, Register
of Directors and Secretaries, Interests Register, Register of Charges and
Register of Directors' Shareholdings of the Company are correct and such
registers have been properly kept.
11. Properties and Assets
11.1 Leasehold Premises: The Premises are held upon lease terms which have
been fully disclosed to the Purchaser.
11.2 Title and Compliance: The Company had on the Last Accounting Date and
will on Completion have sole title to and possession and control of all
the freehold and leasehold properties used or occupied by it free from
all leases, tenancies or Charges. Each of the said properties complies
and will on Completion comply with the local body code or ordinances
affecting the same and with all other statutory, local body and other
regulations and requirements.
11.3 All Premises Included: The Premises comprise all the freehold and
leasehold land and premises owned, used or occupied by the Company and
all the estate interest right and title whatsoever of the Company in,
under, over or in respect of any such land or premises.
11.4 Compliance with Statutes: The Company has to the extent to which it is
required to complied with all provisions of the Building Act 1991,
Resource Management Act 1991 and all other legislation (including
regulations, bylaws, ordinances, codes of practice, circulars and
guidance notes made thereunder) relating to building, planning or
environmental matters and dealing with (but without limitation) waste,
contaminated land, discharges to land or ground and surface water or
sewers, emissions to air, noise, dangerous, hazardous or toxic substances
and materials, nuisance or health and safety. There are no actions,
claims or proceedings (whether actual or potential) existing in relation
to such matters nor any liability likely to arise in relation to such
matters.
11.5 Compliance with Leases: The Company has paid all rent that may be payable
and has performed and observed all covenants (whether in relation to
freehold or leasehold land) conditions, agreements, statutory
requirements, planning or building or resource consent, bylaws, orders
and regulations affecting the Premises or any business carried on the
Premises. No notice of any breach of any such matter has been received
nor are the Vendors aware of any such breach having occurred.
11.6 No Defects: No structural, drainage or other material defects have
appeared in respect of or affected the buildings and structures on or
comprising the Premises. All such buildings are in good and substantial
repair and condition and none has been constructed, maintained, altered
or repaired using materials containing any deleterious building material.
None of the Premises has been affected by flooding or subsidence.
[INIT] 35
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11.7 No Other Matter: There is no other matter of which the Vendors are or
ought to be aware on reasonable enquiry and which adversely affects the
value of any of the Premises or casts any doubt on the right or title of
the Company to those Premises or its use of those Premises for its
business which should be revealed to a Purchaser of the Shares of the
Company or other person entering into this Agreement.
11.8 Plant and Machinery: The Company's plant and machinery (including fixed
plant and machinery) and all equipment, furniture and vehicles taking
into account their age and usage are in good repair and condition (fair
wear and tear excepted) and in satisfactory working order.
11.9 Debts Recoverable: The amount of all debts due or recorded in the
Financial Statements or the books of the Company as being due to the
Company as at Completion (less the amount of any provision or reserve
made in the Financial Statements or the books of the Company in respect
of any particular debts) will be good and collectable in full in the
ordinary course of business and in any event not later than 6 months
after Completion. None of such debts is or will at Completion be subject
to any counterclaim or set-off except to the extent of any such provision
or reserve.
11.10 Debtors Recovery: Should any of the debtors of the Company as at the
Completion fail to satisfy its liability to the Company in full within 6
months from the Completion Date and the aggregate amount due to such
debtors exceeds $3,000, the Vendors will immediately upon demand by the
Purchaser pay to the Purchaser (or the Purchaser may deduct from the
Consideration) the amount of such excess amount. Following payment of
such amount the Purchaser shall be entitled to an assignment of the
benefit of such excess debts.
11.11 Changes Since the Last Accounting Date: Since the Last Accounting Date:
11.11.1 No Write-Offs or Write-Downs: None of the assets of the Company
have been written off or written down nor has there been any
agreement for the release of any person under liability to the
Company;
11.11.2 Cash: The Company has neither disbursed nor received any cash
except in the ordinary course of its business and amounts
received by the Company have been deposited with its bankers and
appear in the appropriate books of account;
11.11.3 Depletion in Assets: There has been no depletion in the net
assets of the Company and they have not been materially
diminished by the negligent, wrongful or fraudulent act of any
person;
11.11.4 GAAP: Everything which should according to generally accepted
accounting practices (as defined in the Financial Reporting Act
1993) have been written up or recorded in the Statutory Books and
financial records of the Company with respect to the assets of
the Company (including the Premises), has been written up and
recorded;
11.11.5 Compliance with Notices: There have been no notices, claims or
demands served on the Company in respect of any of its assets
(including the Premises) which hay not been fully complied with.
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12. Intellectual Property
12.1 All Intellectual Property Included: The Consideration for the Shares is
assessed on the basis that all licences and all Intellectual Property or
other similar rights relating to the business of or used by the Company,
if any, are at present owned solely and beneficially by the Company. All
of such rights shall remain the property of the Company to the intent
that the Company shall be the sole unencumbered and undisputed owner of
all such things as at Completion.
12.2 No Intellectual Property Agreements: The Company has not entered into any
agreement or arrangement for the provision of technical information or
assistance or granting rights in respect of any patents, trade marks or
registered designs or copyright. To the best of Tyree's knowledge and
belief the operations of the Company do not infringe any patent or other
intellectual property right of any kind vested in any other party.
12.3 Disclosure of Intellectual Property: Full details of all Intellectual
Property owned or used by the Company have been given to the Purchaser.
No person has been authorised to make any use whatsoever of any
Intellectual Property owned by the Company. The Company has not disclosed
(except in the ordinary course of its business) any of its know-how,
trade secrets, technical processes, confidential information,
Intellectual Property or lists of customers or suppliers to any other
person.
12.4 Use of Names: The Company is entitled to use its trade names in those
parts of the world in which it currently conducts its business or its
products are sold to its customers. No person has been authorised to make
any use whatsoever of any such name. The use of such names by the Company
does not infringe the rights of any other person or entitle any other
person to a claim against the Company. No such name is being used,
claimed, opposed or attacked by any other person.
12.5 Name: The Company has not consented to and will not before Completion
consent to the adoption of a similar name by any other company or person.
12.6 Intellectual Property Not Disputed: The Intellectual Property rights of
the Company have not been and will not at Completion be challenged or
disputed by any third party. The Vendors are not aware of any facts or
circumstances which might entitle a third party to challenge the
Company's ownership or use of the Intellectual Property used in the
business.
13. Commercial Matters
13.1 All Actions Indemnified: There is no cause of action in respect of which
the Company is not fully indemnified which could and might be used for
the purpose of commencing proceedings either civil or criminal.
13.2 No Legal Proceedings: The Company is not engaged in any Proceedings
whatsoever nor are any Proceedings of any kind being taken against it nor
is Tyree aware of any Proceedings against the Company pending or
threatened.
13.3 No Breaches of Contract: The Company is not and will not on Completion be
breach of any contract commitment or arrangement of any nature whatsoever
which
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it is now or will then be a party and is not and will not on Completion
be a party to any contract, commitment or arrangement which may be
unenforceable by the Company by reason of the transaction being voidable
at the instance of any other party or ultra vires, void or illegal.
13.4 Insurance: Full details of all insurance policies maintained by the
Company have been supplied to the Purchaser. All such insurances are now
in force and all premiums due have been paid. Pending Completion the
Company shall not permit any of its insurances to lapse or do or omit to
do anything the doing or omission of which would make any such policy of
insurance void or voidable or would or might result in an increase in the
rate of premiums. No claims are outstanding and nothing has occurred to
give rise to any such claim.
13.5 No Notice from Lenders to Repay: The Company has not received notice
(whether formal or informal) from any lenders of money to the Company
requiring repayment or intimating the enforcement by such lenders of any
security which they may hold over any assets of the Company. Tyree is not
aware of any circumstances likely to give rise to any such notice being
given or which would enable any such notice to be given.
13.6 Effect of Acquisition of Shares: Tyree has no reason to believe that as a
result of the proposed acquisition of the Shares by the Purchaser:
13.6.1 No Cessation of Supplies: Any supplier of the Company will cease
supplying the Company or may substantially reduce its supplies to
the Company or alter the terms on which it supplies the Company;
or
13.6.2 No Cessation of Custom: Any customer of the Company will terminate
any contract with the Company or cease or materially reduce its
business with it; or
13.6.3 No Notice of Termination of Employment: Any officer or senior
employee of the Company will give notice of termination of his or
her employment with the Company; or
13.6.4 No Termination of Contracts: Any of the licences, consents,
approvals, agreements or contracts currently granted to or entered
into by the Company required in connection with the carrying on of
its business in the manner in which it has been carried on at any
time during the 2 years prior to the date hereof will be
withdrawn, cancelled or be capable of termination.
13.7 Arm's Length Supplies: All supplies of goods or services to the Company
are purchased by the Company direct from manufacturers or suppliers on an
arm's length basis and no commissions or similar payments are made to the
Vendors or any other intermediaries in respect of such supplies.
13.8 No Outstanding Offers: No offer, tender or the like given or made by the
Company and still outstanding is capable of giving rise to a contract
merely by any unilateral act of a third party.
13.9 No Liabilities: The Company does not have and at Completion will not have
any outstanding debts, liabilities, contracts or engagements, guarantees,
undertakings or liabilities (including contingent liabilities) other than
liabilities implied by statute or
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disclosed in the Financial Statements or incurred in the ordinary and
proper course of its trading business.
13.10 Continuance of Name: The Company does not and pending Completion will not
use on its letterheads, brochures, sales literature, books, Premises or
vehicles or otherwise carry on its business under any name other than its
corporate name.
13.11 Electronic Storage: The Company has not and will not pending Completion
have any of its records, systems, controls, data or information recorded,
stored, maintained, operated or otherwise dependent upon or held by any
means (including any electronic, mechanical or photographic process
whether computerised or not) which (including all means of access thereto
and therefrom) are not under the exclusive ownership and direct control
of the Company. There has been no breach of any service or maintenance
contract relevant to any such electronic, mechanical or photographic
process or equipment whereby any person or body providing services or
maintenance thereunder may have the right to terminate such service or
maintenance contract.
13.12 Transactions with Associated Persons: The Vendors and their Associated
Persons have not entered into and will not prior to Completion enter into
any loan, borrowing, agreement or other arrangement with or on behalf of
the Company (other than as employee of the Company on terms fully
disclosed to the Purchaser) and are not and will not at Completion be
interested, whether directly or indirectly, in or have any Charge over
any of the assets of the Company.
14. Corporate Matters
14.1 Share Capital: There is not now outstanding and will not be outstanding
at Completion in respect of the Company any option or agreement under
which any person has or may in any circumstances have or acquire the
right to subscribe for or purchase any share or loan capital of the
Company or to convert any stock or share or security into share capital
or into share capital of a different class.
14.2 Attorneys: The Company has not given any power of attorney or any other
authority (express, implied or ostensible) which is still outstanding or
effective to any person to enter into any contract or commitment or do
anything on its behalf (other than any authority of employees to enter
into routine trading contracts in the normal course of their duties) nor
will it do so prior to Completion.
14.3 Officers: Since the Last Accounting Date no appointments or removals of
any officers of the Company have been made.
14.4 Ultra Vires Contracts: To the best of Tyree's knowledge and belief none
of the activities or contracts or rights of the Company is ultra vires,
unauthorised, invalid or unenforceable or in breach of any contract or
covenant.
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SCHEDULE 3
(clause 7.3)
1. Warranty Limitations: Notwithstanding any other provisions of this
Agreement, neither the Vendors or Tyree shall not be liable in respect of
any Proceedings or Costs for breach of any of the Warranties or other
breach of this Agreement:
1.1 Notice: Unless, promptly after the Purchaser becomes aware or ought to
have become aware of any breach, they shall have received from the
Purchaser written notice containing full details of the relevant
Proceedings including, if practicable, the matter or default which gives
rise to the Proceedings, the breach that results and the amount claimed
in respect of the Proceedings:
1.1.1 Other than Taxation: In the case of any of the Warranties other
than Warranties in relation to Taxation, within a period of 2
years after Completion; or
1.1.2 Taxation: In the case of any of the Warranties in relation to
Taxation, within a period ending the earlier of the date 7 years
after Completion and the date falling six weeks after the date on
which any relevant statutory limitation period in the jurisdiction
relevant to the Taxation Proceedings shall expire;
and (unless the relevant Proceedings shall have been withdrawn or
satisfied) action in a court of competent jurisdiction in respect of such
breach shall have been commenced within 1 year after receipt of such
notice;
1.2 Aggregate of Warranties to Exceed Specified Amount: Unless the aggregate
amount of the liability of the Vendors and Tyree breach of Warranties
exceeds $5,000;
1.3 Limit for Single Proceedings: Unless, in respect of any single breach of
any of the Warranties, the amount of the liability of the Vendors and
Tyree exceeds $1,000;
1.4 Exclusion where Covered by Insurance: If and to the extent that (after
taking account of related Costs and any normal excess in such policy)
recovery is made by the Purchaser or the Company under any policy of
insurance effected by or for the benefit of the Company in respect of any
of the subject matters of such Proceedings;
1.5 Exclusion where Recovery under Another Agreement: If and to the extent
that those Proceedings or Costs occasioned thereby has been recovered
under any other agreement entered into between the parties and vice
versa;
1.6 Provisions Made in Account: If and to the extent that proper provision or
allowance therefor has been made in the Financial Statements;
1.7 Subsequent Changes: If and to the extent that such Proceedings and any
Costs in connection therewith arise or is increased as a result of:
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1.7.1 Any alteration in rates of Taxation after the date of this
Agreement with retrospective effect or the withdrawal after the
date of this Agreement of any published extra-statutory concession
or the alteration after that date of any published statement of
practice of the relevant revenue authority; or
1.7.2 The passing of, or any change in, any legislation after the date
of this Agreement; or
1.7.3 Any change in accounting policy or practice of the Company after
Completion including any changes in methods or practices in
relation to stock valuation;
1.7.4 Any voluntary act or omission or transaction of the Purchaser or
the Company after Completion otherwise than in the ordinary course
of the Company's business as carried on at the date of this
Agreement including (without limitation):
1.7.5 The payment of any unusual or abnormal dividend by the Company;
1.7.6 A change of the date up to which the Company makes up its
Statutory Books;
1.7.7 The cessation of any business carried on by the Company;
1.8 Liability Disclosed: If and to the extent the facts, matters or
circumstances giving rise to the breach are referred to in the Disclosure
Letter or any information disclosed with the Disclosure Information, the
Disclosure Letter or in any document disclosed to the Purchaser or any
officer of or professional adviser to the Purchaser in relation to this
Agreement or the matters contemplated herein or in the Financial
Statements;
1.9 Utilisation of Taxation Relief: In the case of a Proceedings arising in
connection with a payment of Taxation, if and to the extent that such
payment could have been avoided by the utilisation of trading losses or
other reliefs from Taxation (other than trading losses, or other reliefs
arising after the Last Accounting Date) available to the Company;
1.10 Over Provision in Financial Statements: If and to the extent that there
is any over provision in respect of any matter included in the Financial
Statements;
1.11 Pursuant to Agreement: If and to the extent that such matter giving rise
to the Proceedings properly falls to be done in implementing the terms of
this Agreement;
2. Limitations Separate and Independent: For the avoidance of doubt each of
the above paragraphs of this Schedule shall be construed as being
separate and independent and none of them shall be construed as limiting
the effect of any other.
3. Recovery from Third Party: If the Vendors or Tyree pays an amount
pursuant to a Proceedings in respect of breach of any of the Warranties
and the Company or the Purchaser has a right of reimbursement against any
person other than the Company in respect of or relating to those
Proceedings, the Company or the Purchaser shall (subject to the Company
or the Purchaser, as the case may be, being indemnified to its reasonable
satisfaction by the Vendors or Tyree against all reasonable Costs) take
all
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<PAGE>
reasonable steps or proceedings to enforce such right. If the Purchaser
subsequently recovers such reimbursement from such third party, the
Purchaser shall forthwith repay to the Vendors or Tyree as the case
requires such part of the amount paid by either of them by way of damages
for breach of that Warrant as equals the amount which is so recovered by
the Purchaser in respect of the facts, matters or circumstances giving
rise to the breach of that Warranty (after taking account of the Costs of
recovery and (if appropriate) any Taxation arising solely as a result of
the recovery).
4. Conduct of Proceedings by the Vendors/Tyree: The Purchaser shall give and
shall procure that the Company shall give, to the Vendors and Tyree full
facilities to investigate any Proceedings and the extent of possible
liability under the Warranties and at the request of the Vendors or Tyree
shall (subject to the Purchaser being indemnified as to any reasonable
Costs which may be incurred thereby) allow them at their own expense to
participate in, or have the conduct of (as they may elect), all
proceedings of whatsoever nature against the relevant third party arising
out of, or in connection with such Proceedings or dispute, in the name of
the Company or the Purchaser as it may consider necessary in order to
mitigate any Proceedings or Costs arising under this Agreement. Neither
the Purchaser nor the Company shall accept or pay or compromise any such
liability or Proceedings as is referred to above without the Vendors or
Tyree either consenting to such action or having a reasonable opportunity
to resist the same.
5. Limitation on Aggregate Liability: The total liability of the Vendors and
Tyree under this Agreement whether under the Warranties or otherwise in
respect of all breaches or claims whatsoever shall not exceed a maximum
aggregate sum equivalent to the total Consideration paid to, or otherwise
received by, the Vendors.
6. No Double Liability: No liability shall attach to the Vendors or Tyree
for any loss resulting from any breach of the Warranties or otherwise
under this Agreement to the extent that the same loss has been recovered
by the Company or the Purchaser under any indemnity under this Agreement.
No liability shall attach to the Vendors or Tyree under any indemnity to
the extent that the same loss has been recovered by a claim under a
Warranty.
7. Insurances: If, in respect of any claim against the Vendors or Tyree
which may arise in respect of this Agreement, the Purchaser or the
Company is entitled to claim under any policy of insurance, then the
Vendors and Tyree shall not be liable in respect of such claim until a
claim has been made under such policy. Any claims against the Vendors
and/or Tyree shall be reduced by any amount actually recovered under any
such policy.
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<PAGE>
SCHEDULE 4
(clauses 9.1.3)
Item 1. Consents (clause 9.1.3)
Hanimex (N.Z.) Limited
Sam Montegue Trust
Item 2. Charges (clause 4.1.3)
Debenture in favour of the Sam Montegue Trust dated 9 April 1997
Item 3. Guarantees (clause 4.2)
Melco NZ Limited
Company motor vehicle leasing (x2)
Premises lease
Equipment Finance Limited
Note: the above contracts are "not material" for the purposes of
clause 9.1.3
Item 4. The Software Licensing Agreement Variation document (copy
attached) (clause 4.1.8)
Item 5. The Hanimex Variation Agreement (copy attached) (clause 4.1.9)
Item 6. The Mortgage of Shares (clause 5.1.10)
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<PAGE>
ANNEXURES
1. Financial Statements (clause 1.1)
2. Service Agreement (clause 4.1.4)
3. Form of Escrow Agreement (clause 1.1)
4. Assets Schedule (clause 3.1.2)
5. Disclosure Letter
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<PAGE>
================================================================================
N.Z. On Line Limited
====================
Financial Statements
====================
For the Six Months
==================
To 30th Sep 1997
================
DAVID J. DOLBEL A.C.A.
CHARTERED ACCOUNTANT
P.O. BOX 74-271 MARKET ROAD
AUCKLAND
PH 520-3710
================================================================================
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<PAGE>
PARRILOTT PTY. LTD. 30-Sep-97
PAGE 2
Balance Sheet
As at 30-Sep-97
LAST YEAR ACCOUNT NAME THIS YEAR
CURRENT LIABILITIES
- LOAN - N.Z. OnLine Ltd. 42,681
- LOAN - Intern.Telecommunicatn. 100
- SUNDRY CREDITORS 1,427
- SHAREHOLDERS LOANS 452
- ------------- -------
TOTAL CURRENT LIABILITIES 44,660
- ------------- -------
TERM LIABILITIES
- ------------- -------
TOTAL LIABILITIES 44,660
============= =======
- ------------- -------
EXCESS ASSETS/LIABILITIES 53,971
============= =======
END OF REPORT 21 RECORD(S) PRINTED 03:42:O2pm 19-Nov-97
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<PAGE>
- --------------------------------------------------------------------------------
DATED the day of 1997
BETWEEN
NEW ZEALAND ONLINE LIMITED
("the Company")
AND
RICHARD LYELL TYREE
("Employee")
- --------------------------------------------------------------------------------
EMPLOYMENT CONTRACT
- --------------------------------------------------------------------------------
----------
MALLOY GOODWIN HARFORD
SOLICITORS
NEWMARKET
- --------------------------------------------------------------------------------
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<PAGE>
2
EMPLOYMENT CONTRACT
DATED the day of 1997
BETWEEN: NEW ZEALAND ONLINE LIMITED at Auckland
("the Company")
AND: RICHARD LYELL TYREE of Auckland, Company Director
("the Employee")
THE PARTIES AGREE as follows:
1 TERM
1.1 This Employment Contract records the terms and conditions of the
employment of the Employee by the Company, which will apply to the
Employee from the date this agreement is signed. This Employment Contract
supersedes and replaces all previous written or verbal agreements between
the parties.
1.2 The terms and conditions of this agreement shall come into force on the
date this Contract is signed and shall run for a term expiring on the
3Oth day of March 2001, unless this Agreement shall be earlier terminated
in accordance with the termination provisions of this Agreement. The
parties agree that there is no expectation that further employment will
be offered at the end of the Term and nothing in this agreement shall
oblige the Company to make such an offer, or the Employee to accept any
offer that may be made.
1.3 This Agreement is entered into pursuant to the terms of a certain
Agreement for Sale and Purchase of Shares ("the Share Agreement") dated
the 24th day of December 1997 made between Brocker Investments (NZ)
Limited ("the Purchaser") as Purchaser and Laurence John Ryan and M & H
Trustee Services Limited ("the Vendor") as Vendor relating to all the
shares in the Company. Related to the Share Agreement is an Escrow
Agreement and a Deed of Mortgage of all the shares in the Company to be
entered into by (enter alia) the Vendor and the Purchaser. In this
Employment Contract, the term "Relevant Agreement" refers to the Share
Agreement, the Escrow Agreement and the Deed of Mortgage of Shares. In
the event of there being any inconsistency or ambiguity between any
provision in this Employment Contract and any provision in the Share
Agreement, the provisions of the Share Agreement shall prevail.
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3
2 DUTIES AND RESPONSIBILITIES
2.1 You shall be responsible for the overall and daily activities of the
Company and shall carry out and discharge the duties and responsibilities
commonly expected of a Managing Director and a General Manager based on
the size of the operation planned by the Company. You accept that you may
be required to perform other duties or tasks outside the scope of your
normal duties.
2.2 It is expected that your duties will be performed in accordance with the
instructions of the Company and that you will devote all of your normal
working hours and best endeavour to performing your duties in a manner
which will promote the interest of the Company.
3 HOURS OF WORK
3.1 By virtue of the nature of responsibilities on any director and manager,
the nature of the business of the Company and the international nature of
the Company is business, you acknowledge that the performance of your
duties will require work to be carried out outside the normal hours of
business. The salary specified in clause 4.1 will be accepted as full
payment for all work performed in the course of your duties as managing
director and general manager.
4 REMUNERATION
4.1 Your base salary is $55,000 per annum, to be reviewed annually.
4.2 You will be entitled to the payment of a bonus detailed in the Schedule,
upon achieving the criteria set out in the Schedule.
4.3 Motor Vehicle Allowance - You shall be paid an annual Motor Vehicle
Allowance of $18,000.00 gross per annum.
4.4 Expenses - Subject where appropriate to the production of the relative
GST invoices (or other appropriate invoices) you will be reimbursed for
all out-of-pocket expenses properly and reasonably incurred in the
performance of your duties hereunder PROVIDED THAT in each case they are
in accordance with the requirements of the Company's policy on expenses
applicable at the time (if any).
5 PAYMENT OF REMUNERATION
5.1 Base salary will be paid monthly, by direct credit to the bank account of
your choice.
5.2 Any variable component of bonus will be paid by the 30th of the month
following the bonus period, or the Wednesday following the 30th. Any
non-variable component of
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4
bonus will be paid quarterly, no later than the 30th of the month
following the applicable quarter. Such payments shall be made by direct
credit to a bank of your choice.
5.3 The vehicle allowance shall be paid at the same time as the salary
payment, and paid by direct credit as above.
5.4 No deduction shall be made from your salary without your consent, except
for time lost through sickness or default or accident to yourself unless
required by law or clause 7 below.
5.5 The Company will provide you with a statement of your earnings and
deductions for a pay period at your request or where there is any change
to your salary payments.
5.6 The Company reserves the right to change the date of payment of salaries
to the 15th of each month or the following Monday thereafter, such
payment being made in advance up to and inclusive of the end of the
month. Three months notice of this change will be given.
6 APPRAISAL
6.1 An appraisal will be carried out at least annually, generally in the
month of April.
7 STATUTORY HOLIDAYS
7.1 Public holidays shall be granted and observed in accordance with the
provisions of the Holidays Act 1981.
7.2 Any time worked on a statutory holiday that has been authorised by the
Company shall be taken in lieu on a day that it mutually agreed upon or
credited to your annual holiday accumulation.
8 ANNUAL HOLIDAYS
8.1 Annual holidays are provided in accordance with the provisions of the
Holidays Act 1981 and its amendments.
8.2 Holiday entitlements are calculated to 31st March each year. If a full
year has not been worked then entitlement is calculated at 6% of the
ordinary gross pay earned to date.
8.3 Four (4) weeks holiday may be taken each year including the year ending
31 March 1998.
8.4 If your employment is terminated and your period of employment is less
than one year, the Company shall pay you an amount equal to 6% of your
gross taxable earnings, minus any holiday pay you have already received.
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5
8.5 Requests for annual leave must be submitted for approval at least 30 days
in advance.
9 SICK LEAVE AND DOMESTIC LEAVE
9.1 You shall be entitled to sick pay of 7 days in each 12 month period of
employment.
9.2 Sick pay shall be accumulative to up to 21 days.
9.3 The Company may, at its discretion, require you to provide a medical
certificate for any sick leave or domestic leave absence. You shall be
required to provide a medical certificate where you are absent for more
than 2 days for sick leave or domestic leave absence.
9.4 You shall ensure notice is given to us that you are sick or taking
domestic leave, not later than one hour prior to your normal commencing
time and you shall notify us as soon as possible when a return to work is
likely.
9.5 The Company shall also have the right to require you to produce
additionally, a medical certificate at our expense, from a doctor
nominated by ourselves.
9.6 Domestic Leave - Where you have any unused sick leave entitlement, leave
of up to 7 days per year shall be granted where you find it essential to
stay at home in an emergency. This will be available in the event of
illness of your spouse, a dependant child or parent, or maternity
confinement. Such leave shall be treated as though it was due to your own
sickness and this shall be set off against your own sick leave
entitlement.
9.7 Sick leave and domestic leave will not be paid on a day on which a
holiday is being observed.
9.8 The Company may at its discretion grant additional sick leave or domestic
leave with/without pay where special circumstances exist.
10 BEREAVEMENT LEAVE
10.1 In the event of the death of any of your immediate family, being your
spouse or defacto partner, child, stepchild, parent, brother, sister,
mother-in-law, father-in-law, brother-in-law, sister-in-law, grandparent,
or grandchild, the Company shall allow paid leave up to a maximum period
of 3 days on each occasion. The Company may, at its discretion, ask you
for confirmation of the bereavement.
10.2 The Company may at its discretion, grant additional leave without pay
where the Company considers special circumstances exist.
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6
11 SPECIAL HOLIDAYS CLAUSE
11.1 Note that the entitlements in Clauses 10 and 11 are inclusive of and not
in addition to the entitlements for Special Leave provided in Section
30(A) of the Holidays Act 1981 and amendments.
12 UNPAID LEAVE
12.1 Where you need to be away from work for personal reasons the Company may
grant limited time off work without pay. Such leave must be authorised by
the Company in advance.
13 PARENTAL LEAVE
13.1 Parental Leave shall be granted in accordance with the provisions of the
Parental Leave and Employment Protection Act 1987 and its amendments.
14 JURY SERVICE
14.1 Where you are obliged to undertake jury service, the difference between
the fees (excluding reimbursing payments) paid by the Court and your
salary shall be made up by ourselves provided:
15.1.1 That you produce the Court expenses voucher to us.
15.1.2 That you return to work immediately on any day that you are not
actually serving on a jury.
14.2 These payments shall be made for up to a maximum of 15 days in respect of
each separate period of jury service.
14.3 You must advise us on the first normal workday after notification of jury
service is received.
15 TUITION LEAVE
15.1 Where, with the Company's prior written approval, you attend any
job-related course during working hours, you shall be allowed paid time
off.
15.2 Where you pass all the necessary requirements and complete the course,
the Company may reimburse you for the cost of tuition and examination
fees.
15.3 Where you initiate and take tuition leave at your own request and where
you terminate your own employment within 12 months of having the tuition
fees or examination fees
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paid on your behalf, you shall reimburse the Company for fees paid on a
pro rata basis.
16 TERMINATION OF EMPLOYMENT
16.1 The Company may summarily terminate your employment in the case of
serious misconduct and/or serious breach of this contract, having already
received warning from the Company.
16.2 Where you are unable to complete your duties due to sickness your
employment may be terminated by not less than three (3) months notice.
16.3 This Employment Contract may be terminated immediately by the Employee by
written notice to the Company in the event of a Relevant Agreement being
breached by any party thereto other than the Employee and the Vendor
named in clause 1.3.
16.4 If Company issued gear or property is lost, or in the Company's opinion
is wilfully damaged it will be treated as a default by yourself and the
Company shall have the right to recover from you the cost of repairing or
replacing any such items.
16.5 Where employment is terminated by either party and the effective last day
of duty is prior to the normal pay period end date, the Company shall be
entitled to deduct or recover such salary paid in advance.
17. REDUNDANCY
17.1 In the event that your position becomes surplus to the needs of the
Company, you shall be given 3 months notice of termination of employment
(or pay in lieu of notice).
17.2 Redundancy compensation shall be paid to you in the sum of a further
three months salary.
17.3 No redundancy compensation shall be payable in any situation where the
termination of your employment arises as a result of the sale or transfer
of the whole or part of the Company's business and the person acquiring
the business or part being sold or transferred has offered you employment
in the business or part being sold or transferred and the conditions of
employment offered to you by the person acquiring the business or the
part of the business being sold or transferred are similar to, or more
favourable than, those provided for by this employment contract, or are
otherwise acceptable to you.
18 WARNINGS
18.1 the procedure for warnings shall be:
1. Oral warning.
2. Written warning with two weeks minimum evaluation.
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3. Final Notice.
19 SUMMARY DISMISSAL
19.1 Without precluding any other grounds the following will cause instant
dismissal: theft, sabotage, assault on a customer or fellow worker,
deception.
20 RETIREMENT
20.1 The retirement age for all employees if 65. However the employer may
continue to offer employment beyond this age on a casual basis.
21 CONFIDENTIALITY
21.1 For the purposes of this Employment Contract, the term "Confidential
Information" includes any information, regardless of the manner in which
it is recorded, relating to the business, affairs, financial or
commercial arrangements of the Company other than information which:
21.1.1 At the time of disclosure was in the public domain or which
subsequently enters the public domain without fault on your part;
or
21.1.2 At any time is received by you in good faith from a third party
who has lawful possession of such information and the right to
disclose it; or
21.1.3 That it was in your possession or known to you or developed by you
without knowledge of or reference to the Company's information.
21.1.4 Constitutes know-how and business information and methods of the
Employee.
21.2 You shall not at any time (whether during your employment or after
termination or your employment) except as specifically authorised by
Company disclose to any person or copy or make use of in any manner any
Confidential Information.
22 OTHER EMPLOYMENT
22.1 The Employee must not, without the written consent of the employer,
undertake paid employment that conflicts with the interests of the
Company or which impedes the Employee from performing his duties.
23 PERSONAL GRIEVANCE
23.1 All personal grievance claims (as that term is defined in the Employment
Contracts Act 1991) ("Claims") shall be resolved in accordance with this
clause 23.
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23.2 If you have a Claim, you must, within 90 days of the Claim arising or
coming to your attention (whichever is the latter), notify the Company in
writing of the nature of the Claim and the remedies sought ("Claim
Notice").
23.3 We shall then both use our best endeavours to resolve the Claim.
23.4 If within 14 days of the Company receiving the Claim Notice we have not
resolved the Claim, the Company will notify you in writing of the reasons
the Company is not prepared to grant the remedies sought by you.
23.5 The Claim shall then, at the request of either party by written notice to
the other, be referred to mediation.
23.6 The following procedure shall be followed in respect of any mediation:
23.6.1 The mediator shall be as agreed by you and the Company. If we are
unable to agree, the mediator shall be an accredited mediator
appointed by the Chairperson for the time being of the New Zealand
branch of LEADR (Lawyers Engaged in Alternative Dispute
Resolution).
23.6.2 We shall each diligently and in good faith co-operate and
participate in the mediation process making genuine attempts to
find a solution acceptable to both you and the Company.
23.6.3 If no agreement is reached within 28 days of the Company receiving
the Claim Notice or, alternately, if we both agree to abandon the
mediation process then the mediator shall conclusively decide the
matter in question as an arbitrator and his or her ruling shall be
final and binding.
23.7 The subject matter of all Claims and the outcome of any settlement shall
be confidential.
24 DISPUTES
24.1 All disputes (as that term is defined in the Employment Contracts Act
1991) ("Disputes") shall be resolved in accordance with this clause 24.
24.2 If you have a Dispute, you must, within 14 days of he Dispute arising or
coming to your attention (whichever is the latter), notify the Company in
writing of the nature of the Dispute and the remedies sought ("Dispute
Notice").
24.3 We shall then both use our best endeavours to resolve the Dispute.
24.4 If within 14 days of the Company receiving the Dispute Notice we have not
resolved the Dispute, the Company will notify you in writing of the
reasons the company is not prepared to grant the remedies sought by you.
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24.5 The Dispute shall then, at the request of either party by written notice
to the other, be referred to mediation in accordance with the procedure
set out in clause 19.6.
24.6 The subject matter of all Disputes and the outcome of any settlement
shall be confidential.
25 VARIATIONS
25.1 Any of the terms and conditions contained in this contract may be varied
by written agreement of the parties.
26 GOVERNING LAW
26.1 This agreement shall be governed and construed in all respects in
accordance with New Zealand law and the parties hereto submit to the
exclusive jurisdiction of the New Zealand Courts.
27 INDEMNITY OF THE EMPLOYEE
27.1 The Company hereby indemnifies the Employee for costs incurred by you in
any proceedings:
(a) that relates to liability for any act or omission in your capacity
as a director or employee;
(b) in which judgement is given in your favour or in which you are
acquitted, or which has discontinued.
27.2 The Company hereby indemnifies you in respect of:
(a) liability to any person (other than the Company) for any act or
omission in your capacity as a director or employee of the
Company; and
(b) costs incurred by you in defending or settling any claim or
proceeding relating to or any liability under paragraph (a) above
not being a criminal liability in respect of a breach, in the case your
case as a director of the duty specified in Section 131 of the Companies
Act 1993 (duty to act in good faith and in the best interests of the
Company) or, whether as a director or employee, of any fiduciary duty
owed to the Company.
27.3 For the purpose of this clause 27, "indemnify" includes relieve or excuse
from liability whether before or after the liability arises, and
"indemnity" has a corresponding meaning.
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27.4 The indemnity given in this clause 27 shall not extend to any liability
to Hanimex (NZ) Limited under the System Development Agreement dated the
15th of September 1997 until the 31st day of March 2001, on which date
this indemnity shall extend to all such liability in respect of events
arising after that date.
ENTERED into by )
NEW ZEALAND ONLINE )
LIMITED by its director )
RICHARD LYELL TYREE )
in the presence of ) _____________________________
R L Tyree
Witness:
Signature: _____________________________
Name: _____________________________
Occupation: _____________________________
Address: _____________________________
_____________________________
SIGNED by )
RICHARD LYELL TYREE )
in the presence of ) _____________________________
R L Tyree
Witness:
Signature: _____________________________
Name: _____________________________
Occupation: _____________________________
Address: _____________________________
_____________________________
28 INTELLECTUAL PROPERTY
Your intellectual property rights to intellectual property created during
the term of this Employment Contract will be modified to the extent set
out in the Share Agreement.
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SCHEDULE
BONUS SCHEME
In this Schedule:
Annual Budget means the Company's annual budget (1st April to 31st
March in each year) as determined by the Company.
NPAT menus net profit after tax and before interest.
Special Licensing Transactions (as defined below)
shall not be included as income in determining the
Company's actual performance against the Budgeted
NPAT for the purposes of calculating Initial Bonus
and Over-Achievement Bonus.
Budgeted NPAT means the Company's NPAT calculated by reference to
the Annual Budget.
Special Licensing
Transaction means any single fee (excluding hardware) paid by
any of the Potential Transactions (as defined below)
with a total value in excess of NZ$250,000 where the
particular transaction either:
(a) Provides the client with a level of
exclusivity in an industry, market, region,
or country for a specified period of time; or
(b) Gives the client the right to use the
technology as part of another application.
Potential
Transactions means any transaction with any of the following
potential clients in respect of the associated
product:
Potential client: Associated products:
Fuji Japan Pictrix, Pictography drivers
Photo Corporation Digital candid and "blue
screen" technology
Vivitar Camera devices
Ritz Group Pictrix
Hewlett Packard Pictrix gateway software
Harrahs Casino Group "Blue screen" technology
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Bonuses shall be calculated in accordance with the following formulae:
1. Initial Bonus
A variable component to a maximum of $35,000.
The Initial Bonus shall be calculated against the Company's
achievement of Budgeted NPAT. If the Company achieves less than
50% of Budgeted NPAT, no Initial Bonus shall be paid in respect of
that year. If the Company achieves 50% or more of Budgeted NPAT
you shall be paid an Initial Bonus calculated on a pro rata basis
against the Company's performance in achieving between 50% and
100% of Budgeted NPAT.
2. Over-Achievement Bonus
As an additional incentive, 5% of NPAT generated over and above
Budgeted NPAT will be paid after the end of each financial year.
3. Special Licensing Transactions
Income generated from Special Licensing Transactions shall be
apportioned between New Zealand OnLine Limited and the Employee
according to the following table:
(a) 1st November 1987 to 31t March 1998
Richard Tyree 70%
New Zealand OnLine Limited 30%
(b) 1st April 1998 to 30th September 1998
Richard Tyree 50%
New Zealand OnLine Limited 50%
(c) 1st October 1998 to 31st March 1999
Richard Tyree 30%
New Zealand OnLine Limited 70%
(d) 1st April 1999 onwards
New Zealand OnLine Limited 100%
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4. Examples
Example 1:
Budgeted NPAT for the period 1st April 1997 to 31st March $1,000,000
1998
Actual NPAT $900,000
Income generated from Special Licensing Transactions $500,000
Bonus payable:
Initial Bonus (clause 1) - 80% of $35,000 $25,000
Over-Achievement Bonus (clause 2) - 5% of NPAT generated
over and above Annual Budget Nil
Specified Licensing Transaction Bonus (clause 3) -
70% of $500,000 $350,000
Example 2:
Budgeted NPAT for the period 1st April 1998 to 31st March $1,000,000
1999
Actual NPAT $1,500,000
Income generated from Special Licensing Transactions:
(a) For the period 1st April 1998 30th September 1998 $300,000
(b) For the period 1st October 1998 to 31st March 1999 $300,000
Bonus payable:
Initial Bonus (clause 1) - 100% of $35,000 $35,000
Over-Achievement Bonus (clause 2) - 5% of 500,000 $25,000
Specified Licensing Transaction Bonus (clause 3) -
(a) 50% of $300,000 $150,000
(b) 30% of $300,000 $90,000
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- --------------------------------------------------------------------------------
DATED the day of 1997
BETWEEN
BROCKER INVESTMENTS LTD
("the Issuer")
AND
MONTREAL TRUST COMPANY OF CANADA
("the Trustee")
AND
BROCKER INVESTMENTS (NZ) LIMITED
("the Guarantor")
LAURENCE JOHN RYAN
and
M & H TRUSTEE SERVICES LIMITED
("the Security Holder")
---------------------------
ESCROW AGREEMENT
CONCERNING SHARES
IN
BROCKER INVESTMENTS LIMITED
---------------------------
---------------------------
MALLOY GOODWIN HARFORD
SOLICITORS
NEWMARKET
- --------------------------------------------------------------------------------
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ESCROW AGREEMENT
DATED the day of 1997
BETWEEN BROCKER INVESTMENTS LTD at Alberta, Canada ("the Issuer")
AND MONTREAL TRUST COMPANY OF CANADA at Alberta, Canada ("The
Trustee")
AND BROCKER INVESTMENTS (NZ) LIMITED at Auckland (AK/629109) ("the
Guarantor")
AND LAURENCE JOHN RYAN of Whangarei, District Court Judge and M & H
TRUSTEE SERVICES LIMITED at Auckland ("the Security Holder")
INTRODUCTION
1. The Security Holder the Issuer and the Guarantor have entered into an
agreement dated the __________ day __________ of 1997 whereby the
Security Holder has agreed to sell his shareholding in New Zealand OnLine
Limited at Auckland to the Issuer, the consideration for the Property
being in part the allotment of shares in the Issuer to the Security
Holder.
2. One of the terms of the Sale Agreement is that the BIL Shares upon
allotment are to be deposited with the Trustee pursuant to the terms of
this Agreement.
3. The Trustee has agreed to undertake and perform its duties according to
the terms and conditions under this Agreement.
THE PARTIES AGREE as follows:
1. Interpretation
1.1 In this Agreement unless the context otherwise requires:
"Sale Agreement" means the agreement between the Security Holder
and the Issuer and the Guarantor dated the 24th day of December
1997.
"Property" means the Security Holder's 600 A shares, 300 B shares
and 300 C shares in New Zealand OnLine Limited at Auckland.
"BIL Shares" mean the shares allotted or to be allotted by the
Issuer to the
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2
Security Holder as part consideration for the purchase of the
Property, and includes any rights to shares, and any option or
other security of the Issuer that are, or may become convertible
into common or ordinary shares or other voting securities of the
Issuer;
"Cash Flow" means net income of NZOL after tax and before
interest, as shown in the audited financial statements as verified
by KPMG Peat Marwick (Auckland), adjusted for the following
add-backs:
(i) depreciation
(ii) depletion
(iii) deferred taxes
(iv) amortization of goodwill
(v) amortization of research and development costs.
"Exchange" means the principal stock exchange on which the
Issuer's Common Shares are listed and posted for trading.
"NZOL" shall mean New Zealand OnLine Limited at Auckland, New
Zealand.
1.2 Clauses of the words importing the singular number shall include
the plural and vice versa.
1.3 References to persons shall be deemed to include the references to
individuals, companies, corporations, firms, partnerships, joint
ventures, associations, organisations, trusts, states or agencies
of state, government departments and local authorities in each
case whether or not having separate legal personality.
1.4 Expressions defined in the main body of this Agreement bear their
defined meaning in the whole of this Agreement including the
recitals.
1.5 Words importing one gender shall include the other genders.
2. Consideration
2.1 In consideration of the sum of ONE DOLLAR ($1.00) paid by the
parties to each other, receipt of this sum being acknowledged by
each of the parties, the Security Holder covenants and agrees with
the Issuer and with the Trustee, and the Issuer, the Trustee and
the Guarantor covenant and agree each with the other and with the
Security Holder as set out below.
3. Securities deposited with Trustee
3.1 The Security Holder hereby agrees to place and deposit in escrow
with the Trustee the BIL Shares which are to be issued to the
Security Holder in part
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3
consideration for the Property pursuant to the terms of the Sale
Agreement, immediately upon the issue of the BIL Shares.
3.2 The Security Holder agrees to deposit in escrow any further
certificates representing shares in the Issuer which the Security
Holder may receive as a stock dividend on shares hereby escrowed,
and to deliver to the Trustee immediately on receipt thereof the
certificates for any such further shares and any replacement
certificates which may at any time be issued for any escrowed
shares.
3.3 The Parties hereby agree that, subject to the provisions of clause
5, the BIL Shares and the beneficial ownership of or any interest
in them and the certificates representing them (including any
replacement shares or certificates) shall not be sold, assigned,
hypothecated, alienated, released from escrow, transferred within
escrow, or otherwise in any manner dealt with, without the written
consent of the Exchange given to the Trustee or except as may be
required by reason of the death or bankruptcy of the Security
Holder, in which case the Trustee shall hold the said certificates
subject to this Agreement, for whatever person, or company shall
be legally entitled to become the registered owner thereof
3.4 The Security Holder directs the Trustee to retain the BIL Shares
and the certificates (including any replacement shares or
certificates) representing them and not to do or cause anything to
be done to release them from escrow or to allow any transfer,
hypothecation or alienation thereof without the written consent of
the Exchange.
3.5 The Security Holder prior to applying to the Exchange for a
consent for a transfer within escrow shall, before applying, give
notice in writing of his intention to the Issuer and the Trustee.
3.6 If a dividend is declared while the BIL Shares or any of them
continue to be held in escrow under this Agreement, then the
dividend shall be paid to the Trustee, who shall hold the dividend
in escrow on the same terms as the BIL Shares, such dividend to be
subject to release to the Security Holder or return to the Issuer
(as the case may be) in the same manner as the BIL Shares to which
the dividend is attributed. Any options or rights issues or other
securities which may be issued by the Issuer relating to the BIL
Shares granted while any of the BIL Shares are held in escrow
under this Agreement shall also be held by the Trustee in escrow
on the same terms as the BIL Shares, such options or rights or
other issues to be subject to release to the Security Holder or
return to the Issuer (as the case may be) in the same manner as
the BIL Shares to which such options or rights or other securities
are attributable.
4. Trustee Accepts Obligations
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4
4.1 The Trustee accepts the obligations placed on it under this
Agreement and hereby agrees to perform the obligations in
accordance with the terms of this Agreement and any written
consents, orders or directions of the Exchange.
4.2 The Security Holder and the Issuer hereby agree to and do hereby
release and indemnify and save harmless the Trustee from and
against all claims, suits, demands, costs, damages and expenses
which may be occasioned by reason of the Trustee's compliance in
good faith with the terms of this Agreement.
4.3 If the Trustee should wish to resign, it shall give at least 3
months notice to the Issuer which may, with the written consent of
the Exchange, by writing appoint another trustee in its place and
such appointment shall be binding on the Security Holder, and the
new Trustee shall assume and be bound by the obligations of the
Trustee hereunder.
5. Release of Escrowed Shares
5.1 Immediately upon receipt of written notice of NZOL's Cash Flow for
each of the NZOL financial years ending 31 March 1999 and 31 March
2000, the Trustee shall release to the Security Holder that number
of BIL Shares which shall be equal in value to NZOL's Cash Flow
for the preceding fiscal year as notified to the Trustee.
5.2 The Trustee in calculating the number of BIL Shares to release
pursuant to clause 5.1 above shall use:
5.2.1 The average of the Westpac Trust Foreign Exchange buy and
sell rates on 31 March 1998 as the exchange rate for
conversion of the New Zealand dollar denominated NZOL Cash
Flow sum to Canadian dollars; and
5.2.2 The BIL Share price shall be the price of the Issuer's
common shares on the Exchange at the close of business on
31 March 1998.
5.3 The Issuer shall ensure that the Trustee shall receive written
notification of NZOL's Cash Flow no later than the 20th day of
June in the years 1999 and 2000 respectively.
5.4 A release from escrow of all or part of the BIL Shares shall
release from this Agreement those BIL Shares so released. For
greater certainty, this clause does not apply to shares
transferred within escrow.
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5
5.5 Any BIL Shares remaining in escrow following the final release of
shares in April 2000 shall be cancelled by the Issuer.
6. Issuer Wound Up
6.1 If the Issuer is wound up and any BIL Shares remain in escrow
under this Agreement at the time when a distribution of assets to
holders of shares is made by the liquidator, the Security Holder
shall assign his right to receive that part of the distribution
which is attributable to the escrowed shares to the Trustee, for
the benefit of, and in trust for the persons and companies who are
then holders of free shares in the Issuer in proportion to their
holdings in the Issuer except that this section shall not apply to
those of the BIL Shares which are or would be entitled to be
released pursuant to clause 5 but have not yet been so released.
7. Voting Rights
7.1 All voting rights attached to the BIL Shares shall at all times be
exercised by the Security Holder or respective registered holders
thereof
8. Issuer's Obligations
8.1 The Issuer hereby acknowledges the terms and conditions of this
Agreement and hereby agrees to take all reasonable steps to
facilitate its performance and to pay the Trustee's proper charges
for its services as Trustee of this escrow.
9. Security Holder's Obligations
9.1 The covenants of the Security Holder with the Issuer in this
Agreement are made with the Issuer both in its own right and as
trustee for the holders from time to time of free shares in the
Issuer, and may be enforced not only by the Issuer by also by any
holder of free shares.
10. Miscellaneous
10.1 This Agreement may be executed in several parts of the same form
and the parts as so executed shall together constitute one
original agreement, and the parts, if more than one, shall be read
together and construed as if all the signing parties hereto had
executed one copy of this Agreement.
10.2 This Agreement shall enure to the benefit of and be binding on the
parties to this Agreement and each of their heirs, executors,
administrators, successors and permitted assigns (if any).
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6
10.3 The proper law for interpretation of this Agreement is the law of
New Zealand and any proceedings relating to a dispute over this
Agreement shall be brought in the High Court of New Zealand unless
the parties hereto, in writing, submit to arbitration.
11. Facsimile copies and counterparts
11.1 The parties acknowledge that the execution of a facsimile copy of
this Agreement and the transmission thereof by facsimile to each
other or their respective agents or solicitors shall be sufficient
to constitute offer and acceptance and to satisfy the requirements
of Section 2 of the Contracts Enforcement Act 1956.
11.2 If any party requires, the original of any facsimile copy of this
Agreement shall be delivered to the party so requesting within
five (5) working days of receiving the request to do so. If the
original is not delivered, the party accepting the facsimile copy
pursuant to this clause may in any court of law or other
proceeding produce, or exhibit such facsimile copy as if it were
the original hereof and no party to this Agreement may object to
such copy being produced or exhibited as an original and shall be
deemed to have waived any law of evidence or other requirement
that an original executed document be produced or exhibited as
evidence of its existence or of its contents.
11.3 This Agreement may be executed in three or more counterparts each
of which shall be deemed an original but all of which together
shall constitute one and the same instrument.
11.4 This Agreement shall enure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted
assigns (if any). The parties shall only become bound to the terms
of this Agreement, by execution of this Agreement by or on behalf
of such party.
12. Limitation of Liability of Trustees
12.1 The parties acknowledge that Laurence John Ryan, of Whangarei,
District Court Judge and M & H Trustee Services Limited at
Auckland (together "Trustees" and individually "Trustee") have
signed this Agreement in their capacity as trustees pursuant to a
Deed of Trust dated the 26th day of January 1996 known as the Sam
Montegue Family Trust ("the Trust").
12.2 The Trustees together with the executors, administrators, or
personal successors of the Trustees shall be under no personal
liability under this Agreement. The liability of each Trustee
shall at all times and for all purposes be limited to the net
value of the assets for the time being of the Trust together with
such amount as is equivalent to the net value of the assets that
the Trust
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7
would have had except for the wilful neglect or default of such
Trustee.
12.3 The obligations of each Trustee under this Agreement shall end
when such Trustee ceases to be a trustee of the Trust and there
shall be no right of action against either Trustee in respect of
any matter arising under this Agreement after the date the Trustee
ceases to be a trustee of the Trust.
Brocker Investments (NZ) Limited Guarantee
1. In consideration of the Security Holder agreeing to enter into this
Agreement the Guarantor unconditionally and irrevocably:
(a) Guarantees by way of continuing obligation to the Security Holder,
as primary obligor and not merely as a surety, the due performance
by the Issuer and the Trustee of all their respective obligations
and liabilities under this Agreement; and
(b) Indemnifies the Security Holder against any loss or damage which
they may suffer as a direct or indirect result of the breach by
the Issuer and/or the Trustee of any of their respective
obligations and liabilities under this Agreement.
2. The obligations of the Guarantor under this Guarantee will not be
discharged, released or otherwise affected by any delay, grant of time,
release, compromise, forbearance (whether partial or otherwise) or other
indulgence granted by the Security Holder to the Issuer and/or the
Trustee or any other person, or by the Security Holder exercising or
refraining from exercising any rights against the Issuer and/or the
Trustee. The rights of the Security Holder under this Guarantee are
cumulative and are not exclusive of any rights provided by law and are to
remain in full force until the full discharge by the Issuer and the
Trustee of all their respective obligations under this Agreement.
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8
IN WITNESS WHEREOF the Issuer, the Trustee and the Security Holder have caused
their respective corporate seals or hands to be hereto affixed.
SIGNED for and on behalf of )
BROCKER INVESTMENTS LIMITED )
(the Issuer) by MICHAEL BRIAN RIDGWAY )
in the presence of: ) _____________________________
M B Ridgway
Witness:
Signature: _____________________________
Name: _____________________________
Occupation: _____________________________
Address: _____________________________
_____________________________
Is this the appropriate manner for BKI execution?
SIGNED for and on behalf of )
MONTREAL TRUST COMPANY (the Trustee) )
OF CANADA by its director )
___________________ in the presence of: ) _____________________________
Witness:
Signature: _____________________________
Name: _____________________________
Occupation: _____________________________
Address: _____________________________
_____________________________
Is this the appropriate manner for MTC execution?
[INIT]
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9
SIGNED for and on behalf of )
BROCKER INVESTMENTS (NZ) LIMITED )
(the Guarantor) by its two directors )
_______________________________________
Richard John Justice
_______________________________________
Michael Brian Ridgway
SIGNED by )
LAURENCE JOHN RYAN (the Security Holder )
in the presence of: ) _____________________________
L J Ryan
Witness:
Signature: _____________________________
Name: _____________________________
Occupation: _____________________________
Address: _____________________________
_____________________________
SIGNED for and on behalf of )
M & H TRUSTEE SERVICES LIMITED )
(the Security Holder) by its two directors )
_______________________________________
M F Malloy
_______________________________________
J M Goodwin
[INIT]
E-315
AGREEMENT FOR SALE
AND PURCHASE OF SHARES
Parties
THE SHAREHOLDERS OF PRITECH CORPORATION LIMITED
BROCKER INVESTMENTS (N.Z) LIMITED
BROCKER INVESTMENTS LIMITED
Relating to Pritech Corporation Limited
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2
AGREEMENT dated 31st March 1998
PARTIES
1. The parties specified in Item 1 of Schedule 1 (Vendors).
2. BROCKER INVESTMENTS (N.Z.) LIMITED at Auckland, (Purchaser).
3. BROCKER INVESTMENTS LIMITED a company listed on the Alberta Stock Exchange
(BKI).
INTRODUCTION
A. The Vendors are the holders of the Shares together with all rights
attaching to the Shares.
B. The Vendors have agreed to sell to the Purchaser and the Purchaser has
agreed to purchase from the Vendors all of the Shares for the Consideration
and upon the terms and conditions contained in this Agreement.
TERMS
1. Interpretation
1.1 Defined Terms: In this Agreement the following terms shall have the
meanings specified:
Accounting Date 30 September 1998.
Associated Person has the meaning given in section 0D7(l) of the Income
Tax Act 1994.
Business Day a day (other than a Saturday or Sunday) on which
registered banks are open for business in Auckland.
Business Records all books of account, Financial Statements, records,
files, data, databases, certificates or other evidence
of title to assets and information howsoever recorded
or stored relating to or required for the business of
the Company or pertaining to its affairs.
Cashflow shall have the meaning ascribed to that term in the
Escrow Agreement.
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3
Charge includes option, right to acquire, lien, pledge,
mortgage, assignment, charge, security interest,
bailment, or encumbrance or adverse interest of any
nature whether legal or equitable and no matter how
arising but excluding claims of suppliers of goods
subject to retention of title provisions supplied in
the normal course of business.
Company Pritech Corporation Limited, a company incorporated
under the Companies Act 1993 under No.AK1143669 having
its registered office at Auckland and having its
capital divided into 126,979 fully paid shares (total
paid up capital $126,979).
Completion completion by the parties of the sale and purchase of
the Shares as provided in clause 5.
Completion Date 17 April 98 or such other date as may be agreed upon by
the parties.
Consideration the sum calculated by applying a multiple of 4 to the
actual audited NPAT of the Company for the Year ending
on the Accounting Date calculated on the basis that an
allowance is made for income tax at the Company's
appropriate tax rate for that period subject to
adjustment as provided in clauses 2.4 and 3.4.
Constitution the Constitution of the Company.
Costs includes any and all costs (on a solicitor and own
client basis), expenses, damages, penalties, interest,
compensation, and awards.
Disclosure Letter the letter from the Vendor to the Purchaser disclosing
information pursuant to clause 7 and Schedule 3.
Earn Out Period the Years ending on 30 September 1999, and 2000.
Earn Out Sum the Consideration less the Net Asset Value.
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Escrow Agreement the Escrow Agreement in the form annexed as Annexure 3
to be entered into by BKI, the Vendors and the Trustee.
Exchange Rate the average between the WestpacTrust buy and sell rates
for the exchange of $NZ to $CAD, at the close of
business on the date specified in this Agreement or
where a date is not specified, on the last Business Day
prior to the date of the relevant transaction.
Financial Statements each and every part of the financial statements of the
Company for the Year which ended on the Last Accounting
Date.
GAAP Generally accepted accounting principles adopted in New
Zealand.
GST Act Goods and Services Tax Act 1985.
GST Goods and Services Tax levied under the GST Act.
Intellectual Property all intellectual property specified in Item 3 of
Schedule 1 and all intellectual property necessary for
the Company to carry out the projects described in the
Company budgets to be prepared pursuant to clause 5.2.4
and includes all confidential information, trade
secrets, drawings, designs, techniques, programmes,
processes, logos, copyrights, trade or service marks,
patents, registered designs, and other information and
rights capable of being protected under New Zealand or
other laws relating to intellectual property no matter
how recorded or stored and any applications for same.
Interest Rate the cost of funds for the BKI Group.
Last Accounting Date 30 September 1997.
Net Asset Value the net tangible asset value of the Company determined
in accordance with clause 2.4
NPAT the net profit after income tax calculated in
accordance with GAAP.
Penalty Rate the WestpacTrust Indicator Lending Rate plus 5%.
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5
Premises the premises at 2nd Floor, Elders House, 60 Khyber Pass
Road, Auckland.
Proceedings includes proceedings, claims, demands, actions,
conferences, mediations, conciliations, compromises,
arbitrations, hearings or appeals arising out of
preliminary to or in connection with any dispute or
alleged dispute.
Related Company a related company as defined sections 5 to 8 of the
Companies Act 1993.
Shares all of the existing issued shares in the capital of the
Company being acquired by the Purchaser pursuant to
this Agreement
Statutory Books the Company's Constitution, and its Certificate of
Incorporation, Directors' and Members' minute book,
Register of Members, Register of Directors and
Secretaries, Interests Register, Register of Charges
and Seal Register (if any).
Strike Price in respect of the Bid shares to be issued pursuant to
this Agreement is the last sale price for BKI shares on
the Toronto Stock Exchange on the relevant dates
specified in clause 3.
Subsidiary a subsidiary as defined in sections 5 to 8 of the
Companies Act 1993.
Taxation all forms of taxation (including without limitation
capital gains tax, income tax, surtax, estate duty,
stamp duty, rates, GST, PAYE, withholding tax,
provisional tax, duties, customs and other import or
export duties and all other statutory, fiscal, central
or local government or municipal impositions, duties
and levies) and all reassessments, penalties, Charges,
Costs and interest relating to such taxation for
noncompliance or otherwise.
Trustee Montreal Trust or such other trustee approved by the
Toronto Stock Exchange to hold BKI shares pursuant to
the Escrow Agreement.
Warranties the representations, warranties, and undertakings of
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the Vendors set out in Schedule 2.
Year a financial year from 1 October to 30 September in the
next year.
1.2 General Interpretation: In the interpretation of this Agreement, unless
the context otherwise requires:
1.2.1 References to the parties include their respective executors,
administrators, successors and permitted assigns;
1.2.2 Words in the singular shall include the plural and vice versa;
1.2.3 Words importing one gender shall include the other genders;
1.2.4 Any obligation not to do anything includes an obligation not to
suffer, permit or cause that thing to be done;
1.2.5 Headings have been inserted for convenience only and shall not
affect the construction of this Agreement;
1.2.6 Reference to a statute includes all statutes amending,
consolidating or replacing the statute referred to and includes
all subsidiary or delegated legislation or exercises of
authority under such statute or legislation;
1.2.7 References to clauses, schedules and annexures shall be
construed as references to the same in this Agreement;
1.2.8 References to money are references to New Zealand currency
unless otherwise specified.
1.3 Joint and Several: All covenants expressed or implied shall bind all
persons executing this Agreement and any two or greater number of them
jointly and each of them severally.
1.4 Time of the Essence: Time shall be of the essence of this Agreement both
as to dates and periods.
1.5 Precedence of Documents: If there is any conflict between the provisions
of this Agreement and the Escrow Agreement, the provisions of this
Agreement shall prevail.
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7
2. Agreement for Sale and Purchase
Sale and Purchase: The Vendors agree to sell and the Purchaser agrees to
purchase the Shares for the Consideration. Subject to Completion in
accordance with this Agreement, the sale and purchase shall be deemed to
have taken effect as at 1 April 1997
The purchaser ratifies and confirms all the employment terms and
conditions enjoyed by the vendors for the period 1 April 1997 to
Completion Date and shall recognise in any new Employment Contract
between each vendor and the Company, that vendor's continuity of service
with the Company and the ongoing rights and benefits that vendor enjoys
because of his length of service with the Company.
The purchaser further ratifies and confirms all management decisions
made by the vendors prior to the Completion Date and undertakes not to
make, after the date for Completion, any financial decisions affecting
the Company for the period prior to the Completion Date.
2.2 Accrual Rules: The Consideration is the lowest price the parties would
have agreed upon at the date of this Agreement for the sale and purchase
of the Shares and is consequently the core acquisition price pursuant to
Section OB 1(c) of the Income Tax Act 1994.
2.3 Audit: The Purchaser shall be entitled at its cost to appoint KPMG to
audit the calculation of the Net Asset Value, the Earn Out Sum, the
Financial Statements and the financial statements for the Company for
the Year ending on the Accounting Date and each Year of the Earn Out
Period. Such audit shall be conducted by KPMG adopting GAAP which shall
be applied consistently over the various audit periods.
2.4 Initial Consideration Calculation:
2.4.1 Net Asset Value: The Net Asset Value as at the Last Accounting
Date shall be determined by the Company's accountant, Grant
Thornton in accordance with GAAP.
2.4.2 Consideration: The Consideration including the Earn Out Sum
shall be determined by Grant Thornton at the cost of the Vendors
as at the Accounting Date in accordance with GAAP
2.4.3 Adjustment: The Purchaser shall have the right to adjust the Net
Asset Value and the Consideration if the KPMG audit as at the
Last Accounting Date and at the Accounting Date reveals any
discrepancies of accounting practices which are not deemed by
the New Zealand Institute of Chartered Accountants to be
accepted accounting practice in the calculation of the
Consideration.
2.4.4 Vendors' Review: The Vendors shall be provided with a copy of
the KPMG
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8
audit report and shall within a period of 10 days following
receipt of such report to review and make submissions on its
contents.
3. Consideration and Payment
3.1 Satisfaction of Consideration: The Consideration shall be paid or
satisfied by the Purchaser as follows:
3.1.1 Deposit: A deposit of $100,000 shall be paid in cash upon
completion of the Purchaser's due diligence investigation
provided for in clause 9.1.1 and allocated between the Vendors
as provided in Schedule 1.
3.1.2 Net Asset Value: A sum equal to the Net Asset Value less the
deposit specified in clause 3.1.1 shall be paid in cash upon
Completion and allocated between the Vendors as provided in
Schedule 1.
3.1.3 Balance: The balance of the Consideration (subject to adjustment
as provided in clauses 2.4 and 3.4) shall be paid in the manner
provided in clauses 3.2 and 3.3 by way of the issue and
allotment to the Vendors in the percentages specified in
Schedule I free from all Charges of fully paid ordinary shares
in the capital of BKI. Such shares shall rank in all respects
pari passu with the existing ordinary shares in the capital of
Bid.
3.2 Issue of Shares: Bid shall issue the shares pursuant to clause 3.1.3
(Earn Out Shares). The Earn Out Shares shall be:
3.2.1 Issue: Issued in one tranche on or before 31 December 1998.
3.2.2 Value: Issued in numbers which have a value (based on the Strike
Price converted to $NZ at the Exchange Rate as at the Accounting
Date) equal to the Earn Out Sum.
3.2.3 Trust: Issued initially to the Trustee to be held in escrow
pursuant to the Escrow Agreement and subject to the earn out and
escrow conditions specified in clause 3.3 and in the Escrow
Agreement.
3.3 Escrow and Earn Out Provisions: The Earn Out Shares shall be held by the
Trustee subject to the following conditions:
3.3.1 Achieve Cashflow: The Earn Out Shares shall only be released to
the Vendors if the Company produces sufficient cumulative
Cashflow during the Earn Out Period.
3.3.2 Release Dates: Earn Out Shares shall be released to the Vendors
in 2
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9
tranches no later than 31 December 1999 and 31 December 2000
respectively (Release Dates).
3.3.3 Value: The Earn Out Shares to be released on each of the Release
Dates shall equal in value (on each occasion based on the Strike
Price converted to $NZ at the Exchange Rate as at the Accounting
Date) the Cashflow of the Company for the Year which ended
immediately prior to the relevant Release Date.
3.4 Final Adjustment of the Consideration and Earn Out Sum:
3.4.1 Calculation: The Earn Out Sum shall be reduced on the basis of a
$NZ 1.00 reduction for each $NZ 1.00 by which the cumulative
Cashflow of the Company over the Earn Out Period falls short of
the Earn Out Sum.
3.4.2 Final Calculation: Prior to 31 December 2000 there shall be a
final calculation of the Earn Out Sum based on the cumulative
Cashflow for Earn Out Period.
3.4.3 Adjustment: The Earn Out Sum and the Consideration shall then be
adjusted accordingly. Any Earn Out Shares which are not required
to be released to the Vendors following such final calculation
shall be cancelled. The Consideration shall not in any event be
adjusted by more than the value of any Earn Out Shares remaining
at the end of the Earn Out Period.
3.5 Dividends on Earn Out Shares: Any dividends declared or bonus or rights
entitlements issued in respect of Earn Out Shares held in escrow
pursuant to clauses 3.2 or 3.3 shall be issued to and held in trust by
the Trustee for the benefit of the appropriate vendor for whom such
shares are held and shall be additional benefits for such vendor.. Any
such dividends declared or entitlements in respect of such shares shall
also be released, paid or applied to the Vendors in proportion to the
shares that are released. The value of such dividends or other
entitlements shall not be taken into account when calculating the value
of shares to be released. Any dividends or entitlements in respect of
BKI shares which are cancelled will be forfeited to BKI on the date of
cancellation.
4. Parties' Obligations on or before Completion
4.1 Vendors' Obligations: On or before Completion the Vendors shall:
4.1.1 Disclosure: Deliver to the Purchaser prior to the time of
execution of this Agreement the Disclosure Letter signed by the
Vendors.
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4.1.2 Release of Liability to Associated Persons: Procure that the
Company is released unconditionally from all liability and
obligations whatsoever (whether actual or contingent) to the
Vendors or any Associated Persons of the Vendors. If such
release is not or cannot properly be provided on or before
Completion then the Vendors will indemnify the Company and the
Purchaser from and against all Costs and Proceedings in respect
of such liability and obligations. Liabilities and obligations
incurred in respect of normal trade purchases or transactions on
usual commercial terms for payment and performance shall not be
required to be so released;
4.1.3 Access to Premises and Business: Ensure that the Purchaser and
its representatives have full access to the Premises, the
Statutory Books and the Business Records from the date of this
Agreement and will be given promptly all information they may
reasonably require concerning the business or affairs of the
Company;
4.1.4 Filing of Satisfactions of Charges: File memoranda of
satisfaction with the Registrar of Companies, the High Court
Chattels Registry or the Land Transfer Office or the Motor
Vehicles Security Register (as appropriate) in respect of all
Charges registered against the property of the Company except
those Charges which are specified in Item 2 of Schedule 4.
4.1.5 Employment Contracts: Procure the execution by the Company of
employment contracts with the Vendors in the form annexed as
Annexure 2.
4.1.6 Personal Assets: Procure that all assets owned by the Company
but principally employed for the personal use of the Vendors are
sold and removed from the Company asset register by the
Completion Date.
4.1.7 Consultation: Consult with the Purchaser in relation to all
matters which materially affect the Company or its operations
including items of capital expenditure and general expenses
totalling more than $10,000 or falling outside the ordinary
course of business of the Company.
4.2 Purchaser's Obligations: The Purchaser shall use best endeavours to
obtain a release of the Vendors of all personal liabilities which may
arise after Completion in relation to personal guarantees (as specified
in Item 3 of Schedule 4) provided by them in respect of obligations of
the Company. Should any such releases not be procured then the Purchaser
shall indemnify such directors in respect of all Costs and Proceedings
which arise in relation to their personal guarantees for acts or
omissions of the Company after Completion.
5. Completion
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5.1 Initial Settlement: Completion shall take place on the Completion Date
at the offices of the Purchasers solicitors Lowndes Jordan at 2.15 p.m.
or at such other time or place as the parties shall agree at which time
the Purchaser shall be entitled to the possession of the business
conducted by the Company and the Vendors will hand to the Purchaser:
5.1.1 Share Transfers: Transfers of the Shares to the Purchaser and/or
its nominee duly executed by the Vendors in registrable form;
5.1.2 Share Certificates: The share certificates (if any) for the
Shares or if none have been issued a statutory declaration by an
officer of the Company to such effect;
5.1.3 Pre-emptive Rights Waivers: A waiver signed by all the Vendors
whereby they waive all rights of pre-emption conferred on them
by the Constitution or otherwise in respect of the transfer of
all or any of the Shares;
5.1.4 Directors' Resolutions: Evidence of the passing of effective
resolutions of the Directors of the Company to register the
transfer of the Shares into the name of the Purchaser and/or its
nominee in the Register of Members of the Company in respect of
the Shares.
5.1.5 Shareholders' Resolutions: Evidence of the passing of effective
shareholders' resolutions appointing Michael Ridgway and Richard
Justice as directors of the Company in addition to the Vendors
and adopting a Constitution for the Company pursuant to clause
4.1.8.
5.1.6 Releases of Charges over Shares: Unconditional releases of any
Charges over any of the Shares;
5.1.7 Company Records: The Statutory Books and the Business Records of
the Company;
5.1.8 Pre-conditions: Evidence satisfactory to the Purchaser that the
Vendors have fulfilled their obligations under clause 4;
and against compliance with the above provisions the Purchaser shall pay
or satisfy the payment of the Deposit pursuant to clause 3.1.1.
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5.2 Post Settlement Obligations
5.2.1 Purchaser's Obligations:
(a) The Purchaser shall procure that all staff who are
employed by the Company at the date of this Agreement
(except the Vendors) are retained on their current
employment contracts for such time as their performance
is satisfactory and their positions are required to be
filled.
(b) The Purchaser and BKI shall make available to the
Company, expansion capital at the at the cost of funds
for the BKI Group, for the purpose of development of
projects or business expansion as agreed between the
Vendors and the Purchaser.
(c) The Purchaser shall procure that for the Earn Out Period
the Vendors shall, provided that they satisfy all
necessary legal requirement, and remain employees of the
company, remain appointed as directors of the Company
(David Corlett as managing director).
5.2.2 Management of the Company: It is the intention of the parties
that the Purchaser will allow the Vendors to continue to manage
the Company during the Earn Out Period without any material
change to their management policies and practise or to the
direction of the business of the Company or to accounting
policies, provided that:
(a) the Company meets agreed financial and business targets;
and
(b) the profit and loss budgets agreed pursuant to clause
5.2.4 (a) are achieved; and
(c) the Vendors remain as directors and employees of the
Company.
5.2.3 Release of Vendors: Should the Purchaser use its voting control
of the Company to breach its obligations under clause 5.2.2 then
the Vendors, after serving notice of such breach and the
Purchaser failing to rectify such breach within 10 Business
Days, shall.
(a) be released from the restraints provided in clause 10;
and
(b) the Purchaser shall procure that the balance of BKI
shares held in escrow pursuant to clause 3.2 and all
dividends and other benefits attaching to them, are
released to the Vendors.
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5.2.4 Vendors' Obligations
(a) The Vendors and the Company's management team shall
produce a profit and loss budget for the Years ending on
30 September 1998 and 1999. Such budget shall be agreed
with the Purchaser prior to completion.
6. Default
6.1 Default by Vendors; Without prejudice to clause 8, if any of the Vendors
have not fully complied with the provisions of clauses 4 or 5 on
Completion, the Purchaser may (in addition to and without prejudice to
all other rights or remedies available to the Purchaser under this
Agreement or otherwise) at the Purchaser's option:
6.1.1 Rescind: Rescind this Agreement; or
6.1.2 Completion: Effect Completion so far as practicable having
regard to the defaults which have occurred (without releasing
the Vendors from liability to comply as soon as possible with
the Vendors' obligations under clauses 4 and 5).
6.2 Default by Purchaser: If from any cause whatsoever except default of the
Vendors
6.2.1 Interest: Any portion of the Consideration is not paid upon the
due date for payment the Purchaser shall pay to the Vendors
interest calculated at the Penalty Rate on the portion of the
Consideration so unpaid from the due date for payment until
payment.
6.2.2 Other Action: The Purchaser and/or Bid shall be in default under
this Agreement then the Vendors may
(a) Sue the Purchaser for specific performance; or
(b) Cancel this agreement and sue the Purchaser for damages.
7. Warranties
7.1 Vendors' Warranties: The Vendors warrant and undertake to the Purchaser
in terms of the Warranties that:
7.1.1 Investigations not to affect Warranties: Except as disclosed in
Schedule 3 and/or the Disclosure Letter, the Warranties shall
not be modified, qualified or discharged or in any way affected
by any investigation made by the Purchaser into the affairs of
the Company;
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14
7.1.2 Separate and Independent: Each of the Warranties shall be
separate and independent and save as expressly otherwise
provided shall not be limited by reference to any other of the
Warranties or any other provision of this Agreement.
7.1.3 Reliance on Warranties: The Vendors acknowledge that the
Purchaser has entered into this Agreement in reliance (among
other things) on the Warranties.
7.2 Vendors' Covenants: The Vendors warrant, represent and undertake to the
Purchaser and also as a separate covenant to the Company:
7.2.1 Indemnity: That they will keep the Purchaser and the Company
fully indemnified against all and any depletion in or reduction
in the value of the Shares or any of the assets of the Company
and all Proceedings and Costs reasonably suffered or incurred by
the Purchaser or the Company as a result of or in relation to
any breach or non-fulfilment of any of the Warranties and all
Costs incurred in making, defending or compromising any
Proceedings in relation to facts or matters which are a breach
or non-fulfilment; and
7.2.2 No Representations Made: That no promise or representation has
been made to them in connection with any of the Warranties or
the Disclosure Letter in respect of which the Company or any of
the directors or employees of the Company might be liable; and
7.2.3 No Breach of Warranties Prior to Completion: That the Vendors
will, so far as they are able, procure that (except only as may
be necessary to give effect to this Agreement) neither they nor
the Company shall do, allow or procure any act or omission
before Completion which would constitute a breach of any of the
Warranties if they were given at any time prior to or on
Completion or which would make any of the Warranties inaccurate
or misleading if they were so given; and
7.2.4 Disclosure of Change in Circumstances: The Vendors will
forthwith disclose in writing to the Purchaser any matter or
thing which may arise or become known to any of them after the
date of this Agreement and prior to Completion which:
(a) is inconsistent with any of the Warranties or which
might render any of them inaccurate or misleading when
given at Completion; or
(b) might be material to be known by a purchaser for value
of the Shares;
(c) might have a material adverse effect on the value of the
Shares or the assets of the Company.
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15
7.3 Warranty Limitations: Notwithstanding any other provisions of this
Agreement, the warranties are made and given subject to the provisions
of Schedule 3.
7.4 Purchaser Warranties to Vendors:
7.4.1 Purchaser's Power: The Purchaser has the legal right and power
to enter into this Agreement and purchase the Shares from the
Vendors.
7.4.2 BKI's Power: BKI has the legal right and power to enter into
this Agreement and the Escrow Agreement.
7.4.3 Authorisation: The execution, delivery and performance of this
Agreement and the Escrow Agreement have been duly authorised by
all necessary corporate action and each of them is valid,
binding and enforceable against the Purchaser and BKI
respectively.
8. Rights of Rescission
8.1 Rescission for Breach: Without prejudice to clause 6, if on or prior to
Completion it should be found that:
8.1.1 Unfulfilled Obligations: Any obligation of any party hereto
contained in this Agreement is or will on Completion be
unfulfilled; or
8.1.2 Breach of Warranties: Any Warranty is or may at Completion be
inaccurate or misleading;
then the party adversely affected may, without prejudice to any other
rights available to it or them under clause 8.2 of this Agreement, by
notice in writing to the other parties, rescind this Agreement.
8.2 Effect of Rescission: Rescission of this Agreement under clause 8.1
shall not extinguish any right of the rescinding party to damages or
compensation.
8.3 Rescission for Matters other than Default: If on or prior to Completion:
8.3.1 Destruction of Assets: Any asset of the Company shall be
destroyed or damaged to an extent which in the opinion of the
Purchaser materially and adversely affects the Company or the
carrying on of the business of the Company; or
8.3.2 Material Adverse Change: Any other event shall occur which
affects or is
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16
likely to affect adversely to a material degree the Company or
the financial position, business, assets or profitability of the
Company or the value of the Shares to the Purchaser,
the Purchaser shall be entitled by notice in writing to the Vendors to
rescind this Agreement, but the occurrence of such an event shall not
give rise to any right to damages or compensation except where the
Vendors have failed to give notice of such event as required by clause
7.2.4.
9. Conditions
9.1 This Agreement is conditional upon:
9.1.1 Purchaser's Due Diligence: The Purchaser being satisfied with
its due diligence investigation into the affairs of the Company.
9.1.2 Vendors' Due Diligence: The Vendors being satisfied with:
(a) the terms of the employment contracts to be offered to
the Vendors by the Purchaser to take effect from
settlements within 15 Business Days of the date of
supply of the contracts.
(b) Any variation of the terms which may be specified by the
Purchaser pursuant to clause 9.4 within 15 Business Days
of the date of communication of the proposed variations.
9.1.3 Asset Lessor's Consent: Consent being given by the lessor of any
assets leased by or on hire or conditional purchase to the
Company to the transfer of the Shares to the Purchaser where the
failure to obtain such consent might constitute an event of
default under such lease or hire or conditional purchase
agreement; and
9.1.4 Government or Regulatory Consents: Consent being given by any
Canadian government or regulatory body whose consent is required
to enable Completion of this Agreement; and
9.1.5 Material Contractors' Consent: Consent being given by the other
party or parties to any agreement under which the Company enjoys
any material benefit where without such consent such agreement
might be terminated, which agreements include without limitation
those specified in Item I, Schedule 4; and
9.1.6 Landlord's Consent: The lessor of the Premises consenting to the
transfer / of the Shares to the Purchaser; and
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9.1.7 Stock Exchange Approval: The approval of the Alberta and (if
applicable) the Toronto Stock Exchange.
9.1.8 Board Approval: The approval of the board of directors of the
Purchaser and of BKI.
9.2 Fulfilment of Conditions: Each of the parties shall do all acts and
things reasonably necessary to procure the fulfilment of the conditions
set out in clause 9.1.
9.3 Failure of Conditions: Should:
9.3.1 Not Satisfied: Any of the conditions set out in clause 9.1 not
be fulfilled or waived (as the case may be) by the Completion
Date or such later date as may be agreed by the parties; or
9.3.2 Unreasonable Conditions: Any consent or approval required in
terms of the conditions set out in clause 9.1 be granted on
terms not reasonably acceptable to any affected party;
then:
9.3.3 Agreement Voidable: This Agreement shall be voidable by notice
in writing and upon issue of such notice this Agreement shall
then be at an end and the parties shall not have any further
rights or obligations except that the Vendors will repay any
deposit or part payment of the Consideration.
9.4 Variation of Agreement: If the Purchaser has, during the course of its
due diligence investigations, identified that the viability or
profitability of the Company / is substantially less favourable than
represented by the Vendors, the Purchaser may offer to complete the
purchase of the Shares subject to such variations to the terms of this
Agreement as may be specified by the Purchaser and which are accepted by
the vendors.
10. Non Competition
10.1 Consideration: In consideration of the Purchaser entering into this
Agreement and as a condition precedent, the Vendors and each of them
acknowledge that the value of the Consideration is in part dependent
upon, and the Purchaser has agreed to pay the Consideration on, the
basis that none of the Vendors will carry on a business in substantial
competition with that at present carried on by the Company.
10.2 Non Competition: In recognition of the understanding in 10.1 above, the
Vendors severally covenant and agree with the Purchaser that during
their
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employment by the Company and for a period of 90 days from the end of
the Earn Out Period that:
10.2.1 Business: They will each not at any place in New Zealand be
directly or indirectly engaged or connected or interested in any
business in substantial competition with the Company, either on
their own account or as a partner with or as an employee of any
other person or as a shareholder, director, officer, consultant,
adviser or employee of any person or directly or indirectly
assist financially any such business except:
(a) as a servant of the Company, the Purchaser or a
Subsidiary of the Purchaser; or
(b) with the prior written consent of the Purchaser; which
shall not be unreasonably withheld, or
(c) as holder of not more than 5% of the shares in the
capital of any public company if and only so long as
such shares are listed on any official stock exchange;
and
10.2.2 Orders: They will not on their own account or for any business
in substantial competition with the Company solicit orders for
such Business otherwise than for the benefit of the Company from
any person, firm or company who during the term of the Earn Out
Period is or has been a customer of the Company; and
10.2.3 Employees: They will not on their own account or for any
business "in substantial competition with the Company" entice or
attempt to entice away from the Company or the Purchaser any
employee of the Company or of the Purchaser or of any Subsidiary
of the Purchaser. This clause shall not restrict the Vendors'
right to employ any person who makes an unsolicited application
to the Vendors or any of them.
10.2.4 Substantial Competition: For the purposes of this clause 10 the
expression "in substantial competition with the Company" shall
mean, offering for sale or reward any specific product also
offered by the Company, or offering any service using the same
tool-sets as any tool-sets used by the Company. Use of any generic
professional, business or technical skills used by the Vendors or
any of them in the delivery of any product or service, but not
specific to any product offered or tool-set used by the Company,
shall not in itself constitute "substantial competition" with the
Company.
10.3 Provisions with respect to Covenants: Each of the covenants contained in
clause 10.2 shall:
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10.3.1 Separate and Severable: Be separate and severable and to the
extent that any such provision is unenforceable by reason of its
period, scope or area being held by a court of competent
jurisdiction to be unreasonable, then such provision shall be
limited to the maximum period, scope or area which such court
considers reasonable and shall be enforceable on those terms;
10.3.2 Benefit of Purchaser and Assigns: Be given for the benefit of
and be enforceable by the Purchaser and the Purchaser's
successors and assigns.
11. First Right of Refusal
11.1 Should the Purchaser or BKI at any time after settlement determine that
the Company and/or its assets are no longer required within the Bid
group, then the Purchaser shall procure that the Vendors (or, if not all
of them are interested, then such of them as are interested) are
provided with the first right to purchase the Company and/or its assets
as follows:
11.1.1 The purchase price shall be the fair market value. Such purchase
price shall not be higher than the price at which the Company
and/or the Purchaser is prepared to sell to a third party.
11.1.2 The Purchaser or BKI shall give notice to the Vendors of the
desire to sell, the price and terms and conditions of sale and
the Vendors (or such of them as are interested) shall have a
period of 15 Business Days in which to advise in writing whether
they wish to exercise the right to purchase.
11.1.3 If those Vendors do not give notice within the time provided in
clause 11.1.2 then the Purchaser or BKI shall be free to sell to
a third party but shall not offer to a third party a more
favourable price or other more favourable terms and conditions
without first offering those terms to the Vendors as provided in
clause 11.1.2.
11.2 If such right is exercised by the Vendors (or any of them) then with
effect from settlement of the purchase all restrictions imposed by
clause 10 shall be terminated and any remaining shares held in escrow
pursuant to clause 3.3 shall be released to the Vendors.
12. Arbitration
12.1 Submission: If any dispute or difference shall arise between any of the
parties in any way arising out of or in connection with this Agreement
such dispute or difference shall be referred to the arbitration pursuant
to the Arbitration Act 1996.
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13. General
13.1 Non-Merger: The warranties, indemnities, representations and
undertakings set out in this Agreement shall notwithstanding any rule of
law to the contrary not merge in the instruments of transfer executed
pursuant to this Agreement but shall remain in full force and effect and
enforceable to the fullest extent.
13.2 No Announcement: The parties agree that (except as may be required by
law or by the requirements of the Toronto Stock Exchange) they will not
make any announcement or disclosures as to the subject matter of this
Agreement except in a form and manner and at such time as all parties
may agree.
13.3 Notices: Any notice to be given pursuant to this Agreement shall be
given in accordance with and subject to the following provisions of this
clause 13.3:
13.3.1 In Writing: Notices shall be in writing signed by a duly
authorised officer of the party giving the notice or by the
party's solicitor;
13.3.2 Delivery: Without prejudice to any other sufficient mode of
delivery, a notice may be sent by hand, prepaid post, telex or
facsimile to the address or number (in the case of telex or
facsimile) of the intended recipient last advised to the sender
in accordance with this clause. The initial addresses and
numbers of the parties are:
(a) Vendors
c/oCockcroft, d'Young
Banisters and Solicitors
P 0 Box 36 187 Northcote
AUCKLAND
Facsimile: 480 0097
(b) Purchaser 4 Bond Street
Grey Lynn
AUCKLAND
Facsimile: 376 7891
13.3.3 Notice by Hand: Subject to clause 13.3.6, a notice delivered by
hand shall be received on delivery;
13.3.4 Notice by Post: Subject to clause 13.3.6, a notice sent by
prepaid post shall be deemed to be received 3 days after being
posted;
13.3.5 Notice by Telex or Facsimile: Subject to clause 13.3.6, a notice
sent by telex or facsimile shall be deemed to be received at the
time of transmission where a transmission report or answerback
code produced by the sender's
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machine indicates successful transmission;
13.3.6 Receipt Outside Business Hours: Any notice received or deemed to
be received pursuant to clauses 13.3.3, 13.3.4 or 13.3.5 after
5.00 p.m. (recipient's time) on a Business Day in the
recipient's city or on a day which is not a Business Day in the
recipient's city shall be deemed to be received at 9.00 a.m.
(recipient's time) on the next Business Day in the recipient's
city;
13.3.7 Proof of Delivery: In proving delivery of a notice, it shall be
sufficient:
13.3.8 By Hand: In the case of a notice by hand, to provide evidence
that the notice was delivered to the address of the recipient
and no acknowledgment from the recipient shall be necessary;
13.3.9 By Post: In the case of a notice by post, to provide evidence
that the notice was correctly addressed and posted in a prepaid
envelope;
13.3.10 By Telex or Facsimile: In the case of a notice by telex or
facsimile, to provide the transmission report produced by the
sender's machine showing a successful transmission to the
correct number of the recipient and to have telephoned the
recipient to confirm receipt of a legible copy of such notice.
13.4 Applicable Law and Jurisdiction: This Agreement shall be governed by and
construed and interpreted in accordance with the laws of New Zealand and
the parties irrevocably submit to the exclusive jurisdiction of the New
Zealand courts.
13.5 Further Assurance: The parties will do all things including without
limitation the execution of documents as shall be necessary to give full
effect to this Agreement.
13.6 Entire Agreement: This Agreement including all schedules, annexures and
exhibits to it, and any documents incorporated by express reference
forms the entire agreement between the parties relating to its subject
matter and supersedes all prior agreements and understandings between
the parties with respect to that subject matter. If there is any
conflict between the terms of this document and any other document
forming part of this Agreement, the terms set out in this document shall
prevail.
13.7 Variation: This Agreement may only be varied by an express written
agreement executed by all the parties or by persons duly authorised in
writing on their respective behalf
13.8 Costs: Each party shall bear their own costs of and incidental to the
preparation, Completion and implementation of this Agreement. If either
party elects not to proceed with this Agreement prior to completion then
all professional fees incurred by both
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parties in relation to this Agreement and the transactions associated
with this Agreement shall be borne by the party so withdrawing.
13.9 Waiver: No failure to exercise and no delay in exercising on the part of
any party any right under this Agreement shall operate as a waiver of
that right. No single or partial exercise of any right shall preclude
any other or further exercise of such right or the exercise of any other
right. Any such waiver unless otherwise expressly agreed in writing,
shall only apply in respect of the particular circumstances for which it
is given.
13.10 Counterparts: This Agreement may be signed in any number of
counterparts, all of which when taken together constitute one and the
same instrument. Any party may enter into this Agreement by executing
any such counterpart. The parties will cooperate to circulate all
counterparts to each other for the purposes of having all counterparts
executed by all parties as soon as practicable following Completion.
13.11 Execution:
13.11.1 The execution of a facsimile copy of this Agreement and its
transmission by facsimile to all of the parties or their
solicitors shall be sufficient to constitute a legal contract
and satisfy the requirements of section 2 of the Contracts
Enforcement Act 1956.
13.11.2 If any party requires the original signed facsimile copy shall
be delivered to that party within 5 Business Days of request
being made. If the original is not delivered any party which
accepts a facsimile copy may in any proceeding produce the
facsimile copy. In such case no party may object to such copy
being produced as an original and all parties shall be deemed to
have waived any law of evidence or other requirement that an
original be produced as evidence of the existence or contents of
the original.
13.11.3 Each party shall only become bound by this Agreement when it has
been executed by or on behalf of such party.
EXECUTED by the parties.
SIGNED for BROCKER INVESTMENTS (NZ) LIMITED
by:
Name /s/ Richard Justice
-------------------------
Director
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Name
Director
SIGNED for BROCKER INVESTMENTS LIMITED
by:
Name /s/ Hal Linstron
-------------------------
Officer
Name
Director
SIGNED by DAV1D WILLIAM CORLETT
/s/ D. Corlett
in the presence of: --------------------
Witness
Witness Name
Witness Address
Occupation
SIGNED by DAVID JOHN COOKE
/s/ D. J. Cooke
in the presence of: --------------------
Witness
Witness Name
Witness Address
Occupation
SIGNED by GARY SPENCER ELMES
/s/ G. S. Elmes
in the presence of: --------------------
Witness
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Witness Name
Witness Address
Occupation
SCHEDULE 1
Item 1.
Shareholders Shares
David William Corlett 71,000
David John Cooke 35,333
Gary Spencer Elmes 20,646
Total 126,979
Item 2.
Shareholders Share of Deposit Percentage of
(clause 3.1) Shares to be
issued
(Clauses 3.1.2)
David William Corlett 56%
David John Cooke 28%
Gary Spencer Elmes 16%
Total 100%
Item 3
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Intellectual Property (Clause 1.1)
SCHEDULE 2
Warranties (clause 7.1)
1. General
1.1 Disclosure Letter: All information contained or referred to in the
Disclosure Letter is true complete and accurate in all respects. The
Vendors are not aware of any other fact or matter which renders or might
upon its disclosure render any such information misleading.
1.2 Agreement; The provisions of the recitals to this Agreement, clause 1.1
of this Agreement and all information contained in the Schedules and
Annexures to this Agreement are complete and correct in all respects.
1.3 Information Supplied: To the best of the knowledge of the Vendors all
information contained in any written documentation or communication
supplied by or on behalf of the Vendors to the Purchaser in the course
of the Purchaser's due diligence investigation or in discussions or
negotiations leading to the signing of this Agreement, including advice,
answers to questions, information, books and papers given or shown to
the Purchaser and/or any of its employees or representatives by or on
behalf of the Vendors is accurate and not misleading in its context
whether by omission or otherwise. The Vendors are not aware of any fact
or matter not disclosed to the Purchaser which renders any such
information untrue, incorrect or misleading.
1.4 All Necessary Disclosures Made: All the facts and circumstances relating
to the Shares and to the assets, business and affairs of the Company
material for disclosure to an intending purchaser of the Shares have
been fully and fairly disclosed to the Purchaser or its advisers. Any
such material facts arising prior to Completion will forthwith be
disclosed in writing to the Purchaser or its advisers.
1.5 Constitution: The Constitution of the Company to be handed to the
Purchaser will be an accurate copy or an original, if available, of the
document in force at Completion and will have annexed a copy of every
resolution required to be annexed by the Companies Act 1993.
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2. Shares
2.1 Shares: The Shares constitute the whole of the issued and allotted share
capital of the Company. They are and will be on Completion held by the
Vendors in the Vendors' own right.
2.2 Encumbrances: There is not any and will not at Completion be any Charge
on, over or affecting the Shares. There is no agreement or commitment to
give or create any such Charge and no demand has been made by any person
claiming to be entitled to any such Charge.
2.3 No Subsidiaries: The Company never has had and does not have and will
not prior to Completion without the prior written consent of the
Purchaser create or acquire any Subsidiary or any shares in any other
company
2.4 No Increase in Capital: The Company has not since the Last Accounting
Date and will not pending Completion increase its share capital or
subdivide, amalgamate, or consolidate the Shares or any of them.
2.5 No Decrease in Capital: The Company has not at any time:
2.5.1 Repaid or agreed to repay or redeem or buy back or repurchase
any shares of any class of its share capital or otherwise
reduced or agreed to reduce its issued share capital or any
class of its share capital
2.5.2 Amalgamated or agreed to amalgamate with any other company.
2.6 No Related Companies: The Company has no Related Companies.
2.7 No Change of Capital Structure or Name: The Vendors will not permit to
be passed before Completion any resolution by the Company:
2.7.1 Altering its share capital;
2.7.2 Altering the rights or obligations attaching to any of the
Shares;
2.7.3 Changing its name;
2.7.4 Altering its Constitution.
3. Financial Statements
3.1 Books of Account: All the Business Records and Statutory Books are in
the Company's possession or under its control and have been fully and
correctly completed and will
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pending Completion continue to be so completed.
There are and will pending Completion be no material inaccuracies or
discrepancies of any kind contained or reflected in any of them. They
give and reflect and at Completion will give and reflect a true and fair
view of the financial, contractual and trading position of the Company
and of its plant and machinery, fixed and current assets and liabilities
(actual and contingent), debtors and creditors, work in progress and
stock.
3.2 Retention of Records: The Company holds and will on Completion have in
its possession all books of Account and other records which it is bound
by law to retain in its possession either indefinitely or for a
particular period or periods of time.
3.3 Financial Statements:
3.3.1 True and Fair View: The Financial Statements are complete and
accurate and give and reflect and will at Completion give and
reflect a true and fair view of the Company, its activities and
its financial status in all respects.
3.3.2 Comply with Statute: The Financial Statements comply with all
applicable requirements of the Companies Act 1993 and the
Financial Reporting Act 1993.
3.3.3 GAAP: The Financial Statements have been prepared in accordance
with generally accepted accounting practice as that term is
defined in the Financial Reporting Act 1993 and to the extent
consistent with such generally accepted accounting practice on a
basis consistent with that adopted for preceding accounting
periods.
3.3.4 No Unusual or Extraordinary Items: The Financial Statements are
not affected by any unusual extraordinary exceptional or
non-recurring items or by any other factor rendering the results
set out in the Financial Statements (or any of them) unusually
better or worse than they (or any of them) might otherwise be or
have been.
3.3.5 Financial Position: The Financial Statements properly reflect
the financial position of the Company as at the Last Accounting
Date and of its results for the accounting period ending on that
date.
3.3.6 Full Disclosure: The Financial Statements fully disclose all the
assets and liabilities (whether ascertained, contingent,
deferred or otherwise and whether or not quantified or disputed)
of the Company as at the Last Accounting Date and make full
provision and/or reserve for all such liabilities.
3.3.7 Provisions for Losses: The Financial Statements make full
provision for any foreseeable losses which may arise on
Completion and/or on realisation of stock and/or on Completion
of any existing or proposed contract.
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3.3.8 Provision for Bad Debts: The Financial Statements make adequate
provision for all bad and doubtful debts of the Company and for
depreciation of the fixed assets of the Company having regard to
their original cost and estimated useful life.
3.3.9 Financial Commitments: The Financial Statements fully disclose
all financial commitments in existence as at the Last Accounting
Date.
3.4 Period Between Agreement and Completion: From the Last Accounting Date
to Completion:
3.4.1 Conduct of Business: The Company has carried on and will carry
on its business in an efficient normal and proper manner so that
the financial standing and position of the Company as at
Completion will not have deteriorated materially from that
disclosed in the Financial Statements;
3.4.2 Liabilities: The Company has not incurred and will not incur any
liability (whether contingent or otherwise) and has not made any
payments except in the normal and ordinary course of business;
3.4.3 Disposals: The Company has not disposed of and will not dispose
of any material portion of its undertaking or any material part
of its fixed assets or any of its goodwill;
3.4.4 Acquisitions: The Company has not acquired any assets of a
capital nature and will not acquire any assets of a capital
nature exceeding $10,000 in value without the Purchaser's prior
consent;
3.4.5 Revaluations: The Company has not revalued upwards and will not
revalue upwards any of its assets;
3.4.6 Capital Investments: The Company has not entered into and will
not enter into any material capital investment or commitment in
excess of $10,000 in aggregate or any major transaction as that
term is defined in section 129(2) of the Companies Act 1993;
3.4.7 Dividends: The Company has not declared, paid or made and will
not declare, pay or make any dividend, bonus or similar
distribution;
3.4.8 Insurance: The Company has kept and will keep effectively
insured to the full insurable amounts all assets and undertaking
of the Company against all normal insurance risks excluding loss
of profits insurance;
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3.4.9 Terms of Trade: The Company has not made or permitted and will
not make or permit any change to any of its product lines or to
the terms or conditions of any agency held by the Company or to
the selling prices or terms and conditions of sale of any
products or services of the Company;
3.4.10 Turnover: The Company has attained a turnover in the current
financial year no less than that for the corresponding period in
the previous financial year;
3.4.11 Deposits: The Company has deposited and will deposit all amounts
received by it to the credit of its bank account and such
amounts appear in the appropriate books of account;
3.4.12 Debts: The Company has paid and will continue to pay all its
debts as they fell or fall due.
3.5 Non-Disclosure of Liabilities: If it is discovered before or after
Completion that the Company had a liability at the Completion Date
(whether contingently or otherwise) to any person prior to the
Completion Date except in the ordinary course of business which
liability has been fully disclosed to the Purchaser, not then without
prejudice to any other rights of the Purchaser, the Vendors will
immediately upon demand by the Purchaser, pay to the Purchaser the
amount of each such liability after deducting from each such liability
any saving to the Company in Taxation as a result of such liability. For
the purposes of this clause:
3.5.1 The word liability shall include liability for or in respect of
Taxation or any reassessment of Taxation which the Company may
be required to pay in respect of any period prior to the
Completion Date and which has not been so fully disclosed and
any amount whatsoever (including all Costs in connection
therewith) a rising out of any occurrence or happening which
shall have taken place prior to the Completion Date;
3.5.2 Provision of any amount by way of note to the Financial
Statements shall not be deemed to be provision of that amount in
the Financial Statements.
4. Stock
4.1 Valuation: The methods of valuing stock and work in progress as at the
Last Accounting Date (which included a physical stocktaking) were the
same as those adopted for the 3 immediately preceding financial years.
All redundant and obsolete stock was wholly written off, all slow moving
stock was written down appropriately and the value attributed to the
remaining stock did not exceed the lower of direct cost or net
realisable value.
4.2 Changes to Stock Since Last Accounting Date: The stock on hand at
Completion will comprise the stock as at the Last Accounting Date less
stock sold and with the addition
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of stock bought in the ordinary course of business since that date. No
stock currently held other than that written off or written down in the
Financial Statements or which are service spares, is slow moving, out of
date or fashion, redundant or obsolete or which will not realise its
book value within 12 months of the Completion Date.
5. GST
5.1 Registration: The Company is registered for the purposes of the GST Act.
5.2 Not a Member of a Group: The Company has not at any time been a member
of a Group or been treated as a member of a Group for GST purposes. No
application for it to be so treated has at any time been or pending
Completion will be made. No act or transaction has been or pending
Completion will be effected which will result in the Company being held
liable for any GST chargeable against some other company.
5.3 Compliance with GST Act: The Company has complied and pending Completion
will comply in all respects with the GST Act legislation.
5.4 Maintenance of Records: The Company has given obtained made and
maintained and pending Completion will give, obtain, make and maintain
complete correct and up to date invoices, records and other documents
appropriate or requisite for the purposes of the GST Act.
5.5 No Arrears: The Company is not and will not pending Completion be in
arrears with any payment or returns under the GST Act or liable to any
abnormal or non-routine payment or any forfeiture or penalty or to the
operation of any penal provision and where payment is not yet due or
receivable has provided for such payment;
5.6 All Supplies Taxable: All supplies made and to be made pending
Completion by the Company are taxable supplies and the Company is not
and will not pending Completion be denied credit for any input tax.
6. Taxation
6.1 Returns Made: All forms, notices, elections, computations, payments
(including, without limitation, any fines or penalties) and returns
which should be made by the Company for any Taxation purpose have and
will at Completion have been made and are and will be up-to-date,
correct and on a proper basis and none of them is now the subject of any
dispute with the Inland Revenue Department or any other Taxation
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collection agency. In particular the returns in relation to provisional
Taxation will not give rise to any assessment, adjustment or set-off
(including any claim for interest on unpaid Taxation) by the inland
Revenue Department.
6.2 No Knowledge of Dispute: There is no fact known to the Vendors after
making due enquiry which might be the occasion of any dispute with the
Inland Revenue Department or any other Taxation collection agency or a
claim for Taxation in respect of any period prior to the Completion Date
which is not provided for in the Financial Statements for the Company as
at the Last Accounting Date.
6.3 Provision in Financial Statements: Full provision and reserves were made
in the Financial Statements in respect of all Taxation liabilities to or
for which the Company was at the Last Accounting Date or at any time
since may have become or may become liable to be assessed or charged or
to pay. Provision of any amount by way of a notice to the Financial
Statements shall not be a provision for the purposes of this clause.
6.4 No Non-commercial Transactions: The Company has not at any tine entered
into a transaction or series of transactions containing steps inserted
without any commercial or business purpose apart from the obtaining of a
Taxation or stamp duty advantage.
6.5 Debtors Recorded Appropriately: All amounts included in the Financial
Statements or (in the case of an amount arising after the date of the
Financial Statements) in the books of the Company as due from Debtors
represent amounts actually invoiced by the Company to such debtors not
earlier than 3 months prior to the Last Accounting Date (or in the case
of an amount arising after the date of the Financial Statements not
earlier than 3 months prior to the date on which it was recorded in the
books of the Company). No part of such amounts still outstanding has
been released on terms that any debtor pays less than the full book
value of its debt or has been written off or has proved to any extent
irrecoverable or is now regarded as irrecoverable or has been
compromised on any terms.
7. Loans
7.1 No Undisclosed Loans: The aggregate amount appearing in the Financial
Statements as being outstanding in respect of loans owing by the Company
was at the Last Accounting Date the aggregate of all loans or financial
accommodation of whatever nature from any source so outstanding.
7.2 Loans Within Corporate Powers: Such aggregate did not (and the amount
outstanding in respect of loans owing by the Company does not and will
not at Completion) exceed any limitation on the Company's borrowing
contained in its Constitution or in any loan offer, facility letter,
debenture or other deed or document executed by it or, in the case of
borrowings on overdraft, its overdraft facilities.
7.3 Loans from Directors or Shareholders: All amounts outstanding and
appearing in the
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books of the Company as loan accounts or as due to directors or
shareholders wholly represent money or money's worth paid or transferred
to the Company as the case may be or remuneration accrued due and
payable for services rendered and (save for such remuneration) no part
thereof has been provided directly or indirectly out of the assets of
the Company.
7.4 No Repayments: The Company has not repaid and pending Completion will
not repay any loans or other financial accommodation in whole or in part
nor has it by reason of any default by it in any of its obligations
become bound or liable to be called upon to repay prematurely any loans
or borrowed moneys and pending Completion no such default will occur.
8. Liabilities and Commitments
8.1 No Capital Commitments: Since the Last Accounting Date the Company has
not except in the ordinary course of business made any capital
expenditure or incurred any capital commitments nor has it disposed of
or realised any substantial capital assets or any interest in such
assets. The Company has no outstanding capital commitment and pending
Completion no capital commitments or disposals of capital assets or land
or any estate or interest in such assets or land will be undertaken by
the Company without the prior written consent of the Purchaser.
8.2 No Guarantees: The Company is not and will not prior to Completion
become a party to any contract of guarantee or indemnity.
8.3 No Material Contracts: The Company has not entered into and will not
enter into any material contract (including the granting of options to
purchase or Charges over all or any of the Company's assets) except in
the normal and ordinary course of business. The Company has not and will
not become a party to any unusual, abnormal or onerous contract or
agreement whatsoever except as disclosed to the Purchaser or as approved
by the Purchaser.
8.4 No Long Term Contracts: The Company is not and will not on Completion be
a party to any contract of service or supply which cannot be terminated
by not more than 1 month's notice without giving rise to any claim for
damages or compensation other than those disclosed to the purchaser.
8.5 No Commitments since Last Accounting Date: The Company has not since the
Last Accounting Date been and will not at Completion be a party to any
contract, commitment or arrangement of any nature except such as have
been entered into in the normal and ordinary course of trading and are
capable of being wholly satisfied or performed within 3 months from
Completion or of
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being terminated within such period without cost to the Company other
than those disclosed to the purchaser.
8.6 No Arrangements: The Company is not and will not on Completion be a
party to any joint venture, partnership, syndicate or other consortium
arrangement.
8.7 No Agents: No person is authorised to act as agent for the Company or
otherwise to bind the Company other than the directors of the Company
acting as a board. The Company has not appointed any agents,
distributors or managers in respect of any of its products or services
in any part of the world.
8.8 No Default under Agreements: The Company is not now, nor pending
Completion will it become, in default under any agreement to which it is
or may become a party or in respect of any other obligations binding
upon it. No event has occurred which would enable any third party to
terminate any contract or any benefit enjoyed by the Company.
9. Employees
9.1 Full Disclosure of Terms: Full disclosure in writing of the current rate
of remuneration, fees and expenses payable to each officer and employee
of or consultant to the Company and the terms of such employment or
consultancy (including obligations in respect of any directors' or
officers' keyman or indemnity insurance) have been made to the Purchaser
in writing. No such officer or employee or consultant has given notice
or is under notice of dismissal or termination of employment of any
consultancy agreement.
9.2 No Amounts Due: No amounts are due to or in respect of any former
officer or employee or consultant and there are no outstanding arrears
of salary, wages, fees, holiday pay or other remuneration.
9.3 No Industrial Disputes: The Company is not involved in any industrial or
trade dispute or any dispute with any trade union or organisation or
body of employees.
9.4 No Changes: No change has been made in the terms of employment or
consultancy by the Company of any person who was employed at the Last
Accounting Date. Pending Completion the Company will not without the
Purchaser's prior written consent engage any new employee or consultant.
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9.5 No Other Payments: No moneys other than in respect of remuneration or
emoluments of employment or fees are payable to or for the benefit of
any director or officer of the Company.
9.6 No Profit Sharing: The Company is not and will not prior to Completion
become a party to any agreement with any director, officer, employee or
consultant of the Company under which any such person is entitled to a
share of profits of the Company or to any bonus calculated on profits or
to participate in any share incentive scheme or share option scheme or
similar arrangement. No pensions, retiring allowances or other benefits
are or will be payable by the Company to any director, officer or
employee of the Company during such person's employment or consultancy.
9.7 No Schemes: There are not now and will not on Completion be in existence
any retirement, death or disability benefit schemes for directors or
employees or any obligations to or in respect of any present or past
directors or employees with regard to retirement, redundancy, death,
sickness or disability pursuant to which the Company is or may become
liable to make any payments.
9.8 No Breaches of Contract: Since the Last Accounting Date no liability has
been incurred or payment made by the Company for breach of any contract
(whether express or implied) of service, for redundancy or for
compensation for loss of office or wrongful dismissal or in respect of
retirement, death, sickness or disability. No gratuitous payment has
been made or will prior to Completion be made or promised by the Company
to or in respect of any director or employee.
9.9 No Liability for Leave Payments: The Company is not and will not at
Completion be under any liability to any person in respect of long
service leave or accrued annual leave.
9.10 Compliance with Legislation: The Premises and operation of the business
of the Company and the terms on which the employees of the Company were
recruited and are employed to the extent that they are required to
comply and will at Completion comply with the Employment Contracts Act
1991, the Equal Pay Act 1972, the Human Rights Act 1993, the New Zealand
Bill of Rights Act 1990, the Wages Protection Act 1983, the Holidays Act
1981, the Health and Safety in Employment Act 1992 and all applicable
legislation governing employment and safety of employees.
10. Statutory Obligations
10.1 Holding of Licences: The Company holds and will on Completion be in
possession of all current licences (including import licences and
concessions, if any) consents, authorities and permits from or issued by
any Governmental Department, municipal or
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local body or other authority whether in respect of the Premises, plant,
machinery, buildings or other assets of the business or otherwise
necessary or required to enable it to carry on its business fully and
effectively. The Company has not had notice that any such licences,
consents, authorities or permits are being or are likely to be withdrawn
or in any manner qualified whether by reason of the sale of the Shares
or otherwise howsoever.
10.2 No Requisitions: There has not since the Last Accounting Date been and
will not on Completion be any unsatisfied requisitions by or dispute
with any local body health authority, government or ad hoc authority or
other body or official or authority having competent jurisdiction
affecting or relating to any of the Premises, plant, machinery,
buildings or other assets of the business, or the employment of staff by
the Company.
10.3 No Illegal Trade Practices: The Company is not, has not been and will
not pending Completion be a party to any agreement, arrangement,
understanding or practice which is contrary to the provisions of the
Commerce Act 1986, the Fair Trading Act 1986, the Consumer Guarantees
Act 1993, or the Privacy Act 1993.
10.4 No Breach of Statute: The Company has not committed any breach which was
unremedied at the Last Accounting Date of any statutory provision,
order, bylaw or regulation (in every case whether applicable in New
Zealand or elsewhere) binding on or applicable to it with regard to the
formation and operation of the Company, the carrying on of the business
of the Company or any other matter relating to the Company. The Company
has not since such date and will not prior to Completion commit any such
breach.
10.5 All Documents Stamped: All documents which in any way affect the right,
title or interest of the Company in or to any of its property,
undertaking or assets or to which the Company is a party and which
attract stamp duty have been duly stamped. No liability to pay stamp
duty will arise as a result of Completion by virtue of any previous
transfer of any property, undertaking or assets to the Company in
particular but without limitation under section 13(4) of the Stamp and
Cheque Duties Act 1971.
10.6 Compliance with Companies Act: The Company has complied with and will up
to Completion comply with all the requirements of the Companies Act 1993
including all requirements for filing of documents with the Registrar of
Companies.
10.7 All Registers Complete: The entries in the Register of Members, Register
of Directors and Secretaries, Interests Register, Register of Charges
and Register of Directors Shareholdings of the Company are correct and
such registers have been properly kept.
11. Properties and Assets
11.1 Leasehold Premises: The Premises are held upon lease terms which have
been fully
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disclosed to the Purchaser.
11.2 Title and Compliance: The Company had on the Last Accounting Date and
will on Completion have sole title to and possession and control of all
the freehold and leasehold properties used or occupied by it free from
all leases, tenancies or Charges. Bach of the said properties complies
and will on Completion comply with the local body code or ordinances
affecting the same and with all other statutory, local body and other
regulations and requirements.
11.3 All Premises Included: The Premises comprise all the freehold and
leasehold land and premises owned, used or occupied by the Company and
all the estate interest right and title whatsoever of the Company in,
under, over or in respect of any such land or premises.
11.4 Compliance with Statutes: The Company has to the extent to which it is
required to complied with all provisions of the Building Act 1991,
Resource Management Act 1991 and all other legislation (including
regulations, bylaws, ordinances, codes of practice, circulars and
guidance notes made thereunder) relating to building, planning or
environmental matters and dealing with (but without limitation) waste,
contaminated land, discharges to land or ground and surface water or
sewers, emissions to air, noise, dangerous, hazardous or toxic
substances and materials, nuisance or health and safety. There are no
actions, claims or proceedings (whether actual or potential) existing in
relation to such matters nor any liability likely to arise in relation
to such matters.
11.5 Compliance with Leases: The Company has paid all rent that may be
payable and has performed and observed all covenants (whether in
relation to freehold or leasehold land) conditions, agreements,
statutory requirements, planning or building or resource consent,
bylaws, orders and regulations affecting the Premises or any business
carried on the Premises. No notice of any breach of any such matter has
been received nor are the Vendors aware of any such breach having
occurred.
11.6 No Defects: No structural, drainage or other material defects have
appeared in respect of or affected the buildings and structures on or
comprising the Premises. All such buildings are in good and substantial
repair and condition and none has been constructed, maintained, altered
or repaired using materials containing any deleterious building
material. None of the Premises has been affected by flooding or
subsidence.
11.7 No Other Matter: There is no other matter of which the Vendors are or
ought to be aware on reasonable enquiry and which adversely affects the
value of any of the Premises or casts any doubt on the right or title of
the Company to those Premises or its use of those Premises for its
business which should be revealed to a Purchaser of the Shares of the
Company or other person entering into this Agreement.
11.8 Plant and Machinery: The Company's plant and machinery (including fixed
plant and machinery) and all equipment, furniture and vehicles taking
into account their age and
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usage are in good repair and condition (fair wear and tear excepted) and
in satisfactory working order and none of it is surplus to the Company's
requirements.
11.9 Debts Recoverable: The amount of all debts due or recorded in the
Financial Statements or the books of the Company as being due to the
Company as at Completion (less the amount of any provision or reserve
made in the Financial Statements or the books of the Company in respect
of any particular debts) will be good and collectable in full in the
ordinary course of business and in any event not later than 6 months
after Completion. None of such debts is or will at Completion be subject
to any counterclaim or set-off except to the extent of any such
provision or reserve.
11.10 Changes Since the Last Accounting Date: Since the Last Accounting Date:
11.10.1 No Write-Offs or Write-Downs: None of the assets of the Company
have been written off or written down nor has there been any
agreement for the release of any person under liability to the
Company;
11.10.2 Cash: The Company has neither disbursed nor received any cash
except in the ordinary course of its business and amounts
received by the Company have been deposited with its bankers and
appear in the appropriate books of account;
11.10.3 Depletion in Assets: There has been no depletion in the net
assets of the Company and they have not been materially
diminished by the negligent, wrongful or fraudulent act of any
person;
11.10.4 GAAP: Everything which should according to generally accepted
accounting practices (as defined in the Financial Reporting Act
1993) have been written up or recorded in the Statutory Books
and financial records of the Company with respect to the assets
of the Company (including the Premises), has been written up and
recorded;
11.10.5 Compliance with Notices: There have been no notices, claims or
demands served on the Company in respect of any of its assets
(including the Premises) which have not been fully complied
with.
12. Intellectual Property
12.1 All Intellectual Property Included: The Consideration for the Shares is
assessed on the basis that all licences and all Intellectual Property or
other similar rights relating to the business of or used by the Company,
if any, are at present owned solely and beneficially by the Company. All
of such rights shall remain the property of the Company to the intent
that the Company shall be the sole unencumbered and undisputed owner of
all such things as at Completion.
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12.2 No Intellectual Property Agreements: The Company has not entered into
any agreement or arrangement for the provision of technical information
or assistance or granting rights in respect of any patents, trade marks
or registered designs or copyright. To the best of the Vendors'
knowledge and belief the operations of the Company do not infringe any
patent or other intellectual property right of any kind vested in any
other party.
12.3 Disclosure of Intellectual Property: Full details of all Intellectual
Property owned or used by the Company have been given to the Purchaser.
No person has been authorised to make any use whatsoever of any
Intellectual Property owned by the Company. The Company has not
disclosed (except in the ordinary course of its business) any of its
know-how, trade secrets, technical processes, confidential information,
Intellectual Property or lists of customers or suppliers to any other
person.
12.4 Use of Names: The Company is entitled to use its trade names in those
parts of the world in which it currently conducts its business or its
products are sold to its customers. No person has been authorised to
make any use whatsoever of any such name. The use of such names by the
Company does not infringe the rights of any other person or entitle any
other person to a claim against the Company. No such name is being used,
claimed, opposed or attacked by any other person.
12.5 Name: The Company has not consented to and will not before Completion
consent to the adoption of a similar name by any other company or
person.
12.6 Intellectual Property Not Disputed: The Intellectual Property rights of
the Company have not been and will not at Completion be challenged or
disputed by any third party. The Vendors are not aware of any facts or
circumstances which might entitle a third party to challenge the
Company's ownership or use of the Intellectual Property used in the
business.
13. Commercial Matters
13.1 All Actions Indemnified: There is no cause of action in respect of which
the Company is not fully indemnified which could and might be used for
the purpose of commencing proceedings either civil or criminal.
13.2 No Legal Proceedings: The Company is not engaged in any Proceedings
whatsoever nor are any Proceedings of any kind being taken against it
nor is # aware of any Proceedings against the Company pending or
threatened.
13.3 No Breaches of Contract: The Company is not and will not on Completion
be in breach of any contract, commitment or arrangement of any nature
whatsoever to which it is
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39
now or will then be a party and is not and will not on Completion be a
party to any contract, commitment or arrangement which may be
unenforceable by the Company by reason of the transaction being voidable
at the instance of any other party or ultra vires, void or illegal.
13.4 Insurance: Full details of all insurance policies maintained by the
Company have been supplied to the Purchaser. All such insurances are now
in force and all premiums due have been paid. Pending Completion the
Company shall not permit any of its insurances to lapse or do or omit to
do anything the doing or omission of which would make any such policy of
insurance void or voidable or would or might result in an increase in
the rate of premiums. No claims are outstanding and nothing has occurred
to give rise to any such claim.
13.5 No Notice from Lenders to Repay: The Company has not received notice
(whether formal or informal) from any lenders of money to the Company
requiring repayment or intimating the enforcement by such lenders of any
security which they may hold over any assets of the Company. The Vendors
are not aware of any circumstances likely to give rise to any such
notice being given or which would enable any such notice to be given.
13.6 Effect of Acquisition of Shares: The Vendors have no reason to believe
that as a result of the proposed acquisition of the Shares by the
Purchaser:
13.6.1 No Cessation of Supplies: Any supplier of the Company will cease
supplying the Company or may substantially reduce its supplies
to the Company or alter the terms on which it supplies the
Company; or
13.6.2 No Cessation of Custom: Any customer of the Company will
terminate any contract with the Company or cease or materially
reduce its business with it; or
13.6.3 No Notice of Termination of Employment: Any officer or senior
employee of the Company will give notice of termination of his
or her employment with the Company; or
13.6.4 No Termination of Contracts: Any of the licences, consents,
approvals, agreements or contracts currently granted to or
entered into by the Company required in connection with the
carrying on of its business in the manner in which it has been
carried on at any time during the 2 years prior to the date
hereof will be withdrawn, cancelled or be capable of
termination.
13.7 Arm's Length Supplies: All supplies of goods or services to the Company
are purchased by the Company direct from manufacturers or suppliers on
an arm's length basis and no commissions or similar payments are made to
the Vendors or any other
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40
intermediaries in respect of such supplies.
13.8 No Outstanding Offers: No offer, tender or the like which has not been
disclosed to the Purchaser has been made by the Company and being still
outstanding is capable of giving rise to a contract merely by any
unilateral act of a third party other than as disclosed to the
Purchaser.
13.9 No Liabilities: The Company does not have and at Completion will not
have any outstanding debts, liabilities, contracts or engagements,
guarantees, undertakings or liabilities (including contingent
liabilities) other than liabilities implied by statute or disclosed in
the Financial Statements or incurred in the ordinary and proper course
of its trading business.
13.10 Continuance of Name: The Company does not and pending Completion will
not use on its letterheads, brochures, sales literature, books, Premises
or vehicles or otherwise carry on its business under any name other than
its corporate name.
13.11 Electronic Storage: The Company has not and will not pending Completion
have any of its records, systems, controls, data or information
recorded, stored, maintained, operated or otherwise dependent upon or
held by any means (including any electronic, mechanical or photographic
process whether computerised or not) which (including all means of
access thereto and therefrom) are not under the exclusive ownership and
direct control of the Company. There has been no breach of any service
or maintenance contract relevant to any such electronic, mechanical or
photographic process or equipment whereby any person or body providing
services or maintenance thereunder may have the right to terminate such
service or maintenance Contract.
13.12 Transactions with Associated Persons: The Vendors and their Associated
Persons have not entered into and will not prior to Completion enter
into any loan, borrowing, agreement or other arrangement with or on
behalf of the Company (other than as employee of the Company on terms
fully disclosed to the Purchaser) and are not and will not at Completion
be interested, whether directly or indirectly, in or have any Charge
over any of the assets of the Company.
14. Corporate Matters
14.1 Share Capital: There is not now outstanding and will not be outstanding
at Completion in respect of the Company any option or agreement under
which any person has or may in any circumstances have or acquire the
right to subscribe for or purchase any share or loan capital of the
Company or to convert any stock or share or security into share capital
or into share capital of a different class.
14.2 Attorneys: The Company has not given any power of attorney or any other
authority (express, implied or ostensible) which is still outstanding or
effective to any person to enter into any contract or commitment or do
anything on its behalf (other than any
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authority of employees to enter into routine trading contracts in the
normal course of their duties) nor will it do so prior to Completion.
14.3 Officers: Since the Last Accounting Date no appointments or removals of
any officers of the Company have been made.
14.4 Ultra Vires Contracts: To the best of the Vendors knowledge and belief
none of the activities or contracts or rights of the Company is ultra
vires, unauthorised, invalid or unenforceable or in breach of any
contract or covenant.
SCHEDULE 3
(clause 7.3)
1. Warranty Limitations: Notwithstanding any other provisions of this
Agreement, the Vendors shall not be liable in respect of any Proceedings
or Costs for breach of any of the Warranties or other breach of this
Agreement:
1.1 Notice: Unless, promptly after the Purchaser becomes aware or ought to
have become aware of any breach, they shall have received from the
Purchaser written notice containing full details of the relevant
Proceedings including, if practicable, the matter or default which gives
rise to the Proceedings, the breach that results and the amount claimed
in respect of the Proceedings: and
1.1.1 Other than Taxation: in the case of any of the Warranties other
than Warranties in relation to Taxation, within a period of 1
year after the Completion Date; or
1.1.2 Taxation: in the case of any of the Warranties in relation to
Taxation, within a period ending the earlier of the date 5 years
after the Completion Date and the date falling six weeks after
the date on which any relevant statutory limitation period in
the jurisdiction relevant to the Taxation Proceedings shall
expire;
and (unless the relevant Proceedings shall have been withdrawn or
satisfied) action in a court of competent jurisdiction in respect of
such breach shall have been commenced within 1 year after receipt of
such notice.
1.2 Aggregate of Warranties to Exceed Specified Amount: Nor shall the
Vendors be liable unless the aggregate amount of the uninsured liability
of the Vendors alleged breach of Warranties exceeds $5,000; and
1.3 Limit for Single Proceedings: Unless, in respect of any single breach of
any of the Warranties, the amount of the uninsured liability of the
Vendors' alleged breach exceeds $1,000; or
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1.4 Exclusion where Covered by Insurance: If and to the extent that (after
taking account of related Costs and any normal excess in such policy)
recovery is made by the Purchaser or the Company under any policy of
insurance effected by or for the benefit of the Company in respect of
any of the subject matters of such Proceedings; or
1.5 Exclusion where Recovery under Another Agreement: If and to the extent
that any costs or other liability occasioned by those Proceedings has
been recovered under any order of a Court of competent jurisdiction,
other award or agreement entered into between the parties; or
1.6 Provisions Made in Account: If and to the extent that proper provision
or allowance therefor has been made in the Financial Statements; or
1.7 Subsequent Changes: If and to the extent that such Proceedings and any
Costs in connection therewith arise or is increased as a result of:
1.7.1 Any alteration in rates of Taxation after the date of this
Agreement with retrospective effect or the withdrawal after the
date of this Agreement of any published extra-statutory
concession or the alteration after that date of any published
statement of practice of the relevant revenue authority; or
1.7.2 The passing of, or any change in, any legislation after the date
of this Agreement; or
1.7.3 Any change in accounting policy or practice of the Company after
Completion including any changes in methods or practices in
relation to stock valuation;
1.7.4 Any voluntary act or omission or transaction of the Purchaser or
the Company after Completion otherwise than in the ordinary
course of the Company's business as carried on at the date of
this Agreement including (without limitation):
1.7.5 The payment of any unusual or abnormal dividend by the Company;
1.7.6 A change of the date up to which the Company makes up its
Statutory Books;
1.7.7 The cessation of any business carried on by the Company;
1.8 Liability Disclosed: Nor shall the Vendors be liable if and to the
extent the facts, matters or circumstances giving rise to the breach are
referred to in the Disclosure Letter or any document disclosed with the
Disclosure Letter or in any document disclosed to the Purchaser or any
officer of or professional adviser to the Purchaser in relation to this
Agreement and such facts, matters or circumstances are accepted by the
Purchaser in writing as not being subject to the Warranties; nor
1.9 Utilisation of Taxation Relief: In the case of a Proceedings arising in
connection with a
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payment of Taxation, if and to the extent that such payment could have
been avoided by the utilisation of trading losses or other relief from
Taxation (other than trading losses, or other relief arising after the
Last Accounting Date) available to the Company; nor
1.10 Over Provision in Financial Statements: If and to the extent that there
is any over provision in respect of any matter included in the Financial
Statements; nor
1.11 Pursuant to Agreement: If and to the extent that such matter giving rise
to the Proceedings properly falls to be done in implementing the terms
of this Agreement;
2. Limitations Separate and Independent: For the avoidance of doubt each of
the above clauses of this Schedule shall be construed as being separate
and independent and none of them shall be construed as limiting the
effect of any other.
3. Recovery from Third Party: If the Vendors pay an amount pursuant to a
Proceedings in respect of breach of any of the Warranties and the
Company or the Purchaser has a right of reimbursement against any person
other than the Company in respect of or relating to those Proceedings,
the Company or the Purchaser shall (subject to the Company or the
Purchaser, as the case may be, being indemnified to its reasonable
satisfaction by the Vendors against all reasonable Costs) take all
reasonable steps or proceedings to enforce such right. If the Purchaser
subsequently recovers such reimbursement from such third party, the
Purchaser shall forthwith repay to the Vendors as the case requires such
part of the amount paid by either of them by way of damages for breach
of that Warranty as equals the amount which is so recovered by the
Purchaser in respect of the facts, matters or circumstances giving rise
to the breach of that Warranty (after taking account of the Costs of
recovery and (if appropriate) any Taxation arising solely as a result of
the recovery).
4. Conduct of Proceedings by the Vendors: The Purchaser shall give and
shall procure that the Company shall give, to the Vendors full
facilities to investigate any Proceedings and the extent of possible
liability under the Warranties. At the request of the Vendors the
Purchaser shall (subject to the Purchaser being indemnified as to any
reasonable Costs which may be incurred thereby) allow the Vendors at
their own expense to participate in, or have the conduct of (as they may
elect), all proceedings of whatsoever nature against the relevant third
party arising out of, or in connection with such Proceedings or dispute,
in the name of the Company or the Purchaser as it may consider necessary
in order to mitigate any Proceedings or Costs arising under this
Agreement. Neither the Purchaser nor the Company shall accept or pay or
compromise any such liability or Proceedings as is referred to above
without the Vendors either consenting to such action or having a
reasonable opportunity to resist the same.
5. No Double Liability: No liability shall attach to the Vendors for any
loss resulting from any breach of the Warranties or otherwise under this
Agreement to the extent that the same loss has been recovered by the
Company or the Purchaser under any indemnity under this Agreement. No
liability shall attach to the Vendors under any indemnity to
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44
the extent that the same loss has been recovered by a claim under a
Warranty.
6. Insurances: If, in respect of any claim against the Vendors which may
arise in respect of this Agreement, the Purchaser or the Company is
entitled to claim under any policy of insurance, then the Vendors shall
not be liable in respect of such claim until a claim has been made under
such policy. Any claims against the Vendors shall be reduced by any
amount actually recovered under any such policy.
SCHEDULE 4
(clauses 9.1.4 and 9.1.6)
Item 1. Consents (clause 9.1.3 9.1.6)
Item 2. Charges (clause 4.1.3)
Item 3. Guarantees (clause 4.2)
ANNEXURES
1. Financial Statements (clause 1.1)
2. Employment Contracts (clause 4.1.5)
3. Form of Escrow Agreement (clause 1.1)
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31 March 1998
Brocker Investments (NZ) Limited
Pritech ("The Company")
We refer to the Heads of Agreement ("the Agreement") to be entered into today
between us as Vendor and you as Purchaser relating to the sale by us of the
entire issued share capital of the Company to you and particularly to clause 14
of that Agreement.
For the purposes of assisting your due diligence process we are supplying the
following information about the company. In doing so we have largely followed
the list of requirements set out in the "Disclosure Document" you have supplied
to us.
1. General Disclosures
For the purposes of that clause we hereby disclose to you the information
set out in this letter subject to the following qualifications:
a. All disclosures are made generally to fulfil our obligations under
the agreement for the purposes of satisfying the questions you
have asked of us and set out in the Disclosure Document. We do not
relate any of the information disclosed to particular paragraphs
of that Document and all disclosures are to be taken where
appropriate as disclosing, in relation to any of the paragraphs of
that Document, the information relevant to it. Accordingly,
numbers or letters appearing against disclosures are references to
numbers of that Document or letters introduced for convenience
only, and do not and are not to be deemed as limiting the
disclosure to the stated paragraph number or letter, and all
information supplied is to be taken as referring to every
paragraph of that Document that is or may be relevant. Defined
terms where used have the same meanings as accorded to them in the
Agreement.
b. None of the matters disclosed in this letter will form the basis
of a claim by you against us under clause 17 of the agreement.
c. We disclose all information which is available to you in records
open to the public and, in particular, but without prejudice to
the generality of the foregoing, all matters contained on the
public files of the Company in New Zealand or in any Land Registry
relating to land or other property owned or occupied by the
Company.
d. We disclose the full contents of the financial statements of the
Company for the months ended September 1997, a copy of which has
been disclosed to the Purchaser.
E-360
<PAGE>
Specific Disclosures
2. Suppliers
2.1 Our Major Supplies are:
2.1.1 ABT Corp
2.1.2 Sealcorp
2.1.3 GWI Software
2.1.4 Quality Decision Management
2.1.5 Robert Scless & Co., Inc
3 Outstanding Invoices
3.1 See attached Aged Payables Report
4 Outstanding Debtors Invoices
4.1 See attached Customer Sales Summaries
5 Warranties
5.1 NZDRI has a 3 month warranty ending 23/4/98 on a Notes
application.
6 Customers
6.1 As per Sales Analysis List
7 Product Distributors
7.1 Not applicable
8 Overseas Distributors
8.1 Not applicable
9 End User Contracts
9.1 ECNZ
9.2 MAF
9.3 State Insurance-- Contract for Lenn French has a 60 days notice to
quit clause (this ends July 98)
9.4 NZDRI-- an unsigned support agreement ($4,835 over 3 months)
10 Repair Contracts
10.1 Not applicable
11 Debtors
11.1 Attached list of Aged Receivables
12 Staff
12.1 See attached list with Salaries & Leave entitlement.
13 Contractors
13.1 Lenn French
13.2 Alama French
13.3 Mark Laugesen
13.4 Miles Stafford - to go on to staff 1/4/98
13.5 Loretta Ruessen -- to go on to staff 1/4/98
14 Redundancy
14.1 Not applicable
15 Holiday Pay
15.1 See Staff
16 Special Issues
16.1 Ipex-- dispute on amount owing ($3,161) re McKay Shipping, should
negotiate part of this.
16.2 With Datatoqu, a sub contractor on BRANZ project, amount to be on
charged to BRANZ $ 13k, charge to us to date $8.5K is disputed on
quality, worst case no profit on $ 13k.
16.3 Guinness Callagher disputing $3,476 for consulting/prototyping to
define needs when they then found a free Lotus supplied template
gave them what they wanted.
16.4 TOPNZ we had a problem with system performance which is now
resolved but may be liable for educational software upgrade -
value $3k.
17 Premises
17.1 Copies of contracts provided
18 Vehicles
18.1 Not applicable
19 Shareholders
19.1 David Corlett, David Cooke, Gary Elmes
20 Financial
E-361
<PAGE>
20.1 Increase In Share Capital
20.1.1 None Since Sept 97
20.2 Dividend Distribution
20.2.1 Not applicable
20.3 Capital Purchases 97/98
20.3.1 Nothing of Significance (over $2,000)
20.4 Tax Liability
20.4.1 GST
20.4.1.1 $$$$
20.4.2 Provisional
20.4.2.1 None
21 Leases
21.1 Cars
21.1.1 Copies provided - 4 from Motor Fleet
21.2 UDC
21.2.1 Copies Provided
21.3 PC Rentals
21.3.1 Copies provided
22 Personal Guarantees
22.1 None
23 Legal
23.1 Company Registration
23.1.1 Attached
23.2 Company Secretary
23.2.1 Chris Gregory
23.3 Company Register
23.3.1 Attached
E-362
<PAGE>
Pritech Corporation Limited
P O Box 8990
Symonds Street P O
2nd Floor Elders House
60 Khyber Pass Road
Aged Payables
30/3/98
30/3/98 Page 1
8:01:32 AM
<TABLE>
<CAPTION>
Name ID# Date Total Due Current 31-60 61-90 90+
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ABT International
0% 20th Net 20th after EOM
1298Rep 30/11/97 $9,416.38 $9,416.38
1297Rep 31/12/97 $6,681.88 $6,681.88
1297Rep 31/12/97 $13,190.73 $13,190.73
1297Rep 31/12/97 $10,020.02 $10,020.02
0198Rep 31/1/98 $5,302.69 $5,302.69
0198Rep 31/1/98 $1,600.00 $1,600.00
0198Rep 31/1/98 $19,922.04 $19,922.04
0198Rep 31/1/98 $755.18 $755.18
0198Rep 31/1/98 $12,164.08 $12,164.08
----------- ---------- ----------- ---------- ----------
Total: $79,053.00 $0.00 $39,753.99 $29,892.63 $9,416.38
- ---------------------------------------------------------------------------------------------------------
ANZ Mastercard
0% 20th Net 20th after EOM
FebMar98 19/3/98 $2,427.46 $2,427.46
----------- ---------- ---------- ---------- ----------
Total: $2,427.46 $2,427.46 $0.00 $0.00 $0.00
- ---------------------------------------------------------------------------------------------------------
Bellsouth
0800-500-021
0% 20th Net 20th after EOM
04425448 4/3/98 $315.00 $315.00
00129889 12/3/98 $4,338.69 $4,338.69
----------- ----------- ---------- ---------- ----------
Total: $4,653.69 $4,653.69 $0.00 $0.00 $0.00
- ---------------------------------------------------------------------------------------------------------
Brainstorm Technologies Inc.
(617)621-0800
0% 20th Net 20th after EOM
00256125 30/9/96 $3,387.57 $3,387.57
00005438 7/6/97 $4,052.12 $4,052.12
----------- ---------- ---------- ---------- -----------
Total: $7,439.69 $0.00 $0.00 $0.00 $7,439.69
- ---------------------------------------------------------------------------------------------------------
Carlton Hotel - Auckland
09-366-5629
0% 20th Net 20th after EOM
PMW 28/2/98 $237.50 $237.50
----------- ---------- ---------- ---------- ----------
Total: $237.50 $237.50 $0.00 $0.00 $0.00
- ---------------------------------------------------------------------------------------------------------
Central Office Supplies
09-4805960
0% 20th Net 20th after EOM
00006453 9/2/98 -$15.02 -$15.02
----------- ---------- ---------- ---------- ----------
Total: -$15.02 $0.00 -$15.02 $0.00 $0.00
- ---------------------------------------------------------------------------------------------------------
Champagne Consultants Limite
0-4-384-6099
C.O.D.
00004301 30/1/98 $917.52 $917.52
00001293 19/2/98 $667.13 $667.13
00020558 25/2/98 $95.63 $95.63
00004305 27/2/98 $1,177.82 $1,177.82
----------- ---------- ----------- ---------- ----------
Total: $2,585.10 $0.00 $2,585.10 $0.00 $0.00
- ---------------------------------------------------------------------------------------------------------
Clear Communications Limited
</TABLE>
E-363
<PAGE>
Pritech Corporation Limited
Aged Payables
3 0/3/98
30/3/98 Page 2
8:01:32 AM
<TABLE>
<CAPTION>
Name ID# Date Total Due Current 31 -60 61-90 90+
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Clear Communications Limited
050-0509
COD.
----------- ---------- ---------- ---------- ----------
Total: $386.68 $386.68 $0.00 $0.00 $0.00
- ---------------------------------------------------------------------------------------------------------
Cockcroft, d'Young Lawyers
09 480 0091
0% 20th Net 20th after EOM
1144/2 20/3/98 $699.75 $699.75
1144/1 24/3/98 $5,895.00 $5,895.00
----------- ---------- ---------- ---------- ----------
Total: $6,594.75 $6,594.75 $0.00 $0.00 $0.00
- ---------------------------------------------------------------------------------------------------------
Dave, Expenses Cooke
0% 20th Net 20th after EOM
PJ00157 28/6/96 $9.97 $9.97
----------- ---------- ---------- ---------- ----------
Total: $9.97 $0.00 $0.00 $0.00 $9.97
- ---------------------------------------------------------------------------------------------------------
Expenses Elmes Gary
0% 20th Net 20th after EOM
JAN97 31/1/97 $83.40 $83.40
----------- ---------- ---------- ---------- ----------
Total: $83.40 $0.00 $0.00 $0.00 $83.40
- ---------------------------------------------------------------------------------------------------------
Fliway Express Ltd
09 275-4009
0% 20th Net 20th after EOM
00253661 6/3/98 $40.00 $40.00
00408906 17/3/98 $111.63 $111.63
----------- ---------- ---------- ---------- ----------
Total: $151.63 $151.63 $0.00 $0.00 $0.00
- ---------------------------------------------------------------------------------------------------------
Hollands Limited
0-9-638-6949
C.O.D.
00951093 3/3/98 $95.85 $95.85
00951393 4/3/98 $98.42 $98.42
----------- ---------- ---------- ---------- ----------
Total: $194.27 $194.27 $0.00 $0.00 $0.00
- ---------------------------------------------------------------------------------------------------------
Inforplex Technology Ltd
Leo Hitchcock
379-8448
0% 20th Net 20th after EOM
86063000 19/12/97 $1,620.00 $1,620.00
86066300 21/3/98 $2,868.75 $2,868.75
86066500 21/3/98 $699.75 $699.75
----------- ---------- ---------- ---------- ----------
Total: $5,188.50 $3,568.50 $0.00 $0.00 $1,620.00
- ---------------------------------------------------------------------------------------------------------
Kirk Motors
04-385-9503
0% 20th Net 20th after EOM
WI20052 20/3/98 $302.75 $302.75
----------- ---------- ---------- ---------- ----------
Total: $302.75 $302.75 $0.00 $0.00 $0.00
- ---------------------------------------------------------------------------------------------------------
MISCELLANEOUS
0% 20th Net 20th after EOM
00030290 11/2/98 $315.00 $315.00
----------- ---------- ---------- ---------- ----------
</TABLE>
E-364
<PAGE>
Pritech Corporation Limited
Aged Payables
3 0/3/98
30/3/98 Page 3
8:01:33 AM
<TABLE>
<CAPTION>
Name ID# Date Total Due Current 31 -60 61-90 90+
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NetLogic Holdings Ltd
04-472-1121
0% 20th Net 20th after EOM
00000024 31/10/97 $371.25 $371.25
----------- ---------- ---------- ---------- ----------
Total: $371.25 $0.00 $0.00 $0.00 $371.25
- ---------------------------------------------------------------------------------------------------------
OTC Office Supplies
0% 20th Net 20th after EOM
W480644 4/3/98 $137.07 $137.07
W481487 6/3/98 $75.94 $75.94
----------- ---------- ---------- ---------- ----------
Total: $213.01 $213.01 $0.00 $0.00 $0.00
- ---------------------------------------------------------------------------------------------------------
PC Rentals Limited
Reg Ball
09-302-1082
0% 20th Net 20th after EOM
00031809 5/3/98 $175.88 $175.88
00031921 10/3/98 $39.38 $39.38
----------- ---------- ---------- ---------- ----------
Total: $215.26 $215.26 $0.00 $0.00 $0.00
- ---------------------------------------------------------------------------------------------------------
Raskis
0% 20th Net 20th after EOM
MoH 16/3/98 $16,875.00 $16,875.00
Stats 16/3/98 $16,875.00 $16,875.00
----------- ---------- ---------- ---------- ----------
Total: $33,750.00 $33,750.00 $0.00 $0.00 $0.00
- ---------------------------------------------------------------------------------------------------------
Sealcorp
09 3767888
0% 20th Net 20th after EOM
00016899 24/12/97 $1.00 $1.00
00256176 20/3/98 $60.75 $60.75
----------- ---------- ---------- ---------- ----------
Total: $61.75 $60.75 $0.00 $0.00 $1.00
- ---------------------------------------------------------------------------------------------------------
Stafford Computing Company L
0-9-424-9347
C.O.D.
ExpFeb 28/2/98 $294.70 $294.70
Exp 16/3/98 -$150.95 -$150.95
Exp03 16/3/98 -$273.11 -$273.11
----------- ---------- ---------- ---------- ----------
Total: -$129.36 -$129.36 $0.00 $0.00 $0.00
- ---------------------------------------------------------------------------------------------------------
Stars Travel Information
09-377-5839
0% 20th Net 20th after EOM
00099084 3/3/98 $709.00 $709.00
00095496 4/3/98 $739.70 $709.00
00099093 4/3/98 $447.00 $477.00
00099153 9/3/98 $719.70 $719.70
00098856 16/3/98 $246.39 $246.39
00098882 16/3/98 $648.00 $648.00
00098891 16/3/98 $245.99 $245.99
00098892 16/3/98 $915.10 $915.10
00098895 18/3/98 $1,123.88 $1,123.88
00098896 18/3/98 $139.17 $139.17
00098898 18/3/98 $129.28 $129.28
00098899 18/3/98 $140.38 $140.38
00099455 24/3/98 $278.93 $278.93
----------- ---------- ---------- ---------- ----------
Total: $6,482.52 $6,482.52 $0.00 $0.00 $0.00
</TABLE>
E-365
<PAGE>
Pritech Corporation Limited
Aged Payables
3 0/3/98
30/3/98 Page 4
8:01:33 AM
<TABLE>
<CAPTION>
Name ID# Date Total Due Current 31 -60 61-90 90+
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Strategic Technology Services
04-801-6111
0% 20th Net 20th after EOM
02019394 3/3/98 $54.00 $54.00
----------- ---------- ---------- ---------- ----------
Total: $54.00 $54.00 $0.00 $0.00 $0.00
- ---------------------------------------------------------------------------------------------------------
Tech Rentals (NZ) Limited
0-9-520-4759
COD.
R61395 4/3/98 $717.75 $717.75
R61666 20/3/98 $1,184.63 $1,184.63
----------- ---------- ---------- ---------- ----------
Total: $1,902.38 $1,902.38 $0.00 $0.00 $0.00
- ---------------------------------------------------------------------------------------------------------
Triforium - JAD Limited
0% 20th Net 20th after EOM
00000176 8/3/98 $20,500.31 $20,500.31
----------- ---------- ---------- ---------- ----------
Total: $20,500.31 $20,500.31 $0.00 $0.00 $0.00
- ---------------------------------------------------------------------------------------------------------
Westpac Mastercard
0% 20th Net 20th after EOM
JuneJuly 1/8/97 $148.57 $179.07 $293.89 $148.57
MayJune 1/8/97 $378.62 $378.62
AugSept 16/9/97 $364.08 $364.08
Oct/Nov 16/11/97 $190.16 $190.16
Dec97 16/12/97 $251.52 $251.52
DeeJan 18/1/98 $293.89
Feb98 16/2/98 $179.07
----------- ---------- ---------- ---------- ----------
Total: $1,805.91 $0.00 $179.07 $293.89 $1,332.95
- ---------------------------------------------------------------------------------------------------------
Grand Total: $175,108.40 $81,566.10 $43,081.14 $30,186.52 $20,274.64
Aging Percent: 46.6% 24.6% 17.2% 11.6%
----------- ---------- ---------- ---------- ----------
</TABLE>
E-366
<PAGE>
Pritech Corporation Limited
P 0 Box 8990
Symonds Street P 0
2nd Floor Elders House
60 Khyber Pass Road
Customer Sales Summary
30/3/98 Page 1
9:15:51 AM
<TABLE>
<CAPTION>
ID# Customer's P0 # Original Date Sale Amount GST Current Balance Status Due/Promised
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Andrews & Partners
00005403 20/5/97 $158.00 $19.76 $177.76 Open 20/6/97
00005642 31/7/97 $210.00 $26.25 $236.25 Open 20/8/97
00005643 31/7/97 $200.00 $25.00 $225.00 Open 20/8/97
00005644 31/7/97 $1,310.25 $163.78 $1,474.03 Open 20/8/97
00005716 31/8/97 $140.00 $17.50 $157.50 Open 20/9/97
00005717 31/8/97 $200.00 $25.00 $225.00 Open 20/9/97
00005718 31/8/97 $1,005.75 $125.72 $1,131.47 Open 20/9/97
00005907 C21 15/9/97 $63.00 $7.88 $70.88 Open 20/10/97
00005838 30/9/97 $35.00 $4.38 $39.38 Open 20/10/97
00005839 30/9/97 $200.00 $25.00 $225.00 Open 20/10/97
00005840 30/9/97 $67.50 $8.44 $75.94 Open 20/10/97
00005918 31/10/97 $70.00 $8.75 $78.75 Open 20/11/97
00005919 31/10/97 $200.00 $25.00 $225.00 Open 20/11/97
00005920 31/10/97 $270.00 $33.75 $303.75 Open 20/11/97
00006170 31/12/97 $200.00 $25.00 $225.00 Open 20/1/98
00006171 31/12/97 $200.00 $25.00 $225.00 Open 20/1/98
----------- ---------- -----------
$4,529.50 $566.21 $5,095.71
- ------------------------------------------------------------------------------------------------------------------
Arthur Andersen
98123554 20/1/98 $1,740.00 $217.50 $1,957.50 Open 20/2/98
----------- ---------- -----------
$1,740.00 $217.50 $1,957.50
- ------------------------------------------------------------------------------------------------------------------
Axon Computer Systems Ltd
00006240 31/1/98 $390.00 $48.75 $438.75 Open 20/2/98
----------- ---------- -----------
$390.00 $48.75 $438.75
- ------------------------------------------------------------------------------------------------------------------
Broadcast Commun. Limited
00006296 56273 31/1/98 $1,050.98 $131.37 $1,182.35 Open 31/1/98
----------- ---------- -----------
$1,050.98 $131.37 $1,182.35
- ------------------------------------------------------------------------------------------------------------------
Brocker Investments
00006241 31/1/98 $2,697.00 $337.13 $3,034.13 Open 20/2/98
----------- ---------- -----------
$2,697.00 $337.13 $3,034.13
- ------------------------------------------------------------------------------------------------------------------
Champagne Consultants Limite
00005374 30/4/97 $3,200.00 $400.00 $3,600.00 Open 30/4/97
00006110 30/6/97 $750.00 $93.75 $843.75 Open 30/4/97
00005925 31/10/97 $750.00 $93.75 $843.75 Open 31/10/97
00005926 31/10/97 $2,250.00 $281.25 $2,531.25 Open 31/10/97
00006174 31/12/97 $3,000.00 $375.00 $3,375.00 Open 31/12/97
----------- ---------- -----------
$9.950.00 $1,243.75 $11,193.75
- ------------------------------------------------------------------------------------------------------------------
Columbia TriStar 31/12/97 $60.00 $7.50 $67.50 Open 20/1/98
----------- ---------- -----------
$60.00 $7.50 $67.50
- ------------------------------------------------------------------------------------------------------------------
ComputerLand - WGTN
00006134 22/12/97 $405.00 $50.63 $455.63 Open 20/1/98
----------- ---------- -----------
$405.00 $50.63 $455.63
- ------------------------------------------------------------------------------------------------------------------
CPS Systems (NZ) Ltd
97123504 31/12/97 $1,160.00 $145.00 $1,305.00 Open 20/1/98
----------- ---------- -----------
$1,160.00 $145.00 $1,305.00
- ------------------------------------------------------------------------------------------------------------------
DataFlow
00006027 30/11/97 $840.00 $105.00 $945.00 Open 20/12/97
00006196 31/12/97 $600.00 $75.00 $675.00 Open 20/1/98
----------- ---------- -----------
$1,440.00 $180.00 $1,620.00
- ------------------------------------------------------------------------------------------------------------------
Datec (Fiji) Limited
00005685 31/7/97 $325.00 $40.63 $365.63 Open 20/8/97
</TABLE>
E-367
<PAGE>
Pritech Corporation Limited
Customer Sales Summary
30/3/98 Page 2
9:15:52 AM
<TABLE>
<CAPTION>
ID# Customer's P0 # Original Date Sale Amount GST Current Balance Status Due/Promised
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ECNZ
00005674 31/7/97 $480.00 $60.00 $540.00 Open 20/8/97
00005872 30/9/97 $240.00 $30.00 $270.00 Open 20/10/97
00006233 31/12/97 $10,000.00 $1,250.00 $405.00 Open 20/1/98
00006309 31/1/98 $2,430.00 $303.75 $2,733.75 Open 20/2/98
00006310 31/1/98 $930.00 $116.25 $1,046.25 Open 20/2/98
----------- ---------- -----------
$14,080.00 $1,760.00 $4,995.00
- ------------------------------------------------------------------------------------------------------------------
ECNZ - Huntly
00006212 31/12/97 $600.00 $75.00 $675.00 Open 20/1/98
----------- ---------- -----------
$600.00 $75.00 $675.00
- ------------------------------------------------------------------------------------------------------------------
ECNZ Waitaki 31/12/97 $240.00 $30.00 $270.00 Open 20/1/98
----------- ---------- -----------
$240.00 $30.00 $270.00
- ------------------------------------------------------------------------------------------------------------------
Education Review Office
00006175 31/12/97 $2,160.00 $270.00 $2,430.00 Open 20/1/98
00006251 31/1/98 $2,220.00 $277.50 $2,497.50 Open 20/2/98
----------- ---------- -----------
$4,380.00 $547.50 $4,927.50
- ------------------------------------------------------------------------------------------------------------------
Gough Gough and Hamer Ltd
00006305 31/1/98 $1,293.66 $161.71 $1,455.37 Open 20/2/98
----------- ---------- -----------
$1,293.66 $161.71 $1,455.37
- ------------------------------------------------------------------------------------------------------------------
Guinness Gallagher
00006042 30/11/97 $420.00 $52.50 $472.50 Open 20/12/97
00006176 31/12/97 $2,670.00 $333.75 $3,003.75 Open 20/1/98
----------- ---------- -----------
$3,090.00 $386.25 $3,476.25
- ------------------------------------------------------------------------------------------------------------------
IBM NZ Limited
00005981 31/10/97 $2,280.00 $285.00 $2,565.00 Open 7/11/97
00005982 31/10/97 $630.00 $78.75 $708.75 Open 7/11/97
00005983 31/10/97 $60.00 $7.50 $67.50 Open 7/11/97
----------- ---------- -----------
$2,970.00 $371.25 $3,341.25
- ------------------------------------------------------------------------------------------------------------------
Intacta Limited
00005425 31/5/97 $360.00 $45.00 $450.00 Open 31/5/97
----------- ---------- -----------
$360.00 $45.00 $450.00
- ------------------------------------------------------------------------------------------------------------------
IPEX Computers Limited
00005766 31/8/97 $7,370.00 $921.26 $465.03 Open 20/9/97
00005895 30/9/97 $17,578.00 $2,197.28 $2,696.65 Open 20/10/97
00006298 31/1/98 $1,305.00 $163.13 $1,468.13 Open 20/2/98
00006299 31/1/98 $6,547.50 $818.44 $7,365.94 Open 20/2/98
00006300 31/1/98 $1,890.00 $236.25 $2,126.25 Open 20/2/98
----------- ---------- -----------
$34,690.50 $4,336.36 $14,122.00
- ------------------------------------------------------------------------------------------------------------------
MAF Regulatory Authority
00006166 31/12/97 $7,442.50 $930.32 $3,948.76 Open 31/12/97
----------- ---------- -----------
$7,442.50 $930.32 $3,948.76
- ------------------------------------------------------------------------------------------------------------------
New Zealand Dairy Board
00005698 31/7/97 $780.00 $97.50 $877.50 Open 31/7/97
00005759 31/8/97 $1,350.00 $168.75 $1,518.75 Open 31/8/97
00005818 31/8/97 $1,410.00 $176.25 $1,586.25 Open 31/8/97
00005876 30/9/97 $1,320.00 $165.00 $1,485.00 Open 30/9/97
00005877 30/9/97 $6,720.00 $840.00 $7,560.00 Open 30/9/97
00005878 30/9/97 $60.00 $7.50 $67.50 Open 30/9/97
00005879 30/9/97 $360.00 $45.00 $303.75 Open 30/9/97
00005880 30/9/97 $1,680.00 $210.00 $1,890.00 Open 30/9/97
00005938 31/10/97 $2,400.00 $300.00 $2,700.00 Open 31/10/97
00005939 31/10/97 $1,470.00 $183.75 $1,653.75 Open 31/10/97
00005940 31/10/97 $480.00 $60.00 $540.00 Open 31/10/97
00006056 30/11/97 $1,140.00 $142.50 $1,282.50 Open 30/11/97
00006200 31/12/97 $3,600.00 $450.00 $4,050.00 Open 31/12/97
</TABLE>
E-368
<PAGE>
Pritech Corporation Limited
Customer Sales Summary
30/3/98 Page 3
9:15:52 AM
<TABLE>
<CAPTION>
ID# Customer's P0 # Original Date Sale Amount GST Current Balance Status Due/Promised
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
New Zealand Dairy Board
----------- ---------- -----------
$47,580.00 $5,947.50 $53,426.25
- ------------------------------------------------------------------------------------------------------------------
Omron Electrical Ltd
00006139 22/12/97 $2,808.00 $351.03 $3,159.03 Open 20/1/98
00006232 31/12/97 $910.00 $113.76 $1,023.76 Open 21/1/98
00006270 31/1/98 $2,379.00 $297.38 $2,676.38 Open 20/2/98
----------- ---------- -----------
$6,097.00 $762.17 $6,859.17
- ------------------------------------------------------------------------------------------------------------------
Open Media Solutions Ltd
00005941 31/10/97 $480.00 $60.00 $540.00 Open 20/11/97
----------- ---------- -----------
$480.00 $60.00 $540.00
- ------------------------------------------------------------------------------------------------------------------
Provoust Hart (NZ) Ltd
00005433 Pierre 31/5/97 $2,456.00 $307.00 $2,763.00 Open 20/6/97
----------- ---------- -----------
$2,456.00 $307.00 $2,763.00
- ------------------------------------------------------------------------------------------------------------------
Scienz
97112383 21/1/98 $2,812.00 $351.50 $3,163.50 Open 20/2/98
----------- ---------- -----------
$2,812.00 $351.50 $3,163.50
- ------------------------------------------------------------------------------------------------------------------
Sealcorp Computer Products
00006073 30/11/97 $169.00 $21.13 $190.13 Open 20/12/97
00006190 3314 31/12/97 $3,856.22 $482.03 $4,338.25 Open 20/1/98
----------- ---------- -----------
$4,025.22 $503.16 $4,528.38
- ------------------------------------------------------------------------------------------------------------------
SGS NZ -- Onehunga/Penrose
00006141 22/12/97 $300.00 $37.50 $202.50 Open 20/1/98
00006274 31/1/98 $2,585.00 $323.13 $135.00 Open 20/2/98
00006275 31/1/98 $1,760.00 $220.00 $1,980.00 Open 20/2/98
----------- ---------- -----------
$4,645.00 $580.63 $2,317.50
- ------------------------------------------------------------------------------------------------------------------
South Pacific Tyres
00006278 31/1/98 $5,392.50 $674.06 $5,841.56 Open 20/2/98
00006279 31/1/98 $200.00 $25.00 $225.00 Open 20/2/98
----------- ---------- -----------
$5,592.50 $699.06 $6,066.56
- ------------------------------------------------------------------------------------------------------------------
State Insurance Ltd
00006282 31/1/98 $24,581.25 $3,072.66 $0.35 Open 20/2/98
----------- ---------- -----------
$24,581.25 $3,072.66 $0.35
- ------------------------------------------------------------------------------------------------------------------
Statistics New Zealand
00006115 150183 20/12/97 $26,262.50 $3,282.81 $0.02 Open 20/1/98
----------- ---------- -----------
$26,262.50 $3,282.81 $0.02
- ------------------------------------------------------------------------------------------------------------------
Task Technology
00005385 30/4/97 $510.00 $63.75 $573.75 Open 30/4/97
----------- ---------- -----------
$510.00 $63.75 $573.75
- ------------------------------------------------------------------------------------------------------------------
Telcom New Zealand -- ICMS
00006287 31/1/98 $1,425.00 $178.13 $1,603.13 Open 20/2/98
----------- ---------- -----------
$1,425.00 $178.13 $1,603.13
- ------------------------------------------------------------------------------------------------------------------
Transit New Zealand
00006085 30/11/97 $303.75 $37.98 $341.73 Open 20/12/97
00006186 31/12/97 $18,000.00 $2,250.00 $20,250.00 Open 20/1/98
----------- ---------- -----------
$18,303.75 $2,287.98 $20,591.73
- ------------------------------------------------------------------------------------------------------------------
Tranz Rail Ltd
00006187 31/12/97 $168.75 $21.09 $189.84 Open 31/12/97
00006288 31/1/98 $101.25 $12.66 $113.91 Open 31/1/98
00006307 3700019 31/1/98 $405.00 $50.63 $455.63 Open 31/1/98
----------- ---------- -----------
$???.?? $??.?? $???.??
</TABLE>
E-369
<PAGE>
Pritech Corporation Limited
Customer Sales Summary
30/3/98 Page 4
9:15:53 AM
<TABLE>
<CAPTION>
ID# Customer's P0 # Original Date Sale Amount GST Current Balance Status Due/Promised
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Trilogy Business Systems
00006109 8833CA 30/11/97 $1,260.00 $157.50 $1,417.50 Open 20/12/97
00006289 31/1/98 $120.00 $15.00 $135.00 Open 20/2/98
----------- ---------- -----------
$4,140.00 $517.50 $4,657.50
- ------------------------------------------------------------------------------------------------------------------
Wilson & Horton
00005816 6870 25/9/97 $138.00 $17.25 $155.25 Open 25/9/97
----------- ---------- -----------
$138.00 $17.25 $155.25
- ------------------------------------------------------------------------------------------------------------------
Worley Consultants
00006161 31/12/97 $960.00 $120.00 $1,080.00 Open 20/1/98
00006292 31/1/98 $120.00 $15.00 $135.00 Open 20/2/98
----------- ---------- -----------
$1,080.00 $135.00 $1,215.00
- ------------------------------------------------------------------------------------------------------------------
Grand Total: $243,697.36 $30,462.34 $173,552.55
----------- ---------- -----------
</TABLE>
E-370
<PAGE>
Pritech Corporation Limited
P 0 Box 8990
Symonds Street P 0
2nd Floor Elders House
60 Khyber Pass Road
Analyse Sales
April 1997 through March 1998
30/3/98 Page 1
8:25:08 AM
Name Tax ID Sales % Total Sales
- --------------------------------------------------------------------------------
Accident Compensation Corp. $8,040.00 0.2%
Adis International Ltd $3,862.40 0.1%
Advantage Group Ltd -$230.00 0.0%
AFS New Zealand $3,970.00 0.1%
Air New Zealand $0.00 0.0%
Alcatel NZ Ltd $0.00 0.0%
John Algar $0.00 0.0%
Alphanumeric Processing Ltd $0.00 0.0%
AMP -$742.50 0.0%
AMPlus $139,062.50 3.7%
Andrews & Partners $8,489.25 0.2%
ANZ Bank $33,152.20 0.9%
ANZ McCaugham $0.00 0.0%
AON Risk Services $4,446.25 0.1%
Arthur Andersen $1,740.00 0.0%
ASB Bank Limited $0.00 0.0%
Asea Brown Boveri Limited $0.00 0.0%
Asea Brown Boveri Limited(Well) $0.00 0.0%
Aspect Systems Ltd $0.00 0.0%
Atlas Copco (NZ) Ltd $660.00 0.0%
Australasian Memory Ltd $0.00 0.0%
Axon Computer Systems Ltd $15,177.50 0.4%
BASF New Zealand Limited $11,689.00 0.3%
Bay of Plenty Electricity $180.00 0.0%
BNZ $0.00 0.0%
Bootstrap Computers $0.00 0.0%
BP Oil New Zealand Limited $0.00 0.0%
BP Oil nz $0.00 0.0%
BRANZ $115,725.00 3.0%
Brocker Investments $15,167.00 0.4%
Bronson & Jacobs Pty. Ltd $12,513.90 0.3%
BSG Finance $0.00 0.0%
Bureau Veritas -$1,449.00 0.0%
George Burrell $0.00 0.0%
BVQI $0.00 0.0%
BVQI $0.00 0.0%
C B Coleman & Associates $0.00 0.0%
CADAM Research $0.00 0.0%
Caltex Oil (NZ) Limited $0.00 0.0%
CardLink Systems Limited $133.00 0.0%
Carter Holt Harvey $0.00 0.0%
Carter Holt Harvey Insulation $0.00 0.0%
Carter Holt Harvey Pulp & Paper $0.00 0.0%
Cellnet NZ Limited $0.00 0.0%
Church of Christ $0.00 0.0%
Clear Communications $90,936.64 2.4%
CMS $2,593.75 0.1%
Columbia TriStar $2,604.00 0.1%
Communication By Design $0.00 0.0%
Compaq $3,000.00 0.1%
ComputerLand $4,776.00 0.1%
ComputerLand - WGTN $1,492.50 0.0%
Comtex Group Limited $0.00 0.0%
Connexion Point Ltd $465.60 0.0%
Continuum NZ Ltd (DOL FM) $0.00 0.0%
Coopers & Lybrand (Auck) $0.00 0.0%
Coopers & Lybrand (Man) Ltd $0.00 0.0%
Coopers & Lybrand (Man)Ltd $0.00 0.0%
Coopers & Lybrand(Wgtn) $0.00 0.0%
Correspondence School $2,640.00 0.1%
Countrywide Bank Corp. $4,060.00 0.1%
CPS Systems (NZ) Ltd $2,280.00 0.1%
Cure Holdings $0.00 0.0%
Datacraft $472.50 0.0%
DataFlow $2,785.00 0.1%
Datec (Fiji) Limited $325.00 0.0%
DB Breweries Limited $31,814.50 0.8%
Delioit $0.00 0.0%
Deboittes (ICS) $0.00 0.0%
E-371
<PAGE>
Pritech Corporation Limited
Analyse Sales
April 1997 through March 1998
30/3/98 Page 2
8:25:09 AM
Name Tax ID Sales % Total Sales
- --------------------------------------------------------------------------------
Department of Labour $12,487.50 0.3%
Department of Social Welfare $0.00 0.0%
Digital Equipment Corp $5,262.00 0.1%
Dodsworth, Dave & Associates $0.00 0.0%
Dynamic Controls Ltd $2,080.00 0.1%
Eagle Technology Limited $0.00 0.0%
ECNZ $301,119.00 7.9%
ECNZ - Hamilton $27,180.00 0.7%
ECNZ - Huntly $1,620.00 0.0%
ECNZ - Turangi $14,190.00 0.4%
ECNZ - Waitaki $2,370.00 0.1%
EDM $33.75 0.0%
Education Review Office $49,057.60 1.3%
Eli Lilly $0.00 0.0%
Enerco Gas Auckland $7,771.00 0.2%
ENZA New Zealand $0.00 0.0%
Ernst & Young $0.00 0.0%
Ernst & Young (Auckl) $126.00 0.0%
Farmers Trading Company $3,150.00 0.1%
Fay, Richwhite & Co Limited $0.00 0.0%
Federal Airports Corporation $25,798.55 0.7%
Financial Automation Ltd $0.00 0.0%
Fisher & Paykel $7,587.50 0.2%
Foodtown Supermarkets Limited $740.00 0.0%
Forest Research Institute $0.00 0.0%
Forestry Corporation NZ $0.00 0.0%
Fujitsu NZ Limited $880.00 0.0%
GAB Robins NZ Ltd $3,345.00 0.1%
Glaxo Pharmaceuticals Limited $0.00 0.0%
Global Solutions Ltd $0.00 0.0%
Goodman Fielder (NZ) Ltd $0.00 0.0%
Gough Gough and Hamer Ltd $4,950.25 0.1%
Guardian Assurance $580.00 0.0%
Guinness Gallagher $3,090.00 0.1%
Gullivers Pacific $0.00 0.0%
H Neumann International Ltd $422.33 0.0%
Harvey Chan $0.00 0.0%
Hewlett Packard NZ Ltd $0.00 0.0%
Housing Corporation $0.00 0.0%
IBM NZ Limited $194,544.26 5.1%
Imagetext Publishing System Ltd $481.00 0.0%
Industrial Research Ltd $0.00 0.0%
Inforplex Technology Limited $41,489.57 1.1%
Inland Revenue Department $0.00 0.0%
IPEX Computers Limited $46,142.16 1.2%
IRD-TAX $0.00 0.0%
Janet Warren $580.00 0.0%
John Goodman $5,920.00 0.2%
John Hill Tourism $600.00 0.0%
KAZ Computer Services Pty Ltd $0.00 0.0%
Kerry (NZ) Ltd $3,030.50 0.1%
Key Corp $1,830.00 0.0%
Kingston Morrison Limited $0.00 0.0%
Labour Market Policy Group $3,060.00 0.1%
Land Transport Safety Authority $9,188.00 0.2%
Larry Elliot Associates Ltd $0.00 0.0%
Law & Economic Consulting Group $2,531.25 0.1%
Lever Rexona $0.00 0.0%
Livestock Improvement Corp $54,675.15 1.4%
Lotus Development B.V. $0.00 0.0%
Lotus Development European $0.00 0.0%
Mace Engineering Ltd $23,746.11 0.6%
Madison Systems $0.00 0.0%
MAF Corporate Office $493.00 0.0%
MAF Fisheries $1,160.00 0.0%
MAF Regulatory Authority $294,016.25 7.7%
Mail Exchange NZ Ltd $2,718.00 0.1%
Mainland Products $0.00 0.0%
McCann-Ercikson Limited $20,143.34 0.5%
McKechnies Metals $3,260.00 0.1%
Method Ware Ltd $0.00 0.0%
Min of Agriculture & Forestry $0.00 0.0%
Min of Foreign Affairs & Trade $6,696.00 0.2%
Ministry of Commerce $0.00 0.0%
E-372
<PAGE>
Pritech Corporation Limited
Analyse Sales
April 1997 through March 1998
30/3/98 Page 3
8:25:10 AM
Name Tax ID Sales % Total Sales
- --------------------------------------------------------------------------------
Ministry of Forestry $1,566.00 0.0%
Ministry of Health $25,000.00 0.7%
Ministry of Transport $3,124.64 0.1%
Mobil Oil NZ Limited $0.00 0.0%
Morgan & Banks $0.00 0.0%
Movements International $0.00 0.0%
Namoi Cotton Co-operative Ltd $12,966.21 0.3%
Natinal I $0.00 0.0%
Netway Communications Ltd $0.00 0.0%
New Zealand Dairy Board $192,720.00 5.1%
New Zealand Employment Services $5,400.00 0.1%
Carl Newdick $4,423.80 0.1%
Nissan NZ Ltd $840.00 0.0%
NZ Dairy Foods Ltd $53,828.30 1.4%
NZ Dairy Group $0.00 0.0%
NZ Dairy Research Institute $63,788.30 1.7%
NZ Disabilities Resource Centre $41,121.74 1.1%
NZ Immigration Service $124,741.50 3.3%
NZ Police $17,722.50 0.5%
NZI Insurance $21,212.25 0.6%
OEM Distributors Limited $270.00 0.0%
Olex Cables(New Zealand) $2,942.00 0.1%
Omron Electrical Ltd $6,266.00 0.2%
Open Media Solutions Ltd $480.00 0.0%
Optimum Computer Training $0.00 0.0%
OSI Software $0.00 0.0%
Owens Road Transport $0.00 0.0%
P and I Services $0.00 0.0%
Pacific Network $0.00 0.0%
Pannell Kerr Foster $0.00 0.0%
PC Magazine New Zealand $0.00 0.0%
Peace Computers $3,060.00 0.1%
PEG $513.00 0.0%
Petes Computer Centre $0.00 0.0%
Picdata Productions Ltd $0.00 0.0%
Police 2000 $2,220.00 0.1%
Police Headquarters $0.00 0.0%
Police National Headquarters $10,224.00 0.3%
Polymer International $766.00 0.0%
Poseidon Consultants $3,060.00 0.1%
Price Waterhouse (Auck) $0.00 0.0%
Pritech Corporation Ltd $0.00 0.0%
Provoust Hart (NZ) Ltd $2,579.00 0.1%
Prudential Assurance Limited $10,805.00 0.3%
Pulsedata International Ltd $0.00 0.0%
Quality Decision Management $0.00 0.0%
Quantum Software Systems Ltd $2,276.25 0.1%
R & D Solutionz $6,295.00 0.2%
Rainger Direct $0.00 0.0%
M K Ratnasvriya $0.00 0.0%
Recruitment Knowledge $300.00 0.0%
REVTECH LTD $0.00 0.0%
Ross Melville KPG $0.00 0.0%
Royal & Sun Alliance $2,801.25 0.1%
Royal NZ Police College $0.00 0.0%
Schering (NZ) Ltd $623.50 0.0%
Schindlers Lifts Ltd -$7,376.50 (0.2%)
Schlage $0.00 0.0%
SCIANZ $4,171.00 0.1%
Scienz $2,812.00 0.1%
Sealcorp Computer Products $4,025.22 0.1%
Seventh-Day Adventist Church $26.00 0.0%
SGS NZ $23,375.50 0.6%
SGS NZ - Onehunga/Penrose $7,285.00 0.2%
SGS NZ - Wellington $305.00 0.0%
Soft Tech Limited $2,070.00 0.1%
South Pacific Tyres $34,595.00 0.9%
Southmark Computers $0.00 0.0%
State Insurance Ltd $491,677.21 12.9%
Statistics New Zealand $72,874.75 1.9%
Statistics New Zealand - AKL $0.00 0.0%
Sundry Debtors $0.00 0.0%
Task Technology $510.00 0.0%
ILLEGIBLE $3,920.00 0.1%
E-373
<PAGE>
Pritech Corporation Limited
Analyse Sales
April 1997 through March 1998
30/3/98 Page 4
8:25:10 AM
Name Tax ID Sales % Total Sales
- --------------------------------------------------------------------------------
The Open Polytechnic of NZ $7,799.38 0.2%
The Simple Group Limited $3,016.00 0.1%
Toyota NewZealand Ltd $0.00 0.0%
Transalta Energy Ltd $51,133.00 1.3%
Transalta Energy Ltd - Penrose $1,620.00 0.0%
Transalta Energy Ltd - Tak $0.00 0.0%
Transit New Zealand $78,681.95 2.1%
Tranz Rail Ltd $17,583.25 0.5%
Trilogy Business Systems $9,960.00 0.3%
Turners & Growers $580.00 0.0%
UDC Finance $2,640.00 0.1%
Unilever New Zealand Limited $31,596.16 0.8%
UNRECONCILLED $0.00 0.0%
Waikato University $0.00 0.0%
Wayne Walker $0.00 0.0%
Wang (NZ) Ltd $2,000.00 0.1%
Wang (NZ) Ltd-Wgtn $0.00 0.0%
Westpac Banking Corp $397,548.50 10.5%
Westpac Trust $52,879.00 1.4%
Westpac Trust $1,419.00 0.0%
Wilson & Horton $11,378.00 0.3%
Works Consultancy Services $0.00 0.0%
Worley Consultants $16,068.00 0.4%
-------------
Total: 53,673,061.42
-------------
E-374
<PAGE>
Aged Receivables
30/3/98
Page 1
<TABLE>
<CAPTION>
Name Total Due Current 31 - 60 61 - 90 90+
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advantage Group Ltd $166.50 $166.50 $0.00 $0.00 $0.00
Andrews & Partners $7,885.71 $0.00 $0.00 $450.00 $7,435.71
AON Risk Services $585.01 $585.01 $0.00 $0.00 $0.00
Arthur Andersen $1,957.50 $0.00 $0.00 $1,957.50 $0.00
Axon Computer Systems Lt $1,755.00 $1,316.25 $438.75 $0.00 $0.00
BASE New Zealand Limited $247.50 $247.50 $0.00 $0.00 $0.00
BRANZ $42,345.00 $42,345.00 $0.00 $0.00 $0.00
Broadcast Commun. Limite $1,182.35 $0.00 $1,182.35 $0.00 $0.00
Brocker Investments $6,786.01 $3,751.88 $3,034.13 $0.00 $0.00
Champagne Consultants Li $11,213.75 $0.00 $0.00 $3,375.00 $7,838.75
Clear Communications $89,100.00 $89,100.00 $0.00 $0.00 $0.00
Columbia TriStar $67.50 $0.00 $0.00 $67.50 $0.00
ComputerLand - WGTN $455.63 $0.00 $0.00 $0.00 $455.63
CPS Systems (NZ) Ltd $1,305.00 $0.00 $0.00 $1,305.00 $0.00
DataFlow $1,620.00 $0.00 $0.00 $675.00 $945.00
Datec (Fiji) Limited $365.63 $0.00 $0.00 $0.00 $365.63
DB Breweries Limited $4,638.11 $0.00 $0.00 $0.00 $4,638.11
ECNZ $10,510.31 $4,320.00 $3,780.00 $405.00 $2,005.31
ECNZ - Hamilton $3,037.50 $3,037.50 $0.00 $0.00 $0.00
ECNZ - Huntly $675.00 $0.00 $0.00 $675.00 $0.00
ECNZ - Waitaki $2,092.50 $1,822.50 $0.00 $270.00 $0.00
Education Review Office $11,340.00 $6,412.50 $2,497.50 $2,430.00 $0.00
Enerco Gas Auckland $146.25 $146.25 $0.00 $0.00 $0.00
Gough Gough and Hamer L $5,569.03 $4,113.66 $1,455.37 $0.00 $0.00
Guinness Gallagher $3,476.25 $0.00 $0.00 $3,003.75 $472.50
IBM NZ Limited $18,331.31 $14,990.06 $0.00 $0.00 $3,341.25
Imagetext Publishing Syste $541.13 $541.13 $0.00 $0.00 $0.00
Inforplex Technology Limit $1,620.00 $1,620.00 $0.00 30.00 $0.00
Intacta Limited $405.00 $0.00 $0.00 $0.00 $405.00
IPEX Computers Limited $14,122.00 $0.00 $10,960.32 $0.00 $3,161.68
Law & Economic Consulting $227.81 $227.81 $0.00 $0.00 $0.00
Livestock Improvement Cor $1,113.75 $1,l13.75 $0.00 $0.00 $0.00
Mace Engineering Ltd $2,120.63 $2,120.63 $0.00 $0.00 $0.00
MAF Regulatory Authority $3,948.76 $0.00 $0.00 $3,948.76 $0.00
Mail Exchange NZ Ltd $2,018.25 $2,018.25 $0.00 $0.00 $0.00
McCann-Ercikson Limited $634.50 $634.50 $0.00 $0.00 $0.00
Ministry of Forestry $3,217.50 $0.00 $0.00 $0.00 $3,217.50
Ministry of Health $28,125.00 $28,125.00 $0.00 $0.00 $0.00
New Zealand Dairy Board $68,782.50 $15,356.25 $20,823.75 $11,137.50 $21,465.00
NZ Dairy Foods Ltd $26,261.24 $19,888.11 $6,373.13 $0.00 $0.00
Omron Electrical Ltd $7,049.30 $190.13 $2,676.38 $1,023.76 $3,159.03
Open Media Solutions Ltd $540.00 $0.00 $0.00 $0.00 $540.00
Oracle Corporation $405.00 $405.00 $0.00 $0.00 $0.00
Peace Computers $3,442.50 $3,442.50 $0.00 $0.00 $0.00
Poseidon Consultants $3,442.50 $3,442.50 $0.00 $0.00 $0.00
Provoust Hart (NZ) Ltd $2,763.00 $0.00 $0.00 $0.00 $2,763.00
Quantum Software Systems $303.75 $303.75 $0.00 $0.00 $0.00
SCIANZ $472.50 $0.00 $0.00 $0.00 $472.50
Scienz $3,163.50 $0.00 $0.00 $3,163.50 $0.00
Sealcorp Computer Products $4,528.38 $0.00 $0.00 $4,338.25 $190.13
SGS NZ $2,281.50 $2,281.50 $0.00 $0.00 $0.00
SGS NZ - Onehunga/Penros $4,180.50 $1,863.00 $2,115.00 $0.00 $202.50
SGS NZ - Wellington $33.75 $33.75 $0.00 $0.00 $0.00
South Pacific Tyres $26,718.75 $20,652.19 $6,066.56 $0.00 $0.00
State Insurance Ltd $24,775.66 $24,775.31 $0.35 $0.00 $0.00
Statistics New Zealand $32,661.30 $32,661.28 $0.00 $0.00 $0.02
Systems Adivsory Services $3,188.25 $3,188.25 $0.00 $0.00 $0.00
Task Technology $4,125.33 $0.00 $0.00 $0.00 -$4,125.33
Telecom New Zealand- IC $1,603.13 $0.00 $1,603.13 $0.00 $0.00
Transit New Zealand $20,591.73 $0.00 $0.00 $20,250.00 $341.73
Tranz Rail Ltd $759.38 $0.00 $569.54 $189.84 $0.00
Trilogy Business Systems $4,927.50 $270.00 $135.00 $0.00 $4,522.50
Westpac Trust $3,015.00 $3,015.00 $0.00 $0.00 $0.00
Wilson & Horton $155.25 $0.00 $0.00 $0.00 $155.25
Worley Consultants $1,620.00 $405.00 $135.00 $1,080.00 $0.00
----------- ----------- ---------- ---------- ----------
Total: $522,054.22 $340,929.20 $63,846.26 $59,745.36 $57,533.40
AgingPercent: 65.3% 12.2% 11.4% 11.0%
----------- ----------- ---------- ---------- ----------
</TABLE>
E-375
<PAGE>
- --------------------------------------------------------------------------------
AS AT 31/1497 Salary Leave Take Entitle Due
- --------------------------------------------------------------------------------
Alexander Justine $55,000 3 4 1
- --------------------------------------------------------------------------------
Bares Andrew $72,000 42 30 -12
- --------------------------------------------------------------------------------
Carden Greg $72,000 27 40 13
- --------------------------------------------------------------------------------
Cooke David $150,000 19 30 11
- --------------------------------------------------------------------------------
Corlett David $170,000
- --------------------------------------------------------------------------------
Diamond Patricia $35,000 30 21.25 -8.75
- --------------------------------------------------------------------------------
Elmes Gary $140,000 20.5 40 19.5
- --------------------------------------------------------------------------------
Hassan Shane $80,000 18 40 22
- --------------------------------------------------------------------------------
Jacques Bradley $55,000 0 0 0
- --------------------------------------------------------------------------------
Jarive David $72,000 26 40 14
- --------------------------------------------------------------------------------
Kelly Tina $66,000 10 17.5 7.5
- --------------------------------------------------------------------------------
MacClure Warren $40,000 3 3.75 0.75
- --------------------------------------------------------------------------------
Manson Ivan $90,000 3 12 9
- --------------------------------------------------------------------------------
Monk Bruce $50,000 26.5 30 3.5
- --------------------------------------------------------------------------------
Newdick Carl $60,000 3 11.75 8.75
- --------------------------------------------------------------------------------
Sinclair Murray $82,000 29 30 1
- --------------------------------------------------------------------------------
Slagter Bernadine $60,000 5 11.75 5.75
- --------------------------------------------------------------------------------
Suh Young $67,000 32 37.5 5.5
- --------------------------------------------------------------------------------
Transom Tony $55,000 33.75 33.75 0
- --------------------------------------------------------------------------------
Usher Bruce $65,000 15 30 15
- --------------------------------------------------------------------------------
White Penny $52,500 3 6.25 3.25
- --------------------------------------------------------------------------------
Wilkes Patrick $50,000 0 3.75 0
E-376
<PAGE>
CHANGE OF DIRECTORS AND PARTICULARS OF DIRECTORS
Form 11
--------------------------------------- --------------
Company Number
Company Name Pritech Corporation Limited AK413669
--------------------------------------- --------------
- --------------------------------------------------------------------------------
* Change of Name or Residential Address of Director
--------------------------- --------------------------
Director's Former
Surname Surname*
--------------------------- --------------------------
--------------------------- --------------------------
First Former First
Name(s) Name(s)*
--------------------------- --------------------------
Residential Former
Address Residential
Address*
--------------------------- --------------------------
Date of Change ----- ----- ------ * Complete only if applicable
Day Month Year
- --------------------------------------------------------------------------------
Set out below are the names and residential addresses of the directors of the
above named company at the date on which this notice is signed.
- --------------------------------------------------------------------------------
Name * Residential Address
- --------------------------------------------------------------------------------
CORLETT, David William 10 Barlow Place
Birkenhead
Auckland
COOKE, David 39 Northland Road
Northland
Wellington
ELMES, Gary 6 Atarua Gardens
Waiatarua
West Auckland
- --------------------------------------------------------------------------------
*Please give Surname in BLOCK letters followed by first(s)
Signature of Director / Authorised Person /s/ David Corlett Date 14/8/97
----------------- -------
Name of Director / Authorised Person David Corlett
E-377
<PAGE>
ANNUAL RETURN
Table of Shareholders
Note: If the company is a parry to a listing agreement with a Stock Exchange
registered under the Sharebrokers Act 1908, only supply the requested
information as follows:
(i)- If there is only one class of shares, the person holding the 10
largest numbers of shares; or
(ii)- If there is more than one class of shares, the persons holding the
ten largest numbers of shares in each class.
- --------------------------------------------------------------------------------
Full Name (in case of a natural person Address No. of shares
please state the surname in block (if (ii) above
letters followed by a first name(s)) applies, specify
the different
classes)
- --------------------------------------------------------------------------------
CORLETT DAVID WILLIAM 10 Barlow Place 71000
Birkenhead Auckland
COOKE DAVID 39 Northland Rd. 35333
Northland, Wellington
ELMES GARY 20646
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CONSTITUTION OF
PRITECH CORPORATION LIMITED
DRAFT
1. Constitution and the Companies Act
The provisions of the Companies Act 1993 ("the Act") are negated,
modified, adopted and extended by this constitution as hereinafter
provided.
CALLS ON SHARES
2. Directors may make calls
The directors may from time to time make such calls as they think fit
upon the shareholders in respect of any moneys unpaid on their shares and
not by the conditions of issue thereof made payable at a fixed time or
times, and each shareholder shall, subject to receiving at least 14 days'
written notice specifying the time or times and place of payment, pay to
the company at the time or times and place so specified the amount
called. A call may be revoked or postponed as the directors may
determine.
3. Timing of calls
A call may be made payable at such times and in such amount as the
directors may decide.
4. Liability of joint holders
The joint holders of a share shall be jointly and severally liable to pay
all calls in respect thereof.
5. Interest
If a sum called in respect of a share is not paid before or on the time
appointed for payment thereof, the person from whom the sum is due shall
pay interest on that sum from the time appointed for payment thereof to
the time of actual payment at such rate not exceeding 10% per annum as
the directors may determine, but the directors shall be at liberty to
waive payment of that interest wholly or in part.
6. Instalments
Any sum which by the terms of issue of a share becomes payable on issue
or at any fixed time shall for all purposes be deemed to be a call duly
made and payable at the time at which by the terms of issue the same
becomes payable, and in case of non-payment all the relevant provisions
hereof relating to payment of interest and expenses, forfeiture, or
otherwise shall apply as if the sum had become payable by virtue of a
call duly made and notified.
7. Differentiation as to amounts
The directors may, on the issue of shares, differentiate between the
holders as to the amount of calls to be paid and the times of payment.
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FORFEITURE OF SHARES
8. Notice of default
If any person liable therefor fails to pay any call or any instalment
thereof at the time appointed for payment thereof, the directors may at
any time thereafter serve notice on such person requiring payment of the
moneys unpaid together with any interest which may have accrued.
9. Final payment date
The notice shall name a further day (not earlier than the expiration of
14 days from the date of service of the notice) on or before which the
payment required by the notice is to be made, and shall state that, in
the event of non-payment on or before the time appointed, the shares in
respect of which the money was owing will be liable to be forfeited.
10. Forfeiture
If the requirements of any such notice are not complied with, any share
in respect of which the notice has been given may be forfeited at any
time before the required payment has been made, by a resolution of the
directors to that effect. Such forfeiture shall include all dividends and
bonuses declared in respect of the forfeited share and not actually paid
before the forfeiture.
11. Sale of forfeited shares
A forfeited share may be sold or otherwise disposed of on such terms and
in such manner as the directors in their sole discretion think fit and,
at any time before a sale or disposition, the forfeiture may be cancelled
on such terms as the directors think fit. If any forfeited share shall be
sold within 12 months of the date of forfeiture, the residue, if any, of
the proceeds of sale after payment of all costs and expenses of such sale
or any attempted sale and all moneys owing in respect of the forfeited
share and interest thereon as aforesaid shall be paid to the person whose
share has been forfeited or to such person's executors, administrators or
assigns.
12. Cessation of shareholding
A person whose share has been forfeited shall cease to be a shareholder
in respect of the forfeited share, but shall, nevertheless, remain liable
to pay to the company all money which, at the time of forfeiture, was
payable by such person to the company in respect of the share, but that
liability shall cease if and when the company receives payment in full of
all such money in respect of the share.
13. Evidence of forfeiture
A statutory declaration in writing declaring that the declarant is a
director of the company and that a share in the company has been duly
forfeited on a date stated in the declaration shall be conclusive
evidence of the facts therein stated as against all persons claiming to
be entitled to the share.
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14. Validity of sale
The company may receive the consideration, if any, given for a forfeited
share on any sale or disposition thereof and may execute a transfer of
the share in favour of the person to whom the share is sold or disposed
of, and such person shall thereupon be registered as the holder of the
share and shall not be bound to see to the application of the purchase
money, if any, nor shall such person's title to the share be affected by
any irregularity or invalidity in the proceedings in reference to the
forfeiture, sale or disposal of the share.
TRANSFER OF SHARES
15.1. Freedom to transfer is qualified
Every change in the ownership of shares in the capital of the company
shall be subject to the limitations and restrictions hereinafter
provided.
15.2. Pre-emptive provisions
No share in the capital of the company shall be sold or transferred by
any shareholder unless and until the tights of pre-emption hereinafter
conferred have been exhausted.
15.3. Transfer notice and fair price
Every shareholder including the personal representative of a deceased
shareholder or the assignee of the property of a bankrupt shareholder
wanting to sell or transfer any share or shares shall give notice in
writing to the directors of the desire to sell or transfer such share or
shares. If such notice includes several shares it shall not operate as if
it were a separate notice in respect of each such share, and the
proposing transferor shall be under no obligation to sell or transfer
some only of the shares specified in such notice. Such notice shall be
irrevocable and shall be deemed to appoint the directors the proposing
transferor's agent to sell such shares in one or more lots to any
shareholder or shareholders of the company (including the directors or
any of them) at a price to be agreed upon between the party giving such
notice and the directors or, failing agreement between them within 28
days of the directors receiving such notice, at a fair price to be
determined on the application of either party by a person to be nominated
by the chairperson for the time being of the Auckland District Law
Society. Such person, when nominated, and in certifying the sum which in
that person's opinion is the fair price for the share, shall be
considered to be acting as an expert and not as an arbitrator and
accordingly the Arbitration Act 1908 and any subsequent modifications or
re-enactment thereof shall not apply.
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15.4. Offer to shareholders and consequent sale
Upon the price for such shares being agreed on or determined as aforesaid
(as the case may be), the directors shall forthwith give notice to each
of the shareholders (other than the person wanting to sell or transfer
such shares) stating the number and price of such shares and inviting
each of the shareholders to whom the notice is given to state in writing
within 21 days from the date of the notice whether such shareholder is
willing to purchase any and, if so, what maximum number of such shares.
At the expiration of 21 days from the date of the notice the directors
shall apportion such shares amongst the shareholders (if more than one)
who have expressed a desire to purchase the same and as far as may be pro
rata according to the number of shares already held by them respectively,
or if there be only one such shareholder, the whole of such shares shall
be sold to that shareholder, provided however, that no shareholder shall
be obliged to take more than the maximum number of shares stated in that
shareholder's response to such notice. Upon such apportionment being made
or such one shareholder notifying such shareholder's willingness to
purchase, as the case may be, the party wanting to sell or transfer such
share or shares shall be bound, upon payment of the said price, to
transfer such share or shares to the respective shareholders or
shareholder who have or has agreed to purchase the same and, in default
thereof, the directors may receive and give a good discharge for the
purchase money on behalf of the party wanting to sell and enter the name
of the purchasers or purchaser in the share register as holder of such
share or shares so sold.
15.5. Sale of shares not taken by shareholders
In the event of all of such shares not being sold under the preceding
sub-clause within 60 days of the directors receiving notice under clause
15.3 hereof, the party wanting to sell or transfer shall be at liberty
within a further period of 30 days to sell the shares not so sold, but
not a portion only, to persons who are not shareholders, provided
however, that such party shall not sell them for a price less than the
price at which the same have been offered for sale to the shareholders as
aforesaid, but every such sale shall nevertheless be subject to the
provisions of clause 16 hereof.
15.6. Family transactions
Any share may be transferred by a shareholder to, or to trustees for, any
husband or wife or child or grandchild or son-in-law or daughter-in-law
of that shareholder, and any share of a deceased shareholder may be
transferred by his or her executors or administrators to any husband or
wife or child or grandchild or son-in-law or daughter-in-law of the
deceased shareholder, and any share held by trustees under any such trust
as aforesaid may be transferred to any beneficiary (being a husband or
wife or child or grandchild or son-in-law or daughter-in-law of such
shareholder) of such trust, and shares standing in the name of the
trustee of the will of any deceased shareholder or trustees under any
such trust as aforesaid may be transferred upon any change of trustees
for the time being of such will or trust, and the restrictions contained
in the preceding clauses 15.2 to 15.5 hereof inclusive shall not apply to
any transfer authorised by this sub-clause but every such transfer shall
nevertheless be subject to the provisions of clause 16 hereof.
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REFUSAL TO REGISTER TRANSFERS
16. Directors' right to refuse registration
Subject to compliance with the provisions of section 84 of the Act, the
directors may refuse or delay the registration of any transfer of any
share to any person whether an existing shareholder or not:
(a) if so required by law;
(b) if registration would impose on the transferee a liability to the
company and the transferee has not signed the transfer;
(c) if a holder of any such share has failed to pay on due date any
amount payable thereon either in terms of the issue thereof or in
accordance with the constitution (including any call made
thereon);
(d) if the transferee is an infant or a person of unsound mind;
(e) if the transfer is in respect of more than one class of shares;
(f) if the transfer is not accompanied by such proof as the directors
reasonably require of the right of the transferor to make the
transfer;
(g) if the pre-emptive provisions contained in clause 15 hereof have
not been complied with.
(h) if the directors acting in good faith decide in their sole
discretion that registration of the transfer would not be in the
best interests of the company and/or any of its shareholders.
NEW ISSUE OF SHARES
17. Disposal of unwanted new shares
New shares offered to shareholders pursuant to section 45 of the Act and
not accepted within the prescribed time or in respect of which an
intimation is received from the person to whom the offer is made
declining such offer may be disposed of by the directors in such manner
as they think most beneficial to the company. If they shall dispose of
any such share at a price in excess of that at which it was offered to a
shareholder, they may in their discretion pay the whole or any part of
such excess to such shareholder.
ACQUISITION OF COMPANY'S OWN SHARES
18. Authority to acquire own shares
For the purposes of sections 59 and 60(l)(b)(ii) of the Act, the company
is hereby expressly authorised to purchase or otherwise acquire shares
issued by it.
PROCEEDINGS AT MEETINGS OF SHAREHOLDERS
19.1. First Schedule modified
The First Schedule to the Act is modified as hereinafter provided.
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19.2. Chairperson
Subclause 1(2) of the First Schedule to the Act is deleted and replaced
with the following:
"1(2) If no chairperson of the board has been elected, or if at
any meeting of shareholders the chairperson of the board is not
present within 15 minutes of the time appointed for the
commencement of the meeting, the directors present shall elect one
of their number to be chairperson of the meeting. If at any
meeting no director is willing to act as chairperson, or if no
director is present within 15 minutes of the time appointed for
holding the meeting, the shareholders present shall choose one of
their number to be chairperson of the meeting."
19.3. Notice of meetings
Clause 2 of the First Schedule to the Act is amended as follows:
(a) by deleting subclause (4) and replacing it with the following:
"(4) The chairperson may, and if so directed by the meeting shall,
adjourn the meeting from time to time and from place to place, but
no business shall be transacted at any adjourned meeting other
than the business left unfinished at the meeting from which the
adjournment took place. When a meeting is adjourned for 30 days or
more, notice of the adjourned meeting shall be given as in the
case of an original meeting. Save as aforesaid, it shall not be
necessary to give any notice of an adjournment or of the business
to be transacted at an adjourned meeting";
(b) by adding the following subclause: "(5) The accidental omission to
give a notice of a meeting to, or the non-receipt of a notice of a
meeting by, any person entitled to receive notice thereof shall
not invalidate the proceedings at that meeting."
19.4. Voting
Clause 5 of the First Schedule to the Act is amended as follows:
(a) by deleting subclause (7) and replacing it with the following:
"(7) In the case of an equality of votes, whether voting is by
voice or show of hands or poll, the chairperson of the meeting
shall be entitled to a second or casting vote";
(b) by adding the following subclauses:
"(9) Subject to any rights or restrictions for the time being
attached to any class of shares, every shareholder present in
person or by proxy and voting by voice or on a show of hands shall
have one vote."
"( 10) The chairperson may demand a poll on a resolution either
before or after a vote thereon by voice or on show of hands."
"(11) The demand for a poll may be withdrawn."
"(12) Except as provided in subclause
(13), if a poll is duly demanded it shall be taken in such manner
as the chairperson directs, and the result of the poll shall be
deemed to be the resolution of the meeting at which the poll was
demanded." "(13) A poll demanded on the election of a chairperson
or on a question of adjournment shall be taken forthwith. A poll
demanded on any other question shall be taken at such time and
place as the chairperson of the meeting directs, and any business
other than that upon which a poll has been demanded may be
proceeded with pending the taking of the poll."
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19.5. Proxies
Clause 6 of the First Schedule to the Act is amended by adding thereto
the following subclauses: "(6) A proxy form shall be sent with
each notice calling a meeting of the company." "(7) An instrument
appointing a proxy shall be in the following form or a form as
near thereto as circumstances admit:
___________________________ LIMITED
INSTRUMENT APPOINTING A PROXY
I/We ________________________________________________________
of___________________________________________________________
being a member of____________________________________________ Limited
hereby appoint ______________________________________________
[print name of proxy]
of___________________________________________________________
or failing him/her __________________ of_____________________
as my/our proxy to vote for me/us on my/our behalf at the ___ the Annual/Special
Meeting of the company to be held at ________________________ on
commencing at ___________ am/pm [or all meetings of
the company held within 12 months of the date hereof] and at any adjournment of
any such meeting.
Signed this __________ day of______________________________
[Usual signature/s]"
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"(8) Where it is desired to afford shareholders an opportunity of voting
for or against a resolution, the instrument appointing a proxy shall be
in the following form or a form as near thereto as circumstances admit:
____________________________ LIMITED
INSTRUMENT APPOINTING A PROXY
I/We ____________________________________________________
of_______________________________________________________
being a member of _______________________________________ Limited
hereby appoint __________________________________________
[print name of proxy]
of_______________________________________________________
or failing him/her ______________________________________
of_______________________________________________________
as my/our proxy to vote for me/us on my/our behalf at the ___ the Annual/Special
Meeting of the company to be held at __________________ on _____________________
commencing at ___________ am/pm and at any adjournment thereof
I/We direct my/our proxy to vote in the following manner
Vote with a tick
Resolutions For Against
1. ______________________________ ____ ____ ____
2. ______________________________ ____ ____ ____
Signed this ____________ day of_______________________
[Usual signature/s]"
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"(9) A vote given in accordance with the terms of an instrument of proxy
shall be valid notwithstanding the previous death or insanity of the
appointor or revocation of the proxy or revocation of the authority under
which the proxy was executed, or the transfer of any share in respect of
which the proxy is given, if no intimation in writing of such death,
insanity, revocation or transfer as aforesaid has been received by the
company before the start of the meeting or adjourned meeting at which the
proxy is used."
"(10) The instrument appointing a proxy and a power of attorney or other
authority, if any, under which it is signed or a notarially certified
copy of that power or authority shall be deposited at the registered
office of the company or at such other place within New Zealand as is
specified for that purpose in the notice convening the meeting not less
than 48 hours before the time for holding the meeting or adjourned
meeting at which the person named in the instrument proposes to vote or,
in the case of a poll, not less than 24 hours before the time appointed
for the taking of the poll, and in default, the instrument of proxy shall
be treated as invalid."
19.6. Postal votes
Clause 7 of the First Schedule to the Act providing for postal votes is
deleted.
19.7. Resolutions in lieu of meeting
A shareholders' resolution in lieu of meeting authorised by section 122
of the Act may consist of several documents in like form, each signed by
one or more shareholders. A facsimile of any such signed resolution shall
be as valid and effectual as the original signed document with effect
from completion of its transmission.
DIRECTORS
20. Number of directors
The minimum and maximum number of directors may be determined from time
to time by the board, and unless so determined, the minimum number shall
be one and there shall be no maximum number.
21. Tenure of office
Each director of the company shall hold office until:
(a) removal in accordance with the constitution; or
(b) vacation of office pursuant to section 157 of the Act; or
(c) vacation of office resulting ipso facto from being absent without
permission of the directors from three consecutive meetings of the
directors.
22.1. Appointment and removal of directors
Section 153 of the Act is qualified as hereinafter provided.
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22.2. Appointment by shareholders
The directors of the company shall be such person or persons as may from
time to time be appointed either by the shareholders by ordinary
resolution or by notice in writing to the company signed by the holder or
holders of a majority of the shares in the capital of the company but so
that the total number of directors shall not at any time exceed the
maximum number, if any, fixed pursuant to clause 20 hereof Every director
shall hold office subject to the provisions of this constitution and may
at any time be removed from office by ordinary resolution of the
shareholders or by notice in writing to the company signed as aforesaid.
Directors may be appointed individually or together unless the
shareholders by ordinary resolution require any director's appointment to
be voted on individually.
22.3. Appointment by directors
The directors shall have power at any time and from time to time to
appoint any person to be a director either to fill a casual vacancy or as
an additional director but so that the total number of directors shall
not at any time exceed the maximum number, if any, fixed pursuant to
clause 20 hereof
23. Cross directorships
A director of the company may be or become a director or other officer
of, or otherwise interested in, any company promoted by the company or in
which the company may be interested as shareholder or otherwise, and no
such director shall be accountable to the company for any remuneration or
other benefits received by him or her as a director or officer of, or
from his or her interests in, any such other company unless the company
otherwise directs or the law requires.
24. Professional directors
Any director may act by himself or herself or his or her firm in a
professional capacity for the company, and a director or firm shall be
entitled to remuneration for professional services as if he or she were
not a director provided that nothing herein contained shall authorise a
director or his or her firm to act as auditor to the company.
25. Directors' gratuities
Subject to the provisions of section 161 of the Act the directors on
behalf of the company may:
(a) pay a gratuity or pension or allowance on retirement to any
director of the company or in the case of a director's death to
his or her spouse or dependants; and
(b) make contributions to any fund and pay premiums for the purchase
or provision of any such benefit.
The amount so paid or used as a base for calculating any such benefit
shall not, without the sanction of an ordinary resolution of
shareholders, exceed the total remuneration paid by the company to such
director as a director in respect of any three financial years selected
by the directors during which he was a director. All such benefits paid
or payable shall be in addition to normal amounts or benefits paid or
payable to any such director from any superannuation scheme established
by the company or any of its subsidiaries.
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26. Alternate directors
Each director shall have the power from time to time to nominate, by
notice in writing to the company, any person not already a director and
who is acceptable to the majority of other directors to act as an
alternative director in his or her place either for a specified period or
generally during the absence from time to time of such director and in
like manner to remove any such alternate director. Unless otherwise
provided for by the terms of his or her appointment, an alternative
director shall have the same rights, powers and privileges (including the
tight to receive notice of meetings of directors but excluding the power
to appoint an alternative director) and shall discharge all the duties of
and be subject to the same provisions as the director in whose place he
or she acts. An alternate director shall not be remunerated otherwise
than out of the remuneration of the director in whose place he or she
acts and shall ipso facto vacate office if and when the director in whose
place he or she acts vacates office. Any notice appointing or removing an
alternate director may be given by delivering the same or by sending the
same through the post or by facsimile to the company and shall be
effective as from the receipt thereof
27.1. Proceedings of directors
The provisions of the Third Schedule to the Act are deleted and replaced
as hereinafter provided.
27.2. Regulation of meetings, quorum and convening
The directors may meet together for the dispatch of business, adjourn and
otherwise regulate their meetings as they think fit. The quorum necessary
for the transaction of business by the directors may be fixed by the
directors and, unless so fixed, shall be the majority of the directors. A
director may, and an employee at the request of a director shall, at any
time, by any means of communication, summon a meeting of the directors.
It shall not be necessary to give notice of a meeting of directors to any
director for the time being absent from New Zealand.
27.3. Voting
Questions arising at any meeting of directors shall be decided by a
majority of votes. In cases of an equality of votes the chairperson shall
have a second or casting vote, provided that where two directors form a
quorum and only two directors entitled to vote are present at a meeting,
the chairperson of such meeting shall not have a second or casting vote.
No business shall be transacted when a quorum is not present.
27.4. Vacancies
The continuing directors may act notwithstanding any vacancy in their
body, but if and so long as their number is reduced below the number
necessary for a quorum, the continuing directors or director may act only
for the purpose of increasing the number of directors to the number
necessary for a quorum or for the purpose of summoning a special meeting
of the company
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27.5. Chairperson
The directors may elect a chairperson of their meetings and determine the
period for which he or she is to hold office; but if no such chairperson
is elected, or if at any meeting the chairperson is not present within
five minutes after the time appointed for the meeting, the directors
present may choose one of their number to be chairperson of the meeting.
27.6. Resolution in writing
A resolution in writing, signed by all the directors for the time being
entitled to receive notice of a meeting of the directors, shall be as
valid and effectual as if it had been passed at a meeting of directors
duly convened and held. Any such resolution may consist of several
documents in like form, each signed by one or more directors. A facsimile
of any such signed resolution shall be as valid and effectual as the
original signed document with effect from completion of its transmission.
27.7. Method of meeting
A meeting of the directors may be held either:
(a) by a number of the directors who constitute a quorum being
assembled together at the place, date and time appointed for the
meeting; or
(b) by means of audio, or audio and visual, communication by which all
directors participating and constituting a quorum can
simultaneously hear each other throughout the meeting.
27.8. Minutes
The directors shall ensure that minutes are kept of all proceedings at
meetings of the directors.
DIRECTOR'S INDEMNITY
28. Indemnity authorised
The company is hereby expressly authorised to indemnify and/or insure any
director or employee against liability for acts or omissions and/or costs
incurred in connection with claims relating thereto of the type
specifically contemplated by subsections (3), (4) and (5) of section 162
of the Act to the maximum extent permitted by those subsections.
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DIVIDENDS
29. Dividends on shares not fully paid up to be paid pro rata
Subject to the rights of persons, if any, entitled to shares with special
rights as to dividend, all dividends on shares not fully paid up shall be
authorised and paid in proportion to the amount paid to the company in
satisfaction of the liability of the shareholder to the company in
respect of the shares either under the constitution of the company or
pursuant to the terms of issue of the shares. No amount paid or credited
as paid on a share in advance of calls shall be treated for these
purposes as paid on the share. All dividends shall be apportioned and
paid proportionately to the amounts paid or credited as paid on the
shares during any portion or portions of the period in respect of which
the dividend is paid, but if any share is issued on terms providing that
it shall rank for dividend as from a particular date that share shall
rank for dividend accordingly.
30. Deduction of unpaid calls
The directors may deduct from any dividend payable to any shareholder any
sums of money, if any, currently payable by such shareholder to the
company on account of calls or otherwise in relation to the shares on
which such dividends are payable.
31. Payment by cheque or warrant
Any dividend, interest, or other money payable in cash in respect of
shares may be paid by cheque or warrant sent through the post directed to
the registered address of the holder, or, in the case of joint holders,
to the registered address of that one of the joint holders who is first
named in the share register or to such person and to such address as the
holder or joint holders may in writing direct. Every such cheque or
warrant shall be made payable to the order of the person to whom it is
sent. Any one of two or more joint holders may give effectual receipts
for any dividends, bonuses, or other money payable in respect of the
shares held by them as joint holders.
32. No interest
No dividend shall bear interest against the company.
33. Unclaimed dividends
All dividends unclaimed for one year after having been authorised may be
invested or otherwise made use of by the board for the benefit of the
company until claimed, and all dividends unclaimed for five years after
having been declared may be forfeited by the board for the benefit of the
company. The board may, however, annul any such forfeiture and agree to
pay a claimant who produces, to the boards satisfaction, evidence of
entitlement to the amount due to such claimant, unless in the opinion of
the board such payment would embarrass the company
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NOTICES
34. Service
A notice may be served by the company upon any director or shareholder
either personally or by posting it by fast post in a prepaid envelope or
package addressed to such director or shareholder at such person's last
known address or by delivery to a document exchange or by facsimile to
the facsimile telephone number of such director or shareholder.
35. Time of service by facsimile
A notice served by facsimile shall be deemed to have been served on the
day following completion of transmission thereof.
36. Time of service by post
A notice sent by post or delivered to a document exchange shall be deemed
to have been served:
(a) in the case of a person whose last known address is in New
Zealand, at the expiration of 48 hours after the envelope or
package containing the same was duly posted or delivered in New
Zealand; and
(b) in the case of a person whose last known address is outside New
Zealand, at the expiration of seven days after the envelope or
package containing the same was duly posted by fast post in New
Zealand.
37. Proof of service
In proving service by post or delivery to a document exchange it shall be
sufficient to prove that the envelope or package containing the notice
was properly addressed and posted or delivered with all attached postal
or delivery charges paid. In proving service by facsimile, it shall be
sufficient to prove that the document was properly addressed and sent by
facsimile.
38. Service on joint holders
A notice may be given by the company to the joint holders of a share by
giving the notice to the joint holder first named in the share register
in respect of the share.
39. Service on representatives
A notice may be given by the company to the person or persons entitled to
a share in consequence of the death or bankruptcy of a shareholder by
addressing it to such person or persons by name or by title or by any
appropriate description, at the address, if any, within New Zealand
supplied for the purpose by the person or persons claiming to be so
entitled, or (until such an address has been so supplied) by giving the
notice in any manner in which the same might have been given if the death
or bankruptcy had not occurred.
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LIQUIDATION
40. Distribution of surplus assets
Subject to the terms of issue of any shares in the company and to clause
41, upon the liquidation of the company the assets, if any, remaining
after payment of the debts and liabilities of the company and the costs
of winding-up ("the surplus assets") shall be distributed among the
shareholders in proportion to their shareholding provided, however, that
the holders of shares not fully paid up shall receive only a
proportionate share of their entitlement being an amount which is in
proportion to the amount paid to the company in satisfaction of the
liability of the shareholder to the company in respect of the shares
either under the constitution of the company or pursuant to the terms of
issue of the shares.
41. Distribution in specie
Upon a liquidation of the company, the liquidator, with the sanction of
an ordinary resolution of shareholders and any other sanction required by
law, may divide amongst the shareholders in kind the whole or any part of
the assets of the company (whether they consist of property of the same
kind or not) and may for that purpose set such value as the liquidator
deems fair upon any property to be divided as aforesaid and may determine
how the division shall be carried out as between the shareholders or
different classes of shareholders. The liquidator may, with the like
sanction, vest the whole or any part of any such assets in trustees upon
such trusts for the benefit of the shareholders as the liquidator thinks
fit, but so that no shareholder shall be compelled to accept any shares
or other securities whereon there is any liability.
REMOVAL FROM THE NEW ZEALAND REGISTER
42. Directors may apply for removal
In the event that:
(a) the company has ceased to carry on business, has discharged in
full its liabilities to all its known creditors, and has
distributed its surplus assets in accordance with its constitution
and the Act; or
(b) the company has no surplus assets after paying its debts in full
or in part, and no creditor has applied to the Court under section
241 of the Act for an order puffing the company into liquidation;
the board of directors may in the prescribed form request the Registrar
to remove the company from the New Zealand register.
Certified as the constitution of the company
--------------------------------------------
Applicant
E-393
<PAGE>
---------
project
manager
workbench
---------
14 June 1988
Mr Gary Limes
2/35 Kowai Street
St Heliers
AUCKLAND
Dear Gary
I am very pleased to hear that you have decided to join Corlett Enterprises Ltd
as a Technical Consultant commencing Tuesday, 21st June 1988.
Below are the board details of the terms and conditions of your employment.
1) Your gross annual salary will be $41,000 p.a. to be reviewed after
six months. In addition to your base salary there will be a profit
dependent bonus of approximately 10% paid at the end of March
1988. This bonus will be based on the profitability of your
projects through a formular to be determined on a consultation
with yourself before the 30 June.
2) Holiday entitlement is four weeks per annum (20 working days) to
be taken in the twelve months from date of employment, and from
anniversary date of employment each year.
3) The company will pay all reasonable travel and hotel expenses,
etc, when you are working away from home.
4) One month's notice in writing will be required by either party to
terminate this employment contract.
Would you kindly confirm your acceptance of the above terms by signing and
returning the copy of letter attached. I look forward to you joining Corlett
Enterprises in its future ventures.
Yours sincerely
Corlett Enterprises Ltd
/s/ David Corlett /s/ Gary Elmes 14/6/88
- ----------------------------- ------------------------------
David Corlett PMW Centre
Director Corlett Enterprises Ltd
Elders House 60 ILLEGIBLE
E-394
<PAGE>
OBJECTIVES FOR GARY ELMES
1 To reduce the problem RFS's to 2 a month from the 1st. October 1988.
2 To obtain 10 chargeable days per month from 1 October 1988.
3 From the 1st. August 1988 ensure that the Works Vax is available 95% of
the time during the working (8.00 to 18.00) day.
4 To obtain a working knowledge of a designated 4GL by 1st. February 1989.
5 To gain a working knowledge of the Project Management products by 1st.
November 1988.
Plan of Action
1 Attend PMW and Bridge courses in July, August and September.
E-395
<PAGE>
---------
project
manager
workbench
---------
28 July 1988
David Cook
8 Ressiten Ave
Waterloo
Lower Hutt
Dear David
I am very pleased to hear that you have decided to join Corlett Enterprises Ltd
as a Consultant commencing Tuesday, 1st October 1988.
Below are the board details of the terms and conditions of your employment.
1) Your gross salary will be $45,000 p.a. to be reviewed annually, the use of
a car, similar to your current one, a petrol allowance and free rental of
telephone. In addition you will receive a commission of 10% on all fees you
earn after the first $6,000 per month, and 3% on any other person you place
for the company.
2) Holiday entitlement is four weeks per annum (20 working days) to be taken
in the twelve months from date of employment, and from anniversary date of
employment each year.
3) The company will pay all reasonable travel and hotel expenses, etc, when
you are working away from home.
4) One month's notice in writing will be required by either party to terminate
this employment contract.
Would you kindly confirm your acceptance of the above terms by signing and
returning the copy of letter attached. I look forward to you joining Corlett
Enterprises in its future ventures.
Yours sincerely
CORLETT ENTERPRISES LTD
/s/ David Corlett /s/ David Cooke 17/8/88
- -------------------------- ----------------------------
David Corlett PMW Centre
DIRECTOR ILLEGIBLE
E-396
<PAGE>
Corlett Enterprises B Rossiter Avenue
PMW Centre Waterloo
PD Box 8508 Lower Hutt
Simon Street
Auckland 5th August 1988
Mr David Corlett
Dear Dave,
Thank you for your letter regarding the offer of a position with Corlett
Enterprises.
As we discussed on Wednesday evening, 3rd August 1988, I would just like you to
clarify a few points before I formally accept your offer. I think the points we
discussed were as follows;
1. What rate of commission will I recieve for;
- Sales or leads to sales for PMW or other products. 2 1/2%
- Fees for people placed on training courses. ILLEGIBLE
- Fees for training courses given. ILLEGIBLE
- Any sales or fees earned by people other than myself at NZR. 3%
2. The position of commission payable in the case where a client has agreed
to take a set number of days consultancy per month and days are moved from
one month to another e.g. NZR agree to 9 days per month for 12 months and
then in the first three months they use 18 days per month and no days in
the final 3 months.
3. At what point will commission be paid eg monthly. ILLEGIBLE
If there is anything not included on this list, or any other matter you like to
add or discuss please let me know.
I look forward to getting these final points clarified and joining you on the
1st October 1988.
Yours sincerely
/s/ David Cooke
- ---------------------
David Cooke.
E-397
<PAGE>
pritech
PROJECT INFORMATION TECHNOLOGY
(A DIVISION OF CORLETT ENTERPRISES)
Memorandum of Directors
of
Corlett Enterprises Ltd
1st November 1988
- --------------------------------------------------------------------------------
In line with senior employees of the company:
1. The directors holiday entitlement will be four weeks (20 working days) per
annum;
2. The directors sick leave entitlement is ten (10) working days;
3. The company will pay all reasonable travel and hotel expenses, etc, when
directors are working away from home; and
4. The company will pay car running costs, parking and telephone charges.
/s/ S.M. Corlett
- -------------------
S.M. Corlett
/s/ D.W. Corlett
- -------------------
D.W. Corlett
E-398
<PAGE>
Salaries & Remuneration for Directors
1 - Remuneration for 1st May 1997 onwards shall be as follows:DCA $170k pa plus
car, car park, health insurance, DCW $150k pa plus car, car park, health
insurance; GEA $140k pa plus car park, health insurance, internet bill. Salaries
to be reviewed after 2 years.
2 - Policy for paying dividends to be:
No dividend for YE April 1997;
No dividend in any year unless taxable profit growth has been 15% over the
previous year and averaged at least 15% over the previous two years;
No dividend in any year where or to the extent that this will bring
shareholders funds below 10% of gross revenues for the year on which
dividends are being considered;
No dividend where or to the extent that payment of a dividend would put the
directors in breach of their fiducary obligations to maintain company liquidity.
E-399
<PAGE>
<TABLE>
<CAPTION>
Date Prob. Company / Opportunity Product Month ValueCycle Status
Division type
==============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
04/02/98 Auckland
50%
04/02/98 NZ Dairy Foods/ Leave Application Consulting 03/98 $3,000 Open Proposal
Main system
09/02/98 Auckland
50%
09/02/98 NZI Insurance/ Architecture Consulting,Lotus 04/98 $10,OOO Open Proposal
Main review Administration,M
Companions
11/02/98 Auckland
0%
11/02/98 Pritech / Auckland Example ABTRepo/TW 09/98 $1,000 Open Inquiry
12/02/98 Auckland
50%
12/02/98 Clear Notes based NotesDomino 03/98 $55,OOO Open Proposal
Communications Documentation
Ltd / Main Management
12/02/98 Wellington
90%
12/02/98 Royal & Notes NotesDomino 03/98 $50,OOO Open Closure
SunAlliance Life/ Infrastructure
Main Implementation
13/02/98 Wellington
50%
13/02/98 NZ Post / Main Project NotesDomino 03/98 $50,OOO Open Proposal
Management
16/02/98 Wellington
Approver%
16/02/98 NZ Police / Repository/ABT ABTRepo/TW 03/98 $20,OOO Open On Track
Policing 2000 Connect
Strategy Group
16/02/98 (Not Categorized)
100%
16/02/98 Statistics New Notebooks on Line NoteBOOKS 03/98 $50,000 Open Collection
Zealand / Installation
Wellington
16/02/98 Wellington
20%
16/02/98 Statistics New Domino.doc Demo NotesDomino 03/98 $25,OOO Open Demo/RFI
Zealand /
Wellington
16/02/98 Wellington
100%
16/02/98 Ministry of Health/ Notebooks on Line NoteBOOKS 03/98 $50,000 Open Collection
Main
16/02/98 Wellington
90%
16/02/98 Horwath Notes Installation NotesDomino 03/98 $20,000 Open Closure
Wellington / Main
16/02/98 Wellington
0%
16/02/98 AMP / Main Outsourcing Notes 03/98 $120,OOO Open Lost
Contract Development, Lot
Administration
16/02/98 Wellington
Approver%
16/02/98 IBM / Wellington CSP renewals ABTRepo/TW 03/98 $5,000 Open On Track
16/02/98 (Not Categorized)
0%
16/02/98 Accident Project Office ABTRepo/TW 03/98 $3,500 Open Inquiry
Compensation
Corp / Main
</TABLE>
E-400
<PAGE>
<TABLE>
<CAPTION>
Date Prob. Company / Opportunity Product Month ValueCycle Status
Division type
==============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
17/02/98 Wellington
20%
17/02/98 Carson Group / Notes Demo NotesDomino 03/98 $30,000 Open Demo/RFI
Main
17/02/98 Wellington
50%
17/02/98 The Open Services proposal Lotus End User 03/98 $10,OOO Open Proposal
Polytechnic of Applications
New Zealand /
Main Campus
17/02/98 Wellington
0%
17/02/98 AMPlus / IT ABT toolset ABTRepo/TW 05/98 $50,000 0pen On Track
Services training
17/02/98 Wellington
10%
17/02/98 AMPlus / IT GWI Help GWI Help! 03/98 $30,000 Open Inquiry
Services Installation
17/02/98 Wellington
50%
17/02/98 Wang (NZ) Ltd / Notes Basic NotesDomino 03/98 $15,OOO Open Proposal
Christchurch Training
18/02/98 Wellington
0%
18/02/98 Arthur Andersen / Project Risk Project Risk 03/98 $2,8l2 Open Inquiry
Business
Consulting
18/02/98 (Not Categorized)
25%
18/02/98 Transit New Web Site NotesDomino 02/98 $30,000 Open Request for
Zealand / Main Development proposal
20/02/98 (Not Categorized)
95%
20/02/98 McCann-Ercikson McCann PEET PEET 03/98 $8,8OO Open Delivery
/ Main
23/02/98 Auckland
20%
23/02/98 Royal & GWI Help GWI Help! 04/98 $30,OOO Open Demo/RFI
SunAlliance Life /
Main
23/02/98 Auckland
90%
23/02/98 Mercury Energy/ 360 App 360 application $12,OOO Open Closure
HR
23/02/98 Auckland
90%
23/02/98 Niro NZ / Main Notes Install NotesDomino 04/98 $50,000 Open Closure
23/02/98 (Not Categorized)
90%
23/02/98 McCann-Ercikson PEET PEET 03/98 $8,800 0pen Closure
/ Main
23/02/98 (Not Categorized)
50%
23/02/98 Auckland Rugby Web Page Domino 05/98 $30,OOO Open Proposal
Union / Auckland
Blues
23/02/98 Auckland
25%
23/02/98 Winters / Main Learning Space Learning Space 10/98 $20,000 Open Request for
proposal
23/02/98 Auckland
</TABLE>
E-401
<PAGE>
<TABLE>
<CAPTION>
Date Prob. Company / Opportunity Product Month ValueCycle Status
Division type
================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
50%
23/02/98 Coca-Cola Amatil GWI Help GWI Help! 04/98 $10,000 Open Proposal
(NZ) Ltd / Main
23/02/98 Auckland
60%
23/02/98 Financial Systems GWI Help GWI Help! 03/98 $10,OOO Open Negotiation
Ltd / Main
23/02/98 Auckland
0%
23/02/98 MIRINZ Meat ABT Repository ABTRepo/TW 05/98 $132,OOO Open
Research / Main
23/02/98 Auckland
50%
23/02/98 Vita NZ / Main Notes licenses NotesDomino 03/98 $20,000 Open Proposal
24/02/98 Wellington
Consultant%
24/02/98 MAF Regulatory 1 Day PMW ABTRepo/TW 03/98 $2,000 Open Slightly Behind
Authority / Main Training Schedule
24/02/98 Auckland
10%
24/02/98 Fletcher GWI Help GWI Help! 04/98 $20,000 Open Inquiry
Aluminium / Main
25/02/98 Auckland
0%
25/02/98 Clear PMW for Project ABTRepo/TW 04/98 $20,000 Open Inquiry
Communications
Ltd/Main
25/02/98 Wellington
0%
25/02/98 ANZ Bank / Main Repository Roll out ABTRepo/TW 03/98 $500,000 Open Inquiry
25/02/98 Wellington
10%
25/02/98 Tranz Rail Limited GWI Help GWI Help! 03/98 $15,000 Open Inquiry
/ Main
25/02/98 Wellington
10%
25/02/98 Tranz Rail Limited Web Page Control GWI Help! 03/98 $12,000 Open Inquiry
/ Main
25/02/98 Wellington
10%
25/02/98 Prudential Help! expansion GWI Help! 03/98 $12,000 Open Inquiry
Assurance Limited
/Main
26/02/98 Auckland
60%
26/02/98 Purity Foods / Notes Consulting 05/98 $20,000 Open Negotiation
Main Development
26/02/98 (Not Categorized)
100%
26/02/98 Statistics New Notes Pump Pilot NotesDomino 03/98 $20,OOO Open Collection
Zealand /
Wellington
26/02/98 (Not Categorized)
95%
26/02/98 MAF Regulatory SLA Notes 03/98 $100,000 0pen Delivery
Authority / Main Development,No
Support
26/02/98 (Not Categorized)
10%
26/02/98 New Zealand Dairy Admin and Lotus 03/98 $120,000 0pen Inquiry
Board / Main Support SLA Administration
</TABLE>
E-402
<PAGE>
<TABLE>
<CAPTION>
Date Prob. Company / Opportunity Product Month ValueCycle Status
Division type
=============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
26/02/98 Auckland
10%
26/02/98 Dynamic Controls Service Database NotesDomino 03/98 $25,000 Open Inquiry
Ltd / Main
26/02/98 Wellington
0%
26/02/98 IBM / Wellington Repository ABTRepo/TW 03/98 $15,000 Open Inquiry
26/02/98 Wellington
10%
26/02/98 Ministry of Fax Server GWI Help! 03/98 $6,000 Open Inquiry
Transport / Main
27/02/98 Wellington
10%
27/02/98 Axon Computer Castrol support 03/98 $12,000 Open Inquiry
Systems Ltd /
Wellington
27/02/98 Wellington
50%
27/02/98 Axon Computer Document Routing 03/98 $19,000 Open Proposal
Systems Ltd /
` Wellington
27/02/98 Wellington
0%
27/02/98 BRANZ / Training ABTRepo/TW 03/98 $4,950 Open Inquiry
Wellington
27/02/98 Wellington
10%
27/02/98 Caltex Oil (N.Z.) Notes NotesDomino $O Open Inquiry
Ltd/Main
27/02/98 Wellington
10%
27/02/98 ECNZ / Twizel Knowledge Domino.doc 05/98 $50,000 Open Inquiry
Management
27/02/98 Wellington
10%
27/02/98 Education Review Annual Declaration 03/98 $10,000 Open Inquiry
Office / Main database
27/02/98 Wellington
10%
27/02/98 Education Review Web Development NotesDomino 06/98 $20,000 Open Inquiry
Office / Main
27/02/98 Wellington
10%
27/02/98 GNB Notes NotesDomino 06/98 $10,000 Open Inquiry
Technologies / implementation
Main
27/02/98 Wellington
0%
27/02/98 IBM / Wellington Repository ABTRepo/TW 04/98 $11,000 Open Inquiry
27/02/98 Wellington
10%
27/02/98 South Pacific Contact 04/98 $10,000 0pen Inquiry
Tyres / Main Management
27/02/98 Wellington
0%
27/02/98 Totalisator Agency Time Recording ABTRepo/TW 07/98 $60,OOO Open Inquiry
Board (TAB). /
Wellington
27/02/98 Wellington
10%
</TABLE>
E-403
<PAGE>
<TABLE>
<CAPTION>
Date Prob. Company / Opportunity Product Month ValueCycle Status
Division type
==============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
27/02/98 Transit New Notes Support 03/98 $10,OOO Open Inquiry
Zealand / Main
27/02/98 Wellington
20%
27/02/98 AMPlus / IT GWI Help GWI Help! 03/98 $10,000 Open Demo/RFI
Services
27/02/98 Auckland
0%
27/02/98 Fletcher Challenge PMW ABT PWW 04/98 $5,000 Open Inquiry
Forest / Main
27/02/98 Auckland
60%
27/02/98 Hunt Agencies / Notes/GWI GWI Contact 04/98 $17,000 Open Negotiation
Main Contact
28/02/98 Auckland
70%
28/02/98 Forest Research Service Desk GWI Help! 04/98 $10,000 Open Product
Inst. / Main Evaluation
02/03/98 Auckland
0%
02/03/98 Policy Notes Intranet NotesDomino 04/98 $233,000 Open Lost
Management
Systems
Corporation / Main
03/03/98 Auckland
10%
03/03/98 Tranz Rail Limited Notes 03/98 $0 Open Inquiry
/ Main
03/03/98 Auckland
10%
03/03/98 Pritech / Demo Demo GWI Help! 04/98 $10,000 Open Inquiry
04/03/98 Wellington
25%
04/03/98 Ministry of Health/ Web Site NotesDomino 04/98 $5,000 Open Request for
Main Development proposal
04/03/98 Wellington
10%
04/03/98 NZ Police / INCIS Notes Messaging NotesDomino 04/98 $10,000 Open Inquiry
Project
10/03/98 Wellington
100%
10/03/98 Ministry of Health/ Word NotesDomino 04/98 $500 Open Collection
Main Objects/templates
in Notes
10/03/98 Wellington
` 10%
10/03/98 Statistics New Notes Data NotesDomino 04/98 $2,000 Open Inquiry
Zealand / conversion
Wellington
13/03/98 Auckland
10%
13/03/98 Bendon Hickory Order Entry Contact $20,OOO Open Inquiry
Ltd / Main Management
16/03/98 Auckland
10%
16/03/98 Tranz Rail Limited Notes Lotus 05/98 $20,000 Open Inquiry
/Main Administration Administration
16/03/98 Auckland
10%
16/03/98 Tranz Rail Limited Notes Support Support 05/98 $20,000 Open Inquiry
/ Main Contract
</TABLE>
E-404
<PAGE>
<TABLE>
<CAPTION>
Date Prob. Company / Opportunity Product Month ValueCycle Status
Division type
=============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
16/03/98 Wellington
10%
16/03/98 ECNZ /Wellington GWI Help! GWI Help! 03/98 $10,OOO Open Inquiry
16/03/98 Wellington
10%
16/03/98 ECNZ / Wellington Notes Licencing Notes clients 05/98 $10,000 Open Inquiry
16/03/98 (Not Categorized)
10%
16/03/98 ECNZ / Wellington SLAl renewal 06/98 $24,000 Open Inquiry
16/03/98 (Not Categorized)
0%
16/03/98 WestpacTrust / Repository ABTRepo/TW 06/98 $15,OOO Open Inquiry
Main Implementation
16/03/98 (Not Categorized)
10%
16/03/98 WestpacTrust / CSC 7.4 06/98 $8,OOO Open Inquiry
Main
16/03/98 Auckland
10%
16/03/98 New Zealand Dairy DARTS Rel 2.0 03/98 $10,OOO Open Inquiry
Board / Main
16/03/98 (Not Categorized)
10%
16/03/98 Prudential Application 03/98 $10,000 Open Inquiry
Assurance Limited
/ Main
16/03/98 (Not Categorized)
10%
16/03/98 ANZ Bank / Main Reports Consulting 03/98 $4,000 Open lnquiry
Development
16/03/98 Auckland
10%
16/03/98 ECNZ / Wellington CTS Project 03/98 $22,000 Open Inquiry
16/03/98 Wellington
60%
16/03/98 South Pacific Customer 03/98 $2,000 Open Negotiation
Tyres / Main Tracking
Enhancements
Review
16/03/98 Wellington
10%
16/03/98 South Pacific Cognos Agents 03/98 $5,000 Open Inquiry
Tyres / Main
16/03/98 Wellington
10%
16/03/98 South Pacific Stock Listing 04/98 $20,000 Open Inquiry
Tyres / Main Application
16/03/98 Wellington
10%
16/03/98 South Pacific Training 04/98 $4,000 Open Inquiry
Tyres / Main
16/03/98 (Not Categorized)
10%
16/03/98 Ministry of MTS 05/98 $10,000 Open Inquiry
Transport / Main Enhancements
16/03/98 (Not Categorized)
10%
16/03/98 Ministry of OutMins 05/98 $5,000 Open Inquiry
Transport / Main Enhancements
16/03/98 Auckland
</TABLE>
E-405
<PAGE>
<TABLE>
<CAPTION>
Date Prob. Company / Opportunity Product Month ValueCycle Status
Division type
=============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
10%
16/03/98 Cybernet / Main GWI Contact GWI Help! 04/98 $5,000 Open Inquiry
16/03/98 Auckland
10%
16/03/98 Tranz Rail Limited Time Recording ABTRepo/TW,N 06/98 $O Open Inquiry
/Main
16/03/98 Auckland
10%
16/03/98 Godfrey Pembroke GWI Help GWI Help! 04/98 $12,OOO Open Inquiry
/ Main
16/03/98 Auckland
20%
16/03/98 BTR / Main GWI Help GWI Help! 04/98 $12,OOO Open Demo/RFI
16/03/98 Auckland
60%
16/03/98 Toyota Finance / Notes install NotesDomino 04/98 $22,000 Open Negotiation
Main
16/03/98 Auckland
10%
16/03/98 Postec / Main GWI Help GWI Help! 05/98 $12,000 Open Inquiry
16/03/98 (Not Categorized)
10%
16/03/98 Sealcorp / Cust Contact Contact $10,OOO Open Inquiry
Management Management
16/03/98 (Not Categorized)
20%
16/03/98 Omron Electronics Notes Domino.Doc 05/98 $12,000 Open Demo/RFI
Ltd / Main Documentation
16/03/98 Auckland
60%
16/03/98 Sony Music / Main Internet Domino(WEB) 06/98 $18,OOO Open Negotiation
Development
16/03/98 (Not Categorized)
60%
16/03/98 Systems Advisory Feltex Notes Support 04/98 $15,000 Open Negotiation
Services / Main development Contract
17/03/98 Auckland
60%
17/03/98 AON Risk Schemes Consulting 05/98 $120,OOO Open Negotiation
Services / Main
17/03/98 Auckland
95%
17/03/98 Bureau Veritas / Contact/Audit NotesDomino 04/98 $15,000 Open Delivery
Main
17/03/98 Auckland
70%
17/03/98 AON Risk Notes to Users GWI Help! 04/98 $15,000 0pen Product
Services / Main Evaluation
17/03/98 Auckland
50%
17/03/98 Bureau Veritas / Contact/Audit NotesDomino 05/98 $40,000 Open Proposal
Main Phase 3
18/03/98 Auckland
0%
18/03/98 Douglas PMW ABT PWW 06/98 $5,000 Open Inquiry
Manufacturing /
Main
18/03/98 Auckland
20%
18/03/98 Douglas Notes Domino(WEB) 06/98 $1O,0O0 Open Demo/RFI
Manufacturing / development Development
Main
</TABLE>
E-406
<PAGE>
<TABLE>
<CAPTION>
Date Prob. Company / Opportunity Product Month ValueCycle Status
Division type
=============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
18/03/98 Auckland
10%
18/03/98 BTR / Main GWI Other GWI Help! 06/98 $25,000 Open Inquiry
helpdesks
18/03/98 Auckland
20%
18/03/98 CSI Ltd / Main GWI Help GWI Help! 04/98 $8,000 Open Demo/RFI
18/03/98 Auckland
10%
18/03/98 Pritech / Demo Test Opportunity BB Service 12/98 $1 Lost Inquiry
20/03/98 Auckland
20%
20/03/98 CSC NZ / Main Notes applications Lotus End User 07/98 $20,000 Open Demo/RFI
Applications
23/03/98 Wellington
10%
23/03/98 Telecom New Quality Review Lotus 03/98 $5,000 Open Inquiry
Zealand Ltd / Companions
ICMS Group-
Year 2000 Project
23/03/98 Wellington
10%
23/03/98 ECNZ / Wellington Contractors and 04/98 $4,000 Open Inquiry
Projects Database
23/03/98 Wellington
10%
23/03/98 ECNZ / Wellington Event Reporting 04/98 $5,600 Open Inquiry
Database
23/03/98 Wellington
10%
23/03/98 ECNZ / Wellington Core Contacts 04/98 $5,800 Open Inquiry
R3.0
23/03/98 Wellington
10%
23/03/98 ECNZ / Wellington Compliance 04/98 $1,500 Open Inquiry
Application
Enhancements
23/03/98 Wellington
10%
23/03/98 ECNZ / Wellington Midas Import 04/98 $3,000 Open Inquiry
24/03/98 Auckland
0%
24/03/98 CSC NZ / Main ABT Repository ABTRepo/TW 07/98 $30,000 Open Inquiry
24/03/98 Auckland
10%
24/03/98 Amway/ Main Notes Dev Notes 06/98 $10,O00 Open Inquiry
Development
24/03/98 Auckland
10%
24/03/98 Amway / Main Web site Domino(WEB) 07/98 $20,O00 Open Inquiry
Development
24/03/98 Auckland
25%
24/03/98 IBM / Auck GWI Contact GWI Contact 04/98 $15,000 Open Request for
proposal
24/03/98 Wellington
0%
24/03/98 WestpacTrust / Time Recording ABTRepo/TW 05/98 $50,000 Open Inquiry
Main
24/03/98 (Not Categorized)
</TABLE>
E-407
<PAGE>
<TABLE>
<CAPTION>
Date Prob. Company / Opportunity Product Month ValueCycle Status
Division type
=============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
10%
24/03/98 Accident PMW Training 03/98 $4,150 Open Inquiry
Compensation Course
Corp / Main
25/03/98 Auckland
10%
25/03/98 James W Piper & Notes Implement NotesDomino 06/98 $20,000 Open Inquiry
Co / Takapuna
30/03/98 Auckland
10%
30/03/98 Brocker Brocker Move to Consulting 04/98 $20,000 Open Inquiry
Investments / Main Beach Haven
30/03/98 Auckland
10%
30/03/98 NZI Insurance / Roles and 05/98 $10,OOO Open Inquiry
Main responsibilities
system
</TABLE>
E-408
================================================================================
AGREEMENT FOR SALE
AND PURCHASE OF SHARES
Parties
G J MCNABB
BROCKER INVESTMENTS (N.Z.) LIMITED
BROCKER INVESTMENTS LIMITED
Relating to Microchannel Limited
LOWNDES JORDAN
BARRISTERS & SOLICITORS
================================================================================
E-409
<PAGE>
Agreement for Sale and Purchase of Shares
AGREEMENT dated 1998
PARTIES
1. GARY JOHN MCNABB of Auckland, Company Director (Vendor)
2. BROCKER INVESTMENTS (N.Z.) LIMITED at Auckland, (Purchaser).
3. BROCKER INVESTMENTS LIMITED a company listed on the Toronto Stock
Exchange (BKI).
INTRODUCTION
A. The Vendor is the holder of the Shares together with all rights attaching
to the Shares.
B. The Vendor has agreed to sell to the Purchaser and the Purchaser has
agreed to purchase from the Vendor all of the Shares for the
Consideration and upon the terms and conditions contained in this
Agreement.
TERMS
1. Interpretation
1.1 Defined Terms: In this Agreement the following terms shall have the
meanings specified:
Accounting Date 31 March 1999.
Associated Person the meaning given in section 0D7(1) of
the Income Tax Act 1994.
Business Day a day (other than a Saturday or Sunday)
on which registered banks are open for
business in Auckland.
Business Records all books of account, Financial
Statements, records, files, data,
databases, certificates or other
evidence of title to assets and
information howsoever recorded or stored
relating to or required for the business
of the Company or pertaining to its
affairs.
Cashflow the meaning ascribed to that term in the
Escrow Agreement.
Charge includes option, right to acquire, lien,
pledge, mortgagee, assignment, charge,
security interest,
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Agreement for Sale and Purchase of Shares
bailment, or encumbrance or adverse
interest of any nature whether legal or
equitable and no matter how arising but
excluding claims of suppliers of goods
subject to retention of title provisions
supplied in the normal course of
business.
Company Microchannel Limited, a company
incorporated under the Companies Act
1993 under No.AK/676642 having its
registered office at Auckland and having
its capital divided into 1,000 ordinary
shares and a total paid up capital of
$100,000.
Completion completion by the parties of the sale
and purchase of the Shares as provided
in clause 5.
Completion Date the actual date of Completion being the
later of 7 days after the date of
calculation of the Net Asset Value
pursuant to clause 2.3 or 7 days after
the date the conditions referred to in
clause 9 have been satisfied or waived
by the party entitled to waive the same
(whichever is the later) or such other
date as may be agreed upon by the
parties.
Consideration the sum calculated by applying a
multiple of 4 to the actual audited NPAT
of the Company for the Year ending on
the Accounting Date calculated on the
basis that an allowance is made for
income tax at the rate of 33% subject to
adjustment as provided in clauses 2.4
and 3.4.
Constitution the Constitution of the Company.
Costs includes any and all costs (on a
solicitor and own client basis),
expenses, damages, penalties, interest,
compensation, and awards.
Disclosure Letter the letter from the Vendor to the
Purchaser disclosing information
pursuant to clause 8 and Schedule 2.
Earn Out Period the Years ending on 31 March 2000
and 2001.
Earn Out Sum the Consideration less the Net Asset
Value.
Escrow the Escrow Agreement in the form annexed
Agreement as Annexure 3 to be entered into by BKI,
the Vendor and the Trustee.
Exchange Rate the average between the WestpacTrust buy
and sell rates for the exchange of $NZ
to $CAD, at the close of business on the
date specified in this Agreement or
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Agreement for Sale and Purchase of Shares
where a date is not specified, on the
last Business Day prior to the date of
the relevant transaction.
Financial each and every part of the financial
Statements statements of the Company for the Year
which ended on the Last Accounting Date.
GAAP Generally accepted accounting principles
adopted in New Zealand.
GST Goods and Services Tax levied under the
GST Act.
GST Act Goods and Services Tax Act 1985.
Intellectual all intellectual property necessary for
Property the Company to carry out the projects
described in the Company budgets to be
prepared pursuant to clause 6.1 and
includes all confidential information,
trade secrets, drawings, designs,
techniques, programmes, processes,
logos, copyrights, trade or service
marks, patents, registered designs, and
other information and rights capable of
being protected under New Zealand or
other laws relating to intellectual
property no matter how recorded or
stored and any applications for same.
Interest Rate the cost of funds rate for the BKI
Group.
Last Accounting 31 March 1998
Date
Net Asset Value the net tangible asset value of the
Company determined in accordance with
clause 2.4.
NPAT the net profit after income tax
calculated in accordance with GAAP less:
(a) the cost of any funds advanced to
the Company by the Purchaser
calculated at the WestpacTrust
Indicator Lending Rate plus a
standard commercial overdraft
margin; and
(b) any management fees charged to
the Company by the Purchaser in
accordance with clause 6.2.
Penalty Rate the WestpacTrust Indicator Lending Rate
plus 8%.
Premises the premises at 206 Symonds Street,
Auckland.
Proceedings includes proceedings, claims, demands,
actions, conferences, mediations,
conciliations, compromises,
arbitrations, hearings or appeals
arising out of,
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Agreement for Sale and Purchase of Shares
preliminary to or in connection with any
dispute or alleged dispute.
Related company a related company as defined sections 5
to 8 of the Companies Act 1993.
Shares all of the existing issued shares in the
capital of the Company being acquired by
the Purchaser pursuant to this
Agreement.
Statutory Books the Company's Constitution, and its
Certificate of Incorporation, Directors'
and Members' minute book, Register of
Members, Register of Directors and
Secretaries, Interests Register,
Register of Charges and Seal Register
(if any).
Strike Price in respect of the BKI shares to be
issued pursuant to this Agreement is the
last sale price for BKI shares on the
Toronto Stock Exchange on the relevant
dates specified in clause 3.
Subsidiary a subsidiary as defined in sections 5 to
8 of the Companies Act 1993.
Taxation all forms of taxation (including without
limitation capital gains tax, income
tax, surtax, estate duty, stamp duty,
rates, (GST, PAYE, withholding tax,
provisional tax, duties, customs and
other import or export duties and all
other statutory, fiscal, central or
local government or municipal
impositions, duties and levies) and all
re-assessments, penalties, Charges,
Costs and interest relating to such
taxation for non-compliance or
otherwise.
Trustee Montreal Trust or such other trustee
approved by the Toronto Stock Exchange
to hold BKI shares pursuant to the
Escrow Agreement.
Warranties the representations, warranties, and
undertakings of the Vendor set out in
Schedule 1.
Year a financial year from 1 April to 31
March in the next year.
1.2 General Interpretation: In the interpretation of this Agreement, unless
the context otherwise requires:
1.2.1 References to the parties include their respective executors,
administrators, successors and permitted assigns;
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Agreement for Sale and Purchase of Shares
1.2.2 Words in the singular shall include the plural and vice versa;
1.2.3 Words importing one gender shall include the other genders;
1.2.4 Any obligation not to do anything includes an obligation not to
suffer, permit or cause that thing to be done;
1.2.5 Headings have been inserted for convenience only and shall not
affect the construction of this Agreement;
1.2.6 Reference to a statute includes all statutes amending,
consolidating or replacing the statute referred to and includes
all subsidiary or delegated legislation or exercises of authority
under such statute or legislation;
1.2.7 References to clauses, schedules and annexures shall be construed
as references to cite same in this Agreement;
1.2.8 References to money are references to New Zealand currency.
1.3 Joint and Several: All covenants expressed or implied shall bind all
persons executing this Agreement and any two or greater number of them
jointly and each of them severally.
1.4 Time of the Essence: Time shall be of the essence of this Agreement both
as to dates and periods.
1.5 Precedence of Documents: If there is any conflict between the provisions
of this Agreement and the Escrow Agreement the provisions of this
Agreement shall prevail.
2. Agreement for Sale and Purchase
2.1 Sale and Purchase: The Vendor agrees to sell and the Purchaser agrees to
purchase the Shares for the Consideration.
2.2 Accrual Rules: The Consideration is the lowest price the parties would
have agreed upon at the date of this Agreement for the sale and purchase
of the Shares and is consequently the core acquisition price pursuant to
Section 0B1(c) of the Income Tax Act 1994.
2.3 Audit and Due Diligence: The Purchaser shall, at its cost, appoint KPMG
to conduct an audit and due diligence investigation. KPMG shall, if
required by the Purchaser, audit the Financial Statements and the
financial statements for the Company for the Year ending on the
Accounting Date and each Year of the Earn Out Period. Such audit shall be
conducted by KPMG adopting GAAP which shall be applied consistently over
the various audit periods.
2.4 Calculation of Consideration: KPMG shall calculate the Net Asset Value
and the
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Agreement for Sale and Purchase of Shares
Consideration in accordance with GAAP. The Vendor shall be provided with
a copy of the KPMG calculations and a period of 10 days following receipt
of such calculations to review and make submissions on the mode of
calculation. Following expiry of such period, if no objection is raised
by the Vendors, the KPMG calculations shall be deemed to have been
accepted and shall be binding on the parties
3. Consideration and Payment
3.1 Satisfaction of Consideration: The Consideration Shall be paid or
satisfied by the Purchaser as follows:
3.1.1 Net Asset Value: The Net Asset Value shall be paid upon
Completion; and
3.1.2 Earn Out Sum: The Earn Out Sum (subject to adjustment as provided
in clauses 2.4 and 3.4) shall be paid during the Earn Out Period;
in each case in the manner provided in clauses 3.2 and 3.3. by way of the
issue and allotment to the Vendor free from all Charges of fully paid
ordinary shares in the capital of BKI. Such shares shall rank in all
respects pari passu with the existing ordinary shares in the capital of
BKI.
3.2 Issue of Shares: BKI shall issue the shares pursuant to clause 3.1 as
follows:
3.2.1 Issue: BKI shares shall be issued in two tranches.
3.2.2 Net Asset Value: The first tranche (NAV Shares) shall be issued on
completion of the calculation of the Net Asset Value by KPMG
pursuant to clause 2.4 in numbers which have a value (based on the
Strike Price converted to $NZ at the Exchange Rate as at the Last
Accounting Date) equal to the Net Asset Value.
3.2.3 Earn Out Shares: The second tranche (Earn Out Shares) shall be
Issued on completion of the calculation of the Earn Out Sum
pursuant to clause 2.4 in numbers which have a value (based on the
Strike Price converted to $NZ at the Exchange Rate as at the
Accounting Date) equal to the Earn Out Sum.
3.2.4 Trust: The NAV Shares and the Earn Out Shares shall initially be
issued to the Trustee to be held in escrow pursuant to the Escrow
Agreement and subject to the escrow and earn out conditions
specified in clause 3.3 and in the Escrow Agreement.
3.3 Escrow and Earn Out Provisions:
3.3.1 NAV Shares: The NAV Shares shall be held by the Trustee and
released to the Vendor on 31 March 1999.
3.3.2 Earn Out Shares: The Earn Out Shares shall be held by the Trustee
subject
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<PAGE>
Agreement for Sale and Purchase of Shares
to the following conditions:
(a) The Earn Out Shares shall only be released to the Vendor if
the Company produces sufficient cumulative Cashflow during
the Earn Out Period.
(b) The Earn Out Shares shall be released to the Vendor in 2
tranches no later than 30 June 2000 and 2001 respectively
(Release Dates).
3.3.3 Value: The Earn Out Shares to be released on each of the Release
Dates shall not exceed in value (based on the Strike Price
converted to $NZ at the Exchange Rate as at the Accounting Date)
the Cashflow of the Company for the Year which ended immediately
prior to the relevant Release Date.
3.4 Adjustment of Acquisition Price:
3.4.1 Calculation: The Earn Out Sum shall be reduced on the basis of a
$NZ 1.00 reduction for each $NZ 1.00 by which the cumulative
Cashflow of the Company over the Earn Out Period falls short of
the Earn Out Sum.
3.4.2 Final Calculation: Prior to 31 December 2000 there shall be a
final calculation of the Earn Out Sum based on the cumulative
Cashflow for Earn Out Period.
3.4.3 Adjustment: The Earn Out Sum and the Consideration shall then be
adjusted accordingly. Any Earn Out Shares which are not required
to be released to the Vendor following such final calculation
shall be cancelled.
3.4.4 Termination of Escrow: If the Company fails to achieve its
budgeted Cashflow during the year ending on the Accounting Date or
at any time during the Earn Out Period then the Purchaser shall
have the right as at the Accounting Date and at 6 monthly
intervals after that date by providing written notice to the
Vendor to terminate the escrow arrangements and cancel any shares
held in escrow. In such case the value of the BKI shares released
before such termination shall be accepted by the Vendor in lieu of
the Earn Out Sum and the Consideration shall be adjusted
accordingly.
3.5 Dividends on Earn Out Shares: Any dividends declared or bonus or rights
entitlements issued in respect of Earn Out Shares held in escrow pursuant
to clauses 3.2 or 3.3 shall be issued to and held in trust by the
Trustee. Any dividends declared or entitlements in respect of shares
which are released to the Vendor shall be paid or applied to the Vendor
when the shares are released. Any dividends or entitlements in respect of
BKI shares which are cancelled will be forfeited to BKI on the date of
cancellation.
4. Parties' Obligations on or before Completion
4.1 Vendor's Obligations: On or before Completion the Vendor shall:
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<PAGE>
Agreement for Sale and Purchase of Shares
4.1.1 Disclosure: Deliver to the Purchaser prior to the time of
execution of this Agreement the Disclosure Letter signed by the
Vendor.
4.1.2 Release of Liability to Associated Persons: Procure that the
Company is released unconditionally from all liability and
obligations whatsoever (whether actual or contingent) to the
Vendor or any Associated Persons of the Vendor. If such release is
not or cannot properly be provided on or before Completion then
the Vendor will indemnify the Company and the Purchaser from and
against all Costs and Proceedings in respect of such liability and
obligations. Liabilities and obligations incurred in respect of
normal trade purchases or transactions on usual commercial terms
for payment and performance shall not be required to be so
released;
4.1.3 Access to Premises and Business: Ensure that the Purchaser and its
representatives have full access to the Premises, the Statutory
Books and the Business Records from the date of this Agreement and
will be given promptly all information they may reasonably require
concerning the business or affairs of the Company;
4.1.4 Filing of Satisfactions of Charges: File memoranda of satisfaction
with the Registrar of Companies, the High Court Chattels Register
or the Land Transfer Office or the Motor Vehicles Security
Register (as appropriate) in respect of all Charges registered
against the property of the Company.
4.1.5 Service Agreement: Procure the execution by the Company of
employment contracts with Chris Kirkness and such other members of
the Company's staff as may be selected by the Vendor in a form
acceptable to the Purchaser.
4.1.6 Personal Assets: Procure that all assets owned by the Company but
principally employed for the personal use of the Vendor are sold
and removed from the Company asset register by the Completion
Date.
4.1.7 Consultation: Consult with the Purchaser in relation to all
matters which materially affect the Company or its operations
including items of capital expenditure and general expenses
totalling more than $5,000 or falling outside the ordinary course
of business of the Company.
4.1.8 Constitution: Procure the adoption of a new Constitution by the
Company which has been approved by the Purchaser.
4.2 Purchaser's Obligations: The Purchaser shall use best endeavours to
obtain a release of the Vendor of all personal liabilities which may
arise after Completion in relation to personal guarantees (as specified
in Item 2 of Schedule 3) provided by him in respect of obligations of the
Company. Should any such releases not be procured then the Purchaser
shall indemnify the Vendor in respect of all Costs and Proceedings which
arise in relation to his personal guarantees for acts or omissions of the
Company after Completion.
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Agreement for Sale and Purchase of Shares
5. Completion
5.1 Initial Settlement: Completion shall take place on the Completion Date at
the offices of the Purchasers' solicitors Lowndes Jordan at 2.15 p.m. or
at such other time or place as the parties shall agree at which time the
Purchaser shall be entitled to the possession of the business conducted
by the Company and the Vendor will hand to the Purchaser:
5.1.1 Share Transfers: Transfers of the Shares to the Purchaser and/or
its nominee duly executed by the Vendor in registrable form;
5.1.2 Share Certificates: The share certificates (if any) for the Shares
or if none have been issued a statutory declaration by an officer
of the Company to such effect;
5.1.3 Pre-emptive Rights Waivers: A waiver signed by all the Vendor
whereby he waives all rights of pre-emption conferred on him by
the Constitution or otherwise in respect of the transfer of all or
any of the Shares;
5.1.4 Directors' Resolutions: Evidence of the passing of effective
resolutions of the Directors of the Company to register the
transfer of the Shares into the name of the Purchaser and/or its
nominee in the Register of Members of the Company in respect of
the Shares.
5.1.5 Shareholders' Resolutions: Evidence of the passing of effective
shareholders' resolutions appointing Michael Ridgway and Richard
Justice as directors of the Company in addition to the Vendor and
adopting a Constitution for the Company pursuant to clause 4.1.8.
5.1.6 Releases of Charges over Shares: Unconditional releases of any
Charges over any of the Shares;
5.1.7 Company Records: The Statutory Books and the Business Records of
the Company;
5.1.8 Pre-conditions: Evidence satisfactory to the Purchaser that the
Vendor has fulfilled his obligations under clause 4.
6. Post Settlement Obligations
6.1 Budgets: Chris Kirkham and the Company's management team shall produce a
profit and loss budget for the Years ending on 31 March 1999 and for each
subsequent Year. Such budget shall be agreed with the Purchaser before
being adopted.
6.2 Management: The Purchaser shall if required by the Company, provide
management services to the Company. Such services shall be undertaken
only in respect of work which would otherwise be undertaken by outside
contractors or in-
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Agreement for Sale and Purchase of Shares
house and charged at commercial rates
6.3 Vendor's Role: The Purchaser shall ensure that the Vendor remains as a
director and as a cheque signatory for the Company for the duration of
the Emit Out Period provided that he remains legally and commercially
competent to perform such functions.
7. Default
7.1 Default by Vendor: Without prejudice to clause 9, if the Vendor has not
fully complied with the provisions of clauses 4 or 5 on Completion, the
Purchaser may (in addition to and without prejudice to all other rights
or remedies available to the Purchaser under this Agreement or otherwise)
at the Purchaser's option:
7.1.1 Rescind: Rescind this Agreement; or
7.1.2 Completion: Effect Completion so far as practicable having regard
to the defaults which have occurred (without releasing the Vendor
from liability to comply as soon as possible with the Vendor's
obligations under clauses 4 and 5).
7.2 Default by Purchaser: If from any cause whatsoever except default of the
Vendor:
7.2.1 Interest: Any portion of the Consideration is not paid upon the
due date for payment the Purchaser shall pay to the Vendor
interest calculated at the Interest Rate on the portion of the
Consideration so unpaid from the due date for payment until
payment.
7.2.2 Other Action: The Purchaser and/or BKI shall be in default under
this Agreement then the Vendor may:
(a) Sue the Purchaser for specific performance; or
(b) Cancel this agreement and sue the Purchaser for damages.
8. Warranties
8.1 Vendor's Warranties: The Vendor warrants and undertakes to the Purchaser
in terms of the Warranties that:
8.1.1 Investigations not to affect Warranties: Except as disclosed in
Schedule 2 and/or the Disclosure Letter, the Warranties shall not
be modified, qualified or discharged or in any way affected by any
investigation made by the Purchaser into the affairs of the
Company:
8.1.2 Separate and Independent: Each of the Warranties shall be separate
and independent and save as expressly otherwise provided shall not
be limited by reference to any other of the Warranties or any
other provision of this
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Agreement for Sale and Purchase of Shares
Agreement.
8.2 Reliance on Warranties: The Vendor acknowledges that the Purchaser has
entered into this Agreement in reliance (among other things) on the
Warranties.
8.3 Vendor's Covenants: The Vendor warrants, represents and undertakes to the
Purchaser and also as a separate covenant to the Company:
8.3.1 Indemnity: That he will keep the Purchaser and the Company fully
indemnified against all and any depletion in or reduction in the
value of the Shares or any of the assets of the Company and all
Proceedings and Costs reasonably suffered or incurred by the
Purchaser or the Company as a result of or in relation to any
breach or non-fulfilment of any of the Warranties and all Costs
incurred in making, defending or compromising any Proceedings in
relation to facts or matters which are a breach or non-fulfilment;
and
8.3.2 No Representations Made: That no promise or representation has
been made to them in connection with any of the Warranties or the
Disclosure Letter in respect of which the Company or any of the
directors or employees of the Company might be liable; and
8.3.3 No Breach of Warranties Prior to Completion: That the Vendor will,
so far as he is able, procure that (except only as may be
necessary to give effect to this Agreement) neither he nor the
Company shall do, allow or procure any act or omission before
Completion which would constitute a breach of any of the
Warranties if they were given at any time prior to or on
Completion or which would make any of the Warranties inaccurate or
misleading if they were so given; and
8.3.4 Disclosure of Change in Circumstances: The Vendor will forthwith
disclose in writing to the Purchaser any matter or thing which may
arise or become known to any of them after the date of this
Agreement and prior to Completion which:
(a) is inconsistent with any of the Warranties or which might
render any of them inaccurate or misleading when given at
Completion; or
(b) might be material to be known by a purchaser for value of
the Shares;
(c) might have a material adverse effect on the value of the
Shares or any of the assets of the Company.
8.4 Warranty Limitations: Notwithstanding any other provisions of this
Agreement, the warranties are made and given subject to the provisions of
Schedule 2.
8.5 Purchaser Warranties to Vendor:
8.5.1 Purchaser's Power: The Purchaser has the legal right and power to
enter
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Agreement for Sale and Purchase of Shares
into this Agreement and purchase the Shares from the Vendor.
8.5.2 BKI's Power: BKI has the legal right and power to enter into this
Agreement and the Escrow Agreement.
8.5.3 Authorisation: The execution, delivery and performance of this
Agreement and the Escrow Agreement have been duly authorised by
all necessary corporate action and each of them is valid, binding
and enforceable against the Purchaser and BKI respectively.
9. Rights of Rescission
9.1 Rescission for Breach: Without prejudice to clause 7, if on or prior to
Completion it should be found that:
9.1.1 Unfulfilled Obligations: Any obligation of the Vendor contained in
this Agreement is or will on Completion be unfulfilled; or
9.1.2 Breach of Warranties: Any Warranty is or may at Completion be
inaccurate or misleading;
then the Purchaser may, without prejudice to any other rights available
to it under clause 9.2 of this Agreement, by notice in writing to the
Vendor, rescind this Agreement.
9.2 Effect of Rescission: Rescission of this Agreement under clause 9.1 shall
not extinguish any right of the Purchaser to damages or compensation.
9.3 Rescission for Matters other than Default: If on or prior to Completion:
9.3.1 Destruction of Assets: Any asset of the Company shall be destroyed
or damaged to an extent which in the opinion of the Purchaser
materially and adversely affects the Company or the carrying on of
the business of the Company; or
9.3.2 Material Adverse Change: Any other event shall occur which affects
or is likely to affect adversely to a material degree the Company
or the financial position, business, assets or profitability of
the Company or the value of the Shares to the Purchaser,
the Purchaser shall be entitled by notice in writing to the Vendor
to rescind this Agreement, but the occurrence of such an event
shall not give rise to any right to damages or compensation except
where the Vendor have failed to give notice of such event as
required by clause 8.2.4.
10. Conditions
10.1 This Agreement is conditional upon:
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Agreement for Sale and Purchase of Shares
10.1.1 Purchaser's Due Diligence: The Purchaser being satisfied with its
due diligence investigation into the affairs of the Company.
10.1.2 Asset Lessor's Consent: Consent being given by the lessor of any
assets leased by or on hire or conditional purchase to the Company
to the transfer of the Shares to the Purchaser where the failure
to obtain such consent might constitute an event of default under
such lease or hire or conditional purchase agreement; and
10.1.3 Government or Regulatory Consents: Consent being given by any
Canadian government or regulatory body whose consent is required
to enable Completion of this Agreement; and
10.1.4 Material Contractors' Consent: Consent being given by the other
party or parties to any agreement under which the Company enjoys
any material benefit where without such consent such agreement
might be terminated, which agreements include without limitation
those specified in Item 1, Schedule 4; and
10.1.5 Landlord's Consent: The lessor of the Premises consenting to the
transfer of the Shares to the Purchaser; and
10.1.6 Stock Exchange Approval: The approval of the Toronto Stock
Exchange.
10.1.7 Board Approval: The approval of the board of directors of the
Purchaser and of BKI.
10.2 Fulfilment of Conditions: Each of the parties shall do all acts and
things reasonably necessary to procure the fulfilment of the conditions
set out in clause 10.1
10.3 Failure of Conditions: Should
10.3.1 Not Satisfied: Any of the conditions set out in clause 10.1 not be
fulfilled or waived (as the case may be) by the Completion Date or
such later date as may be agreed by the parties; or
10.3.2 Unreasonable Conditions: Any consent or approval required in terms
of the conditions set out in clause 10.1 be granted on terms not
reasonably acceptable to any affected party;
then:
10.3.3 Agreement Voidable: This Agreement shall be voidable by notice in
writing and upon issue of such notice this Agreement shall then be
at an end and the parties shall not have any further rights or
obligations except that the Vendor will repay any deposit or part
payment of the Consideration.
11. Non Competition
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Agreement for Sale and Purchase of Shares
11.1 Non-Competition: In consideration of the Purchaser entering into this
Agreement and as a condition precedent the Vendor acknowledges that the
value of the Consideration is dependent upon and the Purchaser has agreed
to pay the Consideration on the basis that the Vendor will not carry on a
business the same as or in substantial competition with that at present
carried on by the Company being the distribution of Computer Associate's
micro range of products, including Accounting ACCPAC, development tools
and productivity products and PC applications (Business) in opposition to
the Company after Completion for the period specified below and
accordingly the Vendor covenants and agrees with the Purchaser that:
11.1.1 Business: He will not during a period of 1 year from the later of
the date of termination of the Earn Out Period or the date of
termination of his Service Agreement with the Company provided for
in clause 4.1.5 at any place in New Zealand or the South Pacific
be directly or indirectly engaged or connected or interested in a
Business either on his own account or as a partner with or as an
employee of any other person or as a shareholder, director,
officer, consultant, adviser or employee of any person or directly
or indirectly assist financially any such Business except:
(a) as a servant of the Company, the Purchaser or a Subsidiary
of the Purchaser; or
(b) with the prior written consent of the Purchaser; or
(c) as holder of not more than 5% of the shares in the capital
of any public company if and only so long as such shares
are listed on any official stock exchange; and
11.1.2 Orders: He will not on his own account or for any person,
enterprise, firm, trust, joint venture or syndicate solicit orders
for such Business otherwise than for the benefit of the Company
from any person, firm or company who at the Completion Date was or
had previously been a customer of the Company; and
11.1.3 Employees: He will not on his own account or for any person,
enterprise, firm, trust, joint venture or syndicate entice or
attempt to entice away from the Company or the Purchaser any
employee of the Company or of the Purchaser or of any Subsidiary
of the Purchaser.
11.2 Provisions With respect to Covenants: Each of the covenants contained in
clause 11.1 shall:
11.2.1 Separate and Severable: Be separate and severable and to the
extent that any such provision is unenforceable by reason of its
period, scope or area being held by a court of competent
jurisdiction to be unreasonable, then such provision shall be
limited to the maximum period, scope or area which such court
considers reasonable and shall be enforceable on those terms;
11.2.2 Benefit of Purchaser and Assigns: Be given for the benefit of and
be
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enforceable by the Purchaser and the Purchaser's Successors and
assigns.
12. First Right of Refusal
12.1 Right to Purchase: Should the Purchaser or BKI at any time after
settlement determine tat the Company and/or its assets are no longer
required within the BKI group, then the Purchaser shall procure that the
Vendor is provided with the first right to purchase the Company and/or
its assets as follows:
12.1.1 Price: The purchase price shall be the fair market value. Such
purchase price shall not be higher than the price at which the
Company and/or the Purchaser is prepared to sell to a third party.
12.1.2 Exercise of Right: The Purchaser or BKI shall give notice to the
Vendor of the desire to sell, the price and terms and conditions
of sale and the Vendor shall have a period of 30 days in which to
advise in writing whether they wish to exercise the right to
purchase.
12.1.3 Sale to Other Party: If the Vendor does not give notice within the
time provided in clause 12.1.2 then the Purchaser or BKI shall be
free to sell to a third party but shall not offer to a third party
a more favourable price or other terms and conditions without
first offering those terms to the Vendor as provided in clause
12.1.2.
12.1.4 Post Settlement: If such right is exercised by the Vendor then
with effect from settlement of the purchase all restrictions
imposed by clause 11 shall be terminated and any remaining shares
held in escrow pursuant to clause 3.3 shall be released to the
Vendor.
13. Arbitration
13.1 Submission: If any dispute or difference shall arise between any of the
parties in any way arising out of or in connection with this Agreement
such dispute or difference shall be referred to the arbitration pursuant
to the Arbitration Act 1996.
14. General
14.1 Non-Merger: The warranties, indemnities, representations and undertakings
set out in this Agreement shall notwithstanding any rule of law to the
contrary not merge in the instruments of transfer executed pursuant to
this Agreement but shall remain in full force and effect and enforceable
to the fullest extent.
14.2 No Announcement: The parties agree that (except as may be required by law
or by the requirements of the Toronto Stock Exchange) they will not make
any announcement or disclosures as to the subject matter of this
Agreement except in a form and manner and at such time as all parties may
agree.
14.3 Notices: Any notice to be given pursuant to this Agreement shall be given
in
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accordance wit and subject to the following provisions of this clause
13.3:
14.3.1 In Writing: Notices shall be in writing
14.3.2 Delivery: Without prejudice to any other sufficient mode of
delivery, a notice may be sent by hand, prepaid post, telex or
facsimile to the address or number (in the case of telex or
facsimile) of the intended recipient last advised to the sender in
accordance with this clause. The initial addresses and numbers of
the parties are:
Vendor c/o Simpson Grierson
Barristers and Solicitors
Private Bag 92518
Wellesley Street
AUCKLAND 1
Facsimile: 307 0331
Purchaser 4 Bond Street
Grey Lynn
AUCKLAND
Facsimile: 376 7891
14.3.3 Notice by Hand: Subject to clause 14.3.6, a notice delivered by
hand shall be received on delivery;
14.3.4 Notice by Post: Subject to clause 14.3.6, a notice sent by
prepaid post shall be deemed to be received 3 days alter being
posted;
14.3.5 Notice by Telex or Facsimile: Subject to clause 14.3.6, a notice
sent by telex or facsimile shall be deemed to be received at the
time of transmission where a transmission report or answerback
code produced by the sender's machine indicates successful
transmission;
14.3.6 Receipt Outside Business Hours: Any notice received or deemed to
be received pursuant to clauses 14.3.3, 14.3.4 or 14.3.5 after
5.00 p.m. (recipient's time) on a Business Day in the recipient's
city or on a day which is not a Business Day in the recipient's
city shall be deemed to be received at 9.00 a.m.. (recipient's
time) on the next Business Day in the recipient's city;
14.4 Proof of Delivery: In proving delivery of a notice, it shall be
sufficient:
14.4.1 By Hand: In the case of a notice by hand, to provide evidence that
the notice was delivered to the address of the recipient and no
acknowledgement from the recipient shall be necessary;
14.4.2 By Post: In the case of a notice by post, to provide evidence that
the notice
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Agreement for Sale and Purchase of Shares
was correctly addressed and posted in a prepaid envelope;
14.4.3 By Telex or Facsimile: In the case of a notice by telex or
facsimile, to provide the transmission report produced by the
sender's machine showing a successful transmission to the correct
number of the recipient and to have telephoned the recipient to
confirm receipt of a legible copy of such notice.
14.5 Applicable Law and Jurisdiction: This Agreement shall be governed by and
construed and interpreted in accordance with the laws of New Zealand and
the parties irrevocably submit to the exclusive jurisdiction of the New
Zealand courts.
14.6 Further Assurance: The parties will do all things including without
limitation the execution of documents as shall be necessary to give full
effect to this Agreement.
14.7 Entire Agreement: This Agreement including all schedules, annexures and
exhibits to it, and any documents incorporated by express reference forms
the entire agreement between the parties relating to its subject matter
and supersedes all prior agreements and understandings between the
parties with, respect to that subject matter. If there is any conflict
between the terms of this document and any
14.8 Variation: This Agreement may only be varied by an express written
agreement executed by all the parties or by persons duly authorised in
writing on their respective behalf.
14.9 Costs: Each party shall bear their own costs of and incidental to the
preparation, Completion and implementation of this Agreement. If either
party elects not to proceed with this Agreement prior to completion then
all professional fees incurred by both parties in relation to this
Agreement and the transactions associated with this Agreement shall be
borne by the party so withdrawing.
14.10 Waiver: No failure to exercise and no delay in exercising on the part of
any party any right under this Agreement shall operate as a waiver of
that right. No single or partial exercise of any right shall preclude any
other or further exercise of such right or the exercise of any other
right. Any such waiver unless otherwise expressly agreed in writing,
shall only apply in respect of the particular circumstances for which it
is given.
14.11 Counterparts: This Agreement may be signed in any number of counterparts,
all of which when taken together constitute one and the same instrument.
Any party may enter into this Agreement by executing any such
counterpart. The parties will cooperate to circulate all counterparts to
each other for the purposes of having all counterparts executed by all
parties as soon as practicable following Completion.
15. Execution:
15.1 Facsimile Copy: The execution of a facsimile copy of this Agreement and
its transmission by facsimile to all of the parties or their solicitors
shall be sufficient to constitute a legal contract and satisfy the
requirements of section 2 of the Contracts
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Agreement for Sale and Purchase of Shares
Enforcement Act 1956.
15.2 Original Copy: If any party requires the original signed facsimile copy
shall be delivered to that party within 5 Business Days of request being
made. If the original is not delivered any party which accepts a
facsimile copy may in any proceeding produce the facsimile copy. In such
case no party may object to such copy being produced as an original and
all parties shall be deemed to have waived any law of evidence or other
requirement that an original be produced as evidence of the existence or
contents of the original.
15.3 Parties Bound: Each party shall only become bound by this Agreement when
it has been executed by or on behalf of such party.
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Agreement for Sale and Purchase of Shares
EXECUTED by the parties.
SIGNED for BROCKER) ) Signature /s/ [ILLEGIBLE]
INVESTMENTS (NZ) LIMITED ) ---------------------------------------
by: ) Name
) ---------------------------------------
Officer
) Signature /s/ RICHARD JUSTICE
) ---------------------------------------
) Name RICHARD JUSTICE
) ---------------------------------------
Director
SIGNED for BROCKER) ) Signature /s/ [ILLEGIBLE]
INVESTMENTS LIMITED ) ---------------------------------------
by: ) Name
) ---------------------------------------
Officer
) Signature /s/ RICHARD JUSTICE
) ---------------------------------------
) Name RICHARD JUSTICE
) ---------------------------------------
Director
SIGNED for GARY JOHN ) Signature /s/ GARY JOHN MCNABB
MCNABB ) ---------------------------------------
in the presence of:
Witness ) /s/ G.C. JORDAN
---------------------------------------
Witness Name ) G.C. Jordan
---------------------------------------
Witness Address ) Auckland
---------------------------------------
Occupation ) Solicitor
---------------------------------------
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SCHEDULE 2
Warranties (clause 7.1)
1. General
1.1 Disclosure Letter: All information contained or referred to in the
Disclosure Letter is true complete and accurate in all respects. The
Vendor is not aware of any other fact or matter which renders or might
upon its disclosure render any such information misleading.
1.2 Agreement: The provisions of the recitals to this Agreement, clause 1.1
of this Agreement and all information contained in the Schedules and
Annexures to this Agreement are complete and correct in all respects.
1.3 Information Supplied: To the best of the knowledge of the Vendor all
information contained in any written documentation or communication
supplied by or on behalf the Vendor to the Purchaser in the course of the
Purchaser's due diligence investigation or in discussions or negotiations
leading to the signing of this Agreement, including advice, answers to
questions, information, books and papers given or shown to the Purchaser
and/or any of its employees or representatives by or on behalf of the
Vendor is accurate and not misleading in its context whether by omission
or otherwise. The Vendor is not aware of any fact or matter not disclosed
to the Purchaser which renders any such information untrue, incorrect or
misleading.
1.4 All Necessary Disclosures Made: All the facts and circumstances relating
to the Shares and to the assets, business and affairs of the Company
material for disclosure to an intending purchaser of the Shares have been
fully and fairly disclosed to the Purchaser or its advisers. Any such
material facts arising prior to Completion will forthwith be disclosed in
writing to the Purchaser or its advisers,
1.5 Constitution: The Constitution of the Company to be handed to the
Purchaser will be an accurate copy or an original, if available, of the
document in force at Completion and will have annexed a copy of every
resolution required to be annexed by the Companies Act 1993.
2. Shares
2.1 Shares: The Shares constitute the whole of the issued and allotted share
capital of the Company. They arc and will be on Completion held by the
Vendor in the Vendor's own right.
2.2 Encumbrances: There is not any and will not at Completion be any Charge
on, over or affecting the Shares. There is no agreement or commitment to
give or create any such Charge and no demand has been made by any person
claiming to be entitled to any such Charge.
2.3 No Subsidiaries: The Company never has had and does not have and will not
prior
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to Completion without the prior written consent of the Purchaser create
or acquire any Subsidiary or any shares in any other company.
2.4 No Increase in Capital: The Company has not since the Last Accounting
Date and will not pending Completion increase its share capital or
subdivide, amalgamate, or consolidate the Shares or any of them.
2.5 No Decrease in Capital: The Company has not at any time:
2.5.1 Repaid or agreed to repay or redeem or buy back or repurchase any
shares of any class of its share capital or otherwise reduced or
agreed to reduce its issued share capital or any class of its
share capital
2.5.2 Amalgamated or agreed to amalgamate with any other company.
2.6 No Related Companies: The Company has no Related Companies
2.7 No Change of Capital Structure or Name: The Vendor will not permit to be
passed before Completion any resolution by the Company:
2.7.1 Altering its share capital;
2.7.2 Altering the rights or obligations attaching to any of the Shares:
2.7.3 Changing its name;
2.7.4 Altering its Constitution.
3. Records
3.1 Books of Account: All the Business Records and Statutory Books are in the
Company's possession or under its control and have been fully and
correctly completed and will pending Completion continue to be so
completed.
There are and will pending Completion be no material inaccuracies or
discrepancies of any kind contained or reflected in any of them. They
give and reflect and at Completion will give and reflect a true and fair
view of the financial, contractual and trading position of the Company
and of its plant and machinery, fixed and current assets and liabilities
(actual and contingent), debtors and creditors, work in progress and
stock.
3.2 Retention of Records: The Company holds and will on Completion have in
its possession all books of Account and other records which it is bound
by law to retain in its possession either indefinitely or for a
particular period or periods of time.
4. Financial Statements:
4.1 True and Fair View: The Financial Statements are complete and accurate
and give
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and reflect and will at Completion give and reflect a true and fair view
of the Company, its activities and its financial status in all respects.
4.2 Comply with Statute: The Financial Statements comply with all applicable
requirements of the Companies Act 1993 and the Financial Reporting Act
1993.
4.3 GAAP: The Financial Statements have been prepared in accordance with
generally accepted accounting practice as that term is defined in the
Financial Reporting Act 1993 and to the extent consistent with such
generally accepted accounting practice on a basis consistent with that
adopted for preceding accounting periods.
4.4 No Unusual or Extraordinary Items: The Financial Statements are not
affected by any unusual extraordinary exceptional or non-recurring items
or by any other factor rendering the results set out in the Financial
Statements (or any of them) unusually better or worse than they (or any
of them) might otherwise be or have been.
4.5 Financial Position: The Financial Statements properly reflect the
financial position of the Company as at the Last Accounting Date and of
its results for the accounting period ending on that date.
4.6 Full Disclosure: The Financial Statements fully disclose all the assets
and liabilities (whether ascertained, contingent, deferred or otherwise
and whether or not quantified or disputed) of the Company as at the Last
Accounting Date and make full provision and/or reserve for all such
liabilities.
4.7 Provisions for Losses: The Financial Statements make full provision for
any foreseeable losses which may arise on Completion and/or on
realisation of stock and/or on Completion of any existing or proposed
contract.
4.8 Provision for Bad Debts: The Financial Statements make adequate provision
for all bad and doubtful debts of the Company and for depreciation of the
fixed assets of the Company having regard to their original cost and
estimated useful life.
4.9 Financial Commitments: The Financial Statements fully disclose all
financial commitments in existence as at the Last Accounting Date.
5. Period Between Agreement and Completion: From the Last Accounting Date to
Completion::
5.1 Conduct of Business: The Company has carried on and will carry on its
business in an efficient normal and proper manner so that the financial
standing and position of the Company as at Completion will not have
deteriorated materially from that disclosed in the Financial Statements;
5.2 Liabilities: The Company has not incurred and will not incur any
liability (whether contingent or otherwise) and has not made any payments
except in the normal and ordinary course of business;
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5.3 Disposals: The Company has not disposed of and will not dispose of any
material portion of its undertaking or any material part of its fixed
assets or any of its goodwill;
5.4 Acquisitions: The Company has not acquired any assets of a capital nature
and will not acquire any assets of a capital nature exceeding $5,000 in
value without the Purchaser's prior consent;
5.5 Revaluations: The Company has not revalued upwards and will not revalue
upwards any of its assets;
5.6 Capital Investments: The Company has not entered into and will not enter
into any material capital investment or commitment in excess of $5,000 in
aggregate or any major transaction as that term is defined in section
129(2) of the Companies Act 1993;
5.7 Dividends: The Company has not declared, paid or made and will not
declare, pay or make any dividend, bonus or similar distribution:
5.8 Insurance: The Company has kept and will keep effectively insured to the
full insurable amounts all assets and undertaking of the Company against
all normal insurance risks including reasonable loss of profits
insurance;
5.9 Terms of Trade: The Company has not made or permitted and will not make
or permit any change to any of its product lines or to the terms or
conditions of any agency held by the Company or to the selling prices or
terms and conditions of sale of any products or services of the Company;
5.10 Turnover: The Company has attained a turnover no less than that for the
corresponding period in the previous financial year;
5.11 Deposits: The Company has deposited and will deposit all amounts received
by it to the credit of its bank account and such amounts appear in the
appropriate books of Account;
5.12 Debts: The Company has paid and will continue to pay all its debts as
they fell or fall due.
6. Non-Disclosure of Liabilities: If it is discovered before or after
Completion that the Company had a liability at the Completion Date
(whether contingently or otherwise) to any person prior to the Completion
Date except in the ordinary course of business which liability has not
been fully disclosed to the Purchaser, then without prejudice to any
other rights of the Purchaser, the Vendor will immediately upon demand by
the Purchaser, pay to the Purchaser the amount of each such liability
after deducting from each such liability any saving to the Company in
Taxation as a result of such liability. For the purposes of this clause:
6.1 The word liability shall include liability for or in respect of Taxation
or any re-
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assessment of Taxation which the Company may be required to pay in
respect of any period prior to the Completion Date and which has not been
so fully disclosed and any amount whatsoever (including all Costs in
connection therewith) arising out of any occurrence or happening which
shall have taken place prior to the Completion Date;
6.2 Provision of any amount by way of note to the Financial Statements shall
not be deemed to be provision of that amount in the Financial Statements.
7. Stock
7.1 Valuation: The methods of valuing stock and work in progress as at the
Last Accounting Date (which included a physical stocktaking) were the
same as those adopted for the 3 immediately preceding financial years.
All redundant and obsolete stock was wholly written off, all slow moving
stock was written down appropriately and the value attributed to the
remaining stock did not exceed the lower of direct cost or net realisable
value.
7.2 Changes to Stock Since Last Accounting Date: The stock on hand at
Completion will comprise the stock as at the Last Accounting Date less
stock sold and with the addition of stock bought in the ordinary course
of business since that date. No stock currently held other than that
written off or written down in the Financial Statements or which are
service spares, is slow moving, out of date or fashion, redundant or
obsolete or which will not realise its book value within 12 months of the
Completion Date.
8. GST
8.1 Registration: The Company is registered for the purposes of the GST Act.
8.2 Not a Member of a Group: The Company has not at any time been a member of
a Group or been treated as a member of a Group for GST purposes. No
application for it to be so treated has at any time been or pending
Completion will be made. No act or transaction has been or pending
Completion will be effected which will result in the Company being held
liable for any GST chargeable against some other company.
8.3 Compliance with GST Act: The Company has complied and pending Completion
will comply in all respects with the GST Act legislation.
8.4 Maintenance of Records: The Company has given obtained made and
maintained and pending Completion will give, obtain, make and maintain
complete correct and up to date invoices, records and other documents
appropriate or requisite for the purposes of the GST Act.
8.5 No Arrears: The Company is not and will not pending Completion be in
arrears with any payment or returns under the GST Act or liable to any
abnormal or non-routine payment or any forfeiture or penalty or to the
operation of any penal provision and where payment is not yet due or
receivable has provided for such
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payment;
8.6 All Supplies Taxable: All supplies made and to be made pending Completion
by the Company are taxable supplies and the Company is not and will not
pending Completion be denied credit for any input tax.
9. Taxation
9.1 Returns Made: All forms, notices, elections, computations, payments
(including, without limitation, any fines or penalties) and returns which
should be made by the Company for any Taxation purpose have and will at
Completion have been made and are and will be up-to-date, correct and on
a proper basis and none of them is now the subject of any dispute with
the Inland Revenue Department or any other Taxation collection agency. In
particular the returns in relation to provisional Taxation will not give
rise to any assessment, adjustment or set-off (including any claim for
interest on unpaid Taxation) by the Inland Revenue Department.
9.2 No Knowledge of Dispute: There is no fact known to the Vendor after
making due enquiry which might be the occasion of any dispute with the
Inland Revenue Department or any other Taxation collection agency or a
claim for Taxation in respect of any period prior to the Completion Date
which is not provided for in the financial statements for the Company as
at the Last Accounting Date.
9.3 Provision in Financial Statements: Full provision and reserves were made
in the Financial Statements in respect of all Taxation liabilities to or
for which the Company was at the Last Accounting Date or at any time
since may have become or may become liable to be assessed or charged or
to pay. Provision of any amount by way of a notice to the Financial
Statements shall not be a provision for the purposes of this paragraph.
9.4 No Non-commercial Transactions: The Company has not at any time entered
into a transaction or series of transactions containing steps inserted
without any commercial or business purpose apart from the obtaining of a
Taxation or stamp duty advantage.
9.5 Debtors Recorded Appropriately: All amounts included in the Financial
Statements or (in the case of an amount arising after the date of the
Financial Statements) in the books of the Company as due from Debtors
represent amounts actually invoiced by the Company to such debtors not
earlier than 3 months prior to the Last Accounting Date (or in the case
of an amount arising after the date of the Financial Statements not
earlier than 3 months prior to the date on which it was recorded in the
books of the Company). No part of such amounts still outstanding has been
released on terms that any debtor pays less than the full book value of
its debt or has been written off or has proved to any extent
irrecoverable or is now regarded as irrecoverable or has been compromised
on any terms.
10. Loans
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10.1 No Undisclosed Loans: The aggregate amount appearing in the Financial
Statements as being outstanding in respect of loans owing by the Company
was at the Last Accounting Date the aggregate of all loans or financial
accommodation of whatever nature from any source so outstanding.
10.2 Loans Within Corporate Powers: Such aggregate did not (and the amount
outstanding in respect of loans owing by the Company does not and will
not at Completion) exceed any limitation on the Company's borrowing
contained in its Constitution or in any loan offer, facility letter,
debenture or other deed or document executed by it or, in the case of
borrowings on overdraft, its overdraft facilities.
10.3 Loans from Directors or Shareholders: All amounts outstanding and
appearing in the books of the Company as loan accounts or as due to
directors or shareholders wholly represent money or money's worth paid or
transferred to the Company as the case may be or remuneration accrued due
and payable for services rendered and (save for such remuneration) no
part thereof has been provided directly or indirectly out of the assets
of the Company.
10.4 No Repayments: The Company has not repaid and pending Completion will not
repay any loans or other financial accommodation in whole or in part nor
has it by reason of any default by it in any of its obligations become
bound or liable to be called upon to repay prematurely any loans or
borrowed moneys and pending Completion no such default will occur.
11. Liabilities and Commitments
11.1 No Capital Commitments: Since the Last Accounting Date the Company has
not except in the ordinary course of business made any capital
expenditure or incurred any capital commitments nor has it disposed of or
realised any substantial capital assets or any interest in such assets.
The Company has no outstanding capital commitment and pending Completion
no capital commitments or disposals of capital assets or land or any
estate or interest in such assets or land will be undertaken by the
Company without the prior written consent of the Purchaser.
11.2 No Guarantees: The Company is not and will not prior to Completion become
a party to any contract of guarantee or indemnity.
11.3 No Material Contracts: The Company has not entered into and will not
enter into any material contract (including the granting of options to
purchase or Charges over all or any of the Company's assets) except in
the normal and ordinary course of business. The Company has not and will
not become a party to any unusual, abnormal or onerous contract or
agreement whatsoever except as disclosed to the Purchaser or as approved
by the Purchaser.
11.4 No Long Term Contracts: The Company is not and will not on Completion be
a party to any contract of service or supply which cannot be terminated
by not more than 1 month's notice without giving rise to any claim for
damages or compensation.
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11.5 No Commitments since Last Accounting Date: The Company has not since the
Last Accounting Date been and will not at Completion be a party to any
contract, commitment or arrangement of any nature except such as have
been entered into in the normal and ordinary course of trading and are
capable of being wholly satisfied or performed within 3 months from
Completion or of being terminated within such period without cost to the
Company.
11.6 No Arrangements: The Company is not and will not on Completion be a party
to any joint venture, partnership, syndicate or other consortium
arrangement.
11.7 No Agents: No person is authorised to act as agent for the Company or
otherwise to bind the Company other than the directors of the Company
acting as a board. The Company has not appointed any agents, distributors
or managers in respect of any of its products or services in any part of
the world.
11.8 No Default under Agreements: The Company is not now, nor pending
Completion will it become, in default under any agreement to which it is
or may become a party or in respect of any other obligations binding upon
it. No event has occurred which would enable any third party to terminate
any contract or any benefit enjoyed by the Company.
12 Employees
12.1 Full Disclosure of Terms: Full disclosure in writing of the current rate
of remuneration, fees and expenses payable to each officer and employee
of or consultant to the Company and the terms of such employment or
consultancy (including obligations in respect of any directors' or
officers' keyman or indemnity insurance) have been made to the Purchaser
in writing. No such officer or employee or consultant has given notice or
is under notice of dismissal or termination of employment of any
consultancy agreement.
12.2 No Amounts Due: No amounts are due to or in respect of any former officer
or employee or consultant and there are no outstanding arrears of salary,
wages, fees, holiday pay or other remuneration.
12.3 No Industrial Disputes: The Company is not involved in any industrial or
trade dispute or any dispute with any trade union or organisation or body
of employees.
12.4 No Changes: No change has been made in the terms of employment or
consultancy by the Company of any person who was employed at the Last
Accounting Date. Pending Completion the Company will not without the
Purchaser's prior written consent engage any new employee or consultant.
12.5 No Other Payments: No moneys other than in respect of remuneration or
emoluments of employment or fees are payable to or for the benefit of any
director or officer of the Company.
12.6 No Profit Sharing: The Company is not and will not prior to Completion
become a
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Agreement for Sale and Purchase of Shares
party to any agreement with any director, officer, employee or consultant
of tbe Company under which any such person is entitled to a share of
profits of the Company or to any bonus calculated on profits or to
participate in any share incentive scheme or share option scheme or
similar arrangement. No pensions, retiring allowances or other benefits
are or will be payable by the Company to any director, officer or
employee of the Company during such person's employment or consultancy.
12.7 No Schemes: There are not now and will not on Completion be in existence
any retirement, death or disability benefit schemes for directors or
employees or any obligations to or in respect of any present or past
directors or employees with regard to retirement, redundancy, death,
sickness or disability pursuant to which the Company is or may become
liable to make any payments.
12.8 No Breaches of Contract: Since the Last Accounting Date no liability has
been incurred or payment made by the Company for breach of any contract
(whether express or implied) of service, for redundancy or for
compensation for loss of office or wrongful dismissal or in respect of
retirement, death, sickness or disability. No gratuitous payment has been
made or will prior to Completion be made or promised by the Company to or
in respect of any director or employee.
12.9 No Liability for Leave Payments: The Company is not and will not at
Completion be under any liability to any person in respect of long
service leave or accrued annual leave.
12.10 Compliance with Legislation: The Premises and operation of the business
of the Company and the terms on which the employees of the Company were
recruited and are employed to the extent that they are required to comply
and will at Completion comply with the Employment Contracts Act 1991, the
Equal Pay Act 1972, the Human Rights Act 1993, the New Zealand Bill of
Rights Act 1990, the Wages Protection Act 1983, the Holidays Act 1981,
the Health and Safety in Employment Act 1992 and all applicable
legislation governing employment and safety of employees.
13. Statutory Obligations
13.1 Holding of Licences: The Company holds and will on Completion be in
possession of all current licences (including import licences and
concessions, if any) consents, authorities and permits from or issued by
any Governmental Department, municipal or local body or other authority
whether in respect of the Premises, plant, machinery, buildings or other
assets of the business or otherwise necessary or required to enable it to
carry on its business fully and effectively. The Company has not had
notice that any such licences, consents, authorities or permits are being
or are likely to be withdrawn or in any manner qualified whether by
reason of the sale of the Shares or otherwise howsoever.
13.2 No Requisitions: There has not since the Last Accounting Date been and
will not on Completion be any unsatisfied requisitions by or dispute with
any local body health
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Agreement for Sale and Purchase of Shares
authority, government or ad hoc authority or other body or official or
authority having competent jurisdiction affecting or relating to any of
the Premises, plant, machinery, buildings or other assets of the
business, or the employment of staff by the Company.
13.3 No Illegal Trade Practices: The Company is not, has not been and will not
pending Completion be a party to any agreement, arrangement,
understanding or practice which is contrary to the provisions of the
Commerce Act 1986, the Fair Trading Act 1986, the Consumer Guarantees Act
1993, or the Privacy Act 1993.
13.4 No Breach of Statute: The Company has not committed any breach which was
unremedied at the Last Accounting Date of any statutory provision, order,
bylaw or regulation (in every case whether applicable in New Zealand or
elsewhere) binding on or applicable to it with regard to the formation
and operation of the Company, the carrying on of the business of the
Company or any other matter relating to the Company. The Company has not
since such date and will not prior to Completion commit any such breach.
13.5 All Documents Stamped: All documents which in any way affect the right,
title or interest of the Company in or to any of its property,
undertaking or assets or to which the Company is a party and which
attract stamp duty have been duly stamped. No liability to pay stamp duty
will arise as a result of Completion by virtue of any previous transfer
of any property, undertaking or assets to the Company in particular but
without limitation under section 13(4) of the Stamp and Cheque Duties Act
1971.
13.6 Compliance with Companies Act: The Company has complied with and will up
to Completion comply with all the requirements of the Companies Act 1993
including all requirements for filing of documents with the Registrar of
Companies.
13.7 All Registers Complete: The entries in the Register of Members, Register
of Directors and Secretaries, Interests Register, Register of Charges and
Register of Directors' Shareholdings of the Company are correct and such
registers have been properly kept.
14. Properties and Assets
14.1 Leasehold Premises: The Premises are held, upon lease terms which have
been fully disclosed to the Purchaser.
14.2 Title and Compliance: The Company had on the Last Accounting Date and
will on Completion have sole title to and possession and control of all
the freehold and leasehold properties used or occupied by it free from
all leases, tenancies or Charges. Each of the said properties complies
and will on Completion comply with the local body code or ordinances
affecting the same and with all other statutory, local body and other
regulations and requirements.
14.3 All Premises Included: The Premises comprise all the freehold and
leasehold land and premises owned, used or occupied by the Company and
all the estate interest
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Agreement for Sale and Purchase of Shares
right and title whatsoever of the Company in, under, over or in respect
of any such land or premises.
14.4 Compliance with Statutes: The Company has to the extent to which it is
required to complied with all provisions of the Building Act 1991,
Resource Management Act 1991 and all other legislation (including
regulations, bylaws, ordinances, codes of practice, circulars and
guidance notes made thereunder) relating to building, planning or
environmental matters and dealing with (but without limitation) waste,
contaminated land, discharges to land or ground and surface water or
sewers, emissions to air, noise, dangerous, hazardous or toxic substances
and materials, nuisance or health and safety. There are no actions,
claims or proceedings (whether actual or potential) existing in relation
to such matters nor any liability likely to arise in relation to such
matters.
14.5 Compliance with Leases: The Company has paid all rent that may be payable
and has performed and observed all covenants (whether in relation to
freehold or leasehold land) conditions, agreements, statutory
requirements, planning or building or resource consent, bylaws, orders
and regulations affecting the Premises or any business carried on the
Premises. No notice of any breach of any such matter has been received
nor is the Vendor aware of any such breach having occurred.
14.6 No Defects: No structural, drainage or other material defects have
appeared in respect of or affected the buildings and structures on or
comprising the Premises. All such buildings are in good and substantial
repair and condition and none has been constructed, maintained, altered
or repaired using materials containing any deleterious building material.
None of the Premises has been affected by flooding or subsidence.
14.7 No Other Matter: There is no other matter of which the Vendor is or ought
to be aware on reasonable enquiry and which adversely affects the value
of any of the Premises or casts any doubt on the right or title of the
Company to those Premises or its use of those Premises for its business
which should be revealed to a Purchaser of the Shares of the Company or
other person entering into this Agreement.
14.8 Plant and Machinery: The Company's plant and machinery (including fixed
plant and machinery) and all equipment, furniture and vehicles taking
into account their age and usage are in good repair and condition (fair
wear and tear excepted) and in satisfactory working order and none of it
is surplus to the Company's requirements.
14.9 Debts Recoverable: The amount of all debts due or recorded in the
Financial Statements or the books of the Company as being due to the
Company as at Completion (less the amount of any provision or reserve
made in the Financial Statements or the books of the Company in respect
of any particular debts) will be good and collectable in full in the
ordinary course of business and in any event not later than 6 months
after Completion. None of such debts is or will at Completion be subject
to any counterclaim or set-off except to the extent of any such provision
or reserve.
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14.10 Debtors Recovery: Should any of the debtors of the Company as at the
Completion fail to satisfy its liability to the Company in full within 3
months from the Completion Date and the aggregate amount due to such
debtors exceeds $3,000, the Vendor will immediately upon demand by the
Purchaser pay to the Purchaser (or the Purchaser may deduct from the
Consideration) the amount of such excess amount. Following payment of
such amount the Purchaser shall be entitled to an assignment of the
benefit of such excess debts.
14.11 Changes Since the Last Accounting Date: Since the Last Accounting Date:
14.11.1 No Write-Offs or Write-Downs: None of the assets of the Company
have been written off or written down nor has there been any
agreement for the release of any person under liability to the
Company;
14.11.2 Cash: The Company has neither disbursed nor received any cash
except in the ordinary course of its business and amounts
received by the Company have been deposited with its bankers and
appear in the appropriate books of account;
14.11.3 Depletion in Assets: There has been no depletion in the net
assets of the Company and they have not been materially
diminished by the negligent, wrongful or fraudulent act of any
person;
14.11.4 GAAP: Everything which should according to generally accepted
accounting practices (as defined in the Financial Reporting Act
1993) have been written up or recorded in the Statutory Books and
financial records of the Company with respect to the assets of
the Company (including the Premises) has been written up and
recorded;
14.11.5 Compliance with Notices: There have been no notices, claims or
demands served on the Company in respect of any of its assets
(including the Premises) which have not been fully complied with.
15. Intellectual Property
15.1 All Intellectual Property Included: The Consideration for the Shares is
assessed on the basis that all licences and all Intellectual Property or
other similar rights relating to the business of or used by the Company,
if any, are at present owned solely and beneficially by the Company. All
of such rights shall remain the property of the Company to the intent
that the Company shall be the sole unencumbered and undisputed owner of
all such things as at Completion.
15.2 No Intellectual Property Agreements: The Company has not entered into any
agreement or arrangement for the provision of technical information or
assistance or granting rights in respect of any patents, trade marks or
registered designs or copyright. To the best of the Vendor's knowledge
and belief the operations of the Company do not infringe any patent or
other intellectual property right of any kind vested in any other party.
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15.3 Disclosure of Intellectual Property: Full details of all Intellectual
Property owned or used by the Company have been given to the Purchaser.
No person has been authorised to make any use whatsoever of any
Intellectual Property owned by the Company. The Company has not disclosed
(except in the ordinary course of its business) any of its know-how,
trade secrets, technical processes, confidential information,
Intellectual Property or lists of customers or suppliers to any other
person.
15.4 Use of Names: The Company is entitled to use its trade names in those
parts of the world in which it currently conducts its business or its
products are sold to its customers. No person has been authorised to make
any use whatsoever of any such name. The use of such names by the Company
does not infringe the rights of any other person or entitle any other
person to a claim against the Company. No such name is being used,
claimed, opposed or attacked by any other person.
15.5 Name: The Company has not consented to and will not before Completion
consent to the adoption of a similar name by any other company or person.
15.6 Intellectual Property Not Disputed: The Intellectual Property rights of
the Company have not been and will not at Completion be challenged or
disputed by any third party. The is not aware of any facts or
circumstances which might entitle a third party to challenge the
Company's ownership or use of the Intellectual Property used in the
business.
16. Commercial Matters
16.1 All Actions Indemnified: There is no cause of action in respect of which
the Company is not fully indemnified which could and might be used for
the purpose of commencing proceedings either civil or criminal.
16.2 No Legal Proceedings; The Company is not engaged in any Proceedings
whatsoever nor are any Proceedings of any kind being taken against it nor
is the Vendor aware of any Proceedings against the Company pending or
threatened.
16.3 No Breaches of Contract: The Company is not and will not on Completion be
in breach of any contract, commitment or arrangement of any nature
whatsoever to which it is now or will then be a party and is not and will
not on Completion be a party to any contract, commitment or arrangement
which may be unenforceable by the Company by reason of the transaction
being voidable at the instance of any other party or ultra vires, void or
illegal.
16.4 Insurance: Full details of all insurance policies maintained by the
Company have been supplied to the Purchaser. All such insurances are now
in force and all premiums due have been paid. Pending Completion the
Company shall not permit any of its insurances to lapse or do or omit to
do anything the doing or omission of which would make any such policy of
insurance void or voidable or would or might result in an increase in the
rate of premiums. No claims are outstanding and nothing has occurred to
give rise to any such claim.
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Agreement for Sale and Purchase of Shares
16.5 No Notice from Lenders to Repay: The Company has not received notice
(whether formal or informal) from any lenders of money to the Company
requiring repayment or intimating the enforcement by such lenders of any
security which they may hold over any assets of the Company. The Vendor
is not aware of any circumstances likely to give rise to any such notice
being given or which would enable any such notice to be given.
16.6 Effect of Acquisition of Shares: The Vendor has no reason to believe that
as a result of the proposed acquisition of the Shares by the Purchaser:
16.6.1 No Cessation of Supplies: Any supplier of the Company will cease
supplying the Company or may substantially reduce its supplies to
the Company or alter the terms on which it supplies the Company;
or
16.6.2 No Cessation of Custom: Any customer of the Company will terminate
any contract with the Company or cease or materially reduce its
business with it; or
16.6.3 No Notice of Termination of Employment: Any officer or senior
employee of the Company will give notice of termination of his or
her employment with the Company; or
16.6.4 No Termination of Contracts: Any of the licences, consents,
approvals, agreements or contracts currently granted to or entered
into by the Company required in connection with the carrying on of
its business in the manner in which it has been carried on at any
time during the 2 years prior, to the date hereof will be
withdrawn, cancelled or be capable of termination.
16.7 Arm's Length Supplies: All supplies of goods or services to the Company
are purchased by the Company direct from manufacturers or suppliers on an
arm's length basis and no commissions or similar payments are made to the
Vendor or any other intermediaries in respect of such supplies.
16.8 No Outstanding Offers: No offer, tender or the like given or made by the
Company and still outstanding is capable of giving rise to a contract
merely by any unilateral act of a third party.
16.9 No Liabilities: The Company does nor have and at Completion will not have
outstanding debts, liabilities, contracts or engagements, guarantees,
undertakings or liabilities (including contingent liabilities) other than
liabilities implied by stature or disclosed in the Financial Statements
or incurred in the ordinary and proper course of its trading business.
16.10 Continuance of Name: The Company does not and pending Completion will not
use on its letterheads, brochures, sales literature, books, Premises or
vehicles or otherwise carry on its business under any name other than its
corporate name.
16.11 Electronic Storage: The Company has not and will not pending Completion
have
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Agreement for Sale and Purchase of Shares
any of its records, systems, controls, data or information recorded,
stored, maintained, operated or otherwise dependent upon or held by any
means (including any electronic, mechanical or photographic process
whether computerised or not) which (including all means of access thereto
and therefrom) are not under the exclusive ownership and direct control
of the Company. There has been no breach of any service or maintenance
contract relevant to any such electronic, mechanical or photographic
process or equipment whereby any person or body providing services or
maintenance thereunder may have the right to terminate such service or
maintenance contract.
16.12 Transactions with Associated Persons: The Vendor and his Associated
Persons have not entered into and will not prior to Completion enter into
any loan, borrowing, agreement or other arrangement with or on behalf of
the Company (other than as employee of the Company on terms fully
disclosed to the Purchaser) and are not and will not at Completion be
interested, whether directly or indirectly, in or have any Charge over
any of the assets of the Company.
17. Corporate Matters
17.1. Share Capital: There is not now outstanding and will not be
outstanding at Completion in respect of the Company any option or
agreement under which any person has or may in any circumstances
have or acquire the right to subscribe for or purchase any share
or loan capital of the Company or to convert
17.2 Attorneys: The Company has not given any power of attorney or any
other authority (express, implied or ostensible) which is still
outstanding or effective to any person to enter into any contract
or commitment or do anything on its behalf (other than any
authority of employees to enter into routine trading contracts in
the normal course of their duties) nor will it do so prior to
Completion.
17.3 Officers: Since the Last Accounting Date no appointments or
removals of any officers of the Company have been made.
17.4 Ultra Vires Contracts: To the best of the Vendor's knowledge and
belief none of the activities or contracts or rights of the
Company is ultra vires, unauthorised, invalid or unenforceable or
in breach of any contract or covenant.
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Agreement for Sale and Purchase of Shares
SCHEDULE 2
(clause 7.3)
1. Warranty Limitations: Notwithstanding any other provisions of this
Agreement the Vendor shall not be liable in respect of any Proceedings or
Costs for breach of any of the Warranties or other breach of this
Agreement:
1.1 Notice: Unless, promptly after the Purchaser becomes aware or ought to
have become aware of any breach, they shall have received from the
Purchaser written notice containing full details of the relevant
Proceedings including, if practicable, the matter or default which gives
rise to the Proceedings, the breach that results and the amount claimed
in respect of the Proceedings:
1.2 Other than Taxation: in the case of any of the Warranties other than
Warranties in relation to Taxation, within a period of 2 years after
Completion; or
1.3 Taxation: in the case of any of the Warranties in relation to Taxation,
within a period ending the earlier of the date 7 years after Completion
and the date falling six weeks after the date on which any relevant
statutory limitation period in the jurisdiction relevant to the Taxation
Proceedings shall expire;
and (unless the relevant Proceedings shall have been withdrawn or
satisfied) action in a court of competent jurisdiction in respect of such
breach shall have been commenced within 1 year after receipt of such
notice;
1.4 Aggregate of Warranties to Exceed Specified Amount: Unless the aggregate
amount of the liability of the Vendor breach of Warranties exceeds
$5,000;
1.5 Limit for Single Proceedings: Unless, in respect of any single breach of
any of the Warranties, the amount of the liability of the Vendor exceeds
$1,000;
1.6 Exclusion where Covered by Insurance: If and to the extent that (after
taking account of related Costs and any normal excess in such policy)
recovery is made by the Purchaser or the Company under any policy of
insurance effected by or for the benefit of the Company in respect of any
of the subject matters of such Proceedings;
1.7 Exclusion where Recovery under Another Agreement: If and to the extent
that those Proceedings or Costs occasioned thereby has been recovered
under any other agreement entered into between the parties and vice
versa;
1.8 Provisions Made in Account: If and to the extent that proper provision or
allowance therefor has been made in the Financial Statements;
1.9 Subsequent Changes: If and to the extent that such Proceedings and any
Costs in connection therewith arise or is increased as a result of;
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Agreement for Sale and Purchase of Shares
1.9.1 Any alteration in rates of Taxation after the date of this
Agreement with retrospective effect or the withdrawal after the
date of this Agreement of any published extra-statutory concession
or the alteration after that date of any published statement of
practice of the relevant revenue authority; or
1.9.2 The passing of, or any change in, any legislation after the date
of this Agreement; or
1.9.3 Any change in accounting policy or practice of the Company after
Completion including any changes in methods or practices in
relation to stock valuation:
1.9.4 Any voluntary act or omission or transaction of the Purchaser or
the Company after Completion otherwise than in the ordinary course
of the Company's business as carried on at the date of this
Agreement including (without limitation):
1.9.5 The payment of any unusual or abnormal dividend by the Company;
1.9.6 A change of the date up to which the Company makes up its
Statutory Books:
1.9.7 The cessation of any business carried on by the Company:
1.10 Liability Disclosed: If and to the extent the facts, matters or
circumstances giving rise to the breach are referred to in the Disclosure
Letter or any document disclosed with the Disclosure Letter or in any
document disclosed to the Purchaser or any officer of or professional
adviser to the Purchaser in relation to this Agreement and such facts,
matters or circumstances are accepted by the Purchaser in writing as not
being subject to the Warranties;
1.11 Utilisation of Taxation Relief: In the case of a Proceedings arising in
connection with a payment of Taxation, if and to the extent that such
payment could have been avoided by the utilisation of trading losses or
other relief from Taxation (other than trading losses, or other relief
arising after the Last Accounting Date) available to the Company;
1.12 Over Provision in Financial Statements: If and to the extent that there
is any over provision in respect of any matter included in the Financial
Statements;
1.13 Pursuant to Agreement: If and to the extent that such matter giving rise
to the Proceedings properly falls to be done in implementing the terms of
this Agreement;
2. Limitations Separate and Independent: For the avoidance of doubt each of
the above paragraphs of this Schedule shall be construed as being
separate and independent and none of them shall be construed as limiting
the effect of any other.
3. Recovery from Third Party: If the Vendor pays an amount pursuant to a
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Proceedings in respect of breach of any of the Warranties and the Company
or the Purchaser has a right of reimbursement against any person other
than the Company in respect of or relating to those Proceedings, the
Company or the Purchaser shall (subject to the Company or the Purchaser,
as the case may be, being indemnified to its reasonable satisfaction by
the Vendor against all reasonable Costs) take all reasonable steps or
proceedings to enforce such right. If the Purchaser subsequently recovers
such reimbursement from such third party, the Purchaser shall forthwith
repay to the Vendor as the case requires such part of the amount paid by
either of them by way of damages for breach of that Warranty as equals
the amount which is so recovered by the Purchaser in respect of the
facts, matters or circumstances giving rise to the breach of that
Warranty (after taking account of the Costs of recovery and (if
appropriate) any Taxation arising solely as a result of the recovery).
4. Conduct of Proceedings by the Vendor; The Purchaser shall give and shall
procure that the Company shall give, to the Vendor full facilities to
investigate any Proceedings and the extent of possible liability under
the Warranties and at the request of the Vendor shall (subject to the
Purchaser being indemnified as to any reasonable Costs which may be
incurred thereby) allow them at their own expense to participate in, or
have the conduct of (as they may elect), all proceedings of whatsoever
nature against the relevant third party arising out of or in connection
with such Proceedings or dispute, in the name of the Company or the
Purchaser as it may consider necessary in order to mitigate any
Proceedings or Costs arising under this Agreement. Neither the Purchaser
nor the Company shall accept or pay or compromise any such liability or
Proceedings as is referred to above without the Vendor either consenting
to such action or having a reasonable opportunity to resist the same.
5. No Double Liability: No liability shall attach to the Vendor for any loss
resulting from any breach of the Warranties or otherwise under this
Agreement to the extent that the same loss has been recovered by the
Company or the Purchaser under any indemnity under this Agreement. No
liability shall attach to the Vendor under any indemnity to the extent
that the same loss has been recovered by a claim under a Warranty.
6. Insurances: If, in respect of any claim, against the Vendor which may
arise in respect of this Agreement, the Purchaser or the Company is
entitled to claim under any policy of insurance, then the Vendor shall
not be liable in respect of such claim until a claim has been made under
such policy. Any claims against the Vendor shall be reduced by any amount
actually recovered under any such policy.
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SCHEDULE 3
Item 1. Consents (clauses 9.1.3 - 9.1.6)
Nil
Item 2. Guarantees (clause 4.2)
Nil
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Agreement for Sale and Purchase of Shares
ANNEXURES
1. Financial Statements (clause 1.1)
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<PAGE>
MICROCHANNEL LIMITED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH 1998
CONTENTS
Accountants Disclaimer
Statement of Financial Position
Statement of Financial Performance
Statement of Movements of Equity
Notes to the Financial Statements
BROWN WOOLLEY GRAHAM - CHARTERED ACCOUNTANTS - AUCKLAND - NEW ZEALAND
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<PAGE>
MICROCHANNEL LIMITED
ACCOUNTANTS DISCLAIMER
FOR THE YEAR ENDED 31ST MARCH 1998
We have compiled the attached Financial Statements. A compilation is limited to
the collection, classification and summarisation of financial information
supplied by the client. A compilation does not involve the verification of that
information. We have not carried out an audit or a review assignment on the
Financial Statements and therefore neither we nor any of our employees accept
any responsibility for the accuracy of the information from which the Financial
Statements have been prepared.
Further, the Financial Statements have been prepared at the request of and for
the purpose of the client only and neither we nor any of our employees accept
any responsibility on any ground whatever, including liability in negligence, to
any other person.
/s/ Brown Woolley Graham
5th May, 1998
Auckland Brown Woolley Graham
Chartered Accountants
BROWN WOOLLEY GRAHAM - CHARTERED ACCOUNTANTS - AUCKLAND - NEW ZEALAND
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<PAGE>
MICROCHANNEL LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 31ST MARCH 1998
<TABLE>
<CAPTION>
This Year Last Year
--------- ---------
<S> <C> <C> <C> <C>
Current Assets
Trade Debtors 119610 250382
Stock 240897 77295
Taxation Refund Due 23 548
Esquire Systems Limited -- 27000
------ ------
360530 355125
Deduct current Liabilities
Bank Accounts 3495 [ILLEGIBLE]
Trade Creditors 154429 236114
Fat Choi Corporation Limited - [ILLEGIBLE] 12000 [ILLEGIBLE] --
Hobson Finance Limited - [ILLEGIBLE] 30000 [ILLEGIBLE] --
Esquire Systems Limited - [ILLEGIBLE] 29950 (paid out @ --
a Rate of
$2000 per
month)
Goods and Services Tax 3445 13270
------ ------
233323 253560
------ ------
Working Capital 127207 101565
Add
Fixed Assets
Fixed Assets at Cost 88588 49924
Less Accumulated Depreciation 33906 18906
------ ------
54602 31018
Intangible
Preliminary Expenses 850 850
------ ------
55452 31868
------ ------
182659 133433
Deduct
Term Liabilities
Hire Purchase Creditors 14417 24593
Less Precharged Interest 1266 3599
------ ------
13151 20994
Shareholders Advances 65758 106235
------ ------
78909 127229
------ ------
Net Assets 103750 6204
====== ======
</TABLE>
The information above has not been audited or reviewed and is to be read in
conjunction with the Accountant Disclaimer and Notes to the Financial Statements
BROWN WOOLLEY GRAHAM - CHARTERED ACCOUNTANTS - AUCKLAND - NEW ZEALAND
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<PAGE>
MICROCHANNEL LIMITED
STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31ST MARCH 1999
This Year Last Year
Represented By
Shareholders Equity
Share Capital
150000 Ordinary Shares 160000 1000
Revenue Reserves
Retained Earnings (56250) 5204
------ ------
Total Sharesholders Equity 103750 6204
====== ======
The financial statements have not been audited.
...............Director ...............Director
...................Date ...................Date
The information above has not been audited or reviewed and is to be read in
conjunction with the Accountant Disclaimer and Notes to the Financial Statements
BROWN WOOLLEY GRAHAM - CHARTERED ACCOUNTANTS - AUCKLAND - NEW ZEALAND
[INIT]
E-452
<PAGE>
MICROCHANNEL LIMITED
STATEMENT OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 31ST MARCH 1998
<TABLE>
<CAPTION>
This Year Last Year
--------- ---------
<S> <C> <C> <C> <C>
Income
Sales 1000245 703470
Deduct Cost of Sales
Opening Stock 77295 34982
Purchases 556622 307800
------- -------
633917 342752
Deduct Closing Stock 240897 77295
------- -------
393020 265487
------- -------
Cost of Sale: 393020 265487
------- -------
Gross Profit 607226 437983
Deduct Expenses --
Directors Salaries 24000
Wages 342336 221779
ACC Levies 3164 --
Advertising 102606 69236
Accountancy 8533 2270
Bank Fees 1479 1454
Cafeteria Expenses 1069 1095
Cleaning 1109 --
Conference and Courses 3249 2266
Relocation Expenses 2111 --
Equipment Hire 6273 7729
Exchange Loss 5801 (1263)
Freight and Cartage 5490 6711
General Expenses 756 1584
Entertainnment 683 22
Insurance 254 (137)
Interest 2702 1812
Internet and Compuserve Charges 2384 1818
Licences and Subscriptions 1000 207
Light and Power 1317 --
Motor Vehicle Expenses 1992 (546)
Postage 2900 1815
Printing and Stationery 10758 9051
Rate 819 --
Rent 27300 18000
Repairs and Maintenance 3480 2947
Staff Recruitment Expenses 580 --
Staff Training Expenses 5365 5090
Telephone and Tolls 33026 15938
Travel 21566 13303
Travel - Overseas 26541 12144
------- -------
284364 180040
Depreciation as per Schedule 11980 12859
------- -------
Total Expenses 668680 415278
------- -------
Net Deficit 61454 (22705)
======= =======
</TABLE>
The information above has not been audited or reviewed and is to be read in
conjunction with the Accountant Disclaimer and Notes to the Financial Statements
BROWN WOOLLEY GRAHAM - CHARTERED ACCOUNTANTS - AUCKLAND - NEW ZEALAND
[INIT]
E-453
<PAGE>
MICROCHANNEL LIMITED
STATEMENT OF MOVEMENTS IN EQUITY
FOR THE YEAR ENDED 31ST MARCH 1998
<TABLE>
<CAPTION>
This Year Last Year
--------- ---------
<S> <C> <C> <C>
Equity at Beginning of Year 6204 (16501)
Net Surplus/(Deficit) for Year (61454) 22705
----------- -----------
Total Recognised Revenues and Expenses for
the period [ILLEGIBLE] [ILLEGIBLE]
Increase in Share Capital 159000 --
----------- -----------
Equity at End of Year 103750 6204
=========== ===========
</TABLE>
The information above has not been audited or reviewed and is to be read in
conjunction with the Accountant Disclaimer and Notes to the Financial Statements
BROWN WOOLLEY GRAHAM - CHARTERED ACCOUNTANTS - AUCKLAND - NEW ZEALAND
[INIT]
E-454
<PAGE>
MICROCHANNEL LIMITED
FIXED ASSETS & DEPRECIATION FOR THE YEAR ENDED 31ST MARCH 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Description Date of Cost: Accum. Bk value: Rate: Method: No 97/98 Accum. Book Value
Purchase: Depn: Mth: Depn: Depn: 31/3/98
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OFFICE EQUIPMENT
P/C Jul-95 2,774.00 1,793.00 981.00 40.0% DV 12 392.00 2,185.00 589.00
Laser Printer Jul-95 2,795.00 1,553.00 1,242.00 33.0% DV 12 410.00 1,963.00 832.00
Mail Software Jul-95 550.00 356.00 198.00 40.0% DV 12 78.00 434.00 116.00
Network Card Jul-95 372.00 240.00 132.00 40.0% DV 12 53.00 293.00 79.00
Ram Card Aug-95 466.00 301.00 165.00 40.0% DV 12 66.00 367.00 99.00
P/C Aug-95 3,050.00 1,508.00 1,142.00 40.0% DV 12 457.00 2,365.00 685.00
Mobile Phone Nov-95 229.00 174.00 55.00 50.0% DV 12 28.00 202.00 27.00
Alarm System Sep-95 730.00 220.00 510.00 18.0% DV 12 92.00 312.00 418.00
PC Jun-95 4,314.00 2,515.00 1,735.00 40.0% DV 12 716.00 3,237.00 1,077.00
Backup-Tape Dec-95 245.00 133.00 112.00 40.0% DV 12 45.00 178.00 67.00
Canon Fax Jul-95 3,795.00 1,654.00 2,141.00 33.0% DV 12 707.00 2,351.00 1,424.00
Ram Card Aug-95 675.00 338.00 337.00 40.0% DV 12 135.00 473.00 202.00
PCanywhere Mar-96 232.00 116.00 116.00 40.0% DV 12 46.00 162.00 70.00
CPU Mar-96 376.00 180.00 196.00 40.0% DV 12 78.00 258.00 118.00
Network Hub Aug-96 1,256.00 402.00 854.00 40.0% DV 12 342.00 744.00 512.00
NEC Telephone
System Sep-96 22,228.00 4,027.00 18,191.00 26.0% DV 12 4,730.00 8,777.00 13,483.00
Modem Oct-96 275.00 66.00 209.00 40.0% DV 12 84.00 150.00 125.00
M/Soft Exchange
Software Oct-96 126.00 63.00 63.00 100.0% DV 12 63.00 126.00 --
Clipart Nov-96 140.00 58.00 82.00 100.0% DV 12 82.00 140.00 --
4Mg Memory Computer Dec-96 180.00 60.00 120.00 100.0% DV 12 120.00 180.00 --
Network Card Jan-97 160.00 40.00 120.00 100.0% DV 12 120.00 160.00 --
Network Card Feb-97 165.00 28.00 137.00 100.0% DV 12 137.00 165.00 --
Notebook 486 Apr-97 1000.00 1000.00 40.0% DV 12 400.00 400.00 600.00
PCMCIA Card Apr-97 800.00 800.00 40.0% DV 12 320.00 320.00 480.00
Monitors x 2 Apr-97 400.00 400.00 40.0% DV 12 160.00 160.00 240.00
Hp deskjet printer Apr-97 200.00 200.00 40.0% DV 12 80.00 80.00 120.00
Modem Apr-97 200.00 200.00 40.0% DV 12 80.00 80.00 120.00
Klipbind Binding
Machine Apr-97 600.00 600.00 26.4% DV 12 158.00 158.00 442.00
2.1 GB
HardDisk SCSI Apr-97 550.00 550.00 48.0% DV 12 264.00 246.00 286.00
16 MB Ram x2 May-97 300.00 300.00 48.0% DV 11 132.00 132.00 168.00
IBM Thinkpad 380D May-97 3,618.00 3,618.00 48.0% DV 11 1,592.00 1,592.00 2,026.00
Modem 56K May-97 299.00 299.00 48.0% DV 11 132.00 132.00 167.00
HP Tape Backup Jun-97 1,137.00 1,137.00 48.0% DV 10 455.00 455.00 682.00
IOMEGA 21p Drive Jun-97 385.00 385.00 48.0% DV 10 114.00 114.00 171.00
ARCserve NT
Single Server Aug-97 679.00 679.00 48.0% DV 8 217.00 217.00 462.00
IBM Thinkpad 365 Aug-97 2,626.00 2,626.00 48.0% DV 8 840.00 840.00 1,786.00
Pentium 166 MMX Aug-97 2,058.00 2,058.00 48.0% DV 8 659.00 659.00 1,399.00
--------------------------------------------------------------------------------------------------------
59,895.00 16,349.00 43,646.00 14,586.00 30,835.00 29,060.00
FURNITURE & FITTINGS
Steel Racks Dec-95 564.00 108.00 456.00 9.5% DV 12 43.00 151.00 413.00
Book Shelf May-95 62.00 62.00 -- 100.0% DV 12 -- 62.00 --
Filing Cabinet Aug-95 179.00 119.00 60.00 100.0% DV 12 60.00 179.00 --
Curtains Oct-96 626.00 83.00 343.00 22.0% DV 12 119.00 202.00 424.00
Boardroom Table Mar-97 465.00 6.00 459.00 12.0% DV 12 55.00 61.00 404.00
[ILLEGIBLE] Mar-97 178.00 15.00 163.00 100.0% DV 12 163.00 178.00 --
Mobile Phone Mar-97 181.00 13.00 148.00 100.0% DV 12 148.00 161.00 --
Drawers x 3 Apr-97 450.00 450.00 15.0% DV 12 68.00 68.00 382.00
Black Cabinet x 3 Apr-97 350.00 350.00 15.0% DV 12 38.00 38.00 212.00
Desks x 2 Apr-97 700.00 700.00 15.0% DV 12 105.00 105.00 395.00
Grey Chairs x 5 Apr-97 350.00 350.00 15.0% DV 12 53.00 53.00 297.00
Chairs x 25 Apr-97 1,250.00 1,250.00 15.0% DV 12 188.00 188.00 1,062.00
Tall Chairs x 7 Apr-97 490.00 490.00 15.0% DV 12 74.00 74.00 416.00
Desks x 5 Apr-97 750.00 750.00 15.0% DV 12 113.00 113.00 637.00
Partition Apr-97 600.00 600.00 18.0% DV 12 108.00 108.00 492.00
Blank Filing
Cabinet x 2 Apr-97 200.00 200.00 18.0% DV 12 36.00 36.00 164.00
Blind Sep-97 373.00 373.00 18.0% DV 7 39.00 39.00 394.00
Desks Sep-97 2,710.00 2,710.00 18.0% DV 7 285.00 285.00 2,425.00
Stackable Chairs Sep-97 100.00 100.00 100.0% DV 7 100.00 100.00 --
Boardroom Desk Oct-97 976.00 976.00 18.0% DV 6 88.00 88.00 888.00
Reception Desk Oct-97 1000.00 1000.00 18.0% DV 6 90.00 90.00 910.00
Leasehold
Improvement Oct-97 16,259.00 16,259.00 9.5% DV 6 772.00 772.00 15,487.00
--------------------------------------------------------------------------------------------------------
28,893.00 406.00 28,287.00 2,745.00 3,151.0 25,543.00
--------------------------------------------------------------------------------------------------------
TOTAL FIXED ASSETS 88,588.00 16,655.00 71,933.00 17,331.00 33,986.00 54,602.00
========================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[INIT]
E-455
<PAGE>
MICROCHANNEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH 1998
NOTE 1: STATEMENT OF ACCOUNTING POLICIES
Reporting Entity
The company is registered under the Companies Act 1993. The financial
statements have been prepared in accordance with the Financial Reporting
Act 1993.
Measurement Base
The financial statements have been prepared on the basis of historical
cost with the exception of certain item for which specific accounting
policies are identified.
Specific Accounting Policies
The following specific accounting policies which materially affect the
measurement of profit and the financial position have been applied:
1) Debtors
Debtors are valued at anticipated rea1isable value. Bad debts are
written off during the period in which they are identified.
ii) Stock
Finished goods are stated at the lower of cost and net realisable
value. Costs have been assigned to stock quantities on hand at
balance date using the weighted average (first in first out)
basis.
iii) Fixed Assets
Fixed assets are recorded at cost less accumulated depreciation.
Depreciation of fixed assets, is calculated at rates as allowed by
the Inland Revenue Department.
Gains and losses on disposal of fixed assets are taken into
account in determining the operatinq result for the year.
BROWN WOOLLEY GRAHAM - CHARTERED ACCOUNTANTS - AUCKLAND - NEW ZEALAND
[INIT]
E-456
<PAGE>
MICROCHANNEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH 1998
iv) Leased Assets
Assets acquired under finance leases are included as fixed assets
in the Statement of Financial Position.
Other leases under which all the risks and benefits of ownership
are effectively retained by the lessor are classified as operating
leases. Operating lease payments are charged to expense over the
periods of expected benefit.
v) Foreign Currencies
Foreign currency transaction, are converted at the exchange rate
at the date of the transaction. Foreign currency receivable and
payable at balance date are translated at exchange rates current
at balance. Exchange gains and losses are brought to account in
determining the gain or loss for the year.
vi) Income Tax
Income tax is accounted for using the taxes payable method after
taking full advantage of all deductions and concessions. No
provision has been made for deferred taxation. There is no
provision for taxation due to losses incurred.
vii) Goods and Services Tax (GST)
The financial statements have been prepared so that all components
are stated exclusive of GST.
viii) Preliminary Expenses
Preliminary Expenses are not amortised.
Changes in Accounting Policies
There have been no significant changes in accounting policies. All
policies applied have been on a basis consistent with those used
in previous years.
NOTE 2: NATURE OF BUSINESS
The principal activity is that of computer software reselling.
BROWN WOOLLEY GRAHAM - CHARTERED ACCOUNTANTS - AUCKLAND - NEW ZEALAND
[INIT]
E-457
<PAGE>
MICROCHANNEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH 1999
NOTE 3: DIFFERENTIAL REPORTING
The company is a qualifying entity within the Institute of Chartered
Accountants of New Zealand's Differential Reporting framework.
The company qualifies under the size criteria and is not publicly
accountable.
The comapny has taken advantage of all differential reporting exemptions
available to it.
NOTE 4: MOVEMENTS IN RETAINED EARNINGS AND RESERVES
i) Retained Earnings
Balance at beginning of period 5204
Add
Net Surplus/(Deficit) for period (61454)
Deduct
Dividends paid and provided --
------
Balance at end of period (56250)
======
NOTE 5: LEASE COMMITMENTS
Lease commitments from non-cancellable operating leases at balance date
are:
Current 37940
Non Current 164700
------
202640
======
NOTE 6: RELATED PARTY INFORMATION
Related Party Transactions
The company has conducted the following types of transactions with
related parties as follows:
Relationships
Name of Related Party Description of Transactions
Esquire Systems Ltd. - Controlling Shareholder - Rent & Advances
Fat Choi Corportion Ltd - Common Sharebholder - Advances
BROWN WOOLLEY GRAHAM - CHARTERED ACCOUNTANTS - AUCKLAND - NEW ZEALAND
[INIT]
E-458
<PAGE>
MICROCHANNEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH 1999
NOTE 7: INVENTORY
Some inventory on hand at balance date may be subject to Romalpa clauses.
NOTE 8: RESTRICTIONS ON TITLE OF ASSETS
Hire purchases are secured by the assets being financed.
NOTE 9: CAPITAL EXPENDITURE COMMITMENTS
There are no liabilities in respect of capital expenditure at balance
date other than those provided for in the accounts.
NOTE 10: CONTINGENT LIABILITIES
There are no contingent liabilities at balance date other than normal
lease commitments.
BROWN WOOLLEY GRAHAM - CHARTERED ACCOUNTANTS - AUCKLAND - NEW ZEALAND
[INIT]
E-459
<PAGE>
Agreement for Sale and Purchase of Shares
2. Form of Escrow Agreement (clause 1.1)
[INIT]
41
E-460
<PAGE>
2
"Profit" means the net income, after tax, of MicroChannel.
"MicroChannel" shall mean MicroChannel Limited.
1.2 Words importing the singular number shall include the plural and vice
versa.
1.3 References to persons shall be deemed to include the references to
individuals, companies, corporations, firms, partnerships, joint
ventures, associations, organizations, trusts, states or agencies of
state, government departments and local authorities in each case whether
or not having separate legal personality.
1.4 Expressions defined in the main body of this Agreement bear their defined
meaning in the whole of this Agreement including the recitals.
1.5 Words importing one gender shall include the other genders.
Consideration
2.1 In consideration of the sum of ONE DOLLAR ($1.00) paid by the parties to
each other, receipt of this sum being acknowledged by each of the
parties, the Security Holder covenants and agrees with the Issuer and
with the Trustee, and the Issuer and the Trustee covenant and agree each
with the other and with the Security Holder as set out below.
Securities deposited with Trustee
3.1 The Security Holder hereby agrees to place and deposit in escrow with the
Trustee the Escrowed Shares which are to be issued to the Security Holder
for the goodwill value of the Shares of MicroChannel in part
consideration for the Property pursuant to the terms of the Sale
Agreement.
3.2 The Security Holder agrees to deposit in escrow any further certificates
representing shares in the Issuer which the Security Holder may receive
as a stock dividend on shares hereby escrowed, and to deliver to the
Trustee immediately on receipt thereof the certificates for any such
further shares and any replacement certificates which may at any time be
issued for any Escrowed Shares.
3.3 The Parties hereby agree that, subject to the provisions of clause 5, the
Escrowed Shares and the beneficial ownership of or any interest in them
and the certificates representing them (including any replacement shares
or certificates) shall not be sold, assigned, hypothecated, alienated,
released from escrow, transferred within escrow, or otherwise in any
manner dealt with, without the written consent of the Exchange given to
the Trustee or except as may be required by reason of the death or
bankruptcy of a Security Holder, in which case the Trustee shall hold the
said certificates subject to this Agreement, for whatever person or
[INIT]
E-461
<PAGE>
3
company shall be legally entitled to become the registered owner thereof,
3.4 The Security Holder directs the Trustee to retain the Escrowed Shares and
the certificates (including any replacement shares or certificates)
representing them and not to do or cause anything to be done to release
them from escrow or to allow any transfer, hypothecation or alienation
thereof without the written consent of the Exchange.
3.5 Any Security Holder prior to applying to the Exchange for a consent for a
transfer within escrow shall, before applying, give notice in writing of
his intention to the Issuer and the Trustee.
3.6 If a dividend is declared while the Escrowed Shares or any of them
continue to be held in escrow under this Agreement, then the dividend
shall be paid to the Trustee, who shall hold the dividend in escrow on
the same terms as the Escrowed Shares, such dividend to be subject to
release or return to the Issuer in the same manner as the Escrowed Shares
to which the dividend is attributed.
4 Trustee Accepts Obligations
4.1 The Trustee accepts the obligations placed on it under this Agreement and
hereby agrees to perform the obligations in accordance with the terms of
this Agreement and any written consents, orders or directions of the
Exchange.
4.2 The Security Holder and the Issuer hereby agree to and do hereby release
and indemnify and save harmless the Trustee from and against all claims,
suits, demands, costs, damages and expenses which may be occasioned by
reason of the Trustee s compliance in good faith with the terms of this
Agreement.
4.3 If the Trustee should wish to resign, it shall give at least 3 months'
notice to the Issuer which may, with the written consent of the Exchange,
by writing appoint another Trustee in its place and such appointment
shall be binding on the Security Holder, and the new Trustee shall assume
and be bound by the obligations of the Trustee hereunder.
5 Release of Escrowed Shares
5.1 The Trustee upon receipt of written notice of MicroChannel's Profit for
the financial years ending March 31,1999, March 31, 2000 and March 31,
2001 shall in the said years release to the Security Holder such number
of Escrowed Shares which shall be equal in value to MicroChannel Profit
as notified to the Trustee in each year.
5.2 The Trustee in calculating the number of Escrowed Shares to be released
pursuant to clause 5.1 above shall use;
[INIT]
E-462
<PAGE>
4
5.2.1 The average of the WestpacTrust Foreign Exchange buy and sell
rates on March 31 of each applicable year as the exchange rate for
conversion of the New Zealand dollar denominated MicroChannel's
Profit after Lax sum to Canadian dollars,
5.2.2 The BIL Share price shall be the price on the Exchange at the
close of business on March 31, 1999 expressed in Canadian Dollars,
5.3 The Issuer shall ensure that the Trustee shall receive written
notification of MicroChannel's Profit no later than September 30, of each
year.
5.4 A release from escrow of all or part of the Escrowed Shares shall release
from this Agreement only those Escrowed Shares so released. For greater
certainty, this clause does not apply to shares transferred within
escrow.
5.5 Any Escrowed Shares remaining in escrow on September 30, 2001 shall be
cancelled by the Issuer.
Right to Cancel Shares
6.1 If the MicroChannel Profit for any of the periods ended March 31, 1999,
March 31, 2000 or March 31, 2001 are less them the amounts projected for
such period, as provided for by the Sale Agreement, then the Issuer shall
have the right, as at March 31, 1999 or on any 6 month anniversary
thereof; to cancel any of the Escrowed Shares then remaining in escrow.
Issuer Wound Up
7.1. If the Issuer is wound up and any Escrowed Shares remain in escrow under
this Agreement at the time when a distribution of assets to holders of
shares is made by the liquidator, the Security Holder shall assign his
right to receive that part of the distribution which is attributable to
the escrowed shares to the Trustee, for the benefit of and in trust for
the persons and companies who are then holders of free shares in the
Issuer in proportion to their holdings in the Issuer except that this
section shall not apply to those of the Escrowed Shares which are or
would be entitled to be released pursuant to clause 5 but have not yet
been so released.
Voting Rights
8.1 All voting rights attached to the Shares shall at all times be exercised
by the Security Holder or respective registered holders thereof.
[INIT]
E-463
<PAGE>
ESCROW AGREEMENT
DATED the 10th day of June, 1998.
BETWEEN: BROCKER INVESTMENTS LTD at Alberta, Canada
("the Issuer")
AND: MONTREAL TRUST COMPANY OF CANADA at Alberta, Canada
("The Trustee")
AND: GARY McNABB, of Auckland, New Zealand
("the Security Holder")
INTRODUCTION
1. The Security Holder and the Issuer have entered into an agreement dated
the 10th day of June, 1998 whereby the Security Holder has agreed to sell
his shareholdings in MicroChannel Limited to the Issuer, the
consideration for the Property being in the allotment of shares in the
Issuer to the Security Holder.
2. One of the terms of the Sale Agreement is that the Escrowed Shares issued
in consideration for the Property are to be deposited with the Trustee
pursuant to the terms of this Agreement.
3. The Trustee has agreed to undertake and perform its duties according to
the terms and conditions under this Agreement.
THE PARTIES AGREE as follows:
1. Interpretation,
1.1 in this Agreement unless the context otherwise requires:
"The Sale Agreement" means the agreement between the Security
Holder and the Issuer dated the 10th day of June, 1998.
"The Property" means the Security Holders shares in MicroChannel
Limited.
The BIL Shares" mean the shares allotted, by the Issuer to the
Security Holder as part consideration for the purchase of the
Property.
"Escrowed Shares" means those of the BIL Shares escrowed
hereunder.
"The Exchange" means the principle stock exchange on which the
Common Shares of the Issuer may be listed at such time.
[INIT]
E-464
<PAGE>
9. Issuer's Obligation
9.1 The Issuer [ILLEGIBLE] Agreement [ILLEGIBLE] its [ILLEGIBLE] as
Trustee [ILLEGIBLE]
10. Security Holder's [ILLEGIBLE]
10.1 The covenant [ILLEGIBLE] are made with [ILLEGIBLE] holders from
[ILLEGIBLE] enforced not [ILLEGIBLE]
11. Miscellaneous
11.1 This Agreement [ILLEGIBLE] the aprts as [ILLEGIBLE] agreement, and
[ILLEGIBLE] construed as if [ILLEGIBLE] this Agreement.
11.2 This Agreement [ILLEGIBLE] parties to this [ILLEGIBLE]
administrators, [ILLEGIBLE]
11.3 The proper law for [ILLEGIBLE] Zealand and any [ILLEGIBLE] shall
be brought in [ILLEGIBLE] hereto, in writing, [ILLEGIBLE]
IN WITNESS WHEREOF [ILLEGIBLE]caused their respective [ILLEGIBLE]
E-465
<PAGE>
MicroChannel
- --------------------------------------------------------------------------------
MicroChannel Limited
Private Bag 91 642
Symonds Street
Auckland
New Zealand
Ph: (64-9) 302 9432
Fax: (64-9) 302 9442
10th June 1998
Hal Linstrom
Brocker Investments
P0 Box 99222
Newmarket
Dear Hal,
Re: Letter of Disclosure - Share Options to Related Parties
You are aware of the open option to Chris Kirkness and Amy Ho for 20% each of
the MicroChannel shares (now Brocker Investments stock), after payment to myself
for their net asset value.
This entitlement will be transferred into individual names from my entitlement
of the stocks to be Issued from the results of trading for the year ended 31st
March 1999.
From the joint entitlement of McNabb, Ho and Kirkness, a total of 6% will be
issued to Mark Matheson (4%) and Craig Larmer (2%) as an incentive on achieving
the agreed tax paid net profit of $184,568.00.
The resultant position of Brocker Investments stock on achievement of the budget
will be as follows:
Gary McNabb 56.4%
Amy Ho 18.8%
Chris Kirkness 18.8%
Craig Larmer 2.0%
Mark Matheson 4.0%
I trust that this now finalizes all matters and that you will have received all
required information and that the transaction is now completed.
Sincerely,
/s/ GARY MCNABB
Gary McNabb
Attached please find copy of letters to:
1. Amy Ho
2. Chris Kirkness
3. Mark Matheson
4. Craig Larmer
[INIT]
E-466
<PAGE>
MicroChannel
- --------------------------------------------------------------------------------
MicroChannel Limited
Private Bag 91 642
Symonds Street
Auckland
New Zealand
Ph: (64-9) 302 9432
Fax: (64-9) 302 9442
10th June 1998
Amy Ho
138 Mokoia Raad
Birkenhead
Auckland
Share/Bonus Option
Dear Amy,
I would like to formalize the discussion we had in regards to the Bonus/Share
option for this financial year April 1996 -- March 1999.
On achieving our agreed after tax net profit budget of $184,568.00 you will be
issued equity by the way of shares. This share payment is calculated on our net
profit result and is made up in the follow manner.
You will be issued Brocker Investments shares to the value of 20% of the
companies Net Profit x 4.
i.e. $184,506.00 Net x 20% = $36,913.60 x 4 = $147,654.40 paid in shares
The value of these shares will be issued to you in April 1999 and can be earned
out when MicroChannel NZ has achieved $184,566.00 net profit x 4 in the
proceeding financial years(s). The above share option is governed by the
conditions of the escrow agreement. Copy of the sale and purchase agreement and
escrow contract are attached.
The above shares offered are from myself as the Vendor of MicroChannel, this is
a private transaction between yourself and Gary McNabb. There is no obligation
from Brocker Investments or MicroChannel in this matter. This does not form part
of your income from the company.
I hope you find this satisfactory.
Sincerely,
/s/ GARY MCNABB
Gary McNabb
[INIT]
E-467
<PAGE>
MicroChannel
- --------------------------------------------------------------------------------
MicroChannel Limited
Private Bag 91 642
Symonds Street
Auckland
New Zealand
Ph: (64-9) 302 9432
Fax: (64-9) 302 9442
10th June 1998
Chris Kirkness
11 Walters Road
Mt Eden
Auckland
Share/Bonus Option
Dear Chris,
I would like to formalize the discussion we had in regards to the Bonus/Share
option for this financial year April 1996 -- March 1999.
On achieving our agreed after tax net profit budget of $184,568.00 you will be
issued equity by the way of shares. This share payment is calculated on our net
profit result and is made up in the follow manner.
You will be issued Brocker Investments shares to the value of 20% of the
companies Net Profit x 4.
i.e. $184,506.00 Net x 20% = $36,913.60 x 4 = $147,654.40 paid in shares
The value of these shares will be issued to you in April 1999 and can be earned
out when MicroChannel NZ has achieved $184,566.00 net profit x 4 in the
proceeding financial years(s). The above share option is governed by the
conditions of the escrow agreement. Copy of the sale and purchase agreement and
escrow contract are attached.
The above shares offered are from myself as the Vendor of MicroChannel, this is
a private transaction between yourself and Gary McNabb. There is no obligation
from Brocker Investments or MicroChannel in this matter. This does not form part
of your income from the company.
I hope you find this satisfactory.
Sincerely,
/s/ GARY MCNABB
Gary McNabb
[INIT]
E-468
<PAGE>
MicroChannel
- --------------------------------------------------------------------------------
MicroChannel Limited
Private Bag 91 642
Symonds Street
Auckland
New Zealand
Ph: (64-9) 302 9432
Fax: (64-9) 302 9442
10th June 1998
Mark Matheson
120 Lynbrooke Ave.
Blockhouse Bay
Auckland
Share/Bonus Option
Dear Mark,
I would like to formalize the discussion we had in regards to the Bonus/Share
option for this financial year April 1996 -- March 1999.
On achieving our agreed after tax net profit budget of $184,568.00 you will be
issued equity by the way of shares. This share payment is calculated on our net
profit result and is made up in the follow manner.
You will be issued Brocker Investments shares to the value of 4% of the
companies Net Profit x 4.
i.e. $184,506.00 Net x 4% = $7,382.70 x 4 = $29,530.80 paid in shares
The value of these shares will be issued to you in April 1999 and can be earned
out when MicroChannel NZ has achieved $184,566.00 net profit x 4 in the
proceeding financial years(s). The above share option is governed by the
conditions of the escrow agreement. Copy of the sale and purchase agreement and
escrow contract are attached.
The above shares offered are from myself as the Vendor of MicroChannel, this is
a private transaction between yourself and Gary McNabb. There is no obligation
from Brocker Investments or MicroChannel in this matter. This does not form part
of your income from the company.
I hope you find this satisfactory.
Sincerely,
/s/ GARY MCNABB
Gary McNabb
[INIT]
E-469
<PAGE>
MicroChannel
- --------------------------------------------------------------------------------
MicroChannel Limited
Private Bag 91 642
Symonds Street
Auckland
New Zealand
Ph: (64-9) 302 9432
Fax: (64-9) 302 9442
10th June 1998
Craig Larmer
441 Wairer Road
Henderson
Auckland
Share/Bonus Option
Dear Craig,
I would like to formalize the discussion we had in regards to the Bonus/Share
option for this financial year April 1996 -- March 1999.
On achieving our agreed after tax net profit budget of $184,568.00 you will be
issued equity by the way of shares. This share payment is calculated on our net
profit result and is made up in the follow manner.
You will be issued Brocker Investments shares to the value of 2% of the
companies Net Profit x 4.
i.e. $184,506.00 Net x 2% = $3,691.40 x 4 = $14,765.60 paid in shares
The value of these shares will be issued to you in April 1999 and can be earned
out when MicroChannel NZ has achieved $184,566.00 net profit x 4 in the
proceeding financial years(s). The above share option is governed by the
conditions of the escrow agreement. Copy of the sale and purchase agreement and
escrow contract are attached.
The above shares offered are from myself as the Vendor of MicroChannel, this is
a private transaction between yourself and Gary McNabb. There is no obligation
from Brocker Investments or MicroChannel in this matter. This does not form part
of your income from the company.
I hope you find this satisfactory.
Sincerely,
/s/ GARY MCNABB
Gary McNabb
[INIT]
E-470
<PAGE>
Heads of Agreement
Date: Friday, 13 February 1996
Parties
1. Brocker Investments (NZ) Limited (BINZ) a subsidiary of Brocker
Investments Limited a company listed on the Alberta stock Exchange (BIK)
2. The shareholders of MicroChannel Limited (Vendor)
Introduction:
A. BKI wishes to acquire all of the shares of MicroChannel Limited.
B. The Vendor wishes to sell these shares.
C. This Agreement sets out the understanding reached between the parties.
Terms:
1 BKNZ will purchase the business of the Vendor (Business) as a going
concern.
2 The purchase price, inclusive of GST (if any), shall comprise the value
of goodwill less the value of the net tangible assets.
3 The net tangible assets shall be valued at 31/3/98. An audit/due
diligence review shall be conducted by KPMG, to confirm the net asset
values. Unless otherwise agreed all value calculations shall be made in
accordance with GAAP as determined by KPMG.
4 The goodwill shall be valued as follows
4.1 A formula of 4 times shall be applied to the audited net profit
after tax of the Business after deducting any cost of funds
provided by BKNZ calculated at commercial rates, and management
fees charged in accordance with clause 5 (if applicable).
4.2 The calculation is to be based on the audited annual accounts for
the Business as at 31 March, 1999.
4.3 A profit and loss budget for the Business shall be produced by
and agreed with BKNZ for the financial years ending 31 March
1999, which the formula will apply to calculate the goodwill value
E-471
<PAGE>
5 Following settlement management fees will be charged to the Business by
BKNZ at commercial rates and apply only to work which would otherwise be
undertaken by outside contractors, or be undertaken in house. It is not a
prerequisite that BKNZ be used for the supply of any services to the
Business. Any activity undertaken in this regard will be quoted upon, and
charged monthly as a standard debtor transaction.
6 Settlement will be by way of
6.1 The issuance of BKI shares subject to the earn out provisions in
clause 8.
7 All BKI shares referred to in clause 6.1 shall be issued by BKI once the
Net tangible asset and Goodwill values have been calculated and held in
escrow by BKI subject to the following provisions.
7.1 Shares issued in the first tranche, to the value of the Net
tangible asset value as at 31/3/98, will be subject to a 12 month
escrow period, ending 31/3/99.
7.2 Shares which are issued in the second trance, to the value of the
goodwill less the value of the net tangible asset value as at
31/3/98, shall be released subject to the earn out provisions in
clause 8 on 30 June 1999, 2000, and 2001.
7.3 The strike price for the shares issued will be set at the close of
business on the 31/3/98 and 31/3/99 for the respective 1st and
second trenches of BKI shares. The exchange rate for conversion
to NZ currency will be the average between the Westpac buy and
sell rates at the time of the transaction.
7.4 Any dividends declared in respect of Escrow Shares shall be held
in trust by BKI, until the appropriate release date.
8 The following earn out provisons will apply to the release of the Escrow
Shares:
8.1 The Shares issued in the second tranche will be earned out through
future profits generated by the Business over the 3 financial
years which ending 31/3/99, 31/3/2000 and 31/3/2001.
8.2 The earn out provisions are governed by the rules of the Alberta
Stock Exchange and the Toronto Stock Exchange.
8.3 If profits equal to the Balance are not achieved by the Business
by 31 March 2001, the unearned portion of the Balance shall not be
payable, the value of the goodwill shall be adjusted and a portion
of the unissued Escrow Shares equal in value to the unearned
portion of the Balance shall be cancelled.
E-472
<PAGE>
8.4 To protect the future earnings for BINZ, if the Business does not
realise it's projected profitability relative to budget over a
period of three years from 31 March 1998 by first achieving
projected profitability by 31 March 1999 and second by sustaining
profitable operation for years ending 31 March 1999, 2000 and 2001
then BKNZ shall have the right, as at 31 March 1999 and on the 6
monthly anniversaries thereafter, to terminate the escrow
arrangement and cancel any unissued Escrow Shares. If this right
is exercised the consideration already paid by BINZI at that date
will be deemed to be full settlement of the acquisition price and
no further consideration shall be payable.
9 Should BINZ determine that the Vendors assets are no longer required
within the Brocker Investments Group, then first right to purchase the
Business, at fair market value, shall be granted to the Vendor.
10 Mr Chris Kirkness and selected staff who currently work within the
Business shall be offered employment contracts with BINZ on favourable
terms but not exceeding his current compensation of $65000 Per Annum and
10% of Net profit before tax as a bonus.
11 Chris Kirkness will hold the position of General Manager and will report
to Mike Ridgway, CEO of BINZ.
12 Each party will pay their legal costs in preparation of the sale and
purchase agreement. The Vendor warrants to the best of its knowledge that
the information provided to BINZ in relation to the Business is fair and
accurate.
13 The parties agree to proceed to formal sale and purchase agreement, once
the acquisition terms and conditions have been has been established and
agreed.
14 If one party withdraws from the negotiations prior to completion, and
professional service fees have been incurred, these costs will be born by
the party withdrawing.
15 BINZ will be Indemnified by the shareholders of the Vendor from any
liability of the Vendor or the Business whether contingent or not
relating to or arising out of any act, omission, obligation, or
circumstance undertaken by or imposed the Business prior to the
Settlement Date which has not been disclosed to the Purchaser prior to
the date of the signing of this Agreement
16 BINZ will be consulted on all matters of material interest, which affect
the Business, prior to acquisition. This includes expenditure on all
items of capital expenditure and general expenses above $5000
E-473
<PAGE>
17 All parties will keep this Agreement and all information disclosed during
negotiations confidential. BKI shall be entitled to make a press
announcement in Canada, once this Agreement is signed, stipulating that
BKI has entered into a heads of Agreements with the Vendor. There will be
no general disclosure in New Zealand, until the formal Agreement for Sale
and Purchase is signed.
18 Gary McNabb is to remain as a Director and as a cheque signatory of
MicroChannel Limited for the term of the acquisition.
19 This heads of agreement is subject to the approval by 20th February 1998
or such later date as agreed between the parties of:
19.1 The Alberta Stock Exchange and Toronto Stock Exchange
19.2 Board approval by BKI.
19.3 Any other regulatory authority in New Zealand end Canada.
19.4 The Directors of the Vendor.
19.5 The major product suppliers to the Business is C.A.
20 All amounts referred to in this Agreement are in NZ$, unless otherwise
specified
Signed by the parties:
/s/ [ILLEGIBLE] (officer)
- ----------------------------------
Michael Brian Ridgway for and on behalf of Brocker Investments (N.Z.) Limited
/s/ GARY MCNABB
- ----------------------------------
Gary McNabb for and on behalf of the Shareholders and Directors of the Vendor
E-474
-----------------------------------------------------------------------
BETWEEN: WILLIAM RUSSELL McLEAN, KENNETH JOHN PARKER, DOUGLAS COWIE,
EVELYN ANN PARKER, ROGER OLIVER BRAEM and DENNIS GRAHAM
BREESE
("THE VENDOR")
AND: BROCKER INVESTMENTS (NZ) LIM1TED
(THE PURCHASER')
-----------------------------------------------------------------------
AGREEMENT FOR SALE AND PURCHASE
OF SHARES
-----------------------------------------------------------------------
-----------------------------------------------------------------------
ED JOHNSTON & CO
SOlICITORS
LEVEL 1
370 GREAT NORTH ROAD
P0 BOX 21 850
WAITAKERE CITY
E-475
<PAGE>
MEMORANDUM OF AGREEMENT made this 26th day of January One thousand nine hundred
and ninety five
BETWEEM WILLIAM RUSSELL McLEAN, KENNETH JOHN PARKER, DOUGLAS COWIE,
EVELYN ANN PARKER, ROGER OLIVER BRAEM and DENNIS GRAHAM BREESE
all of Auckland (hereinafter called "the Vendor") of the one part
AND BROCKER INVESTMENTS (NZ) LIMITED at Auckland (hereinafter called
"the Purchaser") of the other part
WHEREAS
A. PERSONAL COMPUTER SYSTEMS (1993) LIMITED is a duly incorporated Company
carrying on business at Auckland and other parts of New Zealand and having
a nominal share capital of ONE THOUSAND DOLLARS ($1,000.00) divided into
1,000 fully paid up ordinary shares of ONE DOLLAR ($1.00) each (hereinafter
called "the Company").
B. The Vendor is the 1egal and beneficial owner of the shares in the capital
of the Company as set opposite their respective names in Schedule "A"
hereto (hereinafter called "the said shares").
C. The Vendor has agreed to sell to the Purchaser the respective shares in the
capital of the Company with all rights attaching thereto and the Purchaser
has agreed to purchase from the Vendor the said shares in the proportions
nominated by the Purchaser at and for the total purchase price of SIX
HUNDRED & TWENTY FIVE THOUSAND DOLLARS ($625,000.00) plus G.S.T. if any -
see
E-476
<PAGE>
2
Clause 18 (hereinafter called "the Purchase Price").
D. THE parties acknowledge that this Agreement and the transfer of the said
shares referred to herein shall exclude the Company's video base training
division. SEVEN DIMENSIONS TRAINING SYSTEMS which shall remain the property
of the Vendor notwithstanding the terms of this Agreement.
E. The Vendor and the Purchaser are now desirous of formalising such verbal
arrangement in writing
NOW IT IS MUTUALLY AGREED as follows:
1. THE Purchaser shall pay to the Vendor by way of deposit the sum of ONE
THOUSAND DOLLARS ($1,000.00) upon the signing of this Agreement and a
further sum of FIVE THOUSAND DOLLARS ($5,000.00) upon this Agreement
becoming unconditional which monies shall be paid to the Trust Account of
the Vendor's Solicitor. The said sums are to be in reduction of the said
Purchase Price.
2. (i) THE balance of the Purchase Price namely SIX HUNDRED & NINETEEN
THOUSAND DOLLARS ($619,000.00) shall be paid as follows:
(a) As to the sum of TWO HUNDRED & TWENTY THOUSAND DOLLARS
($220,000.00) by way of the Purchaser transferring to the Vendor
fully paid ordinary shares in BROCKER INVESTMENTS (NZ) LIMITED in
accordance with the provisions of paragraph 21 herein.
(b) As to the sum of THREE HUNDRED & NINETY NINE THOUSAND DOLLARS
($399,000.00) (and subject to the provisions of paragraph 21
herein) by way of the Purchaser executing on the Settlement Dare
in favour of the Vendor a first
E-477
<PAGE>
3
mortgage of all its shares in the Company providing for the
following:
(A) Term: That period expiring on the 31st day of
March 1995
(B) Penalty Interest: Penalty interest at a rate 2% above the
Bank of New Zealand base lending rate
(commercial) shall apply to the advance
for that period where the Principal Sum
remains outstanding beyond the 31st day
of March 1995
(ii) The Purchase Price excludes interest and the parties agree that where
in relation to this Agreement it is necessary to determine an
acquisition price for the purposes of Sections 64B and 64M of the
Income Tax Act 1976 the consideration payable under this Agreement is
the lowest price the parties would have agreed upon for the sale and
purchase of the shares in terms of Paragraph (c) (1) of the definition
of a "core acquisition price" in Section 64B of that Act.
3.
(a) THE Date of Settlement shall be the 27th day of January 1995 or
earlier by mutual agreement (herein called "the Settlement Date") at
which time all incoming and outgoings of the Company shall be
apportioned between the parties.
(b) THE parties acknowledge that the Purchase Price has been established
on the basis that such purchase price equals 3.75 times the net profit
after tax of the Company for the year ending the 31st day of July 1994
which profit is evidenced by the books of account attached hereto and
marked "Schedule "B".
E-478
<PAGE>
4
(c) THAT in the event that the net profit after tax of the Company for the
year ending 31 July 1994 is shown by audit on the Settlement Date (or
as soon as practicable thereafter) to be less than the amount referred
to in the books of account of the Company attached hereto and marked
"Schedule B", based on results derived on an annualized basis from 1
August 1993 to 31 July 1994, and adjusted to exclude the Seven
Dimensions Training Systems business activities, then the purchase
price shall be reduced having regard to the parties' Agreement that
the purchase price has been established on the basis of 3.75 x the net
profit after tax of the Company."
(d) THE parties acknowledge that the audit of the company's accounts as
required in terms of Clause 3(c) hereof shall be conducted by the
auditors for the purchaser."
4. NOTWITHSTANDING the transfer now made by the Vendor to the Purchaser of the
said shares so sold, such transfer of shares is hereby acknowledged by the
Purchaser to be without prejudice to the repayment of the said monies (if
any) still owing to the Vendor hereunder and to the Vendor's rights to
recover the same from the Purchaser.
5. UPON the payment of the balance of purchase price referred to in Clause 2
herein the Vendor will hand to the Purchaser at the office of the Vendor's
Solicitor or such other place as may be mutually agreed upon:
(a) TRANSFERS of the said shares in the Company to the Purchaser executed
by the Vendor (and each of them) in registerable form.
(b) THE share certificates (if any) for the said shares.
E-479
<PAGE>
5
(c) RESIGNATIONS in writing of the Vendor and all Officers of the Company
including Directors and Secretary and an acknowledgement by each of
them, and by each and every Shareholder of the Company, that no monies
are owing to any of them whatsoever whether by way of fees, salary or
otherwise.
(d) COMMON Seal, Certificate of Incorporation, Share Register, Mortgage
Register, Minute Book, Books of Account, Memorandum and Articles of
Association, Ownership documents of all descriptions (including
Certificates of Title of land (if the Company owns land) and motor
vehicle registration papers), all other books, papers and assets of
the Company together with any Leases including Leases of real estate
(subject to the provisions of paragraph 6(u).
6. IN consideration of the Purchase Price the Vendor warrants to the Purchaser
as follows:
(a) THAT the capital of the Company is as set out in the recitals to this
agreement and that all the said shares in the capital of the Company
are paid up in full and in the case of shares fully or partly paid up
otherwise than for cash, that all the provisions of Section 60 of the
Companies Act 1955 have been duly complied with.
(b) THAT the said shares are free from any lien, charge or other
encumbrance whatever and that no person other than the Vendor
respectively has any legal or equitable interest in the said shares.
(c) THAT there are no monies owing to the Vendor respectively by the
Company in respect of the said shares.
(d) THAT the Vendor shall not permit to be passed before the Settlement
E-480
<PAGE>
6
Date any resolution by the Company altering its share capital or
changing its name.
(e) THAT as shareholders of the Company the Vendor (and each of them) doth
hereby waive any pre-emptive rights which they may have in respect of
the said shares in the Company held by every other shareholder.
(f) THAT the Purchase Price has been calculated so as to include the
balances of the Shareholders' loan accounts (if any) and loans to
employees. Shareholders and Company officers (if any) as at the
Settlement Date and the Vendor shall not call upon the Company to
repay the balance of any loan account. The vendor shall further ensure
that all monies owed by them to the Company by way of Shareholder's
loan accounts or otherwise and any other loans owing by employees,
shareholders or company officers or otherwise shall be repaid in full
to the Company at the Settlement Date.
(g) THAT no matters of substantial policy of the Company will be decided
prior to the Settlement Date without reference to the Purchaser and
the approval in writing of the Purchaser which approval shall not be
unreasonably or arbitrarily withheld.
(h) THAT they shall not declare, or pay, any distribution of profit or
capital to themselves or any other party in respect of income for the
year ended 31 March 1994 or the Settlement Date (whichever is the
later) or incur any expenditure up to the Settlement Date other than
in respect of salaries at the current rate, motor vehicle expenses,
telephone expenses, interest, entertainment expenses and usual
operating and trading expenses at levels already established.
(i) THAT from the date of this Agreement the Vendor being all the
E-481
<PAGE>
7
Shareholders of the Company shall, if required by the Purchaser,
continue to provide services to the Company on the same terms and
conditions currently applying up to the Settlement Dare and shall be
reimbursed by the Company for such services on the basis currently
existing and PROVIDED FURTHER the said KENNETH JOHN PARKER and EVELYN
ANN PARKER shall provide the said services to the Company at the cost
of the Company for that period expiring 25 February 1995.
(j) THAT they shall secure the passing of Directors' Resolutions approving
the share transfers transferring their holdings of the said shares in
the Company to the Purchaser and or its nominee.
(k) THAT there are no material contracts, contingent liabilities or
arrangements existing or contemplated relating to the Company
(including, but not limited to, agreements with staff, suppliers or
customers) other than as already disclosed to the Purchaser or those
which arise in the normal course of reasonable and prudent business
operation.
(1) THAT no legal proceedings of any kind are being taken against the
Company and that the Vendor (and each of them) is not aware of any
litigation or legal proceedings against the Company pending or
threatening, or circumstances which may give rise to the same.
(m) THAT they are not aware of any cause of action in respect of which the
Company is not fully indemnified against breach of contract, or other
matter which could or might be used for the purpose of commencing
proceedings either civil or criminal against the Company.
(n) THAT the Company has, as and when required by Law, rendered to the
Revenue authorities all necessary returns (including, but not limited
to, retains in respect of Goods and Services Tax, PAYE, Income Tax and
E-482
<PAGE>
8
Fringe Benefit Tax) and that such returns have been made on a proper
basis and that there is no dispute outstanding with the Revenue
authorities in respect of the same and that all tax for which the
Company is or has been liable, has been paid for the period ending on
the Settlement Date.
(o) THAT all current licences, authorities, permits and agreements
required to carry on the business of the Company are at the date
hereof and will at the Settlement Date be in full force and effect and
will not be withdrawn by reason of the acquisition of the said shares
by the Purchaser.
(p) THAT prior to the Settlement Date the Company shall have complied with
all the requirements of the Companies Act 1955 and any Act or Acts
amending the same in relation to the filing of annual returns and any
other documents required to be filed with the Registrar of Companies.
(q) THAT on Settlement Date there will be no pension, retiring allowance
or other benefit payable by the Company to any employee or Officer of
the said Company (either Director, Secretary or otherwise) on their
retirement or resignation from office or termination of their
employment with the said Company.
(r) THE Vendor shall indemnify and save harmless the Purchaser against any
costs and damages suffered by the Purchaser arising from any liability
that may exist in respect of Agreements and arrangements entered into
prior to the Settlement Date between the Vendor, or the Company and
third parties.
(s) THAT the Vendor shall complete at their own cost in all things any
audit of the Company for the period up to the Settlement Date if an
audit of the Company is required by the Revenue Authorities at any
time.
(t) THAT the net profit of the Company is that which is recorded as at the
E-483
<PAGE>
9
31st day of July 1994 in the attached books of account of the Company
attached hereto and marked "Schedule B".
(u) THE Vendor warrants that it has complied in all respects with the
terms of all Leases between the Company and third parties in respect
of real estate, buildings or otherwise AND FURTHERMORE the Vendor
warrants that it shall not commit the Company to any new or renewals
of Leases in respect of real estate, buildings or otherwise without
the written consent of the Purchaser and the Vendor further warrants
to arrange for a complete surrender of its Lease of premises at Unit
F, 123 Dominion Road, Mt Eden to occur on the 31st day of March 1995
and pending expiry of the Lease by affluxion of time or surrender the
Company shall be responsible in all respects with all obligations
under the Lease including but not limited to payments in respect of
rental PROVIDED THAT the Vendor shall indemnify the Purchaser and the
Company in respect of any loss suffered by either as a consequence of
any breach by the Company of the provisions of the Lease prior to the
date of this Agreement.
(v) THAT it has complied with all terms of agency agreements and
dealerships and that the same will at the Settlement Date be in full
force and effect and will not be withdrawn by reason of the
acquisition of the said shares by the Purchaser and that the Vendor
shall take all steps to ensure the smooth and co-operative maintenance
of agreements and dealerships after the Settlement Date.
(w) THAT the Vendor has not provided to any third party any options in
respect of the shareholding referred to herein.
6.A NEITHER party shall, without the express consent of the other, make use of
(whether for its own purposes or otherwise), or divulge to any person,
firm, company or other entity whatsoever, any information or facts relating
to any aspect of this Agreement or matters whatsoever relating thereto.
E-484
<PAGE>
10
7. NO covenant or warranty on the part of the Vendor or of the Purchaser shall
be merged or become of no effect upon settlement hereof or any assurances
pursuant hereto but the same shall remain outstanding and binding upon the
Vendor and his respective Executors and Administrators and the Purchasers
according to the tenor thereof.
8. THE Purchaser shall procure by no later than the 31st day of March 1995 or
upon repayment of the mortgage of shares referred to in Clause 2(i) herein
(whichever is the earlier) the release of the Vendor from all guarantees,
indemnities and other personal covenants, undertaking, liability for the
debts or liabilities of the Company and shall indemnify and save harmless
the Vendor from and against all liabilities of the Company, except to the
extent that such may be the subject of indemnity by the Vendor to the
Purchaser or the Company by virtue of this Agreement.
9. EACH of the parties undertakes to take all steps, sign all documents and
exercise all rights including voting rights necessary to carry this
agreement into effect.
10. ALL differences of disputes which may arise between the parties hereto or
any of them touching or concerning this agreement or the construction
thereof or the rights or liabilities of any part hereunder shall be
determined by the arbitration of a single arbitrator if the parties can
agree on one or failing such agreement by two arbitrators (one to be
appointed by the Vendor and the other by the Purchaser) and their umpire in
accordance with the Arbitration Act 1980.
11.
(i) IF the Purchaser shall make default in payment of any instalment of
the purchase monies hereby agreed to be paid or in the performance or
observance of any other stipulation or agreement on the part of the
Purchaser herein contained and such default shall be continued for the
space of fourteen (14) days, the time for such payments and
performances
E-485
<PAGE>
11
fixed by this Agreement being strictly of the essence of the contract.
then and in such case the Vendor without prejudice to their other
remedies forthwith or at any time hereafter may at their option
exercise all or any of the following remedies, namely:
(a) ENFORCE specific performance of this Agreement including the
payment of all monies payable hereunder in which case the whole
of the unpaid purchase monies shall be deemed to have become due
and payable to the Vendor notwithstanding that the due dare of
payment thereof as aforesaid may not have arrived.
(b) RESCIND this contract of sale and thereupon all monies hereto
before paid shall be forfeited to the Vendor.
(c) RE-ENTER upon and take possession of the lands and properties of
the Company without the necessity of giving any notice or making
any form of demands.
(d) RESELL the said shares in the Company either by public auction or
private contract subject to such stipulations as they may think
fit and any deficiency in price which may result on and all
expenses attending a resale or attempted resale shall be made
good by the Purchaser and shall be recoverable by the Vendor as
liquidated damages the Purchaser receiving credit for any payment
in reduction of the Purchase Price. Any increase in price on
resale after reduction of expenses shall belong to the Purchaser.
(e) TO claim from the Purchaser interest on the unpaid portion of the
Purchase Price at that interest rate being 2% above the Bank of
New Zealand based lending rate (commercial).
(ii) IF the Vendor shall make default in the performance or observance of
any
E-486
<PAGE>
12
stipulation or agreement on the part of the Vendor herein contained
(hereinafter called "the Default") then the Purchaser without
prejudice to its other remedies, may forthwith, or at any time
hereafter at its option, exercise all or any of the following
remedies:
(a) ENFORCE specific performance of this Agreement
(b) RESCIND this Contract of sale and thereupon all monies hereto
before paid shall be refunded to the Purchaser forthwith as
liquidated damages together with interest on such sums at the
interest rate of 10% per annum from the date (or dates) of
payment by the Purchaser until repayment.
(c) CHARGE to the Vendor an amount representing 10% per annum of the
Purchase Price by way of damages (hereinafter called "penalty
interest") for the period from the Settlement Date (or the date
of default whichever is earlier) to the date upon which the
Vendor shall have performed or observed the said stipulations or
agreements on the part of the Vendor herein contained or
otherwise remedied the default. The said sum of penalty interest
shall be deducted from the Purchase Price at the Purchaser's
option in the event that this Agreement is eventually performed.
(d) RECEIVE all profits and rents from the Company notwithstanding
that the Settlement Date has passed and the Purchase Price
remains unpaid.
12. IN consideration of the Purchaser entering into these presents at the
request of the Vendor, DOUGLAS COWIE and KENNETH JOHN PARKER being Officers
of the Company COVENANTS with the Purchaser that they (and each of them)
E-487
<PAGE>
13
shall not for a period of one (1) year from the Settlement Date, or
termination of employment with the Purchaser, Sealcorp Computer Products
Limited or their respective subsidiaries (whichever is the later) either
directly or indirectly carry on or be engaged or concerned or interested or
in partnership with or as manager, agent or servant in any business or
enterprise involved or associated with the sale at wholesale, retail or
otherwise of all products of the type and nature currently sold by the
Company (and its subsidiaries, if any), and the Purchaser (and its
subsidiaries, if any) and Sealcorp Computer Products Limited (or any of its
subsidiaries, if any). This restraint shall apply to the whole of New
Zealand. This provision shall be altered to the extent and in respect of
those shareholders specifically referred to in Schedule "C" hereof.
13. THE Vendor (and each of them) warrant that all information provided and
divulged to the Purchaser in respect of all matters touching upon this
Agreement are true and correct and that no material omissions have been
made in respect of the same and furthermore the Vendor (and each of them)
HEREBY IDEMNIFY the Purchaser in respect of the full value of:
(i) UNDISCLOSED liabilities whether revealed before the Settlement Date or
after the Settlement Daze, (whether contingent or otherwise,
including, but not limited to, Income Tax, Goods and Services Tax,
Fringe Benefit Tax and PAYE).
(ii) FIXED Assets forming part of this Agreement which are not either
available at the Settlement Date or are not in full operational order
at the Settlement Date and to this end the Vendor shall provide to the
Purchaser at the time of signing this Agreement a full and precise
list of fixed assets
E-488
<PAGE>
14
including a list of plant fixtures and fitting.
14. THE parties acknowledge that the Purchaser shall provide employment
contracts to the following only of the Company's staff on new terms and
conditions:
(i) ANGELA PHILLIMORE (or replacement)
Term : twelve (12) months from the date of this Agreement
(ii) CARA LE-VENE
Term : twelve (12) months from the date of this Agreement
(iii) MARTINHO GLORIA and CARLA PAPA
Term: to be advised
(iv) DOUGLAS COWIE
Term : three (3) years from the date of this Agreement
15. (i) SUBJECT to the provisions of paragraph 14 herein the Vendor
shall be responsible for all redundancy payments arising out
of redundancies which it creates up to and including the
Settlement Daze in respect of the employees of the Company.
(ii) THE parties warrant to take all steps and do all things in
order to ensure the total confidentiality of themselves and
the redundant employees in relation to all redundancy
agreements entered into and redundancy payments made to the
said redundant employees by the Purchaser.
(iii) SUBJECT to the preceding sub-paragraphs the Vendor warrants
that all employees of the Company shall be paid all monies
to which they are owed up to the Settlement Date including
but not limited to redundancy, wages, salary, holiday pay
and commissions (if any).
16. (i) IN consideration of the Purchase Price the Vendor (and each
of them) give up the full right, interest and use of the
name PERSONAL COMPUTER SYSTEMS (1993) LIMITED (or any part
of that name as
E-489
<PAGE>
15
required by the Purchaser) from the Settlement Date and the
Vendor (and each of them) shall execute all documents and do
all things necessary to satisfy this provision including, if
required by the Purchaser, execution of Transfer or
assignment of Trade Mark or otherwise in favour of the
Purchaser and/or its nominee.
(ii) THE Vendor shall transfer to the Purchaser all of its
intellectual property rights and interests (including all
designs, logos, Trade Marks, names, licences, permits,
consents and other authorisations) used by the Vendor and
the Company in the conduct of the business of the Company.
17. SUBJECT to earlier provisions herein the parties shall bear their own costs
in connection with preparation, execution and settlement of this Agreement
and all incidental attendances thereto PROVIDED HOWEVER that the Purchaser
shall meet the reasonable costs of the Vendor's solicitor in connection
with preparation, execution and registration of the mortgage of shares
referred to in paragraph 2(i) herein.
18. UNLESS otherwise expressly stated herein the parties are contracting on the
understanding that the supply made pursuant to this Agreement is a supply
within Section 11(1) (c) of the Goods and Services Tax Act 1985 on which
G.S.T. is chargeable at the rate of zero percent PROVIDED THAT if it
transpires that any G.S.T. is payable in respect of the supply then:
(a) THE Purchaser shall pay to the Vendor the G.S.T. which is so payable
in one sum on the Settlement Date or such later date that the parties
may agree upon.
(b) IF the supply under this Agreement is a taxable supply the Vendor
shall deliver a tax invoice to the Purchaser on or before the
Settlement Date or
E-490
<PAGE>
16
such earlier date as the Purchaser is entitled to delivery of an
invoice under the G.S.T. Act.
(c) WHERE G.S.T. is not paid to the Vendor by the Purchaser where such
payment is legally payable, then the Purchaser shall pay to the Vendor
(i) INTEREST at the rate of 10% per annum on the amount of G.S.T.
unpaid from the date referred to in paragraph 21(a) herein until
payment; and
(ii) ANY default G.S.T., being any additional G.S.T., penalty or any
other sum levied against the Vendor by reason of non payment
within the meaning of the G.S.T. Act other than any sum levied
against the Vendor by reason of a default to the Vendor after
payment of G.S.T. to the Vendor by the Purchaser.
19. THE Purchaser will not exploit (whether directly or indirectly) for the
Purchaser's own purposes any customer information or any other information
imparted to or acquired by the Purchaser in the course of the Purchaser's
review of the business of the Company and in the course of all negotiations
and other matters incidental to this sale and purchase. The Purchaser
undertakes, that it will not, without the prior written consent of the
Vendor,:
(a) USE this information for any purpose other than to consider whether to
buy the said shares in the Company
(b) DISCLOSE to any other party any information provided by the Vendor
relating to the Company
(c) COPY in any form any of the customer information provided to the
Purchaser by the Vendor or acquired by the Purchaser, and, if required
by the Vendor, shall return such information immediately to the Vendor
and
E-491
<PAGE>
17
shall keep confidential such information.
(d) SOLICIT the Company's suppliers, distributors and clients.
This provision shall apply only up to the Settlement Date in the event that
this Agreement becomes unconditional and is settled in full otherwise the
provision shall apply for a period of one (1) year from the date of this
Agreement.
20. FOR the sake of clarity the parties acknowledge that the Company occupies
those premises referred to in Schedule "D" as tenants.
21. FOR the sake of clarity the parties acknowledge that the Vendor shall
acquire as soon as practicable after the Settlement Date shares in BROCKER
INVESTMENTS LIMITED (CANADA) to the value of TWO HUNDRED & TWENTY THOUSAND
DOLLARS ($220,000.00) in partial satisfaction of the purchase price as
referred to in Clause 2(i)(a) hereof. Pending issue of the shares in
BROCKER INVESTMENTS LIMITED (CANADA) and transfer of the same to the Vendor
in satisfaction of this provision the Purchaser shall execute in favour of
the Vendor a mortgage of shares securing the said sum of TWO HUNDRED &
TWENTY THOUSAND DOLLARS ($220,000.00) in addition to the mortgage of shares
referred to in paragraph 2(i)(b) hereof to the intent that the mortgage of
shares shall secure an initial sum of SIX HUNDRED & NINETEEN THOUSAND
DOLLARS ($619,000.00) on the terms outlined in Clause 2(i)(b)(A) and (B).
The said mortgage of shares shall provide for partial satisfaction in the
sum of TWO HUNDRED & TWENTY THOUSAND DOLLARS ($220,000.00) immediately the
transfer of shares in BROCKER INVESTMENTS LIMITED (CANADA) in favour of the
Vendor shall occur in accordance with the terms herein.
22. EXECUTION of this Agreement by all parties referred to herein shall bind
each of those parties to this Agreement as if they were contracting parties
to the same in respect of those provisions to which their obligations
relate.
E-492
<PAGE>
18
SCHEDULE A
----------
WILLIAM RUSSELL McLEAN 65 shares
KENNETH JOHN PARKER 164 shares
DOUGLAS COWIE 480 shares
EVELYN ANN PARKER 166 shares
ROGER OLIVER BRAEM 110 shares
DENNIS GRAHAM BREESE 15 shares
SCHEDULE B
----------
COMPANY'S ACCOUNTS
See Attached
SCHEDULE C
----------
The Restraint of Trade provision referred to in paragraph 12 of the Agreement
shall, in respect of DOUGLAS COWIE, apply from the time he ceases employment
with the Company or BROCKER INVESTMENTS (NZ) LIMITED or SEALCORP COMPUTER
PRODUCTS LIMITED (or any of their respective subsidiaries), whichever is the
later and in respect of KENNETH JOHN PARKER, the restraint provision referred to
in paragraph 12 shall apply from the Settlement Date unless KENNETH JOHN PARKER
enters into employment with the abovementioned companies (or any of their
respective subsidiaries) in which case the restraint provision referred to in
paragraph 12 shall apply from the time he ceases employment with the said
companies (or any of their respective subsidiaries).
SCHEDULE D
----------
Those premises at Unit F, 123 Dominion Road, Mt Eden
E-493
<PAGE>
19
IN WTTNESS WHEREOF this Agreement has been executed the day and year first
hereinbefore mentioned.
EXECUTED by the Vendor )
WILLIAM RUSSELL McLEAN ) /s/ William Russel McLean
KENNETH JOHN PARKER ) /s/ Kenneth John Parker
DOUGLAS COWlE and ) /s/ Douglas Cowie
EVELYN ANN PARKER ) /s/ Evelyn Ann Parker
in the presence of:
/s/ Simon J. Hayden
Simon J. Hayden
2/112 St. Andrew's Road
Epsorn, Auckland
Solicitor
EXECUTED by the Vendor )
ROGER OLIVER BRAEM ) /s/ Roger Oliver Braem
in the presence of: )
/s/ [ILLEGIBLE]
146 Tasman St
Wellignton
Technical Specialist
EXECUTED by the Vendor )
DENNIS GRAHAM BREESE ) /s/ Dennis Graham Breese
in the presence of:
/s/ [ILLEGIBLE]
ACCOUNTANT
[ILLEGIBLE]
EXECUTED by the Purchasers ) /s/ MB Ridgway
in the presence of )
/s/ Martin H. Gloria
(Martin Gloria)
128 West Harbour Drive
West Harbour
Auckland
(Product Manager)
E-494
<PAGE>
[LOGO]
Unit F. 123 Dominion Road. Mt Eden
P.O. Box 41-158. St Lukes. Auckland
Telephone (09) 630-1801
Fax (09) 633-2242
Applelink NZ0035
29 September 1994
Additional Notes to July 1994 Consolidated Trading and Profit & Loss Statement
for Personal Computer Systems (1993) Ltd.
The set of accounts presented with this summary is for our company from 1 April
1994 to 31 July 1994 in the style as for those that you have already for the
nine months 1 July 1993 to 31 March 1994. The procedures for arriving at the end
result in both instances are the same but we have taken into account as at 31
July 1994 those accrual factors highlighted by Coopers & Lybrand people during
their audit, except for the amortisation of goodwill which we believe is not an
issue at this time.
The summary is prepared on an annualised basis 1 August 1993 to 31 July 1994;
and adjusted to exclude Seven Dimensions Training Systems business activities
from the performance of Personal Computer Systems (1993) Ltd. for this period.
The performance recorded is considered satisfactory in the context that sales
for the six months 1/4/94 to 30/9/94 will be down on budget (at this time we
predict about $100,000) thus impacting on the bottom line. This result we
believe is primarily because of the price reduction policy for all products (up
to 50% in some instances) introduced by Claris in May this year now impacting on
revenue figures. However, our gross margins remain as previously for Claris
products.
I have already forwarded you our projections for the next six months trading.
From my handwritten notes attached to those forecasts you will see that we have
aggressive business activities already in place (ie. two new product/sales
people) and with the substantial support of the Brocker Group in the financial
and marketing areas particularly, there is no reason to believe that the targets
set can not be achieved. With the other economies of scale we have applied in
the overhead area (eg. exclusion of Ann & Ken Parker from staff roll from 1
November 1994), profitability should be even better than we are realistically
able to project.
E-495
<PAGE>
2.
Summary:
NB: As seen by Coopers... but see page 3 for adjusted summary inc1uding Quark
MDF/Technical Support Credit not avialable at time of first schedule.
Net Profit Recorded in Accounts:
a) 9 months 1/7/93 to 31/3/94 - $ 114.315 *8/9 = $ 101,613
b) 4 months 1/4/94 to 31/7/94 - = $ 46.168
---------
$ 147.781
---------
Adjustment for Seven Dimensions:
a) 9 months 1/7/93 to 31/3/94 add back - consultancy $ 6.609
royal ties $ 22,532
---------
$ 29,141
---------
ie. $487.351 - $ 29,141= $458.210 *8/9 = $407.298 * 14% =
= $ 57,022
b) 4 months 1/4/94 to 31/3/94 -
ie. $ 256.342 * 14% = $ 35,888
---------
Seven Dimensions Adjustment $ 92,910
---------
Adjusted Net Profit Summary:
a) Net profit recorded = $ 147,781
b) Seven Dimensions Adjustment = $ 92,910
---------
Adjusted Net Profit for the year 1/8/93 to 31/7/94 = $ 240,691
less provision for taxation $ 79,428
---------
Net profit after tax for period 1/8/93 to 31/7/94 $ 161.264
---------
E-496
<PAGE>
3.
Summary:
NB: As adjusted for Quark MDF/Technical Support Credit of $ 15,082.
Net Profit Recorded in Accounts:
a) 9 months 1/7/93 to 31/3/94 - $ 114,315 * 8/9 = $ 101,613
b) 4 months 1/4/94 to 31/7/94 - = $ 61,250
---------
$ 162,863
---------
Adjustment for Seven Dimensions:
a) 9 months 1/7/93 to 31/3/94 add back - consultancy $ 6,609
royalties $ 22,532
--------
$ 29,141
--------
ie. $487,351 - $ 29,141= $453,210 *8/9 = $ 407,298 * 14% =
= $ 57,022
b) 4 months 1/4/94 to 31/3/94 -
ie. $ 256,342 * 14% = $ 35,888
--------
Seven Dimensions Adjustment = $ 92,910
---------
Adjusted Net Profit Summary:
a) Net profit recorded = $ 162,863
b) Seven Dimensions Adjustment = $ 92,910
---------
Adjusted Net Profit for the year 1/8/93 to 31/7/94 = $ 255,773
less provision for taxation $ 84,405
---------
Net profit after tax for period 1/8/93 to 31/7/94 $ 171,368
---------
E-497
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993) LIMITED
FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31ST JULY 1994
E-498
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993)
LIMITED
FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31ST JULY 1994
COMPUTER SOFTWARE
AUCKLAND
CONTENTS
Company Register
Directors Report
Notes to the Financial Statements
Trading Statement
Profit and Loss Account
Balance Sheet
Fixed Asset Depreciation Schedule
E-499
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993)
LIMITED
COMPANY REGISTER
FOR THE PERIOD ENDED 31ST JULY 1994
AUTHORISED CAPITAL : 1,000 Fully paid
$1 Ordinary Shares
COMPANY NUMBER : AK 592015
DATE OF INCORPORATION : 15 June 1993
REGISTERED OFFICE : 349 Remuera Road
Auckland
SHAREHOLDERS : DB Cowie 480 Shares
WR McLean 65 Shares
KJ Parker 109 Shares
EA Parker 111 Shares
RO Braem 110 Shares
DG Breese 15 Shares
KJ & EA Parker 110 Shares
-----
1000
DIRECTORS : DB Cowie -----
: KJ Parker
RW McLean
RO Braem
SECRETARY : EA Parker
BANKERS : Bank of New Zealand
Dominion Road
Auckland
ACCOUNTANTS : Lay, Dodd & Partners
Auckland
E-500
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993)
LIMITED
DIRECTORS REPORT
FOR THE PERIOD ENDED 31ST JULY 1994
Presented with and forming part of the Accounts for the
period ended 31ST JULY 1994.
Net Profit for the year $30,932.74
After provision for taxation of: 15,235.44
APPROPRIATIONS:
Net Profit was 30,932.74
Accumulated Profit brought forward 74,479.69
-----------
Accumulated Profits to be carried forward $105,412.43
===========
DIVIDENDS: The Directors recommend that no dividend be paid for the
year ended 31ST MARCH 1994.
AUDITORS: Pursuant to section 354(3) of the Companies Act 1955 and in
terms of the unanimous resolution passed at the last Annual
General Meeting, the accounts have not been audited.
GENERAL: There has been no change in the main activities of the
company during the year under review.
STATE OF AFFAIRS: The state of the company's affairs is satisfactory.
.............................. Director / /1994
E-501
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993)
LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31ST JULY 1994
1. ACTIVITY
The principal business activity of PERSONAL COMPUTER SYSTEMS (1993) LIMITED
is that of computer software and has not changed during the period.
2. STATEMENT OF ACCOUNTING POLICIES
(1) GENERAL ACCOUNTING POLICIES
(A) The general accounting principles appropriate for measurement and
reporting of profit under the historical cost method are used by
PERSONAL COMPUTER SYSTEMS (1993) LIMITED for the preparation of
these accounts.
(B) Accrual accounting is used to match expenses and revenues.
(C) Reliance has been placed on the fact that the company is a going
concern.
(2) PARTICULAR ACCOUNTING POLICIES
(A) Depreciation
Depreciation is written off fixed assets on a diminishing value
basis at the maximum rates permitted for tax purposes. These
rates are considered appropriate in the circumstances.
(B) Inventories and Work in Progress
Inventories and Work in Progress have been valued by the
Directors, at the lower of cost or net realisable value.
(C) G.S.T
These financial statements have been prepared on a G.S.T.
exclusive basis of accounting, except for Accounts Receivable and
Accounts Payable stated in the Balance Sheet which are GST
inclusive. Any G.S.T. due or recoverable is disclosed in the
Balance Sheet.
(D) Accounts Receivable
Accounts Receivable are stated at expected net realisable value.
E-502
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
-2-
(E) Taxation
Taxation charged to the Profit and Loss Account is based on the
Company's assessable income.
Profit Before Taxation $ 46,168.18
Profit Subject to Taxation $ 46,168.18
===========
Taxation Charge $ 15,235.44
===========
Imputation Credits (subject to Inland Revenue Department
Assessments) available to Shareholders at Balance Date are
$294.05.
(D) Goodwill
Goodwill is stated at cost.
(E) Finance Charges
Finance charges resulting from specified lease agreements
and hire purchase contracts are charged against revenue in
the period incurred in accordance with the "Rule of 78
Method".
(3) CHANGES IN ACCOUNTING POLICIES
There have been no significant changes in accounting policies during the
period.
HIRE PURCHASE AND SPECIFIED LEASE CONTRACTS
<TABLE>
<CAPTION>
Current Term
(Less Fin. (Less Fin.
Int Mthly Date of Charges in Charges in
Financier Item Rate Instal Term Advance Advance) Advance)
- --------- ---- ---- ------ ---- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Toyota Toyota 14.46% $515.09 36 Jan 93 6193.08 3096.54
Finance Corolla mnths (710.56) ( 77.24)
NZ Ltd RB3372 -------- --------
$5482.52 $3019.30
-------- --------
</TABLE>
4. TERM LOANS
<TABLE>
<CAPTION>
Principal Int Date of Repayment
Sum Rate Term Advance Security Terms
---------- ------ ---- ------- -------------- ---------
<S> <C> <C> <C> <C> <C>
$67,500.00 10.15% 3 yrs 10/12/93 Debenture over $1875.00
company Assets Ppl/Mnth
and personal & Int on
guarantees reducing
KJ & EA Parker balance
DB & LA Cowie
</TABLE>
5. RELATED PARTY TRANSACTIONS
Net transactions during the year ended 31st July 1994 with Personal
Computer Systems Limited were for taxation and amounted to $760.00
E-503
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
-3-
6. CONTINGENT LIABILITIES
There are no known contingent liabilities at balance date.
7. CAPITAL COMMITMENTS
There are no capital commitments at balance date.
.....................Director ........................Director
Disclaimer of Liability
We have compiled the financial statements of PERSONAL COMPUTER SYSTEMS (1993)
LIMITED for the period ending 31st July 1994.
compilation is limited primarily to the collection, classification and
summarisation of financial information supplied by the client. A compilation
does not involve the verification of that information. We have not conducted an
audit or review assignment and therefore neither we nor any of our employees
accept any responsibility for the accuracy of the material from which the
financial statements have been prepared. Further, the financial statements have
been prepared at the request of and for the purpose of the client only and
neither we nor any of our employees accept any responsibility on any ground
whatever, including liability in negligence, to any other person.
/s/ Lay Dodd & Partners
Lay Dodd & Partners
Auckland
E-504
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993) LiMITED
TRADING STATEMENT
FOR THE PERIOD TO 31ST JULY 1994
<TABLE>
<CAPTION>
1994 1994
---- ----
Income
<S> <C> <C>
1,546,338 Sales 717,371.10
- ---------- -----------
1,546,338 717,371.10
- ---------- -----------
1,546,338 717,371.10
Less Cost of Goods Sold
-- Opening Inventory 305,998.40
1,228,926 Purchases 464,930.30
1,153 Packaging 1,785.58
4,700 Customs Agency --
15,422 Inwards Freight 13,581.09
- ---------- ----------
1,250,201 786,295.37
305,998 Closing Inventory 370,136.18
- ---------- -----------
944,203 416,159.19
- ---------- -----------
$602,135 Gross Profit From Trading $301,211.91
========== ===========
</TABLE>
E-505
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993) LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE PERIOD TO 31ST JULY 1994
<TABLE>
<CAPTION>
1994 1994
---- ----
Income
------
<S> <C> <C>
602,135 Gross Profit From Trading 301,211.91
- ---------- -----------
602,135 301,211.91
Expenditure
-----------
405 A.C.C. Levy 3,207.73
21,467 Advertising & Promotion 14,381.10
1,223 Bank Charges 467.88
85 Cleaning -
141 Commissions 326.00
133 Computer Expenses -
20,029 Consultants Fees 8,657.89
616 Credit Card Charges 222.90
21,551 Depreciation 7,902.00
Entertainment - Fully
3,485 Deductible 902.71
Entertainment - Non
2,252 Deductible -
11,999 Freight and Cartage 7,219.15
3,443 Fringe Benefit Tax 3,408.93
7,540 General Expenses 1,141.86
Hire of Plant and
4,329 Equipment 2,136.08
6,909 Insurance 2,445.73
1,633 Interest - Use of Money
7,842 Interest - Bank 4,379.44
2,291 Interest - Hire Purchase 436.06
44 Legal Costs -
1,762 Light, Power & Heating 1,145.96
750 Loan Fees -
9,475 Motor Vehicle Expenses 5,306.80
- Penalty Taxes 166.19
Printing, Stationery &
15,187 Postage 13.58
14,092 Rent & Rates 8,278.22
3,706 Repairs and Maintenance 2,116.93
22,532 Royalties 1,278.73
241,895 Salaries 147,740.66
4,530 Secretarial & Accounting 3,805.00
777 Security 209.56
1,148 Seminars & Conferences 85.51
52 Staff Welfare 173.76
787 Subscriptions 1,413.85
Telephones, Fax &
17,462 Telecommunications 19,237.91
12,817 Travelling Expenses 3,099.91
Travelling Expenses -
21,163 Overseas 5,034.26
Overseas Travel-Non
1,799 Deductible --
- ---------- -----------
487,351 256,342.29
- ---------- -----------
114,784 Operating Profit 44,869.62
</TABLE>
E-506
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
DISCLAIMER OF LIABILITY
PERSONAL COMPUTER SYSTEMS (1992) LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE PERIOD TO 31ST JULY 1994
<TABLE>
<CAPTION>
1994 1994
---- ----
<S> <C> <C>
Other Income
858 Interest Received 161.56
(1,327) Profit on Sale of Assets --
Asset Disposal Adjustment
-- - 31 March 1994 1,137.00
- ---------- -----------
(469) 1,298.56
- ---------- -----------
$114,315 NET PROFIT $46,168.18
========== ===========
</TABLE>
E-507
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993) LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE PERIOD TO 31ST JULY 1994
<TABLE>
<CAPTION>
1994 1994
---- ----
<S> <C> <C>
114,315 PROFIT BEFORE INCOME TAX 46,168.18
39,599 Provision for Taxation 15,235.44
- ---------- ----------
74,716 PROFIT AFTER INCOME TAX 30,932.74
Extraordinary Items
Gain on Realisation of Key
570 Man Life Policy
- ----------
570 --
- ---------- -----------
--
PROFIT INCLUDING ----------
75,286 EXTRAORDINARY ITEMS 30,932.74
Retained Profits-
-- Beginning of Year 74,479.69
- ---------- ----------
75,286 105,412.43
Less: Appropriations & Transfers
Life Insurance Premiums W
806 R Fowler
- ---------- --
806 -----------
- ---------- --
RETAINED EARNINGS CARRIED -----------
$74,480 FORWARD $105,412.43
========== ===========
</TABLE>
E-508
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993) LIMITED
SHAREHOLDERS' CURRENT ACCOUNTS
AS AT 31ST JULY 1994
<TABLE>
<CAPTION>
1994 1994
---- ----
<S> <C> <C> <C>
D COWIE
5,750 BALANCE BROUGHT FORWARD 169,812.54
172,100 Capital Introduced --
Capital Introduced ex R A
-- Fowler 42,780.59
- ---------- ------------
177,850 212,593.13
5,975 Drawings --
2,062 Life Insurance 1,391.58
Income Protection
-- Insurance (117.70)
- ---------- ------------
8,037 1,273.88
- ---------- -----------
169,813 211,319.25
KJ & EA PARKER
-- BALANCE BROUGHT FORWARD 101,851.29
102,597 Capital Introduced --
Capital Introduced ex R A
-- Fowler 47,058.65
- ---------- ------------
102,597 148,909.94
80 Drawings
Income Protection
666 Insurance 766.05
- ---------- ------------
746 766.05
- ---------- -----------
101,851 148,143.89
R MCLEAN
-- BALANCE BROUGHT FORWARD 30,023.06
30,088 Capital Introduced --
- ---------- ------------
30,088 30,023.06
65 Drawings --
- ---------- ------------
65 --
- ---------- -----------
30,023 30,023.06
D BREESE
-- BALANCE BROUGHT FORWARD 5,312.22
5,312 Capital Introduced --
- ---------- ------------
5,312 5,312.22
- ---------- -----------
5,312 5,312.22
R J MCRAE
5,750 BALANCE BROUGHT FORWARD --
- ---------- ------------
5,750
5,750 Drawings --
- ---------- ------------
5,750
R A FOWLER
5,750 BALANCE BROUGHT FORWARD 95,839.24
96,049 Capital Introduced --
- ---------- ------------
101,799 95,839.24
5,960 Drawings 6,000.00
-- Transfer to D Cowie 42,780.59
</TABLE>
E-509
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993) LIMITED
SHAREHOLDERS' CURRENT ACCOUNTS
AS AT 31ST JULY 1994
<TABLE>
<CAPTION>
1994 1994
---- ----
<S> <C> <C> <C>
Transfer to K J & E A
-- Parker 47,058.65
- ---------- ------------
5,960 95,839.24
- ---------- -----------
95,839
W P FOWLER
2,751 BALANCE BROUGHT FORWARD
- ---------- ------------
2,751
2,751 Drawings
- ---------- ------------
2,751
R BRAEM
- BALANCE BROUGHT FORWARD 50,201.50
50,202 Capital Introduced
- ---------- ------------
50,202 50,201.50
- ---------- -----------
50,202 50,201.50
- ---------- ------------
$453,040 $444,999.92
========== ============
</TABLE>
E-510
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993) LIMITED
BALANCE SHEET
AS AT 31ST JULY 1994
<TABLE>
<CAPTION>
1994 1994
---- ----
<S> <C> <C> <C>
AUTHORISED CAPITAL
1000 Ordinary Shares of $1
1,000 Fully Paid 1,000.00
ISSUED CAPITAL
1000 Ordinary Shares of $1
1,000 Fully Paid 1,000.00
74,480 Unappropriated Profits 105,412.43
- ---------- ------------
$75,480 TOTAL SHAREHOLDERS FUNDS $106,412.43
========== ============
REPRESENTED BY:
CURRENT ASSETS
45 Cash on Hand 45.00
Bank of New Zealand - 25
4,436 Account 117.72
341,626 Accounts Receivable 238,958.58
Seven Dimensions Training
- Systems Limited (4,404.23)
241 Resident Withholding Tx 53.31
305,998 Inventory 370,136.18
- ---------- -----------
652,346 604,906.56
FIXED ASSETS
10,487 Furniture & Fittings 11,624.30
1,368 Less Prov'n for Dep'n 1,944.00
- ---------- ------------
9,119 9,680.30
35,278 Motor Vehicles 35,277.88
6,885 Less Prov'n for Dep'n 9,352.00
- ---------- ------------
28,393 25,925.88
50,186 Office Equipment 50,085.02
12,129 Less Prov'n for Dep'n 16,491.00
- ---------- ------------
38,057 33,594.02
14,098 Leasehold Improvements 14,097.85
1,169 Less Prov'n for Dep'n 1,666.00
- ---------- ------------
12,929 12,431.85
- ---------- -----------
88,498 81,632.05
INVESTMENTS
National Mutual Key Man
410 Life Policy 937.97
- ---------- -----------
410 937.97
INTANGIBLE ASSETS
255,571 Goodwill - at cost 255,571.30
- ---------- -----------
255,571 255,571.30
- ---------- ------------
996,825 TOTAL ASSETS 943,047.88
</TABLE>
E-511
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL C0MPUTER SYSTEMS (1993) LIMITED
BALANCE SHEET
AS AT 31ST JULY 1994
<TABLE>
<CAPTION>
1994 1994
---- ----
<S> <C> <C>
CURRENT LIABILITIES
Bank of New Zealand - 00
6,473 Account 58,460.47
5,235 Hire Purchase Creditors 5,482.52
Bank of New Zealand Term
22,500 Loan (Secured) 22,500.00
343,725 Accounts Payable 205,435.45
Personal Computer Systems
401 Ltd (358.56)
39,599 Provision for Taxation 15,235.44
-- Taxation Payable 1993/94 39,358.60
6,068 Goods & Services Tax 10,627.31
- ---------- -----------
424,001 356,741.23
TERM LIABILITIES
4,929 Hire Purchase Creditors 3,019.30
Bank of New Zealand Term
39,375 Loan (Secured) 31,875.00
- ---------- -----------
44,304 34,894.30
SHAREHOLDER'S CURRENT
453,040 ACCOUNTS 444,999.92
- ---------- ------------
$75,480 NET ASSETS $106,412.43
========== ============
</TABLE>
THESE FINANCIAL ACCOUNTS
HAVE NOT BEEN AUDITED
----------------------------
DIRECTOR
----------------------------
DATE
E-512
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993) LIMITED
<TABLE>
<CAPTION>
DETAIL OF FIXED ASSETS AND DEPRECIATION as at 31/07/94
% PVT COST OPENING ACCUM ADDITION SALE PROFIT(LOSS) CAPITAL RATE & DEPN. CLOSING
USE BK VALUE DEPN COST VALUE ON SALE COST GAIN(LOSS) TYPE BK VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Furniture & Fittings
Furniture & Fittings 2547 2260 400 15.0000 113 2147
Shelving 1137 84 1137 22.0000 84 1053
Cabinet 321 292 41 12.0000 12 280
Curtains & Office
Furnishings 3288 2630 834 20.0000 176 2454
Lundia Shelving 869 725 197 22.0000 53 672
Refrigerator 324 301 33 9.5OOO 10 291
Vacuum Cleaner 467 390 106 22.0000 29 361
4 Drawer Cabinets (4) 1603 1510 143 10.0000 50 1460
Couch & 6 Boardroom Chairs 847 794 93 15.0000 40 754
Coffee Table 221 217 13 12.0000 9 208
------- ------ ------ ------ ----- ----- ----- ----- ------ ------
11624 9119 1944 1137 - - - - 576 9680
Motor Vehicles
1989 Mazda 323 LI Station
Wagon 7297 5873 1934 26.0000 510 5363
l990Mazda 626 GLX Sporthatch 12774 10281 3386 26.0000 893 9388
Toyota Corolla R83372 15207 12239 4032 26.0000 1064 11175
------- ------ ------ ------ ----- ----- ----- ----- ------ ------
35278 28393 9352 - - - - 2467 25926
Office Equipment
Apple Laser Writer 1 1 - 1
100MB Hard Drive 1041 728 410 40.0000 97 631
Fax 1368 1029 453 33.0000 114 915
Mac LC 2827 1978 1113 40.0000 264 1714
Apple Portable Computer
140/Modem 2977 2083 1172 40.0000 278 1805
130MB Hard Drive (Optima) 721 505 284 40.0000 68 437
Binding Machine 535 447 121 22.0000 33 414
Power Modem 391 274 154 40.0000 37 237
Video Camera 1026 772 339 33.0000 85 687
Apple Mac Computer LC 4/40 2165 1515 853 40.0000 203 1312
Binding Machine 474 396 107 22.0000 29 367
486 40Mhz HD Computer 1978 1384 779 40.0000 185 1199
Motorolla Gold 1950
cellphones (2) 2500 1774 1022 50.0000 296 1478
PC Notestar Portable 6524 5008 2186 40.0000 670 4338
Computer LC111/Colour
Monitor 14" 1990 1593 610 40.0000 213 1380
McIntosh Centris 660/AV
Colour Monitor 14" 5928 4746 1816 40.0000 634 4112
McIntosh Quadra 3000 2504 831 40.0000 335 2169
Computer Accessories (355) 402 40.0000 (757) 402
Backup Server & H/T Drives 6848 5257 2294 40.0000 703 4554
Oki Portable Cellphone (8) 9 50.0000 (17) 9
Nokia P405 Cellphone/101
Leather Case 1899 1818 385 50.0000 304 1514
Macintosh LC11 4/40 B&W 12"
Monitor 2200 1539 867 40.0000 206 1333
Macintosh 11 v1 5/80 Colour
14" Monitor 2410 1686 949 40.0000 225 1461
Memory 827 111 827 40.0000 111 716
Software - CC Mail
Communication 455 46 455 40.0000 46 409
------- ------ ------ ------ ----- ----- ----- ----- ------ ------
50085 36674 16491 1282 - - - - 4362 33594
Leasehold Improvements
Wooden Storage Cabinet 981 927 83 9.5000 29 898
Air Conditioning 400 346 75 18.0000 21 325
Renovations & Partitions 10437 9739 1057 9.5000 309 9430
Vertical Blinds 865 754 166 22.0000 55 699
Cabinet 566 442 173 33.0000 49 393
Front Door Canopy 490 463 42 9.5000 15 448
Alarm system 308 257 70 22.0000 19 238
------- ------ ------ ------ ----- ----- ----- ----- ------ ------
14098 12929 1666 497 12432
------- ------ ------ ------ ----- ----- ----- ----- ------ ------
111085 87115 29453 2419 - - - - 7902 81632
======= ====== ====== ====== ===== ===== ===== ===== ====== ======
TOTAL CLAIMED FOR DEPRECIATION 7902
======
</TABLE>
E-513
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993)
LIMITED
FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31ST MARCH 1994
COMPUTER SOFTWARE
AUCKLAND
CONTENTS
Company Register
Directors Report
Notes to the Financial Statements
Trading Statement
Profit and Loss Account
Balance Sheet
Fixed Asset Depreciation Schedule
E-514
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993)
LIMITED
COMPANY REGISTER
FOR THE PERIOD ENDED 31ST MARCH 1994
AUTHORISED CAPITAL : 1,000 Fully paid
$1 Ordinary Shares
COMPANY NUMBER : AK 592015
DATE OF INCORPORATION : 15 June 1993
REGISTERED OFFICE : 349 Remuera Road
Auckland
SHAREHOLDERS : DB Cowie 380 Shares
WR McLean 65 Shares
KJ Parker 109 Shares
EA Parker 111 Shares
RO Braem 110 Shares
DG Breese 15 Shares
RA Fowler 210 Shares
----
1000
----
DIRECTORS : DB Cowie
KJ Parker
RW McLean
RO Braem
SECRETARY : EA Parker
BANKERS : Bank of New Zealand
Dominion Road
Auckland
ACCOUNTANTS : Lay, Dodd & Partners
Auckland
E-515
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993)
LIMITED
DIRECTORS REPORT
FOR THE YEAR ENDED 31ST MARCH 1994
<TABLE>
<CAPTION>
Presented with and forming part of the Accounts
for the year ended 31ST MARCH 1994.
<S> <C> <C>
Net Profit for the tear $74,715.72
After provision for taxation
of: 39,599.34
APPROPRIATIONS:
Net Profit was 74,715.72
Life Insurance Premiums W R
Fowler 806.40
Gain on Realisation of Key Man
Life Policy 570.37
----------
Accumulated Profits to be
carried forward $74,479.69
==========
DIVIDENDS: The Directors recommend that no dividend be paid for
the ended 31ST MARCH 1994.
AUDITORS: Pursuant to section 354(3) of the Companies Act 1955
and in terms of the unanimous resolution passed at
the last Annual General Meeting, the accounts have
not been audited.
GENERAL: There has been no change in the main activities of
the company during the year under review.
STATE OF AFFAIRS: The state of the company's affairs is satisfactory.
</TABLE>
Director / /1994
--------------------------
E-516
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993)
LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31ST MARCH 1994
1. ACTIVITY
The principal business activity of PERSONAL COMPUTER SYSTEMS (1993)
LIMITED is that of computer software and has not changed during the
period.
2. STATEMENT OF ACCOUNTING POLICIES
(1) GENERAL ACCOUNTING POLICIES
(A) The general accounting principles appropriate for
measurement and reporting of profit under the historical
cost method are used by PERSONAL COMPUTER SYSTEMS (1993)
LIMITED for the preparation of these accounts.
(B) Accrual accounting is used to match expenses and revenues.
(C) Reliance has been placed on the fact that the company is a
going concern.
(2) PARTICULAR ACCOUNTING POLICIES
(A) Depreciation
Depreciation is written off fixed assets on a diminishing
value basis at the maximum rates permitted for tax
purposes. These rates are considered appropriate in the
circumstances.
(B) Inventories and Work in Progress
Inventories and Work in Progress have been valued by the
Directors, at the lower of cost or net realisable value.
(C) G.S.T.
These financial statements have been prepared on a G.S.T.
exclusive basis of accounting, except for Accounts
Receivable and Accounts Payable stated in the Balance Sheet
which are GST inclusive. Any G.S.T. due or recoverable is
disclosed in the Balance Sheet.
(D) Accounts Receivable
Accounts Receivable are stated at expected net realisable
value.
E-517
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
-2-
(E) Taxation
Taxation charged to the Profit and Loss Account is based on
the Company's assessable income.
<TABLE>
<CAPTION>
<S> <C> <C>
Profit Before Taxation $114,315.06
Use of Money Interest 1,632.67
Non Deductible Expenses - Entertainment 2,252.09
- Overseas Travel 1,799.00
--------
5683.76
-----------
Profit Subject to Taxation $119,998.82
===========
Taxation Charge $ 39,599.34
===========
</TABLE>
Imputation Credits (subject to Inland Revenue Department
Assessments) available to Shareholders at Balance Date are
$240.74.
(D) Goodwill
Goodwill is stated at cost.
(E) Finance Charges
Finance charges resulting from specified lease agreements
and hire purchase contracts are charged against revenue in
the period incurred in accordance with the "Rule of 78
Method".
(3) CHANGES IN ACCOUNTING POLICIES
There have been no significant changes in accounting policies
during the period.
3. HIRE PURCHASE AND SPECIFIED LEASE CONTRACTS
<TABLE>
<CAPTION>
Current Term
(Less Fin. (Less Fin.
Int Mthly Date of Charges in Charges in
Financier Item Rate Instal Term Advance Advance) Advance)
--------- ---- ---- ------ ---- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Toyota Toyota 14.46% $516.09 36 Jan 93 6193.08 5160.90
Finance Corolla mnths (957.71 (231.72)
NZ Ltd P33372 $5235.37 $4929.18
</TABLE>
4. TERM LOANS
<TABLE>
<CAPTION>
Principal Int Date of Repayment
Sum Rate Term Advance Security Terms
--------- ---- ---- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
$67,500.00 10.15% 3 yrs 10/12/93 Debenture over $1875.00
Company Assets Ppl/Mnth
and personal & Int on
guarantees reducing
KJ & EA Parker balance
DB & LA Cowie
</TABLE>
5. RELATED PARTY TRANSACTIONS
Net transactions during the year ended 31st March 1994 with Personal
Computer Systems Limited were for taxation and amounted to $401.44
E-518
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
-3-
6. CONTINGENT LIABILITIES
There are no known contingent liabilities at balance date.
7. CAPITAL COMMITMENTS
There are no capital commitments at balance date.
Director Director
- ------------------------ ------------------------
Disclaimer of Liability
We have compiled the financial statements of PERSONAL COMPUTER SYSTEMS (1993)
LIMITED for the period ending 31st March 1994.
[ILLEGIBLE] compilation is limited primarily to the collection, classification
and summarisation of financial information supplied by the client. A compilation
does not involve the verification of that information. We have not conducted an
audit or review assignment and therefore neither we nor any of our employees
accept any responsibility for the accuracy of the material from which the
financial statements have been prepared. Further, the financial statements have
been prepared at the request of and for the purpose of the client only and
neither we nor any of our employees accept any responsibility on any ground
whatever, including liability in negligence, to any other person.
/s/ Lay Dodd & Partners
Lay Dodd & Partners
Auckland
E-519
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993) LIMITED
TRADING STATEMENT
FOR THE PERIOD TO 31ST MARCH 1994
<TABLE>
<CAPTION>
1993 1994
---- ----
<S> <C> <C>
Income
-- Sales 1,546,336.31
- ---------- ------------
1,546,336.31
- ---------- ------------
1,546,336.31
Less Cost of Goods Sold
-- Purchases 1,228,925.55
-- Packaging 1,153.03
-- Customs Agency 4,699.66
-- Inwards Freight 15,421.94
- ---------- ------------
1,250,200.18
-- Closing Inventory 305,998.40
- ---------- ------------
-- 944,201.78
- ---------- ------------
-- Gross Profit From Trading $602,134.53
========== ============
</TABLE>
E-520
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993) LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE PERIOD TO 31ST MARCH 1994
<TABLE>
<CAPTION>
1993 1994
---- ----
<S> <C> <C>
Income
-- Gross Profit From Trading 602,134.53
- ---------- ------------
602,134.53
Expenditure
-- A.C.C. Levy 405.44
-- Advertising & Promotion 21,467.43
-- Bank charges 1,223.27
-- Cleaning 85.00
-- Commissions 141.00
-- Computer Expenses 133.33
-- Consultants Fees 20,028.53
-- Credit Card Charges 616.42
-- Depreciation 21,551.00
Entertainment - Fully
-- Deductible 3,484.76
Entertainment - Non
-- Deductible 2,252.09
-- Freight and Cartage 11,998.75
-- Fringe Benefit Tax 3,442.82
-- General Expenses 7,539.43
Hire of Plant and
-- Equipment 4,329.32
-- Insurance 6,908.99
-- Interest - Use of Money 1,632.67
-- Interest - Bank 7,841.87
-- Interest - Hire Purchase 2,291.00
-- Legal Costs 44.44
-- Light, Power & Heating 1,761.79
-- Loan Fees 750.00
-- Motor Vehicle Expenses 9,475.30
Printing, Stationery &
-- Postage 15,186.70
-- Rent & Rates 14,092.16
-- Repairs and Maintenance 3,705.54
-- Royalties 22,532.04
-- Salaries 241,894.95
-- Secretarial & Accounting 4,530.00
-- Security 776.51
-- Seminars & Conferences 1,148.33
-- Staff Welfare 51.50
-- Subscriptions 787.11
-- Telephone, Tolls & Fax 17,461.91
-- Travelling Expenses 12,817.09
Travelling Expenses -
-- Overseas 21,162.92
Overseas Travel-Non
-- Deductible 1,799.00
- ---------- ------------
-- 487,350.41
- ---------- ------------
-- Operating Profit 114,784.12
</TABLE>
E-521
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993) LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE PERIOD TO 31ST MARCH 1994
<TABLE>
<CAPTION>
1993 1994
---- ----
<S> <C> <C>
Other Income
-- Interest Received 857.60
-- Loss on Sale of Assets 1,326.66
- ---------- ------------
(469.06)
- ---------- ------------
-- NET PROFIT $114,315.06
</TABLE>
E-522
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993) LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE PERIOD TO 31ST MARCH 1994
<TABLE>
<CAPTION>
1993 1994
---- ----
<S> <C> <C>
-- PROFIT BEFORE INCOME TAX 114,315.06
-- Provision for Taxation 39,599.34
- ---------- ------------
-- PROFIT AFTER INCOME TAX 74,715.72
Extraordinary Items
Gain on Realisation of Key
-- Man Life Policy 570.37
- ---------- ------------
-- 570.37
- ---------- ------------
75,286.09
Less: Appropriations & Transfers
Life Insurance Premiums W
-- R Fowler 806.40
- ---------- ------------
-- 806.40
- ---------- ------------
RETAINED EARNINGS CARRIED
-- FORWARD $74,479.69
========== ============
</TABLE>
E-523
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993) LIMITED
SHAREHOLDERS' CURRENT ACCOUNTS
AS AT 31ST MARCH 1994
<TABLE>
<CAPTION>
1993 1994
---- ----
<S> <C> <C> <C>
D COWIE
-- BALANCE BROUGHT FORWARD 5,749.75
-- Capital Introduced 172,099.94
- ---------- ------------
-- 177,849.69
-- Drawings 5,974.75
-- Life Insurance 2,062.40
- ---------- ------------
-- 8,037.15
- ---------- ------------
-- 169,812.54
K J & E A PARKER
-- Capital Introduced 102,597.29
- ---------- ------------
102,597.29
-- Drawings 80.00
-- Income Protection
-- Insurance 666.00
- ---------- ------------
-- 746.00
- ---------- ------------
-- 101,851.29
R MCLEAN
-- Capital Introduced 30,088.06
- ---------- ------------
-- 30,088.06
-- Drawings 65.00
- ---------- ------------
-- 65.00
- ---------- ------------
-- 30,023.06
D BREESE
-- Capital Introduced 55,513.72
- ---------- ------------
-- 55,513.72
- ---------- ------------
-- 55,513.72
-- R J MCRAE
BALANCE BROUGHT FORWARD 5,749.75
- ---------- ------------
-- 5,749.75
-- Drawings 5,749.75
- ---------- ------------
-- 5,749.75
R A FOWLER
-- BALANCE BROUGHT FORWARD 5,749.75
-- Capital Introduced 96,049.24
- ---------- ------------
-- 101,798.99
-- Drawings 5,959.75
- ---------- ------------
-- 5,959.75
- ---------- ------------
-- 95,839.24
W P FOWLER
-- BALANCE BROUGHT FORWARD 2,750.75
- ---------- ------------
-- 2,750.75
-- Drawings 2,750.75
- ---------- ------------
2,750.75
</TABLE>
E-524
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993) LIMITED
SHAREHOLDERS' CURRENT ACCOUNTS
AS AT 31ST MARCH 1994
<TABLE>
<CAPTION>
1993 1994
---- ----
<S> <C>
- ---------- ------------
-- $453,039.85
========== ============
</TABLE>
E-525
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993) LIMITED
BALANCE SHEET
AS AT 31ST MARCH 1994
<TABLE>
<CAPTION>
1993 1994
---- ----
<S> <C> <C> <C>
AUTHORISED CAPITAL
1000 Ordinary Shares of $1
-- Fully Paid 1,000.00
ISSUED CAPITAL
1000 Ordinary Shares of $1
-- Fully Paid 1,000.00
-- Unappropriated Profits 74,479.69
- ---------- ------------
-- TOTAL SHAREHOLDERS FUNDS $75,479.69
========== ============
REPRESENTED BY:
CURRENT ASSETS
-- Cash on Hand 44.88
Bank of New Zealand - 25
-- Account 4,436.13
-- Accounts Receivable 341,625.96
-- Resident Withholding Tax 240.74
-- Inventory 305,998.40
- ---------- ------------
-- 652,346.11
FIXED ASSETS
-- Furniture & Fittings 10,487.30
-- Less Prov'n for Dep'n 1,368.00
- ---------- ------------
-- 9,119.30
-- Motor Vehicles 35,277.88
-- Less Prov'n for Dep'n 6,885.00
- ---------- ------------
-- 28,392.88
-- Office Equipment 50,185.89
-- Less Prov'n for Dep'n 12,129.00
- ---------- ------------
-- 38,056.89
-- Leasehold Improvements 14,097.85
-- Less Prov'n for Dep'n 1,169.00
- ---------- ------------
-- 12,928.85
- ---------- ------------
-- 88,497.92
INVESTMENTS
National Mutual Key Man
-- Life Policy 409.85
409.85
- ---------- ------------
-- INTANGIBLE ASSETS
-- Goodwill - at cost 255,571.30
- ---------- ------------
-- 255,571.30
- ---------- ------------
-- TOTAL ASSETS 996,825.18
</TABLE>
E-526
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993) LIMITED
BALANCE SHEET
AS AT 31ST MARCH 1994
<TABLE>
<CAPTION>
1993 1994
---- ----
<S> <C> <C>
CURRENT LIABILITIES
-- Bank of New Zealand -- 00
Account 6,473.38
-- Hire Purchase Creditors 5,235.37
Bank of New Zealand Term
-- Loan (Secured) 22,500.00
-- Accounts Payable 343,723.51
Personal Computer Systems
-- Ltd 401.44
-- Provision for Taxation 39,599.34
-- Goods & Services Tax 6,068.42
- ---------- ------------
424,001.46
TERM LIABILITIES
-- Hire Purchase Creditors 4,929.18
Bank of New Zealand Term
-- Loan (Secured) 39,375.00
- ---------- ------------
-- 44,304.18
SHAREHOLDER'S CURRENT
-- ACCOUNTS 453,039.85
- ---------- ------------
-- NET ASSETS $75,479.69
========== ============
</TABLE>
THESE FINANCIAL ACCOUNTS
HAVE NOT BEEN AUDITED
----------------------------
DIRECTOR
----------------------------
DATE
E-527
<PAGE>
[LOGO OF LAY DODD AND PARTNERS]
PERSONAL COMPUTER SYSTEMS (1993) LIMITED
<TABLE>
<CAPTION>
DETAIL OF FIXED ASSETS AND DEPRECIATION as at 31/03/94
% PVT COST OPENING ACCUM ADDITION SALE PROFIT(LOSS) CAPITAL RATE & DEPN. CLOSING
USE BK VALUE DEPN COST VALUE ON SALE COST GAIN(LOSS) TYPE BK VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Furniture & Fittings
Furniture & Fittings 2547 287 2547 15.0000 237 2260
Cabinet 321 29 321 12.0000
29 292
Curtains & Office 20.0000 658 2630
Furnishings 3288 658 3288
Lundia Shelving 869 144 869 22.0000 144 725
Refrigerator 324 23 324 9.5000 23 301
Vacuum Cleaner 467 77 467 22.0000 77 390
4 Drawer Cabinets (4) 1603 93 1603 1O.O000 93 1510
Couch & 6 Boardroom Chairs 847 53 847 15.0000 53 794
Coffee Table 221 4 221 12.0000 4 217
------- ------ ------ ------ ------ ----- ----- ----- ------ ------
10487 -- 1368 10487 -- -- -- -- 1368 9119
Motor Vehicles
1988 Toyota Corolla GL
Hatchback -- 7297 6667 (630) 7297
1989 Mazda 323 LI Station
Wagon 7297 1424 7297 26.0000 1424 5873
l990 Mazda 626 GLX Sporthatch 12774 2493 12774 26.0000 2493 10281
Toyota Corolla R83372 15207 2968 15207 26.0000 2968 12239
------- ------ ------ ------ ------ ----- ----- ----- ------ ------
35278 -- 6885 42575 6667 (630) 7297 -- 6885 28393
Office Equipment
Apple Laser Writer 1 -- 1 1
Apple Mac 11 -- 1363 667 (696) 1363
100MB Hard Drive 1041 313 1041 40.0000 313 728
Fax 1368 339 1368 33.0000 339 1028
Mac LC 2827 849 2827 40.0000 849 1978
Apple Portable Computer
l40/Modem 2977 894 2977 40.0000 894 2083
130MB Hard Drive (Optima) 721 216 721 40.0000 216 505
Binding Machine 535 88 535 22.0000 88 447
Power Modem 391 117 391 40.0000 117 274
Video Camera 1026 254 1026 33.0000 254 772
Apple Mac Computer LC 4/40 2165 650 2165 40.0000 650 1515
Ubix Photocopier -- 1 1 1
Binding Machine 474 78 474 22.0000 78 396
386 40Mhz HO Computer 1978 594 1978 40.0000 594 1384
Motorolla Gold 1950
cellphones (2) 2500 726 2500 50.0000 726 1774
PC Notestar Portable 6524 1516 6524 40.0000 1516 5008
Computer LC111/Colour
Monitor 14" 1990 397 1990 40.0000 397 1593
McIntosh Centris 660/AV
Colour Monitor 14" 5928 1182 5928 40.0000 1182 4746
McIntosh Quadra 3000 496 3000 40.0000 496 2504
Computer Accessories 1183 355 1183 40.0000 355 828
Backup Server & H/T Drives 6848 1591 6848 40.0000 1591 5257
Oki Portable Cellphone 200 8 200 50.0000 8 192
Nokia P405 Cellphone/lOl
Leather Case 1899 81 1899 50.0000 81 1818
Macintosh LC11 4/40 B&W 12"
Monitor 2200 661 2200 40.0000 661 1539
Macintosh 11 V1 5/80 Colour
14" Monitor 2410 724 2410 40.0000 724 1686
------- ------ ------ ------ ------ ----- ----- ----- ------ ------
50186 -- 12129 51550 668 (696) 1364 -- 12129 38057
Leasehold Improvements
Wooden Storage Cabinet 981 54 981 9.5000 54 927
Air Conditioning 400 54 400 18.0000 54 346
Renovations & Partitions 10487 748 10487 9.5000 748 9739
Vertical Blinds 865 111 865 22.0000 111 754
Carpet 566 124 566 33.0000 124 442
Front Door Canopy 490 27 490 9.5000 27 463
Alarm System 308 51 308 22.0000 51 257
------- ------ ------ ------ ------ ----- ----- ----- ------ ------
14098 -- 1169 14098 -- -- -- -- 1169 12929
------- ------ ------ ------ ------ ----- ----- ----- ------ ------
110049 -- 21551 118710 7334 (1327) 8661 -- 21551 88498
======= ====== ====== ====== ====== ===== ===== ===== ====== ======
TOTAL CLAIMED FOR DEPRECIATION 21551
</TABLE>
E-528
<PAGE>
---------------------------------------------------
BETWEEN: WILLIAM RUSSELL McLEAN, KENNETH JOHN
PARKER, DOUGLAS COWIE, EVELYN ANN
PARKER, ROGER OLIVER BRAEM and DENNIS
GRAHAM BREESE
VENDOR
AND: BROCKER INVESTMENTS (NZ) LIMITED
PURCHASER
---------------------------------------------------
DEED OF VARIATION
---------------------------------------------------
---------------------------------------------------
ED JOHNSTON & CO
Solicitors
Level 1
370 Great North Road
(P 0 Box 21-850)
WAITAKERE CITY
PHONE: (09) 838 8812 FAX: (09) 838 8882
E-529
<PAGE>
THIS AGREEMENT is dated the ____ day of ______________ 1995
PARTIES
1. WILLIAM RUSSELL McLEAN, KENNETH JOHN PARKER, DOUGLAS COWIE, EVELYN ANN
PARKER, ROGER OLIVER BRAEM and DENNIS GRAHAM BREESE all of Auckland
(hereinafter called "the Vendor") of the one part
2. BROCKER INVESTMENTS (NZ) LIMITED at Auckland (hereinafter called "the
Purchaser") of the other part
BACKGROUND
A. The Vendor and the Purchaser have entered Into an Agreement dated the
26th day of January 1995 for the Sale and Purchase of Shares in PERSONAL
COMPUTER SYSTEMS (1993) LIMITED ("the" Main Agreement")
B. The parties have agreed to amend the Main Agreement as provided herein.
THE PARTIES AGREE
AMENDMENTS
1. The parties acknowledge and agree that effective at the date of execution
of the Main Agreement that agreement shall be deemed to have been amended
as follows:
(a) Clause 2(1)(a) is deleted and replace4 with the following new
provision:
[INIT]
E-530
<PAGE>
2
"2(i)(a) As to the sum of TWO HUNDRED & TWENTY THOUSAND
DOLLARS ($220,000.00) by way of the Purchaser
transferring to the Vendor fully paid ordinary
shares in that Canadian listed company, BROCKER
INVESTMENTS LIMITED (hereinafter called "BROCKER
INVESTMENTS LIMITED (CANADA)") in accordance with
the provisions of paragraph 21 herein."
(b) Cause 6A is deleted and replaced with the following new provision:
"6A This Agreement is conditional upon the following:
(a) Approval in all respects, and at the absolute and
unfettered discretion, of the Board of Directors of BROCKER
INVESTMENTS LIMITED (CANADA) by the 17th day of February
1995.
(b) Approval in all respects, and at the absolute and
unfettered discretion, of the Securities Commission of
Canada (or similar regulatory body for the time being in
Canada) by the 17th day of February 1995.
(c) Approval by the 17th day of February 1995 in all respects,
and at the absolute and unfettered discretion, of any other
Canadian regulatory body (in addition to the body referred
to in sub-paragraph (b) herein) being a body whose consent
and authority is necessary to the transfer of shares in
BROCKER INVESTMENTS LIMITED (CANADA) as proposed in terms
of these presents."
COUNTERPARTS
E-531
<PAGE>
3
2. This Agreement way be signed in any number of counterparts, each of which
shall be signed by authorised signatories on behalf of the parties, which
together shall constitute one agreement binding on the parties
norwithstanding that the parties are not signatories to the original or
same counterpart.
FACSIMILE SIGNATURE
3. The parties may sign a counterpart copy of this Agreement by photocopying
a facsimile thereof and signing that photocopy. The transmission by
facsimile by a party to another party of a counterpart copy of this
Agreement so signed shall be proof of signature of the original and the
signed facsimile so transmitted shall be deemed an original.
SIGNED on the date hereinbefore stated.
SIGNED by WILLIAM RUSSEL
McLEAN in the presence of: [ILLEGIBLE]
[ILLEGIBLE]
SIGNED by KENNETH JOHN
PARKER in the presence of: [ILLEGIBLE]
[ILLEGIBLE]
SIGNED by DOUGLAS COWIE
in the presence of: [ILLEGIBLE]
[ILLEGIBLE]
SIGNED by EVELYN ANN
PARKER in the presence of: [ILLEGIBLE]
[ILLEGIBLE]
SIGNED by ROGER OLIVER
BRAEM in the presence of: [ILLEGIBLE]
[ILLEGIBLE]
E-532
<PAGE>
SIGNED by DENNIS GRAHAM
BREESE in the presence of: [ILLEGIBLE]
[ILLEGIBLE]
BROCKER INVESTMENTS (NZ) LIMITED
by its Directors in the presence
of:
Director [ILLEGIBLE]
----------------------------
Director ----------------------------
E-533
<PAGE>
MEMORANDUM OF AGREEMENT made this 24th day of November One thousand nine hundred
and ninety fire
BETWEEN WILLIAM RUSSELL McLEAN, KENNETH JOHN PARKER, DOUGLAS COWIE, EVELYN
ANN PARKER, ROGER OLIVER BRAEM and DENNIS GRAHAM BREESE all of
Auckland (hereinafter called "the Vendor") of the one part
AND BROCKER INVESTMENTS (NZ) LIMITED at Auckland (hereinafter called
"the Purchaser") of the other part
BACKGROUND
A. THE Vendor and thee Purchaser have entered into an Agreement dated the
26th day of January 1995 for the sale and purchase of shares in PERSONAL
COMPUTER SYSTEMS (1993) LIMITED ("the Main Agreement")
B. THE parties have amended the Main Agreement in accordance with the
provisions of a Deed of Variation dated the 24th day of November 1995
("the First Variation").
C. THE parties have now agreed to amend the Main Agreement again as provided
herein.
THE PARTIES AGREE
AMENDMENTS
THE parties acknowledge and agree that effective at the date of execution of the
Main
E-534
<PAGE>
Agreement that Agreement shall be deemed to have been amended as follows:
(a) Clause 2(1)(a) is deleted and replaced with the following new provision
(and clause 1(a) of the First Variation is thereby amended accordingly
also):
"2(1)(a) AS to the sum of TWO HUNDRED & TWENTY THOUSAND DOLLARS
($220,000.00):
(1) BY way of the Purchaser transferring to DOUGLAS
COWIE TWO HUNDRED THOUSAND (200,000) fully paid
ordinary shares at $1.00 each in that Canadian
listed company BROCKER INVESTMENTS LIMITED
(hereinafter called "Brocker Investments Limited
(Canada)") in accordance with the provisions of
Clause 21 herein, and:
(2) BY way of the purchaser transferring to ROGER OLIVER
BRAEM TWENTY THOUSAND (20,000) fully paid ordinary
shares at $1.00 each in BROCKER INVESTMENTS LIMITED
(CANADA) in accordance with the provisions of Clause
21."
(b) CLAUSE 21 shall be amended by replacing the word "Vendor" in lines 1,8,9
and 18 with the words "DOUGLAS COWIE and ROGER OLIVER BRAEM".
(c) THE parties acknowledge that the vendors are WILLIAM RUSSEL McLEAN,
KENNETH JOHN PARKER, EVELYN ANN PARKER and DENNIS GRAHAM BREESE have
received the full settlement of the monies to which they are entitled
under the Main Agreement to which end said DOUGLAS COWIE and ROGER OLIVER
BRAEM alone are to be settled from the balance of proceeded settlement
funds herein namely by way of transfer of shares as referred in Clause
2(1)(a) hereof.
(d) IN all other respects the terms of the Main Agreement and the First
Agreement:
E-535
<PAGE>
are confirmed
IN WITNESS WHEREOF this Agreement has been executed the day and year first
hereinbefore mentioned.
EXECUTED by the Vendor ) [ILLEGIBLE]
in the presence of: )
EXECUTED by the Purchaser )
in the presence of: )
E-536
THIS AGREEMENT made this 10 day of November, A.D. 1994.
BETWEEN:
GENETICS LIMITED,
OF THE FIRST PART,
- and -
MIKE J. DUFF, CASEY J. O'BYRNE, LIONEL A. SINGLETON,
DAMEN NG and ROGER N. GIMBY,
OF THE SECOND PART,
- and -
BROCKER INVESTMENTS LTD.,
OF THE THIRD PART.
SHARE PURCHASE AGREEMENT
WHEREAS Brocker Investments Ltd. formed under the laws of the Province of
Alberta, is a junior capital pool corporation as defined in the Alberta
Securities Commission Policy 4.11;
AND WHEREAS Mike J. Duff, Casey J. O'Byrne, Lionel A. Singleton, Damen Ng and
Roger N. Gimby are the directors of the Corporation and the holders of rights
under a Stock Option Plan of the Corporation to acquire NINETY ONE THOUSAND SIX
HUNDRED (91,600) additional shares each for a total of FOUR HUNDRED AND FIFTY
EIGHT THOUSAND (458,000) shares of the Corporation;
AND WHEREAS Genetics Limited may wish to acquire the Option Shares of the
Vendors in the Corporation;
AND WHEREAS by Letter of Intent the Vendors agreed to transfer the Option Shares
if acquired to Edgewell Limited and Talgarth Limited;
NOW THEREFORE WITNESSETH that in consideration of the sum of ONE ($1.00) DOLLAR
paid herewith and of the mutual covenants and agreements herein contained, and
in consideration of the purchase of the shares of the Vendors in the Corporation
by Edgewell Limited and Talgarth Limited by agreement of concurrent date, the
parties hereto covenant and agree as follows:
E-537
<PAGE>
-2-
ARTICLE 1 -- DEFINED TERMS
1.1 In the within Agreement:
(a) "Agreement" means this instrument and all schedules hereto;
(b) "Closing Date" means that date TEN (10) days following the exercise of
the rights of the Vendors under the Stock Option Plan;
(c) "Corporation" means Brocker Investments Ltd.;
(d) "Encumbrances" means any and all liens, charges, encumbrances,
hypothecations, pledges, mortgages or adverse claims whatsoever;
(e) "Major Transaction" means the agreement for the purchase of the shares
of Classic Portraits and Design Ltd. by the Corporation;
(f) "Option Shares" means all those issued Shares of the Corporation owned
by the Vendors and issued pursuant to the rights of the Vendors in the
Stock Option Plan of the Corporation all as more particularly set out
in the second recital hereto;
(g) "Purchaser" means Genetics Limited being a corporation of St. Peter
Port, Guernsey, Channel Islands;
(h) "Share Sale Agreement" means that Share Sale Agreement between the
Vendors and Edgewell Limited and Talgarth Limited, and Brocker
Investments Ltd. respecting the sale of the Shares of the Corporation,
the said agreement dated concurrent herewith;
(i) "Shares" means all those issued Shares of the Corporation owned by the
Vendors and agreed to be purchased and sold herein as set out in the
second recital hereto;
(j) "Stock Option Plan" means that stock option plan of the Corporation
adopted November 25, 1993;
(k) "Vendors" mean collectively Mike J. Duff, Casey J. O'Byrne, Lionel A.
Singleton, Damen Ng and Roger N. Gimby.
1.2 All monetary figures and obligations contained in this Agreement shall
refer and be deemed to be in Canadian Dollars
ARTICLE 2 -- SCHEDULES
2.1 The following are the Schedules attached to and in this Agreement by
reference and deemed to be a part hereof:
NIL
E-538
<PAGE>
-3-
ARTICLE 3 -- PURCHASE OF SHARES
3.1 The Vendors hereby grant to the Purchaser the irrevocable right to purchase
the Option Shares at the price herein set out, subject to the terms and
provisions of this Agreement.
3.2 The Option Shares shall be purchased by the Purchaser upon the acquisition
of the Option Shares by the Vendors pursuant to the terms of the Stock Option
Plan.
3.3 The Vendors hereby agree that they shall not exercise their option to
acquire any or all of the Option Shares of the Corporation as provided in the
Stock Option Plan without receiving the request and notice from the Purchaser
requiring them to acquire all or part of the Option Shares available to them
under the said Stock Option Plan. Upon receiving notice from the Purchaser to
the Vendors to acquire all or part of the Option Shares under the Stock Option
Plan, the Vendors shall immediately exercise such rights and upon the giving of
the said notice by the Purchaser, the agreement for the purchase and sale of the
Option Shares shall be concluded in accordance herewith.
3.4 The Purchaser acknowledges that if the Vendors fail to exercise their option
rights within the time limits for such exercise as set out in the Stock Option
Plan the option rights granted under the Stock Option Plan in their favour shall
cease and determine.
ARTICLE 4 -- PAYMENT OF PURCHASE PRICE
4.1 In the event of the acquisition of the Option Shares as set out, the
Purchase Price payable to the Vendors for the Option Shares shall be the market
value of each share of the Corporation established by the Alberta Stock Exchange
effective on the date of the acquisition of the Option Shares by the Vendors
from the Corporation pursuant to the Stock Option Plan. The Purchase Price shall
be paid in full on the Closing Date.
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES
5.1 The Vendors represent and warrant to the Purchaser as follows (the Vendors
acknowledging that the Purchaser is relying upon such representations and
warranties):
(a) That the Corporation has been duly incorporated under the laws of the
Province of Alberta and is in good standing with the Registrar of
Corporations for the Province of Alberta, the Alberta Securities
Commission and the Alberta Stock Exchange, and all other offices where
registration of documentation is required on behalf of the
Corporation;
(b) That the corporate books, records and documents of the Corporation
have been fully and duly kept and maintained and contain a complete
and accurate record of any and all material matters and proceedings of
all shareholders and the Board of Directors and in accordance with
good and usual business practice;
E-539
<PAGE>
-4-
(c) That the Option Shares being sold pursuant to the terms and conditions
of this Agreement are and will be on the Closing Date of this
Agreement free and clear of all liens, charges, and encumbrances
whatsoever;
(d) That all information and statements made and provided in the
Information Circular prepared for distribution to the shareholders of
the Corporation respecting the requirements of the Alberta Stock
Exchange for the purposes of the approval of the Corporation's Major
Transaction are accurate, true and complete in all respects as may be
material to the affairs of the Corporation and to the shareholders in
providing their approval for the said Major Transaction;
(e) That all information and statements made and provided in the
Prospectus of the Corporation dated March 4, 1994, is accurate, true
and complete in all material respects;
(f) That each and every of the warranties provided hereunder shall be true
and applicable on and as of the Closing Date.
ARTICLE 6 - CLOSING REQUIREMENTS
6.1. The obligations of the Purchaser to purchase and pay the Purchase Price of
the Option Shares in this Agreement provided shall be subject to the accuracy of
the representations, warranties and covenants contained in this Agreement at the
Closing Date as if made at the Closing Date and to the satisfaction or
fulfillment of the following additional conditions:
(a) There shall be delivered to the Purchaser at the Closing Date all
share certificates evidencing the Option Shares as fully and properly
endorsed to the Purchaser as herein set out;
(b) Each of the parties shall execute such further affidavits, documents,
minutes, transfers, covenants and agreements and do such further acts,
deeds and things as may be requisite to give full force and effect to
the terms of the within Agreement and completely divest the Vendors
from any interest whatsoever in the Option Shares.
ARTICLE 7 -- SURVIVAL OF REPRESENTATIONS
7.1 The representations and warranties contained in this Agreement shall survive
the purchase and sale of the Option Shares herein provided for and any
investigations by the Purchaser, and the transfer of the Option Shares, and
shall remain in full force and effect for the benefit of the Purchaser; PROVIDED
HOWEVER, that no claim with respect to the said representations and warranties
shall be made by the Purchaser unless written notice thereof has been given to
the Vendors prior to the expiry of four years from the Closing Date.
E-540
<PAGE>
-5-
ARTICLE 8 -- INDEMNITY
8.1 The Vendors covenant and agree to indemnify and save harmless the Purchaser
from and against any and all claims, causes of action, demands, liability,
expenses, costs and charges in respect of the inaccuracy, incompleteness, breach
or default of any of the representations and warranties of the Vendors contained
herein.
ARTICLE 9 -- NOTICES
9.1 Any notice or waiver or other documents required or permitted to be given to
any of the parties herein shall be in writing and be given by mailing the same,
postage paid, or delivering the same to that party at their addresses as
hereinafter specified:
(a) With respect to the Vendors, c/o Casey J. O'Byrne, 2150 Scotia Place,
10060 Jasper Avenue, Edmonton, Alberta T5J 3R8;
(b) With respect to the Purchaser, c/o Duncan & Craig, Barristers and
Solicitors, 2800 Scotia Place, 10060 Jasper Avenue, Edmonton, Alberta
T5J 3V9, Attention: W. Gordon Plewes;
(c) With respect to the Corporation, c/o Gregory R. Harris, Barrister and
Solicitor, Suite 1410, 1122 - 4th Street S.W., Calgary, Alberta T2R
1M1.
9.2 Any notice or waiver or direction or other document aforesaid, if delivered,
shall be deemed to have been given on the date it was delivered and if mailed,
shall be deemed to have been given on the third business day following the date
upon which it was mailed.
ARTICLE 10 -- TIME OF ESSENCE
10.1 Time is of the essence of the within Agreement.
ARTICLE 11 -- COUNTERPARTS
11.1 This Agreement may be executed by the parties in counterpart.
ARTICLE 12 -- APPLICABLE LAW
12.1 The validity and interpretation of this Agreement and of each clause or
part thereof shall be governed by the laws of the Province of Alberta.
E-541
<PAGE>
-6-
ARTICLE 13 -- ENUREMENT
13.1 This Agreement shall enure to the benefit of and be binding upon the
parties hereto, their respective heirs, executors, administrators, successors,
and assigns.
IN WITNESS WHEREOF the parties have hereunto set their hands and seals or
affixed their corporate seals duly attested by the proper officers authorized in
that behalf as of the day and year first above written.
GENETICS LIMITED
PER: /s/ [ILLEGIBLE]
----------------------------
Secretary
PER: /s/ [ILLEGIBLE]
----------------------------
Authorised Signatory
SIGNED SEALED AND DELIVERED)
in the presence of:
/s/ [ILLEGIBLE] /s/ Mike J. Duff
- ---------------------------------- ----------------------------------
WITNESS MIKE J. DUFF
/s/ [ILLEGIBLE] /s/ Case J. O'Byrne
- ---------------------------------- ----------------------------------
WITNESS CASEY J. O'BYRNE
/s/ [ILLEGIBLE] /s/ Lionel A. Singleton
- ---------------------------------- ----------------------------------
WITNESS LIONEL A. SINGLETON
/s/ [ILLEGIBLE] /s/ Damen Ng
- ---------------------------------- ----------------------------------
WITNESS DAMEN NG
/s/ [ILLEGIBLE] /s/ Roger N. Gimby
- ---------------------------------- ----------------------------------
WITNESS ROGER N. GIMBY
GENETICS LIMITED
PER: /s/ [ILLEGIBLE]
----------------------------
PER: /s/ [ILLEGIBLE]
----------------------------
(corporate seal)
E-542
<PAGE>
Minutes
GENETICS LIMITED
MINUTES OF A MEETING OF THE BOARD OF DIRECTORS OF THE
COMPANY HELD AT FRANCES HOUSE, SIR WILLIAM PLACE. ST PETER
PORT. GUERNSEY ON 10 NOVEMBER 1994
PRESENT Mr J L Arklie
Mr R M Falla
CHAIRMAN Mr R M Falla was elected to the Chair
MINUTES The Minutes of the previous Meeting had been circulated,
approved and signed
QUORUM The Chairman confirmed a quorum and declared the Meeting
open
SHARE PURCHASE
AGREEMENT The Chairman tabled to the Meeting a Share Purchase
Agreement (the Agreement) to be entered into between the
Company, M J Duff, C J O'Byrne, L A Singleton, D Ng and R N
Grimby (the Vendors), and Brocker Investments Limited
(Brocker) whereby the Vendors are the directors of Brocker
and the holders of rights under a Stock Option Plan of
Brocker to acquire 91,600 additional shares each in Brocker
(total 458,000), and whereby the Company may wish to acquire
the Option Shares of the Vendors in Brocker; and whereby in
a Letter of Intent the Vendors agreed to transfer the Option
Shares if acquired to Edgewell Limited and Talgarth Limited.
After due consideration and on a motion proposed and duly
seconded, IT WAS RESOLVED that the company accept the terms
and conditions of the Agreement and that IT WAS FURTHER
RESOLVED that the Common Seal of the Company be affixed to
the document and that R M Falla as Director and I D Rouget
as Authorised Signatory of Fidsec Limited, Corporate
Secretary, be authorised to sign the said Agreement.
ANY
OTHER BUSINESS There being no further business the Meeting was declared
closed.
/s/ R
-----------------------------
CHAIRMAN
E-543
SHARE EXCHANGE AGREEMENT
THIS AGREEMENT made effective as at the 31st day of August, 1994.
AMONG:
TALGARTH LIMITED, a body corporate under the laws of Guernsey, Channel
Islands, of P.O. Box 175, Frances House, Sir William Place, St. Peter
Port, Guernsey, Channel Islands, GY1 4HQ (hereafter "Talgarth")
OF THE FIRST PART
- and -
EDGEWELL LIMITED, a body corporate under the laws of Guernsey, Channel
Islands of P.O. Box 175, Frances House, Sir William Place, St. Peter
Port, Guernsey, Channel Islands, CYI 4HQ (hereafter "Edgewell")
OF THE SECOND PART
(Talgarth and Edgewell are collectively referred to as the "Classic
Shareholders")
- and -
CLASSIC PORTRAITS AND DESIGN LTD. a body corporate incorporated under
the laws of Alberta, of 104 - 10315 - 109 Street, Edmonton, Alberta
(hereafter "Classic")
OF THE THIRD PART
- and -
BROCKER INVESTMENTS LTD., a body corporate incorporated under the
laws of Alberta of 1410, 1122 - 4th Street S.W., Calgary, Alberta, T2R
1M1 (hereafter "Brocker")
OF THE FOURTH PART
WITNESSES THAT:
WHEREAS:
A. The Classic Shareholders own the Classic Shares as set out in schedule
"A";
B. The Classic Shareholders and Brocker wish to effect the exchange of
the Classic Shares for the Brocker Shares, upon the terms and
conditions hereinafter set forth; and
D. This Agreement is intended to be approved by the shareholders of
Brocker as the "Major Transaction" of Brocker within the meaning of
Policy 4.11 of the Alberta Securities Commission and Circular No. 7
of the Alberta Stock Exchange.
E-544
<PAGE>
- 2 -
NOW THEREFORE the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Agreement and the recitals hereto, the following words and phrases
have the following respective meanings:
a. "Brocker" means Brocker Investments Ltd.;
b. "Brocker Shares" means fully paid and non-assessable common shares in
the capital of Brocker to be issued to the Classic Shareholders as set
out in Schedule "A" attached hereto;
c. "Brocker Financial Statements" means the audited financial statements
of Brocker for the fiscal period ended November 25, 1993 attached and
forming part of the prospectus of Brocker dated March 4, 1994;
d. "Circular No. 7" means Circular No. 7 of The Alberta Stock Exchange,
as amended from time to time;
e. "Closing" means the completion of all transactions and matters under
this Agreement to occur on or before the Closing Time;
f. "Closing Time" means 10:00 a.m. on the second business day after the
approval of this Agreement as a Major Transaction in the manner
required by Policy 4.11 and Circular No. 7;
g. "Edgewell" means Edgewell Limited;
h. "Effective Date" means the date of Closing;
1. "Escrow Agreement" means the form of escrow agreement set out in
Schedule "C" attached hereto;
j. "Classic" means Classic Portraits and Design Ltd.;
k. "Classic Financial Statements" means the audited financial statements
of Classic for the fiscal period ended July 31, 1994 attached hereto
as Schedule "B";
l. "Classic Shares" means the common shares in the capital of Classic to
be transferred to Brocker under this Agreement as set out in Schedule
"A" attached hereto;
m. "Classic Shareholders" means Talgarth and Edgewell;
n. "Policy 4.11" means Policy 4.11 of the Alberta Securities Commission
as amended from time to time;
o. "Talgarth" means Talgath Limited; and
p. "Valuation" means Brocker Investments Ltd. Valuation of all the Issued
and Outstanding Shares of Classic Portraits and Design Ltd., prepared
by Acumen Management Consultants and dated June, 1994.
E-545
<PAGE>
- 3 -
ARTICLE 2
AGREEMENT TO EXCHANGE
2.1 Classic Shares
The Classic Shareholders hereby agree to sell the Classic Shares to Brocker
in consideration of the issuance by Brocker to the Classic Shareholders of the
Brocker Shares.
2.2 Brocker Shares
Brocker hereby agrees to issue the Brocker Shares to the Classic
Shareholders for the Classic Shares as fully paid and non-assessable shares, in
consideration of the transfer of the Classic Shares held by the Classic
Shareholders. The parties hereto acknowledge and agree that the Brocker Shares
shall be issued subject to substantially the escrow provisions contained in the
form of Escrow Agreement attached hereto as Schedule "C".
2.3 Other Shares
If and to the extent that the Classic Shareholders have any absolute,
contingent, optional, pre-emptive or other right to acquire shares in the
capital of Classic, the Classic Shareholders shall be conclusively deemed, as
and from Closing, to have transferred the same to Brocker to the fullest extent
permitted by law, and to otherwise hold the same in trust for and at the
direction of Brocker.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Representations and Warranties of the Classic Shareholders
Effective both as at the date hereof and as at the Closing Time, the
Classic Shareholders individually represent and warrant to Brocker that:
a. the Classic Shareholders are each a resident of Guernsey, Channel
Islands, for the purposes of the Income Tax Act (Canada), as amended,
and are not a "Canadian" as defined in the Investment Canada Act
(Canada), as amended;
b. the Classic Shareholders are the sole, full and absolute legal and
beneficial owner of the Classic Shares and the said Classic Shares are
fully paid and non-assessable and free and clear of liens, charges,
encumbrances, pledges, mortgages, hypothecations and adverse claims,
of any and all nature whatsoever, including without limitation options
and pre-emptive and other rights of acquisition, in favour of any
person, firm or body corporate, whether conditional or absolute;
c. the Classic Shareholders have the full right to vote all of the
Classic Shares and in particular but without limitation such shares
are not, and will not be immediately prior to Closing; be subject to
any voting trust or similar arrangement; and
d. the Classic Shareholders have the full authority and capacity required
to enter into this Agreement and perform its obligations hereunder.
E-546
<PAGE>
-4-
3.2 Representations and Warranties of Classic
Effective both as at the date hereof and as at the Closing Time, Classic
represents and warrants to Brocker that:
a. Classic is duly incorporated and validly subsisting according to the
laws of Alberta and is registered or qualified to carry on business in
all jurisdictions where the nature of its assets or its business
require such registration or qualification;
b. the entry into and performance of this Agreement by Classic has been
duly authorized by the Board of Directors of Classic;
c. the entry into and performance of this Agreement by Classic will not
result in the violation of any applicable law, the Articles of
Incorporation or Articles of Amendment of Classic, any court or
administrative judgment or order or any indenture or agreement which
Classic is a party to or bound by, and Classic has full right and
authority to enter into and perform this Agreement on the terms
contained herein;
d. Classic is a "private company" as defined in the Securities Act
(Alberta), as amended, and is not a "distributing corporation" as
defined in the Business Corporation Act (Alberta), as amended;
e. The authorized capital of Classic is an unlimited number of Class "A",
Class "B" and Class "C" common shares of which the only issued and
outstandIng shares of Classic are as set out in Schedule "A";
f. there are no outstanding securities of Classic which are convertible
into shares of Classic and, there are no outstanding options or rights
to subscribe for or receive the issuance of any shares in the capital
of Classic;
g. the minute book of Classic contains complete and accurate minutes of
all meetings of the directors and shareholders of Classic held since
its incorporation, all such meetings were duly called and held and all
registers therein are complete and accurate;
h. there have been no amendments made to the By-laws or Articles of
Incorporation of Classic, and there are no resolutions, special
resolutions or other proceedings pending for any further amendment,
excepting a name change that was completed on December 31, 1993 by
Articles of Amendment;
i. the books and records of Classic fairly and correctly set out and
disclose in all material respects, in accordance with generally
accepted accounting principles consistently applied, the financial
position of Classic as at this date and will be accurate at Closing
and all material financial transactions of Classic have been
accurately recorded in such books and records;
j. the Classic Financial Statements have been prepared in accordance with
generally accepted accounting principles, and present fairly (i) the
assets, liabilities (whether accrued, absolute, contingent or
otherwise) and the financial condition of Classic as at the date
thereof, and (ii) the results of its operations during the periods
covered by the Classic Financial Statements, and the financial
position of Classic is now at least as good as that shown by or
reflected in the Classic Financial Statements;
k. since July 31, 1994 the business of Classic has been carried on in the
usual and ordinary course and there has been no material adverse
change in the affairs, business, prospects, operations or conditions
of Classic, financial or otherwise, howsoever arising;
E-547
<PAGE>
- 5 -
l. except for (i) liabilities which are disclosed, reflected or
adequately provided for in the Classic Financial Statements, or which
need not be disclosed, reflected or adequately provided for in the
Classic Financial Statements under generally accepted accounting
principles, and (ii) liabilities incurred in the ordinary course of
business after the date of the Classic Financial Statements, Classic
has no absolute or contingent liabilities which are material to its
affairs, business, prospects, operations or condition, financial or
otherwise;
m. Classic has duly and timely filed all tax returns required to be filed
by it and has paid all taxes and assessments which are shown on such
returns as due and payable by it and adequate provision has been made
for taxes payable for the current period for which tax returns are not
yet required to be filed;
n. Since August 31, 1994 Classic has not (i) declared and paid or set
aside for payment any dividend, whether in cash, shares or otherwise;
(ii) reduced its stated capital in any manner or purchased, acquired,
cancelled or redeemed, or agreed to purchase, acquire, cancel or
redeem, any outstanding shares in its issued capital; or (iii)
authorized or paid any bonus or similar payment to any employee,
officer or director, and Classic is not presently indebted to any of
its present or former shareholders, directors or officers in any
material respect;
o. except as specifically disclosed to Brocker in writing, there are no
actions, suits or proceedings (whether or not purportedly on behalf of
Classic), and having or reasonably capable of having a material
adverse effect on Classic, outstanding, pending or threatened by or
against or affecting Classic at law or in equity or before or by any
federal, provincial, municipal or other governmental department,
commission, board, bureau, agency or instrumentality;
p. Classic has no wholly or partially owned subsidiary bodies corporate
and no obligation to wholly or partially acquire the shares of any
body corporate other than the wholly owned subsidiaries;
q. all written data, information and reports supplied by or on behalf of
Classic in connection with the Valuation is complete and accurate in
all material respects;
r. Classic is a Canadian resident for the purposes of the Income Tax Act
(Canada), as amended, and is not a "Canadian" as defined in the
Investment Canada Act (Canada), as amended;
s. Classic holds all licenses, authorizations and permits required by law
in relation to the business carried on by Classic and the business of
Classic is in compliance with all applicable laws;
t. Classic has no labour union agreement in effect or pending in relation
to its operations; and
u. Classic owns no real estate and is the lessee of the space at 104 -
10315 109 Street, Edmonton, Alberta, 9640 54 Avenue, Edmonton,
Alberta, 106 - 6th Avenue S.W., Calgary, Alberta and 10525 Jasper
Avenue, Edmonton, Alberta.
The recourse of Brocker for any inaccuracy in any of the foregoing
representations and warranties is expressly limited and restricted to the
indemnity provided for in Section 3.5.
3.3 Representations and Warranties of Brocker
Effective both as at the date hereof and as at the Closing Time, Brocker
represents and warrants to the Classic Shareholders that:
E-548
<PAGE>
-6-
a. Brocker is duly incorporated and validly subsisting and is registered
or qualified to carry on business in all jurisdictions where the
nature of its assets or its business require such registration or
qualification;
b. the entry into and performance of this Agreement by Brocker has been
duly authorized by the directors of Brocker;
c. the entry into and performance of this Agreement by Brocker will not
result in the violation of any applicable law, the Articles of
Incorporation of Brocker, any court or administrative judgment or
order or any indenture or agreement which Brocker is a party to or
bound by, and Brocker has full right and authority to enter into and
perform this Agreement on the terms contained herein;
d. Brocker is in all respects in good standing with and up to date in
regard to all filings required by The Alberta Stock Exchange and
Brocker is not in default of any requirements under the Securities Act
(Alberta), as amended, or any regulations pursuant thereto;
e. the authorized capital of Brocker is an unlimited number of common
shares and an unlimited number of preferred shares of which, at the
Closing Time, the following will be the only shares issued and
outstanding:
Class of Shares No. Issued
--------------- ----------
common shares 4,583,000
f. the common shares of Brockor are listed and posted for trading only on
The Alberta Stock Exchange, and are not subject to any cease trading
or trading suspension order;
g. Brocker is, and has been since March 4, 1994 a "reporting issuer" in
accordance with the Securities Act (Alberta), as amended, for the
purposes of the transactions provided for in this Agreement;
h. there are no outstanding securities of Brocker which are convertible
into shares of Brocker and, except for the following, there are no
outstanding options or rights to subscribe for or receive the issuance
of any shares in the capital of Brocker:
<TABLE>
<CAPTION>
NAME OF NUMBER OF COMMON EXERCISE PRICE PER
OPTIONEE SHARES UNDER OPTION COMMON SHARE EXPIRY DATE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Yorkton Securities Inc. 200,000 $0.10 February 16, 1996
Mike J. Duff 91,600 $0.10 November 25, 1998
Casey J. O'Byrne 91,600 $0.10 November 25, 1998
Lionel A. Singleton 91,600 $0.10 November 25, 1998
Roger N. Gimby 91,600 $0.10 November 25, 1998
Damen Ng 91,600 $0.10 November 25, 1998
</TABLE>
E-549
<PAGE>
-7-
i. the minute book of Brocker contains complete and accurate minutes of
all meetings of the directors and shareholders of Brocker held since
its incorporation, all such meetings were duly called and held and all
registers therein are complete and accurate;
j. since the date of incorporation of Brocker there have been no
amendments made to the By-laws or Articles of Incorporation of Brocker
and there are no resolutions, special resolutions or other proceedings
pending for any such amendment;
k. the books and records of Brocker fairly and correctly set out and
disclose in all material respects, in accordance with generally
accepted accounting principles consistently applied, the financial
position of Brocker as at December 2, 1993 and all material financial
transactions of Brocker have been accurately recorded in such books
and records;
l. the Brocker Financial Statements have been prepared in accordance with
generally accepted accounting principles, and present fairly (i) the
assets, liabilities (whether accrued, absolute, contingent or
otherwise) and the financial condition of Brocker at the date thereof,
and (ii) the results of its operations during the period covered by
the Brocker Financial Statements, and the financial position of
Brocker is now at least as good as that shown by or reflected in the
Brocker Financial Statements provided that Brocker has completed its
initial public offering pursuant to the March 4, 1994 prospectus and
received $200,000 less commission and offering expenses;
m. since incorporation the business of Brocker has been carried on in the
usual and ordinary course and there has been no material adverse
change in the affairs, business, prospects, operations or conditions
of Brocker, financial or otherwise, howsoever arising other than the
completion of the initial public offering and entering into this
agreement;
n. except for (i) liabilities which are disclosed, reflected or
adequately provided for in the Brocker Financial Statements, or which
need not be disclosed, reflected or adequately provided for in the
Brocker Financial Statements under generally accepted accounting
principles, and (ii) liabilities incurred in the ordinary course of
business after the date of the Brocker Financial Statements, Brocker
has no absolute or contingent liabilities which are material to its
affairs, business, prospects, operations or condition, financial or
otherwise;
o. Brocker has duly and timely filed all tax returns required to be filed
by it and has paid all taxes and assessments which are shown on such
returns as due and payable by it and adequate provisions has been made
for taxes payable for the current period for which tax returns are not
yet required to be filed;
p. Brocker has not (i) declared and paid or set aside for payment any
dividend, whether in cash, shares or otherwise; (ii) reduced its
stated capital in any manner or purchased, acquired, cancelled or
redeemed, or agreed to purchase, acquire, cancel or redeem, any
outstanding shares in its issued capital; or (iii) authorized or paid
any bonus or similar payment to any employee, officer or director, and
Brocker is not presently indebted to any of its present or former
shareholders, directors or officers in any material respect;
q. except as specifically disclosed to Classic in writing, there are no
actions, suits or proceedings (whether or not purportedly on behalf of
Brocker) and having or reasonably capable of having a material adverse
effect on Brocker, outstanding, pending or threatened by or against or
affecting Brocker at law or in equity or before or by any federal,
provincial, municipal or other governmental department, commission,
board, bureau, agency or instrumentality;
E-550
<PAGE>
-8-
r. Brocker has no wholly or partially owned subsidiary bodies corporate
and no obligation to wholly or partially acquire the shares of any
body corporate;
s. Brocker is a Canadian resident for the purposes of the Income Tax Act
(Canada), as amended, and a "Canadian" as defined in the Investment
Canada Act (Canada), as amended;
t. Brocker holds all licenses, authorizations and permits required by law
in relation to the business carried on by Brocker and the business of
Brocker is in compliance with all applicable laws;
u. Except as disclosed in the final prospectus of Brocker dated March 4,
1994, Brocker is not a party to any contracts, leases, licenses or
other agreements of any kind; and
v. On the Closing, Brocker shall have liquid assets of not less than
$200,000.
The recourse of the Classic Shareholders for any inaccuracy in any of the
foregoing representations and warranties is expressly limited and restricted to
the indemnity provided for in Section 3.5.
3.4 Survival
The representations and warranties in Sections 3.1, 3.2 and 3.3 shall
survive Closing, in accordance with the following provisions:
a. the representations and warranties relating to tax liability shall,
unless based upon any misrepresentation made or fraud committed in
filing a return or supplying information for the purposes of the
Income Tax Act (Canada), as amended, or any other legislation imposing
tax, continue in full force and effect until the expiration of the
last of the limitation periods contained in the Income Tax Act
(Canada), as amended, and any other applicable legislation imposing
tax, subsequent to the expiration of which an assessment, reassessment
or other form or recognized document assessing liability for tax,
interest or penalties thereunder for the period ended on the Closing
Time cannot be issued;
b. the representations and warranties relating to tax liability and based
upon any misrepresentation made or fraud committed in filing a return
or in supplying information for the purposes of the Income Tax Act
(Canada), as amended, or any other legislation imposing tax shall
continue in full force and effect and be unlimited as to duration; and
c. the representations and warranties set forth in Section 3.1 and the
remaining representations and warranties set forth in Sections 3.2 and
3.3 shall continue in full force and effect for a period of one (1)
year from the date hereof.
After the applicable survival period specified in subsections 3.4(a) and
3.4(c), if no claim shall have been made hereunder prior to expiry of such
survival periods against a party hereto with respect to any incorrectness in or
breach of any representation or warranty contained herein, the party making the
representation or warranty in this Agreement shall have not further liability
hereunder with respect to any such representation or warranty.
3.5 Indemnity
Brocker hereby agrees to indemnify and save harmless the Classic
Shareholders and Classic, and the Classic Shareholders individually hereby agree
to indemnify and save Brocker harmless from and against all losses, claims,
actions, causes of action and liabilities, of any and all nature whatsoever,
which the other may suffer, sustain or incur or which may be brought, made or
asserted against the other as the result of any
E-551
<PAGE>
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inaccuracy in any representation and warranty made in this Agreement by the
indemnifying party, subject to the following limitations:
a. there shall be no obligation to indemnify unless the total claim of
Brocker, Classic, or the Classic Shareholders exceeds or could exceed
$50,000;
b. there shall be no obligation to indemnify in respect of a claim not
made in writing both within:
i. the applicable survival period, if any, specified in Section 3.4;
and
ii. the period of 120 days from the date upon which the party
claiming the indemnity first learned of the facts giving rise to
the claim;
c. the liability of Brocker to the Classic Shareholders under this
section shall not, in the aggregate, exceed the product obtained by
multiplying the number of Brocker Shares issued to the Classic
Shareholders under this Agreement by $0.20 per share;
d. the liability of the Classic Shareholders to Brocker under this
section shall not, in the aggregate, exceed the product obtained by
multiplying the number of Brocker Shares issued to the Classic
Shareholders under this Agreement by $0.20 per share;
e. the effect of an inaccuracy in any representation and warranty shall
be assessed in the total context of this Agreement;
f. Classic shall not be considered to be in breach of any representation
and warranty concerning the assets or liabilities of Classic by reason
of an inaccuracy in aggregate assets or aggregate liabilities which
occurs in good faith and does not exceed $50,000; and
g. Brocker shall not be considered to be in breach of any representation
and warranty concerning the assets or liabilities of Brocker by reason
of an inaccuracy in aggregate assets or aggregate liabilities which
occurs in good faith and does not exeed $50,000.
3.6 Tax Information
The parties shall provide each other with such assistance as may reasonably
be requested by any of them in connection with the preparation of any return of
taxes, any audit or other examination by any trading authority, or any judicial
or administrative proceedings relating to liabilities for taxes arising out of
this Agreement, and each will retain and, upon request of the other, provide the
other with such records or information as is relevant to such return, audit or
examination or proceedings. Such assistance shall include providing copies of
any relevant returns of taxes and supporting work schedules. The party
requesting assistance hereunder shall reimburse the other for reasonable
out-of-pocket expenses incurred by the other in providing such assistance. Any
party in possession of records or information relating to taxes shall retain
such records and information for such time as may be prescribed by any relevant
legislation.
3.7 Tax Assessments
If any assessment or reassessment of income tax results or may result in
making any representation and warranty in this Agreement inaccurate in any
material respect, the party (and if more than one party, any on of them) making
the representation and warranty may, at its or their expense, require the same
to be contested in such manner and upon such basis as such party or parties may
reasonably determine. All other parties shall offer all reasonable cooperation
(but without the obligation to incur expense) as may be required in connection
therewith.
E-552
<PAGE>
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ARTICLE 4
PRE-CLOSING MATTERS
4.1 Preservation of Representations and Warranties
Each of the parties shall, at all times up to and including the Closing
Time, do or cause to be done all such acts and things as may be required to
ensure the continued material accuracy of the representations and warranties
made by it in Article 3.
4.2 Commitments
Classic and Brocker respectively agree with each other that, except for
commitments existing at the date of this Agreement and disclosed or referred to
in this Agreement, they will not, between the date hereof and the Closing Time,
(i) undertake or make any absolute or contingent commitments or expenditures in
the aggregate exceeding $50,000 in cash or cash equivalent, or (ii) in any way
alienate or otherwise dispose of any of their respective assets or properties,
unless the consent of the other is first obtained, such consent not to be
unreasonably withheld.
4.3 Public Announcements
Brocker and Classic shall consult with each other before any press release
is issued or other public statement made with respect to this Agreement and the
transactions provided hereby, and, except as may be required by law or pursuant
to any listing agreement with any stock exchange, no such press release or
public statement shall be issued or made without the prior consent of the other,
such consent not to be unreasonably withheld.
4.4 Examination
At all reasonable times up to the Closing Time, Classic and Brocker shall:
a. permit the other to examine and inspect, in organized form, and to
take extracts from, their respective books, records, accounts, data
systems, and files; and
b. furnish to the other such information relating to their respective
attairs, businesses, prospects, operations, conditions and assets,
as may be reasonably requested from time to time and as they respectively have
access to or control over. The rights under this section shall be extended to
the respective representatives and professional advisors of Brocker and Classic.
ARTICLE 5
CLOSING
5.1 Conditions of Classic Shareholders
The obligation of the Classic Shareholders to complete the transactions
provided for in this Agreement is subject to the following conditions:
a. the representations and warranties of Brocker in this Agreement shall
be true and correct in all material respects as at the Closing Time;
b. the board of directors of Brocker shall have authorized and approved
this Agreement and all acts and things required to be performed on the
part of Brocker hereunder;
E-553
<PAGE>
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c. Brocker shall have complied with all obligations on its part under
this Agreement required to be performed at or before the Closing Time;
d. Receipt of a legal opinion from counsel to Brocker that all Alberta
Stock Exchange and other regulatory requirements have been complied
with, that all shareholder and other approvals required to complete
the transaction have been obtained and that the Brocker Shares have
been accepted for listing by the Alberta Stock Exchange; and
e. The present directors of Brocker have agreed to sell their 2,583,000
common shares of Brocker to the Classic Shareholders;
f. No challenge is made under the Investment Canada Act to the
transaction.
If any or all of the aforesaid conditions are not fulfilled, the Classic
Shareholders may withdraw from this Agreement by notice to Brocker and in that
event the Classic Shareholders shall be released from all obligations hereunder
and Brocker shall also be released from all obligations hereunder in regard to
the withdrawing Classic Shareholders. Notwithstanding the foregoing, the Classic
Shareholders may by written instrument waive compliance with any of the said
conditions, without prejudice to its rights of rescission in the event of
non-fulfilment of any other condition or conditions.
5.2 Conditions of Brocker
The obligations of Brocker to complete the transactions provided for in
this Agreement is subject to the following conditions:
a. the representations and warranties of Classic and the Classic
Shareholders in this Agreement shall be true and correct in all
material respects as at the Closing Time and the President of Classic
shall provide a Certificate that the representation and warranties
contained in Section 3.2 are true and correct at Closing Time;
b. Classic and the Classic Shareholders shall have complied with all the
obligations on their respective parts required to be performed at or
before the Closing Time;
c. the board of directors of Classic shall have approved of all matters
contemplated by the transfer of the Classic Shares to Brocker, and all
other acts and things shall have occurred as are necessary to give
Brocker full status as owner of the Classic Shares, upon delivery to
Brocker of the certificates therefor; and
d. this Agreement shall have been executed by each party listed in
Schedule "A" as owning shares in Classic.
If any or all of the aforesaid conditions are not fulfilled, Brocker may rescind
this Agreement by notice to the Classic Shareholders, and in such event Brocker
shall be released from all obligations hereunder. Unless the condition or
conditions, the non-performance of which has given rise to rescission, were
reasonably capable of being performed or caused to be performed by them, then
the Classic Shareholders shall also be released from all obligations hereunder.
Notwithstanding the foregoing, Brocker may waive by written instrument
compliance with any of the said conditions, without prejudice to its right of
rescission in the event of non-fulfilment of any other condition or conditions.
E-554
<PAGE>
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5.3 Mutual Conditions
The obligations of all parties to complete the transactions provided for in
this Agreement are subject to the conditions that:
a. The Alberta Stock Exchange shall have approved this Agreement and the
within contemplated transactions at or before the Closing Time;
b. the shareholders of Brocker shall have approved this Agreement and the
transactions contemplated hereunder and the acquisition of all the
shares of Classic at a meeting of the shareholders of Brocker duly
called and held in accordance with the provisions of Policy 4.11 and
Circular No. 7;
c. at or before the Closing Time, The Alberta Stock Exchange shall have
agreed to list the Brocker Shares for trading upon release from
escrow;
d. all closing documentation tabled by or on behalf of the parties hereto
shall be mutually satisfactory to counsel acting for each of the
Classic Shareholders and Brocker.
Brocker alone shall bear the cost and expense of obtaining fulfilment of the
conditions set forth in paragraphs 5.3.a, b and c. above, and each of Classic
and Brocker agrees to use their best efforts to achieve fulfilment of the said
conditions. If any of the said conditions are not fulfilled by the Closing Time,
this Agreement shall automatically terminate, with all parties released from
liability hereunder.
5.4 Closing Obligations of Brocker
At the Closing Time, Brocker shall:
a. tender to the Classic Shareholders share certificates for the Brocker
Shares to be issued to the Classic Shareholders in the numbers set
forth in Schedule "A", such certificates to be in the form required by
law and by the constating documents of Brocker provided however that
such share certificates shall be delivered to the trustee of the
Escrow Agreement to be held pursuant to the terms of the Escrow
Agreement;
b. do or cause to be done all such acts and things as may be required to
give the Classic Shareholders full status as owners of their
respective Brocker Shares set forth in Schedule "A"; and
c. execute and deliver to the Classic Shareholders an Escrow Agreement
regarding the Brocker Shares in substantially the form as set out in
Schedule "C"; and
d. tender the regulations of the Brocker directors and such resolutions
as may be required to permit the Classic Shareholders to appoint their
nominees to the Board of Brocker.
5.5 ClosIng Obligations of Classic Shareholders
At the Closing Time, the Classic Shareholders shall:
a. tender to Brocker the share certificate or certificates for the
Classic Shares owned by each of them, as set forth in Schedule "A",
duly endorsed for transfer to Brocker;
E-555
<PAGE>
- 13 -
b. tender to Brocker a new share certificate registered in the name of
Brocker for the Classic Shares owned by each of them as aforesaid,
such share certificate to be in the form required by law and by the
constating documents of Classic; and
c. execute the Escrow Agreement delivered to the Classic Shareholders by
Brocker as aforesaid, and deliver or cause the Escrow Agreement to be
delivered to the trustee therein.
5.6 Closing Arrangements
Closing shall take place at the Closing Time at the offices of Gregory R.
Harris, Barrister and Solicitor, 1410, 1122 - 4th Street S.W., Calgary, Alberta
T2R 1M1 or such other place as may be agreed upon by the parties.
ARTICLE 6
EFFECTIVE DATE
6.1 Notwithstanding the Closing Time or any other term herein the Effective Date
of the sale shall be the date of Closing or such other date as accountants to
Brocker shall advise.
ARTICLE 7
GENERAL PROVISIONS
7.1 Headings
The headings in this Agreement have been included solely for convenience of
reference and shall not affect the interpretation of any of the provisions of
this Agreement.
7.2 Gender and Number
The provisions of this Agreement shall be read with all changes in gender
and number as may be required by the context.
7.3 Waiver and Amendment
This Agreement may only be amended by further written agreement executed
and delivered by all parties. No waiver or consent by a party of or to any
breach or default by another party shall be effective unless evidenced in
writing, executed and delivered by the party so waiving or consenting. No such
waiver or consent shall operate as a waiver of or consent to any further or
other breach of default in relation to the same or any other provision of this
Agreement.
7.4 Entirety of Agreement
This Agreement contains the entire agreement among the parties with respect
to the matters of agreement herein, and the parties acknowledge and agree that
there are no oral or other written agreements, undertakings, promises,
conditions, representations or warranties respecting the matters of agreement
herein.
7.5 Severance
If any provisions of this Agreement is judicially determined to be void,
illegal or unenforceable, such provision shall be ineffective to the extent of
such voidness, illegality or unenforceability, but without invalidating or
affecting the validity or enforceability of any of the remaining provisions of
this Agreement.
E-556
<PAGE>
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7.6 Arbitration
In the event of a dispute the parties hereto each agree to arbitrate such
matters pursuant to the terms of the Arbitration Act (Alberta) and agree to be
bound to any decision thereof. The purpose of this clause is to avoid the cost
and delays of legal proceedings in the courts of Alberta. Cost of the arbitrator
shall be paid by the party losing the arbitration.
7.7 Proper Law and Jurisdiction of Adjudication and Trades
This Agreement shall be construed in accordance with the laws of Alberta
and the federal laws of Canada. Each of the parties hereto irrevocably attorns
to the jurisdiction of the Courts of Alberta and consents that any dispute
between them may be litigated in and adjudicated upon by any otherwise
appropriate Court located in Alberta subject to section 7.6. Further, the
parties hereto acknowledge and agree that the trades of the Classic Shares for
Brocker Shares as contemplated herein will occur within Alberta.
7.8 Schedules
The following schedules are attached hereto and form a part of this
Agreement:
Schedule "A" - The Classic Shareholders
Schedule "B" - Classic Financial Statements
Schedule "C" - Escrow Agreement
7.9 Confidentiality
Each party shall treat as confidential, shall not communicate to others and
shall use its best efforts to prevent those within its employ and control from
communicating to persons other than its solicitors, accountants, banker and
other professional advisors prior to the Closing Time (and, if the transactions
contemplated by this Agreement do not close for any reason whatsoever,
subsequent to the Closing Time) all written information which it receives
pursuant to or in relation to this Agreement and which is marked "confidential".
The foregoing shall not apply to information which:
a. at the time of disclosure is in the public domain;
b. becomes part of the public domain by publications or otherwise,
through no act or omission on the part of the restricted party; or
c. must be and is disclosed by requirement of law or pursuant to
established policy or any listing agreement with any securities
exchange.
7.10 Notices
All notices and other communications required or permitted to or in
relation to this Agreement shall be in writing and shall be:
a. personally served upon the addressee (if an individual) or an officer
or director of the addressee (if a body corporate), in which case such
notice or other communication shall conclusively be deemed to have
been given to the addressee at the time of such service; or
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<PAGE>
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b. sent by postage prepaid first class mail addressed to the addressee at
the following respective addresses or to the fax numbers hereinafter
se out:
i. For the Classic Shareholders:
P.O. Box 175, Frances House,
Sir William Place
St. Peter Port, Guernsey,
Channel Islands, GY1 4HQ
fax: 0481 711353 / 715544
ii. For Classic:
Duncan & Craig
Barrister & Solicitors
2800, 10060 Jasper Avenue
Edmonton, Alberta TSJ 3V9
Attention: Gordon Plewes
fax: (403) 428-9683
iii. For Brocker:
Gregory R. Harris Professional Corporation
1410, 1122 - 4th Street S.W.
Calgary, Alberta T2R 1M1
fax: (403) 265-6368
in which case such notice or other communication shall conclusively be
deemed to have been given to the addressee upon the same date as the fax
transmission or if mailed, on the expiration of the 5th day (excluding
Saturdays, Sundays and statutory holidays), free from interruption in the
postal service, from the date of mailing. If the postal service is
interrupted due to a strike, lockout or other cause, whether at the time of
such mailing or during the said period of 5 days, service of such notice or
other commnunication shall not be effective unless given in accordance with
the provisions of paragraph 7.10.a. Any party may by notice in writing to
the other parties change its address for service.
7.11 Prohibition on Assignment
No party hereto may assign all or any part to the benefit of this
Agreement.
7.12 Time of the Essence
Time shall be of the essence in this Agreement.
7.13 Further Assurances
A party shall, upon request of another party, execute and deliver or cause
to be executed and delivered all such documents, deeds and other instruments of
further assurance and do or cause to be done all such acts and things as may be
reasonably necessary or advisable to implement and give full effect to the
provisions of this Agreement.
E-558
<PAGE>
- 16 -
7.14 Counterpart Execution
This Agreement may be executed in counterpart and when each party has
executed a counterpart, all counterparts shall constitute one agreement.
7.15 Effective Date
Notwithstanding the date or dates upon which this Agreement is executed and
delivered by the parties, this Agreement shall be effective among the parties as
of and from the date first above written.
7.16 Enurement
This Agreement shall enure to the benefit of and be binding upon the
parties, the successors and permitted assigns of corporate parties and the
heirs, executors, administrators, personal representatives, successors and
assigns of individual parties.
7.17 Commission
The parties hereto hereby represent and warrant to each other that there
are no agent's or broker's commissions payable in respect of the within
contemplated transaction.
IN WITNESS WHEREOF the parties have caused this Agreement to be duly
executed and delivered.
BROCKER INVESTMENTS LTD. CLASSIC PORTRAITS AND DESIGN LTD.
per: /s/ [ILLEGIBLE] per: /s/ [ILLEGIBLE]
------------------------------ ----------------------------c/s
per: /s/ [ILLEGIBLE]
------------------------------c/s
TALGARTH LIMITED EDGEWELL LIMITED
per: /s/ [ILLEGIBLE] per: /s/ [ILLEGIBLE]
------------------------------ -------------------------------
FIDSEC LIMITED FIDSEC LIMITED
Secretary Secretary
/s/ [illegible] /s/ [illegible]
----------------------------- -----------------------------
Authorised Signatory Authorised Signatory
E-559
<PAGE>
- 17 -
SCHEDULE "A"
The Classic Shareholders
Classic Shareholders Classic Shares Brocker Shares
- -------------------- --------------
Talgarth Limited 49 1,715,000
Edgewell Limited 51 1,785,000
Totals 100 3,500,000
E-560
<PAGE>
- 18 -
SCHEDULE "B"
Classic Financial Statements
E-561
<PAGE>
- 1 -
SCHEDULE "C"
FORM A
Escrow Agreement
THIS AGREEMENT made in triplicate this ___ day of _______________________, 1994.
AMONG:
BROCKER INVESTMENTS LTD.
(herein called the "Issuer")
OF THE FIRST PART
- AND -
MONTREAL TRUST COMPANY OF CANADA
(herein called the "Trustee")
OF THE SECOND PART
- AND -
TALGARTH LIMITED AND
EDGEWELL LIMITED
(herein called the "Security Holders")
OF THE THIRD PART
WHEREAS in furtherance of complying with the requirements of the Securities Act,
Alberta Securities Commission Policy 4.11 and Alberta Stock Exchange Circular
No. 7, the Security Holders are desirous of depositing in escrow certain
securities in the Issuer owned or to be received by them;
AND WHEREAS the Trustee has agreed to undertake and perform its duties according
to the terms and conditions hereof;
NOW THEREFORE this agreement witnesses that in consideration of the sum of ONE
($1.00) DOLLAR paid by the parties to each other, receipt of this sum being
acknowledged by each of the parties, the Security Holders jointly and severally
covenant and agree with the Issuer and with the Trustee and the Issuer and the
Trustee covenant and agree with the other and with the Security Holders jointly
and severally as follows:
1. Where used in this agreement, or in any amendment or supplement hereto,
unless the context otherwise requires, the following words and phrases
shall have the meaning ascribed to them below:
a. "Major Transaction" shall include any material transaction in
accordance with the by-laws of The Alberta Stock Exchange, and a
transaction whereby:
E-562
<PAGE>
- 2 -
1. the Issuer issues more than 25% of the number of its previously
outstanding securities to acquire assets (other than cash) or
securities of another issuer;
ii. the Issuer enters into an arrangement, amalgamation, merger or
reorganization with another issuer with Significant Assets other
than cash, whereby the ratio of securities which are distributed
to the two sets of security holders results in the security
holders of the other issuer acquiring control of the resulting
entity;
iii. the Issuer acquires Significant Assets; or
iv. the Issuer issues more than 25% of the number of its perviously
outstanding securities for cash (a "Private Placement");
b. "Significant Assets" means assets (other than cash) or securities of
another issuer whereby the purchase price exceeds $200,000 or such
lesser amount as is acceptable to the Exchange.
2. Each of the Security Holders hereby undertakes and agrees to deposit in
escrow any securities of the Issuer which he has or may acquire pursuant to
the first Major Transaction or pursuant to the exercise of any option
granted to him by the Issuer pursuant to the first Major Transaction
(including any replacement securities if and when issued) which securities
are described in Schedule "A" attached to this agreement.
3. The Parties hereby agree that, subject to the provisions of paragraph 6
herein, the securities and the beneficial ownership of or any interest in
them and the certificate representing them (including any replacement
securities or certificates) shall not be sold, assigned, hypothecated,
alienated, released from escrow, transferred within escrow, or otherwise in
any manner dealt with, without the written consent of the Alberta Stock
Exchange (hereinafter referred to as the "Exchange") given to the Trustee
or except as may be required by reason of the death or bankruptcy of any
Security Holder, in which cases the Trustee shall bold the said
certificates subject to this agreement, for whatever person, or company
shall be legally entitled to become the registered owner thereof.
4. The Security Holders direct the Trustee to retain their respective
securities and the certificates (including any replacement securities or
certificates) representing them and not to do or cause anything to be done
to release them from escrow or to allow any transfer, hypothecation or
alienation thereof except as provided in paragraph 6, without the written
consent of the Exchange. The Trustee accepts the responsibilities placed on
it by the agreement and agrees to perform them in accordance with the terms
of this agreement and the written consents, orders or directions of the
Exchange.
5. Any Security Holder applying to the Exchange for a consent for a transfer
within escrow shall before applying give reasonable notice in writing of
his intention to the Issuer and the Trustee.
6. The securities escrowed pursuant to this agreement shall be released from
escrow as to one third thereof on each of the first, second and third
anniversaries of the shareholder vote which approved the first Major
Transaction, other than a Major Transaction that is a Private Placement.
7. A release from escrow of all or part of the escrowed securities shall
terminate the agreement only in respect to those securities so released.
For greater certainty this paragraph does not apply to securities
transferred within escrow.
8. If during the period in which any of the securities are retained in escrow
pursuant hereto, any dividend is received by the Trustee in respect of the
escrowed securities, any such dividend shall be promptly paid or
transferred to the respective Security Holders entitled thereto.
E-563
<PAGE>
- 3 -
9. All voting rights attached to the escrowed securities shall at all times be
exercised by the respective registered owners thereof.
10. The Security Holders hereby jointly and severally agree to and do hereby
release and indemnify and save harmless the Trustee from and against all
claims, suits, demands, costs and expenses which may be occasioned by
reason of the Trustee's compliance in good faith with the terms hereof.
11. The Issuer hereby acknowledges the terms and conditions of this Agreement
and agrees to take all reasonable steps to facilitate its performance and
to pay the Trustee's proper charges for its services as trustee of this
escrow.
12. If the Trustee should wish to resign, it shall give at least 6 months
notice to the Issuer which may, with the written consent of the Exchange,
by writing appoint another Trustee in its place and such appointment shall
be binding on the Security Holders and the new Trustee shall assume and be
bound by the obligations of the Trustee hereunder.
13. The covenants of the Security Holders with the Issuer in this agreement are
made with the Issuer both in its own right and as trustee for the holders
from time to time of free securities in the Issuer, and may be enforced not
only by the Issuer but also by any holder of free securities.
14. This agreement may be executed in several parts of the same form and the
parts as so executed shall together constitute one original agreement and
the parts, if more than one, shall be read together and construed as if all
the signing parties hereto had executed one copy of this agreement.
15. Wherever the singular or masculine is used, the same shall be construed to
include the plural or feminine or neuter where the context so requires.
16. This agreement shall enure to the benefit of and be binding on the parties
to this agreement and each of their heirs, executors, administrators,
successors and assigns.
IN WITNESS WHEREOF the Issuer and Trustee have caused their respective corporate
seals to be hereto affixed and the Security Holders have hereto set their
respective hands and seals.
BROCKER INVESTMENTS LTD.
per: /s/ [ILLEGIBLE]
-------------------------------------
per: /s/ [ILLEGIBLE]
-----------------------------------(c/s)
MONTREAL TRUST COMPANY OF CANADA
per:
-------------------------------------
per:
-----------------------------------(c/s)
E-564
<PAGE>
- 4 -
SCHEDULE "A"
to agreement dated the 31st day of August, 1994
and made among Brocker Investments Ltd. therein called the "Issuer", Montreal
Trust Company of Canada therein call the "Trustee", and some security holders of
the Brocker Investments Ltd., therein called the "Security Holders".
<TABLE>
<CAPTION>
Name of Security Number of Securities Certificate Numbers of
Holders Type of Securities Escrowed Securities Escrowed
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Talgarth Limited Common 1,715,000
Edgewell Limited Common 1,785,000
</TABLE>
E-565
<PAGE>
Minutes
EDGEWELL LIMITED
MINUTES OF A MEETING OF THE BOARD OF DIRECTORS OF THE
COMPANY HELD AT FRANCES HOUSE, SIR WILLIAM PLACE, ST PETER
PORT, GUERNSEY ON 10 NOVEMBER 1994.
PRESENT Mr J L Arklie
Mr I M Burns
CHAIRMAN Mr J L Arklie was elected to the Chair.
MINUTES The Minutes of the previous Meeting had been circulated,
approved and signed.
QUORUM The Chairman confirmed a quorum and declared the Meeting
open.
SHARE EXCHANGE
AGREEMENT The Chairman tabled to the Meeting a Share Exchange
Agreement (the Agreement) made effective as at 31 August
1994 between Edgewell Limited and Talgarth Limited (the
Classic Shareholders); Classic Portraits and Design Limited
(Classic) and Brocker Investments Limited (Brocker) whereby
the Classic Shareholders own the Classic shares as set in
Schedule A of the Agreement and that Classic Shareholders
and Brocker wish to effect the exchange of the Classic
shares for Brocker shares upon the terms and conditions
hereinafter set out in the Agreement
After due consideration and on a motion proposed and duly
seconded, IT WAS RESOLVED that the company would approve and
ratify the terms of the Agreement and that IT WAS FURTHER
RESOLVED that the Common Seal of the Company be affixed to
the document and that J L Arklie as Director and L N J
Morris as Authorised Signatory of Fidsec Limited, Corporate
Secretary, be authorised to sign the said Agreement.
ANY OTHER
BUSINESS: There being no further business the Meeting was declared
closed.
/s/ [ILLEGIBLE]
--------------------------------------
CHAIRMAN
{STAMP}
E-566
<PAGE>
Minutes
TALGARTH LIMITED
MINUTES OF A MEETING OF THE BOARD OF DIRECTORS OF THE
COMPANY HELD AT FRANCES HOUSE, SIR WILLIAM PLACE, ST PETER
PORT, GUERNSEY ON 10 NOVEMBER 1994
PRESENT Mr J L Arklie
Mr I M Burns
CHAIRMAN Mr I M Burns was elected to the Chair
MINUTES The Minutes of the previous Meeting had been circulated,
approved and signed.
QUORUM The Chairman confirmed a quorum and declared the Meeting
open.
SHARE EXCHANGE
AGREEMENT The Chairman tabled to the Meeting a Share Exchange
Agreement (the Agreement) made effective as at 31 August
1994 between Edgewell Limited and Talgarth Limited (the
Classic Shareholders); Classic Portraits and Design Limited
(Classic) and Brocker Investments Limited (Brocker) whereby
the Classic Shareholders own the Classic shares as set in
Schedule A of the Agreement and that the Classic
Shareholders and Brocker wish to effect the change of the
Classic shares for Brocker shares upon the terms and
conditions hereinafter set out in the Agreement
After due consideration and on a motion proposed and duly
seconded, IT WAS RESOLVED that the company would approve and
ratify the terms of the Agreement and that IT WAS FURTHER
RESOLVED that the Common Seal of the Company be affixed to
the document and that I M Burns as Director and J F Thompson
as Authorised Signatory of Fidsec Limited, Corporate
Secretary, be authorised to sign the said Agreement.
ANY OTHER
BUSINESS: There being no further business the Meeting was declared
closed.
/s/ [ILLEGIBLE]
--------------------------------------
CHAIRMAN
{STAMP}
E-567
THIS AGREEMENT made this 10 day of November, A.D. 1994.
BETWEEN:
EDGEWELL LIMITED and TALGARTH LIMITED,
OF THE FIRST PART
- and -
MIKE J. DUFF, CASEY J. O'BYRNE, LIONEL A. SINGLETON,
DAMEN NG and ROGER N. GIMBY,
OF THE SECOND PART
- and -
BROCKER INVESTMENTS LTD.,
OF THE THIRD PART
SHARE SALE AGREEMENT
WHEREAS Brocker Investments Ltd. formed under the laws of the Province of
Alberta, is a junior capital pool corporation as defined in the Alberta
Securities Commission Policy 4.11;
AND WHEREAS Mike J. Duff, Casey J. O'Byrne, Lionel A. Singleton, Damen Ng and
Roger N. Gimby are the Directors of the Corporation and the beneficial owners of
the following shares of the Corporation:
Mike J. Duff 516,600 Shares
Casey J. O'Byrne 516,600 Shares
Lionel A. Singleton 516,600 Shares
Damen Ng 516,600 Shares
Roger N. Gimby 516,600 Shares
AND WHEREAS Edgewell Limited and Talgarth Limited wish to acquire the Shares of
the Vendors in the Corporation;
AND WHEREAS in addition to the purchase of the Shares herein contemplated, the
Purchasers are prepared to sell to the Corporation all of the issued and
outstanding shares of the Alberta Corporation known as CLASSIC PORTRAITS AND
DESIGN LTD. pursuant to the terms of a contemporaneous agreement;
NOW THEREFORE WITNESSETH that in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto covenant and agree
as follows:
E-568
<PAGE>
ARTICLE 1 -- DEFINED TERMS
1.1 In the within Agreement:
(a) "Agreement" means this instrument and all schedules hereto;
(b) "Closing Date" means that date contemporaneous with the closing date
of the Major Transaction and shall not be later than March 1, 1995;
(c) "Corporation" means Brocker Investments Ltd.;
(d) "Encumbrances" means any and all liens, charges, encumbrances,
hypothecations, pledges, mortgages or adverse claims whatsoever;
(e) "Escrow Agreement" means the Escrow Agreement among the Corporation,
the Vendors and Montreal Trust company of Canada dated November 25,
1993;
(f) "Major Transaction" has the meaning set out in Alberta Securities
Commission Policy 4.11. and Alberta Stock Exchange Circular #7 and
means the Agreement for the purchase of the shares of Classic
Portraits and Design Ltd. referred to in the fourth recital hereof;
(g) "Purchasers" means collectively Edgewell Limited and Talgarth Limited
being corporations of St. Peter Port, Guernsey, Channel Islands;
(h) "Shares" means all those issued Shares of the Corporation owned by the
Vendors and agreed to be purchased and sold herein as set out in the
second recital hereto;
(i) "Vendors" mean collectively Mike J. Duff, Casey J. O'Byrne, Lionel A.
Singleton, Damen Ng and Roger N. Gimby.
1.2 All monetary figures and obligations contained in this Agreement shall refer
and be deemed to be in Canadian Dollars.
ARTICLE 2 -- SCHEDULES
2.1 The following are the Schedules attached to and in this Agreement by
reference and deemed to be a part hereof:
NIL
ARTICLE 3 -- PROPERTY TO BE PURCHASED
3.1 The Purchasers shall purchase the Shares of the Vendors at and for the
Purchase Price of Seventeen Cents ($0.17) per Share, One Million Three Hundred
and Seventeen Thousand Three Hundred and Thirty (1,317,330) Shares to be
purchased by Edgewell Limited and One Million Two Hundred and Sixty Five
Thousand Six Hundred and Seventy (1,265,670) Shares to be purchased by Talgarth
Limited.
E-569
<PAGE>
ARTICLE 4 -- PAYMENT OF PURCHASE PRICE
4.1 The Purchase Price payable to the Vendors for the Shares shall be paid by
the payment of FOUR HUNDRED AND THIRTY NINE THOUSAND ONE HUNDRED AND TEN
($439,110.00) DOLLARS as follows:
(a) by the payment herewith of a non-refundable deposit in the sum of
TWENTY FIVE THOUSAND ($25,000.00) DOLLARS. It is understood that this
deposit is non-refundable except in those instances where this
Agreement or the Major Transaction cannot be completed because of the
act, default, negligence or other failure of one of the Vendors;
(b) the balance of FOUR HUNDRED AND FOURTEEN THOUSAND ONE HUNDRED AND TEN
($414,110.00) DOLLARS on the Closing Date of this Agreement.
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES
5.1 The Vendors represent and warrant to the Purchasers as follows (the Vendors
acknowledging that the Purchasers are relying upon such representations and
warranties):
(a) That the Corporation has been duly incorporated under the laws of the
Province of Alberta and is in good standing with the Registrar of
Corporations for the Province of Alberta, the Alberta Securities
Commission and the Alberta Stock Exchange, and all other offices where
registration of documentation is required on behalf of the
Corporation;
(b) That the corporate books, records and documents of the Corporation
have been fully and duly kept and maintained and contain a complete
and accurate record of any and all material matters and proceedings of
all shareholders and the Board of Directors and in accordance with
good and usual business practice;
(c) That the Shares being sold pursuant to the terms and conditions of
this Agreement are and will be on the Closing Date of this Agreement
free and clear of all liens, charges, and encumbrances whatsoever
excepting the terms of the Escrow Agreement;
(d) That all information and statements made and provided in the
Information Circular prepared for distribution to the shareholders of
the Corporation respecting the requirements of the Alberta Stock
Exchange for the purposes of the approval of the Corporation's Major
Transaction are accurate, true and complete in all respects as may be
material to the affairs of the Corporation and to the shareholders in
providing their approval for the said Major Transaction;
E-570
<PAGE>
(e) That all information and statements made and provided in the
Prospectus of the Corporation dated March 4, 1994, is accurate, true
and complete in all material respects;
(f) That each and every of the warranties provided hereunder shall be true
and applicable on and as of the Closing Date.
ARTICLE 6 -- CONDITIONS PRECEDENT
6.1 The within agreement shall be subject to the fulfillment of the following
conditions precedent:
(a) The approval of the Alberta Securities Commission and the Alberta
Stock Exchange and compliance with Alberta Securities Commission
policy 4.11 and other rules, regulations and policies of the Alberta
Securities Commission and Alberta Stock Exchange;
(b) The completion of the Major Transaction by the Corporation and the
acquisition of all of the issued and outstanding shares of Classic
Portraits and Design Ltd. as proposed in the Information Circular
prepared in connection therewith, it being understood and agreed that
both transactions are dependent upon the other and will be completed
contemporaneously;
(c) The Purchasers acknowledge and understood that the shares purchased
herein shall be held in escrow in accordance with the requirements of
the Escrow Agreement and the Alberta Securities Commission.
ARTICLE 7 -- CLOSING REQUIREMENTS
7.1 the obligations of the Purchasers to purchase and pay the Purchase Price of
the Shares in this Agreement provided shall be subject to the accuracy of the
representations, warranties and covenants contained in this Agreement at the
Closing Date as if made at the Closing Date and to the satisfaction or
fulfillment of the following additional conditions:
(a) There shall be delivered to the Purchasers at the Closing Date all
share certificates evidencing the Vendors' Shares as fully and
properly endorsed to the Purchasers as herein set out;
(b) Each of the Vendors shall at the request of the Purchasers resign as
officers and directors of the Corporation;
(c) Each of the parties shall execute such further affidavits, documents,
minutes, transfers, covenants and agreements and do such further acts,
deeds and things as may be requisite to give full force and effect to
the terms of the within Agreement and completely divest the Vendors
from any interest whatsoever in the said Shares of the Corporation.
E-571
<PAGE>
ARTICLE 8 -- SURVIVAL OF REPRESENTATIONS
8.1 The representations and warranties contained in this Agreement shall survive
the purchase and sale of the Shares herein provided for and any investigations
by the Purchasers, and the transfer of the Shares, and shall remain in full
force and effect for the benefit of the Purchasers; PROVIDED HOWEVER, that no
claim with respect to the said representations and warranties shall be made by
the Purchasers unless written notice thereof has been given to the Vendors prior
to the expiry of four years from the Closing Date.
ARTICLE 9 -- INDEMNITY
9.1 The Vendors covenant and agree to indemnify and save harmless the Purchasers
from and against any and all claims, causes of action, demands, liability,
expenses, costs and charges in respect of the inaccuracy, incompleteness, breach
or default of any of the representations and warranties of the Vendors contained
herein.
ARTICLE 10 -- NOTICES
10.1 Any notice or waiver or other documents required or permitted to be given
to any of the parties herein shall be in writing and be given by mailing the
same, postage paid, or delivering the same to that party at their addresses as
hereinafter specified:
(a) With respect to the Vendors, c/o Casey J. O'Byrne, 2150 Scotia Place,
10060 Jasper Avenue, Edmonton, Alberta T5J 3R8;
(b) With respect to the Purchasers, c/o Duncan & Craig, Barristers and
Solicitors, 2800 Scotia Place, 10060 Jasper Avenue, Edmonton, Alberta
T5J 3V9, Attention: W. Gordon Plewes;
(c) With respect to the Corporation, c/o Gregory R. Harris, Barrister and
Solicitor, Suite 1410, 1122 - 4th Street S.W., Calgary, Alberta T2R
1M1.
10.2 Any notice or waiver or direction or other document aforesaid, if
delivered, shall be deemed to have been given on the date it was delivered and
if mailed, shall be deemed to have been given on the third business day
following the date upon which it was mailed.
ARTICLE 11 -- TIME OF ESSENCE
11.1 Time is of the essence of the within Agreement.
ARTICLE 12 -- COUNTERPARTS
12.1 This Agreement may be executed by the parties in counterpart.
ARTICLE 13 - APPLICABLE LAW
13.1 The validity and interpretation of this Agreement and of each clause or
part thereof shall be governed by the laws of the Province of Alberta.
E-572
<PAGE>
ARTICLE 14 -- ENUREMENT
14.1 This Agreement shall enure to the benefit of and be binding upon the
parties hereto, their respective heirs, executors, administrators, successors,
and assigns.
IN WITNESS WHEREOF the parties have hereunto set their hands and seals or
affixed their corporate seals duly attested by the proper officers authorized in
that behalf as of the day and year first above written.
EDGEWELL LIMITED
PER: /s/ [ILLEGIBLE]
-----------------------------
FIDSEC LIMITED
Secretary
PER: /s/ [ILLEGIBLE]
-----------------------------
(corporate seal)
TALGARTH LIMITED
PER: /s/ [ILLEGIBLE]
-----------------------------
FIDSEC LIMITED
Secretary
PER: /s/ [ILLEGIBLE]
-----------------------------
(corporate seal)
SIGNED, SEALED AND DELIVERED
in the presence of:
/s/ F. GERIDOCCIO /s/ MIKE J. DUFF
- --------------------------------- ----------------------------------
WITNESS MIKE J. DUFF
/s/ F. GERIDOCCIO /s/ CASEY J. O'BYRNE
- --------------------------------- ----------------------------------
WITNESS CASEY J. O'BYRNE
/s/ [ILLEGIBLE] /s/ LIONEL A. SINGLETON
- --------------------------------- ----------------------------------
WITNESS LIONEL A. SINGLETON
/s/ F. GERIDOCCIO /s/ DAMEN NG
- --------------------------------- ----------------------------------
WITNESS DAMEN NG
/s/ [ILLEGIBLE] /s/ ROGER N. GIMBY
- --------------------------------- ----------------------------------
WITNESS ROGER N. GIMBY
BROCKER INVESTMENTS LTD.
PER: /s/ [ILLEGIBLE]
-----------------------------
PER: /s/ [ILLEGIBLE]
-----------------------------
(corporate seal)
E-573
<PAGE>
TALGARTH LIMITED
JLA/LM/jon
06 November 1995
The Directors
Brocker Investments Limited
2150 Scotia Place
Tower One
10060 Jasper Avenue
Edmonton
AB T5J 3RB
Dear Sirs
This letter is to confirm that this company received consideration for the sale
of its Broker Investments (NZ) Limited shares at NZ$1.00 per share, for the
amount of shares held.
This concludes any claims TALGARTH LIMITED has on Brocker Investments (NZ)
Limited.
Yours faithfully
/s/ J L Arklie
- ---------------------------
J L Arklie
Director
PO Box 175, Frances House, Sir William Place, St. Peter Port,
Guernsey, Channel Islands, GYI 4HQ
Telephone 01481 723573 Facsimile 01481 711353/715544 Telex 4191637 BACFIDG
E-574
<PAGE>
EDGEWELL LIMITED
JLA/LM/jon
07 November 1995
The Directors
Brocker Investments Limited
2150 Scotia Place
Tower One
10060 Jasper Avenue
Edmonton
AB T5J 3RB
Dear Sirs
This letter is to confirm that this company received consideration for the sale
of its Broker Investments (NZ) Limited shares at NZ$1.00 per share, for the
amount of shares held.
This concludes any claims EDGEWELL LIMITED has on Brocker Investments (NZ)
Limited.
Yours faithfully
/s/ I M Burns
- ---------------------------
I M Burns
Director
PO Box 175, Frances House, Sir William Place, St. Peter Port,
Guernsey, Channel Islands, GYI 4HQ
Telephone 01481 723573 Facsimile 01481 711353/715544 Telex 4191637 BACFIDG
E-575
<PAGE>
Minutes
EDGEWELL LIMITED
MINUTES OF A MEETING OF THE BOARD OF DIRECTORS OF THE
COMPANY HELD AT FRANCES HOUSE, SIR WILLIAM PLACE, ST PETER
PORT, GUERNSEY ON 10 NOVEMBER 1994.
PRESENT: Mr J L Arklie
Mr I M Burns
CHAIRMAN: Mr J L Arklie was elected to the Chair
MINUTES: The Minutes of the previous Meeting had been circulated,
approved and signed.
QUORUM: The Chairman confirmed a quorum and declared the Meeting
open.
SHARE SALE
AGREEMENT: The Chairman tabled to the Meeting a Share Sale Agreement
(the Agreement) between Edgewell Limited and Talgarth
Limited (the Purchasers); Messrs M J Duff, C J O'Byrne, L A
Singleton, D Ng and Roger N Gimby (the Vendors), and Brocker
Investments Limited (Brocker) whereby the Purchasers wished
to acquire the shares of Brocker held by the Vendors.
In addition to the purchase of the shares referred to above
the Purchasers are prepared to sell to Brocker all of the
issued and outstanding shares of an Alberta Corporation
known as Classic Portraits and Design Limited, pursuant to
the terms of a contemporaneous agreement.
After due discussion and on a motion proposed and duly
seconded, IT WAS RESOLVED that the company would accept the
terms and conditions of the Agreement and IT WAS FURTHER
RESOLVED that the Common Seal of the Company be affixed to
the document and that J L Arklie as Director and L N J
Morris as Authorised Signatory of Fidsec Limited, Corporate
Secretary, be authorised to sign the said Agreement.
ANY OTHER
BUSINESS: There being no further business the Meeting was declared
closed.
- ----------------------------------------
CERTIFIED TRUE COPY
FIDSEC LTD -- COMPANY SECRETARY
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- --------------- ---------------
AUTHORISED AUTHORISED
SIGNATORY SIGNATORY
- ----------------------------------------
E-576
<PAGE>
Minutes
TALGARTH LIMITED
MINUTES OF A MEETING OF THE BOARD OF DIRECTORS OF THE
COMPANY HELD AT FRANCES HOUSE, SIR WILLIAM PLACE, ST PETER
PORT, GUERNSEY ON 10 NOVEMBER 1994.
PRESENT: Mr J L Arklie
Mr I M Burns
CHAIRMAN: Mr I M Burns was elected to the Chair.
MINUTES: The Minutes of the previous Meeting had been circulated,
approved and signed.
QUORUM: The Chairman confirmed a quorum and declared the Meeting
open.
SHARE SALE
AGREEMENT: The Chairman tabled to the Meeting a Share Sale Agreement
(the Agreement) between Edgewell Limited and Talgarth
Limited (the Purchasers) Messrs M J Duff, C J O'Byrne, L A
Singleton, D Ng and Roger N Gimby (the Vendors), and Brocker
Investments Limited (Brocker) whereby the Purchasers wished
to acquire the shares of Brocker held by the Vendors.
In addition to the purchase of the shares referred to above
the Purchasers are prepared to sell to Brocker all of the
issued and outstanding shares of an Alberta Corporation
known as Classic Portraits and Design Limited, pursuant to
the terms of a contemporaneous agreement.
After due discussion and on a motion proposed and duly
seconded, IT WAS RESOLVED that the company would accept the
terms and conditions of the Agreement and IT WAS FURTHER
RESOLVED that the Common Seal of the Company be affixed to
the document and that I M Burns as Director and J F Thompson
as Authorised Signatory of Fidsec Limited, Corporate
Secretary, be authorised to sign the said Agreement.
ANY OTHER
BUSINESS: There being no further business the Meeting was declared
closed.
- ----------------------------------------
CERTIFIED TRUE COPY
FIDSEC LTD -- COMPANY SECRETARY
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- --------------- ---------------
AUTHORISED AUTHORISED
SIGNATORY SIGNATORY
- ----------------------------------------
E-577
THIS AGREEMENT made this 14th day of March, 1995.
BETWEEN:
BROCKER INVESTMENTS LTD.,
a body corporate with offices in the
City of Calgary, in the Province of Alberta,
OF THE FIRST PART,
- and -
621202 ALBERTA LTD.,
a body corporate with offices in the
City of Edmonton, in the Province of Alberta,
OF THE SECOND PART.
AGREEMENT FOR PURCHASE AND SALE OF SHARES
WHEREAS the Purchaser wishes to acquire all of the Shares of the Corporation in
accordance with the terms hereof;
NOW THEREFORE THIS AGREEMENT WITNESSETH that for and in consideration of the
mutual covenants and agreements herein contained, it is agreed by and between
the Parties hereto as follows:
ARTICLE I - GENERAL
1.1 DEFINITIONS
For the purposes of this Agreement, the recitals hereof and the schedules
annexed hereto, each of the following expressions shall have the meaning
ascribed to it in this section 1.1:
(a) "Affiliate", means an affiliate as defined in the Business
Corporations Act (Alberta);
(b) "Agreement", "hereto", "hereby", "hereunder", "hereof" and similar
expressions when used in this offer to purchase and in the attached
schedules refer to the whole of this offer to purchase and the
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<PAGE>
-2-
attached schedules and not to any particular Article or Section or
portion thereof and include any and every instrument supplemental
hereto, and any reference to an Article or Section by number means the
appropriate Article or Section of this Agreement and any reference to
a Schedule by letter means the appropriate Schedule attached to and
forming a part of this Agreement, unless in any of the cases aforesaid
the context is expressly to the contrary;
(c) "Business Day" means any day which is not a Saturday, Sunday or legal
holiday in the Province of Alberta;
(d) "Closing Date" means March 17, 1995, or such earlier or later date as
the parties hereto may jointly determine;
(e) "Corporation" means Classic Portraits & Design Ltd.;
(f) "Obligations to Shareholders" means any and all rights and claims of
the Vendor against the Corporation including in respect of any
advances or loans to the Corporation or any transfers of assets to the
Corporation, and payment of any bonuses and/or dividends which have
been declared but unpaid by the Corporation;
(g) "Permitted Encumbrances" means those interests and encumbrances set
forth in Schedule "C" attached hereto;
(h) "Purchase Price" means the sum of Seven Hundred and Thirty Five
Thousand ($735,000.00) Dollars;
(i) "Purchaser" means 621202 Alberta Ltd.;
(j) "Shares" means all of the issued and outstanding shares in the capital
stock of the Corporation;
(k) "Vendor" means Brocker Investments Ltd..
1.2 DERIVATIVES
Any derivative of any of the definitions set forth herein shall have the
meaning appropriate to the derivation of such definition.
1.3 NUMBER AND GENDER
Words importing the singular number only shall include the plural and vice
versa and words importing the masculine gender shall include the feminine gender
and words importing persons shall include firms and corporations and vice versa.
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<PAGE>
-3-
1.4 HEADINGS AND DIVISIONS
The division of this Agreement into Articles and Sections and the headings
of any Articles and Sections and the table of contents, if any, are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
1.5 APPLICABLE LAW
This Agreement shall be governed by the laws in force in the Province of
Alberta.
1.6 SCHEDULES
The Schedules mentioned in this Section 1.6 and attached hereto shall form
part hereof:
Schedule "A" - Form - Promissory Note
Schedule "B" - Security Agreement
Schedule "C" - Permitted Encumbrances
1.7 JURIDICAL DAY
In any case where the time limited by this Agreement expires on a Saturday,
Sunday or legal holiday in the Province of Alberta, the time limited shall be
extended to and shall include the next succeeding Business Day.
1.8 NOTICES
Any notice to be given by one party hereto to another pursuant to this
Agreement shall be in writing and delivered by hand addressed to:
the Vendor: c/o Duncan & Craig
Barristers and Solicitors
2800, Scotia Place
10060 Jasper Avenue
Edmonton, Alberta T5J 3V9
Attention: W. Gordon Plewes
the Purchaser: c/o 104, 10315 - 109 Street
Edmonton, Alberta T5J 1N3
Attention: Lorne Hildebrandt
Any notice delivered by hand shall be deemed to be received when left during
normal business hours at the office set forth above. Each party shall be
entitled to change its address for notice to an address elsewhere in Canada, by
notice in writing to the others.
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<PAGE>
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1.9 ENUREMENT
The presents shall be binding upon the Vendor and the Purchaser and shall
enure to the benefit of and be binding upon the successors of the Vendor and the
successors and permitted assigns of the Purchaser.
1.10 TIME IS OF THE ESSENCE
Time is of the essence hereof.
1.11 MANNER OF PAYMENT
Any and all reference to money or dollars contained herein shall be a
reference to lawful money of Canada and all payments required to be made
hereunder shall be sufficiently made if made by way of cash, certified cheque,
bank draft or solicitors' trust account cheque and shall be sufficiently paid if
paid to the party for whom the same is intended or to such party's solicitors.
1.12 WHOLE AGREEMENT
This Agreement and any agreement made between the parties in accordance
with the terms hereof constitute the only agreements between the parties
relating to the transaction of purchase and sale contemplated herein.
1.13 REPRESENTATIONS AND WARRANTIES
Except as herein expressly set forth, there are no representations or
warranties by any party with respect to the transaction of purchase and sale
contemplated herein.
1.14 COSTS
Each party hereto is responsible for its own legal fees respecting the
preparation of this Agreement and any collateral or supplementary documentation
hereto.
1.15 NON-MERGER
The representations, warranties, covenants and agreement of the Vendor and
the Purchaser contained in this Agreement shall not merge upon but shall survive
the closing of the transaction of purchase and sale contemplated herein,
notwithstanding any independent examination or investigation conducted by or on
behalf of the Purchaser or the Vendor.
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ARTICLE II - PURCHASE AND SALE
2.1 OFFER TO PURCHASE
The Purchaser shall purchase the Shares from the Vendor and the Vendor
shall sell the Shares to the Purchaser, for the Purchase Price. The transaction
of purchase and sale shall be completed on the Closing Date in the manner herein
contemplated.
2.2 METHOD OF PAYMENT AND SECURITY
(a) The Purchaser shall, subject to any termination of this Agreement in
accordance with the terms hereof, pay the Purchase Price to the Vendor
on the Closing Date by the delivery of the sum of THREE HUNDRED AND
FORTY THOUSAND ($340,000.00) DOLLARS on the Closing Date and by the
delivery of a Promissory Note in the sum of THREE HUNDRED AND NINETY
FIVE THOUSAND ($395,000.00) DOLLARS in the form attached as Schedule
"A";
(b) As further security for the due payment of the Promissory Note set out
in Article 2.2 (a), the Purchaser agrees to grant to the Vendor a
Security Agreement in the form of a pledge of the Shares of the
Corporation, the Security Agreement to be in the form attached as
Schedule "B" hereto.
ARTICLE III - REPRESENTATIONS AND WARRANTIES
3. REPRESENTATIONS AND WARRANTIES OF THE VENDOR
In order to induce the Purchaser to enter into and consummate this
Agreement, the Vendor represents and warrants to and covenants with the
Purchaser as follows:
3.1 The Corporation is a corporation duly incorporated under the
laws of the Province of Alberta, is not a distributing corporation or
a reporting issuer, is a valid and subsisting corporations, is in good
standing as to the filing of annual returns in the Office of the
Registrar of Corporations for the Province of Alberta and has kept and
maintained such corporate records as are required under the Business
Corporations Act, S.A. 1981 c.B15, and amendments thereto, since its
incorporation, which records are accurate and complete and up to date
in all respects.
3.2 The capital structure of the Corporation is as follows:
(a) the authorized capital of the Corporation is divided
into:
(i) an unlimited number of Class "A" Shares;
(ii) an unlimited number of Class "B" Shares;
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<PAGE>
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(iii) an unlimited number of Class "C" Shares; and
(b) the issued and outstanding shares in the capital stock
of the Corporation is owned as follows:
(i) the Vendor - 100 Class "A" Shares.
3.3 The Vendor legally and beneficially own the Shares free of
all liens, claims, charges and encumbrances whatsoever.
3.4 The Vendor own 100% of the issued and outstanding shares of
the Corporation.
3.5 The Vendor has due and sufficient right and authority to
enter into this Agreement on the terms and conditions set forth and to
transfer the legal and beneficial title and ownership of the Shares to
the Purchaser, subject only to the approval of The Alberta Securities
Commission.
3.6 Other than the Articles of Incorporation of the Corporation,
no documents or agreements prohibit the transfer of the Shares or the
transactions contemplated herein.
3.7 No person, firm or corporation has any agreement or option or
right capable of becoming an agreement or option for the purchase of
the Shares, or any shares in the capital of the Corporation owned by
the Vendor or any agreement or option or right capable of becoming an
agreement for the purchase, subscription or issuance of any of the
unissued shares in the capital of the Corporation.
3.8 The Corporation has not agreed to guarantee any debt,
liability or other obligation of any person, firm or corporation.
3.9 There is no basis for and there are no actions, suits,
judgments, investigation or proceedings outstanding or pending, or to
the knowledge of the Vendors or either of them threatened, against or
affecting the Corporation at law or in equity or before or by any
federal, provincial, municipal or other governmental department,
commission, board, bureau or agency.
3.10 The Corporation is not, to the knowledge of the Vendors, in
breach of any laws, ordinances, statutes, regulations, bylaws, orders
or decrees to which it is subject or which apply to it.
Notwithstanding any investigations or inquiries made by the Purchaser or
its representatives, the representations, warranties, covenants and
agreements of the Vendors shall survive the Closing Date and
notwithstanding the closing of the purchase and sale herein provided for
shall continue in full force and effect.
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<PAGE>
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ARTICLE IV - COMPLETION-RISK-POSSESSION-ADJUSTMENTS
4.1 DELIVERIES BY VENDOR
On the Closing Date, the Vendor shall deliver to the Purchaser the following
documents, executed where required:
(a) The minute book of the Corporation including the Articles of
Incorporation and Bylaws, and all corporate records, documents and
instruments, the corporate seal of the Corporation and all books of
account of the Corporation;
(b) Share certificates evidencing the Shares, which share certificates
shall be duly endorsed for transfer to the Purchaser or accompanied by
properly executed share transfer form;
(c) Resignations of the directors and officers of the Corporation as
required by the Purchaser;
(d) Certified copy of the Resolution of the directors of the Corporation
approving the transfer of the Shares to the Purchaser;
(e) An executed certificate for the Shares registered in the name of the
Purchaser;
(f) such other evidence as may be reasonably requested by the Purchaser's
Solicitors that the necessary corporate actions and proceedings have
been taken to permit the due and valid transfer at the Closing Date
from the Vendor to the Purchaser of the Shares.
4.2 DELIVERIES BY PURCHASER
On the Closing Date, subject to compliance by the Vendor with all of the
terms and conditions hereof, the Purchaser shall deliver to the Vendor the
following documents:
(a) a duly executed copy of the Promissory Note;
(b) the Security Agreement of the Purchaser;
(c) a Certified Copy of the Resolution of the Directors of the Purchaser
approving the execution of the Promissory Note and Security Agreement;
(d) such other evidence as may be reasonably requested by the Purchaser's
Solicitors that the necessary corporate actions and proceedings have
been taken to permit the due and valid transfer at the Closing Date
from the Vendors to the Purchaser of the Shares.
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<PAGE>
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4.3 VENDOR'S APPROVALS
This Agreement, and the closing thereof, shall be subject to the condition
precedent that the Vendor shall obtain all necessary approvals from The Alberta
Securities Commission or any other governmental authority having jurisdiction in
respect of this transaction.
4.4 DOCUMENTS IN ESCROW
All of the matters of payment and delivery of documents by the Vendor and
the Purchaser pursuant to the terms hereof shall be in escrow and shall be
deemed to be concurrent requirements such that, unless otherwise agreed by the
parties hereto, nothing is complete and the escrow shall not be released until
everything has been paid and delivered.
4.5 TIME AND PLACE OF CLOSING
This transaction of purchase and sale shall close on the Closing Date at
the offices of the Vendor's Solicitors at the hour of 10:00 a.m. Edmonton time.
IN WITNESS WHEREOF the parties have hereunto affixed their hands and seals,
or their corporate seal duly attested by its proper officers in that ___ the day
and year first above written.
BROCKER INVESTMENTS LTD.
Corporate Seal
BROCKER INVESTMENT LTD.
PER: /s/ [illegible]
PRE:
621202 ALBERTA LTD.
PER: /s/ [illegible]
PER:
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<PAGE>
SCHEDULE "A"
THIS IS SCHEDULE "A" TO THE AGREEMENT DATED THE 14TH DAY OF MARCH, A.D. 1995,
MADE BETWEEN BROCKER INVESTMENTS LTD. AND 621202 ALBERTA LTD.
AMOUNT: $395,000.00 DATE: MARCH 14,1995
PROMISSORY NOTE
FOR VALUE RECEIVED, 621202 ALBERTA LTD. of Edmonton hereby promises to pay to
the order of BROCKER INVESTMENTS LTD. c/o 2150 Scotia Place, Tower 1, 10060
Jasper Avenue, Edmonton, Alberta T5J 3R8, the principal sum of THREE HUNDRED AND
NINETY FIVE THOUSAND ($395,000.00) DOLLARS to become due and payable in any
event on the 30th day of April, 1995.
AFTER DEFAULT of payment of the sum of THREE HUNDRED AND NINETY FIVE THOUSAND
($395,000.00) DOLLARS interest will be payable on the outstanding balance
thereon at the rate per annum equal to the Prime Rate of The Royal Bank of
Canada PLUS FIVE (5%) PER CENT calculated monthly not in advance as well after
as before maturity from the 30th day of April, A.D. 1995, until the whole of the
monies hereby secured together with interest as aforesaid is fully paid.
PROVIDED the undersigned are not in default hereunder the undersigned shall have
the privilege of paying at any time, the whole of the outstanding principal and
accrued interest thereon without notice or bonus or penalty.
AND IN DEFAULT of payment the whole amount payable under this Note shall
forthwith become due and payable at the option of BROCKER INVESTMENTS LTD..
PRESENTMENT FOR PAYMENT, DEMAND, PROTEST, NOTICE OF DISHONOUR, ARE HEREBY WAIVED
AND THE ENDORSERS AGREE TO REMAIN AS FULLY LIABLE AS IF EVERY PRESENTMENT,
DEMAND, PROTEST AND NOTICE HEREBY WAIVED WERE FULLY MADE AND GIVEN.
621202 ALBERTA LTD.
PER:___________________________
PER__________________________
(corporate seal)
E-586
<PAGE>
SCHEDULE "B"
THIS IS SCHEDULE "B" TO THE AGREEMENT DATED THE 14TH DAY OF MARCH, A.D. 1995,
MADE BETWEEN BROCKER INVESTMENTS LTD. AND 621202 ALBERTA LTD.
SECURITY AGREEMENT
THIS AGREEMENT is made as of the 14th day of March, 1995.
BY:
621202 ALBERTA LTD.,
a corporation incorporated under
the laws of the Province of Alberta with an
office at Edmonton, in the Province of Alberta
(the "Pledgor"),
IN FAVOUR OF:
BROCKER INVESTMENTS LTD.,
a corporation incorporated under the
laws of the Province of Alberta, with
an office at Calgary, in the Province of Alberta,
("Pledgee")
RECITALS:
A. The Pledgee has executed and delivered to Pledgor an agreement in
writing of even date (the "Agreement for Purchase") to sell 100 Class "A"
Shares (the "Shares") of the capital stock of Classic Portraits & Design
Ltd. (the "Corporation") to the Pledgor on the terms and at the price
therein stated;
B. The Pledgor has agreed to execute and deliver this Security
Agreement as additional security for the performance of all of its
covenants under the Agreement for Purchase and the Promissory Note granted
according to the terms of the Agreement for Purchase ("Promissory Note")
and to grant a security interest in the Shares of the capital stock of the
Corporation;
NOW THEREFORE in consideration of the sum of $1.00 and for other good and
valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the Pledgor agrees with the Pledgee as follows:
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ARTICLE 1
INTERPRETATION
In this Agreement, in addition to the definitions set out above:
(a) "this Agreement", "hereto", "herein", "hereof", "hereby", "hereunder"
and any similar expressions refer to this Agreement as it may be
amended or supplemented from time to time, and not to any particular
article, section or other portion hereof;
(b) "Agreement for Purchase" means that Agreement for Purchase and Sale of
Shares dated the 14th day of March, 1995, between Brocker Investments
Ltd. and 621202 Alberta Ltd. providing for the sale of 100 Class "A"
Shares of the capital stock of the Corporation;
(c) "Business Day" means any day, other than Saturday, Sunday or any
statutory holiday in the Province of Alberta;
(d) "Chattel Paper" means one or more than one writing that evidences both
a monetary obligation and a security interest in or a lease of
specific Goods;
(e) "Collateral" means all of the property of the Pledgor subject to, or
intended to be subject to, the Security Interest, and any reference to
"Collateral" shall be deemed to be a reference to "Collateral or any
part thereof" except where otherwise specifically provided;
(f) "Corporation" means Classic Portraits & Design Ltd., a corporation
incorporated under the laws of the Alberta;
(g) "Document of Title" means any writing that purports to be issued by or
addressed to a bailee and purports to cover such Goods in the bailee's
possession as are identified or fungible portions of an identified
mass, and that in the ordinary course of business is treated as
establishing that the Person in possession of it is entitled to
receive, hold and dispose of the documents and the Goods it covers;
(h) "Event of Default" means a default by the Pledgor in the performance
of any of the terms and conditions contained in the Agreement for
Purchase or the Promissory Note or this Agreement.
(i) "Goods" means tangible personal property other than Chattel Paper,
Documents of Title, Instruments, Money and Securities, and includes
fixtures, growing crops, the unborn young of animals, timber to be
cut, and minerals and hydrocarbons to be extracted;
(j) "Instrument" means:
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(i) a bill, note or cheque within the meaning of the BillS of
Exchange Act (Canada) or any other writing that evidences a right
to the payment of Money and is of a type that in the ordinary
course of business is transferred by delivery with any necessary
endorsement or assignment, or
(ii) a letter of credit and an advice of credit if the letter or
advice states that it must be surrendered upon claiming payment
thereunder,
but does not include a writing that constitutes part of Chattel Paper,
a Document of Title or a Security;
(k) "Lien" means any mortgage, pledge, charge, assignment, security
interest, hypothec, lien or other encumbrance, including, without
limitation, any agreement to give any of the foregoing, or any
conditional sale or other title retention agreement;
(1) "Money" means a medium of exchange authorized or adopted by the
Parliament of Canada as part of the currency of Canada or by a foreign
government as part of its currency;
(m) "Obligations" means all of the obligations, liabilities and
indebtedness of the Pledgor to the Pledgee under or in respect of the
Agreement for Purchase and Promissory Note;
(n) "Person" means any individual, partnership, limited partnership, joint
venture, syndicate, sole proprietorship, company or corporation with
or without share capital, unincorporated association, trust, trustee,
executor, administrator or other legal personal representative,
regulatory body or agency, government or governmental agency,
authority or entity however designated or constituted;
(o) "Pledgee" means Brocker Investments Ltd.;
(p) "Pledgor" means 621202 Alberta Ltd.;
(q) "Pledged Shares" means the shares referred to in recital A;
(r) "PPSA" means the Personal Property Security Act (Alberta) as amended
from time to time and any Act substituted therefor and amendments
thereto;
(s) "Proceeds" means identifiable or traceable personal property in any
form derived directly or indirectly from any dealing with Collateral
or the proceeds therefrom, and includes any payment representing
indemnity or compensation for loss of or damage to the Collateral or
proceeds therefrom;
(t) "Promissory Note" means the Promissory Note issued pursuant to the
terms of the Agreement for Purchase and granted by 621202 Alberta Ltd.
to Brocker Investments Ltd.. to secure the repayment of the sum of
$395,000.00;
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(u) "Security" means a document that is:
(i) issued in bearer, order or registered form;
(ii) of a type commonly dealt in upon securities exchanges or markets
or commonly recognized in any area in which it is issued or dealt
in as a medium for investment;
(iii)one of a class or series or by its terms is divisible into a
class or series of documents, and
(iv) evidence of a share, participation or other interest in property
or in an enterprise or is evidence of an obligation of the
issuer,
and, without limiting the generality of the foregoing, includes the
Pledged Shares; and
(v) "Security Interest" has the meaning attributed to such term in
Section 2.1.
1.2 Headings
The inclusion of headings in this Agreement is for convenience of reference only
and shall not affect the construction or interpretation hereof.
1.3 References to Articles and Sections
Whenever in this Agreement a particular article, section or other portion
thereof is referred to, then, unless otherwise indicated, such reference
pertains to the particular article, section or portion thereof contained herein.
1.4 Currency
Except where otherwise expressly provided, all amounts in this Agreement are
stated and shall be paid in Canadian currency.
1.5 Gender and Number
In this Agreements unless the context otherwise requires, words importing the
singular include the plural and vice versa and words importing gender include
all genders.
1.6 Invalidity of Provisions
Each of the provisions contained in this Agreement is distinct and severable and
a declaration of invalidity or unenforceability of any such provision or part
thereof by a court of competent jurisdiction shall not affect the validity or
enforceability of any other provision hereof.
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1.7 Amendment, Waiver
No amendment or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any provision of this
Agreement shall constitute a waiver of any other provision nor shall any waiver
of any provision of this Agreement constitute a continuing waiver unless
otherwise expressly provided.
1.8 Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the Province of Alberta and the laws of Canada applicable therein.
ARTICLE 2
SECURITY INTEREST
2.1 Creation of Security Interest
The Pledgor hereby pledges, charges, assigns, transfer and hypothecates to the
Pledgee, and grants to the Pledgee a security interest in (collectively, the
"Security Interest"):
(a) the Pledged Shares;
(b) all Securities, Instruments, negotiable Documents of Title and other
personal property of any kind which may hereafter be acquired by the
Pledgor in renewal of, substitution for, as owner of, or as a result
of the exercise of any rights relating to the property described in
this section;
(c) all dividends, income or other distributions, whether paid or
distributed in cash or other property, in respect of any of the
property described in this section; and
(d) all Proceeds of any of the property described in this section.
2.2 Attachment
The attachment of the Security Interest has not been postponed and the Security
Interest shall attach to any particular Collateral as soon as the Pledgor has
rights in such Collateral.
ARTICLE 3
OBLIGATIONS SECURED
3.1 Obligations Secured
The Security Interest granted hereby secures payment, performance and
satisfaction of the Obligations.
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ARTICLE 4
DEALING WITH COLLATERAL
4.1 The Pledgor shall not, without the prior consent in writing of the
Pledgee:
(a) sell, assign, transfer, exchange, or otherwise dispose of
the Collateral except to the extent permitted by clause
4.3(a)(i) hereof;
(b) create, assume or suffer to exist any Lien upon the
Collateral other than the Security Interest;
(c) cause, allow or permit the Corporation to dispose of any of
its assets in any way other than in the ordinary course of
business.
No provision hereof shall be construed as a subordination or postponement of the
Security Interest to or in favour of any other Lien, whether or not such Lien is
permitted hereunder or otherwise.
4.2 Notices and Other Communications in Respect of Collateral
The Pledgor shall deliver promptly to the Pledgee copies of all notices or other
communications received by the Pledgor in respect of the Collateral. Until the
occurrence of an Event of Default, the Pledgee shall deliver promptly to the
Pledgor all notices or other communications received by the Pledgee or its
nominee in respect of the Collateral. After the occurrence of an Event of
default, the Pledgor waives all rights to receive any notices or communications
received by the Pledgee or its nominee in respect of the Collateral.
4.3 Voting and Other Rights
(a) Until the occurrence of an Event of Default:
(i) The Pledgor may exercise all rights to vote and to exercise all
rights of conversion or retraction or other similar rights with
respect to any Collateral; provided that no such exercise, in the
opinion of the Pledgee, will have an adverse effect on the value
of such Collateral and all expenses of the Pledgee in connection
therewith have been paid in full and provided further that, upon
the exercise of the conversion or retraction right, the
additional Collateral resulting therefrom shall be paid or
delivered to the Pledgee;
(ii) subject to the proviso in clause 4.3(a)(i), the Pledgee shall
grant, or shall cause its nominee to grant, to the Pledgor or its
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nominee a proxy to vote and to exercise all rights of conversion
or retraction or other similar rights with respect to any
Collateral registered in the name of the Pledgee or its nominee,
upon demand by the Pledgor; and
(iii) the Pledgor shall be entitled to receive all dividends (whether
paid or distributed in cash, securities or other property) and
interest declared and paid or distributed in respect of the
Collateral, and such dividends and interest shall cease to be
subject to the Security Interest if paid or distributed to the
Pledgor prior to the occurrence of an Event of Default but not
otherwise.
(b) Upon the occurrence of an Event of Default:
(i) no proxy granted by the Pledgee or its nominee to the Pledgor or
its nominee pursuant to clause 4.3(a) shall thereafter be
effective;
(ii) the Pledgor shall have no rights to vote or take any other action
with respect to any Collateral;
(iii) the Pledgee may, but shall not be obliged to, vote and take all
other action with respect to any Collateral; and
(iv) The Pledgor shall cease to be entitled to receive any dividends
or interest, whether declared or payable before or after the
occurrence of the Event of Default, in respect of the Collateral.
4.4 Delivery of Collateral to Lender
Subject to clause 4.3(a)(iii), all Collateral received at any time by or on
behalf of the Pledgor, whether before or after the occurrence of an Event of
Default, shall be received and held by or on behalf of the Pledgor in trust for
the Pledgee and shall be delivered to the Pledgee immediately upon such receipt.
4.5 Delivery of Share Certificates to Pledger
The Pledgee shall return to the Pledgor the certificates representing the
Pledged Shares when the Obligations have been completely discharged.
4.6 Further Assurances
The Pledgor shall at its own expense do, execute, acknowledge and deliver or
cause to be done, executed, acknowledged and delivered all such further acts,
security agreements, pledges, charges, assignments, hypothecs, powers of
attorney and assurance (including instruments supplemental or ancillary hereto)
and such financing statements as the Pledgee may from time to time request to
better assure and perfect the security on the Collateral.
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ARTICLE 5
REMEDIES
5.1 Remedies Available
Upon the occurrence of an Event of Default, the Pledgee may, either directly or
through its agents or nominees, sell or otherwise dispose of, or concur in
selling or otherwise disposing of, whether by public sale, private sale or
otherwise, Collateral in such manner and on such terms as it considers to be
commercially reasonable. In addition, the Pledgee shall have the following
rights, powers and remedies:
(c) to make payments to Persons having prior rights or Liens on the
Collateral; and
(d) to demand, commence, continue or defend proceedings in the name of the
Pledgee or in the name of the Pledgor for the purpose of protecting,
seizing, collection, realizing or obtaining possession or payment of,
or otherwise enforcing rights, powers or remedies with respect to, the
Collateral and to give effectual receipts and discharges therefor.
In addition to the rights granted in this Agreement and in any other agreement
now or hereafter in effect between the Pledgor and the Pledgee and in addition
to any other rights the Pledgee may have at law or in equity or otherwise, the
Pledgee shall have, both before and after the occurrence of an Event of Default,
all rights and remedies of a secured party under the PPSA.
The Pledgee may incur reasonable expenses in the exercise of its rights, power
and remedies set out in this Agreement.
5.2 Possession of Collateral
The Pledgor acknowledges that the Pledgee may at any time take possession of
Collateral wherever it may be located and by any method permitted by law,
whether before or after the occurrence of an Event of Default.
5.3 Remedies Not Exclusive
All rights, powers and remedies of the Pledgee under this Agreement may be
exercised separately or in combination and shall be in addition to, and not in
substitution for, any other security nor or hereafter held by the Pledgee and
any other rights, powers and remedies of the Pledgee however created or arising.
No single or partial exercise by the Pledgee of any of the rights, powers and
remedies under this Agreement or under any other security now or hereafter held
by the Pledgee shall preclude any other and further exercise of any other right,
power or remedy pursuant to this Agreement or any other security or at law, in
equity or otherwise. The Pledgee shall at all times have the right to proceed
against Collateral or any other security in such order and in such manner as it
shall determine
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without waiving any rights, powers or remedies which the Pledgee may have with
respect to this Agreement or any other security or at law, in equity or
otherwise. No delay or omission by the Pledgee in exercising any right, power or
remedy hereunder or otherwise shall operate as a waiver thereof or of any other
right, power or remedy.
5.4 Pledgor Liable for Deficiency
The Pledgor shall remain liable to the Pledgee for any deficiency after the
proceeds of any sale or other disposition of Collateral are received by the
Pledgee.
5.5 Exclusion of Liability of Lender
The Pledgee shall not be liable for any exercise or any failure to exercise its
rights, powers or remedies arising hereunder or otherwise, including, without
limitation, taking possession of, collecting, enforcing, realizing, selling or
otherwise disposing of, preserving or protecting the Collateral, or taking any
steps or proceedings for any such purposes of any failure to do any of the
foregoing. The Pledgee shall not have any obligation to examine any notices or
other communications with respect to the Collateral or to advise the Pledgor of
the expiry of any warrants, options or other rights in respect of or comprising
the Collateral or to advise the Pledgor of any other matter relating to any
Persons which are issuers of any Collateral, and the Pledgee shall not have any
obligation to take any steps or proceedings to preserve rights against prior
parties to or in respect of the Collateral, whether or not in the Pledgee's
possession. Subject to the foregoing, the Pledgee shall use reasonable care in
the custody and preservation of the Collateral in its possession.
5.6 Notice of Sale
Unless required by law, the Pledgee shall not be required to give the Pledgor
any notice of any sale or other disposition of the Collateral, the date, time
and place of any public sale of Collateral or the date after which any private
disposition of Collateral is to be made.
5.7 Resignation as Directors and Officers
The Pledgor herewith delivers the signed, undated resignations of its nominees
as employees, officers and directors of the Corporation to be held by the
Pledgee hereunder. Upon an Event of Default, the Pledgee shall be entitled to
date and forward such resignations to the Corporation and the nominees of the
Pledgor shall thereupon cease to act as employees, officers and directors of the
Corporation.
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ARTICLE 6
APPLICATION OF PROCEEDS
6.1 Application of Proceeds
The Proceeds arising from the enforcement of the Security Interest as a result
of the possession to the Pledgee of the Collateral or from any sale or other
disposition of, or realization of security on, the Collateral (except following
acceptance of Collateral in satisfaction of the Obligations) shall be applied by
the Pledgee the following order:
(a) first, in payment of the Pledgee's reasonable costs, charges and
expenses (including legal fees on a solicitor and his own client
basis) incurred in the exercise of all or any of the rights, powers or
remedies granted to it under this Agreement;
(b) second, in payment of amounts paid by the Pledgee pursuant to clause
5.1(a);
(c) third, in payment of the remainder of the Obligations in such order of
application as the Pledgee may determine;
(d) fourth, subject to Sections 6.2 and 6.3, to any Person who has a
security interest in Collateral that is subordinate to that of the
Pledgee and whose interest:
(i) was perfected by possession, the continuance of which was
prevented by the Pledgee taking possession of Collateral, or
(ii) was, immediately before the sale or other disposition by the
Pledgee, perfected by registration;
(e) fifth, subject to Sections 6.2 and 6.3, to any other Person with an
interest in such Proceeds who has delivered a written notice to the
Pledgee of the interest before the distribution of such Proceeds; and
(f) last, subject to Sections 6.2 and 6.3, to the Pledgor or any other
Person who is known by the Pledgee to be an owner of the Collateral.
6.2 Proof of Interest
The Pledgee may require any Person mentioned in clauses 6.1(d), 6.1(e), or
6.1(f) to furnish proof of that Person's interest, and unless the proof is
furnished within ten (10) days after demand by the Pledgee, the Pledgee need not
pay over any portion of the Proceeds referred to therein to such Person.
6.3 Payment Into Court
Where there is a question as to who is entitled to receive payment under clauses
6.1(d), 6.1(e) or 6.1(f), the Pledgee may pay the Proceeds referred to therein
into court.
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6.4 Monies Actually Received
The Pledgor shall be entitled to be credited only with the actual Proceeds
arising from the possession, sale or other disposition of, or realization of
security on, the Collateral when received by the Pledgee and such actual
Proceeds shall mean all amounts received in cash by the Pledgee upon such
possession, sale or other disposition of, or realization of security on, the
Collateral.
ARTICLE 7
GENERAL
7.1 Power Of Attorney
The Pledgor hereby appoints the Pledgee, as the Pledgor's attorney, with full
power of substitution, in the name and on behalf of the Pledgor, to execute,
deliver and do all such acts, deeds, documents, transfers, demands, conveyances,
assignments, contracts, assurances, consents, financing statements and things as
the Pledgor has herein agreed to execute, deliver and do or as may be required
by the Pledgee to give effect to this Agreement or in the exercise of any
rights, powers or remedies hereby conferred on the Pledgee, and generally to use
powers or remedies the name of the Pledgor, in the exercise of all or any of the
rights, hereby conferred on the Pledgee. This appointment, coupled with an
interest, shall not be revoked by the insolvency, bankruptcy, dissolution,
liquidation or other termination of the existence of the Pledgor or for any
other reason.
7.2 Expenses
The Pledgor shall pay to the Pledgee on demand all of the Pledgee's reasonable
costs, charges and expenses (including, without limitation, legal fees on a
solicitor and his own client basis) in connection with the preparation,
registration or amendment of this Agreement, the perfection or preservation of
the Security Interest, the enforcement by any means of any of the provisions
hereof or the exercise of any rights, powers or remedies hereunder, together
with interest thereon from the date each of such costs, charges and expenses
were incurred to the date of payment at the yearly rate equal to the Prime Rate
of the Royal Bank of Canada plus Five (5%) per cent, calculated monthly..
7.3 Indemnity
The Pledgor shall indemnify the Pledgee and its nominees against all costs,
expenses, liabilities, claims, demands, damages, losses, actions and proceedings
of any kind which the Pledgee or its nominees may suffer or incur by reason of
the Pledgee being now or hereafter a holder, or registered as owner, of the
Collateral.
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7.4 Set-Off
The Pledgee may at any time and from time to time, without notice to the Pledgor
or to any other Person, set-off, appropriate and apply any and all indebtedness
and liability of either of the Pledgee to the Pledgor, matured or unmatured,
against and on account of the Obligations when due, in such order of application
as the Pledgee may from time to time determine.
7.5 Dealings with Others
The Pledgee may grant extensions of time and other indulgences, take and give up
security, accept compositions, make settlements, grant releases and discharges
and otherwise deal with the Pledgor, debtors of the Pledgor, sureties and other
Persons and with Collateral and other security as the Pledgee sees fit, without
prejudice to the liability of the Pledgor to the Pledgee or the rights, powers
and remedies of the Pledgee under this Agreement.
7.6 No Obligation to Advance
Nothing herein contained shall in any way obligate the Pledgee to advance any
funds, or otherwise make or continue to make any credit available, to the
Pledgor.
7.7 Perfection of Security
The Pledgor authorizes the Pledgee to maintain possession of the certificates
representing the Pledged Shares (endorsed by the Pledgor in blank for transfer)
and to do such acts, matters and things as the Pledgee may consider appropriate
to perfect and continue the Security Interest, to protect and preserve the
interest of the Pledgee in Collateral and to realize upon the Security Interest.
7.8 Communication
Any notice or other communication, including a demand or a direction, required
or permitted to be given hereunder shall be in writing and shall be given by
prepaid first-class mail, by facsimile or other means of electronic
communication or by hand-delivery as hereinafter provided. Any such notice or
other communication, if mailed by ~prepaid first-class mail at any time other
than during or within three (3) Business Days prior to a general discontinuance
of postal service due to strike, lockout or otherwise, shall be deemed to have
been received on the fourth Business Day after the post-marked date thereof, or
if sent by facsimile or other means of electronic communication, shall be deemed
to have been received on the Business Day following the sending, or if delivered
by hand shall be deemed to have been received at the time it is delivered to the
applicable address noted below either to the individual designated below or to a
senior employee of the addressee at such address with responsibility for matters
to which the information relates. Notice of change of address shall also be
governed by this Section. In the event of a general discontinuance of postal
service due to strike, lock-out or otherwise, notices or other communications
shall be delivered by hand or sent by facsimile or other means of electronic
communications and shall be deemed to have been received in accordance with the
foregoing. Notice and other communications shall be addressed as follows:
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(a) if to the Pledgee:
c/o Duncan & Craig
Barristers and Solicitors
2800, One Scotia Place
10060 Jasper Avenue
Edmonton, Alberta T5J 3V9
Attention: Mr. W. Gordon Plewes
Telecopier: (403)428-9683
(b) if to the Pledgor:
c/o 104, 10315 - 109 Street
Edmonton, Alberta T5J 1N3
Attention: Mr. Lorne Hildebrandt
Telecopier:
7.9 Successors and Assigns
This Agreement shall be binding on the Pledgor and its successors and shall
enure to the benefit of the Pledgee and their successors and assigns. This
Agreement shall be assignable by the Pledgee free of any set-off, counter-claim
or equities between the Pledgor and the Pledgee, and the Pledgor shall not
assert against an assignee of the Pledgee any claim defense that the Pledgor has
against the Pledgee.
7.10 Waiver of Financing Statement
The Pledgor hereby acknowledges receipt of a copy of this Agreement and
expressly waives the right to receive a copy of any Financing Statement of any
Financing Change Statement which may be registered by the Pledgee in connection
with this Agreement or any Verification Statement issued with respect thereto
where such waiver is not otherwise prohibited by law.
IN WITNESS WHEREOF the Pledgor has executed this Agreement this 14th day of
March, A.D. 1995.
621202 ALBERTA LTD.
PER:___________________________
PER:___________________________
(corporate seal)
BROCKER INVESTMENTS LTD.
PER:__________________________
(corporate seal)
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<PAGE>
SCHEDULE "C"
THIS IS SCHEDULE "C" TO THE AGREEMENT DATED THE 14TH DAY OF MARCH, A.D. 1995,
MADE BETWEEN BROCKER INVESTMENTS LTD. AND 621202 ALBERTA LTD.
PERMITTED ENCUMBRANCES
NIL
E-600
THIS AGREEMENT made the 24th day of March 1995.
PARTIES:
1. THE NUMBER ONE SOFTWARE COMPANY LIMITED a duly incorporated company
having its registered office at Auckland ("the vendor"); and
2. BROCKER INVESTMENTS (NZ) LIMITED a duly incorporated company having its
registered office at Whangarei ("the purchaser").
BACKGROUND:
A. The vendor carries on business in New Zealand as distributors of software
at wholesale, resellers of software, providers of computer software and
hardware support and resellers of computer hardware.
B. The vendor has agreed to sell and the purchaser has agreed to purchase
that part of the vendor's business comprising the wholesale distribution
of computer software in New Zealand under distribution agreements from
the following:
1. Lotus Development Pty Ltd ("Lotus")
2. Micrografx Inc ("Micrografx")
3. I.B.M. N.Z. Ltd ("IBM")
4. Logitech Inc ("Logitech")
NOW IT IS AGREED that the vendor sells and the purchaser purchases the
distribution arm of the vendor's business upon and subject to the terms of this
agreement:
1. DEFINITIONS:
The following words and terms shall have the definitions set out:
1. The distribution arm of the vendor's business - the Lotus
Distributorship and all or such of the Secondary Distributorships
as the vendor shall be able to arrange the assignment or transfer
or grant of to the purchaser together with all the vendor's stock
in relation to such of the distributorships as are assigned or
transferred or granted to the purchaser.
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2. The Lotus Distributorship: the distribution agreement with Lotus
Development Pty Limited for distribution in New Zealand of Lotus
Software.
3. The Secondary Distributorships: distribution agreements with
Micrografx, IBM and Logitech for distribution in New Zealand of
their computer software.
4. The Condition Date: 31 March 1995
5. The settlement date: 28 April 1995
6. The purchase price: The sums set out in Clause 4.2
7. Brocker: Brocker Investments Limited (Canada)
8. Interest rate for late settlement: 16% p.a.
2. LOTUS DISTRIBUTORSHIP:
2.1 This agreement is entirely conditional on the vendor arranging the
assignment of its existing agreement for distribution of Lotus computer
software in New Zealand to the purchaser, or on the vendor arranging for
Lotus to grant to the purchaser such a distributorship on terms and
conditions not less favourable to the purchaser than the terms and
conditions currently enjoyed by the vendor under its existing Lotus
Distributorship with effect from the settlement date.
2.2 The vendor and the purchaser agree that following satisfaction of the
conditions in clauses 12.1.1 and 12.1.3 that they will both use their
best endeavours to satisfy the condition set out in Clause 2.1 hereof.
The purchaser agrees that for the purposes of satisfaction of the
condition in Clause 2.1 the purchaser will provide to Lotus all financial
and other information required by Lotus in order to enable Lotus to
consider the assignment or grant of the Lotus distributorship to the
purchaser, and the purchaser will enter into such usual deed or agreement
with Lotus and will provide such guarantees as shall be required by Lotus
for such purpose.
2.3 Should the condition in Clause 2.1 not be fulfilled by the condition date
or such later date as may be agreed upon by the vendor and the purchaser
then this agreement shall be voidable by notice in writing given by
either party to this agreement and if so voided this agreement shall be
of no further force and effect and both parties shall be released from
their obligations hereunder
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and the deposit monies paid by the purchaser (if any) shall be refunded
in full.
3. SECONDARY DISTRIBUTORSHIPS:
3.1 Subject to satisfaction of the condition in Clause 2.1, the vendor will
use it best endeavours to arrange the assignment of its existing
agreements for distribution of Micrografx, IBM and Logitec computer
software in New Zealand to the purchaser, or alternatively for grant
direct to the purchaser of distributorships from Micrografx, IBM and
Logitec on terms and conditions no less favourable to the purchaser than
the terms and conditions currently enjoyed by the vendor under the
Secondary Distributorships.
3.2 The purchaser agrees that it will use its best endeavours to assist the
vendor in complying with the vendor's obligations under Clause 3.1 and
the purchaser will provide to each of the principals under the Secondary
Distributorships all financial and other information required by them in
order to enble them to consider the assignment or grant of the Secondary
Distributorships or any of them to the purchaser and the purchaser will
enter into such usual deeds or agreements with each of the principals
under the Secondary Distributorships as shall be required by the
principals under the Secondary Distributorships for such purpose.
3.3 In the event that notwithstanding compliance by the vendor with its
obligations under Clause 3.1 the vendor is not able to arrange assignment
or transfer of all or any of the Secondary Distributorships to the
purchaser by the Condition Date with effect from the settlement date then
and in such case:
3.3.1 The vendor shall be entitled to continue to act as distributor for such
of the principals in respect of the Secondary Distributorships as will
not agree to the assignment of their distributorships to the purchaser or
to grant of a distributorship to the purchaser; and
3.3.2 The purchase price payable hereunder shall be adjusted as set out in 4.2.
4. PURCHASE:
4.1 Subject to satisfaction of the condition in Clause 2.1 the vendor agrees
to assign or transfer its Lotus Distributorship to the purchaser, or to
arrange the grant of a
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Lotus Distributorship to the purchaser from Lotus Development Pty Limited
with effect from the settlement date and on terms no less favourable to
the Purchaser than those currently enjoyed by the Vendor.
4.2 In consideration of Clause 4.1 and Clause 3.2 the purchaser agrees to pay
to the vendor the sum of:
1. For transfer or grant of the Lotus
Distributorship $98,600 (plus GST)
2. For transfer or grant of the IBM
Distributorship $15,300 (plus GST)
3. For transfer or grant of the Micrografx
Distributorship $30,600 (plus GST)
4. For transfer or grant of the Logitech
Distributorship $25,500 (plus GST)
4.3 The purchase price shall be paid in one sum on the settlement date.
4.4 The purchase price shall be paid by the purchaser completing the transfer
to the vendor of such number of shares in Brocker as is required to
equate to a value of the purchase price assessed in accordance with
Clause 4.2 at 10 a.m. New Zealand time on the settlement date. For the
purposes of determining the value of the Brocker Shares the following
shall apply:
1. The exchange rate shall be the buy rate in New Zealand dollars for
Canadian dollars at 10 a.m. on the settlement date as determined
by the vendor's trading bank, and
2. The Brocker Shares shall have the listed value shown at 10 a.m. on
the settlement date in the Alberta Exchange, Canada.
4.5 The GST payable on the purchase price shall be paid in cash in one sum on
the settlement date.
4.6 The purchaser shall use its best endeavours to complete the transfer of
shares in terms of Clause 4.4 by the settlement date. In the event that
the purchaser has not completed the transfer of shares by the 31st July
1995 (time being of the essence) then the purchaser shall pay to the
vendor on that date the sum of $NZ17O,000
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cash in lieu of transfer of the Brocker shares.
5. STOCK:
5.1 In addition to the purchase price plus GST the purchaser shall purchase
from the vendor at the settlement date:
5.1.1 The stock relating to the Lotus Distributorship - being all Lotus stock
held by the vendor at the settlement date; and
5.1.2 The stock relating to such of the Secondary Distributorships as the
vendor has been able to assign or transfer or arrange the grant of to the
purchaser being all stock held by the vendor at the settlement date in
relation to those Secondary Distributorships.
5.2 The vendor and the purchaser and/or their respective appointees shall
carry out a joint stocktake on the evening prior to the settlement date.
The value of each unit of stock shall be as set out in the First Schedule
hereto (plus GST).
5.3 The purchaser shall pay the vendor the actual value of all stock assessed
in accordance with Clase 5.2 to be purchased by the purchaser pursuant to
this agreement plus GST:
1. By a payment of $50,000.00 on the date the conditions in clauses
2.1 and clauses 12.1.1 and 12.1.3 are satisfied (time being of the
essence) and
2. By payment for the balance in cash in one sum on the settlement
date.
6. RISK:
The distribution arm of the vendor's business and all stock in relation
thereto shall remain at the sole risk of the vendor until possession is
given and taken.
7. VENDOR'S WARRANTIES:
7.1 The vendor warrants and undertakes that
7.1.1 At the giving and taking of possession all assets included in the sale
are or will be the unencumbered property of the vendor.
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7.1.2 At the giving and taking of possession all stock included in the sale
will be on the vendor's current price list, will be undamaged and will
not be obsolete, and where applicable will be covered by RMA provisions
of the vendor's distributorship agreements relating to replacement of
stock liable to be replaced or withdrawn.
7.1.3 The vendor will pay and discharge all debts and liabilities incurred or
arising prior to the close of business on the settlement date in
connection with the distributorship arm of the vendor's business or in
respect of any contract dealing or occurrence relating to the
distributorship arm of the vendor's business and shall indemnify the
purchaser from and against all claims proceedings expenses and costs in
connection therewith.
7.1.4 Until possession has been given and taken the vendor will properly carry
on and conserve the distributorship arm of the vendor's business and use
all reasonable endeavours to maintain the turnover and preserve the
goodwill thereof.
7.1.5 The vendor gives no warranty as to turnover of the distributorship arm of
the vendor's business and the purchaser purchases the same solely in
reliance on the purchaser's own enquiries and not on the basis of any
representation or warranty given by the vendor.
7.1.6 The vendor warrants that in respect of the Lotus Distributorship and such
of the Secondary Distributorships as shall be transferred or assigned to
the purchaser or granted to the purchaser as provided in this agreement
as follows: That the vendor has complied (up to the settlement date) in
all material respects with its obligations under the Distribution
Agreements and has received no notification from the principal under the
Distribution Agreements of default on the part of the vendor herein or
cancellation of the agreement.
7.1.7 The vendor will provide the following assistance to the purchaser:
1. Once the agreement is unconditional and the deposit has been paid
the vendor will provide staff training to nominated members of the
purchaser's staff at two courses to be arranged by the vendor at a
time and place to suit the vendor; and
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2. Immediately following settlement date the vendor will advise its
re-sellers of the transaction and will encourage them to accept
the purchaser as distributor in lieu of the vendor.
7.1.8 The vendor warrants that the prices set out in clause 5.2 will be
wholesale cost to the vendor of the stock.
8. RESTRAINT OF TRADE:
8.1 In consideration of the purchase price the vendor hereby agrees with the
purchaser that the vendor will not during the period of two years from
the settlement date either directly or indirectly carry on or be
interested either alone or in partnership with or as manager agent
director shareholder or employee of any other person or entity as
distributors at wholesale of computer software for Lotus Development Pty
Limited and/or such of the principals in respect of the Secondary
Distributorships who agree to the assignment or transfer of such
Secondary Distributorships to the purchaser pursuant to the terms of this
agreement or to the grant of such Secondary Distributorships to the
purchaser pursuant to this agreement within New Zealand.
8.2 The vendor will on or before the possession date procure that its
director Peter Macaulay enter into a Deed of Covenant with the purchaser
binding themselves to like effect, such Deed of Covenant to be prepared
by and at the expense of the purchaser and tendered to the vendor or the
vendor's solicitor for execution prior to the settlement date.
8.3 For the avoidance of doubt it is agreed that this restraint of trade does
not cover:
1. The vendor acting as a reseller (as opposed to wholesaler) of
computer software covered by the Lotus Distributorship and/or the
Secondary Distributorships or any of them; and
2. The vendor continuing to act as a distributor at wholesale only in
accordance with the terms of clause 3.3.1 hereof.
9. DEFAULT:
9.1 If from any cause whatever save default of the vendor any portion of the
purchase price, or GST thereon, or purchase price for the stock or GST
thereon is not paid upon the due date for payment the purchaser will pay
to the vendor interest at
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the interest rate for late settlement on the portion of the purchase
price GST or price for stock so unpaid from the due date for payment
until payment; but nevertheless this stipulation is without prejudice to
any of the vendor's rights or remedies including any right to claim for
additional expenses and damages. For the purposes of this subclause a
payment made on a day other than a working day or after the termination
of a working day shall be deemed to be made on the next following working
day and interest shall be computed accordingly.
9.2 If the sale is not settled on the settlement date either party may at any
time thereafter (unless the contract has first been cancelled or become
void) serve on the other party notice in writing (hereinafter called a
Settlement Notice) to settle in accordance with the clause; but the
notice shall be effective only if the party serving it is at the time of
service either in all material respects ready able and willing to proceed
to settle in accordance with the Notice or is not so ready able and
willing to settle only by reason of the default or omission of the other
party to the contract.
9.3 Upon service of a Settlement Notice the party on whom the Notice is
served shall settle within twelve (12) working days after the date of
service of the Notice (excluding the day of service) and in respect of
that period time shall be of the essence but without prejudice to any
intermediate right of cancellation by either party.
9.4 If the purchaser does not comply with the terms of the Settlement Notice
served by the vendor then:
9.4.1 Without prejudice to any other rights or remedies available to the vendor
at law or in equity the vendor may:
(a) Sue the purchaser for specific performance, or
(b) Cancel the contract and pursue either or both of the following
remedies namely:
(i) Forfeit and retain for the vendor's own benefit the deposit
paid by the purchaser, but not exceeding in all 10% of the
purchase price and
(ii) Sue the purchaser for damages.
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9.4.2 Where the vendor is entitled to cancel the contract the entry by the
vendor into a conditional or unconditional contract for the resale of the
business or any part thereof by the vendor shall take effect as a
cancellation of the contract by the vendor if the contract has not
previously been cancelled and such resale shall be deemed to have
occurred after cancellation.
9.4.3 The damages claimable by the vendor under Paragraph 9.4.1(b)(ii) shall
include all damages claimable at common law or in equity and shall also
include (but shall not be limited) any loss incurred by the vendor on any
bona fide resale of the business or assets contracted within six months
from the date by which the purchaser must settle in compliance with the
Settlement Notice. The amount of that loss may include:
(a) Interest on the unpaid portion of the purchase price at the
interest rate for late settlement from the settlement date to the
settlement of such resale,
(b) All costs and expenses reasonably incurred on any resale or
attempted resale,
(c) All losses incurred by the vendor in carrying on the business from
the settlement date to the settlement of such resale.
9.5 If the vendor does not comply with the terms of a Settlement Notice
served by the purchaser then:
9.5.1 Without prejudice to any other rights or remedies available to the
purchaser at law or in equity the purchaser may
(a) Sue the vendor for specific performance or
(b) Cancel this contract and thereupon all monies paid by the
purchaser to the vendor pursuant to this agreement shall be
refunded to the purchaser.
9.5.2 The purchaser's rights herein are without prejudice to any other rights,
powers, authorities or remedies it may have at law or in equity.
E-609
<PAGE>
-10-
9.6 Nothing in this clause shall preclude a party from suing for specific
performance without giving a Settlement Notice.
10. GST:
The parties are contracting on the understanding that the supply made
pursuant to this agreement is a supply within the Goods and Services Tax
Act 2985 upon which GST shall be payable by the purchaser, provided that
if the purchaser shall on or before the settlement date obtain a binding
ruling in writing from the Commissioner of Inland Revenue declaring that
the sale is a supply within Section 11(1)(c) of the Act on which GST is
charged but at the rate of 0% then GST shall be charged at that rate
provided that if the Commissioner (before or after the settlement date)
determines that GST applies to this sale at a higher rate then the
purchaser shall pay to the vendor the GST which is so payable together
with all interest thereon and any default GST thereon.
11. PURCHASER'S WARRANTIES:
The purchaser warrants and undertakes:
11.1 That as at the settlement date the Brocker Shares to be transferred to
the vendor by the purchaser are the sole and unencumbered property of the
purchaser and will pass to the vendor free from any encumbrances liens or
adverse interests whatsoever, and that the purchaser will do all things,
pay all monies and comply with all requirements (if any) necessary or
desirable to complete registration of the shares in Brocker in the name
of the vendor.
11.2 That the purchaser will indemnify and keep indemnified the vendor from
and against all and any liability under any of the distribution
agreements transferred or assigned by the vendor to the purchaser
pursuant to this agreement and arising after the settlement date and/or
from acts or defaults of the purchaser.
11.3 In the event that the conditions contained in this agreement are not
satisfied the purchaser hereby agrees with the vendor that the purchaser
will not during the period of one year from the date of this agreement
either directly or indirectly carry on or be interested either alone or
in partnership with or as managers
E-610
<PAGE>
-11-
agents directors shareholders or employees of any other person as
distributors at wholesale of computer software for Lotus Development Pty
Limited or any related company or entity and/or such of the principals in
respect of the Secondary Distributorships within New Zealand. The vendor
will on or before the condition date procure that its directors and
shareholders enter into a Deed of Covenant with the vendor binding
themselves to like effect, such Deed of Covenant to be prepared by and at
the expense of the vendor and tendered to the purchaser or the
purchaser's solicitors for execution.
12. PURCHASER'S CONDITIONS:
12.1 This agreement is entirely conditional on:
1. Approval of the Board of Directors of Brocker Investments (NZ) Ltd
by 5 pm on the 19th March 1995 and
2. On the purchaser obtaining all the necessary statutory and
regulatory approvals both in New Zealand and Canada (if any) in
order to enable the purchaser to complete this agreement on the
terms set out in this agreement by 5 pm on the condition date.
3. Approval of the Board of Directors of Brocker by 5 pm on 19th
March 1995.
Should the conditions herein set out not be satisfied by 5 pm on the
dates set out then this agreement shall be voidable at the option of
either party and if voided neither party shall have any further right or
claim against the other.
13. GENERAL:
13.1 The agreement's obligations and warranties of the parties to this
contract and the agreement evidencing it shall not merge with settlement
or with the giving and taking of possession of the distribution arm of
the vendor's business.
13.2 Any notice or communication document or demand requiring to be made or
served herunder shall be in writing signed by the party giving the notice
or by any officer or solicitor of that party and served as follows:
E-611
<PAGE>
-12-
If to the vendor:
To: Keegan Alexander Tedcastle & Friedlander
Solicitors
12th floor
Gosling Chapman Building
63 Albert Street
Auckland
(Attention: J L Sibbald)
If to the purchaser:
To: Ed Johnston & Co.
Solicitors
Level 1
370 Great North Road
Henderson.
13.3 This agreement shall be governed and construed under the law of New
Zealand and the New Zealand courts shall be the forum for any actions or
proceedings under or arising out of this agreement.
IN WITNESS WHEREOF these presence were executed the day and year first herein
before written.
SIGNED for and on behalf of NUMBER ) /s/ [ILLEGIBLE]
ONE SOFTWARE COMPANY LIMITED ) Director
in the presence of: )
/s/ [ILLEGIBLE]
61 Miro Street
[ILLEGIBLE]
Personal Assistant
E-612
<PAGE>
-13-
SIGNED for and on behalf of BROCKER ) /s/ [ILLEGIBLE]
INVESTMENTS (NZ) LiMITED ) C.E.O.
in the presence of: )
Hal Linstrom
General Manager
31 Royal Terrace
[ILLEGIBLE]
Auckland
2902S/1-13
E-613
<PAGE>
DATED 199
--------------------------------
BETWEEN: THE NUMBER ONE
SOFTWARE COMPANY
LIMITED
"the vendor"
AND: BROCKER INVESTMENTS
"the purchaser"
--------------------------------
AGREEMENT FOR SALE AND PURCHASE
OF THE DISTRIBUTION ARM OF THE
VENDOR'S BUSINESS
--------------------------------
--------------------------
KEEGAN ALEXANDER TEDCASTLE &
FRIEDLANDER
SOLICITORS
AUCKLAND
2902S
E-614
----------------------------------------------
BETWEEN: JOHN RICHARD CAMPBELL and ROBYN LORNA CAMPBELL
("THE VENDOR")
AND: BROCKER INVESTMENTS (NZ) LIMITED
("THE PURCHASER")
----------------------------------------------
AGREEMENT FOR SALE AND PURCHASE
OF SHARES
----------------------------------------------
----------------------------------------------
ED JOHNSTON & CO
SOLICITORS
LEVEL 1
370 GREAT NORTH ROAD
PO BOX 21 850
WAITAKERE CITY
E-615
<PAGE>
MEMORANDUM OF AGREEMENT made this 31st day of March, One thousand nine hundred
and ninety five
BETWEEN JOHN RICHARD CAMPBELL and ROBYN LORNA CAMPBELL both of
Christchurch, Company Directors (hereinafter called "the Vendor")
of the first part
AND BROCKER INVESTMENTS (NZ) LIMITED at Auckland (hereinafter called
"the Purchaser") of the second part
AND BROCKER INVESTMENTS LIMITED, a corporation incorporated pursuant
to the Laws of the Province of Alberta, Canada (hereinafter
called "Brocker Investments Limited (Canada)") of the third part
AND SOLSTAT INDUSTRIES LIMITED a duly incorporated company carrying
on business at Auckland (hereinafter called the "Company") of the
fourth part
WHEREAS
A. THE Company carries on business at Auckland and other parts of New Zealand
and has a nominal share capital of ONE MILLION DOLLARS ($1,000,000.00)
divided into 1,000,000 fully paid up ordinary shares of ONE DOLLAR ($1.00)
each.
B. THE Vendor is the legal and beneficial owner of the shares in the capital
of the Company as set opposite their respective names in Schedule "A"
hereto (hereinafter called "the said shares") and the trade matrix,
"Solstat" and "Solstor".
[INIT.]
E-616
<PAGE>
2
C. THE Vendor has agreed to sell to the Purchaser the respective shares in the
capital of the Company with all rights attaching thereto including the
trade marks "Solstat" and "Solstor" and the Purchaser has agreed to
purchase from the Vendor the said shares in the proportions nominated by
the Purchaser at and for the total purchase price equivalent to the net
asset value of the Company as at the 31st of October 1994 (determined in
accordance with Clause 3.3 herein) plus the sum of $500,000.00 plus G.S.T.
(if any) (see Clause 18) (hereinafter called "the Purchase Price").
D. THE Vendor and the Purchaser are now desirous of formalizing such verbal
arrangement in writing.
NOW IT IS MUTUALLY AGREED as follows:
1.1 INTERPRETATION
(a) JOHN RICHARD CAMPBELL and ROBYN LORNA CAMPBELL are herein collectively
referred to as the "Vendor" and are each individually referred to as
the "Vendor".
(b) THE headings herein (if any) contained are intended for convenience of
reference only and shall form no part hereof nor affect the
interpretation of this Agreement.
(c) IF any covenant, obligation or provision contained in this Agreement
or the application thereof to any person or circumstance shall to any
extent be found to be invalid or unenforceable, the remainder of this
Agreement or the application thereof to any person or circumstance
shall not be affected thereby and each covenant, obligation and
provision of this Agreement shall be separately valid and enforceable
to the fullest extent permitted by law.
[INIT.]
E-617
<PAGE>
3
(d) THE words in all the covenants, provisos, conditions and agreements
herein contained which impart the singular number or the masculine
gender shall be read and construed as applying to the plural and each
and every corporate, male or female party hereto and to its and their
heirs, executors, administrators, personal representatives and
successors and assigns, as the case or context requires.
(e) THIS Agreement shall be governed by and interpreted in accordance with
the laws in force in New Zealand. The parties hereto irrevocably refer
to the jurisdiction of the Courts of New Zealand for the determination
of all matters arising hereunder.
(f) THIS Agreement constitutes the entire agreement between the parties
and supersedes all prior contracts, agreements and undertakings
between the parties. No modification or alteration of this Agreement
shall be binding unless executed in writing by these parties. There
are no representatives, warranties, collateral agreements or
conditions affecting this transaction other than as are expressed or
referred to herein in writing.
(g) THE terms, conditions, covenants, agreements, obligations and proviso
contained in this Agreement shall be binding upon and shall enure to
the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives and successors and
assigns.
(h) TIME shall be of the essence hereof.
(i) UNLESS stated otherwise, all reference to "Dollars" or "$" shall mean
New Zealand funds.
2. SALE AND PURCHASE OF SHARES
[INIT.]
E-618
<PAGE>
4
THE Vendor shall sell and the Purchaser shall purchase all the shares in the
Company with all rights attaching thereto together with the trade marks
"Solstat" and "Solstor".
3. PURCHASE PRICE
3.1 THE purchase price for the shares shall be that sum equivalent to the sum
total of the nett tangible asset value of the Company as at the 31st of
October 1994 (being a sum not less than $1,000,000.00), (as determined in
accordance with Clause 3.3) together with the sum of $5,000,000.00.
E-619
<PAGE>
3.2 THE date of settlement shall be the 31st day of July 1995 (hereinafter
called "the Settlement Date").
3.3 IN order to determine the Purchase Price in accordance with the provisions
of the preceding sub-clause the parties agree that the firm of COOPERS &
LYBRAND, Chartered Accountants, Whangarei shall complete a review of the
financial information of the Company as at the 31st day of October 1994 in
order to confirm the nett tangible asset value of the Company as at the
31st day of October 1994 and shall undertake on the 31st day of March 1995,
or as soon as practicable thereafter, an audit of the Company's financial
position (including a stock-take in respect of the Company's
stock-in-trade). The audit shall exclude from the net asset value
calculation the following:
(a) any obsolete and unsaleable items of stock
(b) any unusable or unserviceable items of plant, fixtures and fittings
(c) all debtors having an age of one hundred & twenty (120) days or more
as at the date of the audit and any known bad debts existing at that
date.
The audit shall recognize the trade marks "Solstat" and "Solstor" PROVIDED
HOWEVER that for the purpose of the audit referred to herein no value shall
be
[INIT.]
E-620
<PAGE>
5
attributed to the trade marks "Solstat" and "Solstor".
Otherwise, the audit shall be carried out in accordance with generally
accepted accounting principles applied on a consistent basis.
Any dispute in this regard shall be referred for determination to the
President of the NZ Society of Accountants for the time being or his
nominee, whose decision shall be final.
3.4 THE parties shall use their best endeavours to complete the audit referred
to herein as soon as practicable after the 31st day of March 1995.
3.5 THAT in the event that debtors and known bad debts existing at the 31st day
of March 1995 (whether included in the audit of Coopers and Lybrand in
terms of Clause 3.3 as being part of the net tangible asset of the Company,
or otherwise) are not paid within one hundred & twenty (120) days or date
of invoice by the Company then such sum of debtors and known bad debts
(including G.S.T) (hereinafter called "Bad Debts") shall be deducted from
the Purchase Price on the Settlement Date, and such Bad Debts shall then
become the sole property of the Vendor.
The Purchaser hereby agrees after the Settlement Date to endeavour to
collect all outstanding debtors and those sums collected will be treated as
the property of the Vendor and forthwith be credited to their solicitor's
trust account or otherwise as directed by them.
3.7 THE Purchase Price excludes interest and the parties agree that where in
relation to this Agreement it is necessary to determine an acquisition
price for the
[INIT.]
E-621
<PAGE>
6
purposes of Sections 64B and 64M of the Income Tax Act 1976 the consideration
payable under this Agreement is the lowest price the parties would have agreed
upon for the sale and purchase of the shares in terms of Paragraph (c)(1) of the
definition of a "core acquisition price" in Section 64B of that Act.
4 PAYMENT OF PURCHASE PRICE
4.1 THE Purchase Price shall be paid as follows:
(a) THE sum of FIFTY THOUSAND DOLLARS ($50,000.00) by way of deposit and
in part payment of the Purchase Price on the execution of this
Agreement. This sum shall not be refundable to the Purchaser unless
the Vendor shall default in settlement of this Agreement.
(b) THE balance of the Purchase Price (hereinafter called "the balance of
Purchase Price") shall be satisfied as follows:
(i) AS to the sum representing 60% of the Purchase Price, in cash in
one lump sum, including any payments already made.
(ii) AS to the balance of the Purchase Price by way of transfer to the
Vendor of fully paid ordinary shares in BROCKER INVESTMENTS
LIMITED (CANADA) equivalent in value to 40% of the Purchase Price
and otherwise in accordance with the provisions of Clause 21
herein.
The Purchase Price shall be allocated amongst the Vendors (and/or
their respective nominees) on a pro rata basis in accordance with the
number of the said shares that they hold.
The Vendor may elect to alter the proportions of consideration
referred to herein that are paid in cash or by way of shares in
BROCKER INVESTMENTS LIMITED (CANADA) PROVIDED HOWEVER that any
[INIT.]
E-622
<PAGE>
7
such election shall not entitle the Vendor to require the Purchaser to pay
more than 60% of the Purchase Price in cash.
(c) ON the Settlement Date and as at the Settlement Date, the Purchaser
will forthwith arrange to repay, refinance or rearrange the Company
indebtedness with Wesptac Banking Corporation and shall arrange for
the Vendor to be unconditionally released from the Guarantees given in
respect of such indebtedness.
4.2 ALL parts of the Purchase Price not paid on the due date bear interest at
the rate of 5% above the Bank of New Zealand base lending rate (commercial)
such interest to be calculated on a daily basis and to be payable upon
demand.
5. NOTWITHSTANDING the transfer now made by the Vendor to the Purchaser of the
said shares so sold, such transfer of shares is hereby acknowledged by the
Purchaser to be without prejudice to the repayment of the said monies (if
any) still owing to the Vendor hereunder and to the Vendor's rights to
recover the same from the Purchaser.
6.1A ON the Settlement Date the Vendor will hand to the Purchaser at the office
of the Vendor's Solicitor or such other place as may be mutually agreed
upon:
(a) TRANSFERS of the said shares in the Company to the Purchaser executed
by the Vendor (and each of them) in registerable form.
(b) THE share certificates (if any) for the said shares.
(c) RESIGNATIONS in writing of the Vendor and all Officers of the Company
including Directors and Secretary (excluding the vendor, JOHN
CAMPBELL) and an acknowledgement by each of them, and by each and
every Shareholder of the Company, that no monies are owing to any of
them whatsoever whether by way of fees, salary or otherwise.
[INIT.]
E-623
<PAGE>
8
(d) COMMON Seal, Certificate of Incorporation, Share Register, Mortgage
Register, Minute Book, Books of Account, Memorandum and Articles of
Association, Ownership documents of all descriptions (including
Certificates of Title of land (if the Company owns land) and motor
vehicle registration papers), all other books, papers and assets of
the Company together with any Leases including Leases of real estate
(subject to the provisions of paragraph 7(u)).
(e) A Certificate to the effect that all representations and warranties
provided by the Vendor and the Company in this Agreement are true and
correct on and as at the Settlement Date.
(f) CERTIFIED copies of Resolutions of the Company authorising the
transfer of the said shares to the Purchaser and the issue of share
certificates representing the said shares registered in the name of
the Purchaser.
(g) EXECUTED escrow agreement(s) that may be required or requested by The
Albert Stock Exchange.
6.1B ON the 31st day of march 1995, and only after payment of the deposit of
$50,000.00 referred to in Clause 4.1(a) hereof, the Vendor and the Company
shall accept appointment of MICHAEL RIDGWAY as a Director of the Company
6.2 THE Purchaser and BROCKER INVESTMENTS LIMITED (CANADA) represent and
warrant to the Vendor and acknowledge that the Vendor is relying upon such
representations and warranties as follows:
(a) THE Purchaser is a duly incorporated, validly subsisting company under
the Laws of New Zealand and has the requisite corporate power and
[INIT.]
E-624
<PAGE>
9
authority to own its assets, to conduct its business as it is now
being conducted and is duly qualified to carry on business in each
jurisdiction in which the nature of its business makes such
qualification necessary;
(b) BROCKER INVESTMENTS LIMITED (CANADA) is a duly incorporated validly
subsisting corporation under the laws of the Province of Alberta,
Canada, and has the requisite corporate power and authority to own its
assets, to conduct its business as it is now being conducted and is
duly qualified to carry on business in each jurisdiction in which the
nature of its business makes such qualification necessary;
(c) THIS Agreement has been properly authorised, executed and delivered
under the corporate seals of the Purchaser and BROCKER INVESTMENTS
LIMITED (CANADA) and constitutes a legal, valid and binding obligation
of the Purchaser and BROCKER INVESTMENTS LIMITED (CANADA) enforceable
in accordance with its terms;
(d) THE execution and delivery of the Agreement and the acquisition by the
Purchaser of the said shares in accordance with the terms of this
Agreement will not violate or result in a breach of or default under
any judgement, decree, order, statue, law, regulation, instrument or
Agreement to which the Purchaser is party, subject or bound;
(e) ALL necessary corporate action and procedures have been or will be
taken and all necessary consents and approvals have been or will be
obtained to enable the Purchaser and BROCKER INVESTMENTS LIMITED
(CANADA) to enter into this Agreement and consummate the transaction
contemplated hereby (subject to the conditions referred to in Clause
23 hereof);
(f) BROKER INVESTMENTS LIMITED (CANADA) is a "Reporting Issuer" as that
term is defined in the Securities Act (Alberta) and its common shares
are listed and posted for trading on The Alberta Stock Exchange.
6.3 THE representations and warranties of the Purchaser and BROCKER INVESTMENTS
LIMITED (CANADA) contained in Clause 6.2 hereof shall be
[INIT.]
E-625
<PAGE>
10
for the benefit of the Vendor, and the Purchaser and BROCKER INVESTMENTS
LIMITED (CANADA) acknowledge and confirm that the Vendor is relying upon
such representations and warranties. The Purchaser and BROCKER INVESTMENTS
LIMITED (CANADA) shall give the Vendor written notice of any facts which
may give rise to a claim under Clause 6.2 hereof with reasonable diligence
after such facts come to their attention.
6.4 THE representations and warranties contained in Clause 6.2 hereof shall be
true and correct on the Settlement Date and shall survive the settlement of
the transaction contemplated by this Agreement and remain in full force and
effect for the benefit of the Vendor.
7. EXCEPT as otherwise specifically provided in this Agreement the Vendor, in
consideration of the Purchase Price, warrants to the Purchaser as follows:
(a) THAT the capital of the Company is as set out in the recitals to this
agreement and that all the said shares in the capital of the Company
are paid up in full and in the case of shares fully or partly paid up
otherwise than for cash, that all the provisions of Section 60 of the
Companies Act 1955 have been duly complied with.
(b) THAT subject to the existing indebtedness with Westpac Banking
Corporation the said shares are free from any lien, charge or other
encumbrance whatever and that no person other than the Vendor
respectively has any legal or equitable interest in the said shares.
(c) THAT there are no monies owing to the Vendor respectively by the
[INIT.]
E-626
<PAGE>
11
Company in respect of the said shares.
(d) THAT the Vendor shall not permit to be passed before the Settlement
Date any resolution by the Company altering its share capital or
changing its name.
(e) THAT as shareholders of the Company the Vendor (and each of them) doth
hereby waive any pre-emptive rights which they may have in respect of
the said shares in the Company held by every other shareholder.
(f) THAT as at the Settlement Date the secured company liability to the
Vendor is to be off set against the Shareholder's loan accounts and
the nett balance thereof to be deducted from the Purchase Price.
The Vendor reserves the right to distribute shareholder's salaries out
of profit accumulated as at the 31st day of March 1995 from the 1st
day of November 1994.
(g) THAT no matters of substantial policy of the Company will be decided
prior to the Settlement Date without reference to the Purchaser and
the approval in writing of the Purchaser which approval shall not be
unreasonably or arbitrarily withheld.
(h) THAT they shall not declare, or pay, any distribution or profit or
capital to themselves or any other party in respect of income for the
year ended 31 March 1995 or the Settlement Date (whichever is the
later) or incur any expenditure up to the Settlement Date other than
in respect of salaries at the current rate, motor vehicle expenses,
telephone expenses, interest, entertainment expenses and usual
operating and trading expenses
[INIT.]
E-627
<PAGE>
12
at levels already established.
(i) THAT from the date of this Agreement the Vendor being all the
Shareholders of the Company shall, if required by the Purchaser,
continue to provide services to the Company on the same terms and
conditions currently applying up to the Settlement Date and shall be
reimbursed by the Company for such services on the basis currently
existing.
(j) THAT they shall secure the passing of Directors' Resolutions approving
the share transfers transferring their holdings of the said shares in
the Company to the Purchaser and or its nominee.
(k) THAT there are no material contracts, contingent liabilities or
arrangements existing or contemplated relating to the Company
(including, but not limited to, agreements with staff, suppliers or
customers) other than as already disclosed to the Purchaser or those
which arise in the normal course of reasonable and prudent business
operation.
(l) THAT no legal proceedings of any kind are being taken against the
Company and that the Vendor (and each of them) is not aware of any
litigation or legal proceedings against the Company pending or
threatening, or circumstances which may give rise to the same.
(m) THAT they are not aware of any cause of action in respect of which the
Company is not fully indemnified against breach of contract, or other
matter which could or might be used for the purpose of commencing
proceedings either civil or criminal against the Company.
(n) THAT the Company has, as and when required by Law, rendered to the
Revenue authorities all necessary returns (including, but not limited
to, returns in respect of Goods and Services Tax, PAYF, Income Tax and
[INIT.]
E-628
<PAGE>
13
Fringe Benefit Tax) and that such returns have been made on a proper
basis and that there is no dispute outstanding with the Revenue
authorities in respect of the same and that all tax for which the
Company is, or has been liable, has been paid for the period ending on
the Settlement Date.
(o) THAT all current licenses, authorities, permits and agreements
required to carry on the business of the Company are at the date
hereof and will at the Settlement Date be in full force and effect.
(p) THAT prior to the Settlement Date the Company shall have complied with
all the requirements of the Companies Act 1955 and any Act or Acts
amending the same in relation to the filing of annual returns and any
other documents required to be filed with the Registrar of Companies.
(q) THAT on Settlement Date there will be no pension, retiring allowance
or other benefit payable by the Company to any employee or Officer of
the said Company (either Director, Secretary or otherwise) on their
retirement or resignation from office or termination of their
employment with the said Company.
(r) THE Vendor shall indemnify and save harmless the Purchaser against any
costs and damages suffered by the Purchaser arising from any liability
that may exist in respect of Agreements and arrangements entered into
prior to the Settlement Date between the Vendor, or the Company and
third parties.
(s) THAT the Vendor shall complete at their own cost in all things any
audit of the Company for the period up to the Settlement Date if an
audit of the Company is required by the Revenue Authorities at any
time.
(t) THAT the net profit of the Company after tax is that which is recorded
as at the 31st day of October 1994 in the attached books of account of
the
[INIT.]
E-629
<PAGE>
14
Company attached hereto and marked "Schedule B".
(u) THE Vendor warrants that it has complied in all respects with the
terms of all Leases between the Company and third parties in respect
of real estate, buildings or otherwise AND FUTHERMORE the Vendor
warrants that it shall not commit the Company to any new or renewals
of Leases in respect of real estate, buildings or otherwise without
the written consent of the Purchaser.
(v) THAT it is complied with all terms of agency agreements and
dealerships and that the same will at the Settlement Date be in full
force and effect and that the Vendor shall take all steps to ensure
the smooth and cooperative maintenance of agreements and dealerships
after the Settlement Date.
(w) THAT the Vendor has not provided to any third party any options in
respect of the shareholding referred to herein.
(x) THAT the Vendor warrants that he has not received any claim or
notification from any third party (including customers, purchasers or
otherwise) as to the failure of any product or service provided to
such third party by the Company and furthermore the Vendor hereby
indemnifies and saves harmless the Purchaser and the Company against
any claim which may arise at any time in connection with such failure
where such failure is shown to have occurred on or before the
Settlement Date.
(y) THERE are no outstanding warrants, options or rights to acquire the
said shares or other securities of the Company, or the business,
assets or undertaking of the Company, or any part thereof, and
furthermore, for clarity, but not so as to limit the generality of the
foregoing, no person, firm or corporation has any option or right
(whether at Law, pre-emptive,
[INIT.]
E-630
<PAGE>
15
contractual, equitable or otherwise) capable of becoming an agreement
to purchase all or any portion of said Shares, or the business, assets
or undertaking of the Company or any shares or securities of the
Company.
(z) THAT the Vendor shall use its best endeavours to complete all filings
and other matters that may be required to comply with the applicable
securities laws and The Alberta Stock Exchange requirements in order
to give full force and effect to this Agreement.
(aa) THE said shares represent 100% of the issued and outstanding shares in
the capital of the Company and are legally and beneficially owned by
the Vendor herein.
(bb) THE execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the fulfilment of and compliance
with the terms and provisions hereof do not and will not:
(i) result in the breach of or violate any term or provision of the
charter, constitution, articles of association, by-laws,
governing documents or internal resolutions of the Company,
(ii) conflict with, result in a breach of, constitute a default under
or accelerate or permit the acceleration of the performance
required by any agreement, instrument lease, license, permit or
authority to which the Vendor or the Company are party or is
subject or by which the Vendor or the Company are bound,
(iii)result in the creation of any lien, charge or encumbrance
against the Company or upon the business, assets or undertaking
of the Company,
E-631
<PAGE>
16
purchase, termination, cancellation or acceleration, or
(v) violate any provision of law, statue, rule or administrative
regulation or any judicial or administrative order, award,
judgment or degree binding on or applicable to the Vendor or the
Company,
(cc) THERE is not and will not be any action, claim, proceeding, suit
or governmental investigation contingent, in progress, pending or
threatened, which may affect the said shares, the Company or the
business, assets or undertaking of the Company in any manner
whatsoever or which may affect the ability of the Vendor to
consummate the transactions contemplated by this Agreement;
(dd) THERE are no court actions, charges, judgments, writs, decrees or
injunctions in existence, contemplated or threatened, against or
in respect of [ILLEGIBLE]
(ee) THE Vendor and the Company have done no act or thing whereby the
vendor's title to or interest in the said shares, may be
cancelled, determined or in any way diminished;
(ff) THE Vendor and the Company have done no act or thing whereby the
Company's title to or interest in its business, assets or
undertakings may be cancelled, determined or in any way
diminished;
(gg) ALL necessary consents, authorizations and approvals will be
obtained by the Vendor and the Company and all necessary laws,
regulations, rules and orders have been complied with by the
Vendor and the Company to enable the valid transfer of the said
shares to the Purchaser pursuant to the terms and conditions of
this Agreement;
[INIT.]
E-632
<PAGE>
17
(hh) THIS Agreement has been properly authorised, executed and
delivered by the Vendor and the Company and constitutes legal,
valid and binding obligations of the Vendor and the Company;
(ii) THERE are no transfer or resale restrictions on or attached to
the said shares other than as have been disclosed to the
Purchaser and which have been satisfied;
(jj) NEITHER the Vendor nor the Company have entered into any
shareholder agreement or similar agreement with respect to or
affecting the said shares.
(kk) THE Vendor has not entered into any arrangement or agreement in
respect of brokerage or finders' fees or commissions for which
the Purchaser or the Company is or may become liable, except as
otherwise stated herein.
(ll) EACH and every Vendor is a resident of New Zealand.
(mm) THE Company
(i) is a duly incorporated company, validly subsisting under the
laws of New Zealand,
(ii) has the requisite company power and authority to own or
lease its properties and assets and to conduct its business
as it is now being conducted,
(iii) holds all requisite licences, registrations,
qualifications, permits and consents necessary to enable it
to conduct its business as it is now being conducted,
[INIT.]
E-633
<PAGE>
18
(iv) is duly qualified to carry on business in each jurisdiction
in which the nature of its business makes such qualification
necessary;
(nn) THE Company has not mortgaged, pledged, charged, encumbered, sold
or alienated any of its properties, assets or businesses in any
manner whatsoever and the title in the Company to its respective
properties, assets or business is not otherwise subject to the
interest or right of any person claiming by, through or under the
Vendor or the Company except as otherwise as set forth and
described in Schedule "B" hereof.
(oo) THE Vendor and the Company are not aware of any material defects
in the title of the Company to its properties, assets, business
or undertaking;
(pp) THE Vendor and the Company are not obligated to obtain the
consent of any person or to provide notice to any person with
respect to the transactions contemplated by this Agreement, nor
do the transactions contemplated by this Agreement give rise to
any rights of first refusal or pre-emptive, preferential or
similar rights of purchase;
(qq) NO contractual commitments or authorisations for expenditures,
whether oral or written, in respect of the Company or the
properties, assets or business of the Company have been given,
entered into, made or effected the Vendor or the Company, except
those which have been disclosed to the Purchaser in writing by
the Vendor, those which have been entered into by the Company in
the ordinary course of its business to provide products and
services to its clients, and as disclosed in the Company's
accounts attached hereto as Schedule "B".
(rr) THE Vendor and the Company have made available to the Purchaser
all material information with respect to the business and affairs
of the Company and all material agreements, undertakings and
arrangements to
[INIT.]
E-634
<PAGE>
19
which the Company is a party, subject or bound;
(ss) THE authorised and issued capital of the Company is as follows:
Capital Authorised Issued
------- ---------- ------
$1,000,000.00 $1,000,000.00 $1,000,000.00
(tt) THE said shares have been duly authorised and issued by the
Company as fully paid shares;
(uu) THE Company has no subsidiaries
(vv) THE Company is not a party to any agreement or commitment to
acquire any subsidiary, business, operation or assets;
(ww) THE Company has no liabilities or obligations, contingent or
otherwise, except as set forth and described in Schedule "B"
hereto, and except those which have been disclosed to the
Purchaser in writing by the Vendor;
(xx) THE Company has no benefit plan or profit sharing plan or similar
arrangement, except those which have been disclosed in writing to
the Purchaser by the Vendor;
(yy) THE Company is not a manager or partner in any partnership or
joint venture
(zz) THE Company has no leases or other arrangements for office space,
office equipment or other assets, except those which have been
disclosed in writing to the Purchaser by the Vendor and as
outlined in Schedule "D" hereof.
[INIT.]
E-635
<PAGE>
20
(aaa) THE Company has not resolved or undertaken to:
(i) wind up its business or make any alterations to its Articles of
Association or Constitution or to change its name
(ii) make any guarantee, endorsement, accommodation or similar
arrangement
(iii)dispose of any of its properties or assets, except in the
ordinary course of business
(iv) write off, surrender or abandon any accounts receivable or any
right of claim
(v) pay dividends, bonuses or other distributions of any nature or
kind, except as provide for herein
(bbb) THE Vendor is not a creditor of the Company except as set out and
described herein or in Schedule "B"
(ccc) ALL of the acts of the directors, officers and shareholders of the
Company have been duly authorised by the necessary company
proceedings, and the Company is not in contravention of any law,
bylaw, statue, rule, regulation, order, award, judgment or decree;
(ddd) ALL income tax returns of the Company required by law to be filed for
period ending on or before the Settlement Date and all present and
contingent tax liability with respect to such returns has been duly
and properly paid in full by the Company, the Company has not received
a Notice of Reassessment and the Company and the Vendor has no reason
to believe the Company may be reassessed;
[INIT.]
E-636
<PAGE>
(eee) THE Company's accounts attached hereto as Schedule "B" have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis, constitute a true, accurate and
complete statement of the affairs and financial position of the
Company for the period indicated including, without limitation,
provision for taxes,
(fff) THE Company has not made any employment contracts or other
arrangements with any officers, agents, servants or employees of the
Company (other than those which have been disclosed to the Purchaser)
which are terminable on more than one (1) month's notice or which
provide for any payment in excess of normal salaries or wages, and
there are no outstanding loans or guarantees for such persons;
(ggg) NO substantial adverse change has occurred to the financial position,
physical assets or affairs of the Company since the date of the
Company's accounts attached hereto as Schedule "B" and the business of
the Company has been and will be conducted in the usual and business
like manner in the period from the date of this Agreement to the
Settlement Date.
(hhh) THE financial and company records (including the minute book) of the
Company are substantially complete and correct in all material
respects;
(iii) THE Company is in compliance with all environmental and hazardous
chemicals and materials legislation
(jjj) THE Company has paid to date all amounts due or owing to any level of
government for taxes, including company taxes and fees, G.S.T.,
employee withholdings and remittances and licensing fees
(kkk) THE Company has insurance on all of its assets and properties with
financially sound and reputable insurance companies against such
perils as
[INIT.]
E-637
<PAGE>
22
is usual with companies holding similar assets and properties and in
an amount not less than their full insurable value, and all premiums
on the same have been paid to the Settlement Date.
(lll) THAT the Vendor shall terminate the Company's superannuation scheme
and distribute the proceeds and benefits thereof to the beneficiaries
of the scheme as at the 31st of March 1995.
7.A NEITHER party shall, without the express consent of the other, make use of
(whether for its own purposes or otherwise), or divulge to any person,
firm, company or other entity whatsoever, any information or facts relating
to any aspect of this Agreement or matters whatsoever relating thereto
except in order to facilitate and advance the process of settlement of this
Agreement.
8. NO covenant or warranty on the part of the Vendor or of the Purchaser shall
be merged or become of no effect upon settlement hereof or any assurances
pursuant hereto but the same shall remain outstanding and binding upon the
Vendor and his respective Executors and Administrators and the Purchasers
according to the tenor thereof.
9. THE Purchaser shall procure by the Settlement Date the release of the
Vendor from all guarantees, indemnities, and other personal covenants,
undertaking, liability for the debts or liabilities of the Company (except
in relation to the Leases of the Company's premises) and shall indemnify
and save harmless the Vendor from and against all liabilities of the
Company, except to the extent that such may be the subject of indemnity by
the Vendor to the Purchaser or the Company by virtue of this Agreement.
The Purchaser shall use its best endeavours to obtain release of the
Vendor's guarantees given in respect of the Company's premises.
10. EACH of the parties undertakes to take all steps, sign all documents and
exercise all rights including voting rights necessary to carry this
agreement into effect.
[INIT.]
E-638
<PAGE>
23
11. ALL differences of disputes which may arise between the parties hereto or
any of them touching or concerning this agreement or the construction
thereof or the rights or liabilities of any part hereunder shall be
determined by the arbitration of a single arbitrator if the parties can
agree on one or failing such agreement by two arbitrators (one to be
appointed by the Vendor and the other by the Purchaser) and their umpire in
accordance with the Arbitration Act 1980.
12. (i) IF the Purchaser shall make default in payment of any instalment of
the purchase monies hereby agreed to be paid or in the performance or
observance of any other stipulation or agreement on the part of the
Purchaser herein contained and such default shall be continued for the
space of fourteen (14) days, the time for such payments and
performances fixed by this agreement being strictly of the essence of
the contract, then and in such case the Vendor without prejudice to
their other remedies forthwith or at any time hereafter may at their
option exercise all or any of the following remedies, namely:
(a) ENFORCE specific performance of this Agreement including the
payment of all monies payable hereunder in which case the whole
of the unpaid purchase monies shall be deemed to have become due
and payable to the vendor notwithstanding that the due date of
payment thereof as aforesaid may not have arrived.
(b) RESCIND this contract of sale and thereupon all monies hereto
before paid shall be forfeited to the Vendor.
(c) RE-ENTER upon and take possession of the lands and properties of
the Company without the necessity of giving any notice or making
any form of demands.
(d) RESELL the said shares in the Company either by public auction
[INIT.]
E-639
<PAGE>
24
or private contract subject to such stipulations as they may
think fit and any deficiency in price which may result on and all
expenses attending a resale or attempted resale shall be made
good by the purchaser and shall be recoverable by the Vendor as
liquidated damages the Purchaser receiving credit for any payment
in reduction of the Purchase Price. Any increase in price on
resale after reduction of expenses shall belong to the Purchaser.
(e) TO claim from the Purchaser interest on the unpaid portion of the
Purchase Price at that interest rate being 5% above the Bank of
New Zealand based lending rate (commercial) from the due date on
a daily basis and to be repayable upon demand.
(ii) IF the Vendor shall make default in the performance or observance of
any stipulation or agreement on the part of the Vendor herein
contained (hereinafter called "the Default") then the Purchaser
without prejudice to its other remedies, may forthwith, or at any time
hereafter at its option, exercise all or any of the following
remedies:
(a) ENFORCE specific performance of this Agreement
(b) RESCIND this Contract of sale and thereupon all monies hereto
before paid shall be refunded to the Purchaser forthwith as
liquidated damages together with interest on such sums at the
interest rate of 10% per annum from the date (or dates) of
payment by the Purchaser until repayment.
(c) CHARGE to the Vendor an amount representing 10% per annum of the
Purchase Price by way of damages (hereinafter called "penalty
interest") for the period from the Settlement Date (or the date
of default whichever is earlier) to the date upon which the
Vendor shall have performed or observed the said stipulations or
[INIT.]
E-640
<PAGE>
25
agreements on the part of the Vendor herein contained or
otherwise remedied the default. The said sum of penalty interest
shall be deducted from the Purchase Price at the Purchaser's
option in the event that this Agreement is eventually performed.
(d) RECEIVE all profits and rents from the Company notwithstanding
that the Settlement Date has passed and the Purchase Price
remains unpaid.
13. IN consideration of the Purchaser entering into these presents at the
request of the Vendor and each of them being Officers of the Comapny
COVENANT with the Purchaser that they (and each of them) shall not for a
period of one (1) year from the Settlement Date, or termination of
employment with the Purchaser, Sealcorp Computer Products Limited or their
respective subsidiaries (whichever is the later) either directly or
indirectly carry on or be engaged or concerned or interested or in
partnership with or as manager, agent or servant in any business or
enterprise involved or associated with the sale at wholesale, retail or
otherwise of all products of the type and nature currently sold by the
Company (and its subsidiaries, if any), and the Purchaser (and its
subsidiaries, if any) and Sealcorp Computer Products Limited (or any of its
subsidiaries, if any). This restraint shall apply to the whole of New
Zealand. This provision shall be altered to the extent and in respect of
those shareholders and specifically referred to in Schedule "C" hereof.
JOHN RICHARD CAMPBELL and ROBYN LORNA CAMPBELL being Officers of the
Company shall each execute a Deed of Restraint of Trade providing for the
terms referred to herein which Deeds of Restraint of Trade shall be made
available to the Purchaser or its nominee, and any other party taking
benefit thereunder, on the Settlement Date, and shall be prepared at the
cost of the Purchaser.
14. THE Vendor (and each of them) warrant that all information provided and
divulged to the Purchaser in respect of all matters touching upon this
Agreement
[INIT.]
E-641
<PAGE>
26
are true and correct and that no material omissions have been made in
respect of the same and furthermore the Vendor (and each of them) HEREBY
INDEMNIFY the Purchaser in respect of the full value of:
(i) UNDISCLOSED liabilities whether revealed before the Settlement Date or
after the Settlement Date, (whether contingent or otherwise,
including, but not limited to, Income Tax, Goods and Services Tax,
Fringe Benefit Tax and PAYE).
(ii) FIXED Assets forming part of this Agreement which are not either
available at the Settlement Date or are not in full operational order
at the Settlement Date and to this end the Vendor shall provide to the
Purchaser at the time of signing this Agreement a full and precise
list of fixed assets including a list of plant fixtures and fittings.
15.1 (a) THE parties acknowledge that the Vendor shall pay to the Company's
employees all monies due and owing to such employees up to the
Settlement Date including but not limited to salary, wages, holiday
pay, commissions, bonuses, and in respect of such payments where
appropriate shall pay the same to the Purchaser on the Settlement Date
in consideration for which the Purchaser on the Settlement Date in
consideration for which the Purchaser shall then assume full
responsibility for these payments on behalf of the Vendor to the
Vendor's employees. In this regard the Vendor shall also provide to
the Purchaser at the Settlement Date a full schedule of employees
together with details relating to the payments referred to herein in
respect of those employees.
(b) THE Vendor shall provide to the Purchaser on execution of this
Agreement the following:
(i) A full list of the Company's employees together with the personal
details of each employee.
[INIT.]
E-642
<PAGE>
27
(ii) Current job descriptions of each employee
(iii) Details of each employee's service history and salary
information
(iv) Copies of each employee's Employment Contracts
(v) All such other information as the Purchaser shall reasonably
require.
15.2A THE purchaser shall provide to JOHN RICHARD CAMPBELL an Employment
Contract with the Company on new terms and conditions which are
acceptable to both parties. The terms and conditions of the employment
contract shall include the following:
(a) Commnecement Date: 1 April 1995
(b) Income Package: $100,000.00 on target earnings which
shall include base salary of $75,000.00
and commissions. Commissions shall be
based on the budget performance by the
Company for the ensuing year being
equivalent to the gross profit of the
Company for that previous twelve (12)
months preceding the 31st of March 1995.
(c) Vehicle Allowance: An annual vehicle allowance of
$12,000.00
(d) Bonuses An annual bonus based on the performance
of the Company in relation to the
Company's target being 30% above the
gross profit for the previous twelve
(12) month period to a maximum of
$13,000.00 per annum payable in cash or
by way of shares in BROCKER INVESTMENTS
LIMITED (CANADA) (at the option of the
Vendor).
15.2B THE Purchaser shall employ ROBYN LORNA CAMPBELL for that period 1
April 1995 to the Settlement Date at an annual salary of $12,000.00
per annum.
16. (i) IN consideration of the Purchase Price the Vendor (and each of them)
give up the full right, interest and use of the name SOLSTAT
[INIT.]
E-643
<PAGE>
28
INDUSTRIES LIMITED (or any part of that name as required by the
Purchaser) from the Settlement Date and the Vendor (and each of them)
shall execute all documents and do all things necessary to satisfy
this provision including, if required by the Purchaser, execution of
Transfer or assignment of Trade Mark or otherwise in favour of the
Purchaser and/or its nominee.
(ii) THE Vendor shall transfer to the Purchaser all of its intellectual
property rights and interests (including all designs, logos, Trade
Marks, names, licences, permits, consents and other authorizations)
used by the Vendor and the Company in the conduct of the business of
the Company.
17. SUBJECT to earlier provisions herein the parties shall bear their own costs
in connection with preparation, execution and settlement of this Agreement
and all incidental attendances thereto PROVIDED HOWEVER that the Purchaser
shall meet the reasonable costs of the Vendor's solicitor in connection
with preparation, execution and registration of the mortgage of shares
referred to in paragraph 4.1(b) herein.
18. UNLESS otherwise expressly stated herein the parties are contracting on the
understanding that the supply made pursuant to this Agreement is a supply
within Section 11(1)(c) of the Goods and Services Tax Act 1985 on which
G.S.T. is chargeable at the rate of zero percent PROVIDED THAT if it
transpires that any G.S.T. is payable in respect of the supply then:
(a) THE Purchaser shall pay to the Vendor the G.S.T. which is so payable
in one sum on the Settlement Date or such later date that the parties
may agree upon.
(b) IF the supply under this Agreement is a taxable supply the Vendor
shall deliver a tax invoice to the Purchaser on or before the
Settlement Date or
[INIT.]
E-644
<PAGE>
29
such earlier date as the Purchaser is entitled to delivery of an
invoice under the G.S.T. Act.
(c) WHERE G.S.T. is not paid to the Vendor by the Purchaser where such
payment is legally payable, then the Purchaser shall pay to the Vendor
(i) INTEREST at the rate of 10% per annum on the amount of G.S.T.
unpaid from the date referred to in paragraph 21(a) herein until
payment; and
(ii) ANY default G.S.T., being any additional G.S.T. penalty or any
other sum levied against the Vendor by reason of non payment
within the meaning of the G.S.T. Act other than any sum levied
against the Vendor by reason of a default by the Vendor after
payment of G.S.T. to the Vendor by the Purchaser.
19. THE Purchaser will not exploit (whether directly or indirectly) for the
Purchaser's own purposes any customer information or any other information
imparted to or acquired by the purchaser in the course of the Purchaser's
review of the business of the Company and in the course of all negotiations
and other matters incidental to the sale and purchase. The Purchaser
undertakes, that it will not, without prior written consent of the Vendor,:
(a) USE this information for any purpose other than to consider whether to
buy the said shares in the Company
(b) DISCLOSE to any other party any information provided by the Vendor
relating to the Company
(c) COPY in any form any of the customer information provided to the
Purchaser by the Vendor or acquired by the Purchaser, and, if required
by the Vendor, shall return such information immediately to the Vendor
and
[INIT.]
E-645
<PAGE>
30
shall keep confidential such information.
(d) SOLICIT the Company's suppliers, distributors, clients or staff.
This provision shall apply only up to the date that this Agreement becomes
fully unconditional and is settled in full.
20. FOR the sake of clarity the parties acknowledge that the Company occupies
those premises referred to in Schedule "D" as tenants.
21. (a) NOTWITHSTANDING the provisions of Clause 4.1(b) herein the Purchaser
at its own unfettered and absolute discretion shall have the option of
satisfying that portion of the purchase price as recorded in Clause
4.1(b) herein in cash in one lump sum instead of transferring to the
Vendor shares in BROCKER INVESTMENTS LIMITED (CANADA) as otherwise
provided for therein.
(b) FOR the sake of clarity the parties acknowledge that the number of
shares that shall be transferred to the Vendor (subject to the
provisions of Clause 21(a) herein) in satisfaction of the balance of
the Purchase Price in accordance with the provisions of Clause 4.1(b)
herein shall be based on the said shares in BROCKER INVESTMENTS
LIMITED (CANADA) having a value equivalent to the listed value of such
shares on the Alberta Stock Exchange Canada at 10.00 a.m. (Canada
time) on the settlement date. The parties shall also take into account
the exchange rate between New Zealand dollar and the Canadian dollar
at that time to the intent that the exchange rate shall be the buy
rate in New Zealand dollars for Canadian dollars at 10.00 a.m. (Canada
time) on the day the transfer of the said shares shall take place.
(c) THE Vendor acknowledges that the shares in BROCKER INVESTMENTS
[INIT.]
E-646
<PAGE>
31
LIMITED (CANADA) shall be subject to such restrictions on transfer
provided for by the Securities Act (Alberta) or such other Laws that
may apply and that the shares in BROCKER INVESTMENTS LIMITED (CANADA)
shall also be subject to such escrow conditions and other restrictions
that may be impacted by The Alberta Stock Exchange. The Vendor hereby
agrees to enter into such escrow agreement(s) that may be requested by
The Alberta Stock Exchange.
22. EXECUTION of the Agreement by all parties referred to herein shall bind
each of those parties to this Agreement as if they were contracting parties
to the same in respect of those provisions to which their obligations
[WORD?]
23. THIS Agreement is conditional upon the following:
(a) APPROVAL in all respects, and at the absolute and unfettered
discretion, of the Board of Directors of BROCKER INVESTMENTS LIMITED
(CANADA) by the 31st day of March 1995.
(b) UPON the Purchaser, prior to the Settlement Date, obtaining from the
Lessors under the Leases of the Company's premises confirmations that
such Lessors consent to the transfer of the said shares without any
onerous conditions being imposed by the Lessors as a pre-requisite to
such consent being available to the Purchasers.
(c) APPROVAL in all respects, and at the absolute and unfettered
discretion, of the Securities Commission of Canada (or similar
regulatory body for the time being in Canada).
(d) APPROVAL in all respects, and at the absolute and unfettered
discretion, of The Alberta Stock Exchange any other regulatory body
(in addition to the body referred to in sub-paragraph (b) herein)
being a body whose consent and authority is necessary to the transfer
of shares in BROCKER
[INIT.]
E-647
<PAGE>
32
INVESTMENTS LIMITED (CANADA) as proposed in terms of these presents.
The Vendor and the Company shall provide to the Purchaser and its
solicitors access to all its financial, company and other records and
information and shall provide to the Purchaser such other information that
The Alberta Stock Exchange may require or such other information as the
parties shall herein require in order to advance the approval of the
conditions herein.
24 (i) UPON payment of the deposit referred to in Clause 4.1(a) herein
the parties acknowledge that provided the Purchaser completes
settlement of this agreement in accordance with the terms herein
the parties agree that the Purchaser shall from the 31st day of
March 1995 be the sole beneficiary of the Company's undertaking
to which end the Vendor shall hold in trust for the Purchaser the
said shares.
(ii) THE outgoings and incomings of the Company shall be apportioned
between the parties on the 31st day of March 1995.
(iii) THIS provision is entirely conditional upon completion of
settlement by the Purchaser as aforesaid.
25. THIS Agreement may be signed in any number of counterparts, each of which
shall be signed by authorised signatories on behalf of the parties, which
together shall constitute one agreement binding on the parties
notwithstanding that the parties are not signatories to the original or
same counterpart.
26. THE parties may sign a counterpart copy of this Agreement by photocopying a
facsimile thereof and signing that photocopy. The transmission by facsimile
by a party to another party of a counterpart copy of this Agreement so
signed shall be proof of signature of the original and the signed facsimile
so transmitted shall be deemed an original.
[INIT.]
E-648
<PAGE>
33
SCHEDULE A
JOHN RICHARD CAMPBELL 555,560 shares
ROBYN LORNA CAMPBELL 444,440 shares
SCHEDULE B
COMPANY'S ACCOUNTS
See Attached
SCHEDULE C
The Restraint of Trade provision referred to in paragraph 13 of the Agreement
shall, in respect of JOHN RICHARD CAMPBELL apply from the time he ceases
employment with the Company, or BROCKER INVESTMENTS (NZ) LIMITED or SEALCORP
COMPUTER PRODUCTS LIMITED (or any of their respective subsidiaries), whichever
is the later and in respect of ROBYN LORNA CAMPBELL, the restraint provision
referred to in paragraph 13 shall apply from the Settlement Date unless ROBYN
LORNA CAMPBELL enters into employment with the abovementioned companies (or any
of their respective subsidiaries) in which case the restraint provision referred
to in paragraph 13 shall apply from the time she ceases employment with the said
companies (or any of their respective subsidiaries).
SCHEDULE D
Those premises at:
1. 32 Sheffield Crescent, Burnside, Christchurch
2. 66 Vivian Street, Te Aro, Wellington
[INIT.]
E-649
<PAGE>
34
IN WITNESS WHEREOF this Agreement has been executed the day and year first
hereinbefore mentioned.
EXECUTED by the Vendor in the presence of: } [ILLEGIBLE]
} [ILLEGIBLE]
EXECUTED by the Purchaser } [ILLEGIBLE]
in the presence of } [ILLEGIBLE]
EXECUTED by Brocker }
Investments Ltd. } Per: [ILLEGIBLE]
[STAMP]
E-650
Agreement for sale and purchase of shares
AN AGREEMENT dated this 20th day of December 1994
PARTIES:
(1) MICHAEL BRIAN RIDGWAY of Auckland, Company Director [hereinafter called the
"Vendor"]
(2) BROCKER INVESTMENTS (NZ) LIMITED at Whangarei [hereinafter called "the
Purchaser"]
RECITALS:
A SEALCORP COMPUTER PRODUCTS LIMITED at Auckland (the "Company") is a duly
incorporated private company having an issued capital of $100,000.00
divided into 100,000 fully paid ordinary shares of ONE DOLLAR ($1.00) each.
B The Vendor is the beneficial owner of 33,000 ordinary ONE DOLLAR ($1.00)
shares in the capital of the Company (the said shares referred to herein as
the "Shares").
C The Vendor has agreed to sell to the Purchaser, and the Purchaser has
agreed to purchase from the Vendor 32,999 of the Shares in the capital of
the Company for the consideration and upon the terms and conditions
contained in this Agreement.
TERMS OF THIS AGREEMENT:
1 Definitions
1.1 In this Agreement and each Schedule hereto unless inconsistent with the
context, the following terms shall have the following meanings:
"this Agreement" means this Agreement and the Schedule attached.
"Security Interest" means any mortgage, debenture, charge (whether fixed or
floating or both), pledge, lien, right to equitable interest in or other
encumbrance (other than any lien of encumbrance arising by operation of
law) over or affecting the Shares.
[INITIALED]
E-651
<PAGE>
"Interest Rate" means a rate of interest calculated by taking the 90 day
prime commercial bill rate on the relevant day or the nearest business day
and adding an additional 6%.
"Settlement Date" means 5.00 pm on the 31st day of January of 1996.
"Share Purchase Price" means "the Total Purchase Price" (as hereinafter
defined) divided by the company's issued capital of $100,000.00 multiplied
by the number of shares namely 32,999.
"Total Purchase Price" means the amount calculated by multiplying the
audited after tax profits of the company for the year ending 31st March
1995 by 3.75 or the sum of $2,500,000.00 whichever is the greater.
2 Interpretation
In this Agreement:
2.1 References: Unless otherwise stated a reference to a clause or to a
Schedule is to a clause in, or a Schedule to, this Agreement.
2.2 Plurals: Words importing the singular shall include the plural and vice
versa.
2.3 Writing: Expressions referring to writing shall be construed as including
references to words printed, typewritten, telexed, lithographed or
otherwise traced, copied or reproduced.
2.4 Currency: Unless otherwise stated, references to dollars and "$" are
references to the lawful currency of New Zealand.
3 Execution
This Agreement may be executed:
3.1 In two or more counterparts all of which shall be deemed originals but
which together constitute one and the same instrument.
3.2 By facsimile copies signed by the parties provided that forthwith after
transmission of the executed Agreement such party will forward to the other
the original executed copies for the purpose of forming the counterparts
referred to in 3.1 above.
4 Sale and purchase of shares
4.1 Subject to the terms and conditions set out in this Agreement and on the
basis of the representations, warranties and agreements contained within
it, the Purchaser agrees to
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<PAGE>
purchase from the Vendor and the Vendor agrees to sell to the Purchaser the
Shares for the Share Purchase Price.
4.2 As at the settlement date the company will cause to be prepared company
accounts and for such accounts to be audited by the auditors. The purchase
price shall be ascertained from the audited accounts in the manner set out
in clause 1. 1.
4.3 Accounting standards
If a difference of opinion arises between the vendor and the purchaser as
to whether or not an accounting principle, standard or practice adopted in
the preparation of the settlement accounts is generally accepted in New
Zealand at the date thereof then the difference of opinion in question
shall be referred for arbitration to the President of the New Zealand
Society of Accountants for the time being or his nominee whose decision
shall be final. The accounting principle standard or practice determined in
accordance with the arbitration as being generally accepted in New Zealand
at the date thereof shall be adopted by the parties for the purposes of the
settlement accounts. Pending the determination of the arbitration on any
such difference of opinion the parties shall in accordance with clause 4.4
include in the provisional settlement accounts an amount in respect of any
item which may be affected by the difference of opinion.
4.4 Dispute in respect of settlement accounts
If the parties are unable to reach full agreement on the audit of the
settlement accounts within the time period specified in clause 4.3 they
shall forthwith at the expiry of that time period provide the auditors with
full details of all matters in dispute between them and stating the amount
that party considers should be included or allowed in the settlement
accounts and thereupon the auditors shall complete the settlement accounts
with an audit certificate qualified in respect of the amounts in dispute
and shall refer the amounts in dispute to the parties for agreement and in
such event the settlement accounts shall be referred to as the "provisional
settlement accounts". For the purpose of such provisional settlement
accounts any particular liability, accrual or provision shall be included
in the provisional settlement accounts at the higher of each party's
opinion of the amount of such liability accrual or provision and any
particular asset shall be included at the lower of each party's opinion of
the amount of such asset. For the purposes of clauses 4. 1 and 4.5 the
difference between each such amount shall be referred to as a "disputed
amount".
4.5 Arbitrator
The parties shall use their best endeavours to reach agreement on all
disputed amounts within fourteen (14) days of the receipt by the parties of
the provisional settlement accounts but failing agreement the disputed
amounts shall be referred to such arbitrator as is agreed by the parties
within the same period of fourteen (14) days it being the
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<PAGE>
intention of the parties that at the same time as they endeavour to reach
agreement they also endeavour to agree on an arbitrator as a precautionary
measure. Failing agreement by them within fourteen (14) days on all the
disputed amounts and on an arbitrator then the disputed amounts shall be
referred to such arbitrator as is appointed by the President of the New
Zealand Society of Accountants and the decision of such arbitrator as to
the disputed amounts shall be final and binding on the parties. The parties
shall take all reasonable steps to expedite such arbitration.
5 Settlement
5.1 Settlement of the sale and purchase of the Shares shall be effected on the
Settlement Date and shall take place at the offices of Thorne Dallas &
Partners, Solicitors, Whangarei..
5.2 Delivery of Documents: Upon receipt of the Share Purchase Price the Vendor
shall deliver to the Purchaser:
(a) The share certificate or certificates for the Shares (if such
certificate exist).
(b) Duly executed transfers of the Shares in favour of the Purchaser or
any nominee or nominees of the Purchaser in registrable form; and
(c) All other documents listed below, the form and content of such
documents to have been previously agreed between the Vendor and the
Purchaser where appropriate:
(i) A waiver signed by the shareholders of the Company waiving all
rights of pre-emption conferred on them by the Articles of
Association of the Company in respect of the transfer of all of
the Shares.
(ii) A resolution of the Directors of the Company approving the
transfers of the Shares and directing that upon presentation of
those transfers duly executed the name of the Purchaser and/or
its nominees (as the case may be) be entered in the register as
members of the Company in respect of the said shares.
(iii)Evidence of the release of the Shares from all Security
Interests over them (if any).
5.3 On payment of the Share Purchase Price the Vendor shall also deliver to the
Purchaser:
(a) Effective resolutions of the shareholders of the Company appointing
such persons as Directors and Secretary of the Company as the
Purchaser may notify, such appointments to be effective from the
Settlement Date.
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(b) Such effective resolutions of the Company altering its Articles of
Association as the Purchaser may reasonably require.
(c) The Memorandum and Articles of Association, Certificates of
Incorporation, Minute Books and all other books, documents,
debentures, mortgages, agreements, registers, common seals, accounts,
records, keys and papers belonging to or held by the Company, or (in
the case of documents, debentures, mortgage agreements and papers) to
which the Company is a party.
(d) The Company's copy of all documents of title, leases of premises
and/or plant and vehicle and of all hire purchase agreements and
charges (to the extent such items have not already been made available
under subclause (c) above).
(e) Any licences, distributorship, agency and like agreements under which
the Company sells or manufactures any products or applies any design
or trade mark thereto (to the extent such items have not already been
made available under subclause (c) above).
(f) Certificates of registration and renewals of trade marks, registered
designs and patents, if any, held by the Company and copies of all
licences and registered user agreements relating to trade marks,
registered designs and patents (to the extent such items have not
already been made available under subclause (c) above).
6 Payment
6.1 The Share Purchase Price shall be satisfied by the Purchaser granting in
favour of the vendor a mortgage of shares in the form attached.
7 Default interest
7.1 If (save for the default of the Vendor) any portion of the money payable to
the Vendor pursuant to this Agreement shall not be paid on the Settlement
Date then the Purchaser shall pay to the Vendor interest on such moneys in
respect of which default has been made at the Interest Rate, for the period
from and including the Settlement Date until the relevant amount in respect
of which such default has been made and all interest thereof has been paid
in full. Such interest shall be calculated on a daily basis, and shall be
payable without prejudice to any of the Vendor's rights and remedies under
this Agreement or otherwise howsoever.
8 Representation and warranties
The Vendor warrants with the Purchaser that:
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8.1 Authority: The Vendor has full corporate power and authority to execute and
deliver this Agreement and to fulfil its obligations hereunder.
8.2 Ownership: The Vendor is the beneficial owner of the Shares in the capital
of the Company.
8.3 No security interests: As at Settlement Date, the Shares will be held by
the Vendor free and clear of all Security Interests.
8.4 No options: The Vendor will not prior to settlement grant to any person
under any contract or agreement a right or option for such person to take
shares in the capital of the Company.
8.5 No assets: The Vendor does not directly or indirectly own, nor is
beneficially entitled to, any of the assets normally employed in the day to
day operation of the business of the Company.
8.6 Inter-company debts: As at Settlement Date the Vendor will have repaid to
the Company any and all outstanding inter-company indebtedness, other than
such debts as may occur during or arise out of the normal course of
business, and that no such debts will be owing by the Company to the
Vendor.
9 Undertakings on conduct of business
9.1 Until Settlement Date or the termination of this Agreement, whichever is
the earlier, the Vendor undertakes to the Purchaser that it will use its
best endeavours as a shareholder of the Company to ensure that the Company
does not:
(a) Enter into any further significant obligations or contracts other than
those previously approved in writing by the Purchaser; or
(b) Create any further mortgage, charge or otherwise encumber its assets
or any of them; or
(c) Pay any dividend or make any other distribution to any shareholder
from the Company's profits in respect of the issue capital of the
Company;
(d) Do anything nor pass any resolution which may defeat or prejudice the
provisions of this Agreement; or
(e) Alter its Memorandum or Articles of Association prior to the
Settlement Date
PROVIDED THAT the Purchaser hereby acknowledges and agrees that the Vendor,
as a shareholder in the Company, cannot, and does not seek to, usurp to the
shareholders
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<PAGE>
of the Company the day to day management and control of the Company vested
in the directors of the Company under and by virtue of the Articles of
Association of the Company and at common law. The Purchaser therefore
agrees that the Vendors undertakings in this clause of this Agreement do
not extend to commitments, acts or omissions properly in the domain of the
directors of the Company and carried out in the normal course of business
of the Company up to and including the Settlement Date.
10 Conditions precedent to agreement
10.1 The creation of the contractual obligations represented by this Agreement
are subject to the Vendor obtaining all necessary approvals, releases and
consents to enable it to sell and pass good clear title to the Shares free
of any and all Security Interest at or before 5 pm on the [tenth] business
day after the date of this Agreement including:
(a) Consents: The consent of any and of all of the Company's mortgages or
chargeholders, if necessary, to the sale of the Shares.
(b) The execution of a waiver of pre-emptive rights, under the Articles of
the Company by the parties thereto, such waiver to be for the
transaction in this Agreement.
11 Conditions precedent to settlement
11.1 The obligations of the Vendor to complete settlement of the transaction
contained and contemplated under this Agreement are subject to the
satisfaction of the following conditions precedent, namely, the procurement
of unconditional releases of all guarantees, indemnities, or assurances or
like kind given by the Vendor in respect of any obligation of the Company,
prior to the date specified in clause 10.
12 Waiver of conditions
12.1 In the event that any of the conditions contained in clauses 10 and 11 are
not satisfied on or prior to the dates stipulated then either party (in the
case of clause 10) or the Vendor (in the case of clause 11) shall have the
right to terminate this Agreement and no party shall have any claim against
the other, other than claims arising out of the obligations in clause 15.
Either party may choose to waive its right to insist on the satisfaction of
any one or more of the conditions precedent, and in the event that both
parties waive any one or more of the conditions precedent in clause 10, or
the Vendor waives the requirement of satisfaction of a condition precedent
in clause 11, then any such waived condition precedent shall be deemed to
be satisfied on the date of waiver.
13 Effect of termination
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13.1 In the event of termination of this Agreement pursuant to clause 12 this
Agreement shall thereafter become void and except as provided in clause 15
shall have no effect and none of the parties to this Agreement shall have
any liability to any of the other parties except that nothing in this
clause shall relieve any party from liability for any breach of this
Agreement prior to such termination. No party shall in any event be liable
to any other party for loss of anticipated profits from the transactions
contemplated by this Agreement or any other consequential damages arising
out of the termination of this Agreement.
14 No assignment
14.1 Neither party to this Agreement shall have the right to assign its benefits
under this Agreement to any third party. This clause shall not operate to
prevent a party assigning to a subsidiary or associated company within its
group, nor to prevent it assigning pursuant to a corporate reconstruction.
15 Publicity -- confidentiality
15.1 Except as required by law and the Rules of the New Zealand Stock Exchange,
no announcement shall be made by the Vendor or the Purchaser as to the
subject matter or terms of this Agreement except at such time and in such
form and manner as they shall agree.
15.2 In the event that the sale of the Shares does not proceed the Purchaser
covenants not to disclose whether directly or indirectly any information
relating to the Company and its business without the prior written consent
of the Vendor. Any such disclosure that is detrimental to the business of
the Company shall be actionable by the Company and the Vendor and a benefit
is hereby conferred on the Company under the Contracts (Privity) Act 1986
for this purpose.
16 Merger
16.1 Notwithstanding any rule of law to the contrary, none of the
representations, undertakings, warranties and covenants contained in this
Agreement shall merge or be extinguished upon settlement, but shall
continue to remain in full force and effect.
17 Payment of expenses
17.1 Each party will pay all fees and expenses incurred by it in connection with
this Agreement and the transactions contemplated in this Agreement.
18 Entire agreement, amendments and waivers
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18.1 This Agreement (and any schedules to it) constitutes the entire agreement
between the parties and supersedes all prior agreements, understandings,
negotiations, representations and discussions, whether oral or written, of
the parties. The Vendor makes the representations and warranties set forth
in clause 8 and no others. Any and all implied warranties are expressly
excluded. No supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the parties to this Agreement. The
Vendor and/or the Purchaser may, at its or their option, waive in writing
any or all of the conditions in this Agreement to which its or their
obligations are subject. No waiver of any of the provisions of this
Agreement shall be deemed to constitute a waiver of any other provision
(whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
19 Headings, table of contents
19.1 The headings and the table of contents are inserted for convenience and
reference only and shall not affect the meaning or interpretation of this
Agreement.
20 Severability
20.1 In the event that any one or more of the provisions contained this
Agreement shall for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement or
any other such instrument.
21. Re-Registration
Forthwith after the company is re-registered under the Companies Act 1993
in consideration of the sum of $1.00 to be paid by the purchaser to the
vendor the vendor shall transfer to the purchaser the vendor's one
remaining share.
SIGNED by the said MICHAEL BRIAN ) /s/ MICHAEL BRIAN RIDGWAY
RIDGWAY in the presence of [ILLEGIBLE] -------------------------
Witness: [ILLEGIBLE]
Occupation: PA to Managing Director
Address: 20 Auckland Rd
St. Helens, AK.
THE COMMON SEAL of )
BROCKER INVESTMENTS (NZ) )
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<PAGE>
[SEAL]
LIMITED was hereunto affixed
in the presence of:
/s/ Ean Innes Brown Geoffrey Peniston Elliot Clarkson
------------------- (Director) by his attorney Ean Innes
Brown
/s/Melody de Brocas Melody de Brocas (Secretary) by her
------------------- attorney Stephen Wayne Perkinson
E-660
April 1997
POWERCALL TECHNOLOGIES LIMITED(PTL)
SALARIED EMPLOYMENT CONTRACT
NAME: Evan James Read
POSITION: Technology Manager
RESPONSIBLE TO: General Manager
LOCATED AT: Takapuna
E-661
<PAGE>
POWERCALL TECHNOLOGIES LIMITED
SALARIED EMPLOYMENT CONTRACT
BETWEEN: POWERCALL TECHNOLOGIES LIMITED
AND Evan James Read
COMMENCEMENT
OF EMPLOYMENT: 1/4/97
The terms and conditions contained herein supersede and replace any terms and
conditions of employment that may have applied prior to the coming into force of
this contract.
This contract expires on the 31st March 2002.
1. DUTIES/RESPONSIBILITIES
A copy of your job description as attached outlines your duties and
responsibilities of your position. Because of the changing nature of the
business, other duties will be included as agreed between the parties from time
to time. It is expected that those duties will be performed in accordance with
the instructions of the Company and that you will devote all of your normal
working hours and best endeavour to performing these duties outlined in a manner
which will promote the interest of the company.
2. HOURS OF WORK
(a) Your hours of work are a minimum of 40 per week to be worked on 5 days of
the week Monday to Friday inclusive, between the hours of 8 am to 5.30 pm.
Your hours of work and any conditions relating to them may be varied by
mutual agreement.
(b) The Company may require you to work more than 40 hours per week to fulfil
the responsibilities of your position within reasonable limits. Payment for
such time worked in excess of the weekly hours have been included in your
salary package, however excessive overtime is to be credited as time in
lieu to be taken as mutually agreed.
You may be required to work on Saturday or Sunday as required from time to
time by the Company.
(c) Rest periods and meal breaks may be taken at your discretion, of up to 1
hour per day.
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3. REMUNERATION
(a) Total package is $68,000 __________ per annum.
(i) Your base salary is $________ per annum.
Your base salary will be reviewed annually.
(b) Expenses - Expenses incurred by yourself while performing our business
shall be reimbursed according to the Company Expenses Policy.
(c) Medical Insurance - You are invited to take advantage of the Companies
Southern Cross Group Scheme.
4. PAYMENT OF REMUNERATION
(a) Your base salary shall be paid monthly on the 15th of each month or the
following Monday thereafter, such payment being made in advance up to and
inclusive of the end of the month. Such payment shall be made by direct
credit to the bank of your choice.
(b) No deduction shall be made from your salary without your consent, except
for time lost through sickness or default or accident to yourself, unless
required by law.
(c) The Company will provide you with a statement of your earnings and
deductions for a pay period at your request or where there is any change to
your salary payments.
5. STATUTORY HOLIDAYS
(a) Public holidays shall be granted and observed in accordance with the
provisions of the Holidays Act 1981.
(b) Any time worked on a statutory holiday that has been authorised by your
manager shall be taken in lieu on a day that is mutually agreed upon and
credited to your annual holiday accumulation.
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6. ANNUAL HOLDAYS
(a) Annual holidays are provided in accordance with the provisions of the
Holidays Act 1981 and its amendments.
(b) You shall be entitled to an annual holiday of 4 weeks. Where your
employment is terminated (as specified in Clause 14) at the end of a period
of employment which is less than one year, the Company shall pay you an
amount equal to 6% of your gross taxable earnings, minus any holiday pay
you have already received. Requests for annual leave must be submitted for
approval at least 30 days in advance.
7. SICK LEAVE AND DOMESTIC LEAVE
(a) You shall be entitled to sick pay of 7 days for the following 12 month
period and for each subsequent year of service thereafter.
Sick pay shall be accumulative to up to 21 days.
(b) The company may, at its discretion, require you to provide a medical
certificate for any sick leave or domestic leave absence. You shall be
required to provide a medical certificate where you are absent for more
than 2 days for sick leave or domestic leave absence.
(c) You shall ensure notice is given to us that you are sick or taking domestic
leave, not later than one hour prior to your normal commencing time and you
shall notify us as soon as possible when a return to work is likely.
(d) The Company shall also have the right to require you to produce
additionally, a medical certificate at our expense, from a doctor nominated
by ourselves.
(e) Domestic Leave - Where you have any unused sick leave entitlement, leave of
up to 7 days per year shall be granted where you find it essential to stay
at home in an emergency in the event of illness of a dependant child or
spouse's illness or dependant parent or maternity confinement. Such leave
shall be treated as though it was due to your own sickness and this shall
be set off against your own sick leave entitlement.
(f) Sick leave and domestic leave will not be paid on a day on which a holiday
is being observed.
(g) Your manager may at their discretion grant additional sick leave or
domestic leave with/without pay where special circumstances exist.
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<PAGE>
8. BEREAVEMENT LEAVE
(a) In the event of the death of any of your immediate family, ie your spouse
or defacto partner, child, stepchild, parent, brother, sister,
mother-in-law, father-in-law, brother-in-law, sister-in-law, grandparent,
or grandchild, the Company shall allow paid leave up to a maximum period of
3 days on each occasion. The Company may, at our discretion, ask you for
confirmation of the bereavement.
(b) The company may at its discretion, grant additional leave without pay where
the Company consider special circumstances exist.
9. SPECIAL HOLIDAYS CLAUSE
Note that the entitlements in Clauses 7 and 8 are inclusive of and not in
addition to the entitlements for Special Leave provided in Section 30 (A) of the
Holidays Act 1981 and amendments.
10. UNPAID LEAVE
Where you need to be away from work for personal reasons the company may grant
limited time off work without pay. Such leave must be authorised by the company
in advance. Please make a request for such leave as far ahead of the intended
date as possible and talk to your manager regarding the circumstances for the
leave. Such approved leave must be recorded on an official leave application
form.
11. PARENTAL LEAVE
Parental Leave shall be granted in accordance with the provisions of the
Parental Leave and Employment Protection Act 1987 and its amendments.
12. JURY SERVICE
(a) Where you are obliged to undertake jury service, the difference between the
fees (excluding reimbursing payments) paid by the Court and your salary
shall be made up by ourselves provided:
(i) That you produce the Court expenses voucher to us.
(ii) That you return to work immediately on any day that you are not
actually serving on a jury.
(b) These payments shall be made for up to a maximum of 5 days in respect of
each separate period of jury service.
(c) You must advise us on the first normal work day after notification of jury
service is received.
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13. TUITION LEAVE
(a) Where, with the Company's prior written approval, you attend any
job-related course during working hours, you shall be allowed paid time off
Where you pass all the necessary requirements and complete the course, the
company may reimburse you for half the cost of tuition and examination
fees.
(b) Where you initiate and take tuition leave at your own request and where you
terminate your own employment within 12 months of having the tuition fees
or examination fees paid on your behalf, you shall reimburse the Company
for fees outlaid on a pro rata basis.
14. TERMINATION OF EMPLOYMENT
(a) Notification - Employment may be terminated with 1 months notice by the
employee. If PTL terminates employment for any reason other than serious
misconduct or serious breach of contract or employment engagement by
another company within the Brocker Group, the salary obligations of PTL
shall continue for the full term of the contract.
(b) Deductions -
(i) Where company issued gear or property is lost, or in our opinion
wilfully damaged it will be treated as a default by yourself and the
Company shall have the right to recover from you the cost of repairing
or replacing any such items.
(ii) Where employment is terminated by either party and the effective last
day of duty is prior to the normal pay period end date, the Company
shall be entitled to deduct or recover such salary paid in advance.
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15. RESTRAINT OF TRADE
(a) In order to protect the employer's proprietary interests, for twelve months
after the termination of this contract you shall not engage to work for or
on behalf of an organisation in direct competition with this Company, nor
establish your own business in competition with this Company. Nor shall you
solicit in competition with the Company the custom of any person who has at
any time during the period of your employment by the Company been a
customer of the Company or who will become a customer of the Company as a
result of any tender, negotiations, arrangements or proceedings made or
taking place at the date of such termination.
(b) Consideration for this restraint is included in the remuneration package
provided in clause 3 of this contract.
(c) It is acknowledged that in view of your position with the Company and your
direct association with the customers of the Company during your
employment, the restraint provided for in subclause (a) is fair and
reasonable and does not inhibit your ability to earn a reasonable living.
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<PAGE>
16. PERSONAL GRIEVANCE/DISPUTES
The Company consider it desirable that any dispute over the interpretation
application or operation of this contract or any grievance of any employee be
resolved as quickly as possible at the place of work between ourselves.
Personal grievances and disputes shall be as defined under the Employment
Contracts Act 1991. Personal Grievance procedures shall be in accordance with
the First Schedule of the Employment Contracts Act 1991. Disputes procedures
shall be in accordance with the Second Schedule of the Employment Contracts Act
1991.
17. VARIATIONS
Any of the terms and conditions contained in this contract may be varied by
mutual agreement.
18. OTHER PROVISIONS
(a) I agree to abide by all Company Policies as may from time to time be in
operation.
(b) I agree to work a reasonable number of hours in excess of my weekly hours
as may be required by the Company.
(c) I agree, in the event of termination of my employment to the deduction from
my final pay for any unreturned company property, or other debt owing to
the company, whatsoever it may be.
(d) I agree, during the period of my employment or at any time thereafter, not
to disclose to any unauthorised person or company, or otherwise make use
of, any confidential or secret information related to or obtained as a
result of my employment with the Company including, without limiting the
generality of processes, customer lists, formulae, designs, new products,
finances or relating to know-how, inventions, improvements or other matters
connected with the products or services manufactured, marketed, provided or
obtained by the Company.
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19. DECLARATION
I (full name) Evan James Read declare that I have read and understand the
conditions of employment detailed above and accept them fully. I further declare
that I have read (or had explained to me to my satisfaction) the House Rules and
accept them.
Signed: /s/ Evan James Read Date: 1/4/97
---------------------
Signed: /s/ [ILLEGIBLE] Date: 1/4/97
---------------------
FOR AND ON BEHALF OF
POWERCALL TECHNOLOGIES LIMITED
Enclosed: Job Description
House Rules
E-669
<PAGE>
POWERCALL TECHNOLOGIES LTD
HOUSE RULES
Serious Misconduct - It is important to each one of us that we read and
understand these Company House Rules because instant dismissal usually occurs
when an individual breaches one of the following fundamental and important
rules:
ITEMS THAT CAN CONSTITUTE SERIOUS MISCONDUCT FOR WHICH THE PENALTY IS INSTANT
DISMISSAL INCLUDE BUT ARE NOT LIMITED TO:
a) Unauthorised possession and/or movement of company, client or other
employees property. This includes the taking of any company equipment, data
or information off company property.
b) Fighting with another employee, customer, or client on company premises or
when attending company functions.
c) Falsification or being a party to falsification of any company or client
document or record. This includes time/wage/accident/expense/leave records
etc.
d) Failure to follow cash handling procedures, and/or negligence or
carelessness when handling cash/cheques etc.
e) Unauthorised use of company/client equipment or vehicles.
f) Refusal to attend doctor nominated by your employer.
g) Disclosure of confidential information; including making unauthorised
statements to the media, or at public meetings which effect or pertain to
the company, customer or client.
h) Failure to follow safety requirements.
i) Irresponsible use of fire protection or safety equipment.
j) Holding any interview, directly or indirectly, in a business outside of
Brocker's that conflicts in any way with Brocker's operations.
k) Wilful, deliberate or negligent acts which cause injury or damage, or
adversely effects quality or productivity.
l) Wilful damage to property/equipment/product.
m) Refusal to obey lawful and reasonable instruction
n) Proven sexual harassment or intimidation of another employee, customer or
client.
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<PAGE>
o) Consuming alcohol on company or client property, unless with management's
consent.
p) Bring drugs (except as prescribed by own doctor) or consuming drugs on
company or client property.
ITEMS THAT CAN CONSTITUTE LESS SERIOUS MISCONDUCT FOR WHICH THE PENALTY IS A
WARNING, INCLUDE BUT ARE NOT LIMITED TO:
a) Failure to perform work to required standard.
b) Failure to follow product handling procedure.
c) Unauthorised absence.
d) Boisterous, disruptive or irresponsible behaviour.
e) Reporting for work in such a condition that duties are unable to be
performed properly or safely.
f) Failure to report any accident or personal injury occurring at work, no
matter how minor the incident.
g) Poor time keeping, including arriving late for work, or from lunch and/or
tea breaks.
h) Careless or indifferent performance of duties.
i) Being discourteous to other employees, customers or clients.
j) Aggressive/argumentative behaviour.
k) Using abusive language which may cause offence to another person, while at
the company's place of work.
l) Leaving assigned place of work without permission.
m) Failing to be at assigned place of work during working hours without the
permission of management.
I, (full name) Evan James Read declare that I have read and understand the House
Rules detailed above, and accept them fully.
Signed: /s/ Evan James Read Date: 1/4/97
---------------------
[INITIALED]
E-671
April 1997
POWERCALL TECHNOLOGIES LIMITED
SALARIED EMPLOYMENT CONTRACT
NAME: Greg Hunt
POSITION: Sales and Marketing Manager
RESPONSIBLE TO: General Manager
LOCATED AT: [ILLEGIBLE]
E-672
<PAGE>
POWERCALL TECHNOLOGIES LIMITED
SALARIED EMPLOYMENT CONTRACT
BETWEEN: POWERCALL TECHNOLOGIES LIMITED
AND Gregory Hunt
COMMENCEMENT
OF EMPLOYMENT: 1/4/97
The terms and conditions contained herein supersede and replace any terms and
conditions of employment that may have applied prior to the coming into force of
this contract.
This contract expires on the 31st March 2002.
1. DUTIES/RESPONSIBILITIES
A copy of your job description as attached outlines your duties and
responsibilities of your position. Because of the changing nature of the
business, other duties will be included as agreed between the parties from time
to time. It is expected that those duties will be performed in accordance with
the instructions of the Company and that you will devote all of your normal
working hours and best endeavour to performing these duties outlined in a manner
which will promote the interest of the company.
2. HOURS OF WORK
(a) Your hours of work are a minimum of 40 per week to be worked on 5 days of
the week Monday to Friday inclusive, between the hours of 8 am to 5.30 pm.
Your hours of work and any conditions relating to them may be varied by
mutual agreement.
(b) The Company may require you to work more than 40 hours per week to fulfil
the responsibilities of your position. Payment for such time worked in
excess of the weekly hours have been included in your salary package.
You may be required to work on Saturday or Sunday as required from time to
time by the Company.
(c) Rest periods and meal breaks may be taken at your discretion, of up to 1
hour per day.
E-673
<PAGE>
3. REMUNERATION
(a) Total package is $68,000 per annum.
(i) Your base salary is $68,000 per annum.
Your base salary will be reviewed annually.
(b) Expenses - Expenses incurred by yourself while performing our business
shall be reimbursed according to the Company Expenses Policy.
(c) Medical Insurance - You are invited to take advantage of the Companies
Southern Cross Group Scheme.
4. PAYMENT OF REMUNERATION
(a) Your base salary shall be paid monthly on the 15th of each month or the
following Monday thereafter, such payment being made in advance up to and
inclusive of the end of the month. Such payment shall be made by direct
credit to the bank of your choice.
(b) No deduction shall be made from your salary without your consent, except
for time lost through sickness or default or accident to yourself, unless
required by law.
(c) The Company will provide you with a statement of your earnings and
deductions for a pay period at your request or where there is any change to
your salary payments.
5. STATUTORY HOLIDAYS
(a) Public holidays shall be granted and observed in accordance with the
provisions of the Holidays Act 1981.
(b) Any time worked on a statutory holiday that has been authorised by
your manager shall be taken in lieu on a day that is mutually agreed
upon and credited to your annual holiday accumulation.
6. ANNUAL HOLIDAYS
(a) Annual holidays are provided in accordance with the provisions of the
Holidays Act 1981 and its amendments.
(b) You shall be entitled to an annual holiday of 4 weeks. Where your
employment is terminated (as specified in Clause 14) at the end of a period
of employment which is less than one year, the Company shall pay you an
amount equal to 6% of your gross taxable earnings, minus any holiday
E-674
<PAGE>
pay you have already received. Requests for annual leave must be submitted
for approval at least 30 days in advance.
7. SICK LEAVE AND DOMESTIC LEAVE
(a) After completing 6 months current continuous service you shall be entitled
to sick pay of 7 days for the following 12 month period and for each
subsequent year of service thereafter.
Sick pay shall be accumulative to up to 21 days.
(b) The company may, at its discretion, require you to provide a medical
certificate for any sick leave or domestic leave absence. You shall be
required to provide a medical certificate where you are absent for more
than 2 days for sick leave or domestic leave absence.
(c) You shall ensure notice is given to us that you are sick or taking domestic
leave, not later than one hour prior to your normal commencing time and you
shall notify us as soon as possible when a return to work is likely.
(d) The Company shall also have the right to require you to produce
additionally, a medical certificate at our expense, from a doctor nominated
by ourselves.
(e) Domestic Leave - Where you have any unused sick leave entitlement, leave of
up to 7 days per year shall be granted where you find it essential to stay
at home in an emergency in the event of illness of a dependant child or
spouse's illness or dependant parent or maternity confinement. Such leave
shall be treated as though it was due to your own sickness and this shall
be set off against your own sick leave entitlement.
(f) Sick leave and domestic leave will not be paid on a day on which a holiday
is being observed.
(g) Your manager may at their discretion grant additional sick leave or
domestic leave with/without pay where special circumstances exist.
E-675
<PAGE>
8. BEREAVEMENT LEAVE
(a) In the event of the death of any of your immediate family, ie your spouse
or defacto partner, child, stepchild, parent, brother, sister,
mother-in-law, father-in-law, brother-in-law, sister-in-law, grandparent,
or grandchild, the Company shall allow paid leave up to a maximum period of
3 days on each occasion. The Company may, at our discretion, ask you for
confirmation of the bereavement.
(b) The company may at its discretion, grant additional leave without pay where
the Company consider special circumstances exist.
9. SPECIAL HOLIDAYS CLAUSE
Note that the entitlements in Clauses 7 and 8 are inclusive of and not in
addition to the entitlements for Special Leave provided in Section 30 (A) of the
Holidays Act 1981 and amendments.
10. UNPAID LEAVE
Where you need to be away from work for personal reasons the company may grant
limited time off work without pay. Such leave must be authorised by the company
in advance. Please make a request for such leave as far ahead of the intended
date as possible and talk to your manager regarding the circumstances for the
leave. Such approved leave must be recorded on an official leave application
form.
11. PARENTAL LEAVE
Parental Leave shall be granted in accordance with the provisions of the
Parental Leave and Employment Protection Act 1987 and its amendments.
E-676
<PAGE>
12. JURY SERVICE
(a) Where you are obliged to undertake jury service, the difference between the
fees (excluding reimbursing payments) paid by the Court and your salary
shall be made up by ourselves provided:
(i) That you produce the Court expenses voucher to us.
(ii) That you return to work immediately on any day that you are not
actually serving on a jury.
(b) These payments shall be made for up to a maximum of 5 days in respect of
each separate period of jury service.
(c) You must advise us on the first normal work day after notification of jury
service is received.
13. TUITION LEAVE
(a) Where, with the Company's prior written approval, you attend any
job-related course during working hours, you shall be allowed paid time
off. Where you pass all the necessary requirements and complete the course,
the company may reimburse you for half the cost of tuition and examination
fees.
(b) Where you initiate and take tuition leave at your own request and where you
terminate your own employment within 12 months of having the tuition fees
or examination fees paid on your behalf, you shall reimburse the Company
for fees outlaid on a pro rata basis.
E-677
<PAGE>
14. TERMINATION OF EMPLOYMENT
(a) Notification - Employment may be terminated with 1 months notice by the
employee. If PTL terminates employment for any reason other than serious
misconduct or serious breach of contract or employment engagement by
another company within the Brocker Group, the salary obligations of BK1
shall continue for the full term of the contract.
(b) Deductions -
(i) Where company issued gear or property is lost, or in our opinion
wilfully damaged it will be treated as a default by yourself and the
Company shall have the right to recover from you the cost of repairing
or replacing any such items.
(ii) Where employment is terminated by either party and the effective last
day of duty is prior to the normal pay period end date, the Company
shall be entitled to deduct or recover such salary paid in advance.
15. RESTRAINT OF TRADE
(a) In order to protect the employer's proprietary interests, for twelve months
after the termination of this contract you shall not engage to work for or
on behalf of an organisation in direct competition with this Company, nor
establish your own business in competition with this Company. Nor shall you
solicit in competition with the Company the custom of any person who has at
any time during the period of your employment by the Company been a
customer of the Company or who will become a customer of the Company as a
result of any tender, negotiations, arrangements or proceedings made or
taking place at the date of such termination.
(b) Consideration for this restraint is included in the remuneration package
provided in clause 3 of this contract.
(c) It is acknowledged that in view of your position with the Company and your
direct association with the customers of the Company during your
employment, the restraint provided for in subclause (a) is fair and
reasonable and does not inhibit your ability to earn a reasonable living.
E-678
<PAGE>
16. PERSONAL GRIEVANCE/DISPUTES
The Company consider it desirable that any dispute over the interpretation
application or operation of this contract or any grievance of any employee
be resolved as quickly as possible at the place of work between ourselves.
Personal grievances and disputes shall be as defined under the Employment
Contracts Act 1991. Personal Grievance procedures shall be in accordance
with the First Schedule of the Employment Contracts Act 1991. Disputes
procedures shall be in accordance with the Second Schedule of the
Employment Contracts Act 1991.
17. VARIATIONS
Any of the terms and conditions contained in this contract may be varied by
mutual agreement.
18. OTHER PROVISIONS
(a) I agree to abide by all Company Policies as may from time to time be in
operation.
(b) I agree to work a reasonable number of hours in excess of my weekly hours
as may be required by the Company.
(c) I agree, in the event of termination of my employment to the deduction from
my final pay for any unreturned company property, or other debt owing to
the company, whatsoever it may be.
(d) I agree, during the period of my employment or at any time thereafter, not
to disclose to any unauthorised person or company, or otherwise make use
of, any confidential or secret information related to or obtained as a
result of my employment with the Company including, without limiting the
generality of processes, customer lists, formulae, designs, new products,
finances or relating to know-how, inventions, improvements or other matters
connected with the products or services manufactured, marketed, provided or
obtained by the Company.
E-679
<PAGE>
19. DECLARATION
I (full name) Gregory [ILLEGIBLE] Hunt declare that I have read and
understand the conditions of employment detailed above and accept them
fully. I further declare that I have read (or had explained to me to my
satisfaction) the House Rules and accept them.
Signed: /s/ Gregory [ILLEGIBLE] Hunt Date: 10/5/97
------------------------------
Signed: /s/[ILLEGIBLE] Date: 10/5/97
-----------------------------
FOR AND ON BEHALF OF
POWERCALL TECHNOLOGIES LIMITED
Enclosed: Job Description
House Rules
E-680
<PAGE>
POWERCALL TECHNOLOGIES LTD
HOUSE RULES
Serious Misconduct - It is important to each one of us that we read and
understand these Company House Rules because instant dismissal usually occurs
when an individual breaches one of the following fundamental and important
rules:
ITEMS THAT CAN CONSTITUTE SERIOUS MISCONDUCT FOR WHICH THE PENALTY IS INSTANT
DISMISSAL INCLUDE BUT ARE NOT LIMITED TO:
a) Unauthorised possession and/or movement of company, client or other
employees property. This includes the taking of any company equipment, data
or information off company property.
b) Fighting and/or verbal abuse of another employee, customer, or client on
company premises or when attending company functions.
c) Falsification or being a party to falsification of any company or client
document or record. This includes time/wage/accident/expense/leave records
etc.
d) Failure to follow cash handling procedures, and/or negligence or
carelessness when handling cash/cheques etc.
e) Unauthorised use of company/client equipment or vehicles.
f) Refusal to attend doctor nominated by your employer.
g) Disclosure of confidential information; including making unauthorised
statements to the media, or at public meetings which effect or pertain to
the company, customer or client.
h) Failure to follow safety requirements.
i) Irresponsible use of fire protection or safety equipment.
j) Holding any interview, directly or indirectly, in a business outside of
Brocker's that conflicts in any way with Brocker's operations.
k) Wilful, deliberate or negligent acts which cause injury or damage, or
adversely effects quality or productivity.
l) Wilful damage to property/equipment/product.
m) Refusal to obey lawful and reasonable instruction
n) Sexual harassment or intimidation of another employee, customer or client.
E-681
<PAGE>
o) Consuming alcohol on company or client property, unless with management's
consent.
p) Bring drugs (except as prescribed by own doctor) or consuming drugs on
company or client property.
ITEMS THAT CAN CONSTITUTE LESS SERIOUS MISCONDUCT FOR WHICH THE PENALTY IS A
WARNING, INCLUDE BUT ARE NOT LIMITED TO:
a) Failure to perform work to required standard.
b) Failure to follow product handling procedure.
c) Unauthorised absence.
d) BOISTEROUS, DISRUPTIVE OR IRRESPONSIBLE BEHAVIOUR.
e) Reporting for work in such a condition that duties are unable to be
performed properly or safely.
f) Failure to report any accident or personal injury occurring at work, no
matter how minor the incident.
g) Poor time keeping, including arriving late for work, or from lunch and/or
tea breaks.
h) Careless or indifferent performance of duties.
i) Being discourteous to other employees, customers or clients.
j) AGGRESSIVE/ARGUMENTATIVE BEHAVIOUR.
k) USING ABUSIVE LANGUAGE WHICH MAY CAUSE OFFENCE TO ANOTHER PERSON, WHILE AT
THE COMPANY'S PLACE OF WORK.
l) Leaving assigned place of work without permission.
m) Failing to be at assigned place of work during working hours without the
permission of management.
I, (full name) ___________________________ declare that I have read and
understand the House Rules detailed above, and accept them fully.
Signed: ___________________________ Date:__________
E-682
April 1997
POWERCALL TECHNOLOGIES LIMITED
SALARIED EMPLOYMENT CONTRACT
NAME: Michael Gerard Duncraft
POSITION: Operations Manager
RESPONSIBLE TO: General Manager
LOCATED AT: Dundonald St Newton
[INITIALED]
E-683
<PAGE>
POWERCALL TECHNOLOGIES LIMITED
SALARIED EMPLOYMENT CONTRACT
BETWEEN: POWERCALL TECHNOLOGIES LIMITED
AND Mike Duncraft
COMMENCEMENT
OF EMPLOYMENT: 1/4/97
The terms and conditions contained herein supersede and replace any terms and
conditions of employment that may have applied prior to the coming into force of
this contract.
This contract expires on the 31st March 2002.
1. DUTIES/RESPONSIBILITIES
A copy of your job description as attached outlines your duties and
responsibilities of your position. Because of the changing nature of the
business, other duties will be included as agreed between the parties from time
to time. It is expected that those duties will be performed in accordance with
the instructions of the Company and that you will devote all of your normal
working hours and best endeavour to performing these duties outlined in a manner
which will promote the interest of the company.
2. HOURS OF WORK
(a) Your hours of work are a minimum of 40 per week to be worked on 5 days of
the week Monday to Friday inclusive, between the hours of 8 am to 5.30 pm.
Your hours of work and any conditions relating to them may be varied by
mutual agreement.
(b) The Company may require you to work more than 40 hours per week to fulfil
the responsibilities of your position. Payment for such time worked in
excess of the weekly hours have been included in your salary package.
You may be required to work on Saturday or Sunday as required from time to
time by the Company.
(c) Rest periods and meal breaks may be taken at your discretion, of up to 1
hour per day.
[INITIALED]
E-684
<PAGE>
3. REMUNERATION
(a) Total package is $68,000 __________ per annum.
Your total package will be reviewed annually.
(b) Expenses - Expenses incurred by yourself while performing our business
shall be reimbursed according to the Company Expenses Policy.
(c) Medical Insurance - You are invited to take advantage of the Companies
Southern Cross Group Scheme.
4. PAYMENT OF REMUNERATION
(a) Your base salary shall be paid monthly on the 15th of each month or the
following Monday thereafter, such payment being made in advance up to and
inclusive of the end of the month. Such payment shall be made by direct
credit to the bank of your choice.
(b) No deduction shall be made from your salary without your consent, except
for time lost through sickness or default or accident to yourself, unless
required by law.
(c) The Company will provide you with a statement of your earnings and
deductions for a pay period at your request or where there is any change to
your salary payments.
5. STATUTORY HOLIDAYS
(a) Public holidays shall be granted and observed in accordance with the
provisions of the Holidays Act 1981.
(b) Any time worked on a statutory holiday that has been authorised by
your manager shall be taken in lieu on a day that is mutually agreed
upon and credited to your annual holiday accumulation.
[INITIALED]
E-685
<PAGE>
6. ANNUAL HOLIDAYS
(a) Annual holidays are provided in accordance with the provisions of the
Holidays Act 1981 and its amendments.
(b) You shall be entitled to an annual holiday of 4 weeks. Where your
employment is terminated (as specified in Clause 14) at the end of a period
of employment which is less than one year, the Company shall pay you an
amount equal to 6% of your gross taxable earnings, minus any holiday pay
you have already received. Requests for annual leave must be submitted for
approval at least 30 days in advance.
7. SICK LEAVE AND DOMESTIC LEAVE
(a) You shall be entitled to sick pay of 7 days for the following 12 month
period and for each subsequent year of service thereafter.
Sick pay shall be accumulative to up to 21 days.
(b) The company may, at its discretion, require you to provide a medical
certificate for any sick leave or domestic leave absence. You shall be
required to provide a medical certificate where you are absent for more
than 2 days for sick leave or domestic leave absence.
(c) You shall ensure notice is given to us that you are sick or taking domestic
leave, not later than one hour prior to your normal commencing time and you
shall notify us as soon as possible when a return to work is likely.
(d) The Company shall also have the right to require you to produce
additionally, a medical certificate at our expense, from a doctor nominated
by ourselves.
(e) Domestic Leave - Where you have any unused sick leave entitlement, leave of
up to 7 days per year shall be granted where you find it essential to stay
at home in an emergency in the event of illness of a dependant child or
spouse's illness or dependant parent or maternity confinement. Such leave
shall be treated as though it was due to your own sickness and this shall
be set off against your own sick leave entitlement.
(f) Sick leave and domestic leave will not be paid on a day on which a holiday
is being observed.
(g) Your manager may at their discretion grant additional sick leave or
domestic leave with/without pay where special circumstances exist.
[INITIALED]
E-686
<PAGE>
8. BEREAVEMENT LEAVE
(a) In the event of the death of any of your immediate family, ie your spouse
or defacto partner, child, stepchild, parent, brother, sister,
mother-in-law, father-in-law, brother-in-law, sister-in-law, grandparent,
or grandchild, the Company shall allow paid leave up to a maximum period of
3 days on each occasion. The Company may, at our discretion, ask you for
confirmation of the bereavement.
(b) The company may at its discretion, grant additional leave without pay where
the Company consider special circumstances exist.
9. SPECIAL HOLIDAYS CLAUSE
Note that the entitlements in Clauses 7 and 8 are inclusive of and not in
addition to the entitlements for Special Leave provided in Section 30 (A) of the
Holidays Act 1981 and amendments.
10. UNPAID LEAVE
Where you need to be away from work for personal reasons the company may grant
limited time off work without pay. Such leave must be authorised by the company
in advance. Please make a request for such leave as far ahead of the intended
date as possible and talk to your manager regarding the circumstances for the
leave. Such approved leave must be recorded on an official leave application
form.
11. PARENTAL LEAVE
Parental Leave shall be granted in accordance with the provisions of the
Parental Leave and Employment Protection Act 1987 and its amendments.
12. JURY SERVICE
(a) Where you are obliged to undertake jury service, the difference between the
fees (excluding reimbursing payments) paid by the Court and your salary
shall be made up by ourselves provided:
(i) That you produce the Court expenses voucher to us.
(ii) That you return to work immediately on any day that you are not
actually serving on a jury.
(b) These payments shall be made for up to a maximum of 5 days in respect of
each separate period of jury service.
(c) You must advise us on the first normal work day after notification of jury
service is received.
[INITIALED]
E-687
<PAGE>
13. TUITION LEAVE
(a) Where, with the Company's prior written approval, you attend any
job-related course during working hours, you shall be allowed paid time
off. Where you pass all the necessary requirements and complete the course,
the company may reimburse you for half the cost of tuition and examination
fees.
(b) Where you initiate and take tuition leave at your own request and where you
terminate your own employment within 12 months of having the tuition fees
or examination fees paid on your behalf, you shall reimburse the Company
for fees outlaid on a pro rata basis.
14. TERMINATION OF EMPLOYMENT
(a) Notification - Employment may be terminated with 1 months notice by the
employee. If PTL terminates employment for any reason other than serious
misconduct or serious breach of contract or employment engagement by
another company within the Brocker Group, the salary obligations of PTL
shall continue for the full term of the contract.
(b) Deductions -
(i) Where company issued gear or property is lost, or in our opinion
wilfully damaged it will be treated as a default by yourself and the
Company shall have the right to recover from you the cost of repairing
or replacing any such items.
(ii) Where employment is terminated by either party and the effective last
day of duty is prior to the normal pay period end date, the Company
shall be entitled to deduct or recover such salary paid in advance.
[INITIALED]
E-688
<PAGE>
15. RESTRAINT OF TRADE
(a) In order to protect the employer's proprietary interests, for twelve months
after the termination of this contract you shall not engage to work for or
on behalf of an organisation in direct competition with this Company, nor
establish your own business in competition with this Company. Nor shall you
solicit in competition with the Company the custom of any person who has at
any time during the period of your employment by the Company been a
customer of the Company or who will become a customer of the Company as a
result of any tender, negotiations, arrangements or proceedings made or
taking place at the date of such termination.
(b) Consideration for this restraint is included in the remuneration package
provided in clause 3 of this contract.
(c) It is acknowledged that in view of your position with the Company and your
direct association with the customers of the Company during your
employment, the restraint provided for in subclause (a) is fair and
reasonable and does not inhibit your ability to earn a reasonable living.
[INITIALED]
E-689
<PAGE>
16. PERSONAL GRIEVANCE/DISPUTES
The Company consider it desirable that any dispute over the interpretation
application or operation of this contract or any grievance of any employee
be resolved as quickly as possible at the place of work between ourselves.
Personal grievances and disputes shall be as defined under the Employment
Contracts Act 1991. Personal Grievance procedures shall be in accordance
with the First Schedule of the Employment Contracts Act 1991. Disputes
procedures shall be in accordance with the Second Schedule of the
Employment Contracts Act 1991.
17. VARIATIONS
Any of the terms and conditions contained in this contract may be varied by
mutual agreement.
18. OTHER PROVISIONS
(a) I agree to abide by all Company Policies as may from time to time be in
operation.
(b) I agree to work a reasonable number of hours in excess of my weekly hours
as may be required by the Company.
(c) I agree, in the event of termination of my employment to the deduction from
my final pay for any unreturned company property, or other debt owing to
the company, whatsoever it may be.
(d) I agree, during the period of my employment or at any time thereafter, not
to disclose to any unauthorised person or company, or otherwise make use
of, any confidential or secret information related to or obtained as a
result of my employment with the Company including, without limiting the
generality of processes, customer lists, formulae, designs, new products,
finances or relating to know-how, inventions, improvements or other matters
connected with the products or services manufactured, marketed, provided or
obtained by the Company.
[INITIALED]
E-690
<PAGE>
19. DECLARATION
I (full name) Michael Gerard Duncraft declare that I have read and understand
the conditions of employment detailed above and accept them fully. I further
declare that I have read (or had explained to me to my satisfaction) the House
Rules and accept them.
Signed: /s/ Michael Gerard Duncraft Date: 1/4/97
-----------------------------
Signed: /s/[ILLEGIBLE] Date: 1/4/97
-----------------------------
FOR AND ON BEHALF OF
POWERCALL TECHNOLOGIES LIMITED
Enclosed: Job Description
House Rules
E-691
<PAGE>
POWERCALL TECHNOLOGIES LTD
HOUSE RULES
Serious Misconduct - It is important to each one of us that we read and
understand these Company House Rules because instant dismissal usually occurs
when an individual breaches one of the following fundamental and important
rules:
ITEMS THAT CAN CONSTITUTE SERIOUS MISCONDUCT FOR WHICH THE PENALTY IS INSTANT
DISMISSAL INCLUDE BUT ARE NOT LIMiTED TO:
a) Unauthorised possession and/or movement of company, client or other
employees property. This includes the taking of any company equipment, data
or information off company property.
b) Fighting with another employee, customer, or client on company premises or
when attending company functions.
c) Falsification or being a party to falsification of any company or client
document or record. This includes time/wage/accident/expense/leave records
etc.
d) Failure to follow cash handling procedures, and/or negligence or
carelessness when handling cash/cheques etc.
e) Unauthorised use of company/client equipment or vehicles.
f) Refusal to attend doctor nominated by your employer.
g) Disclosure of confidential information; including making unauthorised
statements to the media, or at public meetings which effect or pertain to
the company, customer or client.
h) Failure to follow safety requirements.
i) Irresponsible use of fire protection or safety equipment.
j) Holding any interview, directly or indirectly, in a business outside of
Brocker's that conflicts in any way with Brocker's operations.
k) Wilful, deliberate or negligent acts which cause injury or damage, or
adversely effects quality or productivity.
l) Wilful damage to property/equipment/product.
m) Refusal to obey lawful and reasonable instruction
n) Proven sexual harassment or intimidation of another employee, customer or
client.
[INITIALED]
E-692
<PAGE>
o) Consuming alcohol on company or client property, unless with management's
consent.
p) Bring drugs (except as prescribed by own doctor) or consuming drugs on
company or client property.
ITEMS THAT CAN CONSTITUTE LESS SERIOUS MISCONDUCT FOR WHICH THE PENALTY IS A
WARNING, INCLUDE BUT ARE NOT LIMITED TO:
a) Failure to perform work to required standard.
b) Failure to follow product handling procedure.
c) Unauthorised absence.
d) Boisterous, disruptive or irresponsible behaviour.
e) Reporting for work in such a condition that duties are unable to be
performed properly or safely.
f) Failure to report any accident or personal injury occurring at work, no
matter how minor the incident.
g) Poor time keeping, including arriving late for work, or from lunch and/or
tea breaks.
h) Careless or indifferent performance of duties.
i) Being discourteous to other employees, customers or clients.
j) Aggressive/argumentative behaviour.
k) Using abusive language which may cause offence to another person, while at
the company's place of work.
l) Leaving assigned place of work without permission.
m) Failing to be at assigned place of work during working hours without the
permission of management.
I, (full name) Michael Gerard Duncraft declare that I have read and understand
the House Rules detailed above, and accept them fully.
Signed: /s/ Michael Gerard Duncraft Date: 1/4/97
--------------------------- ------
E-693
Easy PC Computer Rental Limited
A Brocker Investments Group Company
SALARIED EMPLOYMENT CONTRACT
NAME: Jon Hugh Barker
POSITION: General Manager
RESPONSIBLE TO: C.E.O
LOCATED AT: Gundry Street, Newton Auckland
[INITIALED]
E-694
<PAGE>
BETWEEN: Easy PC Computer Rentals Limited
AND Jon Hugh Barker
COMMENCEMENT
OF EMPLOYMENT: 1 July 1997
CONTRACT DATE: N/A
The terms and conditions contained herein supersede and replace any terms and
conditions of employment that may have applied prior to the coming into force of
this contract.
1. DUTIES/RESPONSIBILITIES
A copy of your job description as attached outlines your duties and
responsibilities of your position. Because of the changing nature of the
business, other duties will be included as agreed between the parties from time
to time. It is expected that those duties will be performed in accordance with
the instructions of the Company and that you will devote all of your normal
working hours and best endeavour to performing these duties outlined in a manner
which will promote the interest of the company.
2. HOURS OF WORK
2.1. Your hours of work are a minimum of 40 per week to be worked on
5 days of the week Monday to Friday inclusive, between the hours
of 8 am to 5.00 pm. Your hours of work and any conditions
relating to them may be varied by mutual agreement.
2.2. The Company may require you to work more than 40 hours per week
to fulfil the responsibilities of your position. Payment for
such time worked in excess of the weekly hours has been included
in your salary package.
You may be required to work on Saturday or Sunday as required from time
to time by the Company.
2.3. Rest periods and meal breaks may be taken at your discretion, of
up to 1 hour per day.
2.4. You are to attend all regular staff meetings and training
courses as advised of from time to time whether within or
outside working hours. The Company will reimburse your travel
and accommodation costs and course fees for training courses
undertaken outside of the Company.
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3. REMUNERATION
3.1. Total package is $115,000 OTE per annum.
3.1.1. Your base salary is $ 60,000 per annum.
3.1.2. Variable Component - Where you reach your budgeted
targets approved by the company, you will receive the
agreed commission on a monthly and/or quarterly basis.
(refer Section 5)
3.1.3. Company Motor Vehicle - You shall be provided with a
motor vehicle in accordance with the Company's Motor
Vehicle Policy. {with company fuel card provided.} or
3.1.4. Motor Vehicle Allowance - You shall be paid an annual
Motor Vehicle Allowance of $12,000 gross per annum {with
company fuel card provided.}
3.2. Expenses - Expenses incurred by you while performing our
business shall be reimbursed according to the Company Expenses
Policy.
4. PAYMENT OF REMUNERATION
4.1. Base salary will be paid monthly, direct into the bank account
of your choice.
4.2. Any variable component shall be paid by the 30th of the month
following the bonus period, or the following Wednesday
thereafter. Such payment shall be made by direct credit to the
bank of your choice.
4.3. The vehicle allowance shall be paid at the same time as the
salary payment, and paid by direct credit as above.
4.4. No deduction shall be made from your salary without your
consent, except for time lost through sickness or default or
accident to yourself, unless required by law or under clause
16.4.1.
4.5. The Company will provide you with a statement of your earnings
and deductions for a pay period at your request or where there
is any change to your salary payments.
4.6. The company reserves the right to change the paying of salaries
to be on the 15th of each month or the following Monday
thereafter, such payment being made in advance up to and
inclusive of the end of the month. Three months notice of this
change will be given.
5. BONUS
5.1. The bonus will be paid quarterly, no later than 30th of the
month after the end of the quarter. It will be paid direct to
the nominated bank account.
5.2. Format of the scheme
5.3. Subject to budget against performance measured at a net profit
level before taxation.
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6. APPRAISAL
6.1. An appraisal will be carried out at least annually, within one
month of the anniversary of starting.
7. STATUTORY HOLIDAYS
7.1. Public holidays shall be granted and observed in accordance with
the provisions of the Holidays Act 1981.
7.2. Any time worked on a statutory holiday that has been authorised
by your manager shall be taken in lieu on a day that is mutually
agreed upon or credited to your annual holiday accumulation.
8. ANNUAL HOLIDAYS
8.1. Annual holidays are provided in accordance with the provisions
of the Holidays Act 1981 and its amendments.
8.2. Holiday entitlements are calculated to 31st December each year.
If a full year has not been worked then entitlement is
calculated at 6% of the ordinary gross pay earned to date.
8.3. Where a full year has been worked, then three weeks holiday may
be taken.
8.4. Where your employment is terminated at the end of a period of
employment which is less than one year, the Company shall pay
you an amount equal to 6% of your gross taxable earnings, minus
any holiday pay you have already received.
8.5. Requests for annual leave must be submitted for approval at
least 30 days in advance.
8.6. All but one weeks leave is to be taken over the core holiday
time from one week prior to Christmas to the end of January
unless approved by the general manager.
8.7. Service Holiday - Where you have completed 5 years current
continuous service you shall become entitled to an annual
holiday of 4 weeks instead of the 3 weeks provided for above.
8.8. Long Service Leave - For every 10 years of continuous service
you have completed you shall become entitled to a special
holiday of two weeks.
9. SICK LEAVE AND DOMESTIC LEAVE
9.1. After completing 6 months current continuous service you shall
be entitled to sick pay of 7 days for the following 12 month
period and for each subsequent year of service thereafter.
9.2. Sick pay shall be accumulative to up to 21 days.
9.3. The company may, at its discretion, require you to provide a
medical certificate for any sick leave or domestic leave
absence. You shall be required to provide a medical certificate
where you
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are absent for more than 2 days for sick leave or domestic leave
absence.
9.4. You shall ensure notice is given to us that you are sick or
taking domestic leave, not later than one hour prior to your
normal commencing time and you shall notify us as soon as
possible when a return to work is likely.
9.5. The Company shall also have the right to require you to produce
additionally, a medical certificate at our expense, from a
doctor nominated by ourselves.
9.6. Domestic Leave - Where you have any unused sick leave
entitlement, leave of up to 7 days per year shall be granted
where you find it essential to stay at home in an emergency.
This will be available in the event of illness of your spouse, a
dependant child or parent, or maternity confinement. Such leave
shall be treated as though it was due to your own sickness and
this shall be set off against your own sick leave entitlement.
9.7. Sick leave and domestic leave will not be paid on a day on which
a holiday is being observed.
9.8. Your manager may at their discretion grant additional sick leave
or domestic leave with/without pay where special circumstances
exist.
10. BEREAVEMENT LEAVE
10.1. In the event of the death of any of your immediate family, i.e.
your spouse or defacto partner, child, stepchild, parent,
brother, sister, mother-in-law, father-in-law, brother-in-law,
sister-in-law, grandparent, or grandchild, the Company shall
allow paid leave up to a maximum period of 3 days on each
occasion. The Company may, at our discretion, ask you for
confirmation of the bereavement.
10.2. The company may at its discretion, grant additional leave
without pay where the Company considers special circumstances
exist.
11. SPECIAL HOLIDAYS CLAUSE
Note that the entitlements in Clauses 9 and 10 are inclusive of and not in
addition to the entitlements for Special Leave provided in Section 30 (A) of the
Holidays Act 1981 and amendments.
12. UNPAID LEAVE
Where you need to be away from work for personal reasons the company may grant
limited time off work without pay. Such leave must be authorised by the company
in advance. Please make a request for such leave as far ahead of the intended
date as possible and talk to your manager regarding
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the circumstances for the leave. Such approved leave must be recorded on an
official leave application form.
13. PARENTAL LEAVE
Parental Leave shall be granted in accordance with the provisions of the
Parental Leave and Employment Protection Act 1987 and its amendments.
14. JURY SERVICE
14.1. Where you are obliged to undertake jury service, the difference
between the fees (excluding reimbursing payments) paid by the
Court and your salary shall be made up by ourselves provided:
14.1.1. That you produce the Court expenses voucher to us.
14.1.2. That you return to work immediately on any day that you are not
actually serving on a jury.
14.2. These payments shall be made for up to a maximum of 5 days in
respect of each separate period of jury service.
14.3. You must advise us on the first normal workday after
notification of jury service is received.
15. TUITION LEAVE
15.1. Where, with the Company's prior written approval, you attend any
job-related course during working hours, you shall be allowed
paid time off.
15.2. Where you pass all the necessary requirements and complete the
course, the company may reimburse you for the cost of tuition
and examination fees.
15.3. Where you initiate and take tuition leave at your own request
and where you terminate your own employment within 12 months of
having the tuition fees or examination fees paid on your behalf
you shall reimburse the Company for fees paid on a pro rata
basis.
16. TERMINATION OF EMPLOYMENT
16.1. Notification - Employment may be terminated with 1 months notice
by either party or where the employment is terminated by either
party without notice 1 months pay shall be paid or forfeited in
lieu of notice.
This provision shall not prevent us from summarily terminating the employment in
the case of serious misconduct and/or serious breach of contract.
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16.2. For new employees, a three month trial period is incorporated
when required notice will be one week.
16.3. Where a person is unable to do their job due to sickness
employment may be terminated by due notice.
16.4. Deductions -
16.4.1. Where company issued gear or property is lost, or in our
opinion wilfully damaged it will be treated as a default
by yourself and the company shall have the right to
recover from you the cost of repairing or replacing any
such items.
16.4.2. Where employment is terminated by either party and the
effective last day of duty is prior to the normal pay
period end date, the company shall be entitled to deduct
or recover such salary paid in advance.
16.5. Redundancy-
16.5.1. In the event that your position becomes surplus to the
needs of the company, you shall be given notice of
termination in accordance with the provisions of clause
16.1.
16.5.2. Redundancy compensation shall be calculated on the basis
of four weeks pay for the first year of service with the
Company and two weeks pay for each subsequent year of
service. For the purposes of this clause, a week's pay
shall be 1/52 of your annual salary.
16.5.3. No redundancy compensation shall be payable in any
situation where the termination of your employment
arises as a result of the sale or transfer of the whole
or part of the Company's business if the person
acquiring the business or part being sold or transferred
has offered you employment in the business or part being
sold or transferred and the conditions of employment
offered to you by the person acquiring the business or
the part of the business being sold or transferred are
similar to, or more favourable than, those provided for
by this contract, or are otherwise acceptable to you.
17. WARNINGS
If not covered by the Summary Dismissal clause the procedure will be
1. Oral warning; 2. Written warning with two weeks minimum evaluation; 3. Final
Notice
18. SUMMARY DISMISSAL
18.1. The customer is the source of your employment and anything that
breaches the relationship between the customer and the company
is cause for instant dismissal.
18.2. Without precluding any other grounds the following will cause
instant dismissal: theft, sabotage, assault on a customer or
fellow worker, deception.
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19. RETIREMENT
The retirement age for all employees is 65. However the employer may continue to
offer employment beyond this age on a casual basis.
20. CONFIDENTIALITY
20.1. Any trade, professional or other like information of a
confidential nature gained by the employee during the course of
employment shall not without the specific authority of the
employer, be passed on to any person who would be in a position
to use such information to the detriment of the employer. Nor
must it be used for personal gain.
20.2. Any secrecy agreement entered into by the company with a third
party whether prior or after this contract, is binding on all
employees as though they had signed the agreement.
20.3. This clause (20 - CONFIDENTIALITY) is binding after the
termination of the employment contract.
21. OTHER EMPLOYMENT
Employees must not, without the written consent of the employer, undertake any
other paid employment that may conflict with the interests of the employer or
which may impair the ability of the employee to perform their expected
functions.
22. PERSONAL GRIEVANCE/DISPUTES
22.1. The Company consider it desirable that any dispute over the
interpretation, application or operation of this contract or any
grievance of any employee is resolved as quickly as possible, at
the place of work, between us.
22.2. Personal grievances and disputes shall be as defined under the
Employment Contracts Act 1991. Personal Grievance procedures
shall be in accordance with the First Schedule of the Employment
Contracts Act 1991. Disputes procedures shall be in accordance
with the Second Schedule of the Employment Contracts Act 1991.
23. VARIATIONS
Any of the terms and conditions contained in this contract may be varied by
mutual agreement.
24. OTHER PROVISIONS
24.1. I agree to abide by all Company Policies as may from time to
time be in operation.
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24.2. I agree to work a reasonable number of hours in excess of my
weekly hours as may be required by the Company.
24.3. I agree, in the event of termination of my employment to the
deduction from my final pay for any company property not
returned, or other debt owing to the company, whatsoever it may
be.
24.4. I agree, during the period of my employment or at any time
thereafter, not to disclose to any unauthorised person or
company, or otherwise make use of, any confidential or secret
information related to or obtained as a result of my employment
with the Company including, without limiting the generality: of
processes, customer lists, formulae, designs, new products,
finances or relating to know-how, inventions, improvements or
other matters connected with the products or services
manufactured, marketed, provided or obtained by the Company.
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EMPLOYMENT CONTRACT dated 1 of April 1998
1st Party Pritech Corporation Limited
a Company incorporated in New Zealand
and having its registered office at
Auckland.
Employer
2nd Party David William Corlett
of Auckland, Managing Director.
Executive
CONTRACT:
The Employer agrees to employ the Executive and the Executive accepts employment
on the terms and conditions set out in Schedules I, II and III The terms and
conditions set out in these schedules supersedes any other employment
arrangements that may have existed between the Executive and the Employer prior
to the signing of this contract.
SIGNED by the Employer by its authorised ) X [ILLEGIBLE]
officer name to be included ) -----------------------------
in the presence of: ) Director
)
) X [ILLEGIBLE]
) -----------------------------
) Director
SIGNED by the Executive ) X [ILLEGIBLE]
David William Corlett ) -----------------------------
in the presence of: ) [ILLEGIBLE]
[INITIALLED]
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SCHEDULE I
Term Meaning
Annual Leave 20 Working Days per annum.
Commencement Date The 1st day of April 1998.
Company The Employer, Pritech Corporation limited.
Escrow period The period commencing on the commencement date and
ending on 30 September 2000.
Notice 90 days.
Minimum Hours 8 hours per Working Day; and
40 hours per week.
Payment Provisions Payments will be made monthly on the 30th day of each
month by direct credit.
Position Managing Director at Auckland.
Position Description To be advised
Salary $120,000 per annum.
Bonus Salary $50,000, to be paid in full, within 3 months of the end
of each of the Company's financial years, provided the
Employer's net pre tax profit targets for that year are
met. Progress towards such targets shall be estimated,
and a proportionate instalment of the Bonus paid,
quarterly. If such profit target is not met in any year
then that year's Bonus Salary shall abate by the same
proportion as the actual net pre tax profit falls short
of the target. Any adjusted sum shall be paid or
refunded at the time the final payment for that year is
due.
Special Leave 10 Working Days.
[INITIALLED]
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SCHEDULE II
TO: The Executive
Your general conditions of employment are:
1. INTERPRETATION
Definitions
1
Term Meaning
Act The Employment Contracts Act 1991
Working Day Any day of the week other than:
a. Saturday and Sunday.
b. Any public holiday within the meaning of s.7A of
the Holidays Act 1981.
Interpretation
2 In this contract:
a. Unless the context otherwise requires terms given a meaning in
Schedule I and clause 1.1 have that meaning.
b. Clause headings are for reference purposes only.
2. TERM OF CONTRACT
1 Neither party shall terminate this contract (other than for serious
misconduct or poor performance) during the Escrow Period.
2 After the expiry of the Escrow Period your employment shall continue on the
terms and conditions set out in this contract.
3. COMMENCEMENT DATE
1 You must commence work on the Commencement Date.
[INITIALLED]
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4. WORK
1 You must carry out from the Commencement Date:
a. the work in the Position Description; and
b. all other work which the Employer reasonably requires you to do.
5. HOURS OF WORK
1 You must work the Minimum Hours.
1 You may have to work such additional hours as may be reasonably be required
to properly carry out your duties.
6. PAYMENT
1 You will be paid the Salary in accordance with the Payment Provisions and
the Bonus Salary and Over Achievement Bonus each in one sum as provided for
in Schedule 1.
2 All other payments due to you will be paid in accordance with the Payment
Provisions unless stated otherwise.
7. ANNUAL LEAVE
1 The Employer acknowledges and accepts your continuity of service with the
Company and recognises that your Annual leave for the year ending 31 March
1998 shall become due on the Commencement Date. Annual Leave for subsequent
years shall become due on the anniversaries of the Commencement Date.
2 You may take paid Annual Leave by arrangement between yourself and the
Employer but if you cannot agree then at times fixed by the Employer. The
Employer will make reasonable endeavours to accommodate your wishes for the
timing of Annual leave.
3 You are required to use each year's annual holiday entitlement within 24
months of its becoming due, or you may forfeit accrued annual holiday
entitlement in excess of your minimum entitlement under the Holidays Act
1981.
4 Failure to take your leave when reasonably required by the Employer may be
treated by the Employer as serious misconduct by you.
8. SPECIAL LEAVE
1
a. You will be entitled to paid Special Leave in each 12 month period of
employment.
[INITIALLED]
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b. Special Leave under this clause may be taken only when:
i. you are sick;
ii. your spouse or partner is sick;
iii. your dependant child or dependant parent or the parent of your
spouse or partner is sick;
iv. you suffer a bereavement.
c. At least 4 hours notice of your intention to take Special Leave must
be given unless impracticable.
d. You are entitled to accrue up to 120 days personal sick leave unused
but no payment will be made to you for any unused sick leave on
termination of your employment for any reason.
e. Where leave is taken because of sickness, you may be required to
produce a medical certificate.
2 The provisions of Section 30A of the Holidays Act 1981 apply to Special
Leave under this Contract except to the extent that they are modified by
clause 8.1.
9. EXECUTIVE'S DUTIES
1 You must:
a. Diligently and faithfully serve the Employer and use your best
endeavours to promote and protect the Employer's interests;
b. Carry out and comply with all lawful directions which you are given by
the Employer; and
c. Devote your efforts during normal business hours and other necessary
times to the discharge of your duties.
10. ABANDONMENT OF EMPLOYMENT
1 You will be deemed to have terminated employment if you are absent from
work for a continuous period of 5 Working Days without notifying the
Employer.
[INITIALLED]
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11. NOTICE
1 After the expiry of the Escrow Period you may terminate your employment at
any time by giving Notice in writing to the Employer.
2 The Employer shall not (other than for serious misconduct or poor
performance) terminate your employment prior to the expiry of the Escrow
period, but thereafter if the Employer terminates your employment in
circumstances requiring notice, the specified Notice, in writing, will be
given to you.
3 The Employer may pay Salary in lieu of notice.
12. TERMINATION ON MEDICAL GROUNDS
1 If you are prevented by accident or ill health from carrying out your
duties under this agreement:
a. You will continue to receive your full salary and allowances for a
period of up to 120 working days but shall, if required, furnish the
Employer with medical evidence of your incapacity and its cause to the
satisfaction of the Employer;
b. If your incapacity continues for more than 120 working days or if you
are incapacitated at different times for more than 120 working days in
any 12 month period then in either of those cases the Employer may
terminate your employment without notice or compensation in lieu of
notice;
c. If at any time in the opinion of a medical practitioner nominated by
the Employer you have become permanently disabled or incapacitated,
the Employer may terminate your employment without notice or
compensation in lieu of notice.
13. TERMINATION FOR SERIOUS MISCONDUCT
1 The Employer may at any time terminate your employment without notice for
serious misconduct which includes (but is not limited to):
a. Dishonesty.
b. Refusal to carry out your duties or to carry out any proper and lawful
instruction given by the Employer or any other person acting with the
Employer's authority.
c. Physical violence against any person on the Employer's premises.
d. Being at work under the influence of alcohol or non-prescription
drugs.
e. Repeated or persistent breaches of these terms and conditions.
[INITIALLED]
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f. Being adjudicated bankrupt.
g. Being convicted of any crime:
i. involving dishonesty; or
ii. for which you are sentenced to any term of periodic detention or
imprisonment.
14. PROCEDURES IN RESPECT OF SERIOUS MISCONDUCT
1 The following procedure will be followed if you are suspected of serious
misconduct.
a. In considering any alleged serious misconduct, the Employer will
observe the principles of natural justice. In particular, and without
limitation, you will be entitled to see or hear (as appropriate) any
evidence of the alleged misconduct being considered by the Employer.
b. The Employer will enquire into the circumstances as soon as
practicable after they come to the Employer's notice and give you
reasonable opportunity to comment on the matter.
c. You may be represented at all stages throughout the enquiry (other
than at any meeting convened as a matter of urgency to discuss
suspension).
d. The Employer may temporarily suspend you from work for up to 5 Working
Days on pay until the Employer makes a decision but you must first be
given an opportunity (which may be brief) to comment on suspension.
e. If after hearing your explanation the Employer is satisfied that there
has been serious misconduct, the Employer may terminate your
employment without notice or on other terms which the Employer
considers appropriate.
15. HEALTH AND SAFETY
1 You must co-operate in making all areas of employment healthy and safe
working places. In particular you must:
a. Observe and practice safe work methods.
b. Comply with all codes of practice relevant to the Employer's business.
c. Comply with any policies of the Employer relating to health and safety
in employment.
[INITIALLED]
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16. IMPLIED TERMS
1 The terms implied by law in employment contracts are implied in this
contract unless they are inconsistent with it and less beneficial to you.
17. SEVERANCE
1 Any illegality, unenforceability or invalidity in this contract will not
affect the rest of it which will remain in full force and effect.
SCHEDULE III
To: The Executive.
Your special conditions of employment are:
18. ADDITIONAL BENEFITS
1 The Employer will:
a. Pay all business call charges incurred by you from your private and
cellular telephones.
b. Pay all your Internet connection and user charges.
c. Pay all reasonable travel expenses incurred in the performance of your
duties on presentation of valid accounts.
d. Reimburse you for all expenses incurred by you in relation to your
duties on presentation of valid accounts.
e. Pay up to $500 towards subscriptions or levies for your membership of
professional organisations and for professional publications chosen by
you with the Employer's approval.
f. Pay your Medical Insurance premiums. You may elect to have your spouse
and dependent children included in your Medical Insurance scheme at
your own expense. The Employer will, if required, facilitate this and
will be entitled to deduct the appropriate proportion of the premium
from your salary.
2 You will be allocated a motor vehicle and parking facilities in accordance
with current policy. That policy provides for the allocation of a Peugeot
306 Cabriolet (or its equivalent) to the Position. The motor vehicle will
be replaced with an equivalent new model every three years.
[INITIALLED]
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3 Operating costs (including licensing and insurance) for business and
reasonable personal use of the vehicle will be met by the Employer. You
will be personally responsible for meeting petrol costs during holiday
periods and for "extraordinary" personal use at other times (e.g. long
personal trips out of town), for garaging the vehicle overnight, and for
ensuring that the care and use of the vehicle are in accordance with the
policy.
19. CONFIDENTIALLY
1 In the course of your work for the Employer, you are likely to become aware
of information which is commercially sensitive or valuable to the Employer
(and/or its subsidiary or associated companies) concerning its
organisation, marketing, finance of other affairs and possibly also trade
secrets or secret processes which are commercially sensitive or valuable.
You must not:
a. Reveal any such information to anyone without the express written
authority of the Employer; or
b. Use or attempt to use it in any manner which may injure or cause loss
either directly or indirectly to the Employer or any of its
business(es).
2 The obligation to keep such information confidential continues after
termination of employment. On termination you must return books, manuals or
other documents and all electronic data which you have received, made or
copied in the course of your employment with the Company.
This obligation applies to all information whether or not it is recorded or
memorised and includes information which is or may be of use to any of the
Employer's competitors.
20. DISCLOSURE OF DISCOVERIES ETC
1 You must disclose to the Employer full details of all inventions, designs,
improvements and discoveries relating to the Employer's business and made
by you in the course of your employment.
2 All such inventions, designs, improvements and discoveries will be the sole
property of the Employer.
3 You must assist the Employer in doing everything necessary (at the
Employer's expense) to:
a. obtain letters patent and vest the full and exclusive title to the
letters patent and to any copyright in drawings, plans or diagrams
relating to such
[INITIALLED]
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inventions, designs, improvements and discoveries in the name of the
Employer; and
b. protect them against infringement by others.
4 You irrevocably appoint the Employer as your attorney to undertake all such
action on your behalf in your name if you fail to do so.
21. INTELLECTUAL PROPERTY RIGHTS
1 You must not directly or indirectly contest any of the Employer's rights or
those of any associate or licensee of the Employer in respect of any
patent, design, trademark, copyright or other right used in connection with
the Employer's business.
22. NO COMPETING INVESTMENTS
1 You must not directly or indirectly invest in or be involved with any
company or business which trades with, or is a customer of the Employer, or
competes with the Employer, without the Employer's consent but you may
purchase for investment purposes only shares, debentures, or other
securities (not carrying the right to control) in any company whose shares
are listed on a recognised stock exchange.
2 Nothing in this clause 22 prevents you from holding not more than 5% of the
issued securities of any entity whose securities are for the time being
listed on any recognised stock exchange whether in New Zealand or
elsewhere.
23. NO COMPETITION WITH EMPLOYER
1 You must not without the Employer's written consent be directly or
indirectly interested, engaged or concerned, at any place in New Zealand in
any business in substantial competition with the Employer, either on your
own account or as a partner with, or as an employee of any other person or
as a shareholder, director, officer, consultant, advisor or employee of any
firm or person or directly or indirectly assist financially any such
business;
a. during employment with the Employer (whether in regular working hours
or otherwise); and
b. for the period of 90 days from the end of the Escrow Period or the
valid termination of your employment with the Employer whichever is
the later.
[INITIALLED]
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2 You must not, during the periods referred to above, on behalf of any other
person, firm or limited company, canvass or solicit business for or from
any customer of the Employer or its subsidiary companies.
3 For the purposes of this clause 23:
a. "in substantial competition with the Employer" means, offering for
sale or reward any specific product also offered by the Employer, or
offering any service using the same tool-sets as any tool-sets used by
the Employer during the term of your employment. Use of any generic
professional, business or technical skills used by you in the delivery
of any product or service but not specific to any particular product
offered or tool-set used by the Employer shall not of itself
constitute substantial competition with the Employer.
b. A customer" includes any person or firm who was or is a customer of
the Employer at any time during your employment.
4 You acknowledge that the restrictive covenants in this clause 23 are
reasonable and necessary in order to protect and maintain the proprietary
interests and other legitimate business interests of the Employer.
24. MANAGEMENT OF THE COMPANY
1 In addition to your executive duties you will be appointed a Director of
the company and shall fill the role of Managing Director.
2 Your Directorship shall continue during the Escrow Period.
3 You and your fellow Directors shall continue to manage the company during
the Escrow Period without any material change to your current management
policies and practise or to the direction of the business of the company or
to accounting policies, provided that:
a. the company meets agreed financial and business targets; and
b. the profit and loss budgets agreed with the company's shareholder are
achieved; and
c. you remain as a director and employee of the company.
Should the Employer use its voting control of the company to breach its
obligations under this clause then you shall be released from the
restraints provided in clause 23 and the Escrow period shall be deemed to
be at an end.
[INITIALLED]
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<PAGE>
25. NO OTHER DIRECTORSHIP
1 You must not accept office as a director of any company during your
employment without the prior written consent of the Employer.
26. RESIGNATION AS DIRECTOR
1 If your employment is terminated you must resign from:
a. any directorship of the Employer and its related companies; and
b. any other directorship to which you have been appointed to in the
course of your employment under this agreement.
2 You irrevocably appoint the Employer as your attorney to resign on your
behalf and in your name if you fail to do so.
27. PERFORMANCE AND SALARY REVIEW
1 Subject to the provisions of clause 28 There will be no review of your
performance or salary during the Escrow Period.
2 The Employer will review your performance and salary at the end of the
Escrow Period and thereafter at six monthly intervals.
3 You must co-operate with the Employer on each review and provide all
information held by you which is relevant to the review.
4 The Employer will take into account:
a. Your efficiency and competence in carrying out your duties and meeting
any established targets;
b. Your relationship with other staff and public relations with the
Employer's customers;
c. Your other personal attributes including versatility, judgement and
productivity;
[INITIALLED]
E-714
<PAGE>
d. Prevailing New Zealand market conditions and trends in remuneration
and other terms of employment for executives in similar roles and with
similar responsibilities;
e. Any other arrangements which have been set in place between you and
the Employer concerning your work.
5 A copy of a written summary of the review will be given to you when the
review is completed but will not be disclosed to any other staff member
with the exception of those who have a proper interest in considering the
review.
6 The Employer may review your performance at any other times the Employer
considers appropriate.
28. POOR PERFORMANCE
1 Notwithstanding the provisions of the preceding clause 27, if the Employer
considers that your performance is substantially below the Employer's
reasonable expectations, the Employer will:
a. Meet with you and
i. discuss the reasons for dissatisfaction;
ii. discuss the steps expected of you to improve performance;
iii. discuss the consequences of your failure to improve including any
prospect of dismissal;
iv. give you an assessment period (not less than 3 months) within
which to meet the Employer's performance criteria.
b. After the meeting give you a written record of the matters discussed.
c. Hold regular meetings with you to discuss progress during the
assessment period.
d. At the end of the assessment period meet with you and advise you of
the Employer's assessment of the improvement (if any) and the
Employer's intended course of action.
e. Provide you with a further opportunity to comment.
f. Provide you with a written record of the last meeting.
2 You may be represented at any of the meetings referred to in clause 28.1.
[INITIALLED]
E-715
<PAGE>
3 The Employer in reviewing your performance will observe the principles of
natural justice but, if after a full and unbiased consideration of all
relevant matters the Employer considers that your performance standards
have not been met and your explanation is unacceptable, may, after giving
you Notice as provided for in this contract, dismiss you.
29. REDUNDANCY
1 In this clause "redundancy" means a situation where your employment may be
terminated because there is not enough work available in your position.
There shall be no redundancy during the Escrow Period. In a redundancy
situation the restraints provided for in clause 23 shall not apply.
2 If the Employer considers you may become redundant, the Employer will:
a. consult you a reasonable time in advance; and
b. discuss the reasons for the proposed redundancy; and
c. the reasons for selecting you.
3 If your position is to be made redundant, the Employer will discuss
possible redeployment with you.
4 The Employer will give you at least 3 months notice of termination of
employment for redundancy or will pay you at least 3 months pay in lieu of
notice.
5 No other amount is payable for termination of employment for redundancy.
6 Clause 29.4 does not apply if:
a. the Employer offers you reasonable alternative employment in Auckland;
or
b. a third party offers you employment in Auckland on substantially the
same conditions.
30. CONFLICT
1 These Special Conditions take priority over the General Conditions if there
is any conflict.
[INITIALLED]
E-716
EMPLOYMENT CONTRACT dated / of April 1998
1st Party Pritech Corporation Limited
a Company incorporated in New Zealand
and having its registered office at
Auckland.
Employer
2nd Party David John Cooke
of Wellington, Sales Manager.
Executive
CONTRACT:
The Employer agrees to employ the Executive and the Executive accepts employment
on the terms and conditions set out in Schedules I, II and III. The terms and
conditions set out in these schedules supersedes any other employment
arrangements that may have existed between the Executive and the Employer prior
to the signing of this contract.
SIGNED by the Employer by its authorised ) [ILLEGIBLE]
officer name to be included ) DIRECTOR
in the presence of: [ILLEGIBLE]
) X ---------------------
DIRECTOR
SIGNED by the Executive )
David John Cooke )
in the presence of: ) X /s/ David J. Cooke
---------------------
[ILLEGIBLE]
[ILLEGIBLE]
[ILLEGIBLE]
E-717
<PAGE>
SCHEDULE I
Term Meaning
Annual Leave 20 Working days per annum.
Commencement Date The 1st day of April 1998.
Company The Employer, Pritech Corporation
limited.
Escrow Period The period commencing on the
commencement date and ending on 30
September 2000.
Notice 90 days.
Minimum Hours 8 hours per Working Day; and
40 hours per week.
Payment Provisions Payments will be made monthly on the
30th day of each month by direct credit.
Position National Sales Manager at Wellington.
Position Description To be advised
Salary $120,000 per annum.
Bonus Salary $30,000, to be paid in full, within 3
months of the end of each of the
Company's financial years, provided the
Employer's net pre tax profit targets
for that year are met. Progress towards
such targets shall be estimated, and a
proportionate instalment of the Bonus
paid, quarterly. If such profit target
is not met in any year then that year's
Bonus Salary shall abate by the same
proportion as the actual net pre tax
profit falls short of the target. Any
adjusted sum shall be paid or refunded
at the time the final payment for that
year is due.
Special Leave 10 Working Days.
E-718
<PAGE>
SCHEDULE II
TO: The Executive
Your general conditions of employment are:
1. INTERPRETATION
Definitions
1
Term Meaning
Act The Employment Contracts Act 1991
Working Day Any day of the week other than:
a. Saturday and Sunday.
b. Any public holiday within the
meaning of s.7A of the Holidays Act
1981.
Interpretation
2 In this contract:
a. Unless the context otherwise requires terms given a meaning in
Schedule I and clause 1.1 have that meaning.
b. Clause headings are for reference purposes only.
2. TERM OF CONTRACT
1 Neither party shall terminate this contract (other than for serious
misconduct or poor performance) during the Escrow Period.
2 After the expiry of the Escrow Period your employment shall continue on the
terms and conditions set out in this contract.
3. COMMENCEMENT DATE
1 You must commence work on the Commencement Date.
E-719
<PAGE>
4. WORK
1 You must carry out from the Commencement Date:
a. the work in the Position Description; and
b. all other work which the Employer reasonably requires you to do.
5. HOURS OF WORK
1 You must work the Minimum Hours.
1 You may have to work such additional hours as may reasonably be required to
properly carry out your duties.
6. PAYMENT
1 You will be paid the Salary in accordance with the Payment Provisions.
2 All other payments due to you will be paid in accordance with the Payment
Provisions unless stated otherwise.
7. ANNUAL LEAVE
1 The Employer acknowledges and accepts your continuity of service with the
Company and recognises that your Annual leave for the year ending 31 March
1998 shall become due on the Commencement Date. Annual Leave for subsequent
years shall become due on the anniversaries of the Commencement Date.
2 You may take paid Annual Leave by arrangement between yourself and the
Employer but if you cannot agree then at times fixed by the Employer. The
Employer will make reasonable endeavours to accommodate your wishes for
timing of Annual leave.
3 You are required to use each year's annual holiday entitlement within 24
months of its becoming due, or you may forfeit accrued annual holiday
entitlement in excess of your minimum entitlement under the Holidays Act
1981.
4 Failure to take your leave when reasonably required by the Employer may be
treated by the Employer as serious misconduct by you.
8. SPECIAL LEAVE
1 a. You will be entitled to paid Special Leave in each 12 month period of
employment.
E-720
<PAGE>
b. Special Leave under this clause may be taken only when:
i. you are sick;
ii. your spouse or partner is sick;
iii. your dependant child or dependant parent or the parent of your
spouse or partner is sick;
iv. you suffer a bereavement.
c. At least 4 hours notice of your intention to take Special Leave must
be given unless impracticable.
d. You are entitled to accrue up to 120 days personal sick leave unused
but no payment will be made to you for any unused sick leave on
termination of your employment for any reason.
e. Where leave is taken because of sickness, you may be required to
produce a medical certificate.
2 The provisions of Section 30A of the Holidays Act 1981 apply to Special
Leave under this Contract except to the extent that they are modified by
clause 7.1.
9. EXECUTIVE'S DUTIES
1 You must:
a. Diligently and faithfully serve the Employer and use your best
endeavours to promote and protect the Employer's interests;
b. Carry out and comply with all lawful directions which you are given by
the Employer; and
c. Devote your efforts during normal business hours and other necessary
times to the discharge of your duties.
10. ABANDONMENT OF EMPLOYMENT
1 You will be deemed to have terminated employment if you are absent from
work for a continuous period of 5 Working Days without notifying the
Employer.
E-721
<PAGE>
11. NOTICE
1 After the expiry of the Escrow Period you may terminate your employment at
any time by giving Notice in writing to the Employer.
2 The Employer shall not (other than for serious misconduct or poor
performance) terminate your employment prior to the expiry of the Escrow
period, but thereafter if the Employer terminates your employment in
circumstances requiring notice, the specified Notice, in writing, will be
given to you.
3 The Employer may pay Salary in lieu of notice.
12. TERMINATION ON MEDICAL GROUNDS
1 If you are prevented by accident or ill health from carrying out your
duties under this agreement:
a. You will continue to receive your full salary and allowances for a
period of 120 working days and must, if required, furnish the Employer
with medical evidence of your incapacity and its cause to the
satisfaction of the Employer;
b. If your incapacity continues for more than 120 working days or if you
are incapacitated at different times for more than 120 working days in
any 12 month period then in either of those cases the Employer may
terminate your employment without notice or compensation in lieu of
notice;
c. If at any time in the opinion of a medical practitioner nominated by
the Employer you have become permanently disabled or incapacitated,
the Employer may terminate your employment without notice or
compensation in lieu of notice.
13. TERMINATION FOR SERIOUS MISCONDUCT
I The Employer may at any time terminate your employment without notice for
serious misconduct which includes (but is not limited to):
a. Dishonesty.
b. Refusal to carry out your duties or to carry out any proper and lawful
instruction given by the Employer or any other person acting with the
Employer's authority.
c. Physical violence against any person on the Employer's premises.
d. Being at work under the influence of alcohol or non-prescription
drugs.
E-722
<PAGE>
e. Repeated or persistent breaches of these terms and conditions.
f. Being adjudicated bankrupt.
g. Being convicted of any crime:
i. involving dishonesty; or
ii. for which you are sentenced to any term of periodic detention or
imprisonment.
14. PROCEDURES IN RESPECT OF SERIOUS MISCONDUCT
1 The following procedure will be followed if you are suspected of serious
misconduct.
a. In considering any alleged serious misconduct, the Employer will
observe the principle of natural justice. In particular, and without
limitation, you will be entitled to see or hear (as appropriate) any
evidence of the alleged misconduct being considered by the Employer.
b. The Employer will enquire into the circumstances as soon as
practicable after they come to the Employer's notice and give you
reasonable opportunity to comment on the matter.
c. You may be represented at all stages throughout the enquiry (other
than at any meeting convened as a matter of urgency to discuss
suspension).
d. The Employer may temporarily suspend you from work for up to 5 Working
Days on pay until the Employer makes a decision but you must first be
given an opportunity (which may be brief) to comment on suspension.
e. If after hearing your explanation the Employer is satisfied that there
has been serious misconduct, the Employer may terminate your
employment without notice or on other terms which the Employer
considers appropriate.
15. HEALTH AND SAFETY
1 You must co-operate in making all areas of employment healthy and safe
working places. In particular you must:
a. Observe and practice safe work methods.
b. Comply with all codes of practice relevant to the Employer's business.
c. Comply with any policies of the Employer relating to health and safety
in employment.
16. IMPLIED TERMS
E-723
<PAGE>
1 The terms implied by law in employment contracts are implied in this
contract unless they are inconsistent with it and less beneficial to you.
17. SEVERANCE
1 Any illegality, unenforceability or invalidity in this contract will not
affect the rest of it which will remain in full force and effect.
SCHEDULE III
To: The Executive
Your special conditions of employment are:
18. ADDITIONAL BENEFITS
1 The Employer will:
a. Pay all business call charges incurred by you from your private and
cellular telephones.
b. Pay all your Internet connection and user charges.
c. Pay all reasonable travel expenses incurred in the performance of your
duties on presentation of valid accounts.
d. Reimburse you for all expenses incurred by you in relation to your
duties on presentation of valid accounts.
e. Pay up to $500 towards subscriptions or levies for your membership of
professional organisations and for professional publications chosen by
you with the Employer's approval.
f Pay your Medical Insurance premiums. You may elect to have your spouse
and dependent children included in your Medical Insurance scheme at
your own expense. The Employer will facilitate this, if required, and
will be entitled to deduct the appropriate proportion of the premium
from your salary.
2 You will be allocated a motor vehicle and parking facilities in accordance
with current policy. That policy provides for the allocation of a Chrysler
Cherokee Sport Jeep (or its equivalent) to the Position. The motor vehicle
will be replaced with an equivalent new model every three years.
E-724
<PAGE>
3 Operating costs (including licensing and insurance) for business and
reasonable personal use of the vehicle will be met by the Employer. You
will be personally responsible for meeting petrol costs during holiday
periods and for "extraordinary" personal use at other times (e.g. long
personal trips out of town), for care of the vehicle overnight, and for
ensuring that the care and use of the vehicle are in accordance with the
policy.
19. CONFIDENTIALITY
1 In the course of your work for the Employer, you are likely to become aware
of information which is commercially sensitive or valuable to the Employer
(and/or its subsidiary or associated companies) concerning its
organisation, marketing, finance of other affairs and possibly also trade
secrets or secret processes which are commercially sensitive or valuable.
You must not:
a. Reveal any such information to anyone without the express written
authority of the Employer; or
b. Use or attempt to use it in any manner which may injure or cause loss
either directly or indirectly to the Employer or any of its
business(es).
2 The obligation to keep such information confidential continues after
termination of employment. On termination you must return books, manuals or
other documents and all electronic data which you have received, made or
copied in the course of your employment with the Company.
This obligation applies to all information whether or not it is recorded or
memorised and includes information which is or may be of use to any of the
Employer's competitors
20. DISCLOSURE OF DISCOVERIES ETC
1 You must disclose to the Employer full details of all inventions, designs,
improvements and discoveries relating to the Employer's business and made
by you in the course of your employment.
2 All such inventions, designs, improvements and discoveries will be the sole
property of the Employer.
3 You must assist the Employer in doing everything necessary (at the
Employer's expense) to:
a. obtain letters patent and vest the full and exclusive title to the
letters patent and to any copyright in drawings, plans or diagrams
relating to such
E-725
<PAGE>
inventions, designs, improvements and discoveries in the name of the
Employer; and
b. protect them against infringement by others.
4 You irrevocably appoint the Employer as your attorney to undertake all such
action on your behalf in your name if you fail to do so.
21. INTELLECTUAL PROPERTY RIGHTS
1 You must not directly or indirectly contest any of the Employer's rights or
those of any associate or licensee of the Employer in respect of any
patent, design, trademark copyright or other right used in connection with
the Employer's business.
22. NO COMPETING INVESTMENTS
1 You must not directly or indirectly invest in or be involved with any
company or business which trades with, or is a customer of the Employer, or
competes with the Employer, without the Employer's consent but you may
purchase for investment purposes only shares, debentures, or other
securities (not carrying the right to control) in any company whose shares
are listed on a recognised stock exchange.
2 Nothing in this clause 22 prevents you from holding not more than 5% of the
issued securities of any entity whose securities are for the time being
listed on any recognised stock exchange whether in New Zealand or
elsewhere.
23. NO COMPETITION WITH EMPLOYER
1 You must not without the Employer's written consent be directly or
indirectly interested, engaged or concerned, at any place in New Zealand in
any business in substantial competition with the Employer, either on your
own account or as a partner with, or as an employee of any other person or
as a shareholder, director, officer, consultant, advisor or employee of any
firm or person or directly or indirectly assist financially any such
business;
a. during employment with the Employer (whether in regular working hours
or otherwise); and
b. for the period of 90 days from the end of the Escrow Period or the
valid termination of your employment with the Employer whichever is
the later.
E-726
<PAGE>
2 You must not, during the periods referred to above, on behalf of any other
person, firm or limited company, canvass or solicit business for or from
any customer of the Employer or its subsidiary companies.
3 For the purposes of this clause 23:
a. "in substantial competition with the Employer" means, offering for
sale or reward any specific product also offered by the Employer, or
offering any service using the same tool-sets as any tool-sets used by
the Employer during the term of your employment. Use of any generic
professional, business or technical skills used by you in the delivery
of any product or service but not specific to any particular product
offered or tool-set used by the Employer shall not of itself
constitute substantial competition with the Employer.
b. "A customer" includes any person or firm which was a customer of the
Employer at any time during your employment or within the one year
following termination of your employment.
4 You acknowledge that the restrictive covenants in this clause 21 are
reasonable and necessary in order to protect and maintain the proprietary
interests and other legitimate business interests of the Employer.
24. MANAGEMENT OF THE COMPANY
1 In addition to your executive duties you will be appointed a Director of
the company.
2 Your Directorship shall continue during the Escrow Period.
3 You and your fellow Directors shall continue to manage the company during
the Escrow Period without any material change to your current management
policies and practise or to the direction of the business of the company or
to accounting policies, provided that:
a. the company meets agreed financial and business targets; and
b. the profit and loss budgets agreed with the company's shareholder are
achieved; and
c. you remain as a director and employee of the company.
Should the Employer use its voting control of the company to breach its
obligations under this clause then you shall be released from the
restraints provided in clause 23 and the Escrow period shall be deemed to
be at an end.
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<PAGE>
25. NO OTHER DIRECTORSHIP
1 You must not accept office as a director of any company during your
employment without the prior written consent of the Employer.
26. RESIGNATION AS DIRECTOR
1 If your employment is terminated you must resign from:
a. any directorship of the Employer and its related companies; and
b. any other directorship to which you have been appointed to in the
course of your employment under this agreement.
2 You irrevocably appoint the Employer as your attorney to resign on your
behalf and in your name if you fail to do so.
27. PERFORMANCE AND SALARY REVIEW
1 There will be no review of your performance or salary during the Escrow
Period.
2 The Employer will review your performance and salary at the end of the
Escrow Period and thereafter at six monthly intervals.
3 You must co-operate with the Employer on each review and provide all
information held by you which is relevant to the review.
4 The Employer will take into account:
a. Your efficiency and competence in carrying out your duties and meeting
any established targets;
b. Your relationship with other staff and public relations with the
Employer's customers;
c. Your other personal attributes including versatility, judgement and
productivity;
E-728
<PAGE>
d. Prevailing New Zealand market conditions and trends in remuneration
and other terms of employment for executives in similar roles and with
similar responsibilities.
e. Any other arrangements which have been set in place between you and
the Employer concerning your work.
5 A copy of a written summary of the review will be given to you when the
review is completed but will not be disclosed to any other staff member
with the exception of those who have a proper interest in considering the
review.
6 The Employer may review your performance at any other times the Employer
considers appropriate.
28. POOR PERFORMANCE
1 Notwithstanding the provisions of the preceding clause 27, if the Employer
considers that your performance is substantially below the Employer's
reasonable expectations, the Employer will:
a. Meet with you and
i. discuss the reasons for dissatisfaction;
ii. discuss the steps expected of you to improve performance;
iii. discuss the consequences of your failure to improve including any
prospect of dismissal;
iv. give you an assessment period (not less than 3 months) within
which to meet the Employer's performance criteria.
b. After the meeting give you a written record of the matters discussed.
c. Hold regular meetings with you to discuss progress during the
assessment period.
d. At the end of the assessment period meet with you and advise you of
the Employer's assessment of the improvement (if any) and the
Employer's intended course of action.
e. Provide you with a further opportunity to comment.
f. Provide you with a written record of the last meeting.
E-729
<PAGE>
2 You may be represented at any of the meetings referred to in clause 28.1.
3 The Employer in reviewing your performance will observe the principles of
natural justice but, if after a full and unbiased consideration of all
relevant matters the Employer considers that your performance standards
have not been met and your explanation is unacceptable, may, after giving
you Notice as provided for in this contract, dismiss you.
29. REDUNDANCY
1 In this clause "redundancy" means a situation where your employment may be
terminated because there is not enough work available in your position.
There shall be no redundancy during the Escrow Period. In a redundancy
situation the restraints provided for in clause 23 shall not apply.
2 If the Employer considers you may become redundant, the Employer will:
a. consult you a reasonable time in advance; and
b. discuss the reasons for the proposed redundancy; and
c. the reasons for selecting you.
3 If your position is to be made redundant, the Employer will discuss
possible redeployment with you.
4 The Employer will give you at least 3 months notice of termination of
employment for redundancy or will pay you at least 3 months pay in lieu of
notice.
5 No other amount is payable for termination of employment for redundancy.
6 Clause 29.4 does not apply if:
a. the Employer offers you reasonable alternative employment in
Wellington; or
b. a third party offers you employment in Wellington on substantially the
same conditions.
30. CONFLICT
1 These Special Conditions take priority over the General Conditions if there
is any conflict.
E-730
EMPLOYMENT CONTRACT dated 1 of April 1998
1st Party Pritech Corporation Limited
a Company incorporated in New Zealand
and having its registered office at
Auckland.
Employer
2nd Party Gary Spencer Elmes
of Auckland, Consultant.
Executive
CONTRACT:
The Employer agrees to employ the Executive and the Executive accepts employment
on the terms and conditions set out in Schedules I, II and III. The terms and
conditions set out in these schedules supersedes any other employment
arrangements that may have existed between the Executive and the Employer prior
to the signing of this contract.
SIGNED by the Employer by its authorised ) X [ILLEGIBLE]
officer name to be included ) -----------------------------
in the presence of: ) Director
)
) X [ILLEGIBLE]
) -----------------------------
) Director
SIGNED by the Executive )
Gary Spencer Elmes ) X [ILLEGIBLE]
in the presence of: ) -----------------------------
[INITIALLED]
E-731
<PAGE>
SCHEDULE I
Term Meaning
Annual Leave 20 Working days per annum.
Commencement Date The 1st day of April 1998.
Company The Employer, Pritech Corporation limited.
Escrow period The period commencing on the commencement date and
ending on 30 September 2000.
Notice 90 days.
Minimum Hours 8 hours per Working Day; and
40 hours per week.
Payment Provisions Payments will be made monthly on the 30th day of each
month by direct credit.
Position Senior Consultant at Auckland.
Position Description To be advised
Salary $120,000 per annum.
Bonus Salary $20,000, to be paid in full, within 3 months of the end
of each of the Company's financial years, provided the
Employer's net pre tax profit targets for that year are
met. Progress towards such targets shall be estimated,
and a proportionate instalment of the Bonus paid,
quarterly. If such profit target is not met in any year
then that year's Bonus Salary shall abate by the same
proportion as the actual net pre tax profit falls short
of the target. Any adjusted sum shall be paid or
refunded at the time the final payment for that year is
due.
Special Leave 10 Working Days.
[INITIALLED]
E-732
<PAGE>
SCHEDULE II
To: The Executive
Your general conditions of employment are:
1. INTERPRETATION
Definitions
1
Term Meaning
Act The Employment Contracts Act 1991
Working Day Any day of the week other than:
a. Saturday and Sunday.
b. Any public holiday within the meaning of s.7A
of the Holidays Act 1981.
Interpretation
2 In this contract:
a. Unless the context otherwise requires terms given a meaning in
Schedule I and clause 1.1 have that meaning.
b. Clause headings are for reference purposes only.
2. TERM OF CONTRACT
1 Neither party shall terminate this contract (other than for serious
misconduct or poor performance) during the Escrow Period.
2 After the expiry of the Escrow Period your employment shall continue on the
terms and conditions set out in this contract.
3. COMMENCEMENT DATE
1 You must commence work on the Commencement Date.
[INITIALLED]
E-733
<PAGE>
4. WORK
1 You must carry out from the Commencement Date:
a. the work in the Position Description; and
b. all other work which the Employer reasonably requires you to do.
5. HOURS OF WORK
1 You must work the Minimum Hours.
1 You may have to work such additional hours as may reasonably be required to
properly carry out your duties.
6. PAYMENT
1 You will be paid the Salary in accordance with the Payment Provisions.
2 All other payments due to you will be paid in accordance with the Payment
Provisions unless stated otherwise.
7. ANNUAL LEAVE
1 The Employer acknowledges and accepts your continuity of service with the
Company and recognises that your Annual leave for the year ending 31 March
1998 shall become due on the Commencement Date. Annual Leave for subsequent
years shall become due on the anniversaries of the Commencement Date.
2 You may take paid Annual Leave by arrangement between yourself and the
Employer but if you cannot agree then at times fixed by the Employer. The
Employer will make reasonable endeavours to accommodate your wishes for
timing of Annual Leave.
3 You are required to use each year's annual holiday entitlement within 24
months of its becoming due, or you may forfeit accrued annual holiday
entitlement in excess of your minimum entitlement under the Holidays Act
1981.
4 Failure to take your leave when reasonably required by the Employer may be
treated by the Employer as serious misconduct by you.
8. SPECIAL LEAVE
1
a. You will be entitled to paid Special Leave in each 12 month period of
employment.
[INITIALLED]
E-734
<PAGE>
b. Special Leave under this clause may be taken only when:
i. you are sick;
ii. your spouse or partner is sick;
iii. your dependant child or dependant parent or the parent of your
spouse or partner is sick;
iv. you suffer a bereavement.
c. At least 4 hours notice of your intention to take Special Leave must
be given unless impracticable.
d. You are entitled to accrue up to 120 days personal sick leave unused
but no payment will be made to you for any unused sick leave on
termination of your employment for any reason.
e. Where leave is taken because of sickness, you may be required to
produce a medical certificate.
2 The provisions of Section 30A of the Holidays Act 1981 apply to Special
Leave under this Contract except to the extent that they are modified by
clause 7.1.
9. EXECUTIVE'S DUTIES
1 You must:
a. Diligently and faithfully serve the Employer and use your best
endeavours to promote and protect the Employer's interests;
b. Carry out and comply with all lawful directions which you are given by
the Employer; and
c. Devote your efforts during normal business hours and other necessary
times to the discharge of your duties.
10. ABANDONMENT OF EMPLOYMENT
1 You will be deemed to have terminated employment if you are absent from
work for a continuous period of 5 Working Days without notifying the
Employer.
[INITIALLED]
E-735
<PAGE>
11. NOTICE
1 After the expiry of the Escrow Period you may terminate your employment at
any time by giving Notice in writing to the Employer.
2 The Employer shall not (other than for serious misconduct or poor
performance) terminate your employment prior to the expiry of the Escrow
period, but thereafter if the Employer terminates your employment in
circumstances requiring notice, the specified Notice, in writing, will be
given to you.
3 The Employer may pay Salary in lieu of notice.
12. TERMINATION ON MEDICAL GROUNDS
1 If you are prevented by accident or ill health from carrying out your
duties under this agreement:
a. You will continue to receive your full salary and allowances for a
period of 120 working days and must, if required, furnish the Employer
with medical evidence of your incapacity and its cause to the
satisfaction of the Employer;
b. If your incapacity continues for more than 120 working days or you are
incapacitated at different times for more than 120 working days in any
12 month period then in either of those cases the Employer may
terminate your employment without notice or compensation in lieu of
notice;
c. If at any time in the opinion of a medical practitioner nominated by
the Employer you have become permanently disabled or incapacitated,
the Employer may terminate your employment without notice or
compensation in lieu of notice.
13. TERMINATION FOR SERIOUS MISCONDUCT
1 The Employer may at any time terminate your employment without notice for
serious misconduct which includes (but is not limited to):
a. Dishonesty.
b. Refusal to carry out your duties or to carry out any proper and lawful
instruction given by the Employer or any other person acting with the
Employer's authority.
c. Physical violence against any person on the Employer's premises.
d. Being at work under the influence of alcohol or non-prescription
drugs.
[INITIALLED]
E-736
<PAGE>
e. Repeated or persistent breaches of these terms and conditions.
f. Being adjudicated bankrupt.
g. Being convicted of any crime:
i. involving dishonesty; or
ii. for which you are sentenced to any term of periodic detention or
imprisonment.
14. PROCEDURES IN RESPECT OF SERIOUS MISCONDUCT
1 In considering any alleged serious misconduct, the Employer will observe
the principles of natural justice. In particular, and without limitation,
you will be entitled to see or hear (as appropriate) any evidence of the
alleged misconduct being considered by the Employer.
2 The following procedure will be followed if you are suspected of serious
misconduct.
a. The Employer will enquire into the circumstances as soon as
practicable after they come to the Employer's notice and give you
reasonable opportunity to comment on the matter.
b. You may be represented at all stages throughout the enquiry (other
than at any meeting convened as a matter of urgency to discuss
suspension).
c. The Employer may temporarily suspend you from work for up to 5 Working
Days on pay until the Employer makes a decision but you must first be
given an opportunity (which may be brief) to comment on suspension.
d. If after hearing your explanation the Employer is satisfied that there
has been serious misconduct, the Employer may terminate your
employment without notice or on other terms which the Employer
considers appropriate.
15. HEALTH AND SAFETY
1 You must co-operate in making all areas of employment healthy and safe
working places. In particular you must:
a. Observe and practice safe work methods.
b. Comply with all codes of practice relevant to the Employer's business.
c. Comply with any policies of the Employer relating to health and safety
in employment.
[INITIALLED]
E-737
<PAGE>
16. IMPLIED TERMS
1 The terms implied by law in employment contracts are implied in this
contract unless they are inconsistent with it and less beneficial to you.
17. SEVERANCE
1 Any illegality, unenforceability or invalidity in this contract will not
affect the rest of it which will remain in full force and effect.
SCHEDULE III
To: The Executive
Your special conditions of employment are:
18. ADDITIONAL BENEFITS
1 The Employer will:
a. Pay all business call charges incurred by you from your private and
cellular telephones.
b. Pay all your Internet connection and user charges.
c. Pay all reasonable travel expenses incurred in the performance of your
duties on presentation of valid accounts.
d. Reimburse you for all expenses incurred by you in relation to your
duties on presentation of valid accounts.
e. Pay up to $500 towards subscriptions or levies for your membership of
professional organisations and for professional publications chosen by
you with the Employer's approval.
f. Pay your Medical Insurance premiums. You may elect to have your spouse
and dependent children included in your Medical Insurance scheme at
your own expense. The Employer will, if required, facilitate this and
will be entitled to deduct the appropriate proportion of the premium
from your salary.
19. CONFIDENTIALITY
[INITIALLED]
E-738
<PAGE>
1 In the course of your work for the Employer, you are likely to become aware
of information which is commercially sensitive or valuable to the Employer
(and/or its subsidiary or associated companies) concerning its
organisation, marketing, finance of other affairs and possibly also trade
secrets or secret processes which are commercially sensitive or valuable.
You must not:
a. Reveal any such information to anyone without the express written
authority of the Employer; or
b. Use or attempt to use it in any manner which may injure or cause loss
either directly or indirectly to the Employer or any of its
business(es).
2 The obligation to keep such information confidential continues after
termination of employment. On termination you must return books, manuals or
other documents and all electronic data which you have received, made or
copied in the course of your employment with the Company.
This obligation applies to all information whether or not it is recorded or
memorised and includes information which is or may be of use to any of the
Employer's competitors
20. DISCLOSURE OF DISCOVERIES ETC
1 You must disclose to the Employer full details of all inventions, designs,
improvements and discoveries relating to the Employer's business and made
by you in the course of your employment.
2 All such inventions, designs, improvements and discoveries will be the sole
property of the Employer.
3 You must assist the Employer in doing everything necessary (at the
Employer's expense) to:
a. obtain letters patent and vest the full and exclusive title to the
letters patent and to any copyright in drawings, plans or diagrams
relating to such inventions, designs, improvements and discoveries in
the name of the Employer; and
b. protect them against infringement by others.
4 You irrevocably appoint the Employer as your attorney to undertake all such
action on your behalf in your name if you fail to do so.
21. INTELLECTUAL PROPERTY RIGHTS
[INITIALLED]
E-739
<PAGE>
1 You must not directly or indirectly contest any of the Employer's rights or
those of any associate or licensee of the Employer in respect of any
patent, design, trademark, copyright or other right used in connection with
the Employer's business.
22. NO COMPETING INVESTMENTS
1 You must not directly or indirectly invest in or be involved with any
company or business which trades with, or is a customer of the Employer, or
competes with the Employer, without the Employer's consent but you may
purchase for investment purposes only shares, debentures, or other
securities (not carrying the right to control) in any company whose shares
are listed on a recognised stock exchange.
2 Nothing in this clause 23 prevents you from holding not more than 5% of the
issued securities of any entity whose securities are for the time being
listed on any recognised stock exchange whether in New Zealand or
elsewhere.
23. NO COMPETITION WITH EMPLOYER
1 You must not without the Employer's written consent be directly or
indirectly interested, engaged or concerned, at any place in New Zealand in
any business in substantial competition with the Employer, either on your
own account or as a partner with, or as an employee of any other person or
as a shareholder, director, officer, consultant, advisor or employee of any
firm or person or directly or indirectly assist financially any such
business;
a. during employment with the Employer (whether in regular working hours
or otherwise); and
b. for the period of 90 days from the end of the Escrow Period or the
valid termination of your employment with the Employer whichever is
the later.
2 You must not, during the periods referred to above, on behalf of any other
person, firm or limited company, canvass or solicit business for or from
any customer of the Employer or its subsidiary companies.
3 For the purposes of this clause 23:
a. "in substantial competition with the Employer" means, offering for
sale or reward any specific product also offered by the Employer, or
offering any service using the same tool-sets as any tool-sets used by
the Employer during
[INITIALLED]
E-740
<PAGE>
the term of your employment. Use of any generic professional, business
or technical skills used by you in the delivery of any product or
service but not specific to any particular product offered or tool-set
used by the Employer shall not of itself constitute substantial
competition with the Employer.
b. "A customer" includes any person or firm which was a customer of the
Employer at any time during your employment or within the one year
following termination of your employment.
4 You acknowledge that the restrictive covenants in this clause 23 are
reasonable and necessary in order to protect and maintain the proprietary
interests and other legitimate business interests of the Employer.
24. MANAGEMENT OF THE COMPANY
1 In addition to your executive duties you will be appointed a Director of
the company.
2 Your Directorship shall continue during the Escrow Period.
3 You and your fellow Directors shall continue to manage the company during
the Escrow Period without any material change to your current management
policies and practise or to the direction of the business of the company or
to accounting policies, provided that:
a. the company meets agreed financial and business targets; and
b. the profit and loss budgets agreed with the company's shareholder are
achieved; and
c. you remain as a director and employee of the company. Should the
Employer use its voting control of the company to breach its
obligations under this clause then you shall be released from the
restraints provided in clause 23 and the Escrow period shall be deemed
to be at an end.
25. NO OTHER DIRECTORSHIP
1 You must not accept office as a director of any company during your
employment without the prior written consent of the Employer.
26. RESIGNATION AS DIRECTOR
1 If your employment is terminated you must resign from:
[INITIALLED]
E-741
<PAGE>
a. any directorship of the Employer and its related companies; and
b. any other directorship to which you have been appointed to in the
course of your employment under this agreement.
2 You irrevocably appoint the Employer as your attorney to resign on your
behalf and in your name if you fail to do so.
27. PERFORMANCE AND SALARY REVIEW
1 There will be no review of your performance or salary during the Escrow
Period.
2 The Employer will review your performance and salary at the end of the
Escrow Period and thereafter at six monthly intervals.
3 You must co-operate with the Employer on each review and provide all
information held by you which is relevant to the review.
4 The Employer will take into account:
a. Your efficiency and competence in carrying out your duties and meeting
any established targets;
b. Your relationship with other staff and public relations with the
Employer's customers;
c. Your other personal attributes including versatility, judgement and
productivity;
d. Prevailing New Zealand market conditions and trends in remuneration
and other terms of employment for executives in similar roles and with
similar responsibilities.
e. Any other arrangements which have been set in place between you and
the Employer concerning your work.
5 A copy of a written summary of the review will be given to you when the
review is completed but will not be disclosed to any other staff member
with the exception of those who have a proper interest in considering the
review.
6 The Employer may review your performance at any other times the Employer
considers appropriate.
[INITIALLED]
E-742
<PAGE>
28. POOR PERFORMANCE
1 Notwithstanding the provisions of the preceding clause 27, if the Employer
considers that your performance is substantially below the Employer's
reasonable expectations, the Employer will:
a. Meet with you and
i. discuss the reasons for dissatisfaction;
ii. discuss the steps expected of you to improve performance;
iii. discuss the consequences of your failure to improve including any
prospect of dismissal;
iv. give you an assessment period (not less than 3 months) within
which to meet the Employer's performance criteria.
b. After the meeting give you a written record of the matters discussed.
c. Hold regular meetings with you to discuss progress during the
assessment period.
d. At the end of the assessment period meet with you and advise you of
the Employer's assessment of the improvement (if any) and the
Employer's intended course of action.
e. Provide you with a further opportunity to comment.
f. Provide you with a written record of the last meeting.
2 You may be represented at any of the meetings referred to in clause 28.1.
3 The Employer in reviewing your performance will observe the principles of
natural justice but, if after a full and unbiased consideration of all
relevant matters the Employer considers that your performance standards
have not been met and your explanation is unacceptable, may, after giving
you Notice as provided for in this contract, dismiss you.
29. REDUNDANCY
1 In this clause "redundancy" means a situation where your employment may be
terminated because there is not enough work available in your position.
There shall be no redundancy during the Escrow Period. In a redundancy
situation the restraints provided for in clause 23 shall not apply.
[INITIALLED]
E-743
<PAGE>
2 If the Employer considers you may become redundant, the Employer will:
a. consult you a reasonable time in advance; and
b. discuss the reasons for the proposed redundancy; and
c. the reasons for selecting you.
3 If your position is to be made redundant, the Employer will discuss
possible redeployment with you.
4 The Employer will give you at least 3 months notice of termination of
employment for redundancy or will pay you at least 3 months pay in lieu of
notice.
5 No other amount is payable for termination of employment for redundancy.
6 Clause 29.4 does not apply if:
a. the Employer offers you reasonable alternative employment in Auckland;
or
b. a third party offers you employment in Auckland on substantially the
same conditions.
30. CONFLICT
1 These Special Conditions take priority over the General Conditions if there
is any conflict.
[INITIALLED]
E-744
MEMORANDUM OF AGREEMENT made this 13 day of December,1996.
BETWEEN:
BROCKER INVESTMENTS LTD., a corporation incorporated pursuant to the
laws of the Province of Alberta, having an office at Suite 504, 10169
- 104 Street, Edmonton, in the Province of Alberta, T5J lA5, (fax no.
944-2554),
(hereinafter referred to as the "Corporation")
OF THE FIRST PART
- and -
DES O'KELL, of 59 Dayton Cres. St. Albert AB. T8N4X8.
(hereinafter referred to as the "Consultant")
OF THE SECOND PART
CONSULTING SERVICES AGREEMENT
-----------------------------
WHEREAS the Corporation has agreed to retain the Consultant, and the
Consultant has agreed to be retained by the Corporation, to provide consulting
services to the Corporation of a nature hereinafter described;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
premises and the mutual covenants and agreements herein contained, it is hereby
agreed by and between the parties hereto as follows:
1. The Consultant shall provide to the Corporation the consulting services (the
"Services") in respect of the following matters:
(a) corporate and shareholder communications and investor relations
including preparation of press releases and other material and
responding to shareholder inquiries on a timely basis;
(b) public relations and promotional matters; and
(c) corporate administration and record keeping, including intercorporate
communications and handling accounts payable.
2. The Services shall be provided by the Consultant for an initial period of one
(1) year from the date hereof unless earlier terminated in accordance with
paragraph 4 hereof.
3. In consideration of the provision of the Services, the Corporation agrees to
pay the Consultant a bi-weekly retainer of $1,666.00 and reimburse the
Consultant for his reasonable out-of-pocket expenses incurred in providing the
Services, provided such expenses receive the approval of the Corporation prior
to being incurred, and are evidenced by itemized receipts.
4. This agreement may be terminated by either party by providing thirty days
prior written notice to the other party in the manner hereinafter provided.
E-745
<PAGE>
-2-
5. Except as otherwise expressly provided for herein, each of the Consultant and
the Corporation shall be responsible for and shall bear their own respective
costs incurred in respect of either providing or receiving the Services.
6. The parties acknowledge and agree that the Consultant is an independent
contractor.
7. All information provided to or obtained by the Consultant or its agents or
associates in respect of the Corporation and its subsidiaries shall be treated
as confidential and shall not be disclosed to any party without the prior
written consent of the Corporation.
8. This agreement shall be subject to the approval of The Alberta Stock Exchange
and such other regulatory bodies as may be required. The Consultant agrees to
comply with all applicable securities legislation and regulations of The Alberta
Stock Exchange and to execute and deliver to the Corporation a Personal
Information Form.
9. Any notice required or permitted to be given or served by any of the
provisions of this agreement shall be in writing and shall be delivered
personally or may be mailed, postage prepaid, at any post office in Canada, by
registered mail, or sent by prepaid telegram, telex, or facsimile addressed to
the Corporation and the Consultant as herein set out above, and any notice given
as aforesaid shall be deemed to have been given, if delivered when actually
delivered, or, if mailed on the third business day after the date of mailing, or
if telegraphed, telexed or faxed on the second business day after the date of
telegraphing, telexing or faxing; provided that if mailed and there be, between
the time of mailing and the actual receipt of the notice a mail strike, slowdown
or other labour dispute which might affect the delivery of such notice, then
such notice shall only be effective if actually delivered or if telegraphed,
telexed or faxed.
10. Time is of the essence.
11. This agreement shall be binding upon and enure to the benefit of the parties
hereto and their respective successors and permitted assigns.
12. This Agreement sets out the entire agreement between the parties respecting
the subject matters hereof, and supersedes and replaces all prior or
contemporaneous agreements, understandings or negotiations between the parties
respecting the subject matters hereto.
13. The parties agree to execute such other documents and do such other things
that may be reasonably required to give full force and effect to this Agreement.
IN WITNESS WHEREOF the parties hereto have executed this agreement as of
the day and year first first above written.
BROCKER INVESTMENTS LTD.
BROCKER INVESTMENTS, LTD.
Corporate Seal Per: /s/ ILLEGIBLE
* -----------------------------
/s/ ILLEGIBLE /s/ Des O'Kell
- ----------------------------- ----------------------------------
WITNESS DES O'KELL
E-746
THE COMPANY'S SUBSIDIARIES
<TABLE>
<CAPTION>
====================================================================================================================================
NAME JURISDICTION OF PERCENTAGE NATURE OF BUSINESS
INCORPORATION OWNED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Brocker Technology Group New Zealand 100% Holding Company.
NZ Limited
- ------------------------------------------------------------------------------------------------------------------------------------
SealCorp Computer Products New Zealand 100% Distribution of computer software and related products.
Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial Communications New Zealand 100% Development of cellular and radio solutions to enable
Services Limited cellementary and telemetry applications, and repairs of
cellular phones.
- ------------------------------------------------------------------------------------------------------------------------------------
PowerCall Technologies Limited New Zealand 100% Development of Computer Telephony Limited integration
products. Also operates a telemarketing call center,
providing telephone bureau services to business.
- ------------------------------------------------------------------------------------------------------------------------------------
Easy PC Computer Rentals Limited New Zealand 100% Leases and rents computers and technology equipment.
- ------------------------------------------------------------------------------------------------------------------------------------
Image Craft Limited New Zealand 100% Develops and markets graphic applications software.
- ------------------------------------------------------------------------------------------------------------------------------------
SealCorp Telecommunications New Zealand 100% Distribution of telecommunications products.
Group Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Pritech Corporation Limited New Zealand 100% Provides consulting services and software development for
knowledge management applications.
- ------------------------------------------------------------------------------------------------------------------------------------
1 World Systems Limited New Zealand 100% Develops and distributes accounting software.
- ------------------------------------------------------------------------------------------------------------------------------------
Tech Support Limited New Zealand 100% Provides technical support for computer systems to small
and medium businesses.
- ------------------------------------------------------------------------------------------------------------------------------------
Brocker Financial Limited New Zealand 100% Provides financial consulting services to large
corporations and governments.
- ------------------------------------------------------------------------------------------------------------------------------------
Northmark Technologies Limited New Zealand 100% Reseller of computer network limited solutions, including
computer hardware, software programming and training.
- ------------------------------------------------------------------------------------------------------------------------------------
Photo Magic Limited New Zealand 100% Provides digital film services.
- ------------------------------------------------------------------------------------------------------------------------------------
Highway Technologies Limited New Zealand 20% Develops software solutions for Highway Management.
- ------------------------------------------------------------------------------------------------------------------------------------
Brocker Investments (Australia) Australia 100% Holding Company.
Proprietary Limited
- ------------------------------------------------------------------------------------------------------------------------------------
SealCorp Australia Proprietary Australia 100% Distribution of computer hardware, software and related
Limited products.
- ------------------------------------------------------------------------------------------------------------------------------------
Image Craft Australia Australia 100% Develops and markets graphic applications software.
Proprietary Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Pritech Australia Proprietary Australia 100% Provides consulting services and software development for
Limited knowledge management applications.
- ------------------------------------------------------------------------------------------------------------------------------------
Q*Soft Proprietary Limited Australia 100% Distribution of software products.
====================================================================================================================================
</TABLE>
E-747
