Attached files

file filename
EX-32.2 - EX-32.2 - S&W Seed Cosanw-ex322_6.htm
EX-32.1 - EX-32.1 - S&W Seed Cosanw-ex321_7.htm
EX-31.2 - EX-31.2 - S&W Seed Cosanw-ex312_8.htm
EX-31.1 - EX-31.1 - S&W Seed Cosanw-ex311_11.htm
EX-3.3 - EX-3.3 - S&W Seed Cosanw-ex33_288.htm
10-Q - 10-Q - S&W Seed Cosanw-10q_20200331.htm

Exhibit 10.1

 

 

 

 

 

Execution Version

 

 

Share sale agreement

relating to shares in Pasture Genetics Pty Ltd ACN 074 290 252

Ann Elizabeth Damin (Vendor)

Robert Damin (Damin)

S&W Seed Company Australia Pty Ltd (Purchaser)

 

 

 

 

 

 

 

 

 

 


Execution Version

Share sale agreement

relating to shares in Pasture Genetics Pty Ltd ACN 074 290 252

~*~

 

Details

6

Agreed terms

7

1.

Defined terms & interpretation

7

1.1

Defined terms

7

1.2

Interpretation

12

1.3

Headings

13

1.4

Foreign Exchange

13

2.

Conditions

13

2.1

Conditions

13

2.2

Waiver of Conditions

14

2.3

Conduct of the parties

14

2.4

Failure of Condition

14

3.

Sale and purchase of Shares

14

3.1

Agreement to sell and purchase

14

3.2

Title and risk

14

3.3

All of the shares

15

3.4

Damin obligations

15

4.

Initial Purchase Price of Shares

15

4.1

Payment of the Initial Purchase Price

15

4.2

Cleared funds

15

4.3

Breach of agreement by the Purchaser

15

5.

Obligations before Completion

15

5.1

Continuity of business

15

5.2

Prohibited actions

15

5.3

Exceptions

17

5.4

Access to Business and Records

17

5.5

External Debt Estimate

17

5.6

Purchaser's obligations

17

5.7

Right to copy and consult

17

5.8

Release of personal guarantees

18

6.

Completion

18

6.1

Time and place

18

6.2

Obligations of the Vendor

18

6.3

Obligations of the Purchaser

19

6.4

Simultaneous actions at Completion

20

7.

Completion Accounts

20

7.1

Preparation of Completion Accounts

20

7.2

Vendors’ review of Completion Accounts

20

7.3

Deemed acceptance

20

7.4

Dispute

20

7.5

Adjustment Amount

20

 

Share sale agreement

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Execution Version

7.6

Adjustment of the Earn-Out Amount

20

7.7

Access to information

20

7.8

Dispute Resolution Procedure

21

7.9

Costs

21

8.

Earn-Out Amount

22

8.1

Calculation of Earn–Out Amount

22

8.2

Payment of the Earn–Out Amount

22

8.3

Common Stock

22

8.4

Cleared funds

22

9.

Preparation of Earn-Out Accounts

23

9.1

Preparation of Earn–out Accounts

23

9.2

Access to information to review draft Earn–Out Accounts

23

9.3

Notice by Vendor

23

9.4

Consequences of notice by Vendor

23

9.5

Dispute resolution procedure

23

10.

Vendor Guarantees

25

11.

Warranties

25

11.1

Mutual Representations and Warranties

25

11.2

Purchaser’s warranties

25

11.3

Warranties

25

11.4

Reliance of the Purchaser

25

11.5

Application of Warranties

25

11.6

Qualifications to warranties

26

11.7

Reduction in Purchase Price

27

11.8

Right of reimbursement

27

11.9

Monetary limits

27

11.10

Time Limits on Claims

27

11.11

Maximum amount of Claims

27

11.12

Fraud

27

11.13

No double recovery

27

11.14

Purchaser to mitigate Loss

28

11.15

Survival of Warranties

28

11.16

Right to rescind

28

11.17

No representation by Company

28

11.18

Acknowledgment of parties

28

11.19

Gross–up for Tax

28

12.

Tax Claims

29

12.1

Notice of Tax Claim

29

12.2

Tax Claims process

29

12.3

Dispute between parties in relation to a Tax Claim

29

12.4

Tax Audits

30

12.5

Tax Audit process

30

12.6

Dispute between parties in relation to a Tax Audit

30

13.

Tax returns

31

13.1

Pre–Completion returns

31

13.2

Straddle Returns / Post–Completion returns

31

 

Share sale agreement

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Execution Version

14.

Indemnities

32

14.1

General indemnity

32

14.2

Setoff

32

15.

Tax Indemnity

33

16.

Restraint

34

16.1

Definitions

34

16.3

Duration of prohibition

35

16.4

Geographic application of prohibition

35

16.5

Interpretation

35

16.6

Exceptions

36

16.7

Acknowledgments

36

16.8

Indemnity for breach of Restraint

36

17.

Confidentiality and publicity

36

17.1

Announcements

36

17.2

Warrantor obligations

37

18.

GST

37

18.1

Interpretation

37

18.2

GST gross up

37

18.3

Reimbursements

37

18.4

Tax invoice

37

19.

Benefits held on trust

37

19.1

Vendor

37

19.2

Purchaser

38

20.

Notices and other communications

38

20.1

Service of notices

38

20.2

Effective on receipt

38

21.

Miscellaneous

38

21.1

Alterations

38

21.2

Approvals and consents

38

21.3

Assignment

38

21.4

Costs

38

21.5

Stamp duty

39

21.6

Survival

39

21.7

Indemnities

39

21.8

Counterparts

39

21.9

No merger

39

21.10

Entire agreement

39

21.11

Further action

39

21.12

Severability

39

21.13

Waiver

39

21.14

Relationship

40

21.15

Governing law and jurisdiction

40

 

Schedule 1 - Particulars of Vendor's shareholding in the Company

41

Schedule 2 - Details of the Company (clause 1.1)

42

Schedule 3 - Business Vehicles Loans

43

Schedule 4 - Officers and Key Employees (clause 6.2)

44

 

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Execution Version

Schedule 5 – Adjustment to Purchase Price/Earn-Out – (clauses 7 and 8)

45

Schedule 6 – Warranties (clause 11)

49

Schedule 7 - Properties (clause 1.1)

70

Schedule 8 - Permitted Security Interests

71

Schedule 9 – Intellectual Property Rights (Warranty 14)

76

Schedule 10 – Personal Guarantees (clause 5.8)

84

Schedule 11 – Company Revolver (clause 1.1)

85

Schedule 12 – Stock Purchase Agreement (clause 8.3(c))

86

Signing page

89

 

 


 

Share sale agreement

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Execution Version

Details

Date

 

Parties

Name

Ann Elizabeth Damin

Short form name

Vendor

Notice details

5 Te Anau Avenue, Prospect SA 5082

Email: hello@anndamin.com

 

Attention: Ann Elizabeth Damin

 

 

Name

Robert Damin

Short form name

Damin

Notice details

5 Te Anau Avenue, Prospect SA 5082

Email: rob.damin@pasturegenetics.com

 

Attention: Robert Damin

 

With copy to:

Simon Venus, Partner, Piper Alderman

Level 16, 70 Franklin Street, Adelaide SA 5000

Email: svenus@piperalderman.com.au

 

Name

S&W Seed Company Australia Pty Ltd

ABN

44 061 114 814

Short form name

Purchaser

Notice details

Office 2, 7 Pomona Road, Stirling SA 5152

Email: andrewcarthew@swseedco.com  

 

Attention: Andrew Carthew

 

 

Background

A

The Shares are legally and beneficially owned by the Vendor.

B

The Vendor has agreed to sell and the Purchaser has agreed to purchase the Shares on the terms and conditions set out in this agreement.

 

 

 

 


 

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Execution Version

Agreed terms

1.

Defined terms & interpretation

1.1

Defined terms

In this agreement:

1936 Tax Act means the Income Tax Assessment Act 1936 (Cth).

1997 Tax Act means the Income Tax Assessment Act 1997 (Cth).

ABC Laws means all applicable domestic and international anti-bribery and anti-corruption laws and regulations, including but not limited to the Criminal Code Act 1995 (Cth), Foreign Corrupt Practices Act (US), any applicable law promulgated to implement the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, signed on 17 December 1997, any applicable laws relating to trade sanctions and other applicable laws of similar purpose and scope in any applicable jurisdiction, including commercial bribery offences and books and records offences relating directly or indirectly to a bribe.

Accounting Standards means generally accepted accounting principles applied in the United States.

Accounts means the audited balance sheet of the Company as at the Accounts Date and the profit and loss statement and statement of cash flows of the Company for the previous two (2) financial years ending on the Accounts Date together with the notes to, and the reports of the directors in respect of, those accounts.

Accounts Date means 30 June 2019.

Adjustment Amount means the amount determined in accordance with Item 2 of Schedule 5.

Approval Contract means the DLF Agreement

Assets means the property and assets owned or used by the Company in conducting the Business.

Associate has the meaning given to that term by sections 10 to 17 of the Corporations Act.

Business means the businesses carried on by the Company as at the date of this agreement, including the business of producing and supplying pasture and cropping seed.

Business Day means:

 

(a)

for receiving a notice under clause 20, a day that is not a Saturday, Sunday, public holiday or bank holiday in the place where the notice is received; and

 

(b)

for all other purposes, a day that is not a Saturday, Sunday, public holiday or bank holiday in South Australia, Australia.

Business Hours means from 9.00am to 5.00pm on a Business Day.

Business Vehicles Loans means the loans listed in Schedule 3.

Calculation Time means the close of Business on the last Business Day before the Completion Date, or any other time and date that the Vendor and the Purchaser agree in writing.

Claim includes a claim, notice, demand, action, proceeding, litigation, investigation, judgment, damage, loss, cost, expense or liability however arising, whether present, unascertained, immediate, future or contingent, whether based in contract, tort or statute and whether involving a third party or a party to this agreement.

 

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Execution Version

Company means Pasture Genetics Pty Ltd ACN 074 290 252, further details of which are set out in Schedule 2.

Company Revolver means the outstanding balance of the loan facility accounts described in Schedule 11 as at the Completion Date.

Completion means completion of the sale and purchase of the Shares contemplated by this agreement.

Completion Accounts means the balance sheet for the Company prepared in accordance with clause 7.1.

Completion Accounts Dispute Notice means a notice outlining a dispute in respect of the draft Completion Accounts under clause 7.2(b).

Completion Date means the later of 21 February 2020 and 5 Business Days after satisfaction or waiver of all the Conditions.

Conditions means the conditions set out in clause 2.1.

Confidential Information means:

 

(a)

all information of or used by the Company relating to its transactions, operations and affairs;

 

(b)

all other information treated by the Company as confidential;

 

(c)

all notes, data, reports and other records (whether or not in tangible form) based on, incorporating or derived from information referred to in paragraphs (a) or (b) of this definition; and

 

(d)

all copies (whether or not in tangible form) of the information, notes, reports and records referred to in paragraphs (a), (b) or (c) of this definition,

that is not public knowledge (otherwise than as a result of a breach of a confidentiality obligation of a party).

Confidentiality Deed means the Confidentiality Deed entered into by the Company and the Purchaser on 27 June 2017 and the Mutual Nondisclosure Agreement dated 15 November 2019.

Corporations Act means the Corporations Act 2001 (Cth).

Damin Payment means the amount of $200,000.00.

Data Room Material means the due diligence information contained in the USB memory stick exhibited to this agreement.

Determination Date means the date that is 10 Business Days after the date on which the Completion Accounts are agreed or deemed to be the final Completion Accounts and the Adjustment Amount determined.

Director means Ann Elizabeth Damin.

Disclosed means fully and fairly disclosed with sufficient particularity to enable a reasonable person with skills and experience in matters the subject of this agreement and the Business and with the aid of professional advisers, to assess the full impact on the Company of the matter sought to be disclosed.

Disclosure Letter means the letter from the Warrantors to the Purchaser of the same date as this agreement entitled 'Disclosure Letter' and which contains disclosures in respect of the Warranties.

DLF Agreement means the agreement between the Company and DLF Seeds Limited with a commencement date of 20 October 2009.

Due Diligence Material means the information and documents provided by the Vendor or its Representatives to the Purchaser or its Representatives before the date of this agreement, a list

 

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Execution Version

of which is attached to the Disclosure Letter and includes the Data Room Material, the information in this agreement and any schedules or annexures.

Earn-Out Accounts means the Accounts for the Company prepared in accordance with clause 9 and Item 3 of Schedule 5.

Earn-Out Amount means the amount, if any, calculated under clause 8.

Earn-Out Date means 30 September 2022.

EBITDA means the earnings before interest, tax, depreciation and amortization determined in accordance with the Accounting Standards.

External Debt means the Company Revolver and the Business Vehicles Loans, save always that the External Debt must not exceed $12,000,000.

good faith means an act, omission or decision without malice or capriciousness and without an intention of frustrating effect being given to this agreement.  For the avoidance of doubt, a party will not be taken not to be acting in good faith merely because:

 

(a)

the party prefers its own interests;

 

(b)

if the party acted in another way, the party would not be substantially disadvantaged by so acting; or

 

(c)

another party is substantially disadvantaged by the party so acting.

Governmental Authority includes any governmental, semi-governmental, municipal or statutory authority, instrumentality, organisation, body or delegate (including any town planning or development authority, public utility, environmental, building, health, safety or other body or authority) having jurisdiction, authority or power over or in respect of the Company, the Business or the Properties.

Group means the Company and each of its subsidiaries.

Guarantee means a guarantee or indemnity granted by the Company to any person in respect of any Liabilities of the Vendor or Associate of the Vendor (excluding the Company).

Independent Accountant means a chartered accountant or firm of chartered accountants appointed under clause 7.8 or 9.5 (as relevant).

Initial Purchase Price means $12,000,000 less the amount of the External Debt, save always that the Initial Purchase Price shall not be less than zero.

Key Employees means the persons named in Item 2 of Schedule 4.

Leases means the leases entered into in respect of the Leasehold Properties in satisfaction of Condition 4 of clause 2.1.

Leasehold Properties means the leasehold properties listed in Schedule 7 utilised in the operations of the Business.

Liabilities includes all liabilities (whether actual, contingent or prospective), losses, damages, costs and expenses of whatever description.

Management Accounts means the un-audited financial statements of the Company as at 31 December 2019

Material Adverse Effect means any event, change, circumstance, effect, occurrence or other matter, whether known or unknown at the time of this agreement and notwithstanding any other provision of this agreement or the course of dealings between the parties in connection with this agreement, that has or could reasonably be expected to have either individually or in aggregate, with or without notice, lapse of time or both, a short term or long term material adverse effect on:

 

(a)

the business, assets, liabilities, properties, condition (financial or otherwise), operating results, operations, reputation or prospects of the Company; or

 

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Execution Version

 

(b)

the ability of the Vendor to perform its obligations under this agreement or to consummate in a timely manner the transactions contemplated by this agreement,

and includes, without limitation, any such event, change, circumstance, effect or other matter that has or is reasonably likely to have:

 

(c)

the effect of reducing the profit generated by the Business in respect of the preceding twelve months by $100,000 or more;

 

(d)

the effect of reducing the consolidated assets of the Company from the amount disclosed in the Accounts by more than $100,000;

The burden of proof that there has not been, nor could there reasonably be expected to be, a Material Adverse Effect rests with the Vendor.

Necessary Approvals means, in respect of the Approval Contract, all approvals, amendments, consents or waivers required under the terms of that Approval Contract solely in order to effect all of the transactions contemplated by this agreement without:

 

(a)

breaching the terms of the Approval Contract; or

 

(b)

giving rise to, or permitting any party to the Approval Contract to exercise, any right under the relevant Approval Contract (including any right to terminate the Approval Contract).

Permitted Security Interest means any of:

 

(a)

a security interest referred to in Schedule 8; and

 

(b)

a Security Interest in favour of any Government Authority for taxes, rates or charges which are not overdue or are being contested or litigated in good faith.

Parent Company means S&W Seed Company, a Nevada corporation.

Personal Guarantee means any guarantee given by either the Vendor or Damin to any person in relation to Liabilities of the Company.

PG Amount means the amount calculated as the average PG Earnings for the Company over the two (2) financial years ending 30 June 2021 and 30 June 2022 in accordance with the Earn-Out Accounts.

PG Earnings means the amount shown in the Earn–Out Accounts prepared in accordance with the Accounting Standards and Item 3 of Schedule 5 and agreed by the parties, deemed to be agreed by the parties or determined by the Independent Accountant (as the case may be) under clause 9.

PPSA means the Personal Property Securities Act 2009 (Cth).

Properties means the real property (whether leasehold or freehold) listed in Schedule 7.

Purchase Price means the Initial Purchase Price and the Earn-Out Amount and must not exceed $20,000,000.

Records means all original and copy records, documents, books, files, reports, accounts, plans, correspondence, letters and papers of every description and other material regardless of their form or medium and whether coming into existence before, on or after the date of this agreement, of the Company including certificates of registration, minute books, statutory books and registers, books of account, Tax returns, title deeds and other documents of title, customer lists, price lists, computer programs and software, and trading and financial records.

Representatives means, in relation to a person or entity, its officers, employees, contractors, agents, advisers, or financiers.

RI Chair means the Chair of the Resolution Institute.

Security Interest means a 'security interest' as defined in the PPSA.

 

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Execution Version

Shares means all of the shares in the capital of the Company owned by the Vendor as described in Schedule 1.

Stock means the trading stock, work-in progress, raw materials, consumables and packaging for use in the Business.

Subject Claim means a Claim by the Purchaser against the Vendor arising as a direct or indirect result of a breach of a Warranty, breach of any provision of this agreement or the entry into this agreement by the Purchaser and includes, for the avoidance of doubt, a Tax Subject Claim.

Sunset Date means the date 60 days after the execution of this agreement.

Tax means all forms of taxes, duties, imposts, charges, withholdings, rates, levies or other governmental impositions of whatever nature and by whatever authority imposed, assessed or charged together with all costs, charges, interest, penalties, fines, expenses and other additional statutory charges, incidental or related to the imposition.

Tax Audit means any audit, enquiry or investigation by a Tax Authority regarding the taxation affairs of the Company in relation to a period that includes any day before Completion.

Tax Authority means any government, semi-government, administrative, municipal, statutory, fiscal or judicial body, department, commission, authority, tribunal, agency, entity or person responsible for the collection of any Tax or administration of any law with respect to Tax.

Tax Claim means an assessment, notice, amended assessment, demand or other document issued by or taken by or on behalf of any Tax Authority against the Company whether before or after the date of this agreement as a result of which the Company is liable to make a payment for Tax or is deprived of the benefit of any Tax Relief and also includes any amounts payable by the Company under a valid tax sharing agreement under section 721–25 of the 1997 Tax Act, to the extent that it relates to:

 

(a)

any period up to and including Completion; or

 

(b)

any fact, circumstance, event, transaction, act or omission occurring or deemed to have occurred prior to Completion.

Tax Indemnity means the indemnity given by the Warrantors under clause 15.

Tax Law means any law with respect to or imposing any Tax.

Tax Liability means all Liabilities relating to Tax including:

 

(a)

any Tax payable by the Company (or for which the Company is liable, whether directly or pursuant to any agreement relating to Tax) or any loss or reduction of any Tax Relief of the Company; and

 

(b)

all costs and expenses incurred by or on behalf of the Company in managing any Tax enquiry, dispute or similar action.

Tax Relief means any credit, rebate, refund, relief, allowance or deduction in relation to Tax (including any carry forward Tax losses that accrue before Completion or become available before Completion).

Tax Subject Claim means a Claim by the Purchaser for a breach of a Tax Warranty or Tax Indemnity.

Tax Warranties means the Warranties that comprise Warranty 13 in Schedule 6.

Third Party means a person that is not a party or an Associate of a party.

Third Party Interest means any:

 

(a)

Security Interest;

 

(b)

lease, licence, option, voting arrangement, notation, restriction;

 

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Execution Version

 

(c)

interest under any agreement, equity or trust;

 

(d)

easement, restrictive covenant, caveat or similar restriction over property; or

 

(e)

other right, entitlement or interest of any nature held by a Third Party.

Transaction Document means each of:

 

(a)

this agreement;

 

(b)

the Confidentiality Deed; and

 

(c)

the Disclosure Letter.

VWAP means, for any trading day, the volume weighted average trading price of a share of the Parent Company common stock on the NASDAQ Stock market for such trading day.

Warranties means each of the representations and warranties given under clause 11 and set out in Schedule 6.

Warrantors means the Vendor and Damin.

Warranty Claim means a claim that a Warranty given by the Vendor is untrue, inaccurate, incomplete, misleading or otherwise deficient.

 

1.2

Interpretation

In this agreement, except where the context otherwise requires:

 

(a)

the singular includes the plural and vice versa, and a gender includes other genders;

 

(b)

another grammatical form of a defined word or expression has a corresponding meaning;

 

(c)

a reference to a clause, paragraph, schedule or annexure is to a clause or paragraph of, or schedule or annexure to, this agreement, and a reference to this agreement includes any schedule or annexure;

 

(d)

a reference to a document or instrument includes the document or instrument as novated, altered, supplemented or replaced from time to time;

 

(e)

a reference to A$, $A, dollar or $ is to Australian currency;

 

(f)

a reference to USD is to United States of America dollars;

 

(g)

a reference to time is to Australia Central Standard time;

 

(h)

a reference to a party is to a party to this agreement, and a reference to a party to a document includes the party's executors, administrators, successors and permitted assigns and substitutes;

 

(i)

a reference to a person includes a natural person, partnership, body corporate, association, governmental or local authority or agency or other entity;

 

(j)

a reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re‑enactments or replacements of any of them;

 

(k)

a word or expression defined in the Corporations Act has the meaning given to it in the Corporations Act;

 

(l)

the meaning of general words is not limited by specific examples introduced by including, for example or similar expressions;

 

(m)

any agreement, representation, warranty or indemnity by two or more parties (including where two or more persons are included in the same defined term) binds them jointly and severally;

 

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Execution Version

 

(n)

any agreement, representation, warranty or indemnity in favour of two or more parties (including where two or more persons are included in the same defined term) is for the benefit of them jointly and severally;

 

(o)

a rule of construction does not apply to the disadvantage of a party because the party was responsible for the preparation of this agreement or any part of it;

 

(p)

if a day on or by which an obligation must be performed or an event must occur is not a Business Day, the obligation must be performed or the event must occur on or by the next Business Day;

 

(q)

a reference to except as disclosed is to something disclosed in this agreement, the Due Diligence Material and/or the Disclosure Letter; and

 

(r)

a reference to as far as the Warrantors are aware or to the Warrantors' knowledge, or words to that effect, in relation to a matter, is to the actual knowledge of any of the following persons as at the date of this agreement after having made due and proper enquiries:

 

(i)

the Vendor;

 

(ii)

Damin.

1.3

Headings

Headings are for ease of reference only and do not affect interpretation.

1.4

Foreign Exchange

Any amounts payable in this agreement must be paid in $A.  Any amounts requiring conversion between $A and USD (including for purposes of determining the subscription price for Parent Company common stock under clause 8.3) shall be done at the USD/AUD closing wholesale spot exchange rate published by the Australian Financial Review for the day that is 2 Business Days before the date set for calculation of the relevant amount.

2.

Conditions

2.1

Conditions

Completion must not occur until all of the following Conditions are fulfilled:

 

 

1.All Necessary Approvals required under the Approval Contract is obtained either:

a.without conditions or requirements; or

b.with conditions and requirements that are acceptable to the Purchaser (acting reasonably).

The Purchaser

2.The Purchaser obtains a replacement working capital facility and Business Vehicle Loans for the Company, secured only by the assets of the Company and otherwise on terms satisfactory to the Purchaser acting reasonably, that permit the Company to repay the full amount outstanding in relation to the Company Revolver and Business Vehicle Loans at Completion.

The Purchaser

3.The lessors, as described in Schedule 7, entering into long term leases with the Company in relation to the Leasehold Properties from Completion on terms annexed as Annexure A.

The Purchaser

 

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Execution Version

4.Each Key Employee enters into a new employment agreement with the Company, on terms acceptable to the Purchaser, effective from Completion.

The Purchaser

5.There is no material breach of any of the Warranties nor any facts or circumstances that may reasonably be expected to give rise to a material breach of any of the Warranties. For the purpose of this condition, 'material breach' means a breach which has, or, in the reasonable opinion of the Purchaser is likely to have, either individually or when aggregated with other matters, events or circumstances, a material adverse effect on the Business or Assets or the financial or trading position, liabilities, revenue, earnings, financial condition, profitability or prospects of the Vendor or the Business by:

a.diminishing the net assets of the Business by an amount of $100,000 or more;

b.or reducing the EBITDA generated by the Business in respect of the financial year ended 30 June 2019 or financial year ending 30 June 2020 by $100,000 or more.

The Purchaser

6.There are no matters, events or circumstances which have had, or, in the reasonable opinion of the Purchaser, are likely to have, a Material Adverse Effect.

The Purchaser

2.2

Waiver of Conditions

A Condition may only be waived in writing by each party entitled to the benefit of that Condition (as specified in relation to each Condition in the second column of the table in clause 2.1) and will be effective only to the extent specifically set out in that waiver.

2.3

Conduct of the parties

Each party must use all reasonable efforts within its own capacity to ensure that each Condition is fulfilled before 5.00pm on the Sunset Date.

2.4

Failure of Condition

If a party has complied with its obligations under clause 2.3, it may terminate this agreement by giving notice in writing to the other parties if one or more Conditions are not fulfilled by 5.00pm on the Sunset Date or another date agreed by the parties in writing.

3.

Sale and purchase of Shares

3.1

Agreement to sell and purchase

The Vendor as legal and beneficial owner agrees to sell to the Purchaser and the Purchaser agrees to buy from the Vendor the Shares:

 

(a)

for the Purchase Price;

 

(b)

free from Security Interests;

 

(c)

with all rights, including dividend and voting rights, attached or accrued to them on or after the Completion Date; and

 

(d)

subject to this agreement.

3.2

Title and risk

Beneficial title to and risk in the Shares passes to the Purchaser on Completion.

 

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3.3

All of the shares

The Purchaser will not be obliged to complete the purchase of any of the Shares unless the purchase of all the Shares is completed simultaneously in accordance with this agreement.

3.4

Damin obligations

 

(a)

In consideration of Damin providing the covenants under clauses 11, 12 and 16, the Purchaser shall pay to Damin the Damin Payment subject to and at Completion.

 

(b)

Damin acknowledges and agrees that the Damin Payment is reasonable and appropriate consideration for him to provide the covenants under clauses 11, 12 and 16, and he warrants that he has received independent legal advice in respect thereof.

4.

Initial Purchase Price of Shares

4.1

Payment of the Initial Purchase Price

The Purchaser must pay the Initial Purchase Price on Completion in accordance with clauses 6.3(a) and 4.2.

4.2

Cleared funds

All payments under this agreement must be paid by bank cheque or telegraphic transfer to an account or accounts nominated by the Vendor in cleared funds.

4.3

Breach of agreement by the Purchaser

If the Purchaser breaches a provision of this agreement in a material respect, the Vendor may require the Purchaser to remedy the breach within ten Business Days after receipt of written notice of the breach by the Purchaser.  If the Purchaser fails to remedy the breach within that period, then the Vendor may terminate this agreement. For the purposes of this clause 4.3, any breach of any of the provisions of clauses 2 or 6.3 shall be treated as a breach of a provision of this agreement in a material respect.

5.

Obligations before Completion

5.1

Continuity of business

Until Completion, the Vendor must carry on the Business in the ordinary course.

5.2

Prohibited actions

Subject to clause 5.3, until the earlier of Completion or the termination of this agreement, the Vendor must procure that the Company does not, without the prior written consent of the Purchaser (such consent not to be unreasonably withheld or delayed), do, nor authorise, agree or commit to, any of the following:

 

(a)

alter its constitution or constituent documents;

 

(b)

adopt or change any of its accounting policies, principles, methods, practices, periods or procedures, including any change in the application or interpretation of any applicable accounting principles;

 

(c)

make any Tax election, change any annual Tax accounting period, amend any Tax return, settle or compromise any income Tax Liability, enter into any closing agreement, settle any Tax claim or assessment, surrender any right to claim a Tax refund or fail to make any Tax payments or consent to any extension or waiver of the limitations period applicable to any Tax claim or assessment;

 

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(d)

amalgamate, merge or consolidate the Company with any other entity, issue any shares in the Company or remove any physical assets from the Properties other than in the ordinary and usual course of business;

 

(e)

issue, deliver, sell, transfer, pledge, grant, dispose of, or create, permit, allow or suffer to exist any Third Party Interest on, any Shares;

 

(f)

issue, deliver, sell, transfer, pledge, grant, transfer or dispose of, or create, permit, allow or suffer to exist any Third Party Interest on, any options, warrants, securities convertible into or exercisable for shares in the Company (including convertible debt) or other rights to purchase or obtain any shares in the Company;

 

(g)

save as approved by the Purchaser in writing, distribute or return any capital or pay or declare any dividend to its members or undergo any capital reorganisation or change in its capital structure;

 

(h)

pass any resolution of the members of the Company (whether in a general meeting or otherwise);

 

(i)

enter into any joint venture, partnership, unincorporated association, alliance or similar arrangement with any person;

 

(j)

enter into, amend or terminate (or agree to enter into, amend or terminate) a contract or commitment that:

 

(i)

would have or is reasonably likely to have a Material Adverse Effect;

 

(ii)

will result in aggregate receipts or expenditure in excess of $50,000; or

 

(iii)

is for a term of more than one year.

 

(k)

create a Third Party Interest over, sell, transfer, lease or otherwise dispose of any Asset other than acquisitions or disposals in the ordinary and usual course of business and for less than $20,000 for any single item or $50,000 in aggregate;

 

(l)

incur any capital expenditure exceeding $20,000 for any single item or $50,000 in aggregate for all items;

 

(m)

purchase, lease or otherwise acquire or agree to acquire any individual asset, with a value of more than $50,000;

 

(n)

cancel, waive, release or discount in whole or in part any debt, suit, demand, claim or right of more than $50,000;

 

(o)

do anything that would result in the External Debt exceeding $12,000,000;

 

(p)

shorten or lengthen the customary payment cycle for any of its accounts payable or accounts and notes receivable by more than 60 days;

 

(q)

enter into any new line of business;

 

(r)

save for any payment plans or discount arrangements in place as at the date of this agreement, make any payments, engage in any discount activity or give any other consideration to actual or potential customers or suppliers, other than payments not exceeding $10,000 individually and $20,000 in the aggregate;

 

(s)

do or fail to do anything as a result of which any of the Warranties are breached or are untrue, inaccurate or misleading;

 

(t)

amend the terms of engagement of, or terminate the employment or encourage the resignation of, any employee of the or agree to hire any employee, agent or contractor in the Business or enter into, amend the terms of or terminate any agreement, arrangement or understanding in respect of enterprise agreements related to employees of the Business;

 

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(u)

sell any real property or terminate any lease in relation to real property;

 

(v)

pay, authorise the payment of or agree or commit to pay any bonuses or other incentives to any employee, agent or contractor of the Business other than under an arrangement in place prior to the date of this agreement;

 

(w)

take any action or omit to take any action (in either case within its control) or enter into any contract or transaction that (i) could reasonably be expected to impair or prevent the consummation of the transactions contemplated by this agreement or (ii) cause or result in any of the Warranties to be untrue at any time after the date of this agreement through to the Completion Date; or

 

(x)

enter into or approve any contract to do, engage in or cause any of the foregoing.

5.3

Exceptions

Nothing in this clause 5 prevents any action to the extent:

 

(a)

contemplated or required by this agreement;

 

(b)

required, in the written opinion of outside counsel to the Vendor, by law or any Governmental Authority; or

 

(c)

agreed to in writing between the Vendor and the Purchaser (such agreement not to be unreasonably withheld or delayed).

5.4

Access to Business and Records

The Vendor will allow the Purchaser and its Representatives full access to the Properties and the Records at all reasonable times before Completion to enable the Purchaser to, as is reasonably necessary, become familiar with the Business and the affairs of the Company.

5.5

External Debt Estimate

At 5:00pm on the day that is two Business Days before the Completion Date, the Vendor must advise the Purchaser of the amount of External Debt as at that time together with the Vendor's bona fide estimate of any changes to the amount of External Debt as at Completion Date (Estimated External Debt).  The Estimated External Debt shall be used for the purposes of calculating the Initial Purchase Price payable at Completion but will be subject to reconciliation as part of preparation of the Completion Accounts in accordance with clause 7.

5.6

Purchaser's obligations

Before Completion, the Purchaser must provide to the Company a written consent to act as director in respect of each of the persons listed in the third and fourth columns of the table under Item 1 in Schedule 4 (or any other prospective directors notified in writing by the Purchaser to the Vendor before Completion), and consent to act as company secretary and public officer of at least one of them.

5.7

Right to copy and consult

For the purposes of clause 5.4, the Purchaser may:

 

(a)

make copies of material examined;

 

(b)

consult with the Director; and

 

(c)

with the prior consent of the Vendor (which consent may not be unreasonably withheld), consult with employees of the Company.

 

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5.8

Release of personal guarantees

 

(a)

The Purchaser must use reasonable endeavours to procure the release of the Personal Guarantees listed in Schedule 10 with effect from Completion (Listed Guarantees), including by the Purchaser procuring a replacement guarantee to the relevant party.

 

(b)

If any Listed Guarantee is not released with effect from Completion, the Purchaser must use best endeavours to procure the release of the Vendor or Damin from such Listed Guarantees (including providing a replacement guarantee to the relevant party) as soon as possible after Completion.

 

(c)

If a Personal Guarantee is not released with effect from Completion, the Purchaser irrevocably and unconditionally indemnifies the Vendor and Damin on a full indemnity basis from and against any Claim or Liability however arising out of the Personal Guarantee that may be suffered or incurred by the Vendor or Damin which relates to debts and Liabilities incurred by the Company after Completion.

 

(d)

The Vendor and Damin shall from the date of this agreement provide the Purchaser with all reasonable assistance to facilitate any discussions between the Purchaser and beneficiary of any Listed Guarantee.

6.

Completion

6.1

Time and place

If all the Conditions have been fulfilled or waived under clause 2.2, Completion will take place at 11:00am on the Completion Date at the offices of Minter Ellison, Level 10, 25 Grenfell Street Adelaide, South Australia or another time and place agreed by the parties.

6.2

Obligations of the Vendor

At or before Completion:

 

(a)

the Vendor must, in respect of the Shares:

 

(i)

deliver to the Purchaser duly executed and completed transfers (prepared by the Purchaser) in favour of the Purchaser of the Shares in registrable form (except for the impression of stamp duty or other taxes of a similar nature) together with the relevant share certificates (if any); and

 

(ii)

if the Vendor is unable to deliver the certificate for its Shares in accordance with clause 6.2(a)(i) due to the certificate being lost, stolen or destroyed, then that Vendor must deliver to the Purchaser a duly executed indemnity in respect of the certificate in favour of the Company, on terms satisfactory to the Purchaser; and

 

(iii)

produce to the Purchaser any power of attorney or other authority under which the transfers of the Shares are executed;

 

(b)

the Vendor must:

 

(i)

deliver to the Purchaser:

 

(A)

duly executed instruments (prepared by the Purchaser) irrevocably waiving in favour of the Purchaser all rights of pre-emption which any person has in respect of any of the Shares (if any);

 

(B)

full written releases and discharges for all Security Interests over the Company, its assets or the Shares except for the Permitted Securities, in each case satisfactory to the Purchaser (acting reasonably), or a statement in writing in accordance with section 275(1)(b) of the PPSA setting out that the amount or obligation that is secured is nil as at

 

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Completion, in either case from the relevant holders of those Security Interests, and, if applicable, an undertaking to remove all relevant registrations on the PPSA register as soon as practicable but no later than 20 Business Days following the Completion Date; or

 

(C)

except in relation to PPS registration 201603020022598 in favour of the Commonwealth Bank of Australia which will require compliance with clause 6.2(b)(i)(B), if despite using reasonable endeavours to obtain releases and discharges prior to Completion they are not obtained, then an undertaking from the Vendor to obtain the releases and discharges, or the statements, referred to in clause 6.2(b)(i)(B) as soon as reasonably practicable but no later than 20 Business Days following the Completion Date;

 

(D)

copies of any other consents and waivers required under clause 2 to the extent that those consents and waivers have been obtained;

 

(ii)

cause the board of directors of the Company to resolve that the transfers of the Shares (subject only to the payment of stamp duty or other taxes of a similar nature on the transfers) be approved and registered;

 

(iii)

deliver her resignation as director and company secretary from the board of directors of the Company and as public officer of the Company, with effect from the appointments made under clause 6.2(b)(iv);

 

(iv)

cause the persons listed in the third and fourth columns of the table under Item 1 in Schedule 4 (or any other persons notified in writing by the Purchaser to the Vendor before Completion) to be appointed as directors and secretary and public officer (as applicable) of the Company (as applicable) with effect from Completion;

 

(v)

cause the change, with effect from Completion, of all authorities relating to bank accounts of the Company to include signatories of the Purchaser;

 

(vi)

deliver to the Purchaser all Records by leaving them at the places at the Properties at which they are usually located in the normal course of operations of the Business;

 

(vii)

deliver to the Purchaser all keys and access codes for Properties and for all computer systems and software;

 

(viii)

deliver to the Purchaser the common seal (if any) of the Company;

 

(ix)

deliver to the Purchaser the ASIC corporate key for the Company; and

 

(x)

do all other things which are required by this agreement to be done by the Vendor at Completion, or which are reasonably required by the Purchaser to give to the Purchaser the full possession and benefit of the Shares and control of the Company.

6.3

Obligations of the Purchaser

The Purchaser must:

 

(a)

at Completion pay the Initial Purchase Price to the Vendor in accordance with clause 4;

 

(b)

at Completion pay the Damin Payment to Damin; and

 

(c)

at or before Completion, deliver to the Vendor:

 

(i)

any consents or waivers required under clause 2; and

 

(ii)

counterparts of all documents that the Vendor is required to deliver under clause 6.2 to which the Purchaser is a party or which otherwise contemplates execution by the Purchaser, duly executed by the Purchaser.

 

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6.4

Simultaneous actions at Completion

In respect of Completion:

 

(a)

the obligations of the parties under this agreement are interdependent;

 

(b)

all actions required to be performed will be taken to have occurred simultaneously on the Completion Date; and

 

(c)

a party need not complete the sale or purchase of any of the Shares unless the sale and purchase of all the Shares is completed simultaneously.

7.

Completion Accounts

7.1

Preparation of Completion Accounts

Within 20 Business Days after Completion, the Purchaser must procure that the Company prepares draft Completion Accounts in accordance with the Accounting Standards and consistent with the accounts set out in Items 1 and 2 of Schedule 5, and provides a copy, together with copies of the working papers relating to the preparation of the draft Completion Accounts, to the Vendor.

7.2

Vendors’ review of Completion Accounts

Within 15 Business Days after the Purchaser provides a copy of the draft Completion Accounts to the Vendor under clause 7.1 the Vendor may:

 

(a)

accept those draft Completion Accounts by written notice to the Purchaser, in which case those draft Completion Accounts will constitute the final Completion Accounts; or

 

(b)

dispute the correctness of those draft Completion Accounts by issuing a Completion Accounts Dispute Notice to the Purchaser setting out in reasonable detail the basis of the dispute, including all working papers and calculations, provided that in no case may the Vendor dispute the Purchaser’s application of the Accounting Standards if such application has been accepted by the Purchaser’s independent auditors.

7.3

Deemed acceptance

If the Vendor neither accepts the draft Completion Accounts provided under clause 7.1 nor disputes the correctness of those Completion Accounts in accordance with clause 7.2, the draft Completion Accounts provided under clause 7.1 will constitute the final Completion Accounts.

7.4

Dispute

If the Vendor issues a Completion Accounts Dispute Notice the dispute resolution procedure set out in clause 7.8 will apply.

7.5

Adjustment Amount

The final Completion Accounts must be reviewed, and the Adjustment Amount must be calculated, in accordance with Item 2 of Schedule 5.

7.6

Adjustment of the Earn-Out Amount

The Earn-Out Amount shall be adjusted by any Adjustment Amount.

7.7

Access to information

The Purchaser must ensure that all information and assistance reasonably requested by the Vendor is given to review the draft Completion Accounts and must permit Representatives of the Vendor to have reasonable access to, and take extracts from or make copies of, the Records to review the Completion Accounts.

 

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7.8

Dispute Resolution Procedure

 

(a)

If the Vendor disputes the draft Completion Accounts and serves a Completion Accounts Dispute Notice, within 10 Business Days of the Vendor giving the Purchaser a Completion Accounts Dispute Notice, the Purchaser must give the Vendor a response in writing on the disputed matters and setting out any additional matters in dispute (CA Response).

 

(b)

If the Vendor and the Purchaser have not, acting in good faith, resolved the dispute (including in respect of any additional matters in dispute set out in a CA Response) within 10 Business Days of the Purchaser (as the case may be) giving the CA Response to the Vendor, the dispute must promptly be submitted for determination to the Independent Accountant to determine the matter or matters in dispute.

 

(c)

The Independent Accountant must be agreed by the Vendor and the Purchaser.  If the Vendor and the Purchaser cannot agree within 10 Business Days of a CA Response being received by the Vendor, then either the Vendor or the Purchaser may request that the RI Chair nominates the Independent Accountant.

 

(d)

If the Vendor or the Purchaser requests that the RI Chair nominate the Independent Accountant, the parties must comply with all requirements of the RI Chair for the provision of that nomination including to provide the RI Chair with:

 

(i)

a copy of relevant provisions of this agreement;

 

(ii)

a description of the dispute or issue to be resolved by the Independent Accountant, being the dispute in relation to the draft Completion Accounts; and

 

(iii)

the approximate value of, and the technical area involved in, the dispute.

If the RI Chair nominates a list of persons to be the Independent Accountant rather than one particular person, the first person named on that list will be the Independent Accountant.

 

(e)

The disputed matters must be referred to the Independent Accountant by written submission which must include the draft Completion Accounts, the Completion Accounts Dispute Notice, the CA Response and an extract of the relevant provisions of this agreement.  The Independent Accountant must also be instructed to finish its determination no later than 20 Business Days after its appointment (or another period agreed by the parties).

 

(f)

The parties must promptly supply the Independent Accountant with any information, assistance and cooperation requested in writing by the Independent Accountant in connection with its determination.  All correspondence between the Independent Accountant and a party must be copied to the other parties.

 

(g)

The Independent Accountant must act as an expert and not as an arbitrator and its written determination will be final and binding on the parties in the absence of manifest error and the Completion Accounts will be deemed to be amended accordingly and will be taken to comprise the final draft Completion Accounts.

7.9

Costs

The costs of the:

 

(a)

RI Chair (if requested) in providing his or her nomination of the Independent Accountant; and

 

(b)

Independent Accountant (if instructed),

will be borne by the Purchaser and Vendor as to one half each unless the Independent Accountant determines that there was an error of more than 10% in the Adjustment Amount, in which case the costs will be borne by the Purchaser.

 

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8.

Earn-Out Amount

8.1

Calculation of Earn–Out Amount

Subject to any adjustment in accordance with clause 7.6, the Earn-Out Amount is calculated in accordance with the following.

E = (7.5 x PG) - APP

Where

E means the Earn-Out Amount (which cannot be less than 0 or more than $8,000,000)

PG means the PG Amount

APP means $12,000,000

8.2

Payment of the Earn–Out Amount

The Purchaser must pay the Vendor the Earn–Out Amount on the Earn-Out Date in the following manner:

 

(a)

as to 50% of the Earn-Out Amount, in cash; and

 

(b)

as to the remaining 50% of the Earn-Out Amount, in cash subject to clause 8.3 (Second Tranche).

8.3

Common Stock

 

(a)

The Second Tranche will be payable in cash; provided, however, that, no less than 10 Business Days prior to the Earn-Out Date, the Purchaser may, by written notice to the Vendor, require the Vendor to issue an irrevocable direction directing the Purchaser to pay up to the full amount of the Second Tranche to Parent Company as consideration for the purchase of shares of common stock in Parent Company on behalf of the Vendor.  

 

(b)

The purchase price for each of the common stock shares to be purchased by the Vendor (the "Earnout Shares") will be equal to the average VWAP over the 10-day period ending immediately prior to the Earn-Out Date, as determined by Purchaser. In no event shall the number of Earnout Shares exceed 19.9% of the issued and outstanding shares of the Parent Company common stock as of the date of this agreement.

 

(c)

The Vendor agrees that, upon delivery of the Purchaser's notice in accordance with clause 8.3(a) above, the Vendor shall, on the Earn-Out Date, purchase the Vendor Shares pursuant to a stock purchase agreement, dated as of the Earn-Out Date, in substantially the form included in Schedule 12. In addition, the Vendor shall do all things, including signing documents, as the Purchaser may reasonably require in order to give effect to the issuance of the Earnout Shares.

 

(d)

Following the issue of a notice under clause 8.3(a), if the value of the Second Tranche is such that it would result in the Earn-Out Shares exceeding 19/9% of the issued share capital in the Parent Company, then:

 

(i)

a portion of the Second Tranche will be applied to issue Earn-Out Shares up to 19.9% of the issued share capital in the Parent Company; and

 

(ii)

the balance of the Second Tranche will be paid to the Vendor in cash within 14 days of the Earn-Out Date.

8.4

Cleared funds

All cash payments under this clause 8 must be paid by bank cheque, telegraphic transfer to an account or accounts nominated by the Vendor or otherwise in cleared funds.

 

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9.

Preparation of Earn-Out Accounts

9.1

Preparation of Earn–out Accounts

As soon as practicable, and in any event no later than 30 days prior to the Earn-Out Date, the Purchaser must:

 

(a)

prepare draft Earn–Out Accounts in a form consistent with the principles set out in Item (j) of Schedule 5;

 

(a)

deliver a copy of those draft Earn–Out Accounts to the Vendor for its review;

 

(b)

include in the Earn-Out Accounts delivered to the Vendor specific detail of each individual amount in respect of which the Purchaser has claimed a set-off under clause 14.2; and

 

(c)

notify the Vendor of the proposed Earn-Out Amount based on the draft Earn–Out Accounts.

9.2

Access to information to review draft Earn–Out Accounts

The Purchaser must ensure the Vendor and its Representatives are allowed to examine all working papers relating to the draft Earn–Out Accounts reasonably required by them for the purpose of reviewing the draft Earn–Out Accounts.

9.3

Notice by Vendor

Within 15 days after receiving the draft Earn–Out Accounts (Objection Period), the Vendor must give the Purchaser notice that the Vendor either:

 

(a)

agrees that the draft Earn–Out Accounts have been properly prepared in accordance with clause 9.1(a) and the Earn-Out Amount has been properly calculated; or

 

(b)

does not agree that the draft Earn–Out Accounts have been properly prepared in accordance with clause 9.1(a) or that the Earn-Out Amount has been properly calculated, setting out reasonable details of each matter in dispute and the reasons why each matter is in dispute (each a Disputed Matter) including all working papers and calculations, provided that in no case may Vendor dispute Purchaser’s application of the Accounting Standards if such application has been accepted by Purchaser’s independent auditors.

9.4

Consequences of notice by Vendor

If the Vendor:

 

(a)

gives the Purchaser a notice under clause 9.3(a), the draft Earn–Out Accounts, including the Earn-Out Amount, are final and binding on the Purchaser and the Vendor;

 

(b)

gives the Purchaser a notice under clause 9.3(b) (Dispute Notice), the Disputed Matters must be resolved under clause 9.5; or

 

(c)

fails to give the Purchaser any notice under clause 9.3 within the Objection Period, the draft Earn–Out Accounts, including the Earn-Out Amount, are taken to have been agreed by the Vendor and are final and binding on the Purchaser and the Vendor.

9.5

Dispute resolution procedure

 

(a)

If the Vendor gives the Purchaser a Dispute Notice, the Purchaser must give the Vendor a written response to each of the Disputed Matters within 10 Business Days after the end of the Objection Period (EA Response).

 

(b)

If the Vendor and the Purchaser have not, acting in good faith, resolved the Disputed Matters within 10 Business Days of the Purchaser giving its EA Response to the Vendor, the Disputed Matters must be promptly submitted to the Independent Accountant to determine.

 

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(c)

The Independent Accountant must be agreed by the Vendor and the Purchaser.  If the Vendor and the Purchaser cannot agree on the Independent Accountant within five Business Days of the Vendor giving its EA Response to the Purchaser, then either the Vendor or the Purchaser may request that the RI Chair nominates the Independent Accountant.

 

(d)

If the Vendor or the Purchaser request that the RI Chair nominate the Independent Accountant, the parties must comply with all requirements of the RI Chair for the provision of that nomination including to provide the RI Chair with:

 

(i)

a copy of relevant provisions of this agreement;

 

(ii)

a description of the Disputed Matters to be resolved by the Independent Accountant; and

 

(iii)

the approximate value of, and the technical area involved in, the dispute.

If the RI Chair nominates a list of persons to be the Independent Accountant rather than one particular person, the first person named on that list will be the Independent Accountant.

 

(e)

The Disputed Matters must be referred to the Independent Accountant by written submission, which must include:

 

(i)

the draft Earn–Out Accounts and calculation of the Earn-Out Amount;

 

(ii)

the Dispute Notice;

 

(iii)

the EA Response;

 

(iv)

an extract of the relevant provisions of this agreement; and

 

(v)

instructions to determine the Disputed Matters no later than 20 Business Days after the Independent Accountant's appointment (or any other period agreed by the parties).

 

(f)

The parties must promptly supply the Independent Accountant with any information, assistance and cooperation requested in writing by the Independent Accountant in connection with its determination.  All correspondence between the Independent Accountant and a party must be copied to the other parties.

 

(g)

The Independent Accountant must act as an expert, and not as an arbitrator, in determining the Disputed Matters.

 

(h)

In the absence of manifest error:

 

(i)

the Independent Accountant's written determination of the Disputed Matters will be final and binding on the parties; and

 

(ii)

the draft Earn–Out Accounts, including the Earn-Out Amount, are taken to be amended in accordance with the Independent Accountant's written determination and, as amended, are taken to comprise the final Earn–Out Accounts and Earn-Out Amount.

 

(i)

The costs of the:

 

(i)

RI Chair (if requested) in providing his or her nomination of the Independent Accountant; and

 

(ii)

Independent Accountant (if instructed),

will be borne by the Purchaser and Vendor equally unless the Independent Accountant determines that there was an error of more than 10% in the Earn-Out Amount, in which case the costs will be borne by the Purchaser.

 

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10.

Vendor Guarantees

 

(a)

Before Completion, the Vendor must use best efforts to procure that, effective from Completion, if the Company has provided a Guarantee, that it is released from any actual, contingent or accrued liabilities under that guarantee or indemnity.

 

(b)

If the Company has not been released from a Guarantee by Completion, the Vendor indemnifies the Company from and against any Claims that the Company suffers or incurs under or in connection with that Guarantee.

11.

Warranties

11.1

Mutual Representations and Warranties

Each of the parties represents and warrants that:

 

(a)

it has the power to enter into this agreement and has taken all corporate and other actions necessary to authorise the execution, delivery and performance of this agreement;

 

(b)

this agreement constitutes a valid, legally binding obligation on it;

 

(c)

the execution, delivery and performance of this agreement will not violate any provision of its constitution or any provision of any document or agreement to which it is a party or which is binding upon it or any of its assets; and

 

(d)

all authorisations, consents and approvals (if any) required from any government agency have been obtained.

11.2

Purchaser’s warranties

 

(a)

The Purchaser represents and warrants that the issue of any shares of common stock in the Parent Company to the Vendor under clause 8 will comply with the securities laws of the United States of America.

 

(b)

Each warranty of the Purchaser is separate and independent and unless expressly provided is not limited by any other Purchaser Warranty or provision of this Agreement.

11.3

Warranties

The Warrantors jointly and severally represent and warrant to the Purchaser that as at execution and exchange of this agreement, each of the Warranties are and, up to and including Completion, will be true and accurate and not misleading.

11.4

Reliance of the Purchaser

Each Warrantor acknowledges that the Purchaser enters into this agreement and will complete the sale and purchase of Shares under this agreement in reliance on the Warranties.

11.5

Application of Warranties

Each of the Warranties:

 

(a)

remains in full force after Completion;

 

(b)

is separate and independent and not limited or restricted by any other Warranty or provision of this agreement; and

 

(c)

is not affected or limited in any way by any investigation made by or on behalf of the Purchaser or any information relating to the Business of which the Purchaser has knowledge, actual or constructive, except to the extent that it is disclosed under clause 11.6.

 

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11.6

Qualifications to warranties

 

(a)

The Warranties are qualified by, and the Purchaser and any related body corporate of the Purchaser may not make any Subject Claim for, anything which is Disclosed in this agreement, the Due Diligence Material or in the Disclosure Letter, or information which could be obtained from searching the:

 

(i)

companies register maintained by the Australian Securities and Investments Commission;

 

(ii)

the register of security interests maintained by the registrar under the PPSA;

 

(iii)

the registers of intellectual property maintained by IP Australia,

five (5) Business Days before the date of this agreement.

 

(b)

Without limiting clause 11.6(a), the Warrantors are not liable to the Purchaser for any Subject Claim or Liability:

 

(i)

to the extent that a provision or reserve in relation to the facts, matters, circumstances (including Taxes) giving rise to the Claim or Liability has been specifically provided for in the Accounts or Completion Accounts (unless a specific indemnity has been provided by the Vendor in respect of the relevant fact, matter, circumstance);

 

(ii)

to the extent that an accrual, allowance, provision or reserve in the Accounts or Completion Accounts in respect of a fact, matter or circumstance exceeds the actual liability in respect of that fact, matter or circumstance and that liability has been finally satisfied;

 

(iii)

if the Claim arises from, or to the extent that amount of the Claim is increased as a result of, a change in the rate of Tax or the method of calculating the rate of Tax in each case after the date of this agreement but which is not actually or prospectively in force as at the date of this agreement;

 

(iv)

to the extent that the Claim arises or is increased as a result of any change in Accounting Standards after Completion;

 

(v)

if the liability for that Claim is a contingent liability, unless and until the liability is an actual liability and is due and payable;

 

(vi)

to the extent that the Liability or loss giving rise to the Claim is indirect or consequential, which for the avoidance of doubt includes any loss which is not reasonably foreseeable by the parties or amounts which are punitive or exemplary in nature;  

 

(vii)

to the extent that any Liability or Claim arises or is increased by the passing of, or any change in any law, rule, decision, administrative practice or policy (including any change in any law, rule, decision, practice or policy, which takes effect retrospectively) after Completion;

 

(viii)

to the extent that the Claim arises or is increased as a result of action taken or not taken by the Warrantors at the request, and with the prior written approval, of the Purchaser;

 

(ix)

if the breach is capable of remedy and has been remedied within 15 Business Days to the reasonable satisfaction of the Purchaser.

 

 

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11.7

Reduction in Purchase Price

If payment is made by the Vendor for a breach of a Warranty or under an indemnity, the payment is to be treated as a reduction in the Purchase Price on a dollar-for-dollar basis.  

11.8

Right of reimbursement

The Purchaser must reimburse to the Vendor an amount equal to any sum paid by the Vendor in respect of any Claim or Liability which is subsequently recovered by or received by the Purchaser from any third party (including any insurer), less reasonable costs properly incurred by or on behalf of the Purchaser in connection with that payment or its recovery.

11.9

Monetary limits  

 

(a)

Subject to clause 11.9(b) the Warrantors are not liable to the Purchaser for any Claim under this agreement unless the aggregate amount finally adjudicated or agreed as being payable in respect of:

 

(i)

any such Claim which may be recovered is not less than $50,000; and

 

(ii)

all such Claims which may be recovered is not less than $100,000,

in which case the Warrantors are liable for all of the Claim.

 

(b)

Clause 11.9(a) does not apply in respect of a Claim for a breach of a Tax Warranty, or a breach of Warranties 2, 3, 4, 21 or 26.

11.10

Time Limits on Claims

The Warrantors have no Liability for any Claim, unless the Purchaser has given written notice of the Claim to the Warrantors on or before the date that is:

 

(a)

in respect of any Claim for a breach of a Tax Warranty, or a breach of Warranties 2, 3, 4, 18, 21, 26 or 27, 6 years after the Completion Date; and

 

(b)

in respect of all other Claims, the Earn-Out Date.

11.11

Maximum amount of Claims  

 

(a)

The maximum aggregate amount which the Purchaser may recover from the Warrantors in respect of all Claims, including without limitation a Claim arising out of or in connection with this agreement including a Subject Claim, is the higher of:

 

(i)

Earn-Out Amount calculated under this agreement; or

 

(ii)

the Initial Purchase Price.

 

(b)

Clause 11.11(a) does not apply in respect of a Claim for a breach of a Tax Warranty, or a breach of Warranties 2, 3, 4, 21 or 26.

 

11.12

Fraud

The provisions of clauses 11.6, 11.8, 11.9, 11.10, 11.11, and 11.14 shall not apply in circumstances where the Claim as a result of fraud or intentional misrepresentation by any of the Warrantors.

11.13

No double recovery

The Purchaser is not entitled to recover any Liability or obtain payment, reimbursement, restitution or indemnity more than once in respect of any one Liability, shortfall, deficiency or

 

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other set of circumstances which gives rise to more than one Claim by the Purchaser under this agreement.

11.14

Purchaser to mitigate Loss

The Purchaser or the Company shall take commercially reasonable steps to mitigate or to cause the mitigation of any Liability or loss which it or the Company may suffer or incur and in respect of which it may have a Claim against the Vendor.

11.15

Survival of Warranties

Each Warranty survives Completion and is separate and independent and not limited by reference to any other Warranty.

11.16

Right to rescind

If, prior to Completion, the Purchaser becomes aware that any Warranty given by the Vendor is, or has become untrue, inaccurate or misleading in any material respect or that any material breach of this agreement has occurred, the Purchaser may (without prejudice to any other remedy available to it) immediately terminate this agreement by giving written notice to the Vendor.

11.17

No representation by Company

 

(a)

Each Warrantor acknowledges that the Company does not give any representation, warranty or guarantee about the accuracy of any information or opinion given by the Company or the Company's Representatives to the Vendor or the Vendor's Representatives in connection with the Warranties, the Business, the affairs of the Company, or the negotiation and preparation of this agreement.

 

(b)

Each Warrantor must waive any right or Claim it may have against the Company or the Company's Representatives for any error or misrepresentation in, or omission from, any information or opinion referred to in clause 11.17(a).

11.18

Acknowledgment of parties

Each party acknowledges that:

 

(a)

the party is a sophisticated business person; and

 

(b)

the party has had the benefit of sophisticated legal, financial, accounting and taxation advice during the negotiation and execution of this agreement.

11.19

Gross–up for Tax

 

(a)

If a Warrantor is liable to pay an amount to the Purchaser or the Company pursuant to a Subject Claim and:

 

(i)

any such payment is assessable under Tax Law such that the payment increases the Tax payable by, or reduces any Tax Relief available to, the Purchaser or the Company or the Head Company of any Consolidated Group of which the Company is a member after Completion under the Tax Act; or

 

(ii)

as a consequence of the receipt of a payment referred to in 11.19(a)(i), an amount of taxable income arises to the Purchaser or the Company or the Head Company of any Consolidated Group of which the Company is a member after Completion under the Tax Act.

then in addition to the payment by the Vendor or a Warrantor (as the case may be) of the amount pursuant to the Subject Claim, the Vendor or a Warrantor (as the case may be) must promptly pay to the Purchaser or Company or the Head Company of any Consolidated Group of which the Company is a member after Completion, as the case requires, such additional amount as is necessary to ensure that the Purchaser or Company or the Head Company of any Consolidated

 

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Group of which the Company is a member after Completion, as the case requires, is compensated for the value of the Tax Relief lost, or that the net amount retained by the Purchaser or the Company or the Head Company of any Consolidated Group of which the Company is a member after Completion, as the case requires, after deduction of Tax or payment of the increased income tax, equals the amount the Purchaser or the Company or the Head Company of any Consolidated Group of which the Company is a member after Completion, as the case requires, would have retained had the Tax or increased income tax not been payable or the Tax relief not been lost.

12.

Tax Claims

12.1

Notice of Tax Claim

 

(a)

The Purchaser must, and must procure that the Company does, notify the Vendor within 10 Business Days of becoming aware of a Tax Claim, providing:

 

(i)

the amount of the Tax Claim (where known);

 

(ii)

a description in reasonable detail of the nature of the Tax Claim; and

 

(iii)

a copy of any documents or materials issued by a Tax Authority in respect of the Tax Claim.

 

(b)

For the purpose of the notice period in clause 12.1(a), the Purchaser will only be deemed to be aware of a Tax Claim if the Purchaser is actually aware of the Tax Claim.

 

(c)

Failure by the Purchaser to notify, or to procure that the Company notifies, the Vendor of a Tax Subject Claim in accordance with this clause 12.1 does not prevent the Purchaser from making a Tax Claim under this agreement, however the Vendor’s liability for the Tax Subject Claim will be reduced to the extent that any failure by the Purchaser to comply with this clause 12.1 has increased the amount of the Tax Subject Claim.

12.2

Tax Claims process

 

(a)

Subject to clause 12.2(c), the Purchaser will have the sole control of the conduct of any action to dispute, defend, object to, contest, appeal, compromise or settle a Tax Claim, and shall be free to pay or settle the Tax Claim on such reasonable terms as the Purchaser determines, provided that it must consult with and use its reasonable endeavours to agree with the Vendor the optimal approach to favourably settling the Tax Claim with the Tax Authority.

 

(b)

The Purchaser agrees to keep the Vendor fully informed of any proposed conduct under clause 12.2(a) and provide the Vendor with sufficient time for the Vendor to determine whether or not the Vendor agrees with any proposed course of action.

 

(c)

Where the Vendor provides the Purchaser with written notice of its disagreement with a proposed course of action under clause 12.2(a), subject to the Vendor indemnifying and securing the Purchaser against all Liabilities which may be incurred (including any additional Tax), the Purchaser may take such action as the Vendor reasonably requests in disputing, defending, objecting to, contesting, appealing, compromising or settling the Tax Claim.

12.3

Dispute between parties in relation to a Tax Claim

 

(a)

If a dispute arises between the Vendor and Purchaser in respect of a Tax Claim (including the amount of the Tax Claim) under this clause 12, then, within 21 days of a dispute arising, either the Vendor or Purchaser may refer the matter to an expert with the request that the expert make a decision on the matter as soon as practicable after receiving any submissions from the Vendor and Purchaser.

 

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(b)

The expert is to be a person with over ten years' experience in Tax agreed by the Vendor and the Purchaser, or if they do not agree on the person to be appointed within seven days of one party requesting appointment, a person with the same expertise nominated by RI Chair.

 

(c)

Where an expert is appointed:

 

(i)

the decision of the expert is to be conclusive and binding on the parties in the absence of manifest error;

 

(ii)

the Vendor and the Purchaser agree to each pay one half of the expert’s costs and expenses in connection with the reference;

 

(iii)

the expert is appointed as an expert and not as an arbitrator; and

 

(iv)

the procedures for determination are to be decided by the expert in its absolute discretion.

12.4

Tax Audits

 

(a)

The Purchaser must, and must procure that the Company does, notify the Vendor within 10 Business Days of becoming aware of a Tax Audit, providing:

 

(i)

a description in reasonable detail of the nature of the Tax Audit; and

 

(ii)

a copy of any documents or materials issued by a Tax Authority in respect of the Tax Audit.

 

(b)

For the purpose of the notice period in clause 12.4(a), the Purchaser will only be deemed to be aware of a Tax Audit if the Purchaser is actually aware of the Tax Audit.

 

(c)

Failure by the Purchaser to notify, or to procure that the Company notifies, the Vendor of a Tax Audit in accordance with this clause 12.4 shall prevent the Purchaser from making a Tax Subject Claim under this agreement in respect of a matter the subject of the Tax Audit for so long as the failure to so notify subsists.

 

(d)

The Vendor shall not be responsible for any additional interest and/or penalties resulting from a failure by the Purchaser to comply with clause 12.4(a).

12.5

Tax Audit process

 

(a)

Subject to clause 12.6(a), the Purchaser will have the sole control of the conduct of any Tax Audit, provided that it must consult with the Vendor as to the optimal approach to favourably conducting the Tax Audit with the Tax Authority.

 

(b)

The Warrantors shall provide the Purchaser with all assistance and cooperation as the Purchaser may reasonably request including providing to the Purchaser documents within the possession or control of the Warrantors.

 

(c)

The Purchaser agrees to keep the Vendor  reasonably informed of any proposed conduct under clause 12.5(a) and provide the Vendor with sufficient time for the Vendor to consider and respond to any proposed course of action.

12.6

Dispute between parties in relation to a Tax Audit

 

(a)

If a dispute arises between the Vendor and Purchaser in respect of a Tax Audit under this clause 12, then, within 21 days of a dispute arising, either the Vendor or Purchaser may refer the matter to an expert with the request that the expert make a decision on the matter as soon as practicable after receiving any submissions from the Vendor and Purchaser.

 

(b)

The expert is to be a person with over ten years' experience in Tax appointed by the Purchaser, being the person selected by the Vendor from the three potential experts nominated by the Purchaser.

 

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(c)

Where an expert is appointed:

 

(i)

the decision of the expert is to be conclusive and binding on the parties in the absence of manifest error;

 

(ii)

the Vendor and the Purchaser agree to each pay one half of the expert’s costs and expenses in connection with the reference;

 

(iii)

the expert is appointed as an expert and not as an arbitrator; and

 

(iv)

the procedures for determination are to be decided by the expert in its absolute discretion.

13.

Tax returns

13.1

Pre–Completion returns

 

(a)

The Vendor will, at its own cost and expense, have the conduct and control of the preparation and filing of all tax returns in respect of the activities of the Company for any Tax period ending on or before the Completion Date (Pre–Completion Returns).

 

(b)

The Vendor must ensure that each Pre–Completion Return is prepared in a manner consistent with the requirements of any Tax Law.

 

(c)

The Purchaser, on reasonable notice from the Vendor, must provide to the Vendor:

 

(i)

access to any information and records in relation to Tax, as relevant, within the possession and control of the Purchaser; and

 

(ii)

reasonable assistance to allow the Vendor to prepare any Pre–Completion Returns.

 

(d)

The Vendor must deliver each Pre–Completion Return and supporting workpapers to the Purchaser within a reasonable time before it is due to be filed for the Purchaser’s review and comment, and if the Purchaser objects to any items set out in the Pre–Completion Return, the parties must attempt to resolve the dispute in good faith or failing that, refer the matter to an expert as contemplated by clause 12.3 as if the dispute were a dispute in relation to a Tax Claim.

 

(e)

The Vendor must procure that each Pre–Completion Return is lodged, filed or submitted by the due date (taking into account any extension of time to file the Pre–Completion Return that has been properly obtained).

13.2

Straddle Returns / Post–Completion returns

 

(a)

The Purchaser will, at its own cost and expense, have the conduct and control of the preparation and filing of all tax returns in respect of the activities of the Company for any Tax period ending after the Completion Date, including, for the avoidance of doubt, for any Tax period commencing prior to the Completion Date but ending after the Completion Date (Straddle Returns).

 

(b)

The Purchaser must ensure that each Straddle Return is prepared in a manner consistent with the requirements of any Tax Law.

 

(c)

The Vendor, on reasonable notice from the Purchaser, must provide to the Purchaser:

 

(i)

reasonable access to any information and records in respect of the Company in relation to Tax, as relevant, within the possession and control of the Vendor; and

 

(ii)

reasonable assistance to allow the Purchaser to prepare any Straddle Return.

 

(d)

The Purchaser must deliver each Straddle Return and supporting workpapers to the Vendor within a reasonable time before it is due to be filed for the Vendor’s review and

 

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comment, and if the Vendor objects to any items set forth in the Straddle Return, the parties must attempt to resolve the dispute in good faith or failing that, refer the matter to be resolved by an expert as contemplated by clause 12.3 as if the dispute were a dispute in relation to a Tax Claim.

 

(e)

The Purchaser must procure that any Straddle Return is lodged, filed or submitted by the due date (taking into account any extension of time to file the Straddle Return that has been properly obtained).

14.

Indemnities

14.1

General indemnity

The Warrantors indemnify the Purchaser and the Company:

 

(a)

from all Liabilities which the Purchaser or the Company suffers, pays or incurs by reason of:

 

(i)

any of the Warranties being untrue, inaccurate or misleading in any respect; or

 

(ii)

any failure by a Warrantor to fulfil its obligations under this agreement; and

 

(b)

from all Claims made by any Third Party in relation to:

 

(i)

a matter which constitutes, or circumstances that constitute, a breach of any of the Warranties or any other covenant or representation of the Warrantors in this agreement; or

 

(ii)

any failure by a Warrantor to fulfil its obligations under this agreement.

For the avoidance of doubt, the Purchaser is entitled to bring a Claim either on an indemnity basis under this clause 14.1 or on a contractual basis for breach of a Warranty, or both, provided that the Purchaser may not, in connection with facts, matters or circumstances giving rise to a Claim, recover more than its aggregate Liabilities.

14.2

Setoff

 

(a)

Subject to compliance with this clause 14.2, the Purchaser is entitled to setoff any amounts in respect of any Subject Claims it may have under this agreement against any amounts otherwise payable to the Vendor under clause 8.

 

(b)

Before the Purchaser sets-off any amounts in respect of any Subject Claims against any amounts otherwise payable to the Vendor under clause 8 it must first provide written notice to the Vendor of the Subject Claim and provide reasonable particulars and supporting documentation as to the nature of the Subject Claim and the amount claimed and sought to be the subject of set-off and give the Vendor the opportunity to, within 15 Business Days:

 

(i)

remedy the breach giving rise to the Subject Claim, including by payment of the Subject Claim from a source other than the Purchaser’s recourse to set-off against any amounts otherwise payable to the Vendor under clause 8; or

 

(ii)

dispute the Subject Claim (or a part of it).  If the Vendor disputes the Subject Claim or the amount claimed and sought to be the subject of set-off, then:

 

(A)

the Purchaser's obligation to pay the Earn-Out Amount in accordance with clauses 8 and 9 shall be suspended in relation to so much of the Earn-Out Amount which equals the amount in dispute until the dispute in relation to the Subject Claim is determined, but shall otherwise pay the balance; and

 

(B)

within 21 days of receipt of the Vendor’s written notice given under clause 14.2(b) the Vendor may refer the matter to an expert with the request that

 

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the expert make a decision on the matter as soon as practicable after receiving any submissions from the Vendor and Purchaser.  The expert is to be a person with over ten years' experience in the subject matter of the dispute agreed by the Vendor and the Purchaser, or if they do not agree on the person to be appointed within seven days of one party requesting appointment, a person with the same expertise nominated by RI Chair. Where an expert is appointed:

 

(I)

the decision of the expert is to be conclusive and binding on the parties in the absence of manifest error;

 

(II)

the Vendor and the Purchaser agree to each pay one half of the expert’s costs and expenses in connection with the reference;

 

(III)

the expert is appointed as an expert and not as an arbitrator; and

 

(IV)

the procedures for determination are to be decided by the expert in its absolute discretion.

15.

Tax Indemnity

 

(a)

The Warrantors jointly and severally indemnify the Purchaser and the Company and the Head Company of any Tax Consolidated Group of which the Company is a member after Completion for any Tax Liability incurred, arising as a result of, or in respect of, or by reference to any of the following:

 

(i)

(pre–Completion events) any event (including a supply) occurring, or deemed under any Tax Law to occur, in relation to the activities of the Company before Completion;

 

(ii)

(income) any income, profits or gains (including capital gains) earned, derived, accrued or received or deemed under any Tax Law to have been earned, derived accrued or received in relation to the activities of the Company before Completion;

 

(iii)

(deductions) the disallowance under Tax Law of an expense, loss or outgoing incurred in relation to the activities of the Company before Completion;

 

(iv)

(withholdings) any withholding required to be made or any notice required to be given under any Tax Law in relation to the activities of the Company before Completion;

 

(v)

(credits) the disallowance of a Tax credit or rebate of Tax under any Tax Law relating to a matter referred to in any of clauses 15(a)(i) to 15(a)(iv) (inclusive);

 

(vi)

(rollovers) an asset of the Company having been before Completion the subject of a claim for rollover relief under any Tax Law;

 

(vii)

(transaction tax) any Tax Liability in respect of any agreement, deed, other document or transaction entered into before Completion to which the Company is or has been a party or by which the Company derives, has derived or will derive a substantial benefit (other than this agreement);

 

(viii)

(GST) any supply, transaction, acquisition or importation which has been made or deemed to have been made or attributed to the Company at any time on or before Completion; and

 

(ix)

(GST group liabilities) any liability incurred by a Company, as a member or representative of a GST group, of which the Company was a member at any time before Completion.

 

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(b)

The Warrantors will not be liable for a Tax Subject Claim to the extent that the Tax Subject Claim:

 

(i)

relates to a Tax Liability for which adequate provision has been made in the Accounts or the Completion Accounts;

 

(ii)

arises from any action or omission by the Vendor in accordance with the terms of this agreement, or the prior written approval, consent or agreement of the Purchaser;

 

(iii)

arises out of or in respect of an increase in the rate of Tax after the date of this agreement;

 

(iv)

arises out of a change in Tax Law after the date of this agreement, including a change in Tax Law which takes effect retrospectively (except where the change in Tax Law was publicly announced as at the date of this agreement);

 

(v)

arises from any election or choice made by the Company in relation to Tax, on or after Completion;

 

(vi)

would not have arisen but for any change in ownership of the Company or other restructure of the Business on or after Completion and not otherwise the subject of this agreement or any change in the accounting policy or practice of the Company after Completion; or

 

(vii)

arises out of the cessation or alteration of the Business after Completion.

 

(c)

For the avoidance of doubt, the Purchaser is entitled to bring a Tax Subject Claim either on an indemnity basis under this clause 15 or on a contractual basis for a breach of a Tax Warranty, or both, provided that the Purchaser may not recover more than its aggregate Liabilities.

16.

Restraint

16.1

Definitions

In this clause 16:

engage in means to carry on or prepare to carry on, participate in, provide finance or services, or otherwise be directly or indirectly involved whether solely or jointly with any other person, and whether as a shareholder, unitholder, director, consultant, adviser, contractor, principal, agent, manager, employee, beneficiary, partner, associate, trustee or financier.

Prohibited Persons means:

 

(a)

the Vendor;

 

(b)

Damin; and

 

(c)

any Associate of the Vendor or Damin, with the exception of Tom Damin and Lucy Damin.

16.2

Prohibited activities

Each Warrantor undertakes to the Purchaser (for itself, and as trustee for the Company) that it will not, and it shall cause and ensure that its Prohibited Persons do not, directly or indirectly:

 

(a)

engage in a business or an activity that is:

 

(i)

the same or similar to the Business or any material part of the Business;

 

(ii)

in competition with the Business or any material part of the Business;

 

(iii)

using deceptively similar logos, trademarks and/or business names as those used by the Business; or

 

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(iv)

intentionally interferes with Purchaser’s or Company’s ability to conduct the Business;

 

(b)

solicit, canvass, approach or accept an approach from a person who was at any time during the 12 months ending on the Completion Date a customer of the Company with a view to obtaining their custom in a business that is the same or similar to the Business and is in competition with the Business;

 

(c)

interfere with the relationship between the Company and its customers, employees or suppliers;

 

(d)

induce or help to induce an employee of the Company to leave their employment; or

 

(e)

attempt, counsel, procure or otherwise assist any person to do any of the acts referred to in this clause 16.2.

16.3

Duration of prohibition

The undertakings in clause 16.2 begin on the Completion Date and end on:

 

(a)

the fifth anniversary of the Completion Date, or if that period is held to be unenforceable;

 

(b)

the fourth anniversary of the Completion Date, or if that period is held to be unenforceable;

 

(c)

the third anniversary of the Completion Date, or if that period is held to be unenforceable;

 

(d)

the second anniversary of the Completion Date, or if that period is held to be unenforceable;

 

(e)

the first anniversary of the Completion Date or if that period is held to be unenforceable;

 

(f)

six months of the Completion Date.

16.4

Geographic application of prohibition

The undertakings in clause 16.2 apply only if the activity prohibited by clause 16.2 occurs:

 

(a)

anywhere in the world, or if that area is held to be unenforceable;

 

(b)

anywhere in the Southern Hemisphere, or if that area is held to be unenforceable;

 

(c)

within Europe, Asia, Africa, North America, South America and Oceania, or if that area is held to be unenforceable;

 

(d)

within Europe, North America and Oceania, or if that area is held to be unenforceable;

 

(e)

within North America and Oceania, or if that area is held to be unenforceable;

 

(f)

within Oceania, or if that area is held to be unenforceable;

 

(g)

within Australia and New Zealand, or if that area is held to be unenforceable;

 

(h)

within Australia, or if that area is held to be unenforceable;

 

(i)

South Australia.

16.5

Interpretation

Clauses 16.2, 16.3 and 16.4 have effect together as if they consisted of separate provisions, each being severable from the other.  Each separate provision results from combining each undertaking in clause 16.2, with each period in clause 16.3, and combining each of those combinations with each area in clause 16.4.  If any of those separate provisions is invalid or unenforceable for any reason, the invalidity or unenforceability does not affect the validity or enforceability of any of the other separate provisions or other combinations of the separate provisions of clauses 16.2, 16.3 and 16.4.

 

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16.6

Exceptions

This clause 16 does not restrict a Prohibited Person from:

 

(a)

performing any employment, consultancy or other agreement with the Company; or

 

(b)

holding 5% or less of the shares of a listed company;

 

(c)

undertaking a prohibited activity with the prior written approval of the Company.

16.7

Acknowledgments

Each Warrantor acknowledges that:

 

(a)

the prohibitions and restrictions agreed in this clause 16 are material to the Purchaser's decision to enter into this agreement;

 

(b)

it has had access to Confidential Information of the Company;

 

(c)

it has sought legal and taxation advice in respect of the prohibitions and restrictions in this clause 16 and it agrees that all the prohibitions and restrictions in this clause 16 are reasonable in the circumstances and necessary to protect the goodwill of the Business;

 

(d)

damages are not an adequate remedy if a Prohibited Person breaches this clause 16; and

 

(e)

the Purchaser may apply for injunctive relief if:

 

(i)

a Prohibited Person breaches or threatens to breach this clause 16; or

 

(ii)

it believes a Prohibited Person is likely to breach this clause 16.

16.8

Indemnity for breach of Restraint

Each Warrantor, jointly and severally, in respect of itself and its Prohibited Persons indemnifies the Purchaser (for itself, and as trustee for the Company) against all loss which may be made, brought against, suffered or incurred by the Purchaser or the Company, and which arises directly or indirectly out of or in connection with any breach of the covenants given in clause 16.2 by the Warrantor, whether or not the loss was within the parties' reasonable contemplation as at the date of this agreement.

17.

Confidentiality and publicity

17.1

Announcements

A party must not make or authorise a press release or public announcement relating to the negotiations of the parties or the subject matter or provisions of this agreement unless it has the prior written approval of the Purchaser and the Vendor.  Notwithstanding the foregoing, Vendor acknowledges and agrees that:

 

(a)

the Parent Company:

 

(i)

may be required to inform the U.S. Securities and Exchange Commission or a securities exchange on which the Parent Company’s securities are listed of its entry into this agreement and of its material terms and may be required to disclose the existence and terms of this agreement.  The Parent Company will consult with Vendor in relation to such disclosures, but Vendor agrees that the Parent Company ultimately has the right to determine in its absolute discretion the contents of such disclosures; and

 

(ii)

is a public company with its securities being listed and traded on the NASDAQ Stock Market, and that in connection with any and all discussions between the parties, Vendor may receive material non-public information; and

 

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(b)

it will not trade (whether by buying or selling) in any securities of the Parent Company after it receives any such material non-public information of the Parent Company.

17.2

Warrantor obligations

 

(a)

Each Warrantor:

 

(i)

must keep confidential any confidential information of the Purchaser and, following Completion, all Confidential Information; and

 

(ii)

may disclose any confidential information in respect of which that Warrantor has an obligation of confidentiality under clause 17.2(a)(i) only:

 

(A)

to those of that Warrantor's Representatives who undertake to that Warrantor a corresponding obligation of confidentiality to that undertaken by that Warrantor under this clause 17.2, provided that the Warrantor shall be responsible for any breach of such obligation of confidentiality by its Representatives;

 

(B)

if required (in the written opinion of outside counsel) to do so by law; or

 

(C)

with the prior written approval of the Purchaser.

 

(b)

The provisions of clause 17.2(a) apply in respect of confidential information (including Confidential Information) for five years following Completion.

18.

GST

18.1

Interpretation

In this clause 18, a word or expression defined in the A New Tax System (Goods and Services Tax) Act 1999 (Cth) has the meaning given to it in that Act.

18.2

GST gross up

If a party makes a supply under or in connection with this agreement in respect of which GST is payable, the consideration for the supply but for the application of this clause 18.2 (GST exclusive consideration) is increased by an amount equal to the GST exclusive consideration multiplied by the rate of GST prevailing at the time the supply is made.

18.3

Reimbursements

If a party must reimburse or indemnify another party for a loss, cost or expense, the amount to be reimbursed or indemnified is first reduced by any input tax credit the other party is entitled to for the loss, cost or expense, and then increased in accordance with clause 18.2.

18.4

Tax invoice

A party need not make a payment for a taxable supply made under or in connection with this agreement until it receives a tax invoice for the supply to which the payment relates.

19.

Benefits held on trust

19.1

Vendor

The Vendor holds the benefit of each indemnity, promise and obligation in this agreement that benefits it, any of its Associates or Representatives or any Representatives of its Associates on its own behalf and on trust for each of those persons.

 

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19.2

Purchaser

The Purchaser holds the benefit of each indemnity, promise and obligation in this agreement that benefits it, any of its Associates or Representatives or any Representatives of its Associates on its own behalf and on trust for each of those persons.

20.

Notices and other communications

20.1

Service of notices

A notice, demand, consent, approval or communication under this agreement (Notice) must be:

 

(a)

in writing, in English and signed by a person duly authorised by the sender; and

 

(b)

hand delivered or sent by prepaid post, facsimile or email to the recipient's address for Notices specified in the Details, as varied by any Notice given by the recipient to the sender.

20.2

Effective on receipt

A Notice given in accordance with clause 20.1 takes effect when taken to be received (or at a later time specified in it), and is taken to be received:

 

(a)

if hand delivered, on delivery;

 

(b)

if sent by prepaid post, the seventh Business Day after the date of posting (or the tenth Business Day after the date of posting if posted to or from a place outside Australia);

 

(c)

if sent by facsimile, when the sender's facsimile system generates a message confirming successful transmission of the entire Notice unless, within eight Business Hours after the transmission, the recipient informs the sender that it has not received the entire Notice; and

 

(d)

if sent by email, when sent by the sender unless the sender receives a delivery failure notification indicating that the email has not been delivered to the addressee,

but if the delivery, receipt or transmission is not on a Business Day or is after 5.00pm on a Business Day at the place of receipt, the Notice is taken to be received at 9.00am on the next Business Day.

21.

Miscellaneous

21.1

Alterations

This agreement may be altered only in writing signed by each party.

21.2

Approvals and consents

Except where this agreement expressly states otherwise, a party may, in its discretion, give conditionally or unconditionally or withhold any approval or consent under this agreement.

21.3

Assignment

A party may only assign this agreement or a right under this agreement with the prior written consent of each other party.

21.4

Costs

Each party must pay its own costs of negotiating, preparing and executing this agreement.

 

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21.5

Stamp duty

Any stamp duty, duties or other taxes of a similar nature (including fines, penalties and interest) in connection with this agreement or any transaction contemplated by this agreement, must be paid by the Purchaser.

21.6

Survival

Any obligation of confidence under this agreement is independent and survives termination of this agreement. Any other term by its nature intended to survive termination of this agreement survives termination of this agreement.

21.7

Indemnities

Each indemnity undertaken by any party pursuant to this agreement:

 

(a)

survives Completion;

 

(b)

is separate and independent and not limited by reference to any other indemnity or obligation under this agreement or any other document or agreement;

 

(c)

does not require the party with the benefit of the indemnity to have actually made a payment before making a demand under the indemnity; and

 

(d)

is not released, discharged, varied or otherwise affected by anything that, under the law relating to guarantees, indemnities, sureties, securities or any other area of law, which might, but for this clause 21.7 have that effect.

21.8

Counterparts

This agreement may be executed in counterparts.  All executed counterparts constitute one document.  A counterpart may be a facsimile, pdf or other electronic form.

21.9

No merger

The rights and obligations of the parties under this agreement do not merge on completion of any transaction contemplated by this agreement.

21.10

Entire agreement

This agreement together with the other Transaction Documents constitutes the entire agreement between the parties in connection with its subject matter and supersedes all previous agreements or understandings between the parties in connection with its subject matter.

21.11

Further action

Each party must do, at its own expense, everything reasonably necessary (including executing documents) to give full effect to this agreement and any transactions contemplated by it.

21.12

Severability

A term or part of a term of this agreement that is illegal or unenforceable may be severed from this agreement and the remaining terms or parts of the term of this agreement continue in force.

21.13

Waiver

A party does not waive a right, power or remedy if it fails to exercise or delays in exercising the right, power or remedy.  A single or partial exercise of a right, power or remedy does not prevent another or further exercise of that or another right, power or remedy.  A waiver of a right, power or remedy must be in writing and signed by the party giving the waiver.

 

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21.14

Relationship

Except where this agreement expressly states otherwise, it does not create a relationship of employment, trust, agency or partnership between the parties.

21.15

Governing law and jurisdiction

This agreement is governed by the law of South Australia and each party irrevocably and unconditionally submits to the non‑exclusive jurisdiction of the courts of South Australia.

 

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Schedule 1 - Particulars of Vendor's shareholding in the Company

Vendor

Shares

Beneficial Party

% of total share capital

Ann Elizabeth Damin

1 fully paid ordinary share

Ann Elizabeth Damin

100%

 

 

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Schedule 2 - Details of the Company (clause 1.1)

 

1.

Details of the Company

Name

Pasture Genetics Pty Ltd

ABN

33 074 290 252

Registered office

C/- Moore Stephens (SA) Pty Ltd
Level 2, 180 Flinders Street,
ADELAIDE  SA  5000

Date of incorporation / registration

6 June 1996

Share capital

1 fully paid ordinary share, beneficially owned and paid up as set out Schedule 1.

Directors

Ann Elizabeth Damin

Secretary

Ann Elizabeth Damin

 

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Schedule 3 - Business Vehicles Loans

 

Plate Number

Vehicle Description

Contract Number

Expiry Date

Total Liability Balance as at 31 January 2020

S597BOA

Toyota Rav 4

13055576

20 August 2019

0.00

S979BRR

Toyota Hi Lux

13118286

25 June 2020

25,347.87

S994BRR

Toyota Hi Lux

13118297

25 June 2020

25,952.71

S997BRR

Toyota Hi Lux

13118295

25 June 2020

25,392.22

S998BRR

Toyota Hi Lux

13118291

25 June 2020

26,099.78

S505BTE

Toyota Hi Lux

13153889

13 October 2020

31,920.99

PST

Poncho Seed Treater

AAU1413177

1 March 2021

71,447.59

S420BVD

Toyota Hi Lux

13203386

18 March 2021

32,658.49

S629BVD

Toyota Prado

13238069

20 July 2021

42,451.81

S630BVD

Toyota Rugged X

13238070

20 July 2021

42,229.84

S373BWF

Toyota Landcruiser

13281783

07 December 2021

63,562.81

SB03MD

Isuzu Truck

13048226

15 December 2021

85,972.91

S047BVC

Toyota Landcruiser

13201351

05 March 2022

93,000.07

S325CAT

Toyota Hi Lux

13353400

10 June 2022

51,790.33

S326CAT

Toyota Hi Lux

13353284

10 June 2022

58,070.76

S347CAT

Toyota Hi Lux

13355540

18 June 2022

51,770.41

S348CAT

Toyota Hi Lux

13355538

18/06/2022

48,430.82

XA091P

Land Rover Discovery

13362611

19/08/2022

102,364.68

S685CBB

Toyota Hi Lux

13361426

05/08/2022

58,338.72

TOTAL

936,802.80

 

 

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Schedule 4 - Officers and Key Employees (clause 6.2)

1.

Officers

Outgoing Directors

Outgoing Secretary

Incoming Director

Incoming Secretary

Ann Elizabeth Damin

Ann Elizabeth Damin

To be notified

To be notified

 

2.

Key Employees

 

Robert Damin

Lucy Damin

Tom Damin

 

 

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Schedule 5 Adjustment to Purchase Price/Earn-Out (clauses 7 and 8)

 

1.

Completion Accounts

All calculations must be determined in a manner consistent with the Accounting Standards. This includes that the Accounts have been prepared as special purpose accounts and not general purpose accounts.

 

2.

Adjustment to Earn-Out Amount

The Earn-Out Amount shall be adjusted by the Adjustment Amount determined as follows.

2.1 Adjustment Amount

In the event that at Completion (as reflected in the final Completion Accounts) the sum of:

 

(a)

the Company's accounts receivable balance (net of any allowance for doubtful accounts); and

 

(b)

the value of the Company’s Stock,  

is less than 105% of the sum of:

 

(c)

the full amount outstanding under the Company Revolver; and

 

(d)

the Company’s accounts payable balance in respect of all accounts related to the acquisition of Stock,

then the Earn-Out Amount is to be decreased by the same amount as the shortfall. For the purpose of calculating the Company's accounts receivable balance, any sales between Completion and 29 February 2020 are to be included.

2.2Stock

 

(a)

Stocktake

For the purposes of determining the value of Stock in calculating the amount of any Adjustment Amount, the Purchaser, with the Vendor's Representative present, shall undertake a stocktake as at the day before Completion as follows:

 

i.

the Purchaser must conduct the stocktake and the Vendor must allow the Purchaser and its Representatives to be present at the stocktake;

 

ii.

the Purchaser must prepare stock sheets that list the quantities of each item of Stock;

 

iii.

items of Stock must be valued in accordance with the following valuation principles:

 

1.

items of Stock will be valued at the lesser of invoiced landed cost (net of rebates) and net realisable value;

 

2.

items of Stock which are raw materials or finished goods with a shelf life in excess of industry standard for the particular item will be valued at nil;

 

3.

items of Stock which are obsolete, faulty or damaged or cannot be repackaged will be valued at nil;

 

4.

items of packaging material and other consumables which cannot be used within 18  months (based on current stock usage rates) will be valued at nil; and

 

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5.

to the extent not inconsistent with paragraphs 1 to 4 above (inclusive), Stock will be valued in a manner consistent with the Accounting Standards, policies and procedures used in preparing the Accounts.

 

(b)

Stock statement

The Purchaser must deliver to the Vendor within 10 Business Days after the Calculation Time, a written statement (Stock Statement) setting out its valuation of Stock as at the Calculation Time based on the Stock quantities identified in the stocktake and the valuation principles set out in paragraph (a).  The Stock Statement must be accompanied by copies of the relevant working papers used by the Purchaser in calculating the value of Stock.

 

(c)

Review by the Vendor

The Vendor must deliver to the Purchaser within 5 Business Days after receipt of the Stock Statement, a notice (Vendor's Stock Valuation) stating:

 

i.

that the Vendor agrees with the Purchaser's value of Stock; or

 

ii.

that the Vendor does not agree with the Purchaser's value of Stock, and the following:

 

1.

the matters in respect of which the Vendor disagrees with the Purchaser;

 

2.

the grounds on which the Vendor disagrees with the Purchaser; and

 

3.

the Vendor's opinion of the value of Stock.

 

(d)

If the Vendor agrees with the Purchaser's value of Stock or does not deliver a Vendor's Stock Valuation in accordance with paragraph (c), the Purchaser's determination of the value of Stock will be deemed the value of the Stock for the purposes of calculating any Adjustment Amount.

 

(e)

If the Vendor does not agree with the Purchaser's value of Stock, and the parties have not resolved the dispute within 10 Business Days of service by the Vendor of a Vendor's Stock Valuation in accordance with paragraph 2.2(c)ii, either party may request the value of Stock be determined by an independent expert, to be jointly appointed, to determine the dispute (Expert).

 

(f)

If the Vendor and Purchaser cannot agree an Expert within 10 Business Days immediately following the expiration of the period specified in paragraph (e) above, then either party may request that the RI Chair nominate a person to be the Expert.

 

(g)

The Expert must be of not less than 10 years' current and continuous standing in his or her profession at the date of appointment.

 

(h)

The Vendor and the Purchaser must instruct the Expert to:

 

i.

call for any information or make any investigation that the Expert considers appropriate;

 

ii.

allow each party an opportunity to make written submissions to the Expert;

 

iii.

place the weight on the information or findings of the investigation that the Expert sees fit;

 

iv.

act as an expert and not as an arbitrator;

 

v.

determine the dispute in any manner which the Expert considers appropriate;

 

vi.

determine the dispute within 20 Business Days from the acceptance by the Expert of the appointment; and

 

vii.

advise the parties to the dispute in writing of the determination and the Expert's reasons for that determination.

 

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(i)

The determination of the Expert is final and binding on all parties to the dispute, such that a party will not challenge a determination of the Expert except on grounds of:

 

i.

non-compliance with paragraphs 2.2(e) to (h);

 

ii.

mistake of fact or mistake of law in reaching a determination; or

 

iii.

fraud and misrepresentation.

 

(j)

Unless otherwise determined by the Expert, the parties to the dispute must pay the costs of the Expert equally.

 

3.

Earn-Out calculation

 

PG Earnings, for any financial year, equals the result of:

 

(a)

the Eligible Revenue for such financial year;

minus

 

(b)

the sum of:

 

(i)

COGS for such financial year;

 

(ii)

Allocated S&M Expense for such financial year;

 

(iii)

Allocated R&D Expense for such financial year; and

 

(iv)

Allocated G&A Expense for such financial year.    

All expenses incurred under the Leases for the Leasehold Properties will be included as either COGS, Allocated S&M Expense or Allocated R&D Expense.

No revenue or expenses related to an After-Acquired Business, or rebranding costs associated with the change from Pasture Genetics to S&W Seed Co, or a general corporate rebranding for other than Australia during the financial year ending 30 June 2022 will be taken into account for purposes of determining Eligible Revenue, COGS, Allocated R&D Expense or Allocated S&M Expense.

As used herein, the following terms have the following meanings:

After-Acquired Business” means any entity, business or assets purchased, licensed or otherwise acquired after the Completion Date by Purchaser, any subsidiary of Purchaser or any member of the Group.

Allocated G&A Expense” means:

 

(a)

for the financial year ending June 30, 2021, $780,000; and

 

(b)

for the financial year ending June 30, 2022, $780,000.

Allocated R&D Expense” means, for any financial year, the total amount of research and development expense incurred by the Purchaser Group in such financial year to the extent related to the development of Eligible Products for sale in Australia and/or New Zealand.    Purchaser will determine Allocated R&D Expense in accordance with the Accounting Standards and on a basis consistent with Purchaser’s financial statements.

Allocated S&M Expense” means, for any financial year, the total amount of sales and marketing expense incurred by the Purchaser Group in such financial year to the extent related to the sale, marketing or promotion of Eligible Products in Australia and/or New Zealand.    Purchaser will determine Allocated S&M Expense in accordance with the Accounting Standards and on a basis consistent with Purchaser’s financial statements.

 

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COGS” means, for any financial year, the total amount of cost of goods sold incurred by the Purchaser Group in such financial year to the extent related to the sale of Eligible Products in Australia and/or New Zealand.    Purchaser will determine COGS in accordance with the Accounting Standards and on a basis consistent with Purchaser’s financial statements.

Eligible Revenue” means, for any financial year, the total amount of revenue recognized by the Purchaser Group in such financial year to the extent related to the sale of Eligible Products for end use in Australia and/or New Zealand.    Purchaser will determine Eligible Revenue in accordance with the Accounting Standards and on a basis consistent with Purchaser’s financial statements.  For clarity, (a) sales of Eligible Products for subsequent, resale, export or use outside of Australia and New Zealand will not be included in the calculation of Eligible Revenue and (b) end-point royalties received with respect to wheat seed products will not be included in the calculation of Eligible Revenue.

Eligible Products” means any seed product within a crop category that, at the Completion Date, is actually offered for sale by Company.   Notwithstanding the foregoing, no wheat seed product will be considered an Eligible Product.

Purchaser Group” means Purchaser and its subsidiaries and Group; provided that no After-Acquired Business will be considered a member of the Purchaser Group.

 

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Schedule 6 Warranties (clause 11)

In these Warranties:

Intellectual Property Licences means all agreements under which the Company has the right to use, but not to own, Intellectual Property Rights used in connection with the Business, including those listed in Schedule 9.

Intellectual Property Rights means all intellectual property and proprietary rights relating to the Business (whether registered or unregistered) including:

 

(a)

business names;

 

(b)

trade or service marks;

 

(c)

domain names;

 

(d)

any right to have information (including Confidential Information) kept confidential; and

 

(e)

patents, patent applications, drawings, discoveries, inventions, improvements, trade secrets, technical data, formulae, computer programs, data bases, know‑how, logos, designs, design rights, copyright and similar industrial or intellectual property rights,

and includes the Intellectual Property Rights in Schedule 9.

Owned Intellectual Property Rights means all Intellectual Property Rights owned by the Company, including the Intellectual Property Rights listed in Schedule 9 but excluding any Intellectual Property Rights that are the subject of any of the Intellectual Property Licences.

Plant and Equipment means the vehicles, plant, equipment, fixtures, fittings, furniture, furnishings, and computer software (if any) used in the Business.

SGAA means the Superannuation Guarantee (Administration) Act 1992 (Cth).

Superannuation Arrangement means any fund, plan, or scheme, or division of a fund plan or scheme, under which superannuation, retirement, life assurance, death or disability benefits, pensions, annuities or other allowances, gratuities or benefits are or may be provided to or in respect of any employee of the Company or their dependants.

Warranty 1- Accuracy of Information

1.1

All copies of contracts and other materials given by or on behalf of the Vendor (or their personnel) to the Purchaser (or its personnel) prior to the Completion Date are true, accurate and complete and not misleading.

 

(a)

the Warrantors have not withheld from the Purchaser any information or material that the Purchaser has requested, or that the Warrantors know or ought to have known is materially adverse to the Company and its business and:

 

(b)

no information supplied by or on behalf of the Warrantors (or their personnel) to the Purchaser (or its personnel) in the course of the Purchaser’s due diligence enquiries is untrue, inaccurate, incomplete or misleading in any material respect.

Warranty 2 - Shareholdings

2.1

The Company has no subsidiaries (in either a legal, accounting or other sense) other than as set out in Schedule 2.

2.2

The Company is not the holder or the beneficial owner of:

 

(a)

any shares or other capital; or

 

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(b)

any securities convertible into shares or other capital,

in any company.

2.3

The sale of the Shares under this agreement will not:

 

(a)

impose any Security Interest on the Warrantors; or

 

(b)

put the Warrantors in breach of any obligation or agreement to which is the are bound.

Warranty 3 - The Company

3.1

The Company:

 

(a)

is validly existing under the laws of its place of incorporation or registration and in good standing;

 

(b)

is accurately described in Schedule 2;

 

(c)

has full corporate power to own its properties, assets and businesses and to carry on the businesses it conducts; and

 

(d)

has good and marketable title to all the assets included in the Accounts.

3.2

No:

 

(a)

meeting has been convened, resolution proposed, petition presented or order made for the winding up of the Company;

 

(b)

receiver, receiver and manager, provisional liquidator, liquidator or other officer of the Court has been appointed in relation to all or any material asset of the Company; or

 

(c)

mortgagee or chargee has taken, attempted or indicated an intention to exercise its rights under any security of which the Company is the mortgagor or chargor.

3.3

The Company:

 

(a)

does not act or carry on business in partnership with any other person;

 

(b)

is not a member of any joint venture, corporate or unincorporated body, undertaking or association (other than a trade association); or

 

(c)

does not hold or is not liable on any share or security (other than a share or security in a trade association) which is not fully paid up or which carries any liability.

3.4

The Company does not trade under a name other than its corporate name (excluding trademarks or business names registered in a name other than its corporate name).

3.5

The Company:

 

(a)

is not insolvent within the meaning of section 95A of the Corporations Act;

 

(b)

has not stopped paying its debts as and when they fall due;

 

(c)

has not been served with a demand under section 459E of the Corporations Act which it is taken under section 459F of the Corporations Act to have failed to comply with; or

 

(d)

is not subject to voluntary administration under Part 5.3A of the Corporations Act.

3.6

The entry into and performance of this agreement does not breach:

 

(a)

any obligation (including any statutory, contractual or fiduciary obligation) of the Company;

 

(b)

any law; or

 

(c)

the constitution of the Company.

 

Share sale agreement

MinterEllison | Ref:  AAGC 1240416

Page 50

 


Execution Version

3.7

As at Completion the Company will not owe any amounts to the Warrantors, the Director or their Associates.

3.8

All dividends or other distributions of profits by the Company since the date of its incorporation have been made in compliance with all laws.

3.9

The Due Diligence Material contains a complete and accurate copy of the constitution of the Company.

Warranty 4 - Share capital

4.1

The share capital of the Company set out in Schedule 2:

 

(a)

comprises the entire share capital of the Company; and

 

(b)

is fully paid.

4.2

The Vendor:

 

(a)

is the registered owner of the Shares set out against its name in Sch