UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
___________
FORM 8-K
___________
CURRENT REPORT
Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 14, 2013
Banjo & Matilda, Inc.
(Exact Name of Registrant as Specified in Charter)
Nevada | 000-54277 | 27-1519178 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
76 William Street, Paddington, NSW Australia | 2021 | |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: 011-61-2-8069-2665 |
Eastern World Solutions Inc.
3330 South Federal Highway, Suite 220, Boynton Beach, Florida 33435
(Former Name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13-e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Special Note Regarding Forward Looking Statements
This report contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report and the documents that we reference and filed as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.
Use of Certain Defined Terms
Except where the context otherwise requires and for the purposes of this report only:
· | The “Registrant” refers to Banjo & Matilda, Inc., a Nevada corporation (formerly known as Eastern World Solutions, Inc.) which is a reporting company under the Exchange Act. |
· | “Banjo & Matilda”, “we”, “our” refers to Banjo & Matilda Pty Ltd, a corporation organized under the laws of Australia and a wholly-owned subsidiary of the Registrant; |
· | “Exchange Act” refers to the Securities Exchange Act of 1934, as amended; |
· | “SEC” refers to the Securities and Exchange Commission; and |
· | “Securities Act” refers to the Securities Act of 1933, as amended. |
Item 1.01 Entry into a Material Definitive Agreement.
On November 14, 2013, the Registrant entered into a Share Exchange Agreement (the “Exchange Agreement”) with Banjo & Matilda Pty Ltd, a corporation organized under the laws of Australia (“Banjo & Matilda”) and the shareholders of Banjo & Matilda (“B&M Shareholders”). Pursuant to the Exchange Agreement, at the closing of the transaction contemplated thereunder (the “Transaction”), we agreed to acquire 100% of the issued and outstanding capital stock of Banjo & Matilda, making it a wholly-owned subsidiary of the Registrant. There was no prior relationship between the Company and any of its affiliates and Banjo & Matilda and any of its affiliates.
In consideration for the purchase of 100% of the issued and outstanding capital stock of Banjo & Matilda under the Exchange Agreement, the Registrant issued to the B&M Shareholders an aggregate of 18,505,539 restricted shares of the Registrant’s common stock.
On November 15, 2013, the Registrant entered into an employment agreement with each of Brendan Macpherson, the Chief Executive Officer of the Registrant, and Belinda Storelli Macpherson, the Chief Creative Officer of the Registrant. Each employment agreement has an initial term of three years and will automatically renew for additional term of three years. Either party may elect not to renew the Employment Agreement for an additional three year term by written notice delivered to the other party no later than third August 30 th of the final year of the term (which is 77 days prior to the expiration date).
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Brendan Macpherson Employment Agreement
Under his employment agreement Mr. Macpherson is engaged as the Chief Executive Officer of the Registrant with a base salary of $125,000. His base salary will be increased by at least six percent (6%) each January 1 during the term of the employment agreement, commencing on January 1, 2014. Mr. Macpherson will receive a signing bonus of 1,000,000 restricted shares of common stock of the Registrant and will also receive 1,000,000 shares of preferred stock of the Registrant. During the term of his employment agreement, the preferred stock to be issued to Mr. Macpherson will have super voting rights of 100 votes for every share of preferred stock he owns. Upon the expiration or termination of his employment agreement, all of the preferred shares to be issued to Mr. Macpherson will automatically be cancelled and returned to authorized but unissued preferred stock.
Mr. Macpherson will also receive health and life insurance pursuant to his employment agreement.
In the event that Mr. Macpherson and the Registrant determine not to pay Mr. Macpherson’s base salary in cash, his unpaid salary will accrue interest at the rate of 12% per annum (which interest shall be paid in cash). Mr. Macpherson has the option to convert his unpaid salary into shares of the Registrant’s common stock. The conversion price will equal 50% of the Registrant’s average closing bid price for the thirty day period prior to the Registrant’s receipt of a conversion notice from Mr. Macpherson.
Mr. Macpherson may terminate his employment agreement upon thirty days’ written notice (or such shorter period if agreed to by the Registrant). The Registrant may terminate the employment agreement with Mr. Macpherson with or without cause upon 180 days prior notice. Upon any termination of the employment agreement by the Registrant, Mr. Macpherson is entitled to receive as severance fifty percent (50%) of the total salary compensation he would have been entitled to receive for the reminder of the term of the employment agreement.
Upon any termination (with or without cause) or expiration of the employment agreement, the Registrant must provide Mr. Macpherson, at the Registrant’s expense, life, disability and family health insurance for a period of thirty-six months.
In the event of Mr. Macpherson’s death during the term of his employment agreement, the Registrant will pay to Mr. Macpherson’s designee the greater of (x) $225,000 and (y) fifty percent (50%) of the total salary compensation he would have been entitled to receive for the reminder of the term of the employment agreement. In addition, the Registrant must also continue to pay for medical and health insurance for Mr. Macpherson’s family for three years (which payments are in addition to the payments for family health insurance described in the preceding paragraph).
Upon any termination or expiration of the employment agreement, if Mr. Macpherson will receive severance payments of at least $150,000, he will be subject to non-compete and non-solicitation restrictions for a period of six months after such expiration or termination. The non-compete will apply to any area within five (5) miles of any location where the Registrant designs, manufactures or sells premium contemporary knitwear.
Belinda Storelli Macpherson Employment Agreement
Under her employment agreement Ms. Macpherson is engaged as the Chief Creative Officer of the Registrant with a base salary of $100,000. Her base salary will be increased by at least six percent (6%) each January 1 during the term of the employment agreement, commencing on January 1, 2014. Ms. Macpherson will also receive a signing bonus of 400,000 restricted shares of common stock of the Registrant.
Ms. Macpherson will also receive health and life insurance pursuant to her employment agreement.
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In the event that Ms. Macpherson and the Registrant determine not to pay Ms. Macpherson’s base salary in cash, her unpaid salary will accrue interest at the rate of 12% per annum (which interest shall be paid in cash). Ms. Macpherson has the option to convert her unpaid salary into shares of the Registrant’s common stock. The conversion price will equal 50% of the Registrant’s average closing bid price for the thirty day period prior to the Registrant’s receipt of a conversion notice from Ms. Macpherson.
Ms. Macpherson may terminate her employment agreement upon thirty days’ written notice (or such shorter period if agreed to by the Registrant). The Registrant may terminate the employment agreement with Ms. Macpherson with or without cause upon 180 days prior notice. Upon any termination of the employment agreement by the Registrant, Ms. Macpherson is entitled to receive as severance fifty percent (50%) of the total salary compensation she would have been entitled to receive for the reminder of the term of the employment agreement.
Upon any termination (with or without cause) or expiration of the employment agreement, the Registrant must provide Ms. Macpherson, at the Registrant’s expense, life, disability and family health insurance for a period of thirty-six months.
Upon any termination (with or without cause) or expiration of the employment agreement, the Registrant must provide Ms. Macpherson, at the Registrant’s expense, life, disability and family health insurance for a period of thirty-six months.
In the event of Ms. Macpherson’s death during the term of her employment agreement, the Registrant will pay to Ms. Macpherson’s designee the greater of (x) $200,000 and (y) fifty percent (50%) of the total salary compensation she would have been entitled to receive for the reminder of the term of the employment agreement. In addition, the Registrant must also continue to pay for medical and health insurance for Ms. Macpherson’s family for three years (which payments are in addition to the payments for insurance described in the preceding paragraph).
Upon any termination or expiration of the employment agreement, if Ms. Macpherson will receive severance payments of at least $100,000, she will be subject to a non-compete and non-solicitation restrictions for a period of six months after such expiration or termination. The non-compete will apply to any area within five (5) miles of any location where the Registrant designs, manufactures or sells premium contemporary knitwear.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On November 14, 2013, the Registrant acquired all of the outstanding shares of common stock of Banjo & Matilda in an exchange of restricted shares of the Registrant’s common stock for all of the issued and outstanding shares of Banjo & Matilda under Section 368(a)(1)(B) of the Internal Revenue Code (the “Share Exchange”). Banjo & Matilda is an Australian corporation, with headquarters at 76 William Street, Paddington, New South Wales, Australia 2021. Banjo & Matilda has a website at www.banjoandmatilda.com
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A description of Banjo & Matilda and other relevant information about Banjo & Matilda required by Item 201(f) follows:
Overview
Banjo & Matilda Pty Ltd. (“Banjo & Matilda”, “we” and “our”) was incorporated in Australia on May 27, 2009 as a Proprietary Company under the Corporations Act 2001. Banjo & Matilda is a designer, retailer and wholesaler of contemporary luxury knitwear that draws its inspiration from Australian heritage and beach lifestyle. Banjo & Matilda was founded by the husband and wife team of Belinda Storelli Macpherson and Brendan Macpherson in 2008 near Bondi Beach Australia, and launched its first line of knitwear in May 2008. Since then the brand has captured a very strong following amongst its customers, and is now working with key retailers and apparel industry partners to expand the brand and offering as a result of this success. Banjo & Matilda sells its products primarily through its own website (www.banjoandmatilda.com) and wholesales to a growing list of key retailers in Australia, New Zealand, Europe, Canada and the United States. Retailers sell Banjo & Matilda’s knitwear both online and in their respective retail stores.
Banjo & Matilda’s core business has been the design and sale of premium contemporary cashmere knitwear for women; however, it expects to expand its product lines to include knitwear for men and children among other products. Banjo & Matilda’s current core market are women, 25-55, typically professionals willing to pay a premium for contemporary apparel.
Banjo & Matilda had revenue of $1,724,181 for the fiscal year ended June 30, 2013, an increase of $773,369 from the year ended June 30, 2012, representing an 81.3% increase. Banjo & Matilda‘s income from operations for the fiscal year ended June 30, 2013 was $166,058, compared to a loss from operations of $210,014 for the fiscal year ended June 30, 2012, which is an increase of $376,072 or 179.1%. Banjo & Matilda’s net income increased from a net loss of $266,302 for the fiscal year ended June 30, 2012 to net income of $21,752 for the year ended June 30, 2013, representing an increase of $288,054, or 108.2%.
Our Market
We estimate based on industry feedback and sales data, that knitwear is equivalent to approximately 30% of apparel sales in North America and Europe. Banjo & Matilda’s target customer group is professional women in 25 – 55 age bracket, who have a level of disposable income and typically are in double income householders. Most of Banjo & Matilda’s sales have been in the 33 – 42 age group (36% of sales) and 43 – 52 age group (28% of sales). Women in the 23 – 32 age group make up approximately 25% of sales. Banjo & Matilda’s target customers exhibit a preference for quality apparel that is elegant, comfortable and fun, and they are willing to pay premium for such items. These customers also tend to be loyal to a brand which is “in-sync” with their lifestyle. Because most of Banjo & Matilda’s sales are online, Banjo & Matilda customers are tech-savvy and can be reached throughout the world, primarily in Australia, the United States and Europe.
Our Products
Banjo & Matilda offers a comprehensive line of luxury contemporary cashmere knitwear for women. We also have a line of accessories, such as cashmere scarves, slippers, eye-masks and travel blankets. Each year Banjo & Matilda collaborates with a high profile artist or celebrity to create an exclusive limited edition cashmere sweater. In 2013, we collaborated with the singer Bryan Adams and prior collaborations included Australian businesswoman, television host, model and actress Elle Macpherson, controversial British artist Tracey Emin and Australian singer/songwriter, model and actress Natalie Imbrugila. In the first quarter ending December 31, 2013, we will be launching a capsule collection of four sweaters designed specifically to be sold exclusively through Gwyneth Paltrow’s successful lifestyle blog GOOP.
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Product Design
Our product design efforts are led by Belinda Storelli Macpherson. The design team identifies trends based on market intelligence and research and proactively seeks inspiration from Australian heritage and the beach lifestyle. We seek to combine exclusive cashmere yarn inspired by “luxe” lifestyle and statement designs. Our designs reflect Ms. Macpherson’s unique aesthetic perspective and her desire to develop an accessible and understated luxury lifestyle brand.
Product Manufacturing
Banjo & Matilda do not own or operate any manufacturing facilities. We use third party contract manufacturers in, mostly in China. All yarns and fabrics are sourced from the most reputable suppliers. The materials used are mostly the highest grade that can be sourced locally in China. On occasion we use different suppliers within and outside of China. Banjo & Matilda works with a number of manufacturers, but most of our manufacturing is done by four primary Chinese manufacturers which produced approximately 98.7% of our products during the year ended June 30, 2013. During fiscal 2013, no single manufacturer produced more than approximately 35.7% of our product offering. Our manufacturers provide us with the speed to market necessary to respond quickly to changing trends and increased demand. We have developed a solid relationship with our manufacturers and take great care to ensure that they share Banjo & Matilda’s commitment to quality and ethics. We do not, however, have any long-term agreements requiring us to use any manufacturer, and no manufacturer is required to produce our products in the long-term. We believe that the services of additional, or other, manufacturers and/or suppliers of our fabrics could be obtained with little or no additional expense to us and/or delay in the timeliness of our production process.
Product Distribution
We distribute finished products from two warehouses, one located in Alexandria, New South Wales, Australia, and the other in Hong Kong. At both of these warehouse locations, we use pay for storage of our product and fulfillment services in which our products are packaged and shipped to customers. Our fulfillment service provider in Hong Kong consolidates all of our products manufactured in China, packages the products by region and customer and then ships our products. Products that are sent to our warehouse space in Australia are shipped to our Australian wholesale customers and to our online customers. We believe our distribution infrastructure will be sufficient to accommodate our expected online and wholesale sales growth and expanded product offerings over the next several years.
Product Marketing
Banjo & Matilda markets its products in the following key ways:
Online
Banjo & Matilda markets its products online primarily through its web site(s) www.banjoandmatilda.com, social media & video channels, EDM (email direct mailing) campaigns, paid search engine marketing (SEM), online advertising (some strategic placement of online paid media), affiliate e-commerce and publisher web sites, and online PR (editorial placement in key online related web sites, and engagement with key fashion & lifestyle bloggers). Core online marketing activities include:
· | Driving awareness & traffic to the web site . By extending the brand through our online PR, affiliate and advertising activities, we in turn drive traffic to our web site - which can then be converted to “community” subscribers and sales. |
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· | Expand our Community . We aim to provide compelling reasons for people who become aware of Banjo & Matilda and visit our various web channels to become a member of our community including: content (our Bondi Blog, Facebook, Instagram and EDM’s), special offers to join, and promotions such as the company’s annual Sweater Exchange where the company works with a key media partner driving people to register with us to donate their pre-loved sweaters to charity, and in turn receive a discount voucher for a Banjo & Matilda sweater. In Australia we are up to the fourth year of this program. In 2013 the initiative donated over 6,000 sweaters to homeless woman in Sydney and Melbourne and generated over 2,000 new subscribers to Banjo & Matilda. |
· | Convert traffic and subscribers to sales . The company has a dedicated e-commerce team which analyzes and optimizes its web site to improve conversion from traffic to sale, average order value, and, driving lifetime value of the customer/repeat purchasing. |
Traditional Media
The company engages publicists to drive editorial placement in fashion and related publications including (but not limited to), fashion and lifestyle magazines, news papers and television. It has generated a significant amount of press in Australia (in excess of $6MM in editorial value over the past five years), and expects to do the same overtime in the United States and other key markets. It has just engaged a US based publicist and has begun to place editorial long lead press already.
In store
Through our own store(s) all customers are encouraged to joining our mailing list by having their receipt sent to them, and our online store is promoted to them. Customers who purchase our products in our retail partner stores are encouraged through our swing tags to come to us directly.
Growth Strategy
In the next 12 months we expect to raise approximately $1.5 million in additional financing in order that Banjo & Matilda will be able to grow its online customer base and sales, wholesale customer base, and expand its product offering.
Wholesale
The Company has a small, but growing list of major department stores and premium independent retailers who are adopting the brand strongly. The brand and products have established a foothold in the market; and, over the next two years, we expect to be stocked in a substantial number of key retailers around the world. New key wholesale customers have been secured each season since we began operations in 2009. In addition the company is in the process of appointing sales agents in key markets around the world. We are focused on growing our wholesale customer base mainly to drive awareness, brand positioning, as well as sales. This is a key strategy in “looping” customers who have purchased through our retail network, back to our own higher margin retail store(s) channel.
Online
Banjo & Matilda was an early adopter of the online channel. The Company now has 60 months of online sales data to aid in planning and focus investment with a proven correlation between database subscription, online visitation and sales. In addition to a comprehensive brand reach, subscriber acquisition and conversion, program, the core strategy is to bring customers into our “world”, and keep them as lifetime customers. We have a very loyal base of customers that have been acquired over time and frequently purchase every season (4-5 seasons per annum), and often multiple times each season.
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Competition
Competition in the luxury knitwear industry is principally on the basis of brand image and recognition as well as product quality, style, price and distribution. Banjo & Matilda successfully competes on the basis of a premium brand image, unique designs, attainable price points and broad and cost-effective marketing methods. In addition, we believe our online retail approach and wholesale distribution strategy differentiates us from our competitors and allows us to more effectively control our brand image.
In line with a current trend growth in premium contemporary knitwear, the market is competitive. It includes increasing competition from established companies who are expanding their production and marketing of knitwear products, as well as from frequent new entrants to the market. We are in direct competition with wholesalers and direct sellers of men and women knitwear and related accessories, such as Zadig & Voltaire, Missoni, Equipment and Vince among others. Some of these companies have substantially greater sales than Banjo & Matilda and have a larger global retail and wholesale presence. However, we believe the following strengths differentiate us from our competitors and are important to our success:
· | Uniquely Designed Knitwear. Our products are fresh, fun and versatile. They offer discreet luxury and a relaxed lifestyle attitude. All designs have strong attention to detail, use high-grade yarns and materials, are well designed and fitting, finished well and are reasonably priced. |
· | Unique Australian Brand Heritage & Lifestyle Brand . The brand reflects the aspirational freedom and freshness of the Australian cosmopolitan beach lifestyle. The brand aims to be unpretentious yet still luxurious. |
· | Multi-faceted Marketing Approach. We differentiate Banjo & Matilda’s products through a range of traditional and non-traditional marketing methods to build brand awareness and customer loyalty. We use a multi-faceted marketing strategy that includes social media, Email direct marketing, growing a subscriber database to develop customer loyalty, online video marketing, brand collaboration, fashion blogger outreach and traditional public relations campaigns. We believe this multi-faceted approach allows us to successfully increase brand awareness and broaden our appeal while reinforcing our premium brand image. |
· | Experienced Management Team with Proven Ability to Execute. Our co-founder and Executive Director, Brendan Macpherson, is a successful serial entrepreneur. He has started and developed five companies of which three have been sold and one went public. Mr. Macpherson has significant management experience and he has demonstrated the ability to successfully execute a business plan. Most recently, Mr. Macpherson was the Chief Marketing Officer of Pie Face, which operates bakery and café stores in Australia as well as franchises its business. |
Intellectual Property
In August 2013, we registered our brand name and logo, Banjo & Matilda, with the IP Australia (which is the Australian Government agency that administers intellectual property such as trademarks). We believe we own the material trademarks used in connection with the marketing, distribution and sale of all of our products in Australia, the United States, and Europe (and in the other countries in which our products are currently or intended to be either sold or manufactured). We also own the (i) website URL’s including and associated to banjoandmatilda.com (as well as banjoandmatilda.au, banjoandmatilda.uk, etc.), (ii) account “@BanjoMatilda” on Twitter, (iii) account “#Banjoandmatilda” on Instagram and (iv) Facebook page “Banjo & Matilda”. We also maintain an account on Pininterest.com. As our products sales grow in other countries, we expect to secure the registration of our trademark in foreign jurisdictions, such as the United States, the U.K. and the European Union.
Employees
As of November 14, 2013, we had nine (9) employees, all of which are employed in Australia. None of our employees is currently covered by a collective bargaining agreement. We have had no labor-related work stoppages and we believe our relations with our employees are excellent.
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RISK FACTORS
Risks Related to Our Business
Any material disruption of our information systems could disrupt our business and reduce our sales. We are dependent on information systems to operate our e-commerce websites, process transactions, respond to guest inquiries, manage inventory, purchase, sell and ship goods on a timely basis and maintain cost-efficient operations. Any material disruption or slowdown of our systems, including a disruption or slowdown caused by our failure to successfully upgrade our systems, system failures, viruses, computer “hackers” or other causes, could cause information, including data related to customer orders, to be lost or delayed which could result in delays in the delivery of products to our retail and wholesale customers or lost sales, which could reduce demand for our products and cause our sales to decline. If changes in technology cause our information systems to become obsolete, or if our information systems are inadequate to handle our growth, we could lose retail or wholesale customers.
The fluctuating cost of raw materials, particularly cashmere, could increase our cost of goods sold and cause our results of operations and financial condition to suffer. The fabric used to make our products is primarily cashmere, although we also use natural fibers, including cotton. Our costs for raw materials are affected by, among other things, weather, consumer demand, speculation on the commodities market, the relative valuations and fluctuations of the currencies of producer versus consumer countries and other factors that are generally unpredictable and beyond our control. Increases in the cost of raw materials, including petroleum or the prices we pay for our yarn, could have a material adverse effect on our cost of goods sold, results of operations, financial condition and cash flows.
The apparel industry is heavily influenced by general macroeconomic cycles that affect consumer spending, and a prolonged period of depressed consumer spending could have a material adverse effect on our business, financial condition and operating results. The apparel industry has historically been subject to cyclical variations, recessions in the general economy and uncertainties regarding future economic prospects that can affect consumer spending habits. Purchases of luxury items, such as our products, tend to decline during recessionary periods, when disposable income is lower. The success of our operations depends on a number of factors impacting discretionary consumer spending, including general economic conditions, consumer confidence, wages and unemployment, housing prices, consumer debt, interest rates, fuel and energy costs, taxation and political conditions. A continuation or worsening of the current weakness in the global economy or the economy in our key markets (Australia, the United States and Europe) may negatively affect consumer and wholesale purchases of our products and could have a material adverse effect on our business, financial condition and operating results.
Privacy breaches and other cyber security risks related to our e-commerce business could negatively affect our reputation, credibility and business. We are responsible for storing data relating to our customers and employees and rely on third parties for the operation of parts of our e-commerce website, banjoandmatilda.com , and for the various social media tools and websites we use as part of our marketing strategy. Our online store on our website is operated by a third-party provider. Consumers, lawmakers and consumer advocates alike are increasingly concerned over the security of personal information transmitted over the Internet, consumer identity theft and privacy. We require that our third-party service provider implements reasonable security measures to protect our customers’ identity and privacy. We do not, however, control these third-party service providers and cannot guarantee that no electronic or physical computer break-ins and security breaches will occur in the future. Likewise, our systems and technology are subject to the risk of system failures, viruses, “hackers” and other causes that are out of our control. Any perceived or actual unauthorized disclosure of personally identifiable information regarding our customers or website visitors could harm our reputation and credibility, reduce our online sales, impair our ability to attract website visitors and reduce our ability to attract and retain customers, and potentially expose us to significant related liability. Finally, we could incur significant costs in complying with the multitude of local, national and foreign laws regarding the use and unauthorized disclosure of personal information (to the extent they are applicable). We also may incur significant costs in our implementation of additional security measures to comply with applicable laws and industry standards and to further protect customer data.
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The departure of our co-founders could have a material adverse effect on our business. We depend on the services and management experience of our co-founders, Belinda Storelli Macpherson and Brendan Macpherson, who have substantial experience and expertise in our business. In particular, Ms. Macpherson has provided design leadership to Banjo & Matilda since its inception. She is instrumental to our marketing and publicity strategy and is closely identified with both our brand and company. Our ability to maintain our brand image and leverage the goodwill associated with Ms. Macpherson may be damaged if we were to lose her services. Banjo & Matilda currently does not have an employment agreement with Ms. Macpherson, who has the right to terminate her employment with us at any time. In addition, the leadership of Brendan Macpherson, our Chief Executive Officer, has been a critical element of Banjo & Matilda’s success. The loss of services of Mr. Macpherson and/or Ms. Macpherson or any negative public perception with respect to, or relating to, the loss of one or more of these individuals could have a material adverse effect on our business, financial condition and operating results.
We are dependent on two distribution facilities. If one or more of our distribution facilities experiences operational difficulties or becomes inoperable, it could have a material adverse effect on our business, financial condition and operating results. We use distribution facilities in Hong Kong and in Alexandria, Australia. Our ability to meet the needs of our wholesale customers and our online retail customers depends on the proper operation of these distribution facilities. If either of these distribution facilities were to shut down or otherwise become inoperable or inaccessible for any reason, we could suffer a substantial loss of inventory and/or disruptions of deliveries to our wholesale customers and retail customers. In addition, we could incur significantly higher costs and longer lead times associated with the distribution of our products during the time it takes to reopen or replace the damaged facility. Any of the foregoing factors could have a material adverse effect on our business, financial condition and operating results.
If our manufacturing contractors fail to use acceptable, ethical business practices, our business and reputation could suffer. We require our manufacturing contractors to operate in compliance with applicable laws, rules and regulations regarding working conditions, employment practices and environmental compliance. Additionally, we impose upon our business partners operating guidelines that require additional obligations in those three areas in order to promote ethical business practices, and our staff and third parties we retain for such purposes periodically visit and monitor the operations of our manufacturing contractors to determine compliance. However, we do not control our manufacturing contractors or their labor and other business practices. If one of our manufacturing contractors violates applicable labor or other laws, rules or regulations or implements labor or other business practices that are generally regarded as unethical in our markets, such as Australia, Europe or the United States, the shipment of finished products to us could be interrupted, orders could be cancelled, relationships could be terminated and our reputation could be damaged. Any of these events could have a material adverse effect on our business, financial condition and operating results.
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Due to the highly competitive nature of the apparel industry, our success depends on our ability to meet consumer demands, respond to fashion trends, and provide superior quality. There is intense competition in the sector of the apparel industry in which Banjo & Matilda participates. Banjo & Matilda will compete with many other apparel companies, some of which are larger and have greater financial resources, more comprehensive product lines; longer-standing relationships with suppliers, manufacturers, and retailers; greater distribution and marketing capabilities; and, stronger brand recognition and loyalty than Banjo & Matilda. Our competitors’ greater capabilities in these areas may enable them to better differentiate their products from Banjo & Matilda, withstand periodic downturns in the apparel industry, compete more effectively on the basis of price and production and more quickly develop new products. Management of Banjo & Matilda believes in order to be successful in this industry we must be able to evaluate and respond to changing consumer demand and taste and to remain competitive in the areas of style and quality while operating within the significant domestic and foreign production and delivery constraints of the industry.
Risks Related to Our Common Stock and Our Status as a Public Company
We may need to raise additional capital by sales of our common stock, which may adversely affect the market price of our common stock and your rights in us may be reduced. We will need to raise additional funds to expand our online sales, increase wholesale sales, expand our product lines and add retail stores. In order to satisfy our funding requirements we may consider issuing additional debt or equity securities. If we issue equity or convertible debt securities to raise such additional funds, our existing stockholders may experience dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders. If we incur additional debt, it may increase our leverage relative to our earnings or to our equity capitalization, requiring us to pay additional interest expenses and potentially lower our credit ratings. We may not be able to market such issuances on favorable terms, or at all, in which case, we may not be able to develop or enhance our products, execute our business plan, take advantage of future opportunities or respond to competitive pressures.
State securities laws may limit secondary trading, which may restrict the states in which and conditions under which you can sell the shares offered by this prospectus. Secondary trading in our common stock will not be possible in any state until the common stock is qualified for sale under the applicable securities laws of the state or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary trading in the state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of, the common stock in any particular state, the common stock could not be offered or sold to, or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our common stock, the liquidity for the common stock could be significantly impacted thus causing you to realize a loss on your investment.
The Registrant’s board of directors designated a series of preferred stock without shareholder approval that has voting rights that adversely affect the voting power of holders of the Registrant’s common stock and may have an adverse effect on its stock price. The Registrant’s Certificate of Incorporation provide for the authorization of 100,000,000 shares of “blank check” preferred stock. Pursuant to our Articles of Incorporation, the Registrant’s Board of Directors is authorized to issue such “blank check” preferred stock with rights that are superior to the rights of stockholders of the Registrant’s common stock, including a conversion price then approved by our Board of Directors, which conversion price may be substantially lower than the market price of shares of the Registrant’s common stock, without stockholder approval. In connection with the Registrant’s employment agreement with its Chief Executive Officer, Brendan Macpherson, the Board of Directors authorized 1,000,000 shares of preferred stock with each share having 100 votes until Mr. Macpherson’s employment agreement expires or terminates. The Registrant agreed to issue the 1,000,000 shares of preferred stock to Mr. Macpherson pursuant to his employment agreement and, upon the filing of a certificate of designation for such preferred shares and the subsequent issuance of such shares, Mr. Macpherson will have voting control of the Registrant, which has a negative effect on the voting power of the holders of the Registrant’s common stock and may cause its stock price to decline.
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We will incur significant costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance requirements, including establishing and maintaining internal controls over financial reporting, and we may be exposed to potential risks if we are unable to comply with these requirements. As a public company we will incur significant legal, accounting and other expenses under the Sarbanes-Oxley Act of 2002, together with rules implemented by the Securities and Exchange Commission and applicable market regulators. These rules impose various requirements on public companies, including requiring certain corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly.
The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. In particular, we must perform system and process evaluations and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Compliance with Section 404 may require that we incur substantial accounting expenses and expend significant management efforts. We have not yet evaluated the internal control systems of Banjo & Matilda in order to allow our management to report on our internal controls on a consolidated basis as required by these requirements of Section 404 of the Sarbanes-Oxley Act. Our testing may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. In the event we identify significant deficiencies or material weaknesses in our internal controls that we cannot remediate in a timely manner, the market price of our stock could decline if investors and others lose confidence in the reliability of our financial statements and we could be subject to sanctions or investigations by the SEC or other applicable regulatory authorities.
Our management is not familiar with the United States securities laws. Our management is generally unfamiliar with the requirements of the United States securities laws, which could adversely impact our ability to comply with legal, regulatory, and reporting requirements of those laws. Our management may not be able to implement programs and policies in an effective and timely manner to adequately respond to such legal, regulatory and reporting requirements, including the establishment and maintenance of internal control over financial reporting. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our ability to comply with the reporting requirements of the Exchange Act, which are necessary to maintain public company status, and could result in investigations by the Securities and Exchange Commission, and other regulatory authorities that could be costly, divert management’s attention and disrupt our business, If we were to fail to fulfill those obligations, our ability to operate as a public company would be in jeopardy, in which event you could lose your entire investment in our company.
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There is a limited public trading market for our common stock, which may have an unfavorable impact on our stock price and liquidity. There has been a limited trading market for our common stock in the past and there can be no assurance that a trading market in our shares of common stock will further develop and be sustained. There were no reported trades in our common stock during 2012, one trade of 45,000 shares reported in 2011 and six trades of an aggregate of 23,000 shares in 2013. The trading market for securities of companies quoted on the OTC Bulletin Board or other quotation systems is substantially less liquid than the average trading market for companies listed on a national securities exchange. The quotation of our shares on the OTC Bulletin Board or other quotation system may result in a less liquid market available for existing and potential shareholders to trade shares of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future.
The market price of our common stock can become volatile, leading to the possibility of its value being depressed at a time when you may want to sell your holdings . The market price of our common stock can become volatile. Numerous factors, many of which are beyond our control, may cause the market price of our common stock to fluctuate significantly. These factors include:
· | our earnings releases, actual or anticipated changes in our earnings, fluctuations in our operating results or our failure to meet the expectations of financial market analysts and investors; |
· | changes in financial estimates by us or by any securities analysts who might cover our stock; |
· | speculation about our business in the press or the investment community; |
· | significant developments relating to our relationships with our wholesale customers or suppliers; |
· | stock market price and volume fluctuations of other publicly traded companies and, in particular, those that are in our industry; |
· | customer demand for our products or luxury goods in general; |
· | investor perceptions of our industry in general and Banjo & Matilda in particular; |
· | the operating and stock performance of comparable companies; |
· | general economic conditions and trends; |
· | changes in accounting standards, policies, guidance, interpretation or principles; |
· | loss of external funding sources; |
· | sales of our common stock, including sales by our directors, officers or significant stockholders; and |
· | additions or departures of key personnel. |
Securities class action litigation is often instituted against companies following periods of volatility in their stock price. Should this type of litigation be instituted against us, it could result in substantial costs to us and divert our management’s attention and resources. Moreover, securities markets may from time to time experience significant price and volume fluctuations for reasons unrelated to the operating performance of particular companies. These market fluctuations may adversely affect the price of our common stock and other interests in our Company at a time when you want to sell your interest in us.
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We do not intend to pay dividends for the foreseeable future. We have never declared or paid any cash dividends on our common stock and do not intend to pay any cash dividends in the foreseeable future. We anticipate that we will retain all of our future earnings for use in the development of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.
Our common stock is expected to be considered “a penny stock” and, as a result, it may be difficult to trade a significant number of shares of our common stock. The Securities and Exchange Commission (“SEC”) has adopted regulations that generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. Since our common stock has been eligible for quotation on the OTC markets (such as the bulletin board), the market price of our common stock has been less than $5.00 per share. We expect the market price for our common stock will remain less than $5.00 per share for the foreseeable future and, therefore, may be a “penny stock” according to SEC rules. This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect the ability of investors hereunder to sell their shares. In addition, because our stock is quoted on the OTC markets, investors may find it difficult to obtain accurate quotations of the stock and may experience a lack of buyers to purchase such stock or a lack of market makers to support the stock price.
PROPERTIES
Banjo & Matilda leases a 1,076 square foot showroom located at 76 William Street, Paddington, New South Wales, Australia, where it also maintains its principal executive offices. Banjo & Matilda’s lease for this space expires on October 14, 2014, with an option to renew the lease for an additional three year period. The monthly fixed rent for this space is approximately $4,433 per month. Management believes that the facilities are adequate for the Company’s current needs and for the foreseeable future. We occupy space at a warehouse in Alexandria, New South Wales, Australia where we store merchandise and ship our products through fulfillment services provided at such warehouse. We pay approximately $1,200 per month for such warehousing and fulfillment services. In addition, Banjo & Matilda uses a fulfillment service in Hong Kong that consolidates all of products manufactured in China. The cost of storage of our products by this fulfillment service company is included in our monthly fee.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Company background
Founded in 2008 by Sydney designer Belinda Storelli Macpherson, Banjo & Matilda designs, manufactures, sells and distributes premium contemporary knitwear.
Because of the brand’s fresh designs, premium quality and irreverent Australian brand heritage, it has gained a loyal following by customers, the media, celebrities and retail partners alike.
Since 2008 the Company’s products have been sold through its e-commerce retail store into 16 countries and growing, and a physical retail store location in Sydney, Australia. In addition, products are distributed through wholesale to key retail accounts in Australia, North America, Canada, United Kingdom, the Middle East and Europe.
The brand has experienced strong and consistent year-on-year revenue growth.
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Growth opportunity
The brand currently exclusively targets the premium contemporary knitwear category. Knitwear has grown to approximately 30% of all apparel sales in the Northern Hemisphere, and there are very few knitwear only brands. By focusing on this market exclusively, at least initially, there is large global sales opportunity.
Wholesale sales
The company is expanding its international wholesale program in the Northern Hemisphere, particularly the North American market. In addition to the current small but growing high profile roster of key retailers, leading wholesale sales agents have been appointed which will assist the Company grow its wholesale customer base more aggressively.
The company sees expansion of its wholesale account base of premium retail partners as an effective way to build its brand and ultimately build sales through its higher margin / value online e-commerce retail channel.
Online/ e-commerce retail
In line with the increased brand exposure gained by wholesale account expansion, it is expected the Company’s online retail sales will continue to increase accordingly. Further, additional resources are being allocated to online marketing and e-commerce development to drive meaningful growth through this channel.
Product diversification
At present the Company is exclusively focused on woman’s premium contemporary knitwear. Over time the company plans to develop a more rounded product offering including ready to wear knitted/cashmere and supplementary styles, men’s, and eventually children’s, accessories and gifts. This will expand the brands product line that will:
· | Increase the floor space the Company’s retail partners will commit to the brand, which in turn will increase the “buy” from each retail partner. |
· | Increase the brand’s appeal to a wider audience, acquiring additional customers to the brand both through the Company’s wholesale and retail channels. |
· | Increase the opportunity for existing customers to spend more with the Company. |
Retail stores
Once the Company has firmly established the brand and rounded its product offering, we expect to initiate a retail store roll out program.
Other initiatives
Brand development
In addition to recently appointing a North American leading PR agency, the Company will deploy Publicity & Marketing programs developed in Australia into the much larger Northern Hemisphere markets.
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Margin expansion
The Company will continue to focus on increasing margins by driving manufacturing savings, developing products with higher margins, and increasing sales volume through the higher margin retail online sales channel.
Financial results
Below are the historical financial results of the fiscal year ended June 30, 2013 as compared to 2012:
Increase | ||||||||||||
June 30, 2013 | June 30, 2012 | (Decrease) | ||||||||||
Revenue | $ | 1,724,181 | $ | 950,812 | $ | 773,369 | ||||||
Cost of sales | 977,086 | 677,002 | 300,084 | |||||||||
Gross profit | 747,095 | 273,810 | 473,285 | |||||||||
Payroll and employee related expenses | 240,450 | 131,896 | 108,554 | |||||||||
Administration expense | 195,422 | 165,286 | 30,136 | |||||||||
Marketing expense | 88,826 | 144,303 | (55,477 | ) | ||||||||
Occupancy expense | 47,518 | 36,321 | 11,197 | |||||||||
Depreciation and amortization expense | 8,821 | 6,018 | 2,803 | |||||||||
Total expense | 581,037 | 483,824 | 97,213 | |||||||||
Income (loss) from operations | 166,058 | (210,014 | ) | 376,072 | ||||||||
Other (Income) expense | ||||||||||||
Interest income | (1 | ) | (1 | ) | – | |||||||
Other income | (52,585 | ) | (59 | ) | 52,526 | |||||||
Finance costs | 196,892 | 56,348 | 140,544 | |||||||||
Total other expense | 144,306 | 56,288 | 88,018 | |||||||||
Income (loss) before income tax | $ | 21,752 | $ | (266,302 | ) | $ | 288,054 |
· | Revenue for the year ended June 30 2013 increased to $1,724,181 from $950,812 in 2012, an 81% improvement. This increase was due to retail sales improving by 25% ($112,000), and wholesale sales improving by 311% ($825,000). The increase in wholesale sales came from several additional new key customer wholesale accounts. |
· | Cost of sales improved to 57% in 2013, from 71% in 2012. The improvement in cost of sales was primarily due to higher online sales demand which resulted in fewer mark downs generating higher product sell through; and to a lessor extent, higher wholesale margins driven by an improvement in pricing and merchandising. |
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· | Gross Margins improved 33% to 43% in 2013, from 29% in 2012. Gross profit increased by 173% to $747,095 for 2013, from a gross profit of $273,810 in 2012. This increase was a result of an increase in gross sales and an improvement in cost of sales as described above. |
· | Selling, general and administrative expenses improved 33%, to 34% of sales ($581,037) in 2013, from 51% of sales ($483,824) in 2012. Almost all categories of general and administrative expenses increased as a result of supporting the 81% increase in sales for the year ended June 30, 2013. Additional staff was hired and additional costs were incurred to support the increase in revenue. Marketing expense for the period decreased as the Company became eligible for an Australian Export grant from the government based on expenses directly related to marketing abroad. This grant reimbursed us on actual expenses incurred. |
· | Finance costs as a percent of sales increased to 11% of sales ($196,892) in 2013, from 5.9% ($56,348) in 2012. This increase was due to utilizing accounts receivable finance facilities to accommodate higher sales. In addition the Company issued a convertible note at an interest rate of 30% per annum. Subsequent to June 30, 2013 the convertible note holder converted the debt to equity. The Company has also begun to secure less expensive financing facilities which will significantly decrease funding costs as a percent of sales in the coming periods. |
· | Net income improved by $288,054 to $21,752 in 2013, from a loss of $266,302 in 2012. This increase was primarily a result of an increase in sales, decrease in cost of sales as a percentage of sales, and ability to control the increase in overhead expenses during the period. |
Liquidity and Capital Resources
As of June 30, 2013, the Company had cash on hand of $11,104, which represented an increase of $7,043 from $4,061 at June 30, 2012, other current assets of $419,223 and current liabilities of $502,833. Working capital was ($72,506) and the ratio of current assets to current liabilities was 1.0 to 0.86 as of June 30, 2013.
The following is a summary of cash provided by or used in each of the indicated type of activities during the years ended June 30, 2013 and 2012, respectively:
For the year ended
June 30, 2013 |
For the year ended
June 30, 2012 |
|||||||
Cash provided by (used in): | ||||||||
Operating activities | (452,362 | ) | (308,324 | ) | ||||
Investing activities | (39,463 | ) | (19,213 | ) | ||||
Financing activities | 500,206 | 278,088 | ||||||
Effect of change of exchange rates | (1,338 | ) | 485 | |||||
Cash, beginning of period | 4,061 | 53,025 | ||||||
Cash, end of period | 11,104 | 4,061 |
Net cash used in operating activities was $452,362 for the year ended June 30, 2013, as compared to net cash used in operating activities of $308,324 for the year ended June 30, 2012. The increase in cash used in operations was mainly due to (i) an increase in inventory held from $186,851 in 2012 to $329,598 at June 30 2013, an increase of $142,747. (ii) an increase in other receivable of $96,667, (iii) and a reduction of $88,403 in deposits payable.
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Net cash used in investing activities was $39,463 for the year ended June 30, 2013. The investing activity was mainly due to the expenditures related to the development of the Company website.
Net cash provided by financing activities was $500,206 during the year ended June 30, 2013. The increase was due to loans from a related party of $170,725 and convertible debt issued of $246,749 (which has been converted to equity as of June 30, 2013).
Off-Balance Sheet Arrangement
There are no other off-balance sheet arrangements between the Company and any other entity that have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to shareholders.
The Company has not entered into any financial guarantees or commitments to guarantee the payment obligations of any third parties. The Company has not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in the consolidated financial statements. Furthermore, the Company does not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us.
DIRECTORS AND EXECUTIVE OFFICERS
Directors and Executive Officers
As a condition to the consummation of the Share Exchange Agreement between the Registrant and Banjo & Matilda, Jared Robinson and Neil Kleinman each resigned as an officer and director of the Registrant. Concurrent with the consummation of the Share Exchange Agreement, the Board appointed Brendan Macpherson and Belinda Storelli Macpherson, the co-founders of Banjo & Matilda, to serve on the Board of Directors of the Registrant effective immediately after the closing. In addition to serving on the Board of Directors, Brendan Macpherson has been elected as Chief Executive Officer and Secretary of the Registrant and Belinda Storelli Macpherson has been elected Chief Creative Officer of the Registrant. Additionally, the Board elected Robert Dardano as the Interim Chief Financial Officer of the Registrant.
The following sets forth information about our directors and executive officers:
Name | Age | Position | ||
Brendan Macpherson | 43 | Chief Executive Officer, Secretary and Director | ||
Belinda Storelli Macpherson | 39 | Chief Creative Officer and Director | ||
Robert Dardano | 42 | Interim Chief Financial Officer | ||
Brendan Patrick Gow Macpherson is a co-founder of Banjo & Matilda. Mr. Macpherson has served as Chief Executive Officer of Banjo & Matilda since January 2013 and he was the Executive Director from May 2009 to October 2009. From April 2009 until June 2013, he was the Chief Marketing Officer for P ie Face Pty Ltd. which operates bakery and café stores in Australia. It offers pies and coffees. From June 2002 until January 2009, he was Chief Executive Officer of Brightstars Education, the largest educator of performing arts in Australia.
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Belinda Storelli Macpherson is a co-founder of Banjo & Matilda. Ms. Macpherson has been the managing director of Banjo & Matilda since May 2009 and she began Banjo & Matilda in May 2008. Prior to founding Banjo & Matilda, Ms. Macpherson worked in public relations and marketing in the film industry, including management roles with international movie studios such as Universal Pictures, Dreamworks SKG, and later Warner Bros followed. Ms. Macpherson opened her own boutique PR company called 'Global Artist'.
Robert Dardano joined Banjo & Matilda in June 2012 as an external Chief Financial Officer. Since July 2008 he has served as the Financial Controller of Pie Face Holdings Pty Ltd, which operates bakery and café stores in Australia. At Pie Face Holdings, Mr. Dardano oversaw accounting functions, financial reporting and he provides strategic financial assistance to the directors as needed. From 1997 to June 2008, Mr. Dardano served in various financial controller and accounting positions for various companies such as Scott Corporation and Essilor Pty. Mr. Dardano received a Bachelor of Commerce from the University of Sydney in 1997.
There are no family relationships of any kind among our directors or executive officers, except that Mr. Macpherson, the Chief Executive Officer and Secretary of the Registrant, is the husband of Ms. Macpherson, the Chief Creative Officer of the Registrant .
Involvement in Certain Legal Proceedings
To the knowledge of the Registrant, none of the directors, executive officers, or persons nominated or chosen by us to become directors has been personally involved in any legal proceedings as defined in Section 401 of Regulation S-K in the past ten years.
EXECUTIVE COMPENSATION
The Registrant did not pay and cash or other compensation to its executive officers for the years ended June 30, 2013 and June 30, 2012.
The following summary compensation table set forth information concerning the annual and long-term compensation for services in all capacities to Banjo & Matilda for the fiscal years ended June 30, 2013 and June 30, 2012 of those persons who were, at June 30, 2013, (i) the chief executive officer, (ii) the chief financial officer, (iii) managing director and (ii) the other most highly compensated executive officers of Banjo & Matilda, whose total compensation was in excess of $100,000 (the “named executive officers”):
Summary Compensation Table
Name and Principal Position | Year |
Salary ($) |
Bonus ($) |
Stock Awards ($) |
Option Awards ($) |
Non-Equity Incentive Plan Compensation ($) |
Nonqualified Deferred Compensation Earnings ($) |
All Other Compensation ($) |
Total |
Brendan Macpherson Chief Executive Officer |
2013 2012
|
$0 $0
|
$0 $0
|
$0 $0
|
$0 $0
|
$0 $0
|
$0 $0
|
$0 $0
|
$0 $0
|
Belinda Storelli Macpherson, Managing Director |
2013 2012
|
$0 $0
|
$0 $0
|
$0 $0
|
$0 $0
|
$0 $0
|
$0 $0
|
$0 $0
|
$0 $0
|
Robert Dardano Interim Chief Financial Officer |
2013 2012
|
$0 $0
|
$0 $0
|
$0 $0
|
$0 $0
|
$0 $0
|
$0 $0
|
$0 $0
|
$0 $0
|
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Compensation of Directors
The Registrant did not pay and cash or other compensation to its directors for the years ended June 30, 2013 and June 30, 2012.
Outstanding Equity Awards at Fiscal Year End
For the year ended June 30, 2013, no director or executive officer has received compensation from the Registrant pursuant to any compensatory or benefit plan. There is no plan or understanding, express or implied, to pay any compensation to any director or executive officer pursuant to any compensatory or benefit plan, although we anticipate that we will compensate our officers and directors for services to us with stock or options to purchase stock, in lieu of cash.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
On February 26, 2013, Harboursafe Holdings, an Australian corporation controlled by Brendan Macpherson, our Chief Executive Officer, entered into an Intellectual Property Sale Agreement with Banjo & Matilda pursuant to which Harboursafe Holdings sold to Banjo & Matilda numerous clothing designs for a purchase price of approximately $663,000.
On July 1, 2013, Banjo & Matilda entered into a Loan Facility Agreement pursuant to which Harboursafe Holdings made a loan of approximately $963,000 to Banjo & Matilda. The loan bears interest at 3% per annum and interest accrues daily. The loan is due on June 30, 2014. The loan is convertible into shares of Banjo & Matilda at any time prior to the due date. Interest on the loan is paid on the earlier of the (x) conversion of the loan into shares of Banjo & Matilda and (y) the due date of the loan. Harboursafe may require prepayment of $100,000 of the loan upon 60 days prior notice to Banjo & Matilda. To secure the loan, Banjo & Matilda granted Harboursafe Holdings a security interest in the intellectual property acquired by Banjo & Matilda under the Intellectual Property Sale Agreement (as discussed above).
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On November 3, 2013, Raymond Key, who owns 19% of the Registrant’s common stock, made an unsecured loan of AU$100,000 to Banjo & Matilda which bears interest at the rate of 15% per annum (or 0.041% per day). The loan is due on or before December 4, 2013 and is guaranteed by Brendan Macpherson, the Chief Executive Officer of Banjo & Matilda.
Insider Transactions Policies and Procedures
The Registrant has an insider transaction policy which is filed as Exhibit 14.3 to the Current Report on Form 8-K filed on April 2, 2012.
Code of Ethics
The Registrant has adopted a corporate code of ethics. The Registrant believes its code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. A copy of the code of ethics is filed as Exhibit 14.1 to our Form 10-K filed with the Securities and Exchange Commission on February 15, 2011.
Director Independence
We are not currently a “listed company” under SEC rules and are therefore not required to have a Board comprised of a majority of independent directors or separate committees comprised of independent directors. We currently do not have any independent directors as the term “independent” is defined by the rules of the Nasdaq Stock Market.
Board Committees
Audit Committee and Charter
We do not have a separately-designated audit committee of the board. Audit committee functions are performed by our board of directors. None of our directors are deemed independent. All directors also hold positions as our officers. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee. A copy of the audit committee charter was filed as Exhibit 99.2 to the Registrant’s annual report on Form 10-K filed on February 15, 2011.
We have a disclosure committee and disclosure committee charter. Our disclosure committee is comprised of all of our officers and directors. The purpose of the committee is to provide assistance to the Chief Executive Officer and the Chief Financial Officer in fulfilling their responsibilities regarding the identification and disclosure of material information about us and the accuracy, completeness and timeliness of our financial reports. A copy of the disclosure committee charter was filed as Exhibit 99.3 to the Registrant’s annual report on Form 10-K filed on February 15, 2011.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial ownership of our common stock as of November 13, 2013, after giving effect to the closing under the Exchange Agreement by (i) any person or group with more than 5% of any class of voting securities, (ii) each director, (iii) our chief executive officer and each other executive officer whose cash compensation for the most recent fiscal year exceeded $100,000 and (iv) all such executive officers and directors as a group. Except as indicated in the footnotes to the table below, the address of each of the beneficial owners named in the table below is in care of Banjo & Matilda, 75 William Street, Paddington, New South Wales, Australia 2021 . E xcept as indicated in the footnotes to this table and subject to applicable community property laws, the persons named in the table to our knowledge have sole voting and investment power with respect to all shares of securities shown as beneficially owned by them. The information in this table is as of November 13, 2013 and is based on 26,436,484 shares of common stock outstanding as of such date.
(1) Shares are held by Jibon Trust of which Brendan Macpherson is the trustee.
(2) Consists of shares held by Jibon Trust of which Brendan Macpherson, Ms. Macpherson’s husband, is the trustee.
(3) Lawrence Collie is the director of Rezeruace Investments Ltd. and has voting and dispositive control over the shares held by Rezeruace Investments.
Changes in Control
At the closing under the Share Exchange Agreement on November 14, 2013, the Registrant acquired all of the issued and outstanding shares of common stock of Banjo & Matilda in exchange for 18,505,539 shares of the Registrant’s common stock. Prior to the closing of the share exchange transaction, and pursuant to a letter of intent entered into between Banjo & Matilda and the Registrant on July 12, 2013, the Registrant declared and paid a stock dividend of four shares of common stock for every one share of common stock owned by stockholders of record at the close of business on October 3, 2013. As a result of the stock dividend the number of shares of the Registrant issued and outstanding shares increased from 11,500,000 shares to 57,500,000 shares. However, in October 2013 our then majority shareholder, Bradley Miller, entered into a Stock Purchase Agreement with Karolus Maximus Kapital, LLC (“Karolus”), pursuant to which Karolus agreed to purchase from Mr. Miller his 49,569,055 shares of the Registrant’s common stock (the “Miller Shares”) for $75,000 and the transfer from an affiliate of Karolus of 400,000 shares of the Registrant’s common stock to Nicole Stacy. Mr. Miller agreed that in lieu of transferring the Miller Shares to Karolus he would instead contribute them to the capital of the Registrant prior to the closing of the share exchange. As a result, after the closing of the share exchange the Registrant now has 26,436,484 shares issued and outstanding of which 70%, or 18,505,539 shares, will be owned by the shareholders of Banjo & Matilda.
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On November 14, 2013, the date of the closing of the share exchange transaction, the Registrant’s directors, Jared Robinson and Neil Kleinman, resigned from the Board and immediately prior to such resignation they appointed Brendan Macpherson and Belinda Storelli Macpherson, both officers of Banjo & Matilda, to fill the vacancies from the resignations. In addition, at the Share Exchange Closing, Mr. Robinson resigned as our Chief Executive Officer and Mr. Kleinman resigned as our Secretary and the Board appointed Mr. Brendan Macpherson as our Chief Executive Officer and Secretary, Ms. Belinda Storelli Macpherson as our Chief Creative Officer and Robert Dardano as our Interim Chief Financial Officer. For information concerning our new directors and executive officers, see Item 2.01 – “Directors and Executive Officers.”
On November 15, 2013, pursuant to an employment agreement between the Registrant and its Chief Executive Officer, Brendan Macpherson, the Board of Directors authorized 1,000,000 shares of preferred stock with each share having 100 votes which voting power continues until Mr. Macpherson’s employment agreement expires or terminates. Upon the filing of a certificate of designation for such preferred shares and the subsequent issuance of such shares, Mr. Macpherson will have voting control of the Registrant.
DESCRIPTION OF SECURITIES
Common Stock
Our authorized capital stock consists of 100,000,000 shares of common stock, par value $0.00001 per share. The holders of our common stock:
· | have equal ratable rights to dividends; |
· | are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs; |
· | do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights; and, |
· | are entitled to one non-cumulative vote per share on all matters on which stockholders may vote. |
We refer you to the Registrant’s Articles of Incorporation, Bylaws and the applicable statutes of the State of Nevada for a more complete description of the rights and liabilities of holders of the Registrant’s securities.
Non-cumulative voting
Holders of shares of the Registrant’s common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors. As a result of the issuance of shares under the Share Exchange Agreement, Brendan Macpherson, our Chief Executive Officer and a director, and Raymond Key each own 12,332,561 shares and 5,014,582 shares, respectively, and together they own approximately 65.6% of the outstanding shares of our common stock. As a result, Messrs. Macpherson and Key have the ability to control the policies and management of the Registrant, as well as determine matters requiring stockholder approval, including decisions regarding mergers, consolidations, the sale of all or substantially all of our assets, election of directors and other significant corporate actions.
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Cash dividends
As of the date of this prospectus, we have not paid any cash dividends to stockholders. The declaration of any future cash dividend will be at the discretion of the Registrant’s board of directors and will depend upon its earnings, if any, its capital requirements and financial position, its general economic conditions, and other pertinent conditions. It is the Registrant’s present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in its business operations.
Preferred Stock
We are authorized to issue 100,000,000 shares of preferred stock with a par value of $0.00001 per share. The terms of the preferred shares are at the discretion of the board of directors. Currently no preferred shares are issued and outstanding.
In connection with the employment agreement with Brendan Macpherson, the Board of Directors of the Registrant will be designate 1,000,000 shares as a “Control Series” of Preferred Stock” (or such other name as the Board may adopt). All of the shares of the “Control Series” of Preferred Stock” will be issued to Mr. Macpherson as a signing bonus under his employment agreement. The holders of the Control Series of Preferred Stock will (a) vote on all other matters to come before the stockholders with the holders of the Common Stock as a single class, (b) have one hundred (100) votes per share, and (c) not have preemptive rights. Upon the expiration or termination of Mr. Macpherson’s employment agreement, the Control Series will automatically be cancelled and will be returned to the authorized but unissued preferred stock. The Control Series of Preferred Stock will not be entitled to receive any dividends or any payments upon a event of a liquidation, dissolution, or winding up of the Registrant.
Anti-takeover provisions
There are no Nevada anti-takeover provisions that may have the effect of delaying or preventing a change in control.
MARKET PRICE AND DIVIDENDS ON OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The Registrant’s stock is eligible for quotation on the OTC Market under the symbol “BANJ”, and prior to November 14, 2013 the stock was quoted under the symbol “ESRN.” There are no outstanding options or warrants to purchase, or securities convertible into, our common stock.
The following table reflects the (i) high and low quarterly bid prices for the fiscal year ended December 31, 2011 and December 31, 2012 and (ii) high and low quarterly sales prices fiscal quarters ended March 31, 2013 and June 30, 2013. This information was provided to us by the Financial Industry Regulatory Authority and the Internet. These quotations reflect inter-dealer prices, without retail mark-up or mark-down or commissions. These quotations may not necessarily reflect actual transactions.
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Period | High Sale | Low Sale | ||||||
First Quarter 2013 | $ | 1.20 | $ | 0.40 | ||||
Second Quarter 2013 | $ | 1.10 | $ | 0.52 | ||||
Third Quarter 2013 | $ | 1.00 | $ | 0.51 |
Period | High Bid | Low Bid | ||||||
First Quarter 2012 | $ | 0.30 | $ | 0.30 | ||||
Second Quarter 2012 | $ | 0.30 | $ | 0.30 | ||||
Third Quarter 2012 | $ | 0.30 | $ | 0.30 | ||||
Fourth Quarter 2012 | $ | 0.30 | $ | 0.30 |
Period | High Bid | Low Bid | ||||||
First Quarter 2011 | – | – | ||||||
Second Quarter 2011 | $ | 0.25 | $ | 0.03 | ||||
Third Quarter 2011 | $ | 0.12 | $ | 0.12 | ||||
Fourth Quarter 2011 | $ | 0.12 | $ | 0.12 |
Our Transfer Agent
We have appointed Olde Monmouth Stock Transfer Company, with offices at 200 Memorial Parkway, Atlantic Highlands, New Jersey 07716, phone number 732-872-2727, as transfer agent for our shares of common stock. The transfer agent is responsible for all record-keeping and administrative functions in connection with our shares of common stock.
Holders
There are 124 holders of record for the Registrant’s common stock. There are a total of 26,436,484 shares of common stock outstanding of which 12,332,561 are issued to a trust controlled by Brendan Macpherson, our Chief Executive Officer and director.
Dividends
We have not declared any cash dividends, nor do we intend to do so. We are not subject to any legal restrictions respecting the payment of dividends, except that they may not be paid to render us insolvent. Dividend policy will be based on our cash resources and needs and it is anticipated that all available cash will be needed for our operations in the foreseeable future.
Penny Stock Regulations
The SEC has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. The Registrant’s common stock is a “penny stock” and is subject to Rule 15g-9 under the Exchange Act, or the Penny Stock Rule. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and “accredited investors” (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses). For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser's written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market, thus possibly making it more difficult for us to raise additional capital.
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For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in penny stock, of a disclosure schedule required by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.
There can be no assurance that the Registrant’s common stock will qualify for exemption from the Penny Stock Rule. Even if the Registrant’s common stock were exempt from the Penny Stock Rule, the Registrant would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.
Rule 144
Prior to completion of the closing under the Share Exchange Agreement, the Registrant was considered a shell company. As a result, the Registrant is subject to the provisions of Rule 144(i) which limit reliance on Rule 144 by shareholders owning stock in a shell company (or a former shell company). Under current interpretations, unregistered shares issued after the Registrant first became a shell company cannot be resold under Rule 144 until the following conditions were met:
· | The registrant ceases to be a shell company; |
· | The Registrant remains subject to the Exchange Act reporting obligations; |
· | The Registrant files all required Exchange Act reports during the preceding 12 months; and |
· | At least one year has elapsed from the time the Registrant files “Form 10 information” reflecting the fact that the Registrant ceased to be a shell company. |
Consequently, until the first anniversary of the filing of this Current Report on Form 8-K, holders of the Registrant’s common stock cannot rely on Rule 144 to sell restricted shares of common stock.
Securities Authorized for Issuance under Equity Compensation Plans
The Registrant does not have any equity compensation plans and accordingly there are no shares authorized for issuance under an equity compensation plan.
RECENT SALES OF UNREGISTERED SECURITIES
On November 14, 2013, the Registrant issued an aggregate of 18,505,539 shares of the Registrant’s common stock to the shareholders of Banjo & Matilda in connection with the closing under the Share Exchange Agreement in exchange for all of the outstanding shares of common stock of Banjo Matilda.
On November 15, 2013, the Registrant agreed to issue to Brendan Macpherson 1,000,000 shares of the Registrant’s common stock and will issue, upon filing of a certificate of designation, 1,000,000 shares of preferred stock. These securities will be issued as a signing bonus under Mr. Macpherson’s employment agreement which he and the Registrant entered into on November 15, 2013.
On November 15, 2013, the Registrant agreed to issue to Belinda Storelli 400,000 shares of the Registrant’s common stock. These shares will be issued as a signing bonus under Ms. Macpherson’s employment agreement which she and the Registrant entered into on November 15, 2013.
The securities described above were issued in reliance upon the exemption from registration pursuant to Section 4(2) of the Securities Act.
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INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under its Articles of Incorporation and Bylaws, the Registrant may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. The Registrant may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, the Registrant must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.
Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.
Insofar as indemnification by the Registrant for liabilities arising under the Securities Act may be permitted to its directors, officers or persons controlling the Registrant pursuant to provisions of its certificate of incorporation, bylaws, Nevada law or otherwise, the Registrant has been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification by such director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding is asserted by such director, officer or controlling person in connection with the securities being offered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by the Registrant is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
LEGAL PROCEEDINGS
Each of the Registrant and Banjo & Matilda is not party to any pending litigation and no such litigation is contemplated or threatened by either the Registrant or Banjo & Matilda.
Item 3.02 Unregistered Sales of Equity Securities
Reference is made to the disclosure set forth Item 2.01 of this Current Report under the caption “Recent Sales of Unregistered Securities,” which disclosure is incorporated by reference into this section.
The Registrant’s offer and sale of the shares of common stock to the shareholders of Banjo & Matilda and the issuance of shares to Brendan Macpherson and Belinda Storelli Macpherson under their respective employment agreements were exempt under Section 4(2) of the Securities Act because the transaction by the Registrant did not involve a public offering. The offering was not a “public offering” (as defined in Section 4(2)) due to the insubstantial number of persons involved in the issuance, the size of the offering and the manner of the offering. Based on an analysis of these factors, the Registrant has met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.
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Item 5.01 Changes in Control of Registrant
Reference is made to the disclosure set forth under Item 2.01 of this report, which disclosure is incorporated herein by reference.
As a result of the issuance of shares under the Share Exchange Agreement, Brendan Macpherson, the controlling shareholder of Banjo & Matilda, and Raymond Key beneficially owns approximately 38.6% and 19.0%, respectively, of the Registrant’s common stock, and as a result they have the ability to control the policies and management of the Registrant, as well as determine matters requiring stockholder approval, including decisions regarding mergers, consolidations, the sale of all or substantially all of our assets, election of directors and other significant corporate actions. Upon the issuance of the super voting preferred stock to Brendon Macpherson under his employment agreement, Mr. Macpherson will have voting control of the Registrant.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On November 14, 2013, in conjunction with the Registrant’s acquisition of Banjo & Matilda pursuant to the Share Exchange, (i) Brendan Macpherson became a director, Chief Executive Officer and Secretary of the Registrant, (ii) Belinda Storelli Macpherson, the Wife of Brendan Macpherson, became a director and the Chief Creative Officer of the Registrant and (iii) Robert Dardano became the Interim Chief Financial Officer. Each of Jared Robinson and Neil Kleinman resigned as officers and directors of the Registrant.
Brendan Macpherson is the husband of Belinda Storelli Macpherson. Brendan Macpherson and Belinda Storelli Macpherson shall each serve as a director and an officer of the Registrant until their successors are duly elected and qualified. Ms. Macpherson has, nor has had in the past five (5) years, a directorship with any public company. Mr. Macpherson was a Director of Artists & Entertainment Group, an Australian listed company (ASX: AEM). Mr. Macpherson in or about October 2008. Since January 1, 2012, neither Mr. Macpherson nor Ms. Macpherson has engaged in any transactions with the Registrant which would be required to be reported under Item 404(a) of Regulation S-K.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On October 8, 2013 the Registrant merged its wholly-owned Nevada subsidiary, Banjo & Matilda, Inc. with and into itself (with the registrant being the surviving corporation), and in connection with such merger changed its name from Eastern World Solutions Inc. to that of the subsidiary, Banjo & Matilda, Inc. Except for the change in the Company's name, there were no other changes to the registrant’s Articles of Incorporation. A copy of the Articles of Merger is attached hereto as Exhibit 3.2.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. | Description | |
3.1 | Banjo & Matilda Pty Ltd Certificate of Registration | |
3.2 | Articles of Merger | |
3.3 | Banjo &Matilda (USA) Certificate of Incorporation | |
10.1 | Share Exchange Agreement dated as of November 14, 2013 by and among the Registrant, Banjo & Matilda Pty Ltd and the shareholders of Banjo & Matilda Pty Ltd | |
10.2 | 76 William Street Lease | |
10.3 | Intellectual Property Sale Agreement, dated February 26, 2013, by and between Harboursafe Holdings and Banjo & Matilda Pty Ltd | |
10.4 | Loan Facility Agreement made as of July 1, 2013 by and between Harboursafe Holdings and Banjo & Matilda Pty Ltd | |
10.5 | Loan Facility Agreement, dated November 3, 2013, by and between Raymond Key and Banjo & Matilda Pty Ltd | |
10.6 | Employment Agreement, dated November 15, 2013, by and between the Registrant and Brendan Macpherson | |
10.7 | Employment Agreement, dated November 15, 2013, by and between the Registrant and Belinda Macpherson | |
21.1 | List of Subsidiaries | |
99.1 | Audited Financial Statements of Banjo & Matilda Pty Ltd. for the years ended June 30, 2013 and June 30, 2012 | |
99.2 | Unaudited Pro Forma Financial Information |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
BANJO & MATILDA, INC. | ||
|
||
Dated: November 18, 2013 | By: | /s/ Brendan Macpherson |
Name: Brendan Macpherson | ||
Title: Chief Executive Officer |
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Exhibit 3.1
Exhibit 3.2
Articles of Merger, Eastern World Solutions Inc. Nevada Banjo & Matilda, Inc. corporation
page 2, Banjo & Matilda, Inc. Eastern World Solutions Inc.
The plan of merger has been approved by the directors of the corporation and by each public officer or other person whose approval of the plan of merger is required by the articles of incorporation of the domestic corporation
Pursuant to the Plan of Merger, the name of the surviving entity Eastern World Solutions, Inc., is changed to Banjo & Matilda, Inc.
Banjo & Matilda, Inc. CEO 09-20-13
Exhibit 3.3
CERTIFICATE OF INCORPORATION
OF
BANJO & MATILDA (USA), INC.
FIRST. The name of the corporation is Banjo & Matilda (USA), Inc.
SECOND. The address of the corporation's registered office in the State of Delaware is Suite C -201, 3801 Kennett Pike, Greenville, County of New Castle 19807. The name of its registered agent at such address is Bayard J.Snyder (#9195989).
THIRD. The purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares which the corporation shall have authority to issue is 1,000 shares of capital stock, and the par value of each such share is $.001 per share.
FIFTH. The name and mailing address of the incorporator is Bayard J. Snyder, 3801 Kennett Pike, Suite C-201, Greenville, DE 19807.
SIXTH. The Board of Directors of the corporation is expressly authorized to make, alter or repeal by-laws of the corporation, but the stockholders may make additional by-laws and may alter or repeal any by-law whether adopted by them or otherwise.
SEVENTH. Elections of directors need not be by written ballot, except and to the extent provided in the by-laws of the corporation.
The undersigned incorporator hereby acknowledges that the foregoing certificate of incorporation is his act and deed and that the facts stated therein are true.
/s/ Bayard J. Snyder Bayard J. Snyder (#9195989) |
Date: October 14, 2013
Cert of Corp-Sanjo· & Matilda.frm
Exhibit 10.1
SHARE EXCHANGE AGREEMENT
This SHARE EXCHANGE AGREEMENT (this “ Agreement ”), dated as of November 13, 2013 is by and among Banjo & Matilda, Inc., a Nevada corporation (the “ Parent ”), Banjo & Matilda, Pty Ltd, a corporation formed under the laws of Australia (the “ Company ”), and the Stockholders of the Company that are signatories hereto (the “ Stockholders ”).
BACKGROUND
The Company has 100 shares of its capital stock (the “ Company Stock ”) issued and outstanding, all of which are held by the Stockholders. Each of the Stockholders is the record and beneficial owner of the number of shares of Company Stock set forth opposite such Stockholder’s name on Exhibit A . Each of the Stockholders has agreed to transfer all of his, her or its (hereinafter “ its ”) shares of Company Stock in exchange for the number of shares of Common Stock, par value $0.00001 per share, of the Parent (the “ Parent Stock ”) listed opposite such Stockholder’s name on Exhibit A , which in the aggregate amount to a total of 18,505,539 shares of Parent Stock (the “ Shares ”).
The exchange of Company Stock for Parent Stock is intended to constitute a reorganization within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code of 1986 (the “ Code ”), as amended or such other tax free reorganization exemptions that may be available under the Code.
The Boards of Directors of the Parent and of the Company have determined that it is desirable to effect this plan of reorganization and share exchange.
AGREEMENT
NOW THEREFORE, the parties agree as follows:
ARTICLE
I
Exchange of Shares
SECTION 1.01. Exchange by Stockholders . At the Closing (as defined in Section 1.02 below), each of the Stockholders shall sell, transfer, convey, assign and deliver to the Parent its Company Stock free and clear of all Liens (as defined in Section 2.01 below) in exchange for the number of Shares listed on Exhibit A opposite such Stockholder’s name.
SECTION 1.02. Closing . The closing (the “ Closing ”) of the transactions contemplated hereby (the “ Transactions ”) shall take place on the date hereof or on such later date as the parties hereto may agree (the “ Closing Date ”).
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ARTICLE
II
Representations and Warranties of Stockholders
Each of the Stockholders hereby severally (and not jointly) represents and warrants to the Parent with respect to itself, as follows:
SECTION 2.01. Good Title . The Stockholder is the record and beneficial owner to the shares of Company Stock held by him or her, and has good title to its Company Stock, with the right and authority to sell and deliver such Company Stock to the Parent. Upon delivery of any certificate or certificates duly assigned, representing the same as herein contemplated and/or upon registering of the Parent as the new owner of the Company Stock in the share register of the Company, the Parent will receive good title to its Company Stock, free and clear of all liens, security interests, mortgages, pledges, charges, equities and claims of any kind or other encumbrances of any nature whatsoever (collectively, “ Liens ”), voting trusts or stockholder agreements.
SECTION 2.02. Enforceability . All acts required to be taken by the Stockholders to enter into this Agreement and to carry out the Transactions have been properly taken. This Agreement constitutes a legal, valid and binding obligation of the Stockholder, enforceable against such Stockholder in accordance with the terms hereof.
SECTION 2.03. No Conflicts . The execution and delivery of this Agreement by the Stockholder and the performance by the Stockholder of its obligations hereunder in accordance with the terms hereof: (i) will not require the consent of any third party or any federal, state, local or foreign government or any court of competent jurisdiction, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign (“ Governmental Entity ”) under any statutes, laws, ordinances, rules, regulations, orders, writs, injunctions, judgments, or decrees (collectively, “ Laws ”) applicable to the Company, the Stockholder or its Company Stock; (ii) will not violate any Laws applicable to such Stockholder or its Company Stock and (iii) will not violate or breach any contractual obligation to which such Stockholder is a party.
SECTION 2.04. No Finder’s Fee . The Stockholder has not created any obligation for any finder’s, investment banker’s or broker’s fee in connection with this Agreement or with the Transactions.
SECTION 2.05. Purchase Entirely for Own Account. The Parent Stock to be issued to the Stockholder hereunder will be acquired for investment for the Stockholder’s own account, and not with a view to the resale or distribution of any part thereof, and the Stockholder has no present intention of selling or otherwise distributing the Parent Stock, except in compliance with applicable securities laws.
SECTION 2.06. Available Information . The Stockholder acknowledges awareness that Parent information is available on the SEC EDGAR website. The Stockholder has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of investment in the Parent.
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SECTION 2.07. Non-Registration . The Stockholder understands that the Parent Stock issued to it under this Agreement has not been registered under the Securities Act of 1933, as amended (the “ Securities Act ”) and, if issued in accordance with the provisions of this Agreement, will be issued by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Stockholder’s representations as expressed herein.
SECTION 2.08. Restricted Securities . The Stockholder understands that the Parent Stock is characterized as “restricted securities” under the Securities Act inasmuch as this Agreement contemplates that, if acquired by the Stockholder pursuant hereto, the Parent Stock would be acquired in a transaction not involving a public offering. The Stockholder further acknowledges that if the Parent Stock is issued to the Stockholder in accordance with the provisions of this Agreement, such Parent Stock may not be resold without registration under the Securities Act or the existence of an exemption therefrom. In this connection, the Stockholder represents that it is familiar with Rule 144 promulgated under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.
SECTION 2.09. Legends . The Stockholder understands that the certificates representing Parent Stock to be issued under this Agreement will bear one or all of the following legends or any legend substantially similar to the following:
(a) “THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.”
(b) Any legend required by the “blue sky” laws of any state to the extent such laws are applicable to the securities represented by the certificate so legended.
ARTICLE
III
Representations and Warranties of the Company
In order to induce the Parent to enter into this Agreement and to issue the Shares to the Stockholders, the Company and each of the Stockholders severally (and not jointly) hereby make the following representations and warranties to the Parent:
SECTION 3.01. Organization, Standing and Power . The Company is a corporation duly incorporated, validly existing and in good standing under the laws of Australia and has the requisite corporate power to own, lease and operate its properties and assets and to conduct its business as it is now being conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except for any jurisdiction(s) (alone or in the aggregate) in which the failure to be so qualified will not have a Material Adverse Effect. For the purposes of this Agreement, “ Material Adverse Effect ” shall mean any adverse effect on an entity’s business, operations, assets, prospects or financial condition of such entity, taken as a whole, and which is material to such entity or other entities controlling or controlled by such entity or which is likely to materially hinder the performance by such entity of its obligations hereunder.
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SECTION 3.02. Company Subsidiaries . The Company does not have any Subsidiaries. For the purposes of this Agreement, “ Subsidiary ” shall mean, with respect to any corporation or other entity, any corporation or other entity of which at least a majority of the securities or other ownership interest having ordinary voting power (absolutely or contingently) for the election of directors or other persons performing similar functions are at the time owned directly or indirectly by such corporation or other entity and/or any of its other Subsidiaries
SECTION 3.03. Capital Structure . The authorized capital stock of the Company consists of 100 shares of common stock, of which, 100 shares are issued and outstanding. Except as set forth above, no shares of capital stock or other voting securities of the Company are issued, reserved for issuance or outstanding. All outstanding shares of the capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the applicable corporation law or any contract to which the Company is a party or otherwise bound. There are not any bonds, debentures, notes or other indebtedness of Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of shares of common stock of the Company may vote (“ Voting Company Debt ”). Except as set forth on Schedule 3.03 , as of the date of this Agreement, there are not any options, warrants, rights, convertible or exchangeable securities, “phantom” stock rights, stock appreciation rights, stock-based performance units, commitments, Contracts, arrangements or undertakings of any kind to which the Company is a party or by which its is bound (i) obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, the Company or any Voting Company Debt, (ii) obligating the Company to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, contract, arrangement or undertaking or (iii) that give any person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights occurring to holders of the capital stock of the Company. As of the date of this Agreement, there are not any outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any shares of capital stock of the Company.
SECTION 3.04. Authority; Execution and Delivery; Enforceability . The Company has the requisite corporate power and authority to enter into and perform this Agreement. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated thereby have been duly and validly authorized by all necessary corporate action, and no further consent or authorization of the Company or its Board of Directors or stockholders is required. This Agreement has been duly executed and delivered by the Company. This Agreement constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by equitable principles or remedies of general application.
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SECTION 3.05. No Conflicts; Consents .
(a) The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby do not and will not (i) violate any provision of the Articles of Incorporation or the Bylaws of the Company, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Company is a party or by which the Company’s properties or assets are bound, (iii) create or impose a lien, mortgage, security interest, charge or encumbrance of any nature on any property or asset of the Company under any agreement or any commitment to which the Company is a party or by which the Company is bound or by which any of its properties or assets are bound, or (iv) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree (including the securities laws and regulations of Australia) applicable to the Company or by which any property or asset of the Company is bound or affected, except, in all cases other than violations pursuant to clause (iv) (with respect to U.S. federal and state securities laws) above, for such conflicts, defaults, terminations, amendments, acceleration, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect. The business of the Company is not being conducted in violation of any Laws, except for possible violations which, singularly or in the aggregate, do not and will not have a Material Adverse Effect. The Company is not required under federal, state, foreign or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any Governmental Entity in order for it to execute, deliver or perform any of its obligations under the this Agreement.
(b) Except as set forth in Schedule 3.05 hereto, no material consent, approval, license, permit, order or authorization (“ Consent ”) of, or registration, declaration or filing with, or permit from, any Governmental Entity is required to be obtained or made by or with respect to the Company in connection with the execution, delivery and performance of this Agreement or the consummation of the Transactions.
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SECTION 3.06. Taxes . Except as set forth on Schedule 3.06 hereto, the Company has accurately prepared and filed all governmental and other tax returns required by Australian law to be filed by it, has paid or made provisions for the payment of all taxes shown to be due and all additional assessments, and adequate provisions have been and are reflected in the financial statements of the Company for all current taxes and other charges to which the Company is subject and which are not currently due and payable. The Company has no knowledge of any additional assessments, adjustments or contingent tax liability of any nature whatsoever, whether pending or threatened against the Company for any period, nor of any basis for any such assessment, adjustment or contingency.
SECTION 3.07. Employees . The Company does not have any collective bargaining arrangements or agreements covering any of its employees. Except as set forth on Schedule 3.07 , the Company does not have and, after giving effect to the Transactions, will not have, any employment contract, agreement regarding proprietary information, non-competition agreement, non-solicitation agreement, confidentiality agreement, or any other similar contract or restrictive covenant, relating to the right of any officer, employee or consultant to be employed or engaged by the Company. Since September 30, 2013, no officer, consultant or key employee of the Company whose termination, either individually or in the aggregate, could have a Material Adverse Effect, has terminated or, to the knowledge of the Company, has any present intention of terminating his or her employment or engagement with the Company.
SECTION 3.08. Litigation . There is no action, suit, claim, investigation, arbitration, alternate dispute resolution proceeding or other proceeding pending or, to the knowledge of the Company, threatened against the Company which questions the validity of this Agreement or the Transactions or any action taken or to be taken pursuant hereto. There is no action, suit, claim, investigation, arbitration, alternate dispute resolution proceeding or other proceeding pending or, to the knowledge of the Company, threatened against or involving the Company or any of its properties or assets, which, individually or in the aggregate, would have a Material Adverse Effect. There are no outstanding orders, judgments, injunctions, awards or decrees of any court, arbitrator or governmental or regulatory body against the Company or any officers or directors of the Company in their capacities as such, which, individually or in the aggregate, would have a Material Adverse Effect.
SECTION 3.09. Compliance with Applicable Laws . The business of the Company has been and is presently being conducted in accordance with all applicable Laws, except for any noncompliance with such Laws that, individually or in the aggregate, would not have a Material Adverse Effect. The Company has all franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals necessary for the conduct of its business as now being conducted by it unless the failure to possess such franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
SECTION 3.10. Brokers . The Company has not employed any broker or finder or incurred any liability for any brokerage or investment banking fees, commissions, finders’ structuring fees, financial advisory fees or other similar fees in connection with this Agreement or the Transactions.
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SECTION 3.11. Contracts . Except for this Agreement and as set forth on Schedule 3.11 hereto, the Company is not a party to any written or oral contract, instrument, agreement, commitment, obligation, plan or arrangement, a copy of which would be required to be filed with the Securities and Exchange Commission (the “ Commission ”) if the Company were registering securities under the Securities Act (collectively, “ Company Material Agreements ”). Except as set forth on Schedule 3.11 hereto, the Company has in all material respects performed all the obligations required to be performed by it to date under its Company Material Agreements, has received no notice of default and, to the best of the Company’s knowledge, is not now, and after giving effect to the Transactions will not be, in default under any the Company Material Agreement now in effect, the result of which could cause a Material Adverse Effect.
SECTION 3.12. Title to Properties . The Company has and, after giving effect to the Transactions, will continue to have, good and marketable title to all of its real and personal property, free and clear of any Liens, except for those indicated on Schedule 3.12 hereto or such Liens that, individually or in the aggregate, do not have a Material Adverse Effect. All material leases of the Company are valid and subsisting and in full force and effect.
SECTION 3.13. Intellectual Property . Schedule 3.13 contains a complete and correct list of all patents, trademarks, patent and/or trademark applications, domain names (whether or not registered) and any patentable improvements or copyrightable derivative works thereof, websites and intellectual property rights relating thereto, service marks, trade names, copyrights, licenses and authorizations, and all rights with respect to the foregoing owned or licensed by the Company (collectively, the “ Company Proprietary Rights ”). The Company owns or possesses and, after giving effect to the Transactions, will continue to own or possess, all the Company Proprietary Rights which are necessary for the conduct of its business as now conducted without any conflict with the rights of others. Except as disclosed on Schedule 3.13 hereto, (i) as of the date of this Agreement, the Company has not received any written notice that any Company Proprietary Rights have been declared unenforceable or otherwise invalid by any court or governmental agency or will become unenforceable or otherwise invalid as a result of the Transactions, and (ii) as of the date of this Agreement, there is, to the knowledge of the Company, no material existing infringement, misuse or misappropriation of any Company Proprietary Rights by others that could have a Material Adverse Effect. The Company has not received any written notice alleging that the operation of the business of the Company infringes in any material respect upon the intellectual property rights of others.
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SECTION 3.14. Environmental Compliance . Except as disclosed on Schedule 3.14 hereto, the Company has obtained all material approvals, authorization, certificates, consents, licenses, orders and permits or other similar authorizations of all governmental authorities, or from any other person, that are required under any Company Environmental Laws for the operation of its business as currently conducted and for the consummation of the Transactions. Schedule 3.14 hereto sets forth all material permits, licenses and other authorizations issued under any Company Environmental Laws to the Company. “ Company Environmental Laws ” shall mean all governmental laws applicable to the Company relating to the protection of the environment including, without limitation, all requirements pertaining to reporting, licensing, permitting, controlling, investigating or remediating emissions, discharges, releases or threatened releases of hazardous substances, chemical substances, pollutants, contaminants or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature, into the air, surface water, groundwater or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of hazardous substances, chemical substances, pollutants, contaminants or toxic substances, material or wastes, whether solid, liquid or gaseous in nature. Except as set forth on Schedule 3.14 hereto, the Company has and, after giving effect to the Transactions, will continue to have, all necessary governmental approvals required under all the Company Environmental Laws and used in its business, except for such instances as would not, individually or in the aggregate, have a Material Adverse Effect. The Company is also in compliance with all other limitations, restrictions, conditions, standards, requirements, schedules and timetables required or imposed under all Company Environmental Laws where non-compliance could have a Material Adverse Effect. Except for such instances as would not individually or in the aggregate have a Material Adverse Effect, there are no past or present events, conditions, circumstances, incidents, actions or omissions relating to or in any way affecting the Company that violate or may violate any Company Environmental Law after the Closing or that may give rise to any Environmental Liabilities, or otherwise form the basis of any claim, action, demand, suit, proceeding, hearing, study or investigation (i) under any Company Environmental Law, or (ii) based on or related to the manufacture, processing, distribution, use, treatment, storage (including, without limitation, underground storage tanks), disposal, transport or handling, or the emission, discharge, release or threatened release of any hazardous substance. “ Company Environmental Liabilities ” means all liabilities of a person (whether such liabilities are owed by such person to governmental authorities, third parties or otherwise) currently in existence or arising hereafter and which arise under or relate to any Company Environmental Law.
SECTION 3.15. Financial Statements . As of their respective dates, the financial statements of the Company annexed to Schedule 3.15 hereto and previously delivered to the Parent (the “ Company Financial Statements ”) comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“ GAAP ”) applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements), and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).
SECTION 3.16. No Material Adverse Change . Since September 30, 2013, no event or condition has occurred with respect to the Company which has had or could reasonably be expected to have a Material Adverse Effect.
SECTION 3.17. Transactions With Affiliates and Employees . Except as set forth on Schedule 3.17 hereto, there are no loans, leases, agreements, contracts, royalty agreements, management contracts or arrangements or other continuing transactions between (i) the Company or any of its customers or suppliers, on the one hand, and (ii) on the other hand, any officer, employee, consultant or director of the Company, or any person owning any capital stock of the Company or any member of the immediate family of such officer, employee, consultant, director or stockholder or any corporation or other entity controlled by such officer, employee, consultant, director or stockholder.
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SECTION 3.18. Internal Accounting Controls . The books, records and documents of the Company accurately reflect in all material respects the information relating to the business of the Company, the location and collection of its assets, and the nature of all transactions giving rise to the obligations or accounts receivable of the Company. The Company maintains a system of internal accounting controls sufficient, in the judgment of the Company’s board of directors, to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate actions are taken with respect to any differences.
SECTION 3.19. No Undisclosed Liabilities . Except as disclosed on Schedule 3.19 hereto, the Company has no liabilities, obligations, claims or losses (whether liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent or otherwise) other than those set forth on the balance sheet as of June 30, 2013 included in the Company Financial Statements or incurred in the ordinary course of the Company’s business since June 30, 2013, and which, individually or in the aggregate, do not or would not have a Material Adverse Effect on the Company.
SECTION 3.20. Indebtedness . Schedule 3.20 hereto sets forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company, or for which the Company has commitments, which is not disclosed in the Company Financial Statements. The Company is not in default with respect to any Indebtedness. For the purposes of this Agreement, “ Indebtedness ” shall mean (i) any liabilities for borrowed money in excess of $25,000 (other than trade accounts payable incurred in the ordinary course of business), (ii) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others in excess of $25,000, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, and (iii) the present value of any lease payments in excess of $25,000 due under leases required to be capitalized in accordance with GAAP.
SECTION 3.21. Disclosure . To the best of the Company’s knowledge, neither this Agreement nor any other documents, certificates or instruments furnished to the Parent by or on behalf of the Company in connection with this Agreement and/or the Transactions contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made herein or therein, in the light of the circumstances under which they were made herein or therein, not misleading.
SECTION 3.22. Additional Agreements . Other than this Agreement, the Company does not have any agreement or understanding with the Parent, any Stockholder or any other person or entity with respect to the Transactions or any other transactions contemplated by this Agreement.
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SECTION 3.23. Absence of Certain Developments . Except as set forth on Schedule 3.23 hereto, since September 30, 2013, the Company has not:
(a) issued any stock, bonds or other corporate securities or any rights, options or warrants with respect thereto;
(b) borrowed any amount or incurred or become subject to any liabilities (absolute or contingent) except current liabilities incurred in the ordinary course of business which are comparable in nature and amount to the current liabilities incurred in the ordinary course of business during the comparable portion of its prior fiscal year, as adjusted to reflect the current nature and volume of the Company’s business;
(c) discharged or satisfied any material lien or encumbrance or paid a material amount of any obligation or liability (absolute or contingent), other than current liabilities paid in the ordinary course of business;
(d) declared or made any payment or distribution of cash or other property to any Stockholder with respect to its stock, or purchased or redeemed, or made any agreements so to purchase or redeem, any shares of its capital stock;
(e) sold, assigned or transferred any other tangible assets, or canceled any debts or claims, except in the ordinary course of business;
(f) sold, assigned or transferred any Company Proprietary Rights, which sale, assignment or transfer has had a Material Adverse Effect, or disclosed any proprietary confidential information to any person except in the ordinary course of business or to the Parent or its representatives;
(g) suffered any substantial losses or waived any rights of material value, whether or not in the ordinary course of business, or suffered the loss of any material amount of prospective business;
(h) made any changes in employee compensation except in the ordinary course of business and consistent with past practices;
(i) made capital expenditures or commitments therefor that aggregate in excess of $25,000;
(j) entered into any other transaction other than in the ordinary course of business, or entered into any other material transaction, whether or not in the ordinary course of business;
(k) suffered any material damage, destruction or casualty loss, whether or not covered by insurance; and/or
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(l) experienced any material problems with labor or management in connection with the terms and conditions of their employment, or entered into an agreement, written or otherwise, to take any of the foregoing actions.
ARTICLE
IV
Representations and Warranties of the Parent
In order to induce the Company and the Stockholders to enter into this Agreement and to induce the Stockholders to exchange their Company Stock for the Shares, the Parent hereby makes the following representations and warranties to the Company and the Stockholders:
SECTION 4.01. Organization, Good Standing and Power . Parent is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada and has the requisite corporate power to own, lease and operate its properties and assets and to conduct its business as it is now being conducted. Parent does not have any Subsidiaries or own securities of any kind in any other entity. Prior to giving effect to the Transactions, Parent is not duly qualified as a foreign corporation to do business in any jurisdiction and such failure to be so qualified does not have a Material Adverse Effect.
SECTION 4.02. Subsidiaries . Prior to giving effect to the Transactions, the Parent has no Subsidiaries.
SECTION 4.03. Capitalization . The authorized capital stock of Parent consists of (i) One Hundred Million (100,000,000) shares of Common Stock, par value $0.00001 per share, and (ii) One Hundred Million (100,000,000) shares of Preferred Stock, par value $0.00001 per share. The Parent has 7,930,945 shares of Common Stock issued and outstanding together with 49,569,055 shares of Common Stock held in treasury as of the date of this Agreement. The Parent Stock to be issued to the Stockholders pursuant to this Agreement, when issued hereunder, will be duly and validly authorized and are validly issued, fully paid and non-assessable. No shares of Parent Stock (including, but not limited to the shares of Parent Stock to be issued to the Stockholders pursuant to this Agreement) or any other security of Parent are entitled to preemptive rights or registration rights and, except for this Agreement, there are no outstanding options, warrants, scrip, rights to subscribe to, call or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of Parent. Except as provided on Schedule 4.03 hereto, there are no contracts, commitments, understandings, or arrangements by which Parent is or may become bound to issue additional shares of the capital stock of Parent or options, securities or rights convertible into shares of capital stock of Parent. Except as provided in this Agreement, Parent is not a party to or bound by any agreement or understanding granting registration or anti-dilution rights to any person with respect to any of its equity or debt securities. Parent is not a party to, and it has no knowledge of, any agreement or understanding restricting the voting or transfer of any shares of the capital stock of Parent. Parent has furnished or made available to the Stockholders and the Company true and correct copies of Parent’s Articles of Incorporation as in effect on the date hereof (the “ Parent Charter ”), and Parent’s Bylaws as in effect on the date hereof (the “ Parent Bylaws ”).
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SECTION 4.04. Authority; Enforcement . Parent has the requisite corporate power and authority to enter into and perform this Agreement and to issue and sell the Shares in accordance with the terms hereof. The execution, delivery and performance of this Agreement by Parent and the consummation by Parent of the Transactions have been duly and validly authorized by all necessary corporate action, and no further consent or authorization of Parent or its Board of Directors or stockholders is required. This Agreement has been duly executed and delivered by Parent. This Agreement constitutes a valid and binding obligation of Parent enforceable against Parent in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by equitable principles or remedies of general application
SECTION 4.05. No Conflicts . The execution, delivery and performance of this Agreement by Parent and the consummation by Parent of the Transactions do not and will not (i) violate any provision of the Parent Charter or Parent Bylaws, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which Parent is a party or by which Parent’s properties or assets are bound, (iii) create or impose any Liens on any property or asset of Parent under any agreement or any commitment to which Parent is a party or by which Parent is bound or by which any of its properties or assets are bound, or (iv) result in a violation of any result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree (including U.S. federal and state securities laws and regulations) applicable to the Parent or by which any property or asset of the Parent is bound or affected, except, in the case of (i) above and in all cases other than violations pursuant to clause (iv) (with respect to U.S. federal and state securities laws) above, for such conflicts, defaults, terminations, amendments, acceleration, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect. The business of Parent is not being conducted in violation of any Laws, except for possible violations, which singularly or in the aggregate, do not and will not have a Material Adverse Effect. Parent is not required under federal, state, foreign or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any Governmental Entity in order for it to execute, deliver or perform any of its obligations under this Agreement or issue and sell the Shares, in accordance with the terms hereof (other than any filings which may be required to be made by Parent with the Commission or state securities administrators subsequent to the Closing, or any registration statement which may be filed by the Parent).
SECTION 4.06. Commission Documents; Commission Filings; Financial Statements . The Parent Stock is registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”). The Parent has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the Commission pursuant to the reporting requirements of the Exchange Act, including material filed pursuant to Section 13(a) or 15(d) of the Exchange Act.
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SECTION 4.07. Issuance of Securities . The Shares to be issued at the Closing have been duly authorized by all necessary corporate action and, when issued in accordance with the terms hereof, the Shares shall be validly issued and outstanding, fully paid and nonassessable and free and clear of all Liens and the holders shall be entitled to all rights accorded to a holder of Parent Stock.
SECTION 4.08. Absence of Certain Developments . Except as set forth on Schedule 4.08 hereto, since September 30, 2013 (the date of formation of the Parent), the Parent has not:
(a) issued any stock, bonds or other corporate securities or any rights, options or warrants with respect thereto;
(b) borrowed any amount or incurred or become subject to any liabilities (absolute or contingent) except current liabilities incurred in the ordinary course of business which are comparable in nature and amount to the current liabilities incurred in the ordinary course of business during the comparable portion of its prior fiscal year, as adjusted to reflect the current nature and volume of Parent’s business;
(c) discharged or satisfied any material lien or encumbrance or paid a material amount of any obligation or liability (absolute or contingent), other than current liabilities paid in the ordinary course of business;
(d) declared or made any payment or distribution of cash or other property to stockholders with respect to its stock, or purchased or redeemed, or made any agreements so to purchase or redeem, any shares of its capital stock;
(e) sold, assigned or transferred any other tangible assets, or canceled any debts or claims, except in the ordinary course of business;
(f) sold, assigned or transferred any patent rights, trademarks, trade names, copyrights, trade secrets or other intangible assets or intellectual property rights, which sale, assignment or transfer has had a Material Adverse Effect, or disclosed any proprietary confidential information to any person except in the ordinary course of business or to the Purchasers or their representatives;
(g) suffered any substantial losses or waived any rights of material value, whether or not in the ordinary course of business, or suffered the loss of any material amount of prospective business;
(h) made any changes in employee compensation except in the ordinary course of business and consistent with past practices;
(i) made capital expenditures or commitments therefor that aggregate in excess of $25,000;
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(j) entered into any other transaction other than in the ordinary course of business, or entered into any other material transaction, whether or not in the ordinary course of business;
(k) suffered any material damage, destruction or casualty loss, whether or not covered by insurance;
(l) experienced any material problems with labor or management in connection with the terms and conditions of their employment; or
(m) entered into an agreement, written or otherwise, to take any of the foregoing actions.
SECTION 4.09. Taxes . As of the date of this Agreement, Parent has had no income and (i) is not required to prepare and file any federal, state and other tax returns required by law to be filed by corporations and/or (ii) pay or make provisions for the payment of any taxes or assessments. Parent has no knowledge of any additional assessments, adjustments or contingent tax liability (whether federal or state) of any nature whatsoever, whether pending or threatened against Parent for any period, nor of any basis for any such assessment, adjustment or contingency.
SECTION 4.10. Employees . Parent has no employees.
SECTION 4.11. ERISA . No liability to the Pension Benefit Guaranty Corporation has been incurred with respect to any Plan by the Parent which is or would cause a Material Adverse Effect. The execution and delivery of this Agreement and the issue and sale of the Shares will not involve any transaction which is subject to the prohibitions of Section 406 of ERISA or in connection with which a tax could be imposed pursuant to Section 4975 of the Internal Revenue Code of 1986, as amended (the “ Code ”); provided that, if any Stockholder, or any person or entity that owns a beneficial interest in any Stockholder, is an “employee pension benefit plan” (within the meaning of Section 3(2) of ERISA) with respect to which Parent is a “party in interest” (within the meaning of Section 3(14) of ERISA), the requirements of Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in this Section 4.11, the term “ Plan ” shall mean an “employee pension benefit plan” (as defined in Section 3 of ERISA) which is or has been established or maintained, or to which contributions are or have been made, by Parent or by any trade or business, whether or not incorporated, which, together with Parent or any Subsidiary, is under common control, as described in Section 414(b) or (c) of the Code.
SECTION 4.12. Litigation . There is no action, suit, claim, investigation, arbitration, alternate dispute resolution proceeding or other proceeding pending or, to the knowledge of the Parent, threatened against the Parent which questions the validity of this Agreement or any of the Transactions or any action taken or to be taken pursuant hereto. There is no action, suit, claim, investigation, arbitration, alternate dispute resolution proceeding or other proceeding pending or, to the knowledge of the Parent, threatened against or involving the Parent or any of its properties or assets, which individually or in the aggregate, would have a Material Adverse Effect. There are no outstanding orders, judgments, injunctions, awards or decrees of any court, arbitrator or governmental or regulatory body against the Parent or any officers or directors of the Parent in their capacities as such, which, individually or in the aggregate, would have a Material Adverse Effect.
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SECTION 4.13. Compliance with Law . The business of the Parent has been and is presently being conducted in accordance with all applicable federal, state and local governmental laws, rules, regulations and ordinances, except as set forth in Schedule 4.13 or such that, individually or in the aggregate, the noncompliance therewith would not have a Material Adverse Effect. The Parent has all franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals necessary for the conduct of its business as now being conducted by it unless the failure to possess such franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
SECTION 4.14. Contracts . Except for this Agreement, the Parent is not a party to any written or oral contract, instrument, agreement, commitment, obligation, plan or arrangement.
SECTION 4.15. Title to Assets . The Parent does not own or lease any real and/or personal property.
SECTION 4.16. Intellectual Property . The Parent does not own or license any patents, trademarks, domain names (whether or not registered) and any patentable improvements or copyrightable derivative works thereof, websites and intellectual property rights relating thereto, service marks, trade names, copyrights, licenses and authorizations, and all rights with respect to the foregoing held by Parent.
SECTION 4.17. No Material Adverse Change . Since September 30, 2013, no event has occurred which has or could reasonably be expected to have a Material Adverse Effect.
SECTION 4.18. No Undisclosed Liabilities . The Parent has no liabilities, obligations, claims or losses (whether liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent or otherwise) other than those incurred in the ordinary course of the Parent’s business since September 30, 2013, and which, individually or in the aggregate, do not or would not have a Material Adverse Effect on Parent.
SECTION 4.19. Transactions With Affiliates . Except for this Agreement, there are no loans, leases, agreements, contracts, royalty agreements, management contracts or arrangements or other continuing transactions between (i) the Parent or any of its customers or suppliers, on the one hand, and (ii) on the other hand, any officer, employee, consultant or director of the Parent, or any person owning any capital stock of the Parent or any member of the immediate family of such officer, employee, consultant, director or stockholder or any corporation or other entity controlled by such officer, employee, consultant, director or stockholder.
SECTION 4.20. Books and Records; Internal Accounting Controls . The books, records and documents of the Parent accurately reflect in all material respects the information relating to the business of the Parent, the location and collection of its assets, and the nature of all transactions giving rise to the obligations or accounts receivable of the Parent.
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SECTION 4.21. No Undisclosed Events or Circumstances . Since September 30, 2013, except as disclosed on Schedule 4.21 hereto, no event or circumstance has occurred or exists with respect to the Parent or its business, properties, prospects, operations or financial condition, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Parent but which has not been so publicly announced or disclosed.
SECTION 4.22. Governmental Approvals . Except for the filing of any notice prior or subsequent to the Closing that may be required under applicable state and/or federal securities laws (which if required, shall be filed on a timely basis), no authorization, consent, approval, license, exemption of, filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, is or will be necessary for, or in connection with, the Transactions, or, except as set forth in this Agreement, for the performance by the Parent of its obligations under this Agreement.
SECTION 4.23. Indebtedness . The Parent has no secured or unsecured Indebtedness, and has no Indebtedness for which the Parent has commitments.
SECTION 4.24. Public Utility Holding Company Act and Investment Company Act Status . The Parent is not a “holding company” or a “public utility company” as such terms are defined in the Public Utility Holding Company Act of 1935, as amended. The Parent is not, and as a result of and immediately upon Closing and after giving effect to the Transactions will not be, an “investment company” or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.
SECTION 4.25. Disclosure . To the best of the Parent’s knowledge, neither this Agreement nor any other documents, certificates or instruments furnished to the Company or the Stockholders by or on behalf of the Parent in connection with the Transactions and this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made herein or therein, in the light of the circumstances under which they were made herein or therein, not misleading.
SECTION 4.26. Certain Fees . The Parent has not employed any broker or finder or incurred any liability for any brokerage or investment banking fees, commissions, finders’ structuring fees, financial advisory fees or other similar fees in connection with the Transactions or this Agreement.
SECTION 4.27. Securities Act of 1933 . Assuming the accuracy and completeness of the representations, warranties and covenants of the Stockholders contained herein, the Parent has complied and will comply with all applicable federal and state securities laws in connection with the offer, issuance and sale of the Shares hereunder and no registration under the Securities Act is required for the offer and sale of the Shares by the Parent to the Stockholders under this Agreement. Neither Parent nor anyone acting on its behalf, directly or indirectly, has or will sell, offer to sell or solicit offers to buy any of the Shares, or similar securities to, or solicit offers with respect thereto from, or enter into any preliminary conversations or negotiations relating thereto with, any person, or has taken or will take any action so as to require registration of the issuance and sale of any of the Shares under the registration provisions of the Securities Act and applicable state securities laws. Neither Parent nor any of its affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of any of the Shares. The Parent is eligible to register the Parent Stock for resale by any holder thereof (including, but not limited to, the Stockholders) under Form S-1 promulgated under the Securities Act. Except as set forth on Schedule 4.27 hereto, the Parent has not granted or agreed to grant to any person any rights (including “piggy-back” registration rights) to have any securities of the Parent registered with the Commission or any other governmental authority that have not been satisfied.
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SECTION 4.28. Application of Takeover Protections . The Parent has taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Parent's Charter (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Stockholders as a result of the Stockholders and the Parent fulfilling their obligations or exercising their rights under this Agreement, including, without limitation, the Parent's issuance of the Shares and the Stockholders’ ownership of the Shares.
SECTION 4.29. No Additional Agreements . The Parent does not have any agreement or understanding with any Stockholder with respect to the transactions contemplated by this Agreement other than as specified in this Agreement.
ARTICLE
V
Deliveries
SECTION 5.01. Deliveries of the Stockholders .
(a) Concurrently herewith each Stockholder is delivering to the Parent this Agreement executed by such Stockholder along with the Schedules to the representations and warranties of the Stockholders.
(b) At or prior to the Closing, each Stockholder shall deliver to the Parent (subject to the provisions of Section 6.01) appropriate documentation for transfer by the Stockholders of its Company Stock to the Parent.
SECTION 5.02. Deliveries of the Parent .
(a) Concurrently herewith, the Parent is delivering:
(i) to each Stockholder and to the Company, a copy of this Agreement executed by the Parent along with the Schedules to the representations and warranties of the Parent;
(ii) to the Company, a certificate from the Parent, signed by its Secretary or Assistant Secretary certifying that the attached copies of the Parent Charter, Parent Bylaws and resolutions of the Board of Directors and stockholders of the Parent approving the Agreement and the Transactions are all true, complete and correct and remain in full force and effect;
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(iii) to the Company, an opinion of counsel to the Parent and substantially in the form attached hereto as Exhibit B ;
(iv) to the Company, all books and records of the Parent.
(b) At or immediately after the Closing, the Parent shall deliver (subject to the provisions of Section 6.02):
(i) to each Stockholder, certificates representing the Shares issued to such Stockholder as set forth on Exhibit A .
SECTION 5.03. Deliveries of the Company .
(a) Concurrently herewith, the Company is delivering to the Parent:
(i) this Agreement executed by Company along with the Schedules to the representations and warranties of the Company; and
(ii) a certificate from the Company, signed by its authorized officer certifying that the attached copies (in English) of the Company’s Articles of Incorporation and Bylaws and resolutions of the Board of Directors of the Company approving this Agreement and the Transactions are all true, complete and correct and remain in full force and effect; and
(iii) ASIC Report.
ARTICLE VI
Conditions to Closing
SECTION 6.01. Stockholders and the Company Conditions Precedent . The obligations of the Stockholders and the Company to enter into and complete the Closing is subject, at the option of the Stockholders and the Company, to the fulfillment on or prior to the Closing Date of the following conditions:
(a) Representations and Covenants . The representations and warranties of the Parent contained in this Agreement shall be true in all material respects on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date. The Parent shall have performed and complied in all material respects with all covenants and agreements required by this Agreement to be performed or complied with by the Parent on or prior to the Closing Date. The Parent shall have delivered to the Company, if requested, a certificate, dated the Closing Date, to the foregoing effect.
(b) Litigation . No action, suit or proceeding shall have been instituted before any court or governmental or regulatory body or instituted or threatened by any governmental or regulatory body to restrain, modify or prevent the carrying out of the Transactions or to seek damages or a discovery order in connection with such Transactions, or which has or may have, in the reasonable opinion of the Company, a materially adverse effect on the assets, properties, business, operations or condition (financial or otherwise) of the Parent.
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(c) No Material Adverse Change . There shall not have been any occurrence, event, incident, action, failure to act, or transaction since September 30, 2013 which has had or is reasonably likely to cause a Material Adverse Effect with respect to the Parent.
(d) Post-Closing Capitalization . At, and immediately after, the Closing, the authorized capitalization, and the number of issued and outstanding shares of the capital stock of the Company and the Parent, on a fully-diluted basis, shall be as specified in Schedule 6.01(d) .
(e) Deliveries . The deliveries specified in Section 5.02 shall have been made by the Parent.
SECTION 6.02. Parent Conditions Precedent . The obligations of the Parent to enter into and complete the Closing is subject, at the option of the Parent, to the fulfillment on or prior to the Closing Date of the following conditions, any one or more of which may be waived by the Parent in writing.
(a) Representations and Covenants . The representations and warranties of the Stockholders and the Company contained in this Agreement shall be true in all material respects on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date. The Stockholders and the Company shall have performed and complied in all material respects with all covenants and agreements required by this Agreement to be performed or complied with by the Stockholders and the Company on or prior to the Closing Date. The Company shall have delivered to the Parent, if requested, a certificate, dated the Closing Date, to the foregoing effect.
(b) Litigation . No action, suit or proceeding shall have been instituted before any court or governmental or regulatory body or instituted or threatened by any governmental or regulatory body to restrain, modify or prevent the carrying out of the Transactions or to seek damages or a discovery order in connection with such Transactions, or which has or may have, in the reasonable opinion of the Parent, a materially adverse effect on the assets, properties, business, operations or condition (financial or otherwise) of the Company.
(c) No Material Adverse Change . There shall not have been any occurrence, event, incident, action, failure to act, or transaction since September 30, 2013 which has had or is reasonably likely to cause a Material Adverse Effect with respect to the Company and/or the Company Stock.
(d) Deliveries . The deliveries specified in Section 5.01 and Section 5.03 shall have been made by the Stockholders and the Company, respectively.
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(e) Post-Closing Capitalization . At, and immediately after, the Closing, the authorized capitalization, and the number of issued and outstanding shares of the capital stock of the Company and the Parent, on a fully-diluted basis, shall be as specified in Schedule 6.01(d) .
ARTICLE VII
Covenants
SECTION 7.01. [Intentionally omitted]
SECTION 7.02. Public Announcements . The Parent and the Company will consult with each other before issuing, and provide each other the opportunity to review and comment upon, any press release or other public statements with respect to the Agreement and the Transactions and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange.
SECTION 7.03. Fees and Expenses . All fees and expenses incurred in connection with this Agreement shall be paid by the party incurring such fees or expenses, whether or not this Agreement is consummated.
SECTION 7.04. Continued Efforts . Each party hereto shall use commercially reasonable efforts to (a) take all action reasonably necessary to consummate the Transactions, and (b) take such steps and do such acts as may be necessary to keep all of its representations and warranties true and correct as of the Closing Date with the same effect as if the same had been made, and this Agreement had been dated, as of the Closing Date.
SECTION 7.05. Conduct of Business . During the period from the date hereof through the Closing Date, the Parent and the Company shall carry on their respective businesses in the ordinary and usual course consistent with past practice.
SECTION 7.06. Furnishing of Information . As long as any Stockholder owns any Shares and is not eligible to sell any Shares under Rule 144(b) promulgated under the Securities Act, the Parent covenants to use its reasonable best efforts to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports that the Parent will be required to file pursuant to the Exchange Act. As long as any Stockholder owns Shares and is not eligible to sell any Shares under Rule 144(b), if the Parent is not required to file reports pursuant to such laws, it will prepare and furnish to the Stockholders and make publicly available in accordance with Rule 144(c) promulgated by the Commission pursuant to the Securities Act, such information as is required for the Stockholders to sell the Shares under Rule 144. The Parent further covenants that it will take such further action as any holder of Shares may reasonably request, all to the extent required from time to time to enable such person to sell the Shares without registration under the Securities Act within the limitation of the exemptions provided by Rule 144.
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SECTION 7.07. Integration . The Company shall not, and shall use its best efforts to ensure that no affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Shares in a manner that would require the registration under the Securities Act of the acquisition of the Shares by the Stockholders pursuant to the Agreement, or that would be integrated with the offer or sale of the Shares for purposes of the rules and regulations of any trading market in a manner that would require stockholder approval of the sale of the securities to the Stockholders.
SECTION 7.08. Listing of Parent Stock . The Parent agrees that (i) if the Parent applies to have Parent Stock listed for trading on any exchange or any market operated by NASDAQ, the Parent will include in such application the Shares, and will take such other action as is necessary or desirable to cause the Shares to be listed on such exchange or NASDAQ market or be eligible for such quotation, in each case as promptly as possible, and (ii) the Parent will take all action reasonably necessary to continue the listing and trading of Parent Stock on any such exchange or NASDAQ market or continue the eligibility for quotation and will comply in all material respects with the Parent’s reporting, filing and other obligations under the bylaws or rules of the trading market or OTC Bulletin Board, as the case may be.
ARTICLE VIII
Miscellaneous
SECTION 8.01. Notices . All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given upon receipt by the parties at the following addresses (or at such other address for a party as shall be specified by like notice):
If to the Parent, to:
Banjo & Matilda, Inc.
c/o Fox Law Offices, P.A.
561 NE Zebrina Senda
Jensen Beach, FL 34957
If to the Company, to:
Banjo & Matilda Pty Ltd.
76 William Street
Paddington, New South Wales, Australia 2021
P.O. Box 3438 Tamarama, New South Wales, Australia 2026
Attn: Brendan Macpherson, CEO
If to the Stockholders or the Company, to:
Banjo & Matilda Pty Ltd.
76 William Street
Paddington, New South Wales, Australia 2021
P.O. Box 3438 Tamarama, New South Wales, Australia 2026
Attn: Brendan Macpherson, CEO
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SECTION 8.02. Amendments; Waivers; No Additional Consideration . No provision of this Agreement may be waived or amended except in a written instrument signed by the Company, the Parent and the Stockholders holding a majority of the Shares. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right. No consideration shall be offered or paid to any Stockholder to amend or consent to a waiver or modification of any provision of any transaction document unless the same consideration is also offered to all Stockholders who then hold Shares.
SECTION 8.03. Replacement of Shares . If any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the Parent shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Parent of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Shares. If a replacement certificate or instrument evidencing any Shares is requested due to a mutilation thereof, the Parent may require delivery of such mutilated certificate or instrument as a condition precedent to any issuance of a replacement.
SECTION 8.04. Remedies . In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Stockholders, the Parent and the Company will be entitled to specific performance under this Agreement. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.
SECTION 8.05. Independent Nature of Stockholders' Obligations and Rights . The obligations of each Stockholder under this Agreement are several and not joint with the obligations of any other Stockholder, and no Stockholder shall be responsible in any way for the performance of the obligations of any other Stockholder under this Agreement. The decision of each Stockholder to acquire Shares pursuant to this Agreement has been made by such Stockholder independently of any other Stockholder. Nothing contained herein, and no action taken by any Stockholder pursuant thereto, shall be deemed to constitute the Stockholders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Stockholders are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated herein. Each Stockholders acknowledges that no other Stockholder has acted as agent for such Stockholder in connection with making its investment hereunder and that no Stockholder will be acting as agent of such Stockholder in connection with monitoring its investment in the Shares or enforcing its rights under this Agreement. Each Stockholder shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Stockholder to be joined as an additional party in any proceeding for such purpose. Each of the Company and the Parent acknowledge that each of the Stockholders has been provided with this same Agreement for the purpose of closing a transaction with multiple Stockholders and not because it was required or requested to do so by any Stockholder.
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SECTION 8.06. Limitation of Liability . Notwithstanding anything herein to the contrary, each of the Parent and the Company acknowledge and agree that the liability of a Stockholder arising directly or indirectly, under any transaction document of any and every nature whatsoever shall be satisfied solely out of the assets of such Stockholder, and that no trustee, officer, other investment vehicle or any other affiliate of such Stockholder or any investor, shareholder or holder of shares of beneficial interest of such Stockholder shall be personally liable for any liabilities of such Stockholder.
SECTION 8.07. Interpretation . When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”.
SECTION 8.08. Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that Transactions contemplated hereby are fulfilled to the extent possible.
SECTION 8.09. Counterparts; Facsimile Execution . This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. Facsimile execution and delivery of this Agreement is legal, valid and binding for all purposes.
SECTION 8.10. Entire Agreement; Third Party Beneficiaries . This Agreement (a) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the Transactions and (b) is not intended to confer upon any person other than the parties any rights or remedies.
SECTION 8.11. Governing Law . This Agreement shall be governed by, and construed in accordance with, the laws of the State of Nevada, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.
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SECTION 8.12. Assignment . Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties. Any purported assignment without such consent shall be void. Subject to the preceding sentences, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.
[Signatures appear on the next page]
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The parties hereto have executed and delivered this Share Exchange Agreement as of the date first above written.
The Parent: | BANJO & MATILDA, INC. |
By: /s/Jared Robinson | |
Name: Jared Robinson | |
Title: Chief Executive Officer | |
The Company: | BANJO & MATILDA PTY LTD |
By: /s/Belinda Storelli Machperson | |
Name: Belinda Storelli Macpherson | |
Title: Director | |
The Stockholders: | |
/s/ Brendan Patrick Gow Macpherson | |
Jibon Trust | |
/s/ Raymond Key | |
Raymond Key | |
/s/ Michael Seligman | |
Michael Seligman | |
/s/Matthew Barrelle | |
Matthew Barrelle | |
/s/Gary Blom | |
The Bent Trust |
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EXHIBIT A
Stockholders of Banjo & Matilda Pty Ltd.
Name of Stockholder |
Address of Stockholder |
Number of Shares of
|
Percentage of Total
Company Stock Represented by Shares of Company Being Exchanged |
Number of Shares of
|
Jibon Trust | PO Box 3438 Tamarama New South Wales 2026 Australia | 55.15 | 66.64% | 12,332,561 |
Raymond Key |
396 Ladies Mile Lane Lake Hayes, Queenstown, New Zealand 9304 |
27.1 | 27.1% | 5,014,852 |
Michael Seligman |
Den llp 28 1127 P C, Den llp The Netherlands |
1.13 | 1.13% | 208,952 |
Matthew Barrelle |
504, 44 bvd d’italie Monte Carlo, Monaco |
1.13 | 1.13% | 208,952 |
The Bent Trust | 4 | 4% | 740,222 |
EXHIBIT B
Form of Opinion of Counsel to Parent
1. The Parent is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada and has the requisite corporate power to own, lease and operate its properties and assets, and to carry on its business as presently conducted.
2. The Parent has the requisite corporate power and authority to enter into and perform its obligations under the Exchange Agreement, to consummate the Transactions and to issue the Shares. The execution, delivery and performance of the Exchange Agreement by the Parent, the consummation by it of the Transactions and the issuance of the Shares have been duly and validly authorized by all necessary corporate action and no further consent or authorization of the Parent or its Board of Directors is required. The Exchange Agreement has been duly executed and delivered, and the certificates representing the Shares have been duly executed, issued and delivered by the Parent and the Exchange Agreement constitutes a legal, valid and binding obligation of the Parent enforceable against the Parent in accordance with its terms. The Shares are not subject to any preemptive rights under the Parent Charter or the Parent Bylaws.
3. The Shares have been duly authorized and, when delivered against payment in full as provided in the Exchange Agreement, will be validly issued, fully paid and nonassessable and free and clear of all liens, encumbrances and rights of first refusal of any kind and the holders shall be entitled to all rights accorded to a holder of Parent Stock under applicable Nevada law .
4. The execution, delivery and performance of and compliance with the terms of the Exchange Agreement, the consummation of the Transactions and the issuance of the Shares do not (a) violate any provision of the Parent Charter or Parent Bylaws, (b) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Parent is a party and which is known to us, (c) create or impose a lien, charge or encumbrance on any property of the Parent under any agreement or any commitment known to us to which the Parent is a party or by which the Parent is bound or by which any of its respective properties or assets are bound, or (d) result in a violation of any Federal, state, local or foreign statute, rule, regulation, order, judgment, injunction or decree (including Federal and state securities laws and regulations) applicable to the Parent or by which any property or asset of the Parent is bound or affected, except, in all cases other than violations pursuant to clauses (a) and (d) above, for such conflicts, default, terminations, amendments, acceleration, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect.
5. No consent, approval or authorization of or designation, declaration or filing with any governmental authority on the part of the Parent is required under Federal, state or local law, rule or regulation in connection with the valid execution, delivery and performance of the Exchange Agreement or the offer, sale or issuance of the Shares, other than filings as may be required by applicable Federal and state securities laws and regulations.
6. To our knowledge, there is no action, suit, claim, investigation or proceeding pending or threatened against the Parent which questions the validity of the Exchange Agreement or the Transactions or any action taken or to be taken pursuant thereto. There is no action, suit, claim, investigation or proceeding pending, or to our knowledge, threatened, against or involving the Parent or any of its properties or assets and which, if adversely determined, is reasonably likely to result in a Material Adverse Effect. There are no outstanding orders, judgments, injunctions, awards or decrees of any court, arbitrator or governmental or regulatory body against the Parent or any officers or directors of the Parent in their capacities as such.
Exhibit 10.2
THE REFERENCE SCHEDULE
Lessor | Anastasios Andreou and Sevasti Andreou |
Lessee: | Banjo & Matilda Pty Ltd (A.C.N. 137 355 769) |
Property Leased: | 76 William Street, Paddington |
(The Items in this Reference Schedule are referred to in the Clauses of this Lease).
ITEM 1 - RENT
(Clause 3.01)
The Lessee shall pay to the Lessor the yearly rent of $ 57,200.00 plus GS T by calendar monthly payments in advance of $4,766.67 plus GST (subject to adjustments and reviews as herein provided) the first of such monthly payments to be made on the 1st November 2011 and thereafter on the 181 day of each month.
ITEM 2 - PUBLIC LIABILITY
(Clause 7.02)
The Lessee shall have in effect in the joint names of the Lessor and the Lessee a Public Liability Policy in respect of the premises for not less than $10,000,000.00 .
ITEM 3- USE
(Clause 2.02)
The Lessee shall not without the written authority of the Lessors use or occupy the premises otherwise than as a Retail Clothing Shop .
ITEM 4- GUARANTORS
(Clause 10.01)
Not applicable.
ITEM 5 - BANK GUARANTEE
(Clause 4.01)
$15,730.00, being three months rent (inclusive of GST)
ITEM 6 - SECURITY BOND
(Clause 4.02)
Not applicable.
ITEM 7 - OPTION OF RENEWAL
(Clause 3.11)
15 October 2014 to 14 October 2017
ITEM 8A- OUTGOINGS
(Cause 4.06)
N/A. However the Lessee is responsible to pay all utilities charges including but without limitation to telephone, gas, electricity and water usage as indicated in clause 4.04 and 4.05.
ITEM 8B - PERCENTAGE OF OUTGOINGS
(Clause 4.06)
N/A
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PART 1- EXCLUSION OF IMPLIED COVENANTS AND POWERS
Covenants and Powers:
1.01 The covenants, powers and provisions implied in Leases by virtue of Sections 4, 84A and 85 of the Conveyancing Act 1919 (as amended) are hereby expressly negatived except in so far as the same or some part or parts thereof are included in the covenants hereinafter contained.
PART 2 - USER
Business Hours, Staff and Stock:
2.01 | Where the Premises are retail premises they shall be kept open for business and adequately staffed during normal trading hours applicable to such businesses provided that nothing herein contained shall require the Premises to be open for business in excess of any maximum trading hours prescribed by law. Further the Lessee shall keep the Premises fully stocked and shall operate the business in the Premises during the entire term of the Lease with due diligence and efficiency and in a proper and businesslike manner. |
Permitted Use:
2.02 | The Lessee shall not use or permit to be used the Premises or any part thereof for any purpose other than as indicated in Item 3 of the Reference Schedule. |
Lessees Obligations as User:
2.03 | The Lessee will not at any time during the continuance of this Lease: |
(a) | Use, exercise or carry on or permit or suffer to be used, exercised or carried on, in or upon the Premises or any part thereof any noxious, noisome or offensive act, trade, business, occupation or calling. |
(b) | Do or omit or permit or suffer to be done or omitted any act matter of thing whatsoever in, upon or about the Premises or the Building or any part thereof which is or shall or may be or grow to the annoyance, nuisance, grievance, damage or disturbance of other Lessees or occupiers of the Building or persons otherwise lawfully therein or occupiers or owners or any adjacent premises. |
(c) | Make any use of the Premises whether for the Lessee's permitted use or otherwise, or permit any use to be made of the Premises, or to do or suffer to be done on the Premises anything including, but without limiting the generality of the following, the installation or use of any machinery or the employment of any person, whereby or by reason whereof any public or statutory authority may give or issue or be entitled to give or issue any notice requiring structural alterations or repairs to be made or to be carried out to the Premises or to the whole or any part of the Building. |
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Occupational Health and Safety Act:
2.04 | The Lessee shall comply with the Occupational Health & Safety Act 2000 (as amended) and any other legislation or the requirements of any relevant authority relating to health or safety of persons in respect of the use of the Premises during the continuance of this Lease. |
Display:
2.05 | Where the Premises are retail premises the Lessee shall maintain at all times displays of merchandise in the display window (if any) having regard to the nature of the business being carried on and, unless prevented by causes beyond its control, shall keep such display windows and signs (if any) well lit during trading hours or during such further hours as the Lessor may reasonably require. |
Storage:
2.06 | Where the premises are retail premises, the Lessee shall store and/or stock in the Premises only such goods, wares and merchandise as it intends to offer for sale by retail at in from or upon the Premises or as are necessary to supply services for customers. The Lessee shall use for offices, clerical or other non-selling purposes only such space in the Premises as is from time to time reasonably required for the Lessee's business in the Premises. |
Fitting Out:
2.07 | The Lessee shall at its own expense fit out the Premises as approved by the Lessor with the equipment, fittings and fixtures necessary for the business of the Lessee and will keep such equipment, fittings and fixtures in good repair and condition. |
2.07A(i) | Notwithstanding anything contained herein, the Lessee must not make any alterations or additions to the Premises or any fixtures or fittings therein ("the tenancy work") without the prior consent of the Lessor whose consent may be withheld in its absolute discretion in the case of alterations to the Premises but shall not be unreasonably withheld in the case of alterations to fixtures or fittings PROVIDED THAT all the tenancy works if consented must be carried out strictly in accordance with the provisions of this clause in a proper and workmanlike manner to the satisfaction of the Lessor by builders, tradesmen, contractors or others approved by the Lessor whose approval will not be unreasonably withheld and in conformity with any other requirements of relevant authorities. |
(ii) | The Lessee must ensure that any works it does, including tenancy works, are done: |
(a) | by builders, tradesmen, contractors or any other persons approved by the Lessor; and |
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(b) | in a proper workmanlike manner; and |
(c) | in accordance with any plans, specifications and schedule of finishes required and approved by the Lessor; and |
(d) | in accordance with all laws and the requirements of authorities; and |
(e) | in accordance with the Lessor's reasonable requirements and directions. |
(iii) | Any tenancy works undertaken by the Lessee shall be at the sole risk in all respects of the Lessee. |
(iv) | The Lessee must take out an insurance policy covering any tenancy works it does and must comply with the provisions of that insurance. The Lessee must produce to the Lessor, upon request, the policy and the receipt for the premium. |
No Warranty as to Use:
2.08 | No warranty is given by the Lessor that the permitted use is authorised by the relevant authorities and the Lessee will obtain at its expense from the relevant authorities. A ll consents, licenses and approvals requisite for its permitted use of the Premises. Any work to the Premises required by any relevant authority as a condition of such use shall be carried out by the Lessee at its own cost after obtaining the approval of the Lessor which approval shall not be unreasonably withheld. |
No Vending Machines:
2.09 | The Lessee shall not place or operate in or near the Premises any coin operated or similar type of entertainment or vending machine without the prior consent in writing of the Lessor,. |
No Auction Sales:
2.10 | The Lessee shall not in any circumstances hold any auction, fire or bankrupt sale in. or about the Premises. |
Licensed Premises:
2.11 | The Lessee shall not without the Lessor's written consent at any time apply for or allow any application to be made for a license or licenses for the sale of beer, wine or spirits or similar intoxicating liquors on the Premises or any part thereof and will not permit the Premises or any part thereof to be used for the carrying on therein of the trade of a publican or licensed victualler or for the sale of beer, wine, spirits or similar intoxicating liquors or for the purpose of a club or association where such liquor may be sold supplied or received, stored or bought for consumption by members or any other person. |
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PART 3 - RENT
Rent:
3.01 | The Lessee expressly agrees to make all payments due under this Lease (including those for rent and outgoings) punctually on the date when each payment is due and shall not withhold or be entitled to withhold the whole or part of any such payment by way of deduction, set off or counterclaim in respect of any claim for damages or for compensation which the Lessee shall make or has made against the Lessor. The rent payable by the Lessee on and from the commencement date is specified in Item 1 of the Reference Schedule. |
Bankers Order:
3.02 | Where required by the Lessor, the Lessee shall upon execution of this Lease or at such other time as requested by the Lessor deliver to the Lessor a fully completed and signed Bankers Order directing the Lessee's bankers to periodically debit the Lessee's account with the rent payable pursuant to the terms of the Lease and to remit same free of all costs and charges to the Lessor's bank account as notified by the Lessor, its Agents or its solicitors from time to time. Such Bankers Order shall require the rent to be remitted so as to be credited to the Lessor's bank and account on or before the due date for any payment of rent PROVIDED HOWEVER that the execution and delivery of such Bankers Order shall not relieve the Lessee of its obligations to make any payments of rent hereunder in those amounts and at those times as herein provided. PROVIDED FURTHER that upon any review of rent during the term of the Lease or any holding over, the Lessee shall prior to the date following such review upon which the reviewed rent becomes payable direct its bankers to pay the amount of the reviewed rent in the manner provided. |
Rent Statement:
3.03 | A statement signed by the Lessor or the Lessors agent (or officer of the Lessor if a Company) certifying the amount of the rent or of any other moneys payable by the Lessee hereunder shall be prima facie evidence of the matters stated therein. |
Re-entry or Surrender on Default:
3.04 | If the rent hereby reserved or any part thereof or any other moneys payable by the Lessee hereunder shall at any time be in arrears and unpaid for twenty one (21) days after the same shall have become due (whether any formal or legal demand therefore shall have been made or not) or if the Lessee shall at any time fail or neglect to perform or observe any of the covenants, conditions or agreements herein contained and on its part to be performed or observed and such default continues for twenty one (21) days after receiving written notice of such default or if the Lessee while the Premises or any part thereof shall remain vested in it being a company shall enter into liquidation whether compulsory or voluntary (not being a voluntary liquidation for the purpose of amalgamation or reconstruction) or be placed under official management or a receiver or manager of any of its assets be appointed or if it shall permit any execution to be levied against any of its assets or enter into a scheme or arrangement or composition for the benefit of its creditors or not being a company shall become bankrupt or assign its estate or enter into a deed of arrangement for the benefit of its creditors, then and in such case it shall be lawful for the Lessor or any person or persons duly authorised by it to re-enter the Premises or any part thereof in the name of the whole and to hold and enjoy peaceably the Premises thenceforth as if these presents had not been made without prejudice to any right of action or remedy of the Lessor in respect of the breach or non-observance of any of the covenants by the Lessee or the provisions hereof. |
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Interest on Moneys Overdue:
3.05 | Without prejudice to any other rights, powers and remedies of the Lessor under this Lease, the Lessee will pay to the Lessor interest at the rate of eight (8%) per cent per annum calculated on a daily basis on any moneys due but unpaid for seven (7) days by the Lessee to the Lessor on any rents, outgoings or charges whatsoever pursuant to this Lease such interest to be computed from the due date of payment of the moneys in respect of which the interest is chargeable until payment of such moneys in full and to be recoverable from the Lessee as if the same were overdue rent AND it is agreed by and between all parties hereto that such interest is not a penalty but has been calculated as a sum sufficient to recoup to the Lessor the losses it will suffer and the expenses (excluding legal costs) to which it will be put as a result of the failure by the Lessee to comply with its obligations hereunder. The Lessee shall further pay the Lessor's legal costs of engaging its solicitors to recover the said money and interest calculated on a solicitor/client basis. The payment and acceptance of such interest shall not be construed as a waiver or acceptance or release of the breach involved in non-payment of the said moneys on the due date. |
Lessee not to cause Rent Reduction:
3.06 | The Lessee must not without the approval of the Lessor in writing by any act, matter or deed or by any failure or omission, impair, reduce or diminish directly or indirectly the rent under this Lease or impose or cause or permit to be imposed on the Lessor any liability of the Lessee under or by virtue of this Lease. |
Separate Suits:
3.07 | The Lessor may, without prejudice to any other power, right or remedy under this Lease or at law, sue the Lessee for any rent or other moneys which may from time to time become due and owing by the Lessee to the Lessor under or in connection with this Lease. In particular the Lessor may sue for any instalments of rent or any part thereof as and when the same become due and by a separate suit or suits sue for any further sum or sums which may be found to be due and owing by the Lessee to the Lessor. Neither the institution of each such suit nor the entering of judgment herein bars the Lessor from bringing a separate or subsequent suit or suits for the balance of any rent or other moneys due to the Lessor under this Lease. |
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Exercise of the Lessor's Right of Re-entry:
3.08 | The exercise by the Lessor of the right of re-entry given to it hereunder shall in no way be capable of conferring upon the Lessee a discharge of its obligations under this Part 3. |
Rent Reviews:
3.09 | IT IS HEREBY AGREED AND DECLARED that: |
(a) | The Annual rent hereby reserved and the monthly instalment thereof shall be reviewed yearly on the 15th day of October in each year of the said term and any option period or holding over period (the "review date") the first review to be made on the 15th day of October 2012. |
(b) | The Yearly rent payable for the ensuing year on and from each review date shall be the sum calculated in accordance with the following formula: |
New Rent | = | Base Rent | X | New CPI |
Base CPI |
where for the purpose of this Clause: | |
"New Rent" means | The yearly rent payable for the ensuing year from the date of each review. |
"Base Rent" means | The yearly rent payable for the first year of the term hereby granted. |
"Base CPI" means | The Consumer Price Index Number last published as at the COMMENCING DATE hereof. |
"New CPI" means | The Consumer Price Index Number last published as each Review Date. |
"The Consumer Price | |
Index Number" means | The figure for Sydney of the Consumer Price Index (all groups) published by the Australian Commonwealth Bureau of Census and Statistics from time to time. |
(c) | PROVIDED THAT if during the currency of this Lease the Consumer Price Index Number shall cease to be published, then this clause shall be read and construed as if the words “the figure for Sydney of the Consumer Price Index (All Groups) published by the Australian Commonwealth Bureau of Census and Statistics” appearing in this Clause were deleted and the following words were substituted therefore namely “the index or indices as in the opinion of the Actuary of Westpac Banking Corporation will most nearly reflect changes in the prevailing levels of prices in Sydney” to the effect that the Consumer Price Index shall be deemed to be identical with the index or indices calculated by the said Actuary as herein provided. |
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(d) | PROVIDED FURTHER THAT should there be no such Consumer Price Index Number current at any Review Date then the rent hereby reserved and the monthly instalment thereof shall be altered on each subsequent Review Date by such amount as shall be determined as a proper rent of the premises having regard to the current market rental value by a specialist retail valuer nominated by the President of the Real Estate Institute of New South Wales or its successor on the application of either party and |
(i) | any such determination when made shall be deemed to have been made by such Valuer as an expert and not as an Arbitrator; |
(ii) | the costs of any such determination shall be paid by the Lessor and Lessee in equal shares; |
(iii) | any change in the rent resulting therefrom shall take effect on and from the relevant Review Date and be payable by the Lessee to the Lessor. |
Goods and Services Tax:
3.10 | In this clause: |
(a) | "GST" means a goods and services tax under A New Tax System (Goods and Services Tax Imposition-Goods) Act (1999) as amended and related legislation. |
(b) | The rental referred to in Item 1 of the Reference Schedule is exclusive of GST. |
(c) | The Lessee must pay to the Lessor all GST payable by the Lessor under this Lease and the Lessor must provide the Lessee with a tax invoice as required under A New Tax System (Goods and Services Tax Goods Act (1999). |
(d) | The Lessee must pay the GST with the monthly payment of rent. |
(e) | Except in the case of manifest error, the amount of GST payable under this Lease as notified by the Lessor shall be conclusive. |
Option to Renew:
3.11 (a) | The Lessor will on the written request of the Lessee, made not more than six (6) months and not less than three (3) months before the expiration of this Lease, and provided that there shall not be at the time of giving the aforesaid request any existing breach or non-observance of any -of the covenants or terms or conditions herein contained or implied AND PROVIDED THAT all rent and other monies payable by the Lessee pursuant to this Lease shall have been paid on or by the due date, grant to the Lessee a Lease of the premises (hereinafter referred to as "the New Lease") for a further term as set out in Item 7 containing like provisions except for: |
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(i) | the commencement and termination dates; |
(ii) | Item 1 in the Reference Schedule shall be amended to reflect the new rental determined in accordance with sub-clause (b) hereof; |
(iii) | Item 5 of the Reference Schedule shall be amended by the deletion of the amount therein contained and the insertion of the equivalent amount of three (3) months rental; and |
(iv) | Deletion of this clause 3.11 and 18.27; |
AND FURTHER PROVIDED THAT the Lessee will be obliged to lease the Premises pursuant to the aforesaid conditions for the new term upon it giving the aforesaid written request to the Lessor.
(b) | The annual rental payable by the Lessee on and from the date of 'the commencement of the New Lease shall be a new rental (hereinafter referred to as "the New Rental"). The Lessor or its agent shall notify the Lessee in writing of the New Rental which shall be the then current market rental of the demised premises and should the Lessee not agree to the New Rental so determined by the Lessor then such New Rental shall be the current market rental of the demised premises on the date from which such New Rental would have been payable if the Lessee had agreed as aforesaid, as certified by a Certified Practising Valuer nominated by the President for the time being of the Australian Property Institute Inc. (NSW Division), who shall act as an expert and not as an arbitrator, with the cost of such determination being borne equally by the Lessor and the Lessee. |
(c) | The Valuer must determine the New Rental within one month of being appointed. |
(d) | In determining the New Rental, the Valuer must determine the New Rental for the Premises as at the date of the commencement of the New Lease being the rent that would reasonably be expected to be paid for the Premises, as between a willing lessor and a willing lessee in an arms length transaction (where the parties are acting knowledgeably, prudently and without compulsion), determined on an effective rent basis having regard to the following matters: |
(i) | the provisions of this Lease; |
(ii) | the rent that would reasonably be expected to be paid for the Premise if it was unoccupied and offered for renting for such use or uses as may be permissible under the relevant local government authorities planning codes for the area in which the Premises are located; |
(iii) | the. rent payable by the Lessee and the fact that the Lessee is or is not required to pay outgoings under the Lease; |
(iv) | have regard to rates of rents and incentives payable for comparable premises in comparable locations; |
(v) | consider the Premises as available for use for any purpose for which the Premises may be used in accordance with this Lease and all relevant laws and local government authorities planning codes; |
(vi) | have regard for the fact that the Lease is a gross rent Lease; |
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(vii) | assume that all covenants on the part of the Lessee and the Lessor in the Lease have been fully performed and observed on time |
(viii) | if the Premises have been damaged, destroyed or rendered inaccessible in whole or part, assume that the have been reinstated or made accessible (as appropriate); |
(ix) | disregard: |
(A) | the value of any goodwill created by the Lessee's use or occupation of the Premises; |
(B) | any impaired condition of the Premises if that condition results from any work carried out or not carried out by the Lessee or from any breach under this Lease by the Lessee; and |
(C) | Any sublease or other sub-tenancy agreement or occupational arrangement in respect of any part of the Premises and any rental, fees or money payable under any of them. |
PART 4 - SECURITY DEPOSIT AND CHARGES OTHER THAN RENT
Bank Guarantee:
4.01 | The Lessee shall on the signing of this Lease deposit with the Lessor the sin specified in Item 5 of the Reference Schedule (hereinafter called "the Security Deposit") as security for the due and punctual observance and performance of the covenants obligations and provisions on the Lessee's part contained herein. The Security Deposit shall be provided by way of an unconditional Bank Guarantee given by an Australian domiciled Bank carrying on business in New South Wales. |
Security Bond:
4.02 | The Lessee shall on the signing of this Lease deposit with the Lessor by way of the cash or or unendorsed bank cheque the sum specified in Item 6 of the Reference Schedule (hereinafter called "the Security Bond") as security for the due and punctual observance and performance of all the covenants obligations and provisions on the Lessee's part contained herein. |
Claim On Security Deposit or Security Bond:
4.03 | If at any time the Lessee fails to duly and punctually observe and perform all or any of the covenants obligations and provisions on the Lessee's part contained in the Lease then the Lessor may at its discretion at any time appropriate and apply so much of either part or the whole of either or both the Security Deposit and Security Bond (hereinafter called the "Security") as may be necessary in the opinion of the Lessor to compensate the Lessor for loss or damage sustained or suffered by the Lesson: by reason of such breach by the Lessee. Any such appropriation by the Lessor shall not be deemed to and shall not operate to waive the Lessee's breach and shall not prejudice any other right of the Lessor arising from such breach. Should the Security or any portion thereof be appropriated by the Lessor as aforesaid then the Lessee shall within seven (7) days from the date of demand by the Lessor pay to the Lessor the . amount of the sum so appropriated in order to reinstate the Security. Should the Lessee comply with all the said covenants obligations and provisions and duly and punctually pay all of the rental reserved and all other sums payable by the Lessee to the Lessor herein, the Security less any sums appropriated by the Lessor in accordance with this clause and not reinstated shall be refunded to the Lessee on the Lessees vacating of the Premises on the expiration of the term or of any holding over period or upon the termination of this Lease. Further, the Lessor shall be at liberty to pay the Security less any sums appropriated by the Lessor in accordance with this clause and not reinstated, to any assignee or transferee of the Lessor's interest in the Premises in the event that such interest of the Lessor's is assigned or transferred and thereupon the Lessor shall be discharged from all liability to the Lessee or any other person with respect to the Security. |
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Telephone, Electricity Charges etc.:
4.04 | The Lessee shall pay to the proper authorities all charges for telephones installed in and electricity and gas consumed on the Premises and for all water usage and trade waste charges and if the Lessee shall make default in the payment thereof it shall be optional for the Lessor to pay the same and in addition to the Lessor's other remedies it shall be lawful for the Lessor to recover the amount so paid as if the same was overdue rent hereunder. |
Electricity Charges for Lessee's Signs:
4.05 | If the Lessee has erected any illuminated sign which is not connected to the Lessor's own meter the cost of electricity consumed by such sign shall be apportioned by the Lessor and the Lessee shall pay the proportion attributable to such sign to the Lessor within fourteen (14) days of demand by the Lessor together with any additional fee payable in respect of reading the meter. |
Lessee to Pay Increases in Outgoings:
4.06 | In addition to the annual rent hereinbefore provided, the Lessee shall in respect of each year or part of a year of the Lease reimburse and pay on demand and without any deduction whatsoever to the Lessor each of the respective items of outgoings referred to in Item 8(a) of the Reference Schedule which are levied, assessed or charged against the Lessor in respect of the demised premises in the amount equivalent to the percentage referred to in Item 8(b ) of the Reference Schedule. |
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PART 5 – DESTRUCTION OR PARTIAL DESTRUCTION OF PREMISES
Fire, Flood etc.:
5.01 | If either the whole or any part of the Building shall be resumed or compulsorily acquired by any competent authority or be destroyed or damaged by fire, flood, lightning, storm, tempest or other disabling cause so as to render the Premises during the term substantially unfit for the use and occupation of the Lessee or so as to deprive the Lessee of the substantial use of the same or so as to render the rebuilding or reconstruction of the Building in its previous form impractical or undesirable in the opinion of the Lessor then: |
(a) | This Lease may be terminated without compensation by either the Lessor or the Lessee by notice in writing to the other PROVIDED ALWAYS that in the latter case the Lessor shall have failed to rebuild or reinstate the Premises within a reasonable time after being requested so to do in writing by the Lessee. |
(b) | Any such termination as aforesaid shall be without prejudice to the rights of either party in respect of any antecedent breach matter or thing. |
(c) | Nothing herein contained or implied shall be deemed to impose any obligation upon the Lessor to rebuild or reinstate or make fit for occupation the Premises. |
(d) | Upon the happening of any such damage or destruction as aforesaid the total yearly rent hereby reserved or a proportionate part thereof according to the nature and extent of the damage sustained shall abate until the Premises shall have been rebuilt or reinstated or made fit for the occupation and use of the Lessee or until the Lease shall be terminated pursuant to the provisions of sub-clause (a) of this clause as the case may be. |
(e) | In the event of any dispute arising out of this clause the same shall be referred to mediation under the provisions of the laws for the time being in force in the State of New South Wales. |
Notwithstanding anything in this clause express or implied the Lessee shall have no such right of termination and rent shall not abate if the destruction or damage was caused or contributed to by the Lessee or any clerk, servant, licensee, invitee, employee or agent of the Lessee.
PART 6 - ASSIGNMENT
Restriction on Assignment, Sub-letting etc.:
6.01 | The Lessee covenants not to assign this Lease except in accordance with the provisions contained in this clause. |
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Furnishing of Disclosure Statement
6.02 | If the Lessee desires to assign this Lease: |
(a) | The Lessee shall, before requesting the Lessor's consent, furnish the proposed assignee with a copy of any disclosure statement given to the Lessee in respect of the Lease, together with details of any changes that have occurred in respect of the information contained in that disclosure statement since it was given to the Lessee (being changes of which the Lessee is aware or could reasonably be expected to be aware): |
(b) | If the Lessee cannot provide the proposed assignee with a copy of the disclosure statement, the Lessee may request the Lessor to provide a copy of that disclosure statement, and if the Lessor is unable or unwilling to provide that copy within 14 days after the request the Lessee need not comply with sub clause 6.02(a). |
(c) | The Lessee shall request the Lessor's consent to the assignment of this Lease in writing and shall furnish with that request: |
(i) | information regarding the financial resources and financial standing and the business experience and retailing skills of the proposed assignee; |
(ii) | particulars of the use of the Leased premises intended by the proposed assignee; |
(iii) | confirmation that the Lessee complied with sub-clause 6.02(a) of this Clause. |
Lessors Enquiries
6.03 | The Lessor: |
(a) | Agrees to deal expeditiously with the Lessee's request for consent to assign this Lease; |
(b) | Is entitled to require the Lessee to furnish to the Lessor: |
(i) | details of the Lessee's financial resources and retailing skills at the time of the request for consent; |
(ii) | such further information as the Lessor may reasonably require concerning the financial standing and business experience of the proposed assignee; |
(c) | Is entitled to withhold consent to the assignment of this Lease in any of the following circumstances; |
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(i) | if the proposed assignee proposes to change the use to which the premises is put (unless the Lessor consents to the change of use in accordance with the provisions of this Lease); |
(ii) | if the proposed assignee has financial resources and retailing skills that are inferior to those of the Lessee; |
(iii) | if the Lessee has failed to comply with the provisions contained in this clause for requesting and obtaining consent to the assignment. |
Requirements of Lessee and Assignee
6.04 | For the purposes of the Lessee making a request and the Lessor considering that request under this clause: |
(a) | The retailing skills of the assignee, if it is a corporation, include the retailing skills of those of its directors who have actively participated in the assignee's business and intend to actively participate in the business in the Leased premises; |
(b) | If the Lessor consents to a change of use by the assignee, the assignee's retail' .1g skills for that use should be compared with the Lessee's retailing skills for the Lessee's use of the Leased premises. |
Lessees and Assignees Obligations
6.05
(a) | The Lessor may require the assignee to execute an instrument in which the assignee will assume liability under the Lease for the residue of the Lease term. |
(b) | If the assignee is a corporation whose shares are not listed on an Australian Stock Exchange, the Lessor may require as a condition of the Lessor's consent to the assignment that not less than two of its directors or shareholders (chosen by the Lessor) execute personal guarantees in respect of the payment of rent and the observance and performance of Lease covenants by the Assignee during me Lease term. |
(c) | The Lessee will pay the Lessor's reasonable legal and other expenses of investigating the Lessee's application for consent and of preparing, executing, stamping and registering all the required instruments or dealings and the costs of obtaining the mortgagee's consent. |
Lessors Response
6.06 | If the Lessee has complied with the requirements of this clause, the Lessor shall indicate, within 42 days after the Lessee shall have made its request under sub-clause 6.02(c) and furnished any further details required under sub-clause 6.03(b) whether the Lessor consents or withholds consent. If the Lessor does not provide t. at indication within 42 days, it shall be taken to have consented to the assignment, subject to the conditions in Clause 6.05. |
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Deemed Assignment Where Lessee is a Company:
6.07 | Where the Lessee is a corporation the shares in which are not listed on any member exchange of the Australian Associated Stock Exchanges and there is any alteration in the beneficial ownership of or issue of further shares in the share capital of the Lessee which in the reasonable opinion of the Lessor alters the effective control of the Lessee from the control thereof at the date of this Lease such change in control of the Lessee shall be deemed to be an assignment of this Lease. |
Assignment of Benefit of Lessee's Obligations:
6.08 | Subject to the provisions of Clauses 6.01 to 6.06 (inclusive), if the Lessor transfers or assigns its interest in this Lease or the land or the reversion of the Lease, the Lessee will also be entitled to assign the benefit of all obligations of the Lessee under this Lease and: |
(a) | Any bank guarantee which is then in place may be assigned to the transferee or assignee; |
(b) | The Lessee shall, if requested by the Lessor, at the expense of the Lessee either: |
(i) | enter into a deed with any transferee or assignee to protect that assignment; or |
(ii) | provide a replacement bank guarantee in the form acceptable to the Lessor in favour of the transferee or assignee. |
(c) | The Security Deposit and/or the Security Bond (hereinafter called "the Security") will be deemed to have been assigned to the assignee or transferee; and |
(d) | The owner of the reversion of this Lease at the expiry or termination of this Lease or any renewal will be liable for the repayment of the Security, and the Lessor will have no personal liability to the Lessee or to any assignee of the reversion for repayment of the Security whether that owner has or has not acquired control of the Security. |
6.09 | Subletting, Parting with Possession etc. |
The Lessee will not during the continuance of this Lease mortgage, charge .or otherwise deal with the Lessee's interest in the premises, sublet or part with possession of or grant any license affecting the premises without the Lessors written consent.
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PART 7 - INSURANCE
Plate Glass:
7.01 | The Lessee shall insure and keep insured in the name of the Lessee noting the interest of the Lessor thereon and in such amount (not being less than the full insurable value) and against such risks as the Lessor may reasonably require all plate glass, windows, doors, displays, showcases and other glass forming part of the Premises. |
Public Liability:
7.02 | The Lessee shall effect and keep effected in the name of the Lessee noting the interest of the Lessor thereon in respect of the Premises at all times during the continuance of this Lease a public liability policy in such amount as may be reasonably required from time to time by the Lessor but in any event not less than the amount set out in Item 2 of the Reference Schedule. |
Stock and Fixtures:
7.03 | The Lessee will insure and keep insured during the continuance of this Lease the goods if any comprising the Lessee's stock-in-trade and the Lessee's fixtures, fittings and exterior signs in or about the Premises to the full insurable value thereof against such risks (including fire, damage and water) as the Lessor may reasonably nominate in writing. |
Workers Compensation:
7.04 | The Lessee will keep in force during the continuance of this Lease a policy of insurance or indemnity for the full amount of his legal liability under the Workers' Compensation Act 1926 (as amended) to each person employed by him in the business conducted in and from the Premises who is a "worker" within the meaning of the said Act. |
Not to Increase Risk:
7.05 | The Lessee shall not bring to or do or suffer to be done or allow any act matter or thing on the Premises or keep anything in the Premises whereby any fire or other insurances on the Building may be rendered void or voidable (except with the approval in writing of the Lessor) or whereby the rate of fire or other insurance in respect of the Building or any property therein may be increased or which may conflict with the laws or regulations relating to fires or any insurance policy upon the Building or any property therein, or the regulations or ordinances of any public authority or the provisions of any Statute for the time being in force. |
Additional Premium:
7.06 | The Lessee will pay to the Lessor upon demand all additional premiums of insurance on the Building and on any property therein on account of extra risk caused by the use to which the Premises are put by the Lessee and the Lessee will comply promptly at the Lessee's expense with all the requirements of the insurer company in relation to the installation, cleaning and maintenance of exhaust systems (if any) and other fire prevention equipment installed or as required by the insurance company to be installed in the Premises due to the use of the Premises by the Lessee. |
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Reputable Insurer:
7.07 | All policies of insurance required to be effected by the Lessee hereunder whether in respect of the property or risk either by the Lessor or the Lessee shall be taken out . with a reputable insurance office or company of sound financial standing approved by the Lessor which approval shall not be unreasonably withheld. |
Evidence of Insurance:
7.08 | The Lessee shall whenever requested so to do by the Lessor produce to the Lessor the insurance policies abovementioned and evidence of the currency thereof. |
Compliance with Fire Regulations:
7.09 | The Lessee, at his cost, must comply with all insurance, sprinkler, security and fire alarm regulations (and the requirements of all relevant authorities for the installation, maintenance and servicing of all fire equipment) in respect of or arising from the Lessee's (or the Lessee's Sublessees or Licensee) particular use or occupation of the Premises including fire blankets and fire extinguishers, and any reasonable request in writing made by the Lessor in respect of such compliance. Provided further that where the Lessor has supplied fire equipment to the Premises and the Lessor is by Law required to service it then the Lessor for himself and/or his agents shall have ''the right of access to the Premises for maintenance and service of such equipment. |
Compliance with Lessor's Safety Requirement:
7.10 | The Lessee must within ten (1 0) business days of written demand pay to the Lessor the cost of any alteration to the sprinkler, security or fire alarm installations or for the provision of additional fire· safety or fire fighting equipment which may, in the reasonable opinion of the Lessor, become necessary or desirable by reason of the non-compliance by the Lessee with the then current recommendations of the Insurance Council of Australia or the requirements of the Lessor's insurer or any local or other authority. |
Lessee's Alteration to Safety Systems:
7.11 | The Lessee will not, without the Lessor's written consent and subject to the Lessee's obligations under clauses 7.06, 7.09 and 7.10 hereto, in any manner interfere with, alter or remove any part or component of the ventilation system, fire alarm system, sprinkler system or fire fighting equipment now installed or hereafter to be installed. in the Premises by the Lessor. |
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PART 8 - TERMINATION, DEFAULT ETC.
Yield Up Possession:
8.01 | The Lessee shall at the expiration or sooner determination of the Lease peaceably surrender and yield up to the Lessor the whole of the Premises in good and substantial repair, order and condition (having regard to the condition thereof at the commencement of the Lease) and clean and free from rubbish (damage by fire, flood, lightning, storm, tempest, Act of God, war and reasonable wear and tear only excepted). |
Essential Terms:
8.02 | The parties expressly agree and declare that each of the covenants which are specified in this sub-clause are essential terms of the Lease: |
(a) (i) | the covenant to pay rent throughout the Lease term at a date not later than seven (7) days after the due date for the payment of each monthly instalment of rent (clauses 3.01, 3.02, 3.04 and 3.05). |
(ii) | the covenant to pay outgoings (clause 4.06) |
(iii) | the covenant as to assignment of the Lease (Part 6). |
(iv) | the covenant as to the use of the Premises (clauses 2.02 and 2.03). (v) the covenants as to insurance (clauses 7.01 to 7.11). |
(b) | In respect of the Lessee's obligation to pay rent, the acceptance by the Lessor of arrears or of any late payment of rent shall not constitute a waiver of the essentiality of the Lessee's obligation to pay rent in respect of those arrears or of the late payments or in respect of the Lessee's continuing obligation to pay rent during the Lease term. |
(c) | The Lessee covenants to compensate the Lessor in respect of any breach of an essential term of this Lease and the Lessor is entitled to recover damages from the Lessee in respect of such breaches. The Lessor's entitlement under this clause is in addition to any other remedy or entitlement to which the Lessor is entitled (including to terminate this Lease). |
Damages for Repudiation:
8.03
(a) | In the event that the Lessee's conduct (whether acts or omissions) constitutes a repudiation of the Lease (or of the Lessee's obligations under the Lease) or constitutes a breach of any Lease covenants, the Lessee covenants to compensate the Lessor for the loss or damage suffered by reason of such repudiation or breach. · |
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(b) | The Lessor shall be entitled to recover damages against the Lessee in respect of repudiation or breach of covenant for the damage suffered by the Lessor during the entire term of this Lease. |
(c) | The Lessor's entitlement to recover damages shall not be affected or limited by any of the following: |
(i) | if the Lessee shall abandon or vacate the Premises; |
(ii) | if the Lessor shall elect to re-enter or to terminate the Lease; (iii) if the Lessor shall accept the Lessee's repudiation; |
(iv) | if the party's conduct shall constitute a surrender by operation of law. |
(d) | The Lessor shall be entitled to institute legal proceedings claiming damages against the Lessee in respect of the entire Lease term, including the periods before and after the Lessee has vacated the Premises and before and after the abandonment, termination, repudiation, acceptance of repudiation or surrender by operation of law referred to in sub-clause 8.03(c) whether the proceedings are instituted either before or after such conduct. |
Director etc. may act for Company:
8.04 | The right of re-entry hereunder may be exercised on behalf of the Lessor (if a company) by any director, secretary, officer or manager or by any person authorised in writing by such director, manager or secretary. |
Weekly Tenancy:
8.05 | That upon the powers of re-entry granted by clause 3.04 hereof becoming exercisable the tenancy hereby created shall at the option of the Lessor (to be exercised by notice in writing to the Lessee) thereby become a tenancy from week to week and be terminable by one (1) week's notice to quit in writing. |
PART 9 - INDEMNITIES
Injury on Premises:
9.01 | The Lessee shall indemnify and hold harmless the Lessor from and against all damages, sums of money, costs, charges expenses, actions, claims and demands which may be sustained or suffered or recovered or made against the Lessor by any person for any injury such person shall sustain when using, entering, leaving any portion of the Building of which the Premises form a part limited to the circumstances where whether the injury arises or has arisen as the result of the negligence of or as a result of the creation of some dangerous thing or state of affairs by the Lessee or by any clerk, servant, licensee, invitee, workman, employee, agent, customer, visitor or patron of the Lessee. except in the case of the negligent act or omission of the Lessor and whether the existence of such dangerous thing or state of affairs was known or ought to have been known to the Lessor or not. |
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Damage to Premises:
9.02 | The Lessee shall indemnify and hold harmless the Lessor from and against all loss and damage to the Premises caused by the negligent use or misuse or abuse of water, gas or electricity supplied to the Lessee in connection with the Premises or any faulty water, gas or electric light or power fittings or fixtures of the same which may be in the control of the Lessee and the Lessee will give to the Lessor prompt written notice of any accident to or defects in the water pipes, gas pipes, electric light and power wiring and fittings. |
Damaged Merchandise:
9.03 | If any merchandise or any other property which may be in the Premises during the said term shall be damaged or destroyed by the negligent use or misuse, waste or abuse of water, gas, petrol or electricity or by faulty water, gas or electric (light or power) or oil fittings or fixtures or from or by the overflow of water, sewerage. or other matter which may leak into or issue from any part of the Premises or from only adjoining or neighbouring land or building or the Building of which the Premises form part (including the roof or any pipe attached or connected with or appurtenance. to the said adjoining or neighbouring land or building) no part of the loss or damage occasioned by such injury or destruction shall be borne by the Lessor provided that such loss or damage was not caused or contributed to by the Lessor, the Lessor's agents, contractors or invitees. |
Lessor Not Liable:
9.04 | Notwithstanding any implication or rule or law to the contrary the Lessor shall not be liable for any damage or loss the Lessee may suffer by any act default or neglect· of the Lessor or any other person: |
(a) | In carrying out the powers, authorities, and provisions herein contained or otherwise with respect to the Premises; or |
(b) | By reason of the Lessor neglecting to do something to the Premises or to the Building of which the Premises form part and which as between the Lessor and Lessee he might be legally liable to do. |
PART 10 - GUARANTEE
Guarantee:
10.01 | The Guarantor named in Item 4 of the Reference Schedule, so as to bind himself, his heirs, executors, administrators and assigns, HEREBY COVENANTS with the Lessor that in consideration of the Lessor entering into the Lease at the Guarantor's request (which request the Guarantor by his execution hereof hereby acknowledges) the said Guarantor (in the case of a company, the directors of the company) does hereby guarantee to the Lessor the due payment of all moneys hereby covenanted or agreed to be paid and the due performance, observance and fulfilment by the Lessee of all covenants, terms, provisions and conditions herein contained or implied and ·in the part of the Lessee to be performed, observed and fulfilled, and in particular without limiting the generality of the guarantee hereby given it is agreed that: |
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(a) | In the event of default by the Lessee in payment of any moneys due and payable by it pursuant to this Lease then as regards such moneys the Guarantor shall be deemed to become a principal debtor to the Lessor and the Guarantor shall forthwith upon the occurrence of such default pay such moneys to the Lessor. |
(b) | The guarantee hereby granted shall be deemed to extend to all costs, fees, expenses and other moneys which the Lessor may incur in enforcing or attempting to enforce against the Lessee the terms of this Lease and the observance and performance by the Lessee of its several obligations and duties or any of them to be observed fulfilled or performed pursuant to this Lease or in the recovery or attempted recovery from the Lessee of any moneys which may be payable by the Lessee pursuant to this Lease. |
(c) | The guarantee hereby granted shall be deemed to extend to and cover the payment to the Lessor of all moneys by way of damages or compensation for any breach or non-observance (should such breach or non-observance occur) by the Lessee of the terms of this Lease. |
Guarantors Indemnity in Favour of the Lessor:
10.02 | The Guarantor hereby indemnifies the Lessor and agrees at all times hereafter to keep the Lessor indemnified from and against all damages and all claims, costs, losses, expenses or obligations, direct or indirect, which the Lessor may suffer or incur consequent upon or arising directly or indirectly out of any breach or non-observance by the Lessee of any of the covenants, terms, provisions or conditions contained or implied in this Lease or any extension or renewal thereof and on the part of the Lessee to be performed, observed or fulfilled. |
Guarantors Obligations Not Limited:
10.03 | Without limiting the generality of any other provision of this Lease the rights, remedies and recourse of the Lessor pursuant to this Part 10 shall not in any way be prejudiced or affected and shall remain fully enforceable and the liability of the Guarantor hereunder shall not be abrogated; prejudiced, limited or affected notwithstanding any one or more of the following circumstances: |
(a) | the granting of any time, credit, forbearance, indulgence or concession at any time by the Lessor to the Lessee or any Guarantor; |
(b) | any absolute or partial release of the Lessee or any one or more Guarantor or any compromise with the Lessee or any one or more Guarantor; |
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(c) | any variation of the provisions of this Lease or any extension or renewal thereof or holding over of the term or other continued occupation of the Premises by the Lessee; |
(d) | any composition, compromise, release, discharge, arrangement, abandonment, waiver, variation, relinquishment or renewal of any security or right by the Lessor; |
(e) | any assignment or sub-lease of the Premises or any part thereof excluding the circumstances in which the Lessor obtains substitute guarantors pursuant to an assignment or sub lease of the premises; |
(f) | any determination of the Lease (whether by effluxion of time, re-entry, forfeiture, surrender or otherwise); |
(g) | the fact that the several rentals and other moneys hereby reserved or any part thereof may not be recoverable or may cease to be recoverable or may never have been recoverable or that any transaction affecting in any way the several rentals and such other moneys or the obligations contained in or secured by this Lease are void, voidable or unenforceable in whole or in part whether initially or otherwise; |
(h) | the death, disability, bankruptcy, infancy, deed of arrangement, assignment or composition for the benefit of creditors, winding-up, scheme of arrangement, reduction of capital, capital reconstruction, or the appointment of a receiver and manager (whether by the Court or under the powers contained in any instrument) or official management of the Lessee or any Guarantor or notice of any of the preceding circumstances; |
(i) | the fact that one or more of the persons named herein as a Guarantor may never execute this Lease as Guarantor or that the execution of this Lease by any one or more of such Guarantor (other than the person sought to be made liable hereunder) is or may become unenforceable, void or voidable; |
(j) | any exercise or purported exercise by the Lessor of its right of re-entry; |
AND EACH of the above circumstances shall be construed separately and independently and shall not be limited by the provisions of any other clause.
Guarantee Irrevocable and Continuing:
10.04 | This Guarantee and Indemnity shall be irrevocable and continuing and shall extend to cover all obligations of the Lessee to the Lessor howsoever arising and it shall continue and remain in full force and effect until the due performance, observance and fulfilment by the Lessee of all the covenants, terms, provisions and conditions on the part of the Lessee to be performed, observed and fulfilled in accordance with the terms hereof. |
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Guarantors Obligations to Lessor not Prejudiced:
10.05 | Neither the Guarantor's liability nor the Lessor's rights under this Guarantee and Indemnity or otherwise shall be prejudiced or discharged by any act or omission or any event of any description which might otherwise have the effect (whether at law, in equity or under statute) of prejudicing or discharging the liability of the Guarantor hereunder either as a guarantor or principal debtor or as an indemnifier. |
Statutory Provisions:
10.06 | The Guarantor further agrees that any payment made to the Lessor that is later avoided by any statutory provision shall be deemed not to have discharged the Guarantor's liability and in any such event the Lessor, the Lessee and the Guarantor shall be restored to the rights which each respectively would have had if the payment had not been made. |
Appointment of Liquidator:
10.07
(a) | The Guarantor hereby agrees to indemnify and keep indemnified the Lessor against all losses, claims, costs, expenses, damages or obligations, direct or indirect, sustained or incurred by the Lessor in consequence of any disclaimer of this Lease by a Liquidator of the Lessee for the residue of the term which would have remained if there had been no disclaimer; |
(b) | The Guarantor shall not prove or claim in any such liquidation, composition, arrangement or assignment or in respect of such appointment until the Lessor has received one hundred cents in the dollar in respect of the moneys due, owing or payable by the Lessee to the Lessor and the Guarantor shall hold in trust for the Lessor such proof and claim and any dividend received thereon. |
Joint and Several:
10.08 | Where two or more persons are Guarantors hereunder, the provisions hereof and the obligations and agreements on their part contained herein referred to and shall bind them and any two or greater number of them jointly and each of them severally. |
Assignment of Benefit of Guarantee:
10.09
(a) | In the event that the land or the Lessor's interest in this Lease is transferred or assigned then the benefit of this Guarantee and Indemnity shall extend to me transferee or assignee and the· benefit of this Guarantee and Indemnity shall enure for the benefit of the Transferee/Assignee notwithstanding any such transfer or assignment. |
(b) | In addition to the provisions of sub-clause 10.09(a) above the Guarantor shall, if requested by the Lessor, at the expense of the Lessor promptly enter into a Deed with any transferee or assignee from the Lessor in terms substantially similar to this Part 10 (including this clause). |
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PART 11- REPAIRS AND MAINTENANCE
Lessee to Repair and Maintain Premises:
11.01 | The Lessee shall during the whole term of this Lease and otherwise so long as the Lessee may remain in possession or occupation of the Premises and when, where and so often as the need arises keep and maintain the whole of the interior of the Premises and all fixtures and fittings (including any carpets, curtains and blinds) installed or provided by the Lessor in good and substantial repair, order and condition (having regard to their condition at the commencement of the Lease or where this Lease is a renewal then in the condition at the commencement of the initial term) and at the expiration or sooner determination of the term of this Lease shall yield up the Premises and the fixtures and fittings of the Lessor in good repair, order and condition, reasonable wear and tear excepted. |
No Alterations etc. :
11.02 | The Lessee shall not without the written consent of the Lessor make any alteration or addition in or to the Premises or any of the Lessor's fixtures or fittings therein or deface any part thereof PROVIDED ALWAYS that in the event that the Lessor so consents then any such alteration and/or additions shall be carried out in a proper and workmanlike manner and in accordance with the requirements of the relevant authorities under the supervision and to the reasonable satisfaction of the Lessor's architect whose fee shall be paid by the Lessee. |
Not to Deface Walls etc. :
11.03 | The Lessee shall not cut, make holes in, mark, deface, drill or damage the floors, walls, ceilings or other parts of the Premises except so far as may be reasonably necessary for the erection of signs, blinds, awnings or shop fittings approved by the Lessor in writing and if such consent is given, the Lessee shall observe and comply with the requirements of the Lessor and all relevant government or other competent authorities. Subject to clause 14, the Lessee shall at its own cost and expense reinstate, repair and make good any damage caused by the erection or removal of such signs, blinds, awnings or shop fittings |
Roof and Facia:
11.04 | The Lessor expressly reserves the sole and exclusive right to the use of the roof and fascia and all external surfaces of the Building including the right to erect and display advertising signs thereon provided that all such advertising signs do not obscure the Lessee's shop front or signage for the premises. |
Removal of Signs:
11.05 | Upon the expiration or sooner determination of the said term the Lessee shall at his own expense remove all lettering and distinctive marks or signs erected, affixed or inscribed by the Lessee or by the Lessor for the Lessee on any of the doors, walls or windows of the Premises and shall make good any damage or disfigurement caused to such doors, walls or windows by reason of such removal. Should the Lessee fail to remove such lettering, markings or signs, or make good any damage or disfigurement arising from such removal, then the Lessor by itself and/or by those authorised by it, may attend to all or any of the required work and/or repairs and in addition to the Lessors other remedies recover from the Lessee the cost of such work and repairs as if the same were overdue charges and the provisions of Clause 3.05 under this Lease with regard to interest on overdue charges shall apply. |
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To Comply with Notices:
11.06 | That the Lessee will comply with and relieve the Lessor from all liability in respect of the requirements of any notice issued by any government department or statutory or municipal authority in relation to all alterations, additions, conveniences and/or repairs to the Premises including works of a structural nature or for use in connection therewith occasioned by reason of the nature of the particular business carried on·by the Lessee in the said Premises or the number of persons employed by the Lessee therein or using or occupying the same or by reason of the nature of the Lessee's occupation of the said Premises AND so far as the same are applicable to the said Premises and the business carried on therein by the Lessee, the Lessee will observe and conform to the rules and regulations of the Factories and Shops Act or any other Act or regulation or by-law which may be in force during the said term PROVIDED THAT all notices received by the Lessor from any of the above authorities shall within a reasonable time after receipt thereof by the Lessor be served on the Lessee. |
To Keep Clean:
11.07 | The Lessee will keep the Premises in a thorough state of cleanliness and shall not allow any accumulation of useless property or rubbish therein and shall keep all trade waste, trash and garbage in proper receptacles and arrange for the regular removal thereof from the Premises, and shall at his own expense employ staff for the regular cleaning of the interior of the Premises and the exterior surface of the windows and shop fronts. |
Use of Sinks, Drains and Toilets:
11.08 | The Lessee shall not use or permit to be used the toilets, sinks, drains, and other plumbing facilities in the Premises and/or the Building of which the Premises forms part for any other purposes other than those for which they were provided and shall not deposit nor permit to be deposited therein any sweepings, rubbish or other matter therein and any damage caused by misuse shall be made good by the Lessee at its expense forthwith. |
To Keep Drains Clear:
11.09 | The Lessee will at its own expense keep all drains, basins and sewer lines, grease traps and septic tanks in or about the Premises clean and free from chokage and shall at his own expense cause such grease traps and septic tanks to be emptied and cleaned when required and shall clear any chokage and upon any such chokage shall notify the Lessor immediately. |
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To Maintain Pipes and Electrical Installations:
11.10 | The Lessee will maintain at his own expense the water, sewerage and drainage pipes and installations and electrical installations of the Premises in good repair and working order excluding circumstances of fair wear and tear. |
Maintain the Grounds:
11.11 | Where applicable the Lessee will maintain and leave the grounds in good order and condition in accordance with the requirements of the Local Council and not allow trees, shrubs or ornamental plants to be damaged or removed and where there are grassed and landscaped areas, will keep the grass properly mown and will at its own expense replace any trees, ornamental plants or shrubs damaged or destroyed with trees, ornamental plants or shrubs of equal quality and value. |
11.12 | DELETED. |
Damage to Premises:
11.13 | In the event of any damage to the said Premises or fixtures or equipment therein being caused by the Lessee his employees or customers whether deliberate or accidental then such damage shall be repaired and replaced and put in good condition by the Lessee at his expense to the satisfaction of the Lessor. |
Repair Glass:
11.14 | The Lessee shall immediately repair and replace all broken glass (with glass of the same or similar quality) and all damaged lighting installed upon the Premises. |
Pests:
11.15 | The Lessee shall take all reasonable precautions to keep the Premises free from rodents, insects, pests, birds and animals and for such purposes shall arrange an inspection and report of the Premises each year of the term by a recognised pest exterminator and shall comply with any recommendations of such pest exterminator and shall promptly send to the Lessor copies of such reports by the pest exterminator as to the completion of any works which have been recommended and in default the Lessor may employ a pest exterminator for such purposes and the Lessee shall on demand pay to the Lessor the amount of the fees of such pest exterminator. |
Illness:
11.16 | Should any infectious illness transpire in or about the Premises the Lessee shall forthwith give notice thereof in writing to the Lessor and thoroughly fumigate and disinfect the Premises at his own expense and to the satisfaction of the local Health Officer. |
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Right to View Premises:
11.17 | The Lessor may when and as often as he shall require and with reasonable notice at all reasonable times, except in case of emergency as determined in the Lessor's sole opinion when no notice need be given, of the day by itself or its agents enter the Premises and view the state of repair and condition thereof and make such reasonable investigations as it or they may deem necessary for the purpose of ascertaining whether or not there has been any breach of any of the covenants or conditions herein contained and to serve upon the Lessee a notice in writing of any defect requiring it to repair the same in accordance with any requirements herein contained PROVIDED THAT such entry and investigation shall be made and carried out without undue interference to the use and occupation of the Premises by the Lessee. |
The Lessor's Right of Inspection for Sale or Re-letting:
11.18 | The Lessee shall at all reasonable times allow prospective Purchasers and, within three (3) months immediately preceding the expiration of this Lease, allow prospective tenants or occupiers to inspect the Premises; and the Lessor shall have the right to affix and exhibit on the exterior of the Premises or the Building where the Lessor shall think fit notices and signs (including those of Real Estate Agents) indicating that the Premises are for sale or, within the said three (3) months period, that the Premises are to become vacant or are to let and such notices or signs shall not be interfered with or removed by the Lessee. |
Lessor may Repair where Lessee Defaults:
11.19 | In default of the Lessee repairing any defect according to a notice issued under clause 11.17 hereof then the Lessor by itself and/or those authorised by it may enter the Premises and execute all or any of the required repairs which the Lessor shall think fit and in addition to the Lessor's other remedies to recover from the Lessee the cost of such repairs as the Lessee ought to have effected including all sums paid or payable on account of any insurances, indemnities or compensation under the Workers' Compensation Act or otherwise with respect thereto. |
Lessor May Alter Building:
11.20 | The Lessor shall have the right for its architects and surveyors or its agents or other authorised servants or workmen to carry out any works or make any repairs alterations, refurbishment or additions or other work which the Lessor may consider necessary or desirable to any part of the Building or any buildings adjacent thereto from time to time. Provided however that should any alterations, refurbishment or additions to the Building be likely to adversely affect the business of the Lessee the Lessor shall give to the Lessee not less than 2 months written notice of such work and shall take all reasonable steps to minimize adverse interference to the Lessee's approved use of the premises. |
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Lessee's Right to Compensation on Alterations
11.21 | In respect of all occurrences referred to in Clause 11.20, the likelihood of which have been specifically drawn to the Lessee's attention in the disclosure statement given to the Lessee before entering into this Lease, the Lessee is precluded from making any claim for compensation for any loss or damage suffered by the Lessee as provided in section 34 of the Retail Leases Act 1994 and the Lessor is exempted from any liability for compensation. |
PART 12 - SECURITY
Protection of Premises:
12.01 | The Lessee will be responsible to protect and keep the Premises and any property contained therein safe from theft or robbery and shall keep all doors, windows or other openings closed and securely fastened when the Premises are not being used and hereby authorises the Lessor or its representatives, agents or other duly authorised person to enter the Premises for the purpose of locking any such door or window, left unlocked or unfastened. |
PART 13 - LESSOR'S OBLIGATIONS
To Pay Rates:
13.01 | The Lessor covenants with the Lessee to pay all rates, taxes and assessments charged upon the Premises except those which the Lessee has covenanted to pay. |
Quiet Enjoyment:
13.02 | The Lessor covenants with the Lessee that the Lessee paying the said rent and performing and observing the covenants and obligations on the Lessee's part herein contained shall and may, but subject to any applicable Rules and Regulations of the Building, peaceably possess and enjoy the Premises during the continuance of this Lease without any undue interruption or disturbance by the Lessor or any person or persons lawfully claiming by from or under it. |
PART 14 - FIXTURES
Removal of Fixtures:
14.01 | The Lessee may at its absolute discretion during the last fourteen (14) days of the term remove from the Premises all fixtures, fittings, floor coverings, signs and notices which have been erected or installed by the Lessee during or prior to the term of the Lease or purchased with the consent of the Lessor from any previous tenant of the Premises (other than any fixtures the cost of which have been paid or subsidized by the Lessor or its predecessors in title if any) PROVIDED THAT such removal can be effected without causing any damage to the Premises and PROVIDED FURTHER THAT the Lessee shall make good any damage whatsoever caused to the Premises by such removal. Notwithstanding the foregoing it is specifically agreed that at the determination of the Lease the shop front shall become the property of the Lessor and shall not be removed by the Lessee. |
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14.02 | If the Lessee shall not have done so as of right under clause 14.01 the Lessor acknowledges that the Lessee shall not be required to remove from the Premises any of such Lessees's fixtures, fittings, floor coverings, signs and notices upon the expiration of the Lease. Notwithstanding anything contained herein, the Lessee acknowledges that the provisions of this clause do not operate to release the Lessee from any obligation to make good any damage caused to the Premises by the Lessee during the term of the Lease. |
Abandonment:
14.03 | Any fixtures, fittings, floor coverings, plant, equipment, signs, notices and other articles not removed by the Lessee within the last fourteen (14) days of the term shall be deemed abandoned by the Lessee and shall at the option of the Lessor become the property of the Lessor. |
PART 15 - HOLDING OVER
Holding Over:
15.01 | In the event of the Lessee holding over after the expiration or sooner determination of the term with the consent of the Lessor the Lessee shall become a monthly tenant only of the Lessor at a monthly rental equivalent to a monthly proportion of the total annual rental reserved and payable by the Lessee hereunder at the expiration or sooner determination of the term or at a monthly rental to be nominated by the Lessor and otherwise on the same terms and conditions as those herein contained as far as applicable and such tenancy shall be determinable at the will of either the Lessee or the Lessor by one (1) month's notice in writing expiring on any day of the month. |
PART 16 - LEGAL FEES
Costs of Lease, Stamp Duty etc. :
16.01 | The Lessee shall pay the Lessor's legal costs and all duties, fees, charges and expenses of or incidental to: |
(a) | The stamping (including any additional stamping) and registration (if any) of this. Lease (including the cost of any certified copy); and |
(b) | Any application for or grant of the approval or consent to or under this Lease of the Lessor, Head Lessor or of any mortgagee of the Lessor; and |
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(c) | Any breach or default by the Lessee under this Lease, and the exercise or attempted exercise of any right, power, privilege, authority or remedy of the Lessor under or by virtue of this Lease or in law or equity (including, without limit, the fees of all professional consultants and legal costs and expenses on an indemnity basis incurred by the Lessor in consequence of or in connection with such breach, default, exercise or attempted exercise); and |
(d) | Any assignment or request for assignment by the Lessee including the cost of investigating the prospective Assignee. |
PART 17 - NOTICES
Notices:
17.01 | Should any damage occur to the Premises or should the Lessee receive any notice from any statutory, public or municipal authority with respect to the Premises THEN he shall forthwith give notice thereof in writing to the Lessor. |
Service of Notices:
17.02 | Service of any notice or document hereunder shall be sufficiently served for ·the purposes of this Lease if: |
(a) | served as provided under Section 170 of the Conveyancing Act 1919 (as amended). |
(b) | served on the recipient party's solicitor in any manner provided in Section 170 of the Conveyancing Act 1919 (as amended). |
(c) | if addressed to the recipient party's solicitor and delivered to the facilities of the document exchange system in which the recipient's solicitor has receiving facilities and in such case service shall be deemed to have been received by such party and that party's solicitor on the second business day following the date, on which it was first delivered to the said document exchange facility. |
(d) | by facsimile transmission to the recipient party or the solicitor for that party and in such case service shall be deemed to have been received when the transmission has been completed unless: |
(i) | the sender's machine indicates a malfunction in the transmission or the recipient immediately notifies the sender of an incomplete transmission, in which case the facsimile transmission shall be deemed not to have been given or made; or |
(ii) | the time of dispatch is not before 5.00 p.m. (local time) on the day on which business is generally carried on in the place to which such notice is sent, in which case the notice shall be deemed to have been received at the commencement of business on the next such day in that place. |
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Execution of Notices:
17.03 | Any notice, other document or writing served, delivered or given under this Lease is valid and effectual if signed on behalf of the party or by the party personally, by that party's solicitor or, if a company, by a director, secretary or other officer of the Company or manager, assistant manager of that Company and any notice so signed shall be conclusive evidence as to its execution and of the authority of the person whose name appears therein to sign same. |
Validity of Service:
17.04 | Service as provided under Clauses 17.02 and 17.03 shall in all respects be valid and effectual notwithstanding that at the date of such service the recipient party may be: |
(a) | Absent from New South Wales; or |
(b) | (In the case of a corporation) is in receivership, under official management or in the course of liquidation or being wound up or deregistered. |
PART 18 - MISCELLANEOUS
Physical Condition:
18.01 | The Lessee hereby acknowledges that he is fully familiar with the physical condition of the Premises, the Building, improvements, fixtures and equipment thereof and that the Lessor has made no representations of any nature in connection with the condition of the Premises or of the Building, improvements, fixtures or equipment hereof and the Lessor shall not be liable for any latent or patent defects therein. |
Weights:
18.02 | The Lessee shall observe the maximum floor loading weights nominated by the Lessor and shall not permit the floors of the Premises to be broken, strained or damaged by overloading. In particular, the Lessee shall not install any safes or other heavy equipment except in such positions and subject to such conditions as the Lessor may in writing prescribe. |
Keys etc:
18.03 | The Lessor will provide keys for locks on doors or other openings of the Premises and the Lessee will return all such keys to the Lessor on the termination of this Lease and shall not permit the same at any time to come into the possession or control of any person other than the Lessee its servants or agents. |
Deliveries:
18.04 | The Lessee shall not allow the delivery or pick up of merchandise or goods or the removal of garbage or refuse except through the areas duly designated by the Lessor. |
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Bulk Deliveries:
18.05 | The Lessee will use or permit to be used for the receipt, delivery or other movement of any goods wares or merchandise or articles of bulk or quantity only such parts of the Building and of the Premises and at such times as the Lessor may from time to time permit and the Lessee will generally comply with all reasonable requirements of the Lessor in regard to such matters. |
Refuse Removal:
18.06 | In the event of any local or other authority providing any cleaning or refuse service for the Premises whether at the request of the Lessor or of the tenant or by direction of any officer of such authority the Lessee shall pay the cost thereof to the assessing authority on or before the due date for payment thereof if assessed directly against the Lessee but otherwise to the Lessor within fourteen (14) days of demand by the Lessor. |
Burning:
18.07 | The Lessee will not bum any rubbish or refuse whatsoever on or near the Premises or the Building except with the consent of the Lessor, Council and any other relevant local authority and then only in a properly constructed incinerator designed for that purpose. |
Waste Removal:
18.08 | Notwithstanding any other matter or thing contained in this Lease it is hereby expressly agreed and declared by and between the Lessor and the Lessee that the Lessee shall at its own cost and expense in all respects comply with the terms, conditions, obligations and duties imposed upon the Lessee by any Water Board or Authority, Board of Fire Commissioners, Local Government Council, Authority, Department, Ministry and/or Corporation (hereinafter called "the Board") having any power or authority in respect of the discharge or removal of trade waste, toxic materials, fumes, fluids, dust, rubbish, refuse, garbage and/or other waste and materials (hereinafter called the "Trade Waste") AND it is further expressly agreed and declared by and between the parties hereto that any breach of any terms, conditions and obligations so imposed by the Board upon the Lessee or any failure to pay any charges related to Trade Waste and other fees shall be an immediate breach of the terms and conditions of this Lease. |
Chemicals:
18.09 | The Lessee will not (without the written consent of the Lessor first had and obtained) store chemicals inflammable liquids acetylene gas or alcohol volatile or explosive oils compounds or substances upon the Premises and will not use any such substance or fluids in the Premises for any purpose. |
Page 34 of 39 |
Heating:
18.10 | The Lessee shall not use any apparatus which radiates heat (other than an apparatus for the heating of beverages) without the prior consent in writing of the Lessor (which consent may be withdrawn at any time) and then only in such positions and subject to such conditions as may be specified in such consent. |
Aerials etc:
18.11 | The Lessee shall not (without the consent in writing of the Lessor) erect or place upon, within or without the Premises or Building any radio or television aerial or antenna or any loud speakers, screens or similar devices or equipment and shall not without the like consent use any radio, gramophone, compact disc, audio tape system, television or other like media or equipment likely to be heard or seen from outside the Premises or Building PROVIDED FURTHER that any consent so given ·as aforesaid may at any time be withdrawn at the Lessor's discretion. |
Power for Lighting:
18.12 | The Lessee shall not use any form of light, power or heat other than electric current or gas supplied through meters. This covenant shall not prevent the use of auxiliary power or lighting (other than an exposed flame) during a period of power failure or power restriction. |
Awnings:
18.13 | No window blinds, window screens or awnings shall be erected without the written approval of the Lessor or its agents. |
Obstruction:
18.14 | Where the Premises are office premises or retail premises within a shopping centre the Lessees shall not in any way obstruct or permit the obstruction of the pavement, entry, arcade, vestibule, corridors, passages, elevators, stairways, fire doors and escape doors or any other part or parts of the common area or use them or any of them for any other purpose than for ingress and egress. |
Light and Air etc:
18.15 | The Lessee shall not cover or obstruct the floors, skylights, glazed panels, ventilators or windows that reflect or emit light or air into passageways in any part of the Building or cover or obstruct any lights or any other means of illumination in the Building. |
Lifts and Elevators:
18.16 | Where a lift or lifts, escalator or escalators are provided or installed in the Building the Lessor shall endeavour to keep the lift or lifts escalator or escalators in operation and reasonably available for the use of the Lessee (delays or stoppages due to repairs and maintenance, strikes, accidents or unavoidable causes excepted) PROVIDED HOWEVER THAT should the lifts or escalators fail to function for any cause whatsoever the Lessee shall not by reason of such happening be entitled to determine this Lease nor shall the Lessee have any right or action or claim for compensation or damages against the Lessor in respect thereof or arising therefrom. |
Page 35 of 39 |
Lift Conditions:
18.17 | Where a lift or lifts, escalator or escalators are provided or installed in the Building the Lessee shall comply with and observe the following conditions and restrictions as to delivery of goods or furniture to and from the Premises: |
(a) | In carrying goods or furniture in any lifts installed in the Building priority shall at all times be given to passenger traffic. |
(b) | Before goods or furniture are carried in any of the lifts the side of the lifts shall be covered in such a manner as the lessor or its agents shall direct to prevent scratching or damage thereto. |
Delivery of Furniture:
18.18 | The Lessee shall comply with and observe the following conditions and restrictions as to the delivery of goods or furniture to or from the Building or the Premises: |
(a) | Goods or furniture may be delivered to and from the Building only through such entrances as may be permitted by the Lessor or its agents and only at such times and in such manner as will ensure minimum interference with persons using the entrances, vestibules, corridors, passages, stairways, landings and lifts and will be subject to the prior approval of and under the supervision of the Lessor or its agent. |
(b) | Goods and/or furniture shall not be left in corridors or on stairways at any time and if so left may be removed by the Lessor or its agent at the expense and risk of the Lessee. |
Air-Conditioning:
18.19 | The Lessee shall comply with and observe the following conditions and restrictions as to any plant, machinery or equipment for heating, cooling or circulating air (hereinafter referred to as "the air-conditioning plant"): |
(a) | Notwithstanding any other matter or thing contained in this Lease it is hereby expressly agreed and declared by and between the Lessor and the Lessee that the Lessee shall at its own cost and expense in all respects maintain and repair the air-conditioning plant in existence in the Premises and will not do or permit· or suffer to do anything in relation to the use or ventilation of the Premises which might interfere with or impair the efficient operation of the air-conditioning plant in the Premises or the Building. |
Page 36 of 39 |
(b) | Should the air-conditioning plant for the time being installed in the Building or the Premises fail to function from any cause whatsoever the Lessee shall not by reason of such happening be entitled to determine this Lease nor shall the Lessee have any right of action or claim for compensation or damages against the Lessor in respect thereof. |
(c) | Nothing herein contained shall be construed as imposing on the Lessor any liability to keep any air-conditioning plant working at any time. |
Waiver:
18.20 | The Lessor shall not be deemed to have waived any of his rights and powers herein unless such waiver is expressly made in writing by the Lessor. |
Statutes:
18.21 | All references to statutes herein shall include all statutes amending, consolidating or replacing the statutes referred to. |
Severability of Clauses:
18.22 | If any term or condition or part of any term or condition of this Lease or the application thereof shall be or become illegal, invalid or unenforceable then the same shall be severed from this Lease and the remaining terms and conditions of the Lease or any part thereof shall continue and remain to be in full force and effect. |
Status of Authorities and Other Entities:
18.23 | Where a reference is made to any body or authority such reference shall, if the body or authority has ceased to exist, be deemed to be a reference to the body or authority as shall then serve substantially the same objects as that body or authority and any reference to the President of such body or authority shall in the alternative include a reference to the chief executive or senior officer for the time being of the body or authority or such other person fulfilling the duties of President or such officer. |
Proper Law:
18.24 | Irrespective of the domicile or residence of any of the parties, this Lease shall .be governed by the Laws of New South Wales and further the parties acknowledge and submit to the jurisdiction of the Courts of that State with respect of any legal proceedings in connection or related to this Lease. |
Non-Smoking Area:
18.25 The Lessee acknowledges that the building has been designated a non-smoking area and that in consequence the Lessee shall not allow or permit its employee's, agents representatives of invitees to smoke upon the premises.
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Repairs to Walls:
18.26 | The Lessee acknowledges that the walls on the premises are in good, clean and sound condition. The Lessee agrees that at the expiration, termination or determination of the Lease, the Lessee shall at its own expense and if so directed by the Lessor, replaster, seal and paint any walls of the premises as are damaged or stained by the Lessee's removal works referred to in clause 14.01. The works referred to in this clause shall be carried out by qualified tradesman using good quality materials and paint. |
Rent Free Period:
18.27 | Notwithstanding any other provision contained herein, the Lessee shall not be liable to the payment of rent for the period up to and including 31 October 2011. |
PART 19 - DEFINITIONS AND SUB-HEADINGS
Definitions:
19.01 | In the interpretation of this Lease except to the extent that such interpretation shall be excluded or be repugnant to the context when used herein: |
(a) | "Lessor" shall mean and include the Lessor, his successors or assigns. |
(b) | "Lessee" shall mean and include the Lessee and the executors, administrators and permitted assigns and subtenants of the Lessee and where two or more persons are Lessees shall mean and include the Lessees and each of them and the executors, administrators and permitted assigns and subtenants of them and each of them. |
(c) | "Premises" means the property, rooms or floor space hereby demised and every covenant, power and provision herein contained or implied relating to the Premises shall relate to the whole and every part thereof. |
(d) | "Building" means the Building or structure of which the Premises form part. |
(e) | "Land" means the land upon which the Building is erected and being the whole of the land comprised in the Certificate of Title or Folio Identifier set out on the front page of this Lease. |
(f) | "Reference Schedule" means the Reference Schedule attached to and forming part of the Lease. |
(g) | "Persons" shall be deemed to include a corporation. |
(h) | "Current Market Rent" means: |
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(i) | the rent that, having regard to the terms and conditions of the Lease and such other matters as are relevant to the assessment of current market rent, world be reasonably expected to be paid for the premises if it were unoccupied and offered for renting for the use to which the premises may be put in accordance with the Lease; |
(ii) | the value of goodwill created by the Lessee's occupation and the value of the Lessee's fixtures and fittings on the retail shop premises are to be ignored for the purposes of the assessment of current market rent. |
(iii) | the following are agreed to be matters which are relevant to the assessment of the current market rent, without limiting the generality of paragraph (i), that the rent shall be determined: |
(1) | on the basis that the premises are available for leasing for a term equal to the term of this Lease and any additional option for renewal. |
(2) | on the basis that the Lessee's Lease covenants and obligations shall have been fully performed at the review date. |
(i) | Words importing the singular or plural number shall be deemed to include the plural or singular numbers respectively and words importing the masculine gender only shall include the feminine and neuter gender, and vice versa, as the case may require. |
(j) | When two or more persons are Lessees all covenants, agreements, restrictions, conditions and provisions shall. bind the Lessees and any two or greater number of them jointly and each of them severally and shall also bind their executors, administrators and permitted assigns of them and each of them and every two or greater number of them jointly and severally. |
Sub-headings:
19.02 | Sub-headings shall not affect the construction or interpretation of this Lease. |
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Exhibit 10.3
INTELLECTUAL PROPERTY SALE AGREEMENT
This Intellectual Property Sale Agreement (the "Agreement") is made and effective 26TH OF FEBRUARY 2013.
BETWEEN: |
HARBOURSAFE HOLDINGS
(the "Seller"), a corporation organized and
existing under the laws of the NSW AUSTRALIA, with its head office located at:
Cnr Lime & Cuthbert Streets, King Street Wharf Sydney NSW 2000 Boxes 9-11, 26a Lime Street King Street Wharf Sydney NSW 2000 |
AND: |
BANJO & MATILDA
(the "Buyer") , a corporation organized and existing
under the laws of the NSW AUSTRALIA with its head office located at
76 William Street Paddington NSW Australia 2021
WHEREAS, Seller is the owner of certain Intellectual Property identified in detail in Schedule A and Schedule B attached to this Agreement; and
WHEREAS, Buyer, wishes to irrevocably acquire the entire rights, title, and interest in the identified Intellectual Property and exploit such property.
NOW, the parties intent to be legally bound and agree as follows: |
1. definitions
"Designs" means any designs developed and owned by the Seller including but not limited to sketches, CAD designs, photographic archives, physical samples, tech packs, design specifications, patterns, and artwork owned by Seller and sold to the Buyer, related to clothing designs developed for the Buyer including, without limitation, all Intellectual property Rights and Technical Information.
"Intellectual Property Rights" means all Patents, Trade Marks, Copyrights, System Designs, and other intellectual property rights whether registered or not, owned by Seller and sold to the Buyer, relating to the Intellectual Property described in Schedule A.
"Documents" includes all information fixed in any tangible medium of expression in whatever form or format, and copies thereof.
"Technical Information" means all know-how and related technical knowledge of the Seller, relating to the Intellectual Property described in Schedule A including, without limitation:
(a) All trade secrets and other proprietary know-how, public information, non-proprietary know-how and invention disclosures;
(b) Any information of a technical or business nature regardless of its form;
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(c) All documented research, developmental, demonstration or engineering work;
(d) All information that can be or is used to define a design or process or procedure, produce, support or operate material and equipment;
(e) All other drawings, blueprints, patterns, plans, flow charts, equipment, parts lists, software and procedures, specifications, formulas, designs, technical data, descriptions, related instructions, manuals, records and procedures.
2. sale and Assignment of intellectual property
Seller hereby irrevocably sells and transfers to Buyer all rights, title, and interest (including but not limited to, all registration rights, all rights to prepare derivative works, all goodwill and all other rights), in and to the Intellectual Property.
3. Consideration
In consideration for the sale of rights and assignment set forth in Article 2, Buyer shall pay Seller the sum of $700,000 plus GST credited to the Buyers Harboursafe Shareholder Loan account no later than June 30 2013 after this Agreement becomes effective.
4. Representations and Warranties
Seller represents and warrants to Buyer:
(a) Seller has the right, power and authority to enter into this Agreement;
(b) Seller is the exclusive owners of all right, title and interest in the Technology free of any security interest, charge or encumbrance;
(c) Seller warrants that all documents, computer records, disks and other materials of any nature of kind containing the Technology or any portion thereof have been turned over to Buyer, and that Seller will not retain the Technology, or any portion thereof, in any form whatsoever after the closing of the within transaction except as specifically permitted hereunder;
(d) The Intellectual Property does not infringe the rights of any person or entity;
(e) There are no claims, pending or threatened, with respect to Seller's rights in the Intellectual Property;
(f) This Agreement is valid, binding and enforceable in accordance with its terms;
(g) Seller is not subject to any agreement, judgment or order inconsistent with the terms of this Agreement.
5. Attorney's Fees
Should either party hereto, or any heir, personal representative, successor or assign of either party hereto, resort to litigation to enforce this Agreement, the party prevailing in such litigation shall be entitled, in addition to such other relief as may be granted, to recover its or their reasonable attorneys' fees and costs in such litigation from the party against whom enforcement was sought.
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6. Entire Agreement
This Agreement, contains the entire understanding and agreement between the parties hereto with respect to its subject matter and supersedes any prior or contemporaneous written or oral agreements, representations or warranties between them respecting the subject matter hereof.
7. Amendment
This Agreement may be amended only by a writing signed by both parties.
8. Severability
If any term, provision, covenant or condition of this Agreement, or the application thereof to any person, place or circumstance, shall be held by a court of competent jurisdiction to be invalid, unenforceable or void, the remainder of this Agreement and such term, provision, covenant or condition as applied to other persons, places and circumstances shall remain in full force and effect.
9. no Waiver
No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this Agreement shall be effective unless it is in writing and signed by the party waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy, whether or not similar, nor shall any waiver constitute a continuing waiver unless the writing so specifies.
10. Agreement to Perform Necessary Acts
Buyer agrees to perform any further acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement.
11. Representation on Authority of Parties/Signatories
Each person signing this Agreement represents and warrants that he or she is duly authorized and has legal capacity to execute and deliver this Agreement. Each party represents and warrants to the other that the execution and delivery of the Agreement and the performance of such party's obligations hereunder have been duly authorized and that the Agreement is a valid and legal agreement binding on such party and enforceable in accordance with its terms.
12. Headings
The headings in this Agreement are included for convenience only and shall neither affect the construction or interpretation of any provision in this Agreement nor affect any of the rights or obligations of the parties to this Agreement.
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13. Survival
Except as otherwise expressly provided in this Agreement, representations, warranties, and covenants contained in this Agreement, or in any instrument, certificate, exhibit, or other writing intended by the parties to be a part of this Agreement, shall survive for [number] years after the date of this Agreement.
14. Ambiguities
Each party and its counsel have participated fully in the review and revision of this Agreement. Any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in interpreting this Agreement. The language in this Agreement shall be interpreted as to its fair meaning and not strictly for or against any party.
15. Governing Law
This Agreement shall be construed in accordance with, and all actions arising hereunder shall be governed by, the laws of the NSW Australia.
IN WITNESS WHEREOF, the parties have executed this Agreement on January 11, 2013 in NSW Australia with full knowledge of its content and significance and intending to be legally bound by the terms hereof.
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Exhibit 10.4
LOAN FACILITY AGREEMENT
LOAN FACILITY AGREEMENT
This Loan Facility Agreement ("Agreement") is made and effective the 1st of July 2013
BETWEEN: |
HARBOURSAFE
HOLDINGS, BRENDAN MACPHERSON, BELINDA STORELLI
(the "Lender"), a stockholder
of BANJO & MATILDA PTY LTD having [his/her]
main residence located at:
263 MILITARY ROAD VAUCLUSE NSW 2030 AUSTRALIA POSTAL: PO BOX 3438 TAMARAMA NSW 2026 |
AND: |
BANJO &
MATILDA PTY LTO AND THE BANJO & MATILDA TRUST
(the "Borrower''), a corporation organized
and existing under the laws of the NSW] of AUSTRALIA,
with its head office located at:
76 WILLIAM ST PADDINGTON NSW 2021 AUSTRALIA POST: PO BOX 3438 TAMARAMA NSW 2026 |
RECITALS
WHEREAS, Borrower desires to obtain a loan facility from Lender a loan in the principal amount of AU$1,016,625 (the "Loan"); and
WHEREAS, Lender is a stockholder owns 100% of the shares in BANJO & MATILDA PTY LTD (trustee for the BANJO & MATILDA TRUST) and, Lender desires to grant Borrower the Loan to provide a working capital line of credit.
WHEREAS, Borrower's obligation to repay the Loan shall be evidenced by a promissory note substantially in the form attached as Exhibit A hereto (the "Note"). Borrower shall execute and deliver to Lender the Note concurrently with execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the terms and conditions herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
PROMISE TO PAY
The Borrower promises to pay to Lender the sum of AU$1,016,625 and interest and other charges as part of this Agreement by June 30 2014 (the "Repayment Date").
CONVERSION
Conversion rights of Lender
1.1 | The Lender may convert all or any of its Loan into Ordinary Shares at any time and at a date prior to the Repayment Date by giving a Conversion Notice to the Borrower. Conversion Notice may not be given when the date of the conversion could be after the Repayment Date. |
PO BOX 3438 TAMARAMA NSW 2026 AUSTRALIA
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1.2 | A Conversion Notice requires the Borrower to convert the outstanding Loan balance including all Interest and any charges into shares in the Borrower at a discount of 10% to last 30 days average share price if publicly quoted; or at the fair market value as determined by an independent valuer. |
Allotment, quotation and ranking of shares
1.3 | Each Ordinary Share issued upon conversion of will have all of the following features: |
1.3.1 | Be allotted within 15 business days after the Conversion Date. |
1.3.2 | Be fully paid up. |
1.3.3 | Rank pari passu with the existing Ordinary Shares. |
Promptly after each allotment the Borrower will issue a share certificate to the Lender in the same manner as notices are to be given to it, unless the Borrower is participating in a share transfer scheme under which the ownership of shares is recorded without certificates, in which case, at the request of an Lender, the Borrower may not issue a certificate for the Ordinary Shares allotted to that member.
INTEREST
1.4 | Interest must be paid by the Borrower from JULY 1 2013 until (and including) the following times: |
(a) | Where all or part of the Loan is not converted to shares per 1.1, 1.2, 1.3, the date on which it is repaid. |
(a) | Where all or part of the Loan is converted, the date which it is converted |
1.5 | The amount of interest payable in any period under this document will accrue daily and will be calculated at 3% annually on the outstanding balance of the Loan amount for the number of days in that period. |
Time and manner of payment
1.6 | Interest must be paid on or by the Repayment Date. |
1.7 | All accrued interest must be paid upon the conversion or repayment of the Loan |
REPAYMENT
Obligations on Repayment Date
1.8 | On the Repayment Date the Borrower must pay to the Lender the Loan and all accrued interest which have not previously been converted. |
Obligations cease
1.9 | Upon the payment of all amounts owing to the Lender the obligations of the Borrower in respect of the Convertible Notes shall be extinguished. |
1.10 | The Lender may request early repayment prior to the Repayment Date of up to AU$100,000 by giving 60 days notice to the Borrower (“At Call Funds”). |
PO BOX 3438 TAMARAMA NSW 2026 AUSTRALIA
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1.11 | Repayment of At Call Funds is subject to all interest, charges and conversion rights under this Agreement. |
LATE CHARGE
1.12 | Any amount which is outstanding beyond the repayment date of June 30 2014 shall be subject to a late charge equivalent to 15% annually, calculated daily. |
SECURITY
1.13 | To protect Lender, Borrower gives what is known as a security interest or mortgage in the Intellectual Property of the Borrower including, but not limited to all brand names, logos, garment designs, imagery, web site code and web sites, data bases including online and wholesale customers. |
DEFAULT
1.14 | If for any reason Borrower fails to make any payment on time, the Borrower shall be in default. The Lender can then demand immediate payment of the entire remaining unpaid balance of this Loan, without giving anyone further notice. |
1.15 | If the Borrower cannot or does not pay the amount due to the Borrower per clause 1.12, then the Borrower may request the immediate transfer of the named Intellectual Property to the Lender, and the Borrower must transfer the Intellectual property within 5 business days. |
RIGHT OF OFFSET
1.16 | If this Loan becomes past due, the Lender will have the right to pay this Loan from any deposit or security Borrower has with Lender without further notice. |
IN WITNESS WHEREOF, the undersigned has caused this Loan Agreement to be duly executed as of the date first written below.
PO BOX 3438 TAMARAMA NSW 2026 AUSTRALIA
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PROMISSORY NOTE
This Promissory Note (the "Note") is made and effective the July 1, 2013.
BETWEEN: |
HARBOURSAFE HOLDINGS
(the "Lender"), a stockholder of BANJO &
MATILDA having [his/her] main residence located at:
263 MILITARY ROAD VAUCLUSE NSW 2030 AUSTRALIA POSTAL: PO BOX 3438 TAMARAMA NSW 2026 |
AND: |
BANJO & MATILDA
(the "Borrower"), a corporation organized and
existing under the laws of the NSW of AUSTRALIA with its head office located at:
76 WILLIAM ST PADDINGTON NSW 2021 AUSTRALIA POST: PO BOX 3438 TAMARAMA NSW 2026 |
TERMS
1. | FOR VALUE RECEIVED, the Borrower promises to pay to the order of Lender the principal sum outstanding of the Loan as at June 30 2014 together with all charges and Interest herein provided, payable at the rate and in the manner hereinafter set forth: |
2. | Borrower shall pay all amounts due under this Note, including principal, interest and other charges due and payable in full on or before the Repayment Date of 30th of June 2014. Time is of the essence of the payment obligations hereunder. |
3. | This Note is and will be secured by a first priority interest in certain tangible and intangible property of the Borrower. All of the terms, covenants, Conditions, representations and warranties contained in the Agreement are hereby made part of this Note to the same extent and with the same force and effect as if fully set forth herein. |
4. | If the Borrower becomes insolvent then the Note sum outstanding will become immediately due and payable. If the outstanding sum is not paid within 30 days of such insolvency event, then the Borrower has the right to transfer and take possession of the Security tangible and intangible assets as defined in Clause 1.11, 1.12, and 1.13. |
5. | If all or any portion of any payment due hereunder is not received by the Lender within 30 calendar days after the date when such payment is due, the Borrower shall pay a late charge equal to 15% per annum, calculated daily, and payable weekly. Such late charge to be immediately due and payable without demand by Lender. |
6. | If any payment under this Note is not paid in full on or before the Repayment Date, or should default be made in the performance or observation of any of the terms, covenants, or condition contained in the Loan Documents, or if any representation or warranty contained in the Loan Documents is breached or is or becomes untrue, this Note shall be in default, and the entire principal amount outstanding hereunder, accrued interest thereon, all late charges, if any, and any and all other charges due hereunder, shall, at Lender's option, immediately become due and payable, Without further notice, the giving of such notice being expressly waived by the Borrower. Lender may exercise this option to accelerate during any default by the Borrower, regardless of any prior forbearance. In the event of any such default, and if the same is referred to an attorney-at-law for collection, or if any action at law or in equity is brought with respect hereto, Borrower shall pay to Lender, in addition to all other charges required pursuant to the terms hereof or pursuant to the terms of the Loan Documents, all costs and expenses of the Lender. From and after the Repayment date, or during default, if such default should occur prior to the Repayment Date, the outstanding principal amount hereunder and accrued interest and other charges shall bear interest at the highest rate allowed by law. |
PO BOX 3438 TAMARAMA NSW 2026 AUSTRALIA
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7. | From time to time, without affecting the joint and several obligations of all makers, sureties, guarantors and endorsers hereof, and their respective successors and assigns, (I) to pay the outstanding principal balance herein and accrued interest thereon, (ii) to observe the covenants contained herein, (iii) to observe the terms, covenants and conditions of the Loan Documents or any instrument govern to secure the performance hereof, and without giving notice to or obtaining the consent of any maker, surety, guarantor or endorser hereof or their successors or assigns, and without liability on the part of the holder hereof, the holder hereof may, at its option, extend the time for payment or any part thereof, release anyone liable for payment herein, renew this note, modify the terms or times for payment herein ,join in any extension of subordination hereof, release any security given here fore, take or release additional security, modify the rate of interest herein or agree in writing with the undersigned to modify the terms, covenants and conditions of any instrument given to secure performance hereof. |
8. | ANY RIGHT OF TRIAL BY JURY, PRESENTMENT, NOTICE OF DISHONOR, AND PROTEST ARE HEREBY WAIVED BY ALL MAKERS, SURETIES, GUARANTORS AND ENDORSERS HEREOF. This Note shall be the joint and several obligations of all makers, sureties, guarantors, and endorsers hereof and shall be binding upon them and their respective heirs, executors, administers, successors and assigns. |
9. | Borrower shall pay the costs of all documentary, revenue, tax or other stamps now or hereafter required by any law at any time to be affixed to or which are otherwise made necessary as a result of this Note or any of the Loan Documents, and if any taxes be imposed with respect to debts secured by mortgages and or deeds of trust with respect to notes evidencing debts so secured, Borrower agrees to pay to Lender the full amount of any such taxes, and hereby waives any contrary provisions if any laws of rules of court now or hereafter in effect. |
10. | Lender and Borrower intend that the relationship created and evidenced by this Note and the Loan Documents shall be solely that of debtor and creditor nothing in this Note shall be construed as creating a joint venture, partnership. tenancy in common, or joint tenancy between Lender and Borrower |
11. | The remedies of this Note are cumulative and concurrent and may be pursued singularly or successively together, at the sole discretion of the holder, and may be exercised as often as occasion therefore shall occur. The waiver by Lender or failure to enforce any term, covenant or condition of this Note or to declare any default hereunder, shall not operate as a waiver of any subsequent default or affect the right of the holder to exercise any right or remedy not expressly waived in writing by the holder. |
12. | The unenforceability or invalidity of any one or more provisions of this Note shall not render any other provision herein contained unenforceable or invalid. This note and all of the Loan Documents shall be construed under the laws of the [State/Province] of [STATE/PROVINCE. |
PO BOX 3438 TAMARAMA NSW 2026 AUSTRALIA
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IN WITNESS WHEREOF, the undersigned has caused this Promissory Note to be duly executed as of the date first written below.
PO BOX 3438 TAMARAMA NSW 2026 AUSTRALIA
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Exhibit 10.5
Loan Agreement
Banjo & Matilda Pty Ltd
Raymond Key
4 November 2013
ANZARUT & HOLM LAWYERS
Level 3
117 York Street
Sydney New South Wales 2000
Tel: (02) 9261 2702
Fax: (02) 9261 2558
Ref: JN
ANZARUT & HOLM LAWYERS
Table of contents
Parties | 1 | |
1 | Loan | Error! Bookmark not defined. |
Loan | Error! Bookmark not defined. | |
Use of funds | 1 | |
Right to borrow, grant loan security and issue further securities | 1 | |
2 | Calculation of interest | 2 |
Interest | 2 | |
Time and manner of payment | 2 | |
3 | Repayment | 2 |
Obligations on Repayment Date | 2 | |
Obligations cease | 2 | |
4 | Guarantee | 2 |
Guarantee | 2 | |
Payment on demand under guarantee | 2 | |
Continuing obligation | 3 | |
Primary obligations | 3 | |
5 | Events of Default | 3 |
Events of Default | 3 | |
Effect of event of Default | 3 | |
6 | Assignment | 3 |
Assignment by Investor | 3 | |
Company and Guarantors | 4 | |
7 | Disclaimers | 4 |
Responsibility of Investor | 4 | |
Decision taking | 4 | |
8 | Confidentiality | 4 |
Disclosure | 4 | |
Survives termination | 5 | |
9 | Notices | 5 |
General | 5 | |
How to give a communication | 5 | |
Particulars for delivery of notices | 5 | |
Communications by post | 6 | |
Communications by fax | 6 | |
After hours communications | 6 | |
Process service | 6 | |
10 | General | 6 |
Amendment | 6 | |
Waiver and exercise of rights | 6 | |
Rights cumulative | 7 | |
Consents | 7 | |
Governing law and jurisdiction | 7 | |
Liability | 7 | |
Counterparts | 7 | |
Time of the essence | 7 | |
Business Days | 7 | |
11 | Definitions and Interpretation | 8 |
Definitions | 8 | |
Construction | 9 | |
Subsisting Events of Default | 10 | |
Headings | 10 | |
Company's liability | 10 | |
Execution and date | 11 |
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Parties
Banjo & Matilda Pty Ltd ABN 29 627 134 474 (Company)
Raymond Key (Investor)
Ben Macpherson of 263 Military Road Dover Heights 2030 (Guarantor)
Background
A The Company operates the Banjo & Matilda business.
B The Company wishes to raise funds by taking a Loan.
C The Investor has agreed to provide funds to the Company by issuing a Loan on the terms set out in this document.
D The Guarantor has, at the request of the Investor, agreed to enter into this document to guarantee the Company's obligations on the terms set out in this document.
Agreed terms
Loan
1.1 The Investor agrees to provide a $100,000 Loan on the Loan Date by:
(a) paying the Loan Amount to the Company.
Use of funds
1.2 The Company must only use the Loan Amount for the Approved Purpose.
Right to borrow
1.3 The Company may without notice to or approval of the Investor from time to time exercise any borrowing power provided that:
1.3.1 The Company may not grant any loan that must be repaid earlier than the Repayment Date or that must be repaid in priority to the Loan Amount.
1.3.2 The Investor has the right of last refusal to match any loan finance offered by a third party to the Company to fund the Company's future working capital requirements. If the Investor wishes to provide the loan finance, it must notify the Company in writing within 7 days of first being notified of the third party offer to provide loan finance.
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2 Calculation of interest
Interest
2.1 Interest must be paid by the Company from the date of the Loan until (and including) the date on which it is repaid in full.
Subject to clause 2.2, the amount of interest payable on a Loan in any period under this document will accrue daily and will be calculated at the Interest Rate on the Loan Amount of the Loan for the number of days in that period.
2.2 If the Company opens a Bank Trade Finance Facility, the amount of interest payable on a Loan for the period from the date the Bank Trade Finance Facility is open, will accrue daily and will be calculated at the Adjusted Interest Rate on the Loan Amount of the Loan for the number of days in that period.
Time and manner of payment
2.3 Interest must be paid on or by the Repayment Date.
2.4 All accrued interest must be paid upon the repayment of the Loan.
3 Repayment
Obligations on Repayment Date
3.1 On the Repayment Date the Company must pay to the Investor the Loan Amount and all accrued interest then held by it
Obligations cease
3.2 Upon the payment of all amounts owing to the Investor the obligations of the Company in respect of the Loan shall be extinguished.
4 Guarantee
Guarantee
4.1 The Guarantor unconditionally and irrevocably guarantees to the Investor the punctual payment to it by the Company of the Guaranteed Money on the terms set out in this clause.
Payment on demand under guarantee
4.2 If the Company defaults in the punctual payment of any of the Guaranteed Money, the Guarantor must pay the whole amount of the Guaranteed Money to the Investor immediately on demand.
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Continuing obligation
4.3 The guarantee contained in clause 5.1 is a continuing guarantee for the whole of the Guaranteed Money and is not limited to any transaction or other thing.
Primary obligations
4.4 The Guarantor's obligation to pay the Guaranteed Money is a primary obligation and the Investor is not obliged to proceed against or enforce any other right against any person or property or demand payment from any other person before making a demand for payment by the Guarantor of the Guaranteed Money.
5 Events of Default
Events of Default
5.1 Each of the following is an Event of Default (whether or not caused by anything outside the control of any party):
(a) | non-payment: the Company or the Guarantor does not pay on the due date any money due for payment by it under this document; |
(b) | Insolvency Event: an Insolvency Event occurs in relation to the Company or the Guarantor; |
(c) | default under document: a default or event occurs which is, is deemed to be or is defined to be, a default or an event of default by or in relation to the Company or the Guarantor under this document; |
(d) | cessation of business: the Company or the Guarantor ceases or threatens to cease to carry on its business or a substantial part of its business. |
Effect of event of Default
5.2 Without limiting any other rights set out in this document, on the occurrence of an Event of Default the Investor may at any time by notice to the Company require that the Company redeem all of the Loan then on issue and pay to the Investor the Loan Amount and all accrued interest on each Note then held by it.
Recognition of registered Investor
5.3 The payment to the registered holder of the interest payable on the Loan and of any other moneys payable upon the Loan shall be a good discharge for the Company notwithstanding any notice it may have whether express or otherwise of the right title or interest of any other person to or in the Loan or such moneys.
6 Assignment
Assignment by Investor
6.1 The Investor may assign any of its rights or novate, sub- participate, sell-down or transfer by whatever form or otherwise deal with any or all of its rights and obligations under this document without the consent of, or notice to, the Company or the Guarantor.
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Company and Guarantor
6.2 Neither the Company nor the Guarantor may assign its rights or novate its obligations under this document without the Investor's prior written consent.
7 Disclaimers
Responsibility of Investor
7.1 This issue of the Loan has been made to an independently advised Investor which issuing for the Loan thereby acknowledges that it has formed its own view as to the businesses, affairs and prospects of the Company based on such information and documents as it considers appropriate and is responsible for its decision to subscribe for the Loan.
Decision taking
7.2 The Investor must independently and without reliance on any other party and based on such information and documents as it considers appropriate continue to make its own analysis and decisions in taking or not taking any action under this document.
7.3 The Investor warrants to the Company that it is either a sophisticated investor as referred to in section 708(8) of the Corporations Act 2001 or, if not, that the offer to it to subscribe in the Loan is a personal offer to which section 708(1) and (2) of the Corporations Act 2001 apply. The Investor acknowledges and agrees that no prospectus or other disclosure document as referred to in the Corporations Act 2001 is being issued to it or is required as a part of its investment in the Loan.
8 Confidentiality
Provide information
8.1 The Company must give the Investor sufficient management and financial information and reports to allow the Investor to monitor the efficient conduct of the Company's business.
Disclosure
8.2 The Investor may disclose to any person any information or document relating to the Company or a Guarantor:
(a) | where permitted in this document; |
(a) | to another party to this document; |
(b) | to a potential transferee, assignee, participant or sub-participant of the Investor's interests under this document or to any other person who is considering entering into contractual relations with it in connection with this document; |
(c) | to the Investor's related bodies corporate and shareholders, or to any employee, banker, lawyer, auditor or other consultant of the Investor, its related bodies corporate or its shareholders; |
(d) | if required by law or by any governmental agency or stock exchange; |
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(e) | in connection with any legal proceedings relating to this document or a document delivered under or in relation to this document; |
(f) | if the information or document is in the public domain; or |
(g) | with the consent of the Company (which must not be unreasonably withheld or delayed). |
Survives termination
8.3 This clause 8 survives the termination of this document.
9 Notices
General
9.1 A notice, demand, certification, process or other communication relating to this document must be in writing in English and may be given by an agent of the sender.
How to give a communication
9.2 In addition to any other lawful means, a communication may be given by being:
(a) | personally delivered; |
(b) | left at the party's current address for notices; |
(c) | sent to the party's current address for notices by pre-paid ordinary mail or, if the address is outside Australia, by pre-paid airmail; or |
(d) | sent by fax to the party's current fax number for notices. |
Particulars for delivery of notices
9.3 The particulars for delivery of notices are initially:
Company:
Address: 76 William St Paddington NSW 2021
Fax: +61 (0) 2 80111213
Attention: Ben Macpherson
Investor:
Address: 396 Ladies Mile, Lake Hayes, Queenstown, New Zealand
Email: raymondjkey@yahoo.co.uk
Attention: Raymond Key
Ben Macpherson:
Address: PO BOX 3438 TAMARAMA NSW 2026
Email: ben@banjoandmatilda.com
Attention: Ben Macpherson
Each party may change its particulars for delivery of notices by notice to each other party.
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Communications by post
9.4 Subject to clause 9.6, a communication is given if posted:
(a) | within Australia to an Australian address, three Business Days after posting; or |
(b) | in any other case, ten Business Days after posting. |
Communications by fax
9.5 Subject to clause 10.7, a communication is given if sent by fax, when the sender's fax machine produces a report that the fax was sent in full to the addressee. That report is conclusive evidence that the addressee received the fax in full at the time indicated on that report. After hours communications
9.6 If a communication is given:
(a) | after 5.00 pm in the place of receipt; or |
(b) | on a day which is a Saturday, Sunday or bank or public holiday in the place of receipt, |
it is taken as having been given at 9.00 am on the next day which is not a Saturday, Sunday or bank or public holiday in that place.
Process service
9.7 Any process or other document relating to litigation, administrative or arbitral proceedings relating to this document may be served by any method contemplated by this clause 9.7 or in accordance with any applicable law.
10 General
Amendment
10.1 This document may only be varied or replaced by a document executed by the parties.
Waiver and exercise of rights
10.2 A right in favour of the Investor under this document, a breach of an obligation of the Company under this document or an Event of Default can only be waived by an instrument signed by the Investor. No other act, omission or delay of the Investor constitutes a waiver binding, or estoppel against, the Investor.
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10.3 A single or partial exercise or waiver by a party of a right relating to this document does not prevent any other exercise of that right or the exercise of any other right.
10.4 A party is not liable for any loss, cost or expense of any other party caused or contributed to by the waiver, exercise, attempted exercise, failure to exercise or delay in the exercise of a right.
Rights cumulative
10.5 Except as expressly stated otherwise in this document, the rights of a party under this document are cumulative and are in addition to any other rights of that party.
Consents
10.6 Except as expressly stated otherwise in this document, the Investor may conditionally or unconditionally give or withhold any consent to be given under this document and is not obliged to give its reasons for doing so.
Governing law and jurisdiction
10.7 This document is governed by and is to be construed in accordance with the laws applicable in New South Wales.
10.8 Each party irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts exercising jurisdiction in New South Wales and any courts which have jurisdiction to hear appeals from any of those courts and waives any right to object to any proceedings being brought in those courts.
Liability
10.9 An obligation of two or more persons binds them separately and together.
Counterparts
10.10 This document may consist of a number of counterparts and, if so, the counterparts taken together constitute one document.
Time of the essence
10.11 Time is of the essence as regards any obligations of the Company or any date or period determined under this document.
10.12 If any date or period is altered by agreement between the parties, time is of the essence as regards such altered date or period.
Business Days
10.13 If the day on or by which anything, other than making a payment, must be done by the Company or any Guarantor under this document is not a Business Day, that thing must be done on or by the preceding Business Day.
10.14 If a payment would otherwise be due on a day which is not a Business Day it will be due on the immediately following Business Day.
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10.15 If anything, including making a payment, is to be done by the Company or the Guarantor on or by a particular day and it is done:
(a) | after the time by which this document states it must be done or, if this document does not state a time, after 4.00 pm in the place where it is to be done; or |
(b) | on a day which is not a Business Day, |
it will be deemed to have been done at 9.00 am on the next Business Day.
11 Definitions and Interpretation
Definitions
11.1 In this document:
Adjusted Interest Rate means .0329% per day.
Approved Purpose means funding the expansion of the Business including working capital to fund the cost of meeting wholesale sales orders and related product production costs and such other purpose as may be approved by the board of directors of the Company from time to time.
Bank Trade Finance Facility means a bank trade finance facility greater than $400,000 with an annual interest rate below 10%.
Business means the business conducted by the Company
Business Day means a day which is not a Saturday, Sunday or bank or public holiday in Sydney.
Loan means a Loan issued by the Company on the terms set out in this document. Event of Default means any event or circumstance described in clause 6.
Guaranteed Money means all money which now or in the future is owing (actually or contingently) by the Company to the Investor under or in relation to this document;
Insolvency means:
(a) | in relation to a corporation, its winding up or dissolution or its administration, provisional liquidation or any administration having a similar effect; |
(b) | in relation to an individual, his or her bankruptcy; and |
(c) | in relation to a person, any arrangement (including a scheme of arrangement or deed of company arrangement), composition or compromise with, or assignment for the benefit of, all or any class of that person's creditors or members or a moratorium involving any of them. |
Insolvency Event means any of the following:
(a) | a person is or states that the person is unable to pay from the person's own money all the person's debts as and when they become due and payable; |
(b) | a person is taken or must be presumed to be insolvent or unable to pay the person's debts under any applicable legislation; |
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(c) | an application or order is made for the winding up or dissolution or a resolution is passed or any steps are taken to pass a resolution for the winding up or dissolution of a corporation; |
(d) | an administrator, provisional liquidator, liquidator or person having a similar or analogous function under the laws of any relevant jurisdiction is appointed in respect of a corporation or any action is taken to appoint any such person and the action is not stayed, withdrawn or dismissed within seven days; |
(e) | a controller is appointed in respect of any property of a corporation; |
a corporation is deregistered under the Corporations Act 2001 or notice of its proposed deregistration is given to the corporation;
(g) | a distress, attachment or execution is levied or becomes enforceable against any property of a person; |
(h) | a person enters into or takes any action to enter into an arrangement (including a scheme of arrangement or deed of company arrangement), composition or compromise with, or assignment for the benefit of, all or any class of the person's creditors or members or a moratorium involving any of them; |
(i) | a petition for the making of a sequestration order against the estate of a person is presented and the petition is not stayed, withdrawn or dismissed within seven days or a person presents a petition against himself or herself; |
a person presents a declaration of intention under section 54A of the Bankruptcy Act 1966; or
(k) | anything analogous to or of a similar effect to anything described above under the law of any relevant jurisdiction occurs in respect of a person. |
Interest Rate means 15% per annum or 0.041% per day
Receiver means a receiver or receiver and manager appointed by the Investor under this document and any person who derives a right directly or indirectly from such a receiver or receiver and manager.
Repayment Date means the date which is 30 days after the Loan Date or earlier at the discretion of the Company
Loan Amount means the amount that the Investor agrees is to be advanced by the Investor under the Loan subscribed for under clause 1.1 and 1.2.
Loan Date means the date that the Investor subscribes for the Loan, which must not be more than two Business Days after the date of this document.
Construction
11.2 Unless expressed to the contrary, in this document:
(a) | words in the singular include the plural and vice versa; |
(b) | any gender includes the other genders; |
(c) | if a word or phrase is defined its other grammatical forms have corresponding meanings; |
(d) | "includes" means includes without limitation; |
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(e) | no rule of construction will apply to a clause to the disadvantage of a party merely because that party drafted, put forward or would benefit from any term; |
(f) | a reference to: |
(i) | a person includes a partnership, joint venture, unincorporated association, corporation and a governmental agency; |
(ii) | a person includes the person's legal personal representatives, successors, assigns and persons substituted by novation; |
(iii) | any legislation includes subordinate legislation under it and includes that legislation and subordinate legislation as modified or replaced; |
(iv) | an obligation includes a warranty or representation and a reference to a failure to comply with an obligation includes a breach of warranty or representation; |
(v) | a right includes a benefit, remedy, discretion or power; |
(vi) | time is to local time in Sydney; |
(vii) | "$" or "dollars" is a reference to Australian currency; |
(viii) | this or any other document includes the document as novated, varied or replaced and despite any change in the identity of the parties; |
(ix) | writing includes any mode of representing or reproducing words in tangible and permanently visible form, and includes fax transmissions; |
(x) | this document includes all schedules and annexures to it; and |
(xi) | a clause, schedule or annexure is a reference to a clause, schedule or annexure, as the case may be, of this document; |
(g) | if the date on or by which any act must be done under this document is not a Business Day, the act must be done on or by the next Business Day; and |
(h) | where time is to be calculated by reference to a day or event, that day or the day of that event is excluded. |
Subsisting Events of Default
11.3 An Event of Default subsists if it has occurred and has not been waived by the Investor in accordance with this document.
Headings
11.4 Headings do not affect the interpretation of this document.
Company's liability
11.5 Company's liability
(i) A reference in this document to:
(i) the Company's property or business includes property owned and the business carried on by the Company and any property owned and any business carried on by the Company in the Company's own right.
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Exhibit 10.6
Banjo & Matilda, Inc.
EMPLOYMENT CONTRACT: BRENDAN PATRICK GOW MACPHERSON
THIS EMPLOYMENT CONTRACT ("Agreement") is dated as of the _th day of October 2013, by and between Banjo & Matilda, Inc., Nevada corporation (the "Company') and Brendan Patrick Gow Macpherson, an individual ("Executive", "Employee" or “Mr. Macpherson").
WHEREAS, the Board of Directors of the Company (the "Board") and Executive each desires that Executive furnish services to the Company on the terms and conditions hereinafter set forth. The parties enter into this agreement setting forth the terms and conditions of the employment of the Executive with the Company.
NOW, THEREFORE, in consideration of the foregoing and of the mutual promises and undertakings contained in this Employment Contract, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Executive, and the Executive hereby accepts such employment, on the terms and conditions hereinafter set forth.
2. Term. The term of Executive's employment under this Agreement shall be for a period of three (3) years, commencing on November 15, 2013 and ending on November 15, 2016, unless further extended or sooner terminated as hereinafter provided.
On November 15, 2016 and on the last day of November each third year thereafter, this Agreement shall be automatically extended for three (3) years, he last day of the Term, as from time to time extended, is hereinafter referred to as the "Expiration Date." The Company or Executive may elect to terminate the automatic extension of the Term set forth in this section by giving written notice of such election on or before August 30 th of any Expiration Date year Upon the giving of such notice, Executive's employment under this Agreement shall terminate on the Expiration Date (as last extended).
3. Position and Duties. During the Term of this Agreement, Executive shall be employed as the Secretary, the Chief Executive Officer of the Company and shall be a member of the Company’s Board of Directors. In this capacity Executive shall have overall authority for the management of the business of the Company and the subsidiaries and affiliates of the Company of which he serves as Chief Executive Officer, Executive hereby accepts such employment and agrees to perform the customary duties of a Chief Executive Officer and accepts such other duties as may be set forth herein.
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Executive shall be responsible for driving shareholder value through:
· | Developing appropriate business strategy(s) in cooperation with the Board |
· | Developing a corresponding business plans |
· | Implementing such plans through effective management of the business |
· | Ensuring the company is properly capitalized |
· | Ensuring the Board is fully informed of the businesses operations, and financial affairs |
· | Liaising with shareholders where required |
· | Minimizing risk through appropriate management of the business, financial, and complying with all statutory and legal requirements. |
4. Compensation and Related Matters.
a. Base Salary. As compensation for the performance by the Executive of his duties hereunder, the Company shall pay the Executive an annual base salary of $125,000 for the period commencing October 01, 2013 through and including January 1, 2014 which base pay shall be increased each January 1 st for the subsequent twelve (12) month periods by a minimum of six percent (6%). In addition, the Board shall meet at this time to discuss and review any additional potential pay increases based upon performance.
b. Annual Bonus/Incentive Compensation. In addition to the compensation described in subparagraph a. above, Executive may receive such additional compensation, if any, in the form of an annual incentive bonus, as may be approved by the Company's Board of Directors during the annual review.
c. Stock and Warrants. Executive will receive a signing bonus in the form of preferred stock and common stock as a performance incentive. Executive will receive: 1) an issuance of Common Stock as set forth below; and 2) an issuance of a new class of Control Series Preferred Stock as follows;
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a) Amend Preferred Shares. The Company shall amend its 100,000,000 shares of preferred shares of its stock as set forth below.
b) Reservation of Preferred Shares. The Company shall specifically reserve issuance of these shares for the Executive and they shall not be issued to any other party without the written consent of the Executive.
c) Issuance of Preferred Shares. The Company shall issue 1,000,000 preferred shares to the Executive upon execution of this Agreement.
d) Voting Rights of Preferred Shares. The preferred shares shall be entitled to 100 votes to every one share of common stock.
e) The Preferred Shares shall only valid during the term of this Agreement. At the end of the Agreement the shares shall be cancelled and returned to Treasury and the Executive shall have no preferential voting rights. If this Agreement is renewed the preferred shares remain the Executives.
f) Restriction of further Issuances. The Company shall not issue or authorize any additional classes of stock with voting rights without the written consent of the Executive.
g) Issuance of Common Stock. Executive shall receive one million shares of the COMPANY’s Common Stock upon execution of this Agreement.
d. Life and Disability Insurance Premium. COMPANY shall pay Executive's premium on his personal life insurance policy for the period [he or she] performs the duties of EXECUTIVE in an amount which is reasonable and commercially customary. EXECUTIVE shall receive disability insurance in an amount which is reasonable and commercially customary.
e. Vacation and sick leave. Paid vacation of four (4) weeks per year, which vacation shall be taken at such times as are mutually convenient to Executive and the Company. Paid sick leave for up to 21 days per year.
f. Medical and Dental Insurance. COMPANY shall either provide to EXECUTIVE and pay the full premium for a comprehensive family health medical and dental insurance policy or if EXECUTIVE elects to provide [his or her] own health insurance, pay to EXECUTIVE an amount equal to the cost of providing said comprehensive family health insurance policy.
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g. Accrual of Base Salary. If COMPANY and EXECUTIVE deem it in the parties best interest to not pay the EXECUTIVE his base salary as set forth above, said salary shall accrue with a 12% annual interest rate, the accrued salary may be converted at the EXECUTIVE’s sole discretion into the COMPANY’S Common Stock. The interest shall be paid in cash. The conversion price shall be 50% of the Company’s average closing bid price during the thirty day period prior to the COMPANY’s receiving conversion notice from the EXECUTIVE. Accrued Salary= A, Average Thirty Day Bid Price=B, Conversion Share Price=C, Shares issued in Lieu of Compensation=S. (B*
.50 = C , and = S )
For example if the EXECUTIVE accrues $10,000 in salary and the COMPANY’s average Bid Price during the 30 day period is $1.00, the conversion share price would be $0.50. Therefore when you divide the 10,000 in accrued salary by the .50 Conversion Share Price you have 20,000 shares of restricted common stock which would be issued in lieu of compensation.
5. Representations and Warranties of the Executive. The Executive, in relation to the issuance of preferred and common shares (“Securities”) of the Company herein, hereby represents and warrants as of the Closing Date to the Company as follows:
(a) Authority. Executive has the power and authority to enter into and to consummate the transactions contemplated by the Employment Agreement and otherwise to carry out its obligations hereunder and thereunder.
(b) Own Account. Executive understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for his own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law.
(c) Executive Status . At the time such Executive was offered the Securities, he was, and at the date hereof he is, an “accredited investor” as defined in Rule 501(a) under the Securities Act. Such Executive is not required to be registered as a broker dealer under Section 15 of the Exchange Act.
(d) Experience of Such Executive . Executive, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Executive is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
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(e) General Solicitation . Executive is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.
(f) Short Sales. Other than consummating the transactions contemplated hereunder, Executive has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Executive, executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing from the time that such Executive began discussing this Agreement with the Company (“ Discussion Time ”) .
6. Representations and Warranties of the Company. The Company hereby represents and warrants as of the Closing Date to the Executive as follows:
(a) Organization and Qualification . The Company and each Subsidiary is an entity duly formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “ Material Adverse Effect ”) and no action or proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
(b) Authorization; Enforcement. The Company and the Subsidiaries have the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Employment Agreement and otherwise to carry out their obligations hereunder and thereunder. The execution of the Employment Agreement by the Company and the Subsidiaries and the consummation by them of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and the Subsidiaries and no further action is required by the Company, the Subsidiaries, the Board of Directors, the board of directors of each Subsidiary or their stockholders in connection therewith other than in connection with the Required Approvals. The Employment Agreement has been (or upon delivery will have been) duly executed by the Company and the Subsidiaries, as applicable, and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company and the Subsidiaries enforceable against the Company and the Subsidiaries in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
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(c) No Conflicts. The execution, delivery and performance of the Employment Agreement by the Company and the Subsidiaries and the consummation by the Company and the Subsidiaries of the other transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, loan or credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
(d) Filings, Consents and Approvals . Neither the Company nor any Subsidiary is required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company and the Subsidiaries of the Employment Agreement, other than those obtained and/or made prior to or as of the Closing Date, and the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “ Required Approvals ”).
(e) Issuance of the Securities . The Securities are duly authorized and, when issued and paid for in accordance with the applicable Employment Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Employment Agreement. The Preferred and Common Shares, when issued in accordance with the terms of the Employment Agreement, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Employment Agreement. The Company has reserved from its duly authorized capital stock a number of shares of Preferred and Common Stock for issuance.
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(f) SEC Reports; Financial Statements. To the Company’s knowledge, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the 12 months preceding the date hereof (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “ SEC Reports ”). To the Company’s knowledge, as of their respective dates, the SEC Reports complied as to form in all material respects with the disclosure requirements of the Securities Act and the Exchange Act, as applicable, and, to the Company’s knowledge none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. To the Company’s knowledge the financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“ GAAP ”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
(g) Certain Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Employment Agreement. The Executive shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this section that may be due in connection with the transactions contemplated by the Employment Agreement.
7. Reimbursement of Expenses . The Executive may incur reasonable expenses for furthering the Company's business, including expenses for entertainment, travel, meals, and similar items. The Company shall reimburse Executive for all business expenses after the Executive presents an itemized account of expenditures, pursuant to Company policy.
8. Devotion to Company. The Executive will devote substantially his full time, attention, and energies to the business of the Company, its affiliates and subsidiaries during this employment. The Company understands that Executive is engaged in other non-competing businesses, and Executive is not prohibited from an active involvement in the operation of said business, however the parties do anticipate that Executive will devote substantially his full time not less than 70% of his work time) to Company.
9. Termination by Executive. Executive may terminate his employment hereunder by giving thirty days written notice to the Company, in which event such termination shall become effective at the end of the notice period, or earlier as may be specified by the Company after receipt of Executive's Notice of Termination.
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10. Termination by Company. With or without cause, the Company may terminate Executive's employment at any time prior to the expiration of the three-year term upon 180 days' written notice to the Executive. If terminated the Executive will be paid his/her regular salary up to the date of termination. In addition, the Company will pay the Executive on the date of the termination a severance allowance of fifty percent (50%) of the total salary compensation Executive would have been entitled to for the remainder of his Term of employment. The Company will pay any required withholding tax on said severance allowance without deducting the same from the amount to be paid to Executive.
11. Notice of Termination. Any purported termination of the Executive's employment shall be communicated by written Notice of Termination to the other party hereto. If such notice is served by the Company on the Executive, to be effective, it must include the signatures of the majority of the board of directors approving such termination and thanking Executive for his service to date.
12. Termination Benefits, Upon the expiration or termination of this Agreement or Executives employment, by either party for any reason, Company shall continue to provide Executive with life and disability insurance and family health insurance described above for a period of thirty six (36) months from said termination/expiration. Company will make all reasonable efforts to allow Executive to continue such coverage thereafter at Executives own expense. This provision shall survive the expiration or termination of this agreement for any reason.
13. Death Benefit. Should Executive die during the term of employment, the Company shall pay to Executive's designee, the greater of two hundred twenty five thousand dollars ($225,000) or fifty percent (50%) of the total salary compensation Executive would have been entitled to for the remainder of his Term of employment, whichever is greater, Company will also continue to pay the medical and health benefits for Executive's family for a period of three (3) years, in addition to the benefits to Executives spouse, provided in section 12 above.
14. Covenant Not to Compete. If the Executive receives Termination Benefits of at least $150,000 under paragraph 10 herein, the following Covenant Not to Compete shall be triggered.
a. Term. The Executive shall not compete for a period of six months.
b. Scope. The Executive shall not perform services whether as an Employee, Independent Contractor or Consultant for any third party involved in the design, manufacture, sale or distribution of premium contemporary knitwear.
c. Geographical Restrictions. This Covenant not to Compete shall be limited to a seventy five mile radius around areas which the Company designs, manufactures or sells premium contemporary knit wear.
d. Non-Solicitation. The Executive shall not solicit the Company’s Employees, manufacturers, distributors or customers during the term of this Non Compete.
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15. Choice of Law. It is the intention of the parties to this Agreement that this Agreement and the performance under this Agreement, and all suits and special proceedings under this Agreement, be construed in accordance with and under the Laws the State of Nevada.
16. DISPUTED COMPENSATION. In the event that the Company should at anytime dispute any payment or vesting of compensation as provided herein to executive, Company agrees that it will provide Executive with a timely and immediate written notice of such dispute detailing the specific compensation that it disputes and detailing all of the legal reasons and the detailed factual basis for its objection thereto. Such written notice will be provided to Executive in advance of the payment or vesting of any such disputed payment to Executive. Providing such a notice does not eliminate or obviate the Company's responsibility to make such a payment of compensation, its dispute or objection notwithstanding.
In the event that the reasons for the dispute or objection arise after the disbursement or vesting of such compensation to Executive, then Company agrees that it will provide notice to Executive at the earlier of twenty one (21) days from the date of any such disbursement or vesting if Company knew or reasonably should have known of the basis for such an objection within seven (7) days of such disbursement or vesting, or if Company did not know or reasonably could not be expected to known of the basis for such an objection, within one hundred and thirty one (131) days of the disbursement, payment or vesting of such benefit. Any request or demand by the Company for reimbursement of compensation paid to Executive pursuant to this agreement is waved if not made within the limitation period described in this paragraph. No action will be brought or maintained by the Company against Executive, either in a court of law or in arbitration, or otherwise, to recover compensation paid to executive if the Company has not complied with this section 15.
Under no circumstances will any action will be brought or maintained by the company against executive, either in a court of law or in arbitration, or otherwise, to recover compensation already vested or paid to executive, even if prior notice of the dispute or objection as described above has been served, if more than three hundred and sixty five (365) days have passed since the payment or vesting which the company would otherwise seek to recover or overturn.
This section 16 shall not apply to any compensation that Executive should receive that is over and above the compensation specifically described in this Agreement.
17. NO WAIVER. The failure of either party to this Agreement to insist upon the performance of any of the terms and conditions of this Agreement, or the waiver of any breach of any of the terms and conditions of this Agreement, shall not be construed as thereafter waiving any such terms and conditions, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred.
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18. PARAGRAPH HEADINGS. The titles to the paragraphs of this Agreement are solely for the convenience of the parties and shall not be used to explain, modify, simplify, or aid in the interpretation of the provisions of this Agreement.
19. COMPLETE AGREEMENT, This Agreement contains the complete agreement concerning the employment arrangement between the parties. The parties stipulate that neither of them has made any representation with respect to the subject matter of this Agreement or any representation including the execution and delivery of this Agreement except such representations as are specifically set forth in this Agreement and each of the parties acknowledges that [he or she] or it has relied on its own judgment in entering into this Agreement. The parties further acknowledge that any representations that may have been made by either of them to the other prior to the date of executing this Agreement are of no effect and that neither of them has relied thereon in connection with [his or her] dealings with the other.
20. INDEMNIFICATION. Company shall indemnify Executive to the maximum extent allowable under the applicable jurisdictions laws including but not limited to against any and all expenses, including amounts paid upon judgments, counsel fees, environmental penalties and fines, and amounts paid in settlement (before or after suit is commenced),incurred by the Executive in connection with [his or her] defense or settlement of any claim, action, suit or proceeding in which [he or she] is made a party or which may be asserted against [him or her} by reason of [his or her] employment or the performance of duties in this Agreement or as an officer or director of the Company or otherwise in connection to the Company. Such indemnification shall be in addition to any or rights to which Executive may be entitled under any law, the articles of incorporation, the bylaws, any agreement, or otherwise. This provision shall survive the expiration or termination of this agreement for any reason.
21. Assumption of Agreement by Company's Successors and Assignees. The Company's rights and obligations under this agreement will inure to the benefit and be binding upon the Company's successors and assignees.
22. Legal Fees. In the event of any dispute or proceeding arising under this Agreement where the Executive is ultimately the substantially prevailing party, the Company shall promptly reimburse Executive for all costs, including without limitation, the reasonable attorneys' fees of any attorney of the Executive's choosing, incurred by the Executive in any such dispute or proceeding arising under this Agreement.
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23. Assignment. This Agreement shall not be assignable by either party without the prior written consent or the other party, However:
(1) It maybe assigned by the Company to any person or entity acquiring all or substantially all of the assets thereof, however Company will remain as a guarantor of obligations hereunder: and
(2) It may be assigned by Executive as to his right to payment, but not as to any of his obligations hereunder; and
24. Severability of Provisions. If any of the provisions of this Agreement or the application of any such provision shall for any reason be held invalid by a court of competent jurisdiction, such invalidity shall not affect or impair any other provision, it being the intention of the parties that such other provisions shall be and remain in full force and effect.
25. Notices. Ali notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall deemed to have been given at the time when mailed at any office of the United States Postal Service enclosed in a certified postage-paid envelope addressed to the respective party at the addresses set forth below (together with an electronic copy to the designated e-mail addresses listed below if notice is being served on Executive) or to such changed address as such party may have fixed by notice to the other party, provided, however, that any notice or change of address shall be affected only upon receipt and further provided that any notice may be personally delivered to the respective party by the party giving notice in lieu of being mailed.
If to Company:
Banjo & Matilda, Inc.
76 William St Paddington
NSW Australia 2021
Fax +61 (0) 2 811 1213
Phone +61 (0) 2 8096 2665
If to Executive:
Brendan Patrick Gow
Macpherson
PO BOX 3438 Tamarama
NSW 2026
+61 (0) 413 83 66 33
Ben@banjoandmatilda.com
Either party may waive this notice provision by providing a written acknowledgement to the other party that the first party has received effective notice.
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26. Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon the Company, its successors and assigns, and any corporation which may acquire all or substantially all of the Company's assets or into which the Company may be consolidated or merged, and shall inure to the benefit of Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. Upon the Executive's death, all amounts, warrants, and other compensation, to which he is entitled hereunder, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's designee, or, if there be no such designee, to the Executive's estate.
27. Vesting of compensation and benefits. Executive's (and where applicable Executive’s Spouse's and Designee's) right(s) to the compensation and benefits described in this Agreement are fully vested as of the date of this Agreement.
28. Bankruptcy, Security and Liens. It is the intention of the parties that to the greatest extent allowable under the law, the rights and obligations of this employment agreement shall not be waved or subordinated by any bankruptcy.
29. Execution in Counterparts. This Agreement maybe executed by the parties hereto signing the same instrument, or by each party hereto signing a separate counterpart or counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument The parties agree that documents executed by facsimile or electronic transmission shall be acceptable in this transaction, and the signatures thereof shall have the same force and effect as original signatures.
30. Waiver. The failure of any party to insist in any one or more Instances upon performance of any terms or conditions of this Agreement shall not be construed as a waiver of future performance of any such term, covenant or conditions, but the obligations of either party with respect thereto shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal the day and year above first written.
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BRENDAN PATRICK GOW MACPHERSON | BELINDA STORELLI MACPHERSON |
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Exhibit 10.7
Banjo & Matilda, Inc.
EMPLOYMENT CONTRACT: Belinda Storelli Macpherson
THIS EMPLOYMENT CONTRACT ("Agreement") is dated as of the 15th day of November 2013, by and between Banjo & Matilda, Inc., a Nevada corporation (the "Company') and Belinda Storelli Macpherson, an individual ("Executive", "Employee" or “Mrs. Macpherson").
WHEREAS, the Board of Directors of the Company (the "Board") and Executive each desires that Executive furnish services to the Company on the terms and conditions hereinafter set forth. The parties enter into this agreement setting forth the terms and conditions of the employment of the Executive with the Company.
NOW, THEREFORE, in consideration of the foregoing and of the mutual promises and undertakings contained in this Employment Contract, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Executive, and the Executive hereby accepts such employment, on the terms and conditions hereinafter set forth.
2. Term. The term of Executive's employment under this Agreement shall be for a period of three (3) years, commencing on November 15, 2013 and ending on November 15, 2016, unless further extended or sooner terminated as hereinafter provided.
On November 15, 2016 and on the last day of November each third year thereafter, this Agreement shall be automatically extended for three (3) years, he last day of the Term, as from time to time extended, is hereinafter referred to as the "Expiration Date." The Company or Executive may elect to terminate the automatic extension of the Term set forth in this section by giving written notice of such election on or before August 30 th of any Expiration Date year Upon the giving of such notice, Executive's employment under this Agreement shall terminate on the Expiration Date (as last extended).
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3. Position and Duties. During the Term of this Agreement, Executive shall be employed as Chief Creative Officer of the Company and shall be a member of the Company’s Board of Directors. In this capacity Executive shall have overall authority for all design, the creative development and brand management of the Company and the subsidiaries and affiliates of the Company of which she serves as Chief Creative Officer, Executive hereby accepts such employment and agrees to perform the customary duties of a Chief Creative Officer and accepts such other duties as may be set forth herein.
Executive shall be responsible for the following:
· | design of the company's products |
· | brand management and development. |
· | Overall creative development and direction of the brand. |
4. Compensation and Related Matters.
a. Base Salary. As compensation for the performance by the Executive of her duties hereunder, the Company shall pay the Executive an annual base salary of $100,000 for the period commencing October 01, 2013 through and including January 1, 2014 which base pay shall be increased each January 1 st for the subsequent twelve (12) month periods by a minimum of six percent (6%). In addition, the Board shall meet at this time to discuss and review any additional potential pay increases based upon performance.
b. Annual Bonus/Incentive Compensation. In addition to the compensation described in subparagraph a. above, Executive may receive such additional compensation, if any, in the form of an annual incentive bonus, as may be approved by the Company's Board of Directors during the annual review.
c. Stock Issuances. Executive will receive a signing bonus in the form of common stock as a performance incentive. Executive will receive: 1) an issuance of Common Stock as set forth below;
a) Issuance of Common Stock. Executive shall receive four hundred thousand shares of the COMPANY’s Restricted Common Stock upon execution of this Agreement.
d. Life and Disability Insurance Premium. COMPANY shall pay Executive's premium on her personal life insurance policy for the period [he or she] performs the duties of EXECUTIVE in an amount which is reasonable and commercially customary. EXECUTIVE shall receive disability insurance in an amount which is reasonable and commercially customary.
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e. Vacation and sick leave. Paid vacation of four (4) weeks per year, which vacation shall be taken at such times as are mutually convenient to Executive and the Company. Paid sick leave for up to 21 days per year.
f. Medical and Dental Insurance. COMPANY shall either provide to EXECUTIVE and pay the full premium for a comprehensive family health medical and dental insurance policy or if EXECUTIVE elects to provide [his or her] own health insurance, pay to EXECUTIVE an amount equal to the cost of providing said comprehensive family health insurance policy.
g. Accrual of Base Salary. If COMPANY and EXECUTIVE deem it in the parties best interest to not pay the EXECUTIVE her base salary as set forth above, said salary shall accrue with a 12% annual interest rate, the accrued salary may be converted at the EXECUTIVE’s sole discretion into the COMPANY’S Common Stock. The interest shall be paid in cash. The conversion price shall be 50% of the Company’s average closing bid price during the thirty day period prior to the COMPANY’s receiving conversion notice from the EXECUTIVE. Accrued Salary= A, Average Thirty Day Bid Price=B, Conversion Share Price=C, Shares issued in Lieu of Compensation=S. ( B *
.50 = C , and = S )
For example if the EXECUTIVE accrues $10,000 in salary and the COMPANY’s average Bid Price during the 30 day period is $1.00, the conversion share price would be $0.50. Therefore when you divide the 10,000 in accrued salary by the .50 Conversion Share Price you have 20,000 shares of restricted common stock which would be issued in lieu of compensation.
5. Representations and Warranties of the Executive. The Executive, in relation to the issuance of common shares (“Securities”) of the Company herein, hereby represents and warrants as of the Closing Date to the Company as follows:
(a) Authority. Executive has the power and authority to enter into and to consummate the transactions contemplated by the Employment Agreement and otherwise to carry out her obligations hereunder and thereunder.
(b) Own Account. Executive understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for her own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law.
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(c) Executive Status . At the time such Executive was offered the Securities, she was, and at the date hereof she is, an “accredited investor” as defined in Rule 501(a) under the Securities Act. Such Executive is not required to be registered as a broker dealer under Section 15 of the Exchange Act.
(d) Experience of Such Executive . Executive, either alone or together with her representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Executive is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
(e) General Solicitation . Executive is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.
(f) Short Sales. Other than consummating the transactions contemplated hereunder, Executive has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Executive, executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing from the time that such Executive began discussing this Agreement with the Company (“ Discussion Time ”) .
6. Representations and Warranties of the Company. The Company hereby represents and warrants as of the Closing Date to the Executive as follows:
(a) Organization and Qualification . The Company and each Subsidiary is an entity duly formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “ Material Adverse Effect ”) and no action or proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
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(b) Authorization; Enforcement. The Company and the Subsidiaries have the requisite corporate power and authority to enter into and to consummate the transactions contemplated by the Employment Agreement and otherwise to carry out their obligations hereunder and thereunder. The execution of the Employment Agreement by the Company and the Subsidiaries and the consummation by them of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and the Subsidiaries and no further action is required by the Company, the Subsidiaries, the Board of Directors, the board of directors of each Subsidiary or their stockholders in connection therewith other than in connection with the Required Approvals. The Employment Agreement has been (or upon delivery will have been) duly executed by the Company and the Subsidiaries, as applicable, and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company and the Subsidiaries enforceable against the Company and the Subsidiaries in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(c) No Conflicts. The execution, delivery and performance of the Employment Agreement by the Company and the Subsidiaries and the consummation by the Company and the Subsidiaries of the other transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, loan or credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
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(d) Filings, Consents and Approvals . Neither the Company nor any Subsidiary is required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company and the Subsidiaries of the Employment Agreement, other than those obtained and/or made prior to or as of the Closing Date, and the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “ Required Approvals ”).
(e) Issuance of the Securities . The Securities are duly authorized and, when issued and paid for in accordance with the applicable Employment Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Employment Agreement. The Common Shares, when issued in accordance with the terms of the Employment Agreement, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Employment Agreement. The Company has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance.
(f) SEC Reports; Financial Statements. To the Company’s knowledge, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the 12 months preceding the date hereof (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “ SEC Reports ”). To the Company’s knowledge, as of their respective dates, the SEC Reports complied as to form in all material respects with the disclosure requirements of the Securities Act and the Exchange Act, as applicable, and, to the Company’s knowledge none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. To the Company’s knowledge the financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“ GAAP ”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
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(g) Certain Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Employment Agreement. The Executive shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this section that may be due in connection with the transactions contemplated by the Employment Agreement.
7. Reimbursement of Expenses . The Executive may incur reasonable expenses for furthering the Company's business, including expenses for entertainment, travel, meals, and similar items. The Company shall reimburse Executive for all business expenses after the Executive presents an itemized account of expenditures, pursuant to Company policy.
8. Devotion to Company. The Executive will devote substantially her full time, attention, and energies to the business of the Company, its affiliates and subsidiaries during this employment. The Company understands that Executive is engaged in other non-competing businesses, and Executive is not prohibited from an active involvement in the operation of said business, however the parties do anticipate that Executive will devote substantially her full time not less than 70% of his work time) to Company.
9. Termination by Executive. Executive may terminate her employment hereunder by giving thirty days written notice to the Company, in which event such termination shall become effective at the end of the notice period, or earlier as may be specified by the Company after receipt of Executive's Notice of Termination.
10. Termination by Company. With or without cause, the Company may terminate Executive's employment at any time prior to the expiration of the three-year term upon 180 days' written notice to the Executive. If terminated the Executive will be paid her regular salary up to the date of termination. In addition, the Company will pay the Executive on the date of the termination a severance allowance of fifty percent (50%) of the total salary compensation Executive would have been entitled to for the remainder of her Term of employment. The Company will pay any required withholding tax on said severance allowance without deducting the same from the amount to be paid to Executive.
11. Notice of Termination. Any purported termination of the Executive's employment shall be communicated by written Notice of Termination to the other party hereto. If such notice is served by the Company on the Executive, to be effective, it must include the signatures of the majority of the board of directors approving such termination and thanking Executive for her service to date.
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12. Termination Benefits, Upon the expiration or termination of this Agreement or Executive’s employment, by either party for any reason, Company shall continue to provide Executive with life and disability insurance and family health insurance described above for a period of thirty six (36) months from said termination/expiration. Company will make all reasonable efforts to allow Executive to continue such coverage thereafter at Executives own expense. This provision shall survive the expiration or termination of this agreement for any reason.
13. Death Benefit. Should Executive die during the term of employment, the Company shall pay to Executive's designee, the greater of two hundred thousand dollars ($200,000) or fifty percent (50%) of the total salary compensation Executive would have been entitled to for the remainder of her Term of employment, whichever is greater, Company will also continue to pay the medical and health benefits for Executive's family for a period of three (3) years, in addition to the benefits to Executives spouse, provided in section 12 above.
14. Covenant Not to Compete. If the Executive receives Termination Benefits of at least $100,000 under paragraph 10 herein, the following Covenant Not to Compete shall be triggered.
a. Term. The Executive shall not compete for a period of six months.
b. Scope. The Executive shall not perform services whether as an Employee, Independent Contractor or Consultant for any third party involved in the design, manufacture, sale or distribution of premium contemporary knitwear.
c. Geographical Restrictions. This Covenant not to Compete shall be limited to a seventy five mile radius around areas which the Company designs, manufactures or sells premium contemporary knit wear.
d. Non-Solicitation. The Executive shall not solicit the Company’s Employees, manufacturers, distributors or customers during the term of this Non Compete.
15. CHOICE OF LAW. It is the intention of the parties to this Agreement that this Agreement and the performance under this Agreement, and all suits and special proceedings under this Agreement, be construed in accordance with and under the Laws the State of Nevada.
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16. DISPUTED COMPENSATION. In the event that the Company should at anytime dispute any payment or vesting of compensation as provided herein to executive, Company agrees that it will provide Executive with a timely and immediate written notice of such dispute detailing the specific compensation that it disputes and detailing all of the legal reasons and the detailed factual basis for its objection thereto. Such written notice will be provided to Executive in advance of the payment or vesting of any such disputed payment to Executive. Providing such a notice does not eliminate or obviate the Company's responsibility to make such a payment of compensation, its dispute or objection notwithstanding.
In the event that the reasons for the dispute or objection arise after the disbursement or vesting of such compensation to Executive, then Company agrees that it will provide notice to Executive at the earlier of twenty one (21) days from the date of any such disbursement or vesting if Company knew or reasonably should have known of the basis for such an objection within seven (7) days of such disbursement or vesting, or if Company did not know or reasonably could not be expected to known of the basis for such an objection, within one hundred and thirty one (131) days of the disbursement, payment or vesting of such benefit. Any request or demand by the Company for reimbursement of compensation paid to Executive pursuant to this agreement is waved if not made within the limitation period described in this paragraph. No action will be brought or maintained by the Company against Executive, either in a court of law or in arbitration, or otherwise, to recover compensation paid to executive if the Company has not complied with this section 16.
Under no circumstances will any action be brought or maintained by the company against executive, either in a court of law or in arbitration, or otherwise, to recover compensation already vested or paid to executive, even if prior notice of the dispute or objection as described above has been served, if more than three hundred and sixty five (365) days have passed since the payment or vesting which the company would otherwise seek to recover or overturn.
This section 16 shall not apply to any compensation that Executive should receive that is over and above the compensation specifically described in this Agreement.
17. NO WAIVER. The failure of either party to this Agreement to insist upon the performance of any of the terms and conditions of this Agreement, or the waiver of any breach of any of the terms and conditions of this Agreement, shall not be construed as thereafter waiving any such terms and conditions, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred.
18. PARAGRAPH HEADINGS. The titles to the paragraphs of this Agreement are solely for the convenience of the parties and shall not be used to explain, modify, simplify, or aid in the interpretation of the provisions of this Agreement.
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19. COMPLETE AGREEMENT, This Agreement contains the complete agreement concerning the employment arrangement between the parties. The parties stipulate that neither of them has made any representation with respect to the subject matter of this Agreement or any representation including the execution and delivery of this Agreement except such representations as are specifically set forth in this Agreement and each of the parties acknowledges that [he or she] or it has relied on its own judgment in entering into this Agreement. The parties further acknowledge that any representations that may have been made by either of them to the other prior to the date of executing this Agreement are of no effect and that neither of them has relied thereon in connection with [his or her] dealings with the other.
20. INDEMNIFICATION. Company shall indemnify Executive to the maximum extent allowable under the applicable jurisdictions laws including but not limited to against any and all expenses, including amounts paid upon judgments, counsel fees, environmental penalties and fines, and amounts paid in settlement (before or after suit is commenced),incurred by the Executive in connection with [his or her] defense or settlement of any claim, action, suit or proceeding in which [he or she] is made a party or which may be asserted against [him or her} by reason of [his or her] employment or the performance of duties in this Agreement or as an officer or director of the Company or otherwise in connection to the Company. Such indemnification shall be in addition to any or rights to which Executive may be entitled under any law, the articles of incorporation, the bylaws, any agreement, or otherwise. This provision shall survive the expiration or termination of this agreement for any reason,
21. Assumption of Agreement by Company's Successors and Assignees. The Company's rights and obligations under this agreement will inure to the benefit and be binding upon the Company's successors and assignees.
22. Legal Fees. In the event of any dispute or proceeding arising under this Agreement where the Executive is ultimately the substantially prevailing party, the Company shall promptly reimburse Executive for all costs, including without limitation, the reasonable attorneys' fees of any attorney of the Executive's choosing, incurred by the Executive in any such dispute or proceeding arising under this Agreement.
23. Assignment. This Agreement is intended to survive the Eastern World merger after that it shall not be assignable by either party without the prior written consent or the other party, However:
(1) It maybe assigned by the Company to any person or entity acquiring all or substantially all of the assets thereof, however Company will remain as a guarantor of obligations hereunder: and
(2) It may be assigned by Executive as to his right to payment, but not as to any of his obligations hereunder; and
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24. Severability of Provisions. If any of the provisions of this Agreement or the application of any such provision shall for any reason be held invalid by a court of competent jurisdiction, such invalidity shall not affect or impair any other provision, it being the intention of the parties that such other provisions shall be and remain in full force and effect.
25. Notices. Ali notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall deemed to have been given at the time when mailed at any office of the United States Postal Service enclosed in a certified postage-paid envelope addressed to the respective party at the addresses set forth below (together with an electronic copy to the designated e-mail addresses listed below if notice is being served on Executive) or to such changed address as such party may have fixed by notice to the other party, provided, however, that any notice or change of address shall be affected only upon receipt and further provided that any notice may be personally delivered to the respective party by the party giving notice in lieu of being mailed.
If to Company:
Banjo & Matilda Inc.
76 William St Paddington NSW
Australia 2021
Fax +61 (0) 2 811 1213
Phone +61 (0) 2 8096 2665
If to Executive:
BELINDA STORELLI
MACPHERSON
PO BOX 3438 Tamarama NSW
2026
+61 (0) 413 83 66 33
Belynda@banjoandmatilda.com
Either party may waive this notice provision by providing a written acknowledgement to the other party that the first party has received effective notice.
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26. Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon the Company, its successors and assigns, and any corporation which may acquire all or substantially all of the Company's assets or into which the Company may be consolidated or merged, and shall inure to the benefit of Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. Upon the Executive's death, all amounts, warrants, and other compensation, to which she is entitled hereunder, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's designee, or, if there be no such designee, to the Executive's estate.
27. Vesting of compensation and benefits. Executive's (and where applicable Executive's Spouse's and Designee's) right(s) to the compensation and benefits described in this Agreement are fully vested as of the date of this Agreement.
28. Bankruptcy, Security and Liens. It is the intention of the parties that to the greatest extent allowable under the law, the rights and obligations of this employment agreement shall not be waved or subordinated by any bankruptcy.
29. Execution in Counterparts. This Agreement may be executed by the parties hereto signing the same instrument, or by each party hereto signing a separate counterpart or counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. The parties agree that documents executed by facsimile or electronic transmission shall be acceptable in this transaction, and the signatures thereof shall have the same force and effect as original signatures.
30. Waiver. The failure of any party to insist in any one or more Instances upon performance of any terms or conditions of this Agreement shall not be construed as a waiver of future performance of any such term, covenant or conditions, but the obligations of either party with respect thereto shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal the day and year above first written.
Executive |
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|
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BELINDA STORELLI MACPHERSON | BRENDAN MACPHERSON |
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Exhibit 21.1
SUBSIDIARIES OF THE REGISTRANT
Subsidiary | Jurisdiction | |
Banjo & Matilda Pty Ltd | Australia | |
Banjo & Matild (USA), Inc. | Delaware |
Exhibit 99.1
BANJO & MATILDA TRUST
AUDITED FINANCIAL STATEMENTS
JUNE 30, 2013 AND 2012
INDEX TO AUDITED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm | 2 |
Balance Sheets | 3 |
Statements of Operations and Comprehensive Income (Loss) | 4 |
Statements of Changes in Stockholder's Equity | 5 |
Statements of Cash Flows | 6 |
Financial Statements | 7 |
1 |
LICHTER, YU AND ASSOCIATES
CERTIFIED PUBLIC ACCOUNTANTS
16133 VENTURA BLVD., SUITE 450
ENCINO, CALIFORNIA 91436
TEL (818)789-0265 FAX (818) 789-3949
Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders of
Banjo & Matilda Trust
We have audited the accompanying balance sheets of Banjo & Matilda Trust (the “Company”) as of June 30, 2013 and 2012, and the related statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for the years ended June 30, 2013 and 2012. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2013 and 2012, and the results of its operations and its cash flows for the years ended June 30, 2013 and 2012, in conformity with U.S. generally accepted accounting principles.
Encino, California
September 25, 2013
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BANJO & MATILDA TRUST
BALANCE SHEETS
JUNE 30, 2013 AND 2012
The accompanying notes are an integral part of these financial statements
3 |
BANJO & MATILDA TRUST
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED JUNE 30, 2013 AND 2012
2013 | 2012 | |||||||
Revenue | $ | 1,724,181 | $ | 950,812 | ||||
Cost of sales | 977,086 | 677,002 | ||||||
Gross profit | 747,095 | 273,810 | ||||||
Payroll and employee related expenses | 240,450 | 131,896 | ||||||
Administration expense | 195,422 | 165,286 | ||||||
Marketing expense | 88,826 | 144,303 | ||||||
Occupancy expenses | 47,518 | 36,321 | ||||||
Depreciation and amortization expense | 8,821 | 6,018 | ||||||
581,037 | 483,824 | |||||||
Income (loss) from operations | 166,058 | (210,014 | ) | |||||
Other (Income) Expense | ||||||||
Interest income | (1 | ) | (1 | ) | ||||
Other income | (52,585 | ) | (59 | ) | ||||
Finance costs | 196,892 | 56,348 | ||||||
Total Other Expense | 144,306 | 56,288 | ||||||
Income (loss) before income tax | 21,752 | (266,302 | ) | |||||
Provision for income taxes | – | – | ||||||
Net income (loss) | 21,752 | (266,302 | ) | |||||
Other comprehensive income | ||||||||
Foreign currency translation | 46,875 | 4,231 | ||||||
Comprehensive income (loss) | $ | 68,627 | $ | (262,071 | ) | |||
Net income (loss) per share from net income (loss) | ||||||||
Basic | $ | 218 | $ | (2,663 | ) | |||
Diluted | $ | 186 | $ | (2,663 | ) | |||
Weighted average number of shares outstanding: | ||||||||
Basic | 100 | 100 | ||||||
Diluted | 117 | 100 |
The accompanying notes are an integral part of these financial statements
4 |
BANJO & MATILDA TRUST
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED JUNE 30, 2013 AND 2012
Other | Total | |||||||||||||||||||
Common Stock | Comprehensive | Accumulated | Stockholders' | |||||||||||||||||
Shares | Amount | Gain (Loss) | Deficit | Equity | ||||||||||||||||
Balance June 30, 2011 | 100 | $ | 102 | $ | – | $ | (225,992 | ) | $ | (225,890 | ) | |||||||||
Foreign currency translation adjustments | – | – | 4,231 | – | 4,231 | |||||||||||||||
Net loss for the year ended June 30, 2012 | – | – | – | (266,302 | ) | (266,302 | ) | |||||||||||||
Balance June 30, 2012 | 100 | 102 | 4,231 | (492,293 | ) | (487,960 | ) | |||||||||||||
Foreign currency translation adjustments | – | – | 46,875 | – | 46,875 | |||||||||||||||
Conversion of debt to equity | 17 | 246,479 | – | – | 246,479 | |||||||||||||||
Net income for the year ended June 30, 2013 | – | – | – | 21,752 | 21,752 | |||||||||||||||
Balance June 30, 2013 | 117 | $ | 246,581 | $ | 51,106 | $ | (470,541 | ) | $ | (172,854 | ) |
5 |
BANJO & MATILDA TRUST
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2013 AND 2012
2013 | 2012 | |||||||
Net income (loss) | $ | 21,752 | $ | (266,302 | ) | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Depreciation and amortization | 8,821 | 6,018 | ||||||
(Increase)/decrease in assets: | ||||||||
Trade receivables | 8,674 | 14,006 | ||||||
Inventory | (181,720 | ) | (189,868 | ) | ||||
Other assets | (86,215 | ) | ||||||
Other receivable | (113,924 | ) | (46,723 | ) | ||||
Increase/(decrease) in current liabilities: | ||||||||
Trade payables | (31,212 | ) | 80,829 | |||||
Accrued interest | 9,905 | 4,808 | ||||||
Deposits payable | (88,443 | ) | 88,908 | |||||
Net cash used in operating activities | (452,362 | ) | (308,324 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchase of intangible assets | (38,446 | ) | (14,895 | ) | ||||
Purchase of property, plant and equipment | (1,017 | ) | (4,318 | ) | ||||
Net cash used in investing activities | (39,463 | ) | (19,213 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Loan from related party | 170,725 | 268,226 | ||||||
Proceeds from loan payable | 334,837 | 17,042 | ||||||
Repayment on loan payable | (5,356 | ) | (7,180 | ) | ||||
Net cash provided by financing activities | 500,206 | 278,088 | ||||||
Effect of exchange rate changes on cash and cash equivalents | (1,338 | ) | 485 | |||||
Net (decrease)/increase in cash and cash equivalents | 7,043 | (48,964 | ) | |||||
Cash and cash equivalents at the beginning of the period | 4,061 | 53,025 | ||||||
Cash and cash equivalents at the end of the period | $ | 11,104 | $ | 4,061 | ||||
SUPPLEMENTAL DISCLOSURES: | ||||||||
Conversion of debt to equity | $ | 246,479 | $ | – | ||||
Cash paid during the year for: | ||||||||
Income tax payments | $ | – | $ | – | ||||
Interest payments | $ | 35,071 | $ | 16,229 |
The accompanying notes are an integral part of these financial statements
6 |
BANJO & MATILDA PTY LTD
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013 AND 2012
Note 1 -- BASIS OF PRESENTATION AND ORGANIZATION
Banjo & Matilda Trust (“the Company”) was incorporated under the laws of Australia on May 27, 2009 and manufactures and sells cashmere fashion. Headquartered at Bondi Beach, the Aussie lifestyle of sun, sand and surf resonates innately with this label and its philosophy of low maintenance, style and comfort.
The ultra-soft cashmere staples, pairing simplicity with cool sophistication has rapidly gained loyal customers worldwide positioning the label as the 'go-to' for contemporary cashmere products.
Note 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements were prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”).
Exchange Gain (Loss)
During the fiscal years ended June 30, 2013 and 2012, the transactions of the Company were denominated in foreign currency and were recorded in Australian dollar (AUD) at the rates of exchange in effect when the transactions occurred. Exchange gains and losses are recognized for the different foreign exchange rates applied when the foreign currency assets and liabilities are settled.
Foreign Currency Translation and Comprehensive Income (Loss)
The accounts of the Company were maintained, and its financial statements were expressed, in AUD. Such financial statements were translated into USD with the AUD as the functional currency. All assets and liabilities were translated at the exchange rate at the balance sheet date, stockholder's equity is translated at the historical rates and income statement items are translated at the average exchange rate for the period. Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the statements of operations. The resulting translation adjustments are reported under other comprehensive income as a component of shareholders' equity. There were no significant fluctuations in the exchange rate for the conversion of AUD to USD after the balance sheet date.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include collectability of accounts receivable, accounts payable, sales returns and recoverability of long-term assets.
Reportable Segment
The Company has one reportable segment. The Company's activities are interrelated and each activity is dependent upon and supportive of the other. Accordingly, all significant operating decisions are based on analysis of financial products provided as a single global business.
Liquidity Matters
Based upon its current projection of revenue, management believes that its current cash position and available financing provide sufficient resources and operating flexibility through at least the next twelve months. However, there can be no assurance that projected revenue growth and improvement in operating results will occur or that the Company will successfully implement its plans. In the event cash flow from operations is not sufficient, additional sources of financing will be required in order to maintain the Company's current operations. Whereas management believes it will have access to other financing sources, no assurance can be given that such additional sources of financing will be available on acceptable terms, on a timely basis or at all.
7 |
Revenue Recognition
Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. Revenue generally is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities.
Cost of Sales
Cost of sales consists primarily of inventory costs, as well as warehousing costs (including the cost of warehouse labor), third party royalties and research, design and development costs.
Operating Overhead Expense
Operating overhead expense consists primarily of payroll and benefit related costs, rent, depreciation and amortization, professional services, and meetings and travel.
Income Taxes
The Company utilizes FASB Accounting Standards Codification (ASC) Topic 740, Income Taxes, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that were included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The Company follows FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (codified in FASB ASC Topic 740). When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statements of income.
At June 30, 2013 and 2012, the Company had not taken any significant uncertain tax positions on its tax returns for 2012 and prior years or in computing its tax provision for 2013.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base, most of which are in Australia. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.
Risks and Uncertainties
The Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.
8 |
Contingencies
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company's management and legal counsel assess such contingent liabilities, and such assessment inherently involves judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.
If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company's financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.
Cash and Equivalents
Cash and equivalents include cash in hand and cash in demand deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. At June 30, 2013 and 2012, the Company had $11,104 and $4,061 in cash in Australia and not covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.
Allowance for Doubtful Accounts
The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. The allowance for doubtful accounts was $0 at June 30, 2013 and $0 at June 30,2012.
Inventory
Inventories are valued at the lower of cost (determined on a weighted average basis) or market. Management compares the cost of inventories with the market value and allowance is made to write down inventories to market value, if lower. As of June 30, 2013 and 2012, inventory only consisted of the following:
2013 | 2012 | |||||||
Work in progress | $ | 124,492 | $ | 131,479 | ||||
Finished goods | 194,324 | 50,090 | ||||||
Raw material | 10,782 | 5,282 | ||||||
$ | 329,598 | $ | 186,851 |
Property, Plant & Equipment
Property and equipment is stated at cost and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The estimated useful lives of our property and equipment are generally as follows: computer software developed or acquired for internal use, three to 10 years; computer equipment, two to three years; buildings and improvements, five to 15 years; leasehold improvements, two to 10 years; and furniture and equipment, one to five years. As of June 30, 2013 and 2012, Property, Plant & Equipment consisted of the following:
2013 | 2012 | |||||||
Plant and Equipment | $ | 21,855 | $ | 23,305 | ||||
Accumulated Depreciation | (14,531 | ) | (11,102 | ) | ||||
$ | 7,324 | $ | 12,203 |
Depreciation was $5,117 and $5,137 for 2013 and 2012, respectively.
9 |
Fair Value of Financial Instruments
For certain of the Company's financial instruments, including cash and equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.
As of June 30, 2013, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at fair value.
Earnings Per Share (EPS)
Basic EPS is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similar to basic net income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if all the potential common shares, warrants and stock options had been issued and if the additional common shares were dilutive. Diluted EPS is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding options and the if-converted method for the outstanding convertible preferred shares. Under the treasury stock method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, convertible outstanding instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later).
The following table sets for the computation of basic and diluted earnings per share for period ended June 30, 2013 and 2012:
2013 | 2012 | |||||||
Basic and Diluted: | ||||||||
Basic: | ||||||||
Net income | $ | 21,752 | $ | (266,302 | ) | |||
Weighted average common shares outstanding | 100 | 100 | ||||||
Earnings per share | $ | 218 | $ | (2,663 | ) | |||
Diluted: | ||||||||
Net income | $ | 21,752 | $ | (266,302 | ) | |||
Weighted average common shares outstanding | 117 | 100 | ||||||
Earnings per share | $ | 186 | $ | (2,663 | ) |
10 |
Intangible Assets
The Company records identifiable intangible assets at fair value on the date of acquisition and evaluates the useful life of each asset.
Finite-lived intangible assets primarily consist of software development capitalized. Finite-lived intangible assets are amortized on a straight-line basis and are tested for recoverability if events or changes in circumstances indicate that their carrying amounts may not be recoverable. These intangibles have useful lives ranging from 1 to 10 years. No events or changes in circumstances indicate that impairment existed as of June 30, 2013.
Recently Issued Accounting Pronouncements
In December 2010, the FASB issued ASU 2010-29, which provides requirements over pro forma revenue and earnings disclosures related to business combinations. The ASU requires disclosure of revenue and earnings of the combined business as if the combination occurred at the start of the prior annual reporting period only. The Company adopted ASU 2010-29 effective October 1, 2011. The adoption did not have a material impact on the financial statements.
In June 2011, the FASB issued ASU 2011-05, which impacts the presentation of comprehensive income. The guidance requires components of other comprehensive income to be presented with net income to arrive at total comprehensive income. This ASU impacts presentation only and does not impact the underlying components of other comprehensive income or net income. In December 2011, the FASB issued an amendment to ASU 2011-05, which defers the requirement to present components of reclassifications of other comprehensive income on the face of the income statement. All other components of ASU 2011-05 are effective October 1, 2012. Adoption is not expected to have a material impact on the financial statements.
In July 2012, the FASB issued ASU 2012-02, which will allow an entity to first assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test for indefinite-lived intangible assets. The standard will be adopted on October 1, 2012, and is not expected to have a material impact on the financial statements.
Note 3 -- TRADE RECEIVABLE
As of June 30, 2013 and 2012, trade receivables are comprised of the following:
2013 | 2012 | |||||||
Trade receivable | $ | 11,120 | $ | 20,951 | ||||
Allowance for bad debt | – | – | ||||||
$ | 11,120 | $ | 20,951 |
Note 4- OTHER ASSETS
Other assets consist of the following as of June 30, 2013 and 2012:
2013 | 2012 | |||||||
VAT paid | $ | 68,168 | $ | – | ||||
Prepaid and other assets | 10,337 | 2,032 | ||||||
$ | 78,505 | $ | 2,032 |
11 |
Note 5 -- OTHER RECEIVABLE
Other assets consist of the following as of June 30, 2013 and 2012:
2013 | 2012 | |||||||
Development grant | $ | 98,792 | $ | – | ||||
Other receivable | 43,866 | 45,981 | ||||||
$ | 142,658 | $ | 45,981 |
Note 6 -- INTANGIBLE ASSETS
Intangible assets consist of the following as of June 30, 2013 and 2012:
2013 | 2012 | |||||||
Website | $ | 47,371 | $ | 14,658 | ||||
Accumulated amortization | (4,061 | ) | (853 | ) | ||||
$ | 43,310 | $ | 13,805 |
The intangible assets are amortized over 1 to 10 years. Amortization expense was $3,704 and $881 for 2013 and 2012, respectively. Amortization for the Company's intangible assets over the next five fiscal years from June 30, 2013 is estimated to be:
June 30, | ||||
2014 | $ | 6,180 | ||
2015 | 6,180 | |||
2016 | 6,180 | |||
2017 | 6,180 | |||
2018 | 6,180 | |||
Thereafter | 12,410 | |||
$ | 43,310 |
Note 7 -- TRADE AND OTHER PAYABLES
As of June 30, 2013 and 2012, trade and other payable are comprised of the following:
2013 | 2012 | |||||||
Trade payable | $ | 334,776 | $ | 380,853 | ||||
Employee benefits | 33,085 | 77,856 | ||||||
Other liabilities | 27,941 | 12,434 | ||||||
$ | 395,802 | $ | 471,143 |
Note 8 -- LINE OF CREDIT
The Company has line of credit available with a financial institution in Australia with a maximum limit of AUD $100,000 at an interest rate of 20.95% per annum. As of June 30, 2013 and 2012, the Company had outstanding balances of $93,968 and $47,442, respectively.
12 |
Note 9 -- LOANS
CURRENT | 2013 | 2012 | ||||||
Loan | $ | – | $ | 5,299 | ||||
$ | – | $ | 5,299 |
The Company entered into a term loan agreement for AUD $13,909 in 2011 with a bank in Australia. Interest rate was 24% per annum and required 24 monthly payments of AUD $735. As of June 30, 2013 the loan was paid off, at June 30, 2012 the Company had a balance due of$5,299.
Convertible Loan
During the year ended June 30, 2013 the company entered into two convertible loan arrangements with an individual at an annual interest rate of thirty percent (30%). On June 30, 2013 the individual exercised his right to convert the loans and accrued interest of $246,749 into equity and received seventeen (17) shares of Company. Interest expense on these loans was $19,254 during the year ended June 30, 2013.
Related Party Loans
The Company has loans payable in the amount of $293,640 and $157,733 to a shareholder of the Company as of June 30, 2013 and 2012, respectively. Interest is at three percent (3%) per annum. Interest expense on these loans for the years ended June 30, 2013 and 2012 was $9,904 and $4,808, respectively.
NON-CURRENT | 2013 | 2012 | ||||||
Related party loan | $ | 293,640 | $ | 157,733 | ||||
$ | 293,640 | $ | 157,733 |
Note 10 -- INCOME TAX
The following is a reconciliation of the provision for income taxes as the US federal income tax rate to the income taxes reflected in the Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended June 30, 2013 and 2012, respectively:
June 30, 2013 | U.S. | State | International | Total | ||||||||||||
Current | $ | – | $ | – | $ | – | $ | – | ||||||||
Deferred | ||||||||||||||||
Total | $ | – | $ | – | $ | – | $ | – |
June 30, 2012 | U.S. | State | International | Total | ||||||||||||
Current | $ | – | $ | – | $ | – | $ | – | ||||||||
Deferred | ||||||||||||||||
Total | $ | – | $ | – | $ | – | $ | – |
Reconciliation of the differences between the statutory U.S. Federal income tax rate and the effective rate is as follows:
June 30, 2013 | June 30, 2012 | |||||||
US statutory tax rate (benefit) | 34% | 34% | ||||||
Tax rate difference | (4% | ) | (4% | ) | ||||
Net operating loss | (30% | ) | (30% | ) | ||||
Tax expense at actual rate | --% | -- % |
Note 11 -- SUBSEQUENT EVENTS
Management has evaluated events subsequent through September 25, 2013 for transactions and other events that may require adjustment of and/or disclosure in such financial statements.
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Exhibit 99.2
BANJO AND MATILDA TRUST AND SUBSIDIARY
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 2013
Banjo and Matilda Trust | Eastern World Solutions, Inc. | Combined Historical | Proforma Adjustments | Combined Pro Forma | |||||||||||||||||
CURRENT ASSETS | |||||||||||||||||||||
Cash and cash equivalents | $ | 11,104 | $ | – | $ | 11,104 | $ | 11,104 | |||||||||||||
Trade and other receivables, net | 11,120 | – | 11,120 | 11,120 | |||||||||||||||||
Inventory | 329,598 | – | 329,598 | 329,598 | |||||||||||||||||
Deferred tax | – | – | – | – | |||||||||||||||||
Other current assets | 78,505 | – | 78,505 | 78,505 | |||||||||||||||||
TOTAL CURRENT ASSETS | 430,327 | – | 430,327 | 430,327 | |||||||||||||||||
NON-CURRENT ASSETS | |||||||||||||||||||||
Investment in subsidiary | 1 | 4,626,385 | – | ||||||||||||||||||
2 | (4,626,385 | ) | |||||||||||||||||||
Intangible assets, net | 43,310 | – | 43,310 | 43,310 | |||||||||||||||||
Other receivable | 142,658 | – | 142,658 | 142,658 | |||||||||||||||||
Property and equipment, net | 7,324 | – | 7,324 | 7,324 | |||||||||||||||||
TOTAL NON-CURRENT ASSETS | 193,292 | – | 193,292 | 193,292 | |||||||||||||||||
TOTAL ASSETS | $ | 623,619 | $ | – | $ | 623,619 | $ | 623,619 | |||||||||||||
CURRENT LIABILITIES | |||||||||||||||||||||
Trade and other payables | $ | 395,802 | $ | 7,123 | $ | 402,925 | $ | 402,925 | |||||||||||||
Line of credit | 93,968 | – | – | – | |||||||||||||||||
Accrued interest | 13,063 | – | 13,063 | 13,063 | |||||||||||||||||
Advances | – | 26,837 | 26,837 | - | 26,837 | ||||||||||||||||
TOTAL CURRENT LIABILITIES | 502,833 | 33,960 | 536,793 | 536,793 | |||||||||||||||||
NON-CURRENT LIABILITIES | |||||||||||||||||||||
Loan from related party | 293,640 | – | 293,640 | 293,640 | |||||||||||||||||
TOTAL NON-CURRENT LIABILITIES | 293,640 | – | 293,640 | 293,640 | |||||||||||||||||
TOTAL LIABILITIES | 796,473 | 33,960 | 830,433 | 830,433 | |||||||||||||||||
STOCKHOLDERS’ EQUITY | |||||||||||||||||||||
Common stock | 246,581 | 115 | 246,696 | 1 | 185 | 300 | |||||||||||||||
2 | (246,581 | ) | |||||||||||||||||||
Additional paid in capital | – | 76,304 | 76,304 | 1 | 4,626,200 | 246,281 | |||||||||||||||
2 | (4,456,223 | ) | |||||||||||||||||||
Accumulated deficit | (492,293 | ) | (76,419 | ) | (568,712 | ) | 2 | 76,419 | (492,293 | ) | |||||||||||
Current income (loss) | 21,752 | (33,960 | ) | (12,208 | ) | – | (12,208 | ) | |||||||||||||
Accumulated other comprehensive income (loss) | 51,106 | – | 51,106 | 51,106 | |||||||||||||||||
Treasury stock | – | – | – | – | |||||||||||||||||
TOTAL STOCKHOLDERS’ EQUITY | (172,854 | ) | (33,960 | ) | (206,814 | ) | (206,814 | ) | |||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 623,619 | $ | – | $ | 623,619 | $ | 623,619 |
Pro Forma Adjustments
#1 | Investment in subsidiary | 4,626,385 | – | ||||||
Common stock | 185 | ||||||||
Additional paid in capital | 4,626,200 |
To record investment for Banjo. Issuance of 18,505,539 at $0.25 per share
#2 | Investment in subsidiary | – | 4,626,385 | ||||||
Common stock | 246,581 | – | |||||||
Accumulated deficit | – | 76,419 | |||||||
Additional paid in capital | 4,456,223 |
To remove investment during consolidation and adjust equity for reverse merger.
1 |
UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
For the Fiscal Year Ended June 30, 2013
UNAUDITED
Banjo and Matilda Trust | Eastern World Solutions, Inc. | Combined Historical | Proforma Adjustments | Pro Forma | ||||||||||||||||
Revenue, net | $ | 1,724,181 | $ | – | $ | 1,724,181 | – | $ | 1,724,181 | |||||||||||
Cost of sales | 977,086 | – | 977,086 | 977,086 | ||||||||||||||||
Gross profit | 747,095 | – | 747,095 | 747,095 | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Payroll expenses | 240,450 | – | 240,450 | 240,450 | ||||||||||||||||
Administration expenses | 195,422 | 33,960 | 229,382 | – | 229,382 | |||||||||||||||
Marketing expense | 88,826 | – | 88,826 | 88,826 | ||||||||||||||||
Occupancy expenses | 47,518 | – | ||||||||||||||||||
Depreciation and amortization expenses | 8,821 | – | 8,821 | 8,821 | ||||||||||||||||
Total operating expenses | 581,037 | 33,960 | 567,479 | 567,479 | ||||||||||||||||
Income (loss) from operations | 166,058 | (33,960 | ) | 132,098 | 132,098 | |||||||||||||||
Other income (expense) | ||||||||||||||||||||
Interest income | 1 | – | 1 | 1 | ||||||||||||||||
Other income | 52,585 | – | 52,585 | 52,585 | ||||||||||||||||
Finance costs | (196,892 | ) | – | (196,892 | ) | – | (196,892 | ) | ||||||||||||
Total other income (expense) | (144,306 | ) | – | (144,306 | ) | (144,306 | ) | |||||||||||||
Income (loss) before income tax provision | 21,752 | (33,960 | ) | (12,208 | ) | (12,208 | ) | |||||||||||||
Income tax provision | – | – | – | – | ||||||||||||||||
Net income (loss) | 21,752 | (33,960 | ) | (12,208 | ) | (12,208 | ) | |||||||||||||
Earnings per share: | ||||||||||||||||||||
Basic | $ | 217.520 | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |||||||||
Diluted | $ | 185.915 | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |||||||||
Weighted average number of shares outstanding: | ||||||||||||||||||||
Basic | 100 | 11,500,000 | 11,500,100 | 22,005,439 | 33,505,539 | |||||||||||||||
Diluted | 117 | 11,500,000 | 11,500,117 | 22,005,422 | 33,505,539 |
Pro Forma Adjustments
#1 | To effect shares issued upon reorganization |
The Company did not include potentially dilutive shares issued or outstanding as the effect of those shares would have resulted in an antidilutive. |
2 |
UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
For the Fiscal Year Ended June 30, 2012
UNAUDITED
Banjo and Matilda Trust | Eastern World Solutions, Inc. | Combined Historical | Proforma Adjustments | Pro Forma | ||||||||||||||||
Revenue, net | $ | 950,812 | $ | – | $ | 950,812 | – | $ | 950,812 | |||||||||||
Cost of sales | 677,002 | – | 677,002 | 677,002 | ||||||||||||||||
Gross profit | 273,810 | – | 273,810 | 273,810 | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Pay roll expenses | 131,896 | – | 131,896 | 131,896 | ||||||||||||||||
Administration expenses | 165,286 | 19,942 | 185,228 | – | 185,228 | |||||||||||||||
Marketing expense | 144,303 | – | 144,303 | 144,303 | ||||||||||||||||
Occupancy expenses | 36,321 | – | – | – | ||||||||||||||||
Depreciation and amortization expenses | 6,018 | – | 6,018 | 6,018 | ||||||||||||||||
Total operating expenses | 483,824 | 19,942 | 467,445 | 467,445 | ||||||||||||||||
Income (loss) from operations | (210,014 | ) | (19,942 | ) | (229,956 | ) | (229,956 | ) | ||||||||||||
Other income (expense) | ||||||||||||||||||||
Interest income | 1 | – | 1 | 1 | ||||||||||||||||
Other income | 59 | – | 59 | 59 | ||||||||||||||||
Finance costs | (56,348 | ) | – | (56,348 | ) | – | (56,348 | ) | ||||||||||||
Total other income (expense) | (56,288 | ) | – | (56,288 | ) | (56,288 | ) | |||||||||||||
Income (loss) before income tax provision | (266,302 | ) | (19,942 | ) | (286,244 | ) | (286,244 | ) | ||||||||||||
Income tax provision | – | – | – | – | ||||||||||||||||
Net income (loss) | (266,302 | ) | (19,942 | ) | (286,244 | ) | (286,244 | ) | ||||||||||||
Earnings per share: | ||||||||||||||||||||
Basic | $ | (2,663.020 | ) | $ | (0.00 | ) | $ | (0.02 | ) | $ | (0.01 | ) | ||||||||
Diluted | $ | (2,663.020 | ) | $ | (0.00 | ) | $ | (0.02 | ) | $ | (0.01 | ) | ||||||||
Weighted average number of shares outstanding: | ||||||||||||||||||||
Basic | 100 | 11,500,000 | 11,500,100 | 22,005,439 | 33,505,539 | |||||||||||||||
Diluted | 100 | 11,500,000 | 11,500,100 | 22,005,439 | 33,505,539 |
Pro Forma Adjustments
#1 | To effect shares issued upon reorganization |
The Company did not include potentially dilutive shares issued or outstanding as the effect of those shares would have resulted in an antidilutive. |
3 |
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Note 1 – Basis for Pro Forma Presentation
The accompanying condensed combined pro forma financial statements illustrate the effect of the acquisition effective June 30, 2013 between Eastern World Solutions, Inc. (Company), and Banjo and Matilda Trust (Banjo) on the Company's financial position and results of operations. The pro forma condensed combined balance sheet as of June 30, 2013 is based on the historical balance sheets of the Company and Banjo as of that date. The pro forma condensed combined balance sheet assumes the acquisition took place on July 1, 2012.
The pro forma condensed combined income statement for the year ended June 30, 2013 is based on the historical income statements of Banjo and the Company, and assumes the acquisition took place on July 1, 2012. The pro forma condensed combined income statements for the fiscal year ended June 30, 2012 is based on the historical income statements of the Company and Banjo and assumes the acquisition took place on July 1, 2011.
The pro forma condensed combined financial statements may not be indicative of the actual results of the acquisition and there can be no assurance that the foregoing results will be obtained. In particular, the pro form condensed combined financial statements are based on the Company’s acquisition on June 30, 2013. The actual may differ.
The accompanying pro forma condensed combined financial statements should be read in conjunction with the historical financial statements of the Company and Banjo.
Note 2 – Acquisition
Eastern World Group, Inc. is an early stage company and was organized to engage in creating, marketing and selling of proprietary engagement marketing technologies and or acquiring complementary technologies and or other companies focused on the development and marketing of such technologies.
Banjo & Matilda Trust was formed in 2009 as a chartered proprietary limited entity in New South Wales, Australia. Banjo designs, produces, markets, distributes and sells luxury cashmere fashion.
The Reorganization has been accounted for as a reverse merger with Banjo being treated as the accounting acquirer.
Note 3 – Pro Forma Adjustments
Certain adjustments have been made to the historical financial statements in order to prepare the pro forma financial information as if the transaction had occurred at the beginning of the fiscal periods presented.
The adjustments are as follows:
(1) To record stock issuance of 18,505,539 common shares for the acquisition of Banjo.
(2) To eliminate the investment in subsidiaries during consolidation and equity for reverse merger.
4 |