iN THE HIGH COURT or NEW ZEALAND AUCKLAND REGISTRY - BETWEEN . SAMANTHA MARIE BERRY of 121 Kaikorai IValley Road, Glenross, Dunedin, Consultant Plaintiff AND CRIMSON CONSULTING LIMITED a duly incorporated company having its registered office at Suite 27, 2 Nuffield Street, Newmarket, Auckland, and carrying on business as an education support services provider Defendant STATEMENT OF CLAIM Dated {[144 NovemberZOlG 7 Solicitor: Mark Kirkland Counsel: Brent O?Callahar Plaintiff?s solicitors: Kirkland Morrison O?Callahan Barristers Solicitors Level 9, 1?3 Albert Street Box 2137 Auakland Ph: (09) 366 1366 Fax: (09) 366 1363 COURT HO brent@kmolegal.co.nz Dongjunumvan - I NOV 2015 - 3 joy@kmolegal.co.nz AUCKI STATEMENT OF CLAIM The plaintiff by its solicitors says:- 1 The defendant is a duly incorporated company having its registered office at Auckland and carrying on business there and elsewhere as an academic support service company, either directly or through subsidiaries. 2 On or about 26 October 2015 the plaintiff and the defendant entered into a written agreement under which the plaintiff agree to sell and the defendant agreed to buy the plaintiff?s shares, constituting the whole of the issued share capital in UniTutor Limited (the UniTutor Shares), a duly incorporated company (UniTutor) that was operating a business organising private group tdtoring for university students (the Agreement). 3 The Agreement included the following material terms: The completion date forthe transaction was 2 November 2015; The issue by the defendant of 161 ordinary shares in the defendant?s share capital (the Crimson Shares) to be held by it and transferred to the plaintiff by delivering to'the plaintiff duly executed and registrable transfers of the Crimson Shares and share certificates in the most recent form within 10 working days of the earlier of certain events, which included: (1) the defendant issuing shares and allottin?g them to any other person; and (2) the defendant transferring to any other person shares in its own issued share capital held by-it (Treasury Stock). gnawemr- - (the Share of Gross Revenue). ., ?Mega-- am.? The plaintiff would transfer the UniTutor Shares to the defendant on the completion date. Failure to meet an obligation would carry default interest at the rate of 15% per annum, compounding The Deposit was paid to a stakeholder. On or about 2 November 2015: the plaintiff transferred the UniTutor Shares to the defendant; and The Deposit was released to the plaintiff. mm 1?:an - First cause of action breach of contract failure to deliver the Crimson Shares 6 in the period between 2 November 2015 and 31 May 2016 the defendant issued new shares, allotted some of them to other persons and transferred treasury stock to other persons (the Crimson Share Dealings). Particulars On or about 24 November 2015, a total of 14,755 new shares were issued by the defendant. The details of the issue were: 78 new shares issued and allotted to ice Angels Nominees Limited; (ii) 12,396 new shares issued and allotted to Julian Robertson; 1,467 new shares issued and allotted to Chase Coleman; (iv) 40 new shares issued and allotted to Sheridan Adams; 40 new shares issued and allotted to Charles Bartlett; and (vi) 734 new shares issued and allotted to the defendant as treasury stock. On or about 19 January 2016, new shares were issued by the defendant and some Treasury Stock shares were transferred, which included the following: 10 new shares issued and allotted to Yongcai John Jiang; (C) (E) (ii) (W) (V) - 734 new shares issued and allotted to CCDD International Holdings Limited; I 147 new shares issued and allotted to the defendant as treasury stock; 85 new shares issued and allotted to Ice Angels Nominees Limited; and 2,006 new shares issued and allotted to EFU Investment and 734. treasury stock shares transferred from the defendant to EFU investment Limited. On or about 13 February 2016, a total of 374 new shares were issued by the defendant. The details of the issue were: (ii) 272 new shares issued and allotted to Anne Gaze; 29 new shares issued and allotted to Asher Meltzer; and 73 new shares issued and allotted to Ice Angels Nominees Limited. On or about 14 April 2016, the defendant transferred 177 Treasury Stock shares to Guy Wallace; and On or about 31 May 2016, the defendant transferred 63 Treasury Stock shares to Sujaree Xu. 7 in breach of the Agreement, the defendant failed to transfer to the plaintiff 161 shares in its issued share capital or at all. 8 On or about 21 July 2016 the defendant by board resolution converted each share in its issued share capital into 10 shares (the Crimson Share Split). 9 As a result of the Crimson Share split the plaintiff is entitled to 1,610 shares in the issued capital of the defendant. 3.. interest at 15% per annum, compounding and C. Costs. Additional cause of action Share of Gross Revenue 12 Under the Agreement, in order to protect the plaintiff?s entitlement to the Share of Gross RevenUe, the defendant agreed to refrain from: Diverting or seeking to divert the business of UniTutor away from UniTuto r; Diverting or seeking to divert the customers of UniTutor gained after the completion date away from UniTutor; Procuring that UniTutor carries out any act or makes any omission which is inconsistent with the maintenance of UniTutor's ability to earn revenue or unfair to the interests of the plaintiff or which may diminish or adversely affect UniTutor or the terms on which it trades or restricts in any way the ability of UniTutor to earn and achieve a maximum Gross Revenue; Procuring UniTutor to enter into any transaction, agreement or arrangement on terms which are less favourable to UniTutor than would be available from a third party dealing at arm?s length; and Procuring UniTutor to enter into any transaction with any person or otherwise do anything which could reasonably be expected to have an adverse effect on Gross Revenue (Gross Revenue Protection Provisions). 13 in breach of the Gross Revenue Protection Provisions the defendant operated the business of UniTutor in a way that: was not fair to the interests ofthe defendant; and/or adversely affected the ability of Uanutor to achieve a maximum Gross Revenue. Particulars Failed to commit any resources to the development of Uanutor?s business or to the provision of any of its services until on or about 21 January 2016; Diverted competent tutors away from the provision of tutoring services under UniTutor's business by offering more favourable rates to Uanutor?s tutors for tutoring under other businesses controlled by the defendant; (vi) As a result of any one or more of the defendant?s breaches of the Gross Revenue Protection Provisions the plaintiff has lost the opportunity to earn the Share of Gross RevenUe. 14 The defendant?s verbal representations to the plaintiff in the course 'of negotiating the Agreement between'l October 2015 and 1 November 2015 were: the defendant had; ?ailable to commit to achieve that growth; 15' The plaintiff has suffered loss being the value of the plaintiff?s opportunity to earn the Share of Gross Revenue. WHEREFORE THE PLAINTIFF SEEKS: A. An enquiry into damages; B. Interest at 15% per annum, compounding and C. Costs. FIRST SCHEDULE Financial Statements For the purposes of establishing the Gross Revenue In UniTutor: 1 PREPARATION AND AGREEMENT OF THE FINANCIAL STATEMENTS 1.1The Purchaser shall procure that the Company prepares draft Financial Statements for the Company and the Company?s subsidiaries and associated companies (if any), and deliver a copy thereof to the "Vendor within 1 calendar month from the end ofthe relevant 12 months period. 1.2The Purchaser shall deliver the draft Financial Statements to the Vendor together with all working papers and reocrds used to prepare the. Financial Statements and other supporting documentation as reasonably requested by the Vendor to enable the Vendor to review and approve the draft Financial Statements. 10 1.3The Vendor may review the draft Financial Statements in order to satisfy herself that they have been prepared in accordance with the provisions in this Schedule 3. 1.4If within a period of 20 Business Days of the Vendor?s receipt of the Financial Statements the Vendor notifies the Purchaser of any. disagreement or difference of opinion relating to Gross Revenue, the matter must be referred to the decision of an independent accountant to be appointed by agreement between the Pur?haser and the Vendor or if the parties cannot reach agreement within 5 Business Days, by the President of the New Zealand Institute of Chartered Accountants. The Purchaser must instruct its accountants to give the Vendor reasonable access to all their working papers during the review of the Financial Statements. The independent accountant shall deliver within 15 Business Days of appointment, a determination that will be binding on all parties. Subject to paragraph 1.5 but otherwise without limitation, the independent accountant is entitled to award costs against either party. 1.5The Purchaser shall pay all costs and expenses in connection with the preparation of the Financial Statements and the costs of the independent accountant. The independent accountant shall act as expert and not as arbitrator and his decision shall be final and binding on the parties. 1.6The draft Financial Statements shall be determined as final and binding either pursuant to either as a result of agreement between the Purchaser and the Vendors or as a result of the decision of the independent accountant pursuant to paragraph 1.4 ofthis Schedule 3. 2 BASIS OF PREPARATION Financial Statements shall be prepared: 2.1 In accordance with the provisions hereof and, subject thereto, on a basis consistent with the principles, policies and practices used in the preparation of the financial statements of the Company prepared most recently prior to the Completion Date; and 11 2.2 Subject to the provisions hereof, in accordance with GAAP. This STATEMENT OF CLAIM is filed by Mark Kirkland of the firm Kirkland Morrison O?Callahan on behalf of the abovenamed plaintiff whose address for service is the solicitor at Level 9, West Plaza Building, 1?3 Albert Street, Auckland. Documents for service on the abovenamed may be'left at that address or may be: 1. Posted to the solicitor at Box 2137, Shortland Street, Auckland 1140; or 2. Transmitted by electronic format to each of the following email addresses: a. b. ioy@kmolegal.co.nz. u. a .mr IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY BETWEEN SAMANTHA MAFIIE BERRY PLAINTIFF AND CRIMSON CONSULTING LIMITED DEFENDANT STATEMENT OF DEFENCE Dated: 16 Decemberr2016 - - - NIGFI SSW r" IBDEC I16 . Po Box 3798, Auckland 1140 TELEPHONMWWOO FACSIMILE +64 9 353 9701 m. SOLICITOH ACTING: JENNIFER HAMBL FIFRPONQIFII F: QFAN GOI I IN - 1 THE DEFENDANT BY ITS SOLICITORS SAYS in response to the plaintiff?s. statement of claim dated 11 November 2016 (Claim); 1. 2. It admits paragraph 1 of the Claim. . It admits paragraph 2 of the Claim. As to paragraph 3 of the Claim and its subparagraphs, it: (0) admits that the terms of the Agreement included those pleaded at subparagraphs and 3(9) of the Claim; and save as expressly admitted, otherwise denies paragraph 3 and Its subparagraphs; and - says further that the Agreement included the following terms: (iV) within 10 business days of the Vesting Date or the other specified events, the defendant was required to provide 7 documents to the plaintiff that included: (aa) duly executed and registrable transfers of the Crimson Shares; and (lob) the share certificates for the Crimson Shares in the most current form; - the Vesting Date means the third year's anniversary of, the commencement date of the employment agreement between the plaintiff, the defendant and UniTutor Limited (Employment Agreement) which was calculated to be 1 October 2018; the plaintiff was required to be employed by the defendant full? time for 3 years. to be eligible to receive the Crimson Shares; in the event that the Employment Agreement was terminated by the plaintiff Or was terminated by the defendant in accordance with clause 14 and/or clause 17 of the Employment Agreement at any time prior to the Vesting Date, the Crimson Shares would not vest and the plaintiff was required to return the Crimson Shares to the Purchaser; (9) (0) (vi) 2 the defendant would pay the plaintiff a Share of Gross Revenue of UniTutor's revenue unless the Employment Agreement was terminated by the plaintiff or was terminated by the defendant In accordance with clause 14 and/or 17 of the Employment Agreement at any time before the second year?s anniversary of its commencement date; (Vii): (iX) MW, . Ace?s any?; a sagas-v. i as? are of Gross FteVenue" means, provided the plaintiff. continued to work in a full-time capacity in accordance with the Employment Agreement betWeen the plaintiff and the defendant for a period of 24 months tram its commencement date, for each . 12-month period thereafter and without limitation as to time or amount, the average of the first two years? (following the Completion Date) Share of Gross Revenue; i if any party failed to pay any sum payable by that party under the Agreement when due and payable (whether on Completion or otherwise), that party would be required to pay interest on that overdue sum calculated daily at the Default Interest Flats of 15% and compounded and relies on the Agreement as if it were pleaded in full. As to paragraph 4 of the Claim, it: admits that the Deposit was paid; but otherwise denies paragraph 4 of the Claim; and says further that the Deposit was paid to the plaintiff on or about 10 November 2015. As to paragraph 5 of the Claim, it: 3 admits that the plaintiff transferred the UniTutor Shares to the defendant on or about 2 November 2015; but otherwise denies paragraph 5 of the Claim; and repeats paragraph 4 above. FIRST CAUSE OF ACTION AGAINST THE DEFENDANT: BREACH OF CONTRACT FAILURE TO DELIVER THE CRIMSON SHARES 6. As to paragraph 6 of the Claim, it: admits that in the period between 2 November 2015 and 31 May 2016 it issued new shares to third parties; but Particulars On or about 24 November 2015, the defendant issued the following shares to third parties: (aa) 40 shares were issued to Sheridan Adams; (bb) 40 shares were issued to Charles Bartlett; (cc) 12,396 shares wereissued to Julian Robertson; (dd) 1,467 shares were issued to Chase Coleman; and (ii) On or about 19 January 2016, the defendant issued the following shares: (aa) 10 shares were issued to Yongcai John Jiang; (bb) 158 shares were issued to ice Angel Nominee Limited; (cc) 2,740 shares were issued to EFU investment Limited; and (dd) 734 shares were issued to CCDD International Holdings Limited. On or about 13 February 2016, the defendant issued the following shares: (aa) 272 shares were issued to Anne Gaze; and (bb) 29 shares were issued to Asher Meltzer. (iv) On or about 14 April 2016, the defendant issued 177 shares to Guy Wallace. On or about 31 May 2016, the defendant issued 67 new shares to Sujaree Xu. save as expressly admitted, denies paragraph 6 of the Claim; and says further that: it did not hold treasury stock in the period between 2 November 2015 and 31 May 2016; and (ii) shares issued by the defendant in the period between 2 November 2015 and 31' May 2016 were. issued to the persons named in the defendant's share register on or about the dates recorded in that document. 7. As to paragraph 7 of the Claim it: admits that it did not transfer to the plaintiff 161 shares in its issued share capital or at all; but otherwise denies paragraph 7 of the Claim; and (0) says further that there was no obligation under the Agreement to transfer the Crimson Shares to the plaintiff because: in the period betWeen 2 November 2015 and 2 June 2016, there was no sale, disposition or transfer of any interest in any of the defendant's shares in Itself to a third party; and . (ii) after 2 June 2016, the plaintiff was no longer employed by the defendant. 8. it admits paragraph 8 cf the Claim and says further that the board resolved to split its issued shares on 19 July 2016. 9. It denies paragraph 9 of the Claim and repeats paragraph 7 above. 10. 11. ADDITIONAL CAUSE OF ACTION AGAINST DEFENDANT SHARE OF GROSS REVENUE 12. As. to paragraph 12 of the Claim and its subparagraphs, it: admits that the Agreement included the terms alleged at subparagraphs 12(a), 12(b), 12(d) and 12(e); but save as expressly admitted, denies paragraph 12 and its subparagraphs; and - says further that clause 3.4.3 of the Agreement reads as follows: "[The defendant will not at any time] procure that UniTutcr carries out any act or makes any omission which is inconsistent with the maintenance of the UniTutor and/or which is artificial or unfair to the interests of the [plaintiff] and/or which may diminish or adversely affect UniTutor or the terms upon which it trades or restricts in any way the ability for UniTutcr to earn and achieve a maximum Gross Revenue"; and 13. -14. 15. relies on the Agreement as if it were pleaded in full. lt denies paragraph 13 of the Claim. it deniesparagraph 14 of the Claim. It denies paragraph 15 of the Claim. AND BY WAY OF FIRST AFFIRIUIATIVE DEFENCE TO FIRST CAUSE OF ACTION AGAINST THE DEFENDANT: NO ENTITLEMENT T0 CRIMSON SHARES lt repeats paragraphs 3 and 6 to 11 above and says further thatabout 1 October 2015, the plaintiff commenced employment with the defendant and UniTutor Limited in the position of Chief Executive Officer of UniTutor and Vice President of Strategy for the defendant. On or about 26 October 2015, the plaintiff, the defendant and UniTutor Limited entered into a written employment agreement (Employment Agreement). The terms of the Employment Agreement provided inter alia that the term of the agreement commenced on 1 October 2015. Off-19 May 2016, the plaintiff tendered her resignation to the defendant, giving two weeks? notice to 2 June 2016. Particulars Resignation notice from the plaintiff to Mr Jamie Beaton dated 19 May 2016. The plaintiff ceased her employment with the defendant on or about 2 June 2016. . As a consequence of the plaintiff?s termination of her employment with the defendant and UniTutor Limited, the plaintiff: was not eligible under the terms of the Agreement to receive the . Crimson Shares as she was not employed by the plaintiff for a period of 3years; and - was required under the terms of the Agreement to return to the defendant any of the Crimson Shares that had vested in the plaintiff prior to the date of termination. If it is held that the defendant has breached the provisions of the Agreement pleaded at paragraph 3 of the Claim by not transferring the Crimson Shares to the plaintiff (which is denied), then the plaintiff has not suffered loss and/or any breaches of the defendant (which are denied) have not caused loss to the plaintiff. vt 6 AND BY WAY OF SECOND AFFIRMATIVE DEFENCE TO THE ADDITIONAL CAUSE OF ACTION AGAINST THE DEFENDANT: NO CAUSE OF ACTION 23. . lt repeats paragraphs 12 to 15 above and says further that-the additional cause of action pleaded by the plaintiff fails to disclose a cause of action against the defendant as the plaintiff?s loss is not alleged to have been caused by the defendant. AND BY WAY OF THIRD AFFIRMATIVE DEFENCE TO THE ADDITIONAL CAUSE OF ACTION AGAINST THE DEFENDANT: N0 ENTITLEMENT TO GROSS REVENUE . It repeats paragraphs 3 and 12 to 20 above and says further and in the alternative: 24. As a consequence of the plaintiff?s termination of her employment with the defendant, the plaintiff was not entitled under the terms of the Agreement to any Share of Gross Revenue in UniTutor. 25. If it is held that the defendant has breached the provisions of the Agreement pleaded at paragraph 12 of the Claim (which is denied), then the plaintiff has not suffered loss and/or any breaches of the defendant (which are denied) have not caused loss to the plaintiff. This STATEMENT OF DEFENCE is filed by SEAN CHRISTOPHER DAVID ALBERT GOLLIN, solicitor for the abovenamed defendant of the firm Minter Ellison Rudd Watts. The address for service of the abovenamed defendant is at the offices of Minter Ellison Fiudd Watts, Level 20, Lumley Centre, 88 Shortland Street, Auckland 1010: Documents for service on the abovenamed Defendant may be left at that address for service or may be: posted tothe solicitor at PO Box 3798, Auckland 1140; (to) left for the solicitor at the Document Exchange for direction to DX GP 24061; or transmitted by electronic format to each of the following email addresses: (ii) seangollin minterellison.co.nz