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CVC LIMITED Capital/Financing Update 2007

Mar 1, 2007

64728_rns_2007-03-01_15196c97-79d7-46cc-ac00-2b51b5641c6e.pdf

Capital/Financing Update

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CVC LIMITED

A.C.N. 002 700 361

NOTICE OF MEETING

NOTICE is hereby given that a General Meeting of CVC Limited will be held in the Board Room of the Company at Level 42, 259 George Street, Sydney on Monday 2 April 2007 at 11.00am.

BUSINESS

$1.$ Ratification of issue of first tranche of placement shares

To consider and if thought fit pass the following resolution as an ordinary resolution:

That for the purposes of Listing Rule 7.4 and for all other purposes, the shareholders approve, with immediate effect, the issue of 17,400,000 fully paid ordinary shares in the Company at an issue price of \$2.00 per share to institutions, sophisticated and professional investor clients of Bell Potter Securities Limited and Shaw Corporate Finance Pty Limited.'

Voting exclusion statement

The Company will disregard any votes cast on this resolution by any person who participated in the issue and any associate of such person. However, the Company will not disregard a vote if:

  • (a) it is cast by a person as the proxy for a person who is entitled to vote, in accordance with directions on the proxy form; or
  • (b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with directions on the proxy form to vote as the proxy decides.

$\overline{2}$ . Approval for proposed issue of second tranche of placement shares

To consider and if thought fit pass the following resolution as an ordinary resolution:

That for the purposes of Listing Rule 7.1 and for all other purposes, the Directors be authorised to issue 37,600,000 fully paid ordinary shares in the Company at an issue price of \$2.00 per share to institutions, sophisticated and professional investor clients of Bell Potter Securities Limited and Shaw Corporate Finance Pty Limited'

Voting exclusion statement

The Company will disregard any votes cast on this resolution by:

  • (a) any person who may participate in the proposed issue and any person who might obtain a benefit, except a benefit solely in the capacity as a holder of ordinary shares, if the resolution is passed; and
  • (b) any associate of such persons.

However, the Company will not disregard a vote if:

  • (a) it is cast by a person as the proxy for a person who is entitled to vote, in accordance with directions on the proxy form; or
  • (b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with directions on the proxy form to vote as the proxy decides.

$\overline{3}$ . Approval for participation of related parties in issue of second tranche of placement shares

To consider and if thought fit pass the following resolution as an ordinary resolution:

That, for the purposes of Listing Rule 10.11 and for all other purposes, the shareholders approve the issue and allotment of fully paid ordinary shares in the Company at an issue price of \$2.00 per share to the persons named in the Explanatory Memorandum accompanying the notice of meeting."

Votina exclusion statement

The Company will disregard any votes cast on this resolution by the proposed allottees and any of their associates. However, the Company will not disregard a vote if:

  • (a) it is cast by a person as a proxy appointed in writing that specifies how the proxy is to vote on the proposed resolution: and
  • (b) it is not cast on behalf of a related party to whom the resolution would permit a financial benefit to be given or an associate of such a related party.

$\overline{\mathbf{4}}$ . Approval for proposed issue of shares under Long Term Incentive Plan

To consider and, if thought fit, pass the following resolution as an ordinary resolution for the purposes of exception 9(b) of Listing Rule 7.2 and for all other purposes:

'That approval be given for the proposed issue and allotment of up to an additional 5 million fully paid ordinary shares in the Company under the CVC Long Term Incentive Plan.'

Voting exclusion statement

The Company will disregard any votes cast on this resolution by Alexander Beard (being the only director who is eligible to participate in the proposed Plan) and any of his associates. However, the Company need not disregard a vote if:

  • (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
  • (b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote in accordance with a direction on the proxy form to vote as the proxy decides.

5. Approval for issue and allotment of shares to Alexander Beard under the Long Term Incentive Plan

To consider and, if thought fit, pass the following resolution as an ordinary resolution for the purposes of Listing Rule 10.14 and for all other purposes:

'That, approval is given for the issue and allotment to the managing director of the Company, Mr Alexander Beard, of 1 million fully paid ordinary shares in the Company under the terms of the CVC Limited Executive and Non Executive Long Term Incentive Plan'

Voting exclusion statement

The Company will disregard any votes cast on this resolution by Mr Beard and any of his associates. However, the Company will not disregard a vote if:

  • (a) it is cast by a person as a proxy appointed in writing that specifies how the proxy is to vote on the proposed resolution: and
  • (b) it is not cast on behalf of a related party to whom the resolution would permit a financial benefit to be given or an associate of such a related party.

6. Other business

To transact any other business in accordance with the Constitution of the Company that may be brought forward.

INFORMATION

Notes to the Notice of Meeting & Explanatory Information accompanies and forms part of this Notice of Meeting.

PROXY FORM

A Proxy Form accompanies this Notice of Meeting.

ENQUIRIES

For enquiries or further information, please contact John Hunter at the Company on (02) 9087 8000.

By Order of the Board

John Hunter Company Secretary

Sydney 2 March 2007

CVC LIMITED

NOTES TO NOTICE OF MEETING & EXPLANATORY INFORMATION

GENERAL INFORMATION

Documents

A proxy form accompanies these documents.

Persons entitled to vote

Under regulation 7.11.37 of the Corporations Regulations 2001, the Directors have determined that the shareholding of each member for the purposes of ascertaining their voting entitlements at the General Meeting will be as it appears in the share register at 7.00pm Sydney time on 31 March 2007

How to vote

If you are eligible, you may vote by attending the meeting in person or by proxy or attorney. A member who is a body corporate may appoint a representative to attend and vote on its behalf.

Voting in person

To vote in person, attend the meeting at the time and place set out in this notice of meeting.

Voting by proxy

To vote by proxy, please complete, sign and return the enclosed proxy form in accordance with the following instructions. If you require an additional proxy form, the Company will supply it on request.

Proxies

A member who is entitled to vote at the meeting, may appoint:

  • one proxy if the member is only entitled to one vote: Ωf
  • one or two proxies if the member is entitled to more than one vote.

Where the member appoints 2 proxies, the appointment may specify the proportion or number of votes that each proxy may exercise. If the appointment does not specify a proportion or number, each proxy may exercise one-half of the votes, in which case any fraction of votes will be disregarded.

A proxy need not be a member of the Company.

The proxy form must be signed by the member or the member's attorney. Proxies given by a corporation must be executed in accordance with the Corporations Act and the constitution of that corporation.

The proxy form and the power of attorney or other authority (if any) under which it is signed or a certified copy, must be received by the Company at least 48 hours before the time for holding of the meeting or any adjourned meeting (or such lesser period as the Directors may permit) at:

The Company's registered office at Level 42, 259 George Street, Sydney, New South Wales 2000; or the following fax number at the Company's registered office: (02) 9087 8088.

Voting by attorney

A member may appoint an attorney to act on the member's behalf at the meeting. The power of attorney or such other evidence of the attorney's appointment and authority to the satisfaction of the Directors must be received by the Company at least 48 hours before the time for holding of the meeting or any adjourned meeting.

Enquiries

For further information, please contact John Hunter at the Company on (02) 9087 8000.

INFORMATION ON MATTERS TO BE CONSIDERED

Background

On 16 February 2007, the Company announced that it had successfully completed a placement of 55 million ordinary shares in the Company at an issue price of \$2.00 per share, to raise \$110 million.

The shares were placed with institutional and sophisticated investors of Bell Potter Securities Limited and Shaw Corporate Finance Pty Limited.

As the proposed placement exceeds the number of shares which may be issued without shareholder approval under Australian Securities Exchange Listing Rule 7.1, the placement shares will be issued in two tranches, with the first tranche of approximately 17.4 million shares issued on 22 February 2007 and the balance to be issued, subject to shareholder approval.

The Company also announced an offer of shares under a Share Purchase Plan to be run concurrently with the placement (SPP Offer).

Purpose of the meeting

The purpose of the meeting is to seek approval:

  • to issue the second tranche of the placement shares; and
  • to issue shares under the Long Term Incentive Plan.

Resolution 1 - Ratification of issue of first tranche of placement shares

Australian Securities Exchange Listing Rule 7.1 prescribes a 15% limitation on the number of shares that may be issued in each 12 month period without the prior approval of shareholders.

However, under Australian Securities Exchange Listing Rule 7.4, an issue of shares that was not subject to prior approval by shareholders may be excluded from the 15% limitation under Australian Securities Exchange Listing Rule 7.1 if it is subsequently approved by shareholders.

By issuing the first tranche of 17.4 million placement shares, the Company has substantially used its placement capacity under Listing Rule 7.1.

Accordingly, to provide the Board with the maximum flexibility to issue further shares without the need for shareholder approval, it seeks approval for the placement of 17.4 million shares which occurred on 22 February 2007. In accordance with Australian Securities Exchange Listing Rule 7.5, the Company provides the following information in respect of the shares issued:

Number 17,400,000 Ordinary Shares
Price \$2.00 per share
Terms Ordinary shares ranking pari passu with
existing shares on issue
Allottees Institutions, sophisticated and professional
investor clients of Bell Potter Securities
Limited and Shaw Corporate Finance Pty
Limited
Use of funds As announced on 16 February 2007.

namely:

  • Acquisition of the consumer foods ٠ division of Green's Foods
  • Opportunities to make private equity and direct property investments
  • Development of existing assets such as Ron Finemore Transport
  • Acquire/merge with existing equities manager to manage and grow listed share portfolio

No Director or their related entities participated in the issue of shares.

The effect of obtaining the approval will be that the Company's ability to issue the number of shares permitted under Listing Rule 7.1 without shareholder approval will not be affected by the issue of the first tranche shares.

The Directors consider it prudent that the Company have that ability and recommend that shareholders vote in favour of the proposed resolution.

Resolution 2 - Approval for proposed issue of second tranche of placement shares

Shareholder approval is sought under Listing Rule 7.1 for the proposed issue of 37,600,000 shares under the second tranche of the placement for an issue price of \$2.00 per share.

In accordance with Australian Securities Exchange Listing Rule 7.3, the Company provides the following information in respect of the shares to be issued:

Number maximum of 37.6 million Ordinary Shares
Price \$2.00 per share
Terms Ordinary shares ranking pari passu with
existing shares on issue
Allottees Institutions, sophisticated and professional
investor clients of Bell Potter Securities
Limited and Shaw Corporate Finance Pty
Limited
Use of funds Same purpose as set out in the explanatory
notes to Resolution 1.
Date of issue If approved, the Company will issue and
allot the shares as soon as practicable (the
anticipated allotment date is 3 April 2007)
and in any event by no later than 3 months
after the date of the meeting.

The effect of obtaining the approval will be that the Company's ability to issue the number of shares permitted under Listing Rule 7.1 without shareholder approval will not be affected by the issue of the second tranche shares.

The Directors consider it prudent that the Company have that ability and recommend that shareholders vote in favour of the proposed resolution.

Resolution 3 - Approval for participation of related parties in issue of second tranche of placement shares

Listing Rule 10.11 provides that a listed company must not issue or agree to issue any equity securities to a related party (which includes a director and its associates) without the approval of shareholders.

Certain related parties wish to participate in the Company's recent placement and, accordingly, shareholder approval is sought under Listing Rule 10.11 for the proposed issue of those shares at an issue price of \$2.00 per share.

If approval is given to the issue, then further approval is not required under Listing Rule 7.1 because of the exception to that rule set out in Listing Rule 7.2 exception 14.

In accordance with Australian Securities Exchange Listing Rule 10.13, the Company provides the following information in respect of the proposed shares to be issued:

Proposed
Allottee
Related party
relationship
Maximum
number of
securities to
be issued
Wenola Pty
Limited
Trustee of
superannuation fund
of John Leaver
(director)
500,000
Mira Leaver Spouse of John
Leaver
91.380
Sophie Leaver Daughter of John
Leaver
100,000
Alexander
Rapajic-Nickolls
Son of John Leaver 100.000
Kate Leaver Daughter of John
Leaver
100,000
Pascale Beard Spouse of Mr
Alexander Beard
(director)
25.000

The funds raised will be used for the same purpose as set out in the explanatory notes to Resolution 1.

If approved, the Company will issue and allot the shares as soon as practicable (the anticipated allotment date is 3 April 2007) and in any event by no later than 1 month after the date of the meeting.

The Directors (with Messrs Leaver and Beard) absent and not voting) recommend that shareholders vote in favour of the proposed resolution.

Resolution 4 - Approval for proposed issue of shares under the Executive Long Term Incentive Plan

Background

On 9 August 2004, shareholders approved:

  • the adoption of a Long Term Incentive Plan for executives (the Plan) and
  • for the purposes of Listing Rule 7.2, exception 9(b), the issue of up to 5 million shares under the Plan.

The purpose of the Plan is to align the interests of the shareholders and executives (Eligible Participants) of the Company by linking the rewards of Eligible Participants to the long term success of the Company. The Plan forms part of a comprehensive remuneration strategy for Eligible Participants.

A summary of the plan is set out in Annexure A to this explanatory memorandum.

Under Listing Rule 7.2, exception 9(b), shares issued under an employee incentive scheme pursuant to an approval of shareholders given within 3 years of the date of issue are excluded from the calculation of the 15% placement limit in Listing Rule 7.1.

3 million shares have been issued under the Plan since 9 August 2004, being the date of the last shareholder approval to issue shares under the Plan. Accordingly, a further 2 million shares can be issued before 9 August 2007 under the terms of the original approval. After that date, for the purposes of Listing Rule 7.2, exception 9(b), the original approval lapses and a new approval will be required to issue shares under that exception.

Approval sought

In anticipation of the lapse of the original 2004 approval, a new approval is being sought to exempt the issue of up to an additional 5 million shares under the Plan from the requirements of ASX Listing Rule 7.1.

The effect of obtaining the approval will be that the Company's ability to issue the number of shares permitted under Listing Rule 7.1 without shareholder approval will not be affected by the issue of up to an additional 5 million shares under the Plan.

The Directors consider it prudent that the Company have that ability and recommend that shareholders vote in favour of the proposed resolution.

Resolution 5 - Approval for issue and allotment of shares to Mr Alexander Beard under the Long Term Incentive Plan

Background

Listing Rule 10.14 prohibits the acquisition by a director of the Company (or an associate of the director) of shares in the Company under an employee incentive scheme without shareholder approval.

Accordingly, shareholder approval is sought under ASX Listing Rule 10.14 and for all other purposes for the proposed issue and allotment of 1 million fully paid ordinary shares under the Plan to the managing director, Mr Alexander Beard, or his nominee on the terms and conditions set out below.

Directors recommendation

The Directors (with Mr Beard absent and not voting) believe that Mr Beard's participation in the Plan is appropriate and will provide a suitable long-term incentive.

The Directors recommend that shareholders vote in favour of the proposed resolution.

Terms and conditions of proposed share issue

Participation

It proposed that Alexander Beard be invited to acquire up to 1 million shares under the Plan as part of his remuneration as Managing Director of the Company.

Issue price

Shares will be issued at the market price at the date of allocation, being the weighted average price at which those shares were traded on the ASX over the one week period before the date of allocation or, if there were no transactions on the ASX during that one week period, the last price at which an offer was made on the ASX in that period to buy such a share.

Performance hurdles

Subject to the Plan rules, shares will not generally be able to be sold or otherwise dealt with by Mr Beard until the loan has been settled and following performance hurdles have been satisfied.

  • (Minimum Employment Period) Except in the case of Special Circumstances or if the Board terminates the Plan, Mr Beard must continue to be employed as Managing Director of the Company for 36 months following the issue of the shares. If this is not satisfied, the Managing Director will forfeit all the shares he acquires under the Invitation.
  • (Performance Criterion) The performance criteria will be assessed over the period from the date of issue of the shares up to and including the third anniversary of the date of issue or in the case of earlier termination of the Plan over the period from the date of issue to the date of termination.

The performance criterion is that the total shareholder return to shareholders of the Company exceeds the rate of growth over the same period for the S&P/ASX Small Ordinaries Accumulation Index.

Total shareholder return is to be calculated by comparing the market value of a holding in the Company's shares, on the date of issue of shares under this resolution to Mr Beard, with the market value of the holding at the end of the vesting period with all dividends being reinvested in further shares of the Company on the day that the dividends were declared. For these purposes, share values are calculated by reference to the closing price on that day on Australian Securities Exchange for shares in the Company.

If the performance criterion is not satisfied, Mr Beard will be required to forfeit the shares by transferring them to the Company for their original subscription price, subject to adjustment for certain capital restructures, repay any outstanding borrowings in full and have no further entitlement under the Plan.

Fundina

The Board (with Mr Beard absent and not voting) proposes that the Company will lend Mr Beard sufficient funds to enable him to acquire the shares under the based on the share price determined according to the Plan rules.

As an example, if the share price determined according to the Plan was \$2.00 then the 1 million shares would require a loan from the Company of \$2 million. Other details of the terms applicable to the loan (including the interest rate) are set out in the Plan rules which are summarised in Annexure A

Further information

Mr Beard's remuneration currently comprises salary and superannuation to a total of \$220,000 per annum. He also holds 1 million shares issued at \$1.15 under the Plan, which are expected to become free of performance hurdles on 27 October 2007.

The opportunity costs or benefits forgone by CVC in issuing the shares include the potential dilutionary impact on the existing shareholders of the Company, compared with the non-dilutionary impact of cash remuneration. The Directors believe however the dilutionary impact to be immaterial and that any potential dilutionary impact is more than offset by the advantages accruing to the Company from providing an long term incentive to the managing director.

There are no materially adverse taxation consequences for CVC or its shareholders in the proposed share issue and loan.

In accordance with Australian Securities Exchange Listing Rule 10.15, the Company provides the following further information in respect of the proposed issue of shares:

  • Except for Mr Beard, who has been issued 1 million shares at an issue price of \$1.15 under the Plan, no other director (or associate of a director) has been issued shares under the Plan.
  • Except for Mr Beard, no other director (or associate of a director) is eligible to participate in the Plan.
  • The shares to be acquired by Mr Beard under this approval will be issued within 12 months of the date of this meeting.
  • As the Managing Director, Alexander Beard, is the only director of CVC currently entitled to participate in any employee incentive scheme of CVC, all the other directors and their associates will be entitled to vote on resolution 5.

Annexure A - Summary of Long Term Incentive Plan Rules

A full copy of the Plan rules is available for inspection at the Company's registered office and will be provided by the Company to shareholders on request. A summary of the terms of the Plan is set out below.

Eligibility

The Board, or a remuneration committee comprised of Board members, may from time to time invite Participants to participate in the Plan and acquire shares in the Company. Participants will acquire no shares under the Plan unless the requirements of the Corporations Act 2001 and the ASX Listing Rules have been complied with.

Manner of acquisition

The Participants will be invited, in writing, to subscribe for a new issue of the Company's shares. Generally, shares will be issued to the Participants at the market price at the date of the allocation, being the weighted average price at which those shares were traded on the ASX over the one week period before the date of allocation or, if there were no transactions on the ASX during that one week period, the last price at which an offer was made on the ASX in that period to buy such a share.

A Company provided loan as outlined below would fund the acquisition cost of the shares. The shares will be registered in the name of the Participants, but will remain subject to restrictions on dealing as specified by the directors (which may include applying a holding lock to the shares) until the Participants become entitled to withdraw the shares from the Plan (see below).

Performance hurdles

The Directors will specify the performance hurdles that will generally need to be satisfied before the Participants may withdraw their shares from the Plan. Generally, provided any loan outstanding has been repaid, the Participant may withdraw his/her shares from the Plan once the applicable performance hurdles have been satisfied.

In certain special circumstances (including if a Participant dies, becomes totally and permanently disabled (in the opinion of the Directors), reaches normal retirement age or if the Directors determine that a change of control of the Company has occurred or is likely to occur (for example, because the Company is subject to a takeover bid. proposes to enter into a scheme of arrangement or is to be wound up) the Rules permit the Participant (or his/her legal personal representative as the case may be) to withdraw from the Plan all of the Participant's shares that remain subject to the performance hurdles.

Loan and security

The Company may extend a loan to enable the Participants to acquire shares under the Plan as determined by the Board. Generally speaking, subject to special circumstances (see above) and Company discretion, the

loan is repavable within 3 years unless one of the following events occurs first in which case the loan will become repayable immediately:

  • the dismissal of the Participant;
  • the acceptance of the resignation of the Participant by the Company or any subsidiary of the Company:
  • failure to satisfy the performance hurdles within the required time period (as specified by the Board at the time of the invitation);
  • termination of the employment of the Participant otherwise than by way of dismissal or resignation.

Where a Participants employment is terminated because of special circumstances, the financial assistance will become payable on the earlier of the forfeiture of their plan shares or twelve weeks after termination of employment.

Interest will be payable on the balance of the loan in an amount equal to the value of any dividends paid by the Company in respect of the shares.

As security for the loan, the Participants will pledge the shares acquired under the Plan to the Company at the time the financial assistance is provided and will grant a charge over any benefits attributable to those shares, including bonus shares, rights, and dividends. Under the terms of the loan, the Participant authorises and directs the Company to sell any bonus shares and other rights attributable to the shares held by the Participant under the Plan and apply the proceeds and the value of any special dividends to reduce the outstanding balance of the loan.

Loans or other financial assistance will only be extended to the Participants as permitted by the Corporations Act.

Forfeiture and buy-back

The Participants will generally, subject to the special circumstances (see above), forfeit his/her shares where any of the following apply:

  • the performance hurdles specified by the Board are not satisfied:
  • the dismissal or resignation of the employee; or
  • the last sale price of the shares three years after the date of issue is lower than their original subscription price (unless the relevant Participants requests to retain the shares and the Board decides in its absolute discretion to waive the forfeiture).

In these circumstances, the shares will be transferred to the Company (subject to compliance with the Corporations Act and the ASX Listing Rules) for their original subscription price and be cancelled.

The Participants may vote their shares acquired under the Plan at meetings of shareholders of the Company.

Expenses of the Plan

The Company will meet the ongoing administration expenses of the Plan. The Participants will meet all outgoings and expenses in selling or otherwise dealing with his or her shares.

Other provisions

The Plan rules also contain various provisions relating to administration of the Plan, variation of the Plan rules and termination of the Plan.

CVC LIMITED

ACN 002 700 361

Registered Office: Level 42 AAP Centre, 259 George Street Sydney NSW 2000, Australia
Phone: (02) 9087 8000 Fax: (02) 9087 8088

PROXY FORM

I,
(FULL NAME, BLOCK LETTERS)
٥f
being a member of CVC Limited.
SECTION A
HEREBY APPOINT
٥f
or, failing him/her, the Chairman of the Meeting, as my/our proxy to vote for me/us and on my/our behalf at the General Meeting of the Company to be held on Monday 2 April 2007 at 11.00am (Sydney
time), or at any adjournment thereof. The proxy so appointed shall represent all my/our voting rights except those (if any) specified in B below.
SECTION B (DO NOT COMPLETE THIS SECTION UNLESS YOU WISH TO APPOINT TWO PROXIES)
AND I FURTHER APPOINT
οf

as my proxy to vote for me/us and on my/our behalf at the said meeting or at any adjournment thereof. The proxy, appointed by this Section B, shall represent my/our voting rights in respect of
.
If we instruct my/our proxy to vote as indicated below in respect of the resolutions:
Α в
Resolution 1-
Ratification of issue of first tranche of placement shares
For Against Abstain For Against Abstain
Resolution 2 -
Approval for proposed issue of second tranche of placement shares
Resolution 3 -
Approval for participation of related parties in issue of second tranche of
placement shares
Resolution 4 -
Approvat for proposed issue of shares under Long Term incentive Plan
Resolution 5-
Approval for issue and allotment of shares to Alexander Beard under the
Long Term Incentive Plan
If the Chair of the meeting is appointed as your proxy, or may be appointed by default and you do not wish to direct your proxy how to vote as your proxy in respect of a resolution,
please place a mark in the box. By marking this box you acknowledge that the Chair of the Meeting may exercise your proxy even if her she has an interest in the outcome of the
resolutions and votes cast by him/ her other than as proxy holder will be disregarded because of that interest.
If you do not mark this box, and you have not directed your proxy how to vote, the Chair will not cast your votes on the resolution and your votes will not be counted in catculating
the required majority if a poll is called on the resolution.
The Chair of the Meeting will vote all undirected proxies in favour of all resolutions.

Signature of Shareholder (s)

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Signature of Witness

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