Exhibit 2.1
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made the18th day of March, 2002.
B E T W E E N:
MAGICVISION MEDIA INC., a corporation incorporated under the laws of
Ontario,
(hereinafter referred to as the "Purchaser")
- and -
NTN INTERACTIVE NETWORK INC., a corporation incorporated under the
federal laws of Canada,
(hereinafter referred to as the "Vendor")
- and -
MAGIC LANTERN COMMUNICATIONS LTD., a corporation incorporated under
the laws of Canada,
(hereinafter referred to as the "Company")
WITNESSETH THAT:
WHEREAS the Vendor is the legal and beneficial owner of all the
issued and outstanding shares in the capital of the Company; and
AND WHEREAS the Vendor has agreed to sell to the Purchaser and the
Purchaser has agreed to purchase from the Vendor all of the issued and
outstanding shares in the capital of the Company upon and subject to the terms
and conditions of this Agreement;
- Page 2 -
NOW THEREFORE, in consideration of the premises and mutual
agreements herein contained and of other good and valuable consideration (the
receipt and sufficiency of which are acknowledged by each Party hereto), the
Parties agree with one another as follows:
1. INTERPRETATION
1.1 Definitions
Whenever used in this Agreement, unless there is something in the subject
matter or context inconsistent therewith, the following words and terms
shall have the respective meanings ascribed to them in this Section 1.1:
1.1.1 "Act" means the Business Corporations Act (Ontario) as in effect on
the date hereof;
1.1.2 "Accounts Receivable" means any and all accounts receivable, bills
receivable, trade accounts, book debts and insurance claims recorded
as receivable in the books and records of the Company, and any
amount due from third parties to the Company in connection with the
Business, including prepaid expenses, advances and any refunds
(other than refundable income taxes of the Company) and rebates
receivable in connection with the Business, other than from persons
who are not dealing at arm's length with the Company, and the
benefit of all security, guarantees and other collateral held by the
Company in connection with the Business;
1.1.3 "Affiliate" means an affiliate (as that term is defined in the Act)
of the Company and/or the Subsidiaries;
1.1.4 "Agreement" means this agreement and all schedules attached to this
agreement, in each case as they may be amended or supplemented from
time to time, and the expressions "hereof", "herein", "hereto",
"hereunder", "hereby" and similar expressions refer to this
agreement
- Page 3 -
and unless otherwise indicated, references to Articles and Sections
are to Articles and Sections in this agreement;
1.1.5 "Arm's length" will have the meaning ascribed to such term under
the Income Tax Act (Canada);
1.1.6 "Assets" means the undertaking, property and assets of the Company
and the Subsidiaries relating to the Business as a going concern,
of every kind and description and wheresoever situated but does not
include the Real Property located at 775 Pacific Road, Oakville,
Ontario;
1.1.7 "Auditors" means the Company's Auditor;
1.1.8 "Benefit Plan" has the meaning ascribed in Section 4.1.20;
1.1.9 "Best of Knowledge, Information and Belief" or any similar
expression when used in reference any representation or warranty of
a party shall be limited to its actual knowledge having made due
and careful inquiry;
1.1.10 "Business" means all of the operations of the Company and the
Subsidiaries including, without limitation, the distribution and
sale of educational videos and all operations related thereto.
1.1.11 "Business Day" means any day, other than a Saturday, Sunday or any
other day on which the principal chartered banks located in the
City of Toronto are not open for business during normal banking
hours;
1.1.12 "Claim" means any claim, demand, action, suit, litigation, charge,
complaint, prosecution or other proceeding for which one Party can
seek indemnification from the other Party pursuant to Sections 6.1
or 6.2;
1.1.13 "Closing" means the completion of the sale to and the purchase by
the Purchaser of the Shares and the completion of the transactions
contemplated by this Agreement including the transfer and delivery
of all documents of title to the Shares and the payment of the
Purchase Price;
- Page 4 -
1.1.14 "Closing Date" means March 18, 2002, or such other date as the
Parties may agree in writing as the date upon which the Closing
shall take place;
1.1.15 "Closing Documents" has the meaning ascribed in Article 7;
1.1.16 "Closing Time" means 10:00 o'clock in the forenoon on the Closing
Date or such other time on such date as the Parties may agree as
the time at which the Closing shall take place;
1.1.17 "Company's Auditor" means Harendorf LaBane Moss;
1.1.18 "Contracts" means those Material contracts, agreements,
commitments, entitlements and engagements of the Company and the
Subsidiaries relating to the Business and the Assets whether with
bankers, suppliers, customers or otherwise and including all
unfilled orders from customers; all forward commitments for
supplies or materials; all orders for new machinery and equipment
as yet undelivered; all of which are described in Schedule 1.1.18;
1.1.19 "Employment Legislation" means, collectively, the Labour Relations
Act (Ontario), the Ontario Human Rights Code, the Occupational
Health and Safety Act (Ontario), the Pay Equity Act (Ontario), the
Employment Standards Act (Ontario), the Pension Benefits Act
(Ontario), the Workers' Compensation Act (Ontario) and the
Unemployment Insurance Act (Canada);
1.1.20 "Equipment Leases" means those Material equipment leases,
conditional sales contracts, title retention agreements and other
agreements between the Company and Third Persons relating to
equipment used by the Company all of which are listed in Schedule
1.1.20;
1.1.21 "Financial Statements" means the consolidated balance sheet and
statement of earnings prepared by the Company for the fiscal year
ended on the 31st day of August, 2001 and for the quarter ending
November 30, 2001 and attached hereto as Schedule 1.1.21;
- Page 5 -
1.1.22 "GAAP" means the Canadian generally accepted accounting principles
consistently applied; "generally accepted accounting principles"
mean the accounting principles stated in the Handbook of the
Canadian Institute of Chartered Accountants, applicable as at the
date on which any calculation made hereunder is to be effective;
0.0.1 "Intellectual Property Rights" means all patents and inventions,
trade marks, including those described in Schedule 1.1.23 all trade
names and styles, logos and designs, trade secrets, technical
information, engineering procedures, designs, knowhow and processes
(whether confidential or otherwise), software, and other industrial
property (including applications for any of these) in each case
used or reasonably necessary to permit satisfactory operation of
the Business as presently constituted;
1.1.23 "Inter-Company Receivables" means all accounts receivable
(determined in accordance with GAAP) owing from any one or more of
the Company and the Subsidiaries to the Vendor and its Affiliates
(as defined in the Act, and excluding the Company and the
Subsidiaries) as at the Closing Date. For greater certainty,
Inter-Company Receivables includes all accounts receivable owing to
the Vendor, Chell Group Corporation, GalaVu Entertainment Network
Inc., 3484751 Canada Inc., Chell.com USA Inc., and any other
Affiliate or Subsidiary of Chell Group Corporation (excluding the
Company and the Subsidiaries);
1.1.24 "Interim Period" means the period from and including the date of
this Agreement to and including the Closing Date;
1.1.25 "Inventories" means all inventories of every kind and nature and
wheresoever situate owned by the Company and the Subsidiaries and
pertaining to the Business including, without limitation, all
inventories of raw materials, work-in-progress and finished goods
pertaining to the Business;
1.1.26 "Leases" means those leases of real property used by the Company in
the Business and identified in Schedule 1.1.27;
- Page 6 -
1.1.27 "Letter of Intent" means the letter agreement dated October 29,
2001 between the Purchaser and the Vendor concerning the subject
matter hereof;
0.0.2 "Licenses" means all licenses, registrations, qualifications,
permits and approvals, issued by any government or governmental
unit, agency, board, body or instrumentality, whether federal,
provincial or municipal, relating to the Business, including those
listed in Schedule 4.1.29, together with all applications for such
licenses or permits;
1.1.28 "November 30 Financial Statements" means the consolidated financial
statements of the Company for the period ended on November 30,
2001, prepared in accordance with GAAP consistently applied,
(except that no notes will be made by the Company's Auditors with
respect to such statements and there shall be no statement of
changes in financial position) consisting of balance sheet as at
such date, and statements of earnings and retained earnings and of
changes in financial position for such period, together with a copy
of the Company's consolidated spreadsheet provided to the Company's
Auditor for the quarter ending on November 30, 2001 (the
"Supporting Documents");
1.1.29 "Parties" means the Vendor, the Purchaser and the Company,
collectively, and "Party" means any one of them;
1.1.30 "Permits" means permits, licences, approvals and franchises which
the Company and/or the Subsidiaries hold and which are required by
the Company and/or the Subsidiaries to carry on the Business;
1.1.31 "Permitted Encumbrances" means in respect of the Business of the
Company:
(1) liens for Taxes, assessments and charges in favour of any
Governmental Authority due and being contested in good faith
and diligently by appropriate proceedings;
(2) liens for Taxes, either due and payable or due but for which
notice of assessment has not been given;
- Page 7 -
(3) undetermined or inchoate liens, charges and privileges
incidental to current operations, and statutory liens,
charges, adverse claims, security interests or encumbrances of
any nature whatsoever claimed or held by any Governmental
Authority that have not, at the Closing Time, been filed or
registered against the title to any Asset or served upon the
Company pursuant to law, or that relate to obligations not due
or delinquent;
(4) assignments of insurance provided to landlords (or their
mortgagees) pursuant to the terms of any real property lease,
and liens or rights reserved in any real property lease for
rent or for compliance with terms of such lease;
(5) security given in the ordinary course of the Company's
Business to any public utility or Governmental Authority in
connection with the operations of the Company's Business,
other than security for borrowed money; and
(6) any liens or other encumbrances which in the aggregate do not
have any material adverse effect on the use and value of the
affected asset.
1.1.32 "Person" includes an individual, corporation, partnership, joint
venture, trust, unincorporated organization, the Crown or any
agency or instrumentality thereof or any other juridical entity;
1.1.33 "Principals" means, collectively, Douglas R. Connolly, Wendy E.
Connolly, George B. Wright and Gregory J. Abrams, and "Principal"
means any one of them;
1.1.34 "Purchase Price" means the purchase price to be paid by the
Purchaser to the Vendor for the Shares as provided in Section 3.1;
1.1.35 "Real Property" means all freehold, leasehold, and other interests
in real and immoveable properties owned or used by the Company and
the Subsidiaries in connection with the Business, including,
without limitation, the freehold lands and premises described in
Schedule 1.1.37;
- Page 8 -
1.1.36 "Shares" means all of the issued and outstanding shares in the
capital of the Company, to be sold by the Vendor to the Purchaser
pursuant to the terms of this Agreement;
1.1.37 "Subsidiaries" means the Subsidiaries (as defined in the Act) of
the Company, namely, Tutorbuddy.com Inc., and Sonoptic Technologies
Inc. excluding always 1113659 Ontario Ltd.;
1.1.38 "Taxes" means federal, provincial or municipal taxes, including,
without limitation, income, sales, goods and services, excise,
business, duties and other like charges and all penalties, interest
and fines with respect thereto, payable to any federal, provincial,
municipal, local or other government or governmental agency,
authority, board, bureau or commission, domestic or foreign, and
"Tax Legislation" means legislation pursuant to which Taxes may be
exigible or payable;
1.1.39 "Third Party Claim" means for the purposes of Section 6.3 any
demand which has been made on, or communicated to the Vendor or the
Purchaser by or on behalf of any Person other than the Parties
hereto and which, if maintained or enforced, might result in a
loss, liability or expense of the nature described in either
Section 6.1 or Section 6.2.
1.2 Gender and Number
In this Agreement, words importing the singular include the plural and
vice versa and words importing gender include all genders.
1.3 Entire Agreement
This Agreement, including all Schedules hereto, together with the
agreements and other documents to be delivered under this Agreement constitute
the entire agreement between the Parties pertaining to the subject matter of
this Agreement and supersede all prior agreements (including, without
limitation, the Letter of Intent), understandings, negotiations and discussions,
whether oral or written, of the Parties and there are no warranties,
representations or other agreements between the Parties in
- Page 9 -
connection with the subject matter of this Agreement except as specifically set
forth in this Agreement. No supplement, modification or amendment to this
Agreement and no waiver of any provision of this Agreement shall be binding on
any Party unless executed by such Party in writing. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision (whether or not similar) nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
1.4 Article and Section Headings
Article and Section headings contained in this Agreement are included
solely for convenience, are not intended to be full or accurate descriptions of
the content of any Article or Section and shall not be considered to be part of
this Agreement.
1.5 Schedules
The following Schedules are an integral part of this Agreement:
Schedule 1.1.18 - Material Contracts
Schedule 1.1.20 - Equipment Leases
Schedule 1.1.21 - Financial Statements
Schedule 1.1.23 - Intellectual Property Rights
Schedule 1.1.27 - Leases
Schedule 1.1.37 - Real Property
Schedule 4.1.5 - Authorized and Issued Shares
Schedule 4.1.7 - Conflicting Agreements
Schedule 4.1.8 - Guarantees
Schedule 4.1.12(c) - Extraordinary Losses
Schedule 4.1.23 - Litigation
Schedule 4.1.25 - Accounts Receivable
Schedule 4.1.27 - Environmental Matters
Schedule 4.1.29 - Licences and Permits
Schedule 4.1.30 - Banks
Schedule 4.1.38a - Encumbrances
- Page 10 -
Schedule 4.1.38a - Assets
1.6 Applicable Law
This Agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario and the federal laws of Canada applicable in the
Province of Ontario and shall be treated, in all respects, as an Ontario
contract. Each Party to this Agreement irrevocably attorns to and submits to the
jurisdiction of the Courts of Ontario with respect to any matter arising under
or relating to this Agreement.
1.7 Currency
Unless otherwise indicated, all dollar amounts referred to in this
Agreement are in Canadian funds.
1.8 Accounting Terms
All accounting terms not otherwise defined have the meanings assigned to
them, and all calculations are to be made and all financial data to be submitted
are to be prepared, in accordance with "GAAP".
1.9 Business Days
Whenever any action or payment to be taken or made under this Agreement
shall be stated to be required to be taken or made on a day other than a
Business Day, any payment shall be made or such action shall be taken on the
next succeeding Business Day.
- Page 11 -
1.10 Statutory Instruments
Unless otherwise specifically provided in this Agreement any reference in
this Agreement to any law, by-law, rule, regulation, order, act or statute of
any government, governmental body or other regulatory body shall be construed as
a reference to those as amended or re-enacted from time to time or as a
reference to any successor to those.
1.11 Materiality
In this Agreement "Material" means, when used as an adjective, that any
breach, default or deficiency in the satisfaction of any covenant,
representation or warranty so described might reasonably:
1.11.1 give rise to an aggregate remedial cost (including consequential
loss and loss of profit) of more than $15,000 in any individual
instance or where all such instances arise pursuant to multiple
breaches of the same covenant, representation or warranty; or
1.11.2 where no adequate remedy is reasonably available, result in
disturbance in the ordinary conduct of the Business of an aggregate
cost properly attributable to such disturbance (including
consequential loss and loss of profit) of more than $15,000,
and "Materially" shall have the corresponding meaning.
2. PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale of Shares
Upon and subject to the terms and conditions of this Agreement, the Vendor
shall sell, transfer, assign and set over to the Purchaser and the Purchaser
shall purchase and acquire from the Vendor at the Closing Time, the Shares for
the Purchase Price payable as provided in Section 3.1.
- Page 12 -
2.2 Third Party Consents
On or before the Closing Date, the Vendor shall use reasonable best
efforts to obtain the consents of third parties as may be necessary arising from
the change of control of the Company and/or the Subsidiaries for the assignment
of the Contracts, the Equipment Leases, the Leases and the Licenses.
3. PURCHASE PRICE AND PAYMENT
3.1 Payment of Purchase Price
The Parties agree that the Purchase Price, subject to the adjustments
provided in this Agreement, will be One Million Eight Hundred and Fifty Thousand
Dollars ($1,850,000). The Purchase Price will be satisfied by certified cheque
or wire transfer of immediately available funds at the Closing Time.
3.2 {Intentionally Deleted}
3.3 Delivery of Certificates, etc.
The Vendor shall transfer and deliver to the Purchaser at the Closing
Time, share certificates representing the Shares duly endorsed for transfer to
the Purchaser (or as the Purchaser may otherwise direct) and shall cause the
Company to enter the Purchaser in the Company's share register as the holder of
the Shares.
- Page 13 -
3.4 Place of Closing
The Closing shall take place at the Closing Time at the offices of Miller
Thomson LLP, or at such other place as may be agreed upon by the Vendor and the
Purchaser.
3.5 Tender
Any tender of documents or money hereunder may be made upon the Parties or
their respective counsel and money may be tendered by official draft drawn upon
a Canadian chartered bank or trust company or by negotiable cheque payable in
Canadian funds and certified by a Canadian chartered bank.
4. REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Vendor
- Page 14 -
The Vendor hereby represents and warrants to the Purchaser as follows and
acknowledges that the Purchaser is relying on these representations and
warranties in entering into this Agreement and the transactions contemplated
under this Agreement. It is specifically agreed that insofar as the Vendor has
relied upon statements made and information provided to it by any of the
Principals of the Purchaser, acting in their capacity as officers of the Company
and or any one or more of the Subsidiaries, or in the event that any of the
Principals of the Purchaser have withheld information from the Vendor so that
the Vendor was not fully informed of any information required to make the
representations and warranties herein, including any information arising prior
to purchase of the Company from some of the Principals on October 1, 1996, in
making the following representations and warranties, the Vendor shall not be
liable to the Purchaser for any breach of such representation or warranty to the
extent that it was reasonable to rely upon such statement or information or to
the extent that any such information required to make such representations
truthful was withheld:
4.1.1 Organization and Good Standing - The Company and each of the
Subsidiaries is a corporation duly incorporated, organized and
validly existing in good standing under the laws of its respective
jurisdiction of incorporation.
4.1.2 Bankruptcy, etc. - No bankruptcy, insolvency or receivership
proceedings have been instituted or are pending against the Company
or any Subsidiary and the Company and each of the Subsidiaries is
able to satisfy its liabilities as they become due.
4.1.3 Capacity to Carry on Business - The Company and each of the
Subsidiaries has all necessary corporate power, authority and
capacity to own its property and assets and to carry on the Business
as presently owned and carried on by it, and the each one of the
Company and the Subsidiaries is duly licensed, registered and
qualified as a corporation to do business and is in good standing in
each jurisdiction in which the nature of the Business make such
qualification necessary, and all such
- Page 15 -
licenses, registrations and qualifications are valid and subsisting
and in good standing and none of them contains any burdensome term,
provision, condition or limitation which has or may have an adverse
effect on the Company or Subsidiary, as applicable.
4.1.4 Due Authorization - The Company and the Vendor have all necessary
corporate power, authority and capacity to enter into this Agreement
and to perform their obligations under this Agreement; the execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company and the
Vendor, respectively.
4.1.5 Authorized and Issued Capital of the Company and the Subsidiaries -
The authorized capital of the Company and each of the Subsidiaries
is as set forth in Schedule 4.1.5. The number of shares in the
capital of the Company and each of the Subsidiaries which have been
validly issued and are outstanding as fully paid and non-assessable
shares is also set forth in Schedule 4.1.5.
4.1.6 Title to Shares - The legal and beneficial owners of all issued and
outstanding shares of the Company is set forth together with their
respective shareholdings in Schedule 4.1.5. For greater certainty,
100% of the issued and outstanding shares in the capital of the
Company (the "Shares") are legally and beneficially owned by the
Vendor and, on Closing, the Purchaser shall acquire good and
marketable title to the Shares and the Inter-Company Receivables,
free and clear of all agreements, mortgages, pledges, charges,
hypothecs, claims, liens, security interests, encumbrances and
rights of other Persons. The Shares constitute all of the issued and
outstanding shares in the capital of the Company. No options,
warrants or other rights for the purchase, subscription or issuance
of shares or other securities of the Company or securities
convertible into or exchangeable for shares of the Company have been
authorized or agreed to be issued or are outstanding. There are no
restrictions on the transfer of the Shares except those set forth in
the Articles.
4.1.7 Absence of Conflicting Agreements - Except as set out in schedule
4.1.7, to the Vendor's Best Knowledge, Information and Belief,
except
- Page 16 -
for the Contracts, the Equipment Leases, and the Leases, and the
consent to the change of control of the Company which may be
required from lessors or other third parties thereunder in
connection with the completion of the transactions contemplated by
this Agreement, neither the Vendor nor the Company nor any
Subsidiary is a party to, bound or affected by or subject to any
indenture, mortgage, lease, agreement, instrument, statute,
regulation, arbitration award, charter or by-law provisions, order
or judgment which would be violated, contravened, breached by, or
under which any default would occur as a result of the execution
and delivery of this Agreement or the consummation of any of the
transactions contemplated under this Agreement. Without limiting
the generality of the foregoing, none of the shares or assets of
the Company or the Subsidiaries are currently subject to security
interests (whether secured or unsecured) and/or registrations
listed on any personal property registry or equivalent system,
except those relating purely to equipment leases.
4.1.8 Absence of Guarantees - Except for the guarantees set out on
Schedule 4.1.8, neither the Company nor any Subsidiary has given or
agreed to give, nor is it a party to or bound by, any guarantee of
indebtedness or other obligations of third parties nor any other
commitment by which the company is, or is contingently, responsible
for such indebtedness or other obligations.
4.1.9 Enforceability of Obligations - This Agreement constitutes a valid
and binding obligation of the Vendor and the Company, enforceable
against each in accordance with its terms, provided that
enforcement may be limited by bankruptcy, insolvency, liquidation,
reorganization, reconstruction and other similar laws generally
affecting enforceability of creditors' rights and that equitable
remedies such as specific performance and injunction are in the
discretion of the court from which they are sought.
4.1.10 Books and Records - The Company's books and records and the books
and records of each of the Subsidiaries are fully and accurately
maintained and its books of account provide for all excise, sales,
business and property taxes and other rates, charges, assessments,
levies, duties, taxes, contributions, fees, licenses and other
governmental charges of whatsoever kind and nature that have become
- Page 17 -
or may become due and payable on or before the Closing Time. The
provisions and reserves in the books of account of the Company in
respect of same, together with the provisions and reserves in the
books of account of the Company in respect of taxes charged upon
its income for which returns have been filed but for which no
assessments have yet been received or determined, are adequate and
the Vendor does not know of any basis for any additional assessment
for any of such years for which adequate provision has not been
made. The minute books of the Company and each Subsidiary are
complete and accurate and reflect all material actions taken and
resolutions passed by the directors and shareholders of the Company
or Subsidiary, as applicable, since the date of its incorporation
and all such meetings were duly called and held and the share
certificate books, register of shareholders, register of transfer
and registers of directors are complete and accurate.
4.1.11 Financial Statements - The items reported in the Financial
Statements are reported in accordance with GAAP applied on a basis
consistent with that of the preceding period and present fairly:
(1) all of the assets of the Company as at November 30, 2001 that
are of a nature customarily reflected or reserved against in a
balance sheet,
(2) all of the liabilities of the Company as at November 30, 2001
that are of a nature customarily reflected or reserved against
in a balance sheet, and
(3) the sales and earnings from operations of the Company for the
12 month period ended November 30, 2001.
Without limiting the foregoing, the Financial Statements truly and
fairly present the assets and liabilities of the Company and its
financial position as at the dates thereof, and the results of its
operations for the fiscal periods reported on, and, in particular,
without limiting the foregoing, include all liabilities or
obligations of any nature, whether accrued, contingent or
otherwise, and whether due or to become due as at the dates of the
Financial Statements. Since November 30, 2001, there has not been
any material adverse change in the financial position of the
Company, computed on a basis consistent with that used in the
- Page 18 -
preparation of the balance sheet included in the Financial
Statements other than operating losses in the normal course,
material changes related to the sale of real property known
municipally as 775 Pacific Avenue, Oakville, Ontario and related
to the sale of 100% of the issued and outstanding shares in the
capital of 1113659 Ontario Ltd. to the Vendor.
4.1.12 Absence of Unusual Transactions - Since November 30, 2001, the
Company has not:
(1) transferred, assigned, sold or otherwise disposed of any of
the assets shown in the Balance Sheet to the Financial
Statements except in the ordinary and usual course of business
and except for the sale of real property known municipally as
775 Pacific Avenue, Oakville, Ontario and related to the sale
of 100% of the issued and outstanding shares in the capital of
1113659 Ontario Ltd. to the Vendor.;
(2) discharged or satisfied any lien or encumbrance, or paid any
obligation or liability (fixed or contingent) other than
liabilities included in the balance sheet to the Financial
Statements and liabilities incurred since the date of the
Financial Statements in the ordinary and normal course of
business except for the discharge of indebtedness to the
Vendor in the amount of $3,796,475 in exchange for 100 common
shares of the Company;
(3) suffered any extraordinary losses or waived any rights of
Material value other than those losses and waived rights
disclosed in Schedule 4.1.12(c);
(4) entered into any Material commitment or transaction not in the
ordinary and usual course of business except for the sale of
real property known municipally as 775 Pacific Avenue,
Oakville, Ontario, sale of 100% of the issued and outstanding
shares in the capital of 1113659 Ontario Ltd. to the
Vendor.and the discharge of indebtedness to the Vendor in the
amount of $3,796,475 in exchange for 100 common shares of the
Company;
- Page 19 -
(5) made any general wage or salary increases or other payments in
respect of personnel which it employs except in the ordinary
course of business;
(6) declared or paid any dividends or declared or made any other
distribution on any of its securities or shares of any class,
and has not directly or indirectly, redeemed, purchased or
otherwise acquired any of its securities or shares of any
class or has agreed to do so;
(7) made any capital expenditure, except in the usual and ordinary
course of business,;
(8) mortgaged, pledged, subjected to lien, granted a security
interest in or otherwise encumbered any of the assets of the
Company or any Subsidiary;
(9) incurred or assumed any obligation or liability (fixed or
contingent), except secured and unsecured current obligations
and liabilities incurred in the ordinary and normal course of
business;
(10) issued or sold any shares in its capital or any warrants,
bonds, debentures or other securities of the Company or any
Subsidiary or issued, granted or delivered any right, option
or other commitment for the issuance of any such securities;
(11) amended or changed or taken any action to amend or change its
Articles or by-laws; or
(12) authorized or agreed or otherwise become committed to do any
of the foregoing.
4.1.13 Employment Payments by the Company to Date of Closing - The Company
and each of the Subsidiaries has paid to the date of this Agreement
all amounts payable on account of salary, bonus payments and
commission to or on behalf of any and all Employees;
- Page 20 -
4.1.14 Worker's Compensation - The Company and each of the Subsidiaries
has not prepared or duly filed all estimates of payroll and other
documentation and related information, required pursuant to the
Worker's Compensation Act (Ontario) (and comparable legislation in
British Columbia, New Brunswick and Illinois) which are required to
be filed by it up to and including the date hereof. The Vendor has
included, in the Vendor's returns, payment in respect of employees
of the Company and its Subsidiaries where applicable. The Vendor
has paid all premiums, penalties, interest, charges, fines and
other monies which have become due pursuant to any assessment which
has been issued to the Vendor based on the above method of filing.
As at the date hereof, there are no proceedings or actions pending
against the Company or any Subsidiary for the assessment collection
of premiums or penalties and there are no material questions or
assessments which are the subject of dispute with the Worker's
Compensation Board or related authority; however, the Company will
be required to file its own return. There are not now any
outstanding appeals, actions or claims under the Worker's
Compensation Act (Ontario). The Vendor shall cause the Company and
each Subsidiary to execute and deliver to the Purchaser such
consent or consents as may be required to permit the Purchaser to
obtain such information and materials from the Worker's
Compensation Board as the Purchaser may reasonably require. The
parties hereto confirm that the Company will be responsible for any
premiums, penalties, interest, charges, fines and other monies due
in the event of any reassessment.
4.1.15 Labour Matters - To the Vendor's Best Knowledge, Information and
Belief, there are no:
(1) unfair labour practice or other similar complaint under any
Employment Legislation against the Company or any of the
Subsidiaries pending before the provincial labour tribunals or
any similar agency or body having jurisdiction therefor;
(2) labour strike threatened against or involving the Company or
any of the Subsidiaries;
(3) certification application outstanding respecting the
Employees;
- Page 21 -
(4) grievance or arbitration proceeding or governmental proceeding
relating to the Employees pending, nor is there any such
proceeding threatened against the Company or any of the
Subsidiaries which might have a material adverse effect on the
Company or the Subsidiary or on the conduct of the Business;
(5) collective bargaining agreement currently being negotiated by
the Company or any Subsidiary; and (1)
(6) Employees in receipt of or who have claimed benefits under any
weekly indemnity, long term disability or workers'
compensation plan or arrangement or any other form of
disability benefit programme.
4.1.16 Material Contracts - To the Vendor's Best Knowledge, Information
and Belief, except for the Contracts, the Equipment Leases, the
Leases, neither the Company nor any Subsidiary is a party to or
bound by any Material contract or commitment relating to the
Business whether oral or written. The Contracts, the Leases, and
the Equipment Leases are all in good standing and in full force and
effect unamended and no Material default or breach exists in
respect of them on the part of any of the parties to them and no
event has occurred which, after the giving of notice or the lapse
of time or both, would constitute such a default or breach; the
foregoing includes all the presently outstanding material contracts
entered into by the Company in the course of carrying on the
Business.
4.1.17 Residence - The Vendor is not a non-resident of Canada within the
meaning of the Income Tax Act (Canada).
4.1.18 Insurance - The Company and the Subsidiaries maintain such policies
of insurance, issued by responsible insurers, as are appropriate to
the Business and its property and assets, in such amounts and
against such risks as are customarily carried and insured against
by owners of comparable businesses, properties and assets; all such
policies of insurance are in full force and effect, and will
continue to be so until the Closing Date, and neither the Company
nor any Subsidiary is in default, whether as to the payment of
premium or otherwise, under the terms of any such policy, nor has
the Company or any Subsidiary failed to give
- Page 22 -
any notice or present any claim under any such insurance policy in
due and timely fashion.
4.1.19 Compliance with Applicable Laws - To the Vendor's Best Knowledge,
Information and Belief, the Company has conducted and is conducting
the Business in compliance in all material respects with all
applicable laws, rules and regulations of each jurisdiction in
which the Business is carried on and are not in breach of any such
laws, rules or regulations, except for breaches which are not
Material.
4.1.20 No Pension Plan - Neither the Company nor any Subsidiary has a
pension plan for the Employees.
4.1.21 Benefit Plans - To the Vendor's Best Knowledge, Information and
Belief, neither the Company nor any Subsidiary is a party to any
management agreement, pay equity plan, vacation or vacation pay
policy, employee insurance, hospital or medical expense programme
or pension, retirement, profit sharing, stock bonus or other
employee benefit plan, programme or arrangement or to any executive
or key personnel incentive or other special compensation
arrangement or to other contracts or agreements with or with
respect to officers, employees or agents other than those listed
and described in Schedule 4.1.20 (the "Benefit Plans").
4.1.22 Health and Safety - The business premises located on the Real
Properties are in compliance with applicable health and safety
legislation and regulations and are not subject to any orders or
directions of an occupational health and safety authority or
similar body.
4.1.23 (i) Litigation - Company - Except as disclosed in Schedule 4.1.22,
there is no suit, action, litigation, arbitration proceeding or
governmental proceeding, including appeals and applications for
review, in progress, pending or, to the Best of the Knowledge,
Information and Belief of the Vendor, the Company and each of the
Subsidiaries threatened against or relating to the Company and/or
any Subsidiary, affecting its properties or Business which if
determined adversely to the Company and/or any Subsidiary might
Materially and adversely affect the properties, business, future
prospects or financial
- Page 23 -
condition of the Company or any Subsidiary and there is not
presently outstanding against the Company or any Subsidiary any
judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or
arbitrator. Neither the Company nor any Subsidiary has received any
notices to the effect that the operations or the assets of the
Company or Subsidiary are (i) not in full compliance with all of
the requirements of applicable federal, provincial or local
environmental, health and safety statutes and regulations, or (ii)
the subject of any federal or provincial remedial or control action
or order, or any investigation or evaluation as to whether any
remedial action is needed to respond to a release or threatened
release of any contaminant into the environment or any facility or
structure.
4.1.24 (ii) Litigation - Shares - There is no suit, action, litigation,
arbitration proceeding or governmental proceeding, including
appeals and applications for review, in progress, pending or, to
the Best of the Knowledge, Information and Belief, after due
enquiry, of the Vendor and the Company, threatened against or
relating to the Shares and there is not presently outstanding
against the Vendor any judgment, decree, injunction, rule or order
of any court, governmental department, commission, agency,
instrumentality or arbitrator which would affect the Vendor's
ability to sell the Shares as provided for in this Agreement.
4.1.25 Accounts Receivable - Except as disclosed in Schedule 4.1.25, to
the Best of Knowledge, Information and Belief of the Vendor, all
Accounts Receivable are bona fide and good and subject to an
allowance for doubtful accounts taken in accordance with GAAP are
collectible without set-off or counterclaim.
4.1.26 Inter-Company Receivables - The Inter-Company Receivables, if any,
a re rendered in the books and records of the Company and the
Subsidiaries (as payables) and are set forth in the Financial
Statements (and will be set forth in the November 30 Financial
Statements) in accordance with GAAP.
4.1.27 Environmental Matters - To the Vendor's Best Knowledge, Information
and Belief, except as disclosed in Schedule 4.1.26, there are no
facts, circumstances or conditions that directly or indirectly
relate to
- Page 24 -
the Company or the Subsidiaries or the past or present conduct of
the Business with respect to environmental, health or safety
matters that have existed or now exist and already have had or may
have a material adverse effect on the operation of the Business or
use of the Assets and Real Property or that may give rise to any
Material liability on the Purchaser concerning the protection,
preservation or remediation of the natural environment, whether
air, land, surface water or groundwater. 1.1.1
4.1.28 Consents - Except for Contracts, Equipment Leases and Leases
requiring the consent to the change of control of the Company there
are no consents, authorizations, licenses, franchise agreements,
permits, approvals or orders of any person or government required
to permit the Vendor to complete this transaction with the
Purchaser.
4.1.29 Licenses and Permits - To the Vendor's Best Knowledge, Information
and Belief, all of the licenses, registrations, qualifications,
permits, bonds and approvals (including environmental licenses or
permits) issued by any government or governmental unit, agency,
board, body or instrumentality, whether federal, provincial or
municipal, related to the Company or any Subsidiary or necessary
for the conduct of the Business have been obtained and are current
as of the date hereof, except for those listed on Schedule 4.1.29.
4.1.30 Banks - Schedule 4.1.30 contains a true and complete list
(including address and account number) of each bank, trust company
or similar institution in which the Company has an account or a
safety deposit box and the names of all persons, including any
person or firm holding a power of attorney, authorized to draw
thereon or to have access thereto and a description of all credit
facilities, lines of credit, loan agreements and the like which the
Company has with any financial institution. All of the bank
accounts operated in connection with the Business are maintained
and operated solely in the name of the Company. There are no bank
accounts operated in the name of any division or business or trade
name or style of the Company.
4.1.31 Intellectual Property - To the Vendor's Best Knowledge, Information
and Belief, the Intellectual Property Rights are valid and
subsisting and held by the Company and/or the Subsidiaries with
good and marketable title and are in good standing free and clear
of all security interests,
- Page 25 -
claims, liens, objections and infringements of every nature and
kind and all registrations therefor have been kept renewed and are
in full force and effect. To the Vendor's Best Knowledge,
Information and Belief, the operation of the Business does not
involve infringements or claimed infringement of any patent,
trademark, trade name or copyright. No employee of the Company
owns, directly or indirectly in whole or in part, any Intellectual
Property Rights. 1.1.1
4.1.32 Inventories - To the Vendor's Best Knowledge, Information and
Belief, the Inventories are in good and merchantable condition and
are usable or saleable in the ordinary course of business for the
purposes for which they are intended.
4.1.33 Tax Matters - Neither the Company nor any Subsidiary is liable for
any Taxes, due and unpaid at the date hereof, other than those
Taxes that may be accrued but not due and payable as at the Closing
Date. Neither the Company nor any Subsidiary is in default in
filing any returns or reports covering any Taxes or other reports
in respect of its income, business or property. The Company and
each of the Subsidiaries have filed all reports or returns with
respect to income, capital, sales (including goods and services and
Ontario employer health tax reports), excise, business and property
taxes and all other taxes and customs duties which are required to
be filed by them up to the date of this Agreement (and all such
returns and reports are correct and complete in all material
respects) and have paid, or where permitted by law, provided
security for, all Taxes as shown on such reports or returns to the
extent such Taxes are payable or have or may become due and has
paid, or where permitted by law, provided security for, all
assessments received by them. The Company and each of the
Subsidiaries have withheld from any amounts payable, including
without limiting the generality of the foregoing, from any
salaries, bonuses or dividends paid by them all deductions required
by law to be made therefrom and has remitted the same to the proper
tax or other authorities. Federal Canadian income tax assessments
have been issued to the Company and each of the Subsidiaries
covering all past periods through the fiscal year ended August 31,
2000 (and such assessments, if any amounts were owing in respect
thereof, have been paid or, where permitted by law, security
therefor has been provided). There are no currently outstanding
reassessments, suits, actions, proceedings,
- Page 26 -
investigations, claims or questions which have been issued or
raised by any governmental authority relating to any such reports
or tax returns and neither the Company nor any Subsidiary has any
negotiations or discussions in progress with respect to any
eventual assessment or reassessment with any such authority.
Neither the Company nor any Subsidiary has executed or filed with
any taxing authority any waiver or agreement extending the period
for assessment or collection of any income or other taxes.
4.1.34 Undisclosed Liabilities - To the Vendor's Best Knowledge,
Information and Belief, neither the Company nor any Subsidiary has
liabilities (whether accrued, absolute, contingent or otherwise) of
any kind except liabilities disclosed on the Financial Statements
and except liabilities incurred in the ordinary course of business
since November 30, 2001 which are not inconsistent with past
practice, are not Material and adverse to the business, assets,
financial condition or results of operations of the Company, and do
not Materially violate any covenant contained in this Agreement or
constitute a Material misrepresentation or breach of warranty made
in or pursuant to this Agreement.
4.1.35 Non-Arm's Length Transactions - The Company has not entered into
any contracts, agreements, options, or arrangements or incurred or
assumed any obligation or liability (whether fixed or contingent)
with, on behalf of, or with respect to the Vendor or other
"non-arm's length person" (as that term is defined in the Income
Tax Act (Canada)) or a Related Person, whether jointly or
severally.
4.1.36 Accountants - Since 1999, the accountants of the Company have been
the firm of Lazar, Levine and Felix, Chartered Accountants, of the
City of New York.
4.1.37 Restrictions on Business - To the Vendor's Best Knowledge,
Information and Belief, neither the Company nor any Subsidiary is a
party to any agreement, indenture, mortgage, debenture, security
agreement, lease, agreement or instrument, or subject to any
restriction in the Articles or by-laws or subject to any
restriction imposed by regulatory authorities having jurisdiction
over it or subject to any statute, order, regulation or rule or to
any writ, judgment, injunction or decree of any court or federal,
provincial, municipal or other
- Page 27 -
governmental department, commission, board of instrumentality which
might prevent or interfere with the use of its Assets or which may
limit or restrict or otherwise adversely affect the Business,
properties, assets or financial condition, other than statutory
provisions and restrictions of general application to its
particular business. The Business is the only business carried on
by the Company and the Subsidiaries on the date hereof.
4.1.38 Titles to Properties - Except for any liens, charges or
encumbrances or other minor imperfections of title which are not in
the aggregate Material and which do not Materially impair the use
of the property or assets subject thereto and except for the Leases
listed on Schedule 1.1.27 and except as disclosed in the Financial
Statements and Schedule 4.1.38a, the Company has good and
marketable title to all its properties, interests in properties and
assets, real and personal (which assets include, but are not
limited to, the assets listed in Schedule 4.1.38b) free and clear
of all mortgages, pledges, charges, hypothecs, liens, title
retention agreements, security interests, encumbrances or rights of
other Persons, of any kind or character.
4.1.39 Real Property - The Company is not a party to or bound by any
leases of real property other than the Leases. Where applicable,
all rental and other payments required to be paid by the Company
pursuant to the Leases have been duly paid and the Company is not
in default or in breach of any material term or provision of the
Leases.
4.1.40 Leased Equipment - To the Vendor's Best Knowledge, Information and
Belief, Schedule 1.1.27 sets forth a true and complete list of all
equipment, other personal property and fixtures in the possession
or custody of the Company and its Subsidiaries which, as of the
date hereof, is leased or held under license or similar arrangement
and of the leases, licenses, agreements or other documentation
relating thereto.
4.1.41 Condition of Assets - All material tangible assets of the Company
and the Subsidiaries used in or in connection with the Business are
in good condition, repair and, working order and have been properly
maintained, having regard to the use and age thereof.
- Page 28 -
4.1.42 Securities Legislation - The Company is a private company within
the meaning of the Securities Act (Ontario) and the sale of the
Shares by the Vendor to the Purchaser will be made in compliance
with all applicable securities legislation.
4.1.43 Powers of Attorney - To the Vendor's Best Knowledge, Information
and Belief, no person has any tax or other power of attorney from
the Company or any Subsidiary with respect to any matter.
4.1.44 Product Liability Claims - To the Vendor's Best Knowledge,
Information and Belief, there is no pending or threatened product
liability or similar claim which relates to the products
manufactured, distributed or sold by the Company which is not
covered fully by insurance.
4.1.45 Supporting Documents - The Supporting Documents (as defined in
paragraph 1.1.30 hereof) are a full and complete copy of the
Company's consolidated spread sheet provided to the Company's
Auditor for the three month period ending on November 30, 2001;
4.1.46 Disclosure - None of the foregoing representations, warranties and
statements of fact contains any untrue statement of material fact
or omits to state any material fact necessary to make any such
representation, warranty or statement not misleading to a
prospective purchaser of the Shares seeking full information
concerning the matters which are the subject of such
representations, warranties and statements.
4.1.47 1113659 Ontario Ltd. - 1113659 Ontario Ltd. was an inactive
corporation at the time that NTN Interactive Network Inc. purchased
100% of the issued and outstanding shares in the capital of 1113659
Ontario Ltd. from the Company (the "1113659 Sale"). At the time of
the 1113659 Sale, 1113659 Ontario Ltd. had no material assets and,
without limiting the foregoing, did not own any assets required by
the Company or the Subsidiaries to carry on their respective
businesses.
4.1.48 Inter-Company Receivables - There are no Inter-Company Receivables.
- Page 29 -
4.2 Representations and Warranties of the Purchaser
The Purchaser hereby represents and warrants to the Vendor as follows:
4.2.1 Organization and Good Standing - The Purchaser is a corporation duly
incorporated, organized, and validly existing and in good standing
under the laws of the Province of Ontario.
4.2.2 Authority Relative to this Agreement, etc. - The Purchaser has all
necessary corporate power, authority and capacity to enter into this
Agreement and any other agreements entered into pursuant hereto and
to perform its obligations hereunder; the execution and delivery of
this Agreement and the consummation of the transactions contemplated
hereby or thereby have been duly authorized by all necessary
corporate action on the part of the Purchaser.
4.2.3 Absence of Conflicting Agreements - The Purchaser is not a party to,
bound or affected by or subject to any indenture, mortgage, lease,
agreement, instrument, charter or by-law provision, statute,
regulation, order, judgment, decree or law which would be violated,
contravened or breached by, or under which any default would occur
as a result of the execution and delivery by it of this Agreement or
the consummation of the transactions contemplated herein, except as
disclosed in this Agreement.
4.2.4 Enforceability of Obligations - This Agreement and any other
agreements entered into pursuant hereto constitute valid and binding
obligations of the Purchaser enforceable against it in accordance
with its terms provided that enforcement may be limited by
bankruptcy, insolvency, liquidation, reorganization, reconstruction
and other similar laws generally affecting enforceability of
creditors' rights and that equitable remedies such as specific
performance and injunction are in the discretion of the court from
which they are sought.
4.2.5 Governmental Consents - No governmental or regulatory
authorizations, consents, approvals, filings or notices pertaining
to the Purchaser are required to be obtained or given or waiting
period is
- Page 30 -
required to expire in order that the purchase and sale of the Shares
may be consummated by the Purchaser or for the Purchaser to carry
out its obligations set out in this Agreement. 1.1.1
4.3 Non-Waiver
No investigations made by or on behalf of the Purchaser at any time shall
have the effect of waiving, diminishing the scope of or otherwise affecting any
representation or warranty made by the Vendor herein or pursuant hereto. No
waiver by the Purchaser of any condition, in whole or in part, shall operate as
a waiver of any other condition.
4.4 Nature and Survival of Representations and Warranties
All statements contained in any certificate or other instrument delivered
by or on behalf of a Party pursuant to or in connection with the transactions
contemplated by this Agreement shall be deemed to be made by that Party under
this Agreement. All representations, warranties, covenants and agreements
contained in this Agreement on the part of each of the Parties shall survive the
Closing, the execution and delivery hereunder of any instruments of conveyance,
assignments or other instruments of transfer of title to any of the Shares and
the payment of the consideration contemplated under this Agreement, except that
the representations and warranties contained in this Article shall only survive
for five years following Closing (except for the Vendor's representations and
warranties relating to tax matters which shall survive for the period of time
during which the taxes to which such representations and warranties relate may
be reassessed by the relevant taxation authority, unless the Vendor has been
fraudulent in filing a return or supplying information to any taxation authority
under any taxation legislation or unless the Vendor has agreed to extend by
waiver the period in which tax reassessments may be made, in which case the
survival of those representations and
- Page 31 -
warranties relating to tax matters shall be unlimited) after which period of
time, if no claim shall, prior to the expiry of such period, have been made
under this Agreement against a Party with respect to any incorrectness in or
breach of any representation or warranty made herein by such Party, such Party
shall have no further liability under this Agreement with respect to such
representation or warranty.
5. COVENANTS OF THE PARTIES
5.1 Conduct of Business Prior to Closing
During the Interim Period the Vendor shall do or cause the Company to do
the following and the Purchaser shall ensure that the Principals do not take any
action that would interfere with the Vendor's ability to do or cause the
following:
5.1.1 Conduct Business in Ordinary Course - Except as otherwise
contemplated or permitted by this Agreement, the Company shall
conduct the Business in the ordinary and normal course and shall
not, without the prior written consent of Purchaser, enter into any
transaction which, if entered into before the date of this
Agreement, would cause any representations or warranties of the
Vendor contained in this Agreement to be incorrect or constitute a
breach of any covenant or agreement of the Vendor contained in this
Agreement. The Vendor shall use its best efforts to preserve intact
the Company and the Business and the relationship existing with the
customers of the Company.
5.1.2 Continue Insurance - The Company shall continue in force and in good
standing all existing insurance maintained by it.
5.1.3 Perform Obligations - The Company shall comply with all applicable
laws, regulations, by-laws and other governmental requirements of
each jurisdiction in which the Business is carried on.
- Page 32 -
5.1.4 Material Changes - The Company shall not take any action which
would result in any Material adverse change, which shall be deemed
to include the circumstances specified in Section 4.1.12, in or to
the Business or sell, transfer or dispose of any of the assets of
the Company, other than in the ordinary course of business.
5.1.5 Liens, Vendor - The Vendor shall not suffer or permit any
mortgages, pledges, hypothecs, security interests, deemed trusts,
liens, charges, rights or claims of other Persons, or any other
encumbrances whatsoever, to attach to or affect the Shares.
5.1.6 Liens, Company - The Company shall not suffer or permit any
mortgages, pledges, hypothecs, security interests, deemed trusts,
liens, charges, rights or claims of other Persons, or any other
encumbrances whatsoever, to attach to or affect the assets of the
Company other than those specifically consented to by the Purchaser
in writing.
5.1.7 Wage Increases, Hiring and Firing - The Company shall not make or
commit to make any wage increases or grant any bonuses to any of
the employees of the Company, nor employ any new employees in the
Company without the Purchaser's consent nor terminate the
employment of any key employees of the Company, without the
Purchaser's consent.
5.1.8 Accounts Receivable - The Company shall not write off any existing
Account Receivable without the prior written consent of the
Purchaser except for usual adjustments made in the ordinary course
of business for prompt payment.
5.1.9 Transfer Real Property - The Vendor shall, at its sole expense,
cause the Company to transfer the real property known municipally
as 775 Pacific Road, Oakville, Ontario (the "Owned Real Property")
to the Vendor prior to the Closing Date, together with all
mortgages, liens and encumbrances against the Owned Real Property.
The Owned Real Property shall not form part of the Assets of the
Company on the Closing Date.
5.1.10 Encumbrances - Take all commercially reasonable steps to ensure
that the Shares and the Inter-Company Receivables will be
transferred to the
- Page 33 -
Purchaser free and clear of all charges, mortgages, liens and
encumbrances on the Closing Date and to ensure that the Assets are
free and clear of all charges, mortgages, liens and encumbrances on
the Closing Date.
5.1.11 Transfer of 1113659 Ontario Ltd. - The Vendor or an Affiliate of
the Vendor shall purchase from the Company, on terms acceptable to
the Company,100% of the issued and outstanding shares in the
capital of 1113659 Ontario Ltd. at the sole expense of the Vendor.
5.1.12 Discharge of Indebtedness to Vendor. - The Vendor shall have
capitalized all of the indebtedness of the Company to the Vendor in
the amount of $3,796,475 in exchange for 100 common shares of the
Company;
5.2 Access for Investigation
The Vendor and the Company shall permit the Purchaser and its employees,
agents, counsel and accountants or other representatives, between the date of
execution of this Agreement and the Closing Time, without interference to the
ordinary conduct of the Business, to have access during normal business hours to
the premises and to all the books, accounts, records and other data of the
Company (including, without limitation, all corporate and accounting records of
the Vendor relating exclusively to the Company) and to furnish to the Purchaser
such financial and operating data and other information with respect to the
Company, as the Purchaser shall from time to time reasonably request to enable
confirmation of the matters warranted in Section 4.1.
5.3 Delivery of Books and Records
- Page 34 -
At the Time of Closing, the Vendor and the Company shall deliver to the
Purchaser the following documents only to the extent that same are in the
possession of the Vendor and not in possession of the Purchaser: (i) lists of
suppliers and customers of the Company; (ii) employee records with respect to
the Employees; (iii) advertising, promotional and marketing materials which
relate to the Company; and (iv) files relating to the assets of the Company. The
Purchaser agrees that it will preserve the documents, books and records so
delivered to it for a period of six years from the Closing Date, or for such
other period as is required by any applicable law, and will permit the Vendor or
their authorized representatives reasonable access to those books and records in
connection with the affairs of the Vendor relating to any tax matters, workers'
compensation, litigation matters or other matters that may require access to
such records. The Vendor agrees that it will preserve the documents, books and
records which are not delivered to the Purchaser for a period of six years from
the Closing Date, or for such longer period as is required by applicable law,
and will permit the Purchaser or its authorized representatives reasonable
access to those books and records in connection with the affairs of the Company
relating to any tax, workers' compensation or litigation matters.
5.4 Actions to Satisfy Closing Conditions
Each Party agrees to take all such actions as are within its power to
control, and to use its best efforts to cause other actions to be taken which
are not within its power to control, so as to ensure compliance with any
conditions set forth in Article 7 which are for the benefit of the other Party.
5.5 Navision Accounting System
- Page 35 -
On the request of the Purchaser prior to the Closing Date, the Vendor will
use its reasonable best efforts to assist the Purchaser in negotiating with
Navision a software licence in the name of the Purchaser for the accounting
system currently used by the Company, together with 10 seat licences and all
related Navision documentation. The Purchaser shall be responsible for all costs
associated with the issuance of such licence.
6. INDEMNIFICATION, SETOFF AND RELEASE
6.1 Indemnification by Vendor
6.1.1 Subject to this Article 6, if the transactions contemplated by this
Agreement are consummated, the Vendor agrees to indemnify and hold
the Purchaser harmless from and against and in respect of any loss,
damage, claim, cost or expense whatsoever, including any and all
incremental out-of-pocket costs, including, without limitation, all
reasonable legal and accounting fees, which the Purchaser or the
Company, as the case may be, may incur, suffer or be required to
pay, pursuant to or in defence or prosecution of any claim, demand,
action, suit, litigation, change, complaint, prosecution, appeal or
other proceeding (collectively, a "Claim") that may be made or
asserted against or affect the Purchaser, or the Company provided,
however, that the subject matter of any such Claim relates to or
arises out of or in connection with the following matters:
(1) any misrepresentation or breach of any warranty, agreement,
covenant or obligation of the Vendor contained in this
- Page 36 -
Agreement or in any agreement, schedule, certificate or other
document required to be entered into or delivered by the
Vendor;
(2) any reassessment of the Company or any Subsidiary for income,
corporate, realty or business taxes (and all interest and/or
penalties relating thereto) in respect of which tax returns
have been filed before the Closing Time which result in the
payment of tax in excess of the amount already paid on such
returns for the periods of such returns;
(3) any guarantee given by the Purchaser of the obligations of the
Vendor and/or Affiliates of the Vendor (other than the Company
and the Subsidiary).
6.1.2 The obligation of the Vendor to indemnify the Purchaser as set forth
in Section 6.1.1(a) for any loss, damage, claim, cost or expense
shall be subject to the limitation period referred to in Section 4.4
with respect to survival of representations and warranties. In
addition, the obligation of the Vendor to indemnify the Purchaser as
set forth herein shall only be in respect of any loss, damage, claim
or cost or expense that may have arisen or incurred during the time
period in which the Vendor had sole ownership of the Company, being
from October 1, 1996 to the Closing Date and which loss, damage,
claim, cost or expense is in excess of $15,000.
6.2 Indemnification by Purchaser
- Page 37 -
6.2.1 Subject to this Article 6, if the transactions contemplated by this
Agreement are consummated, the Purchaser agrees to indemnify and
hold the Vendor harmless against and in respect of any loss, damage,
claim, cost or expense whatsoever, including any and all incremental
out-of-pocket costs, including, without limitation, all reasonable
legal and accounting fees, which the Vendor may incur, suffer or be
required to pay, pursuant to any claim, demand, action, suit,
litigation, change, complaint, prosecution or other proceeding
(collectively, a "Claim") that may be made or asserted against or
affect the Vendor, provided, however, that the subject matter of any
such claim relates to or arises out of or in connection with any
misrepresentation or breach of any warranty, agreement, covenant or
obligation of the Purchaser contained in this Agreement or in any
agreement, schedule, certificate or other document required to be
entered into or delivered by the Purchaser or in connection with any
guarantee given by the Vendor of the obligations of the Company
and/or the Subsidiaries to a third party.
6.2.2 The obligation of the Purchaser to indemnify the Vendor as set forth
in Section 6.2.1 for any loss, damage, claim, cost or expense shall
be subject to the limitation period referred to in Section 4.4 with
respect to survival of representations and warranties and shall be
further limited to losses, damages, claims, costs and expenses only
that are cumulatively in excess of $15,000.
6.3 Mutual Release
- Page 38 -
6.3.1 The Vendor, Chell Group Corporation, Company, Douglas Connolly and
Wendy Connolly shall enter into on Closing a full and final mutual
release of all actions, causes of action, suits, debts, dues,
covenants, accounts, contracts, rights, damages, costs, judgments,
expenses, claims or demands which, each may now have, or may
hereafter have, whether in law or in equity, against one another.
Without limiting the generality of the foregoing, Douglas R.
Connolly and Wendy E. Connolly shall specifically release the Vendor
and its parent or affiliated companies from any employment
agreements entered into prior to the Closing Date save and except
for any options in Chell Group Corporation which may have vested on
or before the Closing Date, which options and the rights under such
options shall not be released.
Notwithstanding the generality of the foregoing, this Release shall
not apply to any actions, causes of actions, suits, debts, dues,
covenants, accounts, contracts, rights, damages, costs, judgements,
expenses, claims or demands which Douglas R. Connolly, Wendy E.
Connolly, the Company or the Vendor may have or may hereafter have
against each other arising out of their respective obligations set
out in this Agreement.
6.4 Claims by Third Parties
6.4.1 Promptly upon receipt by either the Purchaser or the Vendor (herein
referred to as the "Indemnitee") of notice of any Third Party Claim
in respect of which the Indemnitee proposes to demand
indemnification
- Page 39 -
from the other party to this Agreement (the "Indemnitor"), the
Indemnitee shall forthwith give notice to that effect to the
Indemnitor.
6.4.2 The Indemnitor shall have the right, exercisable by giving notice to
the Indemnitee not later than 30 days after receipt of the notice
described in Section 6.3.1, to assume the control of the defence,
compromise or settlement of the Third Party Claim, provided that:
(1) the Indemnitor shall first deliver to the Indemnitee its
written consent to be joined as a party to any action or
proceeding relating thereto; and,
(2) the Indemnitor shall at the Indemnitee's request furnish it
with reasonable security against any costs or other
liabilities to which it may be or become exposed by reason of
such defence, compromise or settlement.
6.4.3 Upon the assumption of control by the Indemnitor as aforesaid, the
Indemnitor shall, at its expense, diligently proceed with the
defence, compromise or settlement of the Third Party Claim at the
Indemnitor's sole expense, including employment of counsel
reasonably satisfactory to the Indemnitee, and in connection with
such proceedings, the Indemnitee shall co-operate fully, but at the
expense of the Indemnitor, to make available to the Indemnitor all
pertinent information and witnesses under the Indemnitee's control
and to make such assignments and take such other steps as in the
opinion of counsel for the Indemnitor are necessary to enable the
Indemnitor to conduct such defence, provided always that the
Indemnitee shall be entitled to reasonable
- Page 40 -
security from the Indemnitor for any expense, costs or other
liabilities to which it maybe or may become exposed by reason of
such co-operation.
6.4.4 The final determination of any such Third Party Claim, including all
related costs and expense, will be binding and conclusive upon the
Parties as to the validity or invalidity, as the case may be, of
such Third Party Claim against the Indemnitor.
6.4.5 Should the Indemnitor fail to give notice to the Indemnitee as
provided in Section 6.3.2, the Indemnitee shall be entitled to make
such settlement of the Third Party Claim as in its sole discretion
may appear advisable, and such settlement or any other final
determination of the Third Party Claim shall be binding upon the
Indemnitor.
6.5 Indemnification Sole Remedy
The provisions of this Article 6 shall constitute the sole remedy to the
Vendor and the Purchaser or the Company, as the case may be, against the other
party to this Agreement with respect to any and all breaches of any agreement,
covenant, representation or warranty made by such party in this Agreement.
- Page 41 -
7. CONDITIONS PRECEDENT TO THE PERFORMANCE BY THE PURCHASER AND THE VENDOR OF
THEIR OBLIGATIONS UNDER THIS AGREEMENT
7.1 Purchaser's Conditions
The obligation of the Purchaser to complete the transactions contemplated
by this Agreement shall be subject to the satisfaction of, or compliance with,
at or before the Closing Time, each of the following conditions precedent (each
of which is hereby acknowledged to be inserted for the exclusive benefit of the
Purchaser and may be waived by it in whole or in part):
7.1.1 Truth and Accuracy of Representations of the Vendor at the Closing
Time -All of the representations and warranties of the Vendor made
in or under this Agreement, including, without limitation, the
representations and warranties made by the Vendor and set forth in
Section 4.1, shall be true and correct in all material respects as
at the Closing Time and with the same effect as if made at and as of
the Closing Time (except as such representations and warranties may
be affected by the occurrence of events or transactions expressly
contemplated and permitted by this Agreement) and the Purchaser
shall have received a certificate from the Vendor confirming the
truth and correctness in all material respects of the
representations and warranties of the Vendor.
7.1.2 Performance of Obligations - The Vendor shall have performed or
complied with, in all material respects, all their obligations,
covenants and agreements under this Agreement.
- Page 42 -
7.1.3 Receipt of Closing Documentation - All instruments of conveyance and
other documentation and assurances relating to the sale and purchase
of the Shares including, without limitation, share certificates (the
"Closing Documents") and all actions and proceedings taken on or
prior to the Closing in connection with performance by the Vendor of
its obligations under this Agreement shall be satisfactory to the
Purchaser and its counsel, acting reasonably, and the Purchaser
shall have received copies of all such documentation or other
evidence as it may reasonably request in order to establish the
consummation of the transactions contemplated under this Agreement
and the taking of all corporate proceedings in connection with those
transactions in compliance with this Section 7.1, in form (as to
certification and otherwise) and substance satisfactory to the
Purchaser and its counsel.
7.1.4 Closing Documentation - Without limiting the generality of Section
7.1.3, the Purchaser shall have received at or before the Closing
Time sufficient duly executed original copies of the following:
(1) certified copy of a resolution of the board of directors of
each of the Company and the Vendor approving this Agreement
and the transactions contemplated under this Agreement;
(2) statutory declaration of the Vendor concerning residence of
the Vendor, the matters referred to in subsection 7.1.1 and
confirming that all conditions under this Agreement in favour
of the Vendor have been either fulfilled or waived;
(3) certificate of incumbency of each of the Vendor and the
Company;
(4) certificate of status of the Company;
(5) share certificates representing the Shares and duly endorsed
for transfer;
(6) assignment of Inter-Company Receivables to the Purchaser; and
(7) books and records of the Company;
- Page 43 -
7.1.5 Opinion of Counsel for the Vendor - The Purchaser shall have
received an opinion in form satisfactory to counsel for the
Purchaser dated the Closing Date from counsel for the Vendor,
respecting, inter alia, the matters set forth in subsections 4.1.1,
4.1.3, 4.1.4, 4.1.5, 4.1.6 (in respect to legal title only), 4.1.9.
In giving such opinion, counsel to the Vendor may rely on
certificates of the Vendor as to factual matters.
7.1.6 Consents to Assignment - The Vendor shall have used its
commercially reasonable efforts to obtain all consents or approvals
from or notifications to any lessor or other third Person required
under the terms of any of the Equipment Leases, the Leases or the
Licenses with respect to the acquisition of control of the Company
by the Purchaser, or otherwise in connection with the consummation
of the transactions contemplated under this Agreement, on or before
the Closing Time.
7.1.7 Consents, Authorizations and Registrations - The Vendor shall have
used its commercially reasonable efforts to obtain all consents,
approvals, orders and authorizations of or from governmental or
regulatory authorities (including, without limitation, securities
regulatory authorities and stock exchanges) required in connection
with the completion of the transactions contemplated in this
Agreement on or prior to the Closing Time.
7.1.8 No Actions Taken Restricting Sale - No action or proceeding in
Canada by law or in equity shall be pending or threatened by any
person, firm, corporation, government, governmental authority,
regulatory body or agency to enjoin, restrict or prohibit the
purchase and sale of the Shares and the Inter-Company Receivables
contemplated under this Agreement.
7.1.9 Officers and Directors of Company - There shall have been delivered
to the Purchaser on or before the Closing Time, the resignations,
effective as and from Closing, of all of the officers and directors
of the Company (excluding the Principals if applicable), together
with comprehensive releases from each such person of all their
claims respectively, except for any claims for unpaid remuneration.
7.1.10 Status of Vendor - The Vendor has delivered to the Purchaser
reasonable and satisfactory evidence that the Vendor is at the
Closing
- Page 44 -
Date a resident of Canada within the meaning of the Income Tax Act
(Canada).
7.1.11 10 Meteor Drive - The Vendor shall enter into an agreement with the
Purchaser, on or before the Closing Date, which agreement provides
that the Company shall be entitled to lease the space which is
currently occupied by the Vendor at 10 Meteor Drive, Etobicoke,
Ontario (the "Premises") on terms the same as are currently in
place between the Vendor and the Company for a period of 6 months
following the Closing Date. Such agreement shall be terminable by
the Purchaser on 30 days' notice and by the Vendor on 2 months'
notice only if the Vendor sells the Premises to a third party. For
greater certainty, the current terms provide, inter alia, for rent
in the amount of $7,300 per month. The Purchaser shall also pay to
the Vendor any costs that occur solely by the Purchaser's
occupation of the Premises, which costs will not be occurred
without the consent of the Purchaser.
7.2 Vendor's Conditions
The obligations of the Vendor to complete the transactions contemplated by
this Agreement shall be subject to the satisfaction of, or compliance with, at
or before the Closing Time, each of the following conditions precedent (each of
which is hereby acknowledged to be inserted for the exclusive benefit of the
Vendor and may be waived by the Vendor in whole or in part);
7.2.1 Truth and Accuracy of Representations of the Purchaser at Closing
Time - All of the representations and warranties of the Purchaser
made in or under this Agreement, including, without limitation, the
representations and warranties made by the Purchaser and set forth
in Section 4.2, shall be true and correct in all material respects
as at the Closing Time and with the same effect as if made at and
as of the Closing Time (except as such representations and
warranties may be affected by the occurrence of events or
transactions contemplated and permitted hereby) and the Vendor
shall have received a certificate from a senior officer of the
Purchaser confirming the truth and correctness in all material
respects of such representations and warranties of the Purchaser.
- Page 45 -
7.2.2 Performance of Agreements - The Purchaser shall have performed or
complied with, in all respects, all of its other obligations,
covenants and agreements under this Agreement.
7.2.3 Receipt of Closing Documentation - All documentation and assurances
relating to the performance by the Purchaser of its obligations
under this Agreement shall be satisfactory to the Vendor and their
counsel, acting reasonably, and the Vendor shall have received
copies of all such documentation or other evidence as they may
reasonably request in order to establish the consummation of the
transactions contemplated under this Agreement and the taking of all
corporate proceedings in connection with those transactions in
compliance with this Section 7.2, in form (as to certification and
otherwise) and substance satisfactory to the Vendor and its counsel.
7.2.4 Closing Documentation - Without limiting the generality of Section
7.2.3, the Vendor shall have received at or before the Closing Time
sufficient duly executed original copies of the following:
(1) certificate of incumbency of the Purchaser; and
(2) certificate of compliance of the Purchaser.
7.2.5 Opinion of Counsel for Purchaser - The Vendor shall have received
from counsel for the Purchaser an opinion dated the Closing Date, in
form satisfactory to counsel for the Vendor, respecting, inter alia,
the matters set forth in subsections 4.2.1, 4.2.2 and 4.2.4. In
giving such opinion, counsel to the Purchaser may rely on
certificates of the Purchaser as to factual matters.
7.2.6 No Actions Taken Restricting Sale - No action or proceeding in
Canada by law or in equity shall be pending or threatened by any
person, firm, corporation, government, governmental authority,
regulatory body or agency to enjoin, restrict or prohibit the
purchase and sale of the Shares contemplated under this Agreement.
- Page 46 -
7.2.7 Payment of Purchase Price - The Purchaser shall have tendered to the
Vendor the certified cheques or evidence of wire transfer for the
portion of the Purchase Price payable at the Time of Closing.
7.2.8 Consents, Authorizations and Registrations - All consents,
approvals, orders and authorizations of or from governmental or
regulatory authorities required in connection with the completion of
the transactions contemplated in this Agreement shall have been
obtained on or prior to the Closing Time including:
7.3 Failure to Satisfy Conditions
If any condition set forth in Sections 7.1 or 7.2 is not satisfied on or
before the Closing Time, the Party entitled to the benefit of such condition
(the "First Party") may terminate this Agreement by notice in writing to the
other Party and in such event the First Party shall be released from all
obligations under this Agreement, and unless the First Party can show that the
condition or conditions which have not been satisfied and for which the First
Party has terminated this Agreement are reasonably capable of being performed or
caused to be performed by the other Party then the other Party shall also be
released from all obligations under this Agreement, except that the First Party
shall be entitled to waive compliance with any such conditions, obligations or
covenants in whole or in part if it sees fit to do so without prejudice to any
of its rights of termination in the event of non-performance of any other
condition, obligation or covenant, or whole or in part.
- Page 47 -
7.4 Destruction or Expropriation
If, prior to the Closing Time, there occurs any material destruction or
damage by fire or other cause or hazard to any of the properties or assets of
the Company, or if such properties or assets or any material part of them are
expropriated or forcefully taken by any governmental authority or if notice of
intention to expropriate a material part of such properties or assets has been
filed in accordance with applicable legislation, then the Purchaser may, at its
option, but shall not be obliged to, terminate this Agreement by notice to the
other Parties.
8. CLOSING ARRANGEMENTS
8.1 Time and Place of Closing
The completion of the transactions contemplated by this Agreement shall
take place at the Closing Time on the Closing Date at the offices of Miller
Thomson LLP, or at such other place as may be agreed upon between the Parties.
8.2 Closing Arrangements
At the Closing Time, upon fulfillment of all the conditions under this
Agreement which have not been waived in writing by the Purchaser or the Vendor
respectively:
8.2.1 Purchase and Sale of Shares - The Vendor shall sell and the
Purchaser shall purchase the Shares for the Purchase Price payable
under this Agreement.
8.2.2 Delivery of Closing Documents - The Parties shall respectively
deliver the Closing Documents.
- Page 48 -
8.2.3 Actual Possession - The Vendor shall deliver actual possession of
certificates representing the Shares to the Purchaser.
8.2.4 Payment of Purchase Price - On the fulfillment of the foregoing
terms of this Article 8, the Purchaser shall pay and satisfy the
Purchase Price as provided in Section 3.1.
8.3 Tender
Any tender of documents or money hereunder may be made upon the Parties or
their respective counsel and money may be tendered by official bank draft drawn
upon a Canadian chartered bank or by negotiable cheque payable in Canadian funds
and certified by a Canadian chartered bank or trust company.
9. NOTICES
9.1 Delivery of Notice
Any notice, direction or other instrument required or permitted to be
given by either party under this Agreement shall be in writing and shall be
sufficiently given if delivered personally or transmitted by telecopier or other
form of electronic communication during the transmission of which no indication
of failure of receipt is communicated to the sender:
9.1.1 in the case of a notice to the Vendor at:
NTN Interactive Network Inc.
14 Meteor Drive
Etobicoke, Ontario M9W 1A4
Attention: President
- Page 49 -
Fax No. (416)-675-6284
With a copy to:
Morrison Brown Sosnovitch LLP
Suite 910 - 1 Toronto Street
Toronto, Ontario M5C 2V6
Attention: Kevin Gallagher
Facsimile: 416.368.6068
9.1.2 in the case of a notice to the Purchaser at:
10 Meteor Drive
Toronto, Ontario
M9W 1A4
Attention: President
Facsimile:
With a copy to:
Miller Thomson LLP
20 Queen Street West, Suite 2500
Toronto, Ontario M5H 3S1
Attention: Peter H. Smith
Facsimile: 416.595.8695
Any such notice, direction or other instrument, if delivered personally, shall
be deemed to have been given and received on the date on which it was received
at such address, or if transmitted by telecopier or other form of electronic
communication shall be deemed to have been given and received on the date of its
transmission provided that if such day is not a Business Day or if it is
received after the end of normal business hours on the date of its transmission
at the place of receipt, then it shall be deemed to have been given and received
at the opening of business in the office of the recipient on the first Business
Day next following the transmission thereof. If normal telecopier or
- Page 50 -
other form of electronic communication is interrupted by strike, slowdown, force
majeure or other cause, a notice, direction or other instrument sent by the
impaired means of communication will not be deemed to be received until actually
received, and the party sending the notice shall utilize any other such service
which has not been so interrupted to deliver such notice.
10. GENERAL
10.1 Expenses
All costs and expenses (including, without limitation, the fees and
disbursements of legal counsel) incurred in connection with this Agreement and
the transaction contemplated under this Agreement shall be paid by the Party
incurring such expenses and, without limiting the generality of the foregoing,
no expenses incurred by the Vendor shall be charges to the Company or any of the
Subsidiaries and shall not be set off against any amounts owing by the Vendor to
the Company or any of the Subsidiaries.
10.2 Time
Time shall be of the essence hereof.
10.3 Assignment/Successors and Assigns
Neither this Agreement nor any rights or obligations under this Agreement
shall be assignable by any Party without the prior written consent of the other
Party. Subject to that condition, this Agreement shall enure to the benefit of
and be binding upon the Parties and their respective successors (including any
successor by reason of amalgamation of any Party) and permitted assigns.
- Page 51 -
10.4 Further Assurances
Each Party agrees that upon the written request of any other Party, it
will do all such acts and execute all such further documents, conveyances,
deeds, assignments, transfers and the like, and will cause the doing of all such
acts and will cause the execution of all such further documents as are within
its power to cause the doing or execution of, as the other Party may from time
to time reasonably request be done and/or executed as may be required to
consummate the transactions contemplated under this Agreement or as may be
necessary or desirable to effect the purpose of this Agreement or any document,
agreement or instrument delivered under this Agreement and to carry out their
provisions or to better or more properly or fully evidence or give effect to the
transactions contemplated under this Agreement, whether before or after the
Closing.
10.5 Public Notices
All notices to third parties and all other publicity concerning the
transactions contemplated by this Agreement shall be jointly planned and
coordinated by the Vendor and the Purchaser and no Party shall act unilaterally
in this regard without the prior approval of the other Party, (such approval not
to be unreasonably withheld), except where required to do so by law or by the
applicable regulations or policies of any provincial, federal or other
regulatory agency of competent jurisdiction or any stock exchange, in which
case, the party so required shall give the other parties a copy of such notice
prior to its publication.
- Page 52 -
10.6 Counterparts
This Agreement may be executed by the Parties in separate counterparts
each of which when so executed and delivered shall be an original, and all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF the Parties have duly executed this Agreement as
of the date and year first above written.
MAGICVISION MEDIA INC.
Per: /s/ George Wright C/S
----------------------------------------------
Name: George Wright
Title:
NTN INTERACTIVE NETWORK INC.
Per: /s/ Don Pagnutti C/S
----------------------------------------------
Name: Don Pagnutti
Title: COO
MAGIC LANTERN COMMUNICATIONS LTD.
Per: /s/ Doug Connolly C/S
-----------------------------------------------
Name: Doug Connolly
Title: President
* Schedules were deleted for filing purposes.