SCHEDULE "G"
OCCUPANCY AND INDEMNITY AGREEMENT
THIS AGREEMENT dated as of the 13th day of September 1999.
B E T W E E N :
ARTHUR ANDERSON INC., in its capacity as Interim Receiver
of GalaVu Entertainment Inc., and not in its personal capacity
(hereinafter referred to as the "Receiver")
-and -
1373224 ONTARIO LIMITED
(hereinafter referred to as "Purchaser")
WHEREAS:
A. GalaVu Entertainment Inc. ("GalaVu") was the tenant of the Toronto
Premises, the Markham Premises, the London Premises and the Dartmouth
Premises (as hereinafter defined);
B. Arthur Andersen Inc. was appointed as Interim Receiver of the property,
undertaking and assets of GalaVu pursuant to an order of Ontario Superior
Court of Justice dated September 13, 1999 (the "Order");
C. The Purchaser has agreed to purchase the Purchased Assets from the
Receiver on the basis that the Purchaser shall be entitled to occupy the
Premises for the Occupancy Period, and the Receiver has agreed to permit
such occupation on the terms and conditions set out in this Agreement;
D. All capitalized terms shall have the meanings given to them in the
Purchase Agreement, unless otherwise defined herein or unless the context
otherwise requires.
NOW THEREFORE for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I - INTERPRETATION
1.1 Interpretation In this Agreement, the following terms shall have the
following meanings:
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(a) "Agreement" means this Agreement including the Schedules to this
Agreement as it or they may be amended, supplemented or restated
from time to time, and the expressions "hereof", "herein",
"hereunder", "hereby" and similar expressions refer to this
Agreement and not to any particular Section or other portion of this
Agreement;
(b) "Hazardous Substances" means any substance or material that is or
becomes prohibited, controlled or regulated by an governmental
authority whether federal, provincial, regional, municipal or local,
including, without limitation, any paints, solvents, PCB's,
asbestos, contaminants, pollutants, dangerous substances, toxic
substances, designated substances, controlled products, wastes,
hazardous wastes, subject wastes, hazardous materials, dangerous
goods or petroleum, its derivatives, by-products, or other
hydrocarbons, all as defined in or pursuant to any laws,
regulations, bylaws, guidelines, policies, approvals, permits or
orders rendered by any governmental authority;
(c) "Occupancy Period" means the period between the Closing Date and the
Vacancy Date;
(d) "Premises" means the premises leased by GalaVu and situated at 3816A
Victoria Park Avenue, Willowdale, Ontario, M2H 3H7 (the "Toronto
Premises"), 7800 Woodbine Avenue, Suite 300, Markham, Ontario, L3R
2N7 (the "Markham Premises"), 470 Rideout Street North, London,
Ontario (the "London Premises") and 780 Windmill Road, Suite 302,
Dartmouth, Nova Scotia, B3B 1T3 (the "Dartmouth Premises");
(e) "Proceeds of Sale" means the gross proceeds of sale of the Purchased
Assets;
(f) "Purchase Agreement" means the purchase agreement set out in the
offer dated September 10, 1999 from the Purchaser and accepted by
the Receiver on September 13, 1999;
(g) "Purchased Assets" means the right, title and interest, if any, of
the Receiver and GalaVu in and to the assets of GalaVu purchased by
the Purchaser from the Receiver pursuant to the Purchase Agreement;
(h) "Vacancy Date" means, subject to section 2.3 hereof, the earliest
date following receipt by the Receiver of the Vacancy Notice in
respect of a particular Premises to which the Receiver must pay rent
for that particular Premises pursuant to the Order and in any event
no later than October 31, 1999;
(i) "Vacancy Notice" means the notice in writing from the Purchaser to
the Receiver specifying a Vacancy Date in respect of a particular
Premises provided that in the case of any Premises where there will
be tangible Excluded Assets thereat as of
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the Vacancy Date, such notice shall be given not less than 15 days
prior to the Vacancy Date, together with a list of such tangible
Excluded Assets.
1.2 Heading The division of this Agreement into Articles and Sections and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement.
1.3 Number and Gender Unless the context requires otherwise, words importing the
singular include the plural and vice versa and words importing gender include
all genders.
1.4 Sections and Schedule References Unless the context requires otherwise,
references in this Agreement to Sections or Schedules are to Sections or
Schedules of this Agreement.
1.5 Schedule The following Schedule is attached to and forms part of this
Agreement:
Schedule "A" - Indemnity
ARTICLE 2 - OCCUPATION OF THE GALAVU PREMISES
2.1 Right to Occupancy The Purchaser shall have the exclusive right (subject to
Sections 2.3 and 2.4 hereof) to occupy the Premises and to conduct thereon the
business formerly carried on by GalaVu and remove the Purchased Assets during
the Occupancy Period, subject to the following terms and conditions:
(1) during the Occupancy Period, the Purchaser shall ensure that all
employees (whether its own or that of others engaged by the
Purchaser to assist it in the conduct of its business) on the
Premises at any time are covered by workmen's compensation and by
all such other insurance as would be appropriate in the
circumstances;
(2) during the Occupancy Period, the Purchaser shall, at its own
expense, provide public liability insurance, on terms reasonably
acceptable to the Receiver;
(3) during the Occupancy Period, the Purchaser shall, at its own
expense, provide damage insurance in respect of the Premises, on
terms reasonably acceptable to the Receiver;
(4) during the Occupancy Period, the Purchaser shall be responsible for
and forthwith pay all occupancy costs for the Premises, including
without limitation, all rent, business taxes, property taxes,
insurance, common area expenses and utility charges, (including,
gas, water, heat, hydro, and telephone);
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(5) the Purchaser shall surrender possession of the Premises on the
Vacancy Date, and the Purchaser shall ensure that the Premises are
left in a clean, "broomswept" condition as approved by the Receiver
on or before the Vacancy Date;
(6) the Purchaser shall use and occupy the Premises only for the
purposes of carrying on the business formerly carried on by GalaVu
and removing or arranging for the removal of the Purchased Assets
during the Occupancy Period, and for no other purpose;
(7) the Purchaser shall arrange for the disposal bins required to leave
the Premises in a clean, "broomswept" condition and the Purchaser
shall pay the costs and expenses of the removal of the disposal bins
from the Preemies on the Vacancy Date;
(8) the Purchaser acknowledges and agrees that it and other Persons
removing the Purchased Assets from the Premises will comply with all
health and safety, environmental and any other pertinent legislation
and regulations relating to the removal of such assets from the
Premises and the Purchaser shall provide qualified inspectors for
the dismantling and removal of such assets by the Purchaser and any
other Persons who have made arrangements with the Purchaser to
remove assets from the Premises;
(9) the Purchaser shall ensure that the activities of the Purchaser and
its agents, employees, licensees, contractors, officers, directors
and invitees (including members of the public) on the Premises
during the Occupancy Period, do not breach any law, by-law,
regulation or order of any federal, provincial, municipal or other
governmental or regulatory authority and remove the Purchased Assets
in compliance with the conditions for removal set out herein; and
(10) the Purchaser shall deliver an indemnity to the Receiver in the form
attached as Schedule "A" hereto.
2.2 Removal of Purchased Assets. The Purchaser acknowledges that the removal of
the Purchased Assets from the Premises shall be at the Purchaser's sole cost and
risk.
2.3 Occupancy Agreement The Parties hereto acknowledge and agree that in the
event that the lease between GalaVu and the landlord for any particular Premises
shall have terminated or expired prior to the Vacancy Date, the Purchaser shall
have no right to occupy or access such Premises beyond the date on which any
such lease shall terminate or expire, and that the Vacancy Date in respect of
any such particular Premises shall be deemed to be the date of termination or
expiration of the lease in respect thereof.
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2.4 Rights to Access
(1) The Receiver shall have the right to access the Premises at any time
during the Occupancy period, during regular business hours.
(2) The Purchaser acknowledges and agrees that the Excluded Assets may
be removed from the Premises during the Occupancy Period and that
the Receiver and any purchaser of the Excluded Assets (and any of
such Purchaser's agents, employees and contractors) shall have the
right to access any of the Excluded Assets (including, without
limitation, the books and records of GalaVu relating thereto) during
regular business hours for the purpose of inspecting, removing or
preparing for the removal of the Excluded Assets from the Premises
so long as the Purchaser is present at the premises. The parties
hereto acknowledge and agree that none of the landlords' assets
shall be removed from the Premises without the consent of the
relevant landlord.
2.5 Acknowledgement of Liability The Purchaser hereby acknowledges and agrees
that it shall be responsible for (i) any damage to the Premises or the Excluded
Assets during the Occupancy Period, caused by the acts or omissions of the
Purchaser, its employees, contractors, licensees, agents or invitees; (ii) any
damage to the Premises or the Excluded Assets as a result of the removal of the
Purchased Assets, including any environmental spills or discharge arising from
or associated with such removal; and (iii) any damages or claims arising out of
the injury or death at the Premises suffered by any of the Purchaser's
employees, contractors, licensees, agents or invitees during the Occupancy
Period, or as a result of the removal of such Purchased Assets. For greater
certainty, the Purchaser acknowledges that it shall be responsible for any
damages or claims arising out of any injury or death suffered by any employee,
contractor, licensee, agent or invitee of the Purchaser or any party whose
services the Purchaser has requested. The Purchaser will protect and hold
harmless the Receiver from any liability or costs (including legal expenses on a
solicitor and client basis) of any kind arising from any damage, environmental
spills or discharge and any failure or alleged failure by the Purchaser to
comply with the provisions of this Agreement and will provide the Receiver with
an indemnity in the form set out in Schedule "A" hereto upon execution of this
Agreement.
ARTICLE 3 - CONDITIONS PRECEDENT
3.1 General Conditions Precedent. The obligations of the parties hereto are
subject to fulfilment of the following conditions precedent on the Closing Date:
(1) the Purchase Agreement will have been executed and delivered by all
the parties thereto:
(2) the Approval Order will have been obtained; and
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(3) there will be no injunction or restraining order issued, and no
pending or threatening claim, action or litigation or proceeding,
judicial or administrative, by any person enjoining or preventing
the performance of the obligations set out in this Agreement or the
Purchase Agreement.
ARTICLE 4 - GENERAL PROVISIONS
4.1 Notices.
(1) Any notice or other communication given or made under or in connection with
this Agreement shall be in writing and shall be effectively given and made if
(i) delivered personally, or (ii) sent by prepaid courier service or mail, in
each case to the applicable address set out below:
(a) if to the Receiver, to:
Arthur Andersen Inc.
4 King Street West
Suite 1050
Toronto, Ontario M5H 1B6
Attention: Brian Deazeley
Facsimile No.: (416) 947-7788
(b) if to the Purchaser, to:
1373224 Ontario Limited
14 Meteor Drive
Toronto, Ontario
M9W 1A4
Attention: President
Facsimile No.: (416) 675-8838
(2) Any such communication so given or made shall be deemed to have been given
or made and to have been received on the day of delivery, if delivered, provided
that such day is a Business Day and the communication is so delivered or sent
prior to 5:30 p.m. on such day. Otherwise, such communication shall be deemed to
have been given and made and to have been received on the next following
Business Day. Any such communication sent by mail shall be deemed to have been
given and made and to have been received on the fifth Business Day following the
mailing thereof; provided, however, that no such communication shall be mailed
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during any actual or apprehended disruption of postal services. Any such
communication given or made in any other manner shall be deemed to have been
given or made and to have been received only upon actual receipt.
(3) Either party may from time to time change its address under this Section 4.1
by notice to the other party given in the manner provided by this Section.
4.2 Further Assurances. Each party shall, at the expense of the other party,
promptly do, execute, deliver or cause to be done, executed and delivered all
further acts, documents and things in connection with this Agreement that the
other party may reasonably require, for the purposes of giving effect to this
Agreement, provided, however, that (a) the Receiver shall not be obligated to
provide any further assurance which could result in personal liability to the
Receiver unless the Purchaser provides an appropriate indemnity to the Receiver
for any costs, losses or damages it may incur in connection therewith; and (b)
the obligation of the Receiver to comply with this provision shall only survive
and be in existence for so long as the Receiver is the Receiver, and has not
been discharged pursuant to an Order of the Court.
4.3 Successors and Assigns. This Agreement shall enure to the benefit of, and be
binding on, the parties and their respective successors and permitted assigns.
neither party may assign or transfer, whether absolutely, by way of security or
otherwise, all or any part of its respective rights or obligations under this
Agreement without the prior consent of the other party.
4.4 Entire Agreement. This Agreement constitutes the entire agreement between
the parties pertaining to the subject matter of this Agreement and supersedes
all prior agreements, understandings, negotiations and discussions, whether oral
or written. There are no conditions, warranties, representations or other
agreements between the parties in connection with the subject matter of this
Agreement (whether oral or written, express or implied, statutory or otherwise)
except as specifically set out in this Agreement.
4.5 Amendment. No amendment of this Agreement will be effective unless made in
writing and signed by the parties.
4.6 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such prohibition or unenforceability and shall be severed from
the balance of this Agreement, all without affecting the remaining provisions of
this Agreement or affecting the validity or enforceability of such provision in
any other jurisdiction; provided, however that the substance of this Agreement
remains materially unaffected.
4.7 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which taken together
shall be deemed to constitute on and the same instrument. Counterparts may be
executed either in original or faxed form and the parties adopt any signatures
received by a receiving fax machine as original signatures of the parties;
provided, however, that any party providing its signature in such
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manner shall promptly forward to the other party an original of the signed copy
of this Agreement which was so faxed.
4.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable in that Province and shall be treated, in all respects, as an Ontario
contract.
4.9 Limited Liability. The Purchaser acknowledges and agrees that in all matters
pertaining to this Agreement, including without limitation, in its section,
Arthur Andersen Inc. is acting solely in its capacity as Interim Receiver of
GalaVu Entertainment Inc., and as such, its liability as a consequence of this
Agreement will be in its capacity as interim Receiver, and it will have no
personal or corporate liability of any kind, whether in contract or in tort. The
Purchaser further acknowledges and agrees that any liability of the Interim
Receiver under this Agreement will be limited in amount to the proceeds of sale
received by the Interim Receiver pursuant to the Purchase Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date first
written above.
AUTHUR ANDERSEN INC., in its
capacity as Interim Receiver
of GalaVu Entertainment Inc.
and not in its personal
capacity
By:__________________________________
Name:
Title:
1373224 ONTARIO LIMITED
By:__________________________________c/s
Name:
Title:
SCHEDULE "A'
INDEMNITY
TO: ARTHUR ANDERSEN INC.
AND TO: ARTHUR ANDERSEN INC., in its capacity as Interim Receiver of the
Property, Undertaking and Assets of GalaVu Entertainment Inc. (the
"Receiver")
RE: Leased premises municipally known as Suite 300, 7800 Woodbine
Avenue, Markham, Ontario and 3816A Victoria Park Avenue, Willowdale,
Ontario, 470 Rideout Street North, London, Ontario and 780 Windmill
Road, Suite 302, Dartmouth, Nova Scotia (collectively the
"Premises")
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All capitalized terms used herein have the meanings ascribed thereto in the
Offer to Purchase dated September 10, 1999 between 1373224 Ontario Limited and
the Receiver, and the Occupancy and Indemnity Agreement dated September 13, 1999
between 1373224 Ontario Limited and the Receiver (the "Occupancy and Indemnity
Agreement").
IN CONSIDERATION of the Receiver permitting the undersigned to occupy the
Premises during the Occupancy Period, the undersigned hereby indemnifies and
agrees to save harmless each of Arthur Andersen Inc., and the Receiver and their
respective officers, directors and employees from and against all manner of
claims, demands, liabilities, debts, dues, actions, causes of actions, suits,
proceedings, judgments, expenses, damages and disbursements (including without
limitation, legal fees on a solicitor and client basis) of any nature arising
from or as a result of or in any way connected with:
(a) any damage to the Premises or the Excluded Assets during the Occupancy
Period caused by or resulting from any action or failure to act by the
undersigned or any of its agents, employees, licensees, contractors,
officers, directors and invitees;
(b) any injury or death suffered by any of the Purchaser's employees, agents,
licensees, contractors or invitees while on the Premises at any time
during the Occupancy Period caused by or resulting from any action or
failure to act by the undersigned or any of its agents, employees,
licensees, contractors, officers, directors and invitees;
(c) the failure of the undersigned to vacate the Premises on or before the
Vacancy Date (as defined in the Occupancy and Indemnity Agreement), and to
leave the Premises in a clean, "broomswept" condition as approved by the
Receiver on or before the Vacancy Date;
(d) the removal of the Purchased Assets from the Premises and damages to the
Premises, including any environmental spills or discharge arising from
such removal, and any injury or death suffered by any person during such
removal process;
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(e) all occupancy costs for the Premises during the Occupancy Period; and
(f) any breach by the undersigned of the provisions of the Occupancy and
Indemnity Agreement.
For greater certainty, and without limiting the generality of the foregoing the
undersigned agrees to indemnify and save harmless Arthur Andersen Inc. and the
Receiver from any claims made by or damages suffered by any of the landlords of
the Premises (the "Landlords") (including any claims for rent or other amounts
payable under the lease or any other agreement between Arthur Andersen Inc., or
the Receiver and the Landlords for any of the Premises) as a result of the
undersigned failing to vacate the Premises on the Vacancy Date.
DATED this 13th day of September, 1999
1373224 ONTARIO LIMITED
By:_______________________________c/s
Name:
Title: