EXHIBIT 10.5
TRANSFER AGREEMENT
THIS AGREEMENT made as of January 1, 1998.
BETWEEN: THE NEW BRUNSWICK TELEPHONE COMPANY, LIMITED, a business corporation,
organized and existing under the laws of the Province of New Brunswick,
(hereinafter called "NBTel")
OF THE ONE PART,
AND: imagicTV Inc., a business corporation, organized and existing under the
laws of Canada,
(hereinafter called "imagic")
OF THE OTHER PART
WHEREAS NBTel is engaged in the telecommunications business and in conjunction
therewith has programs for the development of intellectual property ("IP")
including software, service designs and processes and, in particular, has
developed a software solution relating to IP multicasting and video over IP (the
"TV-IP Assets"); and
WHEREAS imagic has been created to acquire the TV-IP Assets, and, based on that
knowledge, to develop and subsequently market, license and maintain certain
software products and computer hardware and software architecture and interfaces
that will enable the delivery of broadcast television services to residential
subscribers over any high speed Internet-Protocol network infrastructure,
including Asymetrical Digital Subscriber Line access technology.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the mutual
covenants and agreements hereinafter contained and set forth, and all other
considerations hereafter mentioned, the parties respectively covenant and agree
with each other as follows:
1. In this Agreement, the TV-IP Assets shall consist of NBTel's
intellectual property relating to IP multicasting and video over IP.
2. NBTel hereby transfers the TV-IP Assets to imagic;
3. imagic shall pay to NBTel in consideration for the transfer of the
TV-IP Assets the fair market value thereof, which shall be satisfied by
the issue to NBTel of 2,000,000 Class A Shares in the capital of
imagic.
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4. (a) NBTel and imagic agree to jointly file an election pursuant
to subsection 85(1) of the Income Tax Act (Canada) in
prescribed form and within the time referred to in subsection
85(6) of the said act with respect to the said TV-IP Assets
acquired by imagic with the agreed amount to be equivalent to
NBTel's adjusted cost base thereof for income tax purposes or
such other amount as NBTel directs.
(b) NBTel and imagic agree that any Harmonized Sales Tax ("HST")
payable shall be the responsibility of imagic. imagic shall
register for HST purposes and both parties shall file the HST
forms required to claim an exemption from HST for the
transfer.
(c) The Vendor and Purchaser agree that in accordance with the
provisions of subsection 26(3) of the Canada Business
Corporations Act, R.S.C. 1985, c. C-44, for the 2,000,000
Class A Shares of the Purchaser allotted and issued to the
Vendor pursuant to paragraph 3(c) hereof the aggregate sum of
$1.00 shall be added to the stated capital account maintained
for the Class A Shares of the Purchaser.
5. NBTel undertakes with, represents and warrants to and in favour of
imagic as follows that:
(a) it has full and absolute right, power and authority to sell,
transfer and deliver the TV-IP Assets in the manner
contemplated by this Agreement;
(b) there are no actions, suits or proceedings (whether or not
purportedly on behalf of NBTel) pending or to NBTel's
knowledge threatened against or affecting NBTel at law or in
equity or before any federal, provincial, municipal or
governmental department, commission, board, agency or
instrumentality, domestic or foreign, which might in any way
materially adversely affect the TV-IP Assets;
(c) the consummation of the transactions provided in this
Agreement and in any other agreements, deeds and documents
mentioned or referred to in this Agreement do not and will not
conflict with and do not and will not result in any breach of
any of the terms, conditions or provisions of the constating
instruments of NBTel or any agreement or instrument to which
NBTel is a party or by which it is bound;
(d) it is a business corporation, duly incorporated, organized and
existing under the laws of the Province of New Brunswick, and
is in good standing with the Director, Corporate Affairs
Branch of the Department of Justice of New Brunswick, and all
documents required to be filed with such Director have in fact
been filed; and
(e) NBTel will observe and perform all of the covenants, terms,
conditions and agreements contained in this Agreement and on
its part to be observed and performed.
6. imagic undertakes with, represents and warrants to and in favour of NBTel
as follows that:
(a) it is a business corporation, duly incorporated, organized and
existing under the laws of Canada, and is in good standing with the
Director under the Canada Business Corporations Act, and all
documents required to be filed with such Director have in fact been
filed; and
(b) it will observe and perform all of the covenants, terms, conditions
and agreements contained in this Agreement and on its part to be
observed and performed.
7. NBTel shall indemnify and save harmless imagic and its successors and
assigns from, against, for and in respect of any and all damages, losses,
obligations, liabilities, claims, encumbrances, deficiencies, costs and
expenses (including, without limitation, reasonable solicitors' fees and
other costs and expenses incidental to any suit, action, investigation,
claim or proceeding) suffered, sustained, incurred or required to be paid
by imagic, its successors or assigns by reason of any breach or failure of,
observation or performance of any of NBTel's undertakings, representations
or warranties set forth in this Agreement. Notwithstanding any of the
foregoing, NBTel's liability to imagic hereunder shall not exceed the total
consideration paid to NBTel for the TV-IP Assets.
8. imagic shall indemnify and save harmless NBTel and its successors and
assigns from, against, for and in respect of any and all damages, losses,
obligations, liabilities, claims, encumbrances, deficiencies, costs and
expenses (including, without limitation, reasonable solicitors' fees and
other costs and expenses incidental to any suit, action, investigation,
claim or proceeding) suffered, sustained, incurred or required to be paid
by NBTel, its successors or assigns by reason of any breach or failure of
observation or performance of any of imagic's undertakings, representations
or warranties set forth in this Agreement.
9. NBTel and imagic shall at all times, do, execute, acknowledge and deliver
or cause to be done, executed, acknowledged and delivered all such deeds,
documents and things which in the opinion of any of the solicitors for
NBTel or imagic are necessary for the purpose of accomplishing and
effectuating the intentions of the parties as contemplated by this
Agreement.
10. No delay or omission of any of the parties to exercise any right or power
accruing upon any default under this Agreement by the other party shall be
a waiver of any such default or acquiescence therein and every power or
remedy given to any of the parties by this Agreement or by law, equity or
by statute may be exercised from time to time and as often as may be deemed
expedient.
11. Any notice required to be given under this Agreement shall be sufficiently
served if delivered personally or sent by registered mail or facsimile to:
(a) NBTel, if the notice is addressed to:
Attention: General Counsel
The New Brunswick Telephone Company, Ltd.
P.O. Box 1430
Saint John, N. B.
E2L 4K2
Facsimile No.: (506) 694-2722
(b) imagic, if the notice is addressed to:
Attention: General Manager
imagicTV Inc.
P. 0. Box 1430
Saint John, N. B.
E2L 4K2
Facsimile No.: (506) 694-2722
(c) Any such notice personally delivered shall be considered as
having been received on the day of delivery, any such notice
delivered by facsimile shall be considered as having been
received on the day following transmission, and any such
notice sent by registered mail shall be considered as having
been received on the fourth day following the day of mailing;
and
(d) Any party to this Agreement may at any time and from time to
time change its address for service set forth in this
Agreement by notice in writing given to the other party in the
manner prescribed.
12. This Agreement shall be deemed to have been made and to have come into
force on January 1, 1998.
13. This Agreement shall be governed by and construed in accordance with
the laws of the Province of New Brunswick.
14. Neither party shall assign this Agreement, or any of its rights under
the Agreement, without the prior written consent of the other, which
consent shall not be unreasonably withheld.
15. This Agreement and everything contained herein shall enure to the
benefit of and be binding upon each of the parties and their successors
and assigns as fully and as effectually as if the same had been
mentioned herein.
IN WITNESS WHEREOF the parties hereto have executed these
presents in accordance with their rules and regulations in that behalf as of the
day and year first before written.
THE NEW BRUNSWICK TELEPHONE
COMPANY, LIMITED
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Treasurer
imagic TV INC.
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President