EXHIBIT 6.3
THIS AGREEMENT made effective the 31st day of December 1998.
BETWEEN:
4-12 Electronics Corporation a corporation incorporated under the laws
of Manitoba and having its business offices at # 17 - 1421 ▇▇. ▇▇▇▇▇
▇▇., ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ (hereinafter called the "Vendor")
OF THE FIRST PART
AND:
MDU COMMUNICATIONS INC., a corporation incorporated under the laws of
Canada and having its business offices at #108 - ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇ ▇▇▇ (hereinafter called the "Purchaser")
OF THE SECOND PART
WHEREAS:
A. The Vendor carries on a business of satellite television distribution to
multiple dwelling units (the "Business") and in connection therewith has
verbal and written contractual arrangements (the "Contracts") with
suppliers and a number of owners and managers of multiple dwelling units
("MDU's) to supply monthly satellite television services to their buildings
which Contracts are listed and described in Schedule A hereto;
B. The Vendor owns, leases and licenses certain equipment and satellite
reception facilities (collectively referred to herein as the "Equipment")
all as listed and described in Schedule B to this Agreement which Equipment
is located on or about the MDU's with which it has contractual
arrangements;
C. The Equipment, together with the equipment owned or operated by customers
constitutes all the necessary equipment for the proper and effective
delivery of monthly satellite television services to customers of the
Vendor; and
D. The Vendor has agreed to sell the Assets (as hereinafter defined),
including the goodwill of the Business and the Purchaser has agreed to buy
the same on the terms and conditions hereinafter set forth.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the promises,
covenants and agreements hereinafter set forth, the parties hereto covenant and
agree, represent and promise as follows:
PURCHASE AND SALE
1. Subject to the terms and conditions of this Agreement and based on the
warranties and representations herein contained, the Vendor agrees to sell
and the Purchaser agrees to
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purchase the assets constituting the Business including, but without limiting
the foregoing:
(a) The goodwill of the Business, together with the exclusive right to the
Purchaser to represent itself as being the successor to the Business
in continuation of and in succession to the Vendor.
(b) The Contracts with "Full Cable Service" subscribers and "Discretionary
Cable Service" subscribers more particularly described in Schedule A
attached hereto and all income and other monies flowing therefrom.
(c) The Equipment more particularly described in Schedule B attached
hereto.
(the assets referred to above are collectively referred to herein as the
"Assets").
PURCHASE PRICE
2. The purchase price of the Assets shall be the sum of Two Hundred Thousand
Dollars ($200,000) (the "Purchase Price") allocated as follows:
Contracts $157,085
Equipment $42,915
Other 0
3. The Purchaser will pay the Purchase Price as follows:
(a) The sum of One Hundred Seventy Five Thousand Dollars ($175,000) shall
be paid by negotiable cheque at the Closing of this Agreement or by
wire transfer to counsel for the Vendor, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
Thorvaldson, in trust for the Vendor.
(b) The balance of Twenty Five Thousand ($25,000) shall be paid sixty (60)
days after Closing provided that the Vendor has complied in all
respects with this Agreement and the Vendor has not breached any of
the Vendor's representations or warranties. If the Vendor has not
complied in all respects with this Agreement or the Vendor has
breached any of its covenants, representations or warranties
hereunder, the Purchaser may, at its discretion and in addition to any
other remedies it may have against the Vendor, set off the amount of
damages arising from such non-compliance or breach against the balance
of the Purchase Price.
REPRESENTATIONS AND WARRANTIES OF THE VENDOR
4. The Vendor hereby represents and warrants to the Purchaser as follows, with
the intent that the Purchaser shall rely thereon in entering into this
Agreement, and concluding the purchase and sale contemplated herein:
(a) The Vendor is a corporation duly organized and validly existing in
good standing under the laws of the Province of Manitoba, and has the
power, authority and
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capacity to enter into this Agreement and to carry out the
transactions contemplated hereby, all of which have been validly
authorized by all corporate proceedings;
(b) The completion of the transactions contemplated hereby will not
constitute a breach by the Vendor of any statute, by-law, or
regulation of its Memorandum, Articles, or By-laws, or of any contract
or agreement to which it is a party, or by which it is bound, or which
would result in the creation of any lien, encumbrance or other charge
on any of the Assets;
(c) The Vendor has good and marketable title to the Assets, free and clear
of all liens, mortgages, encumbrances, equities or claims of every
kind and nature whatsoever and can assign such Contracts or licenses
or leases of Equipment as are required to be assigned to the Purchaser
without any consent or approval or where such consent or approval is
required it will be obtained on or before Closing;
(d) All Equipment comprised in the Assets are in normal operating
condition and in a state of reasonable maintenance and repair;
(e) The financial information contained in Schedule C attached hereto is
the Full Cable & Excel Billing Report (the "Report") which describes
the income generated from subscribers and expenses associated
therewith and constitutes a full, complete and true financial report
of the Business and the income and expenses incurred in connection
therewith. The Report has been prepared in a manner consistent with
previous reports;
(f) The Vendor is not aware of any facts or circumstances, which would
cause the Report to be untrue in any way or which would adversely
effect or impact on the financial affairs or net revenue of the
Business or otherwise diminish the value of the Assets to the
Purchaser;
(g) The Vendor is not in default of any term, condition or provision of
any of the leases or licenses of the Equipment and the Contracts and
all such leases or licenses of the Equipment and the Contracts are in
good standing;
(h) The Vendor is not aware of any programmers with which it has business
relationships which are considering terminating, reviewing or changing
its relationship with the Vendor or their pricing to the Vendor;
(i) The Vendor is not aware of any customers with which it has business
relationships which are considering terminating, reviewing or changing
its relationship with the Vendor or contesting the pricing of services
provided by the Vendor;
(j) The Vendor is not a party to any collective bargaining agreement or
other agreement with a trade union by which the Purchaser will be
bound by virtue of the purchase of the Assets;
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(k) Neither the execution and delivery of this Agreement, nor the
completion of the purchase and sale contemplated herein will:
(i) violate any of the terms and provisions of any order, statute,
by-law, regulation, covenant or restriction applicable to the
Vendor, the Business or any of the Assets;
(ii) give any person the right to terminate, cancel or remove any of
the Assets; or
(iii) result in any fees, duties, taxes (other than Provincial Sales
Tax), assessments or other amounts relating to any of the Assets
becoming due or payable by the Purchaser;
(l) The Vendor owns and possesses and has a good and marketable title to
the Assets free and clear of all mortgages, liens, charges, pledges,
security interests, encumbrances and other claims whatsoever and the
Vendor has good and sufficient right, power and authority to transfer
to the Purchaser the legal beneficial title to and ownership of all
the Assets, free and clear of all mortgages, liens, charges, pledges,
security interest, encumbrances, or claims of every nature and kind
whatsoever;
(m) All governmental licenses and permits required for the conduct of the
Vendor's Business and the uses to which the Assets have been put, have
been obtained and are in good standing and such conduct and uses are
not in breach of any statute, by-law, regulation, covenant,
restriction, plan or permit;
(n) The Vendor is not a "non-resident person" within the meaning of that
phrase in Section 116 of the INCOME TAX ACT (Canada);
(o) The Vendor has no indebtedness to any person, firm or corporation
which by operation of law or otherwise might now or hereafter
constitute a lien, charge or encumbrance upon any of the purchased
Assets;
(p) The Vendor has paid all excise, sales, business and property taxes and
all other rates, charges, assessments, levies and duties of whatsoever
nature and kind to be required by law insofar as they are due and
payable insofar as they affect the Assets;
(q) The Vendor is not a party to or threatened by any proceedings,
litigation or investigations which involve the possibility of
materially or adversely affecting the financial condition of the
Business, the Assets or the ability of the Vendor to complete the
transaction contemplated by this Agreement; and
(r) No representation or warranty by the Vendor in this Agreement nor any
statement or certificate furnished or to be furnished pursuant to this
Agreement or in
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connection with the transactions herein contemplated knowingly
contains or will knowingly contain any untrue statement of fact or
knowingly omits to state or will knowingly omit to state any fact
necessary in order to make the statements herein and therein not
misleading.
5. The Vendor covenants and agrees:
(a) To use its best efforts in assisting the Purchaser in an orderly
transition of the Business and the transfer of the Assets to the
Purchaser including but not limited to:
(i) Reviewing and informing the Purchaser with respect to the
financial affairs; record keeping; status of contracts and
maintenance thereof and the billing of and cut-off procedures
and timelines regarding billing periods of customers and
provision of services to the customers of the Business all of
which are necessary to maintain the Business and the income
generated therefrom;
(ii) Carryover of existing rates from the programmers which provide
services to the Vendor; and
(iii) Notifying all customers of the Vendor of this purchase and sale.
(b) To take or cause to be taken all proper steps, actions and corporate
proceedings on its part (including the approval of the sale by the
shareholders of the Vendor if required) to enable it to vest a good
and marketable title in the Purchaser to the Assets, free and clear of
all liens, mortgages, encumbrances, equities or claims of every nature
and kind whatsoever, and shall deliver on the Closing Date such deeds
of conveyance, bills of sale, transfers, assignments and consents
(including consents by creditors of the Vendor, if required) and
consents to the transfers of licenses, leases, leasehold properties,
contracts and rights as the solicitor for the Purchaser may reasonably
require;
(c) To deliver possession of the Assets to the Purchaser on Closing;
(d) Both before and after the Closing Date, the Vendor will, execute and
do all such further deeds, acts, things and assurances as may be
requisite in the opinion of the solicitors for the Purchaser for more
perfectly and absolutely assigning, transferring and assuring to and
vesting in the Purchaser title to the Assets free and clear of all
liens, mortgages and encumbrances, equities or claims of every nature
and kind whatsoever, save as aforesaid;
(e) At the Closing, to deliver to the Purchaser:
(i) all books, records, contracts, memoranda and documents relating
to the Assets;
(ii) all business leads;
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(iii) full and complete itemization of all specifications and
information in the possession or control of the Purchaser
relating to the Assets.
INDEMNIFICATION
6. The Vendor shall indemnify and hold harmless the Purchaser and all of its
servants, employees and agents, from any and all actions, causes of
actions, suits, proceedings, demands, assessments, judgments, damages,
deficiencies, costs and legal and other expenses resulting from any breach
of warranty, misrepresentation or non-fulfilment of any covenant on the
part of the Vendor under this Agreement and from any misrepresentation in
or omission from any certificate or other instrument furnished or to be
furnished to the Purchaser hereunder.
7. The Purchaser shall indemnify and hold harmless the Vendor and all of its
servants, employees and agents, from any and all actions, causes of
actions, suits, proceedings, demands, assessments, judgments, damages,
deficiencies, costs and legal and other expenses resulting from the
purchase of the Assets under this Agreement and the operation of the
business following the closing of this Agreement.
PURCHASER'S CONDITIONS
8. Notwithstanding anything herein contained, the obligation of the Purchaser
to complete the purchase hereunder shall be subject to the following
conditions:
(a) The representations and warranties of the Vendor contained in this
Agreement shall be true on and as of Closing;
(b) All of the covenants and agreements of the Vendor to be performed on
or before Closing pursuant to the terms of this Agreement shall have
been duly performed;
(c) No substantial loss or destruction of or damage to any of the Assets
shall have occurred on or before Closing;
(d) The Vendor shall deliver to the Purchaser on or before Closing
certified copies of Resolutions of the Directors and Shareholders of
the Vendor, if required, authorizing the sale of the Assets in form
and substance satisfactory to the solicitor for the Purchaser;
(e) The Purchaser shall have received from its solicitor an opinion to the
effect that a good and valid title to the assets is vested in the
Purchaser free and clear of all liens, encumbrances, equities or
claims of every nature or kind, (such solicitor may for the purpose of
such opinion rely on a certificate of an officer or officers of the
Vendor to any fact relevant to title); and
(f) That on or before the Closing Date no federal, provincial, regional or
municipal government or any agency thereof shall have enacted any
statute or regulation or
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announce any policy that will materially or adversely effect the
Business, Assets or the right of the Purchaser to the full enjoyment
of the Assets.
The foregoing conditions are for the sole and exclusive benefit of the
Purchaser and may be waived in whole or in part by the Purchaser.
GENERAL PROVISIONS
9. The parties agree to complete and file the required elections under the
provisions of the GOODS AND SERVICES TAX ACT of Canada (GST) in the
prescribed form and time and take such steps necessary to make this
transaction exempt from the payment of GST.
10. The Assets shall be at the risk of the Vendor up to Closing and shall be at
the risk of the Purchaser on and after Closing.
11. All the representations, warranties, covenants and agreements of the Vendor
contained in this Agreement shall survive the Closing Date and the payment
of the Purchase Price.
12. Time shall be of the essence of this Agreement.
13. It is understood and agreed that the purchase shall be deemed to have taken
effect after the close of business on December 31, 1998 and all purchases
and sales as of and from that date shall be deemed to have been conducted
for and on behalf of the Purchaser. The closing shall take place at the
offices of the Purchaser's solicitors, ▇▇▇▇▇▇ Danderfer Banno & ▇▇▇▇▇▇▇▇,
Vancouver, British Columbia at 2:00pm (Vancouver time) on December 31, 1998
(referred to as "Closing" or the "Closing Date").
14. Any monies collected by the Purchaser with respect to accounts owing to the
Vendor after Closing shall be endorsed over to the Purchaser or deposited
by the Vendor to an account at the banking institution in favour of the
Vendor in accordance with the directions of the Purchaser.
15. Any notice required or permitted to be given hereunder may be effectively
given by prepaid registered post addressed as follows:
If to the Vendor:
4-12 Electronics Corporation
#17 - 1421 St. ▇▇▇▇▇ St.,
Winnipeg, Manitoba, R3H OY9
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, CEO
Fax: 204 Tel: 204
If to the Purchaser:
MDU COMMUNICATIONS INC:
#108 - ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇,
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▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Secretary
Fax: ▇▇▇ ▇▇▇-▇▇▇▇ Tel: ▇▇▇ ▇▇▇-▇▇▇▇
or at such other address as may from time to time be notified in writing by
any of the foregoing. Any such notice, request, demand or other
communication shall be deemed to have been given and received, if delivered
by hand, on the day delivered and, if mailed, on the second day (excluding
holidays) after it has been posted as aforesaid at any postal station in
British Columbia provided that if mailed, should there be at the time of
mailing or between the time of mailing and the actual receipt of notice, a
mail strike, slowdown or other dispute which might affect the delivery of
such notice by the mails, then such notice shall only be effective when
actually delivered. For the purpose of this paragraph the term "holiday"
shall have the same meaning as set out in the Interpretation Act (B.C.).
16. This Agreement shall enure to the benefit of and be binding upon the
parties hereto, their respective heirs, executors, administrators,
successors and assigns.
17. This Agreement once signed may be delivered and received in facsimile form,
which shall be deemed an original together with any counterparts, which may
also be delivered and received, in facsimile form.
IN WITNESS WHEREOF the parties hereto have hereunto affixed their respective
corporate seals in the presence of their duly authorized signing officers and
have affixed their respective hands and seal the day and year first above
written.
4-12 Electronics Corporation:
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Authorised Signatory
MDU COMMUNICATIONS INC:
Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Authorised Signatory
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