EXHIBIT 10.19
ASSET PURCHASE AGREEMENT
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THIS AGREEMENT MADE EFFECTIVE AS OF THE 1ST DAY OF JANUARY, 1997 (the "Effective
Date"), EXECUTED THIS 16TH DAY OF JANUARY, 1997 (the "Execution Date").
BETWEEN:
INTERURBAIN COMMUNICATIONS, INC., a corporation incorporated under the
laws of New Jersey, U.S.A. having a place of business at 000 Xxxx
Xxxxxxx, Xxxx 00, Xxxxxxx Xxxxxx, Xxx Xxxxxx, X.X.X. 00000;
("Interurbain")
AND:
XXXXXX XXXXXXX,
XXXXX XXXXXXX,
XXXXXX XXXXXXXXX
XXXXXXXX XXXXXXXXX,
all c/o 000 Xxxx Xxxxxxx, Xxxx 00,
Xxxxxxx Xxxxxx, Xxx Xxxxxx, X.X.X. 00000;
(individually a "Principal" and collectively the "Principals")
AND:
DATAWAVE SYSTEMS INC, a company incorporated under the laws of British
Columbia having a place of business at 000 Xxxx 0xx Xxxxxx, Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, Xxxxxx
X0X 0X0;
("Datawave")
AND:
DTV TELECOMMUNICATIONS (US) INC., a corporation incorporated under the
laws of Nevada having a place of business at 0000 Xxxxxxx Xxxxx, Xxxxx
000, Xxxxxx Xxxxx, Xxxxxxxxxx, X.X.X. 00000;
("DTV")
WHEREAS:
A. Interurbain operates the business (the "Business") of placing, maintaining
and servicing vending machines selling pre-paid phone cards;
B. The Principals are the recorded and beneficial owners of all of the shares
of Interurbain, the only directors and officers of Interurbain, and the key
employees of Interurbain;
C. DTV is a wholly-owned subsidiary of Datawave Systems (US) Inc. (a Nevada
corporation) which in turn is a wholly owned subsidiary of Datawave;
D. Interurbain has agreed to sell the assets (the "Assets") constituting the
Business of Interurbain, more particularly described on Schedule "A" to this
Agreement, to DTV and DTV has agreed to purchase the Assets on the terms and
conditions set forth in this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants
and agreements herein contained, the parties hereto do covenant and agree (the
"Agreement") each with the other as follows:
1. REPRESENTATIONS AND WARRANTIES
1.1 In order to induce Datawave and DTV (collectively, the "Purchasers") to
enter into this Agreement and complete their respective transactions
contemplated hereunder, Interurbain and the Principals jointly and severally
represent and warrant to the Purchasers that:
(a) Interurbain:
(i) was and remains duly incorporated under the laws of the State of
New Jersey; and
(ii) is in good standing with respect to the fling of annual reports
with the appropriate regulatory body in the State of New Jersey;
(b) Interurbain holds all material licences and permits that are required
for carrying on its Business in the manner in which such Business has
been carried on immediately prior to the Time of Closing (as
hereinafter defined);
(c) the Assets represent all of the assets necessary for the conduct of
the Business for which such Business has been carried on immediately
prior to the Time of Closing;
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(d) Interurbain is the beneficial owner of the Assets and, in those cases
where title to the Assets can be registered, the registered owner of
those Assets, and such Assets represent all of the property and assets
used in all material respects by Interurbain to carry on the Business
in all jurisdictions in the manner in which it carries on the Business
immediately prior to the Time of Closing;
(e) Interurbain has the corporate power to own the Assets and to carry on
the Business and Interurbain is duly qualified to carry on the
Business in the State of New Jersey and will be immediately prior to
the Time of Closing;
(f) Interurbain has good and marketable title to the Assets free and clear
of all liens, charges and encumbrances of any kind whatsoever save and
except those specified as "Permitted Encumbrances" on Schedule "A" to
this Agreement;
(g) all machinery and equipment of any kind whatsoever comprised in the
Assets are, and will be at the Time of Closing, in reasonable
operating condition and in a state of reasonable maintenance and
repair taking into account their age and use, wear and tear in the
ordinary course of business excluded;
(h) Interurbain maintains insurance against loss of, or damage to, the
Assets by all insurable risks on a replacement cost basis and
reasonable insurance with respect to public liability for a business
of its size and nature;
(i) the contracts and agreements included on Schedule "A" to this
Agreement (collectively the "Material Contracts") constitute all of
the material contracts and agreements necessary to conduct the
Business in the manner in which Interurbain conducts the Business
immediately prior to the Time of Closing;
(j) except as is noted on Schedule "A" to this Agreement, the Material
Contracts are in good standing in all material respects and not in
default in any material respect;
(k) except as is noted on Schedule "A" to this Agreement, all of the
Material Contracts can be terminated by Interurbain on not more than
one month's notice except as may be required by principles of equity;
(l) all of the Material Contracts are assignable without the consent of
the parties thereto other than Interurbain or, in the alternative,
with their consent and Interurbain will use its best efforts to obtain
such consent prior to the Time of Closing;
(m) the Principals are the only shareholders, directors and officers of
Interurbain and attached as Schedule "J" is a true and complete list
of all employees of
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Interurbain and their respective titles of employment as of the Time
of Closing;
(n) to the best of their knowledge, there are no actions, suits,
judgments, investigations or proceedings of any kind whatsoever of a
material nature outstanding, pending or threatened against or
affecting Interurbain, the Principals (or any one of them) or any part
of the Assets at law or in equity or before or by any Federal, State,
Municipal or other governmental department, commission, board, bureau
or agency of any kind whatsoever and there is no basis therefor and
there are no prior felony convictions or other similar criminal
convictions of any of the Principals;
(o) to the best of their knowledge, neither Interurbain nor any of the
Principals is in breach of any law, ordinance, statute, regulation,
by-law, order or decree of any material nature that would have a
material adverse impact on the Assets;
(p) in connection with the acquisition of the Datawave Securities (as
defined below) by Interurbain (or, if so directed by Interurbain, the
Principals), Interurbain or each of the Principals, as the case may
be:
(i) is acquiring the Datawave Securities for investment purposes
only and not with a view to, or for resale in connection with,
any distribution thereof;
(ii) is aware of the business affairs and financial condition of
Datawave and has acquired sufficient information about Datawave
to reach an informed and knowledgeable decision to acquire the
Datawave Securities; and
(iii) understands that none of the Datawave Securities have been
registered under the Securities Act of 1933 and that they will
be issued in reliance upon a specific exemption therefrom, or
under the Securities Act of 1933, which exemption depends upon,
among other things, the bona fide nature of the investment
intent expressed herein, and each of Interurbain further
represents and covenants that they will not offer, sell or
otherwise dispose of any of the Datawave Securities except in
compliance with all applicable federal and state securities laws
of the United States and New Jersey and of all applicable
securities laws of the Provinces of Canada;
(q) Interurbain and each of the Principals has good and sufficient right
and authority to enter into this Agreement and complete their
respective transactions contemplated under this Agreement on the terms
and conditions set forth herein;
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(r) to the best of their knowledge, the execution and delivery of this
Agreement, the performance of their respective obligations under this
Agreement and the completion of their respective transactions
contemplated under this Agreement will not:
(i) conflict with, or result in the breach of, in any material
respect, or the acceleration of any indebtedness under, or
constitute default under, the Certificate of Incorporation, as it
shall have been amended from time to time and the By-laws of
Interurbain or any indenture, mortgage, agreement, lease, licence
or other instrument of any kind whatsoever of a material nature
to which Interurbain or any of the Principals is a party or by
which any one of them is bound, or any judgment or order of any
kind whatsoever of any Court or administrative body of any kind
whatsoever by which any one of them is bound; or
(ii) result in the violation of any law or regulation of any kind
whatsoever a material nature by Interurbain or by any of the
Principals;
(s) neither Interurbain nor any of the Principals has incurred any
liability for brokers' or finder's fees of any kind whatsoever with
respect to this Agreement or any transaction contemplated under this
Agreement; and
(t) the representations and warranties of Interurbain and the Principals
contained in this Agreement disclose all material facts specifically
relating to the transactions involving Interurbain, the Principals and
the Assets contemplated under this Agreement which at the Time of
Closing may materially and adversely affect the ability of Interurbain
and the Principals to perform their respective obligations under this
Agreement.
1.2 The representations and warranties of Interurbain and the Principals
contained in this Agreement shall be true at the Time of Closing as though they
were made at the Time of Closing and they shall survive the completion of the
transactions contemplated under this Agreement and remain in full force and
effect for a period of two years for the benefit of the Purchasers.
1.3 In order to induce Interurbain and the Principals to enter into this
Agreement and complete their respective transactions contemplated hereunder, the
Purchasers jointly and severally represent and warrant to Interurbain and to
the Principals that:
(a) Datawave was and remains duly incorporated under the laws of British
Columbia and:
(i) Datawave is a "reporting issuer" as that term is defined in the
Securities Act, S.B.C. 1985 c.83 as amended (the "Securities
Act");
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(ii) Datawave is in good standing with respect to the filing of
annual reports with the British Columbia Registrar of Companies;
and
(iii) Datawave's common shares are listed and, as of the Time of
Closing, posted for trading on the Vancouver Stock Exchange;
(b) DTV:
(i) was and remains duly incorporated under the laws of the State of
Nevada; and
(ii) is in good standing with respect to the filing of annual reports
with the appropriate regulatory body in the State of Nevada;
(c) as of the Effective Date, the authorized share capital of Datawave
consisted of 50,000,000 common shares without par value of which
20,886,526 common shares were issued and outstanding;
(d) the Datawave Shares will be, when issued in accordance with this
Agreement, validly issued as fully paid and non-assessable common
shares of Datawave registered in the name of Interurbain (or as it may
direct) and free and clear of all liens, charges, encumbrances and
voting restrictions other than trade restrictions as may apply by
operation of Applicable Securities Laws (as defined below);
(e) the Purchasers hold all material licences and permits that are
required for carrying on their respective businesses in the manner in
which such businesses have been carried on;
(f) the Purchasers have the corporate power and authority to acquire the
Assets and good and sufficient right and authority to enter into this
Agreement and complete their respective transactions contemplated
under this Agreement on the terms and conditions set forth herein;
(g) to the best of their knowledge, the execution and delivery of this
Agreement, the performance of their respective obligations under this
Agreement and the completion of their respective transactions
contemplated under this Agreement will not:
(i) conflict with, or result in the breach of, in any material
respect, or the acceleration of any indebtedness under, or
constitute default under, the constating documents of either of
the Purchasers, or any indenture, mortgage, agreement, lease,
licence or other instrument of any kind whatsoever of a material
nature to which either of the Purchasers is a party or by which
either of the Purchasers is bound, or any judgment
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or order of any kind whatsoever of any Court or administrative
body of any kind whatsoever by which either of the Purchasers is
bound; or
(ii) result in the violation of any law or regulation of any kind
whatsoever of a material nature by either of the Purchasers;
(h) the audited financial statements of Datawave for its fiscal year ended
March 31, 1996 and the unaudited financial statements of Datawave for
the interim six month period ended September 30, 1996 of its current
fiscal year (collectively "Datawave's Financial Statements") are true
and correct in every material respect and present fairly and
accurately the financial position and results of the operations of
Datawave for the periods then ended and Datawave's Financial
Statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis;
(i) since September 30, 1996 there has not been any material adverse
change of any kind whatsoever in the financial position or condition
of Datawave or any damage, loss or other change of any kind whatsoever
in circumstances materially affecting the business or assets of
Datawave or the right or capacity of Datawave to carry on its
business;
(j) there are no material liabilities of Datawave, whether direct,
indirect, absolute, contingent or otherwise which are not disclosed or
reflected in Datawave's Financial Statements except those incurred in
the ordinary course of business of Datawave since September 30, 1996
which are recorded in the books and records of Datawave;
(k) to the best of its knowledge, there are no actions, suits, judgments,
investigations or proceedings of any kind whatsoever of a material
nature outstanding, pending or threatened against or affecting either
of the Purchasers at law or in equity or before or by any Federal,
Provincial, State, Municipal or other governmental department,
commission, board, bureau or agency of any kind whatsoever and them is
no basis therefor;
(l) to the best of their knowledge, the Purchasers are not in material
breach of any law, ordinance, statute, regulation, by-law, order or
decree of any kind whatsoever;
(m) the Purchasers have not incurred, and Interurbain and the Principals
will not incur, any liability for broker's or finder's fees of any
kind whatsoever on behalf of the Purchasers with respect to this
Agreement or any transaction contemplated under this Agreement; and
(n) the representations and warranties of the Purchasers contained in this
Agreement disclose all material facts specifically relating to the
transactions
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involving the Purchasers contemplated under this Agreement which at
the Time of Closing may materially and adversely affect the ability of
the Purchasers to perform their respective obligations under this
Agreement.
1.4 The representations and warranties of the Purchasers contained in this
Agreement shall be true at the Time of Closing as though they were made at the
Time of Closing and they shall survive the completion of the transactions
contemplated under this Agreement and remain in full force and effect for a
period of two years for the benefit of Interurbain and the Principals.
2. PURCHASE AND SALE
2.1 Subject to the terms and conditions of this Agreement, Interurbain agrees
to sell the Assets to Datawave, and Datawave agrees with Interurbain to purchase
the Assets, on the Closing Date for the sum of $880,000 in Canadian funds (the
"Purchase Price"). Datawave shall cause the Assets to be acquired by DTV at the
Time of Closing.
2.2 The Purchase Price shall be paid by Datawave to Interurbain by the
issuance of a total of up to 1,600,000 common shares without par value in the
capital stock of Datawave (the "Datawave Shares") at a price of Cdn. $0.55 per
Datawave Share. Subject to adjustment as provided for herein, the Datawave
Shares will be issued as follows:
(a) 210,000 Datawave Shares (the "First Tranche on the date which is
three months following the Effective Date;
(b) 210,000 Datawave Shares (the "Second Tranche") on the date which is
six months following the Effective Date;
(c) 590,000 Datawave Shares (the "Third Tranche") on the date which is
nine months following the Effective Date; and
(d) 590,000 Datawave Shares (the "Fourth Tranche") on the date which is
one year following the Effective Date.
Provided that none of the Principals is in material default of his obligations
under this Agreement (or any agreement entered into him pursuant hereto), then
the four tranches of Datawave Shares to be issued over time as provided for
above shall become immediately issuable in the event that one or more of the
following events occurs:
(a) the Company proposes to undertake a merger or amalgamation (by
arrangement, take over, reorganization or otherwise) with another
corporation which has the result of causing the issuance of that
number of common shares of the Company as is equal to 40% or more of
its issued and outstanding share capital after taking into account
such issuance; or
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(b) the Company proposes to undertake the sale of all or substantially all
of its assets; or
(c) the proposed sale of 40% or more of the issued and outstanding shares
of the Company from a group of vendors acting jointly or in concert
(other than to an associate or affiliate of the vendors or any one of
them);
and such Datawave Shares will be issuable no later then the day preceding the
closing of such transaction or, if applicable, the record date set for
shareholder approval of such transaction.
2.3 In the event that:
(a) the Pathmark Agreement (as defined on Schedule "A") is cancelled or
terminated (other than as the result of any act or omission of the
Purchasers after the Time of Closing) or materially breached or
altered by Pathmark in the first six months following the Effective
Date, then the number of Datawave Shares to be issued to Interurbain
shall be reduced by 180,000 Datawave Shares, such reduction to be
effected by reducing the Third Tranche and Fourth Tranche share
issuances by 90,000 Datawave Shares each;
(b) the Price Choppers Agreement (as defined on Schedule "A") is cancelled
or terminated (other than as the result of any act or omission of the
Purchasers after the Time of Closing) or materially breached or
altered by Price Choppers in the first six months following the
Effective Date, then the number of Datawave Shares to be issued to
Interurbain shall be reduced by 180,000 Datawave Shares, such
reduction to be effected by reducing the Third Tranche and Fourth
Tranche share issuances by 90,000 Datawave Shares each;
(c) the weighted average trading price of the Company's common shares
exceeds, on each of five consecutive trading days at any time during
the period beginning on the Effective Date and ending on the date
which is six months following the Effective Date, the sum of Cdn.
$1.00, then the number of Datawave Shares to be issued to Interurbain
shall be reduced by 400,000 Datawave Shares, such reduction to be
effected by reducing the Third Tranche and Fourth Tranche share
issuances by 200,000 Datawave Shares each; and
(d) any one of the Principals is removed for cause (as defined by common
law, unless defined in an employment agreement between the Principal
and Datawave (or a subsidiary or affiliate) then in effect, in which
case as defined therein) or the Principal voluntarily ceases to be an
employee of the Datawave organization for any reason during the one
year period following the Effective Date, then the number of the
Datawave Shares that have not yet
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25% for each Principal whose employment terminates notwithstanding any
entitlement to such shares set out in paragraph 2.2.
2.4 In addition to the Datawave Shares, Datawave shall, at the Time of
Closing, grant to each of the Principals, the following:
(a) a non-transferrable share purchase warrant (the "Warrant") such
Warrant to entitle the holder to purchase up to 50,000 common shares
of Datawave at a price of Cdn. $1.00 per share for a period of two
years following the Closing Date, and such Warrant to be in the form
(the "Warrant Certificate") appearing at Schedule "B" to this
Agreement and such Warrant to have the additional terms and conditions
set forth in the Warrant Certificate; and
(b) an employee stock option (the "Stock Option") such Stock Option to
entitle the holder to purchase up to 50,000 common shares of Datawave
at a price of Cdn. $1.00 per share for a period of five years
following the Closing Date, such Stock Option to vest as follows:
(i) as to 12,500 shares six months following the Closing Date;
(ii) as to 12,500 shares one year following the Closing Date;
(iii) as to 12,500 shares 18 months following the Closing Date; and
(iv) as to 12,500 shares two years following the Closing Date;
and such Stock Option to be in the form (the "Stock Option Agreement")
appearing at Schedule "C" to this Agreement and such Stock Option to
have the additional terms and conditions set forth in the Stock Option
Agreement.
2.5 Interurbain and the Principals jointly and severally acknowledge to and
agree with the Purchasers that:
(a) the Datawave Shares, Warrants and Stock Options (and the common shares
that may be acquired upon the exercise thereof) (collectively the
"Datawave Securities") will be issued pursuant to registration and
prospectus exemptions in British Columbia and in the United States and
New Jersey (including applicable federal exemptions) and will be
subject to such trading restrictions as may be imposed under British
Columbia law and the laws of the United States and New Jersey which
may apply (the "Applicable Securities Laws"); and
(b) the Datawave Securities will not be transferable before all applicable
hold periods have expired; and
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(c) the certificate or certificates issued for the Datawave Securities
will bear such legends concerning the applicable hold periods as
described in the Warrant Certificate appearing at Schedule "B" to this
Agreement or as may otherwise be required by the Applicable Securities
Laws.
3. COVENANTS, AGREEMENTS AND ACKNOWLEDGEMENTS
3.1 Interurbain and the Principals jointly and severally covenant and agree
with the Purchasers that they shall:
(a) from and including the Execution Date through to and including the
Time of Closing at all reasonable times during normal business hours,
permit the Purchasers, through their respective directors, officers,
employees and authorized agents and representatives (collectively the
"Purchasers' Representatives") at their own cost, full access to the
books, records and property of Interurbain including, without
limitation, all of the Assets, contracts and minute books of
Interurbain, so as to permit the Purchasers to make such investigation
(the "Purchasers' Investigation") of Interurban as the Purchasers deem
necessary;
(b) on or before the 20th day of January, 1997, provide to the Purchasers
all such further documents, instruments and materials and, at the cost
of the Purchasers, do all such acts and things as may be reasonably
required or reasonably requested by the Purchasers to obtain
Regulatory Approval including, but not limited to, providing to the
Purchasers a valuation opinion of the Assets in a form and by a party
acceptable to the VSE so as to permit the Datawave Shares to be issued
as "trading shares" as that term is defined in VSE Listings Policy
Statement No. 18;
(c) pay all United States taxes (including State taxes) arising from or
related to the transactions contemplated by this Agreement and
including, without limitation, all sales taxes, excise or transfer
taxes, and any income taxes of Interurbain or any of the Principals
arising from this transaction;
(d) from and including the Execution Date through to and including the
Time of Closing, to the extent reasonably possible, do all such acts
and things necessary to ensure that all of the representations and
warranties of Interurbain and the Principals contained in this
Agreement or any certificates or documents delivered by them pursuant
to this Agreement remain true and correct;
(e) from and including the Execution Date through to and including the
Time of Closing, preserve and protect the Business and Assets of
Interurbain (except for changes in the ordinary course of business)
and, without limiting the
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generality of the foregoing, carry on the Business of Interurbain in a
reasonable and prudent manner;
(f) from and including the Execution Date through to and including the
Time of Closing, keep confidential all discussions and communications
(including all information communicated therein) between the parties,
and all written and printed materials of any kind whatsoever exchanged
by the parties, and, if so requested by the Purchasers, Interurbain
shall arrange for any director, officer, employee, authorized agent or
representative of Interurbain to enter into a non-disclosure agreement
with the Purchasers in a form acceptable to the Purchasers acting
reasonably;
(g) pay all severance, termination or other benefits payable to employees
of Interurbain due to the transfer of the Assets to DTV or due to any
employees not continuing in the employment of DTV after the Time of
Closing;
(h) cooperate with the Purchasers to effect a smooth transition of
Business in accordance with the terms of this Agreement; and
(i) use their best efforts to obtain all necessary consents from third
parties as may be required for the transactions contemplated hereunder
on or before the Time of Closing.
3.2 Interurbain and the Principals jointly and severally covenant and agree
with the Purchasers that, from and including the Execution Date through to and
including the Time of Closing, they shall:
(a) not do any such act or thing that would render any representation or
warranty of Interurbain or of the Principals contained in this
Agreement or any certificates or documents delivered by them pursuant
to this Agreement untrue or incorrect; and
(b) not negotiate with any other person in respect of a purchase and sale
of any of the Assets or any part of the Assets, other than a sale of
part of the Assets in the ordinary course of Interurbain's business.
3.3 Interurbain and the Principals jointly and severally acknowledge to and
agree with the Purchasers that the Purchasers' Investigation shall in no way
limit or otherwise adversely affect the rights of the Purchasers as provided for
hereunder in respect of the representations and warranties of Interurbain and of
the Principals contained in this Agreement or any certificates or documents
delivered by them pursuant to this Agreement.
3.4 Datawave covenants and agrees with Interurbain and with the Principals
that Datawave shall:
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(a) from and including the Execution Date through to and including the
Time of Closing, permit the Principals and Interurbain, through their
respective directors, officers, employees and authorized agents and
representatives, as the case may be, (collectively the "Vendors'
Representatives") at their own cost, full access to the books, records
and property of Datawave including, without limitation, all of the
assets, contracts and minute books of Datawave, so as to permit them
to make such investigation (the "Vendors' Investigation") of Datawave
as they deem necessary;
(b) use its best efforts to obtain Regulatory Approval for this Agreement
and the transactions contemplated hereunder on or before the 21st day
of February, 1997;
(c) from and including the Execution Date through to and including the
Time of Closing, to the extent reasonably possible, do all such acts
and things necessary to ensure that all of the representations and
warranties of the Purchasers contained in this Agreement or any
certificates or documents delivered by them pursuant to this Agreement
remain true and correct;
(d) be responsible for the payment of any Canadian tax arising from or
related to the transactions contemplated by this Agreement; and
(e) from and including the Execution Date through to and including the
Time of Closing and subject to its obligations as a reporting issuer
listed on a stock exchange, keep confidential all discussions and
communications (including all information communicated therein)
between the parties, and all written and printed materials of any kind
whatsoever exchanged by the parties, and, if so requested by
Interurbain, Datawave shall arrange for any of the Purchasers'
Representatives to enter into a non-disclosure agreement with
Interurbain in a form acceptable to Interurbain acting reasonably.
3.5 The Purchasers covenant and agree with Interurbain and with the
Principals that, from and including the Effective Date through to and including
the Time of Closing, the Purchasers shall not knowingly do any such act or thing
that would render any representation or warranty of the Purchasers contained in
this Agreement or any certificates or documents delivered by them pursuant to
this Agreement untrue or incorrect.
3.6 The Purchasers jointly and severally acknowledge to and agree with the
Interurbain and with the Principals that the Vendors' Investigation shall in no
way limit or otherwise adversely affect the rights of Interurbain and the
Principals as provided for hereunder in respect of the representations and
warranties of the Purchasers contained in this Agreement or any certificates or
documents delivered by them pursuant to this Agreement.
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4. INDEMNITY
4.1 Notwithstanding the completion of the transactions contemplated under
this Agreement or the Purchasers' Investigation, the representations, warranties
and acknowledgements of Interurbain and the Principals contained in this
Agreement or any certificates or documents delivered by them pursuant to this
Agreement shall survive the completion of the transactions contemplated by this
Agreement and shall continue in full force and effect for a period of two years
for the benefit of the Purchasers. If any of the representations, warranties or
acknowledgements given by Interurbain or the Principals in this Agreement are
found to be untrue or there is a breach of any covenant or agreement in this
Agreement on the part of Interurbain or the Principals, Interurbain and the
Principals shall jointly and severally indemnify and save harmless the
Purchasers from and against any and all liability, claims, debts, demands,
suits, actions, penalties, fines, losses, costs (including legal fees and
disbursements as charged by a lawyer to his own client), damages and expenses of
any kind whatsoever which may be brought or made against the Purchasers by any
person, firm or corporation of any kind whatsoever or which may be suffered or
incurred by the Purchasers, directly or indirectly, arising out of or as a
consequence of any such misrepresentation or breach of warranty,
acknowledgement, covenant or agreement. Without in any way limiting the
generality of the foregoing, this shall include any loss of any kind whatsoever
which may be suffered or incurred by the Purchasers, directly or indirectly,
arising out of any material assessment or reassessment levied upon Interurbain
or the Principals for tax, interest and/or penalties for any period up to and
including the Closing Date and all claims, demands, costs (including legal fees
and disbursements as charged by a lawyer to his own client) and expenses of any
kind whatsoever in respect of the foregoing.
5. CONDITIONS PRECEDENT
5.1 The obligation of the Purchasers, or either of them, to carry out the
terms of this Agreement and to complete their respective transactions
contemplated under this Agreement is subject to the fulfilment to the
satisfaction of the Purchasers of each of the following conditions that:
(a) on or before the Time of Closing, the Purchasers shall have been able
to complete the Purchasers' Investigation to their reasonable
satisfaction;
(b) on or before the Time of Closing, subject to Section 5.4, Datawave,
DTV or another member of the Datawave organization shall have entered
into satisfactory written employment agreements (collectively, the
"Employment Agreements") with each of the Principals in substantially
the respective forms which appear on Schedule "D" to this Agreement.
(c) at the Time of Closing, Interurbain shall have delivered to the
Purchasers, in form and content reasonably satisfactory to the
Purchasers, all consents and approvals from, and assumption agreements
with, such third parties as may be necessary, or as the Purchasers
shall reasonably request, for the
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consummation of the transactions contemplated under this Agreement
(collectively, the "Third Party Agreements") including, without
limitation, consents from any software suppliers or vendors, lessors
or parties to any Material Contracts;
(d) at the Time of Closing, Interurbain and the Principals shall have
entered into an escrow agreement (the "Escrow Agreement") between
Interurbain, each of the Principals, Pitney, Xxxxxx, Xxxx & Xxxxx,
Attorneys, (the "Escrow Agent") and each of the Purchasers, on
substantially the same terms and conditions stated in the form of
escrow agreement attached as Schedule "E" hereto;
(e) prior to the Time of Closing, there shall not have occurred any
material adverse change in the condition, financial or otherwise, of
the Assets or of the Business operations or prospects represented by
the Assets;
(f) at the Time of Closing, the solicitors for Interurbain shall provide
an opinion dated as of the Closing Date, the form of which appears as
Schedule "F" to this Agreement;
(g) as of the Time of Closing, Interurbain and the Principals shall have
complied with all of their respective covenants and agreements
contained in this Agreement; and
(h) as of the Time of Closing, the representations and warranties of
Interurbain and of the Principals referred to in paragraph 1.1 of this
Agreement, contained elsewhere in this Agreement or contained in any
certificates or documents delivered by Interurbain and by the
Principals pursuant to this Agreement shall be true in all material
respects as if such representations and warranties had been made by
Interurbain and the Principals as of the Time of Closing.
The conditions set forth above are for the exclusive benefit of the Purchasers
and may be waived by the Purchasers in whole or in part on or before the Time of
Closing.
5.2 Interurbain's and the Principals' obligations to carry out the terms of
this Agreement and to complete their respective transactions contemplated under
this Agreement are subject to the fulfilment to their satisfaction of each of
the following conditions that:
(a) on or before the Time of Closing, each of the Principals shall have
entered into their respective Employment Agreement;
(b) at the Time of Closing, DTV shall have entered into either an
assignment of each of the Third Party Agreement referred to in
subparagraph 5.1(c), or a
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new agreement directly with such third party to replace the Third
Party Agreement in question;
(c) at the Time of Closing, the Purchasers shall have entered into the
Escrow Agreement and shall have delivered to the Escrow Agent signed
irrevocable treasury orders (collectively, the "Treasury Orders")
providing for the issuance of the Datawave Shares bearing the
appropriate legends as provided for in Section 2;
(d) at the Time of Closing, the Purchasers shall have delivered to the
Principals duly executed Warrant Certificates;
(e) at the Time of Closing, the Purchasers shall have delivered to the
Principals duly executed Stock Option Agreements;
(f) at the Time of Closing, the solicitors for the Purchasers shall
provide an opinion dated as of the Closing Date, the form of which
appears as Schedule "G" to this Agreement;
(g) as of the Time of Closing, the Purchasers shall have complied with all
of their respective covenants and agreements contained in this
Agreement; and
(h) at the Time of Closing, the representations and warranties of the
Purchasers referred to in paragraph 1.3 of this Agreement, contained
elsewhere in this Agreement or contained in any certificates or
documents delivered by them pursuant to this Agreement shall be true
in all material respects as if such representations and warranties had
been made by the Purchasers as of the Time of Closing.
The conditions set forth above are for the exclusive benefit of Interurbain and
the Principals and may be waived by them in whole or in part on or before the
Time of Closing.
5.3 The parties acknowledge and agree each with the other that this Agreement
and all of the transactions contemplated under this Agreement are subject to the
approval ("Regulatory Approval") of the Vancouver Stock Exchange ("VSE"). In
the event that Regulatory Approval is not obtained on or before the 21st day of
February, 1997, this Agreement shall terminate and be of no further force and
effect. The Purchasers agree to use all reasonable efforts to obtain the
Regulatory Approvals on or before February 21, 1997.
5.4 Datawave shall cause DTV to assume the position of Interurbain under the
agreement made between MCI and Freemont Quality Products, Inc. ("Freemont")
dated June 7, 1996 (the "MCI Agreement") so long as it is on terms no less
favourable to DTV than apply to Freemont as of the Execution Date of this
Agreement, subject to those conditions set forth on Schedule "A".
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6. CLOSING
6.1 The completion of the transactions contemplated under this Agreement
shall be closed at the offices of Xxxxxxx & Xxxxxx, P.O. Box 48800, 0000-0000
Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx at 9:00 o'clock a.m. local time
in Vancouver, B.C. (the "Time of Closing") on the fifth business day (the
"Closing Date") following the date Regulatory Approval is given or at such other
time and date as the parties may agree to.
6.2 At the Time of Closing, Interurbain and the Principals shall deliver to
the solicitors for Datawave:
(a) certified true copies of the resolutions of the directors and
shareholders of Interurbain evidencing that the directors and
shareholders of Interurbain have approved this Agreement and all of
the transactions contemplated hereunder and the resolutions shall
include specific reference to the sale and transfer of the Assets from
Interurbain to Datawave (or if so directed by Datawave, DTV) as
provided for in this Agreement;
(b) such documentation as the Purchasers consider necessary to effect the
valid sale and transfer of the Assets to DTV including, without
limitation, a Xxxx of Sale in a form provided by the Purchasers and
any documents necessary to effect the registration or assignment of
any of the Assets into the name of DTV;
(c) the Employment Agreements referred to in subparagraph 5.1 (b) of this
Agreement;
(d) the Third Party Agreements referred to in subparagraph 5.1(c) of this
Agreement;
(e) the Escrow Agreement referred to in subparagraph 5.1(d) of this
Agreement;
(f) the solicitor's opinion referred to in subparagraph 5.1(f) of this
Agreement;
(g) a certificate of confirmation signed by Interurbain and by the
Principals in the form attached as Schedule "H" to this Agreement;
(h) a certificate of good standing for Interurbain issued by the
appropriate administrative body in the jurisdiction of incorporation
of Interurbain; and
(i) any other materials that are, in the opinion of the solicitors for
Datawave, reasonably required to complete the transactions
contemplated under this Agreement.
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6.3 At the Time of Closing, the Purchasers shall deliver to the solicitors
for Interurbain:
(a) certified true copies of the resolutions of the directors of each of
the Purchasers evidencing that the respective boards have approved
this Agreement and all of the respective transactions of the
Purchasers contemplated hereunder;
(b) evidence that Regulatory Approval has been obtained;
(c) the Employment Agreements referred to in subparagraph 5.2(a) of this
Agreement;
(d) the Third Party Agreements referred to in subparagraph 5.2(b) of this
Agreement;
(e) the Escrow Agreement referred to in subparagraph 5.2(c) of this
Agreement and evidence that the Treasury Orders have been delivered to
the Escrow Agent as provided for in subparagraph 5.2(c) of this
Agreement;
(f) the Warrant Certificates referred to in subparagraph 5.2(d) of this
Agreement;
(g) the Stock Option Agreements referred to in subparagraph 5.2(e) of this
Agreement;
(h) the solicitor's opinion referred to in subparagraph 5.2(f) of this
Agreement;
(i) a certificate of confirmation signed by each of the Purchasers in the
form attached as Schedule "I" to this Agreement; and
(j) any other materials that are, in the opinion of the solicitors for
Interurbain, reasonably required to complete the transactions
contemplated under this Agreement.
7. ARBITRATION
7.1 The parties hereto agree that all questions or matters in dispute with
respect to this Agreement shall be submitted to arbitration pursuant to the
terms hereof. For the purpose of this Part 7 of the Agreement, Interurbain and
the Principals shall be one party and Datawave and DTV shall be one party.
7.2 It shall be a condition precedent to the right of any party hereto to
submit any matter to arbitration pursuant to the provisions hereof that any
party intending to refer any matter to arbitration shall have given prior
written notice of its intention to do so to the other party together with
written particulars of the matter in dispute. On the expiration of 10 days
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from the date such notice is deemed delivered, the party who gave such notice
may proceed to refer the dispute to arbitration as provided in paragraph 7.3
hereof.
7.3 The party desiring arbitration shall appoint one arbitrator, and shall
notify the other party of such appointment, and the other party shall, within 15
days after such notice is deemed delivered, appoint an arbitrator, and the two
arbitrators so named, before proceeding to act, shall, within 30 days of the
appointment of the last appointed arbitrator, unanimously agree on the
appointment of a third arbitrator to act with them and be chairman of the
arbitration herein provided for. If the other party shall fail to appoint an
arbitrator within 15 days after notice of the appointment of the first
arbitrator is deemed delivered, the first arbitrator shall be the only
arbitrator. If the two arbitrators appointed by the parties shall be unable to
agree on the appointment of the chairman, the chairman shall be appointed under
the rules of the American Arbitration Association. Except as specifically
otherwise provided in this paragraph, the arbitration herein provided for shall
be conducted in accordance with such Act. The chairman, or in the case where
only one arbitrator is appointed, the single arbitrator, shall fix a time and
place in Xxxxxx County, New Jersey, U.S.A. for the purpose of hearing the
evidence and representations of the parties, and he shall preside over the
arbitration and determine all questions of procedure not provided for under such
Act or this paragraph. After hearing any evidence and representations that the
parties may submit, the single arbitrator, or the arbitrators, as the case may
be, shall make an award and reduce the same to writing, and deliver one copy
thereof to each of the parries. The expense of the arbitration shall be paid as
specified in the award.
7.4 The parties agree that the award of a majority of the arbitrators, or in
the case of a single arbitrator, of such arbitrator, shall be final and binding
upon each of them.
8. GENERAL
8.1 Time and each of the terms and conditions of this Agreement shall be of
the essence of this Agreement and any waiver by the parties of this paragraph
8.1 or any failure by them to exercise any of their rights under this Agreement
shall be limited to the particular instance and shall not extend to any other
instance or matter in this Agreement or otherwise affect any of their rights or
remedies under this Agreement.
8.2 The Schedules to this Agreement incorporated by reference and the
recitals to this Agreement constitute a part of this Agreement.
8.3 This Agreement constitutes the entire Agreement between the parties
hereto in respect of the matters referred to herein and there are no
representations, warranties, covenants or agreements, expressed or implied,
collateral hereto other than as expressly set forth or referred to herein.
8.4 The headings in this Agreement are for reference only and do not
constitute terms of the Agreement.
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8.5 The provisions contained in this Agreement which, by their terms, require
performance by a party to this Agreement subsequent to the Closing Date of this
Agreement, shall survive the Closing Date of this Agreement.
8.6 No alteration, amendment, modification or interpretation of this
Agreement or any provision of this Agreement shall be valid and binding upon the
parties hereto unless such alteration, amendment, modification or interpretation
is in written form executed by the parties directly affected by such alteration,
amendment, modification or interpretation.
8.7 Whenever the singular or masculine is used in this Agreement the same
shall be deemed to include the plural or the feminine or the body corporate as
the context may require.
8.8 The parties hereto shall execute and deliver all such further documents
and instruments and do all such acts and things as any party may, either before
or after the Closing Date, reasonably require in order to carry out the full
intent and meaning of this Agreement.
8.9 Any notice, request, demand and other communication to be given under this
Agreement shall be in writing and shall be delivered by hand or by telecopier to
the parties at their following respective addresses:
To Interurbain and the Principals:
c/o Interurbain Communications, Inc.
000 Xxxx Xxxxxxx, Xxxx 00
Xxxxxxx Xxxxxx, Xxx Xxxxxx, X.X.X.
07444
Attention: Xxxxxx Xxxxxxx
Telecopier: (000) 000-0000
with a copy to:
if mailed: if hand delivered or by overnight
courier:
Pitney, Xxxxxx, Xxxx & Xxxxx Pitney, Xxxxxx, Xxxx & Xxxxx
P.O. Box 1945 200 Campus Drive
Morristown, New Jersey, U.S.A. Xxxxxxxx Xxxx, Xxx Xxxxxx, X.X.X.
00000-0000 07932
Attention: Xxxx X. Xxxxxxxx
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Telecopier (000) 000-0000
To Datawave and DTV:
c/o Datawave Systems Inc.
000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxx Xxxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx & Xxxxxx
Barristers and Solicitors
X.X. Xxx 00000
2100 - 0000 Xxxx Xxxxxxx Xx.
Xxxxxxxxx, X.X. X0X 0X0
Attention: Xxxxx X. Xxxxx/Xxxxxxx X. Xxxxxx
Telecopier: (000) 000-0000
or to such other addresses as may be given in writing by the parties hereto in
the manner provided for in this paragraph, and shall be deemed to have been
received, if delivered by hand, on the date of delivery, or if delivered by
telecopier, on the date that it is sent.
8.10 This Agreement may not be assigned by any party hereto without the prior
written consent of all of the parties hereto.
8.11 This Agreement shall be subject to, governed by, and construed in
accordance with the laws of the State of New Jersey.
8.12 Interurbain and each of the Principals hereby appoints Xxxxxx Xxxxxxx as
his or its attorney for the purposes of receiving all payments and notices to be
delivered to them hereunder, and for the purpose of altering, mending, modifying
or interpreting this Agreement on behalf of them, or executing and delivering
documents and instruments and doing all such acts and things as may be required
of them to carry out the full intent of this Agreement.
8.13 This Agreement may be signed by the parties in as many counterparts as
may be deemed necessary, each of which so signed shall be deemed to be an
original, and all such counterparts together shall constitute one and the same
instrument.
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8.14 This Agreement may be terminated at any time prior to the Time of
Closing by any one of the following methods:
(a) by mutual consent of the parties in writing;
(b) by Purchasers in writing if any of the conditions in Section 5.1 have
not been fulfilled, or waived by the Purchasers in writing, on or
before February 21, 1997; or if any petition in bankruptcy shall have
been filed by or against Interurbain or a receiver has been appointed
for Interurbain or any of its assets or Interurbain admits in writing
its inability to pay its debts as they mature (an "Event of
Bankruptcy"); or
(c) by Interurbain and Principals in writing if there shall have occurred
an Event of Bankruptcy with respect to either of the Purchasers; or if
any of the conditions in Section 5.2 have not been fulfilled or waived
by them on or before February 21, 1997.
IN WITNESS WHEREOF the parties have hereunto set their hands and seals as of the
Effective Date first above written.
The CORPORATE SEAL of )
INTERURBAIN COMMUNICATIONS, )
INC. was hereunto affixed )
in the presence of: ) c/s
)
/s/ )
________________________ )
)
/s/ )
________________________ )
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SIGNED, SEALED AND DELIVERED )
by XXXXXX XXXXXXX in the presence of: )
)
)
/s/ Xxxxx Xxxxxxx ) /s/ Xxxxxx Xxxxxxx
---------------------------------- ) --------------------------------
) XXXXXX XXXXXXX
Signature of Witness )
)
Name of Witness: Xxxxx Xxxxxxx )
------------------ )
)
Address of Witness: )
Interurbain Communications, Inc)
------------------------- )
000 Xxxx Xxxxxxx, Xxxx 00 )
------------------------- )
Xxxxxxx Xxxxxx, XX 00000 )
------------------------- )
)
------------------------- )
Occupation of Witness: Vice President )
----------- )
)
SIGNED, SEALED AND DELIVERED )
by XXXXX XXXXXXX )
in the presence of: )
)
)
)
/s/ Xxxxxx Xxxxxxx ) /s/ Xxxxx Xxxxxxx
------------------------------------- ) -----------------------------------
) XXXXX XXXXXXX
Name of Witness: Xxxxxx Xxxxxxx )
------------------ )
Address of Witness: )
Interurbain Communications, Inc)
------------------------- )
000 Xxxx Xxxxxxx, Xxxx 00 )
------------------------- )
Xxxxxxx Xxxxxx, XX 00000 )
------------------------- )
)
------------------------- )
Occupation of Witness: Vice President )
----------- )
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SIGNED, SEALED AND DELIVERED )
by XXXXXX XXXXXXXXX )
in the presence of: )
)
)
/s/ Xxxxxxxx Xxxxxxxxx ) /s/ Xxxxxx Xxxxxxxxx
---------------------------------- ) --------------------------------
) XXXXXX XXXXXXXXX
Signature of Witness )
)
Name of Witness: )
Xxxxxxxx Xxxxxxxxx )
--------------------------- )
Address of Witness: )
Interurbain Communications, Inc)
------------------------- )
000 Xxxx Xxxxxxx, Xxxx 00 )
------------------------- )
Xxxxxxx Xxxxxx, XX 00000 )
------------------------- )
)
------------------------- )
Occupation of Witness: Vice President )
----------- )
SIGNED, SEALED AND DELIVERED )
by XXXXXXXX XXXXXXXXX )
in the presence of: )
)
)
/s/ Xxxxxx Xxxxxxxxx ) /s/ Xxxxxxxx Xxxxxxxxx
---------------------------------- ) --------------------------------
) XXXXXXXX XXXXXXXXX
Signature of Witness )
)
Name of Witness:
Xxxxxx Xxxxxxxxx )
--------------------------- )
Address of Witness:
Interurbain Communications, Inc)
------------------------- )
000 Xxxx Xxxxxxx, Xxxx 00 )
------------------------- )
Xxxxxxx Xxxxxx, XX 00000 )
------------------------- )
)
------------------------- )
Occupation of Witness: President )
----------- )
The CORPORATE SEAL OF )
DATAWAVE SYSTEMS INC. was )
hereunto affixed in the presence of: ) c/s
)
/s/ )
------------------------------------- )
)
/s/ )
------------------------------------- )
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The CORPORATE SEAL of DTV )
TELECOMMUNICATIONS (US) INC. )
was hereunto affixed in the presence of:) c/s
)
/s/ )
------------------------------------- )
/s/ )
------------------------------------- )
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