Exhibit 10.5
OPTION AGREEMENT
THIS AGREEMENT made the 1st day of October, ▇▇▇▇,
▇ ▇ ▇ ▇ ▇ ▇ ▇:
1199846 ONTARIO LTD., a corporation incorporated
pursuant to the laws of the Province of Ontario,
(hereinafter referred to as the "Vendor"),
OF THE FIRST PART;
- and -
NTN INTERACTIVE NETWORK INC., a corporation
amalgamated pursuant to the laws of Canada,
(hereinafter referred to as the "Corporation"),
OF THE SECOND PART;
- and -
NTN CANADA, INC., a corporation incorporated pursuant
to the laws of the State of New York,
(hereinafter referred to as "NTN Canada"),
OF THE THIRD PART.
WHEREAS:
1. Pursuant to a share purchase agreement dated October 1, 1996 (the "Share
Purchase Agreement"), entered into between ▇▇▇▇▇▇▇▇-▇▇▇ Holdings Inc.
("▇▇▇▇▇▇▇▇-▇▇▇"), the Vendor, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and the
Corporation, the Vendor and ▇▇▇▇▇▇▇▇-▇▇▇ sold all of the issued and outstanding
common shares in the capital of Magic Lantern Communications Ltd. ("Magic
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Lantern") to the Corporation and the Vendor sold 20.1% of the issued and
outstanding shares in the capital of 745695 Ontario Ltd. to the Corporation;
2. As part of the consideration received by the Vendor in connection with the
aforesaid transaction, the Vendor received a promissory note from the
Corporation in the principal sum of $546,867.00 dated October 1, 1996 (the
"Promissory Note");
3. Pursuant to the provisions of the Promissory Note, the Corporation may elect
to deliver to the Vendor or the Vendor may elect to receive from the
Corporation, common shares in the capital of NTN Canada (the "Common Shares") in
lieu of payment as therein provided;
4. Pursuant to the provisions of the Share Purchase Agreement, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
entered into an employment agreement with Magic Lantern dated October 1, 1996
(the "Employment Agreement").
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
completion of the transactions contemplated by the Share Purchase Agreement, the
respective covenants and agreements of the parties contained herein, the sum of
One Dollar ($1.00) now paid by each party hereto to each of the other parties
hereto and other good and valuable consideration (the receipt and sufficiency of
which is hereby acknowledged by each of the parties hereto), the parties hereto
hereby agree as follows:
1. Put Option -
(1) In the event Magic Lantern decides that it does not wish to extend the
term of the Employment Agreement as provided in Article 10 of the
Employment Agreement and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ decides that he does wish to
extend the term of the Employment Agreement as so provided, and
regardless of whether or not Magic Lantern and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ would
otherwise have been able to agree upon the terms and conditions of the
said extension assuming both parties had decided that they wished to
extend the said term, the Vendor shall, on or after September 1, 1999,
have the right (hereinafter in this Article 1 referred to as the "Put
Option") to require NTN Canada to purchase from the Vendor all, but not
less than all, of the Common Shares acquired by the Vendor pursuant to
the provisions of the Promissory Note, if any, which are then still
beneficially owned by the Vendor (hereinafter in this Article 1
collectively referred to as the "Vendor's Shares").
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(2) The Put Option shall be exercised by the Vendor giving to NTN Canada
notice in writing (in this Article 1 referred to as the "Notice of
Exercise") of its intention to exercise the Put Option.
(3) Upon exercise of the Put Option, NTN Canada shall be obligated to
purchase from the Vendor, and the Vendor shall be obligated to sell to
NTN Canada, the Vendor's Shares in accordance with the provisions of
Section 1(4) hereof.
(4) The sale and purchase of the Vendor's Shares under this Article shall
be completed on the following terms and conditions:
(a) the purchase price payable for each of the Vendor's Shares
shall be equal to 90% of the average closing price of the
Common Shares during the twenty-trading day period ending on
the business day which immediately precedes the day on which
the Notice of Exercise is delivered by the Vendor to NTN
Canada as reported by the NASDAQ "Small-Cap" market (or, if
the Common Shares are not, at such time, included in the
NASDAQ "Small-Cap" market, then such other market or exchange
in which the Common Shares are then included;
(b) the purchase price shall be payable by certified cheque or
bank draft at the time of completion of the transaction;
(c) the Vendor's Shares shall be free and clear of any liens,
mortgages, charges and encumbrances whatsoever and the Vendor
shall have good and marketable title thereto;
(d) the completion of the sale shall take place at 10:00 a.m.
(Toronto time) on the date being 60 days after the date on
which the Vendor delivered the Notice of Exercise to NTN
Canada, provided such day is not a Saturday, Sunday or
statutory holiday, in which event the completion of the sale
shall take place on the next business day thereafter.
(5) The Put Option shall expire on September 30, 1999.
2. Call Option
(1) In the event Magic Lantern decides that it does wish to extend the term
of the Employment Agreement as provided in Article 10 of the Employment
Agreement and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ decides that he does not wish to extend
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the term of the Employment Agreement as so provided, and regardless of
whether or not Magic Lantern and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ would otherwise have
been able to agree upon the terms and conditions of the said extension
assuming both parties had decided that they wished to extend the said
term, NTN Canada shall, on or after September 1, 1999, have the right
(hereinafter in this Article 2 referred to as the "Call Option") to
require the Vendor to sell to NTN Canada all, but not less than all, of
the Common Shares acquired by the Vendor pursuant to the provisions of
the Promissory Note, if any, which are then still beneficially owned by
the Vendor (hereinafter in this Article 2 collectively referred to as
the Vendor's Shares).
(2) The Call Option shall be exercised by NTN Canada giving to the Vendor
notice in writing (in this Article 2 referred to as the "Notice of
Exercise") of its intention to exercise the Call Option.
(3) Upon exercise of the Call Option, the Vendor shall be obligated to sell
to NTN Canada, and NTN Canada shall be obligated to purchase from the
Vendor, the Vendor's Shares in accordance with the provisions of
Section 2(4) hereof.
(4) The sale and purchase of the Vendor's Shares under this Article shall
be completed on the following terms and conditions:
(a) the purchase price payable for each of the Vendor's Shares
shall be equal to 110% of the average closing price of the
Common Shares during the twenty-trading day period ending on
the business day which immediately precedes the day on which
the Notice of Exercise is delivered by NTN Canada to the
Vendor as reported by the NASDAQ "Small-Cap" market (or, if
the Common Shares are not, at such time, included in the
NASDAQ "Small-Cap" market, then such other market or exchange
in which the Common Shares are then included;
(b) the purchase price shall be payable by certified cheque or
bank draft at the time of completion of the transaction;
(c) the Vendor's Shares shall be free and clear of any liens,
mortgages, charges and encumbrances whatsoever and the Vendor
shall have good and marketable title thereto;
(d) the completion of the sale shall take place at 10:00 a.m.
(Toronto time) on the date being 60 days after the date on
which NTN Canada delivered the Notice of Exercise to the
Vendor, provided such day is not a Saturday, Sunday or
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statutory holiday, in which event the completion of the sale
shall take place on the next business day thereafter.
(5) The Call Option shall expire on September 30, 1999.
3. General Provisions
(1) Notices - Any notice, direction or other document required or permitted to
be given hereunder or for the purposes hereof (hereinafter in this Section 3(1)
called a "notice") to any party shall be in writing and shall be sufficiently
given if delivered personally or if sent by prepaid registered mail to such
party:
(a) in the case of a notice to the Vendor, at:
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
(b) in the case of a notice to the Corporation, at:
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
(c) in the case of a notice to NTN Canada, at:
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
or at such other address as may be given by such party to the other parties
hereto in writing from time to time.
All such notices shall be deemed to have been received when delivered
or, if mailed, 48 hours after 12:01 a.m. on the day following the day of the
mailing thereof.
(2) Additional Considerations - The parties shall sign such further and other
documents, cause such meetings to be held, resolutions passed and by-laws
enacted, exercise their vote and influence, do and perform and cause to be done
and performed such further and other acts and things as may be necessary or
desirable in order to give full effect to this Agreement and every part thereof.
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(3) Time of the Essence - Time shall be of the essence of this Agreement and of
every part hereof and no extension or variation of this Agreement shall operate
as a waiver of this provision.
(4) Entire Agreement - This Agreement constitutes the entire agreement between
the parties with respect to all of the matters herein and its execution has not
been induced by, nor do any of the parties rely upon or regard as material, any
representations or writings whatsoever not incorporated herein and made a part
hereof and may not be amended or modified in any respect except by written
instrument signed by the parties hereto.
(5) Modification of Agreement - Any modification to this Agreement must be in
writing and signed by the parties hereto or it shall have no effect and shall be
void.
(6) Assignment and Enurement - Neither this Agreement nor any rights or
obligations of the Vendor under this Agreement shall be assignable by the Vendor
without the prior written consent of the Corporation and NTN Canada. Subject to
such consent, this Agreement shall enure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.
(7) Headings for Convenience Only - The division of this Agreement into Articles
and Sections is for convenience of reference only and shall not affect the
interpretation or construction of this Agreement.
(8) Governing Law - This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein and each of the parties hereto hereby irrevocably
attorns to the jurisdiction of the courts of such Province.
(9) Waiver - No term or condition of this Agreement shall be deemed waived
unless such waiver is expressed in writing and signed by the parties hereto.
Failure or delay on the part of any party to enforce any right hereunder shall
not operate as a waiver hereof.
(10) Gender - In this Agreement, words importing the singular number shall
include the plural and vice versa, and words importing the use of any gender
shall include the masculine, feminine and neuter genders and the word "person"
shall include an individual, a trust, a partnership, a body corporate, an
association or other incorporated or unincorporated organization or entity.
(11) Severability - If any Article, Section or any portion of any Section of
this Agreement is determined to be unenforceable or invalid for any reason
whatsoever, that unenforceability or invalidity shall not affect the
enforceability or validity of the remaining portions of this Agreement and such
unenforceable or invalid Article, Section or portion thereof shall be severed
from the remainder of this Agreement.
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IN WITNESS WHEREOF the parties hereto have duly executed this
Agreement.
1199846 ONTARIO LTD.
Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
President - ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Secretary - Treasurer
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
NTN INTERACTIVE NETWORK INC.
Per: /s/ ▇▇▇▇▇ ▇▇▇▇
---------------------------------
President - ▇▇▇▇▇ ▇▇▇▇
NTN CANADA, INC.
Per: /s/ ▇▇▇▇▇ ▇▇▇▇
---------------------------------
President - ▇▇▇▇▇ ▇▇▇▇
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Secretary - ▇▇▇▇▇ ▇▇▇▇▇
SCHEDULE "A"
RELEASE
TO: Magic Lantern Communications Ltd.
(herein called the "Release")
KNOW ALL MEN BY THESE PRESENTS that, in consideration of other good
and valuable consideration and the sum of ONE DOLLAR ($1.00) of lawful money of
Canada now paid by the Releasee to the undersigned (herein called the
"Releasor"), the receipt and sufficiency of which is hereby acknowledged, the
Releasor hereby remises, releases and forever discharges the Releasee, of and
from all manner of actions, causes of action, suits, debts, dues, duties,
accounts, bonds, covenants, contracts, claims and demands whatsoever which
against the Releasee, the Releasor, as a shareholder of the Releasee, ever had,
now has or hereafter can, shall or may have for or by reason of or in any way
arising out of any cause, matter or thing whatsoever existing up to the present
time relating to, or arising directly or indirectly by reason of or as a
consequence of, the Releasor; having been a shareholder of the Releasee.
AND in consideration of the foregoing, the Releasor covenants and
agrees not to make any claims or take any proceedings against any corporation,
firm or person which could claim contribution and/or indemnity against the
Releasee, pursuant to the provisions of any statute or otherwise with respect to
any of the aforesaid matters.
AND the provisions hereof shall enure to the benefit of and be
enforceable by the successors and assigns of the Releasee and shall be binding
upon and enforceable against the successors of the Releasor.
IN WITNESS WHEREOF the Releasor has duly executed this Release the 1st
day of October, 1996.
TELESAT CANADA
Per: ______________________________
Per: ______________________________
SCHEDULE "B"
MUTUAL RELEASE
The undersigned hereby acknowledge and agree that the agreement between
the undersigned and Canadian Satellite Learning Services Inc. dated October 13,
1995 (the "Agreement") is hereby terminated and cancelled and of no further
force and effect, and the undersigned further hereby remise, release and forever
discharge each other of and from all manner of actions, causes of action,
suits, debts, dues, duties, accounts, bonds, covenants, contracts, claims and
demands which against each other, each of them ever had, now has or hereafter
can, shall or may have for or by reason of or in any way arising out of the
Agreement.
AND in consideration of the foregoing, each of the undersigned
covenants and agrees not to make any claims or take any proceedings against any
corporation, firm or person which could claim contribution and/or indemnity
against the other of them, pursuant to the provisions of any statute or
otherwise with respect to any of the aforesaid matters.
AND the provisions hereof shall enure to the benefit of and be
enforceable by the successors of the undersigned and shall be binding upon and
enforceable against the successors of the undersigned.
IN WITNESS WHEREOF the undersigned has duly executed this Release the
1st day of October, 1996.
TELESAT CANADA
Per: ______________________________
Per: ______________________________
MAGIC LANTERN COMMUNICATIONS
LTD.
Per: ______________________________
Per: ______________________________
RELEASE
TO: Magic Lantern Communications Ltd.
(herein called the "Releasee")
KNOW ALL MEN BY THESE PRESENTS that, in consideration of other good
and valuable consideration and the sum of ONE DOLLAR ($1.00) of lawful money of
Canada now paid by the Releasee to the undersigned (herein called the
"Releasor"), the receipt and sufficiency of which is hereby acknowledged, the
Releasor hereby remises, releases and forever discharges the Releasee, of and
from all manner of actions, causes of action, suits, debts, dues, duties,
accounts, bonds, covenants, contracts, claims and demands whatsoever which
against the Releasee, the Releasor, as a shareholder of the Releasee, ever had,
now has or hereafter can, shall or may have for or by reason of or in any way
arising out of any cause, matter or thing whatsoever existing up to the present
time relating to, or arising directly or indirectly by reason of or as a
consequence of, the Releasor having been a shareholder of the Releasee.
AND in consideration of the foregoing, the Releasor covenants and
agrees not to make any claims or take any proceedings against any corporation,
firm or person which could claim contribution and/or indemnity against the
Releasee, pursuant to the provisions of any statute or otherwise with respect to
any of the aforesaid matters.
AND the provisions hereof shall enure to the benefit of and be
enforceable by the successors and assigns of the Releasee and shall be binding
upon and enforceable against the successors of the Releasor.
IN WITNESS WHEREOF the Releasor has duly executed this Release the 1st
day of October, 1996.
TELESAT CANADA
Per: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇. ▇. ▇▇▇▇▇▇▇▇, President & C.E.O.
Per: /s/ ▇. ▇. ▇▇▇▇▇▇▇,
-----------------------------------
▇. ▇. ▇▇▇▇▇▇▇, Secretary
MUTUAL RELEASE
The undersigned hereby acknowledge and agree that the agreement between
the undersigned and Canadian Satellite Learning Services Inc. dated October 13,
1995 (the "Agreement") is hereby terminated and cancelled and of no further
force and effect, and the undersigned further hereby remise, release and forever
discharge each other of and from all manner of actions, causes of action,
suits, debts, dues, duties, accounts, bonds, covenants, contracts, claims and
demands which against each other, each of them ever had, now has or hereafter
can, shall or may have for or by reason of or in any way arising out of the
Agreement.
AND in consideration of the foregoing, each of the undersigned
covenants and agrees not to make any claims or take any proceedings against any
corporation, firm or person which could claim contribution and/or indemnity
against the other of them, pursuant to the provisions of any statute or
otherwise with respect to any of the aforesaid matters.
AND the provisions hereof shall enure to the benefit of and be
enforceable by the successors of the undersigned and shall be binding upon and
enforceable against the successors of the undersigned.
IN WITNESS WHEREOF the undersigned has duly executed this Release the
1st day of October, 1996.
TELESAT CANADA
Per: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇. ▇. ▇▇▇▇▇▇▇▇, President & C.E.O.
Per: /s/ ▇. ▇. ▇▇▇▇▇▇▇,
-----------------------------------
▇. ▇. ▇▇▇▇▇▇▇, Secretary
MAGIC LANTERN COMMUNICATIONS
LTD.
Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
President, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Per: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Secretary, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
