Exhibit 10.3
SCL ELECTRONICS LTD.
October 6, 1998
Via Fax (000) 000-0000
Xxxxxx Electronics, Inc., and
Xxxxxx Electronics Limited
c/o 000 Xxxxxxx Xxx
Xxxxxx Xxxxx
Xxxxxxxxxx 00000
Attention: President
Dear Sirs:
Re: Xxxxxx Electronics Limited (formerly
Xxxxxxx Technologies Inc.) (the "Company")
The purpose of this letter is to confirm the following terms and conditions upon
which Xxxxxx Electronics, Inc. (the "Purchaser"), the Company and SCL
Electronics Ltd. (the "Seller") have agreed to finalize certain matters arising
out of:
(1) a share purchase agreement dated June 13, 1997 pursuant to which the
Purchaser acquired from the Seller all of the shares of the Company
(the "Agreement"); and
(1) the Debt Agreement (as defined below).
By way of background, as part of the transaction provided for in the Agreement
the Company, the Seller and Xxxxxxxx Capital Limited entered into an
Intercompany Debt Repayment Agreement dated June 13, 1997 (the "Debt
Agreement"). The Debt Agreement provides for the payment of certain amounts
including an obligation is Section 3.1 for the Company (now owned by the
Purchaser) to pay to Xxxxxxxx Capital Limited an amount calculated in the manner
provided for therein.
It has been agreed that, upon the payment by the Purchaser or the Company to
Xxxxxxxx Capital Limited of the sum of U.S. $800,000, (i) the obligations of the
Company under Section 3.1 of the Debt Agreement shall be satisfied in full and
the Company shall be released from any obligations under the Debt Agreement;
(ii) the sum of Can. $221,409.10 being amounts due to the Company from the
Seller in respect of the accounts described in Schedule "A" attached to this
letter shall be satisfied in full and the Seller shall be released from any
obligations under such accounts.
2
It is expected that we will complete the foregoing by October 8, 1998 subject to
the lease issue described below. Upon payment of U.S. $800,000 as aforesaid and
Schedule "A" marked "Paid in Full", the Company, Xxxxxxxx Capital Limited and
the Seller will deliver an executed release releasing the Purchaser and the
Company from any further obligation under Section 3.1 of the Debt Agreement in
the form of the release attached as Schedule "B".
Completion of the foregoing is conditional upon severing the lease at 000
Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxx. By way of background, the lease is between
Wychrest, Inc., as landlord, Xxxxxxxx Capital Limited, as tenant and Xxxxxx
Electronics, Inc. as indemnifier. The parties want to sever the lease so that
each of Xxxxxxxx Capital Limited and the Company is responsible for its own
portion of the premises. In that regard, the Purchaser or the Company has
agreed to provide a Can. $250,000 limited guarantee to the landlord in respect
of the construction costs which may be required to divide the building. The
Purchaser, the Company and Xxxxxxxx Capital Limited hereby agree to use their
respective reasonable commercial best efforts to negotiate, finalize, execute
and deliver a lease and in the case of the Purchaser or the Company the
guarantee referred to above, in each case, in form and substance satisfactory to
each party, acting reasonably.
If the foregoing accurately reflects the terms of our agreement them would you
please execute and deliver the copy of this letter provided for that purpose and
return a copy to the undersigned.
Yours truly,
SCL ELECTRONICS LTD.
Per:
/s/ Xxxxx X'Xxxx
----------------------------
XXXXXXXX CAPITAL LIMITED
Per:
/s/ Xxxxx X'Xxxx
----------------------------
The foregoing is hereby accepted this 7th day of October, 1998.
XXXXXX ELECTRONICS, INC. XXXXXX ELECTRONICS LIMITED
Per: Per:
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxxx
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Authorized Signature Authorized Signature
Xxxxxx Electronics Limited
October 7, 1998
SCL Receivable
Pickering Rent & CAM:
May 98 30,000.00
June 98 30,000.00
July 98 30,000.00
August 98 30,000.00
September 98 30,000.00
October 98 30,000.00
Subtotal
180,000.00
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Taxes:
1994 Payroll 2,937.97
0000 Xxxxxxx - Xxxxxxx 2,902.08
1997 Workmen's Comp 3,264.46 50% of $6,528.92
0000 Xxxxxxx Xxxxxxxxxx - Xxxxxx 25,219.67
0000 Xxxxxxx Xxxxxxxxxx - Xxxxxx 5,562.20 50% of $11,124.39
Subtotal 39,886.38
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Employee Dispute:
Xxxxxxxxxx settlement 6,500.00
Subtotal 6,500.00
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Accounts Receivable:
011546 SCL Technologies 5,427.00
065603 SCL Technologies (2,118.76)
065599 SCL Systems 291.60
010641 SCL Systems 6,325.16
010253 Xxxxxxxx Capital 5,097.72
Subtotal 15,022.72
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Due to SCL:
Rent AS400 May & June (20,000.00)
Subtotal (20,000.00)
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Total due to Xxxxxx 221,409.10
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RELEASE
TO: Xxxxxx Electronics, Inc. ("Xxxxxx")
AND TO: Xxxxxx Electronics Limited (the "Company")
WHEREAS pursuant to a letter form of share purchase agreement dated June 13,
1997 (the "Agreement") Xxxxxx acquired all of the issued shares of the Company
(formerly Xxxxxxxx Technologies Inc.) from SCL Electronics Ltd. (the "Seller")
which is a wholly-owned subsidiary of Xxxxxxxx Capital Limited ("SCL");
AND WHEREAS as part of the transaction contemplated under the Agreement, the
Company, SCL and the Seller entered into an Intercompany Debt Repayment
Agreement dated June 13, 1997 (the "Debt Agreement");
AND WHEREAS the parties have agreed by letter agreement dated October 6, 1998 to
settle certain outstanding matters arising under the Agreement including the
settlement of the Company's obligations under Section 3.1 of the Debt Agreement;
AND WHEREAS pursuant to an assignment of lease dated April 30, 1996 the Company
is the tenant and assignee and SCL is the assignor under a lease dated June 2,
1995 (collectively with the assignment the "Lease Documents") with Wychrest
Inc., as landlord, for premises at 000 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxx;
NOW THEREFORE in consideration of the sum of $1 and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned hereby remise, release and forever discharge Xxxxxx and the Company,
including their respective successors and assigns of and from all actions,
causes of action, suits, debts, dues, accounts, bonds, covenants, contracts,
claims, indemnities and demands whatsoever which the undersigned (or any of
them) ever had or now has or may hereafter have against Xxxxxx or the Company
for or by reason of, or in any way arising out of any cause, matter or thing
existing up to and including the date hereof, whether accrued or contingent,
relating to, or arising directly or indirectly by reason of Section 3.1 of the
Debt Agreement or of the Lease Documents.
DATED: October , 1998
SCL ELECTRONICS LTD.
Per:
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SIMMMONDS CAPITAL LIMITED
Per:
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