Exhibit 10.4
OPTION AGREEMENT
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THIS AGREEMENT made the 1st day of October, 0000,
X X X X X X X:
XXXXXXXX-XXX HOLDINGS INC., a
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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
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corporation amalgamated pursuant to the laws
of Canada,
(hereinafter referred to as the "Corporation"),
OF THE SECOND PART;
- and -
NTN CANADA, INC., a corporation
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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 the Vendor, 1199846 Ontario Ltd.
("1199846"), Xxxxxxx Xxxxxxxx, Xxxxx Xxxxxxxx and the Corporation, the Vendor
and 1199846 sold all of the issued and outstanding common shares in the capital
of Magic Lantern Communications Ltd. ("Magic Lantern") to the Corporation and
10.4
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1199846 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 $703,133.00 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, Xxxxxxx
Xxxxxxxx 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 Xxxxxxx Xxxxxxxx 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 Xxxxxxx Xxxxxxxx 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"). In the event that
the Vendor has not, as of such time, accelerated delivery of the Common
Shares otherwise due on August 31, 2000 to August 31, 1999 pursuant to
the provisions of the Promissory Note, the Vendor shall, prior to
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giving to NTN Canada the Notice of Exercise (as hereinafter defined),
accelerate delivery of the Common Shares otherwise due on August 31,
2000 to the date on which the Notice of Exercise is delivered to NTN
Canada, which acceleration is hereby consented and agreed to by the
Corporation and NTN Canada.
(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.
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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 Xxxxxxx Xxxxxxxx decides that he does not wish to extend
the term of the Employment Agreement as so provided, and regardless of
whether or not Magic Lantern and Xxxxxxx Xxxxxxxx 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). The Vendor shall, forthwith upon NTN Canada
giving to the Vendor the Notice of Exercise (as hereinafter defined),
accelerate delivery of the Common Shares otherwise due on August 31,
2000 pursuant to the provisions of the Promissory Note to the date
which is five business days after the date on which the Notice of
Exercise is delivered to the Vendor, which acceleration is hereby
consented and agreed to by the Vendor.
(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;
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(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
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:
00 Xxxxxxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
(b) in the case of a notice to the Corporation, at:
00 Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx
X0X 0X0
(c) in the case of a notice to NTN Canada, at:
00 Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx
X0X 0X0
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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.
(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.
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(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.
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement.
XXXXXXXX-XXX HOLDINGS INC.
Per: /s/ Xxxxx Xxxxxxxx
______________________________
President - Xxxxx Xxxxxxxx
Per: /s/ Xxxxxxx Xxxxxxxx
______________________________
Secretary - Xxxxxxx Xxxxxxxx
NTN INTERACTIVE NETWORK INC.
Per: /s/ Xxxxx Xxxx
______________________________
President - Xxxxx Xxxx
NTN CANADA, INC.
Per: /s/ Xxxxx Xxxx
______________________________
President - Xxxxx Xxxx
Per: /s/ Xxxxx Xxxxx
______________________________
Secretary - Xxxxx Xxxxx