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SUBSCRIPTION AGREEMENT MADE AND ENTERED INTO IN XXX XXXX XXX XXXXXXXX XX
XXXXXXXX, XX THE 18TH DAY OF MAY, 2000
BY AND AMONG: CAPITAL COMMUNICATIONS CDPQ INC., a
body politic duly incorporated
according to the Companies Act
(Quebec), having its head office
and principal place of business in
the City of Montreal, Province of
Quebec,
(hereinafter referred to as
("CDPQ")
PARTY OF THE FIRST PART
AND: SOFINOV SOCIETE FINANCIERE
D'INNOVATION INC., a body politic,
duly incorporated according to the
Companies Act (Quebec), having its
head office and principal place of
business in the City of Montreal,
Province of Quebec,
(hereinafter referred to as
"Sofinov")
PARTY OF THE SECOND PART
AND: TOUCHTUNES MUSIC CORPORATION, a
body politic and corporate, duly
incorporated according to the laws
of the State of Nevada, having its
head office and principal place of
business in the City of Las Vegas,
State of Nevada,
(hereinafter referred to as the
"Corporation")
PARTY OF THE THIRD PART
1. PREAMBLE
1.1 WHEREAS each of CDPQ and Sofinov wishes to subscribe for shares from the
treasury of the Corporation, the whole at the price and on the terms and
conditions hereinafter set out in this Agreement;
2
1.2 WHEREAS CDPQ loaned to the Corporation the sum of US$1,000,000 on May 5,
2000, which sum the Corporation agreed to repay by applying same against a
portion of the total subscription price payable by CDPQ pursuant to this
Agreement; and
1.3 WHEREAS Sofinov loaned to the Corporation the sum of US$2,000,000 on
December 17, 2000, and the sum of US$1,000 000 on each of January 17, 2000,
February 1, 2000 and March 24, 2000, which sums the Corporation agreed to repay
by applying same against the total subscription price payable by Sofinov
pursuant to this Agreement.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
2. INTERPRETATION
2.1 Definitions. In this Agreement:
2.1.1 "Agreement" means this Subscription Agreement and all instruments
supplemental hereto or in amendment or confirmation hereof; "herein",
"hereof", "hereto", "hereunder" and similar expressions mean and refer to
this Agreement and not to any particular Section, subsection or other
subdivision; "Section", "subsection" or other subdivision of this
Agreement means and refers to the specified Section, subsection or other
subdivision of this Agreement;
2.1.2 "Applicable Law" means any domestic or foreign federal, state,
provincial, county, local, municipal and regional statute, law,
ordinance, rule, regulation, restriction, regulatory policy or guideline,
by-law (zoning or otherwise), principles of common law, civil law or
equity, as well as Permits, Orders, decrees and rules (having the force
of law); and any judgments or injunctions issued, prolongated, approved
or entered thereunder;
2.1.3 "Articles of Incorporation" means the Second Amended and Restated
Articles of Incorporation of the Corporation dated May 3, 2000;
2.1.4 "Assets" means all of the assets, rights and properties of the
Corporation, of whatsoever nature, kind or description, including movable
or immovable, real or personal, tangible or intangible;
2.1.5 "Balance Sheet Date" means March 31, 2000;
2.1.6 "Benefit Plans" means all pension, retirement, profit sharing, bonus,
savings, compensation, incentive, severance, stock option, stock
purchase, stock appreciation, group insurance, medical, dental,
hospitalization, disability, death and other fringe benefit plans,
programs, arrangements or practices, sponsored or maintained by and
covering any or all past or present employees, shareholders, directors or
officers of the Corporation;
2.1.7 "Books and Records" means all books of account, accounting records,
files, data and writings and other financial information, lists and files
of past, present and prospective clients and contacts, purchasing and
marketing records, personnel and payroll records, and all data stored on
computer support devices relating to any of the aforementioned materials;
2.1.8 "Business Day" means any day, other than a Saturday or Sunday or a day on
which the principal commercial banks in the State of New York are not
open for business during normal banking hours;
2.1.9 "Business Plan" means the business plan of the Corporation dated April
2000, a copy of which has been delivered to the Investors,
2.1.10 "CDPQ Shares" has the meaning described thereto in subsection 3.1;
2.1.11 "Common Shares" means shares of the Corporation's class A voting common
stock having the rights privileges and preferences as set forth in the
Articles of Incorporation;
2.1.12 "Contracts" means all agreements, obligations and undertakings of
whatsoever nature, kind or description;
2.1.13 "Corporation SEC Documents" has the meaning ascribed thereto in
subsection 4.3.9;
2.1.14 "dollar", "dollars" and the sign "$" each mean, unless otherwise
indicated, lawful money of the United States of America;
2.1.15 "Encumbrances" means any encumbrance of any nature, kind or description
whatever and includes a security interest, mortgage, lien, hypothecation,
pledge, prior claim, assignment, charge, trust or deemed trust (whether
contractual, statutory or howsoever otherwise arising), voting trust or
pooling agreement with respect to securities, right of first refusal,
easement, servitude, restrictive covenant, encroachment or other survey
or title defect, any adverse claim or any other right, option or claim of
any Person of any nature, kind or description whatever, or any covenant
or other agreement, restriction or limitation on transferability;
2.1.16 "Environment" means surface waters, ground water, drinking water supply,
land-surface, subsurface strata, air, both inside and outside of
buildings and structures, and plant and animal life;
2.1.17 "Environmental Law" means any Applicable Law relating to the pollution or
protection of the Environment;
2.1.18 "Equipment" means all furnishings, fixtures, machinery, equipment,
tooling, spare parts, leasehold improvements, supplies, computer
hardware, telephone systems, signs and all other tangible property,
together with all related accessories and maintenance equipment;
2.1.19 "ERISA" has the meaning ascribed thereto in subsection 4.3.25.2;
2.1.20 "Exchange Act" means the Securities Exchange Act of 1934 (United States),
as amended from time to time;
2.1.21 "Financial Statements" means:
2.1.21.1 the consolidated audited financial statements of the Corporation
for the fiscal year ended December 31, 1999 consisting of the balance
sheet and the statement of income and retained earnings of the
Corporation as at December 31, 1999, and
2.1.21.2 the consolidated unaudited financial statements of the
Corporation for the 3-month period ended March 31, 2000 consisting of the
balance sheet, statement of income and retained earnings, statement of
expenses and statement of changes in financial position of the
Corporation as at March 31, 2000,
a copy of both of which is annexed hereto as Schedule 2.1.21;
2.1.22 "Generally Accepted Accounting Principles" means generally accepted
accounting principles in the United States of America applicable as at
the date on which any calculation or determination is required to be made
in accordance with generally accepted accounting principles, applied on a
consistent basis;
2.1.23 "Governmental Body" means (i) any domestic or foreign national, federal,
provincial, state, county, local, municipal or other government or body,
(ii) any multinational, multilateral or international body, (iii) any
subdivision, agent, commission, board, instrumentality or authority of
any of the foregoing governments or bodies, (iv) any quasi-governmental
or private body exercising any regulatory, expropriation or taxing
authority under or for the account of any of the foregoing governments or
bodies, or (v) any domestic, foreign, international, multilateral or
multinational judicial, quasi-judicial, arbitration or administrative
court, tribunal, commission, board or panel;
2.1.24 "including" and "includes" is to be deemed to be followed by the
statement "without limitation" and neither of such terms shall be
construed as limiting any word or statement which precedes it to the
specific or similar items or matters immediately following it;
2.1.25 "Intellectual Property Rights" means, collectively:
2.1.25.1 all intellectual property rights of whatsoever nature, kind or
description including:
2.1.25.1.1 all trade marks, service marks, trade xxxx and service xxxx
registrations, trade xxxx and service xxxx applications, rights
under registered user agreements, trade names and other trade
xxxx and service xxxx rights,
2.1.25.1.2 all copyrights, industrial designs and registrations thereof
and applications therefor,
2.1.25.1.3 all inventions, patents, patent applications and patent
rights (including any patents issuing on such applications or
rights),
2.1.25.1.4 all licenses, sub-licenses and franchises,
2.1.25.1.5 all trade secrets and proprietary and confidential
information,
2.1.25.1.6 all computer software and rights related thereto,
2.1.25.1.7 all renewals, modifications, developments and extensions of
any of the items listed in subsections 2.1.25.1.1 through
2.1.25.1.6 (inclusively) hereof; and
2.1.25.2 all patterns, plans, designs, research data, other proprietary
know-how, processes, drawings, technology, inventions, formulae,
specifications, performance data, quality control information, unpatented
blue prints, flow sheets, equipment and parts lists, instructions,
manuals, records and procedures, and all licenses, agreements and other
contracts and commitments relating to any of the foregoing;
2.1.26 "Investors" means CDPQ and Sofinov, collectively, and "Investor" means
either of them;
2.1.27 "Knowledge" - an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
2.1.27.1 such individual is actually aware of such fact or other matter,
or
2.1.27.2 a prudent individual could be expected to discover or otherwise
become aware in a reasonable period of time of such fact or other matter
in the course of conducting a reasonable investigation concerning the
existence of such fact or other matter.
A Person (other than an individual) will be deemed to have "Knowledge" of
a particular fact or other matter if any individual who is serving, or
who has at any time served, as a director, officer, partner, executor, or
trustee of such Person (or in any similar capacity) has, or at any time
had, Knowledge of such fact or other matter;
2.1.28 "Order" means any order (draft or otherwise), judgment, injunction,
decree, award or writ of any Governmental Body;
2.1.29 "ordinary course of business" means an action taken by a Person that is
consistent with the past practices of such Person and is taken in the
ordinary course of the normal day-to-day operations of such Person;
2.1.30 "Permit" means any license, permit, certificate, authorization, approval,
right, privilege, consent, concession or franchise issued, granted,
conferred or otherwise created by a Governmental Body;
2.1.31 "Person" means an individual, corporation, company, cooperative,
partnership, trust, unincorporated association, entity with judicial
personality, Governmental Body; and pronouns when they refer to a Person
have a similarly extended meaning;
2.1.32 "Premises" means the real property, together with all buildings,
structures, fixtures and improvements thereon, covered by the Real
Property Leases;
2.1.33 "Prime Rate" means the interest rate quoted publicly by the Corporation's
regular bankers as the reference rate of interest for commercial demand
loans made in US dollars and commonly known as such bank's prime rate, as
adjusted from time to time, on the basis of the Prime Rate in effect on
the first day of each month;
2.1.34 "Purchased Securities" means the CDPQ Shares and the Sofinov Shares;
2.1.35 "Real Property Leases" means the lease agreements listed in Schedule
2.1.35 annexed hereto covering, collectively, the Premises;
2.1.36 "Registration Rights Agreement" means the registration rights agreement
entered into on the date hereof among CDPQ, Sofinov, SociEtE Innovatech
du Grand MontrEal and the Corporation;
2.1.37 "Registrable Shares" means all Common Shares issuable to the Investors
upon the conversion of the Purchased Securities;
2.1.38 "SEC" means the United States Securities and Exchange Commission;
2.1.39 "Securities Act" means the Securities Act of 1933, as amended;
2.1.40 "Series B Preferred Shares" means the shares of Series B Preferred Stock
as described in the Articles of Incorporation;
2.1.41 "Shareholders Agreement" means the Voting Trust and Limited Shareholders
Agreement entered into on the date hereof among the Corporation, the
Investors, SociEtE Innovatech du Grand MontrEal and Techno ExprEs S.A.;
2.1.42 "Sofinov Shares" has the meaning ascribed thereto in subsection 3.4;
2.1.43 "Tax Returns" means all reports, returns or other information, or any
amendment thereof, required to be filed in connection with any Taxes;
2.1.44 "Taxes" means all taxes, foreign or domestic, whether federal, state,
provincial, county, local, municipal or otherwise (including income,
profit, corporation, business, excise, sales, goods and services, value-
added, franchise, withholding, capital, transfer, stamp, unemployment
compensation, payroll, property, and duties), whether or not measured in
whole or in part by net income, and including interest and penalties with
respect thereto;
2.1.45 "TouchTunes" means TouchTunes Digital Jukebox Inc.
2.2 Gender. Any reference in this Agreement to any gender shall include both
genders and the neutral, and words used herein importing the singular number
only shall include the plural and vice versa.
2.3 Headings. The division of this Agreement into Sections, subsections and
other subdivisions, and the insertion of headings are for convenience of
reference only and shall not affect or be utilized in the construction or
interpretation of this Agreement.
2.4 Severability. Any Section, subsection or other subdivision of this
Agreement or any other provision of this Agreement which is, or becomes,
illegal, invalid or unenforceable shall be severed therefrom and shall be
ineffective to the extent of such illegality, invalidity or unenforceability
and shall not affect or impair the remaining provisions hereof, which
provisions shall be severed from an illegal or unenforceable Section,
subsection or other subdivision of this Agreement or any other provisions of
this Agreement.
2.5 Entire Agreement. This Agreement together with any other instruments to
be delivered pursuant hereto, constitute the entire agreement among the parties
pertaining to the subject matter hereof and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, among
any or all of the parties.
2.6 Amendments. No amendment of this Agreement shall be binding unless
otherwise expressly provided in an instrument duly executed by each of the
parties hereto.
2.7 Waiver. Except as otherwise provided in this Agreement, no waiver of any
of the provisions of this Agreement shall be deemed to constitute a waiver of
any other provisions (whether or not similar), nor shall such waiver constitute
a continuing waiver unless otherwise expressly provided in an instrument duly
executed by the parties.
2.8 Delays. When calculating the period of time within which or following
which any act is to be done or step taken pursuant to this Agreement, the day
which is the reference day in calculating such period shall be excluded. If the
day on which such delay expires is not a Business Day, then the delay shall be
extended to the next succeeding Business Day.
2.9 Preamble. The preamble hereof shall form an integral part of this
Agreement.
2.10 Governing Law. This Agreement shall be governed in all respects by the
laws of the State of New York as they are applied to agreements entered into in
New York between New York residents and performed entirely within New York.
2.11 Currency. Unless otherwise specified, all statements of or references to
dollar amounts in this Agreement are of or to the lawful currency of the United
States of America.
2.12 Schedules. The following Schedules form an integral part of this
Agreement and are incorporated hereby by this reference:
Schedule 2.1.21 Financial Statements
Schedule 2.1.35 Real Property Leases
Schedule 4.3.3 Jurisdictions
Schedule 4.3.4 Constating documents
Schedule 4.3.8 Issued Shares
Schedule 4.3.14.3 Stock Option Plan
Schedule 4.3.15 Encumbrances
Schedule 4.3.18 Litigation
Schedule 4.3.19 Insurance
Schedule 4.3.24 List of employees
Schedule 4.3.24.5 Employment agreements providing a notice
of termination
Schedule 4.3.25 Benefit Plans
Schedule 4.3.26 List of Contracts
Schedule 4.3.27 Intellectual Property
Schedule 4.3.32.5 Tax Audits
Schedule 4.3.33 Accounts receivable and payable
Schedule 7.1 Budget
3. SUBSCRIPTIONS FOR SHARES
3.1 CDPQ Subscription. Subject to the terms and conditions of this Agreement
and in reliance upon the representations, warranties, covenants, agreements and
obligations of the Corporation contained herein, CDPQ hereby subscribes for
6,666,667 Series B Preferred Shares (collectively the "CDPQ Shares") of the
Corporation's share capital at the aggregate subscription price of
US$15,000,000. The Corporation hereby accepts the subscription of CDPQ for the
CDPQ Shares.
3.2 Payment and Issue of CDPQ Shares. CDPQ hereby agrees to remit to the
Corporation on the date hereof the aggregate subscription price set forth in
subsection 3.1 payable as to (i) US$14,000,000 by cheque and (ii) US$1,000,000
by CDPQ agreeing to extinguish the indebtedness of the Corporation to CDPQ in
the like amount, and the Corporation shall issue the CDPQ Shares to CDPQ as
fully paid and non-assessable Series B Preferred Shares and deliver share
certificate representing same.
3.3 Sofinov Subscription. Subject to the terms and conditions of this
Agreement and in reliance upon the representations, warranties, covenants,
agreements and obligations of the Corporation contained herein, Sofinov hereby
subscribes for 2,222,222 Series B Preferred Shares (collectively the "Sofinov
Shares") of the Corporation's share capital at the aggregate subscription price
of US$5,000,000. The Corporation hereby accepts the subscription of Sofinov
for the Sofinov Shares.
3.4 Payment and Issue of Sofinov Shares. Sofinov hereby agrees to remit to
the Corporation on the date hereof the aggregate subscription price set forth
in subsection 3.3 entirely payable by Sofinov agreeing to extinguish the
indebtedness of the Corporation to Sofinov in the amount of US$5,000,000, and
the Corporation shall issue the Sofinov Shares to Sofinov as fully paid and
non-assessable Series B Preferred Shares and deliver share certificate
representing same.
4. REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGEMENTS
4.1 Representations and Warranties of the Investors. Each Investor (with
respect to itself, and not with respect to the other Investor) hereby
represents and warrants, severally and not jointly, to the Corporation and to
the other Investor, and acknowledges and confirms that the Corporation and the
other Investor are relying upon such representations and warranties in
connection herewith and would not have entered into this Agreement without such
representations and warranties:
4.1.1 Corporate Organization. Such Investor is duly incorporated and
constituted, validly existing and in good standing under the laws of its
jurisdiction of incorporation;
4.1.2 Power and Authority. Such Investor has the necessary corporate power and
authority to execute this Agreement and to perform its obligations
hereunder. The execution of this Agreement by such Investor and the
performance by such Investor of its obligations hereunder have been duly
authorized by all necessary action on its part and do not require any
action or consent of, any registration with, or notification to any
Person, or any action or consent under any laws of the Province of Quebec
and the laws to which such Investor is subject;
4.1.3 Validity. The execution of this Agreement, the consummation of the
transactions contemplated herein, the performance by such Investor of its
obligations hereunder and the compliance by it with this Agreement do
not:
4.1.3.1 violate, contravene or breach, or constitute a default under, the
constating documents, law or by-laws of such Investor;
4.1.3.2 violate, contravene or breach, or constitute a default under any
Contract to which such Investor may be a party, or its properties may be
subject, or by which it is bound or affected; or
4.1.3.3 violate, contravene or breach any laws to which such Investor is
subject;
4.1.4 Investment. Such Investor is acquiring the Purchased Securities as
provided in this Agreement and the Common Shares issuable upon the
conversion of such Purchased Securities for investment for its own
account, for the account of the other Investor or for the account of its
affiliates, and not with the view to, or for resale in connection with,
any distribution thereof other than to the other Investor or its
affiliates;
4.1.5 Brokers or Finders. The Corporation has not incurred and will not incur,
directly or indirectly, as a result of any action taken by it any
brokerage fees, finder's fees, agents' commissions or other similar
charges in connection with this Agreement, other than the commitment fees
payable by the Corporation to CDPQ.
4.2 Acknowledgements. Each Investor hereby makes the following
acknowledgements:
4.2.1 Registration. It understands that the right to acquire the Purchased
Securities as provided in this Agreement and the Common Shares issuable
upon the conversion of such Purchased Securities has not been, and will
not be, registered under the Securities Act or applicable state
securities laws, and is being extended to the Investors pursuant to a
specific exemption from the registration provisions of the Securities Act
and such laws, the availability of which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of
its representations as expressed in subsection 4.1.4;
4.2.2 Non-transferability. Subject to the Corporation's undertakings pursuant
to the Registration Right Agreement, it acknowledges that any resale of
any of the Purchased Securities and the Common Shares issuable upon the
conversion of such Purchased Securities may be subject to restrictions
under applicable securities laws unless a subsequent disposition thereof
is registered under the Securities Act or exempt from such registration;
4.2.3 Accredited Investor. Such Investor is an "accredited investor" within
the meaning of Rule 501 under the Securities Act.
4.3 Representations and Warranties of the Corporation. The Corporation
hereby represents and warrants as follows to each of the Investors and
acknowledges and confirms that the Investors are relying upon such
representations and warranties in connection herewith and would not have
entered into this Agreement without such representations and warranties:
4.3.1 Securities Act Representation. The offer, issuance and sale of the
Purchased Securities hereunder is exempt from the registration and
prospectus delivery requirements of the Securities Act;
4.3.2 "Blue Sky" Law Compliance. The Corporation has made all filings and
taken all actions necessary to comply with all "blue sky" laws with
regard to the sale of the Purchased Securities as contemplated by this
Agreement;
4.3.3 Corporate Organization and Authority. The Corporation is duly
incorporated and organized, validly existing, and in good standing under
the laws of its jurisdiction of incorporation. The Corporation has all
the requisite power and authority to own, lease and operate its
properties and carry on its business as presently conducted. Neither the
nature of its business nor the location or character of any of its Assets
requires the Corporation to be registered, licensed or otherwise
qualified as an out of state or foreign corporation or to be in good
standing in any jurisdiction other than jurisdictions where it is duly
registered, licensed or otherwise qualified and in good standing for such
purpose being the jurisdictions described in Schedule 4.3.3 annexed
hereto. The Corporation has all requisite legal and corporate power and
authority to execute and deliver this Agreement and to carry out and
perform its obligations under the terms of this Agreement. Without
limiting the generality of the foregoing, all corporate action on the
part of the Corporation, its directors and shareholders necessary (i) for
the authorization, execution, delivery and performance of this Agreement
by the Corporation and (ii) for the authorization, issuance and delivery
of the Common Shares issuable upon the conversion of such Purchased
Securities. The execution and delivery of this Agreement and the
performance of the transactions contemplated hereby will not, with or
without the giving of notice and/or the passage of time, or both (i)
violate any provision of law applicable to the Corporation, or require
any consent, approval or authorization of, or any declaration, filing or
registration with or notice to, any third party, Governmental Body or
otherwise, (ii) result in the loss of any right under or conflict with or
result in a default of any provision or termination of or accelerate the
date of performance of any obligation under any agreement, obligation or
undertaking to which the Corporation may be a party or by which the
Corporation or any of its Assets may be bound, or (iii) conflict with or
result in a default of any provision or termination of any of the
constating documents or by-laws of the Corporation. This Agreement
constitutes a valid and binding obligation of the Corporation enforceable
against it in accordance with its terms;
4.3.4 Constating and Corporate Documents. Schedule 4.3.4 annexed hereto
contains a true and complete copy of the constating documents of the
Corporation including the authorized capital stock of the Corporation,
which have not been amended other than as reflected in said Schedule, and
there is no application pending for the amendment of any of same. The
minute books and corporate records of the Corporation have been
maintained in accordance with the Applicable Law and contain true and
complete records of all the by-laws of the Corporation and all meetings
and consents in lieu of meetings of the board of directors of the
Corporation and its shareholders, and accurately and completely reflect
all matters referred to in such minutes and consents. All resolutions
contained in such records have been duly passed and all such meetings
have been duly called and held. The share certificate books and the
registers of shareholders, directors and transfers of the Corporation are
complete and accurate;
4.3.5 Offering Valid. Assuming the accuracy of the representations and
warranties of the Investors contained in subsection 4.1 hereof, the
offer, sale and issuance of the Purchased Securities pursuant to this
Agreement and the Common Shares issuable upon the conversion of such
Purchased Securities is or will be exempt from the registration
requirements of the Securities Act and all state "blue sky" laws or has
been or will have been registered or qualified under the registration,
permit or qualification requirements of all applicable federal and state
securities laws;
4.3.6 Reservation of Stock. The Corporation has reserved up to 8,888,889
Common Shares issuable upon the conversion of the Purchased Securities.
The number of Common Shares to be reserved for issuance shall be adjusted
in accordance with the Articles of Incorporation;
4.3.7 Issuance of Purchased Securities and Common Shares. The issuance of
Purchased Securities pursuant to this Agreement and the issuance of
Common Shares issuable upon the conversion of such Purchased Securities
is and will not be subject to any preemptive rights or rights of first
refusal. When issued in compliance with the provisions of the Agreement
and the Articles of Incorporation, the Purchased Securities and Common
Shares issuable upon the conversion of such Purchased Securities will be
validly issued, fully paid and non-assessable, and will be free of all
Encumbrances and restrictions on transfer other than restrictions on
transfer provided in the Shareholders Agreement and under the state
and/or federal securities laws at the time a transfer by an Investor is
proposed;
4.3.8 Issued Shares. After giving effect to this Agreement, the only issued
and outstanding shares in the capital stock of the Corporation (and
rights, options and warrants to acquire same) are as set out in Schedule
4.3.8 annexed hereto. All such shares are validly issued, fully paid and
non-assessable, there are no other outstanding shares, warrants, rights,
options, securities convertible into shares of the capital stock of the
Corporation or any other agreements or rights to purchase or subscribe
for any shares of the capital stock of the Corporation or convert any
obligation or shares into any shares of the capital stock of the
Corporation and the Corporation has not agreed to issue or sell any
shares of its capital stock or any securities of any kind except as set
out in this Agreement;
4.3.9 Public Filings. The Corporation has delivered to the Investors accurate
and complete copies (excluding copies of exhibits) of each report,
registration statement (on a form other than Form S-8) and definitive
proxy statement filed by the Corporation with the SEC from March 1995
until the date hereof (the "Corporation SEC Documents"). As of the time
it was filed with the SEC (or, if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing): (i) each
of the Corporation SEC Documents complied in all material respects with
the applicable requirements of the Securities Act or the Exchange Act, as
the case may be; and (ii) none of the Corporation SEC Documents contained
any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
4.3.10 Subsidiaries. Except for TouchTunes, the Corporation has no subsidiary
nor owns any equity or other interest in any corporation, partnership,
joint venture or other entity;
4.3.11 Power and Authority. The Corporation has the requisite corporate power,
authority and capacity to carry on its business and to own and operate
its Assets.
4.3.12 Financial Statements.
4.3.12.1 The Financial Statements have been prepared in accordance with
Generally Accepted Accounting Principles and present fairly the financial
position and the results of the operations of the Corporation, as at the
dates thereof and for the periods covered thereby. No information has
become available to the Corporation that would render the Financial
Statements incomplete or inaccurate;
4.3.12.2 As for the financial statements contained in the Corporation SEC
Documents, they: (i) complied as to form in all material respects with
the published rules and regulations of the SEC applicable thereto; (ii)
were prepared in accordance with Generally Accepted Accounting Principles
applied on a consistent basis throughout the periods covered, except as
may be indicated in the notes to such financial statements and (in the
case of unaudited statements) as permitted by Form 10-Q of the SEC, and
except that unaudited financial statements may not contain footnotes and
are subject to normal and recurring year-end audit adjustments (which
will not, individually or in the aggregate, be material in magnitude);
and (iii) fairly present the financial position of the Corporation as of
the respective dates thereof and the results of operations of the
Corporation for the periods covered thereby;
4.3.13 Undisclosed Liabilities of the Corporation. The Corporation has no
liabilities (whether accrued, absolute, contingent or otherwise) of any
kind except liabilities disclosed or provided for in the Financial
Statements and liabilities incurred in the ordinary course of business
since the Balance Sheet Date which are not, in the aggregate, material
and adverse to its business, or to its financial condition or results of
operations and do not constitute a violation, contravention or breach of
any covenant, agreement or obligation contained in this Agreement or
constitute a breach of any representation or warranty made in or pursuant
to this Agreement;
4.3.14 Subsequent Activities of the Corporation. Since the Balance Sheet Date
there has not occurred any change in the condition, financial or
otherwise, or prospects of the Corporation other than changes occurring
in the ordinary course of business which changes, individually or in the
aggregate, have not materially adversely affected its business, financial
condition, results of operations or prospects; without limiting the
generality of the foregoing, since the Balance Sheet Date, the
Corporation has not, directly or indirectly:
4.3.14.1 declared or paid any dividend on its capital stock or redeemed,
purchased or otherwise acquired any shares of its capital stock, or
otherwise reduced its paid up capital or altered its capital stock,
except as set forth in the Articles of Incorporation,
4.3.14.2 entered into any Contract outside the ordinary course of
business,
4.3.14.3 increased the salary, benefits, bonuses or other compensation of
its officers, directors or employees or adopted any Benefit Plan outside
the ordinary course of business and other than as disclosed in the
Financial Statements, except for the incentive stock option plan approved
by resolutions of the board of directors of the Corporation dated April
19, 2000, a copy of such resolutions and stock option plan are annexed
hereto as Schedule 4.3.14.3;
4.3.14.4 sold, leased, mortgaged, hypothecated, pledged or otherwise
subjected any of its Assets to any Encumbrance other than Encumbrances
taken in the ordinary course of business,
4.3.14.5 settled any liability, claim, dispute, proceedings, suit or
appeal pending against it or any of its Assets,
4.3.14.6 except as disclosed in the Financial Statements, suffered any
extraordinary loss or loss from operations,
4.3.14.7 purchased or leased, or made any commitment to purchase or lease,
any Assets, except for purchases of Equipment and supplies in the
ordinary course of business,
4.3.14.8 made any change in personnel practices, except in the ordinary
course of business,
4.3.14.9 cancelled or released any debts or claims other than as disclosed
in the Financial Statements,
4.3.14.10 made any change in its accounting principles, policies or
practices as heretofore applied, including the basis upon which its
assets and liabilities are recorded on its books, its earnings are
ascertained or the methods or rates of depreciation or amortization
employed, other than as disclosed in the Financial Statements, or
4.3.14.11 agreed to do any of the things described in subsections
4.3.14.1 through 4.3.14.10, inclusively, hereof;
4.3.15 Title to Assets. The Corporation is the legal and beneficial owner of,
has good and marketable title to and possesses all its Assets free and
clear of any Encumbrances save as to those mentioned in the Financial
Statements and in Schedule 4.3.15 annexed hereto;
4.3.16 Equipment. The Corporation owns or leases all Equipment necessary to
conduct its business as presently conducted;
4.3.17 Assets and Conditions of Assets. All the Assets owned or used by the
Corporation are located at the Premises. All of the Assets of the
Corporation (i) are in good working order and operating condition and
have been regularly serviced and properly maintained and (ii) are
adequate and sufficient for the continuing conduct of the business of the
Corporation as now conducted. To the Knowledge of the Corporation, there
are no outstanding work orders relating to any of the Assets of the
Corporation which have been received from or required by any Governmental
Body;
4.3.18 Litigation. There is no existing or, to the Knowledge of the
Corporation, threatened claim, demand, suit, action, cause of action,
dispute, proceeding, litigation, investigation, grievance, arbitration,
governmental proceeding or other proceeding, including appeals and
applications for review, in progress against, by, affecting or relating
to the Corporation and/or any of its Assets except for the claims
described in Schedule 4.3.18 annexed hereto. To the Knowledge of the
Corporation, there is no state of facts which could provide a valid basis
for any of the foregoing. To the Knowledge of the Corporation, there is
not at present outstanding against, affecting or relating to the
Corporation and/or its Assets any Order which adversely affects the
Corporation in any way or that in any way relates to this Agreement or
the transactions contemplated hereby;
4.3.19 Insurance. Schedule 4.3.19 annexed hereto contains a true and complete
list of each material insurance policy currently maintained by the
Corporation. All such policies are in full force and effect and are not
void or voidable and nothing has been done or omitted to be done by the
Corporation that would make any such policy void or voidable. All
liability policies maintained by the Corporation provide coverage on a
claims basis, except for commercial liability insurance which provides
for coverage on an occurrence basis. The Corporation has not failed to
give any notice or present any claim under any insurance policy when due
or in a timely fashion. No claim presented by the Corporation has been or
continues to be disputed or is under negotiation, nor does any amount
recoverable from any insurer in respect of any such claim remain unpaid.
The insurance coverage maintained by the Corporation is in such amounts
and against such losses as are reasonable based on the Corporation's
claims history;
4.3.20 Real Property Leases and Premises. The Real Property Leases, are the
only leases, offers to lease, subleases, licenses or other agreements
under which the Corporation uses or occupies or has the right to use or
occupy, now or in the future, any immovable or real property or any
buildings, structures, fixtures or improvements thereon;
4.3.21 Place of Business. The Corporation carries on business at the Premises
and has no other place of business;
4.3.22 Environmental Matters. Without limiting the generality of
subsection 4.3.18 or 4.3.29 hereof:
4.3.22.1 to the Knowledge of the Corporation, the operations of, and the
use of the Premises and Equipment by the Corporation are now and have
been in compliance, in all material respects, with Environmental Law, and
the operations of and use of the Premises by any predecessor in interest
of the Corporation or any present or prior owner, lessee or occupant of
the Premises have, to the Knowledge of the Corporation, been in
compliance, in all material respects, with Environmental Law, and
4.3.22.2 the Corporation has obtained and holds all Permits required under
Environmental Law for the conduct of its operations and all such Permits
are valid and in full force and effect. The Corporation has not received
any notice amending, revoking or replacing any such Permits or requiring
the issuance of any additional Permits. The Corporation has filed in a
timely manner all reports, notifications and plans required pursuant to
any such Permits;
4.3.23 Books and Records. The Books and Records of the Corporation are true and
complete in all material respects;
4.3.24 Employees and Labour Relations. Schedule 4.3.24 annexed hereto contains
a true and complete list of the employees of the Corporation detailing
dates of hire, base remuneration and position held. Each of the employees
listed on Schedule 4.3.24 annexed hereto received compensation from the
Corporation solely in consideration of services performed on its behalf.
The compensation of all officers and employees of the Corporation was
paid entirely by the Corporation,
4.3.24.1 at the date hereof, the Corporation has not been informed that
any of its officers, directors or other key employees has any present
intention to terminate its relationship with the Corporation,
4.3.24.2 without limiting the generality of subsection 4.3.29 hereof, the
Corporation is, in all material respects, in compliance with Applicable
Law respecting employment and employment practices, terms and conditions
of employment, wages, hours of work and human and civil rights,
4.3.24.3 without limiting the generality of subsection 4.3.26 hereof, the
Corporation is not bound by or subject to any collective bargaining
agreement or collective bargaining obligation (or any ongoing organizing
activity),
4.3.24.4 without limiting the generality of subsection 4.3.18 hereof,
there are no labour disruptions pending or, to the Knowledge of the
Corporation, threatened against the Corporation and the Corporation is
not involved in any material controversy with any of its employees except
in the ordinary course of business, and
4.3.24.5 except as set forth in Schedule 4.3.24.5 annexed hereto, no
employment agreement to which the Corporation is a party provides for a
specified notice of termination or fixed term of employment. There is no
director, officer or employee of the Corporation who cannot be dismissed
upon such notice as is required by Applicable Law;
4.3.25 Benefit Plans. Schedule 4.3.25 annexed hereto contains a true and
complete list of all Benefit Plans.
4.3.25.1 without limiting the generality of subsection 4.3.29 hereof, all
Benefit Plans which are funded plans are funded in accordance with their
rules and Applicable Law and are fully funded on both a going-concern and
a termination basis. Without limiting the generality of subsection 4.3.29
hereof, all required employer contributions, premium payments and source-
deducted employee contributions under the Benefit Plans have been made
and remitted to the funding agents thereunder, including all current
service costs and special payments,
4.3.25.2 the Corporation has not at any time contributed to (or been
obligated to contribute to) any plan subject to Title IV or Part I of
Title I of the United States Employee Retirement Income Security Act,
1974, as amended ("ERISA"), save as to those described in Schedule
4.3.25. The Corporation is in compliance with ERISA, the United States
Internal Revenue Code of 1986, as amended, and the regulations
thereunder. Without limiting the generality of subsection 4.3.29, each
of the Corporation's Benefit Plans listed in such Schedule 4.3.25 has
been maintained in compliance with its terms and all requirements
prescribed by Applicable Law, are in good standing under all Applicable
Law, and without limiting the generality of subsection 4.3.26 hereof,
there are no outstanding defaults or violations by the Corporation of any
obligation required to be performed by it in connection with any Benefit
Plan of the Corporation,
4.3.25.3 no step has been taken to terminate any Benefit Plan, and
4.3.25.4 no promises or commitments have been made by the Corporation to
amend any Benefit Plan or to provide increased benefits thereunder or to
establish any additional Benefit Plan;
4.3.26 Contracts. Schedule 4.3.26 annexed hereto contains a true and complete
list of all material Contracts to which the Corporation is a party or by
which it or its Assets may be bound, and none of them will be affected by
the transactions contemplated hereby. The Corporation is not in violation
of or in default with respect to and no event has occurred which, with
lapse of time or action by a third party, or both, could result in
violation of or a default with respect to any of the Contracts listed in
Schedule 4.3.26 annexed hereto. Each of the Contracts listed in Schedule
4.3.26 annexed hereto is in full force and effect and valid, binding and
enforceable in accordance with its terms and, to the Knowledge of the
Corporation, all parties to such Contracts (other than the Corporation)
are in compliance with their obligations thereunder. Neither of the
Corporation and, to the Knowledge of the Corporation, none of the parties
to the Contracts listed in Schedule 4.3.26 annexed hereto (other than the
Corporation) intends to terminate its obligations under any of such
Contracts in the next twelve (12) months;
4.3.27 Intellectual Property. Schedule 4.3.27 annexed hereto contains a true
and complete list and copy of all Intellectual Property Rights used by
the Corporation in the conduct of its business, none of which has been
opposed or held unenforceable and each of which is in full force and
effect. Except as set forth in Schedule 4.3.27 annexed hereto, the
Corporation is the absolute owner and has the sole and exclusive right to
use the Intellectual Property Rights listed beside its name on Schedule
4.3.27 annexed hereto, without making any payment to any Person or
granting rights to any Person in exchange. Unless otherwise indicated in
Schedule 4.3.27, the Corporation owns the entire right, title and
interest in and to the Intellectual Property Rights (including, without
limitation, the right to use and license the same) which are necessary
for the research, development, manufacture, use, sale, lease, license and
service of products of the Corporation's business and the equipment used
to manufacture the Corporation's products. The Corporation's patents and
trademarks, as listed and explained in Schedule 4.3.27, have been duly
registered with, filed in or issued by, as the case may be, such
Governmental Body as is indicated in Schedule 4.3.27 and, except as
otherwise set forth on Schedule 4.3.27, such registrations, filing and
issuances remain in full force and effect and such patents and trademarks
cover the technology and equipment used to manufacture the Products. The
Intellectual Property Rights of the Corporation are sufficient for the
lawful conduct, ownership and operation of the Corporation's business as
presently conducted and enable the manufacturing of the Products and
there are no Intellectual Property Rights of any Person which impair or
prevent the development, manufacture, use, sale, lease, license and
service of products, now existing or under development by the
Corporation. The Corporation has the unabridged right to bring actions
for the infringement of all of its Intellectual Property Rights,
4.3.27.1 without limiting the generality of subsection 4.3.3 hereof, the
execution, delivery and performance of the Agreement and the consummation
of the transactions contemplated thereby will not breach, violate or
conflict with any instrument or agreement governing any of the
Corporation's Intellectual Property Rights, and will not cause the
forfeiture or termination or give rise to a right of forfeiture or
termination of the Corporation's Intellectual Property Rights or in any
way impair the right of the Corporation to use, sell, license or dispose
of or to bring any action for the infringement of any of the
Corporation's Intellectual Property Rights or portion thereof,
4.3.27.2 all employees of, and consultants to, the Corporation have
entered into agreements with the Corporation pursuant to which all
Intellectual Property Rights developed by them in the course of their
relationship with the Corporation belong solely, without any restrictions
or obligations whatsoever, to the Corporation, and all such agreements
are included in the Contracts. The Corporation has taken reasonable
practical steps (including, without limitation, entering into
confidentiality and non-disclosure agreements with all employees of the
Corporation or consultants, third party developers or any other Persons
with access to or knowledge of the Corporation's Intellectual Property
Rights) sufficient to safeguard and maintain the secrecy and
confidentiality of, and its proprietary rights in, all of the
Corporation's Intellectual Property Rights,
4.3.27.3 none of the development, manufacture, marketing, license, sale or
use of any product or service currently licensed or sold by the
Corporation or currently under development or proposed to be developed by
the Corporation violates or will violate any Contract with any Person or
infringe any Intellectual Property Rights of any Person. There are no
pending or, to the Knowledge of the Corporation, threatened proceedings,
litigation or other adverse claims affecting, or with respect to, any
part of the Intellectual Property Rights of the Corporation. Except as
set forth in Schedule 4.3.27, to the Knowledge of the Corporation, no
Person is infringing any Intellectual Property Right of the Corporation,
4.3.27.4 except for the license granted to TouchTunes pursuant to that
certain Research License Agreement dated January 1, 1998 between the
Corporation and TouchTunes no license or sub-license has been granted or
other Contract has been entered into with respect to any of the
Intellectual Property Rights of the Corporation. The Corporation has not
conducted business under any name other than Technical Maintenance
Corporation and its current corporate name;
4.3.28 Related Transactions. Except for current unpaid salaries, the
Corporation has no indebtedness to any of its shareholders, directors,
officers or employees, past or present, or to any Person not dealing at
arm's-length with any of such Persons and no shareholder, director,
officer or employee, past or present, of the Corporation or any Person
not dealing at arm's-length with any of such Persons has any indebtedness
to the Corporation;
4.3.29 Compliance with Applicable Law. The Corporation has conducted and is
conducting its business, in all material respects, in compliance with
Applicable Law, and the Corporation is not in breach of Applicable Law,
including any securities law;
4.3.30 Qualifications. The Corporation has not been required to suspend
operations of its business or been liable for a fine or penalty as a
result of the operation of its business. The Corporation has all Permits
necessary for the conduct of its business as presently conducted and such
Permits are validly issued, in full force and effect and the Corporation
is, in all material respects, in compliance therewith, and none of such
Permits will be affected by the transactions contemplated hereby;
4.3.31 Absence of Guarantees. Without limiting the generality of subsection
4.3.26 hereof and except for commitments disclosed in the Financial
Statements, the Corporation is not a party to or bound by any comfort
letter, understanding or agreement of guarantee, indemnification,
assumption or endorsement or any like commitment with respect to the
liabilities or obligations of any Person;
4.3.32 Tax Matters. Tax Returns required by Applicable Law to be filed by, or
with respect to the activities of the Corporation with applicable
Governmental Bodies have been properly and timely filed with the
appropriate Governmental Bodies and all such Tax Returns are true and
complete and all Taxes shown to be due on such Tax Returns have been
paid,
4.3.32.1 with respect to the Corporation: i) there are no unpaid Taxes now
due and no deficiency for Taxes has been assessed by any applicable
Governmental Body, ii) no audit of any Tax Return is in progress or
pending or threatened, and iii) no waiver of any statute of limitations
has been given or is in effect with respect to the assessment of any
Taxes,
4.3.32.2 all Taxes shown on all Tax Returns for which the Corporation is
liable have been paid or accrued and adequately reserved on its Books and
Records and financial statements (including the Financial Statements) of
the Corporation. The Corporation is not taxed as an "S corporation"
(within the meaning of Section 1361(a) of the United States Internal
Revenue Code of 1986, as amended),
4.3.32.3 none of the Tax Returns of the Corporation have ever been audited
by any taxing Governmental Body at any time,
4.3.32.4 the Corporation has never entered into any closing or similar
agreement with any taxing Governmental Body,
4.3.32.5 in each jurisdiction in which the Corporation is paying or has
paid sales tax, sales tax audits have been conducted and completed
through the years shown on Schedule 4.3.32.5 annexed thereto,
4.3.32.6 the Corporation was not a member of an entity required to file a
federal partnership Tax Return that is expected to have taxable income
for any taxable period beginning prior to the date hereof that is in
excess of cash distributions of such income to be made after the date
hereof,
4.3.32.7 the Corporation has not adopted a plan of complete liquidation
and no consent has been filed on behalf of any of them pursuant to
Section 341(f) of the United States Internal Revenue Code of 1986, as
amended, or any predecessor provision,
4.3.32.8 the Corporation has not taken any action not in the ordinary
course of business that would have the effect of deferring any Tax
liability from any taxable period ending prior to the date hereof,
4.3.32.9 without limiting the generality of the foregoing, the Corporation
has collected all sales, goods and services and use taxes required to be
collected and has remitted same on a timely basis to the appropriate
Governmental Body, or has been furnished properly completed exemption
certificates for all exempt transactions. The Corporation has in its
possession all Books and Records, including supporting documents,
required by Applicable Law regarding the collection and payment of all
sales, goods and services and use taxes required to be collected and paid
over and regarding all exempt transactions for all periods open under the
applicable statutes of limitations as of the date hereof, and the
Corporation has maintained all such Books and Records, including
supporting documents, in the manner required by applicable sales, goods
and services and use tax statutes and regulations,
4.3.32.10 the Corporation has withheld from each payment made to each
of its past and present shareholders, agents, employees, officers and
directors all deductions required to be made therefrom and has paid same
to the proper Governmental Body;
4.3.33 Accounts Receivable and Payable. Schedule 4.3.33 annexed hereto sets
forth a true and complete (i) trade accounts receivable listing of the
Corporation as of May 17, 2000 and (ii) accounts payable listing of the
Corporation as of May 17, 2000. The accounts receivable of the
Corporation reflected on the Financial Statements and those created after
the Balance Sheet Date, are genuine and bona fide receivables which arose
in the ordinary course of business, and net of reserves (which reserves
are adequate and determined in accordance with Generally Accepted
Accounting Principles, consistently applied) are collectible, to the
Knowledge of the Corporation, in full when due without any discount, set-
off or counterclaim;
4.3.34 Accounts Receivable of the Corporation. There exist no accounts
receivable in respect of any fees described by Rule 12b-1 promulgated
under the United States Investment Company Act of 1940, as amended;
4.3.35 No Broker. Without limiting the generality of subsection 4.3.26 hereof,
the Corporation has not employed any broker, finder, consultant or other
intermediary in connection with any of the transactions contemplated by
this Agreement and the Investors have not incurred and will not incur,
directly or indirectly, as a result of any action taken by the
Corporation any liability for any brokerage fees, finder's fees, or
agents' commissions or other similar charges in connection with this
Agreement;
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
5.1 Surivival. Notwithstanding any investigation conducted prior or
subsequent to the date hereof, the parties shall be entitled to rely upon the
representations and warranties set forth herein and all representations and
warranties made by, and all covenants, obligations and agreements of, the
parties, under or pursuant to this Agreement or any other document or
certificate delivered in connection therewith shall survive for a period of
twenty-four (24) months from the date hereof.
6. INDEMNIFICATION
6.1 Definitions. As used in this Section 6:
6.1.1 "Claim" means any act, omission or state of facts and any demand, action,
suit, proceeding, investigation, arbitration, trial, claim, assessment,
judgment, settlement or compromise relating thereto which may give rise
to a right to indemnification under subsection 6.2 or 6.3 hereof;
6.1.2 "Direct Claim" means any Claim by an Indemnified Party against an
Indemnifying Party which does not result from a Third Party Claim;
6.1.3 "Indemnifying Party" means any party obligated to provide indemnification
under this Agreement (including the parties intervening into this
Agreement);
6.1.4 "Indemnified Party" means any party entitled to indemnification under
this Agreement;
6.1.5 "Indemnity Payment" means the aggregate amount of each Loss required to
be paid pursuant to subsection 6.2 or the amount of each Loss required to
be paid pursuant to subsection 6.3 hereof;
6.1.6 "Loss" means any and all loss , liability, damage, cost, expense, charge,
fine, penalty or assessment, resulting from or arising out of any Claim,
including the reasonable costs and expenses of any action, suit,
proceeding, demand, assessment, judgment, settlement or compromise
relating thereto and all interest, punitive damages, fines and penalties
and reasonable attorneys', accountants' and experts' fees and expenses
incurred in connection therewith; and
6.1.7 "Third Party Claim" means any Claim asserted against an Indemnified Party
by any Person who is not a party to this Agreement.
6.2 Indemnification by the Corporation. The Corporation hereby agrees to
indemnify and save and hold harmless each Investor from and against any Loss
suffered or incurred by an Investor as a result of, arising out of or relating
to:
6.2.1 any violation, contravention or breach of any covenant, agreement or
obligation of the Corporation under or pursuant to this Agreement or any
other document or certificate delivered to the Investors by or on behalf
of the Corporation in connection with this Agreement, as well as any
Claim by any Person containing allegations which, if true, would
constitute such an event; and
6.2.2 any incorrectness in, or breach of, any representation or warranty made
by the Corporation in this Agreement, or made or to be made in any other
document or certificate delivered or to be delivered to the Investors by
or on behalf of the Corporation in connection therewith as well as any
Claim by any Person containing allegations which, if true, would
constitute such an event.
6.3 Indemnification by the Investors. Each Investor hereby agrees to
indemnify and save and hold harmless the Corporation from and against any Loss
suffered or incurred, directly or indirectly, by it as a result of, arising out
of or relating to:
6.3.1 any violation, contravention or breach of any covenant, agreement or
obligation of such Investor under or pursuant to this Agreement or any
other document or certificate delivered to the Corporation by or on
behalf of such Investor in connection therewith, as well as any Claim by
any Person containing allegations which, if true, would constitute such
an event; and
6.3.2 any incorrectness in, or breach of, any representation or warranty made
by such Investor in this Agreement, or made or to be made in any other
document or certificate delivered or to be delivered to the Corporation
by or on behalf of such Investor in connection with this Agreement, as
well as any Claim by any Person containing allegations which, if true,
would constitute such an event.
6.4 Payment and Interest. The Indemnifying Party shall reimburse, on demand,
to the Indemnified Party the amount of each Loss suffered or incurred by the
Indemnified Party, the whole as of the date that the Indemnified Party incurs
such Loss, together with interest on such amount(s) from the aforesaid date
until payment in full at a rate per annum equal to the Prime Rate, plus two (2)
percentage points. Interest shall be calculated and payable monthly on the last
day of each month during which any amount in respect of any Loss remained
unpaid, both before and after an arbitration award and/or judgment, with
interest on overdue interest calculated and payable at the same rate. The
interest payable in any month shall be calculated on the average amount of all
amounts in respect of any Loss that remained unpaid at any time during such
month. This amount shall be calculated by i) multiplying any amount in respect
of each Loss that remained unpaid at any time during such month by the number
of days that amount remained unpaid during such month and ii) dividing the
aggregate of all such products by the number of days in such month. If such
Claim is subsequently determined not to have been valid, the Indemnified Party
shall reimburse the Indemnifying Party for the amount so paid together with
interest at the Prime Rate per annum, plus two (2) percentage points,
calculated and payable monthly as provided previously in this subsection, from
the month such payment was made by the Indemnifying Party to the month in which
the Indemnified Party repaid such amount.
6.5 Notification. Promptly upon obtaining knowledge thereof, the Indemnified
Party shall notify the Indemnifying Party of each Claim which the Indemnified
Party has determined has given or could give rise to indemnification under this
Section 6, describing such Claim in reasonable detail. In circumstances where
the Indemnifying Party is notified of such Claim but not promptly, the
Indemnifying Party shall not be relieved from any duty to indemnify and save
and hold harmless which otherwise might exist with respect to such Claim unless
(and only to that extent) the omission to notify promptly materially prejudices
the ability of the Indemnifying Party to exercise its right to defend provided
in this Section 6.
6.6 Defense of Third Party Claims. The Indemnifying Party shall have the
right, after receipt of the Indemnified Party's notice under subsection 6.5
hereof with respect to a Third Party Claim and upon giving written notice to
the Indemnified Party within ten (10) Business Days of such receipt, and
subject to the rights of any insurer or other third party having potential
liability therefor, to defend the Third Party Claim at its own cost and expense
with counsel of its own selection, provided that:
6.6.1 the Indemnified Party shall at all times have the right to fully
participate in the defense at its own expense;
6.6.2 the Third Party Claim seeks only monetary damages and does not seek any
injunctive or other relief against the Indemnified Party;
6.6.3 the Indemnifying Party unconditionally acknowledges in writing its
obligation to indemnify and save and hold the Indemnified Party harmless
with respect to the Third Party Claim, if it is found that such
obligation exists;
6.6.4 legal counsel chosen by the Indemnifying Party is satisfactory to the
Indemnified Party, acting reasonably; and
6.6.5 in the event that such Third Party Claim is in excess of $2,000,000, the
Indemnifying Party shall deliver a letter of credit, surety bond or
similar security in form and substance satisfactory to the Indemnified
Party, acting reasonably, in the amount of such Third Party Claim as
security for the payment of amounts payable by the Indemnifying Party to
the Indemnified Party pursuant hereto, inclusive of reasonably estimated
interest and costs. Amounts payable by the Indemnifying Party pursuant to
a Third Party Claim shall be paid in accordance with the terms of the
settlement or judgment, as applicable, but in any event prior to the
expiry of any delay for a judgment to become executory.
6.7 Settlement of a Third Party Claim. The Indemnifying Party shall not be
permitted to compromise and settle or to cause a compromise and settlement of
any Third Party Claim, without the prior written consent of the Indemnified
Party, unless:
6.7.1 the terms of the compromise and settlement require only the payment of
money and do not require the Indemnified Party to admit any wrongdoing or
take or refrain from taking any action;
6.7.2 the Indemnified Party receives, as part of the compromise and settlement,
a legally binding and enforceable unconditional satisfaction and release,
which is in form and substance satisfactory to the Indemnified Party,
acting reasonably; and
6.7.3 the Third Party Claim and any claim or liability of the Indemnified Party
with respect to such Third Party Claim is being fully satisfied because
of the compromise and settlement and the Indemnified Party is being
released from any and all obligations or liabilities it may have with
respect to the Third Party Claim.
6.8 Waiver of Right to Defend Third Party Claims. If the Indemnifying Party
fails:
6.8.1 within fifteen (15) Business Days from receipt of the notice of a Third
Party Claim to give notice of its intention to defend the Third Party
Claim in accordance with subsection 6.6 hereof, or
6.8.2 to comply at any time with any of subsections 6.6.1 through 6.6.5
(inclusively) hereof,
then the Indemnifying Party shall be deemed to have waived its right to defend
the Third Party Claim and the Indemnified Party shall have the right (but not
the obligation) to undertake the defense of the Third Party Claim and
compromise and settle the Third Party Claim on behalf, for the account and at
the risk and expense of the Indemnifying Party.
6.9 Direct Claims. If the Indemnifying Party fails to respond in writing to
any written notice of a Direct Claim given by the Indemnified Party pursuant to
subsection 6.5 hereof, and fails to make an Indemnity Payment to the
Indemnified Party within ten (10) Business Days thereof, the Indemnifying Party
shall be deemed to have rejected such Direct Claim, in which event the
Indemnified Party shall be free to pursue such rights, recourses and remedies
as may be available to it.
6.10 Right of Offset. Without in any way limiting the terms of this Section
6, each party shall have the right to offset against all amounts payable from
time to time by it to any other party, howsoever arising, including under this
Agreement, any amount owing by such other party pursuant to the indemnification
obligations contained in this Agreement to the party intending to offset.
6.11 Cumulative Rights. The rights, recourses and remedies provided to an
Indemnified Party under this Section 6 are cumulative with any other right,
recourse and remedy such Indemnified Party may have or may hereafter acquire
under Applicable Law, and any right, recourse or remedy of such Indemnified
Party may be asserted completely against the Indemnifying Party, without regard
to the rights, recourses or remedies the Indemnified Party may have against any
other Person.
7. COVENANTS OF THE CORPORATION
7.1 Use of Proceeds. The Corporation hereby covenants and agrees that the
subscription price to be delivered by the Investors to the Corporation pursuant
to this Agreement shall be used in accordance with the detailed budget of the
Corporation annexed hereto as Schedule 7.1 and in the manner set forth in the
Business Plan or as may be deemed appropriate by the Board of Directors of the
Corporation.
7.2 Reservation of Stock. So long the Investors hold any Purchased
Securities, the Corporation will at all times reserve and keep available,
solely for issuance and delivery upon the conversion of such Purchased
Securities, all Common Shares issuable upon the conversion of such Purchased
Securities.
7.3 Notice and Information Rights. The Corporation shall from the date
hereof deliver to each Investor such information and notices as the Corporation
is required to deliver to the holders of Common Shares of the Corporation
pursuant to the Articles of Incorporation or otherwise.
8. GENERAL PROVISIONS
8.1 Further Assurances. Each party upon the request of the others, shall do,
execute, acknowledge and deliver or cause to be done, executed, acknowledged or
delivered all such further acts, deeds, documents, assignments, transfers,
conveyances, powers of attorney and assurances as may be reasonably necessary
or desirable to effect complete consummation of the transactions contemplated
by this Agreement.
8.2 Default Interest. Subject to the provisions of subsection 6.4 hereof, if
any party fails to pay any other party any amounts due hereunder within ten
(10) days of the due date, the party owing such money shall pay to the party
owed such money, from the date such amount was due, interest at the Prime Rate,
plus three (3) percentage points, compounded monthly and payable on demand.
8.3 Successors in Interest. This Agreement and the provisions hereof shall
enure to the benefit of and be binding upon the parties and their respective
successors and permitted assigns.
8.4 Arbitration. All disputes or controversies between the parties in
respect of the validity, interpretation or performance of the provisions of
this Agreement shall be definitively dealt with using the rules of conciliation
and arbitration of the International Chamber of Commerce, by one arbitrator
appointed in accordance with said rules, and to the exclusion of any courts
except for any provisional remedy including injunctive relief and seizure
before judgment which may be obtained from any court or tribunal, the whole in
accordance with said rules in force at the time of execution of this Agreement.
Any arbitration proceeding required pursuant to the terms thereof shall take
place in Montreal, Quebec and shall be conducted in both the English and French
language.
8.5 Notices. All offers, acceptances, rejections, notices, requests,
authorizations, permissions directions, demands and other communications
hereunder shall be given in writing and shall be given by telecopier, or
delivered by hand, to the other party at the following addresses:
if to Sofinov: SOFINOV SOCIETE FINANCIERE
D'INNOVATION INC.
0000 XxXxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: The President
Telecopier: (000) 000-0000
if to CDPQ: CAPITAL COMMUNICATIONS CDPQ INC.
0000 XxXxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: The President
Telecopier: (000) 000-0000
if to the Corporation: TOUCHTUNES MUSIC CORPORATION
0000 Xxxx Xxxxxx
Xxxxx 000
Xxx xxxxx, Xxxxxx
00000, X.X.X.
Attention: The President
Telecopier: (000) 000-0000
with a copy in all cases to: XXXXXXXX XXXXXXXXXX
0000 XxxX-XXxxxxxx Blvd. West
Suite 1400
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxxxxx
Telecopier: (000) 000-0000
with a copy in all cases to: XX XXXXXXXX CHAIT
1000 de la GauchetiEre Xxxx
00xx Xxxxx
Xxxxxxxx, Xxxxxx
Attention: Xxxxxxx Xxxxxxx
Telecopier: (000) 000-0000
with a copy in all cases to: XXXX & XXXXXXX
000 Xxxxx Xxxxxx
Xxx Xxxx, XX
00000, XXX
Attention: Xxxxx Xxxx
Telecopier: (000) 000-0000
or at such other address as the parties may have previously indicated to the
other parties in writing in conformity with the foregoing. Any such notice,
request, demand or other communication shall be deemed to have been received on
the date of delivery if delivered by hand, or the next Business Day immediately
following the date of transmission if sent by telecopier. The original copy of
any notice sent by telecopier shall be forwarded to the other party by
registered mail, receipt return requested.
8.6 Time of the essence. Time shall be of the essence in this Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same document.
IN WITNESS WHEREOF, the parties have signed at the place and on the date
first hereinabove mentioned.
SOFINOV SOCIETE FINANCIERE
D'INNOVATION INC.
Per: /s/Xxxxx Xxxxxx
-----------------------------
Xxxxx Xxxxxx
Per: /s/Xxxxxx Xxxxxxx
------------------------------
Xxxxxx Xxxxxxx
CAPITAL COMMUNICATIONS CDPQ INC.
Per:/s/Xxxxxx Xxxxxxxx
-------------------------
Xxxxxx Xxxxxxxx
Per /s/Xxxxxx Ribotti
-------------------------
Xxxxxx Ribotti
TOUCHTUNES MUSIC CORPORATION
Per:/s/Xxxx Xxxxxxxxxxx
-------------------------
Xxxx Xxxxxxxxxxx
INTERVENTION
EACH OF THE UNDERSIGNED HEREBY INTERVENES TO THESE PRESENTS, hereby declares
having taken cognizance of all of the provisions contained in this Agreement,
with which he declares himself to be entirely satisfied and familiar, and
hereby represents and warrants to each of the Investors, jointly and severally
with the Corporation, waiving the benefits of division and discussion, that all
of the representations and warranties of the Corporation set forth in
subsections 4.3.4, 4.3.8, 4.3.12, 4.3.13, 4.3.14, 4.3.18, 4.3.26, 4.3.27,
4.3.28, 4.3.31 and 4.3.32 are true, accurate and complete.
Montreal, this 18th day of May, 2000
/s/Xxxx Xxxxxxxxxxx
---------------------
XXXX XXXXXXXXXXX
/s/Xxx Xxxxxx
---------------------
XXX XXXXXX
