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DEBENTURE PUT RIGHT AGREEMENT MADE AND ENTERED INTO IN XXX XXXX XXX XXXXXXXX XX
XXXXXXXX, XX THE 11TH DAY OF FEBRUARY, 1998
BY AND AMONG: SOCIETE INNOVATECH DU GRAND MONTREAL, a body
politic duly constituted according to An Act
respecting Societe Innovatech du Grand Montreal,
R.S.Q., ch. S-17.2, having its head office and
principal place of business in the City of
Montreal, Province of Quebec,
(hereinafter referred to as "Innovatech")
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: TECHNICAL MAINTENANCE 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 "Company")
PARTY OF THE THIRD PART
SECTION 1 - PREAMBLE
1.1 WHEREAS on the date hereof, Innovatech and Sofinov have subscribed for
debentures from Touchtunes Digital Jukebox Inc. ("Canco");
1.2 WHEREAS the Company has agreed to grant to each of Innovatech and
Sofinov the right to oblige the Company to purchase their debentures in
consideration for shares in the capital stock of the Company, on the terms and
conditions set out in this Agreement.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
SECTION 2 - DEFINITIONS
2.1 Definitions. In this Agreement:
2.1.1 "Additional Securities" has the meaning ascribed thereto in paragraph 0;
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2.1.2 "Agreement" means this 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;
2.1.3 "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;
2.1.4 "Assets" means all of the assets, rights and properties of the Company,
of whatsoever nature, kind or description, including movable or
immovable, real or personal, tangible or intangible;
2.1.5 "Balance Sheet Date" means September 30, 1997;
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 covering any or all past or present
employees, shareholders, directors or officers of the Company;
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 or the
Province of Quebec are not open for business during normal banking
hours;
2.1.9 "Canco" has the meaning ascribed thereto in subsection 0;
2.1.10 "Canco Shares" means the shares of Canco currently held by the
Purchasers;
2.1.11 "Charges" means any security interest, hypothec, prior claim, lien,
charge, pledge, encumbrance, mortgage, adverse claim or title retention
agreement of any nature or kind whatsoever;
2.1.12 "Closing" means the closing of any purchase of a Debenture in
consideration for the issuance of Preferred Shares pursuant to any
exercise of the Put Option;
2.1.13 "Closing Date" means the date of each Closing;
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2.1.14 "Common Shares" means shares of the Company's Class A voting common
stock having the rights, privileges and preferences as set forth in the
Amended and Restated Articles of Incorporation of the Company dated
March 19, 1997;
2.1.15 "Company SEC Documents" has the meaning ascribed thereto in paragraph 0;
2.1.16 "Contracts" means all agreements, obligations and undertakings of
whatsoever nature, kind or description;
2.1.17 "Debentures" has the meaning ascribed thereto in the Debenture
Subscription Agreement;
2.1.18 "Debenture Subscription Agreement" means the subscription agreement
dated the date hereof among the Purchasers and Canco setting forth the
rights and obligations of each of the Purchasers with respect to its
subscription for its respective Debentures;
2.1.19 "dollar", "dollars" and the sign "$" , unless otherwise indicated, each
mean lawful money of the United States of America;
2.1.20 "Encumbrance" 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;
2.1.21 "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;
2.1.22 "Environmental Law" means any Applicable Law relating to the pollution
or protection of the Environment;
2.1.23 "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;
2.1.24 "Exchange Act" means the Securities Exchange Act of 1934 (United
States), as amended from time to time;
2.1.25 "Financial Statements" has the meaning ascribed thereto in paragraph 0
hereof;
2.1.26 "Future Debentures" has the meaning ascribed thereto in paragraph 0;
2.1.27 "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,
consistently applied since the incorporation of the Company, including
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those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants, or any successor institute, and statements and
pronouncements of the Financial Accounting Standards Board or in such
other statements by such other entity as is approved by a significant
segment of the accounting profession in the United States of America;
2.1.28 "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;
2.1.29 "Intellectual Property Rights" means, collectively:
2.1.29.1 all intellectual property rights of whatsoever nature, kind
or description including:
2.1.29.1.1 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,
2.1.29.1.2 all copyrights, industrial designs and registrations thereof
and applications therefor,
2.1.29.1.3 all inventions, patents, patent applications and patent
rights (including any patents issuing on such applications or
rights),
2.1.29.1.4 all licenses, sub-licenses and franchises,
2.1.29.1.5 all trade secrets and proprietary and confidential
information,
2.1.29.1.6 all computer software and rights related thereto,
2.1.29.1.7 all renewals, modifications, developments and extensions of
any of the items listed in subsections 0 through 0
(inclusively) hereof; and
2.1.29.2 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;
2.1.30 "Knowledge" - an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
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2.1.30.1 such individual is actually aware of such fact or other
matter, or
2.1.30.2 a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course of
conducting a reasonably comprehensive 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;
2.1.31 "Notice of Exercise" has the meaning ascribed thereto in subsection 0;
2.1.32 "Order" means any order (draft or otherwise), judgment, injunction,
decree, award or writ of any Governmental Body;
2.1.33 "ordinary course of business" means an action taken by a Person that is:
2.1.33.1 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,
2.1.33.2 not required to be authorized by the board of directors of
such Person (or by any Person or group of Persons exercising similar
authority) and is not required to be specifically authorized by the
parent company (if any) of such Person, and
2.1.33.3 similar in nature and magnitude to actions customarily taken,
without any authorization by the board of directors (or by any Person or
group of Persons exercising similar authority), in the ordinary course
of the normal day-to-day operations of other Persons that are in the
same line of business as such Person;
2.1.34 "Permit" means any license, permit, certificate, authorization,
approval, right, privilege, consent, concession or franchise issued,
granted, conferred or otherwise created by a Governmental Body;
2.1.35 "Person" is to be broadly interpreted and includes an individual, body
corporate, legal person, moral person, partnership, joint venture,
trust, association, incorporated organization, governmental authority or
any other entity recognized by law;
2.1.36 "Preferred Shares" means the shares of Series A Preferred Stock as
described in the Amended and Restated Articles of Incorporation of the
Company dated March 19, 1997;
2.1.37 "Premises" means the real property, together with all buildings,
structures, fixtures and improvements thereon, covered by the Real
Property Leases;
2.1.38 "Proportionate Share" means, the amount of the Additional Securities
determined by multiplying the number of Common Shares offered by a
fraction, the numerator of which is the number of Common Shares held by
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the particular Purchaser to whom reference is made and the denominator
of which is the total number of Common Shares held by both Purchasers,
it being understood that for the purposes hereof, each Purchaser shall
be deemed to hold that number of Common Shares as would be issuable to
such Purchaser upon the conversion into Common Shares of (i) all
Preferred Shares held by such Purchaser and (ii) all Preferred Shares
issuable to such Purchaser upon the full exercise of (a) all of such
Purchaser's exchange rights under the Stock Exchange Agreement and (b)
all of such Purchaser's Put Rights;
2.1.39 "Purchasers" means Innovatech and Sofinov and all transferees of Canco
Shares held by Innovatech and Sofinov (other than the Company) in
accordance with the shareholders agreement entered into on March 24,
1997 among Canco and the shareholders of Canco, collectively, and
"Purchaser" shall mean either of them;
2.1.40 "Put Rate" means, at any time, the number of Preferred Shares that each
Purchaser shall be entitled to receive for its respective Debentures
from time to time pursuant to subsection 0;
2.1.41 "Put Right" has the meaning ascribed thereto in subsection 0;
2.1.42 "Real Property Leases" means (i) the existing tenancy agreement between
the Company, as tenant, and Nevada Corporate Services, as landlord, (ii)
the existing month-to-month tenancy agreement in respect of the premises
located in Willow Grove, Pennsylvania and (iii) the existing tenancy
agreement in respect of the premises located in Buffalo Grove, Illinois,
covering, collectively, the Premises, a copy of each of which is annexed
hereto as Schedule 0;
2.1.43 "Registrable Shares" means all shares of the Company's Class A voting
common stock issuable to the Purchasers upon the conversion of (i) any
Preferred Shares currently held by the Purchasers; (ii) any Preferred
Shares issuable to the Purchasers pursuant to the exercise of their
exchange rights under the Stock Exchange Agreement and (iii) any
Preferred Shares issuable to the Purchasers pursuant to the exercise of
their Put Rights;
2.1.44 "Registration Statement" means the registration statement required to be
filed pursuant to paragraph 0 hereinbelow, and includes any preliminary
prospectus, final prospectus, exhibit, supplement or amendment included
in or relating to such registration statement;
2.1.45 "SEC" means the United States Securities and Exchange Commission;
2.1.46 "SEC Documents" means the documents filed by the Company with the SEC at
any time;
2.1.47 "Securities Act" means the Securities Act of 1933 (United States), as
amended from time to time;
2.1.48 "Shareholders Agreement" means the amended and restated shareholders
agreement entered into on the date hereof among the parties hereto and
Techno Expres S.A. setting forth the terms and conditions which will
govern the relationship of the shareholders of the Company;
2.1.49 "Stock Exchange Agreement" means the stock exchange agreement dated
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March 21, 1997 among the Purchasers and the Company, providing inter
alia for the exchange by the Purchasers of the Canco Shares held by them
for Preferred Shares;
2.1.50 "Strike Price" has the meaning ascribed thereto in paragraph 0;
2.1.51 "Tax Returns" means all reports, returns or other information, or any
amendment thereof, required to be filed in connection with any Taxes;
and
2.1.52 "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;
2.1.53 "Third-Party Offer" has the meaning ascribed thereto in paragraph 0.
SECTION 3 - AUTHORIZATION AND PUT RIGHT
3.1 Authorization. Prior to the date hereof, the Company has authorized the
issuance, in accordance with the terms hereof, of up to 5,000,000 Preferred
Shares issuable upon the exercise of the Put Option and 5,000,000 Common Shares
issuable upon the conversion of such Preferred Shares.
3.2 Put Right. Subject to the terms and conditions hereof, each Purchaser
shall have the right (the "Put Right") to oblige the Company to purchase, at
any time and from time to time, all or a portion of the principal amount then
outstanding under any of its respective Debentures in consideration for
Preferred Shares at the Put Rate.
3.3 Put Rate. Subject to the provisions of paragraph 0 below, the Company
shall issue to each Purchaser upon delivery by such Purchaser of any of its
Debentures, in consideration therefor, that number of Preferred Shares as is
equal to the number of shares obtained when dividing (i) the principal amount
then outstanding under such Debenture(s) by (ii) $2.00.
3.4 Deemed Issuance Date of Preferred Shares. Upon the conversion into
Common Shares, in accordance with the Amended and Restated Articles of
Incorporation of the Company dated March 19, 1997, of any Preferred Shares
issued upon the exercise of the Put Right pursuant to subsection 0, the number
of Common Shares to be issued upon the conversion of such Preferred Shares
shall be adjusted to take into account changes to and dilutive events in
respect of the Common Shares as contemplated in the Amended and Restated
Articles of Incorporation of the Company dated March 19, 1997 occurring from
the date hereof until the date such Preferred Shares were issued.
SECTION 4 - EXERCISE OF PUT RIGHT
4.1 Closing. Each Closing shall be held at the offices of Canco in
Montreal, at 10:00 a.m., local time, ten (10) Business Days after receipt by
the Company of a properly completed and executed notice of exercise in the form
attached hereto as Schedule "0" (the "Notice of Exercise") on behalf of either
Purchaser or at such other time and place upon which the Company and such
Purchaser shall mutually agree.
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4.2 Delivery. At each Closing, each Purchaser who has given a Notice of
Exercise shall surrender its Debenture(s) contemplated therein duly endorsed.
Thereupon, the Company shall issue and deliver at such office to such Purchaser
a certificate or certificates for the number of Preferred Shares to which such
Purchaser is entitled pursuant to subsection 0. Such exercise of the Put Right
shall be deemed to have been made at the close of business on the date of
receipt by the Company of the Notice of Exercise and the Purchaser entitled to
receive Preferred Shares issuable upon such exercise of the Put Right shall be
treated for all purposes as the record-holder of such Preferred Shares on the
date of receipt by the Company of the Notice of Exercise.
4.3 Covenants of the Company upon Closing. The Company hereby covenants and
agrees to cause all of the conditions hereinbelow set forth to be satisfied as
of the Closing Date, all of which conditions are agreed to be material and are
inserted for the exclusive benefit of each Purchaser, and may be waived in
whole or in part by such Purchaser, provided that any waiver to be effective
must be in writing:
4.3.1 the representations and warranties of the Company contained in this
Agreement shall be true and correct in all respects as if made at and as
of the date of such Closing;
4.3.2 the Company shall have complied with all its covenants, obligations and
agreements contained in this Agreement;
4.3.3 the Company shall have furnished to such Purchaser an opinion addressed
to it and dated the date of such Closing from United States counsel to
the Company, covering substantially the same matters as were covered in
the opinion furnished by such counsel to the Purchasers on the date
hereof;
4.3.4 the Company shall have furnished to such Purchaser an officer's
certificate certifying that the representations and warranties of the
Company contained in this Agreement are true and correct in all respects
as if made at and as of the date of such Closing and confirming that the
Company has complied with all its covenants, obligations and agreements
contained in this Agreement; and
4.3.5 the Company shall have delivered to such Purchaser all consents and
approvals of all Persons required in order to consummate the
transactions contemplated by the exercise of the Put Right set forth in
subsection 0.
4.4 Failure to Satisfy Conditions Precedent to Closing. In the event that
any of the conditions precedent set forth in subsection 0 hereof shall not have
been fulfilled and/or performed as of the Closing Date, each Purchaser may, at
its option, either (i) advise the Company that it shall not proceed with the
exercise of its Put Right as contemplated in the Notice of Exercise; or
(ii) proceed with the exercise of its Put Right, in either case without
prejudice to such Purchaser's rights, recourses and remedies.
SECTION 5 - REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGEMENTS
AND COVENANTS OF THE COMPANY
5.1 Representations and Warranties. The Company hereby represents and
warrants to each of the Purchasers, as of the date hereof, the following:
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5.1.1 Public Filings. The Company has delivered to the Purchasers 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 Company with the SEC prior to the date
hereof (the "Company 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
Company 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 Company 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.
5.1.2 Financial Statements. The financial statements contained in the Company
SEC Documents (the "Financial Statements"): (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 Company as of the respective dates thereof and
the results of operations of the Company for the periods covered
thereby.
5.1.3 Undisclosed Liabilities of the Company. The Company has no liabilities
(whether accrued, absolute, contingent or otherwise) of any kind except
(i) liabilities disclosed or provided for in the Financial Statements,
(ii) liabilities disclosed in the minutes of the meetings of the board
of directors of the Company held since March 21, 1997, which minutes are
attached as Schedule 0 hereto, and (iii) 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;
5.1.4 Subsequent Activities of the Company. Since the Balance Sheet Date
there has not occurred any change in the condition, financial or
otherwise, or prospects of the Company 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 Company has not, directly or indirectly:
5.1.4.1 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,
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5.1.4.2 entered into any Contract outside the ordinary course of
business,
5.1.4.3 increased the salary, benefits, bonuses or other compensation
of its officers, directors or employees or adopted any Benefit Plan,
save that: (i) the compensation of each of Xx. Xxxx Xxxxxxxxxxx and Xx.
Xxx Xxxxxx is presently being reviewed and (ii) the Company intends to
put into a place a stock option plan that will benefit certain of its
employees,
5.1.4.4 sold, leased, mortgaged, hypothecated, pledged or otherwise
subjected any of its Assets to any Encumbrance,
5.1.4.5 settled any liability, claim, dispute, proceedings, suit or
appeal pending against it or any of its Assets,
5.1.4.6 except as disclosed in Schedule 0 annexed hereto or in the
Financial Statements, suffered any extraordinary loss, or loss from
operations,
5.1.4.7 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,
5.1.4.8 made any change in personnel practices, except in the ordinary
course of business,
5.1.4.9 cancelled or released any debts or claims,
5.1.4.10 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,
5.1.4.11 violated any provision of any Contract to which it is a party
or by which it or any of its Assets may be bound, or
5.1.4.12 agreed to do any of the things described in subsections 0
through 0, inclusively, hereof;
5.1.5 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing, and in good standing under
the laws of the State of Nevada. The Company has full power and
authority to own and operate its properties and assets, and to carry on
its business as presently conducted and as presently proposed to be
conducted.
5.1.6 Corporate Power. The Company 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 Company, its directors and shareholders necessary (i)
for the authorization, execution, delivery and performance of this
Agreement by the Company and (ii) for the authorization, issuance and
delivery of the Preferred Shares pursuant to this Agreement and the
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Common Shares issuable upon the conversion of such Preferred Shares.
5.1.7 Offering Valid. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 0 hereof, the offer,
sale and issuance of the Preferred Shares pursuant to this Agreement and
the Common Shares issuable upon the conversion of such Preferred Shares
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.
5.1.8 Binding Agreement. This Agreement, when executed and delivered by the
Company, shall constitute a valid and binding obligation of the Company,
enforceable in accordance with its terms.
5.1.9 Issuance of Preferred Shares and Common Shares. The issuance of
Preferred Shares pursuant to this Agreement and the issuance of Common
Shares issuable upon the conversion of such Preferred Shares is and will
not be subject to any preemptive rights or rights of first refusal. When
issued in compliance with the provisions of this Agreement and the
Amended and Restated Articles of Incorporation of the Company dated
March 19, 1997, as amended, the Preferred Shares and Common Shares
issuable upon the conversion of such Preferred Shares will be validly
issued, fully paid and non-assessable, and will be free of all Charges
and restrictions on transfer other than restrictions on transfer under
state and/or federal securities laws at the time a transfer by a
Purchaser is proposed.
5.1.10 Consents. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body or any
Person is required for the consummation by the Company of the
transactions contemplated by this Agreement, except such consents,
approvals, authorizations, orders, registrations or qualifications which
have been obtained by the Company prior to the date hereof;
5.1.11 Compliance with Laws. The Company is not in violation of any law,
ordinance, administrative or governmental rule or regulation or court
decree applicable to it, and is not in violation with any term or
condition of, and has not failed to obtain, any license, permit,
franchise or other administrative or governmental authorization
necessary to the ownership of its property or to the conduct of its
business, which violation, non-compliance or failure to obtain,
individually or in the aggregate, would adversely affect the
consummation by the Company of the transactions contemplated by this
Agreement;
5.1.12 Compliance with Other Instruments. The execution and delivery of this
Agreement and the fulfilment of the terms hereof do not result in a
breach of, do not conflict with, and do not constitute a default under,
whether after notice or lapse of time, (i) any statute, rule or
regulation applicable to the Company; (ii) any court judgment, decree or
order binding the Company; or (iii) the constating documents and by-laws
of the Company.
5.1.13 Reservation of Stock. The Company has reserved up to 5,000,000
Preferred Shares and 5,000,000 Common Shares issuable upon the
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conversion of the Preferred Shares for issuance hereunder. The number
of Preferred Shares and Common Shares to be reserved for issuance shall
be adjusted in accordance with the Amended and Restated Articles of
Incorporation of the Company dated March 19, 1997.
5.1.14 Brokers or Finders. The Purchasers have not incurred and will not
incur, directly or indirectly, as a result of any action taken by the
Company any liability for any brokerage fees, finder's fees, or agents'
commissions or other similar charges in connection with this Agreement.
5.1.15 Constating and Corporate Documents. Schedule 0 annexed hereto contains
a true and complete copy of the constituant documents of the Company
including the authorized capital stock of the Company, 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 Company, which have been made available to
the Purchasers' solicitors for review prior to the date hereof, have
been maintained in accordance with the Applicable Law and contain true
and complete records of all the by-laws of the Company and all meetings
and consents in lieu of meetings of the board of directors of the
Company 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 Company are
complete and accurate;
5.1.16 Issued Shares. The only issued and outstanding shares in the capital
stock of the Company (and rights, options and warrants to acquire same)
are as set out in Schedule 0 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 Company or any other agreements
or rights to purchase or subscribe for any shares of the capital stock
of the Company or convert any obligation or shares into any shares of
the capital stock of the Company and the Company 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, the Debenture Subscription
Agreement and the Stock Exchange Agreement;
5.1.17 Subsidiaries. Except for its 50% equity interest in Canco, the Company
has no subsidiary nor owns any equity or other interest in any
corporation, partnership, joint venture or other entity;
5.1.18 Title to Assets. The Company is the legal and beneficial owner of, has
good and marketable title to and possesses all its Assets free and clear
of any Encumbrances;
5.1.19 Equipment. The Company owns or leases all Equipment necessary to
conduct its business as presently conducted;
5.1.20 Assets and Condition of Assets. All the Assets owned or used by the
Company are located at the Premises and, as at March 1, 1998, shall be
located at 0 Xxxxx xx Xxxxxxxx, 0xx Xxxxx, Xxx'x Xxxxxx, Xxxxxx. All of
the Assets of the Company (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
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business of the Company as now conducted. There are no outstanding work
orders relating to any of the Assets of the Company which have been
received from or required by any Governmental Body;
5.1.21 Litigation. Except as set out in the demand letters from (i) Xxxxxx Xx
Xxxxxx claiming unpaid commissions and (ii) Xxxx Xxxxxxxxx claiming
shares from Techno Expres S.A, copies of each of which are attached as
Schedule 0 hereto, there is no existing or 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 Company and/or any of its
Assets. There is no state of facts which could provide a valid basis
for any of the foregoing. There is not at present outstanding against,
affecting or relating to the Company and/or its Assets any Order which
adversely affects the Company in any way or that in any way relates to
this Agreement or the transactions contemplated hereby;
5.1.22 Insurance. The Company has no policies of insurance in place;
5.1.23 Real Property Lease and Premises The Real
Property Lease, is the only lease, offer to lease, sublease, license or
other agreement under which the Company 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;
5.1.24 Place of Business. The Company carries on business at the Premises and
at the residence of Xx. Xxx XxXxxxxxxx, regional sales manager of the
Company, in Lawrenceville, Georgia, and has no other place of business;
5.1.25 Environmental Matters.
Without limiting the generality of subsection 0 or 0 hereof:
5.1.25.1 the operations of, and the use of the Premises and Equipment
by the Company 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 Company have, to the
Knowledge of the Company, been in compliance, in all material respects,
with Environmental Law, and
5.1.25.2 the Company does not require any Permits under Environmental
Law for the conduct of its operations. The Company has not received any
notice requiring the issuance of any Permits;
5.1.26 Books and Records. The Books and Records of the Company are true and
complete in all material respects;
5.1.27 Employees and Labour Relations. The Company has no employees, nor is
the Company a party to any employment agreements other than the
employment agreements with each of Xx. Xxxx Xxxxxxxxxxx and Xx. Xxx
Xxxxxx, both of which are presently under review;
5.1.28 Benefit Plans. The Company does not maintain or contribute to any
Benefit Plans other than the Benefit Plan attached as Schedule 0 hereto;
5.1.29 Contracts. Schedule 0 annexed hereto contains a true and complete list
- 14 -
of all Contracts entered into since March 21, 1997 to which the Company
is a party or by which it or its Assets may be bound, such Contracts
together with the Contracts listed on Schedule 4.2.22 of the
Subscription Agreement dated March 21, 1997 among the parties hereto
constitute a true and complete list of all 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 Company has delivered to the Purchasers a true and complete copy of
each of the Contracts listed in Schedule 0 annexed hereto. The Company
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
aforesaid Contracts. Each of the aforesaid Contracts is in full force
and effect and valid, binding and enforceable in accordance with its
terms and, to the Knowledge of the Company, all parties to the such
Contracts (other than the Company) are in compliance with their
obligations thereunder. Neither of the Company and, to the Knowledge of
the Company, none of the parties to the aforesaid Contracts (other than
the Company) intends to terminate its obligations under any of such
Contracts;
5.1.30 Intellectual Property.
5.1.30.1 Schedule 0 annexed hereto contains a true and complete list of
all Intellectual Property Rights used by the Company 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 0 annexed hereto, the Company is the absolute owner and has the
sole and exclusive right to use the Intellectual Property Rights listed
beside its name on Schedule 0 annexed hereto, without making any payment
to any Person or granting rights to any Person in exchange. Unless
otherwise indicated in Schedule 0, the Company 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 Company's business
and the equipment used to manufacture the Company's products. The
Company's patents and trademarks, as listed and explained in Schedule 0,
have been duly registered with, filed in or issued by, as the case may
be, such Governmental Body as is indicated in Schedule 0 and, except as
otherwise set forth on Schedule 0, 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 Company are
sufficient for the lawful conduct, ownership and operation of the
Company's business and enable the manufacturing of its 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 Company.
The Company has the unabridged right to bring actions for the
infringement of all of its Intellectual Property Rights,
5.1.30.2 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 Company's Intellectual Property Rights, and will not cause
the forfeiture or termination or give rise to a right of forfeiture or
termination of the Company's Intellectual Property Rights or in any way
- 15 -
impair the right of the Company to use, sell, license or dispose of or
to bring any action for the infringement of any of the Company's
Intellectual Property Rights or portion thereof,
5.1.30.3 except as disclosed in Schedule 0 annexed hereto, none of the
Intellectual Property Rights have been derived, in part or in whole,
from the Intellectual Property Rights of any other Person. All employees
of, and consultants to, the Company have entered into agreements with
the Company pursuant to which all Intellectual Property Rights developed
by them in the course of their relationship with the Company belong
solely, without any restrictions or obligations whatsoever, to the
Company, and all such agreements are included in the Contracts. The
Company has taken all reasonable and practical steps (including, without
limitation, entering into confidentiality and non-disclosure agreements
with all employees of the Company or consultants, third party developers
or any other Persons with access to or knowledge of the Company's
Intellectual Property Rights) sufficient to safeguard and maintain the
secrecy and confidentiality of, and its proprietary rights in, all of
the Company's Intellectual Property Rights,
5.1.30.4 none of the development, manufacture, marketing, license, sale
or use of any product or service currently licensed or sold by the
Company or currently under development or proposed to be developed by
the Company violates or will violate any Contract with any Person or
infringe or will infringe any Intellectual Property Rights of any
Person. There are no pending or threatened proceedings, litigation or
other adverse claims affecting, or with respect to, any part of the
Intellectual Property Rights of the Company and, except as set forth in
Schedule 0, to the Knowledge of the Company, no Person is infringing any
Intellectual Property Right of the Company,
5.1.30.5 except for the license granted to Canco pursuant to that
certain Research License Agreement dated March 18, 1997 between the
Company and Canco, 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 Company. The Company has not conducted business
under any name other than its current corporate name;
5.1.31 Related Transactions. Except as set forth in Schedule 0 annexed hereto
and except for current unpaid salaries, the Company 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 Company or any Person not dealing at arm's-length with
any of such Persons has any indebtedness to the Company;
5.1.32 Compliance with Applicable Law. The Company has conducted and is
conducting its business in compliance with Applicable Law, and the
Company is not in breach of Applicable Law, including any securities
law;
5.1.33 Qualifications. The Company 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 Company has all Permits necessary for the
conduct of its business and such Permits are validly issued, in full
force and effect and the Company is in compliance therewith, and none of
such Permits will be affected by the transactions contemplated hereby;
- 16 -
5.1.34 Absence of Guarantees. Without limiting the generality of subsection 0
hereof and except for commitments disclosed in the Financial Statements
and in Schedule 0 annexed hereto, the Company 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 (whether accrued, absolute, contingent or
otherwise) or obligations of any Person;
5.1.35 Tax Matters.
5.1.35.1 Tax Returns required by Applicable Law to be filed by, or with
respect to the activities of the Company 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,
5.1.35.2 with respect to the Company: 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,
5.1.35.3 all Taxes shown on all Tax Returns for which the Company is
liable have been paid or accrued and adequately reserved on its Books
and Records and financial statements (including the Financial
Statements) of the Company. The Company 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),
5.1.35.4 none of the Tax Returns of the Company have ever been examined
or audited by any taxing Governmental Body at any time,
5.1.35.5 the Company has never entered into any closing or similar
agreement with any taxing Governmental Body,
5.1.35.6 in each jurisdiction in which the Company is paying or has
paid sales tax, sales tax audits have been conducted and completed
through the years shown on Schedule 0 annexed thereto,
5.1.35.7 copies of all Tax Returns, deficiencies, assessments and
notices from all taxing Governmental Bodies have been delivered to the
Purchasers,
5.1.35.8 the Company 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,
5.1.35.9 the Company 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,
5.1.35.10 the Company has not taken any action not in the ordinary
course of business that would have the effect of deferring any Tax
- 17 -
liability from any taxable period ending prior to the date hereof,
5.1.35.11 without limiting the generality of the foregoing, the Company
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 Company 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 Company 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,
5.1.35.12 the Company 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;
5.1.36 Accounts Receivable and Payable. Schedule 0 annexed hereto sets forth a
true and complete (i) trade accounts receivable listing of the Company
as of December 31, 1997 and (ii) accounts payable listing of the Company
as of December 31, 1997. The accounts receivable of the Company
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 in full when due
without any discount, set-off or counterclaim;
5.1.37 Accounts Receivable of the Company. 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;
5.1.38 No Broker. Without limiting the generality of subsection 0 hereof, none
of the directors of the Company or the Company has employed, nor is any
of them subject to any claim of, any broker, finder, consultant or other
intermediary in connection with any of the transactions contemplated by
this Agreement;
5.1.39 Accuracy of Information.
5.1.39.1 The Company has made or caused to be made reasonable inquiry
with respect to each covenant, agreement, obligation, representation and
warranty of the Company contained in this Agreement and any other
document or certificate referred to herein or furnished by the Company
to the Purchasers pursuant thereto, and none of the aforesaid covenants,
agreements, obligations, representations, warranties or documents or
certificates contains any untrue statement of a material fact or omits
to state a material fact necessary to make such covenant, agreement,
obligation, representation, warranty or other document or certificate
not misleading, and
5.1.39.2 to its Knowledge, there is no fact, condition or circumstance,
including without limitation, in connection with the Company's
Intellectual Property Rights and the equipment and the products
- 18 -
developed and/or manufactured by the Company, which (i) materially
adversely or in the future may (so far as the Company can now reasonably
foresee) materially adversely affect the business, operations,
properties, prospects, or condition of the Company or the ability of the
Company to perform its covenants, agreements and obligations under this
Agreement or (ii) relates to the business of the Company and might
reasonably be expected to deter a Purchaser from entering into this
Agreement or any other agreements entered into between the Purchasers
and the Company on the date hereof, save as disclosed in the Company's
prospectus dated December 15, 1997, a copy of which has been previously
delivered to each of the Purchasers.
5.2 Covenants of the Company. The Company hereby covenants as follows:
5.2.1 SEC Documents. As soon as practicable after the filing of any SEC
Documents, and in any event within twenty (20) days thereafter, the
Company will furnish each of the Purchasers with such SEC Documents;
5.2.2 Reservation of Stock. So long as any amount of principal remains
outstanding under any of the Debentures, the Company will at all times
reserve and keep available, solely for issuance and delivery upon the
exercise of the Put Right, all Preferred Shares issuable from time to
time upon such exercise and all Common Shares issuable upon the
conversion of such Preferred Shares;
5.2.3 Listing of Shares. Promptly after the issuance of the Common Shares
issuable upon the conversion of any of the Preferred Shares issuable to
any of the Purchasers pursuant to this Agreement, if the Company's
securities are publicly traded, the Company shall take all necessary
action to list such Common Shares, to the extent not already listed, on
the securities exchange or over-the-counter market where the Company's
securities are listed;
5.2.4 Regulation S. At the request of either of the Purchasers, the Company
shall use its best efforts to ensure the application of Regulation S
under the Securities Act to the issuance of the Common Shares issuable
upon the conversion of the Preferred Shares issued to such Purchaser
pursuant to this Agreement;
5.2.5 Notice and Information Rights. The Company shall from the date hereof
deliver to each Purchaser such information and notices as the Company is
required to deliver to the holders of Common Shares of the Company
pursuant to the Company's Amended and Restated Articles of Incorporation
dated March 19, 1997, as amended, or otherwise;
5.2.6 Declaration of Dividends. The Company shall, at least ninety (90) days
prior to the declaration of any dividend (other than a stock dividend),
advise each Purchaser of same in writing;
5.2.7 Conditions Precedent. Without limiting the provisions of this
Agreement, the Company shall use its best efforts to fulfil the
conditions precedent set forth in subsection 0 prior to any Closing.
5.2.8 Registration Statement. The Company hereby covenants and agrees to:
5.2.8.1 file, as soon as practicable after the written request of either of the
Purchasers, which request may be exercised at any time at the
- 19 -
Purchaser's entire discretion, a Registration Statement with the SEC
under the Securities Act on a form which is appropriate to register the
sale or the resale of the Registrable Shares;
5.2.8.2 use its best efforts, subject to receipt of necessary information from
the Purchasers owning such Registrable Shares, to cause such
Registration Statement to become effective, as that term is used in the
Securities Act, within 120 days of the Company's receipt of the written
request referred to in paragraph 0;
5.2.8.3 prepare and file with the SEC such amendments and supplements to such
Registration Statement and the prospectus used in connection therewith
as may be necessary to keep such Registration Statement effective until
the earlier to occur of (i) such time as all the Registrable Shares
have been sold pursuant thereto or otherwise, or (ii) the date on which
Purchasers who are not deemed to be "affiliates" of the Company as
defined in Rule 144 under the Securities Act are permitted to publicly
sell or resell such Registrable Shares under Rule 144(k) under the
Securities Act, as the same may be amended from time to time, or any
successor regulation;
5.2.8.4 furnish to the Purchasers with respect to the Registrable Shares
registered on the Registration Statement (and to each underwriter, if
any, of such Registrable Shares) such number of copies of prospectuses
in conformity with the requirements of the Securities Act as the
Purchasers may reasonably request, in order to facilitate the public
sale or other disposition of all or any of the Registrable Shares by
the Purchasers; provided, however, that the obligation of the Company
to deliver copies of prospectuses to the Purchasers shall be subject to
the receipt by the Company of reasonable assurances from the Purchasers
that the Purchasers will comply with the applicable provisions of the
Securities Act and of such other securities laws as may be applicable
in connection with any use of such prospectus;
5.2.8.5 file such documents as may be required of the Company for normal
securities law clearance for the sale or the resale of Registrable
Shares in such states of the United States as may be reasonably
requested by the Purchasers; provided, however, that the Company shall
not be required in connection with this paragraph 0 to qualify as a
foreign corporation or execute a general consent to service of process
in any jurisdiction; and
5.2.8.6 bear all expenses in connection with the procedures set forth in
paragraphs 0 through 0, but excluding underwriting discounts, selling
commissions and any expenses required by law to be borne by the
Purchasers.
5.2.9 Pre-Emptive Right. The Company hereby covenants and agrees that in the
event that any third party or group of third parties offers to invest
at least US $5,000,000 in the Company by way of subscription of Common
Shares or other securities convertible into or exchangeable for Common
Shares or Canco Shares which are ultimately convertible into or
exchangeable for Common Shares (the "Additional Securities"), by way of
one transaction or a series of related transactions, then each
Purchaser shall have preemptive rights with respect to the issue of
such Additional Securities, such that the Corporation shall not issue
any Additional Securities without: (i) in the event that the price per
- 20 -
Common Share of such Additional Securities (or the price per Common
Share into which such Additional Securities are convertible into or
exchangeable for Common Shares) is no greater than $2.00, offering to
each Purchaser the right to subscribe for its Proportionate Share of
the Additional Shares to be issued by the Corporation. or (ii) in the
event that the price per Common Share of such Additional Securities (or
the price per Common Share into which such Additional Securities are
convertible into or exchangeable for Common Shares) is greater than
$2.00, offering to each Purchaser the right to subscribe for its
Proportionate Share of 50% of the aggregate amount of Additional Shares
to be issued by the Corporation. The provisions of Section 5 of the
Shareholders Agreement shall apply, mutatis mutandis, to the issuance
of Additional Securities pursuant to this paragraph 0.
5.2.10 Adjustment to Put Rate. In the event of any issuance, or the
acceptance by the Company of any offer (a "Third-Party Offer") from any
third party or group of third parties in connection with any issuance
of Additional Securities at a price (the "Strike Price") per Common
Share (or, in the event that such Additional Securities are convertible
into or exchangeable for Common Shares, at a price per Common Share
into which such Additional Securities are convertible into or
exchangeable for Common Shares) that is greater than $2.00, then the
Put Rate in respect of any Debentures (the "Future Debentures") not yet
issued as of the date of such issuance (or as of the date of the
acceptance of such Third-Party Offer, as the case may be) shall be
automatically adjusted to provide that the Company shall issue to each
Purchaser exercising its Put Right, upon delivery by such Purchaser of
any of its Future Debentures, in consideration therefor, that number of
Preferred Shares as is equal to the number of shares obtained when
dividing (i) the principal amount then outstanding under such Future
Debenture(s) by (ii) the product obtained by multiplying the Strike
Price by 0.85 (subject to such product being no less than $2.00).
Notwithstanding the foregoing, in the event that the transactions
contemplated by the Third-Party Offer are not consummated within 90
Business Days of the date of the acceptance of such Third-Party Offer,
then the Put Rate in respect of the Future Debentures shall be
automatically re-adjusted to the Put Rate in effect immediately prior
to the date of the acceptance of such Third-Party Offer.
- 21 -
SECTION 6 - REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGEMENTS
OF THE PURCHASERS
6.1 Representation and Warranties. Each Purchaser hereby, severally and not
jointly and severally, represents and warrants to the Company as follows:
6.1.1 Investment. It is acquiring the right to acquire the Preferred Shares
as provided in this Agreement and the Common Shares issuable upon the
conversion of such Preferred Shares for investment for its own account
or for the account of the other Purchaser, and not with the view to, or
for resale in connection with, any distribution thereof other than to
the other Purchaser.
6.1.2 Title to Debentures. It is upon the date hereof the owner of record of
its Debenture(s) and shall be upon each Closing Date the owner (both
beneficially and of record) of its Debenture(s). It will have upon each
Closing Date good and marketable title to its Debenture(s) and the
absolute right, power and capacity to transfer and deliver its
Debenture(s) to the Company pursuant to this Agreement, free and clear
of all Charges.
6.1.3 Brokers or Finders. The Company 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 to each of the Purchasers.
6.2 Acknowledgements. Each Purchaser hereby makes the following
acknowledgements:
6.2.1 Registration. It understands that the right to acquire the Preferred
Shares as provided in this Agreement and the Common Shares issuable upon
the conversion of such Preferred Shares has not been, and will not be,
registered under the Securities Act or applicable state securities laws,
and is being extended to the Purchasers 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 paragraph 0.
6.2.2 Non-transferability. Subject to the Corporation's undertakings pursuant
to paragraph 0 hereof, it acknowledges that any resale of any of the
Preferred Shares and the Common Shares issuable upon the conversion of
such Preferred Shares 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.
6.2.3 Accredited Investor. It is an "accredited investor" within the meaning
of Rule 501 under the Securities Act.
- 22 -
SECTION 7 - GENERAL PROVISIONS
7.1 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
the State of New York between New York residents and performed entirely within
New York.
7.2 Survival. 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 the date hereof.
7.3 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.
7.4 Successors and Assigns. The provisions hereof shall enure to the
benefit of and be binding upon the parties hereto and their respective
successors, assigns, heirs, executors and administrators. Notwithstanding the
foregoing, the Company shall not be entitled to assign its rights hereunder.
The parties hereto hereby confirm that each transferee of Debentures shall
benefit from the Put Rights contemplated in this Agreement provided that the
transfer of such Debenture(s) was made in conformity with the terms thereof.
7.5 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 or more
arbitrators 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. Any
arbitration proceeding required pursuant to the terms hereof shall take place
in Montreal, Quebec and shall be conducted in both the English and French
language.
7.6 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 parties at the following addresses:
- 23 -
if to Sofinov: SOFINOV SOCIETE FINANCIERE D'INNOVATION INC.
0000 XxXxxx Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: The President
Telecopier: (000) 000-0000
if to Innovatech: SOCIETE INNOVATECH DU GRAND MONTREAL
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxxxx
Telecopier: (000) 000-0000
if to the Company: TECHNICAL MAINTENANCE 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: XXXX & XXXXXXX
Attorneys At Law
000 Xxxxx Xxxxxx
Xxx Xxxx, X.X.
00000, X.X.X.
Attention: Xxxxx Xxxx
Telecopier: (000) 000-0000
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with a copy
in all cases to: GUY & XXXXXXX
000 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxxx Xxxxxxx
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 parties by
registered mail, receipt return requested.
7.7 Time of the Essence. Time shall be of the essence in this Agreement.
7.8 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.
7.9 Entire Agreement; Amendment. This Agreement and the Shareholders
Agreement and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. In the event that any provision of
this Agreement conflicts with any provision of the Shareholders Agreement, the
former provision shall prevail. Except as expressly provided herein, neither
this Agreement nor any term hereof may be amended, other than by a written
instrument signed by all the parties hereto.
7.10 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.
7.11 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.
7.12 Waiver. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any party, shall be
cumulative and not alternative.
7.13 Preamble. The preamble hereof shall form an integral part of this
Agreement.
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7.14 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.
7.15 Severability. In the event that any provision of this Agreement becomes
or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.
7.16 Survival. This Agreement shall terminate with respect to each Purchaser
upon the exercise by such Purchaser of its Put Right.
7.17 Language. The parties hereto state their express wish that Agreement as
well as all documentation contemplated hereby or pertaining hereto or to be
executed in connection herewith be also drawn up in English; les parties
expriment leur xxxxx explicite a l'effet que cette convention de meme que tous
documents envisages par les presentes ou y ayant trait ou qui seront signes
relativement aux presentes soient aussi rediges en anglais.
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
SOCIETE INNOVATECH DU GRAND MONTREAL
Per: /s/Xxxxxx Xxxxxxx
------------------------------
Xxxxxx Xxxxxxx
TECHNICAL MAINTENANCE CORPORATION
Per: /s/Xxxx Xxxxxxxxxxx
------------------------------
Xxxx Xxxxxxxxxxx
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INTERVENTION
THE UNDERSIGNED INTERVENES TO THESE PRESENTS and agrees to be bound by
the provisions of paragraph 0 of this Agreement such that in the event that any
Additional Securities are comprised of Canco Shares or securities which are
convertible into or exchangeable for Canco Shares, the undersigned hereby
agrees that the provisions of the said paragraph 0 shall apply to it, mutatis
mutandis, with respect to such Additional Securities.
Montreal, this 11th day of February, 1998
TOUCHTUNES DIGITAL JUKEBOX INC.
Per: /s/Xxxx Xxxxxxxxxxx
------------------------------
Xxxx Xxxxxxxxxxx
Debenture Put Right Agreement
Technical Maintenance Corporation
SCHEDULE 0
NOTICE OF EXERCISE
In accordance with the terms of that certain Debenture Put Right
Agreement, dated February 11, 1998, by and among Technical Maintenance
Corporation (the "Company") and the Purchasers (as defined therein) (the "Put
Right Agreement"), notice is hereby given pursuant to subsection 4.1 of the Put
Right Agreement that the undersigned Purchaser elects to exchange, on the date
hereof, US$ ___________ of the outstanding capital of its Debenture (as
defined in the Put Right Agreement) issued on ______________ , for the number
of Preferred Shares (as defined in the Put Right Agreement) calculated pursuant
to the relevant provisions of the Put Right Agreement.
Date: _____________,_______.
PURCHASER
Per: _________________________________
Print Name: __________________________
Title: _______________________________
