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EXHIBIT 4.1
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DISCREET LOGIC INC.
COMMON SHARES PURCHASE AGREEMENT
This Common Shares Purchase Agreement (this "Agreement") is made and
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entered into as of March 4, 1998, by and between DISCREET LOGIC INC., a company
incorporated under the laws of Quebec (the "Company"), and INTEL CORPORATION, a
Delaware corporation (the "Investor").
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R E C I T A L
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WHEREAS, the Company desires to sell to the Investor, and the Investor
desires to purchase from the Company, the Company's Common Shares, without par
value ("Common Shares"), on the terms and conditions set forth in this
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Agreement;
NOW, THEREFORE, in consideration of the foregoing recital, the mutual
promises hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO PURCHASE AND SELL STOCK.
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1.1 Authorization. As of the Closing (as defined below), the
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Company's Board of Directors will have authorized the issuance, pursuant to the
terms and conditions of this Agreement, of 645,000 (the "Purchased Shares") of
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the Company's Common Shares.
1.2 Agreement to Purchase and Sell Common Shares. The Company hereby
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agrees to sell to the Investor at the Closing, and the Investor agrees to
purchase from the Company at the Closing, the Purchased Shares at a price per
share equal to the Per Share Purchase Price.
1.3 Per Share Purchase Price. The "Per Share Purchase Price" shall
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be $21.00.
2. CLOSING
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2.1 The Closing. The purchase and sale of the Purchased Shares will
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take place at the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 0000 Xxxx Xxxx Xxxx,
Xxxx Xxxx, Xxxxxxxxxx 00000, at 10:00 a.m. California time, within three (3)
business days after the conditions set forth in Articles 5 and 6 have been
satisfied, or at such other time and place as the Company and the Investor
mutually agree upon (which time and place are referred to in this Agreement as
the "Closing"). At the Closing, the Company will deliver to the Investor a
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certificate representing the Purchased Shares, against delivery to the
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Company by the Investor of the full purchase price of the Purchased Shares, paid
by wire transfer of funds to the Company.
3. REPRESENTATLONS AND WARRANTIES OF THE COMPANY. The Company hereby
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represents and warrants to the Investor that the statements in this Section 3
are true and correct, except as set forth in the Disclosure Letter from the
Company dated as of the date hereof (the "Disclosure Letter").
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3.1 Organization, Good Standing and Qualification. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of the Province of Quebec and has all corporate power and authority required to
(a) carry on its business as presently conducted, and (b) enter into this
Agreement, the Investor Rights Agreement (as defined in Section 5.7), and to
consummate the transactions contemplated hereby and thereby. The Company is
qualified to do business and is in good standing in each jurisdiction in which
the failure to so qualify would have a Material Adverse Effect. As used in this
Agreement, "Material Adverse Effect" means a material adverse effect on, or a
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material adverse change in, the business, operations, financial condition,
results of operations, assets or liabilities of the Company.
3.2 Capitalization. As of the date hereof, the capitalization of the
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Company is as follows:
(a) Preferred Shares. An unlimited number of authorized Preferred
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Shares, without par value per share (the "Preferred Shares"), none of which is
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issued or outstanding.
(b) Common Shares. As of March 3, 1998, an unlimited number of
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authorized Common Shares, without par value, of which 28,899,261 shares are
issued and outstanding. All of such outstanding shares are validly issued,
fully paid and non-assessable. No such outstanding shares were issued in
violation of any preemptive right.
(c) Options, Warrants, Reserved Shares. Except for the plans set
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forth in the SEC Documents (as defined below) (the "Plans"), there are not
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outstanding any options, warrants, rights (including conversion or preemptive
rights) or agreements for the purchase or acquisition from the Company of any
shares of its capital stock or any securities convertible into or ultimately
exchangeable or exercisable for any shares of the Company's capital stock.
Except for any stock repurchase rights of the Company under the Plans, no shares
of the Company's outstanding capital stock, or stock issuable upon exercise,
conversion or exchange of any outstanding options, warrants or rights, or other
stock issuable by the Company, are subject to any rights of first refusal or
other rights to purchase such stock (whether in favor of the Company or any
other person), pursuant to any agreement, commitment or other obligation of the
Company.
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3.3 Subsidiaries. The Company does not presently own or control,
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directly or indirectly, any interest in any other corporation, partnership,
limited liability company, trust, joint venture, association or other entity.
3.4 Due Authorization. All corporate action on the part of the
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Company, its officers, directors and shareholders necessary for the
authorization, execution, delivery of, and the performance of all obligations of
the Company under, this Agreement, the Investor Rights Agreement (as defined
below), and the authorization, issuance, reservation for issuance and delivery
of all of the Purchased Shares being sold under this Agreement has been taken or
will be taken prior to the Closing, and this Agreement constitutes, and the
Investor Rights Agreement when executed, will constitute, valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as may be limited by (a)
applicable bankruptcy, insolvency, reorganization or others laws of general
application relating to or affecting the enforcement of creditors' rights
generally, (b) the effect of rules of law governing the availability of
equitable remedies and (c) the fact that any indemnification or contribution
provision contained in the Investor Rights Agreement or this Agreement may be
unenforceable insofar as the enforceability of such provision may be sought
under Canadian or United States federal, provincial or state securities laws.
3.5 Valid Issuance of Stock.
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(a) The Purchased Shares, when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration provided for
herein, will be duly and validly issued, fully paid and nonassessable.
(b) Based in part on the representations made by the investors in
Section 4 hereof, the Purchased Shares will be issued in compliance with the
registration and prospectus delivery requirements of the Securities Act of 1933,
as amended (the "1933 Act"), or in compliance with applicable exemptions
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therefrom, and the registration and qualification requirements of all applicable
securities laws of Canada, the Province of Quebec and the state of California .
3.6 Governmental Consents. No consent, approval, order or
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authorization of, or registration, qualification, designation, declaration or
filing with, any Canadian or United States federal, provincial, state or local
governmental authority on the part of the Company is required in connection with
the consummation of the transactions contemplated by this Agreement, except for
the filing of such qualifications or filings under the 1933 Act and the
regulations thereunder under NASDAQ national market rules and all applicable
Canadian or United States provincial and state securities laws as may be
required in connection with the transactions contemplated by this Agreement.
All such qualifications will be effective on the Closing and all such filings
have been or will be made within the time prescribed by law.
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3.7 Non-Contravention. The execution, delivery and performance of
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this Agreement and the Investor Rights Agreement by the Company, and the
consummation by the Company of the transactions contemplated hereby and thereby,
do not and will not (i) contravene or conflict with the Articles of
Incorporation or Bylaws of the Company; (ii) constitute a material violation of
any provision of any Canadian or United States federal, provincial, state, local
or, to the Company's knowledge, foreign (non-Canadian or non-United States) law
binding upon or applicable to the Company; or (iii) constitute a default or
require any consent under, give rise to any right of termination, cancellation
or acceleration of, or to a loss of any benefit to which the Company is entitled
under, or result in the creation or imposition of any lien, claim or encumbrance
on any assets of the Company under, any contract to which the Company is a party
or any permit, license or similar right relating to the Company or by which the
Company may be bound or affected in such a manner as would have Material Adverse
Effect.
3.8 Litigation. Except as disclosed in the SEC documents, there is
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no action, suit, proceeding, claim, arbitration or investigation ("Action")
pending: (a) against the Company, its activities, properties or assets or, to
the best of the Company's knowledge, against any officer, director or employee
of the Company in connection with such officer's, director's or employee's
relationship with, or actions taken on behalf of, the Company which is
reasonably likely to have a Material Adverse Effect, (b) that seeks to prevent,
enjoin, alter or delay the transactions contemplated by this Agreement or the
Investor Rights Agreement. Except as individually or in the aggregate is not
reasonably likely to have a Material Adverse Effect, (i) there is no Action
pending or, to the best of the Company's knowledge, threatened, or any basis
therefor, relating to the current or prior employment of any of the Company's
current or former employees or consultants, their use in connection with the
Company's business of any information, technology or techniques allegedly
proprietary to any of their former employers, clients or other parties, or their
obligations under any agreements with prior employers, clients or other parties,
and (ii) the Company is not a party to or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality. No Action by the Company is currently pending nor does the
Company have a current intent to initiate any Action which is reasonably likely
to have a Material Adverse Effect.
3.9 Intellectual Property.
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(a) Ownership or Right to Use. To the best of the Company's
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knowledge, the Company has title to and owns, or is licensed or otherwise
possesses legally enforceable rights to use, all patents or patent applications,
software, know-how, registered or unregistered trademarks and service marks and
any applications therefor, registered or unregistered copyrights, trade names,
and any applications therefor, trade secrets or other confidential or
proprietary information ("Intellectual Property") necessary to enable the
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Company to carry on its business as currently conducted or as presently proposed
to be conducted, except where any deficiency therein would not have a Material
Adverse Effect.
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(b) Licenses; Other Agreements. The Company is not currently subject
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to any exclusive licenses (whether such exclusivity is temporary or permanent)
to any material portion of the Intellectual Property of the Company. To the
best of the Company's knowledge, there are not outstanding any licenses or
agreements of any kind relating to any Intellectual Property of the Company,
except for agreements with OEM's and other customers of the Company entered into
in the ordinary course of the Company's business. The Company is not obligated
to pay any royalties or other payments to third parties with respect to the
marketing, sale, distribution, manufacture, license or use of any Intellectual
Property, except as the Company may be so obligated in the ordinary course of
its business or as disclosed in the Company's SEC Documents (as defined below)
or where the failure to make such payments would not have a Material Adverse
Effect.
(c) No Infringement. To the best of the Company's knowledge, the
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Company has not violated or infringed and is not currently violating or
infringing, and the Company has not received any communications alleging that
the Company (or any of its employees or consultants) has violated or infringed,
any Intellectual Property of any other person or entity, to the extent that any
such violation or infringement, either individually or together with all other
such violations and infringements, would have a Material Adverse Effect.
(d) Employees and Consultants. To the best of the Company's
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knowledge, no employee of or consultant to the Company is in default under any
term of any employment contract, agreement or arrangement relating to
Intellectual Property of the Company or any non-competition arrangement, other
contract, or any restrictive covenant relating to the Intellectual Property of
the Company, which default would have a Material Adverse Effect.
3.10 Compliance with Law and Charter Documents. The Company is not
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in violation or default of any provisions of its Articles of Incorporation or
Bylaws, both as amended, and except for any violations that would not, either
individually or in the aggregate, have a Material Adverse Effect. The Company
has complied and is in compliance with all applicable statutes, laws, and
regulations and executive orders of the United States of America, Canada and all
states, provinces, and to the Company's knowledge foreign countries (non-
Canadian or non-United States) and other governmental bodies and agencies having
jurisdiction over the Company's business or properties except where such
noncompliance would not, either individually or in the aggregate, have a
Material Adverse Effect.
3.11 Registration Rights. Except as provided in the Investor Rights
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Agreement or as described in, or filed as exhibits to, the SEC Documents
effective upon the Closing, the Company is not currently subject to any grant or
agreement to grant to any person or entity any rights (including piggyback
registration rights) to have any securities of the Company registered with the
United States Securities and Exchange Commission ("SEC") or any other
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governmental authority.
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3.12 SEC Documents.
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(a) The Company has furnished to the Investor prior to the date hereof
copies of its Annual Report on Form 10-K for the fiscal year ended June 30, 1997
("Form 10-K"), and all other registration statements, reports and proxy
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statements filed by the Company with the Securities and Exchange Commission
("Commission") on or after June 30, 1997 (the Form 10-K and such registration
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statements, reports and proxy statements, are collectively referred to herein as
the "SEC Documents"). Each of the SEC Documents, as of the respective date
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thereof, did not, and each of the registration statements, reports and proxy
statements filed by the Company with the Commission after the date hereof and
prior to the Closing will not, as of the date thereof, contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except as may have been corrected in a
subsequent SEC Document. The Company is not a party to any material contract,
agreement or other arrangement which was required to have been filed as an
exhibit to the SEC Documents that is not so filed.
(b) The Company has provided the Investor with its audited financial
statements (the "Audited Financial Statements") for the fiscal year ended June
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30, 1997 (the "Balance Sheet Date"). Since July 1, 1997 , the Company has duly
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filed with the Commission all registration statements, reports and proxy
statements required to be filed by it under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the 1933 Act. The audited and unaudited
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consolidated financial statements of the Company included in the SEC Documents
filed prior to the date hereof fairly present, in conformity with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
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(except as may be indicated in the notes thereto), the consolidated financial
position of the Company and its consolidated subsidiaries as at the date thereof
and the consolidated results of their operations and cash flows for the periods
then ended (subject to normal year and audit adjustments in the case of
unaudited interim financial statements).
(c) Except as and to the extent reflected or reserved against in the
Company's Audited Financial Statements (including the notes thereto), the
Company has no material liabilities (whether accrued or unaccrued, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined or determinable) other than: (i)
liabilities incurred in the ordinary course of business since the Balance Sheet
Date that are consistent with the Company's past practices, (ii) liabilities
with respect to agreements to which the Investor is a party, and (iii) other
Liabilities that either individually or in the aggregate, would not result in a
Material Adverse Effect.
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3.13 Absence of Certain Changes Since Balance Sheet Date. Since the
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Balance Sheet Date, the business and operations of the Company have been
conducted in all material respects in the ordinary course consistent with past
practice and there has not been:
(a) any declaration, setting aside or payment of any dividend or other
distribution of the assets of the Company with respect to any shares of capital
stock of the Company, or any repurchase, redemption or other acquisition by the
Company or any subsidiary of the Company of any outstanding shares of the
Company's capital stock;
(b) any damage, destruction or loss, whether or not covered by
insurance, except for such occurrences that have not resulted, and are not
expected to result, in a Material Adverse Effect;
(c) any waiver by the Company of a valuable right or of a material
debt owed to it, except for such waivers that have not resulted, and are not
expected to result, in a Material Adverse Effect;
(d) any material change or amendment to, or any waiver of any material
rights under, a material contract or arrangement by which the Company or any of
its assets or properties is bound or subject, except for changes, amendments, or
waivers that are expressly provided for or disclosed in this Agreement or that
have not resulted, and are not expected to result, in a Material Adverse Effect;
(e) any change by the Company in its accounting principles, methods or
practices or in the manner it keeps its accounting books and records, except any
such change required by a change in GAAP; and
(f) any other event or condition of any character, except for such
events and conditions that have not resulted, and are not expected to result, in
a Material Adverse Effect.
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3.14 Tax Matters. The Company and each of its subsidiaries have
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filed all material tax returns required to be filed with respect to any Canadian
or United States federal, provincial, state, local or other taxes (collectively,
"Taxes"), which returns are true and correct in all material respects, and
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neither the Company nor any of its subsidiaries is in default in the payment of
any material amount of Taxes, including penalties and interest, assessments,
fees and other charges, shown thereon due or otherwise assessed, other than
those being contested in good faith and for which adequate reserves have been
provided or those currently payable without interest which were payable pursuant
to said returns or any assessments with respect thereto. The provisions for
taxes in the audited and unaudited financial statements included in the SEC
Documents have determined in accordance with GAAP.
3.15 Real Property Holding Corporation Status. Since its inception,
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the company has not been a "United States real property holding corporation," as
defined in Section 897(c)(2) of the United States Internal Revenue Code of 1986,
as amended, and in Section 1.897-2(b) of the Treasury Regulations issued
thereunder (the "Regulations"), and the Company has filed with the Internal
Revenue Service all statements, if any, with its United States income tax
returns which are required under Section 1.897-2(h) of the Regulations.
3.16 Full Disclosure. This Agreement, the Disclosure Letter and the
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SEC documents with respect to the business, operations, assets, results of
operations and financial condition of the Company, and the transactions
contemplated by this Agreement and the Investor Rights Agreement do not contain
any untrue statement of material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE INVESTOR.
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The Investor hereby represents and warrants to the Company, and agrees that:
4.1 Authorization. This Agreement and the Investor Rights Agreement
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have been duly authorized by all necessary corporate action on the part of the
Investor. This Agreement and the Investor Rights Agreement constitute the
Investor's valid and legally binding obligations, enforceable in accordance with
their respective terms, except as may be limited by (a) applicable bankruptcy,
insolvency, reorganization or other laws of general application relating to or
affecting the enforcement of creditors' rights generally, (b) the effect of
rules of law governing the availability of equitable remedies, and (c) the fact
that any indemnification or contribution provision contained in the Investor
Rights Agreement or this Agreement may be unenforceable insofar as the
enforceability of such provision may be sought under Canadian or United States
federal, provincial or state securities laws. The Investor has full corporate
power and authority to enter into this Agreement and the Investor Rights
Agreement.
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4.2 Purchase for Own Account. The Purchased Shares are being
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acquired for investment for the Investors own account, not as a nominee or
agent, and not with a view to the public resale or distribution thereof within
the meaning of the 1933 Act, and the Investor has no present intention of
selling, granting any participation in, or otherwise distributing the same. The
Investor also represents that it has not been formed for the specific purpose of
acquiring the Purchased Shares.
4.3 Disclosure of Information. The Investor has received or has had
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full access to all the information it considers necessary or appropriate to make
an informed investment decision with respect to the Purchased Shares to be
purchased by the Investor under this Agreement. The Investor further has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Purchased Shares and to obtain
additional information (to the extent the Company possessed such information or
could acquire it without unreasonable effort or expense) necessary to verify any
information furnished to the investor or to which the Investor had access. The
foregoing, however, does not in any way limit or modify the representations and
warranties made by the Company in Article 3.
4.4 Investment Experience. The Investor understands that the
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purchase of the Purchased Shares involves substantial risk. The Investor (a)
has experience as an investor in securities of companies and acknowledges that
it is able to fend for itself, can bear the economic risk of its investment in
the Purchased Shares and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of this
investment in the Purchased Shares and protecting its own interests in
connection with this investment and/or (b) has a preexisting personal or
business relationship with the Company and certain of its officers, directors or
controlling persons of a nature and duration that enables the Investor to be
aware of the character, business acumen and financial circumstances of such
persons.
4.5 Accredited Investor Status. The Investor is an "accredited
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investor" within the meaning of Regulation D promulgated under the 0000 Xxx.
4.6 Restricted Securities. The Investor understands that the
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Purchased Shares to be purchased by the Investor hereunder are characterized as
"restricted securities" under the 1933 Act inasmuch as they are being acquired
from the Company in a transaction not involving a public offering and that under
the 1933 Act and applicable regulations thereunder such securities may be resold
without registration under the 1933 Act only in certain limited circumstances.
The Investor is familiar with Rule 144 of the SEC, as presently in effect, and
understands the resale limitations imposed thereby and by the 1933 Act. The
Investor understands that the Company is under no obligation to register any of
the securities sold hereunder except as provided in the Investor Rights
Agreement.
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4.7 Further Limitations on Disposition. Without in any way limiting
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the representations set forth above, the Investor further agrees not to make any
disposition of all or any portion of the Purchased Shares unless and until:
(a) there is then in effect a registration statement under the 1933
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(b) the Investor has notified the Company of the proposed disposition
and has furnished the Company with a statement of the circumstances surrounding
the proposed disposition, and the Investor has furnished the Company, at the
expense of the Investor or its transferee, with an opinion of counsel,
reasonably satisfactory to the Company, that such disposition will not require
registration of such securities under the 1933 Act.
Notwithstanding the provisions of paragraphs (a) and (b) of this Section 4.7, no
such registration statement will be required for any transfer of any Purchased
Shares in compliance with SEC Rule 144, Rule 144A or Rule 145(d), or if such
transfer otherwise is exempt, in the reasonable opinion of the Company's legal
counsel, from the registration requirements of the 1933 Act. The Investor
agrees that, without the prior written consent of the Company, it shall not sell
any of the Purchased Shares during the period from the date of this Agreement
through two (2) business days after the Company has announced financial results
for the quarter and year ended June 30, 1998.
4.8 Legends. Certificates evidencing the Purchased Shares will bear
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each of the legends set forth below:
(a) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS
OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
(b) THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS SPECIFIED IN A CERTAIN INVESTOR RIGHTS AGREEMENT BETWEEN THE
COMPANY AND THE ORIGINAL HOLDER OF SUCH SHARES DATED AS OF MARCH 3, 1998, A COPY
OF WHICH IS AVAILABLE FOR EXAMINATION AT THE ISSUER'S PRINCIPAL OFFICE.
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(c) Any Legends required by any applicable state securities laws.
The Legend set forth in Section 4.8(a) hereof will be removed by the Company
from any certificate evidencing Purchased Shares upon delivery to the Company of
an opinion by counsel, reasonably satisfactory to the Company, that a
registration statement under the 1933 Act is at that time in effect with respect
to the legended security or that such security can be freely transferred in a
public sale without such a registration statement being in effect and that such
transfer will not jeopardize the exemption or exemptions from registration
pursuant to which the Company issued the Purchased Shares.
5. CONDITIONS TO THE INVESTOR'S OBLIGATIONS AT CLOSING. The obligations
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of the Investor under Sections l and 2 of this Agreement are subject to the
fulfillment or waiver, on or before the Closing, of each of the following
conditions:
5.1 Representations and Warranties True. Each of the representations
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and warranties of the Company contained in Section 3 will be true and correct on
and as of the date hereof and on and as of the date of the Closing, except as
set forth in the Disclosure Letter, as amended through the Closing, with the
same effect as though such representations and warranties had been made as of
the Closing.
5.2 Performance. The Company will have performed and complied with
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all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing and
will have obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein.
5.3 Compliance Certificate. The Company will have delivered to the
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Investor at the Closing a certificate signed on its behalf by its Chief
Executive Officer or Chief Financial Officer certifying that the conditions
specified in Sections 5.1 and 5.2 hereof have been fulfilled.
5.4 Securities Exemptions. The offer and sale of the Purchased
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Shares to the Investor pursuant to this Agreement will be exempt from the
registration requirements of the 1933 Act and the registration and/or
qualification requirements of all applicable Canadian, provincial and state
securities laws.
5.5 Proceedings and Documents. All corporate and other proceedings
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in connection with the transactions contemplated at the Closing and all
documents incident thereto will be reasonably satisfactory in form and substance
to the Investor, and the Investor will have received all such counterpart
originals and certified or other copies
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of such documents as it may reasonably request. Such documents shall include
(but not be limited to) the following:
(a) Certified Charter Documents. A copy of (i) the Articles of
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Incorporation and (ii) the Bylaws of the Company (each as amended through the
date of the Closing) certified by the Secretary of the Company as true and
correct copies thereof as of the Closing.
(b) Board Resolutions. A copy, certified by the Secretary of the
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Company, of the resolutions of the Board of Directors of the Company providing
for the approval of this Agreement and the Investor Rights Agreement and the
issuance of the Purchased Shares and the other matters contemplated hereby.
5.6 Opinion of Company Counsel. The Investor will have received an
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opinion on behalf of the Company, dated as of the date of the Closing, from
counsel to the Company, , in form and substance reasonably satisfactory to the
Investor.
5.7 Investor Rights Agreement. The Company will have executed and
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delivered the Investor Rights Agreement substantially in the form attached to
this Agreement as Exhibit A (the "Investor Rights Agreement").
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5.8 No Material Adverse Effect. Between the date hereof and the
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Closing, there shall not have occurred any Material Adverse Effect.
6. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations of
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the Company to the Investor under this Agreement are subject to the fulfillment
or waiver on or before the Closing, of each of the following conditions:
6.1 Representations and Warranties True. The representations and
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warranties of the Investor contained in Section 4 will be true and correct on
and as of the date hereof and on and as of the date of the Closing with the same
effect as though such representations and warranties had been made as of the
Closing.
6.2 Payment of Purchase Price. The Investor will have delivered to
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the Company the full purchase price of the Purchased Shares as specified in
Section 1.2.
6.3 Securities Exemptions. The offer and sale of the Purchased
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Shares to the Investor pursuant to this Agreement will be exempt from the
registration requirements of the 1933 Act and the registration and/or
qualification requirements of all applicable Canadian, provincial and state
securities laws.
6.4 Proceedings and Documents. All corporate and other proceedings
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in connection with the transactions contemplated at the Closing and all
documents incident thereto will be reasonably satisfactory in form and substance
to the Company and to the Company's legal counsel, and the Company will have
received all such counterpart originals and certified or other copies of such
documents as it may reasonably request.
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6.5 Investor Rights Agreement. The Investor will have executed and
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delivered the Investor Rights Agreement.
7. INDEMNIFICATION.
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7.1 Agreement to Indemnify.
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(a) Company Indemnity. The Investor, its Affiliates, and each officer
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and director, of any of the foregoing (collectively, the "Investor Indemnitees")
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shall each be indemnified and held harmless to the extent set forth in this
Section 7 by the Company with respect to any and all Damages (as defined below)
incurred by any Investor Indemnitee as a proximate result of any inaccuracy or
misrepresentation in, or breach of, any representation, warranty, covenant or
agreement made by the Company in this Agreement or the Investor Rights Agreement
(including any Exhibits and Schedules hereto).
(b) Investor Indemnity. The Company, its respective Affiliates, and
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each officer and director, of any of the foregoing (collectively, the "Company
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Indemnitees") shall each be indemnified and held harmless to the extent set
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forth in this Section 7, by the Investor, in respect of any and all Damages
incurred by any Company Indemnitee as a result of any inaccuracy or
misrepresentation in, or breach of, any representation, warranty, covenant or
agreement made by the Investor in this Agreement or the Investor Rights
Agreement.
(c) Equitable Relief. Nothing set forth in this Section 7 shall be
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deemed to prohibit or limit any Investor Indemnitee's or Company Indemnitee's
right at any time before, on or after the Closing Date, to seek injunctive or
other equitable relief for the failure of any Indemnifying Party to perform or
comply with any covenant or agreement contained herein.
7.2 Survival. All representations and warranties of the Investor and
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the Company contained herein or in the Investor Rights Agreement, and all claims
of any Investor Indemnitee or Company Indemnitee in respect of any inaccuracy or
misrepresentation in or breach thereof, shall survive the Closing until 18
months from the date of this Agreement, regardless of whether the applicable
statute of limitations, including extensions thereof, may expire (except to the
extent any such covenant or agreement shall expire by its terms). All covenants
and agreements of the Investor and the Company contained herein or in the
Investor Rights Agreement shall survive the Closing in perpetuity (except to the
extent any such covenant or agreement shall expire by its terms). All claims of
any Investor Indemnitee or Company Indemnitee in respect of any breach of such
covenants or agreements shall survive the Closing until the expiration of 18
months following the non-breaching party's obtaining actual knowledge of such
breach.
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7.3 Claims for Indemnification. If any Investor Indemnitee or
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Company Indemnitee (an "Indemnitee") shall believe that such Indemnitee is
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entitled to indemnification pursuant to this Section 7 in respect of any
Damages, such Indemnitee shall give the appropriate Indemnifying Party (which
for purposes hereof, in the case of an Investor Indemnitee, means the Company,
and in the case of a Company Indemnitee, means the Investor) prompt written
notice thereof. Any such notice shall set forth in reasonable detail and to the
extent then known the basis for such claim for indemnification. The failure of
such Indemnitee to give notice of any claim for indemnification promptly shall
not adversely affect such Indemnitee's right to indemnity hereunder except to
the extent that such failure adversely affects the right of the Indemnifying
Party to assert any reasonable defense to such claim. Each such claim for
indemnity shall expressly state that the Indemnifying Party shall have only the
twenty (20) business day period referred to in the next sentence to dispute or
deny such claim. The Indemnifying Party shall have twenty (20) business days
following its receipt of such notice either (a) to acquiesce in such claim by
giving such Indemnitee written notice of such acquiescence or (b) to object to
the claim by giving such Indemnitee written notice of the objection. If
Indemnifying Party does not object thereto within such twenty (20) business day
period, such Indemnitee shall be entitled to be indemnified for all Damages
reasonably and proximately incurred by such Indemnitee in respect of such claim.
If the Indemnifying Party objects to such claim in a timely manner, the senior
management of the Company and the Investor shall meet to attempt to resolve such
dispute. If the dispute cannot be resolved by the senior management either
party may make a written demand for formal dispute resolution and specify
therein the scope of the dispute. Within thirty days after such written
notification, the parties agree to meet for one day with an impartial mediator
and consider dispute resolution alternatives other than litigation. If an
alternative method of dispute resolution is not agreed upon within thirty days
after the one day mediation, either party may begin litigation proceedings.
Nothing in this section shall be deemed to require arbitration.
7.4 Defense of Claims. In connection with any claim that may give
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rise to indemnity under this Section 7 resulting from or arising out of any
claim or Proceeding against an Indemnitee by a person or entity that is not a
party hereto, the Indemnifying Party may but shall not be obligated to (unless
such Indemnitee elects not to seek indemnity hereunder for such claim), upon
written notice to the relevant Indemnitee, assume the defense of any such claim
or proceeding if the Indemnifying Party with respect to such claim or Proceeding
acknowledges to the Indemnitee the Indemnitee's right to indemnity pursuant
hereto to the extent provided herein (as such claim may have been modified
through written agreement of the parties or arbitration hereunder) and provides
assurances, satisfactory to such Indemnitee, that the Indemnifying Party will be
financially able to satisfy such claim to the extent provided herein if such
claim or Proceeding is decided adversely; provided, however, that nothing set
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forth herein shall be deemed to require the Indemnifying Party to waive any
crossclaims or counterclaims the Indemnifying Party may have against the
Indemnified Party for damages. The Indemnified Party shall be entitled to
retain separate counsel, reasonably acceptable to the Indemnifying Party, if the
Indemnified Counsel shall
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determine, upon the written advice of counsel, that an actual or potential
conflict of interest exists between the Indemnifying Party and the Indemnified
Party in connection with such Proceeding. The Indemnifying Party shall be
obligated to pay the reasonable fees and expenses of such separate counsel to
the extent the Indemnified Party is entitled to indemnification by the
Indemnifying Party with respect to such claim or Proceeding under this Section
7.4. If the Indemnifying Party assumes the defense of any such claim or
Proceeding, the Indemnifying Party shall select counsel reasonably acceptable to
such Indemnitee to conduct the defense of such claim or Proceeding, shall take
all steps necessary in the defense or settlement thereof and shall at all times
diligently and promptly pursue the resolution thereof. If the Indemnifying Party
shall have assumed the defense of any claim or Proceeding in accordance with
this Section 7.4, the Indemnifying Party shall be authorized to consent to a
settlement of, or the entry of any judgment arising from, any such claim or
Proceeding, with the prior written consent of such Indemnitee, not to be
unreasonably withheld; provided, however, that the Indemnifying Party shall
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pay or cause to be paid all amounts arising out of such settlement or judgment
concurrently with the effectiveness thereof; provided, further, that the
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Indemnifying Party shall not be authorized to encumber any of the assets of any
Indemnitee or to agree to any restriction that would apply to any Indemnitee or
to its conduct of business; and provided, further, that a condition to any such
settlement shall be a complete release of such Indemnitee and its Affiliates,
directors, officers, employees and agents with respect to such claim, including
any reasonably foreseeable collateral consequences thereof. Such Indemnitee
shall be entitled to participate in (but not control) the defense of any such
action, with its own counsel and at its own expense. Each Indemnitee shall, and
shall cause each of its Affiliates, directors, officers, employees and agents
to, cooperate fully with the Indemnifying Party in the defense of any claim or
Proceeding being defended by the Indemnifying Party pursuant to this Section
7.4. If the Indemnifying Party does not assume the defense of any claim or
Proceeding resulting therefrom in accordance with the terms of this Section 7.4,
such Indemnitee may defend against such claim or Proceeding in such manner as it
may deem appropriate, including settling such claim or proceeding after giving
notice of the same to the Indemnifying Party, on such terms as such Indemnitee
may deem appropriate. If any Indemnifying Party seeks to question the manner in
which such Indemnitee defended such claim or Proceeding or the amount of or
nature of any such settlement, such Indemnifying Party shall have the burden to
prove by a preponderance of the evidence that such Indemnitee did not defend
such claim or Proceeding in a reasonably prudent manner.
7.5 Certain Definitions. As used in this Section 7, (a) "Affiliate"
------------------- ---------
means, with respect to any person or entity, any person or entity directly or
indirectly controlling, controlled by or under direct or indirect common control
with such other person or entity; (b) "Damages" means all damages, costs,
-------
expenses, or amounts paid in settlement to third parties, including (1) interest
on cash disbursements in respect of any of the foregoing at the prime rate of
Bank of America, NT & SA, as in effect from time to time, compounded quarterly,
from the date each such cash disbursement is made until the date the party
incurring such cash disbursement shall have been indemnified in respect thereof,
and (2) reasonable out-of-pocket costs, fees and expenses (including reasonable
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costs, fees and expenses of attorneys, accountants and other agents of, or other
parties retained by, such party), and (c) "Proceeding" means any action, suit,
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hearing, arbitration, proceeding (public or private) or investigation that is
brought or initiated by or against any Canadian or United States federal,
provincial, state, local or foreign governmental authority or any other person
or entity.
7.6 Limitations on Indemnities. Notwithstanding any other provision
--------------------------
in this Section 7, neither party shall have any obligation to indemnify the
other party under Section 7.1 unless the aggregate for all such claims exceeds
$500,000, in which case to the full extent of Damages (including such initial
$500,000) up to a maximum aggregate indemnity of 645,000 multiplied by the Per
Share Purchase Price. NEITHER PARTY TO THIS AGREEMENT NOR ANY OF ITS AFFILIATES
SHALL BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES SUFFERED BY A PARTY OR
ITS AFFILIATES WITH RESPECT TO ANY TERM OR THE SUBJECT MATTER OF THIS AGREEMENT.
8. MISCELLANEOUS.
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8.1 Successors and Assigns. The terms and conditions of this
----------------------
Agreement will inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties. Neither party may assign this
Agreement or any rights hereunder without the consent of the other party, except
that Investor may assign its rights hereunder to a wholly-owned subsidiary.
8.2 Governing Law. This Agreement will be governed by and construed
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under the internal laws of the State of Delaware as applied to agreements among
Delaware residents entered into and to be performed entirely within Delaware,
without reference to principles of conflict of laws or choice of laws.
8.3 Counterparts. This Agreement may be executed in counterparts,
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each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
8.4 Headings. The headings and captions used in this Agreement are
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used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules will, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by this reference.
8.5 Notices. Any notice required or permitted under this Agreement
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will be given in writing, shall be effective when received, and shall in any
event be deemed received and effectively given upon personal delivery to the
party to be notified one (1) business day after deposit with a nationally
recognized courier service such as FedEx for next business day delivery, or one
(1) business day after being sent by facsimile with copy delivered by a
nationally recognized courier service such as FedEx
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for next business day delivery, addressed to the party to be notified at the
address indicated for such party on the signature page hereof or at such other
address as the Investor or the Company may designate by giving at least ten (10)
days advance written notice pursuant to this Section 8.5.
8.6 No Finder's Fees. Each party represents that it neither is nor
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will be obligated for any finder's or broker's fee or commission in connection
with this transaction. The Investor will indemnify and hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' or broker's fee for which the Investor or any of its officers,
partners, employees or consultants, or representatives is responsible. The
Company will indemnify and hold harmless the Investor from any liability for any
commission or compensation in the nature of a finder's or broker's fee for which
the Company or any of its officers, employees or consultants or representatives
is responsible.
8.7 Amendments and Waivers. This Agreement may be amended and the
----------------------
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Investor. Any amendment or waiver
effected in accordance with this Section 8.7 will be binding upon the Investor,
the Company and their respective successors and assigns.
8.8 Severability. If any provision of this Agreement is held to be
------------
unenforceable under applicable law, such provision will be excluded from this
Agreement and the balance of the Agreement will be interpreted as if such
provision were so excluded and will be enforceable in accordance with its terms.
8.9 Entire Agreement. This Agreement, together with all Exhibits and
----------------
schedules hereto, constitutes the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any and all
prior negotiations, correspondence, agreements, understandings duties or
obligations between the parties with respect to the subject matter hereof.
8.10 Further Assurances. From and after the date of this Agreement
------------------
upon the request of the Investor or the Company, the Company and the Investor
will execute and deliver such instruments, documents or other writings as may be
reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.
8.11 Meaning of Include and Including. Whenever in this Agreement
--------------------------------
the word "include" or "including" is used, it shall be deemed to mean "include,
without limitation" or "including, without limitation," as the case may be, and
the language following "include" or "including" shall not be deemed to set forth
an exhaustive list.
8.12 Fees, Costs and Expenses. All fees, costs and expenses
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(including attorneys' fees and expenses) incurred by either party hereto in
connection with the
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preparation, negotiation and execution of this Agreement and the Investor Rights
Agreement and the consummation of the transactions contemplated hereby and
thereby, shall be the sole and exclusive responsibility of such party.
8.13 Intellectual Property Covenant. For the term of 18 months from
-------------------------------
the date of this Agreement, the Company covenants that it will, where the
Company, in the exercise of reasonable judgment deems it appropriate, use
reasonable business efforts to seek copyright and patent registration, and other
appropriate intellectual property protection, for Intellectual Property of the
Company.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
DISCREET LOGIC INC. INTEL CORPORATION
By: /s/ Xxxxxxxx Xxxxxxxxx By: /s/ Xxxxxx Xxxxxxx
----------------------------- ---------------------------------
Name: Xxxxxxxx Xxxxxxxxx Name: Xxxxxx Xxxxxxx
--------------------------- -------------------------------
Title: Sr. Vice President and Title: Vice President and Treasurer
Chief Financial Officer, ------------------------------
Treasurer and Secretary
--------------------------
Address: 00 Xxxx Xxxxxx Address: 0000 Xxxxxxx Xxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxx Mail Stop SC4-210
Canada H3D 2L7 Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel Attention: Treasurer and General
Counsel
Telephone No.: (000) 000-0000 Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000 Facsimile No.: (000) 000-0000
WITH A COPY TO:
Xxxx X. Xxxxxxx, Esq.
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx; Xxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
[SIGNATURE PAGE TO COMMON SHARES PURCHASE AGREEMENT]
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COMMON SHARES PURCHASE AGREEMENT
LIST OF EXHIBITS
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Exhibit A - Form of Investor Rights Agreement
