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EXHIBIT 2.2
HAPTIC TECHNOLOGIES INC.
as Corporation
And
9039-4115 QUEBEC, INC.
as Holdco
and
THE SHAREHOLDERS OF
CORPORATION AND HOLDCO
LISTED IN THE SIGNATURE PAGE HERETO
And
511220 N.B. INC.
as Purchaser
and
IMMERSION CORPORATION
as Immersion
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SHARE PURCHASE AGREEMENT
FEBRUARY 28, 2000
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TABLE OF CONTENTS
SHARE PURCHASE AGREEMENT
ARTICLE 1
INTERPRETATION
1.1 Defined Terms.....................................................1
1.2 Gender and Number.................................................5
1.3 Headings, etc.....................................................5
1.4 Currency..........................................................5
1.5 Knowledge.........................................................6
1.6 Accounting Terms..................................................6
1.7 Incorporation of Schedules........................................6
ARTICLE 2
PURCHASED SHARES AND PURCHASE PRICE
2.1 Purchase and Sale.................................................6
2.2 Purchase Price....................................................6
2.3 Irrevocable Subscription..........................................6
2.4 Payment of the Purchase Price.....................................7
2.5 Treatment of Corporation Options..................................7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF VENDORS
3.1 Individual Representations and Warranties of Vendors..............8
3.2 Representations and Warranties of Vendors.........................9
3.3 Representations and Warranties of Holdco Vendors.................19
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
4.1 Representations and Warranties of Purchaser......................19
ARTICLE 5
COVENANTS OF THE PARTIES
5.1 Conduct of Business Prior to Closing.............................20
5.2 Access for Due Diligence.........................................21
5.3 Request for Required Consents....................................22
5.4 Filings and Required Consents....................................22
5.5 Notice of Untrue Representation or Warranty......................22
5.6 Exclusive Dealing................................................22
5.7 Additional Covenants.............................................23
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ARTICLE 6
CONDITIONS OF CLOSING
6.1 Conditions for the Benefit of Purchaser..........................23
6.2 Termination by Purchaser.........................................25
6.3 Conditions for the Benefit of Vendors............................26
6.4 Termination by Vendors...........................................26
ARTICLE 7
CLOSING
7.1 Date, Time and Place of Closing..................................27
ARTICLE 8
INDEMNIFICATION
8.1 Individual Vendors Indemnification in Favour of Purchaser........27
8.2 Indemnification by Visuaide, Innovatech and FTTI in Favour of
Purchaser........................................................27
8.3 Indemnification by Holdco Vendors in favour of Purchaser.........28
8.4 Purchaser Indemnification in Favour of Vendors...................28
8.5 Time Limitations.................................................28
8.6 Limitation on Damages............................................29
8.7 Obligation to Reimburse..........................................30
8.8 Notification.....................................................30
8.9 Defense of Third Party Claim.....................................30
ARTICLE 9
POST-CLOSING COVENANTS
9.1 Confidentiality..................................................32
9.2 Compensation and Benefits........................................32
9.3 Visuaide.........................................................32
9.4 Further Assurances...............................................32
ARTICLE 10
MISCELLANEOUS
10.1 Notices..........................................................32
10.2 Time of the Essence..............................................40
10.3 Brokers..........................................................40
10.4 Announcements....................................................40
10.5 Immersion Guarantee..............................................41
10.6 Third Party Beneficiaries........................................41
10.7 Expenses.........................................................41
10.8 Advances.........................................................41
10.9 Shareholders Agreement...........................................41
10.10 Amendments.......................................................41
10.11 Waiver...........................................................41
10.12 Non-Merger.......................................................42
10.13 Entire Agreement.................................................42
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10.14 Successors and Assigns...........................................42
10.15 Severability.....................................................42
10.16 Governing Law....................................................42
10.17 Counterparts.....................................................42
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SHARE PURCHASE AGREEMENT
Share Purchase Agreement dated February 28, 2000, between MATTHEW Mather,
a businessman, residing and domiciled at 5037, Saint-Andre Street, Montreal,
Quebec H2J 3A5 ("MATHER"); and CHRISTOPHE RAMSTEIN, a businessman, residing and
domiciled at 4275, Garnier Street, Montreal, Quebec H2J 3R7 ("RAMSTEIN"); and
VINCENT HAYWARD a businessman, residing and domiciled at 2277, Av. Harvard,
Montreal, Quebec H4A 2W1 ("HAYWARD"); and VINCENT Canonico, a businessman,
residing and domiciled at 750, Versaille, Montreal, Quebec H3C 1Z4 ("CANONICO");
and PEDRO GREGORIO, an engineer, residing and domiciled at 7353, Dunver
Crescent, Verdun, Quebec H4H 2H6 ("GREGORIO"); and ALAIN PARE, a businessman,
residing and domiciled at 253 Acres, Kirkland, Quebec, H9H 4M1 ("PARE"); and
SOCIETE INNOVATECH DU GRAND MONTREAL, a company duly incorporated under the
Companies Act (Quebec, 1992, C.33 ), having its registered office at 2020,
University Street, Suite 1527, Montreal, Quebec H3A 2A5, acting through and
represented by Mr. Hubert Manseau, its President, duly authorized for the
purposes hereof as he so declares ("INNOVATECH"); and FONDS EN TRANSFERTS DE
TECHNOLOGIES INDUSTRIELLES, societe en commandite d'investissement, having its
registered office at 255, Saint-Jacques Street, West, Montreal, Quebec, H2Y 1M6,
acting through and represented by its General Partner, 90271602 Quebec, Inc.,
represented by Mr. Bernard Hamel, duly authorized for the purposes hereof as he
so declares ("FTTI"); and VISUAIDE, INC, a company duly incorporated under the
Companies Act, having its registered office at 841, boul. Jean-Paul Vincent a
Longueuil, (Quebec), J4G 1R3, acting through and represented by, Mr. Gilles
Pepin, authorized for the purposes hereof as he so declares ("VISUAIDE"); and
9039-4115 QUEBEC, INC a company duly incorporated under the Companies Act,
having its registered office at 3575, rue Saint-Laurent, bureau 422, Montreal
(Quebec) H2X 2T7, acting through and represented by, Mr. Matthew Mather and Mr.
Christophe Ramstein, authorized for the purposes hereof as they so declare
("HOLDCO"); and HAPTIC TECHNOLOGIES INC, a company duly incorporated under the
Canada Business Corporations Act, having its registered office at 3575,
Saint-Laurent Blvd, suite 422, Montreal (Quebec) H2X 2T7, acting through and
represented by, Mr. Alain Pare, President and CEO, authorized for the purposes
hereof as he so declares ("CORPORATION"); and 511220 N.B. INC., a corporation
incorporated under the laws of New Brunswick ("PURCHASER"), acting through and
represented by, Victor Viegas, authorized for the purposes hereof as he so
declares; IMMERSION CORPORATION, a corporation incorporated under the laws of
Delaware ("IMMERSION") acting through and represented by, Victor Viegas,
authorized for the purposes hereof as he so declares;
ARTICLE 1
INTERPRETATION
1.1 DEFINED TERMS.
As used in this Agreement, the following terms have the following
meanings:
"AFFILIATE" has the meaning ascribed thereto in the Canada Business
Corporations Act.
"AGREEMENT" means this share purchase agreement and all schedules and
instruments in amendment or confirmation of it; and the expressions
"ARTICLE" and "SECTION" followed by a number mean and refer to the
specified Article or Section of this Agreement.
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"AUTHORIZATION" means, with respect to any Person, any order, permit,
approval, waiver, licence or similar authorization of any Governmental
Entity having jurisdiction over the Person.
"BOOKS AND RECORDS" means all books of account, tax records, sales and
purchase records, customer and supplier lists, computer software,
formulae, business reports, plans and projections and all other documents,
files, correspondence and other information of Corporation whether in
writing or electronic form.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day on
which the principal commercial banks in Montreal, Quebec are not open for
business during normal business hours.
"CANONICO" has the meaning in the initial description of the Parties
hereto.
"CLOSING" means the completion of the transaction of purchase and sale
contemplated in this Agreement.
"CLOSING DATE" means March 9, 2000.
"CONSENT" means the consent of a contracting party to a direct or indirect
change in control of Corporation if required by the terms of any Contract.
"CONTRACTS" means all agreements to which Corporation is a party including
all contracts, leases of personal property and commitments of any nature,
written or oral.
"CORPORATE RECORDS" means the corporate records of Corporation or Holdco,
as the case may be, including (i) all constating documents and by-laws,
(ii) all minutes of meetings and resolutions of shareholders and directors
(and any committees), and (iii) the share certificate books, securities
register, register of transfers and register of directors.
"CORPORATION" has the meaning in the initial description of the Parties
hereto.
"CORPORATION OPTIONS" has the meaning specified in Section 2.5.
"DAMAGES" has the meaning specified in Section 8.1.
"EMPLOYEE PLANS" means all the employee benefit, fringe benefit,
supplemental unemployment benefit, bonus, incentive, profit sharing,
termination, change of control, pension, retirement, stock option, stock
purchase, stock appreciation, health, welfare, medical, dental,
disability, life insurance and similar plans, programmes, arrangements or
practices relating to the current or former employees, officers or
directors of Corporation maintained, sponsored or funded by Corporation,
whether written or oral, funded or unfunded, insured or self-insured,
registered or unregistered.
"FINANCIAL STATEMENTS" shall mean the audited financial statements for
Corporation as at August 31, 1997, August 31, 1998 and August 31, 1999,
respectively, consisting in each case of a balance sheet and the
accompanying statements of income, retained earnings and changes in
financial position for the period then ended and notes to the financial
statements together with the report of the auditors thereon, a copy of
which financial statements is annexed hereto as Schedule 3.2(r).
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"FTTI" has the meaning in the initial description of the Parties hereto.
"GAAP" means, at any time, accounting principles generally accepted in
Canada including those set out in the Handbook of the Canadian Institute
of Chartered Accountants, at the relevant time applied on a consistent
basis.
"GOVERNMENTAL ENTITY" means any (i) multinational, federal, provincial,
state, municipal, local or other governmental or public department,
central bank, court, commission, board, bureau, agency or instrumentality,
domestic or foreign, (ii) any subdivision or authority of any of the
foregoing, or (iii) any quasi-governmental or private body exercising any
regulatory, expropriation or taxing authority under or for the account of
any of the above.
"GREGORIO" has the meaning in the initial description of the Parties
hereto.
"HAYWARD" has the meaning in the initial description of the Parties
hereto.
"HOLDCO" has the meaning in the initial description of the Parties hereto.
"HOLDCO SHARES" has the meaning specified in Section 2.1.
"HOLDCO VENDORS" shall mean Mather, Ramstein, Hayward, Canonico and
Gregorio.
"IMMERSION" has the meaning specified in the initial description of the
Parties hereto.
"IMMERSION COMMON STOCK" has the meaning specified in Section 2.5.
"IMMERSION SHARES" has the meaning specified in Section 2.2(b) .
"INDIVIDUAL VENDORS" shall mean Mather, Ramstein, Hayward, Canonico,
Gregorio and Pare.
"INNOVATECH" has the meaning in the initial description of the Parties
hereto.
"INTELLECTUAL PROPERTY" means (i) any trade marks, trade names, business
names, brand names, service marks, logos, computer software, computer
programmes, copyrights, including any performing, author or moral rights,
designs, inventions, patents, franchises, formulae, processes, know-how,
technology and related goodwill, (ii) any applications, registrations,
issued patents, continuations in part, divisional applications or
analogous rights or licence rights therefor, and (iii) other intellectual
or industrial property in each case, owned or used by the Corporation.
"INTERIM FINANCIAL STATEMENTS" means the unaudited balance sheets of
Corporation as at December 31, 1999 and January 31, 2000 and the
accompanying unaudited statements of income of Corporation for the periods
then ended and all notes in respect thereof.
"INTERIM PERIOD" means the period between the close of business on this
date and the Closing.
"ITA" has the meaning specified in Section 3.2(y)(ix).
"LAWS" shall mean (i) all constitutions, treaties, laws, statutes, codes,
ordinances, orders, decrees, rules, regulations, and municipal by-laws,
whether domestic, foreign or international;
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(ii) all judgments, orders, writs, injunctions, decisions, rulings,
decrees, and awards of any governmental authority or body; and (iii) all
policies, practices and guidelines of any governmental authority or body
which, although not actually having the force of law, are considered by
such governmental authority or body as requiring compliance as if having
the force of law, in each case binding on or affecting the Party or Person
referred to in the context in which such word is used; and "LAW" shall
mean any one of them.
"LEASED PROPERTY" means the land and premises listed and described in
Schedule 3.2(m).
"LEASES" means the leases of the Leased Property described in Schedule
3.2(m).
"LIEN" means any mortgage, charge, pledge, hypothecation, security
interest, assignment, lien (statutory or otherwise), title retention
agreement or arrangement, restrictive covenant or other encumbrance of any
nature or any other arrangement or condition which, in substance, secures
payment or performance of an obligation.
"MATERIAL CONTRACTS" has the meaning specified in Section 3.2(n).
"MATHER" has the meaning in the initial description of the Parties hereto.
"OPTION PLAN" has the meaning specified in Section 2.5.
"ORDINARY COURSE" means, with respect to an action taken by a Person, that
such action is consistent with the past practices of the Person and is
taken in the ordinary course of the normal day-to-day operations of the
Person.
"PARE" has the meaning in the initial description of the Parties hereto.
"PARTIES" means Vendors, Immersion, Corporation and Purchaser and any
other Person who may become a party to this Agreement.
"PERSON" means a natural person, partnership, limited liability
partnership, corporation, joint stock company, trust, unincorporated
association, joint venture or other entity or Governmental Entity, and
pronouns have a similarly extended meaning.
"PRIME RATE" shall mean the annual rate of interest on commercial loans
charged by Canadian Imperial Bank of Commerce from time to time.
"PUBLIC STATEMENT" has the meaning specified in Section 10.4.
"PURCHASE PRICE" has the meaning specified in Section 2.2.
"PURCHASED SHARES" has the meaning specified in Section 2.1.
"PURCHASER" has the meaning in the initial description of the Parties
hereto.
"R&D CREDIT OR REFUNDS" has the meaning specified in Section 3.2(y)(xi).
"RAMSTEIN" has the meaning in the initial description of the Parties
hereto.
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"REQUIRED CONSENTS" means those Consents and Authorizations listed and
described in Schedule 3.2(b).
"SHAREHOLDERS AGREEMENT OF CORPORATION" means the shareholders agreement
of Corporation made as of December 15, 1998 among Corporation and the
other shareholders listed therein.
"SHAREHOLDERS AGREEMENT OF HOLDCO" means the shareholders agreement of
Holdco made as of February 3, 2000.
"SUBSCRIPTION AMOUNT" has the meaning specified in Section 2.3.
"TAX" has the meaning specified in Section 3.2(y)(i).
"TAX RETURNS" has the meaning specified in Section 3.2(y)(ii).
"THIRD PARTY CLAIM" has the meaning specified in Section 8.9(1).
"US PERSON" shall mean (i) a natural person resident in the United States;
(ii) a partnership or corporation organized or incorporated under the laws
of the United States; (iii) an estate of which any executor or
administrator is a US Person; (iv) any trust of which any trustee is a US
Person; (v) an agency or branch of a foreign entity located in the United
States; (vi) a non-discretionary account or similar account (other than an
estate of trust) held by a dealer or other fiduciary for the benefit or
account of a US Person; (vii) a discretionary account or similar account
(other than an estate or trust) held by a dealer or other fiduciary
organized, incorporated, or (if an individual) resident in the United
States; and (viii) a partnership or corporation if (A) organized or
incorporated under the laws of any foreign jurisdiction; and (b) formed by
a US Person principally for the purpose of investing in securities not
registered under the Securities Act (U.S.), unless it is organized or
incorporated, and owned by accredited investors (as defined in Rule 501(a)
promulgated under the U.S. federal Securities Act of 1933) who are not
natural persons, estates or trusts.
"VENDORS shall mean Mather, Ramstein, Hayward, Canonico, Gregorio, Pare,
Innovatech, FTTI and Visuaide and "VENDOR" shall mean any one of them.
"VISUAIDE" has the meaning in the initial description of the Parties
hereto.
1.2 GENDER AND NUMBER.
Any reference in this Agreement to gender includes all genders and words
importing the singular number only shall include the plural and vice versa.
1.3 HEADINGS, ETC.
The division of this Agreement into Articles and Sections and the
insertion of headings are for convenient reference only and are not to affect
its interpretation.
1.4 CURRENCY.
All references in this Agreement to dollars, unless otherwise specifically
indicated, are expressed in Canadian currency.
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1.5 KNOWLEDGE.
Where any representation or warranty contained in this Agreement is
expressly qualified by reference to the knowledge of the Individual Vendors, it
shall be deemed to refer to the actual knowledge of such person. Where any
representation or warranty contained in this Agreement is expressly qualified by
reference to the knowledge of Visuaide, it shall be deemed to refer to the
actual knowledge of Gilles Pepin.
1.6 ACCOUNTING TERMS.
All accounting terms not specifically defined in this Agreement shall be
interpreted in accordance with GAAP.
1.7 INCORPORATION OF SCHEDULES.
The schedules attached to this Agreement shall, for all purposes of this
Agreement, form an integral part of it.
ARTICLE 2
PURCHASED SHARES AND PURCHASE PRICE
2.1 PURCHASE AND SALE.
Subject to the terms and conditions of this Agreement, each Vendor agrees
to sell, assign and transfer to Purchaser and Purchaser agrees to purchase from
each Vendor listed in Schedule 2.1 on the Closing Date, all (but not less than
all) of their respective shares in the capital of Corporation listed in Schedule
2.1, which shares constitute all (but not less than all) of the issued and
outstanding shares in the capital of Corporation with the exception of the
shares in the capital of Corporation held by Holdco (collectively, the
"PURCHASED SHARES") and all (but not less than all) of their respective shares
in the capital of Holdco listed in Schedule 2.1, which shares constitute all
(but not less than all) of the issued and outstanding shares in the capital of
Holdco (collectively, the "HOLDCO Shares").
2.2 PURCHASE PRICE.
The purchase price (the "PURCHASE PRICE") payable by Purchaser to Vendors
for the Purchased Shares and the Holdco Shares shall be as follows:
(a) $492,546.69; and
(b) an amount (the "SUBSCRIPTION AMOUNT") equal to the consideration to
be paid by the Vendors in connection with their subscription for
141,538 shares of Immersion common stock (the "IMMERSION SHARES"),
provided at Section 2.3 hereunder.
2.3 IRREVOCABLE SUBSCRIPTION.
The Vendors hereby irrevocably undertake to subscribe, at Closing, for the
Immersion Shares in the proportions set out in Schedule 2.3. The aggregate
consideration to be paid by the Vendors in connection with their subscription of
the Immersion Shares is an amount equal to the Subscription
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Amount. The Vendors hereby solidarily direct the Purchaser to pay the
Subscription Amount on their behalf to Immersion in consideration of the
Immersion Shares.
2.4 PAYMENT OF THE PURCHASE PRICE.
Purchaser shall pay the Purchase Price to Vendors as follows:
(a) An aggregate of $492,546.69 to the Vendors at Closing in the
proportions set out in Schedule 2.4(a) attached hereto by bank
draft, certified cheque or wire transfer of immediately available
funds to accounts designated in writing by each Vendor; and
(b) The Subscription Amount to Immersion and cause the delivery to the
Vendors, at Closing, by Immersion of a certificate of Boston
EquiServe L.P., transfer agent to Immersion, stating that the
certificates representing the Immersion Shares have been issued in
the name of the names of the Vendors in the proportions set out in
Schedule 2.3. The Vendors acknowledge and agree that the
Immersion Shares will not be registered under the Securities Act of
1933, as amended and that the Immersion Shares will be subject to
limitations on transfer.
The certificates representing the Immersion Shares will bear the
following legend:
"The securities represented hereby have not been registered under
the United States Securities Act of 1933, as amended ("ACT"). Such
securities may not be transferred unless a registration statement
under the Act is in effect as to such transfer or, in the opinion of
counsel for Immersion Corporation, such transfer may be made
pursuant to Regulation S or an available exemption from
registration, or registration under the Act is unnecessary in order
for such transfer to comply with the Act. In addition, hedging
transactions may not be conducted except in compliance with the
Act."
2.5 TREATMENT OF CORPORATION OPTIONS.
Immediately following Closing, all options to purchase common shares in
the share capital of Corporation outstanding and unexercised as of the Closing
and granted pursuant to Corporation's 2000 Stock Option Plan (respectively, the
"CORPORATION OPTIONS" and the "OPTION PLAN"), shall cease to represent a right
to acquire common shares in the share capital of Corporation and shall be
converted into options to acquire shares of common stock of Immersion, par value
US $0.01 per share ("IMMERSION COMMON STOCK"), subject to the terms and
conditions set forth in the Option Plan; provided, however, that immediately
after Closing, (i) such Corporation Options shall be exercisable for that number
of whole shares of Immersion Common Stock equal to the number of common shares
in the share capital of Corporation underlying such Corporation Option
immediately prior to Closing multiplied by 0.2, rounded down to the nearest
whole number of shares of Immersion Common Stock, and (ii) the per share
exercise price for the shares of Immersion Common Stock issuable upon exercise
of such assumed Corporation Option shall be equal to five times the exercise
price of the Corporation Option. The exercise price of the Corporation Options
is US $6.375 per share.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF VENDORS
3.1 INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF VENDORS.
Each Vendor individually represents and warrants as to himself or itself,
as the case may be, as follows to Purchaser and acknowledges and confirms that
Purchaser is relying upon such representations and warranties in connection with
the purchase by Purchaser of the Purchased Shares:
(a) INCORPORATION AND QUALIFICATION. To the extent Vendor is a
corporation or a partnership, it is a corporation duly
incorporated, organized, in good standing and existing under its
jurisdiction of incorporation or a partnership duly formed and
constituted and existing under the laws of its formation, as the
case may be, and has the corporate power to own and operate its
property, carry on its business and enter into and perform its
obligations under this Agreement;
(b) VALIDITY OF AGREEMENT. The execution, delivery and performance
by him or it, as the case may be, of this Agreement:
(i) to the extent that Vendor is a corporation or a
partnership, have been duly authorized by all necessary
corporate action on its part;
(ii) do not (or would not with the giving of notice, the lapse of
time or the happening of any other event or condition) result
in a breach or a violation of, or conflict with, or allow any
other Person to exercise any rights under, any of the terms or
provisions of any contracts to which it is a party or
instruments or, to the extent Vendor is a corporation or
partnership, its constating documents or by-laws; and
(iii) will not result in the violation of any Law, except where such
violation would not have a material adverse effect on the
transactions contemplated by this Agreement or the business,
operations and assets of Corporation.
(c) EXECUTION AND BINDING OBLIGATION. This Agreement has been duly
executed and delivered by, and constitutes a legal, valid and
binding obligation of, enforceable against, him or it, as the
case may be, in accordance with its terms;
(d) TITLE TO PURCHASED SHARES. He or it is the registered and
beneficial owner of the number and class of shares set out beside
his or its respective name in Schedule 3.1(d), with a good title
thereto, free and clear of all Liens. Such shares collectively
constitute the Purchased Shares and the Holdco Shares. The Purchased
Shares together with the shares in the capital of the Corporation
held by Holdco constitute all of the issued and outstanding shares
in the capital of the Corporation. Upon Closing, Purchaser will have
good and valid title to such Purchased Shares and Holdco Shares,
free and clear of all Liens;
(e) NO OTHER AGREEMENTS TO PURCHASE. Except for Purchaser's right under
this Agreement and except as set forth in Schedule 3.1(e), no Person
has any written or oral agreement, option or warrant or any right or
privilege (whether by Law, pre-emptive or contractual) capable of
becoming such for (i) the purchase or acquisition from Vendors
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of any of the Purchased Shares, or (ii) the purchase, subscription,
allotment or issuance of any of the unissued shares or other
securities of Corporation;
(f) RESIDENCE OF VENDORS. He or it, as the case may be, is not a
non-resident of Canada within the meaning of the Income Tax Act
(Canada);
(g) US PERSON. He or it is not a US Person and is not acquiring a
security for the benefit of a US Person.
3.2 REPRESENTATIONS AND WARRANTIES OF VENDORS.
The Vendors (excluding Innovatech and FTTI) solidarily, without the
benefit of division or discussion, represent and warrant to Purchaser as
provided in this Section 3.2. Vendors acknowledge and confirm that Purchaser is
relying upon such representations and warranties in connection with the purchase
by Purchaser of the Purchased Shares. Notwithstanding the foregoing, the
representations and warranties of Visuaide contained in this Section 3.2 are
provided in all cases to its knowledge only.
(a) INCORPORATION AND QUALIFICATION. Corporation is a corporation
incorporated, in good standing and existing under the Laws of its
jurisdiction of incorporation and has the corporate power to own and
operate its property, carry on its business and enter into and
perform its obligations under this Agreement;
(b) VALIDITY OF AGREEMENT. Except as disclosed in Schedule 3.2(b), the
execution, delivery and performance by Vendors of this Agreement do
not (or would not with the giving of notice, the lapse of time or
the happening of any other event or condition) result in a breach or
a violation of, or conflict with, or allow any other Person to
exercise any rights under, or cause any acceleration under or alter
the application of, any of the terms or provisions of its constating
documents or by-laws or any contracts or instruments to which
Corporation is a party or pursuant to which any of its assets or
property may be affected;
(c) REQUIRED AUTHORIZATIONS. There is no requirement to make any filing
with, give any notice to, or obtain any Authorization of, any
Governmental Entity or Person as a condition to the lawful
completion of the transactions contemplated by this Agreement,
except for the filings, notifications and Authorizations described
in Schedule 3.2(c) or that relate solely to the
identity of Purchaser or the nature of the business carried on by
Purchaser;
(d) AUTHORIZED AND ISSUED CAPITAL. The authorized capital of
Corporation consists of an unlimited number of Class "A" shares,
Class "B" shares and Class "C" shares which 292,324 Class "A"
shares and 466,061 Class "B" shares (and no more) have been duly
issued and are outstanding as fully paid and non-assessable; such
shares constitute all of the Purchased Shares and all the shares
held by Holdco in Corporation. All of the Purchased Shares and
all of the shares held by Holdco in Corporation have been issued
in compliance with all applicable Laws including, without
limitation, applicable securities Laws.
Except as set forth in Schedule 3.2(d), there are no outstanding
options, securities, loans or notes convertible or exchangeable for
any shares or other securities of Corporation;
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(e) SUBSIDIARIES. Corporation has no subsidiaries and holds no
shares or other ownership, equity or proprietary interests in any
other Person;
(f) NO OTHER AGREEMENTS TO PURCHASE. Except for Purchaser's right
under this Agreement and except as set forth in Schedule 3.2(f),
no Person has any written or oral agreement, option or warrant or
any right or privilege (whether by Law, pre-emptive or contractual)
capable of becoming such for (i) the purchase or acquisition from
Vendors of any of the Purchased Shares, or (ii) the purchase,
subscription, allotment or issuance of any of the unissued shares or
other securities of Corporation;
(G) CORPORATE RECORDS. The Corporate Records of Corporation are complete
and accurate, and contain copies of all of the articles, by-laws and
resolutions passed by the shareholders and directors of Corporation
since the date of its incorporation. Other than the Shareholders'
Agreement, Corporation have never been subject to, or affected by,
any unanimous shareholders agreement;
(h) CONDUCT OF BUSINESS IN ORDINARY COURSE. Except as disclosed in
Schedule 3.2(h), since August 31, 1999, Corporation has carried on
its business in the Ordinary Course and, without limiting the
generality of the foregoing, Corporation has not:
(i) made or assumed any commitment, obligation or liability
which is outside the Ordinary Course;
(ii) ceased to operate its properties and to carry on its
business as heretofore carried on;
(iii) sold or otherwise in any way alienated or disposed of any
of its assets other than in the Ordinary Course or sold or
in any way alienated or disposed of any Intellectual
Property whether or not in the Ordinary Course;
(iv) split, combined or reclassified any of its shares, or
issued redeemed, retired, repurchased or otherwise acquired
shares in its capital or any warrants, rights, bonds,
debentures, notes or other corporate security, or reserved,
declared, made or paid any dividend, or made any other
distributions or appropriations of profits or capital;
(v) discharged any secured or unsecured obligation or liability
(whether accrued, absolute, contingent or otherwise), other
than obligations and liabilities discharged in the Ordinary
Course;
(vi) waived or cancelled any material claim, account receivable,
trade account, or right outside the Ordinary Course or made
any gift;
(vii) made any change in the rate or form of compensation or
remuneration payable or to become payable to any of its
shareholders, directors, officers, employees or agents
which is outside the Ordinary Course, or accelerated the
vesting of any options or provided other equity incentives
to its employees;
(viii) made any change in its accounting principles and practices
as utilized in the preparation of the Financial Statements,
or granted to any customer any special
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allowance or discount, or changed its pricing, credit or
payment policies, other than in the Ordinary Course;
(ix) made any individual capital expenditure in excess of $
50,000;
(x) made any loan or advance, or assumed, guaranteed or
otherwise became liable with respect to the liabilities or
obligations of any Person;
(xi) modified its constating instruments, by-laws or capital
structure;
(xii) removed any auditor;
(xiii) purchased or otherwise acquired any corporate security or
proprietary, participatory or profit interest in any
Person;
(xiv) incurred any indebtedness other than to trade creditors in
the Ordinary Course; or
(xv) authorized, agreed or otherwise committed to any of the
foregoing.
(i) NO MATERIAL ADVERSE CHANGE. Since August 31, 1999, there has not
been any material adverse change in the affairs, operations,
business, assets or condition of Corporation.
(j) COMPLIANCE WITH LAWS. Corporation has conducted and is conducting
its business in compliance with all applicable Laws other than acts
of non-compliance which, in the aggregate, are not material.
(k) AUTHORIZATIONS. Corporation owns, holds, possesses or lawfully uses
in the operation of its business, all Authorizations which are
necessary for it to conduct its business, as presently conducted or
for the ownership and use of its assets in compliance with all
applicable Laws.
(l) TITLE TO THE ASSETS. Corporation owns (with good title) all of the
properties and assets (whether real, personal or mixed and whether
tangible or intangible) that it purports to own including all the
properties and assets reflected as being owned by Corporation in the
financial Books and Records. Corporation is the sole and
unconditional owner of such assets free and clear of all Liens
except as disclosed in Schedule 3.2(l).
(m) LEASES. Corporation is not a party to, or under any agreement to
become a party to, any lease with respect to real property other
than the Leases, copy of which has been provided to Purchaser. The
Leases are in good standing, create a good and valid leasehold
estate in the Leased Property thereby demised and are in full force
and effect without amendment, except as disclosed in Schedule
3.2(m). The Leases (or a notice in respect of the
Leases) has been properly registered in the appropriate land
registry office, all rents and additional rents have been paid, no
waiver, indulgence or postponement of the lessee's obligations has
been granted by the lessor and there exists no event of default
under the Leases.
(n) CONTRACTS. Except for the Contracts described in Schedule 3.2(n)
(collectively the "MATERIAL CONTRACTS") the Leases, the Employee
Plans, the insurance policies set out in
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Schedule 3.2(w) and the Contracts listed in Schedule 3.2(u),
Corporation is not a party to or bound by:
(i) any distributor, sales, advertising, agency or
manufacturer's representative Contract;
(ii) any continuing Contract for the purchase of materials,
supplies, equipment or services;
(iii) any Contract that expires or that may be renewed at the
option of any Person other than Corporation, as the case
may be, so as to expire more than one year after the date
of this Agreement;
(iv) any trust indenture, mortgage, promissory note, loan
agreement or other Contract for the borrowing of money, any
currency exchange, commodities or other hedging arrangement
or any leasing transaction of the type required to be
capitalized in accordance with GAAP;
(v) any Contract for capital expenditures;
(vi) any confidentiality, secrecy or non-disclosure Contract or
any Contract limiting the freedom of Corporation to engage
in any line of business, compete with any other Person,
operate its assets at maximum production capacity or
otherwise conduct its business;
(vii) any Contract pursuant to which Corporation is a lessor of
any machinery, equipment, motor vehicles, office furniture,
fixtures or other personal property;
(viii) any Contract with any Person with whom Corporation or any
of or Vendors does not deal at arm's length within the
meaning of the Income Tax Act (Canada);
(ix) any agreement of guarantee, support, indemnification,
assumption or endorsement of, or any similar commitment
with respect to, the obligations, liabilities (whether
accrued, absolute, contingent or otherwise) or indebtedness
of any other Person; or
(x) any Contract made out of the Ordinary Course.
(o) NO BREACH OF MATERIAL CONTRACTS. Corporation has performed all of
the obligations required to be performed by it and is entitled to
all benefits under, and is not alleged to be in default of any
Material Contract to which it is a party. Each of the Material
Contracts is in full force and effect, unamended, and there
exists no default or event of default or event, occurrence,
condition or act (including the purchase of the Purchased Shares)
which, with the giving of notice, the lapse of time or the
happening of any other event or condition, would become a default
or event of default under any Material Contract. True, correct
and complete copies of all Material Contracts have been delivered
to Purchaser.
(p) INTELLECTUAL PROPERTY.
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(i) Attached as Schedule 3.2(p)(i) is a list of Intellectual
Property owned by or licensed to Corporation in carrying on
its businesses. Schedule 3.2(p)(i) also includes complete
and accurate particulars of all registrations or applications
for registration of the Intellectual Property, as well as
particulars (including a description of the underlying
agreements) of any interest in the Intellectual Property
enjoyed by third parties. Subject only to any third party
interests listed in Schedule 3.2(p)(i),
Corporation is the beneficial and unconditional owner of its
Intellectual Property, free and clear of all Liens, and is not
a party to or bound by any Contract or other obligation that
limits or impairs its ability to use, sell, transfer, assign
or convey, or that otherwise affects, its Intellectual
Property, nor has any Person been granted any interest in or
right to use all or any portion of the Intellectual Property.
For greater certainty, notwithstanding the provisions of any
contract, Vendors acknowledge that they have no rights in or
to any Intellectual Property developed by the Corporation on
its own initiative or on behalf of third parties. Neither of
Vendors has knowledge of any infringement or violation of any
of its rights or the rights of Corporation in the Intellectual
Property. To the knowledge of each of the Vendors, the conduct
of the business of Corporation does not infringe upon the
patents, trade marks, licences, trade names, business names,
copyright or other industrial or intellectual property rights,
domestic or foreign, of any other third party.
(ii) EMPLOYEE CONFIDENTIALITY AGREEMENTS. Except as set forth on
Schedule 3.2(p)(ii), all current and former employees and
consultants of Corporation whose duties or responsibilities
relate to Corporation's business have entered into
confidentiality, invention assignment and proprietary
information agreements with Corporation in the form provided
to Purchaser.
(q) BOOKS AND RECORDS. All accounting and financial Books and
Records have been fully, properly and accurately kept and
completed in all material respects. The Books and Records and
other data and information are not recorded, stored, maintained,
operated or otherwise wholly or partly dependent upon or held by
any means (including any electronic, mechanical or photographic
process, whether computerized or not) which are not available to
Corporation in the Ordinary Course.
(r) FINANCIAL STATEMENTS. The Financial Statements and the Interim
Financial Statements have been prepared in accordance with GAAP
applied on a basis consistent with those of previous fiscal years
and each fairly, accurately and completely discloses in all
material respects (i) the assets, liabilities and obligations
(whether accrued, contingent, absolute or otherwise), income,
losses, retained earnings, reserves and financial position of
Corporation, (ii) the results of operations of Corporation and
(iii) the changes in the financial position of Corporation all as
at the dates and for the periods therein specified.
True, correct and complete copies of the Financial Statements and
the Interim Financial Statements are attached as Schedule 3.2(r).
(s) NO LIABILITIES. Except as disclosed in Schedule 3.2(s) or reflected
or reserved against in the balance sheet forming part of the Interim
Financial Statements, Corporation has no liabilities or obligations
of any nature (whether absolute, accrued, contingent or
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otherwise) except for current liabilities incurred in the Ordinary
Course since August 31, 1999.
(t) BANK ACCOUNTS AND POWERS OF ATTORNEY. Schedule 3.2(t) is a correct
and complete list showing (i) the name of each bank in which
Corporation has an account or safety deposit box and the names of
all Persons authorized to draw on the account or to have access to
the safety deposit box, and (ii) the names of all Persons holding
powers of attorney from Corporation. Copies of the powers of
attorney have been provided to Purchaser.
(u) EMPLOYEES. Except as set forth in Schedule 3.2(u):
(i) there is no collective agreement in force with respect to
the employees of Corporation, no collective agreement is
currently being negotiated by Corporation, no union or
employee bargaining agent holds bargaining rights with
respect to any employees of Corporation and there are no
current or, to the Vendors' knowledge, threatened attempts
to organize or establish any trade union or employee
association with respect to Corporation. There is no
unfair labour practice complaint pending or, to the
Vendors' knowledge, threatened against Corporation and
there is no labour strike, slow down, work stoppage or
lockout in effect or, to the Vendors' knowledge, threatened
against Corporation nor has there been any such event
within the past three (3) years; and
(ii) all amounts due and owing or accrued due but not yet owing for
all salary, wages, bonuses, commissions, vacation with pay,
pension benefits or other employee benefits have been paid or
if accrued are reflected in the Books and Records.
Schedule 3.2(u) contains a correct and complete list of each
employee of Corporation whether actively at work or not, their
salaries, wage rates, commissions and bonus arrangements, benefits,
positions, ages, status as full-time or part-time employees and
length of service. No employee of Corporation has any agreement as
to length of notice or severance payment required to terminate his
or her employment, other than such as results by Law from the
employment of an employee without an agreement as to notice or
severance.
Schedule 3.2(u) also contains a correct and complete list of each
consultant of Corporation (together with their consulting fees) that
is actively at work or which has received more than $20,000 in
compensation from the Corporation in the last 12 months.
(v) EMPLOYEE PLANS.
(i) Schedule 3.2(v) lists and describes all Employee Plans.
Corporation has furnished to the Purchaser true, correct and
complete copies of all the Employee Plans as amended as of the
date hereof, together with all related documentation
including, without limitation, funding and investment
management agreements, summary plan descriptions, the most
recent actuarial reports, financial statements and asset
statements, all material opinions and memoranda (whether
externally or internally prepared) and all material
correspondence with all regulatory authorities or other
relevant persons. No changes have occurred or
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are expected to occur which would materially affect the
information contained in the actuarial reports, financial
statements or asset statements required to be provided to
the Purchaser pursuant to this provision.
(ii) All of the Employee Plans are and have been established,
registered, qualified, invested and administered, in all
respects, in accordance with their terms and all Laws,
including all Tax Laws where same is required for
preferential tax treatment. To the knowledge of Vendors, no
fact or circumstance exists that could adversely affect the
preferential tax treatment ordinarily accorded to any such
Employee Plan.
(iii) All obligations regarding the Employee Plans have been
satisfied, there are no outstanding defaults or violations
by any party to any Employee Plan and no Taxes, penalties,
or fees are owing or exigible under or in respect of any of
the Employee Plans.
(iv) No Employee Plan is subject to any pending investigation,
examination or other proceeding, action or claim initiated
by any regulatory authority, or by any other party (other
than routine claims for benefits).
(v) All contributions or premiums required to be paid by
Corporation under the terms of each Employee Plan or by
Laws have been made in a timely fashion in accordance with
Laws and the terms of the Employee Plans. Corporation has
no liability (other than liabilities accruing after the
Closing Date) with respect to any of the Employee Plans.
Contributions or premiums for the period up to the Closing
Date have been paid by Corporation even though not
otherwise required to be paid until a later date.
(vi) No commitments to improve or otherwise amend any Employee
Plan have been made except as required by applicable Laws.
(vii) Each Employee Plan which is a funded plan is fully funded
as of the Closing Date on both a going concern and a
solvency basis pursuant to the actuarial assumptions and
methodology utilized in the most recent actuarial valuation
therefor.
(viii) None of the Employee Plans enjoy any special tax status
under any Laws, nor have any advance Tax rulings been
sought or received in respect of any Employee Plan.
(ix) No insurance policy or any other agreement affecting any
Employee Plan requires or permits a retroactive increase in
contributions, premiums or other payments due thereunder.
The level of insurance reserves under each insured Employee
Plan is reasonable and sufficient to provide for all
incurred but unreported claims.
(x) None of the Employee Plans (other than pension plans)
provide benefits to retired employees or to the
beneficiaries or dependants of retired employees.
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(xi) No Employee Plan exists that could result in (i) the payment
to any person of any money, benefits or other property, (ii)
accelerated or increased funding requirements for any Employee
Plan or (iii) the acceleration or provision of any other
increased rights or benefits to any person as a result of the
transactions contemplated by this Agreement.
(w) INSURANCE. Schedule 3.2(w) contains a list of insurance policies
which are maintained by Corporation setting out, in respect of each
policy, a description of the type of policy, the name of insurer,
the coverage allowance, the expiration date, the annual premium and
any pending claims.
(x) LITIGATION. Except as described in Schedule 3.2(x), there are no
(i) actions, suits or proceedings, at law or in equity, by any
Person,(ii) arbitration or alternative dispute resolution process,
or (iii) any administrative or other proceeding by or before (or to
the knowledge of Vendors any investigation by) any Governmental
Entity, pending, or, to the knowledge of Vendors, threatened against
or affecting Corporation, the business or assets of Corporation.
Corporation is not subject to any judgment, order or decree entered
in any lawsuit or proceeding nor has Corporation settled any claim
prior to being prosecuted in respect of it. Corporation is not the
plaintiff or complainant in any action, suit or proceeding.
(y) TAX MATTERS:
(i) DEFINITION OF TAXES - For the purposes of this Agreement,
the term "TAX" or, collectively, "TAXES" shall mean (A) any
and all federal, state, provincial, municipal, local and
foreign taxes, assessments and other governmental charges,
duties, impositions and liabilities including Canada
Pension Plan and Provincial Pension Plan contributions and
unemployment insurance contributions and employment
insurance contributions and workman's compensation and
deductions at source, including taxes based upon or
measured by gross receipts, income, profits, sales, capital
use and occupation, good and services, and value added, ad
valorem, transfer, franchise, withholding, customs duties,
payroll, recapture, employment, excise and property taxes,
together with all interest, penalties, fines and additions
imposed with respect to such amounts and (b) any liability
for the payment of any amounts of the type described in
clause (A) of this Section 3.2(y)(i) as a result of any
express or implied obligation to indemnify any other Person
or as a result of any obligations under any agreements or
arrangements with any other Person with respect to such
amounts and including any liability for taxes of a
predecessor entity.
(ii) COMPUTATION, PREPARATION AND PAYMENT - Corporation has
correctly computed all Taxes, prepared and duly and timely
filed all federal, state, provincial, municipal, local and
foreign returns, estimates, information statements, elections,
designations, reports and any other related filings ("TAX
RETURNS"), required to be filed by it, has timely paid all
Taxes which are or may become due and payable and has made
adequate provision in the Financial Statements for the payment
of all Taxes which are or may become due and payable for any
taxation year ending on or prior to August 31, 1999.
Corporation has made adequate and timely installments of Taxes
required to be made.
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(iii) ACCRUED TAXES - With respect to any periods for which Tax
Returns have not yet been required to be filed or for which
Taxes are not yet due and payable, Corporation has only
incurred liabilities for Taxes in the Ordinary Course and
in a manner and at a level consistent with prior periods.
Tax returns, reports, elections, designations and any other
filings required to be filed for any period ending up to
the Closing Date will correctly be prepared and duly and
timely filed by Vendors.
(iv) STATUS OF ASSESSMENTS - All Tax returns of Corporation have
been assessed through and including each of the dates set
forth in Schedule 3.2(y)(iv) annexed hereto, and there are
no outstanding waivers of any limitation periods or
agreements providing for an extension of time for the
filing of any Tax Return or the payment of any Tax by
Corporation or any outstanding objections to any assessment
or reassessment of Taxes. Any deficiencies proposed as a
result of such assessments or reassessments of the Tax
returns through and including the dates set forth in
Schedule 3.2(y)(iv) annexed hereto have been paid and
settled.
(v) WITHHOLDINGS - Corporation has withheld from each payment
made to any of its past and present shareholders,
directors, officers, employees and agents the amount of all
Taxes and other deductions required to be withheld and has
paid such amounts when due, in the form required under the
appropriate legislation, or made adequate provision for the
payment of such amounts to the proper receiving
authorities. The amount of Tax withheld but not remitted by
Corporation will be retained in its accounts and will be
remitted by it to the appropriate authorities when due.
(vi) COLLECTION AND REMITTANCE - Corporation has collected from
each receipt from any of its past and present customers (or
other Persons paying amounts to Corporation) the amount of
all Taxes (including goods and services tax and provincial
sales taxes) required to be collected and has paid and
remitted such Taxes when due, in the form required under
the appropriate legislation or made adequate provision for
the payment of such amounts to the proper receiving
authorities. The amount of Tax collected but not remitted
by Corporation will be retained in its accounts and
remitted by it to the appropriate authorities when due.
(vii) ASSESSMENTS - Corporation is not or to the knowledge of
Vendors will not be subject to any assessments,
reassessment, levies, penalties or interest with respect to
Taxes which will result in any liability on its part in
respect of any period ending on or prior to the Closing
Date.
(viii) JURISDICTIONS OF TAXATION - Corporation has not been and is
not currently required to file any returns, reports,
elections, designations or other filings with any taxation
authority located in any jurisdiction outside Canada or
outside the province of Quebec.
(IX) RELATED PARTY TRANSACTIONS - Corporation has not, or has
not been deemed to have for purposes of the Income Tax Act
(Canada) (the "ITA"), acquired or had the use of property
for proceeds greater than the fair market value thereof
from,
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or disposed of property for proceeds less than the fair
market value thereof to, or received or performed services
for other than the fair market value from or to, or paid or
received interest or any other amount other than at a fair
market value rate to or from, any Person, firm or
corporation with whom it does not deal at arm's length
within the meaning of the ITA.
(x) FORGIVENESS OF DEBT - Corporation has not at any time
benefited from a forgiveness of debt or entered into any
transaction or arrangement (including conversion of debt
into shares of their share capital) which could have
resulted in the application of Section 80 and following of
the ITA.
(xi) RESEARCH AND DEVELOPMENT TAX CREDITS AND EXPENDITURES - All
refund of taxes or credits claimed with respect to research
and development ("R&D CREDIT OR REFUNDS") were claimed by
Corporation in accordance with the provisions of the ITA
and the relevant provincial legislation and Corporation
satisfied at all relevant times the relevant criteria and
conditions entitling it to such R&D Credit or Refunds.
(xii) R&D EXPENSES - The aggregate amount of expenditures
qualifying as research and development expenditures under
the ITA incurred in the years ending on or prior to the
Closing Date which were not deducted for income tax
purposes and are available to be applied against income for
years subsequent to the Closing Date is nil for federal
income tax purposes and nil for provincial income tax
purposes.
(xiii) TAX RETURNS - Corporation has made available to Purchaser
or its legal counsel, copies of all foreign, federal,
state, provincial, municipal and local income and all state
and local sales and use Tax Returns for Corporation filed
for all periods terminating on or after August 31st, 1996.
(xiv) DEDUCTIBILITY - As of the Closing, there will not be any
Contract, plan or arrangement, including but not limited to
the provisions of this Agreement, covering any employee or
former employee of Corporation that, individually or
collectively, could give rise to the payment of any amount
that would not be deductible by Corporation as an expense
under applicable Law other than reimbursements of a
reasonable amount of entertainment expenses and other
non-deductible expenses that are commonly paid by similarly
situated businesses in reasonable amounts.
(xv) TAX BASIS -Corporation's tax basis in its assets (and the
undepreciated capital cost of such assets) for purposes of
determining its future amortization, depreciation and other
Federal or Provincial income Tax deductions is accurately
reflected on Corporation's Tax Returns and records.
(z) PAID-UP CAPITAL - The paid-up capital for Tax purposes of each of
the Purchased Shares is no less than its stated capital for
corporate purposes.
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3.3 REPRESENTATIONS AND WARRANTIES OF HOLDCO VENDORS
The Holdco Vendors solidarily, without the benefit of division of
discussion, represent and warrant to Purchaser as provided in this Section 3.3.
Holdco Vendors acknowledge and confirm that Purchaser is relying upon such
representations and warranties in connection with the purchase by Purchaser of
the Holdco Shares.
(a) INCORPORATION AND QUALIFICATION. Holdco is a corporation duly
incorporated, in good standing and existing under the laws of its
jurisdiction of incorporation and has the corporate power to own and
operate its property, carry on its business and enter into and
perform its obligations under this Agreement.
(b) AUTHORIZED AND ISSUED CAPITAL. The authorized capital of Holdco
consists of an unlimited number of Class "A" shares, Class "B"
shares, Class "C" shares, Class "D" shares, Class "E" shares and
Class "F" shares of which 110 Class "A" shares (and no more) have
been duly issued and are outstanding as fully paid and
non-assessable; such shares constitute all the Holdco Shares.
All of the Holdco Shares have been issued in compliance with all
applicable Laws including, without limitation, applicable
securities laws. There are no outstanding options, securities,
loans or notes convertible or exchangeable for any shares or
other securities of Holdco.
(c) NO OTHER AGREEMENTS TO PURCHASE. Except for Purchasers' right
under this Agreement, no Person has any written or oral
agreement, option or warrant or any right or privilege in
(whether by Law, pre-emptive or contractual) capable of becoming
such for: (i) the purchase or acquisition from Vendors of any of
the Holdco Shares; or (ii) the purchase, subscription, allotment
or issuance of any of the unissued shares or other securities of
Holdco;
(d) CORPORATE RECORDS. The Corporate Records of Holdco are complete and
accurate, and contain copies of all of the articles, by-laws and
resolutions passed by the shareholders and directors of Holdco since
the date of its incorporation.
(e) LIABILITIES. Except as set forth in Schedule 3.3(e) Holdco has no
liabilities or obligations of any nature whatsoever, whether direct,
indirect, absolute, contingent or otherwise.
(f) PROPERTY. Holdco has no assets, and has never had any assets
other than the shares held by it in Corporation.
(g) TITLE TO SHARES IN CORPORATION. Holdco is the beneficial owner and
holder of record of 200,000 Class "A" shares in the capital of
Corporation, free and clear of all Liens. Upon Closing, Holdco will
have good and valid title to such shares, free and clear of all
Liens.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
4.1 REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser and Immersion solidarily, without the benefit of division or
discussion, represent and warrant as follows to Vendors and acknowledge and
confirm that Vendors are relying on such
24
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representations and warranties in connection with the sale by Vendors of
the Purchased Shares and the Holdco Shares:
(a) INCORPORATION AND CORPORATE POWER. Each of Immersion and Purchaser
is a corporation incorporated, in good standing and existing under
the Laws of its jurisdiction of incorporation and has the corporate
power and authority to enter into and perform its obligations under
this Agreement.
(b) VALIDITY OF AGREEMENT. The execution, delivery and performance
by each of Immersion and Purchaser of this Agreement:
(i) have been duly authorized by all necessary corporate action
on the part of Immersion and Purchaser;
(ii) do not (or would not with the giving of notice, the lapse of
time or the happening of any other event or condition) result
in a breach or a violation of, or conflict with, any of the
terms or provisions of its constating documents or by-laws or
any contracts or instruments to which it is a party or
pursuant to which any of its assets or property may be
affected; and
(iii) will not result in the violation of any Law.
(c) EXECUTION AND BINDING OBLIGATION. This Agreement has been duly
executed and delivered by each of Immersion and Purchaser and
constitutes a legal, valid and binding obligation of Immersion and
Purchaser, enforceable against them in accordance with their
respective terms.
ARTICLE 5
COVENANTS OF THE PARTIES
5.1 CONDUCT OF BUSINESS PRIOR TO CLOSING.
(1) Except as set forth in Schedule 5.1(1), Corporation shall and each of
Individual Vendors shall cause Corporation to, during the Interim Period,
conduct its business in the Ordinary Course and, without limiting the
generality of the foregoing, Corporation shall and each of Individual
Vendors shall cause Corporation not to:
(a) make or assume any commitment, obligation or liability which is
outside the Ordinary Course;
(b) cease to operate its properties and to carry on its business as
heretofore carried on;
(c) sell or otherwise in any way alienate or dispose of any of its
assets, other than in the Ordinary Course or sell or in any way
alienate or dispose of any of its Intellectual Property whether or
not on the Ordinary Course;
(d) split, combine or reclassify any of its shares, or issue, redeem,
retire, repurchase or otherwise acquire shares in its capital or any
warrants, rights, bonds, debentures, notes
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or other corporate security, or reserve, declare, make or pay any
dividend, or make any other distributions or appropriations of
profits or capital;
(e) discharge any secured or unsecured obligation or liability (whether
accrued, absolute, contingent or otherwise), other than obligations
and liabilities discharged in the Ordinary Course;
(f) waive or cancel any material claim, account receivable, trade
account or right outside the Ordinary Course or make any gift;
(g) make any change in the rate or form of compensation or remuneration
payable to or to become payable to any of its shareholders,
directors, officers, employees or agents which is outside the
Ordinary Course or accelerate the vesting of any option or provide
other equity incentives to its employees;
(h) make any change in its accounting principles and practices as
utilized in the preparation of the Financial Statements, or grant to
any customer any special allowance or discount, or change its
pricing, credit or payment policies, other than in the Ordinary
Course;
(i) make any capital expenditure;
(j) make any loan or advance, or assume, guarantee, endorse or otherwise
become liable with respect to the liabilities or obligations of any
Person;
(k) modify its constating instruments, by-laws or capital structure;
(l) remove any auditor;
(m) purchase or otherwise acquire any corporate security or
proprietary, participatory or profit interest in any Person;
(n) incur any indebtedness other than to trade creditors in the
Ordinary Course; and
(o) authorize, agree or otherwise commit to any of the foregoing.
5.2 ACCESS FOR DUE DILIGENCE.
(1) Vendors and Corporation shall (i) permit Purchaser and its employees,
counsel, accountants or other representatives, during the Interim Period,
without undue interference to the ordinary conduct of the business of
Corporation, to have reasonable access during normal business hours and
upon reasonable notice to (a) the premises of Corporation and Holdco (b)
the assets and, in particular to any information, including all Books and
Records whether retained by Vendors, Corporation, or otherwise, (c) all
Contracts(without identification of the parties thereto) and the Lease,
and (d) the senior personnel of Corporation, and (ii) furnish to Purchaser
or its employees, counsel, accountants or other representatives such
financial and operating data and other information with respect to the
assets and business of Corporation as Purchaser shall from time to time
reasonably request, it being agreed that Corporation shall use its best
efforts to deliver to Immersion all of the foregoing information and
access and unaudited financial statements of Corporation for the one month
period ended January 31, 2000 on or before February 20, 2000.
Notwithstanding the foregoing, Immersion shall have access to
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the following material only after it has notified Corporation that it does
not intend to exercise its right of termination under Section 6.2(i): (1)
technical due diligence regarding the Corporation's hardware and software
products, including, but not limited to the PenCAT, TouchDesktop,
TouchWare, and TouchWeb products; (2) information regarding the
Corporation's "Hub and Spoke" business strategy and (3) copies of the
Corporation's patent applications and the file histories for such patent
applications.
(2) No investigations made by or on behalf of Purchaser, whether under this
Section 5.2 or any other provision of this Agreement, shall have the
effect of waiving, diminishing the scope of, or otherwise affecting any
representation or warranty made in this Agreement.
5.3 REQUEST FOR REQUIRED CONSENTS.
Vendors shall use their best efforts to obtain, prior to Closing, all of
the Required Consents. Such Required Consents shall be upon such terms as are
acceptable to Purchaser, acting reasonably. Purchaser will co-operate in
obtaining such Required Consents.
5.4 FILINGS AND REQUIRED CONSENTS.
Each of Vendors and Purchaser, as promptly as practicable after the
execution of this Agreement, will (i) make, or cause to be made, all such
filings and submissions under all Laws applicable to it, as may be required for
it to consummate the purchase and sale of the Purchased Shares in accordance
with the terms of this Agreement, and (ii) obtain, or cause to be obtained, all
Required Consents necessary or advisable to be obtained by it in order to
consummate such transfer. Vendors and Purchaser will coordinate and cooperate
with one another in exchanging such information and supplying such assistance as
may be reasonably requested by each in connection with the foregoing including,
without limitation, providing each other with all notices and information
supplied to or filed with any Governmental Entity (except for notices and
information which Vendors or Purchaser, in each case acting reasonably,
considers highly confidential and sensitive which may be filed on a confidential
basis), and all notices and correspondence received from any Governmental
Entity.
5.5 NOTICE OF UNTRUE REPRESENTATION OR WARRANTY.
Each Vendor shall promptly notify Purchaser, and Purchaser shall promptly
notify Vendors, upon any representation or warranty made by either of them
contained in this Agreement becoming untrue or incorrect during the Interim
Period. Any such notification shall set out particulars of the untrue or
incorrect representation or warranty and details of any actions being taken by
the applicable Vendor or Purchaser, as the case may be, to rectify that state of
affairs.
5.6 EXCLUSIVE DEALING.
During the Interim Period, Corporation shall not and Vendors and Holdco
shall not and shall cause Corporation not to, directly or indirectly, solicit,
initiate, or encourage any inquiries or proposals from, discuss or negotiate
with, provide any non-public information to, or consider the merits of any
inquiries or proposals from, any Person (other than Purchaser) relating to any
transaction involving the sale of any shares of Vendors or Holdco or the sale of
the business or assets of Corporation or Holdco.
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5.7 ADDITIONAL COVENANTS.
(a) Each of Corporation's employees, as of the date hereof, excluding
administrative support and accounting personnel, and Hayward will
sign a one-year non-competition agreement in favour of Immersion
measured from the Closing Date and in the form attached hereto as
Schedule 5.7(a) except for the non-competition agreement of Hayward
the scope of which shall be agreed to prior to Closing;
(b) Visuaide covenants and agrees to use its best efforts, promptly
after the Closing, to obtain the rights from CITI for Immersion
for use of CITI work product. Visuaide further covenants and
agrees that any and all language in agreements between Visuaide
and the Corporation which in any way impose a restriction or
limitation of competition between Visuaide and the Corporation or
on the use of the CITI work product in any market or channel,
including but not limited to those markets or channels related to
persons with disabilities of any kind, will terminate on Closing.
Visuaide hereby covenants that the intellectual property relating
to improvements made upon the technology subject to such CITI
sublicense is wholly owned by Corporation ; and
(c) The Vendors shall obtain, prior to Closing, a letter of conformity
from the Commission de la sante et de la securite du travail
attesting that Corporation is in good standing.
ARTICLE 6
CONDITIONS OF CLOSING
6.1 CONDITIONS FOR THE BENEFIT OF PURCHASER.
The purchase and sale of the Purchased Shares is subject to the following
conditions to be fulfilled or performed at or prior to the Closing Date, which
conditions are for the exclusive benefit of Purchaser and may be waived, in
whole or in part, by Purchaser in its sole discretion:
(a) TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Vendors contained in this Agreement shall be true
and correct as of the Closing Date with the same force and effect
as if such representations and warranties had been made on and as
of such date and Vendors shall have executed and delivered a
certificate to that effect. The receipt of such certificate and
the Closing shall not constitute a waiver by Purchaser of any of
the representations and warranties of Vendors which are contained
in this Agreement. Upon the delivery of such certificate, the
representations and warranties of Vendors in Article 3 shall be
deemed to have been made on and as of the Closing Date with the
same force and effect as if made on and as of such date.
(b) PERFORMANCE OF COVENANTS. Vendors shall have fulfilled or complied
with all covenants contained in this Agreement to be fulfilled or
complied with by it at or prior to the Closing, and Vendors shall
have executed and delivered a certificate to that effect. The
receipt of such certificate and the Closing shall not constitute a
waiver by Purchaser of any of the covenants of Vendors which are
contained in this Agreement.
(c) REQUIRED CONSENTS. All Required Consents shall have been obtained on
terms acceptable to Purchaser, acting reasonably. There shall have
been obtained from all appropriate Governmental Entities all
approvals and consents necessary in order to
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permit the transactions contemplated herein to be completed on the
Closing Date. To the extent that a notification is required under
the Competition Act (Canada), all applicable waiting periods shall
have expired.
(d) DELIVERIES. Vendors shall deliver or cause to be delivered to
Purchaser the following in form and substance satisfactory to
Purchaser, acting reasonably:
(i) share certificates representing the Purchased Shares and
Holdco Shares duly endorsed in blank for transfer, or
accompanied by irrevocable security transfer powers of
attorney duly executed in blank, in either case by the
holders of record;
(ii) certified copies of (i) the charter documents and by-laws
of Corporation and Holdco and each of Vendors that is a
corporation, (ii) all resolutions of the shareholders and
the board of directors of Corporation and Holdco and each
of Vendors that is a corporation approving the entering
into and completion of the transaction contemplated by this
Agreement; and
(iii) a certificate of status, compliance, good standing or like
certificate with respect to Corporation and Holdco and
Vendors that are corporations issued by appropriate
government officials of their respective jurisdictions of
incorporation and, in the case of Corporation, of each
jurisdiction in which Corporation carries on its business;
(iv) the certificates referred to in Section 6.1(a) and Section
6.1(b);
(v) an opinion of counsel to Vendors, Holdco and Corporation
substantially in the form set forth in Schedule 6.1(d)(v);
(vi) a duly executed non-competition agreement in favour of
Corporation and Immersion by each of Corporation employees
as provided for at Section 5.7(a);
(vii) a letter of conformity from the Commission de la sante et
de la securite du travail attesting to the good standing of
Corporation; and
(viii) a duly executed resignation effective as at the Closing of
the auditors and each director and officer of Corporation
and Holdco specified by Purchaser in writing at least 3
Business Days prior to Closing.
(e) NO LEGAL ACTION. No action or proceeding shall be pending or
threatened by any Person (other than Purchaser) in any jurisdiction,
to enjoin, restrict or prohibit any of the transactions contemplated
by this Agreement or the right of Corporation to conduct their
respective business after Closing on substantially the same basis as
heretofore operated.
(f) NO MATERIAL CHANGE. During the Interim Period, there shall have been
no material adverse change in the business, operations, properties,
prospects or condition of Corporation.
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(g) CONTINUANCE OF EMPLOYMENT. All employees of Corporation employed on
the date hereof shall continue to be employed with Corporation on
the Closing Date.
(h) NON-DISCLOSURE AGREEMENT. The employees of Corporation shall have
executed Immersion's standard form of non-disclosure, assignment of
inventions and confidentiality agreement.
(i) EMPLOYMENT AGREEMENTS. Each of Corporation's employees, as of the
date hereof, excluding administrative support and accounting
personnel, shall have executed an employment agreement with
Corporation on terms and conditions substantially conform to those
set forth in Schedule 6.1(i).
(j) TERMINATION OF THE SHAREHOLDERS AGREEMENT. Purchaser shall have
received evidence satisfactory to it, acting reasonably, that the
Shareholders Agreement of Corporation and the Shareholders Agreement
of Holdco have been terminated without any further liability to
Corporation or Holdco thereunder.
(k) CONFIRMATION. Confirmation by Innovatech and FTTI to the effect that
all loans or advances that may have been made by either of them to
Corporation have been repaid in full.
(l) LISTING. The Immersion Shares shall have been duly listed for
quotation on the National Association of Securities Dealers
Automated Quotations National Market Systems.
6.2 TERMINATION BY PURCHASER.
(i) If Purchaser's due diligence investigation discloses any
matter which Purchaser, acting reasonably, considers to be
materially adverse to Corporation or Holdco or its decision to
acquire the Purchased Shares or Holdco Shares, Purchaser may,
on or before February 21, 2000, or
(ii) If any of the conditions set forth in Section 6.1 have not
been fulfilled or waived at or prior to the Closing Date or
any obligation or covenant of Vendors to be performed at or
prior to Closing has not been observed or performed by such
time, Purchaser may,
terminate this Agreement by notice in writing to the Vendors, and in such event
Purchaser shall be released from all obligations save and except for its
obligations under Sections 10.3, 10.4 and 10.7 which shall survive. Vendors
shall only be released from their obligations if the condition or conditions for
the non-performance of which Purchaser has terminated this Agreement are not
reasonably capable of being performed or caused to be performed by Vendors. If
Purchaser waives compliance with any of the conditions, obligations or covenants
contained in this Agreement, the waiver will be without prejudice to any of its
rights of termination in the event of non-fulfilment, non-observance or
non-performance of any other condition, obligation or covenant in whole or in
part. Purchaser's right of termination under this Article 6 is in addition to
any other rights it may have under this Agreement or otherwise, and the exercise
of a right of termination will not be an election of remedies. Except as
otherwise provided herein, nothing in Article 6 shall limit or affect any other
rights or causes of action Purchaser may have with respect to the
representations, warranties, covenants and indemnities in its favour contained
in this Agreement.
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6.3 CONDITIONS FOR THE BENEFIT OF VENDORS.
The purchase and sale of the Purchased Shares is subject to the following
conditions to be fulfilled or performed at or prior to the Closing, which
conditions are for the exclusive benefit of Vendors and may be waived, in whole
or in part, by Vendors in their sole discretion:
(a) TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser and Immersion contained in this Agreement
shall be true and correct as of the Closing Date with the same
force and effect as if such representations and warranties had
been made on and as of such date and Purchaser and Immersion
shall have executed and delivered a certificate to that effect.
The receipt of such certificate and the Closing shall not
constitute a waiver of the representations and warranties of
Purchaser and Immersion which are contained in this Agreement.
Upon delivery of such certificate, the representations and
warranties of Purchaser and Immersion in Article 4 shall be
deemed to have been made on and as of the Closing Date with the
same force and effect as if made on and as of such date.
(b) PERFORMANCE OF COVENANTS. Purchaser and Immersion shall have
fulfilled or complied with all covenants contained in this
Agreement to be fulfilled or complied with by them at or prior to
the Closing Date and Purchaser and Immersion shall have executed
and delivered a certificate to that effect. The receipt of such
certificate and the Closing shall not constitute a waiver by
Vendors of the covenants of Purchaser and Immersion which are
contained in this Agreement.
(c) DELIVERIES. Purchaser and Immersion shall deliver or cause to be
delivered to Vendors the following in form and substance
satisfactory to Vendors acting reasonably:
(i) certified copies of (i) the charter documents and extracts
from the by-laws of Purchaser and Immersion relating to the
execution of documents and, (ii) all resolutions of the board
of directors of Purchaser and Immersion approving the entering
into and completion of the transactions contemplated by this
Agreement;
(ii) a certificate of status, compliance, good standing or like
certificate with respect to Purchaser issued by appropriate
government official of the jurisdiction of its incorporation;
and
(iii) the certificates referred to in Section 6.3(a) and
Section 6.3(b).
6.4 TERMINATION BY VENDORS.
If any of the conditions set forth in Section 6.3 have not been fulfilled or
waived at or prior to the Closing Date or any obligation or covenant of
Purchaser or Immersion to be performed at or prior to the Closing Date has not
been observed or performed by such time, the Vendors may terminate this
Agreement by notice in writing to Purchaser, and in such event Vendors shall be
released from all obligations hereunder save and except for their obligations
under Sections 10.3, 10.4 and 10.7 which shall survive. Purchaser and Immersion
shall only be released from its obligations if the condition or conditions for
the non-performance of which Vendors have terminated this Agreement are not
reasonably capable of being performed or caused to be performed by Purchaser or
Immersion. If Vendors waive compliance with any of the conditions, obligations
or covenants contained in this
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Agreement, the waiver will be without prejudice to any of their rights of
termination in the event of non-fulfilment, non-observance or non-performance of
any other condition, obligation or covenant in whole or in part. The Vendors'
right of termination under this Article 6 is in addition to any other rights
they may have under this Agreement or otherwise, and the exercise of a right of
termination will not be an election of remedies. Except as otherwise provided
herein, nothing in Article 6 shall limit or affect any other rights or causes of
action the Vendors may have with respect to the representations, warranties,
covenants and indemnities in their favour contained in this Agreement.
ARTICLE 7
CLOSING
7.1 DATE, TIME AND PLACE OF CLOSING.
The completion of the transaction of purchase and sale contemplated by
this Agreement shall take place at the offices of Stikeman Elliott, 1155
Rene-Levesque Blvd. West, Suite 4000, Montreal, Quebec, at 10:00 a.m. (Montreal
time) on the Closing Date or at such other place, on such other date and at such
other time as may be agreed upon in writing between Vendors and Purchaser.
ARTICLE 8
INDEMNIFICATION
8.1 INDIVIDUAL VENDORS INDEMNIFICATION IN FAVOUR OF PURCHASER.
Subject to Sections 8.5 and 8.6, Individual Vendors shall indemnify and
save each of Immersion, Purchaser and Corporation harmless of and from any loss,
liability, claim, damage (including direct, indirect, incidental and
consequential damage) or expense (whether or not involving a third-party claim)
including legal expenses (collectively, "DAMAGES") suffered by, imposed upon or
asserted against Immersion, Purchaser or Corporation as a result of, in respect
of, connected with, or arising out of, under, or pursuant to:
(a) any failure of Individual Vendors to perform or fulfil any covenant
of Individual Vendors under this Agreement or any failure of
Corporation to perform or fulfil any of its covenants under this
Agreement;
(b) any breach or inaccuracy of any representation or warranty given
by Individual Vendors in Sections 3.1 and 3.2 in this Agreement;
(c) any liabilities or obligations of Corporation for Taxes due,
together with any penalties or interest, in connection with any
period ending on or prior to the Closing Date; and
(d) any liabilities or obligations of Corporation of any nature
whatsoever existing on or arising after the Closing Date in respect
of any fact, condition or circumstance existing or occurring on or
prior to the Closing Date.
8.2 INDEMNIFICATION BY VISUAIDE, INNOVATECH AND FTTI IN FAVOUR OF PURCHASER
Subject to Sections 8.5 and 8.6, Visuaide, Innovatech and FTTI shall
indemnify and save each of Immersion, Purchaser and Corporation harmless of and
from any Damages suffered by, imposed upon
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or asserted against Immersion, Purchaser or Corporation as a result of, in
respect of, connected with, or arising out of, under, or pursuant to
(a) any failure of Visuaide, Innovatech or FTTI to perform or fulfil
any of its covenants under this Agreement; or
(b) any breach or inaccuracy of any of its representations or
warranties given in this Agreement.
8.3 INDEMNIFICATION BY HOLDCO VENDORS IN FAVOUR OF PURCHASER
Subject to Sections 8.5 and 8.6, Holdco Vendors shall indemnify and save
each of Immersion, Purchaser, Holdco and Corporation harmless of and from any
Damages suffered by, imposed upon or asserted against Immersion, Purchaser,
Holdco or Corporation as a result of, in respect of, connected with, or arising
out of, under, or pursuant to:
(a) any breach or inaccuracy of any representation or warranty given
by Holdco Vendors in Section 3.3;
(b) any failure of Holdco to perform or fulfil any of its covenants
under this Agreement; and
(c) any liabilities or obligations of Holdco of any nature whatsoever
existing on or arising after the Closing Date in respect of any
fact, condition or circumstance existing or occurring on or prior to
the Closing Date.
8.4 PURCHASER INDEMNIFICATION IN FAVOUR OF VENDORS.
Subject to Section 8.5, Purchaser and Immersion shall solidarily indemnify
and save Vendors harmless of and from any Damages suffered by, imposed upon or
asserted against Vendors as a result of, in respect of, connected with, or
arising out of, under or pursuant to:
(a) any failure of Purchaser or Immersion to perform or fulfil any
covenant of Purchaser or Immersion under this Agreement; and
(b) any breach or inaccuracy of any representation or warranty given by
Purchaser or Immersion contained in this Agreement.
8.5 TIME LIMITATIONS.
(1) The representations and warranties of Vendors contained in this Agreement
shall survive the Closing and, notwithstanding the Closing and any
investigation made by or on behalf of Purchaser, shall continue for a
period of 18 months after the Closing, except that:
(a) the representations and warranties set out in Sections 3.1(c),
3.1(d), 3.1(e), 3.1(f), 3.1(g), 3.2(a), 3.2(d), 3.2(f) and 3.3 (and
the corresponding representations and warranties set out in the
certificate to be delivered pursuant to Section 6.1(a) (the
"VENDOR'S CLOSING CERTIFICATE")) shall survive the Closing and
continue in full force and effect without limitation of time;
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(b) the representations and warranties set out in Sections 3.2(v) and
3.2(y) (and the corresponding representations and warranties set out
with Vendor's Certificate) shall survive for a period of 30 days
after the expiration of the statute of limitations applicable to
claims relating to such matters; and
(c) a claim for any breach of any of the representations and warranties
of Vendors contained in this Agreement involving fraud or fraudulent
misrepresentation shall survive and continue in full force and
effect without limitation of time.
(2) The representations and warranties of Purchaser and Immersion contained in
this Agreement shall survive the Closing and, notwithstanding the Closing
and any investigation made by or on behalf of Vendors, shall continue for
a period of 18 months after the Closing except that:
(a) the representation and warranty set out in Sections 4.1 (c) shall
survive the Closing and continue in full force and effect without
limitation of time; and
(b) a claim for any breach of any representations and warranties of
Purchaser and Immersion contained in this Agreement involving fraud
or fraudulent misrepresentation shall survive and continue in full
force and effect without limitation of time.
(3) The obligations of indemnification set out in Sections 8.1, 8.2, 8.3 and
8.4 shall survive the Closing and continue in full force and effect
without limitation of time, except for the obligation of indemnification
arising from any incorrectness in, or breach of, any representation or
warranty made by Vendors or Purchaser and Immersion, as the case may be,
which in each case shall be subject to the limitations regarding survival
of representations and warranties set forth in Sections 8.5(1) or 8.5(2)
as the case may be.
8.6 LIMITATION ON DAMAGES.
(1) The covenants of each of the Vendors in Section 2.1, the covenants of
Visuaide, Innovatech and FTTI contained in this Agreement and the
representations and warranties of each Vendor in Section 3.1 and of
Visuaide in Section 3.2 are individual representations, warranties and
covenants of each such Vendor (collectively, the "INDIVIDUAL
REPRESENTATIONS AND COVENANTS"). This means that the particular Vendor
making the Individual Representations and Covenants will be solely liable
for such Individual Representations and Covenants as they pertain to
himself or itself, but not to the other Vendors. The remainder of the
representations, warranties (collectively the "COLLECTIVE
REPRESENTATIONS") and covenants (the "COLLECTIVE Covenants") in this
Agreement are made solidarily by Vendors making such representation and
warranty or covenant. This means that the Vendors making the
representation and warranty or covenant will be solidarily liable to
Purchaser for any Collective Representation and any Collective Covenant to
the extent provided in Article 8.
(2) Other than Damages suffered by Purchaser as a result of a breach or
inaccuracy of the representations and warranties contained in Sections
3.1, 3.2(a), 3.2(d), 3.2(f), 3.2(y) and 3.3 all of which shall not be
subject to the following limitation, Vendors shall have no liability for
indemnification pursuant to Section 8.1 as a result of a breach by Vendors
of the Collective Representations until the aggregate of the total of all
Damages suffered by Purchaser as a result of a breach by Vendors of its
Collective Representations exceeds $50,000 after which Vendors' liability
for indemnification shall commence from the first dollar of such Damages.
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8.7 OBLIGATION TO REIMBURSE
The amount of any Damages suffered or incurred by a party being
indemnified hereunder (the "INDEMNIFIED PARTY") shall accrue interest at a rate
per annum equal to the Prime Rate, plus two percent from the date it is
determined that the Indemnified Party incurs any such Damages until payment in
full by the Party providing for indemnification hereunder (the "INDEMNIFYING
PARTY").
8.8 NOTIFICATION.
Promptly upon obtaining knowledge thereof, the Indemnified Party shall
notify the Indemnifying Party of any cause which the Indemnified Party has
determined has given or could give rise to indemnification under this Article 8.
The omission so to notify the Indemnifying Party shall not relieve the
Indemnifying Party from any duty to indemnify and hold harmless which otherwise
might exist with respect to such cause unless (and only to that extent) the
omission to notify materially prejudices the ability of the Indemnifying Party
to exercise its right to defend provided in this Article 8.
8.9 DEFENSE OF THIRD PARTY CLAIM.
(1) If any legal proceeding shall be instituted or any claim or demand shall
be asserted by a third party against the Indemnified Party (each a "THIRD
PARTY CLAIM"), then the Indemnifying Party shall have the right, after
receipt of the Indemnified Party's notice under Section 8.8 and upon
giving notice to the Indemnified Party within five calendar days of such
receipt, to defend the Third Party Claim at its own cost and expense with
counsel of its own selection, provided that:
(a) the Indemnified Party shall at all times have the right to fully
participate in the defense at its own expense;
(b) the Third Party Claim seeks only monetary damages and does not seek
any injunctive or other relief against the Indemnified Party;
(c) the Indemnifying Party unconditionally acknowledges in writing its
obligation to indemnify and hold the Indemnified Party harmless with
respect to the Third Party Claim;
(d) legal counsel chosen by the Indemnifying Party is satisfactory to
the Indemnified Party, acting reasonably; and
(e) if the amount of the Third Party Claim is greater than $500,000
inclusive of reasonably estimated interest and costs, then the
Indemnifying Party shall deliver a letter of credit, surety bond
or similar security in form and substance satisfactory to the
Indemnified Party, acting reasonably, in the amount by which such
Third Party Claim exceeds $500,000 as security for the payment
of amounts payable by the Indemnifying Party to the Indemnified
Party pursuant hereto.
Amounts payable by the Indemnifying Party pursuant to a Third Party Claim
shall be paid in accordance with the terms of the settlement or, the
judgment, as applicable, but in any event prior to the expiry of any delay
for a judgment to become executory.
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(2) The Indemnifying Party shall not be permitted to compromise and settle or
to cause a compromise and settlement of any Third Party Claim, without the
prior written consent of the Indemnified Party, unless:
(a) the terms of the compromise and settlement require only the payment
of money and do not require the Indemnified Party to admit any
wrongdoing or take or refrain from taking any action; and
(b) the Indemnified Party receives, as part of the compromise and
settlement, a legally binding and enforceable unconditional
satisfaction or release, which his in form and substance
satisfactory to the Indemnified Party, acting reasonably, from any
and all obligations or liabilities it may have with respect to the
Third Party Claim.
(3) If the Indemnifying Party fails:
(a) within ten calendar days from receipt of the notice of a Third Party
Claim to give notice of its intention to defend the Third Party
Claim in accordance with Section 8.9(1), or
(b) to comply at any time with any of SubSections 8.9(1)(c) or
8.9(1)(e),
then the Indemnifying Party shall be deemed to have waived its right to
defend the Third Party Claim and the Indemnified Party shall have the
right (but not the obligation) to undertake or to cause Corporation to
undertake the defense of the Third Party Claim and compromise and settle
the Third Party Claim on behalf, for the account and at the risk and
expense of the Indemnifying Party.
(4) Where the defence of a Third Party Claim is being undertaken and
controlled by the Indemnifying Party, the Indemnified Party will use its
reasonable efforts to make available to the Indemnifying Party those
employees whose assistance, testimony or presence is necessary to assist
the Indemnifying Party in evaluating and defending any such claims.
However, the Indemnifying Party shall be responsible for the expense
associated with any employees made available by the Indemnified Party to
the Indemnifying Party pursuant to this Section 8.9(4), which expense
shall be equal to an amount to be mutually agreed upon per person per hour
or per day for each day or portion thereof that the employees are
assisting the Indemnifying Party and which expenses shall not exceed the
actual cost to the Indemnified Party associated with the employees.
(5) With respect to any Third Party Claim at the request of the Indemnifying
Party, the Indemnified Party shall make available to the Indemnifying
Party or its representatives on a timely basis all documents, records and
other materials in the possession of the Indemnified Party, at the expense
of the Indemnifying Party, reasonably required by the Indemnifying Party
for its use in defending any such claim and shall otherwise cooperate on a
timely basis with the Indemnifying Party in the defence of such claim.
(6) With respect to any Third Party Claim in respect of income, corporate,
sales, excise, or other tax or other liability enforceable by Lien against
the property of the Indemnified Party, the Indemnifying Party's right to
so defend the Proceeding shall only apply after payment of the
re-assessment.
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ARTICLE 9
POST-CLOSING COVENANTS
9.1 CONFIDENTIALITY.
After the Closing, Vendors will keep confidential and will not use or
disclose any information in their possession or under their control relating to
Corporation or their respective business, unless such information is or becomes
generally available to the public other than as a result of a disclosure by
Vendors in violation of this Agreement.
9.2 COMPENSATION AND BENEFITS.
For at least twelve (12) months following Closing, the employees of
Corporation shall be entitled to receive compensation and benefits no less
favourable than their current compensation and benefits which are set forth in
Schedule 3.2(u). Immersion acknowledges that Corporation's Board of Directors
approved salary increases for certain of Corporation's employees on January 11,
2000. These increases in salary are described in Section 5 of the minutes of the
Remuneration Committee dated November 8, 1999. Immersion agrees to accept these
new salary levels, but only on the condition that such salary increases shall
commence as of the Closing and that such salary increases shall not be deemed to
have been effective during any period prior to the Closing. Following the
Closing, employees shall be eligible to participate in Immersion's Stock
Purchase Plan. Immersion acknowledges and agrees that salary increases for
Ramstein and Mather have already become effective and are being paid.
9.3 VISUAIDE
Visuaide and Immersion agree to discuss in good faith a strategic
relationship related to the visually impaired
9.4 FURTHER ASSURANCES.
From time to time after the Closing Date, each Party shall, at the request
of any other Party, execute and deliver such additional conveyances, transfers
and other assurances as may be reasonably required to effectively transfer the
Purchased Shares to Purchaser and carry out the intent of this Agreement.
ARTICLE 10
MISCELLANEOUS
10.1 NOTICES.
Any notice, direction or other communication given under this Agreement
shall be in writing and given by delivering it or sending it by facsimile or
other similar form of recorded communication addressed:
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(a) to Purchaser and Immersion at:
IMMERSION CORPORATION
2158 Paragon Drive
San Jose, California
95131
Attention: Craig Factor
Telephone: (408) 467-1900
Facsimile: (408) 467-1901
with a copy to HELLER EHRMAN WHITE &
McAULIFFE at:
525 University Avenue
Suite 1100, Palo Alto California
943011908
Attention: Sarah O'Dowd
Telephone: (650) 324-7045
Facsimile: (650) 324-0638
with a copy to Stikeman Elliott at:
1155 Rene-Levesque Blvd West
Suite 4000
Montreal, Quebec
H3B 3V2
Attention: John W. Leopold
Telephone: (514) 397-3000
Facsimile: (514) 397-3222
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(b) to Mather at:
5037 St. Andre
Montreal, Quebec
H2J 3A5
Telephone: (514) 987-9800
Facsimile: (514) 987-9808
with copy to McCarthy Tetrault at:
Le Windsor
1170, Peel Street
5th, Floor
Montreal, Quebec
H3B 4S8
Attention: Peter S. Martin
Telephone: (514) 397-4111
Facsimile: (514) 875-6246
(c) to Ramstein at:
4275 Garnier
Montreal, Quebec
H2J 3R7
Telephone: (514) 987-9800
Facsimile: (514) 987-9808
with copy to McCarthy Tetrault at:
Le Windsor
1170, Peel Street
5th, Floor
Montreal, Quebec
H3B 4S8
Attention: Peter S. Martin
Telephone: (514) 397-4111
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Facsimile: (514) 875-6246
(d) to Hayward at:
2277 Harvard
Montreal, Quebec
H4A 2W1
Telephone: (514) 987-9800
Facsimile: (514) 987-9808
with copy to McCarthy Tetrault at:
Le Windsor
1170, Peel Street
5th, Floor
Montreal, Quebec
H3B 4S8
Attention: Peter S. Martin
Telephone: (514) 397-4111
Facsimile: (514) 875-6246
(e) to Canonico at:
750, Versaille,
Montreal, Quebec
H3C 1Z4
Telephone: (514) 987-9800
Facsimile: (514) 987-9808
with copy to McCarthy Tetrault at:
Le Windsor
1170, Peel Street
5th, Floor
Montreal, Quebec
H3B 4S8
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Attention: Peter S. Martin
Telephone: (514) 397-4111
Facsimile: (514) 875-6246
(f) to Gregorio at:
7353 Dunver Crescent
Verdun, Quebec
H4H 2H6
Telephone: (514) 987-9800
Facsimile: (514) 987-9808
with copy to McCarthy Tetrault at:
Le Windsor
1170, Peel Street
5th, Floor
Montreal, Quebec
H3B 4S8
Attention: Peter S. Martin
Telephone: (514) 397-4111
Facsimile: (514) 875-6246
(g) to Pare at:
253 Acres
Kirkland, Quebec
H9H 4M1
Telephone: (514) 987-9800
Facsimile: (514) 987-9808
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with copy to McCarthy Tetrault at:
Le Windsor
1170, Peel Street
5th, Floor
Montreal, Quebec
H3B 4S8
Attention: Peter S. Martin
Telephone: (514) 397-4111
Facsimile: (514) 875-6246
(h) to Innovatech at:
2020 University St., Suite 1527
Montreal, Quebec
H3A 2A5
Attention: Hubert Manseau
Telephone: (514) 864-2929
Facsimile: (514) 864-4220
with copy to McCarthy Tetrault at:
Le Windsor
1170, Peel Street
5th, Floor
Montreal, Quebec
H3B 4S8
Attention: Peter S. Martin
Telephone: (514) 397-4111
Facsimile: (514) 875-6246
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(i) to FTTI at:
255 Saint-Jacques St. West
Montreal, Quebec
H2Y 1M6
Attention: John Simons
Telephone: (514) 845-3806
Facsimile: (514) 845-3810
with copy to McCarthy Tetrault at:
Le Windsor
1170, Peel Street
5th, Floor
Montreal, Quebec
H3B 4S8
Attention: Peter S.Martin
Telephone: (514) 397-4111
Facsimile: (514) 875-6246
(j) to Visuaide at:
841 boul. Jean Paul Vincent
Longueuil, Quebec
J4G 1R3
Attention: Gilles Pepin
Telephone: (450) 463-1717
Facsimile (450) 463-0120
(k) to Holdco at: Immersion Corporation
IMMERSION CORPORATION
2158 Paragon Drive
San Jose, California
95131
Attention: Craig Factor
Telephone: (408) 467-1900
Facsimile: (408) 467-1901
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With a copy to Heller Ehrman White & McAuliffe at:
525 University Avenue Suite 1100
Palo Alto, California
943011908
Attention: Sarah O'Dowd
Telephone: (650) 324-7045
Facsimile (650 324-0638
With a copy to Stikeman Elliott at:
1155 Rene-Levesque Blvd West
Suite 4000
Montreal, Quebec
H3B 3V2
Attention: John W. Leopold
Telephone: (514) 397-3000
Facsimile: (514) 397-3222
(l) to Corporation at: IMMERSION CORPORATION
2158 Paragon Drive
San Jose, California
95131
Attention: Craig Factor
Telephone: (408) 467-1900
Facsimile: (408) 467-1901
With a copy to Heller Ehrman White & McAuliffe at:
525 University Avenue Suite 1100
Palo Alto, California
943011908
Attention: Sarah O'Dowd
Telephone: (650) 324-7045
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Facsimile: (650) 324-0638
With a copy to Stikeman Elliott at
1155 Rene-Levesque Blvd West
Suite 4000
Montreal, Quebec
H3B 3V2
Attention: John W. Leopold
Telephone: (514) 397-3000
Facsimile: (514) 397-3222
Any such communication shall be deemed to have been validly and effectively
given(i) if personally delivered, on the date of such delivery if such date is a
Business Day and such delivery was made prior to 4:00 p.m. (Montreal time) and
otherwise on the next Business Day, or (ii) if transmitted by facsimile or
similar means of recorded communication on the Business Day following the date
of transmission. Any Party may change its address for service from time to time
by notice given in accordance with the foregoing and any subsequent notice shall
be sent to such Party at its changed address.
10.2 TIME OF THE ESSENCE.
Time shall be of the essence of this Agreement.
10.3 BROKERS.
Vendors shall indemnify and save harmless Immersion, Purchaser and
Corporation from and against any and all claims, losses and costs whatsoever for
any commission or other remuneration payable or alleged to be payable to any
broker, agent or other intermediary who purports to act or have acted for such
Vendors, or Corporation. Purchaser and Immersion shall solidarily indemnify and
save harmless Vendors from and against any and all claims, losses and costs
whatsoever for any commission or other remuneration payable or alleged to be
payable to any broker, agent or other intermediary who purports to act or have
acted for Purchaser. These indemnities shall not be subject to any of the
limitations set out in Article 8 of this Agreement.
10.4 ANNOUNCEMENTS.
The Vendors, Holdco and Corporation shall not make any announcement
regarding the transaction contemplated herein without the prior written consent
of Immersion, and shall disclose the transaction only to such of their employees
and professional advisers who have a need to know. Purchaser and Immersion shall
consult with the Corporation prior to any press release or public statement or
announcement (a "PUBLIC STATEMENT") with respect to the transaction contemplated
in this Agreement unless such Public Statement is required by Law or by any
stock exchange, in which case the Party required to make the Public Statement
shall be free to make such Public Statement.
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10.5 IMMERSION GUARANTEE.
Immersion hereby unconditionally and irrevocably guarantees the
performance and fulfilment by Purchaser of its obligations and covenants under
this Agreement, and acknowledges that there is solidarity between Purchaser and
Immersion in respect of this guarantee. Immersion hereby waives any benefit of
division and discussion.
10.6 THIRD PARTY BENEFICIARIES.
Vendors and Purchaser intend that this Agreement shall not benefit or
create any right or cause of action in, or on behalf of, any Person other than
the Parties to this Agreement and no Person, other than the Parties to this
Agreement shall be entitled to rely on the provisions of this Agreement in any
action, suit, proceeding, hearing or other forum.
10.7 EXPENSES.
Purchaser and Immersion shall pay for its own fees and expenses and
Vendors shall pay for their own fees and expenses and the fees and expenses of
Corporation, incident to the negotiation, preparation and execution of this
Agreement and the agreements contemplated hereby, including, without limitation,
legal and accounting fees and expenses; provided that Immersion agrees to pay
the reasonable attorneys' fees of Corporation and Vendors in an amount not to
exceed $50,000 in the event that Closing occurs.
10.8 ADVANCES.
Promptly after the date hereof, Immersion will loan to Corporation an
amount not to exceed $300,000 which, in the event that Closing does not occur,
shall be repaid in totality by Corporation to Immersion on March 31, 2000 at the
latest.
10.9 SHAREHOLDERS AGREEMENT.
The Vendors hereby consent to the transactions contemplated herein and
waive any right of first refusal or other rights they may have with respect to
the sale of the Purchased Shares, whether such rights arise from the
Shareholders Agreement of Corporation or from any other agreement.
The Holdco Vendors hereby consent to the transactions contemplated herein
and waive any right of first refusal or other rights they may have with respect
to the sale of the Holdco Shares, whether such rights arise from the
Shareholders Agreement of or from any other agreement.
10.10 AMENDMENTS.
This Agreement may only be amended, supplemented or otherwise modified by
written agreement signed by the Parties.
10.11 WAIVER.
(1) No waiver of any of the provisions of this Agreement shall be deemed to
constitute a waiver of any other provision (whether or not similar), nor
shall such waiver be binding unless executed in writing by the Party to be
bound by the waiver.
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(2) No failure on the part of a Party to exercise, and no delay in exercising
any right under this Agreement shall operate as a waiver of such right;
nor shall any single or partial exercise of any such right preclude any
other or further exercise of such right or the exercise of any other
right.
10.12 NON-MERGER.
Except as otherwise expressly provided in this Agreement, the covenants,
representations and warranties shall not merge on and shall survive the Closing
and, notwithstanding such Closing and any investigation made by or on behalf of
any Party, shall continue in full force and effect. Closing shall not prejudice
any right of one Party against any other Party in respect of anything done or
omitted under this Agreement or in respect of any right to damages or other
remedies.
10.13 ENTIRE AGREEMENT.
This Agreement together with the agreements referred to herein constitutes
the entire agreement between the Parties with respect to the transactions
contemplated in this Agreement and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
Parties. There are no representations, warranties, covenants, conditions or
other agreements, express or implied, collateral, statutory or otherwise,
between the Parties in connection with the subject matter of this Agreement
except as specifically set forth herein and therein and neither Vendors nor
Purchaser has relied or is relying on any other information, discussion or
understanding in entering into and completing the transactions contemplated in
this Agreement.
10.14 SUCCESSORS AND ASSIGNS.
This Agreement shall become effective when executed by the Parties and
after that time shall be binding upon and enure to the benefit of the parties
and their respective successors and permitted assigns. Neither this Agreement
nor any of the rights or obligations under this Agreement shall be assignable or
transferable by Vendors without the prior written consent of the Purchaser which
shall not be unreasonably withheld. Purchaser may assign and transfer this
Agreement and any of its rights and obligations under this Agreement to an
Affiliate without the prior written consent of the Vendors, provided that
Purchaser shall not by reason of any such assignment and transfer be released
from its obligations hereunder.
10.15 SEVERABILITY.
If any provision of this Agreement shall be determined by an arbitrator or
any court of competent jurisdiction to be illegal, invalid or unenforceable,
that provision shall be severed from this Agreement and the remaining provisions
shall continue in full force and effect.
10.16 GOVERNING LAW.
This Agreement shall be governed by and interpreted and enforced in
accordance with the Laws of the Province of Quebec and the federal Laws of
Canada applicable therein.
10.17 COUNTERPARTS.
This Agreement may be executed in any number of counterparts (including
counterparts by facsimile) and all such counterparts taken together shall be
deemed to constitute one and the same instrument.
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IN WITNESS WHEREOF the parties have executed this Share Purchase
Agreement.
CORPORATION
HAPTIC TECHNOLOGIES INC.
By: /s/ Alain Pare
------------------------------------
Authorized Signing Officer
HOLDCO
9039-4115 QUEBEC, INC.
By: /s/ Mathew Mather
------------------------------------
Authorized Signing Officer
SHAREHOLDERS OF CORPORATION AND HOLDCO:
By: /s/ Mathew Mather
------------------------------------
Mathew Mather
By: /s/ Christophe Ramstein
------------------------------------
Christophe Ramstein
By: /s/ Vincent Hayward
------------------------------------
Vincent Hayward
By: /s/ Vincent Canonico
------------------------------------
Vincent Canonico
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By: /s/ Pedro Gregorio
------------------------------------
Pedro Gregorio
By: /s/ Alain Pare
------------------------------------
Alain Pare
SOCIETE INNOVATECH DU GRAND MONTREAL
By: /s/ Hubert Manseau
------------------------------------
Authorized Signing Officer
FONDS EN TRANSFERTS DE TECHNOLOGIES
INDUSTRIELLES, by its General Partner,
90271602 QUEBEC, INC.
By: /s/ Bernard Hamel
------------------------------------
Authorized Signing Officer
VISUAIDE INC.
By:
------------------------------------
Authorized Signing Officer
PURCHASER
511220 N.B. INC.
By: /s/ Victor Viegas
------------------------------------
Authorized Signing Officer
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IMMERSION
IMMERSION CORPORATION
By: /s/ Victor Viegas
------------------------------------
Authorized Signing Officer