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Exhibit 10.15
SHARE SUBSCRIPTION AGREEMENT
THIS AGREEMENT made as of the 29/th/ day of September, 2000;
B E T W E E N:
AMERICA ONLINE, INC. (hereinafter referred
to herein as "Purchaser")
- and -
ImagicTV INC. (hereinafter referred to as
the "Issuer")
WHEREAS the Issuer is authorized to issue an unlimited number of Class
A Voting Shares in the capital of the Issuer;
AND WHEREAS the Purchaser desires to subscribe for and purchase from
Treasury Class A Voting Shares of the Issuer upon and subject to the terms and
conditions hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and the covenants and agreements herein contained the parties hereto
agree as follows:
ARTICLE ONE - INTERPRETATION
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1.1 Definitions
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In this Agreement, unless something in the subject matter or context
is inconsistent therewith:
(a) "Agreement" means this agreement and all amendments made hereto by
written agreement between the Issuer and the Purchaser.
(a) "Balance Sheet" means the balance sheet of the Issuer as at the
Balance Sheet Date.
(c) "Balance Sheet Date" means February 29, 2000.
(d) "Business Day" means a day other than a Saturday, Sunday or statutory
holiday in the Province of New Brunswick or the Commonwealth of Virginia.
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(e) "Common Shares" means the Class A Voting shares, Class B Non-Voting shares
and Class C Non-Voting shares in the capital of the Issuer.
(f) "Financial Statements" has the meaning set out in Section 3.1(h).
(g) "Intellectual Property" means all intellectual property of the Issuer
existing as of the Time of Closing and used or currently being developed for use
by the Issuer and all rights of the Issuer therein, worldwide, whether
registered or unregistered, including without limitation:
(i) Copyrights - all copyrights used by or currently being developed for
use by the Issuer, including without limitation, all copyrights in and to
the computer software programs listed in Schedule I, including the Software
and all applications and registrations of such copyrights;
(ii) Trade-marks - all trade-marks, trade-names, service marks, brand
names, logos or the like applied or used by or currently being developed
for use by the Issuer, whether used or applied in association with wares or
services, including without limitation, those trade-marks listed in
Schedule I and all applications, registrations, renewals, modifications and
extensions of such trade-marks;
(iii) Patents - all patents, patent applications and other patent rights,
if any, including divisional and continuation patents of the Issuer;
(iv) Technology -all technology created, developed or acquired by the
Issuer whether or not patented or patentable and whether or not fixed in
any medium whatsoever, including without limitation, all inventions, know
how, techniques, processes, procedures, methods, trade secrets, research
and technical data, records, formulae, designs, sketches, patterns,
specifications, blue prints, flow charts or sheets, equipment and parts
lists and descriptions, samples, reports, studies, findings, algorithms,
instructions, guides, manuals, and plans for new or revised products and/or
services; and
(i) Licenses - all licenses, sub-licenses and franchises used or
exploited by the Issuer in which the Issuer is a licensee or a
licensor of intellectual property of a nature described in
paragraphs (i) - (iv) above.
(b) "Operating Agreement" means the Operating Agreement dated December 17, 1999
made among the Issuer and all of its voting shareholders.
(i) "Purchased Common Shares" has the meaning given to such term in Section 2.1
hereof.
(j) "Software" means the computer programs known by the names as set out in
Schedule I, including all versions thereof, and all related documentation,
manuals, source code and object code, program files, data files, computer
related data, field and data definitions and relationships, data definition
specifications, data models, program and
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system logic, interfaces, program modules, routines, sub-routines, algorithms,
program architecture, design concepts, system designs, program structure,
sequence and organization, screen displays and report layouts, and all other
material related to the said computer programs, all as they exist at the Time of
Closing.
(k) "Subsidiary" has the meaning given to such term in the Canada Business
Corporations Act.
(l) "Time of Closing" means 10:00 a.m. on September 29, 2000.
(m) "USA" means the unanimous shareholders' agreement dated December 17, 1999
among the Issuer and all of its shareholders.
1.2 Headings
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The division of this Agreement into Articles and Sections and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement. The terms "this Agreement",
"hereof", "hereunder" and similar expressions refer to this Agreement and not to
any particular Article, Section or other portion hereof and include any
agreement supplemental hereto. Unless something in the subject matter or context
is inconsistent therewith, references herein to Articles and Sections are to
Articles and Sections of this Agreement.
1.3 Extended Meanings
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In this Agreement words importing the singular number only shall include the
plural and vice versa, words importing the masculine gender shall include the
feminine and neuter genders and vice versa and words importing persons shall
include individuals, partnerships, associations, trusts, unincorporated
organizations and corporations.
1.4 Accounting Principles
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Wherever in this Agreement reference is made to a calculation to be made in
accordance with generally accepted accounting principles, such reference shall
be deemed to be to the generally accepted accounting principles from time to
time approved by the Canadian Institute of Chartered Accountants, or any
successor institute, applicable as at the date on which such calculation is made
or required to be made in accordance with generally accepted accounting
principles.
1.5 Currency
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All references to currency herein are to lawful money of the United States of
America, unless otherwise indicated..
1.6 Schedules
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The following are the Schedules annexed hereto and incorporated by reference and
deemed to be part hereof:
Schedule A - Exceptions to Representations and Warranties
Schedule B - Rights, Privileges, Restrictions and Conditions
attached to the Common Shares;
Schedule C - Outstanding Shares and Options;
Schedule D - Intentionally Deleted;
Schedule E - Licenses and all other material agreements;
Schedule F - Intentionally Deleted;
Schedule G - Employee Indebtedness;
Schedule H - Third Party Programs;
Schedule I - Intellectual Property and Software;
Schedule J - Intentionally Deleted;
Schedule K - Intentionally Deleted;
Schedule L - USA;
Schedule M - Operating Agreement
ARTICLE TWO - SUBSCRIPTION AND ACCEPTANCE
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2. Subscription and Acceptance
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2.1 The Purchaser hereby irrevocably subscribes for 234,375 Class A Voting
Shares in the capital of the Issuer (together, the "Purchased Common Shares") at
the aggregate purchase price of $3,000,000.00. The Purchaser tenders herewith a
certified cheque or a wire transfer for the purchase price amount in full
payment for its Purchased Common Shares.
2.2 The Issuer hereby accepts the subscription for the Purchased Common Shares
by the Purchaser in Section 2.1 above and acknowledges having received payment
in full of the purchase price for the Purchased Common Shares.
ARTICLE THREE - REPRESENTATIONS AND WARRANTIES
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3.1 Issuer's Representations and Warranties
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The Issuer represents and warrants to the Purchaser, subject to those matters
specifically excluded pursuant to Schedule A attached hereto, that as at the
Time of Closing:
(a) the Issuer is a corporation duly incorporated, organized and
subsisting under the Canada Business Corporations Act, has the
corporate power to own its assets and to carry on its business
and has made all necessary filings under all applicable
corporate, securities and taxation laws or any other laws to
which it is subject and is a private company as that term is
defined under applicable securities legislation;
(b) the authorized capital of the Issuer consists of an unlimited
number of Class A Voting Shares, of which 12,900,962 have been
validly issued and are outstanding as fully paid and non-
assessable, an unlimited number of Class B Non-Voting Shares, of
which 1,500,000 have been issued and are outstanding as fully
paid and non-assessable and an unlimited number of Class C Non-
Voting Shares, of which 689,383 have been issued and are
outstanding as fully paid and non-assessable, in each case,
before giving effect to the sale of the Purchased Common Shares
contemplated herein;
(c) the rights, privileges, restrictions and conditions attached to
the Common Shares of the Issuer are as set out in Schedule B
attached hereto;
(d) Schedule C hereto accurately sets out the names of all holders of
issued shares in the capital of the Issuer and the number and
class of any shares issued to each such holder;
(e) the Issuer has good and sufficient power, authority and right to
enter into and deliver this Agreement and to issue the Purchased
Common Shares to the Purchaser free and clear of all liens,
charges, encumbrances and any other rights of others;
(f) there is no contract, warrant, option or any other right (
including pre-emptive rights or rights of first refusal)
including of another binding upon or which at any time in the
future may become binding upon the Issuer to allot or issue any
of the unissued shares of the Issuer or to create any additional
class of shares other than pursuant to (i) the employee share
option plan which has been duly approved and adopted by the
Issuer, a copy of which has been delivered to the Purchaser, (ii)
the obligations of the Issuer under the USA and the Operating
Agreement, and (iii) those obligations listed in Schedule C
(g) the entering into and the delivery of this Agreement, and the
completion of the transactions contemplated hereby by the Issuer
will not result in the violation of:
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(i) any of the provisions of the constating documents or by-laws of
the Issuer,
(ii) any agreement or other instrument to which the Issuer is a party
or by which the Issuer is bound, or
(iii) any applicable law, rule or regulation;
(h) the audited financial statements of the Issuer, consisting of the
Balance Sheet and statements of loss, deficit and changes in financial
position for the period ended on the Balance Sheet Date, together with
the report of KPMG, chartered accountants, thereon and the notes
thereto (hereinafter collectively referred to as the "Financial
Statements"), a copy of which has been provided to the Purchaser:
(i) are in accordance with the books and accounts of the Issuer as at
the Balance Sheet Date,
(ii) are true and correct and present fairly the financial position of
the Issuer as at the Balance Sheet Date,
(iii) have been prepared in accordance with generally accepted
accounting principles consistently applied, and
(iv) present fairly all of the assets and liabilities of the Issuer as
at the Balance Sheet Date including, without limiting the
generality of the foregoing, all contingent liabilities of the
Issuer as at the Balance Sheet Date;
(i) to the best of its knowledge, information and belief, after due
enquiry, the financial position of the Issuer is at least as good as
the financial position of the Issuer as at the Balance Sheet Date;
(j) since the Balance Sheet Date the business of the Issuer has been
carried on in its usual and ordinary course and the Issuer has not
entered into any transaction out of the usual and ordinary course of
business;
(k) to the best of its knowledge, information and belief, after due
inquiry, since the Balance Sheet Date there has been no material
adverse change in the affairs, business, prospects, operations or
condition of the Issuer, financial or otherwise, whether arising as a
result of any legislative or regulatory change, revocation of any
licence or right to do business, fire, explosion, accident, casualty,
labour dispute, flood, drought, riot, storm, condemnation, act of God,
public force or otherwise, except changes occurring in the usual and
ordinary course of business which have not affected the affairs,
business, prospects, operations or condition of the Issuer, financial
or otherwise;
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(l) the Issuer owns, with a good and marketable title, free and
clear of all liens, charges, encumbrances and any other rights
of others, all assets shown or reflected on the consolidated
Balance Sheet including, without limitation, the property
listed on Schedule I, except only such of the assets of the
Issuer as have been disposed of in the usual and ordinary
course of business since the Balance Sheet Date, and of all
assets acquired by the Issuer since the Balance Sheet Date;
(m) to the best of its knowledge, information and belief, after
due inquiry, all machinery and equipment owned or used by the
Issuer has been properly maintained and is in good working
order for the purposes of ongoing operation, subject to
ordinary wear and tear for machinery and equipment of
comparable age;
(n) to the best of its knowledge, information and belief, after
due inquiry, all of the inventories of the Issuer are of
merchantable quality and reasonably fit for their usual
purpose;
(o) there are no outstanding orders, notices or similar
requirements relating to the Issuer issued by any building,
environmental, fire, health, labour or police authorities or
from any other federal, provincial, state or municipal
authority and there are no matters under discussion with any
such authorities relating to orders, notices or similar
requirements;
(p) no dividends have been declared or paid on or in respect of
the Common Shares and no other distribution on any of its
securities or shares has been made by the Issuer;
(q) the Issuer has no liability, obligation or commitment for the
payment of income taxes, corporation taxes or any other taxes
or duties of whatever nature or kind, or interest or penalties
with respect thereto, except such as are disclosed in the
Financial Statements or such taxes or duties not yet due as
have arisen since the Balance Sheet Date in the usual and
ordinary course of business and for which adequate provision
in the accounts of the Issuer has been made, and the Issuer is
not in arrears with respect to any required withholdings or
installment payments of any tax or duty of any kind and has
not filed any waiver for a taxation year of the Issuer under
the Income Tax Act (Canada) or any other legislation imposing
tax on the Issuer;
(r) except as otherwise set out in the Balance Sheet, there are no
outstanding liabilities against the Issuer except trade debts
incurred in the usual and ordinary course of business;
(s) the Issuer is not a party to any contract or commitment
outside the usual and ordinary course of business nor a party
to any contract or commitment extending for a period of time
longer than three months or involving
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expenditures by the Issuer in the aggregate in excess of
$100,000, except such contracts or commitments as are listed
in Schedule E attached hereto;
(t) the Issuer is not in default or breach of any contract or
commitment to which it is a party and there exists no
condition, event or act which, with the giving of notice or
lapse of time or both would constitute such a default or
breach and all such contracts and commitments are in good
standing and in full force and effect without amendment
thereto and the Issuer is entitled to all benefits thereunder;
(u) the Issuer is not a party to or bound by any guarantee,
indemnification, surety or similar obligation except those
listed in Schedule A attached hereto;
(v) except as otherwise set out in Schedule A, the Issuer is not a
party to any lease or agreement in the nature of a lease for
real property, whether as lessor or lessee;
(w) the Issuer has no Subsidiaries, except for iMagicTV (US), Inc.
and ImagicTV (UK) Limited (all of the issued and outstanding
shares of which are legally and beneficially owned by the
Issuer). iMagicTV (US), Inc. was incorporated on November 17,
1999 . ImagicTV (UK) Limited was incorporated on July 17,
2000. There are no agreements, options or commitments to
acquire any shares or securities of the Issuer or to acquire
or lease any business operations, real property or assets;
(x) there is no agreement, option, understanding or commitment, or
any right or privilege capable of becoming an agreement, for
the purchase from the Issuer of its business or any of its
assets other than in the usual and ordinary course of
business;
(y) the Issuer is not a party to or bound by any contract or
commitment to pay any royalty, licence fee or management fee
except those listed in Schedule "E attached hereto;
(z) all of the current and prior employees of the Issuer have
signed an Agreement of Confidentiality and Assignment of
Invention; and all of the current and prior independent
contractors of the Issuer have signed Individual Secrecy of
Information and Non Disclosure Agreement ;
(aa) all benefit plans of the Issuer have been duly registered
where required by, and are in good standing under, all
applicable legislation including, without limiting the
generality of the foregoing, the Income Tax Act (Canada) and
the Pension Benefits Act (New Brunswick) or similar
legislation in any other jurisdiction, and all required
employer contributions under any such plans have been made and
the applicable
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funds have been funded in accordance with the terms thereof of
the plans and no past service funding liabilities exist
thereunder;
(bb) the Issuer is not bound by or a party to:
(i) any collective bargaining agreement, or
(ii) any benefit plan including, without limiting the
generality of the foregoing, any pension plan
maintained by or on behalf of the Issuer for any of
its employees;
(cc) no trade union, council of trade unions, employee bargaining
agency or affiliated bargaining agent:
(i) holds bargaining rights with respect to the Issuer's
employees by way of certification, interim
certification, voluntary recognition, designation or
successor rights,
(ii) has applied to be certified as the bargaining agent
of any of the Issuer's employees, or
(iii) has applied to have the Issuer declared a related
employer pursuant to the Industrial Relations Act
(New Brunswick) or similar legislation in any other
jurisdiction or taken substantially similar action in
any other jurisdiction in which the Issuer conducts
its business;
(dd) except for remuneration paid to employees in the usual and
ordinary course of business and made at current rates of
remuneration, no payments have been made or authorized since
the Balance Sheet Date by the Issuer to officers, directors or
employees of the Issuer;
(ee) no director, former director, officer, shareholder or employee
of the Issuer or any person not dealing at arm's length within
the meaning of the Income Tax Act (Canada) with any such
person is indebted to the Issuer;
(ff) there are no actions, suits or proceedings (whether or not
purportedly on behalf of the Issuer) pending or threatened
against or adversely affecting, or which could adversely
affect, the Issuer or any of its assets or before or by any
federal, provincial, municipal or other governmental court,
department, commission, board, bureau, agency or
instrumentality, domestic or foreign, whether or not insured,
and which might involve the possibility of any judgment or
liability against the Issuer;
(gg) the Issuer is conducting its business in compliance with all
applicable laws, rules, regulations, notices, approvals and
orders of Canada and any other jurisdiction in which the
business of the Issuer is carried on, is not in breach of any
such laws, rules, regulations, notices, approvals or orders
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and is duly licensed, registered or qualified, and duly
possesses all permits and quotas, in each of the jurisdictions
in which the Issuer carries on its business to enable its
business to be carried on as now conducted and its assets to
be owned, leased and operated, and all such licences,
registrations, qualifications, permits and quotas are valid
and subsisting and in good standing and none of the same
contains or is subject to any term, provision, condition or
limitation which has or may have an adverse effect on the
operation of its business or which may adversely change or
terminate such licence, registration, qualification, permit or
quota by virtue of the completion of the transactions
contemplated hereby;
(hh) all insurance policies maintained by the Issuer are in good
standing;
(ii) no consent, authorization or approval is required from any
person, government, agency, office, bureau or authority in
connection with the entry by the Issuer into this Agreement
and completion of the transactions contemplated hereby;
(jj) attached hereto as Schedule I is a list of all Intellectual
Property; the Intellectual Property is in good standing and
duly registered in all appropriate offices to preserve the
right thereof and thereto unless noted otherwise in Schedule
I;
(kk) no conduct of the Issuer and none of the Issuer's products
infringes (i) upon the trademarks, trade names or copyright of
any other person registered in Canada or the United States,
(ii) to the best of its knowledge and belief, after due
inquiry, upon any registered patent of any other person in
Canada or the United States, or any unregistered trademarks,
trade names, or copyrights of any other person in Canada or
the United States, or (iii) to the best of its knowledge and
belief, after due inquiry, upon any trade marks, trade names,
patents, or copyrights of any other person in any part of the
world, outside of Canada and the United States, where the
Issuer conducts its business;
(ll) the Intellectual Property is all of the intellectual property
used in, or required for the proper carrying on of, the
Issuer's business. The Issuer owns all the Intellectual
Property, except that portion which is the Third Party
Programs. The Issuer is the sole and exclusive owner of, with
all right, title and interest in and to (free and clear of any
liens or encumbrances), the Intellectual Property, and has
sole and exclusive rights (and is not contractually obligated
to pay any compensation to any third party in respect thereof)
to the use thereof or the material covered thereby, except
that portion which is the Third Party Programs. There is no
and has not been any unauthorized use, infringement or
misappropriation of the Intellectual Property by any person,
former employee or other third party to the best of the
Issuer's information and belief after due inquiry;
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(mm) except for the third party software ("Third Party Programs")
listed in Schedule H, the Software was written only by
individuals (the "Developers") who were employed by the Issuer
or contracted by the Issuer whereby such individuals were
obligated to assign all their right, title and interest in and
to any developed work to the Issuer, other than minor
components of the Software which, in the aggregate, do not
comprise more than 1% of the source code for the current
version of the Software;
(nn) all employees (including managers and officers) and
independent contractors, and former employees and independent
contractors, of the Issuer who either alone or in concert with
others developed, invented, discovered, designed, modified or
corrected any of the Intellectual Property or wrote any of the
Software have irrevocably and unconditionally assigned their
intellectual property rights in the Software to the Issuer
pursuant to written agreements;
(oo) all employees (including managers and officers) and
independent contractors, and former employees and independent
contractors, of the Issuer have waived in writing their moral
rights in the Intellectual Property;
(pp) the Software neither contains nor embodies nor uses nor
requires for its full and proper operation any third party
software, including development tools and utilities except
that software and hardware identified by the Issuer as
required for the operating platform of the Software to
function in accordance with its product description, and the
Software, together with the Third Party Programs, contains all
materials necessary for the continued maintenance and
development of the Software;
(qq) copies of all the license and maintenance agreements for the
Third Party Programs have been provided by the Issuer to the
Purchaser, except in respect of Third Party Programs that are
"shrink-wrap" or "web-wrap" software and that are purchased
off-the-shelf by the Issuer;
(rr) only object code versions of the Software have been provided
to those licensee customers of the Software (including
licensees for testing and evaluation purposes), and no person
except for such licensees has been provided with a copy of the
object code of the Software;
(ss) except for the arrangements described in Schedule A, the
source code for the Software has not been delivered or made
available to any person and the Issuer has not agreed to or
undertaken to or in any other way promised to provide such
source code to any person. The source code is being developed
in Saint John, New Brunswick and will be stored in the offices
of the Issuer in Saint John, New Brunswick;
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(tt) Schedule E lists all licenses, maintenance or support
agreements, development contracts and all other material
agreements (other than RFP's and proposals which are referred
to in such agreements) between the Issuer and any third party,
whether at arm's length to the Issuer and its principals or
otherwise, copies of each of which have been supplied to the
Purchaser;
(uu) to the best of its knowledge, information and belief, after
due inquiry, there are no material problems or defects in the
Software including bugs, logic errors and the failure of the
Software to operate as described in the related documentation;
(vv) there are no distributors, sales agents, representatives or
any other persons, including VARs, OEMs or resellers, who have
or had rights to market or license the Software or any of the
Intellectual Property or who have been otherwise utilized by
the Issuer to assist in selling the Issuer's products or
services, except those persons identified in Schedule A; and
(ww) each shareholder of the Issuer and holder of rights or options
to acquire shares of the Issuer, excluding the Purchaser, is a
signatory to the USA and has been advised to obtain
independent legal advice in connection with the entry by such
shareholder or holder, as applicable, into the USA. A copy of
the USA is attached as Schedule L.
(xx) each voting shareholder of the Issuer and holder of rights or
options to acquire voting shares of the Issuer, excluding the
Purchaser, is a signatory to the Operating Agreement and has
been advised to obtain independent legal advice in connection
with the entry by such shareholder or holder, as applicable,
into the Operating Agreement. A copy of the Operating
Agreement is attached as Schedule M.
(yy) no single capital expenditure in excess of $150,000 Canadian
or capital expenditures in the aggregate in excess of $350,000
Canadian has been made or authorized by the Issuer since the
Balance Sheet Date.
(zz) the Issuer has not engaged in the past three (3) months in any
discussion (i) with any representative of any corporation or
corporations regarding the consolidation or merger of the
Issuer with or into any such corporation or corporations, (ii)
with any corporation, partnership, association or other
business entity or any individual regarding the sale,
conveyance or disposition of all or substantially all of the
assets of the Issuer or a transaction or series of related
transactions in which more than fifty percent (50%) of the
voting power of the Issuer is disposed of, or (iii) regarding
any other form of acquisition, liquidation, dissolution or
winding up of the Issuer.
(aaa) The Issuer has not granted or agreed to grant any registration
rights, including piggyback rights, to any person or entity.
Except as
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contemplated in the Operating Agreement and the USA, no
shareholders of the Issuer have entered into any agreements
with respect to the voting shares of the Issuer.
3.2 Survival of Issuer's Representations, Warranties and Covenants
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(a) The representations and warranties of the Issuer set forth in
Section 3.1 shall survive this subscription for the Purchased
Common Shares herein provided for and:
(i) the representations and warranties of the Issuer set
out in subsection 3.1(q) , unless such
representations and warranties prove to be false as a
result of any misrepresentation made or fraud
committed in filing a return or supplying information
for the purposes of the Income Tax Act (Canada) or
any other legislation imposing tax on the Issuer,
continue in full force and effect for the benefit of
the Purchaser until the expiration of the last of the
limitation periods contained in the Income Tax Act
(Canada) and any other legislation imposing tax on
the Issuer subsequent to the expiration of which an
assessment, reassessment or other form or recognized
document assessing liability for tax, interest or
penalties thereunder for the period ended on the
Balance Sheet Date cannot be issued to the Issuer;
(ii) the representations and warranties of the Issuer set
out in subsection 3.1(q) which prove to be false as a
result of any misrepresentation made or fraud
committed in filing a return or in supplying
information for the purposes of the Income Tax Act
(Canada) or any other legislation imposing tax on the
Issuer shall continue in full force and effect for
the benefit of the Purchaser and be unlimited as to
duration; and
(iii) the remaining representations and warranties of the
Issuer set forth in Section 3.1 shall continue in
full force and effect for the benefit of the
Purchaser for a period of five years from the date
hereof except for the representation and warranty in
section 3.1(b) which shall survive indefinitively.
(a) The covenants of the Issuer set forth in this Agreement shall
survive this subscription for the Purchased Common Shares
herein provided for and, shall continue in full force and
effect for the benefit of the Purchaser in accordance with the
terms thereof.
3.3 Purchaser's Representations and Warranties
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The Purchaser represents and warrants to the Issuer that:
(a) it is a corporation duly incorporated, organized and subsisting under
the laws of its jurisdiction of organization; and:
(b) it has good and sufficient power, authority and right to enter into
and deliver this Agreement and to complete the transactions to be
completed by it contemplated hereby;
(c) purchaser is purchasing the Purchased Common Shares as principal for
its own account and not for the benefit of any other person and not
with a view to any resale, distribution or other disposition of the
Purchased Common Shares;
(d) Purchaser has such knowledge and experience in financial and business
matters that Purchaser is capable of evaluating the merits and risks
of purchasing the Purchased Common Shares and is able to bear the
economic loss of its entire investment;
(e) Purchaser is both an accredited investor, as that term is defined in
Rule 501(a) under the Securities Act of 1933, as amended (the "Act"),
and a Qualified Institutional Buyer as defined in Rule 144
(f) Purchaser has had access to such financial and other information and
has had the opportunity to ask questions of and receive answers from
the Issuer as Purchaser deems necessary in connection with its
decision to purchase the Purchased Common Shares;
(g) Purchaser was offered the Purchased Common Shares in the United
States, executed this Subscription Agreement in the United States and
is not purchasing the Purchased Common Shares as the result of any
general solicitation or general advertising, including advertisements,
articles, notices or other communications published in any newspaper,
magazine or similar media or broadcast over radio or television, or
any seminar or meeting whose attendees have been invited by general
solicitation or general advertising;
(h) Purchaser understands and acknowledges that the Purchased Common
Shares will not be and have not been registered under the Act or the
securities laws of any state of the United States and are being
offered only in a transaction not involving any public offering within
the meaning of the Act and in compliance with applicable local laws
and regulations, and are therefore "restricted securities" within the
meaning of Rule 144 under the Act, and that if in the future it shall
decide to resell, pledge or otherwise transfer such Purchased Common
Shares, the same may be resold, pledged or otherwise transferred only
(A) to the Issuer or any of its subsidiaries, (B) to a wholly owned
Subsidiary of the Purchaser,(C)in an offshore transaction meeting the
requirements of Rule 903 or 904 of Regulation S under the Act and in
compliance with applicable local laws and regulations, (D) in a
transaction meeting the requirements of Rule 144
<PAGE>
15
under the Act (and based upon an opinion of counsel and other
information acceptable to the Issuer), (E) in accordance with another
exemption (if available) from the registration requirements of the Act
(and based upon an opinion of counsel and other information acceptable
to the Issuer) or (F) pursuant to an effective registration statement
under the Act, and, in each case, in compliance with all applicable
state securities laws of the United States;
(i) Purchaser understands and acknowledges that the Issuer is not
obligated to file and has no present intention of filing with the U.S.
Securities and Exchange Commission (the "Commission") or with any
state securities administrator any registration statement in respect
of resales of the Purchased Common Shares in the United States;
(j) Purchaser understands and acknowledges that the Issuer has the right
to instruct the transfer agent of the Purchased Common Shares not to
record a transfer by it without first being notified by the Issuer
that it is satisfied that such transfer is exempt from or not subject
to registration under the Act and any applicable state securities
laws;
(k) Purchaser is not, and is not acquiring the Purchased Common Shares
with the assets of, or for or on behalf of, any employee benefit plan
(a "Plan") (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) or other
arrangement that is subject to ERISA or Section 4975 of the U.S.
Internal Revenue Code of 1986, as amended (the "Code"), or any entity
whose underlying assets include assets of a Plan pursuant to 29 C.F.R.
Section 2510.3-101 or otherwise, except to the extent that the
acquisition of the Purchased Common Shares:
(1) (i) is made with the assets of a bank collective investment fund
and (ii) satisfies the applicable requirements and conditions of
Prohibited Transaction Class Exemption 91-38 issued by the U.S.
Department of Labor;
(2) (i) is made with assets of an insurance company pooled separate
account and (ii) satisfies the applicable requirements and
conditions of Prohibited Transaction Class Exemption 90-1 issued
by the U.S. Department of Labor;
(3) (i) is made with assets managed by a qualified professional asset
manager and (ii) satisfies the applicable requirements and
conditions of Prohibited Transaction Class Exemption 84-14 issued
by the U.S. Department of Labor;
(4) is made with the assets of a governmental plan as defined in
Section 3(32) of ERISA which is not subject to the provisions of
Section 401 of the Code;
<PAGE>
16
(5) (i) is made with the assets of an insurance company general
account and (ii) satisfies the applicable requirements and
conditions of Prohibited Transaction Class Exemption 95-60 issued
by the U.S. Department of Labor; and/or
(6) (i) is made with the assets managed by an in-house asset manager
and (ii) satisfies the applicable requirements and conditions of
Prohibited Transaction Class Exemption 96-23 issued by the U.S.
Department of Labor; and
(a) Purchaser understands that, until registered under the Act, the
Purchased Common Shares will bear a legend to the following effect
unless otherwise agreed between the Issuer and the holder thereof:
"THE COMMON SHARES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
UNDER ANY STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE
REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED
UNDER THE SECURITIES ACT OR UNLESS AN EXEMPTION FROM REGISTRATION IS
AVAILABLE, AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY APPLICABLE JURISDICTION.
3.4 Survival of Purchaser's Representations, Warranties and Covenants
-----------------------------------------------------------------
(a) The representations and warranties of the Purchaser set forth in
Section 3.3 shall survive the subscription for the Purchased
Common Shares herein provided for and, notwithstanding such
completion, shall continue in full force and effect for the
benefit of the Issuer for a period of five years from the date
hereof.
(b) The covenants of the Purchaser set forth in this Agreement shall
survive the subscription for the Purchased Common Shares herein
provided for and, notwithstanding such completion, shall continue
in full force and effect for the benefit of the Issuer in
accordance with the terms thereof.
ARTICLE FOUR - COVENANTS
------------------------
4.1 Covenants of the Issuer
-----------------------
(a) Intentionally Deleted.
(b) Intentionally Deleted.
<PAGE>
17
4.2 Covenants of Purchaser
----------------------
(a) At the Time of Closing, the Purchaser will deliver an agreement
whereby the Purchaser agrees to be bound by the terms and
conditions of the USA and the Operating Agreement, as required by
provisions of the USA and the Operating Agreement.
(b) Intentionally Deleted.
ARTICLE FIVE - GENERAL
----------------------
5.1 Further Assurances
------------------
The Issuer and the Purchaser shall from time to time execute and deliver all
such further documents and instruments and do all acts and things as the other
party may, after the date hereof, reasonably require to effectively carry out or
better evidence or perfect the full intent and meaning of this Agreement.
5.2 Benefit of the Agreement
------------------------
This Agreement shall enure to the benefit of and be binding upon the respective
administrators, successors and permitted assigns of the parties hereto.
5.3 Entire Agreement
----------------
This Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and cancels and supersedes any prior
understandings and agreements between the parties hereto with respect thereto.
There are no representations, warranties, terms, conditions, undertakings or
collateral agreements, express, implied or statutory, between the parties other
than as expressly set forth in this Agreement.
5.4 Governing Law
-------------
This Agreement shall be governed by and construed in accordance with the laws of
the Province of New Brunswick and the laws of Canada applicable therein.
<PAGE>
18
IN WITNESS WHEREOF the parties have executed this Agreement as of the date first
hereinabove written.
SIGNED SEALED AND DELIVERED ) ImagicTV Inc.
in the presence of: )
)
)
) per: _________________________
) Authorized Signatory c/s
)
)
)
per: _________________________
Authorized Signatory
AMERICA ONLINE, INC.
Witnessed By: _____________________ per: _________________________
Authorized Signatory c/s
<PAGE>
Index of Schedules
Schedule A Exceptions to representations and warranties
Schedule B Schedule I to ImagicTV's amended articles of incorporation filed
on June 30, 1998, relating to the rights, privileges,
restrictions and conditions of the common shares
Schedule C Shareholder and optionholder list
Schedule D [Intentionally deleted]
Schedule E List of licenses and other material agreements
Schedule F [Intentionally deleted]
Schedule G List of employee indebtedness
Schedule H Third party software / programs
Schedule I List of ImagicTV's intellectual property and software
Schedule J [Intentionally deleted]
Schedule K [Intentionally deleted]
Schedule L Form of Unanimous Shareholders Agreement
Schedule M Form of Operating Agreement
<PAGE>
20
ImagicTV Inc.
One Brunswick Square, 14th Floor
Saint John, New Brunswick E2L 3Y2
Canada
October 4, 2000
as of September 29, 2000
America Online, Inc.
22000 AOL Way
Dulles, Virginia 20166
Re: Share Subscription Agreement
Ladies and Gentlemen:
Reference is hereby made to the Share Subscription Agreement (the
"Agreement"), made as of September 29, 2000, between ImagicTV, Inc. and America
Online, Inc. All terms used herein shall have the meaning attributed to them in
the Agreement.
It is hereby agreed that the Agreement shall be amended as follows:
Subpart (B) of Section 3.3(h) is amended to read:
(B) a subsidiary of the Purchaser in a transaction
which the Purchaser confirms to the Issuer (based upon
an opinion of counsel and other information reasonably
acceptable to the Issuer) is exempt from the
registration requirements of the Act,
The parties hereto hereby acknowledge and confirm that the Agreement, as amended
hereby, is, and shall continue to be, in full force and effect.
If the foregoing is acceptable to you, please indicate your acceptance in the
space indicated below.
[Signatures follow on next page]
<PAGE>
21
Very truly yours,
IMAGICTV INC.
By:__________________________
Name:________________________
Title:_______________________
AGREED AND ACCEPTED:
AMERICA ONLINE, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
