ARRANGEMENT AGREEMENT among TAILWIND FINANCIAL INC. and AV ACQUISITION CORP. and ALLEN-VANGUARD CORPORATION Dated as of January 23, 2009
EXHIBIT
10.1
among
and
AV
ACQUISITION CORP.
and
▇▇▇▇▇-VANGUARD
CORPORATION
Dated
as of January 23, 2009
TABLE OF
CONTENTS
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ARTICLE I DEFINITIONS AND
SCHEDULES
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1
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Section 1.01
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Definitions.
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1
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Section 1.02
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Schedules
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12
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ARTICLE II ARRANGEMENT
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13
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Section 2.01
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Implementation Steps by the
Company.
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13
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Section 2.02
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Interim Order.
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13
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Section 2.03
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Articles of Arrangement.
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14
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Section 2.04
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Company’s Circular
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14
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Section 2.05
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Parent’s Stockholder
Meeting
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15
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Section 2.06
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Parent Proxy Statement.
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16
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Section 2.07
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Preparation of Filings.
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17
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Section 2.08
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Company Action
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19
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Section 2.09
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Consideration.
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19
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Section 2.10
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Company Stock Options and Company
RSUs.
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20
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Section 2.11
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Company Warrants.
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21
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Section 2.12
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Adjustments to Consideration to Company Common
Shareholders.
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21
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
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22
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Section 3.01
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Organization and Qualification;
Subsidiaries.
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22
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Section 3.02
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Certificate of Incorporation and
By-Laws.
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22
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Section 3.03
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Authority.
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23
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Section 3.04
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No Conflict; Required Filings and
Consents.
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23
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Section 3.05
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Capitalization.
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24
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Section 3.06
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Securities Law Matters; Financial
Statements.
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24
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i
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Section 3.07
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Information to be Supplied.
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26
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Section 3.08
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Permits; Compliance.
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26
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Section 3.09
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Absence of Certain Changes or
Events.
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27
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Section 3.10
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Absence of Litigation.
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28
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Section 3.11
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Contracts.
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28
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Section 3.12
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Employee Matters.
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30
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Section 3.13
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Customers.
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33
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Section 3.14
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Property and Leases.
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33
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Section 3.15
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Intellectual Property.
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35
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Section 3.16
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Taxes.
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36
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Section 3.17
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Environmental Matters.
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39
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Section 3.18
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Insurance.
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40
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Section 3.19
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Brokers.
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41
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Section 3.20
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Related Party Transactions; Collateral
Benefit.
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41
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Section 3.21
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Disclosure.
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42
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Section 3.22
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No Other Purchase
Agreements.
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43
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Section 3.23
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Privacy Laws.
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43
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Section 3.24
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Product Warranty; Product
Liability.
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43
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
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44
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Section 4.01
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Due Incorporation, Assets and
Liabilities.
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44
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Section 4.02
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Corporate Authorization.
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44
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Section 4.03
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Governmental Authorization.
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45
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Section 4.04
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No Violation.
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45
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ii
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Section 4.05
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Consents.
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45
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Section 4.06
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Litigation.
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45
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Section 4.07
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Issuance of Parent Common
Stock.
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46
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Section 4.08
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Fees.
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46
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Section 4.09
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Charter Documents;
Legality.
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46
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Section 4.10
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Capitalization and Ownership of the Parent, Trust
Fund.
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47
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Section 4.11
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Financial Statements.
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47
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Section 4.12
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Contracts, Payments on Change of
Control
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48
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Section 4.13
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Absence of Certain Changes or
Events.
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48
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Section 4.14
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Compliance with Laws.
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49
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Section 4.15
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Ownership of Parent
Securities.
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49
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Section 4.16
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Restrictions on Business
Activities.
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49
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Section 4.17
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The Purchaser.
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49
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Section 4.18
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Securities Law Matters.
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49
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Section 4.19
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Other Agreements
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50
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Section 4.20
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Parent SEC Documents.
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50
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ARTICLE V COVENANTS OF THE
COMPANY
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52
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Section 5.01
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Conduct of the Business.
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52
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Section 5.02
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Access to Information.
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53
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Section 5.03
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Notices of Certain Events.
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54
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Section 5.04
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Reporting and Compliance With
Law.
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54
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ARTICLE VI COVENANTS OF ALL
PARTIES
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54
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Section 6.01
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Provisions Relating to
Exclusivity.
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54
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Section 6.02
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Superior
Proposal.
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58
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Section 6.03
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Best Efforts; Further
Assurances.
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59
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iii
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Section 6.04
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Publicity; Securities Law
Filings.
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60
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Section 6.05
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Confidentiality.
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61
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Section 6.06
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Current Information.
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61
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Section 6.07
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Tax Matters.
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61
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Section 6.08
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Indemnification.
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62
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Section 6.09
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Company Meeting.
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63
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Section 6.10
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Purchaser.
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63
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Section 6.11
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Resignation of Directors and
Officers.
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64
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ARTICLE VII CONDITIONS
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64
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Section 7.01
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Condition to the Obligations of the Company,
Parent and the Purchaser
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64
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Section 7.02
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Conditions to Obligations of Parent and the
Purchaser.
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65
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Section 7.03
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Conditions to Obligations of the
Company.
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67
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ARTICLE VIII TERMINATION, AMENDMENT AND
WAIVER
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69
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Section 8.01
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Termination by Mutual
Consent.
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69
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Section 8.02
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Termination by Parent or the
Company.
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69
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Section 8.03
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Termination for Breach of Representations and
Warranties.
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70
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Section 8.04
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Termination by Company in Connection with
Potential Transaction or Superior
Proposal
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71
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Section 8.05
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Termination by Parent in Certain
Circumstances
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71
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Section 8.06
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Effect of Termination and
Abandonment.
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71
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ARTICLE IX GENERAL
PROVISIONS
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71
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Section 9.01
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Waiver.
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71
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Section 9.02
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Survival of Representations and
Warranties.
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72
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Section 9.03
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Amendments, Modification and
Waiver.
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72
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Section 9.04
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Notices.
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72
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iv
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Section 9.05
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Expenses
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74
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Section 9.06
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Severability.
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74
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Section 9.07
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Entire Agreement;
Assignment.
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75
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Section 9.08
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Parties in Interest.
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75
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Section 9.09
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Interpretation.
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75
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Section 9.10
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Specific Performance.
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75
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Section 9.11
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Governing Law.
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75
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Section 9.12
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Waiver of Jury Trial.
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76
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Section 9.13
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Headings.
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76
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Section 9.14
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Ambiguities.
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76
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Section 9.15
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Counterparts.
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76
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Section 9.16
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Adjustment.
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76
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Section 9.17
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Currency.
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77
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v
January
23, 2009
THIS
ARRANGEMENT AGREEMENT (this “Agreement”) is made as of January 23, 2009 by and
among Tailwind Financial Inc., a Delaware corporation (“Parent”), AV Acquisition
Corp., a corporation incorporated under the Business Corporations Act
(Ontario) and a wholly-owned subsidiary of Parent (“Purchaser”) and
▇▇▇▇▇-Vanguard Corporation, a corporation incorporated under the Business Corporations Act
(Ontario) (the “Company”).
WHEREAS,
the Boards of Directors of Parent, the Purchaser and the Company have each
approved the terms and conditions of a business combination of the Company and
the Purchaser, upon the terms and subject to the conditions set forth
herein;
WHEREAS,
the business combination of the Company and the Purchaser shall be effected by
the terms of this Agreement through a plan of arrangement, pursuant to section
182 of the OBCA (as defined below), of the Company and the
Purchaser;
WHEREAS,
the Arrangement (as defined below) is intended, among other things, to provide
the Company Shareholders (as defined below) with the opportunity to dispose of
their shares of Company Common Stock (as defined below) in exchange for shares
of Parent Common Stock (as defined below) on the terms and subject to the
conditions set out herein;
WHEREAS,
the Board of Directors of the Company (the “Company Board”) has unanimously (i)
determined that the Arrangement is fair to the Company Shareholders and in the
best interests of the Company, approved this Agreement and declared its
advisability and approved the Arrangement and the other transactions
contemplated by this Agreement, and (ii) resolved to recommend acceptance of the
Arrangement and adoption of this Agreement by the Company Shareholders (as
defined below); and
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements herein contained, and intending to be legally bound hereby, Parent,
the Purchaser and the Company hereby agree as follows:
ARTICLE
I
DEFINITIONS
AND SCHEDULES
Section
1.01 Definitions.
|
|
(a)
|
For
purposes of this Agreement:
|
“Action” means any
investigation, inquiry, audit, litigation, suit, claim, action, application,
complaint, grievance, or other legal, administrative or arbitration proceeding
of any nature whatsoever.
“Affiliate” of a
specified Person means any other Person who, directly or indirectly through one
or more intermediaries, Controls, is controlled by, or is under common Control
with, such specified Person.
“Annual Financial
Statements” means the audited consolidated financial statements of the
Company as at and for each of the fiscal years ended September 30, 2006,
September 30, 2007 and September 30, 2008, together with the notes thereto and
the auditors’ report thereon.
“Arrangement” means an
arrangement under Section 182 of the OBCA on the terms and subject to the
conditions set out in the Plan of Arrangement, subject to any amendments or
variations thereto made in accordance with Section 9.03 hereof or Article 5 of
the Plan of Arrangement or made at the direction of the Court in the Interim
Order or the Final Order.
“Arrangement
Resolution” means the special resolution of the Company Shareholders
approving the Arrangement.
“Articles of
Arrangement” means the articles of arrangement of the Company in respect
of the Arrangement that are required to be sent to the Director after the Final
Order is made.
“Books and Records”
means all books of account, share registers and other financial and corporate
records, copies of tax records, sales and purchase records, customer and
supplier lists, computer software, formulae, business reports, registers and
operating manuals, plans and projections and all other documents, files,
correspondence and other information (whether in written, printed, electronic or
computer printout form), of the Company and each Company
Subsidiary.
“Business” with
respect to the Company means the business of developing and marketing
proprietary technologies, tools and training used to defeat and minimize the
effects of hazardous devices and materials, whether Chemical, Biological,
Radiological, Nuclear or Explosive (“CBRNE”) and as more fully described in the
Company’s Annual Information Form dated December 29, 2008.
“Business Day” means
any day on which banks are not required or authorized to close in the City of
New York or in the City of Ottawa.
“Canadian Dollars” or
“CAD$” means lawful currency of Canada.
- 2
-
“Canadian Securities
Laws” means all applicable securities laws in the provinces of Canada,
all as now enacted or as the same may from time to time be amended, re-enacted
or replaced, the respective regulations, rules, orders and forms under such laws
and the applicable published policy statements, national instruments, and
multilateral instruments of and any exempting orders issued by the Canadian
Securities Regulators.
“Canadian Securities
Regulators” means the securities commission or other securities
regulatory authority in each of the provinces of Canada.
“Certificate” means a
certificate or certificates representing shares of Company Common
Stock.
“Circular” means the
notice of the Company Meeting, accompanying management proxy circular and forms
of proxy, including all appendices thereto, to be sent to Company Shareholders,
as applicable, in connection with the Company Meeting, as same may be amended
from time to time.
“Code” means the U.S.
Internal Revenue Code of 1986, as amended.
“Company Common Stock”
means the common shares of the Company, without par value.
“Company Financing”
means the issuance by the Company, by way of public rights offering
of up to 350,877,193 subscription receipts for a price of
CAD$0.285 per subscription receipt (aggregate proceeds of up to CAD$100 million)
with each subscription receipt being exercisable, without further consideration
and contingent upon completion of the Arrangement, into one share of Company
Common Stock (which will participate in the Arrangement) on the Effective Date
and prior to the Effective Time; provided that such public rights offering must
be completed by March 20, 2009, and must be on terms acceptable to Parent,
acting reasonably.
“Company Material Adverse
Effect” means any change, circumstance, occurrence, event, fact or effect
which does not affect the Company disproportionately (a) that has given rise to,
or would reasonably be expected to give rise to, a material adverse change, or
that has had, or would reasonably be expected to have, a material adverse effect
(taken alone or in the aggregate with any other adverse change or effect) in, on
or with respect to the business, results of operations, condition (whether
financial or otherwise), capital or future prospects of the Company and the
Company Subsidiaries as a whole; or (b) that is preventing or materially
impeding, or is reasonably likely to prevent or materially impede, the Company
from performing its obligations under this Agreement; provided, however, that
the above shall not include any event, circumstance, change, occurrence, fact or
effect resulting from or relating to: (i) changes in the North American or
international financial markets in general, (ii) any change in the market price
or trading volume of the Company Common Stock, (iii) changes in general economic
conditions in any region in which the Company or the Company Subsidiaries
operate, (iv) changes in the industry in which the Company and the Company
Subsidiaries operate, (v) the public announcement of this Agreement or the
Transactions, (vi) any natural disaster or any acts of terrorism,
sabotage, military action or war (whether or not declared) or any escalation or
worsening thereof, or (vii) changes in GAAP.
- 3
-
“Company Meeting”
means the annual and special meeting of the Company Shareholders, including any
adjournment thereof, to be called and held in accordance with the Interim Order,
to consider, among other things, the Arrangement, and for any other proper
purpose as may be set out in the notice for such meeting.
“Company Permit” means
all franchises, grants, authorizations, licenses, certifications, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Authority necessary for each of the Company and the Company
Subsidiaries to own, lease and operate its properties or to carry on its
business as it is now being conducted and proposed to be conducted after the
Effective Time.
“Company Reports”
means all forms, reports, statements, schedules and other documents required to
be filed by the Company and the Company Subsidiaries with the Canadian
Securities Regulators, whether filed prior to or subsequent to the date
hereof.
“Company RSUs” means
the Restricted Share Units issued from time to time under the Company RSU Plan
and outstanding.
“Company RSU Plan”
means the Restricted Share Unit Plan established on September 21, 2007, as
amended to date and as they may be further amended from time to time as
expressly permitted by this Agreement.
“Company Shareholders”
means the holders of Company Common Stock.
“Company Stock
Options” means, at any time or times, the options to purchase shares of
Company Common Stock, granted under the Company Stock Option Plans, whether or
not exercisable and whether or not vested, being outstanding and unexercised, at
such time or times.
“Company Stock Option
Plans” means, collectively, the Stock Option Plan established on
September 21, 2007 and the Non-Employee Director Stock Option Plan established
on September 21, 2007, in each case as amended to date and as they may be
further amended from time to time as expressly permitted by this
Agreement.
“Company Subsidiaries”
means the Subsidiaries of the Company set out on Schedule 3.01 and any other
Subsidiaries of the Company from time to time.
“Company Warrants”
means the warrants issued by the Company to the Company Warrantholders, as
detailed on Schedule 3.05.
“Company
Warrantholders” means the holders of Company Warrants.
“Confidentiality
Agreement” means the confidentiality agreement between Parent and the
Company dated October 29, 2008.
“Contamination” means
the presence of, or Release on, under, from or to the environment of any
Hazardous Substance, except the routine storage and use of Hazardous Substances
from time to time in the ordinary course of business, in compliance with
Environmental Laws.
- 4
-
“Control” (including
the terms “controlled
by” and “under
common control with”) means the possession, directly or indirectly, or as
trustee or executor, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, as trustee or executor, by contract or credit arrangement or
otherwise.
“Court” means the
Superior Court of Justice (Ontario).
“DGCL” means the
Delaware General Corporation Law.
“Director” means the
Director appointed pursuant to Section 278 of the OBCA.
“Dissent Rights” means
the rights of holders of Company Common Stock to dissent in respect of the
Arrangement as described in Section 3.1 of the Plan of Arrangement.
“Dissenting
Shareholder” means a holder of Company Common Stock who duly exercises
Dissent Rights in respect of the shares of Company Common Stock held by such
holder.
“Drop Dead Date” means
April 17, 2009 or such later date as may be mutually agreed by the parties to
this Agreement.
“Effective Date” means
the date shown on the certificate of arrangement to be issued by the Director
under the OBCA giving effect to the Arrangement.
“Effective Time” means
12:01 a.m. (Toronto time) on the Effective Date.
“Environmental Laws”
means any Law, permit, authorization and opinion relating to: (A) the
environment, human health or safety associated with the environment, or natural
resources; (B) the handling, use, presence, disposal, release or threatened
release of any Hazardous Substance; or (C) noise, odour, wetlands, pollution,
Contamination or any injury or threat of injury to persons or
property.
“Exchange Act” means
the United States Securities Exchange Act of 1934, as amended, and the rules,
regulations and related notices thereunder.
“Exchange Rate” means
the rate posted by the Bank of Canada for one CAD$ expressed in U.S.$ at noon on
the Business Day immediately preceding the Effective Date.
“Exchange Ratio” means
0.046492659 multiplied by the
Exchange Rate.
“Exercise Date” means
the date that is two Business Days prior to the Effective Date.
- 5
-
“Final Order” means
the final order of the Court approving the Arrangement as such order may be
amended by the Court at any time prior to the Effective Date or, if appealed,
then, unless such appeal is withdrawn or denied, as affirmed.
“Financial Statements”
means, collectively, the Annual Financial Statements and the Third Quarter
Financial Statements.
“Generally Accepted
Accounting Principles” or “GAAP” means those
accounting principles which are recognized as being generally accepted in Canada
by the Canadian Institute of Chartered Accountants from time to time, as set out
in the Handbook published by the Canadian Institute of Chartered Accountants, as
amended from time to time.
“Governmental
Authority” means: (i) any domestic or foreign, national, federal,
provincial, state, county, local, municipal or regional government or body; (ii)
any multinational, multilateral or international body; (iii) any subdivision,
agency, commission, board, instrumentality or authority of any of the foregoing
governments or bodies; (iv) any quasi-governmental or private body exercising
any regulatory, expropriation or taxing authority under or for the account of
any of the foregoing governments or bodies; (v) any domestic, foreign,
international, multilateral or multinational judicial, quasi-judicial,
arbitration or administrative court, tribunal, adjudicator, commission, board or
panel; or (vi) any person employed by, acting for, or on behalf of, any of the
foregoing bodies.
“Hazardous Substances”
means: (A) any hazardous substance, pollutant or contaminant, as such terms are
defined under any Environmental Law; (B) any petroleum or petroleum product or
by-product, asbestos or asbestos-containing material, urea-formaldehyde,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; and (C) any other substance which is the subject of
regulatory action by any Governmental Authority pursuant to or could give rise
to Liability under any Environmental Law.
“Indebtedness” means,
as of a given time, (i) all indebtedness for borrowed money or for the deferred
purchase price of property or services in respect of which the Company or any of
the Company Subsidiaries is liable, contingently or otherwise, as obligor or
otherwise, and any commitment by which the Company or any of the Company
Subsidiaries assures a creditor against loss, including contingent reimbursement
obligations with respect to letters of credit; (ii) all indebtedness guaranteed
in any manner by the Company or any of the Company Subsidiaries, including a
guarantee in the form of an agreement to repurchase or reimburse; (iii) all
obligations under capitalized leases in respect of which the Company or any of
the Company Subsidiaries is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which obligations the Company or any of
the Company Subsidiaries assures a creditor against loss; and (iv) all interest,
prepayment penalties, premiums, fees and expenses (if any)
thereon.
- 6
-
“Intellectual Property
Right” means any trademark, service ▇▇▇▇, registration thereof or
application for registration therefore, trade name, license, invention, patent,
patent application, industrial designs, trade secret, trade dress, know-how,
copyright, copyrightable materials, copyright registration, application for
copyright registration, software programs and data bases, names (including
“▇▇▇▇▇-Vanguard”) and all derivations thereof, domain name and any other type of
proprietary intellectual property right, and all embodiments and fixations
thereof and related documentation, registrations and franchises and all
additions, improvements and accessions thereto, in each case which is owned or
licensed or filed by the Company, any Company Subsidiary or any of their
Affiliates or used or held for use in the Business, whether registered or
unregistered or domestic or foreign.
“Interim Order” means
the interim order of the Court, as the same may be amended, in respect of the
Arrangement, as contemplated by 2.02.
“ITA” means the Income Tax Act (Canada) and
the regulations thereunder, as amended from time to time.
“Laws” means all laws,
statutes, codes, ordinances, decrees, consent decrees, rules, regulations,
by-laws, statutory rules, policies, judicial or arbitral or administrative or
ministerial or departmental or judgments, Privacy Laws, orders, decisions,
rulings, letters of finding or awards, agency requirements, including general
principles of common and civil law, and terms and conditions of any grant of
approval, permission, authority or license of any Governmental Authority,
statutory body or self-regulatory authority, and the term “applicable” with
respect to such Laws and in the context that refers to one or more Persons,
means that such Laws apply to such Person or Persons or its or their business,
undertaking, property or securities and emanate from a Governmental Authority
having jurisdiction over the Person or Persons or its or their business,
undertaking or securities.
“Liabilities” means
any direct or indirect liability, indebtedness, obligation, commitment, expense,
claim, guaranty or endorsement of or by any Person of any type, whether accrued,
absolute, contingent, matured, unmatured or other, and without limiting the
foregoing, includes an obligation to respond to an Order.
“Liens” means all
mortgages, pledges, liens, security interests, conditional and installment sale
agreements, encumbrances, charges, claims or rights of third parties of any
kind, including, without limitation, any option, agreement, right of first
refusal or right of first offer or limitation on voting rights.
“Med-Eng Settlement
Amount” means any after-tax amounts paid by the former
shareholders of Med-Eng Systems, Inc., an Ontario corporation acquired by the
Company, in connection with the Action described in Schedule 3.10.
“Misrepresentation”
shall have the meaning attributed to such term in the OSA.
“OBCA” means the Business Corporations Act
(Ontario) and the regulations thereunder as in effect as of the date hereof and
as may be amended from time to time prior to the Effective
Time.
- 7
-
“Order” means any
legally enforceable judgment, order, decision, writ, injunction, stipulation,
ruling or decree of, or any settlement under jurisdiction of, any Governmental
Authority.
“OSA” means the Securities Act (Ontario), as
in effect as of the date hereof and as may be amended from time to time prior to
the Effective Date.
“Parent Common Stock”
means the common stock of Parent, par value U.S. $0.001 per share, currently
listed on the NYSE Alternext US.
“Parent Material Adverse
Effect” means any change, circumstance, occurrence, event, fact or effect
(a) that is preventing or materially impeding, or is reasonably likely to
prevent or materially impede, Parent from performing its obligations under this
Agreement; provided, however, that the above shall not include any event,
circumstance, change, occurrence, fact or effect resulting solely from or
relating solely to: (i) changes in the North American or international financial
markets in general, (ii) any change in the market price or trading volume of
Parent Common Stock, (iii) changes in general economic conditions in any region
in which Parent or its Subsidiaries operate, (iv) changes in the industry in
which Parent and its Subsidiaries operate, (v) the public announcement of this
Agreement or the Transactions, (vi) any natural disaster or any acts of
terrorism, sabotage, military action or war (whether or not declared) or any
escalation or worsening thereof, or (vii) changes in U.S. GAAP.
“Permitted Liens”
means, in respect of the Company and any of the Company Subsidiaries, (A)
statutory liens for current Taxes and assessments or other governmental charges
not yet due and payable, or the amount or validity of which is being contested
in good faith, by the Company or such Company Subsidiary, as the case may be and
for which a reserve has been established by the Company or such Company
Subsidiary on its Books and Records, and (B) mechanics’, materialmen’s,
workmen’s, repairmen’s, warehousemen’s and carriers’ liens and other similar
statutory liens arising in the ordinary course of business of the Company or
such Company Subsidiary consistent with past practice, (C) zoning, entitlement,
building and other land-use regulations imposed by governmental agencies having
jurisdiction over real property which are not violated by the current use and
operation of the real property, and (D) covenants, conditions, restrictions,
easements and other similar matters of record affecting title to the real
property which do not materially impair the occupancy or use of the real
property for the purposes for which it is currently used.
“Person” shall be
broadly interpreted and includes any natural person, legal person, partnership,
limited partnership, joint venture, unincorporated association or other
organization, trust, trustee, executor, administrator or liquidator, regulatory
body or agency, government or governmental agency, authority or entity, however
designated or constituted and whether or not a legal entity.
“Personal Information”
means information about an identifiable individual.
- 8
-
“Plan of Arrangement”
means the plan of arrangement substantially in the form and content of Annex I
annexed hereto and any amendments or variations thereto made in accordance with
Section 9.03 hereof or Article 5 of the Plan of Arrangement or made at the
direction of the Court in the Final Order.
“Privacy Laws” means
all laws, statutes, codes, ordinances, decrees, consent decrees, rules,
regulations, by-laws, statutory rules, letters of finding, policies, judicial or
arbitral or administrative or ministerial or departmental or judgments, orders,
decisions, rulings or awards, agency requirements relating to the protection of
privacy and the processing of Personal Information, including general principles
of common and civil law, policies and guidelines of applicable Governmental
Authorities, and terms and conditions of any grant of approval, permission,
authority or license of any Governmental Authority, statutory body or
self-regulatory authority.
“Purchaser Parties”
means, collectively, Parent and the Purchaser.
“Recommendation” means
the recommendation of the Company Board to the Company Shareholders that the
Company Shareholders vote in favour of the Arrangement Resolution, the
acceptance of the Arrangement, and the adoption of this Agreement.
“Release” means any
presence, emission, spill, seepage, leak, escape, leaching, discharge,
injection, pumping, pouring, emptying, dumping, disposal, migration or release
of a Hazardous Substance from any source into or upon the environment, including
the air, soil, improvements, surface water, groundwater, the sewer, septic
system, storm drain, publicly-owned treatment works, or waste treatment, storage
or disposal systems.
“Remediation” means
any investigation, clean-up, removal action, remedial action, restoration,
repair, response action, corrective action, monitoring, sampling, and analysis,
installation, reclamation, closure or post-closure in connection with the
suspected, threatened or actual Release of Hazardous Substances.
“SEC” means the United
States Securities and Exchange Commission.
“Securities Act” means
the United States Securities Act of 1933, as amended and the rules, regulations
and related notices thereunder.
“Securities
Legislation” means the Securities Act, the Exchange Act and the Canadian
Securities Laws, all as now enacted or as the same may from time to time be
amended, re-enacted or replaced, and the applicable rules, regulations, rulings,
orders and forms made or promulgated under such statutes and the published
policies of the regulatory authorities administering such statutes, as well as
the rules, regulations, by-laws and policies of the TSX and the NYSE Alternext
US.
“Subsidiary” or “Subsidiaries” of a
Person means any corporation, partnership, joint venture or other legal entity
of which such Person (a) owns, directly or indirectly, 50% or more of the
outstanding common stock, limited partnership or member interests or other
equity interests, or otherwise has a financial interest of 50% or more thereof,
or (b) is or Controls a general partner or other managing body of such legal
entity.
- 9
-
“Tax” or “Taxes” means any and
all taxes, surtaxes, fees, levies, duties, tariffs, imposts, withholdings and
other charges of any kind (together with any and all interest, fines, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed by
any Governmental Authority or taxing authority, including, without limitation:
taxes or other charges on or with respect to income, franchise, windfall or
other profits, net worth, gross receipts, property, sales, use, capital stock,
payroll, employment, social security, health, Canada Pension Plan and provincial
pension plan contributions, workers’ compensation or employment insurance and
unemployment insurance premiums or compensation; taxes or other charges in the
nature of excise, withholding, ad valorem, stamp, transfer, value-added or gains
taxes; license, registration and documentation fees; and customers’ duties,
tariffs and similar charges; and including any Liability in respect of any item
described above as a transferee or successor, pursuant to U.S. Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
Law), or as an indemnitor, guarantor, surety or in a similar capacity under any
contract, arrangement, agreement, understanding or commitment (whether oral or
written).
“Tax Returns” means
all returns, reports, declarations, designations, schedules, notices, forms,
elections, information statements, remittances and similar statements (including
estimated Tax returns, claims for refunds, amended returns and reports and
information returns and reports and any attachments thereto) with respect to
Taxes filed or required to be filed with any taxing authority, domestic or
foreign.
“Third Quarter Financial
Statements” means the unaudited consolidated financial statements of the
Company for the nine months ended June 30, 2008, together with the notes
thereto.
“Transaction
Documents” means this Agreement, and all other agreements and documents
contemplated hereunder, executed herewith or required to implement or give
effect to the Transactions.
“Transactions” means
the transactions contemplated by this Agreement, the Plan of Arrangement and by
any of the Transaction Documents, and including, for greater certainty, the
Arrangement.
“TSX” means the
Toronto Stock Exchange.
“United States Dollars” or
“U.S.$” means lawful currency of the United States.
“U.S. GAAP” means U.S.
generally accepted accounting principles, consistently applied.
“U.S. Securities Laws”
means the Securities Act and the Exchange Act.
- 10
-
“U.S. Securities
Regulators” means the SEC or any state securities regulatory authority in
the United States.
(b) The
following additional terms have the meanings given to such terms in the
corresponding sections of this Agreement:
|
SECTION
|
DEFINED TERM
|
|
|
Section
6.02(d)
|
Acquisition
Proposal
|
|
|
Section
2.10(b)(i)
|
Adjusted
RSUs
|
|
|
Section
3.08(c)
|
Approvals
|
|
|
Section
6.01(g)
|
Break
Fee
|
|
|
Section
4.04
|
Charter
Documents
|
|
|
Section
9.01
|
Claim
|
|
|
Section
6.01(c)
|
Company
Representatives
|
|
|
Section
3.21(a)
|
Company
Schedules
|
|
|
Section
6.07
|
Effective
Date Period
|
|
|
Section
3.17(c)
|
Environmental
Permits
|
|
|
Section
6.01(a)
|
Exclusivity
Period
|
|
|
Section
6.08(a)
|
Indemnified
Parties
|
|
|
Section
3.12(a)
|
Key
Employees
|
|
|
Section
3.14(d)
|
Leases
|
|
|
Section
3.11(a)
|
Material
Contracts
|
|
|
Section
2.06(a)
|
Other
U.S. Filings
|
|
|
Section
4.11
|
Parent
Financial Statements
|
|
|
Section
6.01(d)
|
Parent
Group Representatives
|
|
|
Section
4.20(a)
|
Parent
SEC Documents
|
|
|
Section
2.05(a)
|
Parent
Stockholders
|
|
|
Section
2.05(a)
|
Parent
Stockholders Meeting
|
|
|
Section
2.05(a)
|
Parent
Stockholder Proposals
|
|
|
Section
3.12(e)
|
Plans
|
|
|
Section
6.01(c)
|
Potential
Transaction
|
|
|
Section
6.01(d)
|
Potential
Alternative Transaction
|
|
|
Section
9.01
|
Prospectus
|
|
|
Section
2.06(a)
|
Proxy
Statement
|
|
|
Section
6.01(h)
|
Reimbursement
Fee
|
|
|
Section
3.11(a)
|
Related
Party Agreement
|
|
|
Section
9.01
|
Released
Interest
|
|
|
Section
3.11(a)
|
Restrictive
Agreement
|
|
|
Section
6.02(e)
|
Superior
Proposal
|
|
|
Section
8.02(a)
|
Termination
Date
|
|
|
Section
4.10(b)
|
Trust
Account
|
|
|
Section
4.10(b)
|
Trust
Fund
|
|
|
Section
4.10(b)
|
Trustee
|
- 11
-
Section
1.02 Schedules
The
following Schedules are annexed to this Agreement and are incorporated by
reference into this Agreement and form a part hereof:
|
SECTION
|
Schedule
|
|
|
Annex
I
|
Plan
of Arrangement
|
|
|
3.01
|
Company
Subsidiaries, Jurisdiction and Location
|
|
|
3.04(a)
|
Required
Contractual Consents and Notices
|
|
|
3.05
|
Capitalization
|
|
|
3.06(a)
|
Securities
Laws Non-Compliance
|
|
|
3.06(c)
|
Securities
Laws Investigations
|
|
|
3.08(b)
|
Permits;
Compliance
|
|
|
3.09
|
Company
Material Adverse Changes
|
|
|
3.10
|
Litigation
|
|
|
3.11(a)(A)
|
Oral
Material Contracts
|
|
|
3.11(a)(B)
|
Written
Material Contracts
|
|
|
3.12(a)
|
Employee
Matters
|
|
|
3.12(b)
|
Outstanding
Employee Claims
|
|
|
3.12(e)
|
Employee
Plans
|
|
|
3.13
|
Customers
|
|
|
3.14(d)
|
Real
Property Leases
|
|
|
3.15(a)
|
List
of Intellectual Property
|
|
|
3.15(b)
|
Intellectual
Property Claims
|
|
|
3.16(a)
|
Delinquent
Tax Filings
|
|
|
3.16(b)
|
Delinquent
Tax Remittances
|
|
|
3.16(f)
|
Material
Liability for Taxes
|
|
|
3.16(h)
|
Tax
Assessments or Re-Assessments
|
|
|
3.16(j)
|
Tax
Waiver, Extension, Rulings, or Extra-Jurisdictional
Liability
|
|
|
3.16(l)
|
Transfer
Pricing Compliance
|
|
|
3.24
|
Product
Warranty; Product Liability
|
|
|
4.01
|
Due
Incorporation, Assets and Liabilities of Purchaser
Parties
|
|
|
4.03
|
Parent
Governmental Authorization
|
|
|
4.08
|
Fees
|
|
|
4.10
|
Capitalization
and Ownership of the Parent, Trust Fund
|
|
|
4.12
|
Contracts,
Payments on Change of Control
|
|
|
6.01(b)
|
List
of Parties to Potential Transaction
|
|
|
6.11
|
New
Directors and Officers
|
|
|
6.12
|
Parent’s
Board Nominees
|
|
|
7.02(k)(A)
|
Persons
Delivering Lock-Up Agreements
|
|
|
7.02(k)(B)
|
Form
of Lock-Up
Agreements
|
- 12
-
ARTICLE
II
ARRANGEMENT
Section
2.01 Implementation Steps by the
Company.
Subject
to the terms of this Agreement, the Company covenants in favour of Parent and
the Purchaser that the Company shall:
|
|
(a)
|
As
soon as reasonably practical after execution and delivery of this
Agreement and the preparation of a substantially-completed Circular in
accordance with Section 2.04, and in cooperation with Parent’s counsel,
apply in a manner acceptable to Parent and the Purchaser, acting
reasonably, under Section 182 of the OBCA for an order approving the
Arrangement and the Interim Order, and thereafter proceed with and
diligently seek to obtain the Interim Order and complete the
Arrangement;
|
|
|
(b)
|
Convene
and hold the Company Meeting for the purpose of considering the
Arrangement Resolution (and for any other proper purpose as may be set out
in the notice for such meeting with the prior approval of Parent acting
reasonably), in accordance with the Interim
Order;
|
|
|
(c)
|
Include
the Recommendation in the Circular (which Recommendation, for greater
certainty, shall be subject to the provisions of Section
6.02);
|
|
|
(d)
|
Subject
to obtaining the approvals as are required by the Interim Order, proceed
with and diligently pursue the application to the Court for the Final
Order; and
|
|
|
(e)
|
Subject
to obtaining the Final Order and the satisfaction or waiver of the other
conditions herein contained in favour of each party, send to the Director,
for endorsement and filing by the Director, the Articles of Arrangement
and such other documents as may be required in connection therewith under
the OBCA to give effect to the
Arrangement.
|
Section
2.02 Interim
Order.
The
notice of motion for the application referred to in Section 2.01(a) shall
request that the Interim Order provide:
- 13
-
|
|
(a)
|
For
the class of Persons to whom notice is to be provided in respect of the
Arrangement and the Company Meeting and for the manner in which such
notice is to be provided;
|
|
|
(b)
|
That
the requisite approval for the Arrangement Resolution shall be 66-2/3% of
the votes cast on the Arrangement Resolution by the Company Shareholders,
voting as a separate class, present in person or by proxy at the Company
Meeting; such that each Company Shareholder is entitled to one vote for
each share of Company Common Stock held, or such other majority as may be
approved by the Court;
|
|
|
(c)
|
That,
in all other respects, the terms, restrictions and conditions of the
by-laws and articles of the Company, including quorum requirements and all
other matters, shall apply in respect of the Company
Meeting;
|
|
|
(d)
|
For
the grant of the Dissent Rights;
|
|
|
(e)
|
That
each Company Shareholder will have the right to appear before the Court at
the hearing of the Court to approve the Final Order so long as such
Company Shareholder enters an appearance within a reasonable time;
and
|
|
|
(f)
|
For
the notice requirements respecting the presentation of the application to
the Court for a Final Order.
|
Section
2.03 Articles of
Arrangement.
The
Articles of Arrangement shall, with such other matters as are necessary to
effect the Arrangement, and all as subject to the provisions of the Plan of
Arrangement, implement the Plan of Arrangement.
- 14
-
Section
2.04 Company’s
Circular
|
|
(a)
|
As
promptly as practicable after the execution and delivery of this
Agreement, the Company and its legal counsel shall prepare the Circular,
which shall include information provided by Parent regarding the
disclosure required to be provided in respect of the Purchaser Parties in
accordance with applicable Securities Legislation and the OBCA, which
Parent agrees to provide promptly upon request, together with any other
documents required by Securities Legislation and other applicable Laws or
the Interim Order in connection with the Arrangement, and as promptly as
practicable after the date of execution of this Agreement, the Company
shall cause the Circular and any other documentation required in
connection with the Company Meeting to be sent to each Company Shareholder
and to be filed as required by the Interim Order, applicable Securities
Legislation and the OBCA. The Circular together with any other
documents required by Securities Legislation and the OBCA shall be in form
and substance satisfactory to Parent, acting reasonably. The Company will
cause the Circular to provide adequate notice advising the Company
Shareholders of their right to attend the hearing of the Court to give
approval of the Arrangement and provide them with sufficient information
necessary for them to exercise that
right.
|
|
|
(b)
|
The
Company and Parent each shall, upon request by the other, furnish the
other with all information concerning itself, its Subsidiaries, directors,
executive officers and stockholders and such other matters as may be
reasonably necessary or advisable in connection with the Circular or any
other statement, filing, notice or application made by or on behalf of the
Purchaser Parties, the Company or any of their respective Subsidiaries to
any third party and/or any Governmental Authority in connection with the
Arrangement and the Transactions.
|
|
|
(c)
|
Without
limiting the generality of the foregoing, the Company will ensure that the
Circular provides the Company Shareholders with information in sufficient
detail to permit them to form a reasoned judgment concerning the matters
to be placed before them at the Company Meeting and to allow Parent to
rely upon the exemption from registration provided under subsection
3(a)(10) of the Securities Act with respect to the issuance of Parent
Common Stock in exchange for the Company Shares pursuant to the
Transactions.
|
Section
2.05 Parent’s Stockholder
Meeting
|
|
(a)
|
Parent
shall (i) take all steps necessary to duly call, give notice of, convene
and hold a meeting of the stockholders of Parent (the “Parent Stockholders
Meeting”) for the purpose of securing the approval of Parent’s
stockholders (the “Parent Stockholders”) of, among other things (1) the
issuance of the shares of Parent Common Stock to the Company Shareholders
in connection with the Arrangement, (2) an increase in the number of
shares of common stock that Parent is authorized to issue, if required (3)
the approval of the change of name of Parent to “▇▇▇▇▇-Vanguard
Corporation”, (4) the amendment to the Certificate of Incorporation of
Parent to remove various provisions that are specific to SPACs, and (5)
the adoption of the Company RSU Plan and the Company Warrants
(collectively, the “Parent Stockholder Proposals”); (ii) recommend to the
Parent Stockholders the approval of the Parent Stockholder Proposals and
the Transactions and use commercially reasonable efforts to obtain, as
promptly as practicable, such approvals, and (iii) cooperate and consult
with the Company with respect to each of the foregoing matters. Parent
shall provide notice to the Company of the Parent Stockholders Meeting and
allow Company’s representatives to attend the Parent Stockholders
Meeting.
|
- 15
-
|
|
(b)
|
The
board of directors of Parent will recommend to the Parent Stockholders the
approval of the Parent Stockholder Proposals and the Transactions and
Parent, in its capacity as the sole stockholder of the Purchaser, has
approved and adopted this Agreement and the Transactions by the execution
of a written consent of sole stockholder in lieu of a meeting. Parent and
its board of directors shall not withdraw, amend, modify or qualify the
recommendation of the Parent Stockholder Proposals (or announce
its intention to do so).
|
Section
2.06 Parent Proxy
Statement.
|
|
(a)
|
As
promptly as practicable after the execution of this Agreement, Parent will
prepare a Proxy Statement in connection with the Parent Stockholders
Meeting (the “Proxy Statement”). Parent will consult with the Company with
respect to the preparation of the Proxy Statement and in connection with,
and will respond to, any comments of the SEC and will use its best efforts
to have the Proxy Statement cleared by the SEC, and the respective rules
and regulations promulgated thereunder, as promptly as practicable after
its filing, and Parent will cause the Proxy Statement to be mailed to its
stockholders at the earliest practicable time. As promptly as practicable
after the date of this Agreement, Parent will prepare and file any other
filings required to be filed by it under the Exchange Act, and the rules
and regulations promulgated thereunder, the Securities Act or any other
U.S. federal or state laws relating to the Arrangement and the
Transactions (the “Other U.S. Filings”). Parent will notify the Company
promptly upon the receipt of any comments from the SEC or its staff or any
other government officials and of any request by the SEC or its staff or
any other government officials for amendments or supplements to the Proxy
Statement or any Other U.S. Filings or for additional information and will
supply the Company with copies of all correspondence between Parent or any
of its representatives, on the one hand, and the SEC, or its staff or any
other government officials, on the other hand, with respect to the Proxy
Statement, the Arrangement, the Transactions or any Other U.S. Filings.
Parent will cause all documents that it is responsible for filing with the
SEC or other regulatory authorities under this Section 2.06 to comply in
all material respects with all applicable requirements of Law and the
rules and regulations promulgated thereunder. Whenever any event occurs
which is required to be set forth in an amendment or supplement to the
Proxy Statement or any Other U.S. Filings, Parent will promptly inform the
Company of such occurrence and cooperate in filing with the SEC or its
staff or any other government officials, and/or mailing to the Parent
Stockholders, such amendment or supplement. The Proxy Statement together
with any other documents required by Securities Legislation and shall be
in form and substance satisfactory to the Company, acting
reasonably.
|
- 16
-
|
|
(b)
|
The
Company shall, upon request by Parent, furnish Parent with all information
concerning itself, its Subsidiaries, directors, executive officers and
stockholders and such other matters as may be reasonably necessary or
advisable in connection with the Proxy Statement or any other statement,
filing, notice or application made by or on behalf of the Purchaser
Parties or any of their respective Subsidiaries to any third party and/or
any Governmental Authority in connection with the Arrangement and the
Transactions.
|
|
|
(c)
|
The
Company shall indemnify and hold harmless the Purchaser and its directors
and officers from and against all claims, damages, liabilities, actions or
demands to which they may become subject insofar as such claims, damages,
liabilities, actions or demands arise out of or are based upon the
information provided by the Company and included in the Proxy Statement or
any amendment thereto; provided however that, notwithstanding the
foregoing, the Company shall have no liability or obligation under this
paragraph (c) in the event that such information shall have been modified
in any way, or reproduced in any manner other than that provided by the
Company, without its prior written
consent.
|
Section
2.07 Preparation of
Filings.
|
|
(a)
|
Each
of Parent, Purchaser and the Company shall cooperate and use its
reasonable commercial efforts in:
|
|
|
(i)
|
the
preparation and filing of any application and any other documents
reasonably deemed by Parent or the Company to be necessary to discharge
their respective obligations under Securities Legislation, the DGCL and
the OBCA in connection with the Arrangement and the
Transactions;
|
|
|
(ii)
|
the
taking of all such action as may be required under any applicable
Securities Legislation in connection with the Arrangement;
and
|
- 17
-
|
|
(iii)
|
the
taking of all such action as may be required under the DGCL and the OBCA
in connection with the
Transactions.
|
|
|
(b)
|
Each
of Parent and the Company shall furnish to the other all such information
concerning it and its stockholders as may be required (and, in the case of
its stockholders, available to it) for the effecting of the actions
described in Section 2.04 and Section 2.06 and the foregoing provisions of
this Section 2.07 and the obtaining of all regulatory approvals required
by Section 7.01(d), and each covenants that no information furnished by it
(to its knowledge in the case of information concerning its stockholders)
in connection with such actions will contain any untrue statement of a
material fact or omit to state a material fact required to be stated in
any such document or necessary in order to make any information so
furnished for use in any such document not misleading in light of the
circumstances in which it is
furnished.
|
|
|
(c)
|
Each
of Parent and the Company shall promptly notify each other if, at any time
before or after the Effective Time, it becomes aware that the Circular or
the Proxy Statement, as the case may be, contains any untrue statement of
a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements contained therein not
misleading in light of the circumstances in which they are made, or that
otherwise requires an amendment or supplement to the Circular or the Proxy
Statement, as the case may be. In any such event, the Company
or Parent, as the case may be, shall (with the cooperation and assistance
of the other) prepare a supplement or amendment to the Circular or the
Proxy Statement, as the case may be, or such other document, as required
and as the case may be, and, if required, shall cause the same to be
distributed to the Company Shareholders or the Parent Stockholders, as the
case may be and/or filed with the relevant securities regulatory
authorities.
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(d)
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The
Purchaser Parties shall indemnify and hold harmless the Company and its
directors and officers from and against all claims, damages, liabilities,
actions or demands to which they may become subject insofar as such
claims, damages, liabilities, actions or demands arise out of or are based
upon the information provided by the Purchaser Parties and included in the
Circular or any amendment thereto in order to comply with Securities
Legislation and the OBCA; provided however that, notwithstanding the
foregoing, the Purchaser Parties shall have no liability or obligation
under this paragraph (d) in the event that such information shall have
been modified in any way, or reproduced in any manner other than that
provided by a Purchaser Party, without its prior written
consent. In no event will this paragraph be interpreted to
permit the Company to make a claim against the Trust Account (as defined
below) in violation of Section 9.01 of this
Agreement.
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Section
2.08 Company
Action
The
Company hereby approves of and consents to the Arrangement and represents that
the Company Board, at a meeting duly called and held, has unanimously (i)
determined that this Agreement and the Transactions are fair to the Company
Shareholders and in the best interests of the Company, (ii) approved and
declared advisable this Agreement and the Transactions, and (iii) resolved to
make the Recommendation, and agrees and undertakes to use its reasonable
commercial efforts to obtain the necessary vote in favour of the Arrangement by
the Company Shareholders, subject to the provisions of Section
6.02. The Company hereby consents to the inclusion in the Circular of
the Recommendation and the Company shall not withdraw, qualify, modify or amend
the Recommendation in any manner adverse to Parent or Purchaser except as and
only to the extent permitted by Section 6.02.
Section
2.09 Consideration.
In
connection with the Arrangement:
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(a)
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Holders
of Company Common Stock at the Effective Date who do not exercise Dissent
Rights under the Arrangement and are entitled to receive fair value for
the Company Common Stock held by them, will be entitled to receive, in
exchange for each share of Company Common Stock, a fraction of a share of
Parent Common Stock equal to the Exchange Ratio. If between the date of
this Agreement and the Effective Time the outstanding shares of Parent
Common Stock or Company Common Stock shall have been changed into a
different number of shares or a different class, by reason of any stock
dividend, stock split, reclassification, recapitalization, combination or
exchange of shares, the Exchange Ratio shall be correspondingly adjusted
to reflect such stock dividend, stock split, reclassification,
recapitalization, combination or exchange of
shares.
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(b)
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Company
Stock Options that are not exercised prior to the Exercise Date will be
cancelled and terminated at the Effective
Time.
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(c)
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Holders
of Company Warrants that are not exercised prior to the Exercise Date will
be entitled to retain such Company Warrants and such
Company Warrants will be exercisable from and after the
Effective Date for shares of Parent Common Stock after making adjustments
as contemplated by Section 2.11
hereof.
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(d)
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Holders
of Company RSUs that are not redeemed prior to the Exercise Date will be
entitled to retain such Company RSUs, and such Company RSUs will be
redeemable from and after the Effective Date for cash as provided in the
Company RSUs (adjusted to reflect the Exchange Ratio and as otherwise
required to reflect the Arrangement), or for shares of Parent Common Stock
after making adjustments as contemplated by Section 2.10(b)
hereof.
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(e)
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No
certificates or scrip evidencing fractional shares of Parent Common Stock
shall be issued upon the surrender for exchange of Certificates (after
taking into account all Certificates delivered by such holder) and such
fractional share interests will not entitle the owner thereof to vote or
to any rights of a stockholder of Parent. Company Shareholders who would
otherwise have been entitled to receive decimal five (0.5) or more of a
share of Parent Common Stock pursuant to the Arrangement shall receive a
number of shares of Parent Common Stock rounded up to the next whole
number of shares of Parent Common Stock. Company Shareholders
who would otherwise have been entitled to receive less than decimal five
(0.5) of a share of Parent Common Stock pursuant to the Arrangement shall
receive a number of shares of Parent Common Stock rounded down to the next
whole number of shares of Parent Common Stock. For greater
certainty, Company Shareholders shall not be entitled to receive a cash
payment in lieu of a fractional share of Parent Common
Stock.
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Section
2.10 Company Stock Options and
Company RSUs.
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(a)
|
Before
the Effective Date, the Company Board (or, if appropriate, any committee
of the Company Board administering the Company Stock Option Plans) shall
adopt such resolutions or take such other actions as may be required to
effect the following:
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(i)
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in
accordance with the provisions of the Company Stock Option Plans, declare
that all of the unvested Company Stock Options shall vest and specify a
date prior to the Effective Date before which all Company Stock Options
must be exercised, failing which any unexercised Company Stock Options
shall terminate at the Effective Time;
and
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(ii)
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make
such other changes to the Company Stock Option Plans as Parent and the
Company may agree are appropriate to give effect to the
Arrangement.
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(b)
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Before
the Effective Date, the Company Board (or, if appropriate, any committee
of the Company Board administering the Company RSU Plan) shall adopt such
resolutions or take such other actions as may be required to effect the
following:
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(i)
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amend
the terms of all outstanding unvested Company RSUs, as necessary and as
permitted by the Company RSU Plan, to provide that, at the Effective Time,
the Company RSUs outstanding immediately prior to the Effective Time (the
“Adjusted RSUs”) shall from and after the Effective Time be redeemable in
accordance with the terms of the Company RSU Plan for such number of
shares of Parent Common Stock as equals (i) the number of shares of
Company Common Stock for which the Company RSUs, if vested, would have
been redeemable immediately prior to the Effective Time, multiplied by
(ii) the Exchange Ratio; and
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(ii)
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make
such other changes to the Company RSU Plan as Parent and the Company may
agree are appropriate to give effect to the
Arrangement.
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(c)
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At
the Effective Time, by virtue of the Arrangement and without the need of
any further corporate action, Parent shall assume the Company RSU Plan,
with the result that all obligations of the Company under the Company RSU
Plan, including with respect to unvested Company RSUs outstanding at the
Effective Time (adjusted pursuant to Section 2.10(b)), shall be
obligations of Parent following the Effective
Time.
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(d)
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As
soon as practicable after the Effective Time, Parent shall prepare and
file with the SEC a registration statement on Form S-8 (or another
appropriate form) registering a number of shares of Parent Common Stock
equal to the number of shares of Parent Common Stock issuable in
connection with the redemption of the Adjusted RSUs. Such
registration statement shall be kept effective (and the current status of
the prospectus or prospectuses required thereby shall be maintained) at
least for so long as any Adjusted RSUs or any unsettled awards granted
under the Company RSU Plan after the Effective Time may remain
outstanding.
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Section
2.11 Company
Warrants.
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(a)
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Following
the
Effective Time, the Company Warrants shall be exercisable in accordance
with the terms thereof for such number of shares of Parent Common Stock as
equals (a) the number of shares of Company Common Stock for which the
Company Warrants were exercisable immediately prior to the Effective Time
multiplied by (b) the Exchange Ratio. The exercise price for the Company
Warrants following the Effective Time shall be the exercise price for the
Company Warrants prior to the Effective Time divided by the Exchange
Ratio.
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(b)
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Parent shall prepare
and file with the SEC a registration statement on Form S-1 (or another
appropriate form) registering for public sale such shares of Parent Common
Stock issuable upon exercise of Company Warrants dealt with under the
Arrangement. Such registration in respect of Parent Company Stock issuable
upon exercise of those Company Warrants covered in any existing
registration rights agreement shall comply and be made in accordance with
the terms of such registration rights agreement. The registration with
respect to each other holder of Company Warrants not covered in any
existing registration rights agreement shall be made as soon as
practicable after the Effective Time and shall be kept effective (and the
current status of any prospectus required thereby shall be maintained) at
least for so long as any Company Warrants held by such other holders
remain outstanding.
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Section
2.12 Adjustments to Consideration
to Company Common Shareholders.
If the
Company shall receive any Med-Eng Settlement Amount after the date of this
Agreement but before March 15, 2009, for every CAD$1,000,000 of payments
received by the Company in respect of the Med-Eng Settlement Amount (after
giving effect to taxes payable and contingent liabilities relating to which the
Med-Eng Settlement Amount has been paid) the Exchange Ratio will be increased by
a percentage equal 0.001109883 multiplied by the Exchange Rate.
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ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
As an
inducement to Parent and Purchaser to enter into this Agreement and to implement
the Transactions, the Company hereby represents and warrants to Parent and
Purchaser as follows:
Section
3.01 Organization and
Qualification; Subsidiaries.
The
Company is a corporation duly formed, validly existing and in good standing
under and by virtue of the Laws of the Province of Ontario, Canada, and has all
power and authority, corporate and otherwise to own and operate its properties
and assets and to carry on its business as now conducted and as proposed to be
conducted. Each of the Company Subsidiaries is listed on Schedule 3.01. Each
Company Subsidiary is duly formed, validly existing and in good standing under
and by virtue of the Laws of their respective jurisdiction of organization, and
has all power and authority to own and operate its properties and assets and to
carry on businesses as now conducted and as proposed to be
conducted. Except as set forth on Schedule 3.01, neither the Company
nor any Company Subsidiary is qualified to do business as a foreign corporation
in any jurisdiction, and there is no jurisdiction in which the character of the
property owned or leased by the Company or any Company Subsidiary or the nature
of its activities make qualification of the Company or any Company Subsidiary in
any such jurisdiction necessary, except where the failure to so qualify would
not have a Company Material Adverse Effect. The only offices or
business locations of the Company and each Company Subsidiary are listed on
Schedule 3.01. Neither the Company nor any Company Subsidiary has taken any
action, adopted any plan, or made any agreement in respect of any merger,
consolidation, sale of all or substantially all of its respective assets,
reorganization, recapitalization, dissolution or liquidation, except as
explicitly set forth in this Agreement.
Section
3.02 Certificate of Incorporation
and By-Laws.
The
Company has heretofore made available to Parent a complete and correct copy of
the certificate of incorporation or other constating documents and the by-laws
or equivalent organizational documents, each as amended to date, of the Company
and each Company Subsidiary. Such certificates of incorporation,
constating documents, by-laws or equivalent organizational documents, as amended
to date, are in full force and effect. Neither the Company nor any
Company Subsidiary is in violation of any of the provisions of its certificate
of incorporation, constating document, by-laws or equivalent organizational
documents.
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Section
3.03 Authority.
The
Company has all necessary corporate power and authority to execute and deliver
each of the Transaction Documents, to perform its obligations hereunder and
thereunder and to consummate the Transactions. The execution and
delivery of the Transaction Documents by the Company and the consummation by the
Company of the Transactions have been duly and validly authorized by all
necessary corporate action of the Company. No corporate proceedings
on the part of the Company are necessary to authorize the Transaction Documents
or to consummate the Transactions, other than the approval of the Company
Shareholders and the filing of appropriate documents as required by the
OBCA. Each of the Transaction Documents has been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by each of the other parties hereto and subject to the
terms and conditions of this Agreement and the requisite approval of the
Arrangement Resolution by the Company Shareholders, each of the Transaction
Documents constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar Laws affecting the
enforcement of creditors’ rights generally and by general equitable
principles.
Section
3.04 No Conflict; Required
Filings and Consents.
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(a)
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The
execution and delivery of the Transaction Documents by the Company do not,
and the performance by the Company of its obligations thereunder, will
not, (i) result in a breach of or conflict with or violate the certificate
of incorporation or other constating documents or by-laws or any
equivalent organizational documents, each as amended to date, of the
Company or any Company Subsidiary, (ii) result in a breach of, constitute
a default under, violate or conflict with any material term or provision
of any order of any court, Governmental Authority or any Law applicable to
the Company or any Company Subsidiary or by which any property or asset of
the Company or any Company Subsidiary is bound or affected, (iii) result
in any breach of or constitute a default (or an event which, with notice
or lapse of time or both, would become a default) under, or give to others
any right of termination, amendment, acceleration or cancellation of, or
result in the creation of a Lien or other encumbrance on any property or
asset of the Company or any Company Subsidiary pursuant to, or result in
any payment under, any Material Contract (as defined in Section 3.11) or
Company Permit or, except as set forth in Schedule 3.04(a), require the
Company or any Company Subsidiary, under the terms of any agreement,
contract, arrangement or understanding to which it is a party or by which
it or any property or asset of the Company or Company Subsidiary is bound,
to obtain the consent or approval of, or provide notice to, any other
party to such agreement, contract, arrangement or understanding; or (iv)
give rise to any Liability not disclosed in Schedule
3.04(a).
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(b)
|
The
execution and delivery of the Transaction Documents by the Company do not,
and the performance by the Company of its obligations hereunder and
thereunder, will not, require any consent, approval, authorization or
permit of, or filing with or notification to any Governmental Authority,
except (A) for applicable requirements, if any, of Canadian Securities
Laws, the Investment Canada Act and filing of appropriate documents as
required by the OBCA, and (B) as contemplated by Section 2.01, Section
2.02 and the Plan of Arrangement.
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Section
3.05 Capitalization.
Schedule
3.05 sets forth, with respect to the Company and each Company Subsidiary, as at
the date hereof: (i) such company’s authorized capital, (ii) the number of such
company’s equity securities that are outstanding, (iii) each security
convertible into or exercisable or exchangeable for such company’s equity
securities, the number and type of equity securities such security is
convertible into and the exercise or conversion price of such
security. Except as set forth on Schedule 3.05, there is no contract
that requires or under any circumstance would require the Company or any Company
Subsidiary to issue, or grant any right to acquire, any securities of the
Company or any Company Subsidiary, or any security or instrument
exercisable or exchangeable for or convertible into, the capital stock or
membership interest of the Company or any Company Subsidiary or to merge,
consolidate, dissolve, liquidate, restructure, or recapitalize the Company or
any Company Subsidiary. The Company Common Stock and the equity
securities of each Company Subsidiary (i) have been duly authorized and validly
issued and are fully paid and non-assessable, and (ii) were issued in compliance
with all applicable federal, provincial and state securities
laws.
Section
3.06 Securities Law Matters;
Financial Statements.
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(a)
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The
Company is a “reporting issuer” or has equivalent status in each of the
provinces of Canada. The Company Common Stock is listed on the
TSX. Other than as disclosed in Schedule 3.06(a), the Company
has not been notified of any default or alleged default by the Company of
any material requirement of the TSX or applicable Canadian Securities
Laws. No Canadian Securities Regulators have issued any order
preventing or suspending trading of any securities of the Company and the
Company is not in material default of any requirement of applicable
Canadian Securities Laws.
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(b)
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At
the time that they were filed or, if amended, as of the date of such
amendment, the Company Reports complied in all material respects, and each
report subsequently filed by the Company with the Canadian Securities
Regulators will, on the date filed, comply in all material respects, with
all applicable requirements of Canadian Securities Legislation as in
effect on the date so filed. The Company Reports did not or
will not, at the time they were or will be filed, or, if amended, as of
the date of such amendment, contain any
Misrepresentation.
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(c)
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Neither
the Company nor any of the Company Subsidiaries has filed with the SEC any
registration statement under the Securities Act or is currently
registered, or has prior to the date hereof been registered, under the
Exchange Act. The Company is not currently required, and, with
the exception of notices filed with the SEC on Form D pursuant to Rule 503
of Regulation D under the Securities Act and similar notices filed with
certain state securities regulatory authorities as permitted by section 18
of the Securities Act or in connection with offerings of securities
effected pursuant to exemptions from applicable state registration
requirements, has not prior to the date hereof been required, to file any
form, report or other document with the U.S. Securities
Regulators. No Company Subsidiary is required to file any form,
report or other document with the Canadian Securities Regulators or the
U.S. Securities Regulators. Except as set out in Schedule
3.06(c), the Company has not received any non-routine inquires or
interrogatories, whether in writing or otherwise, from any Canadian
Securities Regulators, the TSX or any other Governmental Authority, or, to
the knowledge of the Company, been the subject of any investigation,
audit, review or hearing by or in front of such Persons, in each case with
respect to any of the Company Reports or any of the information contained
therein.
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(d)
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Each
of the consolidated financial statements contained in the Company Reports,
including, for greater certainty, the Financial Statements, and including,
in each case, any notes thereto, have been and, as regards such financial
statements prepared after the date hereof, will be, prepared in accordance
with GAAP applied on a consistent basis throughout the periods indicated
and each fairly presents or will fairly present, in all material respects,
the consolidated financial position, results of operations and cash flows
of the Company and its consolidated Company Subsidiaries as at the
respective dates thereof and for the respective periods indicated therein
(subject, in the case of unaudited statements, to normal and recurring
year-end adjustments) and reflects appropriate and adequate reserves for
contingent Liabilities in accordance with
GAAP.
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(e)
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Except
as and to the extent set forth in the Company Reports, neither the Company
nor any Company Subsidiary has any Liability, except for (i) Liabilities
incurred in the ordinary course of Business consistent with past practice
since September 30, 2008, or (ii) Liabilities for fees, costs and expenses
incurred in connection with the
Transactions.
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(f)
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The
Company and the Company Subsidiaries have devised and maintain a system of
internal accounting controls and information systems sufficient to provide
reasonable assurances that (x) transactions are executed in accordance
with management’s general or specific authorization, and (y) transactions
are recorded as necessary (A) to permit preparation of financial
statements in conformity with GAAP, and (B) to maintain accountability for
assets, in all material respects.
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Section
3.07 Information to be
Supplied.
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(a)
|
The
Circular and the other documents required to be filed by the Company with
the Canadian Securities Regulators in connection with the Transactions
will comply as to form in all material respects with the requirements of
the Canadian Securities Laws and the OBCA, as the case may
be. Each of the Circular and the other documents required to be
filed by the Company with the Canadian Securities Regulators in connection
with the Transactions and any of the information supplied or to be
supplied by the Company or the Company Subsidiaries or their
representatives for inclusion or incorporation by reference in the
Circular will not, on the date of its filing or mailing, on the date of
the Company Meeting or at the Effective Date, contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not
misleading.
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(b)
|
Notwithstanding
the foregoing provisions of this Section 3.07, no representation or
warranty is made by the Company with respect to statements made in the
Circular based on information supplied by or on behalf of the Purchaser
Parties for inclusion therein, unless such information shall have been
modified in any way, or reproduced in any manner other than that provided
by a Purchaser Party, without its prior written
consent.
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Section
3.08 Permits;
Compliance.
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(a)
|
The
operations of the Company and the Company Subsidiaries have been conducted
in compliance with all Laws in each jurisdiction in which it or they carry
on business or hold a Company Permit, except where the failure to so
comply has not resulted in a Company Material Adverse
Effect. The Company holds all necessary Company Permits and all
such Company Permits are in full force and
effect.
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(b)
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Except
as set out on Schedule 3.08(b), neither the Company nor any of the Company
Subsidiaries is in default, in any material respect, with respect to any
Law or Company Permit or has received written notice of any possible
violation (or of any investigation, inspection, audit, or other proceeding
by any Governmental Authority involving allegations of any violation) of
any Law or Company Permit, and, to the knowledge of the Company, no
investigation, inspection, audit or other proceeding by any Governmental
Authority involving allegations of any violation of any Law or Company
Permit is threatened or
contemplated.
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(c)
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Each
of the Company and the Company Subsidiaries has, and to the knowledge of
the Company all employees or agents of each of the Company and the Company
Subsidiaries have, all material licenses, franchises, permits,
authorizations, certifications, easements, variances, exceptions, consents
and orders, including approvals from all Governmental Authorities
(“Approvals”) required for the conduct of the business of each of the
Company and the Company Subsidiaries and the occupancy and operation, for
its present uses, of the real and personal property which each of the
Company and the Company Subsidiaries owns or leases and neither the
Company nor any of the Company Subsidiaries is in material violation of
any such Approval or any terms or conditions
thereof.
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(d)
|
All
Approvals for the Company and each of the Company Subsidiaries are, in all
material respects, in full force and effect, have been issued to and fully
paid for by the holder thereof and, to the knowledge of the Company, no
suspension or cancellation thereof has been
threatened.
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(e)
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No
Approvals for the Company and each of the Company Subsidiaries, nor any
Company Permits, will terminate or cease to be valid and in effect by
reason of the Transactions.
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Section
3.09 Absence of Certain Changes
or Events.
Except as
(a) expressly contemplated by this Agreement or in Schedule 3.09, or (b)
described in the Company Reports filed prior to the date of this Agreement,
since September 30, 2008: (i) the Company and the Company Subsidiaries have
conducted their businesses only in the ordinary course and in a manner
consistent with past practice, (ii) there has not been any Company Material
Adverse Effect, (iii) none of the Company or any Company Subsidiary has taken
any action that, if taken after the date of this Agreement, would constitute a
breach of any of the covenants set forth in Section 5.01; and (iv) other than as
disclosed in Schedule 3.05, none of the Company or any Company Subsidiary has
issued or granted any options, warrants, debentures or other rights, agreements,
arrangements or commitments of any character, relating to the issued or unissued
capital stock of the Company or any Company Subsidiary or obligating the Company
or any Company Subsidiary to issue or sell any shares of capital stock of, or
other equity interests in, the Company or any Company
Subsidiary.
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Section
3.10 Absence of
Litigation.
Except as
set forth in Schedule 3.10, there are no Actions outstanding or, to the
knowledge of the Company, threatened against the Company or any Company
Subsidiary at law or in equity or before or by any court or other Governmental
Authority. To the knowledge of the Company, there are no grounds upon
which any Action may be commenced against the Company or a Company
Subsidiary. Neither the Company nor any Company Subsidiary nor any
property or asset of the Company or any Company Subsidiary is subject to any
continuing order of, consent decree, settlement agreement or other similar
written agreement with, or, to the knowledge of the Company, continuing
investigation, inquiry or audit by, any Governmental Authority, or any order,
writ, judgment, injunction, decree, determination or award of any Governmental
Authority.
Section
3.11 Contracts.
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(a)
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Schedule
3.11(a)(A) contains a complete list of all oral contracts or agreements to
which the Company or any Company Subsidiary is a party involving a
commitment in excess of CAD$15,000. Schedule 3.11(a)(B) contains a
complete list of all written contracts and agreements to which the Company
or any Company Subsidiary is a party: (i) each contract,
agreement or account involving aggregate annual payments to the Company or
any Company Subsidiary of more than CAD$10.0 million, or aggregate annual
payments by the Company or any Company Subsidiary of more than CAD$5.0
million, (ii) all material contracts and agreements with any Governmental
Authority, (iii) all contracts and agreements that (A) limit or purport to
limit the ability of the Company or any Company Subsidiary or, to the
Company’s knowledge, any key executives of the Company or any Company
Subsidiary, to compete in any line of business or with any Person or in
any geographic area or during any period of time or otherwise restricts
the development, manufacture, marketing, distribution or sale of any
products or services by the Company or any Company Subsidiary, (B) require
the Company or any Company Subsidiary to use any supplier or third party
for all or substantially all of the requirements or needs of the Company
or a Company Subsidiary and that provide for services of more than CAD$5.0
million, or aggregate annual payments by the Company or any Company
Subsidiary of more than CAD$5.0 million, (C) limit or purport to limit in
any material respect the ability of the Company or any Company Subsidiary
to solicit any customers or clients of the other parties thereto, (D)
contain “non-solicitation” or “no-hire” provisions that restrict the
Company or any Company Subsidiary in any manner, or (E) require the
Company or any Company Subsidiary to market or co-market any services or
products of a third party (each of (A) through (E), a “Restrictive
Agreement”); (iv) all contracts, agreements and arrangements between the
Company or any of the Company Subsidiaries, on the one hand, and any
Affiliate, stockholder or officers, directors or principals of the Company
or any Company Subsidiary on the other hand (each such contract, a
“Related Party Agreement”); (v) all joint venture contracts, partnership
arrangements or other agreements outside the ordinary course of business
involving a sharing of profits, losses, costs or Liabilities by the
Company or any Company Subsidiary with any third party; (vi) all licenses
issued by any other Governmental Authority including, without limitation,
the identity of the respective licensees thereunder; (vii) each material
employment, services or consulting contract with any employee, service
provider or consultant of the Company or any of the Company Subsidiaries;
(viii) any standstill or similar contract currently restricting the
ability of the Company or any Company Subsidiary to offer to purchase or
purchase the assets or equity securities of another Person; (ix) each
material contract providing that the Company, any Company Subsidiary or
any of their respective employees maintain the confidentiality of any
information, or providing for any Person to maintain the confidentiality
of any information material to the Company, any Company Subsidiary or
their respective businesses; (x) any contract under which the Company or
any Company Subsidiary has directly or indirectly guaranteed Indebtedness
of any Person; (xi) any contract under which the Company or any Company
Subsidiary has borrowed any money from, or issued any note, bond,
debenture or other evidence of Indebtedness to, any Person; (xii) any
contract granting a third party any license to any Intellectual Property
Rights involving aggregate annual payments to the Company or any Company
Subsidiary of more than CAD$10.0 million, or pursuant to which the Company
or any Company Subsidiary has been granted by a third party any license to
any software or Intellectual Property Rights, or any other license, option
or other contract relating in whole or in part to Intellectual Property
Rights or the intellectual property of any other Person; (xiii) all
collective bargaining agreements, letters of understanding, and all other
agreements between the Company or a Company Subsidiary and any trade
union, employee association or similar organization; and (xiv) all other
material contracts and agreements, including any sole source contracts
with suppliers and licensors, whether or not made in the ordinary course
of business, which are material to the Company or any Company Subsidiary
or the conduct of their respective businesses. The contracts in Schedule
3.11(a)(A) and Schedule 3.11(a)(B), collectively, the “Material
Contracts”.
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|
(b)
|
Each
Material Contract is valid and binding on the Company or the Company
Subsidiary that is a party thereto or bound thereby, as the case may be,
is, in all material respects, in full force and effect against the Company
or the relevant Company Subsidiary, except to the extent it has expired in
accordance with its terms, and represents the entire agreement between or
among the parties thereto with respect to the subject matter thereof; and,
upon consummation of the Transactions, each Material Contract shall
continue in full force and effect without penalty. None of the
Company or any Company Subsidiary or, to the knowledge of the Company, as
of the date of this Agreement, any other party thereto, is in breach of,
or default under, in any material respect, any Material
Contract.
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|
|
(c)
|
The
Company has made available to Parent a true, complete and correct copy of
each Material Contract, together with all material amendments, waivers or
other changes thereto.
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Section
3.12 Employee
Matters.
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|
(a)
|
Schedule
3.12(a) sets forth a true and complete list of the names, titles, annual
salaries or wage rates and other compensation, benefits and office
location of all employees of the Company or any Subsidiary whose general
(or annualized in the case of recent hires) compensation exceeds
CAD$100,000 (or CAD$ equivalent if paid in another currency) (“Key
Employees”), indicating all changes in salaries and wage rates per
employee since September 30, 2008. Schedule 3.12(a) also sets
forth a true and complete list of all written agreements with Key
Employees.
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|
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(b)
|
The
Company and all Company Subsidiaries have complied with all applicable
Laws and Orders relating to employment or labor other than those Laws and
Orders with which it could fail to comply, either individually or in the
aggregate, without causing a Company Material Adverse
Effect. Except as set forth on Schedule 3.12(b), no present or
former employee, officer or director of the Company or any Company
Subsidiary has commenced or threatened, or will have commenced at the
Effective Date, any Action against the Company or any Company Subsidiary
for any matter including, but not limited to, for (i) wages, salary,
bonus, vacation, severance, benefit plans, or sick pay except for the same
incurred in the ordinary course of business for the last payroll period
prior to the Effective Time, or (ii) Actions respecting employment
conditions, standards or practices, including discrimination, harassment
including sexual harassment, pay equity, or health and safety conditions,
which in each case if successful would result in a Company Material
Adverse Effect.
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|
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(c)
|
There
is no: (i) unfair labor practice complaint against the Company or any
Company Subsidiary pending or ongoing before the National Labor Relations
Board, relevant employment standards or labour relations board, tribunal
or commission in Canada or any equivalent provincial, state or local
agency, board or commission in any jurisdiction where the Company or any
Company Subsidiary carries on business and has employees; (ii) pending or
ongoing labor strike, lock-out, slow down or other material labor trouble
affecting the Company or any Company Subsidiary; (iii) material labor
grievance pending or ongoing against the Company or any Company
Subsidiary; (iv) pending or ongoing representation question or
certification application respecting the employees of the Company or any
Company Subsidiary; or (v) pending or ongoing arbitration proceeding
arising out of or under any collective bargaining agreement to which the
Company or any Company Subsidiary is a party. In addition, to
the Company’s knowledge: (a) none of the matters specified in clauses (i)
through (v) above is threatened against the Company or any Company
Subsidiary; (b) no union organizing activities are in progress or have
taken place within the last five (5) years with respect to the Company or
any Company Subsidiary; and (c) no basis exists for which a claim may be
made or Action may be commenced under any collective bargaining agreement
to which the Company or any Company Subsidiary is a
party.
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(d)
|
Neither
the Company nor any of the Company Subsidiaries has entered into, made any
commitments to conduct or conducted negotiations for, nor is the Company
or any of the Company Subsidiaries a party to, either directly or by
operation of Law, any collective agreement, letter of understanding, or
other agreement with any trade union, employee association or other
similar organization, which would cover any employee or dependant
contractor of the Company or any of the Company Subsidiaries, currently or
in the future, except as disclosed in Schedule 3.12(a). In the
past five (5) years, there have not been any strikes, labour disturbances,
work refusals, lock-outs, or slow downs by any of the employees of the
Company or Company Subsidiaries.
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|
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(e)
|
Schedule
3.12(e) sets forth a true and complete list of every written pension,
retirement, profit sharing, bonus, incentive compensation, savings,
deferred compensation, stock option, stock purchase or stock appreciation,
employee stock ownership, fringe benefit, vacation, health, welfare,
medical, dental, vision, supplemental unemployment benefit, life
insurance, disability, sick pay, severance pay, group insurance or other
written or oral employee benefit plans, programs or arrangements currently
or within the last one (1) year sponsored, maintained or contributed to by
the Company or any of the Company Subsidiaries or with respect to which
the Company or any of the Company Subsidiaries participates in or has any
potential liability or obligations (collectively, the
“Plans”). Each Plan has been maintained and administered in all
material respects in compliance with its terms and all applicable Laws and
in accordance with all understandings, written or oral, between the
Company and employees of the Company or any of the Company Subsidiaries
and between any of the Company Subsidiaries and employees of the Company
or any of the Company Subsidiaries. All contributions to the
Plans (including both employee and Company and/or Company Subsidiary
contributions), including premium payments, that are required to have been
made, whether by virtue of the terms of the particular Plan or arrangement
or by operation of Law, have, in all material respects, been made by the
due date thereof (including all applicable
extensions).
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|
(f)
|
(i)
No promise to make any improvements to any Plan or to adopt any additional
plan has been made except as required by Law and no improvements to any
Plan will be made or promised by the Company, and no promise to adopt any
additional plan will be made, before the Effective Date; (ii) no event has
occurred which could subject the Company or any of the Company
Subsidiaries to any material tax, penalty or fiduciary liability in
connection with any Plan which has not been accrued on the Annual
Financial Statements; (iii) there have been no withdrawals of surplus or
contribution holidays, except as permitted by Law and the terms of the
Plans; and (iv) no Plan provides post-employment or post-retirement
benefits to former or retired employees or to the beneficiaries or
dependants of former or retired employees, other than as required by
Law.
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|
|
(g)
|
No
insurance policy or any other contract or agreement affecting any Plan
requires or permits a retroactive increase in premiums or payments due
thereunder.
|
|
|
(h)
|
The
Company has furnished or made available to the Parent true, correct,
up-to-date and complete copies of all the Plans, as amended as of the date
hereof together with all current and past related documentation and all
amendments thereto.
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|
|
(i)
|
Neither
the Company nor any of the Company Subsidiaries have received notice of
the intent of any Governmental Authority responsible for the enforcement
or administration of labour or employment laws, to conduct an audit,
inquiry or investigation of the Company or the Company
Subsidiaries.
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|
|
(j)
|
There
are no outstanding Actions, orders, charges or fines against the Company
or any of the Company Subsidiaries under any occupational health and
safety legislation or other Laws. All levies, assessments and penalties
made against or premiums owed by the Company or the Company Subsidiaries
pursuant to applicable workers’ compensation or workplace safety and
insurance legislation have, in all material respects, been paid in full,
and there has been no reassessment under such legislation during the past
three years and, to the knowledge of the Company, there are no
circumstances that would permit a
reassessment
|
|
|
(k)
|
All
obligations of the Company and the Company Subsidiaries as of the
Effective Date for wages, salary, bonuses, commissions or incentives,
vacation pay, holiday pay, sick pay, premiums for employment or
unemployment insurance, employer health tax or premiums, workers’
compensation and workplace safety and insurance payments or premiums, and
all other accrued payroll obligations in respect of the employees of the
Company and the Company Subsidiaries will have, in all material respects,
been paid, or if unpaid, will be accrued and properly reflected in the
Books and Records of the Company and the Company Subsidiaries on the
Effective Date.
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|
|
(l)
|
The
execution of this Agreement and the completion of the Transactions will
not constitute an event under any Plan that will result in any payment
(whether of severance pay or otherwise), acceleration of payment or
vesting of benefits or compensation, forgiveness of indebtedness, vesting,
distribution, restriction on funds, increase in benefits or obligation to
fund benefits or compensation, except as will be accrued and properly
reflected in the Books and Records of the Company and the Company
Subsidiaries on the Effective Date.
|
Section
3.13 Customers.
Except as
set forth on Schedule 3.13, since September 30, 2008: (a) there has not been any
termination of the business relationship of the Company or any Company
Subsidiary with any material licensee, customer or supplier other than in the
ordinary course of business or where the conclusion of such relationship or
contract would not have a Company Material Adverse Effect; (b) there has not
been any threatened termination or withholding of payments by, or any material
dispute with, any material licensee (including, but not limited to, licensee),
customer or supplier; and (c) neither the Company nor any Company Subsidiary has
received any notice or been informed that any such event will occur in the
future, either as a result of the consummation of the Transactions contemplated
by this Agreement or otherwise. Except as set forth on Schedule 3.13, neither
the Company nor any Company Subsidiary is currently in any dispute over any
terms of any material contract or agreement to which the Company or any Company
Subsidiary and any material licensee, customer or supplier is a
party.
Section
3.14 Property and
Leases.
|
|
(a)
|
The
Company and the Company Subsidiaries have good, valid and marketable title
to or, in the case of leased properties and assets, valid leasehold
interest in, all of the properties and assets owned or used by them to
conduct their respective businesses as currently conducted or as currently
contemplated by the Company and the Company Subsidiaries to be conducted,
free and clear of all Liens, subject only to Permitted
Liens.
|
|
|
(b)
|
Neither
the Company nor any Company Subsidiary owns any real
property.
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|
(c)
|
To
the knowledge of the Company, all Leases (as defined below) are in full
force and effect and have not been modified or amended, and there exists
no material default under any such lease by the Company or any Company
Subsidiary, nor any event which, with notice or lapse of time or both,
would constitute a material default thereunder by the Company or any
Company Subsidiary. To the knowledge of the Company, none of the landlords
or other parties to the Leases are in default of any of their material
obligations under the Leases.
|
|
|
(d)
|
Schedule
3.14(d) discloses a full and complete list of all leases of real property
by or for the benefit of the Company and the Company Subsidiaries and all
amendments and modifications thereto (the “Leases”) and the lessors
thereof. The Company has made available to Parent prior to the
date of this Agreement complete and accurate copies of each of the Leases,
and none of the Leases has been modified in any material
respect.
|
|
|
(e)
|
Neither
the Company nor any Company Subsidiary has breached or violated and is not
in default under any of the Leases or any building, zoning or other
statute, by-law, ordinance, regulation, covenant, restriction or official
plan, the breach or violation of which could individually or in the
aggregate have a Company Material Adverse Effect, and no written notice
from any Person has been received by the Company or any Company Subsidiary
or served upon the Company or any Company Subsidiary claiming any such
breach or violation. There are no condemnation or appropriation
or similar proceedings pending or, to the knowledge of the Company,
threatened against any such real property or improvements
thereon. No material capital expenditures by the Company (or
the Company Subsidiaries) or by the landlord are required for the
maintenance and repair of the leased real property. The
Company’s (or the Company Subsidiaries’) leased real property is
adequately served by gas, electricity, water, sewage and waste removal
utilities. To the knowledge of the Company, there are no
challenges or appeals pending, or threatened regarding the amount of the
Taxes on, or the assessed valuation of the leased real property, and
neither the Company nor any of the Company Subsidiaries have entered into
any special arrangements or agreements with any Governmental Authority
with respect thereto. No part of the premises subject to the
Leases has been taken or expropriated by any Governmental Authority nor
has any notice or proceeding in respect thereof been given or commenced to
or against the Company or any Company
Subsidiary.
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- 34
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Section
3.15 Intellectual
Property.
|
|
(a)
|
Schedule
3.15(a) sets forth a true and complete list of all registered or filed
Intellectual Property Rights, specifying as to each, as applicable: (i)
the nature of such Intellectual Property Right; (ii) the owner of such
Intellectual Property Right; (iii) the jurisdictions by or in which such
Intellectual Property Right has been issued or registered or in which an
application for such issuance or registration has been filed and the name
of the owner of each such registration or application; (iv) the filing and
registration numbers and filing or registration dates of such Intellectual
Property Rights; and (v) all licenses, sublicenses and other agreements
pursuant to which any Person is authorized to use such Intellectual
Property Right. The Intellectual Property Rights listed in Schedule
3.15(a) are valid, enforceable and subsisting. The Intellectual Property
Rights owned or licensed to the Company or the Company Subsidiaries
include all of the Intellectual Property Rights used by the Company or any
of the Company Subsidiaries to conduct its business in the manner in which
such business is currently being
conducted.
|
|
|
(b)
|
Except
as set forth on Schedule 3.15(b), neither the Company nor any Company
Subsidiary is currently being sued or charged in writing with or is a
defendant in any claim, suit, action or proceeding that involves a claim
of infringement of any Intellectual Property Right, and the Company has no
knowledge of any other claim of infringement by the Company or any Company
Subsidiary, and no knowledge of any continuing infringement by any other
Person of any Intellectual Property
Right.
|
|
|
(c)
|
To
the knowledge of the Company, the current use by the Company and the
Company Subsidiaries of the Intellectual Property Rights does not infringe
the rights of any other Person, which if the Company was required cease
such use, would have a Company Material Adverse
Effect.
|
|
|
(d)
|
The
Company warrants that the Company or the Company Subsidiaries have good
and valid title to all Intellectual Property Rights they own and that any
licenses by which Intellectual Property Rights are licensed to or from the
Company or the Company Subsidiaries are in full force and effect, are
unamended and there are no outstanding defaults or breaches under any of
them. With respect to any copyrights owned by or licensed to the Company
or the Company Subsidiaries, written, unrestricted waivers of moral rights
have been obtained, the failure of which to obtain would have a Company
Material Adverse Effect and which waivers may be invoked by the Company or
the Company Subsidiaries to use the
work.
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- 35
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Section
3.16 Taxes.
|
|
(a)
|
Except
as set out in Schedule 3.16(a), the Company and each of the Company
Subsidiaries have duly and on a timely basis filed (or have had filed on
their behalf) with all appropriate Governmental Authorities all Tax
Returns and other documents required to be filed by each of them in
respect of all Taxes in accordance with all applicable Laws except where
the failure to file such Tax Returns or other documents is not likely to
result in a Company Material Adverse Effect, and such Tax Returns and
other documents are, in all material respects, complete and
correct. The Company and each of the Company Subsidiaries has
made available to Purchaser complete and correct copies of all Tax Returns
for the three (3) fiscal years ending before the date
hereof.
|
|
|
(b)
|
The
Company and each of the Company Subsidiaries has, within the time and in
the manner prescribed by Law, paid, collected, remitted and discharged all
Taxes that have become due and payable, collectible and remittable and
will timely pay all Taxes which will become due and payable on or prior to
the Effective Date other than such payments as are being diligently
contested in good faith by appropriate proceedings and for which adequate
reserves have been taken on the Annual Financial Statements in accordance
with GAAP.
|
|
|
(c)
|
Neither
the Company nor any Company Subsidiary has granted any waiver of any
statute of limitations with respect to, or any extension of a period for
the assessment, reassessment or payment of, any
Tax.
|
|
|
(d)
|
Neither
the Company nor any Company Subsidiary is party to any Tax-sharing
agreement, Tax-indemnification agreement or other agreement or arrangement
relating to Taxes with any Person; neither the Company nor any of the
Company Subsidiaries has been a member of an affiliated, combined or
unitary group filing a consolidated, combined, unitary or other Tax Return
for Tax purposes reflecting the income, assets or activities of affiliated
companies, or has any Liability for the Taxes of any other Person under
any provision of Canadian federal, provincial, local or non-Canadian Law,
or as a transferee or successor, or by contract, or
otherwise.
|
|
|
(e)
|
The
Company and each of the Company Subsidiaries has, in all material
respects, withheld from each amount paid or credited to any Person the
amount of Taxes required to be withheld therefrom and has remitted such
Taxes to the proper Governmental Authority within the time required by
applicable Law.
|
|
|
(f)
|
Except
as set out in Schedule 3.16(f), neither the Company nor any of the Company
Subsidiaries has any material Liability for any
Taxes.
|
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|
(g)
|
Neither
the Company nor any of the Company Subsidiaries has any material
Liability, obligation or commitment for the payment of Taxes not yet due
other than those that have arisen since September 30, 2008 in the usual
and ordinary course of business and for which adequate provisions have
been made in the Financial Statements in accordance with
GAAP.
|
|
|
(h)
|
Except
as set out in Schedule 3.16(h), all Tax Returns of the Company and the
Company Subsidiaries have been assessed through December 31, 2007, there
are no proposed or issued assessments or reassessments respecting the
Company or any of the Company Subsidiaries pursuant to which there are
amounts owing or discussions in respect thereof with any taxing authority
and there are no outstanding objections to any assessment or reassessment
of Taxes. Neither Canada Revenue Agency, the Internal Revenue
Service nor any other taxing authority or agency has asserted in writing
or, to the knowledge of the Company, has threatened to assert against the
Company or any Company Subsidiary any deficiency or claim for any Taxes
and there are no outstanding actions, suits, proceedings, investigations,
audits or claims existing or, to the knowledge of the Company, threatened
against the Company or any Company
Subsidiary.
|
|
|
(i)
|
The
Company and the Company Subsidiaries have collected from each past and
present customer (or other Person paying amounts to the Company and the
Company Subsidiaries) the amount of all Taxes (including goods and
services Tax and provincial, state and local sales Taxes) required to be
collected, except where the failure to so collect has not and is not
reasonably likely to result in a Company Material Adverse
Effect.
|
|
|
(j)
|
Except
as set out on Schedule 3.16(j), neither the Company nor any of the Company
Subsidiaries (i) is a party to any waiver or agreement extending the time
within which to file any Tax Return or other document relating to Taxes,
(ii) has executed or entered into any written agreement with, or obtained
or applied for any written consents or written clearances or any other Tax
rulings from, nor has there been any written agreement executed or entered
into on behalf of any of them with, any taxing authority relating to any
material amount of Taxes, (iii) has any Liability for the Taxes of another
Person under U.S. Treasury Regulation Section 1.1502-6 (or any comparable
provision of state, local or foreign Law), (iv) has, or has ever had, a
permanent establishment in any country other than the country of its
organization or been subject to Tax in a jurisdiction outside the country
of its organization, or (v) has engaged in any “reportable transaction” as
defined in U.S. Treasury Regulation Section
1.6011-4(b).
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|
|
(k)
|
The
value of consideration paid or received by the Company and each of the
Company Subsidiaries in respect of the acquisition, sale or transfer of
any property or the provision of any services to or from any person with
whom they do not deal at “arm’s length” (as defined for purposes of the
ITA) has been equal to the fair market value of such property acquired,
sold or transferred or services
provided.
|
|
|
(l)
|
Except
as described in Schedule 3.16(l), the Company and each of the Company
Subsidiaries is in compliance in all material respects with all applicable
Tax laws and guidelines relating to transfer pricing. For
greater certainty, and without limiting the foregoing, for all
transactions between the Company and the Company Subsidiaries and any
non-resident person with whom any of the Company and the Company
Subsidiaries was not dealing at “arm’s length” for the purposes of the
ITA, each of the Company and the Company Subsidiaries has made or obtained
records or documents that satisfy, in all material respects, the
applicable transfer pricing
requirements.
|
|
|
(m)
|
Neither
the Company nor any of the Company Subsidiaries has, within the last seven
(7) years, benefited from a forgiveness of debt or entered into any
transaction or arrangement (including conversion of debt into shares of
its share capital) which could have resulted in the application of Section
80 through and including Section 80.04 of the ITA or any corresponding
provision of any provincial Tax
law.
|
|
|
(n)
|
To
the knowledge of the Company, there are no circumstances existing which
could result in the application of Section 78 of the ITA or any
corresponding provision of any provincial Tax law to the Company or any of
the Company Subsidiaries.
|
|
|
(o)
|
Neither
the Company nor any of the Company Subsidiaries has (i) agreed to or is
required to make any adjustments pursuant to a change in Tax accounting
method, (ii) any knowledge that any taxing authority has proposed any such
adjustment, or (iii) any application pending with any taxing authority
requesting permission for any changes in Tax accounting
methods.
|
|
|
(p)
|
Neither
the Company nor any of the Company Subsidiaries has any plan, arrangement
or agreement providing for deferred compensation that is subject to
Section 409A(a) or 457A of the Code or any asset, plan, arrangement or
agreement that is subject to Section 409A(b) of the
Code.
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|
|
(q)
|
Each
U.S. Subsidiary of the Company has complied with all record keeping and
reporting obligations under Section 6038A of the
Code.
|
|
|
(r)
|
Neither
the Company nor any of the Company Subsidiaries is a party to any
agreement or arrangement that would result individually or in the
aggregate in the payment of any amount that would not be deductible by the
Company or such Company Subsidiary by reason of Sections 162, 280G or 404
of the Code.
|
Section
3.17 Environmental
Matters.
|
|
(a)
|
Neither
the Company nor any of the Company Subsidiaries is in violation of or has
violated, during the three previous years, or has any Liability under, any
Environmental Law and there are no facts, circumstances or conditions
existing, initiated or occurring prior to the Effective Date which could
result in Liability under Environmental Laws. Without limiting
the generality of the foregoing: (i) there has been no Release
of Hazardous Substances at, on, under or from any of the properties
currently owned, leased or operated by the Company or any Company
Subsidiary (including, without limitation, soils and surface and ground
waters) during the period of the Company’s or any Company Subsidiary’s
ownership, tenancy or operation of such property; (ii) there
has been no Release of Hazardous Substances at, on, under or from any of
the properties formerly owned, leased or operated by the Company or any
Company Subsidiary (including, without limitation, soils and surface and
ground waters) during the period of the Company’s or any Company
Subsidiary’s ownership, tenancy or operation of such property; (iii) none
of the real property currently leased or operated by the Company or the
Company Subsidiaries contains underground improvements, including but not
limited to treatment or storage tanks, or underground piping associated
with such tanks, used currently or in the past for the management of
Hazardous Substances, and no portion of such real property is or has been
used as a dump or landfill or consists of or contains filled-in land or
wetlands; and (iv) neither PCB’s, “toxic mold,” asbestos-containing
materials, nor any contamination are present on or in the real property
currently or previously owned, operated or leased by the Company or the
Company Subsidiaries or the improvements
thereon.
|
|
|
(b)
|
Neither
the Company nor any Company Subsidiary has received any notice, demand,
claim or request for information or other written communication alleging
that the Company or any Company Subsidiary (i) is actually, potentially or
allegedly liable under any Environmental Law for Remediation of Hazardous
Substances, or (ii) may be in violation of or have any Liability under any
Environmental Law.
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|
|
(c)
|
The
Company and each Company Subsidiary has applied for and maintains all
material permits, licenses, consents, approvals and other authorizations
required under any Environmental Law (“Environmental Permits”) and the
Company and such Company Subsidiaries are in compliance in all material
respects with the Environmental
Permits.
|
|
|
(d)
|
Neither
the Company nor any of the Company Subsidiaries has arranged, by contract,
agreement or otherwise, for the transportation, disposal or treatment of
Hazardous Substances at any location such that it is or could be liable
for Remediation of such location pursuant to Environmental Laws, and no
such location, nor any of the real property currently owned, operated, or
leased by the Company or any of the Company Subsidiaries is listed on any
governmental list or database of properties that may require
Remediation.
|
|
|
(e)
|
No
authorization, notification, recording, filing, consent, waiting period,
Remediation or approval is required under any Environmental Law in order
to consummate the Transactions.
|
Section
3.18 Insurance.
|
|
(a)
|
True
and complete copies of all insurance policies of the Company and the
Company Subsidiaries relating to fire and casualty, general liability,
business interruption, directors’ and officers’ liability, workers’
compensation and workplace safety and insurance and other forms of
insurance of any kind relating to the business and operations of the
Company or any Company Subsidiary, or summaries thereof have been made
available to Parent, and such policies are in full force and effect as of
the date of this Agreement.
|
|
|
(b)
|
The
insurance maintained by the Company and the Company Subsidiaries
adequately covers all material risks reasonably and prudently foreseeable
in the operation and conduct of the business of the Company and the
Company Subsidiaries which would be customary in the business carried on
by the Company and the Company Subsidiaries and the Company and the
Company Subsidiaries are not in material default under the terms of any
such policy.
|
|
|
(c)
|
There
is no claim outstanding under any insurance policy of the Company or a
Company Subsidiary as to which coverage has been questioned, denied or
disputed by the underwriter of such policy, and there has been no notice
of cancellation or termination of, or premium increase with respect to,
any such policy.
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(d)
|
The
Company and the Company Subsidiaries have paid all premiums due under
their insurance policies and none of the Company or any Company Subsidiary
is in default in any material respect under the terms of any of their
insurance policies.
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Section
3.19 Brokers.
No
broker, finder or investment banker (other than Genuity Capital Markets and RBC
Capital Markets) is entitled to any brokerage, finder’s or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of the Company or any of the Company Subsidiaries. The
Company has heretofore furnished to Parent a complete and correct copy of all
agreements between the Company and Genuity Capital Markets and RBC Capital
Markets pursuant to which such firms would be entitled to any payment related to
the Transactions.
Section
3.20 Related Party Transactions;
Collateral Benefit.
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(a)
|
No
executive officer, director or Affiliate of the Company or any Company
Subsidiary, nor any immediate family member or Affiliate of such executive
officer or director is entitled to receive directly or indirectly any
benefit that would constitute a “collateral benefit” within the
meaning of Canadian Securities Legislation, as a consequence of the
Transactions.
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(b)
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Save
for or pursuant to (i) the employment, management or consulting
arrangements listed in Schedule 3.11 or Schedule 3.12 and the payments to
be made thereunder, as disclosed therein, and (ii) compensation payable to
the directors of the Company in accordance with the “Compensation of
Directors” contained in the Company’s Management Information Circular of
March 14, 2008, no executive officer, director or Affiliate of the Company
or any Company Subsidiary, nor any immediate family member or Affiliate of
such executive officer or director:
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(i)
|
is
a party to any agreement, contract, commitment, arrangement or transaction
with the Company or any Company
Subsidiary;
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(ii)
|
is
entitled to any payment or transfer of any assets from the Company or any
Company Subsidiary;
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(iii)
|
has
any material interest in any material property used by the Company or any
Company Subsidiary; or
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(iv)
|
has
an interest in any customer or supplier of the Company or any Company
Subsidiary or provider of any services to the Company or any Company
Subsidiary, other than the ownership of less than 5% of the outstanding
stock of any publicly-traded
company.
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- 41
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Section
3.21 Disclosure.
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|
(a)
|
True
and complete copies of all documents listed in the Schedules attached
hereto relating to the Company (the “Company Schedules”) have been made
available or provided to Parent.
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(b)
|
The
Company has made available to Parent all Books and Records. All such Books
and Records are, in all material respects, complete and correct and have
been maintained, in all material respects, in accordance with good
business practices, including the maintenance of an adequate system of
internal accounting controls, and the information in the Books and Records
is accurately reflected in the Financial
Statements.
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(c)
|
The
minute books of the Company and each Company Subsidiary contain, in all
material respects, accurate and complete records of all meetings held of,
and corporate action by, the stockholders and the board of directors (and
committees thereof) of the Company and each Company Subsidiary, and no
meeting of any such stockholders or board of directors (or committees
thereof) has been held for which minutes have not been prepared and are
not contained in such minute books (except for meetings of the Company
Board held since December 1, 2008).
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(d)
|
None
of the representations or warranties made by the Company herein or in the
Company Schedules, or in any certificate or document furnished by the
Company pursuant to this Agreement, when all such documents are read
together in their entirety, contains or will contain any untrue statement
of a material fact, or omits to state any material fact necessary in order
to make the statements contained herein or therein, in the light of the
circumstances under which it was made, not
misleading.
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Section
3.22 No Other Purchase
Agreements.
The
Company and the Company Subsidiaries are not a party to any other contract,
agreement or understanding of any nature for the purchase or other acquisition
of any of their undertaking, property or assets, other than in the ordinary
course of business.
Section
3.23 Privacy
Laws.
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(a)
|
The
Company and each of the Company Subsidiaries are conducting and have
conducted their respective
businesses in compliance, in all material respects, with all applicable
Privacy Laws.
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(b)
|
The
Company has a written privacy policy which governs the processing of
Personal Information, and the Company is in compliance and has been in
compliance, in all material respects, with such
policy.
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(c)
|
Personal
Information in the custody or control of the Company has been collected,
used and disclosed with the consent of the individual to whom it relates
and has been used only for the purposes for which it was initially
collected.
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(d)
|
There
has been no loss, theft or unauthorized processing of or access to
Personal Information in the custody or control of the Company or of any of
the Company Subsidiaries; and neither the Company nor any Company
Subsidiary has received any written notice or other communication from any
Person regarding or in connection with any actual, alleged, possible or
potential violation of, or failure to comply with, any Privacy Laws or the
Company’s privacy policy or with respect to the loss, theft or
unauthorized processing of or access to Personal Information in the
custody or control of the Company or the Company Subsidiaries.
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Section
3.24 Product Warranty; Product
Liability.
Each
product manufactured, sold or delivered by the Company or any of the Company
Subsidiaries in conducting its business has been in conformity, with all product
specifications and all express and implied warranties, except where the failure
to do so would result in a Company Material Adverse Effect and except as set
forth on Schedule 3.24. Neither the Company nor any of the Company
Subsidiaries has any liability for replacement or repair of any such products or
other damages in connection therewith or any other customer or product
obligations not reserved against on the Financial Statements.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF PARENT AND PURCHASER
As an
inducement to the Company to enter into this Agreement and to implement the
Transactions, the Purchaser Parties hereby, jointly and severally, represent and
warrant to the Company as follows:
Section
4.01 Due Incorporation, Assets
and Liabilities.
Parent is
a corporation duly organized, validly existing and in good standing under the
Laws of the State of Delaware. Except as set forth on Schedule 4.01,
Parent is not qualified to do business as a foreign corporation in any
jurisdiction, and there is no jurisdiction in which the character of the
property owned or leased by Parent or the nature of its activities make
qualification of Parent in any such jurisdiction necessary, except where the
failure to so qualify would not have a Parent Material Adverse
Effect. The Purchaser is a corporation duly organized, validly
existing under the Laws of Ontario, Canada. Parent has all requisite
power and authority, corporate and otherwise, and all governmental licenses,
franchises, permits, authorizations, consents and approvals required to own,
lease, and operate its assets, properties and businesses and to carry on its
business as now conducted on the date hereof. The Purchaser has not
conducted any business to date and has only engaged in certain activities
relating to its organization. Parent has not adopted any plan, or
made any agreement in respect of any merger, consolidation, sale of all or
substantially all of its assets, reorganization, recapitalization, dissolution
or liquidation. Neither Parent or the Purchaser owns or has any interest in any
real or personal property. There are no options or other contracts or agreements
under which Parent or the Purchaser has any right or obligation to acquire or
lease any interest in real property or personal property. Except as set out on
Schedule 4.01, neither Parent nor the Purchaser has any Liability or
Indebtedness whether accrued, absolute, contingent, matured, unmatured or other
(whether or not required to be reflected in the Parent Financial Statements in
accordance with U.S. GAAP).
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Section
4.02 Corporate
Authorization.
The
execution, delivery and performance by Parent and the Purchaser of this
Agreement and each of the other Transaction Documents to which they are a party
and, except for a vote of the Parent Stockholders to approve the Transactions
contemplated by this Agreement, the consummation by Parent and the Purchaser of
the Transactions contemplated hereby and thereby are within the corporate powers
of Parent and the Purchaser and have been duly authorized by all necessary
corporate action on the part of Parent and the Purchaser. This
Agreement constitutes, and upon their execution and delivery, each of the
Transaction Documents will constitute, a valid and legally binding agreement of
Parent or the Purchaser, as applicable, enforceable against each in accordance
with their respective terms.
Section
4.03 Governmental
Authorization.
Except as
set out on Schedule 4.03, none of the execution, delivery or performance by
Parent or the Purchaser of this Agreement or any Transaction Document requires
any consent, approval, license or other action by or in respect of, or
registration, declaration or filing with, any Governmental Authority by Parent
or the Purchaser.
Section
4.04 No
Violation.
Neither
the execution and delivery of this Agreement or any Transaction Document
Agreement to be executed by Parent or the Purchaser hereunder nor, provided that
Parent presents the Transactions contemplated by this Agreement to its
stockholders for approval and obtains the approval of the Parent Stockholders,
the consummation of the Transactions contemplated herein and therein will (a)
violate any provision of Parent’s or the Purchaser’s constating documents,
bylaws and other organizational documents (“Charter Documents”); (b) violate any
Laws or Orders to which either Parent or the Purchaser or their property is
subject, or (c) violate the provisions of any material agreement or other
material instrument binding upon or benefiting Parent or the
Purchaser.
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Section
4.05 Consents.
Except
for the required approval of the Parent Stockholders to the Parent Stockholder
Proposals, there are no agreements, commitments, arrangements, contracts or
other instruments binding upon Parent or the Purchaser or any of their
properties requiring a consent, approval, authorization, order or other action
of or filing with any Person as a result of the execution, delivery and
performance of this Agreement or any of the Transaction Documents or the
consummation of the Transactions contemplated hereby or thereby. The board of
directors of Parent (including any required committee or subgroup of the board
of directors of Parent) has, as of the date of this Agreement (i) determined
that the Arrangement and the other Transactions contemplated by this Agreement
are fair to, and in the best interests of Parent and its stockholders, and (ii)
duly approved this Agreement and the Transactions contemplated
hereby.
Section
4.06 Litigation.
There is
no Action, or to the knowledge of Parent, threatened against or affecting,
Parent, the Purchaser, any of their respective officers or directors, or the
business of Parent, before any court or arbitrator or any governmental body,
agency or official which if adversely determined against any of them, has or
could reasonably be expected to have a material adverse effect on the business,
assets, condition (financial or otherwise), liabilities, results or operations
or prospects of Parent or the Purchaser, or which in any manner challenges or
seeks to prevent, enjoin, alter or delay the Transactions contemplated
hereby. There are no outstanding judgments against Parent or the
Purchaser.
Section
4.07 Issuance of Parent Common
Stock.
The
Parent Common Stock when issued in connection with the Transactions contemplated
herein, will be duly authorized and validly issued, fully paid and
non-assessable and will be freely tradable on resale under the Securities Act
that will apply to “affiliates” of the Company or Parent, as the term
“affiliates” is defined in Rule 144 of the Securities Act, pursuant to Rule
145(c) and (d) of the Securities Act. The Parent Common Stock to be issued in
connection with the Arrangement to Company Shareholders including the Parent
Common Stock to be issued upon the exercise of the Company RSUs and the Company
Warrants will not be subject to any statutory hold or restricted period under
Canadian Securities Laws and, subject to restrictions contained therein in
respect of “control distributions”, will be freely tradable within Canada by the
holders thereof. The Parent Common Stock to be issued in connection with the
Arrangement to Company Shareholders in exchange for the Company Common Stock
held by them, will not bear any Securities Act restrictive legend, and such
Parent Common Stock will not be “restricted securities” as defined under Rule
144 of the Securities Act, other than as may be required for Parent Common Stock
issued to persons that were “affiliates” of the Company or Parent prior to the
Effective Time or “affiliates” of Parent after the Effective Time. The shares of
Parent Common Stock issuable pursuant to the exercise or conversion of
securities of Parent exchanged for the Company RSUs and Company Warrants will be
“restricted securities” under Rule 144 of the Securities Act, unless the
issuance of such shares has been registered by an effective registration
statement filed with the SEC under the Securities Act.
- 45
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Section
4.08 Fees.
Except as
set forth on Schedule 4.08, there is no investment banker, broker, finder,
restructuring or other intermediary that has been retained by or is authorized
to act on behalf of the Parent or the Purchaser or any of their respective
Affiliates who might be entitled to any fee or commission from either the
Purchaser, Parent or any of its Affiliates upon consummation of the Transactions
contemplated by this Agreement. The amount of any fee owed to any
Person listed on Schedule 4.08 is listed opposite such Person’s
name.
Section
4.09 Charter Documents;
Legality.
Parent
has previously delivered to the Company true and complete copies of the Parent’s
Charter Documents, as in effect or constituted on the date
hereof. The execution, delivery, and, provided that Parent presents
the Transactions contemplated by this Agreement to its stockholders for
approval, performance by Parent and the Purchaser of this Agreement and any
Transaction Document to which Parent or the Purchaser is to be a party has not
violated and will not violate, and the consummation by Parent or the Purchaser
of the transactions contemplated hereby or thereby will not violate, any
of Parent’s Charter Documents, the Purchaser’s Charter Documents or
any Law.
Section
4.10 Capitalization and Ownership
of the Parent, Trust Fund.
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|
(a)
|
Schedule
4.10 sets forth, with respect to the Parent, (i) Parent’s authorized
capital, (ii) the number of Parent’s securities that are outstanding, and
(iii) the number of securities convertible into or exercisable or
exchangeable for the Parent’s securities. All outstanding
shares of Parent’s capital stock are, and all such shares that may be
issued prior to the Effective Time and all shares of Parent Common Stock
issuable pursuant to Article II hereof will be when issued, duly
authorized, validly issued, fully paid and non-assessable and not subject
to or issued in violation of any purchase option, call option, right of
first refusal, preemptive right, subscription right or any similar right
under any provision of the DGCL, the Parent’s Charter Documents or any
contract to which Parent is a party or otherwise bound. Except
as set forth in the Parent SEC Documents (as defined herein), there is no
contract, agreement, commitment, arrangement or understanding (whether
written or oral, formal or informal) that requires or under any
circumstance would require Parent to issue, or grant any right to acquire,
any securities of the Parent, or any security or instrument exercisable or
exchangeable for or convertible into, the capital stock or membership
interest of the Parent, “phantom” stock rights, stock appreciation rights,
stock-based performance units or to merge, consolidate, dissolve,
liquidate, restructure, or recapitalize the
Parent.
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- 46
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|
(b)
|
As
of the date hereof and at the Effective Time, Parent has and will have no
less than U.S.$70.0 million (after giving effect to potential redemptions
of the IPO Shares (as defined in the Parent’s Certificate of
Incorporation) (the “Trust Fund”) invested in United States Government
securities or in money market funds meeting certain conditions under Rule
2a-7 promulgated under the Investment Company Act in a trust account (the
“Trust Account”) administered by The American Stock Transfer and Trust
Company (the “Trustee”) pursuant to the Investment Management Trust
Agreement, dated as of April 17, 2007, between Parent and the
Trustee.
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Section
4.11 Financial
Statements.
Parent
has filed with the SEC true and correct copies of the audited consolidated
balance sheets of Parent and its consolidated subsidiaries as of June 30, 2007
and June 30, 2008, and the related consolidated statements of operations and
stockholders’ equity and cash flows for the year then ended and for the period
from June 30, 2006 through June 30, 2008, including footnotes thereto, audited
by BDO ▇▇▇▇▇▇▇, LLP, registered independent public accountants (the “Parent
Financial Statements”). The Parent Financial Statements (i) were
prepared in accordance with U.S. GAAP; (ii) fairly and accurately present the
Parent’s financial condition and the results of its operations as of their
respective dates and for the periods then ended, in all material respects; (iii)
contain and reflect all necessary adjustments and accruals for a fair
presentation of Parent’s financial condition as of their dates, in
all material respects; and (iv) contain and reflect adequate provisions for all
reasonably anticipated liabilities for all material income, property, sales,
payroll or other Taxes applicable to Parent with respect to the periods then
ended. Parent has heretofore delivered to the Company complete and
accurate copies of all “management letters” received by it from Parent’s
accountants and all responses during the last three years by lawyers engaged by
Parent to inquiries from Parent’s accountant or any predecessor
accountants.
Except as
specifically disclosed or as reflected in the Parent SEC Documents, reflected or
fully reserved against in the Parent Financial Statements and for liabilities
and obligations of a similar nature and in similar amounts incurred in the
ordinary course of business since the date of the Parent Financial Statements,
there are no liabilities, debts or obligations of any nature (whether accrued,
absolute, contingent, liquidated or unliquidated, unasserted or otherwise)
relating to the Parent. All debts and liabilities, fixed or
contingent, which should be included under U.S. GAAP on an accrual basis on the
Parent Financial Statements are included therein.
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Section
4.12 Contracts, Payments on
Change of Control
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|
(a)
|
Schedule
4.12 contains a complete list of all written contracts and agreements to
which Parent or any of its Subsidiaries is a party. Each such contract and
agreement is valid and binding on Parent or the Subsidiary that is a party
thereto or bound thereby, as the case may be, is, in all material
respects, in full force and effect against Parent or the relevant
Subsidiary and represents the entire agreement between or among the
parties thereto with respect to the subject matter
thereof. None of Parent or any Subsidiary or, to the knowledge
of the Company, as of the date of this Agreement, any other party thereto,
is in breach of, or default under any such contract or agreement. Parent
has made available to the Company a true, complete and correct copy of
each such contract or agreement, together with all material amendments,
waivers or other changes thereto.
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(b)
|
There
are no plans, contracts or agreements of Parent or the Purchaser pursuant
to which any amount may become payable (whether currently or in the
future) to any officer, director, employee or stockholder of Parent or the
Purchaser as a result of or in connection with the Arrangement or any of
the other Transactions contemplated by this
Agreement.
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Section
4.13 Absence of Certain Changes
or Events.
Except as
set forth in the Parent SEC Documents filed prior to the date of this Agreement,
and except as contemplated by this Agreement, since June 30, 2008, there has not
been: (i) any Parent Material Adverse Effect, (ii) any declaration, setting
aside or payment of any dividend on, or other distribution (whether in cash,
stock or property) in respect of, any Parent capital stock, or any purchase,
redemption or other acquisition by Parent of any Parent capital stock or any
other securities of Parent or any options, warrants, calls or rights to acquire
any such shares or other securities or (iii) any split, combination or
reclassification of any Parent capital stock.
Section
4.14 Compliance with
Laws.
Parent is
not in violation of, has not violated, and to the knowledge of Parent, is not
under investigation with respect to nor have been threatened to be charged with
or given notice of, any violation or alleged violation of, any Law or Order, nor
is there any basis for any such charge.
Section
4.15 Ownership of Parent
Securities.
Upon
issuance and delivery of the Parent Common Stock to each Company Shareholder
pursuant to this Agreement, the Parent Common Stock will be duly authorized and
validly issued, fully paid and non-assessable, free and clear of all Liens,
other than (i) restrictions arising from applicable securities laws, and (ii)
any Lien created by or through such Company Shareholder. The issuance and sale
of the Parent Common Stock pursuant hereto will not be subject to or give rise
to any preemptive rights or rights of first refusal.
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Section
4.16 Restrictions on Business
Activities.
Since the
date of its incorporation, Parent has not conducted any business activities
other than activities directed toward the accomplishment of business
combinations. There is no agreement, commitment, judgment,
injunction, order or decree binding upon Parent or to which Parent is a party
which has or could reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of Parent, any acquisition of
property by Parent or the conduct of business by Parent as currently conducted
other than such effects, individually or in the aggregate, which have not had
and could not reasonably be expected to have, a Parent Material Adverse
Effect.
Section
4.17 The
Purchaser.
The
Purchaser was formed in the Province of Ontario on January •,
2009. One hundred (100) shares of the common stock of the Purchaser
have been issued to Parent and other than such one hundred (100) shares no other
equity securities of the Purchaser have been issued and there are no agreements
by the Purchaser to issue any of its equity securities other than as provided
for in this Agreement. Such one hundred (100) shares of common stock
issued to the Parent have been validly issued, are fully paid and non-assessable
and are owned by Parent free and clear of any Lien. The Purchaser has
no liabilities, debts or obligations of any nature (whether accrued, absolute,
contingent, liquidated or unliquidated, unasserted or otherwise) except those
incurred in connection with this Agreement and the Transactions contemplated
hereby.
Section
4.18 Securities Law
Matters.
The
issuance of the Parent Common Stock under the Arrangement and the modification
of the Company RSUs as contemplated by Section 2.10 will not require
registration under the Securities Act. The Parent Common Stock will
be issued and the Company RSUs will be modified in reliance upon the exemption
available pursuant to section 3(a)(10) of the Securities Act, which exempts
securities issued in exchange for one or more outstanding securities from the
general requirement of registration where the terms and conditions of the
issuance and exchange of such securities have been approved by any court of
competent jurisdiction, after a hearing upon the fairness of the terms and
conditions and exchange at which all persons to whom the securities will be
issued have the right to appear. Parent Common Stock issued under the
Arrangement to persons who are Affiliates of the Company or Parent prior to the
Effective Time or Affiliates of Parent after the Effective Time may be subject
to resale restrictions under U.S. Securities Laws pursuant to Securities Act
Rule 144 or 145(c) and (d), each as applicable.
Section
4.19 Other
Agreements
Parent
and its Subsidiaries are not a party to any outstanding contract, agreement or
understanding of any nature for the purchase or other acquisition of any of
their shares, undertaking, property or assets, or for the purchase or other
acquisition of any of the shares, undertaking, property or assets of any other
person.
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Section
4.20 Parent SEC
Documents.
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(a)
|
Parent
has filed and furnished all required reports, schedules, forms,
prospectuses, and registration, proxy and other statements with the SEC
since July 14, 2006 (collectively, and in each case including all exhibits
and schedules thereto and documents incorporated by reference therein, the
“Parent SEC Documents”). As of their respective effective dates
(in the case of Parent SEC Documents that are registration statements
filed pursuant to the requirements of the Securities Act) and as of their
respective SEC filing dates (in the case of all other Parent SEC
Documents), the Parent SEC Documents complied in all material respects
with the requirements of the Exchange Act or the Securities Act, as the
case may be, applicable to such Parent SEC Documents, and none of the
Parent SEC Documents as of such respective dates contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading. The consolidated financial statements of Parent
included in the Parent SEC Documents comply in all material respects with
applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with
U.S. GAAP (except, in the case of unaudited statements, as indicated in
the notes thereto applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly
present in all material respects the financial position of Parent and its
consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
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(b)
|
Parent
has established and maintains internal control over financial reporting
and disclosure controls and procedures (as such terms are defined in Rule
13a-15 and Rule 15d-15 under the Exchange Act); such disclosure controls
and procedures are designed to ensure that material information relating
to Parent, including its consolidated Subsidiaries, required to be
disclosed by Parent in the reports that it files or furnishes under the
Exchange Act is accumulated and communicated to Parent’s principal
executive officer and its principal financial officer to allow timely
decisions regarding required disclosure; and such disclosure controls and
procedures are effective to ensure that information required to be
disclosed by Parent in the reports that it files or furnishes under the
Exchange Act is recorded, processed, summarized and reported within the
time periods specified in SEC rules and forms. The principal
executive officer and the principal financial officer of Parent have made
all certifications required by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, the
Exchange Act and any related rules and regulations promulgated by the SEC
with respect to the Parent SEC Documents, and the statements contained in
such certifications are complete and
correct.
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(c)
|
The
Parent Common Stock is listed on the NYSE Alternext US. Parent
has not been notified of any default or alleged default by it of any
material requirement of the NYSE Alternext US or applicable U.S.
Securities Laws. No U.S. Securities Regulator has issued any
order preventing or suspending trading of any securities of Parent and
Parent is not in material default of any requirement of applicable U.S.
Securities Laws.
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|
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(d)
|
(i)
Parent has filed all reports required to be filed by it under U.S.
Securities Laws since January 1, 2007, except where the failure to so file
has not and is not reasonably likely to result in a Parent Material
Adverse Effect; (ii) at the time that they were filed or, if amended, as
of the date of such amendment, such reports complied in all material
respects, and each report subsequently filed by Parent with the U.S.
Securities Regulators will, on the date filed, comply in all material
respects with all applicable requirements of U.S. Securities Laws as in
effect on the date so filed; (iii) such reports did not or will not, at
the time they were or will be filed, or, if amended, as of the date of
such amendment, contain any misrepresentation; (iv) no material change has
occurred in relation to Parent which is not disclosed in such reports,
and, other than in connection with SEC reviews providing comments on
registration statements filed pursuant to the Securities Act, all of which
comments have been resolved, Parent is not the subject of any active
formal inquiries or interrogatories, whether in writing or otherwise, from
any U.S. Securities Regulator, the NYSE Alternext US or any other
Governmental Authority, or, to the knowledge of Parent, been the subject
of any investigation, audit, review or hearing by or in front of such
Persons, in each case with respect to any of such reports or any of the
information contained
therein.
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(e)
|
Each
of the consolidated financial statements contained in the reports filed by
Parent under U.S. Securities Laws since January 1, 2007, has been and, as
regards such financial statements prepared after the date hereof, will be,
prepared in accordance with U.S. GAAP, applied on a consistent basis
throughout the periods indicated, except as disclosed therein, and each
fairly presents or will fairly present, in all material respects, the
consolidated financial position, results of operations and cash flows of
Parent and its consolidated Subsidiaries as at the respective dates
thereof and for the respective periods indicated therein (subject, in the
case of unaudited statements, to normal and recurring year-end
adjustments) and reflects appropriate and adequate reserves for contingent
Liabilities in accordance with such generally accepted accounting
principles.
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ARTICLE
V
COVENANTS
OF THE COMPANY
Section
5.01 Conduct of the
Business.
From the
date hereof through the Effective Date, the Company and each Company Subsidiary
shall conduct the Business only in the ordinary course, consistent with past
practices, in a manner consistent with the needs of the Business from the date
hereof to the Effective Time. Without limiting the foregoing, the
Company will use its commercially reasonable efforts to preserve intact the
Company’s business relationships with employees, suppliers, customers and other
third parties and use its commercially reasonable efforts to maintain its
business and operations as an ongoing business consistent with the needs of the
business and its operating budget for the current fiscal year. The Company shall
not take any actions or enter into any transactions that would have a material
adverse impact on the Company and the Company Subsidiaries, without the prior
written consent of Parent, such consent not to be unreasonably withheld or
delayed. In addition, the Company will not (i) take or agree to take
any action that might make any representation or warranty of the Company
hereunder inaccurate in any material respect at, or as of any time prior to, the
Effective Date or (ii) omit to take, or agree to omit to take, any action
necessary to prevent any such representation or warranty from being inaccurate
in any material respect at any such time.
For
example, from the date hereof until the Effective Date, without Parent’s prior
written consent, such consent not to be unreasonably withheld or delayed,
neither the Company nor any Company Subsidiary shall:
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(a)
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make
any capital expenditures other than in the ordinary course of business
consistent with past practice, which is not provided for in the most
recently approved capital expenditure plan of the
Company;
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(b)
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except
as contemplated by this Agreement, declare or promise to pay any dividends
or other distributions with respect to its capital stock or equity
securities other than distributions by wholly-owned Company Subsidiaries
or tax distributions in the ordinary course consistent with past practice,
or pay, declare or promise to pay any other payments to any Company
Shareholder or any Affiliate of the
Company;
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(c)
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except
for indebtedness for borrowed money currently outstanding, and
indebtedness for borrowed money that may arise among the Company and the
Company Subsidiaries, obtain or suffer to exist any further indebtedness
for borrowed money in excess of U.S.$15 million, in the
aggregate;
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(d)
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merge
or consolidate with or acquire any other Person or be acquired by any
other Person other than as provided by this
Agreement;
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(e)
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extend
any loans in excess of CAD$50,000 to any Person, other than travel,
relocation or other expense advances to employees in the ordinary course
of business;
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(f)
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except
in connection with the Company Financing, issue, redeem or repurchase any
shares of its capital stock, other than pursuant to options, warrants or
other rights existing on the date hereof or granted between the date
hereof and the Effective Time to employees and other service providers in
the ordinary course of business and pursuant to the terms of the
arrangements with such employees and service providers;
or
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(g)
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agree
to do any of the foregoing.
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Section
5.02 Access to
Information.
From the
date hereof until and including the Effective Date, the Company and each Company
Subsidiary shall (a) continue to give Parent, its counsel and other
representatives access to the offices, properties and Books and Records of the
Company and each Company Subsidiary during normal business hours upon reasonable
notice, (b) furnish to Parent, its counsel and other representatives such
information relating to the Business as such Persons may reasonably request and
(c) cause the employees, counsel, accountants and representatives of the Company
and each Company Subsidiary to cooperate with Parent in its investigation of the
Business; provided that no investigation pursuant to this Section 5.02 (or any
investigation prior to the date hereof) shall affect any representation or
warranty given by the Company.
Section
5.03 Notices of Certain
Events.
The
Company shall promptly notify Parent of:
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(a)
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any
notice or other communication from any Person alleging or raising the
possibility that the consent of such Person is or may be required in
connection with the Transactions or that the Transactions might give rise
to any claims or causes of action or other rights by or on behalf of such
Person or result in the loss of any rights or privileges of the Company or
any Company Subsidiary to any such
Person;
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(b)
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any
notice or other communication from any regulatory or Governmental
Authority in connection with the
Transactions;
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(c)
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any
Actions commenced or threatened against, relating to or involving or
otherwise affecting the Company, any Company Subsidiary or the Business or
that relate to the consummation of the Transactions;
and
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(d)
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the
occurrence of any fact or circumstance which make any representation made
hereunder by the Company false in any material
respect.
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Section
5.04 Reporting and Compliance
With Law.
From the
date hereof through the Effective Date, the Company and each Company Subsidiary
shall duly and timely file all Tax Returns required to be filed with
Governmental Authorities, pay any and all Taxes required by any Governmental
Authority and duly observe and conform, in all material respects, to all
applicable Laws.
ARTICLE
VI
COVENANTS
OF ALL PARTIES
Section
6.01 Provisions Relating to
Exclusivity.
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(a)
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Each
of the Company and Parent, for themselves and each of their Affiliates,
agrees to the respective provisions of this Section 6.01 from the date
hereof to the date of termination of this Agreement (the “Exclusivity
Period”).
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(b)
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In
consideration of Section 6.01(g), Parent and the Company acknowledge and
agree that from and after the date hereof and until the required approval
of the Arrangement by the Company Shareholders and by Parent
Stockholders is obtained, the
discussions and negotiations of the Company with Parent shall
be on a non-exclusive basis and the Company shall be permitted to
continue, commence or otherwise carry on discussions relating to a
possible alternate transaction with those Persons listed on Schedule
6.01(b) and with any other Person, without restriction. In this connection
the Company and each of its respective officers, directors, employees,
agents, affiliates and advisors, as applicable (collectively, the “Company
Representatives”): (i) are free to deal directly or indirectly with any
Person with respect to negotiating, entering into and/or completing a
transaction regarding the acquisition of or investment in the Company
(whether by way of merger, purchase of capital stock, purchase of assets
or otherwise) of all or substantially all of the capital stock or assets
of the Company (a “Potential Transaction”), (ii) are free to provide
information or documentation with respect to the Company to any Person,
and (iii) may enter into an agreement with any Person providing for a
Potential Transaction.
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(c)
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Subject
to Section 6.02(a), beginning on March 15, 2009 and during the balance of
the Exclusivity Period or, in the event that the Proxy Statement has not
been mailed to the Stockholders of the Parent prior to April 7, 2009,
until April 7, 2009, the Company and the Company Representatives shall
deal, directly or indirectly, exclusively with Parent regarding a
Potential Transaction and, without the prior written consent of Parent,
the Company and the Company Representatives, directly or indirectly, will
not (i) encourage, solicit, initiate discussions or engage in negotiations
with any person (whether such negotiations are initiated by the Company, a
Company Representative or otherwise), other than Parent, relating to a
Potential Transaction, (ii) provide information or documentation with
respect to the Company to any Person, other than Parent, or a person
designated by Parent relating to a Potential Transaction, or (iii) enter
into an agreement with any person, other than Parent or a person
designated by Parent, providing for a Potential
Transaction.
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(d)
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Notwithstanding
the provisions of Section 6.01(a)-(c), the Company will
have the right to pursue, negotiate and enter into and complete a joint
venture, partnership, teaming arrangement or other strategic alliance with
any Person with respect to the Company’s Electronic Systems business (the
“ES Business Transaction”) at any time, whether before or after the
required approval of the Arrangement by the Company
Shareholders is obtained.
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(e)
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During
the Exclusivity Period, Parent and its respective officers, directors,
employees, agents, affiliates and advisors, as applicable (collectively,
the “Parent Group Representatives”) shall deal, directly or indirectly,
exclusively with the Company regarding an acquisition or investment by
Parent (whether by way of merger, purchase of capital stock, purchase of
assets or otherwise) and, without the prior written consent of the
Company, will not (i) encourage, solicit, initiate discussions or engage
in negotiations with any person (whether such negotiations are initiated
by Parent, the Parent Group Representatives or otherwise, other than the
Company, relating to the possible acquisition of or investment in any
other company by Parent (whether by way of merger, purchase of capital
stock, purchase of assets or otherwise) or any material portion of the
capital stock or assets of any other company by the Purchaser (a
“Potential Alternative Transaction”), (ii) receive or review any
information or documentation with respect to any other company from any
Person, other than the Company, relating to a Potential Alternative
Transaction or (iii) enter into an agreement with any Person, other than
the Company or a Person designated by the Company, providing for a
Potential Alternative Transaction.
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(f)
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During
the Exclusivity Period and subject in all cases to the confidentiality
provision of this Agreement and the Confidentiality Agreement, the Company
and the Company Subsidiaries shall afford, and, with respect to clause
(ii) below, the Company shall request its accountants to afford, to the
officers, accountants, counsel and other representatives of Parent
reasonable access to the properties, books, records (including tax returns
filed and those in preparation) and executive personnel of the Company and
the Company Subsidiaries so that (i) Parent may have a full opportunity to
make such investigation as it reasonably desires to make of the Company
and the Company Subsidiaries, and (ii) the accountants of Parent have full
access, to the extent applicable, to the audit work papers and other
records of the independent chartered accountants of the Company and the
Company Subsidiaries. Additionally, upon reasonable notice by Parent to
the Company and at the times and in accordance with the procedures to be
mutually agreed upon by Parent and the Company, and subject in all cases
to the terms and conditions of the confidentiality provisions of this
Agreement and the Confidentiality Agreement, the Company will permit
Parent and its representatives to make such reasonable inspections of the
Company and its operations (and those of the Company Subsidiaries) as
Parent may reasonably require and the Company will cause its officers (and
the Company Subsidiaries’ officers) to furnish Parent with such financial
and operating data and other information with respect to the business and
properties of the Company and the Company Subsidiaries as Parent may from
time to time reasonably
request.
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(g)
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In
consideration of the substantial time, cost and financial risk for Parent
and in the process of moving toward a successful Transaction and in light
of the non-exclusive nature of the arrangements between the Company and
Parent, the Company agrees to pay to Parent or its designate a break fee
of U.S.$5.0 million (the “Break Fee”) in the event that: (a) this
Agreement has not been terminated during the Exclusivity Period pursuant
to (i) Section 8.01, (ii) Section
8.02(a), due to a breach or failure by Parent to fulfill its obligations
under this Agreement, or (iii) Section 8.02(c); (b) Parent has
not announced another Potential Alternative Transaction on or prior to the
completion of a Potential Transaction, and (c) the Company is successful
in completing a Potential Transaction with (i) one or more of the entities
listed on Schedule 6.01(b) by ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) a Person not listed on
Schedule 6.01(b) that makes an unsolicited bid for a majority of the
Company’s capital stock on or prior to April 17, 2009 with the purpose of
taking control of the Company, or (iii) an entity that makes a Superior
Proposal. If and when the Break Fee becomes due, the Company shall within
five (5) Business Days thereof and following the termination of this
Agreement and the Transactions, pay the entire Break Fee by wire transfer
of immediately available funds to Parent or its designee to an account
designated by Parent. For greater certainty, no Break Fee will be payable
in the event that the Parent Stockholders vote against the Parent
Stockholder Proposals relating to the Arrangement at the Parent
Stockholders Meeting, provided that the Company proceeds expeditiously and
in good faith towards approval of the Arrangement Resolution by the
Company Shareholders.
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(h)
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The
Company also agrees that in the event that: (a) this Agreement has not
been terminated during the Exclusivity Period pursuant to (i) Section
8.01, (ii)
Section 8.02(a), due to a breach or failure by Parent to fulfill its
obligations under this Agreement, or (iii) Section 8.02(c); (b) Parent has
not announced another Potential Alternative Transaction on or prior to the
completion of a Potential Transaction, and (c) the Company is successful in
completing by April 30, 2010 a Potential Transaction with a Person that
the Company has provided information to or entered into negotiations with
prior to April 17, 2009, and no Break Fee is otherwise payable pursuant to
Section 6.01(g), the Company’s only obligation to Parent under this
Article 6 in connection with such Potential Transaction will be to
reimburse Parent for its reasonable costs and expenses incurred in
connection with its negotiations with the Company in respect of the
Transactions from and after January 6, 2009, up to a maximum of
CAD$500,000 (the “Reimbursement Fee”). If and when the Reimbursement Fee
becomes due, the Company shall within five (5) Business Days thereof and
following the termination of this Agreement and the Transactions, pay the
entire Reimbursement Fee by wire transfer of immediately available funds
to Parent or its designee to an account designated by Parent. For greater
certainty, the Reimbursement Fee will not be payable in the event that the
Parent Stockholders vote against the Parent Stockholder Proposals at the
Parent Stockholders Meeting, provided that the Company proceeds
expeditiously and in good faith towards approval of the Arrangement
Resolution by the Company
Shareholders.
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Section
6.02 Superior
Proposal.
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(a)
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At
any time during the Exclusivity Period, the Company Board may furnish
information to, and enter into discussions with, a Person who has made an
unsolicited written proposal or offer regarding an Acquisition Proposal
(as defined below), and with respect to which (i) the Company Board has
determined, in its good faith judgment (after consultation with its
financial advisor), that such proposal or offer constitutes or could
reasonably be expected to result in a Superior Proposal (as defined
below), (ii) the Company Board has determined, in its good faith judgment
after consultation with outside legal counsel, that, in light of such
Superior Proposal, the failure to furnish such information or to enter
into such discussions would result in a breach of its fiduciary
obligations under applicable Law, (iii) the Company Board has provided
written notice to Parent of its intent to furnish information or enter
into discussions with such Person at least three Business Days prior to
taking any such action, and (iv) the Company Board has obtained from such
Person an executed confidentiality agreement containing confidentiality
provisions no less favourable to the Company than those contained in the
Confidentiality Agreement, provided that such confidentiality agreement
shall not preclude such Person from making the Acquisition Proposal. Upon
the receipt of a Superior Proposal, the Company shall be entitled to
withdraw the Recommendation, and terminate this Agreement and the
Transactions immediately prior to entering into a binding agreement
relating to the Superior Proposal.
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(b)
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The
Company agrees that in addition to the obligations of the Company set
forth in paragraph (a) of this Section 6.02, immediately upon receipt
thereof, the Company shall advise Parent in writing of any request for
information or any Acquisition Proposal, or any inquiry, discussions or
negotiations with respect to any Acquisition Proposal and the terms and
conditions of such request for information, Acquisition Proposal, inquiry,
discussions or negotiations and the Company shall promptly provide to
Parent copies of any written materials received by the Company in
connection with any of the foregoing, and the identity of the Person or
group making any such request for information, Acquisition Proposal or
inquiry or with whom any discussions or negotiations may be taking
place. The Company agrees that it shall keep Parent informed of
the status, terms and material details (including amendments or proposed
amendments) of any such request for information, Acquisition Proposal or
inquiry and keep Parent informed as to the details of any information
requested of or provided by the Company and as to the status and material
terms of all substantive discussions or negotiations with respect to any
such request, Acquisition Proposal or inquiry. The Company
agrees that it shall simultaneously provide to Parent any non-public
information concerning the Company that may be provided to any other
Person or group in connection with any Acquisition Proposal which was not
previously provided to Parent.
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(c)
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The
Company shall as promptly as practicable reaffirm the Recommendation of
the Transaction by press release after any written Acquisition Proposal
(which is determined not to be a Superior Proposal) is publicly announced
or made.
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(d)
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“Acquisition
Proposal” means any proposal or offer for a transaction,
consolidation, business combination, sale or other transfer or disposition
of substantial assets, sale, exchange, transfer of, or take-over bid for,
shares of capital stock or other similar transaction (other than the
Transactions) involving the Company or any Company
Subsidiary.
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(e)
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“Superior
Proposal” means a unsolicited bona fide written offer
made by a third party to consummate an Acquisition Proposal during the
Exclusivity Period on terms (including conditions to consummation of the
contemplated transaction) that the Company Board determines, in its good
faith judgment (after consultation with its financial advisor), to be more
favourable to the Company Shareholders, from a financial point of view,
than the Transactions contemplated in this Agreement, is reasonably
capable of being consummated, and in respect of which, if the
consideration is to be paid in cash or partly in cash, the third party has
made at that time, in the good faith judgment of the Company Board,
adequate arrangements to ensure that the required funds are available to
effect payment in full for all securities of the Company that the third
party has offered to acquire.
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Section
6.03 Best Efforts; Further
Assurances.
Subject
to the terms and conditions of this Agreement, each party shall use its
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary or desirable under applicable
Laws to consummate and implement expeditiously the Transactions contemplated by
this Agreement, in the case of the Company, as reasonably requested by Parent,
including promptly providing updated financial statements and financial
information for use in the Proxy Statement or other public filings, as requested
by Parent, and, in the case of Parent, all information reasonably requested by
the Company which is required or appropriate for inclusion in the Circular, a
prospectus to be filed in connection with the Company Financing (which Circular
and related documents will be subject to the Parent’s approval, not to be
unreasonably withheld) or any other document required to be prepared by the
Company pursuant to Canadian Securities Laws and/or the rules and policies of
the TSX in connection with the Transactions or any amendments or supplements
thereto. The parties hereto shall execute and deliver such other documents,
certificates, agreements and other writings and take such other actions as may
be necessary or desirable in order to consummate or implement expeditiously the
Transactions contemplated by this Agreement.
Section
6.04 Publicity; Securities Law
Filings.
Subject
to Section 6.04, from the date hereof through the Effective Date, no public
release or announcement concerning this Agreement, the Arrangement or the other
Transactions contemplated hereby shall be issued by any party without the prior
consent of Parent and the Company (which consent shall not be unreasonably
withheld or delayed), except as such release or announcement may be required by
Law or the rules or regulations of any United States, Canadian or foreign
securities exchange, in which case the party required to make the release or
announcement shall allow the other parties reasonable time to comment on such
release or announcement in advance of such issuance; provided, however,
that the Company and Parent may, in consultation with each other, make internal
announcements to their respective employees that are consistent with the
parties’ prior public disclosures regarding the Transactions after reasonable
prior notice to and consultation with the other. Parent will prepare and file
one or more Current Reports on Form 8-K pursuant to the Exchange Act to report
required information under US Securities Laws (including information required by
Form 10) in connection with the execution of this Agreement and the other
Transaction Documents, as well as to file additional proxy solicitation
materials. Any language included in such Current Report that reflects
the Company’s comments, as well as any text as to which the Company has not
commented after being given a reasonable opportunity to do so, shall, be deemed
to have been approved by the Company and may thereafter be used by Parent in
other filings made by it with the SEC and in other documents distributed by
Parent in connection with the Transactions without further review or consent of
the Company. Parent acknowledges that the Company will prepare and file one or
more material change reports on Form 51-102F3 pursuant to the Canadian
Securities Laws to report the execution of this Agreement and the other
Transaction Documents, as well as file any other documents that may be required
to be prepared by the Company pursuant to Canadian Securities Laws and/or the
rules and policies of the TSX in connection with the
Transactions. Any language included in such documents that reflects
Parent’s comments, as well as any text as to which Parent has not commented
after being given a reasonable opportunity to do so, shall be deemed to have
been approved by Parent and may thereafter be used by Company in other filings
made by it with the Canadian Securities Regulators and in other documents
distributed by Company in connection with the Transactions without further
review or consent of Parent.
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Section
6.05 Confidentiality.
Except as
otherwise required by law, no party shall disclose to any other Person or use
(whether for the account of any such party or any other party) any confidential
information or proprietary work product of (i) Parent, the Purchaser or their
advisors, without the prior written consent of Parent, or a person authorized
thereby, or (ii) the Company, any Company Subsidiary, or their advisors, without
the prior written consent of the Company; provided, however, that any such party
may disclose or use any such information (a) as has become generally available
to the public other than through a breach of this Agreement or the
Confidentiality Agreement by such party or any of its Affiliates and
representatives, (b) as becomes available to such party on a non-confidential
basis from a source other than any other party hereto or such other party’s
Affiliates or representatives, provided that such source is not known or
reasonably believed by such party to be bound by a confidentiality agreement or
other obligations of secrecy, (c) as may be required in any report, filing,
statement or testimony required to be submitted to any Governmental Authority
having or claiming to have jurisdiction over it, or as may be otherwise required
by applicable Law, or as may be required in response to any summons or subpoena
or in connection with any litigation, (d) as may reasonably be required to
obtain any consent from a Governmental Authority or other Person required in
order to consummate the transactions contemplated by this Agreement, or (e) as
may be necessary to establish such party’s rights under this
Agreement. In the event a party believes that it is required to
disclose any such confidential information pursuant to applicable Laws, such
party shall give timely written notice to the other party so that such other
party may have an opportunity to obtain a protective order or other appropriate
relief.
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Section
6.06 Current
Information.
During
the period from the date of this Agreement to the Effective Time, each of the
Company and Parent shall cause one or more of its designated representatives to
confer with representatives of the other party on a monthly basis regarding its
business, operations, properties, assets and financial condition and matters
relating to the completion of the Transactions contemplated herein. On a monthly
basis, the Company agrees to provide Parent, and Parent agrees to provide the
Company, with internally prepared profit and loss statements no later than 20
Business Days after the close of each fiscal month, including the month of
December 2008 and each month thereafter. Parent shall file the Parent SEC
Documents with the SEC, and the Company shall make its required filings with the
Canadian Securities Regulators on a timely basis, and shall provide a draft
report to each other at least one Business Day prior to the proposed filing
date.
Section
6.07 Tax
Matters.
The
Company shall prepare or cause to be prepared and file or cause to be filed on a
timely basis all Tax Returns with respect to the Company and the Company
Subsidiaries for all taxable periods ending on or prior to the Effective
Date. Such Tax Returns shall be true, correct and complete, shall be
prepared on a basis consistent with the similar Tax Returns for the immediately
preceding periods and shall not make, amend, revoke or terminate any election or
change any accounting practice or procedure without Parent’s
consent. The Company shall give a copy of each such Tax Return to
Parent with sufficient time for its review and comment prior to
filing. After the Effective Date, Parent will permit the Company to
have reasonable access to Parent’s respective officers, directors, employees,
agents, assets and properties and all relevant Books and Records relating to the
Business and assets of the Company during normal business hours and will furnish
to the Company such information, financial records and other documents relating
to the Company and the Business as may reasonably be requested, provided, however,
that such access and information is reasonably related to the completion of the
Tax Returns the Company is required to file pursuant to this Section
6.07.
For
purposes of this Agreement, any Taxes for a period which includes but does not
end on the Effective Date shall be allocated between the period through and
including the Effective Date (the “Effective Date Period”) and the balance of
the period based on an interim closing of the books as of the Effective Time,
provided, however, that any real property or personal property taxes and any
annual exemption amounts shall be allocated based on the relative number of days
in the Effective Date Period and the balance of the period.
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Section
6.08 Indemnification.
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(a)
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From
and after the Effective Time, Parent will, and will cause the Company to,
fulfill and honor in all respects the obligations of the Company pursuant
to any indemnification agreements between the Company and its directors
and officers immediately prior to the Effective Time (the “Indemnified
Parties”), subject to applicable Law. The constitutional
documents and bylaws of Parent and the Company will contain provisions
with respect to exculpation and indemnification that are at least as
favorable to the Indemnified Parties as those constitutional document and
bylaws of the Company as in effect on the date hereof, which provisions
will not be amended, repealed or otherwise modified for a period of six
years from the Effective Time in any manner that would adversely affect
the rights thereunder of individuals who, immediately prior to the
Effective Time, were directors, officers, employees or agents of the
Company, unless such modification is required by
Law.
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(b)
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For
a period of three years after the Effective Time, Parent will, and will
cause the Company to, use all reasonable efforts to cause to be maintained
directors’ and officers’ liability insurance maintained by the Company
covering those persons who are covered by the Company’s directors’ and
officers’ liability insurance policy as of the date hereof on terms
comparable to those applicable to the current directors and officers of
the Company for a period of three years; provided,
however, that in no event will Parent or the Company be required to
expend in excess of one hundred percent (100%) of the annual premium
currently paid by the Company for such coverage (and to the extent the
annual premium would exceed one hundred percent (100%) of the annual
premium currently paid by the Company for such coverage, Parent and the
Company shall use all reasonable efforts to cause to be maintained the
maximum amount of coverage as is available for such one hundred percent
(100%) of such annual premium).
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(c)
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This
Section 6.08 is intended to be for the benefit of, and shall be
enforceable by, the Indemnified Parties and their heirs and personal
representatives and shall be binding on each of Parent and the Company and
its successors and assigns. In the event either Parent or the
Company or its successor or assign (i) consolidates with or merges into
any other person and shall not be the continuing or surviving corporation
or entity in such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any Person, then, and in
each case, proper provision shall be made so that the successor and assign
of Parent or the Company, as the case may be, honor the obligations set
forth with respect to Parent or the Company, as the case may be, in this
Section 6.08.
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Section
6.09 Company
Meeting.
Subject
to the terms of this Agreement, the Company shall cause the Company Meeting to
be duly called and held as soon as practicable after the date of this Agreement
for the purpose of voting on the Arrangement Resolution. The Company
Meeting shall be held no later than March 16, 2009 unless otherwise agreed by
the Company and Parent, each acting reasonably. The Company shall
provide notice to Parent of the Company Meeting and allow Parent’s
representatives to attend the Company Meeting. The Company shall
conduct the Company Meeting in accordance with the rules of the TSX, the OBCA,
the by-laws of the Company and as otherwise required by applicable
Laws. The Company Board shall (i) include the Recommendation in the
Circular, and (ii) use its commercially reasonable efforts to obtain the
necessary vote by the Company Shareholders in favour of the Arrangement
Resolution. The Company Board shall not withdraw, amend, modify or
qualify in a manner adverse to Parent the Recommendation (or announce its
intention to do so), except that, prior to the receipt of the Company
Shareholders approval, the Company Board shall be permitted to withdraw the
Recommendation, following three Business Days’ prior notice to Parent, if the
Company has entered into an agreement for a Potential Transaction.
Section
6.10 Purchaser.
Parent
shall cause and shall take all action necessary to cause Purchaser to perform
its obligations under this Agreement and to consummate the Transactions on the
terms and subject to the conditions set forth in this Agreement.
Section
6.11 Resignation of Directors and
Officers.
At or
before the Effective Time, Parent shall cause each Person who is a director and
officer of Parent, other than such Persons set out on Schedule 6.11, to
voluntarily submit his or her written resignation as a director or officer of
Parent, as the case may be, which will be effective at the Effective Time and
Parent shall cause such resignations and election of replacement directors of
Parent to be seriatim, such that the Board of Directors of Parent and officers
of Parent immediately after the Effective Time will consist of the individuals
set out on Schedule 6.11.
ARTICLE
VII
CONDITIONS
Section
7.01 Condition to the Obligations
of the Company, Parent and the Purchaser
The
obligations of the Company, Parent and the Purchaser to consummate the
Transactions are subject to the satisfaction of all the following
conditions:
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(a)
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Interim
Order. The Interim Order shall have been obtained in
form and substance satisfactory to each of the Company and Parent, acting
reasonably.
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(b)
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Final
Order. The Court will have determined that the issuance
of the Parent Common Stock to the Company Shareholders pursuant to the
terms of the Arrangement is fair to the Company Shareholders, prior to
issuing the Final Order and will have granted the Final Order, which Final
Order shall be in form and substance satisfactory to each of the Company
and Parent, acting reasonably, and shall not have been set aside or
modified in a manner unacceptable to such parties on appeal or
otherwise.
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(c)
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Stockholder
Approvals. This Agreement and the Transactions contemplated hereby
shall have been approved by the requisite vote of the stockholders of the
Company and Parent, and the issuance of Parent Common Stock in connection
with the Arrangement and the other Parent Stockholder Proposals shall have
been approved by the requisite vote of the Parent
Stockholders.
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(d)
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Approvals. All
other authorizations, consents, orders, declarations or approvals of, or
filings with, or terminations or expirations of waiting periods imposed
by, any Governmental Authority which the failure to obtain, make or occur
would have the effect of making the Arrangement or any of the Transactions
illegal shall have been given or shall be in
effect.
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(e)
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Laws. No
provision of any applicable Law shall prohibit or impose any condition on
the consummation of the Transactions or limit in any material way Parent’s
right to control or operate the Purchaser, the Company or any of the
Company Subsidiaries or any material portion of the
Business.
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(f)
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Third-Party
Proceedings. There shall not be pending or threatened any
proceeding by a third-party to enjoin or otherwise restrict the
consummation of the Transactions.
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(g)
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Exchange
Listing. As of the Effective Time, the shares of Parent Common
Stock issued in connection with the Arrangement shall be quoted and
approved for listing on the NYSE Alternext
US.
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(h)
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Conversion
Rights. At or prior to the
Parent Stockholders’ Meeting, holders of less than thirty percent (30%) of
the IPO Shares (as such term is defined in Parent’s Certificate of
Incorporation) shall have demanded that Parent convert their IPO Shares
into cash pursuant to the terms of the Parent’s Charter
Documents.
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Section
7.02 Conditions to Obligations of
Parent and the Purchaser.
The
obligation of Parent and the Purchaser to consummate the Transactions is subject
to the satisfaction, or the waiver at Parent’s and the Purchaser’s sole and
absolute discretion, of all the following further conditions:
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(a)
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Representations and
Warranties. The representations and warranties of the Company
contained in this Agreement shall be true and correct as of the Effective
Time, with the same effect as though such representations and warranties
were made on and as of the Effective Time (provided that any
representation and warranty that addresses matters only as of a certain
date shall be true and correct as of that certain date), except as
otherwise specifically permitted by this Agreement and except where the
failure of any such representation and warranty to be true and correct in
all material respects would not result in or would not be reasonably
likely to result in a Company Material Adverse
Effect.
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(b)
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Performance of
Obligations. The Company shall have performed and complied with all
covenants, undertakings, obligations, agreements and conditions to be
performed or complied with by it at or before the Effective Time pursuant
to the terms of the Transaction Documents, except where the failure to so
perform or comply would not result in or would not be reasonably likely to
result in a Company Material Adverse
Effect.
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(c)
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Company Material
Adverse Effect. Between the date hereof and the
Effective Date, there shall not have occurred a Company Material Adverse
Effect.
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(d)
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Dissent
Rights. Company Shareholders representing in the
aggregate 10% or more of the issued and outstanding Company Common Stock
immediately prior to the Effective Date shall not have validly exercised
Dissent Rights.
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(e)
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Consents. Each
of the consents referred to in Section 3.04 shall have been obtained,
except where the failure to obtain any such consent would not result in or
would not be reasonably likely to result in a Company Material Adverse
Effect.
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(f)
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Regulatory
Filings. All necessary regulatory or governmental approvals and
consents required to consummate the transactions contemplated hereby
(other than immaterial government permits) shall have been obtained
without any term or condition which would materially impair the value of
the Company. All conditions required to be satisfied prior to the
Effective Time by the terms of such approvals and consents shall have been
satisfied, and any and all statutory waiting periods in respect thereof
shall have expired.
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(g)
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Updated
Schedules. Parent shall have received updated Schedules to this
Agreement as of a date within three (3) Business Days of the Effective
Date. Such updated Schedules shall include the Financial
Statements and financial statements for any subsequent annual or interim
period that would be required under
GAAP.
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(h)
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Transaction
Documents. The Transaction Documents to be executed and delivered
by the Company shall have been duly executed by the Company and delivered
to Parent.
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(i)
|
Certificate of
Officer. Parent shall have received a certificate dated
the Effective Date and signed by the Chief Executive Officer of the
Company, certifying that the conditions specified in this Section 7.02
have been satisfied.
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(j)
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Lender
Arrangements. The Company shall have entered into a
revised arrangement with its senior secured lenders with respect to the
outstanding credit facilities provided to the Company and the Company
Subsidiaries by such lenders, including with respect to the warrants
issued and issuable to such lenders in connection with such facilities,
that is satisfactory to Parent, acting
reasonably.
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(k)
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Lock-up
Agreements. Each of the persons listed on Schedule
7.02(k)(A) shall have entered into a lock-up agreement in the form
attached as Schedule 7.02(k)(B).
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Section
7.03 Conditions to Obligations of
the Company.
The
obligation of the Company to consummate the Transactions is subject to the
satisfaction, or the waiver at the Company’s discretion, of all the following
further conditions:
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(a)
|
Representations and
Warranties. The representations and warranties of Parent contained
in this Agreement shall be true and correct as of the Effective Time, with
the same effect as though such representations and warranties were made on
and as of the Effective Time (provided that any representation and
warranty that addresses matters only as of a certain date shall be true
and correct as of that certain date), except as otherwise specifically
permitted by this Agreement and except where the failure of any such
representation and warranty to be true and correct in all material
respects would not result in or would not be reasonably likely to result
in a Parent Material Adverse
Effect.
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(b)
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Performance of
Obligations. Each of Parent and the Purchaser shall have performed
and complied with all covenants, undertakings, obligations, agreements and
conditions to be performed or complied with by it at or before the
Effective Time pursuant to the terms of the Transaction Documents, except
where the failure to so perform or comply would not result in or would not
be reasonably likely to result in a Parent Material Adverse
Effect.
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(c)
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Parent Material
Adverse Effect. Between the date hereof and the
Effective Date, there shall not have occurred a Parent Material Adverse
Effect.
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(d)
|
Dissent
Rights. Company Shareholders representing in the
aggregate 10% or more of the issued and outstanding Company Common Stock
immediately prior to the Effective Date shall not have validly exercised
Dissent Rights.
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(e)
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Regulatory
Filings. All necessary regulatory or governmental approvals and
consents required to consummate the transactions contemplated hereby
(other than immaterial government permits) shall have been obtained
without any term or condition which would materially impair the value of
Parent. All conditions required to be satisfied prior to the Effective
Time by the terms of such approvals and consents shall have been
satisfied, and any and all statutory waiting periods in respect thereof
shall have expired.
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(f)
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Transaction
Documents. The Transaction Documents to be executed and delivered
by Parent and/or the Purchaser shall have been duly executed by Parent
and/or the Purchaser and delivered to the
Company.
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(g)
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Updated
Schedules. The Company shall have received updated schedules to
this Agreement relating to Parent as of a date within three (3) Business
Days of the Effective Date.
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(h)
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Company RSU Plan and
Company Warrants. Parent will have adopted the Company RSU Plan and
the Company Warrants and will have approved and reserved for issuance the
aggregate number of shares of Parent Common Stock that may be
issued after the Effective Time pursuant to the exercise of the Company
RSUs and Company Warrants, as adopted by
Parent.
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(i)
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Board of Directors and
Officers. The board of directors of Parent and officers of Parent
shall be constituted as determined pursuant to Section
6.11.
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(j)
|
Trust Account.
At the Effective Time, Parent shall have in the Trust Account no less than
an amount equal to U.S.$70.0
million.
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(k)
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Release of Trust
Funds. Parent will have delivered to the Trustee pursuant to the
Investment Trust Management Agreement a notice triggering the release of
funds from the Trust Account to Parent forthwith after completion of the
Arrangement.
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(l)
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Certificate of
Officer.
The Company shall have received a certificate dated the Effective Date and
signed by the Chief Financial Officer of Parent, certifying that, the
conditions specified in this Section 7.03 have been
satisfied.
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(m)
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Lender
Arrangements. The
Company shall have entered into a revised arrangement with its senior
secured lenders with respect to the outstanding credit facilities provided
to the Company and the Company Subsidiaries by such lenders, including
with respect to the warrants issued and issuable to such lenders in
connection with such facilities, that is satisfactory to the Company,
acting reasonably.
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ARTICLE
VIII
TERMINATION,
AMENDMENT AND WAIVER
Section
8.01 Termination by Mutual
Consent.
This
Agreement may be terminated and the Transactions may be abandoned at any time
prior to the Effective Date, whether before or after the approvals at the
Company Meeting or Parent Stockholders Meeting referred to in Section 6.10 or
Section 2.05 respectively, by mutual written consent of the Company and
Parent.
Section
8.02 Termination by Parent or the
Company.
This
Agreement may be terminated and the Transactions may be abandoned at any time
prior to the Effective Date by action of the Board of Directors of either Parent
or the Company if:
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(a)
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The
Transactions shall not have been completed by the Drop Dead Date, whether
such date is before or after the date of the stockholder approvals
referred to in Section 7.01(c) (the “Termination
Date”);
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(b)
|
The
approval of the Company Shareholders required by Section 7.01(c) shall not have
been obtained at the Company Meeting duly convened therefor or at any
adjournment or postponement
thereof;
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(c)
|
The
approval of the Parent Stockholders referred to in Section 7.01(c) shall
not have been obtained at the Parent Stockholder Meeting duly convened
therefor or at any adjournment or postponement thereof;
or
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(d)
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Any
Governmental Authority of competent jurisdiction shall have issued a
non-appealable final Order permanently restraining, enjoining or otherwise
prohibiting the consummation of the
Transactions;
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provided, however, that the
right to terminate this Agreement pursuant to paragraph (a), (b) or (c) above
shall not be available to any party that has breached or failed to fulfill any
of its obligations under this Agreement in any manner that shall have caused the
occurrence of the failure of the Transactions to occur before the Termination
Date or the failure to obtain the approval of the Company Shareholders or the
Parent Stockholders.
Section
8.03 Termination for Breach of
Representations and Warranties.
This
Agreement may be terminated and the Transactions may be abandoned at any time
prior to the Effective Date:
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(a)
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By
the Company, subject to its having complied and being in compliance with
all of its obligations under this Agreement, in the event of a material
breach by a Purchaser Party of any representation, warranty, covenant or
agreement made by it contained in this Agreement or if any representation
or warranty made by a Purchaser Party shall have become untrue, in either
case such that the conditions set forth in Section 7.03(a) or (b) would
not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, and if such breach or
inaccuracy shall not be cured within twenty (20) Business Days after
delivery of written notice thereof by the Company to
Parent;
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(b)
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By
a Purchaser Party, subject to its having complied and being in compliance
with all of its obligations under this Agreement, in the event of a
material breach by the Company of any representation, warranty, covenant
or agreement made by it contained in this Agreement or if any
representation or warranty made by the Company shall have become untrue,
in either case such that the conditions set forth in Section 7.02(a) or
(b) would not be satisfied as of the time of such breach or as of the time
such representation or warranty shall have become untrue, and if such
breach or inaccuracy shall not be cured within twenty (20) Business Days
after delivery of written notice thereof by the Purchaser Party to the
Company;
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(c)
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By
the Company, if any condition specified to be for the benefit of the
Company under Section 7.01 or 7.03, other than a condition set out in
Section 7.03(a) or (b), shall not have been satisfied on or prior to the
date on which it is required to be satisfied and the provisions of Section
8.03(a) do not otherwise apply thereto;
or
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(d)
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By
Parent, if any condition specified to be for the benefit of Parent under
Section 7.01 or 7.02, other than a condition set out in Section 7.02(a) or
(b), shall not have been satisfied on or prior to the date on which it is
required to be satisfied and the provisions of Section 8.03(b) do not
otherwise apply thereto.
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Section
8.04 Termination by Company
in Connection with Potential Transactionor Superior Proposal
Subject
to the requirements of Section 6.01(g) and 6.01(h), this Agreement may be
terminated and the Transactions may be abandoned by the Company: (a) at any time
prior to the date the required approval of the Arrangement by
the Company Shareholders and by Parent Stockholders is obtained, in
connection with the completion of a Potential Transaction with a Person not set
out on Schedule 6.01(b) as contemplated by Section 6.01(b); (ii) at any time
following the date the required approval of the Arrangement by
the Company Shareholders and by Parent Stockholders is obtained and
prior to the Effective Date, in connection with the completion of a Potential
Transaction with a Person set out on Schedule 6.01(b) or with a Person not
listed on Schedule 6.01(b) that makes an unsolicited bid for a majority of the
Company’s capital stock on or prior to April 17, 2009 with the
purpose of taking control of the Company as contemplated by Section
6.01(g)(c)(i)and (ii), or (iii) in connection with the entering into of a
written binding agreement relating to a Superior Proposal as contemplated by
Section 6.02(a).
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Section
8.05 Termination by Parent in
Certain Circumstances
This
Agreement may be terminated and the Transactions may be abandoned at any time
prior to the Effective Date by the Parent, upon written notice to the Company,
on the earlier of (i) the date on which the Parent determines, acting reasonably
and in good faith, that the transactions contemplated by this
Agreement cannot or are unlikely to be consummated because the conditions to the
Parent’s and the Purchaser’s obligation to close set forth in Sections 7.01
and 7.02 have not or are unlikely to be met, unless such failure of consummation
shall be due to the failure of the Parent or the Purchaser to perform or observe
in all material respects the covenants and agreements hereof to be performed or
observed by the Parent or the Purchaser.
Section
8.06 Effect of Termination and
Abandonment.
In the
event of the termination of this Agreement by Parent or Company as provided in
this Article VIII, this Agreement shall forthwith become void and there shall be
no liability hereunder on the part of the Company, Parent or the Purchaser or
their respective officers or directors to perform any of their obligations
hereunder. Notwithstanding the foregoing, no termination of this agreement shall
affect the rights or obligations of the parties pursuant to Section
6.01(g).
ARTICLE
IX
GENERAL
PROVISIONS
Section
9.01 Waiver.
As
contemplated in Parent’s prospectus dated April 2007 (the “Prospectus”), Parent
has established the Trust Account, for the benefit of the “public stockholders”
(as defined in the Prospectus) and that Parent may disburse monies from the
Trust Account only (i) to the public stockholders in the event of the conversion
of their shares or the liquidation of Parent (ii) to Parent (or the company
resulting from the merger of Parent and such company) (a) concurrently or after
it consummates an initial business combination (as described in the Prospectus),
and (b) prior to the consummation of an initial business combination, to the
extent of U.S.$1,600,000 in interest earned on the Trust Account (the “Released
Interest”), net of taxes payable, which shall be released upon demand of Parent;
and (iii) to the underwriters of Parent’s initial public offering, concurrently
or after consummation of an initial business combination, but only after
adjustment for amounts owing to public stockholders for which conversion rights
have been exercised. The Company hereby agrees that it does not have
any right, title, interest or claim of any kind in or to any monies in the Trust
Account (“Claim”) and hereby waives any Claim the Company may have in the future
as a result of, or arising out of, this Agreement or any other negotiations,
contracts or agreements between Parent and the Company and will not seek
recourse against the Trust Account for any reason whatsoever.
Section
9.02 Survival of Representations
and Warranties.
The
representations and warranties of each of the Company, Parent and the Purchaser
contained herein shall not survive the completion of the Transactions and shall
expire and be terminated on the earlier of the termination of this Agreement in
accordance with its terms and the Effective Time.
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Section
9.03 Amendments, Modification and
Waiver.
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(a)
|
Except
as may otherwise be provided herein, any provision of this Agreement may
be amended, modified or waived by the parties hereto, by action taken by
or authorized by their respective Boards of Directors, prior to the
Effective Date if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Company and Parent or, in the
case of a waiver, by the party against whom the waiver is to be effective;
provided further, however, that, after the approval of this Agreement by
the Company Shareholders, no such amendment shall be made except as
allowed under applicable Law.
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(b)
|
No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights
and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
|
Section
9.04 Notices.
All
notices, requests, demands and other communications to any party hereunder shall
be in writing and shall be given to such party at its address or telecopier
number set forth below, or such other address or telecopier number as such party
may hereinafter specify by notice to each other party hereto:
If prior
to the Effective Time
if to
Parent and the Purchaser, to:
Brookfield
Place
▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention:
▇▇▇▇▇▇ ▇▇▇▇▇, Chief Executive Officer
Telecopy: (▇▇▇)
▇▇▇-▇▇▇▇
with a
copy (which shall not constitute notice) to:
Loeb
& Loeb LLP
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇
▇▇▇▇▇▇▇
Telecopy: (▇▇▇)
▇▇▇-▇▇▇▇
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If
subsequent to the Effective Time
c/o
Allen-Vanguard Corporation
▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇,
▇▇▇▇▇▇▇
▇▇▇
▇▇▇
Attention:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Legal Officer
Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇
with a
copy (which shall not constitute notice) to:
Lang
▇▇▇▇▇▇▇▇ LLP
Brookfield
Place, Suite 2500
▇▇▇ ▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention:
▇▇▇▇ ▇▇ ▇▇▇▇▇
Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇
if to the
Company:
▇▇▇▇▇-Vanguard
Corporation
▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇,
▇▇▇▇▇▇▇
▇▇▇
▇▇▇
Attention:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Legal Officer
Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇
with a
copy (which shall not constitute notice) to:
Lang
▇▇▇▇▇▇▇▇ LLP
Brookfield
Place, Suite 2500
▇▇▇ ▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention:
▇▇▇▇ ▇▇ ▇▇▇▇▇
Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇
Each such
notice, request or other communication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified
herein and the appropriate answer back is received or, (ii) if given by
certified or registered mail, seventy-two (72) hours after such communication is
deposited in the mails with first class postage prepaid, properly addressed or,
(iii) if given by any other means, when delivered at the address specified
herein.
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Section
9.05 Expenses
Each of
Parent and the Company will pay their own expenses relating to the
Transactions.
Section
9.06 Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable of
being enforced by any rule of Law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the Transactions is not affected
in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the Transactions be
consummated as originally contemplated to the fullest extent
possible.
Section
9.07 Entire Agreement;
Assignment.
This
Agreement, together with the Annexes, Exhibits and Schedules hereto and the
Confidentiality Agreement, constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. This Agreement shall not be
assigned (whether pursuant to a merger, by operation of law or otherwise)
without the prior written consent of each party hereto.
Section
9.08 Parties in
Interest.
This
Agreement shall be binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
Section
9.09 Interpretation.
References
herein to the “knowledge of the Company” shall mean the actual knowledge of any
one of the Chief Executive Officer, Chief Financial Officer of the Company,
Chief Legal Officer, Vice President of Sales and Vice President of
ES. References herein to the “knowledge of Parent” shall mean the
actual knowledge of the “officers” of Parent (as such term is defined in Rule
3b-2 promulgated under the Exchange Act). Whenever the words
“include”, “includes” or “including” are used in this Agreement they shall be
deemed to be followed by the words “without limitation”. The phrase
“made available” when used in this Agreement shall mean that the information
referred to has been made available if requested by the party to whom such
information is to be made available. References to “hereof” shall
mean this Agreement and references to the “date hereof” shall mean the date of
this Agreement. The parties acknowledge that the parties and their
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any other agreement or document given pursuant to this
Agreement.
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Section
9.10 Specific
Performance.
The
parties hereto agree that irreparable damage would occur in the event any
provision of this Agreement were not performed in accordance with the terms
hereof and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or in equity.
Section
9.11 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of the
Province of Ontario and the federal laws of Canada applicable therein regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws thereof, except to the extent mandatorily governed by the law of another
jurisdiction. Each of the parties hereto (a) irrevocably consents to
the exclusive jurisdiction and venue of the Courts of the Province of Ontario in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, and (b) waives and covenants not to assert or plead
any objection which they might otherwise have to such jurisdiction, venue and
such process.
Section
9.12 Waiver of Jury
Trial.
Each of
the parties hereto hereby waives to the fullest extent permitted by applicable
Law any right it may have to a trial by jury with respect to any litigation
directly or indirectly arising out of, under or in connection with the
Transaction Documents or the Transactions. Each of the parties hereto
(a) certifies that no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce that foregoing waiver and (b) acknowledges
that it and the other parties hereto have been induced to enter into the
Transaction Documents and the Transactions, as applicable, by, among other
things, the mutual waivers and certifications in this Section 9.12.
Section
9.13 Headings.
The
descriptive headings contained in this Agreement are included for convenience of
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.
Section
9.14 Ambiguities.
The
parties acknowledge that each party and its counsel has materially participated
in the drafting of this Agreement and consequently the rule of contract
interpretation that, and ambiguities if any in, the writing be construed against
the drafter, shall not apply.
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Section
9.15 Counterparts.
This
Agreement may be executed and delivered (including by facsimile or other
electronic transmission) in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
Section
9.16 Adjustment.
In the
event of any subdivision, consolidation, reclassification or other change to the
Parent Common Stock or the Company Common Stock prior to the Effective Date, all
appropriate adjustments shall be made, mutatis mutandis, in respect of the
consideration payable in connection with the Arrangement.
Section
9.17 Currency.
For
greater certainty, all dollar amounts expressed in this Agreement (unless
otherwise expressly provided for herein) or in the Company Schedules (unless
otherwise expressly provided for therein) are in Canadian dollars.
SIGNATURE
PAGE FOLLOWS
IN
WITNESS WHEREOF, Parent, the Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
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By:
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Name:
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Title:
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AV
ACQUISITION CORP.
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By:
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Name:
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Title:
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VANGUARD CORPORATION
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By:
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Name:
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Title:
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