This Agreement is made as of February
3, 2006 between
| |
▇. ▇.
▇▇▇▇▇ CORPORATION,
a corporation existing under the laws of the State of Delaware, U.S.A.
(“Parent”) |
| |
GSW
INC.,
a corporation existing under the laws of Canada
(“Company”) |
RECITALS
| A. |
Parent
intends to cause the Offeror to make the Offer. |
| ▇. |
▇▇▇▇▇▇▇
have irrevocably and unconditionally agreed to accept the Offer and deposit
their Shares under the Offer on the terms and subject to the conditions
contained in the Deposit Agreement. |
| C. |
The
Board of Directors, after receiving financial and legal advice, has approved
the entering into of this Agreement and the making of a recommendation that
Shareholders accept the Offer. |
Capitalized terms used but not
defined in this Agreement have the meanings given to them in Schedule A.
FOR VALUE RECEIVED, the parties agree
as follows:
SECTION 1 –
THE OFFER
(1) Subject to the
conditions set forth in Schedule B-1, Parent agrees to cause the Offeror
to make the Offer.
(2) Parent also
agrees as follows:
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(a) |
the
Offeror will make the Offer by way of a take-over bid: |
| |
(i) |
at
a cash offer price of $115.00 per Share, and the Offer will be open for
acceptance until a time to be stated in the Offer Documents, which time
shall be the minimum time required by applicable securities Laws (subject
to the Offeror’s right to extend the period during which Shares may
be deposited under the Offer pursuant to section 1.1(2)(b)(v)); |
-2-
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(ii) |
subject
only to the conditions set forth in Schedule B-2; and |
| |
(iii) |
in
accordance in all material respects with applicable securities Laws; |
| |
(b) |
except
with the consent of Company, the Offer will not be amended to: |
| |
(i) |
increase
the Minimum Tender Condition; |
| |
(ii) |
decrease
the price per Share offered or change the form of consideration offered
(other than by adding consideration); |
| |
(iii) |
decrease
the number of Shares subject to the Offer; |
| |
(iv) |
modify
the conditions to the Offer or impose additional conditions to the Offer,
in either case, in a manner which is adverse to the Shareholders; or |
| |
(v) |
extend
the Expiry Time (including as a result of a variation to the terms of the
Offer) other than: |
| |
(A) |
to
the extent required to satisfy any of the conditions set out in Schedule B-2
(subject to section 5.1(1)(b)(ii)); or |
| |
(B) |
in
circumstances where all of the Shares tendered by Shareholders pursuant to
the Offer prior to such extension have been taken up and paid for by the
Offeror; |
| |
(c) |
to
cause the Offeror to prepare the Offer Documents in accordance in all
material respects with applicable securities Laws in the English language
(and, if required by applicable securities Laws, the French language) and
provide Company with a reasonable opportunity to review and comment on the
contents of the Offer Documents (including by providing a first draft of
the Offer Documents to Company by no later than February 15, 2006, but
recognizing that the contents of the Offer Documents are the
responsibility of the Offeror and Parent) prior to their mailing to
Shareholders; |
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(d) |
to
cause the Offeror to mail the Offer Documents (subject only to the
satisfaction of the conditions set out in Schedule B-1) not later than
5:00 p.m. (Toronto time) on February 23, 2006 (the “Outside Mailing
Date”); provided that, if the mailing of the Offer
Documents is delayed by the failure to satisfy any of the conditions set
out in Schedule B-1, other than any condition which by its nature would be
impossible or impracticable to satisfy, then the Outside Mailing Date will
be extended to the earlier of April 24, 2006 and the third business day
following the date on which such condition is satisfied; |
-3-
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(e) |
to
cause the Offeror to take up and pay for the Shares deposited under the Offer
in accordance with the terms of the Offer within the periods required by
applicable securities Laws and upon the conditions of the Offer having
been satisfied or waived; |
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(f) |
if
the Offeror increases the value of the consideration for the Shares under the
Offer, to cause the Offeror to pay such increased consideration to each
Shareholder (including the Sellers) whose Shares are taken up by the
Offeror under the Offer; and |
| |
(g) |
to
use its reasonable efforts to enable the conditions to the Offer set out in
Schedule B-2 to be satisfied. |
Parent
agrees that the Offer will provide that, if a corporation (a “Holdco”)
incorporated under the laws of Canada or the Province of Ontario and having no assets
other than Shares and no liabilities whatsoever (other than liabilities acceptable to
Parent acting reasonably) is the beneficial owner and holder of record of Shares, all but
not less than all of the shareholders of Holdco (“Holdco Shareholders”)
will be entitled jointly to elect (the “Holdco Election”) to accept the
Offer by selling to the Offeror all of the outstanding shares of Holdco for an aggregate
price equal to the aggregate value of the Shares held by Holdco (based on a price per
Share equal to the consideration offered to each Shareholder whose Shares are taken up by
the Offeror under the Offer); provided that, the Holdco Shareholder(s) shall have entered
into a share purchase agreement with the Offeror at least three business days prior to the
Expiry Time substantially in the form of the agreement attached to this Agreement as
Schedule C.
| 1.3 |
Company
Approval of the Offer |
(1) Company
represents and warrants as follows and acknowledges that Parent and the
Offeror are relying on such representations and warranties in
connection with the entering into of this Agreement and the making of
the Offer:
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(a) |
GMP
Securities L.P. has delivered its written opinion to the special committee
of the Board of Directors and to the Board of Directors to the effect
that the consideration to be received under the Offer is fair from a
financial point of view to Shareholders; GMP Securities L.P. has
authorized Company to permit inclusion of such written opinion (or a
reference thereto) in the Directors’ Circular and any
information circular relating to the Subsequent Acquisition
Transaction; and Company has hereto furnished to Parent a true and
complete copy of such written opinion; |
-4-
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(b) |
the
Board of Directors, after receiving financial and legal advice, has
determined unanimously (excluding one director who was absent from
the meeting and with the exception of those directors, if any, who
have abstained from voting solely due to their position as directors,
officers or shareholders of the Sellers) that the cash offer price
under the Offer is fair from a financial point of view and has
approved the entering into of this Agreement and the making of a
recommendation that Shareholders accept the Offer; and |
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(c) |
after
reasonable inquiry, the Board of Directors has been advised and believes
that each of the directors of Company intends to accept the Offer and
deposit all the Shares of which he or she is the beneficial owner
under the Offer. |
(2) Company
agrees, unless the Offer has been withdrawn or terminated in accordance
with this Agreement or this Agreement has been terminated in
accordance with section 5.1, to take all reasonable action to support
the Offer, including the following:
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(a) |
Company
will provide Parent and the Offeror, within three business days after
the date of this Agreement (and thereafter on such basis as the
Offeror may reasonably request), with: |
| |
(i) |
a
list of the registered holders of Shares, a list of non-objecting beneficial
owners of Shares and a list of participants in book-based nominee
registrants such as CDS & Co. and Cede & Co., together in
each case, as applicable, with their addresses and respective
holdings of Shares; and |
| |
(ii) |
the
names, addresses and holdings of all persons having rights to acquire Shares
and the details of such rights; |
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(b) |
Company
will permit and request its registrar and transfer agent to, at the sole
cost of Parent and/or the Offeror: |
| |
(i) |
act
as the depositary for the Offer; and |
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(ii) |
assist
Parent and the Offeror in connection with the Offer and furnish the
Offeror with such additional information (including updates of the
lists referred to in section 1.3(2)(a), mailing labels and lists of
securities positions) and other assistance as the Offeror may
reasonably request to be able to make the Offer and communicate with
Shareholders and such other persons as may be entitled to receive the
Offer Documents under applicable securities Laws; |
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(i) |
prepare
and make available for distribution contemporaneously with the Offer
Documents sufficient copies of the Directors Circular: |
-5-
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(A) |
prepared
in accordance in all material respects with applicable securities Laws
in the English language (and, if required by applicable securities
Laws, the French language); |
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(B) |
reflecting
the determination and recommendation referred to in section
1.3(1)(b); and |
| |
(C) |
including
a copy of the fairness opinion described in section 1.3(1)(a) and, to
the extent it continues to be true at the time the Directors Circular
is mailed, a statement consistent with section 1.3(1)(c) in respect
of the intention of all of the directors of Company to accept the
Offer; |
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(ii) |
provide
Parent and the Offeror with a reasonable opportunity to review and
comment on the contents of the Directors Circular (including by
providing a first draft of the Directors Circular to Parent by
February 15, 2006, but recognizing that the contents of the Directors
Circular are the responsibility of the Board of Directors) prior to
its mailing to Shareholders; and |
| |
(iii) |
mail
the Directors Circular to the Shareholders on the same date that Offeror
mails the Offer Documents to the Shareholders and include the
Directors Circular in the same package as the Offer Documents,
provided that, for greater certainty, the cost of mailing the Offer
Documents and the Directors Circular shall be borne solely by Parent
and/or the Offeror. |
| 1.4 |
Pre-Acquisition
Reorganization |
Company
will as promptly as possible and in any event before the Expiry Time take such steps as
Parent may reasonably direct to transfer Company’s building products division to a
wholly-owned subsidiary of Company, provided that the taking of such steps will not be
effective until immediately before the Offeror first takes up any Shares under the Offer
and will not have a Material Adverse Effect, delay satisfaction of the conditions of the
Offer (other than those relating to Company’s performance of its obligations under
this Agreement) or impede or hinder the Offer.
| 1.5 |
Communications
with Governmental Authorities |
Subject
to applicable Laws, each party shall keep the other party apprised of all communications
from or with any Governmental Authority relating to the Offer and the transactions
contemplated by this Agreement.
If
Company declares, sets aside or pays any dividend on, or makes any other actual,
constructive or deemed distribution in respect of, any of its Shares, or otherwise makes
any payments to Shareholders, the Offeror may reduce the amount of the Offer price per
Share by the amount of such dividend or distribution received per Share. However, if the
Effective Time has not theretofore occurred, on or after June 15, 2006, Company may
declare a regular annual dividend on the Shares of $0.20 per Share payable in July 2006 to
Shareholders of record (“Recorded Shareholders”). Parent agrees that, if
such dividend is declared and paid in accordance with the preceding sentence, then
Recorded Shareholders who tender their Shares to the Offer on or before the payment date
of the annual dividend will be entitled to receive and retain such dividend with no
reduction in the Offer price per Share.
-6-
Parent
shall cause Company to make, or to cause its Subsidiaries to make, payments to all holders
of deferred share units of Company and to all persons entitled to payments under its
Phantom Stock Appreciation Plan, in each case as set out in the Disclosure
Statement. Parent acknowledges that the payments to holders of deferred share units
of Company shall be due and payable by Company immediately after Shares are first taken up
under the Offer and that payments under the Phantom Stock Appreciation Plan shall be due
and payable by Company within 30 days of the date that Shares are first taken up under the
Offer.
| 1.8 |
Corporate
Office Employees |
Parent
will contact each of the employees affected by a potential closing of Company’s
Corporate Head Office by no later than February 7, 2006, to discuss with them
Parent’s then current intentions with respect to the timing of closing of that office
and transition arrangements. On any termination of employment of a Corporate Head Office
employee of Company, Parent shall cause Company to honour its obligations to that employee
under any written agreement or pursuant to applicable Law with that employee existing as
of the date of this Agreement and under applicable Law.
| 1.9 |
Subsequent
Acquisition Transaction |
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(a) |
If,
within the earlier of 120 days after the date of the mailing of the Offer
Documents and 20 days after the Offeror first takes up and pays for Shares
under the Offer, the Offer has been accepted by holders of not less than
90% of the Class A Common Shares or holders of not less than 90% of the
Class B Subordinate Voting Shares, Parent will cause the Offeror (to the
extent permitted by applicable Law, orders, judgments, decrees, writs or
injunctions) to acquire the remainder of the Class A Common Shares or
Class B Subordinate Voting Shares (as applicable) pursuant to a Compulsory
Acquisition. Parent shall cause the Offeror to do so as soon as legally
and practicably possible. |
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(b) |
If,
within the earlier of 120 days after the date of the mailing of the Offer
Documents and 20 days after the Offeror first takes up and pays for Shares
under the Offer, the Offer is accepted by holders of less than 90% (but
not less than 66?%) of the Class A Common Shares or holders of less than
90% (but not less than 66?%) of the Class B Subordinate Voting Shares (as
applicable) or the Offer has been accepted by holders of not less than 90%
of the Class A Common Shares or holders of not less than 90% of the Class
B Subordinate Voting Shares and a Compulsory Acquisition is otherwise not
available, Parent will cause the Offeror (to the extent permitted by
applicable Law, orders, judgments, decrees, writs or injunctions) to
acquire the remainder of the Shares not tendered to the Offer at a price
equal to that offered under the Offer pursuant to a Subsequent Acquisition
Transaction. Parent shall cause the Offeror to do so as soon as legally
and practicably possible. |
-7-
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(c) |
Company
will assist Parent and the Offeror in connection with the implementation
of a Compulsory Acquisition or a Subsequent Acquisition Transaction
(including, in the case of a Subsequent Acquisition Transaction, calling
of any required Shareholder meeting, making any required regulatory or
court applications, mailing to the Shareholders a proxy or other required
informational statement or circular, as the case may be, and all related
materials and all amendments or supplements thereto, if any, reasonably
acceptable to Parent and the Offeror and providing Parent and the Offeror
with a reasonable opportunity to review and comment on the contents of all
materials prepared by Company in connection with such transaction). The
information provided by Company for use in such materials, on both the
date that such materials are first mailed to the Shareholders and on the
date that any Shareholder meeting is held for the purpose of approving a
Subsequent Acquisition Transaction, shall not contain any untrue statement
of a material fact or an omission to state a material fact that is
required to be stated or that is necessary to make a statement not misleading
in the circumstances in which it was made and will comply in all material
respects with applicable securities Laws. Company will correct promptly
any information provided by it for use in such materials that becomes
false or misleading. |
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(d) |
Notwithstanding
the foregoing, Parent shall not be obligated to cause the Offeror to
effect a Compulsory Acquisition or Subsequent Acquisition Transaction so
long as (i) any act, action, suit or proceeding is pending before or by any
domestic or foreign court or tribunal or governmental agency or other
regulatory authority or administrative agency or commission or by any
elected or appointed public official or private person in Canada or
elsewhere, whether or not having the force of law, against Parent, the
Offeror or Company in any way relating to the transactions contemplated by
this Agreement or (ii) any Law, order, judgment, decree, writ or
injunction shall have been enacted, promulgated or applied, in any case,
to cease trade, enjoin, prohibit or impose material limitations, damages
or conditions on the right of the Offeror to own or exercise full rights
of ownership of the Shares or the Offeror’s ability to effect a
Compulsory Acquisition or a Subsequent Acquisition Transaction. |
-8-
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(a) |
Company
represents and warrants and agrees that, immediately after the Offeror
takes up and pays for Shares under the Offer (provided the Offeror
acquires over 50% of the issued and outstanding Class A Common Shares (on
a fully diluted basis) and over 50% of the issued and outstanding Class B
Subordinate Voting Shares (on a fully diluted basis)), the Board of
Directors shall be duly and validlyreconstituted in accordance with
applicable corporate Law requirements and the by-laws of Company
through resignations of all existing members of the Board of Directors and
the appointment of the Offeror’s nominees in their stead. Subject to
the provisions of applicable securities Laws, Company shall secure the
resignations of all such existing members of the Board of Directors, which
resignations shall be effective at such time or times that Parent
specifies on the first day after the Offeror takes up and pays for Shares,
and cause the election of the Offeror’s nominees to fill the
vacancies so created for the purpose of effecting the foregoing without
the necessity of a Shareholder meeting. Parent acknowledges that the
existing members of the Board of Directors will resign only upon receiving
the release, discharge and confirmation described in subclause (b) of this
section. |
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(b) |
Company
and Parent shall, on the first day after the Offeror takes up and pays for
Shares, each provide each of the existing members of the Board of Directors
with an irrevocable release and discharge from Company and Parent,
respectively, in favour of each director of Company, and Company shall
provide confirmation that insurance coverage has been maintained as
contemplated by section 1.11. |
| 1.11 |
Indemnification
and Insurance |
All
rights to indemnification existing in favour of those persons who are directors and
officers of Company or its Subsidiaries as at the date of this Agreement (the
“Indemnified Managers”) for their acts and omissions occurring prior to
the Effective Time, as provided in the by-laws of Company or its Subsidiaries, shall
survive the completion of the Offer and continue to be the obligation of Company until the
expiration of the applicable limitation period with respect to any claims against the
Indemnified Managers arising out of such acts or omissions. Company shall, on or before
the Effective Time and in consultation with Parent, obtain, on a six-year
“trailing” (or “run off”) basis, directors’ and officers’
liability insurance coverage for the benefit of the Indemnified Managers with respect to
their acts or omissions occurring prior to the Effective Time, on substantially the same
terms and conditions as the existing directors’ and officers’ liability
insurance policy maintained by Company as of the date of this Agreement, in the form
disclosed by Company to Parent in writing prior to the date of this Agreement (the
“Existing Policy”), to the extent that directors’ and officers’
liability insurance coverage is commercially available. If such coverage is not
commercially available, then, from the Effective Time until the sixth anniversary of the
Effective Time, Company shall maintain in effect, for the benefit of the Indemnified
Managers with respect to their acts or omissions prior to the Effective Time, the Existing
Policy or substitute for the Existing Policy a policy of comparable coverage. The
provisions of this section 1.11 are intended to be for the benefit of, and enforceable by,
each Indemnified Manager and his or her heirs and personal representatives and,
accordingly, Company hereby confirms that it is acting as trustee on their behalf and, as
a condition to Parent’s obligations hereunder, the President and Chief Executive
Officer and the Chief Financial Officer of Company (in their capacity as officers and not
in their personal capacity and without personal liability) shall, immediately prior to the
Effective Time, provide Parent with a certificate representing and warranting that they
have made inquiries of each director and officer of Company and its Subsidiaries and are
not aware of any matter which should have been disclosed to the insurer under the Existing
Policy which was not so disclosed.
-9-
SECTION 2 –
COVENANTS OF COMPANY
| 2.1 |
Conduct
of Business and Other Matters Relating to the Offer |
(1) During the
Pre-Acquisition Period, Company will, and will cause its Subsidiaries to,
conduct its business and affairs in, and not take or fail to take any action
except in, the ordinary course of business consistent with past practice
and will use its reasonable efforts, and cause each of its Subsidiaries to
use its reasonable efforts, to:
| |
(a) |
maintain
and preserve its business organization and its rights and franchises; |
| |
(b) |
retain
the services of its employees; |
| |
(c) |
maintain
its relationships with customers, suppliers, lessees, joint venture
partners, licensees, lessors, licensors, distributors and other third
parties; and |
| |
(d) |
maintain
its operating assets in their current condition. |
(2) During the
Pre-Acquisition Period, except with the prior written consent of Parent or
as otherwise expressly contemplated by this Agreement or expressly
required by Law, Company will not, and will not permit any of its
Subsidiaries to, do or permit to occur any of the following (directly or
indirectly):
| |
(a) |
issue,
grant, sell, pledge, lease, dispose of or encumber or agree to issue,
grant, sell, pledge, lease, dispose of or encumber: |
| |
(i) |
shares
in the capital of Company or any of its Subsidiaries or any options,
warrants, conversion privileges, stock appreciation rights, phantom equity
or similar rights, arrangements or commitments based upon the book value,
income or other attribute of Company or any of its Subsidiaries or other
rights, arrangements or commitments (pre-emptive, contingent or otherwise)
obligating Company or any of its Subsidiaries to issue or sell any shares
of Company or any of its Subsidiaries or securities or obligations of any
kind convertible into or exchangeable for any shares of Company or any of
its Subsidiaries; or |
-10-
| |
(ii) |
any
assets of Company or any of its Subsidiaries, except with respect to the
sale of inventory in the usual, ordinary and regular course of business
and consistent with past practice; |
| |
(b) |
amend
or propose to amend its articles or by-laws or similar constating
documents or those of any of its Subsidiaries; |
| |
(c) |
amend,
vary or modify any phantom equity or stock appreciation plans of Company
or any of its Subsidiaries; |
| |
(d) |
split,
combine or reclassify, or (except as expressly permitted by section 1.6)
declare, set aside or pay any dividend or other distribution payable in
cash, stock, property or otherwise with respect to, any shares or any
other securities of Company or any of its Subsidiaries; |
| |
(e) |
redeem,
purchase or offer to purchase (or permit any of its Subsidiaries to
redeem, purchase or offer to purchase) any shares or other securities of
Company or any of its Subsidiaries; |
| |
(f) |
change
the stated capital of Company or any of its Subsidiaries; |
| |
(g) |
acquire
or agree to acquire (by merger, amalgamation, acquisition of securities or
assets or otherwise) any person or, except in the usual, regular and ordinary
course of business, any assets; |
| |
(h) |
incur
any capital expenditures except in accordance with Company’s capital
expenditure budget included in the Disclosure Statement; |
| |
(i) |
other
than those in the nature of capital expenditures subject to subclause (h),
make an investment (by purchase of securities, contributions of capital or
otherwise) in any person, asset or interest in any asset, other than an
investment in one or more Subsidiaries in the usual, regular and ordinary
course of business; |
| |
(j) |
enter
into any partnership, joint venture or similar agreement, arrangement or
relationship except in the usual, regular and ordinary course of business; |
| |
(k) |
enter
into, renew, amend or agree to amend, revise or terminate any Material
Contract; relinquish any material contractual rights or waive any claims
or rights of substantial value; or cancel any material indebtedness
(individually or in the aggregate); |
| |
(l) |
enter
into any interest rate, currency or commodity swaps, ▇▇▇▇▇▇ or other
similar financial instruments or enter into any call arrangement of any
sort or any forward sale for commodities; |
-11-
| |
(m) |
incur
or commit to incur any indebtedness for borrowed money or issue any debt
securities or warrants or other rights to acquire debt securities or
guarantee the obligations of any other person or make any loans or
advances or capital contributions or investments to any other person,
except: (i) between Company and any of its Subsidiaries in the usual,
regular and ordinary course of business and consistent with past practice
and (ii) the borrowing of working capital under the Existing Credit
Facilities, in the usual, regular and ordinary course of business and
consistent with past practice; |
| |
(n) |
settle
or compromise any suit, claim, action proceeding, hearing, notice of
violation, demand letter or investigation against Company or any of its
Subsidiaries (i) by any Governmental Authority; (ii) involving the
possible payment or receipt of amounts that exceed, in the aggregate,
$1,000,000; or (iii) that relates to the transactions contemplated by this
Agreement; |
| |
(o) |
pay,
discharge or satisfy any material liabilities or obligations of Company or
any of its Subsidiaries other than liabilities incurred in the usual,
ordinary and regular course of business or reserved against in the
Financial Statements; |
| |
(p) |
make
any changes to existing accounting policies, methods, practices or
principles relating to Company or any of its Subsidiaries except as
required by applicable GAAP; |
| |
(q) |
enter
into any confidentiality agreement or arrangement other than in the
ordinary course of business consistent with past practice or in accordance
with section 2.2(4); or waive the benefits of, or agree to modify in any
manner, any confidentiality, standstill or similar agreement to which it
is a party or otherwise bound; |
| |
(r) |
make
any material Tax election, settle or compromise any material Tax claim,
change any material Tax practice or otherwise take any material action in
respect of Taxes; |
| |
(s) |
enter
into any Contract with any present or former (i) officer or director
of Company or any of its Subsidiaries; (ii) Shareholder; or (iii)
affiliate or associate of any of the foregoing; |
| |
(t) |
adopt
a plan of complete or partial liquidation, dissolution, merger,
amalgamation, consolidation, restructuring, recapitalization or other
reorganization of Company or any of its Subsidiaries (other than a
Subsequent Acquisition Transaction); |
-12-
| |
(u) |
except
as set out in the Disclosure Statement, (i) increase the compensation
or fringe benefits of any of its directors, officers or employees, except
as required by contractual obligations existing as of the date of this
Agreement, (ii) except to the extent required by Law or permitted by
subclause (i) above, grant any increase in or make any material change to
any salary, bonuses, stock options, pension benefits, profit sharing,
retirement allowances, deferred compensation, incentive compensation,
deferred share units of Company, severance or termination pay or other
form of compensation or profit sharing not currently required to be paid
under existing Company Benefit Plans to any director, officer or other
employee of Company or any Subsidiary, including any increase as a result
of promotion, (iii) enter into or modify any employment, consulting,
severance, collective bargaining or similar Contract, including any
arrangement to provide post-retirement medical or life insurance benefits,
with any present or former director, officer or employee of Company or any
Subsidiary; (iv) except to the extent required by Law, establish,
adopt, enter into or amend or terminate, or take any action to accelerate
any rights or benefits under, or make any material determination not in
the ordinary course of business consistent with past practice under, any
collective bargaining agreement, employee benefit arrangement or other
contract, agreement, arrangement or commitment that would have been a
Company Benefit Plan if it was in effect as of the date of this Agreement;
or (v) make any loan to any consultants, directors, officers or employees
of Company or any of its Subsidiaries other than pursuant to agreements in
effect (without amendment) on the date hereof and provided to Parent in
the Available Information; and |
| |
(v) |
take,
agree to take, authorize, propose, or enter into or modify any Contract to
do any of the matters prohibited by this section 2.1(2), any action that
would cause any representation or warranty made by Company in this
Agreement to become untrue or incorrect in any material respect or any
action that would result in any of the conditions set forth in Schedule
B-1 or Schedule B-2 not being satisfied. |
(3) During the
Pre-Acquisition Period, Company will use reasonable efforts to cause the
current insurance or reinsurance policies (including retrocessional
agreements) of Company and any of its Subsidiaries not to be cancelled or
terminated or any of the coverage thereunder to lapse unless,
simultaneously with such termination, cancellation or lapse, replacement
policies underwritten by insurance and reinsurance companies of nationally
recognized standing providing coverage equal to or greater than the
coverage under the cancelled, terminated or lapsed policies for
substantially similar premiums are in full force and effect, to the extent
such replacement policies are available on those terms.
(4) During the
Pre-Acquisition Period, Company will:
| |
(a) |
not
take, or permit any of its Subsidiaries to take, any action that would be,
or would reasonably be expected to be, inconsistent with the successful
completion of the Offer or any of the other of the transactions
contemplated under this Agreement or would render, or would reasonably be
expected to render, any representation or warranty made by Company in this
Agreement untrue or incorrect in any material respect; |
-13-
| |
(b) |
use
its reasonable efforts to enable the conditions to the Offer set out in
Schedule B-2 to be satisfied; |
| |
(c) |
cause
such of its officers and personnel as may be identified by Parent to
confer with Parent from time to time as reasonably requested by Parent
with respect to operational matters; |
| |
(d) |
promptly
notify Parent orally and in writing upon becoming aware of (i) any change
which has a Material Adverse Effect; (ii) any occurrence or
non-occurrence of any event whose occurrence or non-occurrence is likely
to cause (A) any representation or warranty of Company contained in
this Agreement to be untrue or inaccurate in any material respect at any
time from the date of this Agreement to the Effective Date, (B) any
condition set forth in Schedule B-2 to be unsatisfied at any time from the
date of this Agreement to the date on which Offeror takes up and purchases
Shares pursuant to the Offer or (C) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied
in all material respects; (iii) any failure by Company to comply in
all material respects with any of its covenants or agreements contained in
this Agreement; and (iv) any notice or other communication from any third
party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement;
provided, however, that the delivery of any notice pursuant to this section 2.1(4)(d)
shall not limit or otherwise affect the remedies available to Parent
hereunder; |
| |
(e) |
not
settle or compromise any claim brought by any present, former or purported
holder of any securities of Company in connection with the transactions
contemplated by this Agreement without the prior written consent of
Parent; and |
| |
(f) |
preserve
intact the data room to which Company provided access to Parent. |
(1) Subject to the
remainder of this section 2.2, during the Pre-Acquisition Period, Company
will not, and will cause its Representatives, its Subsidiaries or other
affiliates or any of their respective Representatives not to, do or permit
to occur any of the following (directly or indirectly):
| |
(a) |
solicit,
initiate, encourage or facilitate the making of any inquiries or proposals
regarding any Acquisition Proposal; |
| |
(b) |
encourage
or participate in any discussions or negotiations regarding any
Acquisition Proposal; |
| |
(c) |
agree
to, approve or recommend any Acquisition Proposal; |
-14-
| |
(d) |
withdraw
or modify, or publicly propose to withdraw or modify, in a manner adverse
to Parent or the Offeror the approval and recommendation by the Board of
Directors of the Offer or this Agreement, or |
| |
(e) |
enter
into any agreement, letter of intent or similar document contemplating or
otherwise related to any Acquisition Proposal. |
(2) Company will, and
will cause its Representatives, its Subsidiaries and other affiliates and
their respective Representatives to, immediately cease and cause to be
terminated any existing discussions or negotiations with any persons
(other than Parent and the Offeror) with respect to any Acquisition
Proposal. Subject to section 2.2(4) below, Company will immediately close
to persons other than Parent any data rooms that may be open. Company will
not release any person from any confidentiality, standstill or similar
agreement to which Company and such person are party, except as permitted
by this section 2.2. Company shall immediately request the return or
destruction of all information provided to any person (other than Parent)
that has entered into a confidentiality agreement with Company relating to
any Acquisition Proposal and will use its reasonable efforts to ensure
that such requests are honoured.
(3) Company will
immediately notify Parent of any Acquisition Proposal, any bona fide
inquiry, proposal, discussions or negotiation with respect to any
Acquisition Proposal, or any request for non-public information relating
to Company or any of its Subsidiaries or for access to the properties,
books or records of Company or any Subsidiary by any person in
circumstances where it knows, or ought reasonably to know, that such
information will be used by the recipient in connection with, or in order
to propose, make or evaluate the making of, an Acquisition Proposal; such
notice will include the material terms and conditions of such Acquisition
Proposal, inquiry, proposal, discussion, negotiation or request. Such
notice to Parent shall be made orally and in writing and shall indicate
such details of the proposal, inquiry or contact as Parent may reasonably
request, including the identity of the person making such proposal,
inquiry or contact and the terms and conditions of such Acquisition
Proposal, inquiry, proposal, discussion, negotiation or request. Company
shall keep Parent informed of the status and general progress (including
amendments or proposed amendments) of any such request or Acquisition
Proposal and keep Parent fully informed as to the details of any
information requested of or provided by Company and as to the details of
all discussions or negotiations.
(4) Company will not
make available, after the date hereof, any information to any person
(other than Parent and the Offeror) in connection with any potential or
actual Acquisition Proposal. Notwithstanding the foregoing sentence, if
the Board of Directors receives a request for non-public information from
a person who proposes to Company an unsolicited bona fide Acquisition
Proposal after the date of this Agreement and the Board of Directors
determines in good faith that such proposal, if consummated in accordance
with its terms, is reasonably likely to constitute a Superior Proposal and
that the provision of such non-public information to such person is
required for the Board of Directors to comply with its fiduciary duties
under applicable Law and if, prior to providing such person with access to
such non-public information, Company provides Parent with written notice
of the identity of such person and of Company’s intention to provide
such party with access to information, then, and only in such case,
Company may, subject to the execution by such person of a confidentiality
agreement substantially similar to the Confidentiality Agreement, provide
such person with access to such non-public information regarding Company.
Company shall send a copy of any such confidentiality agreement to Parent
as soon as is practicable upon its execution. Further, Company shall
provide to Parent any information provided to a third party after the date
hereof for the purpose of assisting that third party in making an offer or
proposal to Shareholders which has not been previously made available to
Parent.
-15-
(5) Company will not
approve, recommend or enter into any agreement regarding a Superior
Proposal (the “ProposedAgreement”) except in
accordance with the following: notwithstanding any other provision of this
section 2.2, Company may approve or recommend, or enter into a Proposed
Agreement if (A) none of Company, its Representatives, any of its
Subsidiaries or other affiliates or any of their respective
Representatives has violated any of the provisions of this section 2.2,
(B) Company provides Parent with written notice at least five days
prior to any meeting of the Board of Directors at which the Board of
Directors will consider approval of the underlying Acquisition Proposal
together with a complete copy of the Proposed Agreement, and during such
five-day period, Company causes its financial and legal advisors to
negotiate in good faith with Parent in an effort to make such adjustments
in the terms and conditions of this Agreement or the Offer as would enable
Company to proceed with the transactions contemplated hereby on such
adjusted terms, (C) notwithstanding such negotiations and adjustments
pursuant to clause (B) above, the Board of Directors makes the
determination necessary for the underlying Acquisition Proposal to
constitute a Superior Proposal or Parent fails to effectuate adjustments
in the terms and conditions of this Agreement or the Offer in a binding
manner within the required time such that an Acquisition Proposal remains
a Superior Proposal, as determined by the Board of Directors, (D) such
approval, recommendation or entry into the Proposed Agreement is required
for the Board of Directors to comply with its fiduciary duties under
applicable Law, (E) Company does not approve or recommend or enter
into the Proposed Agreement at any time prior to the lapse of the five-day
period described in subclause (B) above and the Board of Directors
thereafter determines that the underlying Acquisition Proposal constitutes
a Superior Proposal, and (F) not later than the earlier of the approval or
recommendation of any such Superior Proposal or the execution and delivery
of any such Proposed Agreement, Company makes the payments, if any,
required to be made to Parent pursuant to section 3.1. Without limitation,
if Parent agrees to amend this Agreement or the Offer as provided above
and within the time frame provided above, such that the Proposed Agreement
no longer constitutes a Superior Proposal, Company will not enter into the
Proposed Agreement.
(6) Company will
ensure that its Representatives, its Subsidiaries and other affiliates and
their respective Representatives are aware of the provisions of this
section 2.2, and Company will be responsible for any breach of this section
2.2 by such persons.
-16-
| 2.3 |
Access
to Information |
Subject
to the Confidentiality Agreement and upon reasonable notice, Company will (and will cause
each of its Subsidiaries to) afford Parent’s Representatives access, at all
reasonable times during the Pre-Acquisition Period, to its properties, books, contracts
and records as well as to its management personnel, employees and agents or advisors and,
during such period, Company will (and will cause each of its Subsidiaries to) furnish
promptly to Parent all information concerning its business, properties and personnel as
Parent may reasonably request and Parent will hold in confidence all such information on
the terms and subject to the conditions contained in the Confidentiality Agreement. Such
access may include access to perform reasonable environmental site assessments and
environmental sampling activities. However, such access shall not affect the
representations and warranties made by Company in this Agreement. Prior to their filing,
Company shall furnish as promptly as practicable to Parent a draft of each form, report,
schedule, proxy statement, circular, statement, prospectus and other document (including
all exhibits thereto) in the form to be filed by it or its Subsidiaries pursuant to the
requirements of applicable Laws, including applicable securities Laws, the CBCA or stock
exchange requirements. Company shall cause the officers and employees of Company and its
Subsidiaries, in a manner consistent with the fulfillment of their ongoing duties and
obligations, to furnish such additional financial and operating data and other information
and respond to such inquiries as Parent from time to time reasonably requests.
Prior
to the Expiry Time, Company will prepare the annual consolidated financial statements of
Company for the year ended December 31, 2005 and related MD&A and file them with the
Ontario Securities Commission such that the financial statements:
(1) comply
as to form in all material respects with the published rules, regulations,
policies and notices of the Canadian securities regulatory authorities
applicable thereto;
(2) are prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered (except as may be indicated in the notes to such financial statements);
(3) fairly present the
consolidated financial position of Company and its Subsidiaries as of the
respective dates thereof and the consolidated results of operations and cash
flows of Company and its Subsidiaries for the periods covered thereby; and
(4) reflect adequate
provision for liabilities of Company and its Subsidiaries on a consolidated
basis in accordance with GAAP.
| 2.5 |
Structure
of Transaction |
Company
will cooperate with Parent in structuring the acquisition by the Offeror of Company in a
tax efficient manner, provided that such structuring will not be effective until
immediately before the Offeror first takes up any Shares under the Offer and will not have
a Material Adverse Effect, delay satisfaction of the conditions of the Offer (other than
those relating to Company’s performance of its obligations under this Agreement) or
impede or hinder the Offer.
-17-
SECTION 3 –
COMPENSATION FEE
(1) Company
shall pay to Parent a fee in the amount of $12,000,000 (the “Termination
Fee”), in immediately available funds to an account
designated by Parent, if but only if the conditions set out in paragraph
(a) or (b) below are satisfied:
| |
(a) |
where,
at any time during the Pre-Acquisition Period: |
| |
(i) |
Company
enters into any agreement (other than a confidentiality agreement
entered into as contemplated by section 2.2(4)) in connection with,
or consummates, any Acquisition Proposal; and |
| |
(ii) |
Company
is released from its obligations under this Agreement (except for its
obligations under section 3.1(1) and section 3.1(2)) and the Sellers
are released from their obligations under the Deposit Agreement; |
| |
(i) |
a
Higher Proposal is consummated at any time on or before the date that is nine
months after the Expiry Time; or |
| |
(ii) |
Company
enters into any agreement (other than a confidentiality agreement in
accordance with section 2.2(4)) in connection with any Higher
Proposal at any time on or before the date that is six months after
the Expiry Time and such Acquisition Proposal (as originally existing
or as amended) is consummated at any time |
| |
but,
for purposes of this paragraph (b) the Termination Fee shall be payable only if: |
| |
(x) |
Company
terminated this Agreement in accordance with section 5.1(1)(b)(i) or
section 5.1(1)(b)(ii); or |
| |
(y) |
Parent
terminated this Agreement in accordance with section 5.1(1)(c)(ii) or
section 5.1(1)(c)(iii), where Parent’s termination was as a
result of action by the Board of Directors to withdraw, or modify or
amend in a manner adverse to Parent or the Offeror, its approval of
the Agreement or recommendation of the Offer. |
| |
“Higher
Proposal” means an Acquisition Proposal that results in a transaction that is
financially superior for Shareholders than the Offer. |
(2) Company shall pay
any Termination Fee:
-18-
| |
(a) |
payable
pursuant to section 3.1(1)(a), within one business day after the later of
the date Company has entered into the agreement or consummated the
Acquisition Proposal referred to in section 3.1(1)(a)(i) and the date the
releases of obligations required by section 3.1(1)(a)(ii) have become
effective; and |
| |
(b) |
payable
pursuant to section 3.1(1)(b), within one business day after consummation
of the Higher Proposal referred to in section 3.1(1)(b)(i) or (ii), as the
case may be, and only if the conditions in 3.1(1)(b)(x) or (y) are
satisfied. |
(3) Company shall pay
to Parent, within three business days after Parent submits an invoice
therefor, an amount equal to all verifiable out-of-pocket expenses
incurred by Parent and/or the Offeror in connection with this Agreement
and the Deposit Agreement and the transactions contemplated under this
Agreement and the Deposit Agreement to a maximum of US $5,000,000 (the
“Expense Amount”), in immediately available funds to an
account designated by Parent, if Parent terminates this Agreement by
reason of the failure of the condition in paragraph (d) or paragraph (e)
of Schedule B-1 of this Agreement or the condition in paragraph (e) or
paragraph (f) of Schedule B-2 of this Agreement to be satisfied.
Notwithstanding the foregoing, if Company is required to pay the
Termination Fee, then Company will not be required to pay the Expense
Amount.
(4) Company
acknowledges that the amounts payable under this section 3.1 in respect of
a Fee Event represent liquidated damages which are a genuine pre-estimate of
damages, including opportunity costs, which the Parent will suffer or
incur as a result of the Fee Event and are not a penalty. Company
irrevocably waives any right it may have to raise as a defence that any
such liquidated damages are excessive or punitive. For greater certainty,
the parties agree that the compensation or damages to be received pursuant
to this section 3.1 is the sole remedy in compensation or damages of
Parent and the Offeror in those circumstances in which the compensation or
damages are payable; provided, however, that nothing contained in this
section 3.1 shall relieve or have the effect of relieving Company in any
way from liability for damages incurred or suffered by Parent or the
Offeror as a result of an intentional or wilful breach of this Agreement,
including the intentional or wilful making of a misrepresentation in this
Agreement (including the Schedules). Nothing herein shall preclude
Parent or the Offeror from seeking injunctive relief to restrain any
breach or threatened breach of the covenants or agreements of Company set
forth in this Agreement or otherwise to obtain specific performance of any
such covenant or agreements, without the necessity of posting bond or
security in connection therewith.
SECTION 4 –
REPRESENTATIONS AND WARRANTIES
| 4.1 |
Representations
and Warranties of Company |
Company
represents and warrants to Parent and the Offeror as set out in Schedule D-1 to this
Agreement and acknowledges that Parent and the Offeror are relying upon such
representations and warranties in connection with the entering into of this Agreement and
the making of the Offer.
-19-
| 4.2 |
Representations
and Warranties of Parent |
Parent
represents and warrants to Company as set out in Schedule D-2 to this Agreement and
acknowledges that Company is relying upon such representations and warranties in
connection with the entering into of this Agreement.
SECTION 5 –
TERMINATION AND AMENDMENT
(1) This
Agreement may be terminated at any time prior to the Effective Time:
| |
(a) |
by
mutual written consent of Parent and Company, by action of their respective
boards of directors; |
| |
(i) |
the
Offeror has not mailed the Offer Documents on or before the Outside Mailing
Date in accordance with section 1.1(2)(d); or |
| |
(ii) |
the
Offeror has not taken up Shares deposited under the Offer immediately
following the Expiry Time and has not paid for Shares taken up under
the Offer within one business day following the Expiry Time; provided
that, if the take up and payment by the Offeror for Shares deposited
under the Offer is delayed by the failure to satisfy the condition
set out in paragraph (b) of Schedule B-2, as a result of any decree
or order, or paragraph (c) of Schedule B-2, then this Agreement shall
not be terminated by Company pursuant to this section 5.1(1)(b)(ii)
until the earlier of: (A) 60days after the Expiry Time and (B)
the third business day following the date on which such condition is
satisfied; |
| |
and
provided that Company may not terminate this Agreement on the basis of the foregoing if
the event giving rise to the termination right shall have been caused by Company’s
failure to perform any of its obligations under this Agreement or the breach of any
representation or warranty made by Company in this Agreement; or |
| |
(i) |
the
Deposit Agreement is terminated in accordance with its terms; |
| |
(ii) |
the
conditions to making the Offer as set out in Schedule B-1 are not satisfied
or waived by Parent on or before the Outside Mailing Date; |
| |
(iii) |
the
conditions of the Offer as set out in Schedule B-2 are not satisfied or
waived by the Offeror at or before the Expiry Time; or |
-20-
| |
(iv) |
a
Fee Event has occurred under section 3.1; |
| |
and
provided that Parent may not terminate this Agreement on the basis of the foregoing if the
event giving rise to the termination right shall have been caused by Parent’s failure
to perform any of its obligations under this Agreement or the breach of any representation
or warranty made by Parent in this Agreement. |
(2) If this Agreement
is terminated as provided in this section 5.1, this Agreement shall
forthwith become void and there shall be no liability on the part of
Parent or Company, except as set forth in section 3.1, and Parent may
cause the Offeror to terminate or withdraw the Offer without any liability
or further obligation. Nothing contained in this section 5.1 shall:
| |
(a) |
relieve
any party from liability for the breach of any provision of this Agreement
prior to the termination hereof and from any obligation to pay the fees
set forth in section 3.1; or |
| |
(b) |
except
as provided in section 3.1(4), prejudice the rights of a party as a result
of breach by the other party of its obligations under this Agreement
(including any breach of the representations and warranties contained in
this Agreement) or impair the right of any party to compel specific
performance by any other party of its obligations to consummate the
transactions contemplated hereby. |
This
Agreement may only be amended by written agreement of the parties.
SECTION 6 –
GENERAL
So
long as this Agreement is in effect, Parent and Company shall consult with each other
before issuing, and provide each other with a reasonable opportunity to review and comment
upon, any press release or other public announcement with respect to the Offer or a
Subsequent Acquisition Transaction (including a press release announcing the entering into
of this Agreement) and shall not issue, or permit their respective affiliates or their
Representatives to issue, any such press release or public announcement prior to such
consultation, except as such release or announcement may, in the judgment of the releasing
party, be required by the Laws of the United States or Canada or any state or province
thereof or the rules or regulations of the Toronto Stock Exchange or the New York Stock
Exchange, in which case the party required to make the release or announcement shall allow
the other party reasonable time to comment on such release or announcement in advance of
such issuance.
This
Agreement is not assignable by any party.
-21-
This Agreement
is binding upon and will enure to the benefit of and be enforceable by the parties and
their respective successors. No third party other than Offeror will have any rights under
this Agreement except as set out in section 1.11 in respect of the Indemnified Managers.
Except
as provided in section 3.1, each party will pay its own expenses incurred in connection
with this Agreement and the completion of the transactions contemplated under this
Agreement.
Time
is of the essence of this Agreement in each and every matter or thing herein provided.
Any
written notice or other communications required or permitted to be given hereunder will be
sufficiently given if delivered in person or if sent by fax, email or other electronic
means (provided such transmission is recorded as being transmitted successfully and sender
shall bear the burden of proof of delivery):
| |
(a) |
in
the case of Parent as follows: |
| |
▇.
▇. ▇▇▇▇▇ Corporation
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇
▇▇▇▇▇-▇▇▇▇ |
| |
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇ |
| |
with
a copy (which shall not constitute notice to Parent) to: |
| |
▇▇▇▇▇
& ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇ |
| |
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Quick
Email: ▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇ |
-▇▇-
| |
▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Tower
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇ |
| |
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Email:
▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇ |
| |
(b) |
in
the case of Company, as follows: |
| |
GSW
Inc.
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇ |
| |
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Email: ▇▇▇▇▇@▇▇▇.▇▇ |
| |
with
a copy (which shall not constitute notice to Company) to: |
|
Torys LLP |
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ |
|
▇▇▇▇▇ ▇▇▇▇ |
▇▇▇▇▇ ▇▇▇▇ |
|
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ West |
Royal Bank Plaza |
|
TD Centre |
South Tower |
|
Toronto, ON |
Toronto, ON |
|
M5K 1N2 |
▇▇▇ ▇▇▇ |
|
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇ |
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇ |
|
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ |
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ |
|
Email: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇ |
Email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ |
or at such other address as the party
to which such notice or other communication is to be given has last notified the other
party giving same in the manner provided by this section 6.6 and, if so given, the same
shall be deemed to have been received on the date of such delivery or sending thereof if
sent or delivered during normal business hours on a business day at the place of receipt
and, otherwise, on the next following business day (provided that if sent by fax such
transmission is recorded as being transmitted successfully).
-23-
This
Agreement will be governed by and construed in accordance with the laws of the Province of
Ontario and the federal laws of Canada applicable therein. The parties hereby irrevocably
attorn to the jurisdiction of the courts of the Province of Ontario in respect of all
matters arising under or in relation to this Agreement.
The
parties agree that the remedy at law for any breach of the provisions of this Agreement
will be inadequate and any party not in breach of the provisions of this Agreement, on any
application to a court, will be entitled to temporary and permanent injunctive relief,
specific performance and any other equitable relief against the party in breach of the
provisions of this Agreement. The specific remedies contemplated in this section 6.8 are
in addition to and without prejudice to any other remedy to which the party may be
entitled under this Agreement, at law or in equity.
Except
as may be expressly indicated otherwise, all sums of money referred to in this Agreement
and the Schedules hereto are expressed and will be payable in Canadian dollars.
All
accounting terms used in this Agreement shall have the meanings given to them under GAAP
(applied on a consistent basis throughout the periods involved) and all determinations of
an accounting nature required to be made in respect of Company will be made in a manner
consistent with GAAP.
Where
a statement is made “to the knowledge of” a party or refers to information
“known to” a party, it is based on information available to the senior officers
of that party having involvement in its day-to-day operations after due inquiry and
investigation.
This
Agreement and the documents referred to herein constitute the entire obligation of the
parties with respect to the subject matter hereof and will supersede any prior expression
of intent or understandings with respect to the subject matter hereof and the transactions
contemplated hereby other than the Confidentiality Agreement.
Each
party will, from time to time, and at all times hereafter, at the request of the other
party hereto, but without further consideration, do all such further acts and execute and
deliver all such further documents and instruments as will be reasonably required to fully
perform and carry out the terms and intent hereof.
-24-
| 6.14 |
Defence
of Proceedings |
The
parties shall vigorously defend (or shall cause to be vigorously defended) any legal
proceedings brought against it or any of its Subsidiaries or their respective directors,
officers or shareholders challenging this Agreement or the completion of the Offer or any
other transaction contemplated under this Agreement. Company shall not settle or
compromise (or permit any of its Subsidiaries to compromise or settle) any legal
proceedings brought in connection with this Agreement, the Offer or any other transaction
contemplated under this Agreement without the prior written consent of Parent, which
consent shall not be unreasonably withheld.
| 6.15 |
Waiver
and Modifications |
Any
party may waive or consent to the modification of any of the obligations herein contained
for its benefit. Any such waiver or consent to the modification of any of the provisions
of this Agreement, to be effective, must be in writing and executed by the party or
parties granting such waiver or consent.
The
following are the schedules to this Agreement:
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Schedule
A - Definitions
Schedule B-1 - Conditions to Making
the Offer
Schedule B-2 - Conditions of the Offer
Schedule C
- Holdco Share Purchase Agreement
Schedule D-1 -
Representations and Warranties of Company
Schedule D-2 -
Representations and Warranties of Parent |
Any provision
of this Agreement which is prohibited or unenforceable in any jurisdiction will not
invalidate the remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction, and any such provision, to the extent invalid or unenforceable, will
be replaced by a valid and enforceable provision which comes closest to the intention of
the parties underlying such invalid or unenforceable provision.
In
this Agreement:
-25-
| |
(a) |
words
denoting the singular include the plural and vice versa, and words
denoting any gender include all genders; |
| |
(b) |
the
word “including” means “including without limitation”; |
| |
(c) |
any
reference to any statute will mean the statute in force, as amended from
time to time, and any regulation in force thereunder, unless otherwise
expressly provided; |
| |
(d) |
the
use of headings is for convenience of reference only and will not affect the
construction of this Agreement; |
| |
(e) |
when
calculating the period of time within which or following which any act is
to be done or step taken, the date which is the reference day in
calculating such period will be excluded; and |
| |
(f) |
any
tender of documents or money under this Agreement may be made upon the
parties or their respective counsel. |
This
Agreement may be signed in any number of counterparts (by facsimile or otherwise), each of
which will be deemed to be original and all of which, when taken together, will be deemed
to constitute one and the same instrument. It will not be necessary in making proof of
this Agreement to produce more than one counterpart.
-26-
The parties have executed this
Agreement.
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▇. ▇. ▇▇▇▇▇ CORPORATION |
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By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ |
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇ |
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Title: Chairman & Chief Executive Officer |
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GSW INC. |
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By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ |
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇ |
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Title: President & CEO |
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By: /s/ ▇▇▇▇▇ ▇▇▇▇ |
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Name: ▇▇▇▇▇ ▇▇▇▇ |
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Title: VP, Finance & CFO |
Schedule A –
Definitions
Acquisition Proposal
means any proposal or offer from any person other than Parent or Offeror (in each
case, whether or not in writing and whether or not delivered to the Shareholders
generally) relating to (a) any direct or indirect acquisition or purchase of a
substantial amount of assets of Company or any Subsidiary or of over ten percent of any
class of the share capital, voting securities or other equity interests of Company or any
Subsidiary, (b) any take-over bid, tender offer, exchange offer or similar
transaction that, if consummated, would result in any person other than Parent or Offeror
owning or controlling ten percent or more of any class of the share capital, voting
securities or other equity interests of Company or any Subsidiary, (c) any merger,
amalgamation, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Company or any Subsidiary or (d) any
other transaction the consummation of which would reasonably be expected to impede,
interfere with, prevent or materially delay the Offer or the Subsequent Acquisition
Transaction.
affiliate means,
with respect to a specified person, any person that controls, is controlled by or is under
common control with such specified person. For this purpose, the term
“control” (including the terms “controlled
by” and “under common control with”)
shall mean the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person, whether through the ownership of
securities, by contract or by any other means.
Agreement means
this pre-acquisition agreement between Parent and Company, including the recitals and
schedules hereto, as amended, supplemented or restated from time to time.
associate has the
meaning given to such term in the Securities Act (Ontario).
beneficial
ownership has the meaning given to such term in the Securities Act
(Ontario).
Board of
Directors means the board of directors of Company.
business day means a
day (other than a Saturday or a Sunday) on which banks are open for business in Toronto,
Ontario.
CBCA means the
Canada Business Corporations Act.
Class A Common
Shares means the Class A common shares in the capital of Company.
Class B Subordinate Voting
Shares means the Class B subordinate voting shares in the capital of
Company.
Code means the
United States federal Internal Revenue Code of 1986, as amended.
Company means GSW Inc.
Company Benefit Plans
means all “employee benefit plans” (within the meaning of section 3(3) of
ERISA) and all equity-based, severance, employment, change in control, collective
bargaining, bonus, incentive, deferred compensation, supplemental retirement and all other
employee benefit plans, arrangements, agreements, programs, policies, practices or
undertakings, whether oral or written, formal or informal, funded or unfunded, registered
or unregistered, whether or not subject to ERISA, under which:
A-1
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(a) |
any
employees or former employees (or any spouses, dependants, survivors or
beneficiaries of any such employees or former employees), directors or
officers, individuals working on contract with Company or any of its
Subsidiaries or other individuals providing services to it of a kind
normally provided by employees or eligible dependants of any of the
foregoing persons has any present or contingent right to benefits which
are contributed to, sponsored by or maintained by Company or any of its
Subsidiaries; or |
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(b) |
Company
or any of its Subsidiaries has any present or contingent liability. |
Company Documents means
Company’s:
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(a) |
annual
information form prepared as of February 23, 2005 in respect of the year ended
December 31, 2004; |
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(b) |
management
information circular dated March 22, 2005; and |
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(c) |
the
Financial Statements and related management’s discussion and analysis. |
Company IP means:
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(a) |
all
domestic, foreign, registered and pending applications for patents,
trademarks, service marks, copyrights, trade names, domain names and all
material licences running to or from Company or any of its Subsidiaries
relating to its or any Subsidiary’s business or owned by Company or
any of its Subsidiaries; |
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(b) |
all
material common law trademarks, service marks, copyrights and copyrightable
works (including databases, software and Internet site content), trade
names, websites, URLs, brand names and logos; and |
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(c) |
all
trade secrets, inventions, formulae, data, improvements, know-how,
confidential information, material computer programs (including any source
code and object code) documentation, engineering and technical drawings,
processes, methodologies, trade dress, and all other proprietary
technology utilized in or incidental to the businesses of Company and its
Subsidiaries and all common law rights relating to the foregoing. |
Company Reports
means each prospectus, management information circular, annual information form, material
change report and the annual and interim consolidated financial statements and related
management’s discussion and analysis of Company filed with the Ontario Securities
Commission.
A-2
Compulsory Acquisition
means the acquisition of Shares not deposited under the Offer pursuant to section 206
of the CBCA.
Confidentiality
Agreement means the confidentiality agreement between Parent and Company
dated May 10, 2005, as amended, supplemented or restated from time to time.
Contract means a
contract, lease, instrument, note, bond, debenture, mortgage, agreement, arrangement or
understanding, written or oral, to which Company, or any of its Subsidiaries, is a party
or under which Company or any of its Subsidiaries is bound, has unfulfilled obligations or
contingent liabilities or is owed unfulfilled obligations, whether known or unknown, and
whether asserted or not.
Deposit
Agreement means the Deposit Agreement dated the same date as this Agreement
between Parent and the Sellers, including the recitals and schedules thereto, as amended,
supplemented or restated from time to time.
Directors
Circular means the directors circular of the Board of Directors to be
prepared and delivered to Shareholders in respect of the Offer as required by applicable
securities Laws.
Disclosure Statement means
the disclosure statement provided by Company to Parent prior to the execution of this
Agreement and signed by Company and Parent. [This Disclosure Statement has been omitted from this filing
in accordance with Regulation S-K Item 601(b)(2)(17 C.F.R. §229.601(b)(2)). ▇.▇.
▇▇▇▇▇ Corporation agrees to furnish supplementally a copy of this statement to the
Securities and Exchange Commission upon its request.]
Effective Time
means the time at which the Offeror first takes up and pays for Shares under the Offer and
the directors of Company have resigned as contemplated under section 1.10(a) such that the
Board of Directors may immediately be duly and validly reconstituted in accordance
with applicable corporate Law requirements and the by-laws of Company through the
appointment of the Offeror’s nominees in their stead.
Encumbrance means any
security interest, pledge, mortgage, option, lien (including environmental or tax liens),
assessment, lease, charge, encumbrance, adverse claim, preferential arrangement,
condition, equitable interest, right of first refusal or restriction of any kind,
including any (a) shareholders’ agreement, voting trust, proxy, power of attorney or
similar instrument affecting the shares of Company or any Subsidiary and (b) restriction
affecting the ability of any holder of the shares of Company or any Subsidiary to exercise
all ownership rights thereto.
Environmental Laws
means all applicable Laws relating to the environment, natural resources or employee
health or safety, including any such Laws and applicable and enforceable guidelines,
policies and codes published by a Governmental Authority relating to Hazardous Substances,
including the storage, generation, use, handling, control, manufacture, processing,
labelling, deposit, disposal, transport, remediation, discharge or release of Hazardous
Substances.
ERISA means the U.S.
federal Employee Retirement Income Security Act of 1974, as amended.
A-3
Existing Credit Facilities
means the credit facilities described in note 7 of the notes to the consolidated
financial statements of Company for the year ended December 31, 2004.
Existing Policy
has the meaning given to such term in section 1.11.
Expiry Time
means the expiry time of the Offer as contemplated under section 1.1(2)(a)(i) as extended
from time to time in accordance with the terms of this Agreement.
Fee Event means
any event or circumstance in which Company becomes obligated to pay the Termination Fee or
the Expense Amount to Parent pursuant to section 3.1.
Financial Statements
has the meaning given to such term in paragraph 11 of Schedule D-1.
GAAP means Canadian
generally accepted accounting principles as set forth in the Handbook of the Canadian
Institute of Chartered Accountants, as amended from time to time.
Governmental
Authority means any domestic or foreign government, including any federal,
provincial, state, territorial or municipal government, and any government agency,
tribunal, commission or other authority exercising or purporting to exercise executive,
legislative, judicial, regulatory or administrative functions of, or pertaining to,
government.
Hazardous
Substance means any hazardous, dangerous or toxic substance, including
petroleum (including crude oil or any fraction thereof), petroleum products, asbestos and
asbestos-containing materials, polychlorinated biphenyls, radon, toxic mould,
urea-formaldehyde solvent, chemical and any other material, substance or thing that is
regulated pursuant to any Environmental Law or that could result in liability under any
Environmental Law and shall include any contaminant, pollutant, waste, hazardous waste,
special waste or dangerous goods as defined under Environmental Laws.
Higher Proposal has the
meaning given to such term in section 3.1(1).
Holdco, Holdco Election
and Holdco Shareholders have the meanings given to
such terms in section 1.2.
Indemnified
Managers has the meaning given to such term in section 1.11.
Laws, in respect
of any person, property, transaction or event, means all present and future laws,
statutes, regulations, treaties, judgments and decrees applicable to that person,
property, transaction or event and, whether or not having the force of law, all applicable
requirements, requests, official directives, rules, consents, approvals, authorizations,
guidelines, orders and policies of any Governmental Authority having or purporting to have
authority over that person, property, transaction or event.
Material Contracts has
the meaning given to such term in paragraph 16 of Schedule D-1.
A-4
Material Adverse Effect
or Materially Adverse means, with respect to Company, a fact,
circumstance, change, effect, occurrence, event or term that does or could reasonably be
expected to:
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(a) |
materially
and adversely affect the financial condition, operations, results of
operations, business, assets, liabilities or capital of Company and its
Subsidiaries, taken as a whole; or |
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(b) |
prevent
Company from performing its obligations under this Agreement; |
provided, however, that a
“Material Adverse Effect” or “Materially Adverse” shall not be deemed
to mean or include any such fact, circumstance, change, effect, occurrence, event or term
to the extent arising as a result of:
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(i) |
changes
in general economic or political conditions or the securities markets,
including changes in international financial or currency exchange markets,
except, in each case, to the extent those changes disproportionately
impact (relative to similarly situated businesses) the financial
condition, operations, results of operations, business, assets,
liabilities or capital of Company and its Subsidiaries, taken as a whole; |
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(ii) |
changes
affecting generally the industries in which Company or any of its
Subsidiaries conducts business, except, in each case, to the extent those
changes disproportionately impact (relative to similarly situated
businesses) the financial condition, operations, results of operations,
business, assets, liabilities or capital of Company and its Subsidiaries,
taken as a whole; |
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(iii) |
the
announcements of the transactions contemplated by this Agreement or other
communication by Parent of its plans or intentions with respect to any of
the businesses of Company or any of its Subsidiaries; |
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(iv) |
the
consummation of the transactions contemplated by this Agreement or any
actions by Parent taken pursuant to this Agreement; |
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(v) |
any
change in the market price or trading volume of the shares of Company; |
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(vi) |
any
failure by Company to meet any earnings estimates of equity analysts, if
any, for any period; or |
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(vii) |
any
rights of any lender, creditor, property owner or other person in relation
to Company or any of its Subsidiaries on any happening by reason of a
change of control of any of them including by reason of the transactions
contemplated by this Agreement to the extent the existence of such rights
does not constitute a breach of a representation or warranty of Company in
this Agreement. |
A-5
Minimum Tender Condition
has the meaning given to such term in paragraph (a) of Schedule B-2 to this Agreement.
Offer means an offer to
all of the Shareholders to acquire all of the outstanding Shares on the terms and subject
to the conditions contained in this Agreement, including any amendment or extensions of
the Offer as permitted under the terms of this Agreement.
Offer Documents means
the take-over bid circular, letter of transmittal, notice of guaranteed delivery and other
documents to be prepared by the Offeror for delivery to Shareholders in respect of the
Offer as required by applicable securities Laws.
Offeror means a
direct or indirect wholly-owned subsidiary of Parent to be incorporated under the CBCA.
Outside Mailing
Date has the meaning given to such term in section 1.1(2)(d).
Parent means ▇. ▇.
▇▇▇▇▇ Corporation.
Permitted Liens means
the following types of liens:
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(a) |
liens
for current Taxes not yet due and payable or that are being contested in
good faith by appropriate proceedings and are disclosed in the Disclosure
Statement, in each case, for which adequate reserves have been established
in accordance with GAAP; |
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(b) |
statutory
or common law liens in favour of carriers, warehousemen, mechanics and
materialmen to secure claims for labour, materials or supplies, liens in
favour of landlords, lessors and other like liens arising as a result of
obligations that arose in the ordinary course of business and either are
not more than one hundred twenty days past due or are being contested in
good faith by appropriate proceedings; |
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(c) |
with
respect to any assets other than the real property, deposits or pledges to
secure the payment of workers’ compensation, unemployment insurance,
social security benefits or obligations arising under similar legislation,
or to secure the performance of public or statutory obligations, surety or
appeal bonds, and other obligations of a like nature incurred in the
ordinary course of business as to which adequate reserves have been
established; |
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(d) |
utility
easements, building restrictions and such other encumbrances or charges
against real property which are of a nature generally existing with
respect to properties of a similar character and which do not materially
affect the marketability of the same or interfere with the use thereof in
the business of such person; and |
A-6
person means and
includes any individual, sole proprietorship, partnership, joint venture, unincorporated
association, unincorporated syndicate, unincorporated organization, trust, body corporate,
a trustee, executor, administrator or other legal representative and any Governmental
Authority or any agency or instrumentality thereof.
Pre-Acquisition
Period means the period from the time of the execution and delivery of this
Agreement by the parties and the time at which the Offeror first takes up and pays for
Shares under the Offer and the directors of Company have resigned as contemplated under
section 1.10(a) such that the Board of Directors may immediately be duly and validly
reconstituted in accordance with applicable corporate Law requirements and the by-laws
of Company through the appointment of the Offeror’s nominees in their stead,
subject to the earlier termination of this Agreement in accordance with section 5.1.
Proposed
Agreement has the meaning given to that term in section 2.2(5).
Recorded Shareholders
has the meaning given to that term in section 1.6.
Reinsurance
Contracts has the meaning given to that term in paragraph 25 of Schedule
D-1.
Representatives
means a person’s officers, employees, legal counsel, accountants and other authorized
representatives and advisors.
Sellers means
Valleydene Corporation Limited and ▇▇▇▇▇▇▇▇ Group Capital Limited and
Seller means either of them.
Shareholders means
holders of Shares.
Shares means Class A
Common Shares and Class B Subordinate Voting Shares in the capital of Company.
Subsequent Acquisition
Transaction means an amalgamation, statutory arrangement or other transaction by
which the Offeror may acquire Shares not deposited pursuant to the Offer in accordance
with applicable Law.
Subsidiaries means GSW
Holdings, Inc., GSW Industries Inc., American Water Heater Holdings, Inc., American Water
Heater Company, Flame Guard Water Heaters, Inc., GSW Water Products Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇
Insurance Company Ltd. and the corporation formed pursuant to section 1.4.
subsidiary has the
meaning given to such term in the Securities Act (Ontario).
Superior
Proposal means an unsolicited bona fide Acquisition Proposal made in
writing that is submitted after the date of this Agreement and prior to the date that
Offeror takes up any Shares tendered pursuant to the Offer in respect of which a majority
of the members of the Board of Directors has concluded in good faith, after consultation
with and receipt of advice from its financial advisors and outside legal counsel and
taking into account all the terms and conditions of such proposal (including any expense
reimbursement provisions, termination fees and conditions), as follows:
A-7
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(a) |
adequate
financing arrangements have been made to effect payment under the terms of
the Acquisition Proposal; |
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(b) |
the
Acquisition Proposal is reasonably capable of being completed without
material impediment (financial, regulatory, legal proceedings or
otherwise) and is reasonably likely to be consummated; and |
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(c) |
the
Acquisition Proposal would, if consummated in accordance with its terms,
result in a transaction that is financially superior for Shareholders than
the Offer. |
Tax or Taxes
have the meanings given to such terms in paragraph 21 of Schedule D-1.
Tax Act means
the Income Tax Act (Canada).
Tax Returns includes all
returns, reports, declarations, elections, notices, filings, forms, statements and other
documents (whether in tangible, electronic or other form) and including any amendments,
schedules, attachments, supplements, appendices and exhibits thereto, made, prepared,
filed or required to be made, prepared or filed by Law in respect of Taxes.
A-8
Schedule B-1 –
Conditions to Making the Offer
| (a) |
no
event shall have occurred or circumstance shall exist which would make it
impossible or impracticable to satisfy one or more conditions of the Offer
set forth in Schedule B-2; |
| (b) |
no
event, change, effect, condition, fact or circumstance shall have occurred or
come into effect or existence after the date of this Agreement, including
any event, change, effect, condition, fact or circumstance that reflects a
change in the matters disclosed to Parent in the Available Information, in
the Company Documents or in the Financial Statements, that, individually
or in the aggregate, has a Material Adverse Effect; |
| (c) |
there
shall not have occurred, developed or come into effect or existence on or
prior to February 23, 2006 (i) any event, action, state, condition,
terrorist event, war or financial occurrence of national or international
consequence or any Law, action, inquiry or other occurrence of any nature
whatsoever which materially adversely affects, or may materially adversely
affect, the financial markets in Canada or the United States generally,
(ii) any material change in Canadian or U.S. currency exchange rates
or a suspension of, or limitation on, the markets therefor, (iii) any
declaration of a banking moratorium or any suspension of payments in
respect of banks in Canada or the United States, (iv) any material
limitation (whether or not mandatory) by any Governmental Authority on the
extension of credit by banks or other lending institutions in Canada or
the United States, or (v) in the case of any of the foregoing
existing as of the date of this Agreement, any acceleration or worsening
thereof; |
| (d) |
the
representations and warranties of Company set forth in paragraphs 2 and 3 of
Schedule D-1 of this Agreement shall be true and correct in all respects
(other than de minimis inaccuracies) as of the date of this
Agreement and on the date the Offer Documents are mailed pursuant to
section 1.1(2)(d) of this Agreement; and each of the other representations
and warranties of Company set forth in this Agreement, including Schedule
D-1 (but without regard to any materiality qualifications or references to
Material Adverse Effect contained in any representation or warranty),
shall be true and correct in all respects as of the date of this Agreement
and as of the date the Offer Documents are mailed pursuant to section
1.1(2)(d) of this Agreement, except where such failures of the
representations and warranties to be true and correct in all respects,
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect; and a certificate from two senior officers of
Company (in their capacity as officers and not in their personal capacity
and without liability) to such effect shall have been delivered to Parent
and the Offeror; |
| (e) |
Company
shall have performed in all material respects all obligations and complied
in all material respects with all covenants required by this Agreement to
be performed or complied with by it at or prior to the date the Offer
Documents are mailed pursuant to section 1.1(2)(d) of this Agreement, and
a certificate from two senior officers of Company (in their capacity as
officers and not in their personal capacity and without liability) to such
effect shall have been delivered to Parent and the Offeror; |
B-1-1
| (f) |
the
representations and warranties of the Sellers in the Deposit Agreement shall
have been, as of the date made, and be on the date the Offer Documents are
mailed pursuant to section 1.1(2)(d) of this Agreement, true and correct
(or, if not already qualified by a materiality concept, true and correct
in all material respects) and the Sellers shall have performed in all
material respects all obligations and complied in all material respects
with all covenants contained in the Deposit Agreement and a certificate
from a senior officer of each Seller to such effect shall have been
delivered by the Sellers to Parent and the Offeror; |
| (g) |
the
Board of Directors shall have prepared and approved in final form and
delivered to the Offeror the Directors Circular containing the
determination and recommendation referred to in section 1.3(1)(b) of this
Agreement, and the Board of Directors or any committee thereof shall not
have (i) withdrawn, or modified or amended in a manner adverse to Parent
or the Offeror its approval or recommendation of the Agreement or the
transactions contemplated hereby, including the Offer, (ii) approved or
recommended any Acquisition Proposal or (iii) adopted any resolution to
effect any of the foregoing; |
| (h) |
(i)
no Law shall have been enacted, promulgated or applied and (ii) no act,
action, suit or proceeding shall have been initiated or taken before or by
any domestic or foreign court or tribunal or governmental agency or other
regulatory authority or administrative agency or commission or by any
elected or appointed public official or private person (including, without
limitation, any individual, corporation, firm, group or other entity) in
Canada or elsewhere, whether or not having the force of law: |
| |
(A) |
that
could, directly or indirectly, cease trade, enjoin, prohibit, materially
delay or impose material limitations, costs, damages or conditions on the
purchase by or the sale to the Offeror of the Shares or the right of the
Offeror to own or exercise full rights of ownership of the Shares; |
| |
(B) |
that
has a Material Adverse Effect; or |
| |
(C) |
that
could prevent completion by the Offeror of a Subsequent Acquisition
Transaction on the basis of a simple majority of minority approval with
the Offeror being entitled to vote all the Shares acquired by it pursuant
to the Offer; |
| |
provided
that, in the judgment of the Offeror acting reasonably, there is a reasonable risk that
the circumstances referred to above would result in the occurrence of any of the
consequences referred to in (A), (B) or (C) and provided further that the Offeror shall
not be required to take up any pay for the Shares deposited under the Offer as a result of
any act, action, suit or proceeding taken by a private person only if such act, action,
suit or proceeding shall have been decided in favour of such private person as evidenced
by an order, ruling or decision by any domestic or foreign court or tribunal or government
agency or other regulatory authority or administrative agency or commission in Canada or
elsewhere having jurisdiction in respect of the Offeror or the Offer; |
B-1-2
| (i) |
no
cease trade order, injunction, or other prohibition at Law shall exist against
the Offeror making the Offer or taking up and paying for Shares deposited under
the Offer; and |
| (j) |
no
Fee Event shall have occurred under section 3.1 of this Agreement. |
B-1-3
Schedule B-2 –
Conditions of the Offer
| (a) |
there
shall have been validly deposited under the Offer and not withdrawn such
number of: |
| |
(i) |
Class
A Common Shares which constitute at least 66?% of the issued and
outstanding Class A Common Shares (on a fully diluted basis); and |
| |
(ii) |
Class
B Subordinate Voting Shares which constitute at least 66?% of the issued
and outstanding Class B Subordinate Voting Shares (on a fully diluted
basis); |
| |
(together,
the “Minimum Tender Condition”) |
| (b) |
there
shall not exist any prohibition at Law against the Offeror making the
Offer or taking up and paying for any Shares deposited under the Offer or
completing any Compulsory Acquisition or Subsequent Acquisition
Transaction; |
| (c) |
(i)
no Law shall have been enacted, promulgated or applied and (ii) no act,
action, suit or proceeding shall have been initiated or taken before or by
any domestic or foreign court or tribunal or governmental agency or other
regulatory authority or administrative agency or commission or by any
elected or appointed public official or private person (including, without
limitation, any individual, corporation, firm, group or other entity) in
Canada or elsewhere, whether or not having the force of law: |
| |
(A) |
that
could, directly or indirectly, cease trade, enjoin, prohibit, materially
delay or impose material limitations, costs, damages or conditions on the
purchase by or the sale to the Offeror of the Shares or the right of the
Offeror to own or exercise full rights of ownership of the Shares; |
| |
(B) |
that
has a Material Adverse Effect; or |
| |
(C) |
that
could prevent completion by the Offeror of a Subsequent Acquisition
Transaction on the basis of a simple majority of minority approval with
the Offeror being entitled to vote all the Shares acquired by it pursuant
to the Offer; |
| |
provided
that, in the judgment of the Offeror acting reasonably, there is a reasonable risk that
the circumstances referred to above would result in the occurrence of any of the
consequences referred to in (A), (B) or (C) and provided further that the Offeror shall
not be required to take up any pay for the Shares deposited under the Offer as a result of
any act, action, suit or proceeding taken by a private person only if such act, action,
suit or proceeding shall have been decided in favour of such private person as evidenced
by an order, ruling or decision by any domestic or foreign court or tribunal or government
agency or other regulatory authority or administrative agency or commission in Canada or
elsewhere having jurisdiction in respect of the Offeror or the Offer; |
B-2-1
| (d) |
no
event, change, effect, condition, fact or circumstance shall have occurred or
come into effect or existence after the date of this Agreement, including any
event, change, effect, condition, fact or circumstance that reflects a change
in the Available Information, in the Company Documents or in the Financial
Statements, that, individually or in the aggregate, has a Material Adverse
Effect; |
| (e) |
the
representations and warranties of Company set forth in paragraphs 2 and 3 of
Schedule D-1 of this Agreement shall be true and correct in all respects (other
than de minimis inaccuracies) as of the date of this Agreement and at
the time immediately prior to the Expiry Time; and each of the other
representations and warranties of Company set forth in this Agreement,
including Schedule D-1 (but without regard to any materiality qualifications or
references to Material Adverse Effect contained in any representation or
warranty), shall be true and correct in all respects as of the date of this
Agreement and at the time immediately prior to the Expiry Time, except where
such failures of the representations and warranties to be true and correct in
all respects, individually or in the aggregate, would not have a Material
Adverse Effect; and a certificate from two senior officers of Company (in their
capacity as officers and not in their personal capacity and without liability)
to such effect shall have been delivered to Parent and the Offeror; |
| (f) |
Company
shall have performed in all material respects all obligations and complied in
all material respects with all covenants required by this Agreement to be
performed or complied with by it at or prior to the Expiry Time, and a
certificate from two senior officers of Company (in their capacity as officers
and not in their personal capacity and without liability) to such effect shall
have been delivered to Parent and the Offeror; |
| (g) |
the
representations and warranties of the Sellers in the Deposit Agreement shall
have been, as of the date made, and be, at the time immediately prior to the
Expiry Time, true and correct (or, if not already qualified by a materiality
concept, true and correct in all material respects) and the Sellers shall have
performed in all material respects all obligations and complied in all material
respects with all covenants in the Deposit Agreement and a certificate from a
senior officer of each Seller to such effect shall have been delivered by the
Sellers to Parent and the Offeror; |
| (h) |
neither
this Agreement nor the Deposit Agreement shall have been terminated, and no
event shall have occurred that gives Parent the right to terminate this
Agreement or the Deposit Agreement; and |
| (i) |
the
Board of Directors or any committee thereof shall not have withdrawn or
modified in a manner adverse to the Offeror its recommendation that
Shareholders accept the Offer (including by amendment of the Directors’ Circular),
and the Board of Directors or any committee thereof shall not have (i)
withdrawn, or modified or amended in a manner adverse to Parent or the Offeror
its approval or recommendation of the Agreement or the transactions
contemplated hereby, (ii) approved or recommended any Acquisition Proposal or
(iii) adopted any resolution to effect any of the foregoing. |
B-2-2
It is understood and agreed by the
parties to the Agreement that the foregoing conditions are for the exclusive benefit of
the Offeror. The Offeror may assert any of the foregoing conditions at any time regardless
of the circumstances. The Offeror may waive any of the foregoing conditions in whole or in
part from time to time, both before and after the Expiry Time, without prejudice to any
other rights which the Offeror may have. The failure by the Offeror at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by the Offeror concerning the events described in
this Schedule B-2 will be final and binding upon the parties.
B-2-3
Schedule C –
Holdco Share Purchase Agreement
HOLDCO SHARE PURCHASE
AGREEMENT
This Agreement is made as of •,
2006, between
| |
•,
[a
corporation existing under the laws of •]
(“Vendor”) |
| |
•,
a
corporation existing under the laws of Canada
(“Offeror”) |
RECITALS
| A. |
Vendor
is the beneficial owner of all of the issued and outstanding shares (“Holdco
Shares”) of •(“Holdco”). |
| B. |
Holdco
is the registered holder of • Class A Common Shares and • Class B
Subordinate Voting Shares (“Subject Shares”) of GSW Inc. (“Company”). |
| C. |
Vendor
has agreed to sell and the Offeror has agreed to purchase the Holdco Shares
upon the terms and conditions set out in this Agreement. |
Certain capitalized terms used but
not defined in this Agreement have the meanings given to them in the offering circular of
the Offeror dated •, 2006.
FOR VALUE RECEIVED, the parties
hereby agree as follows:
SECTION 1 –
AGREEMENT TO SELL
| 1.1 |
Purchase
and Sale of the Holdco Shares |
Subject
to the terms and conditions of this Agreement, the Vendor covenants and agrees to sell,
assign and transfer to the Offeror and the Offeror covenants and agrees to purchase from
the Vendor the Holdco Shares at a price equal to the product of: (a) $• and (b) the
number of Subject Shares held by Holdco.
C-1
The
closing of the purchase and sale of the Holdco Shares will take place as contemplated in
section 3 of this Agreement on the day that the Offeror takes up Shares under the terms of
the Offer (the “Closing Date”), except that the closing shall be
completed in escrow no later than two business days prior to the expiry date of the Offer
and shall become effective as of the Closing Date.
SECTION 2 –
REPRESENTATIONS AND WARRANTIES OF VENDOR
| 2.1 |
Representations
and Warranties of Vendor |
The
Vendor represents and warrants as follows and acknowledges that the Offeror is relying
upon such representations and warranties in connection with the entering into of this
Agreement and the purchase by the Offeror of the Holdco Shares:
| |
(a) |
[Vendor
is a corporation duly incorporated and validly existing under • and
has all necessary corporate power and authority to execute and deliver
this Agreement and to perform its obligations under the terms of this
Agreement] [NTD: Revise if Vendor is not a corporation]; |
| |
(b) |
this
Agreement has been duly authorized, executed and delivered by Vendor and
constitutes a valid and binding obligation of Vendor enforceable against
it in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency and other laws of general application limiting the
enforcement of creditors’ rights generally and subject to the
qualification that equitable remedies may be granted only in the
discretion of a court of competent jurisdiction; |
| |
(c) |
Holdco
is a corporation duly incorporated and validly existing under the laws of
its jurisdiction of incorporation; |
| |
(d) |
neither
the nature of its business nor the location or character of the property
owned by Holdco requires Holdco to be registered, licensed or otherwise
qualified as an extra-provincial or foreign corporation or to be in good
standing in any other jurisdiction; |
| |
(e) |
the
authorized capital of Holdco consists of •; |
| |
(f) |
the
Holdco Shares are validly issued and outstanding as fully paid and
non-assessable shares in the capital of Holdco and are the only issued and
outstanding securities of Holdco; |
| |
(i) |
options,
warrants, conversion or exchange privileges, calls or other rights to
acquires shares or other securities of Holdco of any nature whatsoever; |
C-2
| |
(ii) |
agreements,
arrangements, commitments or obligations to issue or sell any shares in
the capital of Holdco; and |
| |
(iii) |
securities
or obligations of any kind convertible into or exchangeable for shares in
the capital of Holdco; |
| |
(i) |
is
the beneficial owner of the Holdco Shares with good and marketable title
thereto, free and clear of any and all Encumbrances; |
| |
(ii) |
has
the sole right to sell, assign, transfer and otherwise dispose of the Holdco
Shares as provided in this Agreement; and |
| |
(iii) |
has
not granted or agreed to grant any proxy in respect of the Holdco Shares or
entered into any voting trust, vote pooling or other agreement with
respect to the right to vote, call meetings of shareholders or give
consents or approvals of any kind as to the Holdco Shares; |
| |
(i) |
none
of the execution and delivery by the Vendor of this Agreement or the
completion of the transactions contemplated under the terms of this
Agreement or the compliance by the Vendor with its obligations under the
terms of this Agreement will result in a breach of: |
| |
(i) |
the
constating documents of the Holdco; or |
| |
(ii) |
any
agreement or instrument to which Holdco is a party; |
| |
(j) |
except
as disclosed in writing to the Offeror before the date of this Agreement
and accepted by the Offeror, acting reasonably, Holdco: |
| |
(i) |
has
directly held the Subject Shares since •; |
| |
(ii) |
since
its date of incorporation has carried on no business other than •; |
| |
(iii) |
has
no liabilities (whether accrued, absolute, potential, contingent or
otherwise) or employees and owns or holds no property or assets or any
interests therein of any nature or kind whatsoever other than the Subject
Shares; |
| |
(iv) |
is
not a partner, co-tenant, joint venturer or otherwise a participant in any
partnership, joint venture, co-tenancy or other similar jointly owned
business; |
C-3
| |
(v) |
is
not a party to nor bound or affected by any agreements, commitments or
understandings of any nature whatsoever, written or oral except for this
Agreement; and |
| |
(vi) |
is
not a party to nor bound by any agreement of guarantee, indemnification,
assumption or endorsement or any other like commitment of the obligations,
liabilities (contingent or otherwise) or indebtedness of any other person,
firm or corporation; |
| |
(i) |
has
duly and timely filed its tax returns with the appropriate taxing or other
governmental authority or agency or, if not timely filed, has paid any
penalties imposed as a result thereof and has duly, completely and
correctly reported all income and all other amounts and information
required to be reported thereon (complete and correct copies of all such
returns and other documents filed in respect of the three fiscal years of
Holdco ending prior to the date hereof have been provided to the Offeror); |
| |
(ii) |
has
duly and timely paid all taxes, including all interest and penalties
relating thereto, that are due and payable by it and there are no taxes
that are not yet due and payable and that relate to periods ending on or
prior to the date of this Agreement; |
| |
(iii) |
has
not requested, nor entered into any agreement or other arrangement or
executed any waiver providing for, any extension of time within which: |
| |
(A) |
to
file any tax return covering any taxes for which Holdco is or may be liable; |
| |
(B) |
Holdco
is required to pay or remit any taxes or amounts on account of taxes; or |
| |
(C) |
any
taxing or other governmental authority or agency may assess or collect taxes
for which Holdco is or may be liable; |
| |
(iv) |
Canadian
federal and provincial income tax assessments have been issued to Holdco
covering all past periods up to and including the fiscal year ended • and
there are no actions, suits, proceedings, investigations, audits or claims
now pending or, after due inquiry, threatened, against Holdco in respect
of any taxes and there are no matters under discussion, audit or appeal
with any taxing or other governmental authority or agency relating to
taxes; |
C-4
| |
(v) |
has
duly and timely withheld from any amount paid or credited by it to or for
the account or benefit of any person, including, without limitation, any
of its employees, officers and directors and any non-resident person, the
amount of all taxes and other deductions, required by any applicable law,
rule or regulation to be withheld from any such amount and has duly and
timely remitted the same to the appropriate taxing or other governmental
authority or agency; |
| |
(vi) |
has
not and will not settle or extinguish any debt or other obligation of Holdco
on or prior to the Closing Date such that the provisions of sections
80-80.04 of the Tax Act apply or would apply thereto; |
| |
(vii) |
there
are no circumstances that could result in the application of section 78 of
the Tax Act to Holdco; and |
| |
(viii) |
Holdco
is not a non-resident of Canada or a non-resident owned investment
corporation for the purposes of the Tax Act; |
| |
(l) |
the
Vendor is not a non-resident of Canada for the purposes of the Tax Act; |
| |
(m) |
there
are no suits, actions, litigation, investigation, claim, complaint,
grievance or proceeding, including appeals and applications for review, in
progress, pending or threatened against or relating to Holdco or affecting
its assets before any court, governmental department, commission, board,
bureau, agency or arbitration panel; |
| |
(n) |
Holdco
has conducted its business in material compliance with all applicable law,
rules and regulations of any governmental, administrative or regulatory
authority, including any supranational authority, judgments, orders,
rulings or awards of any court arbitrator or any governmental,
administrative or regulatory authority; |
| |
(o) |
no
consent, waiver, approval, authorization, exemption, registration, licence or
declaration of or by, or filing with, or notification to any governmental,
administrative or regulatory authority is required to be made or obtained
by Holdco or the Vendor in connection with: |
| |
(i) |
the
execution, delivery or enforcement of this Agreement; or (ii) the
consummation of any transactions provided for herein; |
| |
(p) |
Vendor
has made available to the Offeror, the articles and by-laws of Holdco,
including any and all amendments thereto and such articles and by-laws as
so amended are in full force and effect and no amendments are being made
to the same; |
C-5
| |
(q) |
Vendor
has made available to the Offeror, all books and records of Holdco,
including the minute books and: |
| |
(i) |
such
books and records fairly and correctly set out and disclose in all material
respects the financial position of Holdco and all financial transactions
relating to Holdco have been accurately recorded in such books and
records; |
| |
(ii) |
the
minute books include complete and accurate minutes of all meetings of the
directors or shareholders of Holdco, held to date or resolutions passed by
the directors or shareholders on consent, since the date of its
incorporation; and |
| |
(iii) |
the
register of shareholders, register of transfers and register of directors of
Holdco as set out in the minute books of Holdco are complete and accurate;
and |
| |
(r) |
Vendor
has made available to the Offeror the financial statements of Holdco for
the last •[five] years ended • , including statements of
the financial position of Holdco as at the end of each such year, and such
financial statements are fair and accurate in all respects. |
SECTION 3 –
CLOSING
The
closing of the purchase of the Holdco Shares shall take place on the Closing Date at the
offices of • prior to the take-up and payment by the Offeror for the Shares tendered
to the Offer. The Offeror agrees to give prior written notice to the Vendor of its
intention to take up and pay for Shares tendered to the Offer.
Upon
closing, the Vendor shall deliver to the Offeror:
| |
(a) |
the
certificates representing the Holdco Shares, duly endorsed for transfer in
blank by the registered holder thereof; |
| |
(b) |
the
certificates representing the Subject Shares registered in the name of
Holdco; |
| |
(c) |
minute
books, corporate seals and any other corporate and business books and
records relating to Holdco; |
| |
(d) |
a
written opinion of legal counsel to the Vendor andHoldco, in form and
substance reasonably acceptable to the Offeror; |
| |
(e) |
resignations
of each director and officer of Holdco; and |
C-6
| |
(f) |
a
certificate confirming that at the Closing Date: |
| |
(i) |
the
representations and warranties of the Vendor are true and correct; and |
| |
(ii) |
all
of the covenants and obligations of the Vendor under this Agreement have
been performed or complied with in all material respects. |
| 3.2 |
Survival
of Vendor’s Representations and Warranties |
The
representations and warranties made by the Vendor herein shall survive for a period of six
years from the date of purchase of the Holdco Shares by the Offeror; provided, however,
that any representations and warranties with respect to tax matters shall survive as to
such tax matters until the last applicable limitation period under applicable tax laws
(or, in the event of a reassessment, the settlement or resolution of all matters relating
thereto). No investigations made by or on behalf of the Offeror or any of its authorized
agents at any time shall have the effect of waiving, diminishing the scope or otherwise
affecting any representation, warranty or covenant made by the Vendor herein or pursuant
hereto.
SECTION 4 –
INDEMNITY
The
Vendor agrees to indemnify and save harmless each of the Offeror and its directors,
employees, officers and affiliates, on an after-tax basis, from and against all
liabilities, claims, losses, costs, damages, causes of action and expenses, including
reasonable counsel’s fees and expenses (collectively, “Losses”),
suffered or incurred by the Offeror as a result of or arising directly or indirectly from,
or in consequence of:
| |
(a) |
any
representation or warranty in this Agreement being untrue or incorrect; |
| |
(b) |
the
non-fulfillment of any covenant or agreement by the Vendor under this
Agreement, except where such covenant or agreement is waived by Offeror; |
| |
(c) |
any
liabilities, duties or obligations of Holdco arising, directly or
indirectly, as a result of or in connection with transactions or events
which occurred prior to the closing of the purchase and sale of the Holdco
Shares hereunder, including, without limitation, (i) all debts,
obligations, liabilities, leases, contracts, commitments or engagements
whatsoever and (ii) all liabilities in respect of income, capital, and
other taxes and governmental charges and assessments; and |
| |
(d) |
any
act, action, suit or proceeding which shall have been taken or, to the
Vendor’s knowledge, threatened before or by any domestic or foreign
court or tribunal or governmental agency or other regulatory authority or
administrative agency or commission by any elected or appointed public
official or private person (including, without limitation, any individual,
corporation, firm, group or other entity) in Canada or elsewhere based
upon any failure or alleged failure by Holdco to comply with applicable
laws, including but not limited to Canadian securities laws, at any time
prior to the date hereof. |
C-7
If
a party (“Indemnified Party”) shall become aware of any claim, proceeding
or other matter (“Claim”) in respect of which another party
(“Indemnifying Party”) agreed to indemnify the Indemnified Party pursuant
to this Agreement, the Indemnified Party shall promptly give written notice thereof to the
Indemnifying Party. Such notice shall specify whether the Claim arises as a result of a
claim by a person against the Indemnified Party (“Third Party Claim”) or
whether the Claim does not so arise (“Direct Claim”) and shall also
specify with reasonable particularity (to the extent that the information is available)
the factual basis for the Claim and the amount of the Claim, if known. The omission to
notify the Indemnifying Party shall not relieve the Indemnifying Party from any duty to
indemnify the Indemnified Party unless (and only to the extent that) the omission to
notify materially prejudices the ability of the Indemnifying Party to exercise its rights
under this section 4 or results in an increase in the amount of Losses.
With
respect to any Direct Claim, following receipt of notice from the Indemnified Party of the
Claim, the Indemnifying Party shall have 30 days to make such investigation of the Claim
as is considered necessary or desirable. For the purpose of such investigation, the
Indemnified Party shall make available to the Indemnifying Party the information relied
upon by the Indemnified Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If both parties agree at or
prior to the expiration of such 30-day period (or any mutually agreed upon extension
thereof) to the validity and amount of such Claim, the Indemnifying Party shall
immediately pay to the Indemnified Party the full agreed upon amount of the Claim, failing
which the matter shall be referred to binding arbitration in accordance with the
Arbitration Act (Ontario).
(1) With
respect to Third Party Claims, the Indemnifying Party shall have the right to
undertake and control any proceedings or objection or other defence of any
Third Party Claim (in which case, the proceeding or objection or other defence
shall be at the expense of the Indemnifying Party and conducted through counsel
chosen by the Indemnifying Party) and, in such case, the Indemnifying Party
shall pursue any such proceedings or objection or other defence in a timely
manner and in good faith and the following provisions of this section 4.4(1)
will apply. Subject to applicable law, the Indemnifying Party shall provide to
the Indemnified Party in a timely manner (i) any proposed written
communications and other documents to be submitted to the relevant Governmental
Authority or filed with a court in respect of any Third Party Claim for review
by the Indemnified Party and (ii) copies of any correspondence received from
any Governmental Authority relating to any Third Party Claim. The Indemnifying
Parry shall consult with the Indemnified Party with respect to the materials
provided pursuant to (i) above prior to the submission or filing thereof. The
Indemnified Party shall provide to the Indemnifying Party any information with
respect to the Third Party Claim as may become available to the Indemnified
Party and the Indemnified Party shall cooperate with the Indemnifying Party to
the extent reasonably requested in the conduct of all proceedings or objection
or other defence relating to any Third Party Claim and related inquiries or
investigations. The Indemnifying Party shall only be able to cease to defend,
settle or otherwise dispose of any proceeding or objection or other defence
relating to any Third Party Claim with the consent of the Indemnified Party,
such consent not to be unreasonably withheld. The Indemnifying Party shall
inform the Indemnified Party of any proposed cessation, settlement or other
disposition of any proceeding or objection or other defence relating to any
Third Party Claim. While the Indemnifying Party is pursuing any proceeding or
objection or other defence relating to any Third Party Claim, the Indemnified
Party shall not have any right to settle any such proceeding or objection or
other defence.
C-8
(2) If,
after having received the notice referred to in section 4.2 in respect of a
Third Party Claim, the Indemnifying Party does not undertake any proceedings or
objection or other defence of any Third Party Claim or if it does not pursue
any such proceedings or objection or other defence in a timely manner and in
good faith or if it proposes to cease to defend any such proceedings or
objection or other defence, the Indemnified Party shall have the right to
undertake and control any proceedings or objection or other defence of the
Third Party Claim at its own expense using counsel of its own choice, and the
following provisions of this section 4.4(2) will apply. Subject to applicable
law, the Indemnified Party shall provide to the Indemnifying Party in a timely
manner (i) any proposed written communications and other documents to be
submitted to the relevant Governmental Authority or filed with a court in
respect of any Third Party Claim for review by the Indemnifying Party and (ii)
copies of any correspondence received from the Governmental Authority relating
to any Third Party Claim. The Indemnified Party shall consult with the
Indemnifying Party with respect to the materials provided pursuant to (i) above
prior to the submission or filing thereof. The Indemnifying Party shall provide
to the Indemnified Party any information with respect to any Third Party Claim
as may become available to the Indemnifying Party and the Indemnifying Party
shall cooperate with the Indemnified Party to the extent reasonably requested
in the conduct of all proceedings or objection or other defence relating to any
Third Party Claim. If, pursuant to this section 4.4(2), the Indemnified Party
undertakes any proceedings or objection or other defence of any Third Party
Claim, the Indemnified Party shall be able to cease to defend, settle or
otherwise dispose of any such proceeding or objection or other defence without
the consent of the Indemnifying Party, provided that the Indemnified Party has
consulted with the Indemnifying Party in a timely manner with respect to such
proposed cessation, settlement or other disposition.
(3) The
Indemnifying Party shall pay to the Indemnified Party all amounts for which the
Indemnifying Party is liable pursuant to this section 4.4 promptly after the
Indemnified Party incurs the Loss in respect of which such liability arises.
The Indemnified Party and the Indemnifying Party shall cooperate fully with
each other with respect to Third Party Claims, and shall keep each other fully
advised with respect thereto (including supplying copies of all relevant
documentation promptly as it becomes available).
C-9
SECTION 5 –
TAX RETURNS
On
or before the statutory due date, the Vendor shall be responsible for preparing and
filing, and the Offeror shall allow the Vendor to, on behalf of and in the name of Holdco,
prepare and file all tax returns, elections, filings, forms or reports (the
“Returns”) of Holdco required by law to be filed for Holdco’s taxation year
ending on or before the closing of the purchase and sale of the Holdco Shares hereunder,
and the Offeror shall cause Holdco to execute the Returns; provided that prior to filing
any Returns, the Vendor shall have first supplied draft copies of the Returns to the
Offeror for review and comment and shall only file the Returns upon obtaining the prior
consent of the Offeror thereto.
SECTION 6 –
GENERAL
This
Agreement may only be amended by written agreement of the parties.
This Agreement
is not assignable by any party.
This
Agreement is binding upon and will enure to the benefit of and be enforceable by the
parties and their respective successors.
Each
party will pay their own expenses incurred in connection with this Agreement and the
completion of the transactions contemplated under the terms of this Agreement.
Time
is of the essence of this Agreement.
Any
written notice or other communications required or permitted to be given hereunder will be
sufficiently given if delivered in person or if sent by fax, email or other electronic
means (provided such transmission is recorded as being transmitted successfully and sender
shall bear the burden of proof of delivery):
| |
(a) |
in
the case of the Offeror as follows: |
C-10
| |
Offeror
c/o ▇. ▇. ▇▇▇▇▇ Corporation
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ 5
▇▇▇▇-▇▇▇▇ |
| |
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇ |
| |
with
a copy (which shall not constitute notice to the Offeror) to: |
| |
▇▇▇▇▇
& ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇ |
| |
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Quick
Email: ▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇ |
| |
McMillan
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Tower
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇ |
| |
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Email: ▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇ |
| |
(b) |
in
the case of Vendor, as follows: |
| |
•
Fax
No.: •
Attention: •
Email: • |
| |
with
a copy (which shall not constitute notice to Vendor) to: |
▇-▇▇
| |
▇▇▇▇▇
▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ West
Suite 3000, TD Centre
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ |
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Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇ |
or at such other address as the party
to which such notice or other communication is to be given has last notified the other
party giving same in the manner provided by this section 6.6 and, if so given, the same
shall be deemed to have been received on the date of such delivery or sending thereof if
sent or delivered during normal business hours on a business day at the place of receipt
and, otherwise, on the next following business day (provided that if sent by fax such
transmission is recorded as being transmitted successfully).
This
Agreement will be governed by and construed in accordance with the laws of the Province of
Ontario and the federal laws of Canada applicable therein. The parties hereby irrevocably
attorn to the jurisdiction of the courts of the Province of Ontario in respect of all
matters arising under or in relation to this Agreement.
The
parties agree that the remedy at law for any breach of the provisions of this Agreement
will be inadequate and any party not in breach of the provisions of this Agreement, on any
application to a court, will be entitled to temporary and permanent injunctive relief,
specific performance and any other equitable relief against the party in breach of the
provisions of this Agreement. The specific remedies contemplated in this section 6.8 are
in addition to and without prejudice to any other remedy to which the party may be
entitled under this Agreement, at law or in equity.
Except
as may be expressly indicated otherwise, all sums of money referred to in this Agreement
are expressed and will be payable in Canadian dollars.
This
Agreement and the documents referred to herein constitute the entire obligation of the
parties with respect to the subject matter hereof and will supersede any prior expression
of intent or understandings with respect to the subject matter hereof and will supersede
any prior expression of intent or understandings with respect to the transactions
contemplated hereby.
C-12
Each
party will, from time to time, and at all times hereafter, at the request of the other
party hereto, but without further consideration, do all such further acts and execute and
deliver all such further documents and instruments as will be reasonably required to fully
perform and carry out the terms and intent hereof.
| 6.12 |
Waiver
and Modifications |
Any
party may waive or consent to the modification of any of the obligations herein contained
for its benefit. Any such waiver or consent to the modification of any of the provisions
of this Agreement, to be effective, must be in writing and executed by the party or
parties granting such waiver or consent.
In
the event that any date on which any action is required to be taken under this Agreement
by any of the parties hereto is not a business day, such actions will be required to be
taken on the next succeeding day which is a business day.
Any
provision of this Agreement which is prohibited or unenforceable in any jurisdiction will
not invalidate the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction will not invalidate or render unenforceable such
provision in any other jurisdiction, and any such provision, to the extent invalid or
unenforceable, will be replaced by a valid and enforceable provision which comes closest
to the intention of the parties underlying such invalid or unenforceable provision.
| 6.15 |
No
Third Party Beneficiaries |
Except
as specifically set forth or referred to herein, nothing herein is intended or shall be
construed to confer upon any person other than the parties hereto and their successors and
permitted assigns, any rights or remedies under or by reason of this Agreement.
In
this Agreement:
| |
(a) |
words
denoting the singular include the plural and vice versa, and words
denoting any gender include all genders; |
| |
(b) |
the
word “including” means “including without limitation”; |
| |
(c) |
any
reference to any statute will mean the statute in force, as amended from
time to time, and any regulation in force thereunder, unless otherwise
expressly provided; |
C-13
| |
(d) |
the
use of headings is for convenience of reference only and will not affect the
construction of this Agreement; |
| |
(e) |
when
calculating the period of time within which or following which any act is
to be done or step taken, the date which is the reference day in
calculating such period will be excluded; and |
| |
(f) |
any
tender of documents or money under this Agreement may be made upon the
parties or their respective counsel. |
This
Agreement may be signed in any number of counterparts (by facsimile or otherwise), each of
which will be deemed to be original and all of which, when taken together, will be deemed
to constitute one and the same instrument. It will not be necessary in making proof of
this Agreement to produce more than one counterpart.
C-14
The parties have executed this
Agreement.
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• |
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By: _____________________________________ |
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Name: • |
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Title: • |
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By: _____________________________________ |
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Name: • |
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Title: • |
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• |
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By: _____________________________________ |
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Name: • |
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Title: • |
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By: _____________________________________ |
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Name: • |
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Title: • |
▇-▇▇
▇▇▇▇▇▇▇▇ ▇-▇ –
Representations and Warranties of Company
No representation or warranty in this
Schedule D-1 shall be qualified or otherwise affected by any fact or item disclosed to
Parent in any manner unless such representation or warranty is expressly qualified by
reference to some disclosure, and in that case, such representation or warranty shall be
qualified or otherwise affected only by facts or items disclosed in the disclosure to
which reference is expressly made. “Available Information” means (a)
information set forth in the Disclosure Statement and (b) written information that Company
made available to Parent in a data room at Company’s headquarters, and during
Parent’s due diligence visits to ▇▇▇▇▇▇▇ City, ▇▇▇▇▇▇, ▇▇▇▇▇▇, Nobel, Atlanta and
Knoxville, prior to the date of this Agreement.
| 1. |
Organization and Qualification |
Each
of Company and its Subsidiaries is a body corporate duly and validly incorporated,
organized and existing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own its properties and conduct its business as
currently owned and conducted. Each of Company and the Subsidiaries is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, operated or leased or the nature
of its activities makes such qualification or licensing necessary, except for any such
failures that would not have a Material Adverse Effect.
| 2. |
Corporate
Records; Subsidiaries |
The
corporate records and minute books of Company and its Subsidiaries contain minutes of all
proceedings and resolutions of directors and shareholders and are maintained in all
material respects in accordance with applicable Laws and full access thereto has been
provided to Parent. Accurate and complete information regarding all of the Subsidiaries,
together with the jurisdiction of incorporation and constating documents of each
Subsidiary and the percentage of each Subsidiary’s outstanding share capital owned by
Company or another Subsidiary, is part of the Available Information. The Disclosure
Statement identifies each material Subsidiary of which Company and/or another Subsidiary
do not in the aggregate own 100% of such Subsidiary’s outstanding share capital,
other than directors’ qualifying shares. All of the outstanding shares and other
ownership interests of the Subsidiaries are (a) held directly or indirectly by Company,
(b) duly authorized, validly issued, fully paid and non-assessable, (c) free of
pre-emptive (or similar) rights and registration rights and (d) are owned directly or
indirectly by Company free and clear of any Encumbrance. Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any person other than
the Subsidiaries. Except for the Subsidiaries, Company does not directly or indirectly own
any equity or similar interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any other person. No proceedings have
been taken or authorized by Company or any of its Subsidiaries or, to Company’s
knowledge, by any other person, with respect to the bankruptcy, insolvency, liquidation,
dissolution or winding-up of Company or any of its Subsidiaries.
D-1-1
The
authorized share capital of Company consists of an unlimited number of Class A Common
Shares, an unlimited number of Class B Subordinate Voting Shares and an unlimited number
of preferred shares (issuable in one or more series) of which 749,608 Class A Common
Shares, 2,672,721 Class B Subordinate Voting Shares and no preferred shares are issued and
outstanding as of the date hereof. All of the outstanding Shares are duly authorized,
validly issued, fully paid and non-assessable.
There
is no form of plan, agreement, contract or instrument which will trigger any rights to
acquire shares or other securities of Company or rights, entitlements or privileges in
favour of any person upon the entering into of this Agreement or in connection with the
making of the Offer.
Except
as set out in the Disclosure Statement, there are no:
| |
(a) |
options,
warrants, conversion privileges, stock appreciation rights, stock-based
performance units, profit sharing, phantom equity or other rights,
agreements, arrangements or commitments (pre-emptive, contingent or
otherwise) (i) based upon the market value of the Shares, the cash offer
price per Share to be paid in the Offer, revenue, value, book value,
income or other attribute of Company or any Subsidiary or (ii) relating to
the issuance, sale, subscription or transfer of any shares of Company or
any Subsidiary or securities or obligations of any kind convertible into
or exchangeable for any shares of Company or any Subsidiary; |
| |
(b) |
bonds,
debentures or other evidences of indebtedness of Company or any Subsidiary
having the right to vote (or which are convertible for or exercisable into
securities having the right to vote) with Shareholders on any matter; |
| |
(c) |
current
or prospective obligations of Company or any Subsidiary to repurchase,
redeem or otherwise acquire any outstanding securities or indebtedness of
Company or any Subsidiary; |
| |
(d) |
current
or prospective obligations of Company or any Subsidiary with respect to
the voting or disposition of any outstanding securities of Company or any
Subsidiary; |
| |
(e) |
current
or prospective obligations of Company or any Subsidiary to provide funds
to, make a capital contribution or investment in or loan to, or to assume
any liability or obligation of, any person; |
| |
(f) |
Encumbrances
to which Company or any Subsidiary is a party or by which Company or any
Subsidiary is bound relating to the issued or unissued shares of Company
or any Subsidiary (including any such agreements or understandings that
may limit in any way the solicitation of proxies by or on behalf of
Company from, or the casting of votes by, the Shareholders with respect to
the Subsequent Acquisition Transaction) or granting to any person the
right to elect, or to designate or nominate for election, a director to
the Board of Directors or a member of the board of directors or similar
supervisory body of any Subsidiary; and |
D-1-2
| |
(g) |
programs
in place or outstanding obligations of Company or any Subsidiary (i) to
repurchase, redeem or otherwise acquire any shares of Company or any
Subsidiary or (ii) to vote or to dispose of any shares of any
Subsidiary. |
| 4. |
Authority
and Enforceability |
Company
has the requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement by Company
and the consummation by Company of the transactions contemplated hereby have been duly
authorized by the Board of Directors, and no other corporate approvals on the part of
Company are necessary to authorize this Agreement and the transactions contemplated hereby
(except for obtaining shareholder approval in respect of any Subsequent Acquisition
Transaction). This Agreement has been duly executed and delivered by Company and
constitutes a legal, valid and binding obligation of Company enforceable against Company
in accordance with its terms.
| 5. |
No
Violations and Defaults |
The
execution and delivery by Company of this Agreement, the performance by it of its
obligations hereunder and the consummation of the Offer and the Subsequent Acquisition
Transaction will not:
| |
(a) |
result
in a violation or breach of, require any consent to be obtained under or
give rise to any termination, purchase, sale or other material rights or
payment or other material obligation under any provision of: |
| |
(i) |
any
certificate of incorporation, articles, by-laws or other constating
documents of Company or any of its Subsidiaries; |
| |
(ii) |
any
applicable Law or any order, judgment or decree; or |
| |
(iii) |
except
as reflected in the Disclosure Statement, any Contract, licence,
franchise, permit loan, government grant or guarantee or understanding to
which Company or any of its Subsidiaries is a party or by which it is
bound or subject or is the beneficiary, except in the case of this clause
(iii) for any such violations, breaches, defaults or other occurrences
that would not, individually or in the aggregate, be Materially Adverse; |
| |
(b) |
result
in any right of termination or acceleration of indebtedness of Company or
any of its Subsidiaries, or cause any such indebtedness to come due before
its stated maturity, or cause any available credit of Company or any of
its Subsidiaries to cease to be available, except as would not,
individually or in the aggregate, be Materially Adverse; |
D-1-3
| |
(c) |
result
in any restriction, hindrance, impairment or limitation on the ability of
Company or any of its Subsidiaries to carry on business as and where it is
now being carried on; |
| |
(d) |
result
in the imposition of any Encumbrance upon any of the assets of Company or
any of its Subsidiaries; and |
| |
(e) |
result
in any option or other right of first refusal becoming exercisable by any
person or any price adjustment provision becoming exercisable by any
person. |
No
notice is required to be given by Company or its Subsidiaries to any person, and no
consent, approval, order or authorization of or declaration or filing with any
Governmental Authority is required on the part of Company or any of its Subsidiaries,
except for those notices, consents, approvals, orders, authorizations, declarations and
filings already made or obtained, in connection with the execution and delivery of this
Agreement by Company, the performance by it of its obligations hereunder or the completion
of the transactions contemplated hereby.
Each
of Company and its Subsidiaries has complied with, and none is in conflict with, in
default (including cross defaults) under or in violation of:
| |
(a) |
its
certificate of incorporation, articles, by-laws or other constating
documents; |
| |
(b) |
any
applicable Law or any order, judgment or decree except for any such
violations, breaches, defaults or other occurrences where neither the
costs to comply nor the failure to comply would, individually or in the
aggregate, be Materially Adverse; or |
| |
(c) |
any
Contract, agreement, licence, franchise, permit loan, government grant or
guarantee or understanding to which Company or any of its Subsidiaries is
a party or by which it is bound or subject or is the beneficiary, except
for any such violations, breaches, defaults or other occurrences that
would not, individually or in the aggregate, be Materially Adverse. |
Without limiting the generality of
the foregoing, all securities of Company have been issued in compliance, in all material
respects, with all applicable securities Laws.
Company
and each Subsidiary owns, possesses, or has obtained and is in compliance with all
licences, permits, certificates, approvals, orders, grants and other authorizations of or
from any Governmental Authority necessary to conduct its businesses as now conducted,
other than such failures to own, possess, obtain or be in compliance with where neither
the costs to comply nor the failure to comply would, individually or in the aggregate, be
Materially Adverse.
D-1-4
| 8. |
Restrictions
on Business Activities |
There
is no agreement, judgment, injunction, order or decree binding upon Company or any of its
Subsidiaries that has, or might have, the effect of prohibiting, restricting or impairing
any business practice of Company or any of its Subsidiaries (other than those contained in
agreements relating to sales of business units included as part of the Available
Information that do not impact the current business of Company or any of its
Subsidiaries), any acquisition of property by Company or any of its Subsidiaries or the
conduct of business by any of them as currently conducted.
| 9. |
Liabilities
in Respect of Third Parties |
None
of Company and its Subsidiaries has agreed or is obligated to make, or is bound by any
Contract under which it may become obligated to make, any future investment in or capital
contribution to any other person.
| 10. |
Company
Reports and Company Documents |
Company
is a reporting issuer not in default in the provinces of Ontario and Quebec, is not a
reporting issuer in any other jurisdiction, and has filed with securities regulatory
authorities in such jurisdictions and all applicable self-regulatory organizations,
including the Toronto Stock Exchange, true and complete copies of all documents required
to be filed with such authorities and organizations under applicable Canadian securities
Laws or otherwise. As of their respective dates, the Company Reports did not contain any
misrepresentation (as defined in the Securities Act (Ontario)) and complied in all
material respects with the applicable securities Laws or other requirements under which
they were filed. As of the date of this Agreement, the Company Documents do not contain
any misrepresentation (as defined in the Securities Act (Ontario)). Company has heretofore
furnished to Parent all Company Documents that are not filed with and publicly available
through SEDAR. Company has not filed any confidential material change report which at the
date hereof remains confidential.
The
audited financial statements of Company for and as at the years ended December 31, 2004,
December 31, 2003 and December 31, 2002 and the unaudited financial statements of Company
for the nine months ended and as at September 30, 2005, prepared, in each case on a
consolidated basis, and the notes thereto, in each case in the form in which Company filed
them with the Ontario Securities Commission prior to the date of this Agreement (together,
the “Financial Statements”):
D-1-5
| |
(a) |
were
prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered and in accordance with applicable securities Laws
(except as may be indicated in the notes to such Financial Statements or,
in the case of the unaudited financial statements, as may be permitted by
applicable Laws); and |
| |
(b) |
fairly
present, in all material respects, the consolidated financial position of
Company and its Subsidiaries as of the respective dates thereof and the
consolidated results of operations and cash flows of Company and its
Subsidiaries for the periods covered thereby (subject, in the case of the
unaudited financial statements, to normal year-end audit adjustments, none
of which would be Materially Adverse, and provided that such unaudited
financial statements may omit notes which are not required in the
unaudited financial statements). |
Neither Company nor any of its
Subsidiaries has any liability or obligation, whether accrued, absolute, contingent or
otherwise, in excess of the amounts of the liabilities or obligations reflected or
reserved therefor in the Financial Statements as at September 30, 2005 other than (i)
liabilities incurred in the usual, ordinary and regular course of business since September
30, 2005, none of which will have a Material Adverse Effect, or (ii) liabilities that,
individually or in the aggregate, would not have a Material Adverse Effect.
The
financial books, records and accounts of Company and its Subsidiaries, in all material
respects:
| |
(a) |
have
been maintained in accordance with good business practices on a basis
consistent with prior years; |
| |
(b) |
are
stated in reasonable detail and accurately and fairly reflect the material
transactions and dispositions of the assets of Company and its
Subsidiaries; and |
| |
(c) |
accurately
and fairly reflect the basis for the Financial Statements. |
Company
has designed and maintains a system of internal accounting controls sufficient to provide
reasonable assurances that:
| |
(a) |
transactions
are executed in accordance with management’s general or specific
authorization; and |
| |
(b) |
transactions
are recorded as necessary: |
| |
(i) |
to
permit preparation of financial statements in conformity with GAAP or any
other criteria applicable to such statements; and |
| |
(ii) |
to
maintain accountability for assets. |
D-1-6
Management
of Company has disclosed, based on its most recent evaluation, to Company’s auditors
and the audit committee of the Board of Directors, and to Parent as part of the Available
Information:
| |
(a) |
all
significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are likely to adversely
affect Company’s ability to record, process, summarize and report
financial data; and |
| |
(b) |
any
fraud, whether or not material, which involves management or other employees
having a significant role in Company’s internal control over
financial reporting. |
Since
September 30, 2005:
| |
(a) |
Company
and each of its Subsidiaries have conducted their respective businesses
only in the ordinary course consistent with past practice and neither
Company nor its Subsidiaries has entered into any transaction or taken any
other action (or omitted to take any action) that, either individually or
in the aggregate, is outside of the ordinary course of business or
inconsistent with past practice; |
| |
(b) |
there
has been no liability or obligation of any nature (whether absolute,
accrued, contingent or otherwise) (i) which has been incurred other than
in the ordinary course of business consistent with past practice or (ii)
which, individually or in the aggregate, would reasonably be expected to
exceed $1,000,000; |
| |
(c) |
there
has not been any event, violation, circumstance, change or other matter
that, individually or in the aggregate, is or would reasonably be expected
to be Materially Adverse (including any decision to implement such a
change made by the Board of Directors or any committee thereof, by the
board of directors or other supervisory board of any of its Subsidiaries
or any committee thereof or by senior management of Company or any of its
Subsidiaries with the belief that the decision will be confirmed by the
relevant board of directors, supervisory board or committee thereof); |
| |
(d) |
there
has not been any loss, damage or destruction to any assets of Company or
any of its Subsidiaries (whether or not covered by insurance) that would
reasonably be expected to have a financial cost of more than $1,000,000 in
the aggregate; |
| |
(e) |
there
has not been any amendment, relinquishment, termination or non-renewal by
Company or any Subsidiary of any Contract, licence, franchise,
transaction, commitment or other right or obligation where such amendment,
relinquishment, termination or non-renewal would be Materially Adverse; |
D-1-7
| |
(f) |
except
for ordinary course adjustments for non-executive employees of Company or
any of its Subsidiaries, there has not been any increase in the salary,
bonus or other remuneration payable to non-executive employees of Company
or any of its Subsidiaries; |
| |
(g) |
there
has not been any increase in the salary, bonus or other remuneration
payable to any executive employee of Company or any of its Subsidiaries
except as reflected in the Available Information; |
| |
(h) |
there
has not been any redemption, repurchase or other acquisition of Shares by
Company or any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, securities or property) with respect
to the Shares; |
| |
(i) |
except
in the usual, ordinary and regular course of business and consistent with
past practice, there has not been: (i) any satisfaction or settlement of
any claims or liabilities prior to the same being due, which were,
individually or in the aggregate, material to Company; or (ii) any grant
of any waiver, exercise of any option or relinquishment of any contractual
rights by Company or any of its Subsidiaries which were, individually or
in the aggregate, material to Company; |
| |
(j) |
neither
Company, any Subsidiary nor, to Company’s knowledge, any director,
officer, employee, auditor, accountant or representative of Company or any
Subsidiary has received or otherwise had or obtained any knowledge of any
material complaint, allegation, assertion or claim, whether written or
oral, regarding the accounting or auditing practices, procedures,
methodologies or methods of Company or any of its Subsidiaries or their
respective internal controls, including any material complaint,
allegation, assertion or claim that Company or any of its Subsidiaries has
engaged in questionable accounting practices; |
| |
(k) |
no
attorney representing Company or any of its Subsidiaries, whether or not
employed by Company or any of its Subsidiaries, has reported evidence of a
material violation of securities Laws, breach of fiduciary duty or similar
violation by Company, any of its Subsidiaries or any of their respective
officers, directors, employees or agents to the Board of Directors or any
committee thereof, to the board of directors or other supervisory board of
any Subsidiary or any committee thereof or to any director or officer of
Company or any Subsidiary; and |
| |
(l) |
except
as set out in the Disclosure Statement, neither Company nor any of its
Subsidiaries has taken any action that would have required the consent of
Parent under section 2.1(2) if such action was taken after the date of
this Agreement. |
| 14. |
Title
to Assets; Real Property; Equipment; Leaseholds |
Except
as set out in the Disclosure Statement, each of Company and its Subsidiaries owns, and has
good, valid and marketable title to, all assets purported to be owned by it, including:
D-1-8
| |
(a) |
all
assets reflected on the balance sheet included in the Financial Statements;
and |
| |
(b) |
all
other assets reflected in the books and records of Company and its
Subsidiaries as being owned by them. |
All of those assets are owned by
Company or its Subsidiaries, as the case may be, free and clear of any Encumbrances except
for Permitted Liens.
The
properties and assets that Company and its Subsidiaries own and assets leased or licensed
under valid Contracts include all tangible and intangible property, assets, Contracts and
rights used in the operation of the business of Company and its Subsidiaries as presently
conducted. All equipment and other tangible assets owned by or leased to Company or its
Subsidiaries are adequate for the uses to which they are being put, are in good and safe
condition and repair (ordinary wear and tear excepted) and are adequate for the conduct of
the business of Company and its Subsidiaries in the manner in which such business is
currently being conducted. None of Company and its Subsidiaries owns any real property or
any interest in real property, except as reflected in the Available Information (the
“Real Property”). The use of the Real Property as currently used is a
permitted use by right in the applicable zoning classification and is not a nonconforming
use or a conditioned use, and no variances are needed and none have been granted with
respect to the Real Property. There are currently in full force and effect duly issued
certificates of occupancy permitting the Real Property and improvements located thereon to
be legally used and occupied as the same are currently constituted. To the knowledge of
Company, neither the whole nor any part of the Real Property is subject to any order to be
sold or is being condemned, expropriated or otherwise taken by any public authority with
or without payment of compensation therefor, nor has any such condemnation, expropriation
or taking been proposed. There is not any claim of adverse possession or prescriptive
rights involving any Real Property.
The
real property leases contained in the Available Information are the only binding offers to
lease, agreements to lease, leases, renewals of leases, tenancy agreements, rights of
occupation, licences or other occupancy agreements granted in favour of Company or any of
its Subsidiaries to possess or occupy space now or in the future that are now, or may in
the future, be enforceable against Company or any of its Subsidiaries. Company or a
Subsidiary is in occupation of the premises subject to each of such real property leases
to which it is a party and is paying the full rent due in accordance with the terms of
that lease and no default is existing on the part of Company or any of its Subsidiaries
or, to Company’s knowledge, on the part of any landlord under any of those leases and
each of those leases is in good standing. None of Company and its Subsidiaries is a party
to, or under any agreement to become a party to, any lease with respect to real property
that, if terminated, could have a Material Adverse Effect.
The
Available Information includes a complete list of Company’s ten largest customers (on
a revenue basis) for each of Company’s business units for the periods covered by the
Financial Statements. Since September 30, 2005, there has not been, and neither Company
nor any of its Subsidiaries has received notice of, any termination or cancellation of, or
a material adverse modification or change in, the business relationship with any such
customers.
D-1-9
Except
as reflected in the Available Information, there is no Contract to which Company or any of
its Subsidiaries is a party or by which any of them or their respective properties or
assets are bound, that:
| |
(a) |
if
terminated, would have a Material Adverse Effect; |
| |
(b) |
is
a Contract with ▇▇▇▇’▇ Companies, Inc. and/or any of its affiliates or
Whirlpool Corporation and/or any of its affiliates or is a Contract (to
which Parent requested access) with any supplier that is material to
Company and its Subsidiaries, taken as a whole; |
| |
(c) |
is
a Contract that contains any exclusivity, confidentiality or other similar
obligation; |
| |
(d) |
is
a Contract under which Company or any of its Subsidiaries has borrowed any
money from or issued any note, bond, debenture or other evidence of
indebtedness to any person in excess of $250,000, other than equipment and
other operating leases; or |
| |
(e) |
is
a Contract pursuant to which Company or any of its Subsidiaries provides an
indemnification to any other person (other than Company or a wholly-owned
Subsidiary) other than Contracts with suppliers, distributors, sales
representatives and customers entered into in the ordinary course of
business or in an amount not in excess of $1,000,000; |
| |
(the
Contracts described in paragraphs (a) to (e) above and those identified in paragraph 16(c)
of the Disclosure Statement are referred to herein as “Material
Contracts”). |
All
Material Contracts are legal, valid, binding and in full force and effect and are
enforceable by Company and its Subsidiaries in accordance with their respective terms
(except as may be limited by applicable bankruptcy, insolvency and other Laws of general
application limiting the enforcement of creditors’ rights generally and subject to
the qualification that equitable remedies may be granted only in the discretion of a court
of competent jurisdiction).
Company
and its Subsidiaries have performed in all material respects all respective obligations
required to be performed by them to date under the Material Contracts and are not, and are
not alleged to be (with or without the lapse of time or the giving of notice, or both) in
breach or default in any material respect thereunder and, to the knowledge of Company, no
other party to any of the Material Contracts is (with or without the lapse of time or the
giving of notice or both) in breach or default in any material respect thereunder.
D-1-10
True
and correct copies of the Material Contracts (or in the case of oral Material Contracts,
accurate summaries of the material terms of such Material Contracts) were included in the
Available Information. The Disclosure Statement lists each Contract with ▇▇▇▇’▇
Companies, Inc. and/or any of its affiliates or with Whirlpool Corporation and/or any of
its affiliates.
All
of the Material Contracts were entered into in the ordinary course of business.
Except
as set out in the Disclosure Statement, there is no Contract to which Company or any of
its Subsidiaries is a party or by which any of them or their respective properties or
assets are bound, that:
| |
(a) |
is
a Contract or group of related Contracts which involves payments to or by
Company and its Subsidiaries of more than $1 million per annum (other than
Contracts with suppliers and customers entered into in the ordinary course
of business); |
| |
(b) |
is
a Contract that contains any non-competition or other obligation that
purports to limit or restricts in any way the business of Company or any
of its Subsidiaries, other than exclusivity or confidentiality obligations
entered into in the ordinary course of business; |
| |
(c) |
is
a Contract or note, bond, debenture or other evidence of indebtedness under
which Company or any of its Subsidiaries has currently outstanding
obligations for borrowed money to any person in excess of $50,000, other
than equipment and other operating leases; |
| |
(d) |
is
a Contract under which (i) any person (including Company or any of its
Subsidiaries) has directly or indirectly guaranteed indebtedness,
liabilities or obligations of Company or any of its Subsidiaries or (ii)
Company or any of its Subsidiaries has directly or indirectly guaranteed
indebtedness, liabilities or obligations of any person in an amount in
excess of $250,000 (in each case other than endorsements for the purpose
of collection in the ordinary course of business and other than guarantees
between or among one or more of Company and its wholly owned
Subsidiaries); |
| |
(e) |
is
a partnership or joint venture agreement in which Company or any of its
Subsidiaries participates as a general partner or joint venturer; or |
| |
(f) |
is
a Contract with respect to factoring or other general assignment of accounts
receivable. |
Except
as reflected in the Available Information:
D-1-11
| |
(a) |
there
is no claim, action, proceeding or investigation pending or, to the
knowledge of Company, threatened against Company or any Subsidiary before
any Governmental Authority which if determined adversely to Company would,
individually or in the aggregate, have a Material Adverse Effect; |
| |
(b) |
neither
Company nor any Subsidiary, nor any of their respective assets and
properties, is subject to any outstanding judgment, judicial or regulatory
order, writ, injunction or decree that involves or, to Company’s
knowledge, may involve, or requires or, to Company’s knowledge, may
require an expenditure of a material amount of money as a condition to or
a necessity for the right or ability of Company or a Subsidiary to conduct
its business in a manner in all material respects in which it currently
carries on such business, that have a Material Adverse Effect or that
could prevent or materially delay completion of the Offer or any other
transaction contemplated under this Agreement; and |
| |
(c) |
neither
Company nor any Subsidiary is subject to any warranty, negligence,
performance or other claims or disputes in respect of products or services
currently being delivered or previously delivered that if resolved
adversely to Company would, individually or in the aggregate, have a
Material Adverse Effect, and to the knowledge of Company, there are no
events or circumstances which would reasonably be expected to give rise to
any such claims or disputes or potential claims or disputes. |
| 18. |
Intellectual
Property |
Except
as reflected in the Available Information:
| |
(a) |
all
rights in Company IP are valid, subsisting and enforceable in all material
respects and Company or its Subsidiaries owns or has the right to use all
material Company IP, free and clear of all Encumbrances; |
| |
(b) |
no
action is pending or, to Company’s knowledge, threatened against or
affecting Company or any of its Subsidiaries or any of their respective
properties, which challenge the validity or use of, or the ownership or
license by, Company or its Subsidiaries of Company IP; |
| |
(c) |
Company
has no knowledge of any infringement or infringing use of any Company IP
or licences by any person which is having or would, individually or in the
aggregate, have a Material Adverse Effect; and |
| |
(d) |
no
infringement, misappropriation or violation by Company or any Subsidiary of
any intellectual property right or other proprietary right of any third
party has occurred or, to Company’s knowledge, will result from the
conduct of the business of Company and its Subsidiaries or from the
signing and execution of this Agreement or the completion of the Offer or
the transactions contemplated under this Agreement, and no written claim
has been made to Company or any Subsidiary by any third party based upon
an allegation of any such infringement. |
D-1-12
| |
(a) |
Neither
Company nor any of its Subsidiaries: |
| |
(i) |
is
a party to any Contract providing for severance, change in control or
termination payments to, or any employment agreement with, any director,
officer or employee, other than any common law and statutory obligations
of reasonable notice of termination or pay in lieu thereof and other than
the six Contracts reflected in the Available Information; or |
| |
(ii) |
except
as set out in the Disclosure Statement, has any liability under any
benefit or severance policy, practice, agreement, plan or program which
exists or arises, or may be deemed to exist or arise, under any applicable
Law or otherwise as a result of or in connection with the completion of
the Offer or any other transaction contemplated under this Agreement; |
| |
(b) |
except
as reflected in the Available Information, neither Company nor any of its
Subsidiaries is subject to any collective bargaining agreements, or
subject to any representation, proceeding or, to the knowledge of Company,
threatened or apparent union organizing campaigns for employees not under
a collective bargaining agreement and no such campaigns have been
conducted within the past three years; |
| |
(c) |
there
are no current, pending or, to the knowledge of Company, threatened
strikes, work stoppages, lockouts, or slowdowns at Company or any
Subsidiary, and Company and its Subsidiaries have not experienced any such
strikes, work stoppages, lockouts, or slowdowns within the past three
years; |
| |
(d) |
neither
Company nor any of its Subsidiaries is subject to any claim, litigation,
charge, inquiry, investigation, grievance, arbitration or proceeding,
actual or to the knowledge of Company threatened, relating to its
employees, job applicants, former employees, representatives of employees,
or independent contractors (including any termination of such persons)
that would, individually or in the aggregate, have a Material Adverse
Effect; |
| |
(e) |
except
as disclosed in the Company Documents or as set out in the Disclosure
Statement, neither Company nor any of its Subsidiaries is a party to any
Contract or other transaction with any officer of director of Company or
any of its Subsidiaries, any Shareholder or any affiliate or associate of
the foregoing; |
D-1-13
| |
(f) |
neither
Company nor any of its Subsidiaries is a party to, or otherwise bound by,
any consent decree in effect with, or material citation by, any Governmental
Authority or other entity, relating to employees or employment practices; |
| |
(g) |
no
unfair labour practice charge or complaint is pending or, to the knowledge of
Company, threatened which, if adversely determined, would, individually or
in the aggregate, have a Material Adverse Effect; and |
| |
(h) |
neither
Company nor any of its Subsidiaries has made any representation to
employees as to incentive plans, retention plans or any other
post-transaction compensation or services that may be offered to such
persons following completion of the Offer. |
Company
and its Subsidiaries have operated in accordance with all applicable Laws and Contracts
with respect to employment and labour, including, but not limited to, employment and
labour standards, labour risk prevention measures, social security and other
contributions, occupational health and safety, employment equity, pay equity,
workers’ compensation, equal employment opportunity, human rights and labour
relations, the applicable provisions of ERISA and the Code and the provisions of the U.S.
federal Worker Adjustment and Retaining Notification Act of 1988 and similar Laws, except
for any violations where neither the costs to comply nor the failure to comply would,
individually or in the aggregate, have a Material Adverse Effect, and there are no
current, pending or, to Company’s knowledge, threatened claims, litigation or
proceedings before any board, tribunal or other Governmental Authority with respect to any
of the areas listed herein, and to the knowledge of Company, no facts or circumstances
exist that would give rise to a material claim, litigation or proceeding under any such
applicable Laws and Contracts.
Neither
Company nor any Subsidiary has closed any plant or facility, effectuated any mass layoffs
of employees or implemented any early retirement, separation or window program within the
past three years, nor has Company or any Subsidiary planned or announced any such action
or program for the future.
As
part of the Available Information, Company has provided Parent with copies of all
employment Contracts between Company or any Subsidiary and all employees, officers and
directors of Company and its Subsidiaries.
| 20. |
Pension
and Employee Benefits |
As
part of the Available Information, Company has provided or made available to Parent a
current, accurate and complete copy (or, to the extent no such copy exists, an accurate
description) of only those Company Benefit Plans requested by Parent and, to the extent
applicable:
| |
(a) |
any
related trust agreement or other funding instrument; |
| |
(b) |
the
most recent determination or opinion letter, if applicable; |
D-1-14
| |
(c) |
any
summary plan description and other written communications (or a description
of any oral communication) by Company or any of its Subsidiaries to any
employee or other individual eligible for coverage concerning the extent
of the benefits provided under a Company Benefit Plan; |
| |
(d) |
a
summary of any material amendments or changes required to be made to Company
Benefit Plans at any time within the 12 months immediately following the
date hereof that are known to Company; and |
| |
(e) |
for
the most recent three years (i) the annual report on Form 5500 and attached
schedules or such other form as applicable, (ii) audited financial
statements, and (iii) actuarial valuation reports. |
Except
as identified in the notes to the Financial Statements or in the Disclosure Statement, no
Company Benefit Plan established or maintained for the benefit of Canadian employees or
former Canadian employees of Company or any of its Subsidiaries is a pension,
superannuation or savings arrangement, including pension plans, supplemental pensions,
“registered pension plans” (as defined in the Tax Act) and “retirement
compensation arrangements” (as defined in the Tax Act).
Company
and its Subsidiaries have complied with all of their obligations under and in respect of
Company Benefit Plans and with all applicable Laws, in each case, in all material respects
and each Company Benefit Plan is and has been established, registered (where required),
qualified, administered and invested in all material respects in accordance with the terms
of such plans, any applicable collective bargaining agreements and all applicable Laws.
No
event has occurred or condition exists with respect to any of Company Benefit Plans or
relating to any employee of Company or a Subsidiary which, individually or in the
aggregate, have a Material Adverse Effect.
No
non-exempt prohibited transaction under ERISA Section 406 or 407 or under Code Section
4975 has occurred with respect to any Company Benefit Plan subject to the provisions
thereof.
Except
to the extent disclosed in the Financial Statements, all of Company Benefit Plans are
either (i) fully insured or (ii) fully funded in accordance with applicable Laws on a
going concern, solvency basis; neither Company nor any of its Subsidiaries has received,
or applied for, any payment of surplus out of any Company Benefit Plan; neither Company
nor its Subsidiaries has taken any premium holidays under any Company Benefit Plan except
as permitted by applicable Laws and the terms of the Company Benefit Plan.
No
event has occurred and no condition or circumstance exists that has resulted in or would
reasonably be expected to result in any Company Benefit Plan being ordered, or required to
be, terminated or wound up, in whole or in part, having its registration under applicable
Laws refused or revoked, being placed under the administration of any trustee or receiver
or regulatory authority or being required to pay any material Taxes, penalties, payments
or levies under applicable Laws (other than withholding Taxes due upon payment of
benefits).
D-1-15
No
Company Benefit Plan is subject to Title IV of ERISA and neither Company nor any of its
Subsidiaries (while directly or indirectly owned by Company or, to the knowledge of
Company, prior to being directly or indirectly owned by Company) has at any time sponsored
or contributed to, or has had any liability or obligation in respect of any such plan.
Neither
Company nor any of its Subsidiaries has incurred or accrued any current or projected
material liability (whether absolute or contingent) in respect of post-employment or
post-retirement health, medical or life insurance benefits for current, former or retired
employees of Company or any of its Subsidiaries or other covered individuals, except as
required to avoid an excise tax under Section 4980B of the Code or otherwise except as may
be required pursuant to any other applicable Law except as are properly accrued on the
Financial Statements in accordance with GAAP.
No
Company Benefit Plan exists that, as a result of the execution of this Agreement or the
completion of the Offer or the transactions contemplated under this Agreement (whether
alone or in connection with any subsequent event(s)) will entitle any current, former or
retired employees, officers or directors of Company or any of its Subsidiaries to: (i)
severance pay or any increase in severance pay upon any termination of employment after
the date of this Agreement; (ii) increased benefits under any other type of Company
Benefit Plan; (iii) accelerate the time of payment or vesting of, or result in any payment
(through a grantor trust or otherwise) of compensation or benefits under, any of Company
Benefit Plans; (iv) result in the acceleration of, or an increase in, funding obligations
in respect of, any of Company Benefit Plans, including the requirement to fund any trust;
(v) limit or restrict the right of Company to merge, amend or terminate any of Company
Benefit Plans (other than solely resulting from becoming a wholly-owned subsidiary of the
Offeror); (vi) an extension of the term of any Company Benefit Plan; or (vii) result in
any payments under any of Company Benefit Plans which would not be deductible under
Section 280G of the Code or similar laws of any other jurisdiction.
Except
for the Steelworker Members Pension Benefits Plan for union employees at the Fergus,
Ontario, facility, none of Company Benefit Plans is a “multiemployer plan” as
defined in Section 3(37) of ERISA or is a multiple employer plan as defined in Section
3(40) of ERISA or Code Section 413(c) or 414(f) or any other applicable Laws, and neither
Company nor any of its Subsidiaries has any liability or obligation in respect of, any
multiemployer plan.
Except
as reflected in the Available Information, there have been no other companies or other
entities that were a part of a controlled group or under common control with either
Company or any of its Subsidiaries within the meaning of Code Sections 414(b), (c) or (m)
within the last seven (7) years. Except as would not have a Material Adverse Effect,
neither Company nor any of its Subsidiaries has any liability with respect to any benefit
plan of any such companies or other entities.
D-1-16
Any
payments, distributions or withdrawals from or transfers of assets to or from any Company
Benefit Plan have been made in all material respects in accordance with the valid terms of
such Company Benefits Plan, applicable collective agreements and all Laws and occurred
with the consent of any applicable Governmental Authority (where required).
Each
Company Benefit Plan intended to be qualified under Section 401(a) of the Code has
heretofore been determined by the Internal Revenue Service to so qualify in all material
respects (and such determination letter takes into account the “GUST”
amendments), and each trust created thereunder has heretofore been determined by the
Internal Revenue Service to be exempt from tax under the provisions of Section 501(a) of
the Code and, nothing has occurred that would cause any such Company Benefit Plan or trust
to fail to qualify under Section 401(a) or 501(a) of the Code.
Neither
Company nor any of its Subsidiaries has engaged in, or is a successor or parent
corporation to an entity that has engaged in, a transaction described in Sections 4069 or
4214(c) of ERISA. No “reportable event” (as such term is defined in Section 4043
of ERISA) that could reasonably be expected to result in material liability and no
“accumulated funding deficiency” (as such term is defined in Section 302 of
ERISA and Section 412 of the Code (whether or not waived)) has occurred with respect to
any Company Benefit Plan.
With
respect to any Company Benefit Plan:
| |
(a) |
no
material actions, suits or claims (other than routine claims for benefits in
the ordinary course) or governmental investigations are pending or, to the
knowledge of Company, threatened; |
| |
(b) |
no
liability to the Pension Benefit Guaranty Corporation has been incurred
(other than routine premium payments) and there is no liability to any
trustee under Section 4042 of ERISA; and |
| |
(c) |
to
the knowledge of Company, no facts or circumstances exist that could give
rise to any such action, suit, claim or liability. |
| |
(a) |
Company
and each of its Subsidiaries has duly filed, and timely made or prepared
all Tax Returns required to be made or prepared by it or caused to be
filed, all Tax Returns required to be filed by them in the form and within
the time prescribed under applicable Laws for so doing (all of which Tax
Returns were correct and complete in all material respects), and has paid
all material amounts of Taxes due and payable, in each case except for any
such Tax Returns or taxes the non-filing or non-payment of which would
not, individually or in the aggregate, have a Material Adverse Effect. The
Financial Statements contain an adequate provision in accordance with GAAP
for all material amounts of Taxes payable in respect of each period
covered by such Financial Statements and all prior periods to the extent
such Taxes have not been paid, whether or not due and whether or not shown
as being due on any Tax Returns. Company and each of its Subsidiaries has
duly and timely paid all instalments on account of Taxes for the current
year that are due and payable by it whether or not assessed other than any
non-payments that would not, individually or in the aggregate, have a
Material Adverse Effect. On a consolidated basis, Company has made
adequate provision in accordance with GAAP in its books and records for
amounts at least equal to the amount of all Taxes payable by Company or
any of its Subsidiaries that will not be due and payable by the Expiry
Time in respect of any period subsequent to the period covered by such
Financial Statements and that relate to the periods ending on or prior to
the Expiry Time. |
D-1-17
| |
(b) |
Neither
Company nor any Subsidiary has received any notification that any issues
involving a material amount of Taxes have been raised (and are currently
pending) by the Canada Revenue Agency, the United States Internal Revenue
Service or any other taxing authority, including, without limitation, any
sales or property tax authority, in connection with any of the Tax Returns
filed or required to be filed, and no waivers of statutes of limitations,
or objections to any assessments or reassessments, have been given or
requested or made with respect to Company or any Subsidiary of Company.
All liability of Company and its Subsidiaries in Canada, the United States
and Barbados for Taxes has been assessed for up to and including 2004. To
the knowledge of Company, neither Company nor any Subsidiary has received:
(i) written notice from any taxing authority to the effect that any Tax
Return is being examined for assessment where such examination is
reasonably likely to result in an obligation to pay a material amount of
additional Taxes or (ii) a written proposal to assess additional Taxes
involving a material amount of Taxes, and to Company’s knowledge, no
such examination or assessment is threatened. No Tax liens exist for
material amounts of Taxes of Company or any of its Subsidiaries. Neither
Company nor any of its Subsidiaries is a party to any tax sharing or other
similar agreement or arrangement with any person (other than with Company
or any of its Subsidiaries) or any taxing authority pursuant to which
Company or any of its Subsidiaries has or could have any material
liabilities in respect of Taxes. Neither Company nor any Subsidiary has
received a refund of any material amount of Taxes to which it was not
entitled. Neither Company nor any of its Subsidiaries has made an election
under Section 897(i) of the Code to be treated as a domestic corporation
for purposes of Section 897, 1445 and 6039C of the Code. |
| |
(c) |
Each
of Company and its Subsidiaries has duly and timely withheld all Taxes and
other amounts required by Law to be withheld by it (including Taxes and
other amounts required to be withheld by it in respect of any amount paid
or credited or deemed to be paid or credited by it to or for the account
or benefit of any person, including any employees, officers or directors
and any non-resident person), and has duly and timely remitted to the
appropriate authority such Taxes and other amounts required by Law to be
remitted by it, except to the extent that the failure to so withhold or
remit has not and would not, individually or in the aggregate, have a
Material Adverse Effect. |
D-1-18
| |
(d) |
Each
of Company and its Subsidiaries has duly and timely collected all amounts
on account of any sales or transfer taxes, including goods and services,
harmonized sales and provincial or territorial sales taxes, required by
Law to be collected by it and has duly and timely remitted to the
appropriate authority any such amounts required by Law to be remitted by
it, except to the extent that such failure has or would not, individually
or in the aggregate, have a Material Adverse Effect. |
| |
(e) |
Neither
Company nor any Subsidiary has been a member of an affiliated or
consolidated group filing a United States consolidated Tax Return or has
any liability for the Taxes of any person other than Company and its
Subsidiaries under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor,
by contract or otherwise. Company has made available to Parent for
inspection: (i) copies of such of its income Tax Returns, complete and
correct in all material respects, and the income Tax Returns of its
Subsidiaries, as have been requested by Parent and (ii) copies of all
private letter rulings, revenue agent reports, closing agreements,
settlement agreements, deficiency notices and any similar documents
requested by Parent submitted by, received by or agreed to by or on behalf
of Company or its Subsidiaries and relating to material Taxes for such
taxable periods, complete and correct in all material respects. |
| |
(f) |
There
are no proceedings, assessments, reassessments, investigations, audits or
claims now pending or, to the knowledge of Company, threatened against
Company or any of the Subsidiaries in respect of any transfer pricing
matters, and there are no matters under discussion, audit or appeal with
any Governmental Authority relating to transfer pricing that would
reasonably be expected to result in a material amount of Taxes being
payable by Company or any of its Subsidiaries in respect of any period
ending on or prior to the Expiry Time. |
| |
(g) |
Neither
Company nor any of its Subsidiaries has made any payments, or has been or
is a party to a Contract (including this Agreement) that under any
circumstances could obligate it to make payments, either before or after
the completion of the Offer and the transactions contemplated under this
Agreement, that will not be deductible because of Section 162(m) or
Section 280G of the Code or similar laws of any other jurisdiction. |
“Tax” and
“Taxes” means, with respect to any entity, all income taxes (including
any tax on or based upon net income, gross income, income as specially defined, earnings,
profits or selected items of income, earnings or profits) and all capital taxes, gross
receipts taxes, environmental taxes, sales taxes, use taxes, ad valorem taxes, value added
taxes, transfer taxes, franchise taxes, licence taxes, withholding taxes or other
withholding obligations, payroll taxes, employment taxes, Canada or Quebec Pension Plan
premiums, excise, severance, social security premiums, workers’ compensation
premiums, employment insurance or compensation premiums, stamp taxes, occupation taxes,
premium taxes, property taxes, windfall profits taxes, alternative or add-on minimum
taxes, goods and services tax, customs duties or other taxes of any kind whatsoever,
together with any interest and any penalties or additional amounts imposed by any taxing
authority (domestic or foreign) on such entity or for which such entity is responsible,
and any interest, penalties, additional taxes, additions to tax or other amounts imposed
with respect to the foregoing.
D-1-19
For purposes of this paragraph, the
term “material amount of Taxes” shall mean an amount of Taxes that is
material to Company and its Subsidiaries taken as a whole.
| 22. |
Environmental
Matters |
Except
as reflected in the information regarding the Fergus, ▇▇▇▇▇▇▇ City, Barrie, Nobel and
Conway, Arkansas facilities that was included in the Available Information:
| |
(a) |
Company,
its Subsidiaries and their respective operations are, and have been, in
compliance with all Environmental Laws except for any violations where
neither the costs to comply nor the failure to comply would, individually
or in the aggregate, be material; |
| |
(b) |
neither
Company nor any Subsidiary: |
| |
(i) |
is
subject to any Environmental Laws or terms of any environmental
authorization, permit or licence which in any such case requires or would
reasonably be expected to require any material work, repairs,
construction, change in business practices or operations, or expenditures; |
| |
(ii) |
has
received written notice of any claim, action, proceeding, investigation,
demand, notice or order with respect to a material breach of or material
liability under any Environmental Laws applicable to Company or any
Subsidiary or under any indemnity granted by Company or any Subsidiary to
any other person; |
| |
(iii) |
has
any material liability with respect to, or has knowledge of, any Hazardous
Substance that has been generated, transported, treated, stored,
installed, deposited, disposed of, arranged to be deposited or disposed
of, released, discharged or emitted, or threatened to be released
discharged or emitted, at, on, from or under any property or facility
currently or formerly owned, leased, used or otherwise controlled by
Company or any of its Subsidiaries, in violation of, or in a manner or to
a location that could reasonably be expected to give rise to material
liability to Company or any of its Subsidiaries under or relating to, any
Environmental Laws or is present at, on, in, or under such currently
owned, leased, used or controlled property or facility in a condition or
at a level or concentration exceeding any remediation or decommissioning
standard set forth under Environmental Laws; or |
D-1-20
| |
(iv) |
has
any material liability or responsibility with respect to, or has knowledge
of, any Hazardous Substance that is migrating toward any Real Property; |
| |
(c) |
neither
Company nor any Subsidiary has contractually assumed any liabilities or
obligations of any other person under or relating to any Environmental
Laws; |
| |
(d) |
Company
has provided Parent with true and complete copies of all reports and
other material documents in its custody or control that assess Company’s
or its Subsidiaries’ compliance with, or potential liability under,
Environmental Laws or environmental conditions at their respective
facilities; and |
| |
(e) |
to
the knowledge of Company, none of the products manufactured by Company or any
of its Subsidiaries (or any of their respective predecessors) or
manufactured by a third party the assets or stock of which were sold to
Company or any of its Subsidiaries (or any of their respective
predecessors) contained asbestos. |
| 23. |
Absence
of Certain Business Practices |
Neither
Company nor any of its Subsidiaries has, directly or indirectly within the past five
years, given or agreed to give any gift or similar benefit to any customer, supplier,
government employee or other person who is or may be in a position to help or hinder the
business of Company or any of its Subsidiaries (or to assist Company or any of its
Subsidiaries with any actual or proposed transaction) which might subject Company or any
of its Subsidiaries to any damage or penalty in any civil, criminal or governmental
litigation or proceeding.
As
part of the Available Information, Company has provided or made available to Parent true,
correct and complete copies of all material policies of insurance under which Company or
any of its Subsidiaries is a named or additional insured. Company and its Subsidiaries
maintain insurance coverage with reputable insurers in such amounts and covering such
risks as Company reasonably believes is in accordance with normal industry practice for
companies engaged in businesses similar to that of Company and its Subsidiaries (taking
into account the cost and availability of such insurance and Company’s ability to
self-insure). Each of such insurance policies is valid and subsisting and in good
standing, there is no default thereunder and Company and each Subsidiary which is an
insured party thereunder is entitled to all rights and benefits thereunder. None of such
insurance policies is subject to any special or unusual terms or restrictions or provides
for a premium in excess of the stipulated or normal rate. No notice of cancellation or
non-renewal with respect to, nor disallowance of any claim, under such insurance policies
has been received by Company or a Subsidiary. Except as contemplated by this Agreement,
the policies of insurance maintained by Company and its Subsidiaries will remain in force
and shall not be cancelled or otherwise terminated as a result of this Agreement, the
completion of the Offer or the completion of any other transaction contemplated under this
Agreement.
D-1-21
As
part of the Available Information, Company has provided Parent with copies of all
Contracts regarding reinsurance and coinsurance treaties or agreements (including
retrocessional agreements) to which Company or any of its Subsidiaries is a party or under
which Company or any Subsidiary has any existing rights, obligations or liabilities
(“Reinsurance Contracts”).
Except
as set out in the Disclosure Statement:
| |
(a) |
the
Reinsurance Contracts are in full force and effect; |
| |
(b) |
neither
Company nor any Subsidiary, nor to the knowledge of Company, any other
party to a Reinsurance Contract, is in default in any material respect as
to any provision thereof; |
| |
(c) |
no
Reinsurance Contract contains any provision providing that the other party or
parties thereto may terminate such Reinsurance Contract as a result of the
completion of the Offer or any other transaction contemplated under this
Agreement; |
| |
(d) |
Company
has not received any notice to the effect that the financial condition of
any other party to any of the Reinsurance Contracts is impaired with the
result that a default thereunder may be reasonably anticipated, whether or
not such default may be cured by the operation of an offset in such
agreement; and |
| |
(e) |
neither
Company nor any Subsidiary has been required to place assets in trust for
the benefit of the ceding company under the terms of any Reinsurance
Contract. |
As
part of the Available Information, Company has provided Parent copies of all interim and
annual financial statements for ▇▇▇▇▇▇▇ ▇▇▇▇ Insurance Company Ltd. (“▇▇▇▇▇▇▇
▇▇▇▇”). The reserves reflected on such financial statements were adequate in the
aggregate to cover the total amount of all reasonably anticipated liabilities of ▇▇▇▇▇▇▇
▇▇▇▇ under the outstanding Reinsurance Contracts as of the respective dates of such
financial statements. The assets of ▇▇▇▇▇▇▇ ▇▇▇▇ as determined under and in accordance
with applicable Laws are in an amount at least equal to the minimum amounts required under
applicable Laws.
| 26. |
U.S.
Securities Law Matters |
Company
is a “foreign private issuer” within the meaning of Rule 3b-4 under the United
States Securities Exchange Act of 1934, as amended, and less than 40% of the Class A
Common Shares and less than 40% of the Class B Subordinate Voting Shares are held by U.S.
holders within the meaning of Rule 14d-1 of the United States Securities Exchange Act of
1934, as amended. Company has not made an offering of securities registered under the
United States Securities Act of 1933, as amended (the “United States Securities
Exchange Act”). Company does not have any securities registered pursuant to the
United States Securities Exchange Act and is not required to file reports pursuant to
section 12 and 15(d) of the United States Securities Exchange Act.
D-1-22
| 27. |
Investment
Company Status |
Company
is not registered as an “investment company” under the United States Investment
Company Act of 1940, as amended.
| 28. |
Accuracy
of Information |
None
of the information supplied by Company specifically for inclusion or incorporation by
reference in any document to be filed with any Governmental Entity or distributed to the
Shareholders in connection with the transactions contemplated hereby will, at the
respective times filed with the Governmental Entity and at the date of any amendment or
supplement and at the time of distribution to the Shareholders, 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 were made, not misleading. Notwithstanding the foregoing,
Company does not make any representation or warranty with respect to statements made or
incorporated by reference in any of the foregoing documents based upon information
regarding Parent or the Offeror that has been supplied by Parent or the Offeror
specifically for inclusion or incorporation by reference in any such document. All such
documents will comply as to form in all material respects with the provisions of all
applicable Laws.
Except
for GMP Securities L.P., no broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission or to the reimbursement of any of its
expenses or any similar arrangements in connection with the Offer or any of the
transactions contemplated under this Agreement as a result of action by Company or any of
its affiliates or their respective Representatives. Company has delivered to Parent a
correct and complete copy of all agreements between Company or any Subsidiary with GMP
Securities L.P. in connection with the Offer or any of the transactions contemplated under
this Agreement.
D-1-23
Schedule D-2 –
Representations and Warranties of Parent
| (a) |
Parent
is a corporation validly existing under the laws of the State of Delaware; |
| (b) |
the
Offeror will, at the time of the Offer, be a corporation duly incorporated and
organized and validly existing under the CBCA; |
| (c) |
Parent
has the requisite corporate power and authority to enter into this Agreement
and to perform its obligations under the terms of the Offer and this Agreement; |
| (d) |
the
Offeror will, at the time of the Offer, have the requisite corporate power and
authority to make the Offer and perform its obligations contemplated under the
Offer and the terms of this Agreement; |
| (e) |
the
execution and delivery of this Agreement by Parent and the consummation by
Parent of the transactions contemplated by this Agreement have been duly
authorized by the board of directors of Parent, and no other proceedings on the
part of Parent are necessary to authorize this Agreement; |
| (f) |
this
Agreement has been duly executed and delivered by Parent and constitutes a
legal, valid and binding obligation of Parent, enforceable against Parent in
accordance with its terms; |
| (g) |
none
of the execution and delivery by Parent of this Agreement, the completion of
the transactions contemplated under this Agreement and the compliance by Parent
with its obligations under the terms of this Agreement will result in a breach
of: |
| |
(i) |
the
constating documents of Parent; |
| |
(ii) |
any
agreement or instrument to which Parent is a party or by which Parent or any of
its property or assets are bound; |
| |
(iii) |
any
judgment, decree, order or award of any court, Governmental Authority or
arbitrator; or |
| |
(iv) |
any
applicable Law; and |
| (h) |
as
at February 23, 2006, Parent and the Offeror shall have provided evidence
satisfactory to Company acting reasonably that Parent has binding commitments
in place to ensure that the required funds are available to effect payment in
full by the Offeror for all of the Shares subject to the Offer as at that date
and continuing to the time the Offer is first commenced within the meaning of
applicable securities Laws, and Parent and the Offeror have provided to Company
on or before this Agreement was executed and delivered documentation, which
Company advised was satisfactory to it, giving comfort regarding such binding
commitments; and |
D-2-1
| (i) |
no
broker, finder or investment banker is entitled to any brokerage, finder’s
or other fee or commission or to the reimbursement of any of its expenses or
any similar arrangements in connection with the Offer or any of the
transactions contemplated under this Agreement as a result of action by Parent
or any of its affiliates or Representatives. |
D-2-2