EXHIBIT 99.1
SUPPORT AGREEMENT
This support agreement is made as of 19th day of September 2004 between
Microcell Telecommunications Inc. (the "CORPORATION") and ▇▇▇▇▇▇ Wireless
Communications Inc. (the "OFFEROR").
RECITALS
A. This Agreement sets out the terms and conditions upon which the Offeror
will, either directly or through a wholly owned subsidiary, make offers
on the terms set forth in Schedule A to this Agreement (the "Offers") for
all of the issued and outstanding Securities of the Corporation at a
consideration per Security as specified in Schedule A hereto.
B. The Board, after consultation with its financial and legal advisors, has
determined that the consideration per Share offered pursuant to the
Offers is fair to the holders of Shares and that the Offers are in the
best interests of the Corporation and the holders of Shares, has approved
this Agreement and has resolved to recommend that holders of Shares
accept the Offers in respect of the Shares.
THE PARTIES HERETO HEREBY AGREE AS FOLLOWS:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
(a) "Acquisition Proposal" means, other than from the Offeror or any issuance
of Shares pursuant to the exercise of the Warrants and the COM Canada
Warrants, any merger, amalgamation, statutory arrangement,
recapitalization, take-over bid, sale of material assets (or any lease,
long-term supply agreement or other arrangement having the same economic
effect as a sale of material assets), liquidation, sale of a material
number of shares or rights or interests therein or thereto or similar
transactions involving the Corporation and/or the Subsidiaries, or a
written proposal to do so, excluding the Offers;
(b) "Board" means the board of directors of the Corporation;
(c) "Business Day" means any day on which banks in each of the Cities of
Montreal and Toronto are open for business;
(d) "CBCA" means the Canada Business Corporations Act, as amended from time
to time;
(e) "Class A Shares" means the Class A restricted voting shares in the
capital of the Corporation;
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(f) "Class B Shares" means the Class B non-voting shares in the capital of
the Corporation;
(g) "COM Canada Warrants" means the warrants issued by the Corporation to COM
Canada, LLC pursuant to a warrant agreement between the Corporation and
COM Canada, LLC effective as of May 3, 2004;
(h) "Commissioner of Competition" means the Commissioner of Competition
appointed under the Competition Act and any person duly authorized to
exercise the powers and perform the duties of the Commissioner of
Competition;
(i) "Competition Act" means the COMPETITION ACT of Canada (R.S.C. 1985, c.
C-34), as amended;
(j) "Competition Act Clearance" means:
(i) except where the Commissioner of Competition waives the obligation
to file, the filing by the Offeror and the Corporation of the
notifications required under Part IX of the Competition Act; and
(ii) any one of the following:
(A) the issuance of an advance ruling certificate ("ARC") by the
Commissioner of Competition under Section 102(1) of the Competition
Act, in form and substance satisfactory to the Offeror acting
reasonably, to the effect that the Commissioner of Competition is
satisfied that the Commissioner of Competition would not have
sufficient grounds on which to apply to the Competition Tribunal for
an order under Section 92 of the Competition Act with respect to the
transactions contemplated in the Offers and which ARC shall remain
in force, unamended, at the Effective Date; or
(B) the waiting period(s) under section 123 of the Competition Act shall
have expired or been earlier terminated or waived and the
Commissioner of Competition shall have advised the Offeror (which
advice will not have been rescinded or amended), to the satisfaction
of the Offeror, in its reasonable judgement but subject to the
Offeror's obligations in Section 7.2 hereof, that she does not
intend to oppose the purchase of the Securities under the Offers and
will not have made or have threatened to make an application under
the Competition Act in respect of the purchase of the Securities
under the Offers or in respect of the business or assets of the
Offeror or the Corporation, where such application or threat remains
outstanding.
(k) "Competition Tribunal" means the Competition Tribunal established under
the COMPETITION TRIBUNAL ACT of Canada (R.S.C. 1985, c.19 (2nd Supp.)),
as amended;
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(l) "Compulsory Acquisition" means a compulsory acquisition pursuant to the
compulsory acquisition provisions of Part XVII of the CBCA;
(m) "Confidentiality Agreement" means the letter agreement dated July 14,
2004 between the Offeror and the Corporation;
(n) "Credit Facilities" means collectively, the Amended and Restated Tranche
A Exit Facility Agreement, the Tranche B-Term Loan A Credit Agreement and
the Tranche B-Term Loan B Credit Agreement, each dated as of March 17,
2004 and entered into among, inter alia, the Corporation, as parent,
Microcell Solutions Inc., as borrower, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank, Toronto
Branch, as administrative agent, and the financial institutions parties
thereto as lenders, as amended, supplemented, restated, extended or
otherwise modified from time to time;
(o) "CSAs" means Canadian Securities Administrators;
(p) "Data Room Information" means the documents listed in the index annexed
as Schedule C, all of which the Corporation confirms it has made
available to the Offeror or its legal counsel pursuant to an IntraLinks
website;
(q) "Effective Date" means the first date on which the Offeror has taken up
and paid for the Securities under the Offers;
(r) "Environmental Laws" means all applicable federal, provincial, state,
local and foreign laws, imposing liability or standards of conduct for or
relating to the regulation of activities, materials, substances or wastes
in connection with or for or to the protection of human health, safety,
the environment or natural resources (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation) and under common law;
(s) "Environmental Liabilities" means, with respect to any person, all
liabilities, obligations, responsibilities, response, remedial and
removal costs, investigation costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages,
natural resource damages, consequential damages, treble damages, costs
and expenses, fines, penalties and sanctions incurred as a result of or
related to any claim, suit, action, administrative order, investigation,
proceeding or demand by any person, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute
or common law, relating to any environmental matter arising under or
related to any Environmental Laws, Environmental Permits, or in
connection with any Release or threatened Release or presence of a
Hazardous Material whether on, at, in, under, from or about or in the
vicinity of any real or personal property;
(t) "Environmental Permits" means all permits, licenses, written
authorizations, certificates, approvals, program participation
requirements, sign-offs or registrations required by or available with or
from any Governmental Entity under any Environmental Laws;
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(u) "Equivalent Insurance" an insurance policy that is substantially
equivalent in terms of amount, scope, exclusions, deductibles and
limitations to the Corporation's current directors' and officers'
liability insurance policy;
(v) "Filed CSA Documents" means any documents filed with the CSAs that are
disclosed in full under the Corporation's name pursuant to the SEDAR
website;
(w) "fully-diluted basis" means with respect to the number of outstanding
Shares at any time, the number of such Shares of any class that would be
outstanding assuming all outstanding Options and other rights to purchase
Class A Shares and Class B Shares have been exercised, including the
exercise of the Warrants and the COM Canada Warrants but excluding the
Rights;
(x) "Governmental Entity" means any (i) multinational, federal, provincial,
territorial, state, municipal, local or other governmental or public
department, central bank, court, commission, commissioner (including the
Commissioner of Competition), tribunal (including the Competition
Tribunal) board, bureau, agency or instrumentality, domestic or foreign,
(ii) any subdivision or authority of any of the foregoing, or (iii) any
quasi-governmental or private body exercising any regulatory,
expropriation or taxing authority under or for the account of any of the
above;
(y) "Hazardous Material" means any substance, material or waste which is
regulated by, or forms the basis of liability under, any Environmental
Laws, including any material or substance which is defined as a "solid
waste", "hazardous waste", "hazardous material", "hazardous substance",
"dangerous good", "extremely hazardous waste", "restricted hazardous
waste", "pollutant", "contaminant", "hazardous constituent", "special
waste", "toxic substance" or other similar term or phrase under any
Environmental Laws, or petroleum or any fraction or by-product thereof,
asbestos, substances used for dry-cleaning and the waste and breakdown
products thereof, polychlorinated biphenyls (PCB's), or any radioactive
substance;
(z) "including", "includes" or similar expressions are not intended to be
limiting and all deemed to be followed by the expression "without
limitation";
(aa) "Liens" means any hypothecs, mortgages, liens, charges, security
interests, encumbrances and adverse claims;
(bb) "Material Adverse Effect" means (a) with respect to the Offeror, any
change or effect having a material adverse effect on the ability of the
Offeror to perform its obligations under this Agreement or to consummate
the transactions contemplated hereby on a timely basis or (b) with
respect to the Corporation and the Subsidiaries, any change or effect
having a material adverse effect on the results of operations or
financial condition of the Corporation and the Subsidiaries, on a
consolidated basis; provided, however, that with respect to the
Corporation and the Subsidiaries, effects relating to (i) changes in
general economic or political
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conditions or the securities markets, (ii) changes in laws, rules,
regulations or orders of any Governmental Entity or interpretations
thereof by any Governmental Entity or changes in accounting rules, (iii)
changes affecting generally the industries in which the Corporation or
any of the Subsidiaries conducts business, (iv) the announcement of the
transactions contemplated by this Agreement or other communication by the
Offeror of its plans or intentions with respect to any of the businesses
of the Corporation or any of the Subsidiaries, (v) the consummation of
the transactions contemplated by this Agreement or any actions by the
Offeror or the Corporation taken pursuant to this Agreement, (vi) any
natural disaster or any acts of terrorism, sabotage, military action or
war (whether or not declared) or any escalation or worsening thereof,
(vii) any change in the market price or trading volume of any of the
Securities, (viii) any failure by the Corporation to meet any earnings
estimates of equity analysts, for any period, (ix) any actual or
threatened litigation by any security holder, whether by way of class
action, derivative proceeding or otherwise arising from allegations of
breach of fiduciary duty relating to this Agreement or the transactions
contemplated hereby or (x) any matter of which the Offeror has actual
knowledge on the date hereof shall be deemed not to constitute a
"Material Adverse Effect" and shall not be considered in determining
whether a "Material Adverse Effect" has occurred;
(cc) "Offers" shall have the meaning ascribed thereto in the Recitals of this
Agreement and "Offer" means any of the Offers;
(dd) "Options" means any existing or future rights or options to purchase
Shares outstanding under the Stock Option Plan or otherwise;
(ee) "Outside Date" means January 1, 2005, subject to the right of either
party to postpone the Outside Date by 30 days if the approvals listed in
Schedule B have not been obtained, by giving written notice to the other
party to such effect no later than 5:00 p.m. (Montreal time) on the date
that is 15 days prior to the original Outside Date, or such other date as
may be agreed to by the parties;
(ff) "partially-diluted basis" means with respect to the number of outstanding
Class B Shares at any time, the number of Class B Shares that would be
outstanding assuming all outstanding Options for Class B Shares and other
rights to purchase Class B Shares (other than Rights) have been exercised
(including the exercise of the COM Canada Warrants for Class B Shares),
but not assuming the exercise of the Warrants or conversion of Class A
Shares;
(gg) "Person" includes any natural person, body corporate, Governmental
Authority or other juridical entity;
(hh) "Release" means any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or migration
of Hazardous Material in the indoor or outdoor environment, including the
movement of Hazardous Material through or in the air, soil, surface
water, ground water or property;
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(ii) "Rights" has the meaning ascribed thereto in the Rights Plan;
(jj) "Rights Plan" means the Shareholder Rights Plan of the Corporation dated
as of May 1, 2003, as amended or supplemented from time to time;
(kk) "Securities" means the Shares and the Warrants, collectively;
(ll) "Shares" means the Class A Shares and the Class B Shares, collectively;
(mm) "Stock Option Plan" means the stock option plan of the Corporation dated
as of May 1, 2003, as amended or supplemented from time to time;
(nn) "Stock Purchase Plan" means the stock purchase plan of the Corporation
dated as of May 1, 2003, as amended or supplemented from time to time;
(oo) "Subsequent Acquisition Transaction" means any proposed statutory
arrangement, amalgamation, merger, reorganization, consolidation,
recapitalization or other transaction involving the Corporation and/or
the Subsidiaries and the Offeror or an affiliate of the Offeror;
(pp) "Subsidiaries" means Microcell Solutions Inc., Inukshuk Internet Inc. and
Telcom Investments Inc., all wholly-owned subsidiaries of the
Corporation, and any other subsidiary of the Corporation whose
consolidated assets or revenues represent 5% or more of the consolidated
assets or revenues, as the case may be, of the Corporation;
(qq) "Superior Proposal" means an unsolicited bona fide written Acquisition
Proposal made or received under circumstances that the Board determines
in good faith, after consultation with its financial and outside legal
advisors, would, if consummated in accordance with its terms, result in a
transaction which (A) is more favourable to the holders of Shares from a
financial point of view than the transactions contemplated by this
Agreement, and (B) is reasonably capable of completion taking into
account all legal, financial, regulatory and other aspects of such
proposal and the party making such proposal;
(rr) "Termination Fee" means a fee equal to $45 million;
(ss) "Termination Fee Event" shall have the meaning ascribed thereto in
Section 9.1 of this Agreement;
(tt) "Warrants" means the Warrants 2005 and the Warrants 2008, collectively;
(uu) "Warrants 2005" means the Warrants 2005 of the Corporation issued
pursuant to the warrant indenture dated as of May 1, 2003 and amended on
November 20, 2003 between the Corporation and Computershare Trust Company
of Canada; and
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(vv) "Warrants 2008" means the Warrants 2008 of the Corporation issued
pursuant to the warrant indenture dated as of May 1, 2003 and amended on
November 20, 2003 between the Corporation and Computershare Trust Company
of Canada.
1.2 SECURITIES
References to "Securities" herein includes any securities into which the
Securities or any of them may be reclassified, sub-divided, consolidated or
converted and any rights and benefits arising therefrom including any
extraordinary distributions of securities which may be declared in respect of
such Securities.
1.3 CURRENCY
All sums of money referred to in this Agreement shall mean Canadian
funds.
1.4 KNOWLEDGE
Where any representation or warranty contained in this Agreement is
expressly qualified by reference to the knowledge of the Corporation, it shall
be deemed to refer to the actual knowledge of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇ after due
inquiry.
2. THE OFFERS
2.1 TIMING
The Offeror agrees to make the Offers for all of the Securities as soon
as possible but in any event not more than ten Business Days after the date of
this Agreement.
2.2 CONDITIONS PRECEDENT
Notwithstanding Section 2.1, the Offeror shall not be required to make
the Offers and shall, if it determines not to make the Offers, terminate this
Agreement by written notice to the Corporation, if at the time the Offeror
proposes to make the Offers:
(a) there exists a cease trade order, injunction or other prohibition or
order at law or under applicable legislation against the Offeror making
the Offers or taking up and paying for all of the Securities under the
Offers or completing a Compulsory Acquisition or Subsequent Acquisition
Transaction; other than in respect of those government or regulatory
approvals, waiting or suspensory periods, waivers, permits, consents,
reviews, orders, rulings, decisions and exemptions referred to in
Schedule A and Schedule B to this Agreement; or
(b) the Corporation shall have breached any of its representations,
warranties, covenants or other agreements contained in this Agreement
(for representations, warranties, covenants or other agreements qualified
as to materiality, in any respect, and for all other representations,
warranties, covenants or other agreements, in any material respect) and
such breach is not curable or if curable is
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not cured within 15 days after written notice of the breach has been
given to the Corporation by the Offeror in which case the period
contemplated in Section 2.1 shall be accordingly extended.
The foregoing conditions are for the sole benefit of the Offeror and may be
waived by the Offeror in whole or in part at any time and shall be deemed to
have been waived by it if the Offeror makes the Offers.
3. REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE OFFEROR
The Offeror hereby represents and warrants that:
(a) Organization, Standing and Corporate Power. The Offeror has been duly
incorporated under applicable law, is validly existing and has the
corporate power and authority to own its properties and conduct its
businesses as currently owned and conducted.
(b) Authority; No conflict. The Offeror 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 the Offeror
and the consummation by the Offeror of the transactions contemplated by
this Agreement have been duly authorized by the board of directors and no
other corporate proceedings on the part of the Offeror are necessary to
authorize this Agreement or the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Offeror and
constitutes a valid and binding obligation of the Offeror, enforceable
against the Offeror in accordance with its terms subject to the usual
exceptions as to creditors' rights and the availability of equitable
remedies and subject to compliance with the Competition Act. Assuming the
approvals and clearances identified in Schedule B hereto are obtained,
the execution and delivery by the Offeror of this Agreement and the
completion of the transactions contemplated hereby, will not result in a
violation or breach by the Offeror of, require any consent to be obtained
by the Offeror under or give rise to any termination rights or other
adverse consequences under any provision of:
(i) its certificate of incorporation, articles, by-laws or other charter
documents;
(ii) any law, regulation, order, judgment or decree applicable to it in
all material respect, except where such violation or breach would
not be material; or
(iii) any material contract, agreement, license, franchise or permit by
which the Offeror is bound or is subject or is the beneficiary.
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(c) Consents and Approvals. No consent, approval or authorization of, or
declaration or filing with, or notice to, any Governmental Entity which
has not been received or made is required by the Offeror in connection
with the execution and delivery of this Agreement by the Offeror, except
as identified in Schedule B hereto or where the absence or failure
thereof would not be material.
(d) Financial Resources. The Offeror has the financial resources and is
financially capable of completing the Offers.
3.2 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation hereby represents and warrants that, except as disclosed
in the Data Room Information or in the Filed CSA Documents:
(a) Organization, Standing and Corporate Power. The Corporation and each of
the Subsidiaries has been duly incorporated under applicable law, is
validly existing and has the corporate power and authority to own its
properties and conduct its businesses as currently owned and conducted.
(b) Authority; No Conflict. The Corporation 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 the
Corporation and the consummation by the Corporation of the transactions
contemplated by this Agreement have been duly authorized by the Board and
no other corporate proceedings on the part of the Corporation are
necessary to authorize this Agreement or the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the
Corporation and constitutes a valid and binding obligation of the
Corporation, enforceable against the Corporation in accordance with its
terms subject to the usual exceptions as to creditors' rights and the
availability of equitable remedies and subject to compliance with the
Competition Act. Assuming the approvals and clearances identified in
Schedule B hereto are obtained, the execution and delivery by the
Corporation of this Agreement and the completion of the transactions
contemplated hereby, will not result in a violation or breach by the
Corporation of, require any consent to be obtained or filing to be made
by the Corporation under or give rise to any termination rights or other
adverse consequences under, any provision of:
(i) its certificate of incorporation, articles or by-laws;
(ii) any law, regulation, order, judgment or decree applicable to it,
except where such violation or breach would not be material; or
(iii) any material contract, agreement, license, franchise or permit by
which the Corporation is bound or is subject or is the beneficiary,
other than the Credit Facilities.
(c) Licences, Consents and Approvals. Except for licences, registrations and
qualifications which, if not obtained, would not reasonably be expected,
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individually or in the aggregate to have a Material Adverse Effect, each
of the Corporation and the Subsidiaries is licensed, registered and
qualified to carry on its business as presently carried on by it and is
in good standing in all material respects in each jurisdiction in which
the nature of its current business makes any such qualification
necessary, and all such licences, registrations and qualifications are
valid and subsisting and in good standing in all material respects. No
consent, approval or authorization of, or declaration or filing with, or
notice to, any Governmental Entity which has not been received or made is
required by the Corporation in connection with the execution and delivery
of this Agreement by the Corporation, except as identified in Schedule B
or where the absence or failure thereof would not be material.
(d) Support of the Offers. The Board, after consultation with its financial
and outside legal advisors, has determined that the consideration per
Share offered pursuant to the Offers is fair to the holders of the Shares
and that the Offers are in the best interests of the Corporation and the
holders of the Shares, has approved this Agreement and has resolved to
support and to recommend that holders of the Shares accept the Offers.
(e) Rights Plan. The Board has resolved to waive the application of the
Rights Plan to allow the Offeror to proceed with the Offers and take-up
and pay for Securities deposited pursuant to the Offers without any
dilutive effects resulting from the issue or exercise of the Rights.
(f) Capital Structure. The authorized share capital consists of an unlimited
number of Class A Shares, an unlimited number of Class B Shares, an
unlimited number of first preferred shares (issuable in series) and an
unlimited number of second preferred shares (issuable in series). As at
August 31, 2004, there were 200,669 Class A Shares, 29,518,545 Class B
Shares, 3,998,302 Warrants 2005 and 6,163,943 Warrants 2008 issued and
outstanding. In addition, as at August 31, 2004, the COM Canada Warrants
entitled the holder thereof, to acquire 3,977,272 additional Class B
Shares. As at August 31, 2004, the Corporation had granted Options to
acquire 1,391,181 Class B Shares. Except as described in this Agreement,
as at August 31, 2004, there were no options, warrants, conversion
privileges or other rights, agreements, arrangements or commitments
obligating the Corporation to issue or sell any shares of the capital of
the Corporation or securities or obligations of any kind convertible into
or exchangeable for any shares of the capital of the Corporation.
(g) Canadian Securities Legislation. The Corporation is a "reporting issuer"
under the applicable Canadian and a foreign private issuer under United
States securities legislation and is not in default of any material
requirements of any applicable securities laws; no delisting, suspension
of trading in or cease trading order with respect to the Securities is
pending or, to the knowledge of the Corporation, threatened.
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(h) Financial Statements. Each of the consolidated financial statements of
the Corporation included in the Filed CSA Documents filed after May 1,
2003 has been prepared in accordance with Canadian generally accepted
accounting principles applied on a consistent basis during the periods
involved (except as may otherwise be indicated in the notes thereto or,
in the case of unaudited interim financial statements, as may be
permitted by applicable laws) and fairly present in all material respects
the consolidated financial position of the Corporation as of the dates
thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited interim
financial statements, to normal year-end audit adjustments and except
that such unaudited interim financial statements may omit notes which are
not required in the unaudited financial statements).
(i) Absence of Certain Changes or Events; No Undisclosed Material
Liabilities. Since June 30, 2004 (i) each of the Corporation and the
Subsidiaries has conducted its business in the ordinary course, including
as to the making of forward commitments, (ii) no liability or obligation
of any nature (whether absolute, accrued, contingent or otherwise)
material to the Corporation and the Subsidiaries, on a consolidated
basis, has been incurred other than in the ordinary course and (iii)
there has not occurred any change which has had a Material Adverse
Effect. No indebtedness for borrowed money has been created, incurred,
assumed or guaranteed since June 30, 2004 in an amount in excess of
$1,000,000 in the aggregate.
(j) Assets. Each of the Corporation and the Subsidiaries has good and valid
title to the material assets reflected as its property in the latest
balance sheet of the Corporation included in the Filed CSA Documents
(other than any such asset disposed of or consumed in the ordinary course
of business), free and clear of any and all Liens except (A) Liens
permitted or required under the Credit Facilities, (B) those reflected or
reserved against in the latest balance sheet of the Corporation included
in the Filed CSA Documents, (C) taxes not in default and payable without
penalty and interest, and (D) other Liens that individually or in the
aggregate do not have a Material Adverse Effect.
(k) Litigation, etc. (i) There is no suit, claim, action or proceeding
pending or, to the knowledge of the Corporation, threatened against the
Corporation or any of the Subsidiaries before any Governmental Entity,
and (ii) neither the Corporation nor any of the Subsidiaries is subject
to any outstanding order, writ, judgment, injunction, decree or
arbitration order or award that, in any such case described in clauses
(i) and (ii), has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. There are no
suits, claims, actions or proceedings pending or, to the knowledge of the
Corporation, threatened against the Corporation or any of the
Subsidiaries, seeking to prevent the transactions contemplated by this
Agreement.
(l) Compliance with Applicable Law. Each of the Corporation and the
Subsidiaries is in compliance with all applicable statutes, law,
ordinances, rules, certificates,
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orders, injunctions, arbitral awards, grants, regulations and other
authorization of any Governmental Entity, except for non-compliances
which would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(m) Brokers. No broker, investment banker, financial advisor or other person
is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of the
Corporation, other than ▇.▇. ▇▇▇▇▇▇ Securities Inc., ▇.▇. ▇▇▇▇▇▇
Securities Canada Inc. and N M Rothschild & Sons Canada Securities
Limited, the fees and expenses of which will be paid by the Corporation
in accordance with the terms of the engagement letters entered into with
each of them (copies of which engagement letters will be given to the
Offeror redacted to blackout the fee structure referred to therein).
Based on the price of the Offers as set forth in Schedule A, the
Corporation will be required to pay fees (not including expenses) in the
aggregate amount of approximately $13,950,000 pursuant to such engagement
letters, of which $2,150,000 has been paid to date.
(n) Written Opinions of Financial Advisors. The Corporation has received the
opinions of each of ▇.▇. ▇▇▇▇▇▇ Securities Inc. and N M Rothschild & Sons
Canada Securities Limited on September 19, 2004 (a true and complete copy
of which, when given in writing, will be delivered to the Offeror by the
Corporation), to the effect that, based upon and subject to the matters
set forth therein, as of the date thereof, the consideration to be
received by the holders of Shares in the Offers is fair, from a financial
point of view, to such holders, and such opinions have not been withdrawn
or modified at the date of the Agreement.
(o) Restrictions on Business Activities. There is no arbitral award,
judgment, injunction, order or decree binding upon the Corporation or any
of the Subsidiaries that has or could reasonably be expected to have the
effect of prohibiting, restricting, or impairing any business practice of
any of them, any acquisition or disposition of property by any of them,
or the conduct of the business by any of them as currently conducted,
which could reasonably be expected to have a Material Adverse Effect.
(p) Registration Rights. Except for the COM Canada Warrants and the Warrants,
no holder of Securities has any right to compel the Corporation to
register or otherwise qualify the Securities (or any of them) for public
sale or distribution in Canada or the United States.
(q) Rights of Other Persons. No person has any right of first refusal or
option to purchase or any other right of participation in any of the
material properties or assets owned by the Corporation or any of the
Subsidiaries, or any part thereof, nor is any person entitled to any
material rebate, refund, payment, credit or other benefit in the event
that any product or service provided by the Corporation or any of the
Subsidiaries fails to achieve specified results, a specified level of
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performance, or other criteria where any such entitlement would
reasonably be expected to have a Material Adverse Effect.
(r) Full Disclosure. All Data Room Information was true, complete and
accurate in all material respects as at its respective dates, except to
the extent that any inaccuracies have not had and could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect with respect to the Corporation. No information contained in this
Agreement or in the Data Room Information or other reports delivered by
or on behalf of the Corporation to the Offeror or any other written
statement furnished by or on behalf of the Corporation to the Offeror
contains a misrepresentation (within the meaning of the Securities Act
(Ontario)), except to the extent that it relates to a matter or
circumstance which could not reasonably be expected to have a Material
Adverse Effect with respect to the Corporation and except as to financial
forecasts and guidance for which the Corporation represents and warrants
only that they have been prepared in good faith using assumptions that
were considered to be fair and reasonable as at the dates of such
forecasts and guidance.
(s) Absence of Cease Trade Orders. No order ceasing or suspending trading in
the Securities or any of them is outstanding and no proceedings for this
purpose have been instituted or, to the knowledge of the Corporation, are
pending, contemplated or threatened.
(t) Insurance. All insurance maintained by the Corporation or any of the
Subsidiaries is in full force and effect and in good standing and neither
the Corporation nor any of the Subsidiaries is in default, whether as to
payment of premium or otherwise, under the terms of any such insurance
nor has the Corporation or any Subsidiary failed to give any notice or
present any claim under any such insurance in a due and timely fashion or
received notice or otherwise become aware of any intent of an insurer to
either claim any default on the part of the Corporation or any of the
Subsidiaries or not to renew any policy of insurance on its expiry or to
increase any deductible or cost, except where such failure or default
would reasonably be expected not to have a Material Adverse Effect.
(u) Real Property. All of the real property owned by the Corporation or any
of the Subsidiaries is completely and accurately described in the Data
Room Information. Except for Liens permitted or required under the Credit
Facilities or where non-compliance with Liens would not have a Material
Adverse Effect, each such real property is held with good and marketable
title free and clear of all Liens and the purpose for which each such
real property is used is in compliance with all zoning and local use
requirements. To the knowledge of the Corporation and the Subsidiaries,
the landlords or licensors under such licences, leases, sub-leases and
agreements are not in material breach of any of their obligations
thereunder and no state of facts which, after notice or lapse of time or
both or otherwise, would result in a material breach or default
thereunder which could reasonably be expected to have a Material Adverse
Effect. Also disclosed in the Data Room Information is a complete and
accurate list of all material immovable
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or real property licenses, leases, sub-leases and all agreements or
offers to lease or sub-lease which are in force and any amendments,
extensions and/or additions thereto to which the Corporation or any
Subsidiary is a party, by which any of them is bound, or in respect of
which any of them is entitled to benefit. Accurate and complete copies of
all such material licenses, leases, sub-leases and agreements and of any
and all material amendments, extensions and/or additions thereto have
been included in the Data Room Information.
(v) Obligations. There are no outstanding obligations relating to any written
notice or order issued by any Governmental Entity in respect of any of
the properties owned or leased by the Corporation or any of the
Subsidiaries nor has the Corporation or any of the Subsidiaries received
any notice from any Governmental Entity alleging any deficiency or
non-compliance with any municipal agreements (including any development
or site plan agreements), building restrictions, zoning or building laws
or by-laws, building codes, fire codes or environmental laws which would
individually or in the aggregate have a Material Adverse Effect.
(w) Expropriation. No part of the property or assets of the Corporation or
any of the Subsidiaries has been taken, condemned or expropriated by any
Governmental Entity nor has any notice or proceeding in respect thereof
been given or commenced nor is the Corporation or any of the Subsidiaries
aware of any intent or proposal to give such notice or commence any such
proceedings.
(x) Licences. All licences that the Corporation or any of the Subsidiaries
are required to obtain that are related to their respective businesses or
the ownership or operation of their respective properties and assets have
been obtained, are disclosed in the Data Room Information and are
currently valid, in full force and effect and in good standing, expect
for such failure as could not individually or in the aggregate reasonably
be expected to have a Material Adverse Effect on the Corporation. Neither
the Corporation nor any of the Subsidiaries has violated the terms or
conditions of any such licence, except for such violations as could not
individually or in the aggregate reasonably be expected to have a
Material Adverse Effect on the Corporation. No notice of a violation of
any such licence has been received by the Corporation or any of the
Subsidiaries or recorded or published and, to the knowledge of the
Corporation, no proceeding is pending or threatened to revoke, suspend,
cancel, prevent the renewal of, or limit any such licence which would
individually or in the aggregate have a Material Adverse Effect.
(y) Labour Matters.
(i) Neither the Corporation nor any of the Subsidiaries is a party to
any collective bargaining agreement nor to the knowledge of the
Corporation subject to any application for certification or
threatened or apparent union-organizing campaigns for employees not
covered under a collective bargaining agreement nor are there any
current, pending or, to the
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knowledge of the Corporation, threatened strikes or lockouts affecting
the Corporation or any of the Subsidiaries or any charge of unfair labour
practice (other than routine individual grievances).
(ii) Except where the same would not result in a Material Adverse Effect,
neither the Corporation nor any of the Subsidiaries is subject to
any claim for wrongful dismissal, constructive dismissal or any
other tort claim, actual or, to the knowledge of Corporation,
threatened, or any litigation, actual or, to the knowledge of
Corporation, threatened, relating to employment or termination of
employment of employees or independent contractors, other than those
claims or such litigation which are disclosed in the Data Room
Information.
(iii) Except where the same would not result in a Material Adverse
Effect, each of the Corporation and the Subsidiaries has operated in
accordance with all applicable laws with respect to employment and
labour, including employment and labour standards, occupational
health and safety, pay equity, workers' compensation, human rights
and labour relations and there are no current, pending or, to the
knowledge of the Corporation, threatened proceedings before any
board or tribunal with respect to any employment or labour matters.
(iv) The Data Room Information lists all the employee benefit, health,
welfare, supplemental employment, pension, profit sharing, deferred
compensation, stock compensation, stock option or purchase,
retirement plans or arrangements applicable to present or former
employees or directors of the Corporation or any of the Subsidiaries
which are currently maintained or participated in by the Corporation
or any of the Subsidiaries (the "Employee Plans").
(v) Except where the same would not result in a Material Adverse Effect,
all of the Employee Plans are registered where required by, and are
in good standing in all material respects under, all applicable laws
or other legislative, administrative or judicial promulgations
applicable to the Employee Plans and, other than routine claims for
benefits, there are no actions, claims, proceedings or governmental
audits (and, to the knowledge of the Corporation, none are pending),
relating to the Employee Plans.
(vi) No amendments to any Employee Plan have been promised and no
amendments to any Employee Plan will be made or promised prior to
the Effective Date which affect or pertain to the employees of
Corporation or any of the Subsidiaries.
(vii) Other than as described in the Data Room Information, there are no
agreements or undertakings by the Corporation or any of the
Subsidiaries
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to provide post-retirement benefits to any of their respective
present or former employees.
(viii) Neither the Corporation nor any of the Subsidiaries has
established or maintains any pension plan.
(z) Employees. The Data Room Information contains or there has been delivered
to the Offeror:
(i) a complete and accurate list, in all material respects, as of the
date of this Agreement, of the employee numbers and annual
compensation entitlements of all individuals earning annual
compensation of $150,000 or more who are employed by the Corporation
or any of the Subsidiaries on a full or part time basis, including
all individuals who may be considered to be employees pursuant to
applicable law or equity, notwithstanding that they may have been
laid off or terminated or on a short term, long term or parental
leave, together with the location of their employment;
(ii) a complete and accurate list, in all material respects, as of the
date of this Agreement, of the date each such individual was hired
by the Corporation or a Subsidiary, as applicable; and
(iii) a summary of the severance arrangements pursuant to each contract
entitling any officer, director, consultant or employee of the
Corporation or any subsidiary to any bonus, retention payment,
severance payment, change in control payment or similar entitlement
as a result of entering into this Agreement or any of the
transactions contemplated hereby.
(aa) Tax Matters.
(i) Each of the Corporation and the Subsidiaries has timely filed, or
caused to be filed, all tax returns required to be filed by them,
all of which returns were correct and complete in all material
respects.
(ii) Each of the Corporation and the Subsidiaries, taken as a whole, have
made adequate provision in their books and records for any taxes
accruing in respect of any period subsequent to the period covered
by the Corporation's most recently published consolidated financial
statements.
(iii) Since the publication date of the Corporation's most recently
published consolidated financial statements, no tax liability not
reflected in such statements or otherwise provided for has been
assessed, proposed to be assessed, incurred or accrued which could
reasonably be expected to have a Material Adverse Effect.
(iv) The Corporation and each of the Subsidiaries have paid, or caused to
be paid, all taxes that are shown on its tax returns to be due and
payable or have provided adequate accruals in accordance with
generally accepted accounting principles,
-17-
which are reflected in the Corporation's most recently published
consolidated financial statements, for any taxes for the period covered
by such financial statements that have not been paid, whether or not
shown as being due on any tax returns.
(v) Except as reserved in the most recently published consolidated
financial statements of the Corporation, neither the Corporation nor
any of the Subsidiaries has received any written notification that
any material issues have been raised (and are currently pending or
threatened) by the Canada Revenue Agency or any other taxing
authority in any jurisdiction, including any sales tax authority, in
connection with any tax returns and no waivers of statutes of
limitation have been given with respect to the Corporation or any of
the Subsidiaries. All assessments of tax made against the
Corporation or any of the Subsidiaries were paid when due, and
adequate reserves have been accrued on the most recently published
financial statements for those amounts owing but not yet due. Except
as reserved in the most recently published consolidated financial
statements of the Corporation, there are no proposed (but
unassessed) additional taxes relating to the Corporation or any of
the Subsidiaries and none has been asserted which, if assessed,
would reasonably be expected to have a Material Adverse Effect.
(vi) Each of the Corporation and the Subsidiaries has deducted and
remitted to the relevant Governmental Entity on or before the due
dates therefor all income taxes, employment insurance contributions,
pension plans contributions, employer health tax remittances, sales
taxes, use taxes, goods and services taxes and other taxes or
deductions or other amounts which it is required by applicable law
or contract to so collect and remit to all Governmental Entities or
other persons entitled to receive payment of same.
(bb) Environmental Matters.
To the Corporation's knowledge, each of the of the Corporation and the
Subsidiaries and their respective businesses, operations, and properties:
(A) has obtained and currently holds all Environmental Permits
which are required under all Environmental Laws except where
the absence of same would not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect;
(B) is in material compliance with all Environmental Laws and all
terms and conditions of all Environmental Permits except where
the failure to be in compliance would not individually or in
the aggregate reasonably be expected to have a Material Adverse
Effect;
(C) has not received any order, request or notice from any person
alleging a material violation of any Environmental Laws except
where any such order, request or notice would not individually
or in the aggregate reasonably be expected to have a Material
Adverse Effect;
-18-
(D) except where the same would not individually or in the
aggregate reasonably be expected to have a Material Adverse
Effect (a) is not a party to any litigation or administrative
proceeding, nor so far as it is aware, is any litigation or
administrative proceeding threatened against it or its property
or assets, which in either case (1) asserts or alleges that it
violated any Environmental Laws, (2) asserts or alleges that it
is required to clean up, remove or take remedial or other
response action due to the Release of any Hazardous Substances,
or (3) asserts or alleges that it is required to pay all or a
portion of the cost of any past, present or future cleanup,
removal or remedial or other response action which arises out
of or is related to the Release of any Hazardous Substances,
(b) is not aware of any conditions existing currently or likely
to exist which could reasonably be expected to subject it to
damages, penalties, injunctive relief or cleanup costs under
any Environmental Laws or which require or are likely to
require cleanup, removal. remedial action or other response
pursuant to applicable Environmental Laws by it; and (c) is not
subject to any judgment, decree, order or citation related to
or arising out of applicable Environmental Law and has not been
named or listed as a potentially responsible party by any
Governmental Entity in a matter arising under any Environmental
Laws;
(E) has not used, owned operated, occupied or managed, had charge
of or control over, now or in the past, any real property that
is not free of contamination from any Hazardous Material except
for such contamination that could not reasonably be expected to
adversely impact the value or marketability of such real
property and which could not reasonably be expected to result
in Environmental Liabilities except where the same would not
individually or in the aggregate reasonably be expected to have
a Material Adverse Effect;
(F) has not caused, suffered or permitted to occur any Release of
Hazardous Materials on, at, in, under, above, to, from or about
any of the real property used, owned, operated, occupied or
managed by it or over which it had charge of or control now or
in the past by it contrary to any Environmental Laws except
where the same would not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect; and
(G) is not involved in operations or knows of any facts,
circumstances or conditions, including any Release of Hazardous
Material, that could reasonably be expected to result in any
Environmental Liabilities except where the same would not
individually or in the aggregate reasonably be expected to have
a Material Adverse Effect.
-19-
(cc) Computer Systems and Software.
The computer systems and software of the Corporation and the Subsidiaries
including personal computers and special purpose systems (including
billing systems, operational support systems and business support
systems) are fully operational and have the appropriate licensing and
material documentation describing, among other things, the operation of
the hardware, software, required maintenance, appropriate period run
books or other operational procedures, all operating systems,
applications and utilities, except where the absence of same would not
individually or in the aggregate reasonably be expected to have a
Material Adverse Effect. To the Corporation's knowledge, such
documentation matches the implementation of the hardware and software in
use.
(dd) Subscribers.
The Corporation has disclosed to the Offeror or its legal counsel the
number, as of May 31, 2004, of postpaid and prepaid subscribers of the
Corporation in the provinces of Ontario and Quebec, in the Maritimes and
in Western Canada.
4. COVENANTS OF THE CORPORATION
4.1 CONDUCT OF BUSINESS
The Corporation hereby agrees that until the Effective Date or the Offers
have been withdrawn in accordance with the terms hereof or this Agreement has
been terminated pursuant to Section 8:
(a) it shall conduct its business in the ordinary course, except as may be
required in order to comply with the terms of this Agreement;
(b) it shall use its reasonable commercial efforts to comply promptly with
all material requirements which applicable law may impose on the
Corporation and the Subsidiaries;
(c) subject to compliance with applicable competition laws, it will promptly
advise the Offeror orally and in writing of any change which becomes
known to its senior officers which would have a Material Adverse Effect;
(d) subject to compliance with applicable competition laws, it will use its
reasonable efforts to consult on an ongoing basis with the Offeror in
order that the representatives of the Offeror will become more familiar
with the philosophy and techniques of the Corporation and the
Subsidiaries as well as with their respective businesses and financial
affairs, such consultations, subject to compliance with applicable
competition laws, to include, using its reasonable efforts, consultations
in relation to any commitments, arrangements or transactions proposed to
be entered into that would be out of the ordinary course of business or
outside the current business plan and that could reasonably be expected
to give rise to a material liability or commitment of any kind and will
use reasonable efforts so
-20-
that such consultations be effected on a basis that will allow sufficient
time for the Offeror to give reasonable consideration to the same;
(e) except as contemplated hereunder, and subject to compliance with
applicable competition laws, it shall not:
(i) pay any dividend or other distribution to shareholders (including by
way of return of capital), or issue or commit to issue any share,
warrant or other ownership interest in the Corporation or any of the
Subsidiaries, except as a result of the exercise of any Warrants,
COM Canada Warrants or Options or pursuant to the Stock Purchase
Plan;
(ii) grant or commit to grant any options, warrants, convertible
securities or rights to subscribe for, purchase or otherwise acquire
or exchange into any shares or other ownership interest in the
Corporation or the Subsidiaries;
(iii) directly or indirectly redeem, purchase or otherwise acquire or
commit or offer to acquire any share, warrant or other ownership
interest in the Corporation or the Subsidiaries;
(iv) effect any subdivision, consolidation or reclassification of any of
its Securities (or pay any dividend or make any distribution on or
in respect of any of its Securities); or
(v) except if required in order to comply with the Canadian ownership
regulations under the Telecommunications Act (Canada) and with the
Offeror's consent, such consent not to be unreasonably withheld,
amend its articles or by-laws or permit any Subsidiary to amend its
articles or by-laws;
(vi) except as publicly disclosed prior to the date hereof, commence to
undertake a substantial or unusual expansion of its business
facilities or an expansion that is out of the ordinary and regular
course of business consistent with prior practice in light of the
current industry and economic conditions, or permit any subsidiary
to do so;
(vii) amend, vary or modify, or take any other action under the COM
Canada Warrants, the Stock Option Plan, the Stock Purchase Plan, or
the Warrants, other than is required pursuant to the provisions
thereof as the same are currently in effect;
(viii) guarantee the payment of any indebtedness or create, incur or
assume any indebtedness or permit any Subsidiary to do so relating
to an aggregate amount of $1 million or more;
(ix) satisfy or settle any claim prior to the same being due, relinquish
any contractual rights, enter into any interest rate, currency or
commodity swaps, ▇▇▇▇▇▇ or similar financial obligations, commence
any claim out of
-21-
the ordinary course of business or amend or otherwise vary any
existing claim out of the ordinary course of business or permit any
Subsidiary to do any of the foregoing, except where the same would
not have a Material Adverse Effect;
(x) enter into any non arm's length transactions or grant or permit any
Subsidiary to grant to any of their respective officers and
directors any increase in compensation (except as expressly required
pursuant to the terms of any existing written employment agreement
including a collective bargaining agreement or except for (i) the
payment of the 2004 corporate bonuses in an aggregate amount of up
to $15 million, inclusive of the entitlement Level "F" employees;
(ii) payments of amounts under the Corporation's long term bonus
plan contained in the Data Room Information and as varied to reflect
the current circumstances which payments shall not exceed $4.5
million in the aggregate, inclusive of the entitlement Level "F"
employees; and (iii) routine annual increases all in the ordinary
course of business consistent with past practice) or to pay any
severance or termination amounts (except pursuant to an existing
written employment agreement), whether or not such compensation,
payment or amount is payable in cash, or enter into or modify any
employment arrangements or contract with any such person (whether
with an existing employee or a new employee) or enter into any
agreement to pay severance amounts for termination or termination
packages (or enter into any commitments for such payment);
(f) it shall not settle or compromise any claim brought by any present,
former or purported holder of any of Securities in connection with the
transactions contemplated by this Agreement prior to the Effective Date
without the prior written consent of the Offeror, such consent not to be
unreasonably withheld;
(g) except in the ordinary course or as required by applicable law, it shall
not enter into or modify in any material respect any contract, agreement,
commitment or arrangement if it would have a Material Adverse Effect;
(h) prior to the Effective Date, the Corporation shall, and shall cause each
of the Subsidiaries to, take such actions as are necessary or desirable
to reorganize their respective capital, assets and corporate structure as
the Offeror may reasonably require; provided, however, that no such
reorganization will be undertaken if (i) the Offeror has not agreed to
pay the reasonable actual out-of-pocket costs and expenses for filing
fees and external counsel and auditors which may be incurred directly
relating to same in the event that the Effective Date does not occur,
(ii) the effectiveness thereof shall only occur immediately prior to the
Offeror taking up the Securities under the Offers and (iii) any such
actions shall not constitute a breach of the covenants, representations
and warranties hereunder;
(i) it shall use its best efforts to maintain and shall use its best efforts
to cause each Subsidiary to maintain its existing insurance except where
replaced by insurance
-22-
from insurers with at least as favourable credit ratings where such
replacement insurance offers similar coverage, is subject to no more
onerous deductibles and is at a similar cost; and
(j) it shall advise the Offeror in writing promptly after any senior officer
acquires actual knowledge thereof:
(A) of any event occurring subsequent to the date of this Agreement that
would render any representation or warranty of the Corporation
contained in this Agreement, if made on or as of the date of such
event or the Effective Date, untrue, inaccurate or incomplete in any
material respect (for any representation or warranty which expressly
speaks solely of a specific date, if it would have been untrue,
inaccurate or incomplete in respect of such date);
(B) of the occurrence of any event that has a Material Adverse Effect;
(C) of any breach by the Corporation of any covenant contained herein;
and
(D) of any death, disability, resignation, termination of employment or
other departure of any senior officer of the Corporation or of any
Subsidiary.
4.2 COVENANTS RELATING TO THE TRANSACTION
The Corporation hereby agrees that unless the Offers have been withdrawn
in accordance with the terms hereof or this Agreement is terminated pursuant
to Section 8:
(a) if the Offeror takes up and pays for Securities pursuant to the Offers,
it will assist the Offeror in connection with any Compulsory Acquisition
or Subsequent Acquisition Transaction to acquire the remaining
Securities, provided that the consideration offered in connection with
the Subsequent Acquisition Transaction for each class of Securities is at
least equal to the consideration offered under the Offers;
(b) subject to obtaining an irrevocable and complete discharge in favour of
each member of the Board and confirmation that insurance coverage is
maintained as contemplated in Section 6.3 and provided that the Offeror
has taken up and paid for at least two-thirds of the outstanding Shares,
it shall use its reasonable commercial efforts to cause such members of
the Board to resign as the Offeror may require, at the time and in the
manner requested by the Offeror, as of the Effective Date, with a nominee
of the Offeror to be appointed to the Board immediately after each such
resignation. In the event that less than two-thirds of the outstanding
Shares but more than 50.1% of the outstanding Shares on a fully diluted
basis are taken up and paid for by the Offeror, the Corporation shall use
its reasonable commercial efforts to cause a majority of the members of
the Board to resign, with a nominee of the Offeror to be appointed
immediately after each such resignation, the whole as provided above;
-23-
(c) it shall recommend that holders of Shares accept the Offers in respect of
the Shares and not act, or fail to act, in any way that might reasonably
be expected to discourage such holders from accepting the Offers and,
except as permitted hereby, not withdraw such recommendation;
(d) it shall use all reasonable efforts to cause each holder of Options,
entitlements under the Stock Option Plan, COM Canada Warrants or Warrants
to exercise same (including, as regards Options or such entitlements,
through application of acceleration of vesting) or to surrender same for
cash or Shares in accordance with the terms thereof; provided that in
connection with any acceleration of the vesting of Options caused by the
Corporation for such purpose, the original vesting thereof shall revert
six months after the Effective Date in respect of any such Options that
remains outstanding;
(e) it shall apply for and use all reasonable efforts to obtain or assist the
Offeror in obtaining, as the case may be, all required regulatory and
other approvals and clearances, including those identified in Schedule B,
other than Competition Act Clearance, relating to the Corporation and the
Subsidiaries and make all necessary filings and notifications in order to
permit the transactions contemplated hereby to proceed together with all
consents and other approvals of third parties as may be necessary or
desirable for the consummation of such transactions;
(f) it shall use all reasonable efforts to assist the Offeror in securing
Competition Act Clearance, including but not limited to:
(i) promptly filing all required notification(s) under Part IX of the
Competition Act;
(ii) promptly co-operating with and providing all necessary information
and documentation reasonably required by the Commissioner of
Competition or her authorized representative upon being requested to
do so by such authority; and
Notwithstanding the foregoing, all requests and enquiries from the
Commissioner of Competition or her authorized representative shall be
dealt with by the Corporation in consultation with the Offeror.
Furthermore, the Corporation shall:
(A) not extend or consent to any extension of any waiting period under
the Competition Act or enter into any agreement with the
Commissioner of Competition or her authorized representative
relating to the Offers to not consummate the transactions
contemplated hereby, except with the consent of the Offeror;
(B) promptly notify the Offeror of written communications of any nature
from the Commissioner of Competition relating to the Offers and
provide the Offeror with copies thereof, except to the extent of any
Highly Confidential Information (as defined in the Confidentiality
Agreement), which Highly Confidential Information shall be provided
only to the
-24-
external legal counsel of the Offeror and shall not be shared by such
counsel with any other person;
(C) permit the Offeror to review in advance any proposed written
communications of any nature with the Commissioner of Competition or
her authorized representative relating to the Offers, and provide
the Offeror with final copies thereof, except to the extent of any
Highly Confidential Information (as defined in the Confidentiality
Agreement), which Highly Confidential Information shall be provided
only to the external legal counsel of the Offeror and shall not be
shared by such counsel with any other Person; and
(D) not participate in any substantive meeting or discussion (whether in
person, by telephone or otherwise) with the Commissioner of
Competition or her authorized representative relating to the Offers
in respect of any filings, investigation or inquiry concerning the
Offers unless it consults with the Offeror in advance and gives the
Offeror the opportunity to attend and participate thereat (except
where the Commissioner of Competition or her authorized
representative expressly requests that the Offeror should not be
present at the meeting or discussion or part or parts of the meeting
or discussion); and
(g) it shall use all reasonable efforts to defend all lawsuits or other
legal, regulatory or other proceedings challenging or affecting the
property or assets of the Corporation or any of the Subsidiaries, and in
co-operation with Offeror, this Agreement or the consummation of the
transactions contemplated hereby.
4.3 DIRECTORS' CIRCULAR AND LIST OF HOLDERS
The Corporation confirms to the Offeror and agrees that:
(a) it shall use its best efforts to mail a directors' circular (which shall
reflect the determination and recommendation referred to in Section
3.2(d)) simultaneously with the mailing of the Offers, as well as
providing drafts thereof to the Offeror, in order to provide the Offeror
with an opportunity to comment thereon (it being agreed that the final
form and content of the directors' circular shall be determined by the
Corporation acting reasonably and on a basis consistent with the terms
hereof); and
(b) it shall cause a list of holders of Securities prepared by the
Corporation or the transfer agent(s) of the Corporation in accordance
with section 50 of the CBCA and a list of holders of Options and any
other rights, Warrants, COM Canada Warrants or convertible securities
currently outstanding (with full particulars as to the purchase, exercise
or conversion price and expiry date) prepared by the Corporation (as well
as a security position listing from each depositary, including The
Canadian Depository for Securities Limited) to be delivered to the
Offeror within five Business Days after execution of this Agreement and
supplemental
-25-
lists setting out any changes thereto for each Business Day thereafter to
be delivered forthwith to the Offeror, all such deliveries to be both in
printed form and computer-readable format.
4.4 NO SOLICITATION, ETC.
Subject to Section 5 and applicable laws, the Corporation agrees:
(a) not, directly or indirectly, through any officer, director, employee,
representative or agent of the Corporation or any of the Subsidiaries, to
solicit, initiate or knowingly encourage or facilitate (including by way
of furnishing information or entering into any form of agreement,
arrangement or understanding) the initiation of any inquiries or
proposals regarding an Acquisition Proposal, participate in any
discussions or negotiations regarding any Acquisition Proposal, withdraw
or modify in a manner adverse to the Offeror the approval of the Board of
the transactions contemplated hereby, accept or approve or recommend any
Acquisition Proposal or cause the Corporation to enter into any agreement
related to any Acquisition Proposal;
(b) immediately to cease and cause to be terminated any existing discussions
or negotiations with any parties (other than the Offeror) with respect to
any potential Acquisition Proposal;
(c) not to release or permit the release of any third party from or waive any
confidentiality, non-solicitation or standstill agreement to which such
third party is a party; and
(d) immediately to cease to provide any other party with access to
information concerning the Corporation and the Subsidiaries and request,
in accordance with the confidentiality agreement signed with such
parties, the return or destruction of all confidential information
provided to any third party that has entered into a confidentiality
agreement with the Corporation relating to any potential Acquisition
Proposal.
5. ACQUISITION PROPOSALS, CHANGES IN RECOMMENDATION, ETC.
5.1 ACQUISITION PROPOSALS
The Corporation shall provide the Offeror with a copy of (i) any written
notice from any person informing it that such person is considering making, or
has made, an Acquisition Proposal or (ii) any Acquisition Proposal (or any
amendment thereto), in each case as soon as practicable after it is received
by the Corporation.
5.2 ACCESS TO INFORMATION
If the Corporation receives a written request for non-public information
relating to the Corporation and/or the Subsidiaries or any of them in
connection with an Acquisition
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Proposal or for access to the properties, books or records of the Corporation
and/or the Subsidiaries or any of them from a person who shall have made or
intends to make an Acquisition Proposal and the Board determines in good
faith, after consultation with financial advisors and outside legal advisors
that the failure to take such action would be inconsistent with the Board's
fiduciary duties and that such proposal, if consummated, in accordance with
its terms, is reasonably likely to result in a Superior Proposal, then:
(a) the Corporation may, subject to entering into a confidentiality agreement
containing a standstill provision substantially similar to that contained
in the Confidentiality Agreement, provide such person with access to such
information; and
(b) subject to any restrictions in that regard contained in the
Confidentiality Agreement, the Offeror will be provided with a list of or
copies of the information and access to similar information as that
provided to such person, except to the extent such information was
already provided or made available to the Offeror.
5.3 CHANGES IN RECOMMENDATION
If the Corporation receives an Acquisition Proposal, the Corporation may
withdraw or modify in a manner adverse to the Offeror its approval or
recommendation of the Offers or accept, approve, recommend or enter into any
agreement in respect of an Acquisition Proposal (other than the
confidentiality agreement referred to in Section 5.2(a)) on the basis that
such an Acquisition Proposal would constitute a Superior Proposal if:
(a) the Corporation has given notice to the Offeror of its intention to do
so, which notice shall disclose the fees and expenses payable to the
Corporation's financial advisors referred to in Section 3.2(m) in respect
of the completion of such Acquisition Proposal together with, in the case
of an Acquisition Proposal that includes non-cash consideration, the
value or range of values attributed by the Board in good faith for such
non-cash consideration after consultation with its financial advisors;
(b) the Corporation has complied with this Section 5;
(c) the Corporation is not in default under Section 4.1(e)(i)-(v), 4.2(c),
4.3 or 4.4 of this Agreement; and
(d) five Business Days shall have elapsed from the later of (i) the date the
Offeror received the notice referred to in Section 5.3(a) and (ii) the
date the Offeror was provided with a copy of such Acquisition Proposal.
5.4 RIGHT TO MATCH
The Offeror may, but is not required to, during the five Business Day
period provided for in Section 5.3(d), offer in writing to amend the terms of
this Agreement and, if it does so, then the Board shall review any such offer
in good faith, in consultation with its financial and outside legal advisors
and, if the Board:
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(a) determines that the Acquisition Proposal would thereby cease to be a
Superior Proposal, it will cause the Corporation to enter into an
amendment to this Agreement reflecting the offer by the Offeror to amend
the terms hereof; or
(b) continues to believe that the Acquisition Proposal would nonetheless
remain a Superior Proposal, provided that the Corporation has paid to the
Offeror the Termination Fee in accordance with the terms of Section 9.2,
it may cause the Corporation to reject the offer by the Offeror to amend
the terms hereof and terminate this Agreement as provided in Section 8.2.
5.5 AMENDMENTS TO ACQUISITION PROPOSALS
For greater certainty, any amendment of an Acquisition Proposal shall
constitute a new Acquisition Proposal for the purposes of this Section 5.
6. COVENANTS OF THE OFFEROR
6.1 OFFERS
Subject to the terms and conditions hereof, the Offeror hereby agrees to:
(a) provide copies of drafts of the Offers to the Corporation and its
advisors, in order to provide them with an opportunity to comment thereon
(it being agreed that the final form and content of the Offers (except
for those terms and conditions described in Schedule A hereto, which will
form part of the Offers) shall be determined by the Offeror, consistent
with the terms hereof);
(b) apply for and use all reasonable efforts to obtain all required
regulatory and other approvals and clearances, including those identified
in Schedule B, other than Competition Act Clearance, and make all
necessary filings and notifications in order to permit the transactions
contemplated hereby to proceed together with all consents and other
approvals of third parties as may be necessary or desirable for the
consummation of such transactions;
(c) subject to Section 7.2, use all reasonable efforts to secure Competition
Act Clearance, including but not limited to:
(i) promptly filing all required notification(s) under Part IX of the
Competition Act; and
(ii) promptly co-operating with and providing all necessary information
and documentation reasonably required by the Commissioner of
Competition or her authorized representative upon being requested to
do so by such authority;
The Offeror shall:
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(A) promptly notify the Corporation of material written communications
from the Commissioner of Competition or her authorized
representative and provide the Corporation with copies thereof; and
(B) permit the Corporation to review in advance any material proposed
written communications with the Commissioner of Competition or her
authorized representative, and provide the Corporation with final
copies thereof, except in case (A) and (B) above, to the extent of
any Highly Confidential Information (as defined in the
Confidentiality Agreement), which Highly Confidential Information
shall be provided only to the external legal counsel of the
Corporation and shall not be shared by such counsel with any other
person;
(d) if all of the conditions of the Offers are either met or, if applicable,
waived at or prior to the expiry of the Offers, the Offeror shall take up
the Securities deposited under the Offers and pay for such Securities as
soon as practicable after, and in any event within two Business Days of,
the first date on which the Offeror is permitted to do so under
applicable securities laws;
(e) in the event that the Offeror increases the consideration per Security
offered under the Offers (but, for greater certainty, excluding any
greater consideration paid as a consequence of a Compulsory Acquisition
Transaction), the Offeror will pay such increased consideration to each
holder of Securities in respect of all Securities tendered,
notwithstanding that such Securities have previously been taken up and
paid for by the Offeror;
(f) if it takes up and pays for Securities pursuant to the Offers, use all
commercially reasonable efforts to acquire the remaining Securities,
within a period not exceeding 120 days after the date of completion of
the Offers, by way of Compulsory Acquisition or Subsequent Acquisition
Transaction for a consideration equal to the consideration under the
Offers for each class of Securities;
(g) following the Effective Date, it will cause the Corporation to duly and
timely perform its obligations pursuant to (i) the compensation policy of
the Corporation in respect of its directors and (ii) the Corporation's
employment arrangements with officers and employees; and
(h) without limitation to any other provision hereof, use all reasonable
efforts to defend all lawsuits or other legal, regulatory or other
proceedings challenging or affecting this Agreement or the consummation
of the transactions contemplated hereby.
6.2 STOCK OPTION PLAN AND RETENTION PLAN
The Offeror acknowledges and agrees that:
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(a) the Board may resolve to permit all persons holding Options, which by
their terms are otherwise currently exercisable or not, to exercise such
Options concurrent with the expiry of the Offers, including by causing
the vesting thereof to be accelerated;
(b) the Board may authorize the cancellation of Options concurrent with the
expiry of the Offers in consideration for cash and/or Shares issued, in
each case in lieu of the cash value thereof;
(c) it shall agree with the Corporation to tendering arrangements in respect
of the Offers in order to facilitate the conditional exercise of the
Options and tender of the Shares to be issued as a result of such
conditional exercise (including providing for the ability of holders of
Options to tender their Options or to tender Shares on the basis of
guaranteed deliveries);
(d) (i) holders of Options will be permitted to tender Shares issuable
thereunder and for such purpose to exercise their Options, conditional
upon the Offeror taking up and paying for the Shares under the Offers,
which Options shall be deemed to have been exercised concurrently with
the take-up of Shares and (ii) all Shares that are to be issued pursuant
to any such conditional exercise shall be accepted as validly tendered
under the Offers, provided that the holders of such Options indicate that
the Shares are tendered pursuant to the Offers and otherwise validly
accept the Offers in accordance with their terms with respect to such
Shares;
(e) if certain holders of Options do not exercise and tender their Options as
contemplated under Section 6.2(d), the Offeror shall offer to pay to such
holders, in respect of each Share subject to an Option, the cash amount,
if any, by which the purchase price for the Shares under the Offers
exceeds the exercise price of such Option on the date of take-up of, and
payment for, the Shares under the Offers, in exchange for the termination
of their Options; and
(f) (i) subject to obtaining the consent of the Offeror, such consent not to
be unreasonably withheld, the Board may establish a new retention pool
for the benefit of certain or all of its key employees and officers so as
to retain them until the Effective Date and (ii) the Board is entitled on
or before the Effective Date to prepay the amounts which may become
payable pursuant to the Corporation's existing retention plan and
existing employment arrangements with its officers and employees.
6.3 DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNITIES
(a) Without limiting the right of the Corporation to do so prior to the
Effective Date, the Offeror hereby agrees to use its reasonable
commercial efforts to secure directors' and officers' liability insurance
coverage for the current and former directors and officers of the
Corporation and the Subsidiaries on a six year "trailing" (or "run-off")
basis. If a trailing policy is not available at a reasonable cost, then
the Offeror agrees that for the entire period from the Effective Date
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until six years after the Effective Date, the Offeror will cause the
Corporation or any successor to the Corporation to maintain the
Corporation's current directors' and officers' liability insurance policy
or Equivalent Insurance having in either case terms and conditions no
less advantageous in any material respect to the directors and officers
of the Corporation or the Subsidiaries (with respect to their acting as
directors or officers thereof) than those contained in the policy in
effect on the date hereof, for all current and former directors and
officers of the Corporation or the Subsidiaries, covering claims made
prior to or within six years after the Effective Date. Further, the
Offeror agrees that, after the expiration of that six year period, if
there is no cost in doing so, the Offeror shall use reasonable commercial
efforts to cause such directors and officers to be covered under the
Offeror's then existing directors' and officers' liability insurance
policy.
(b) From and after the Effective Date, the Offeror shall not do anything to
prevent the Corporation from indemnifying and hold harmless and providing
advancement of expenses to, all past and present directors and officers
of the Corporation or the Subsidiaries to the extent such persons are
lawfully entitled to indemnity from the Corporation or the Subsidiaries
or have the right to advancement of expenses as of the date of this
Agreement by the Corporation or the Subsidiaries pursuant to the
Corporation's or Subsidiaries' by-laws and indemnity agreements, in
existence immediately prior to the Effective Date, for acts or omissions
occurring on or prior to the Effective Date (including acts or omissions
occurring in connection with the approval of this Agreement and
consummation of the transactions contemplated hereby). The Offeror will
not (unless it assumes such obligations and gives written notice to the
beneficiaries thereof to the extent it has their addresses) liquidate the
Corporation or otherwise take any other action to materially adversely
affect the ability of the Corporation to satisfy its indemnity
obligations referred to herein.
(c) The provisions of this Section 6.3 are intended to be for the benefit of,
and will be enforceable by, each insured or indemnified party, his or her
heirs and his or her legal representatives. Furthermore, the provisions
of this Section 6.3 shall survive the termination of this Agreement as a
result of the occurrence of the Effective Date.
6.4 CONFIDENTIALITY AGREEMENT
The Offeror hereby confirms that it remains bound by the terms of the
Confidentiality Agreement in accordance with the terms thereof, except to the
extent modified hereby and notwithstanding that this Agreement may be
terminated for any reason whatsoever.
7. FURTHER ASSURANCES
7.1 SATISFACTION OF CONDITIONS OF THE OFFERS
Subject to the conditions herein provided, each party hereto agrees to
use its commercially reasonable efforts to take, or cause to be taken, all
action and to do, or cause to be
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done, all things necessary, proper or advisable to consummate and make
effective as promptly as is practicable the transactions contemplated by the
Offers and this Agreement, including the execution and delivery of such
documents as the other party hereto may reasonably require, and, without
limiting the foregoing, shall use commercially reasonable efforts:
(a) to obtain all necessary government or regulatory approvals, waivers,
permits, consents, reviews, orders, rulings, decisions, and exemptions
(including, among others, those of Industry Canada and of any stock
exchanges or other securities or regulatory authorities) and waiver or
expiration of all waiting or suspensory periods, in each case required to
be obtained by it;
(b) to satisfy (or cause the satisfaction of) the conditions of the Offers
set forth in Schedule A to this Agreement, the satisfaction of which are
under its control, provided that the Corporation is not responsible for
obtaining the approvals and clearances identified in Schedule B hereto,
except to the extent specifically provided for elsewhere in this
Agreement;
(c) to oppose, lift or rescind any cease trade order, injunction or other
prohibition or other order which adversely affects the Offeror's ability
to consummate the Offers, to take up and pay for the Securities or to
complete a Compulsory Acquisition or Subsequent Acquisition Transaction;
and
(d) to effect all necessary registrations, filings and applications under all
applicable laws.
Each of the parties hereto, where appropriate, shall reasonably co-operate
with the other in taking such actions.
7.2 COMPETITION ACT
Notwithstanding any other provisions of this Agreement, including
Schedule A hereto:
(a) if the Commissioner of Competition advises the Offeror that she has
concerns about the competitive impact of the transactions
contemplated by the Offers and this Agreement, and that Competition
Act Clearance will be given if certain steps are taken to resolve
those concerns, the Offeror shall take any steps necessary to secure
Competition Act Clearance (including negotiating, offering to take
and, if such offer is accepted, effecting by consent agreement or
order, hold separate arrangement, undertaking or otherwise, the
divestiture of assets, or undertaking of any form of behavioural
remedy, however, not including the divestiture of all of the
Securities or all or substantially all of the assets of the
Corporation and its Subsidiaries), so as to enable the transactions
contemplated by the Offers and this Agreement to be completed prior
to the Outside Date; and
(b) subject to Section 7.2(a) above, the Offeror shall be entitled,
either before and/or after the Outside Date or the date on which the
Securities are taken
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up, to challenge before the Commissioner of Competition, the Competition
Tribunal and/or a court any position(s) taken by the Commissioner of
Competition.
8. TERM AND TERMINATION
8.1 TERM
Except as expressly provided herein, this Agreement shall be effective
from the date hereof until the earlier of the Effective Date and the
termination of this Agreement in accordance with its terms.
8.2 TERMINATION BY THE CORPORATION
The Corporation, when not in default in the performance of its material
obligations under this Agreement and when not in breach of its representations
and warranties contained herein, may, without prejudice to any other rights,
terminate its obligations under this Agreement by written notice to the
Offeror if:
(a) the Offers have not been made within the time period provided in Section
2.1;
(b) the Offers (or any amendment thereto) do not conform in all material
respects with the description of the Offers in Schedule A;
(c) the Offeror has not taken up and paid for the Securities on or prior to
the Outside Date;
(d) the Offers shall have expired or have been withdrawn in accordance with
their terms without the Offeror having purchased any Securities pursuant
to the Offers as a result of the failure of any of the conditions set
forth in Schedule A;
(e) Securities deposited under the Offers have not been taken up and paid for
on or before the date that is two Business Days after the expiry date of
the Offers (as they may have been extended) for any reason whatsoever
other than that all the terms and conditions of the Offers have not been
complied with or, to the extent the Offeror is permitted to waive such
conditions pursuant to the provisions of Schedule A, waived by the
Offeror; it being understood that if all of the terms of the extended
Offers have been complied with or waived by the Offeror, such Securities
shall have been taken up and paid for before any further extension of the
Offers in accordance with applicable Canadian securities legislation;
(f) a Termination Fee Event shall have occurred, provided that no termination
under this Section 8.2(f) shall be effective unless and until the
Corporation shall have paid to the Offeror the Termination Fee in
accordance with the terms of Section 9.2; or
(g) the Offeror shall have breached any of its representations, warranties,
covenants or other agreements contained in this Agreement and such breach
is not curable
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or, if curable, is not cured within 15 days after written notice of the
breach has been given to the Offeror by the Corporation.
8.3 TERMINATION BY OFFEROR
The Offeror, when not in default in the performance of its material
obligations under this Agreement, may, without prejudice to any other rights
other than as provided in Section 9.3, terminate its obligations under this
Agreement by notice to the Corporation if:
(a) the Offeror has not taken up and paid for the Securities on or prior to
the Outside Date;
(b) a Termination Fee Event shall have occurred;
(c) the Offers shall have expired or have been withdrawn in accordance with
their terms without the Offeror having purchased, or having been required
to purchase pursuant to this Agreement or applicable law, any Securities
pursuant to the Offers as a result of the failure to satisfy any of the
conditions set forth in Schedule A;
(d) the Corporation shall have breached any of its representations,
warranties, covenants or other agreements contained in this Agreement and
such breach is not curable or, if curable, is not cured within 15 days
after written notice of the breach has been given to the Corporation by
the Offeror; or
(e) Competition Act Clearance cannot be secured except by divesting or
agreeing to divest all of the Securities or all or substantially all of
the assets of the Corporation and its Subsidiaries.
8.4 EFFECT OF TERMINATION
In the event of the termination of this Agreement pursuant to Section 8.2
or 8.3, this Agreement (except for (i) Sections 9.2, 9.4, 10.1 and 11.2 and
(ii) the Confidentiality Agreement) shall forthwith become void and cease to
have any force or effect without any liability on the part of either party
hereto or any of its affiliates; provided that nothing in this Section 8.4
shall relieve either party to this Agreement of liability for any breach of
this Agreement occurring prior to the termination thereof.
9. TERMINATION FEE EVENT
9.1 TERMINATION FEE EVENT
A "Termination Fee Event" shall occur if, prior to the Effective Date:
(a) the Board withdraws or modifies in a manner adverse to the Offeror its
approval or recommendation of the Offers and makes a public announcement
to that effect;
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(b) the Board recommends any Superior Proposal and makes a public
announcement to that effect; or
(c) the Board fails to reaffirm its recommendation of the Offers by press
release within a reasonable time after the public announcement or
commencement of any Acquisition Proposal (or in the event that the Offers
are scheduled to expire, prior to the scheduled expiry of the Offers);
provided in each case, (i) the Offeror is not in default in the performance of
its material obligations under this Agreement and (ii) for greater certainty,
that none of the events described in Section 8.2(a), (b) or (e) shall have
occurred.
9.2 PAYMENT OF TERMINATION FEE
The Corporation shall pay the Termination Fee to the Offeror if this
Agreement is terminated pursuant to Section 8.2(f) or 8.3(b), by bank draft or
wire transfer no later than the first Business Day following the Termination
Fee Event.
9.3 LIQUIDATED DAMAGES
In the event the Termination Fee is paid to the Offeror, no other amounts
will be due and payable as damages or otherwise by the Corporation and the
Offeror hereby accepts that the Termination Fee is in lieu of any damages or
any other payment or remedy which it may be entitled to. The Offeror agrees
that the Termination Fee constitutes payment of liquidated damages which are a
genuine anticipated assessment or estimate of the damages which it will suffer
or incur as a result of the event giving rise to such damages and resulting in
the termination of this Agreement and does not and will not constitute payment
of a penalty.
9.4 ADDITIONAL FEE OBLIGATION
If this Agreement has been terminated without any payment of the
Termination Fee and in circumstances where (i) the Offeror is not in breach of
any or its representations, warranties, covenants or other agreements herein
in any material respect and (ii) the Competition Act Clearance has been
obtained prior to the termination and, within four months thereafter, an
Acquisition Proposal is consummated which has a value per Class A Share and
per Class B Share greater than the per Share value attributable thereto under
the transactions contemplated by this Agreement, the Corporation shall
forthwith pay to the Offeror an amount equal to the Termination Fee.
10. FEES AND EXPENSES
10.1 FEES AND EXPENSES
Except as otherwise provided in section 7.2, each of the Offeror and the
Corporation shall be responsible for and bear all of its own fees, costs and
expenses (including the fees and disbursements of counsel, financial advisors,
accountants, actuaries, consultants and brokers, expenses of its advisors,
agents and other representatives) incurred at any time in
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connection with pursuing or consummating this Agreement and the transactions
contemplated hereby. The provisions of this Section 10 shall survive the
termination of this Agreement.
11. GENERAL
11.1 DISCLOSURE
Except as required by applicable laws or regulations or by any
Governmental Entity or in accordance with the requirements of any stock
exchange, no party shall make any public announcement or statement with
respect to this Agreement without the approval of the other which shall not be
unreasonably withheld or delayed. Moreover, the parties agree to consult with
each other prior to issuing each public announcement or statement with respect
to this Agreement, subject to the overriding obligations of applicable laws or
regulations.
11.2 FIDUCIARY DUTIES OF DIRECTORS
No provision of this Agreement shall require the Corporation to cause any
of its directors to take any action, or refrain from taking any action, that
is required by such person to fulfill his/her fiduciary legal obligations as a
director of the Corporation, nor, so long as the Corporation has not breached
Section 4.1(e)(i)-(v), 4.2(c), 4.3, 4.4 or 5 of this Agreement, shall any
provision of this Agreement prevent the Board from considering, negotiating,
approving, recommending to its holders of Shares or other Securities or
entering into an agreement in respect of a Superior Proposal or from approving
or recommending such Superior Proposal. For greater certainty, a modification,
change or withdrawal by the Board of its recommendation of the Offers after
the date hereof in the proper exercise of such fiduciary duty shall not result
in the representations in Section 3.2 of this Agreement being considered to be
untrue or incorrect. The foregoing shall not be interpreted to diminish,
limit, restrict or otherwise affect in any way any covenant or agreement of
the Corporation under this Agreement or be construed as a forgiveness or
waiver of any breach.
11.3 CONTROL OF OTHER PARTY'S BUSINESS
Nothing contained in this Agreement shall give the Offeror, directly or
indirectly, the right to control or direct the operations of the Corporation
and the Subsidiaries prior to the Effective Date.
11.4 ASSIGNMENT
The Offeror may assign all or any part of its rights and/or obligations
under this Agreement to a wholly-owned subsidiary of the Offeror, but, if such
assignment takes place, the Offeror shall continue to be liable jointly and
severally (solidarily) with the assignee for any obligations hereunder. This
Agreement shall not otherwise be assignable by either party without the
consent of the other.
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11.5 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the Province of Quebec and of Canada applicable therein (without
regard to conflict of laws principles).
11.6 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties made by the Corporation shall remain
in effect during the term of this Agreement. 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 of or otherwise affecting any
representation, warranty or covenant made by the Corporation herein or
pursuant hereto.
11.7 AMENDMENTS
This Agreement may not be amended except by written agreement signed by
all of the parties to this Agreement. For greater certainty, the written
agreement of those persons referred to in Section 6.3(c) shall not be
required, except that no amendment to Section 6.3 or relating to a person's
rights thereunder may be effected on or after the Effective Date without such
person's written agreement.
11.8 SPECIFIC PERFORMANCE AND OTHER RELIEF
Subject to Section 9.3, it is recognized and acknowledged that a breach
by any party of any material obligations contained in this Agreement will
cause any other party to sustain injury for which they would not have an
adequate remedy at law for money damages. Accordingly, in the event of any
such breach, any aggrieved party shall be entitled to the remedy of specific
performance of such obligations and interlocutory, preliminary and permanent
injunctive and other equitable relief in addition to any other remedy to which
it or they may be entitled, at law or in equity, any requirement for the
securing or posting of any bond in connection with the obtaining of any such
injunctive or other equitable relief hereby being waived.
11.9 COUNTERPARTS
This Agreement may be executed in one or more counterparts which together
shall be deemed to constitute one valid and binding agreement, and delivery of
the counterparts may be effected by means of telecopier transmission.
11.10 SCHEDULES
Schedules A, B and C hereto form an integral part of this Agreement.
11.11 ENTIRE AGREEMENT
This Agreement, together with the Confidentiality Agreement, constitutes
the entire agreement and understanding between the parties pertaining to the
subject matter hereof.
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11.12 TIME
Time shall be of the essence in this Agreement.
11.13 NOTICES
Any notice, request, consent, agreement or approval which may or is
required to be given pursuant to this Agreement shall be in writing and shall
be sufficiently given or made if delivered, or sent by telecopier, in the case
of:
(a) the Offeror, addressed as follows:
▇▇▇▇▇▇ Wireless Communications Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Fasken ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Bank Tower
Toronto ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇.▇. ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) the Corporation, addressed as follows:
MICROCELL TELECOMMUNICATIONS INC
800 de la ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Chairman of the Board and
President and Chief Executive Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
MICROCELL TELECOMMUNICATIONS INC
▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ West
Suite 4000
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇, Vice President, Legal Affairs
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and a copy (which shall not constitute notice) to:
STIKEMAN ELLIOTT LLP
▇▇▇▇-▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the relevant person may from time to time advise
by notice in writing given pursuant to this Section. The date of receipt of
any such notice, request, consent, agreement or approval shall be deemed to be
the date of delivery or sending thereof.
11.14 LANGUAGE
The parties have required that this Agreement and all deeds, documents
and notices relating to this Agreement be drawn up in the English language.
Les parties aux presentes ont exige que le present contrat et tous autres
contrats, documents ou avis afferents aux presentes soient rediges en langue
anglaise.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF the parties hereto have duly executed this Agreement
as of the date first above written.
MICROCELL ▇▇▇▇▇▇ WIRELESS
TELECOMMUNICATIONS INC. COMMUNICATIONS INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------- ------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Title: Chairman
Executive Officer
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------- ------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer Title: President & Chief Executive
and Treasurer Officer
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SCHEDULE A
TERMS OF THE OFFERS
1. General Terms. The Offers shall be made by a circular bid prepared in
compliance with the securities laws applicable in Canada and the provinces
thereof and in the United States and the states thereof.
2. Expiry of Offers. The Offers shall be open for acceptance for an initial
period of thirty-five (35) calendar days.
3. Extension of Offers. The Offers shall not expire or be withdrawn and shall
be extended for successive periods of at least 10 days until the earlier of:
(a) the Outside Date; and
(b) the date which is 10 days after the Offeror has publicly announced that
the conditions set out in paragraphs 7(a) and 7(b) below have been
satisfied.
4. Extension of Tender Period. If the Offeror takes up the Securities pursuant
to the Offers, the Offeror shall give the holders of Securities that have not
tendered their Securities an additional 10-day period to permit such holders
to accept the Offers and tender their Securities.
5. Price of the Offers. The Offers shall be made for a consideration of not
less than Cdn. $35 per Class A Share, Cdn. $35 per Class B Share, Cdn. $15.79
per Warrant 2005 and Cdn. $15.01 per Warrant 2008, in each case payable in
cash.
6. Withdrawal of Deposited Securities. Unless the Offers are withdrawn,
Securities may be deposited pursuant to the Offers at any time during which
the Offers are open for acceptance and any Securities deposited pursuant to
the Offers may be withdrawn at any time until taken up.
7. Conditions of the Offers in respect of the Class A Shares. Subject to
applicable law, the Offeror's obligation to take up the Class A Shares under
the Offers shall not be subject to any conditions, other than the following:
(a) there have been validly deposited and not withdrawn, at the expiry of the
Offers:
(i) such number of Class A Shares which represents at least 66-2/3% of
the Class A Shares outstanding;
(ii) such number of Class B Shares which represents at least 66-2/3% of
the Class B Shares on a partially-diluted basis; and
(iii) such number of Securities which represents at least 66-2/3% of the
Shares on a fully-diluted basis;
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(b) those government or regulatory approvals, waiting or suspensory periods,
waivers, permits, consents, reviews, orders, rulings, decisions and
exemptions described in Schedule B shall have been obtained or concluded
or, in the case of waiting or suspensory periods, expired or been
terminated or waived, each on terms and conditions satisfactory to the
Offeror, acting reasonably
(c) no act, action, suit or proceeding shall have been taken before or by any
domestic or foreign court or tribunal or governmental agency or
department or other regulatory authority or administrative agency or
commission or by any elected or appointed public official or private
person (including any individual, corporation, firm, group or other
entity) in Canada or elsewhere which has a Material Adverse Effect;
(d) there shall not exist any prohibition at law, including a cease trade
order, injunction or other prohibition or order at law or under
applicable legislation, against the Offeror making or maintaining the
Offers or taking up and paying for Securities deposited under the Offers
or completing a Compulsory Acquisition or any Subsequent Acquisition
Transaction;
(e) there shall not have occurred (or if there shall have occurred prior to
the commencement of the Offers, there shall not have been generally
disclosed or disclosed as part of the Data Room Information or the
Offeror shall not otherwise be aware of) any change having a Material
Adverse Effect;
(f) the Corporation shall not have breached any of its covenants or other
agreements set out in this Agreement or where such breach occurred, it
shall have been cured within 15 days after written notice of such breach
was given to the Corporation by the Offeror;
(g) all of the representations and warranties of the Corporation made in or
under this Agreement shall be true and correct (for representations or
warranties qualified as to materiality, true and correct in all respects,
and for all other representations and warranties, true and correct in all
material respects) as of the Effective Date and with the same effect as
if made at and as of the Effective Date (except to the extent such
representations and warranties speak solely of an earlier date, in which
event such representations and warranties shall have been true and
correct as of such earlier date, and except as such representations and
warranties may be affected by the occurrence of events or transactions
expressly contemplated and permitted by this Agreement) and the Offeror
shall have received a certificate to that effect of the Corporation
signed by the chief executive and chief financial officers on its behalf
without personal liability, dated as of the Effective Date; and
(h) there shall have not occurred and be continuing a material adverse change
or disruption in the financial, banking or capital markets generally that
prevents or makes impractical the funding of the Offeror's credit
facilities for the financing of the Offers from parties dealing at arms'
length with the Offeror.
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Except for the condition set out in paragraph (a) above, which may only be
waived with the prior written consent of the Corporation, the foregoing
conditions will be for the sole benefit of the Offeror and may be waived by it
in whole or in part at any time.
8. Conditions of the Offers in Respect of the Class B Shares and the Warrants.
Subject to applicable law, the Offers in respect of the Class B Shares and the
Warrants shall only be subject to the Class A Shares being or having been
purchased pursuant to the Offer in respect of the Class A Shares. This
condition may not be waived by the Offeror, unless it has obtained the prior
written consent of the Corporation.
9. Amendment to Conditions. It is understood and agreed that the Offeror shall
not be entitled to (i) modify or amend any of the conditions, (ii) add any
other conditions to the offers, nor (ii) waive the minimum tender condition
set out in paragraph 7(a) above, in each case without having obtained the
prior written consent of the Corporation provided that the Offeror shall be
entitled to waive the minimum tender condition set out in paragraph 7(a) above
if at least 50.1% of the Shares, on a fully diluted basis, have been validly
deposited and not withdrawn, at the expiry of the Offers. The conditions set
out in paragraphs 7 and 8 (except for the condition set out in paragraph 7(a))
shall be conclusively deemed to have been satisfied or waived upon the taking
up by the Offeror of any Securities pursuant to the Offers.
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SCHEDULE B
APPROVALS AND WAITING AND SUSPENSORY PERIODS
1. Competition Act Clearance (as defined in section 1.1 of this Agreement)
shall have been obtained.
2. Approval by the Minister of Industry of the change of control of the
Corporation and its subsidiaries in respect of the spectrum licenses held
by the Corporation and/or its subsidiaries.
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SCHEDULE C
DATA ROOM INDEX
[Omitted]