Exhibit C
ALCATEL
and
IMAGICTV INC.
ARRANGEMENT AGREEMENT
February 6, 2003
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
Section 1.1 Definitions...........................................................................................1
Section 1.2 Interpretation Not Affected by Headings, etc..........................................................9
Section 1.3 Currency..............................................................................................9
Section 1.4 Number, etc..........................................................................................10
Section 1.5 Date For Any Action..................................................................................10
Section 1.6 Entire Agreement.....................................................................................10
Section 1.7 Schedules............................................................................................10
Section 1.8 Accounting Matters...................................................................................10
Section 1.9 Knowledge............................................................................................11
ARTICLE 2
THE ARRANGEMENT
Section 2.1 Implementation Steps by the Company..................................................................11
Section 2.2 Implementation Steps by the Purchaser; Transfer Taxes; Voting; ORAs..................................12
Section 2.3 Interim Order........................................................................................13
Section 2.4 Articles of Arrangement..............................................................................13
Section 2.5 Company Circular.....................................................................................14
Section 2.6 Closing Procedures...................................................................................14
Section 2.7 Securities Compliance................................................................................14
Section 2.8 Preparation of Filings, etc..........................................................................16
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Company........................................................18
Section 3.2 Representations and Warranties of the Purchaser......................................................18
Section 3.3 Survival.............................................................................................18
ARTICLE 4
COVENANTS
Section 4.1 Retention of Goodwill................................................................................18
Section 4.2 Treatment of Options.................................................................................18
Section 4.3 Covenants of the Company.............................................................................19
Section 4.4 Covenants of the Purchaser...........................................................................24
Section 4.5 Covenants Regarding Non-Solicitation.................................................................25
Section 4.6 Notice by the Company of Superior Proposal Determination.............................................27
Section 4.7 Access to Information................................................................................28
(i)
Section 4.8 Closing Matters......................................................................................29
Section 4.9 Indemnification; Insurance...........................................................................29
Section 4.10 Loan Arrangements....................................................................................29
Section 4.11 Employment Arrangements..............................................................................30
Section 4.12 Shareholder Arrangements.............................................................................30
ARTICLE 5
CONDITIONS
Section 5.1 Mutual Conditions Precedent..........................................................................30
Section 5.2 Additional Conditions Precedent to the Obligations of the Purchaser..................................32
Section 5.3 Additional Conditions Precedent to the Obligations of the Company....................................34
Section 5.4 Notice and Cure Provisions...........................................................................35
Section 5.5 Satisfaction of Conditions...........................................................................36
ARTICLE 6
AMENDMENT AND TERMINATION
Section 6.1 Amendment............................................................................................36
Section 6.2 Mutual Understanding Regarding Purchaser Proposed Amendments.........................................36
Section 6.3 Termination..........................................................................................37
Section 6.4 Break and Other Fees.................................................................................39
Section 6.5 Remedies.............................................................................................40
ARTICLE 7
GENERAL
Section 7.1 Notices..............................................................................................41
Section 7.2 Assignment...........................................................................................42
Section 7.3 Binding Effect.......................................................................................42
Section 7.4 Waiver and Modification..............................................................................42
Section 7.5 Further Assurances...................................................................................42
Section 7.6 Expenses.............................................................................................42
Section 7.7 Consultation.........................................................................................43
Section 7.8 Governing Laws.......................................................................................43
Section 7.9 Judgement Currency...................................................................................44
Section 7.10 Time of Essence......................................................................................44
Section 7.11 Counterparts.........................................................................................44
(ii)
ARRANGEMENT AGREEMENT
AGREEMENT made as of the 6th day of February, 2003.
BETWEEN:
ALCATEL
a corporation existing under the laws
of the Republic of France
(hereinafter referred to as the "PURCHASER")
- and -
IMAGICTV INC.
a corporation existing under the laws
of Canada
(hereinafter referred to as the "COMPANY")
THIS AGREEMENT WITNESSES THAT in consideration of the respective covenants
and agreements herein contained, the parties hereto covenant and agree as
follows:
ARTICLE 1
INTERPRETATION
SECTION 1.1 DEFINITIONS.
In this Agreement, unless there is something in the subject matter or
context inconsistent therewith, the following terms shall have the following
meanings respectively:
"1933 ACT" means the United States Securities Act of 1933, as amended;
"ACQUISITION PROPOSAL" means any written or publicly announced proposal or
offer made by any Person other than the Purchaser (or any affiliate of the
Purchaser, or any Person acting in concert with the Purchaser or any
affiliate of the Purchaser) with respect to any merger, amalgamation,
arrangement, business combination, liquidation, dissolution,
recapitalization, take-over bid, purchase of all or any material assets
of, or any purchase of more than 5% of the equity (or rights thereto) of,
or similar transactions involving, the Company or any of its subsidiaries,
excluding the Arrangement;
"AFFILIATE" shall mean an "affiliated entity" within the meaning of OSC
Rule 45-501 under the Securities Act;
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"ARRANGEMENT" means an arrangement under Section 192 of the CBCA on the
terms and subject to the conditions set out in the Plan of Arrangement,
subject to any amendments or variations thereto made in accordance with
Section 6.1 or Article 6 of the Plan of Arrangement or made at the
direction of the Court (with the consent of both the Company and the
Purchaser, each acting reasonably);
"ARRANGEMENT RESOLUTION" means the special resolution of the Company
Securityholders, to be substantially in the form and content of Schedule A
annexed hereto;
"ARTICLES OF ARRANGEMENT" means the articles of arrangement of the Company
in respect of the Arrangement that are required by the CBCA to be sent to
the Director after the Final Order is made;
"BUSINESS DAY" means any day on which commercial banks are generally open
for business in Toronto, New York City and Paris, other than a Saturday, a
Sunday or a day observed as a holiday in Toronto, New York City or Paris
under applicable laws;
"CBCA" means the Canada Business Corporations Act as now in effect and as
it may be amended from time to time prior to the Effective Date;
"COB" means the Commission des Operations de Bourse of France;
"COMPANY CIRCULAR" means the notice of the Company Meeting and
accompanying management information circular, including all appendices
thereto, to be sent to the Company Securityholders in connection with the
Company Meeting;
"COMPANY COMMON SHARES" means the common shares, without par value, in the
capital of the Company;
"COMPANY DISCLOSURE LETTER" means the letter of even date herewith
delivered by (and signed on behalf of) the Company to the Purchaser, in a
form accepted by and initialled on behalf of the Purchaser, with respect
to certain matters in this Agreement;
"COMPANY MEETING" means the special meeting of the Company
Securityholders, including any adjournment or postponement thereof, to be
called and held in accordance with the Interim Order to consider the
Arrangement;
"COMPANY OPTIONS" means the Company Common Share purchase options granted
under the Company Share Option Plans;
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"COMPANY SECURITYHOLDERS" means the holders of the Company Common Shares
and/or the Company Options;
"COMPANY SHARE OPTION PLANS" means the Company's initial share option plan
of February 3, 1998, as amended and restated on December 17, 1999, and the
Company's 2000 share option plan of November 9, 2000;
"COMPANY SHAREHOLDERS" means the holders of the Company Common Shares;
"CONFIDENTIALITY AGREEMENT" means the undated confidentiality letter
agreement between the Purchaser and the Company;
"COURT" means the Superior Court of Justice (Ontario);
"DIRECTOR" means the Director appointed pursuant to Section 260 of the
CBCA;
"DISSENT RIGHTS" means the rights of dissent in respect of the Arrangement
described in section 3.1 of the Plan of Arrangement;
"DISSENTING SHAREHOLDER" has the meaning ascribed thereto in the Plan of
Arrangement;
"EFFECTIVE DATE" means the date shown on the certificate of arrangement to
be issued by the Director under the CBCA giving effect to the Arrangement;
"EFFECTIVE TIME" has the meaning ascribed thereto in the Plan of
Arrangement;
"ENVIRONMENTAL LAWS" means all applicable Laws, including applicable
common law, relating to the protection of the environment and public
health and safety;
"ERISA" has the meaning ascribed thereto in Schedule D;
"EXCHANGE RATIO" means, subject to adjustment as provided in the Plan of
Arrangement, 0.1733, provided that: (a) except where clause (b) below
applies, if 0.1733, when multiplied by the simple average of the reported
closing prices of the Purchaser ADSs on the NYSE during the ten
consecutive NYSE trading days ending on the third day prior to the
Effective Date (the "Effective Date Average ADS Price"), is less than U.S.
$1.00, then the Exchange Ratio will be U.S. $1.00 divided by the Effective
Date Average ADS Price; (b) if the quotient of U.S. $1.00 divided by the
Effective Date Average ADS Price is greater than 0.2022, then the Exchange
Ratio will be 0.2022; and
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(c) if 0.1733, when multiplied by the Effective Date Average ADS Price, is
greater than U.S. $1.30, then the Exchange Ratio will be U.S. $1.30
divided by the Effective Date Average ADS Price;
"FINAL ORDER" means the final order of the Court approving the Arrangement
as such order may be amended by the Court (with the consent of both the
Company and the Purchaser, each acting reasonably) at any time prior to
the Effective Date or, if appealed, then, unless such appeal is withdrawn
or denied, as affirmed or as amended on appeal;
"FORM S-8" has the meaning ascribed thereto in Section 2.7(5);
"GOVERNMENTAL ENTITY" means any (a) multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or
public department, central bank, court, tribunal, arbitral body,
commission, board, bureau or agency, domestic or foreign, (b) any
subdivision, agent, commission, board, or authority of any of the
foregoing, or (c) any quasi- governmental or private body exercising any
regulatory, expropriation or taxing authority under or for the account of
any of the foregoing;
"HOLDERS" means, when used with reference to the Company Common Shares or
the Company Options, the holders thereof shown from time to time in the
register maintained by or on behalf of the Company in respect of such
securities;
"INCLUDING" means including without limitation;
"ITA" means the Income Tax Act (Canada), as amended;
"INFORMATION" has the meaning ascribed thereto in Section 4.7(2);
"INTERIM ORDER" means the interim order of the Court, as the same may be
amended (with the consent of both the Company and the Purchaser, each
acting reasonably), in respect of the Arrangement, as contemplated by
Section 2.3;
"LAWS" means all statutes, regulations, statutory rules, orders, and terms
and conditions of any grant of approval, permission, authority or license
of any Governmental Entity, statutory body (including the OSC, The Toronto
Stock Exchange, the PSE, NASDAQ, the NYSE, the SEC and the COB) or
self-regulatory authority, and the term "applicable" with respect to such
Laws and in the context that refers to one or more Persons, means that
such Laws apply to such Person or Persons or its or their business,
undertaking, property or securities and emanate from a Governmental Entity
having jurisdiction over
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the Person or Persons or its or their business, undertaking, property or
securities;
"LETTER OF TRANSMITTAL" means the form of letter of transmittal for use by
holders of the Company Common Shares;
"MATERIAL", when used in connection with the Company or its subsidiaries,
includes, without limitation, a value in excess of U.S. $250,000, except
that for the purposes of the definition of Material Adverse Change or
Material Adverse Effect it shall, unless otherwise expressly stated,
include, without limitation, a value in excess of U.S. $1,500,000,
individually or in the aggregate;
"MATERIAL ADVERSE CHANGE", when used in connection with the Company or the
Purchaser, means any change, effect, event or occurrence with respect to
the condition (financial or otherwise), properties, assets, liabilities,
obligations (whether absolute, accrued, conditional or otherwise),
businesses, operations, results of operations or prospects of the
Purchaser or its subsidiaries, taken as a whole, or the Company or its
subsidiaries, taken as a whole, that, either alone or together with other
such matters, is, or could reasonably be expected to be, material and
adverse to such party and its subsidiaries taken as a whole, other than
any change (i) resulting from an adverse change in the state of the
Canadian, United States or French economies, political conditions or
securities markets in general, or (ii) affecting the worldwide
telecommunications software and equipment industries in general and which
does not have a materially disproportionate impact on the Company or the
Purchaser, as applicable, or (iii) in the trading price of the Company
Common Shares or the Purchaser Shares or the Purchaser ADSs, as
applicable, either (A) related to the Arrangement or the announcement
thereof, or (B) unrelated to any change, circumstance, effect, event or
occurrence that is, or could reasonably be expected to be, material and
adverse to the Company and its subsidiaries taken as a whole or the
Purchaser and its subsidiaries taken as a whole, as applicable, and
provided further that (X) any material adverse change in the Company's
relationship with either TELUS (it being acknowledged that the Purchaser
will use its commercially reasonable efforts to assist the Company in
seeking to avoid any such change) or SaskTel shall be considered to be a
Material Adverse Change, and (Y) any reduction in the Company's cash that
arises from the reasonable costs and expenses of the Arrangement or from
the operation of its business in the ordinary course and without the
occurrence or existence of one or more other Material Adverse Changes
shall not in and of itself constitute such a Material Adverse Change;
"MATERIAL ADVERSE EFFECT" when used in connection with the Company or the
Purchaser, means any effect that, either alone or together with other such
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matters, is, or could reasonably be expected to be, material and adverse
to the condition (financial or otherwise), properties, assets,
liabilities, obligations (whether absolute, accrued, conditional or
otherwise), businesses, operations, results of operations or prospects of
the Company and its subsidiaries, taken as a whole, or the Purchaser and
its subsidiaries, taken as a whole, other than any effect (i) resulting
from an adverse change in the state of the Canadian, United States or
French economies, political conditions or securities markets in general,
or (ii) affecting the worldwide telecommunications software and equipment
industries in general and which does not have a materially
disproportionate impact on the Company or the Purchaser, as applicable, or
(iii) relating to the trading price of the Company Common Shares or the
Purchaser Shares or the Purchase ADSs, as applicable, either (A) related
to the Arrangement or the announcement thereof, or (B) unrelated to any
change, circumstance, effect, event or occurrence that is, or could
reasonably be expected to be, material and adverse to the Company and its
subsidiaries taken as a whole or the Purchaser and its subsidiaries taken
as a whole, as applicable, and provided further that (X) any material
adverse effect relating to the Company's relationship with either TELUS
(it being acknowledged that the Purchaser will use its commercially
reasonable efforts to assist the Company in seeking to avoid any such
change) or SaskTel shall be considered to have a Material Adverse Effect,
and (Y) any reduction in the Company's cash that arises from the
reasonable costs and expenses of the Arrangement or the operation of its
business in the ordinary course and without the occurrence or existence of
one or more other Material Adverse Effects shall not in and of itself be
considered to have such a Material Adverse Effect;
"MATERIAL FACT" shall have the meaning ascribed thereto under the
Securities Act;
"NASDAQ" means the NASDAQ SmallCap Market;
"ORAS" means the unsecured bonds to be issued by Coralec, a subsidiary of
the Purchaser, that are immediately redeemable at the option of the holder
or by Coralec only into Purchaser Shares, without any further
consideration;
"OSC" means the Ontario Securities Commission;
"OUTSIDE DATE" means May 30, 2003 or such later date as may be mutually
agreed by the parties;
"PSE" means Euronext Paris;
"PERMITTED ENCUMBRANCES" means any one or more of the following with
respect to the property and assets of the Company and its subsidiaries:
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(i) liens for Taxes, assessments or governmental charges or levies
not at the time due and delinquent or the validity of which
are being contested in good faith by proper legal proceedings
and provided that adequate provision has been made for their
payment in the Company's audited financial statements for the
fiscal year ended 2002;
(ii) inchoate or statutory liens and charges incidental to current
operations which have not at such time been filed pursuant to
law and which relate to obligations not yet due or delinquent
and in respect of which adequate holdbacks required by law are
being maintained;
(iii) the encumbrance resulting from the deposit of cash or
securities in connection with contracts, tenders or
expropriation proceedings, or to secure workers' compensation
or surety bonds;
(iv) liens given to a public utility or any municipality or
governmental or other public authority when required by such
utility or other authority in connection with the operations
of the Company, all in the ordinary course of its business;
and
(v) encumbrances set forth in the Company Disclosure Letter;
"PERSON" includes any individual, firm, partnership, limited partnership,
limited liability partnership, joint venture, venture capital fund,
limited liability company, unlimited liability company, association,
trust, trustee, executor, administrator, legal personal representative,
estate, group, body corporate, corporation, unincorporated association or
organization, Governmental Entity, syndicate or other entity, whether or
not having legal status;
"PLAN OF ARRANGEMENT" means the plan of arrangement substantially in the
form and content of Schedule B annexed hereto and any amendments or
variations thereto made in accordance with Section 6.1 hereof or Article 6
of the Plan of Arrangement or made at the direction of the Court (with the
consent of both the Company and the Purchaser, each acting reasonably);
"PRE-EFFECTIVE DATE PERIOD" shall mean the period from and including the
date hereof to and including the Effective Time;
"PUBLICLY DISCLOSED BY THE COMPANY" means disclosed by the Company in a
public filing made by it with the OSC from February 28, 2002 to the date
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hereof and available at ▇▇▇.▇▇▇▇▇.▇▇▇, or as set out in the Company
Disclosure Letter;
"PUBLICLY DISCLOSED BY THE PURCHASER" means disclosed by the Purchaser in
a public filing made by it with the PSE, the COB, the NYSE or the SEC from
January 1, 2002 to the date hereof;
"PURCHASER ADRS" means the Class A American Depositary Receipts of the
Purchaser;
"PURCHASER ADSS" means the Class A American Depositary Shares of the
Purchaser;
"PURCHASER SHARES" means the class A shares in the capital of the
Purchaser, par value Euro 2 each;
"PURCHASER SUBCO" means a subsidiary of the Purchaser that will at the
Effective Time acquire the ORAs and contribute them to the Trust;
"REGULATORY APPROVALS" means those sanctions, rulings, consents, orders,
exemptions, permits and other approvals (including the lapse, without
objection, of a prescribed time under a statute or regulation that states
that a transaction may be implemented if a prescribed time lapses
following the giving of notice without an objection being made) of
Governmental Entities, regulatory agencies or self-regulatory
organizations, as set out in Schedule C hereto, excluding for greater
certainty the Interim Order and the Final Order;
"REVISED OPTIONS" has the meaning ascribed thereto in section 2.1(b) of
the Plan of Arrangement;
"REPRESENTATIVES" has the meaning ascribed thereto in Section 4.7(1);
"RULE 144" means Rule 144 promulgated under the 1933 Act, as such Rule may
be amended from time to time;
"SEC" means the United States Securities and Exchange Commission;
"SECURITIES ACT" means the Securities Act (Ontario) and the rules and
regulations made thereunder, as now in effect and as they may be amended
from time to time prior to the Effective Date;
"SUBSIDIARY" shall mean a "subsidiary entity" within the meaning of OSC
Rule 45-501 under the Securities Act;
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"SUPERIOR PROPOSAL" means any bona fide written Acquisition Proposal that
in the good faith determination of the Board of Directors of the Company,
after consultation with its financial advisors and with outside counsel
(a) is reasonably capable of being completed, (b) would if completed
result in the acquisition of all or substantially all of the assets of the
Company and its subsidiaries taken as a whole or of more than 50% of the
Company Common Shares outstanding, and (c) would, if consummated in
accordance with its terms, result in a transaction more favourable to the
Company Shareholders from a financial point of view than the transaction
contemplated by this Agreement (bearing in mind the fluctuations arising
from the definition of the term Exchange Ratio);
"TAX" and "TAXES" have the respective meanings ascribed thereto in
Schedule D;
"TAX RETURNS" means all returns, declarations, reports, information
returns and statements required to be filed with any taxing authority
relating to Taxes;
"TRUST" means the trust to be established by the Company for the benefit
of the holders of the Company Common Shares in accordance with the terms
of the Trust Agreement;
"TRUST AGREEMENT" means the Trust Agreement substantially in the form
attached as Schedule G hereto;
"TRUSTEE" means the trustee appointed by the Company for purposes of the
Trust Agreement; and
"US CODE" means the US Internal Revenue Code of 1986, as amended.
SECTION 1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this Agreement into Articles, Sections and other portions
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation hereof. Unless otherwise
indicated, all references to an "Article" or "Section" followed by a number
and/or a letter refer to the specified Article or Section of this Agreement. The
terms "this Agreement", "hereof", "herein" and "hereunder" and similar
expressions refer to this Agreement (including the Schedules hereto) and not to
any particular Article, Section or other portion hereof and include any
agreement or instrument supplementary or ancillary hereto.
SECTION 1.3 CURRENCY.
Unless otherwise specifically indicated, all sums of money referred to in
this Agreement are expressed in lawful money of the United States of America.
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SECTION 1.4 NUMBER, ETC.
Unless the context otherwise requires, words importing the singular shall
include the plural and vice versa and words importing any gender shall include
all genders.
SECTION 1.5 DATE FOR ANY ACTION.
In the event that any date on which any action is required to be taken
hereunder by any of the parties hereto is not a Business Day, such action shall
be required to be taken on the next succeeding Business Day.
SECTION 1.6 ENTIRE AGREEMENT.
This Agreement, the agreements and other documents herein referred to and
the Confidentiality Agreement constitute the entire agreement between the
parties hereto pertaining to the terms of the Arrangement and supersede all
other prior agreements, understandings, negotiations and discussions, whether
oral or written, between the parties hereto with respect to the terms of the
Arrangement (including the December 20, 2002 letter agreement between the
parties).
SECTION 1.7 SCHEDULES.
The following Schedules are annexed to this Agreement and are hereby
incorporated by reference into this Agreement and form part hereof:
Schedule A - Arrangement Resolution
Schedule B - Plan of Arrangement
Schedule C - Regulatory Approvals
Schedule D - Company Representations and Warranties
Schedule E - Purchaser Representations and Warranties
Schedule F - Form of Affiliate Agreement
Schedule G - Trust Agreement
SECTION 1.8 ACCOUNTING MATTERS.
Unless otherwise stated, all accounting terms used in this Agreement in
respect of the Company shall have the meanings attributable thereto under
Canadian generally accepted accounting principles and all determinations of an
accounting nature in respect of the Company required to be made shall be made in
a manner consistent with Canadian generally accepted accounting principles and
past practice. Unless otherwise stated, all accounting terms used in this
Agreement in respect of the Purchaser shall have the meanings attributable
thereto under French generally accepted accounting principles and all
determinations of an accounting nature required to be made in respect of the
Purchaser shall be made in a manner consistent with French generally accepted
accounting principles and past practice.
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SECTION 1.9 KNOWLEDGE.
Each reference herein to the knowledge or awareness of a party means,
unless otherwise specified, in the case of the Purchaser, the knowledge or
awareness of ▇▇▇▇ ▇▇▇▇▇▇▇ and/or ▇▇▇▇-▇▇▇▇ Scaillierez, and, in the case of the
Company, the knowledge or awareness of ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
and/or ▇▇▇ ▇▇▇▇▇▇▇▇, in each case following due inquiry.
ARTICLE 2
THE ARRANGEMENT
SECTION 2.1 IMPLEMENTATION STEPS BY THE COMPANY.
The Company covenants in favour of the Purchaser that the Company shall:
(a) as soon as reasonably practicable, apply to the Court in a manner
acceptable to the Purchaser, acting reasonably, under Section 192 of
the CBCA for the Interim Order, and thereafter proceed with and
diligently seek the Interim Order;
(b) convene and, as promptly as is reasonably practicable, hold the
Company Meeting for the purpose of considering the Arrangement
Resolution (provided however that if there is another Acquisition
Proposal to be considered at the Company Meeting, the Company shall
not negatively comment on the Arrangement in contrast to any other
Acquisition Proposal, and shall give the Arrangement at least equal
prominence), but nothing in this Section shall prevent or limit the
Company's board of directors ability to fulfil their fiduciary or
statutory duties in connection with responding to any Acquisition
Proposal and that is otherwise in accordance with the terms of this
Agreement;
(c) subject to Section 5.4(2), except as required for quorum purposes,
not postpone or cancel (or propose for adjournment, postponement or
cancellation) the Company Meeting without the Purchaser's prior
written consent except as required by applicable Laws or required by
the Company Securityholders;
(d) at the request of the Purchaser, use commercially reasonable efforts
to solicit from the Company Securityholders proxies in favour of the
approval of the Arrangement Resolution and to take all other
commercially reasonable actions that are necessary or desirable to
secure the approval of the Arrangement Resolution by the Company
Securityholders, except to the extent that the Company's Board of
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Directors has changed, modified or withdrawn its recommendation in
accordance with the terms of this Agreement;
(e) subject to obtaining such approvals as are required by the Interim
Order, proceed with and diligently pursue the application to the
Court for the Final Order; and
(f) subject to obtaining the Final Order and the satisfaction or waiver
of the other conditions herein contained in favour of each party,
send to the Director, for endorsement and filing by the Director,
the Articles of Arrangement and such other documents as may be
required in connection therewith under the CBCA to give effect to
the Arrangement.
SECTION 2.2 IMPLEMENTATION STEPS BY THE PURCHASER; TRANSFER TAXES; VOTING; ORAS.
The Purchaser covenants in favour of the Company that the Purchaser shall,
subject to the terms and conditions of this Agreement, cooperate with the
Company in and consent to the seeking of the Interim Order and the Final Order.
The Purchaser shall pay French capital duty, stamp duty, issuance, registration
and capital taxes assessed upon or with respect to the issuance of the Purchaser
ADSs or the Purchaser Shares issued in connection with the transactions
contemplated by this Agreement. The Purchaser shall pay or cause the Company to
pay French capital duty, stamp duty, issuance, registration and capital taxes
assessed upon or with respect to the issuance of the Purchaser Shares issued
upon the exercise of the Revised Options. The Purchaser also agrees that it
shall vote its Company Common Shares in favour of the Arrangement at the Company
Meeting.
At the Effective Time, the Purchaser shall cause Purchaser Subco (with
funds provided by the Purchaser) to subscribe for ORAs from Coralec, and Coralec
to issue such ORAs to Purchaser Subco, in a sufficient amount so as to satisfy
the number of Purchaser ADSs required to be delivered in exchange for the
Company Common Shares in accordance with the Plan of Arrangement. At the
Effective Time, the Purchaser shall cause Purchaser Subco to deliver such number
of ORAs to the Trust. Pursuant to the Trust Agreement, the Trustee shall
thereupon immediately request the redemption of such ORAs and direct the
Purchaser to deliver such Purchaser ADSs that represent the Purchaser Shares
issued upon redemption of the ORAs to the Depositary (as defined in the Plan of
Arrangement), whereupon the Purchaser shall issue the applicable Purchaser
Shares and cause to be delivered to the Depositary the applicable Purchaser
ADSs. The Purchaser shall act, and shall use its commercially reasonable efforts
to cause its agents and representatives to act, expeditiously in connection with
all steps required to be taken by it in connection with the matters referred to
in this paragraph.
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SECTION 2.3 INTERIM ORDER.
(1) The notice of motion for the application referred to in Section 2.1(a)
shall request that the Interim Order provide:
(a) for the class of Persons to whom notice is to be provided in respect
of the Arrangement and the Company Meeting and for the manner in
which such notice is to be provided;
(b) that the requisite approval for the Arrangement Resolution shall be
662/3% of the votes cast on the Arrangement Resolution by the
Company Securityholders present in person or by proxy at the Company
Meeting (such that each holder of Company Common Shares is entitled
to one vote for each Company Common Share held and each holder of
Company Options is entitled to the number of votes represented by
the number of Company Common Shares for which such holder's Company
Option is exercisable, rounded down to the nearest whole number of
Company Common Shares and without regard to vesting requirements, if
any);
(c) that, in all other respects, the terms, restrictions and conditions
of the by-laws and articles of the Company, including quorum
requirements and all other matters, shall apply in respect of the
Company Meeting; and
(d) for the grant of the Dissent Rights.
(2) The parties agree that they shall not request that the Interim Order make
any reference to the minority approval requirement under OSC Rule 61-501
(or equivalent provisions in other jurisdictions), but that they shall
seek such approval in addition, with the Company Shareholders who are
party to the agreements referred to in Section 4.12 being able to be
counted as part of the minority.
SECTION 2.4 ARTICLES OF ARRANGEMENT.
(1) The Articles of Arrangement shall, with such other matters as are
necessary to effect the Arrangement, implement the Plan of Arrangement, as
a result of which, among other things, each Company Shareholder will be
entitled to receive such number of Purchaser ADSs (evidenced by the
Purchaser ADRs) as is equal to the number of Company Common Shares held by
such Company Shareholder multiplied by the Exchange Ratio (subject to
certain adjustments as provided in the Plan of Arrangement).
(2) The Company confirms its understanding and agreement that the Purchaser
ADSs, Purchaser ADRs and Purchaser Shares issued in connection with the
-14-
Arrangement will be entitled to the dividend for the fiscal year during
which they were issued (i.e. 2003), and that, consequently, they will
trade on the Paris or New York stock exchanges (and other places of
listing) separately from the Purchaser ADSs, Purchaser ADRs and Purchaser
Shares issued during or prior to the fiscal year 2002, until Euronext
removes the separate trading designation, which absent a dividend usually
occurs 2 trading days after the shareholders meeting of the Purchaser,
which is scheduled for April 17, 2003.
(3) All Purchaser Shares issued in consideration of the exercise of Revised
Options will be entitled to the dividend for the fiscal year during which
they were issued, and consequently, will trade on the Paris or New York
stock exchanges (and other places of listing) separately from the
Purchaser Shares issued during or prior to the end of the preceding fiscal
year, if their date of issuance is prior to the shareholders meeting of
the Purchaser at which shareholders vote on the dividend for the preceding
fiscal year, until Euronext removes the separate trading designation
(which usually occurs 2 trading days after such shareholders meeting).
SECTION 2.5 COMPANY CIRCULAR.
As promptly as reasonably practicable after the execution and delivery of
this Agreement, the Company shall, in consultation with the Purchaser, complete
the Company Circular together with any other documents required by the
Securities Act or other applicable Laws in connection with the Arrangement, and
as promptly as reasonably practicable, the Company shall, unless otherwise
agreed by the parties, cause the Company Circular and other documentation
required in connection with the Company Meeting to be sent to each of the
Company Securityholders and filed as required by the Interim Order and
applicable Laws.
SECTION 2.6 CLOSING PROCEDURES.
The completion of the Arrangement shall take place at the offices of
Stikeman Elliott in Toronto at 12:00 noon (Toronto time) on the Effective Date,
or at such other time on the Effective Date as the Purchaser and the Company may
agree to in writing. The parties acknowledge that the Effective Date may be
required to be one Business Day following the issuance of the certificate and
articles of arrangement in respect of the Arrangement in order to facilitate the
steps required to issue the Purchaser ADSs. Without obligation, the parties
confirm that they intend to seek to close as soon as is reasonably practicable.
SECTION 2.7 SECURITIES COMPLIANCE.
(1) The Purchaser shall, in consultation with the Company, use commercially
reasonable efforts to obtain all orders required from the applicable
Canadian securities regulatory authorities to permit the issuance and
first resale (via a
-15-
registered Canadian dealer, if required) on a stock exchange outside
Canada of (a) the Purchaser ADSs issued to the holders of the Company
Common Shares in connection with the Arrangement, and the Purchaser Shares
issuable upon conversion thereof, and (b) the Purchaser Shares issued from
time to time upon exercise of the Revised Options, in each case without
qualification with or approval of or the filing of any prospectus, or the
taking of any proceeding with, or the obtaining of any further order,
ruling or consent from, any Governmental Entity or regulatory authority
under any Canadian provincial or territorial securities Laws or pursuant
to the rules and regulations of any regulatory authority administering
such Laws, or the fulfilment of any other legal requirement in any such
jurisdiction (other than, with respect to such first resales, compliance
with provisions substantially similar to those set forth in section 2.14
of Multilateral Instrument 45-102 (for greater certainty, in each case
without affecting the need to comply with applicable United States, French
or other Laws). For greater certainty, the Company will support such
efforts.
(2) Each of the Purchaser and the Company shall use commercially reasonable
efforts to obtain the approval of the OSC and other applicable Canadian
securities regulatory authorities to the absence of Canadian GAAP
reconciliation of the Purchaser's financial statements. The Purchaser
shall also, in consultation with the Company, use commercially reasonable
efforts to obtain orders from all applicable Canadian securities
regulatory authorities to ensure that the Purchaser will not become a
reporting issuer (or the equivalent) as a result of the transactions
contemplated in this Agreement. For greater certainty, the Company will
support both such efforts.
(3) The Purchaser shall, in consultation with the Company, use commercially
reasonable efforts to obtain the approval of the COB and the PSE for the
listing of the Purchaser Shares, and of the NYSE for the listing of the
Purchaser ADSs (upon official notice of issuance), to be issued in
connection with the Arrangement, and for greater certainty the Company
will support such efforts.
(4) The parties acknowledge that the transaction will be a "going private
transaction" in respect of the Company under OSC Rule 61-501, and that as
a result it will be subject, absent exemptive relief, to independent
valuation and minority approval requirements. The parties confirm their
view that certain of the agreements with holders of the Company Common
Shares referred to in Section 4.12 provide an exemption from the
independent valuation requirement. The Purchaser shall use commercially
reasonable efforts to obtain an order under section 4.8(1)1 or section 9.1
of OSC Rule 61-501 (and equivalent provisions in other jurisdictions) to
confirm that, as contemplated in section 2.3(2) of OSC Policy 61-501CP,
the Company Shareholders who are
-16-
party to the agreements referred to in Section 4.12 are not acting jointly
or in concert with the Purchaser and thus will be able to be counted as
part of the minority, and for greater certainty the Company will support
such efforts in such application or before the Court and elsewhere in the
event that it is challenged.
(5) Within 5 Business Days after the Effective Date, the Purchaser shall file
a registration statement on Form S-8 (or other applicable form) (the "FORM
S-8") in order to register under the 1933 Act those Purchaser Shares to be
distributed from time to time after the Effective Time upon the exercise
of the Revised Options by U.S. or Canadian employees or former employees.
(6) The Purchaser shall use its commercially reasonable efforts to maintain
the effectiveness under the 1933 Act of the Form S-8 (or such other
applicable form that the Purchaser may have filed) until the earlier of
(i) the time at which all Purchaser Shares to be issued pursuant to the
exercise of Revised Options have been issued, or (ii) the time at which
all Revised Options shall have been cancelled or terminated.
SECTION 2.8 PREPARATION OF FILINGS, ETC.
(1) The Purchaser and the Company shall use their respective commercially
reasonable efforts to cooperate in the preparation, seeking and obtaining
of all circulars, filings, consents, Regulatory Approvals and other
approvals and other matters in connection with this Agreement and the
Arrangement.
(2) Each of the Purchaser and the Company shall furnish to the other all such
information concerning it and its shareholders as may be reasonably
required (and, in the case of its shareholders, available to it) to effect
the actions described in Sections 2.5 and 2.7 and the foregoing provisions
of this Section 2.8, and each covenants that no information furnished by
it (to its knowledge in the case of information concerning its
shareholders) in connection with such actions (including in the case of
the Company the disclosure concerning it to be included in the Company
Circular, and in the case of the Purchaser the disclosure concerning it to
be included or incorporated by reference in the Company Circular) will
contain any untrue statement of a material fact or omit to state a
material fact required to be stated in any such document or necessary in
order to make any information so furnished for use in any such document
not misleading in the light of the circumstances in which it is furnished.
(3) The Purchaser and the Company shall each promptly notify the other if at
any time before the Effective Time it becomes aware that any disclosure
concerning it in the Company Circular, an application for an order or any
other document described in Section 2.7 contains any untrue statement of a
-17-
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements contained therein not
misleading in light of the circumstances in which they are made, or that
otherwise requires an amendment or supplement to the Company Circular or
such application or other document. In any such event, the Purchaser and
the Company shall, subject to the terms and conditions of this Agreement,
cooperate in the preparation of a supplement or amendment to the Company
Circular or such application or other document, as required and as the
case may be, and, if required, shall cause the same to be distributed to
the Company Securityholders and/or filed with the relevant securities
regulatory authorities and/or stock exchanges.
(4) The Company shall ensure that the Company Circular complies with all
applicable Laws and, without limiting the generality of the foregoing,
that the Company Circular does not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements contained therein not
misleading in light of the circumstances in which they are made (other
than with respect to any information concerning and provided by the
Purchaser). Without limiting the generality of the foregoing, the Company
shall ensure that the Company Circular provides the Company
Securityholders with information in sufficient detail to permit them to
form a reasoned judgement concerning the matters to be placed before them
at the Company Meeting, and the Purchaser shall provide all information
regarding it in sufficient detail to permit the Company Securityholders to
form a reasoned judgement concerning matters placed before them at the
Company Meeting.
(5) The Company shall, at least 45 days prior to the date of the Company
Meeting, deliver to the Purchaser a list reasonably satisfactory to the
Purchaser setting forth the names and addresses of all Persons who are at
the time "affiliates" of the Company for the purposes of Rule 145 under
the 1933 Act. The Company shall furnish such information and documents as
the Purchaser may reasonably request for the purpose of reviewing such
list, and the Company shall, except where such Persons have signed an
agreement referred to in Section 4.12 containing substantially similar
provisions, use commercially reasonable efforts to cause each Person who
is identified as an affiliate on such list to execute and deliver to the
Purchaser a written agreement in the form of Schedule F hereto at least 30
days prior to the date of the Company Meeting related to the applicable
resale restrictions of Rule 145 (an "AFFILIATE AGREEMENT"). The Company
shall promptly notify the Purchaser in writing of any other Person(s) who,
to the knowledge of the Company, become an "affiliate" (as so defined) of
the Company after the date hereof, and the Company shall use commercially
reasonable efforts to cause
-18-
such other Person(s) to promptly execute and deliver to the Purchaser an
affiliate agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to and in favour of the Purchaser as
set forth in Schedule D and acknowledges that the Purchaser is relying upon such
representations and warranties in connection with the matters contemplated by
this Agreement.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser represents and warrants to and in favour of the Company as
set forth in Schedule E and acknowledges that the Company is relying upon such
representations and warranties in connection with the matters contemplated by
this Agreement.
SECTION 3.3 SURVIVAL.
For greater certainty, the representations and warranties of the Company
and the Purchaser contained herein shall survive the execution and delivery of
this Agreement and shall terminate on the earlier of the termination of this
Agreement in accordance with its terms and the Effective Time. Any investigation
by a party hereto and its advisors shall not mitigate, diminish or affect the
representations and warranties of the other party to this Agreement.
ARTICLE 4
COVENANTS
SECTION 4.1 RETENTION OF GOODWILL.
During the Pre-Effective Date Period, the Company will, subject to the
fact that a transaction involving its business is contemplated hereby, continue
to carry on the business of the Company and its subsidiaries in a manner
consistent with prior practice, working to preserve the attendant goodwill of
such entities and to contribute to retention of that goodwill to and after the
Effective Date, but subject to the following provisions of this Article 4. The
following provisions of this Article 4 are intended to be in furtherance of this
general commitment.
SECTION 4.2 TREATMENT OF OPTIONS.
The Company Options will be dealt with as provided in the Plan of
Arrangement. With respect to the Revised Options, at or promptly following the
Effective Time, the Company will subscribe for ORAs from Coralec, and the
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Purchaser will cause Coralec to issue such ORAs, in a sufficient amount so as to
satisfy the number of Purchaser Shares to be issued upon exercise of the Revised
Options in accordance with their terms upon the redemption of such ORAs. Upon
exercise of a Revised Option, the Company shall thereupon require the redemption
in part of such ORAs and direct the Purchaser to issue the applicable Purchaser
Shares to be issued upon the redemption in part of the ORAs to the exercising
holder of the Revised Option, whereupon the Purchaser shall issue the applicable
Purchaser Shares to such holder.
SECTION 4.3 COVENANTS OF THE COMPANY.
(a) The Company covenants and agrees that, until the Effective Date or
the earlier termination of this Agreement in accordance with Article
6, except: (i) with the prior written consent of the Purchaser to
any deviation therefrom; (ii) as has been disclosed in writing by
the Company to the Purchaser in the Company Disclosure Letter; or
(iii) with respect to any matter expressly contemplated by this
Agreement or the Plan of Arrangement, including the transactions
involving the businesses of the Company and the Purchaser
contemplated hereby, the Company will, and will cause its
subsidiaries to:
(i) carry on its business in, and only in, the ordinary and
regular course in substantially the same manner as heretofore
conducted and, to the extent consistent with such business,
use all reasonable efforts to preserve intact its present
business organization and keep available the services of its
present officers and employees and others having business
dealings with it to the end that its goodwill and business
shall be maintained;
(ii) not split, consolidate or reclassify any of the outstanding
shares of the Company nor declare, set aside or pay any
dividends on or make any other distributions on or in respect
of the outstanding shares of the Company;
(iii) not amend the articles or by-laws of the Company or any
subsidiary;
(iv) except for the amendment of certain Company Options issued to
former employees to extend the expiry time of such Company
Options by not more than 90 days pursuant to prior commitments
and/or understandings, all as set forth in the Company
Disclosure Letter, not sell, pledge, encumber, allot, reserve,
set aside or issue, authorize or propose the sale, pledge,
encumbrance, allotment, reservation, setting aside or issuance
-20-
of, or purchase or redeem or propose the purchase or
redemption of, any shares in its capital stock or that of any
subsidiary or any class of securities convertible or
exchangeable into, or rights, warrants or options to acquire,
any such shares or other convertible or exchangeable
securities, except for the issuance of the Company Common
Shares pursuant to fully vested and duly exercised Company
Options granted prior to the date hereof;
(v) except for the amendment of certain Company Options issued to
former employees to extend the expiry time of such Company
Options by not more than 90 days pursuant to prior commitments
and/or understandings, all as set forth in the Company
Disclosure Letter, not amend, vary or modify either of the
Company Share Option Plans or any of the Company Options or
other benefits granted thereunder;
(vi) not reorganize, amalgamate or merge the Company or any of its
subsidiaries with any other Person, nor acquire or agree to
acquire by amalgamating, merging or consolidating with,
purchasing substantially all of the assets or shares of or
otherwise, any business of any corporation, partnership,
association or other business organization or division
thereof;
(vii) except with respect to the sale of inventory of the Company or
any subsidiary in the ordinary and regular course of business
consistent with past practice, not sell, lease, encumber or
otherwise dispose of any material assets;
(viii) carry out the terms of the Interim Order and the Final Order
applicable to it and use its commercially reasonable efforts
to comply promptly with all requirements which applicable Laws
may impose on the Company or its subsidiaries with respect to
the transactions contemplated hereby and by the Arrangement;
(ix) not, and cause each of its subsidiaries not, other than as
required pursuant to employment, pension, supplemental
pension, termination, compensation arrangements or policies
existing as of the date hereof or as required by applicable
Laws, enter into or modify any employment, severance,
collective bargaining or similar agreements, policies or
arrangements with, or grant any bonuses, salary increases,
pension or supplemental pension benefits, profit sharing,
retirement allowances, deferred compensation, incentive
compensation,
-21-
severance or termination pay to or any other form of
compensation or with respect to any increase of benefits
payable to, or make any loan to, any officers, directors or
employees (or independent contractors) of the Company or any
subsidiary; or
(x) not, and will cause its subsidiaries not to, settle or
compromise any claim brought by any present, former or
purported holder of any of its securities in connection with
the transactions contemplated by this Agreement or the
Arrangement prior to the Effective Date;
(xi) not guarantee the payment of any indebtedness or incur any
indebtedness for borrowed money or issue or sell any debt
securities, except for borrowings in the ordinary course under
credit facilities in place on the date of execution hereof,
and not not lend or invest amounts in excess of U.S. $250,000
in other than short-term AAA Canadian or U.S. government debt
obligations;
(xii) not: (A) satisfy or settle any claims or liabilities prior to
the same being due, except such as have been reserved against
in financial statements of the Company for the fiscal year
ended February 28, 2002 published and available on
▇▇▇.▇▇▇▇▇.▇▇▇ prior to the date of execution hereof; (B) grant
any waiver, exercise any option or relinquish any contractual
rights which are, individually or in the aggregate, material;
or (C) enter into any interest rate, currency or commodity
swaps, ▇▇▇▇▇▇ or other similar financial instruments, or any
other derivatives;
(xiii) not hire any employees or retain any additional independent
contractors, except for up to 7 more employees or independent
contractors in the aggregate (provided that the number of
employees and/or independent contractors does not increase by
more than 3 above the number in place at the date hereof), and
at an individual annual compensation cost of not more than
U.S. $50,000 per employee or independent contractor, and
without any benefits, severance packages or other perquisites
that are not consistent with those of other non-management
employees or independent contractors generally;
(xiv) use commercially reasonable efforts (or cause each of its
subsidiaries to use commercially reasonable efforts) to cause
its current insurance (or re-insurance) policies not to be
cancelled
-22-
or terminated or any of the coverage thereunder to lapse,
unless simultaneously with such termination, cancellation or
lapse, replacement policies underwritten by insurance and
re-insurance companies of nationally recognized standing
providing coverage equal to or greater than the coverage under
the cancelled, terminated or lapsed policies for substantially
similar premiums are in full force and effect;
(xv) incur or commit to capital expenditures prior to the Effective
Date only in the ordinary course consistent with past practice
and not, in any event, exceeding U.S. $250,000, individually
or in the aggregate;
(xvi) not make any changes to existing accounting practices relating
to the Company or any subsidiary, except as required by
Canadian or U.S. Law or required by Canadian or U.S. generally
accepted accounting principles, or make any material tax
election inconsistent with past practice;
(xvii) not enter into, terminate or amend, or waive any rights
under, any material contract;
(xviii) not enter into any agreement to do any of the foregoing
prohibited matters; and
(xix) promptly advise the Purchaser orally and in writing of any
Material Adverse Change (determined without regard to the
higher numerical threshold in the definition of "material") in
respect of the Company;
(b) the Company shall and shall cause its subsidiaries to perform all
obligations required or desirable to be performed by the Company or
any of its subsidiaries under this Agreement, co-operate with the
Purchaser in connection therewith, and do all such other acts and
things as may be necessary or desirable in order to consummate and
make effective, as soon as reasonably practicable, the transactions
contemplated in this Agreement and, without limiting the generality
of the foregoing, the Company, subject to Section 4.6, shall and
where appropriate shall cause its subsidiaries to:
(i) use commercially reasonable efforts to obtain the requisite
approvals of the Company Securityholders to the Arrangement,
including by recommending that they vote in favour of the
Arrangement at the Company Meeting;
-23-
(ii) apply for and use commercially reasonable efforts to obtain
all Regulatory Approvals relating to the Company or any of its
subsidiaries and, in doing so, keep the Purchaser reasonably
informed, subject to applicable Laws, as to the status of the
proceedings related to obtaining such Regulatory Approvals,
including providing the Purchaser with copies of all related
applications and notifications, in draft form, in order for
the Purchaser to provide its reasonable comments, and
providing the Purchaser with copies of all material
correspondence relating to such Regulatory Approvals;
(iii) apply for and use commercially reasonable efforts to obtain
the Interim Order and the Final Order;
(iv) use commercially reasonable efforts to defend, in consultation
with the Purchaser, all lawsuits or other legal, regulatory or
other proceedings to which it is a party challenging or
affecting this Agreement or the consummation of the
transactions contemplated hereby;
(v) use commercially reasonable efforts to have lifted or
rescinded any injunction or restraining order relating to the
Company or other order which may adversely affect the ability
of the parties to consummate the transactions contemplated
hereby;
(vi) effect all necessary registrations, filings and submissions of
information required by Governmental Entities from the Company
or any of its subsidiaries relating to the Arrangement; and
(vii) use commercially reasonable efforts to obtain all necessary
waivers, consents and approvals required to be obtained by the
Company or a subsidiary in connection with the Arrangement
from Brunswick Square Ltd. and Highwoods Realty Limited
Partnership; and
(c) the Company shall carry out the terms of the Interim Order and Final
Order applicable to it and use commercially reasonable efforts to
comply promptly with all requirements which applicable Laws may
impose on the Company or its subsidiaries with respect to the
transactions contemplated hereby and by the Arrangement.
-24-
SECTION 4.4 COVENANTS OF THE PURCHASER.
The Purchaser hereby covenants and agrees, in accordance with the terms
and subject to the conditions of this Agreement:
(a) to perform all obligations reasonably required to be performed by it
under this Agreement, to co-operate with the Company in connection
therewith, and to do all such other acts and things as may be
reasonably necessary in order to consummate and make effective, as
soon as reasonably practicable, the transactions contemplated by
this Agreement and, without limiting the generality of the
foregoing, to:
(i) apply for and use commercially reasonable efforts to obtain
all Regulatory Approvals relating to the Purchaser, and, in
doing so, to keep the Company informed, subject to applicable
Laws, as to the status of the proceedings related to obtaining
the Regulatory Approvals, including providing the Company with
copies of all related applications and notifications, in draft
form, in order for the Company to provide its reasonable
comments, and providing the Company with copies of all
material correspondence relating to such Regulatory Approvals;
(ii) use commercially reasonable efforts to defend, in consultation
with the Company, all lawsuits or other legal, regulatory or
other proceedings to which it is a party challenging or
affecting this Agreement or the consummation of the
transactions contemplated hereby;
(iii) use commercially reasonable efforts to comply for the period
from the Effective Time and until one year after the Effective
Time with the requirements of Rule 144(c) of the 1933 Act;
(iv) use commercially reasonable efforts to have lifted or
rescinded any injunction or restraining order relating to the
Purchaser which may adversely affect the ability of the
parties to consummate the transactions contemplated hereby;
and
(v) effect all necessary registrations, filings and submissions of
information required by Governmental Entities from the
Purchaser or any of its subsidiaries relating to the
Arrangement;
(b) to carry out the terms of the Interim Order and Final Order
applicable to it and use commercially reasonable efforts to comply
promptly with all requirements which applicable Laws may impose on
the Purchaser
-25-
or its subsidiaries with respect to the transactions contemplated
hereby and by the Arrangement;
(c) until the Effective Time or the earlier termination of this
Agreement in accordance with Article 6, the Purchaser will notify
the Company in the event of any split, consolidation or
reclassification of any of the outstanding Purchaser Shares or
Purchaser ADSs, or any declaration, setting aside or payment of any
dividends on or the making of any other distributions on or in
respect of the outstanding Purchaser Shares or the Purchaser ADSs
(it being acknowledged that certain adjustments with respect thereto
may result from section 2.3(a) of the Plan of Arrangement); and
(d) to comply with the provisions of Section 2.2 hereof relating to the
ORAs.
SECTION 4.5 COVENANTS REGARDING NON-SOLICITATION.
(1) Subject to Section 4.6, the Company shall not, directly or indirectly,
through any officer, director, employee, shareholder, representative
(including for greater certainty any investment banker, lawyer or
accountant) or agent of the Company or any of its subsidiaries, (i)
solicit, initiate, knowingly encourage or otherwise 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, (ii) participate in any discussions or
negotiations regarding any Acquisition Proposal, (iii) approve or
recommend any Acquisition Proposal, or (iv) accept or enter into any
agreement, letter of intent, arrangement or understanding related to any
Acquisition Proposal. Notwithstanding the preceding part of this Section
4.5(1) and any other provision of this Agreement, nothing shall prevent
the Board of Directors of the Company from complying with the Company's
disclosure obligations under applicable Laws with regard to an Acquisition
Proposal or from considering, participating in any discussions or
negotiations, or entering into a confidentiality agreement and providing
information pursuant to Section 4.5(3) (but, subject to Section 4.6, not
approve, recommend, accept or enter into any agreement, letter of intent,
arrangement or understanding), regarding an unsolicited bona fide written
Acquisition Proposal (a) that did not otherwise result from a breach of
this Section 4.5, and (b) which the Board of Directors of the Company has
determined in good faith, after consultation with financial advisors and
with outside counsel, is a Superior Proposal. The Company shall, and shall
cause the officers, directors, employees, representatives and agents of
the Company and its subsidiaries to, cease immediately all current
discussions and negotiations regarding any proposal that constitutes, or
may reasonably be
-26-
expected to lead to, an Acquisition Proposal, and promptly request the
return or destruction of all confidential information provided in
connection therewith.
(2) The Company shall, as promptly as practicable and in any event not later
than the next day, notify the Purchaser, at first orally and then in
writing, of any Acquisition Proposal and any inquiry that could reasonably
be expected to lead to an Acquisition Proposal, or any amendments to the
foregoing, or any request for non-public information relating to the
Company or any subsidiary in connection with an Acquisition Proposal or
for access to the properties, books or records of the Company or any
subsidiary by any Person that informs the Company or such subsidiary that
it is considering making, or has made, an Acquisition Proposal. Such
notice shall include a description of the material terms and conditions of
any proposal, the identity of the Person making such proposal, inquiry or
contact and provide such other details of the proposal, inquiry, contact,
discussions or negotiations as the Purchaser may reasonably request, as
well as a copy of any written proposal. The Company shall keep the
Purchaser informed of the status including any change to any of the terms
of any such Acquisition Proposal or inquiry.
(3) If the Company receives a request for material non-public information from
a Person who has made an unsolicited bona fide written Acquisition
Proposal and the Company is permitted, subject to and as contemplated
under the second sentence of Section 4.5(1), to negotiate the terms of
such Acquisition Proposal, then, and only in such case, the Board of
Directors of the Company may, subject to the execution by such Person of a
confidentiality agreement containing employee non-solicitation provisions
substantially similar to those contained in the Confidentiality Agreement,
provide such Person with access to information regarding the Company;
provided, however, that the Person making the Acquisition Proposal shall
not be precluded under such confidentiality agreement from making the
Acquisition Proposal (but shall not be permitted, except subject to
Section 4.6(4), to make any material amendment thereto) and provided
further that the Company sends a copy of any such confidentiality
agreement to the Purchaser promptly upon its execution and the Purchaser
is provided with a list of or copies of any and all information provided
to such Person and promptly provided with access to similar information to
which such Person was provided.
(4) The Company shall ensure that its officers, directors and employees and
its subsidiaries and their officers, directors and employees and any
financial advisors or other advisors or representatives retained by it or
its subsidiaries are aware of the provisions of this Section 4.5, and it
shall be responsible for any breach of this Section 4.5 by its and its
subsidiaries' officers, directors, employees, representatives or agents.
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SECTION 4.6 NOTICE BY THE COMPANY OF SUPERIOR PROPOSAL DETERMINATION.
(1) Notwithstanding Sections 4.5(1), (2) and (3), but subject to the
Purchaser's rights under Sections 6.3(3)(c) and 6.4, the Company may
accept, approve or recommend or enter into any agreement, understanding or
arrangement in respect of an unsolicited Superior Proposal if, and only
if: (i) it has provided the Purchaser with a copy of the Superior Proposal
document; (ii) the Company and the Superior Proposal comply with the terms
of this Agreement, including this Section 4.6, and (iii) five Business
Days shall have elapsed from the later of the date the Purchaser received
written notice advising the Purchaser that the Company's Board of
Directors has resolved, subject only to compliance with this Section 4.6,
to accept, approve, recommend or enter into an agreement, understanding or
arrangement in respect of such Superior Proposal and the date the
Purchaser received a copy of such Superior Proposal. Any information
provided by the Company to the Purchaser pursuant to this Section 4.6 or
pursuant to Section 4.5 shall constitute "Information" under Section
4.7(2).
(2) During such five Business Day period, the Company agrees that the
Purchaser shall have the right, but not the obligation, to offer to amend
the terms of this Agreement. The Board of Directors of the Company will
review any offer by the Purchaser to amend the terms of this Agreement in
good faith in order to determine, in its discretion in the exercise of its
fiduciary duties, whether the Purchaser's offer (having regard to its
value at that time) upon acceptance by the Company would, if consummated
in accordance with its terms, result in a transaction equally or more
favourable to the Company Shareholders from a financial point of view than
the transaction contemplated by the previously Superior Proposal. If the
Board of Directors of the Company so determines, it will enter into an
amended agreement with the Purchaser reflecting the Purchaser's amended
offer. If the Board of Directors of the Company continues to believe, in
good faith, after consultation with its financial advisors and outside
counsel, that such Superior Proposal remains a Superior Proposal and
therefore rejects the Purchaser's amended offer, the Company and its Board
of Directors may approve, recommend, accept or enter into an agreement,
understanding or arrangement with respect to the Superior Proposal
provided that the Company will continue to fulfill its obligations
pursuant to this Agreement and provided further that the Superior Proposal
does not impose any "break-up", "hello" or other fees or options or rights
to acquire assets or securities, or any other obligations that would
survive the Effective Date, on the Company or any subsidiary unless and
until this Agreement is terminated in accordance with its terms. In
addition, in such circumstances, the Company may proceed with such
approvals, consents and/or filings required by Governmental Entities
and/or such other Persons as the Company shall
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consider appropriate in order to consummate such Superior Proposal,
provided that such activity does not delay the obtaining of any approvals,
consents and/or filings in connection with the Arrangement, which shall
continue to be reasonably proceeded with in good faith by the Company.
(3) Nothing contained in this Section 4.6 shall limit in any way the
obligation of the Company to convene and hold the Company Meeting in
accordance with Section 2.1 of this Agreement.
(4) The Company acknowledges and agrees that each successive amendment to any
Acquisition Proposal with a financial impact (including tax impacts) shall
constitute a new Acquisition Proposal for purposes of the requirement
under clause (iii) of Section 4.6(1) to initiate an additional five
Business Day notice period.
SECTION 4.7 ACCESS TO INFORMATION.
(1) Subject to Section 4.7(2) and applicable Laws, upon reasonable notice, the
Company shall (and shall cause each of its subsidiaries to) afford the
Purchaser's officers, employees, counsel, accountants and other authorized
representatives and advisors ("REPRESENTATIVES") access, during normal
business hours from the date hereof and until the earlier of the Effective
Date or the termination of this Agreement, to its and its subsidiaries'
properties, books, contracts and records as well as to its management
personnel, and, during such period, the Company shall (and shall cause
each of its subsidiaries to) furnish promptly to the Purchaser all
information concerning the Company's and its subsidiaries' businesses,
properties and personnel as the Purchaser may reasonably request.
(2) The Purchaser acknowledges that certain information provided to it under
Section 4.7(1) above will be non-public and/or proprietary in nature (the
"INFORMATION") and will be subject to the terms of the Confidentiality
Agreement. For greater certainty, the provisions of the Confidentiality
Agreement shall survive the termination of this Agreement, provided that
the Confidentiality Agreement and Section 4.7(1) shall terminate at the
Effective Time notwithstanding anything to the contrary contained therein.
(3) In the event that the Company is provided with any confidential
information concerning the Purchaser or its subsidiaries, such information
will be subject to obligations of confidentiality on the part of the
Company identical to those imposed on the Purchaser under the
Confidentiality Agreement, mutatis mutandis. Upon reasonable notice, the
Purchaser shall afford representatives of the Company the opportunity,
upon reasonable notice and during normal business hours from the date
hereof and until the earlier of the Effective Date
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or termination of this Agreement, to speak to appropriate management
personnel of the Purchaser as the Company may reasonably request.
SECTION 4.8 CLOSING MATTERS.
Each of the Purchaser and the Company shall deliver, at the closing of the
transactions contemplated hereby, such customary certificates, certified
resolutions and other closing documents as may be required by the other party
hereto, acting reasonably.
SECTION 4.9 INDEMNIFICATION; INSURANCE.
(1) The Purchaser agrees that all rights to indemnification or exculpation now
existing in favour of the directors or officers of the Company or any
subsidiary as provided in the articles or by-laws thereof shall survive
the Arrangement and shall continue in full force and effect for a period
of not less than six years from the Effective Time.
(2) The Company shall act as agent for its directors and officers for the
purposes of this Section 4.9.
(3) The Company will be permitted, and shall use its commercially reasonable
efforts, prior to the Effective Time, to extend the discovery period for
up to six years from the Effective Time in respect of its directors' and
officers' liability insurance policy(ies) in effect on the date of
execution hereof, to the extent of a maximum aggregate cost of U.S. $1.75
million (net after taking into account any reduction or credit in respect
of the cancellation described in (4) below). The Company shall, prior to
the Effective Time, extend the discovery period in respect of its current
errors and omissions insurance and crime insurance policies for as long as
is possible for the amount of 200% of the current year's premium
applicable to each.
(4) Promptly following the Effective Time, the Company shall cancel its
current directors' and officers' liability insurance policy(ies) and its
current errors and omissions insurance and crime insurance policies,
without prejudice to the discovery period extensions referred to in (3)
above.
SECTION 4.10 LOAN ARRANGEMENTS.
Despite anything to the contrary contained in this Agreement, the Company
shall be permitted to continue its current practice of lending money on a short
term basis (less than 60 days) near its year end, provided that the borrower's
obligations under such loans are fully and unconditionally guaranteed (including
in the event of the borrower's bankruptcy or insolvency) by a Canadian Schedule
1 chartered bank and that such loans terminate (and the loaned funds are
returned to the Company) prior to the Effective Date.
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SECTION 4.11 EMPLOYMENT ARRANGEMENTS.
On or prior to the date hereof, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ have, by
executing or initialling terms sheets related thereto, agreed in principle to
amendments in their existing employment, change in control, Company Option or
other agreements or arrangements with the Company or its subsidiaries to the
Purchaser's satisfaction.
The Company has advised that, to reduce costs, ▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇
▇▇▇▇▇▇▇▇ have agreed to resign from the Company, and the Company has, subject to
the Purchaser's confirmation, accepted such resignations, as of March 1, 2003,
and the executives and the Company have agreed that such resignation will be
treated as a change of control termination. Despite anything to the contrary
contained in this Agreement, the Purchaser confirms these arrangements, but
shall at its option be entitled to request that the termination be deferred
until up to the Effective Date.
SECTION 4.12 SHAREHOLDER ARRANGEMENTS.
(1) The parties confirm that, on or prior to the date hereof, the shareholders
listed below have entered into agreements to support the Arrangement. The
shareholders are Aliant Inc., Whitecastle Investments Limited, 3841553
Canada Inc., ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
(2) The parties confirm their intention and understanding that certain of the
agreements referred to in Section 4.12(1) above will result in the
transactions qualifying for an exemption from independent valuation
requirements under section 4.5(1)2 of OSC Rule 61-501 (and equivalent
provisions in other jurisdictions). Accordingly, the Company shall provide
full access to the shareholders to all confidential corporate information,
subject to the execution by such shareholders of a confidentiality
agreement in form and substance satisfactory to the Purchaser and the
Company, each acting reasonably.
ARTICLE 5
CONDITIONS
SECTION 5.1 MUTUAL CONDITIONS PRECEDENT.
The respective obligations of the parties hereto to complete the
transactions contemplated by this Agreement shall be subject to the
satisfaction, on or before the Effective Date, of the following conditions
precedent, each of which may only be waived by the mutual consent of the
Purchaser and the Company:
(a) the Arrangement Resolution shall have been approved by not less than
two-thirds of the votes cast on such resolution by the Company
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Securityholders present in person or voting by proxy at the Company
Meeting, as well as by the minority as contemplated in Section
2.3(2);
(b) any conditions in addition to those set out in Section 5.1(a) which
may be imposed by the Interim Order shall have been satisfied;
(c) the Interim Order and the Final Order shall each have been obtained
in form and on terms satisfactory to each of the Company and the
Purchaser, acting reasonably, and shall not have been set aside or
modified in a manner unacceptable to such parties, acting
reasonably, on appeal or otherwise;
(d) there shall not be in force any final and non-appealable judgement,
injunction, order or decree preventing, restraining or enjoining the
consummation of the transactions contemplated by this Agreement and
there shall be no proceeding in progress that relates to or results
from the transactions contemplated by this Agreement that would, if
successful, result in an order or ruling of a Governmental Entity
that would preclude completion of the transactions contemplated by
this Agreement in accordance with the terms hereof or would
otherwise be inconsistent with the Regulatory Approvals which have
been obtained;
(e) this Agreement shall not have been terminated pursuant to Article 6;
(f) the Purchaser ADSs to be issued pursuant to the Arrangement shall
have been listed on the NYSE (subject only to official notice of
issuance, the issuance of the Purchaser Shares being a condition
precedent thereof);
(g) there shall not be pending or threatened any suit, action or
proceeding: (i) seeking to prohibit or restrict the acquisition by
the Purchaser or any of its subsidiaries of any the Company Common
Shares, seeking to restrain or prohibit the consummation of the Plan
of Arrangement or seeking to obtain from the Company or the
Purchaser any damages directly or indirectly in connection with the
Arrangement, (ii) seeking to prohibit or materially limit the
ownership or operation by the Purchaser or any of its subsidiaries
of any material portion of the business or assets of the Company or
any of its subsidiaries or to compel the Purchaser or any of its
subsidiaries to dispose of or hold separate any material portion of
the business or assets of the Company or any of its subsidiaries,
(iii) seeking to impose limitations on the ability of the Purchaser
or any of its subsidiaries to acquire or hold, or exercise full
rights of ownership of, any the Company Common Shares, including the
right to vote the Company Common Shares
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purchased by them on all matters properly presented to the
shareholders of the Company, (iv) seeking to prohibit the Purchaser
or any of its subsidiaries from effectively controlling in any
material respect the business or operations of the Company or any of
its subsidiaries, or (v) which otherwise is reasonably likely to
have a Material Adverse Effect on the Company or the Purchaser; and
(h) the Regulatory Approvals (other than the orders or approvals
referred to in Section 2.7 hereof) shall have been obtained or
satisfied on terms and conditions satisfactory to the Purchaser and
the Company (but in the latter case only insofar as it would
directly affect the Company Securityholders), acting reasonably.
SECTION 5.2 ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER.
The obligations of the Purchaser to complete the transactions contemplated
by this Agreement shall also be subject to the fulfilment of each of the
following conditions precedent (each of which is for the Purchaser's exclusive
benefit and may be waived by the Purchaser):
(a) all covenants of the Company under this Agreement to be performed on
or before the Effective Date shall have been duly performed by the
Company in all material respects;
(b) the representations and warranties of the Company shall have been
true and correct on the date hereof, except to the extent that any
untruth or incorrectness would not have a Material Adverse Effect on
the Company;
(c) the representations and warranties of the Company shall be true and
correct (except to the extent that any untruth or incorrectness
would not have a Material Adverse Effect on the Company) as of the
Effective Date as if made on and as of such date (except to the
extent such representations and warranties speak solely as of an
earlier date, in which event such representations and warranties
shall be true and correct to such extent as of such earlier date, or
except as affected by transactions contemplated or permitted by this
Agreement), and the Purchaser shall have received a certificate of
the Company addressed to the Purchaser and dated the Effective Date,
signed on behalf of the Company by two senior executive officers of
the Company (on the Company's behalf and without personal
liability), confirming the same as at the Effective Date;
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(d) the agreements referred to in Section 4.12 shall be in full force
and effect as of the Effective Date;
(e) on or prior to the Effective Date, all required consents, approvals
or waivers of Brunswick Square Ltd. and Highwoods Realty Limited
Partnership shall have been received on terms and conditions
satisfactory to the Purchaser, acting reasonably (provided that the
Purchaser shall not be entitled to object if the landlords demand
consent fees of not more than U.S. $100,000 in aggregate, but any
such consent fees shall be deducted from the U.S. $1.5 million
basket for purposes of the definition of "material");
(f) Intentionally deleted;
(g) the Board of Directors of the Company shall have adopted all
necessary resolutions, and all other necessary corporate action
shall have been taken by the Company and its subsidiaries to permit
the consummation of the Arrangement;
(h) between the date hereof and the Effective Date, there shall not have
occurred a Material Adverse Change to the Company;
(i) the orders and approvals referred to in Section 2.7 hereof shall
have been obtained on terms and conditions satisfactory to the
Purchaser, acting reasonably;
(j) such of the directors and officers of the Company and its
subsidiaries as are specified by the Purchaser shall have tendered
resignations effective as of the Effective Time (it being
acknowledged by the Purchaser that, absent cause, such resignations
by officers shall be treated as terminations without cause);
(k) Intentionally deleted;
(l) the Company and the Trustee shall have entered into the Trust
Agreement;
(m) Intentionally deleted; and
(n) Company Shareholders holding in excess of 5% of the outstanding the
Company Common Shares shall not have exercised dissent or similar
rights in connection with the Arrangement.
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SECTION 5.3 ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to complete the transactions contemplated
by this Agreement shall also be subject to the following conditions precedent
(each of which is for the exclusive benefit of the Company and may be waived by
the Company, except that the condition in (e) may not be waived by the Company):
(a) all covenants of the Purchaser under this Agreement to be performed
on or before the Effective Date (including those in connection with
the ORAs) shall have been duly performed by the Purchaser in all
material respects;
(b) all representations and warranties of the Purchaser under this
Agreement shall have been true and correct on the date hereof,
except to the extent that any untruth or incorrectness would not
have a Material Adverse Effect on the Purchaser;
(c) the representations and warranties of the Purchaser shall be true
and correct (except to the extent that any untruth or incorrectness
would not have a Material Adverse Effect on the Purchaser) as of the
Effective Date as if made on and as of such date (except to the
extent such representations and warranties speak solely as of an
earlier date, in which event such representations and warranties
shall be true and correct to such extent as of such earlier date, or
except as affected by transactions contemplated or permitted by this
Agreement), and the Company shall have received a certificate of the
Purchaser addressed to the Company and dated the Effective Date,
signed on behalf of the Purchaser by a senior executive officer of
the Purchaser (on the Purchaser's behalf and without personal
liability), confirming the same as at the Effective Date;
(d) the Board of Directors of the Purchaser shall have adopted all
necessary resolutions, and all other necessary corporate action
shall have been taken by the Purchaser to permit the consummation of
the Arrangement, the issuance of the Purchaser ADSs in connection
therewith and the issuance of the Purchaser Shares upon the exercise
from time to time of the Revised Options; and
(e) the orders referred to in Section 2.7(1) and (3) shall have been
obtained on terms and conditions satisfactory to the Company, to the
extent that they would affect the Company Shareholders.
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SECTION 5.4 NOTICE AND CURE PROVISIONS.
(1) The Purchaser and the Company will give prompt notice to the other of the
occurrence, or failure to occur, at any time from the date hereof until
the Effective Date, of any event or state of facts of which it is aware
which occurrence or failure would, or would be reasonably likely to:
(a) cause any of the representations or warranties of the other party
contained herein to be untrue or inaccurate on the date hereof or on
the Effective Date; or
(b) result in the failure in any material respect to comply with or
satisfy any covenant, condition or agreement to be complied with or
satisfied by the other hereunder prior to the Effective Date.
(2) Neither the Purchaser nor the Company may seek to rely upon any conditions
precedent contained in Sections 5.1, 5.2 or 5.3, or exercise any
termination right arising therefrom, unless forthwith and in any event
prior to the filing of the Articles of Arrangement for acceptance by the
Director, the Purchaser or the Company, as the case may be, has delivered
a written notice to the other specifying in reasonable detail all breaches
of covenants, representations and warranties or other matters which the
Purchaser or the Company, as the case may be, are asserting as the basis
for the non-fulfilment of the applicable condition precedent or the
exercise of the termination right, as the case may be. If any such notice
is delivered, provided that the Company or the Purchaser, as the case may
be, is proceeding diligently to cure such matter, if such matter is
susceptible to being cured (for greater certainty, except by way of
disclosure in the case of representations and warranties), the other may
not terminate this Agreement as a result thereof until the earlier of the
Outside Date and the expiration of a period of 30 days from such notice.
If any such matter is, by mutual agreement, acting reasonably, not
susceptible to being cured, then, unless the other party waives such
matter (which shall not operate as a waiver of any other matter
whatsoever) in writing within five (5) Business Days, this Agreement shall
be automatically terminated (without prejudice to any liability for prior
non-compliance). If such notice has been delivered prior to the date of
the Company Meeting, such meeting shall, unless the parties agree
otherwise, be postponed or adjourned until the expiry of such period,
provided that such period does not extend beyond the Outside Date. If such
notice has been delivered prior to the making of the application for the
Final Order or the filing of the Articles of Arrangement with the
Director, such application and such filing shall be postponed until the
expiry of such period, provided that such period does not extend beyond
the Outside Date.
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SECTION 5.5 SATISFACTION OF CONDITIONS.
The conditions precedent set out in Sections 5.1, 5.2 and 5.3 shall be
conclusively deemed to have been satisfied, waived or released when, with the
agreement of the Purchaser and the Company, a certificate of arrangement in
respect of the Arrangement is issued by the Director.
ARTICLE 6
AMENDMENT AND TERMINATION
SECTION 6.1 AMENDMENT.
This Agreement and the Plan of Arrangement may, at any time and from time
to time before or after the holding of the Company Meeting but not later than
the Effective Date, be amended by mutual written agreement of the parties
hereto, and any such amendment may, subject to applicable Laws and the Interim
Order, without limitation:
(a) change the time for performance of any of the obligations or acts of
the parties;
(b) waive any inaccuracies or modify any representation or warranty
contained herein or in any document delivered pursuant hereto;
(c) waive compliance with or modify any of the covenants herein
contained and waive or modify performance of any of the obligations
of the parties; and/or
(d) waive compliance with or modify any conditions precedent herein
contained.
SECTION 6.2 MUTUAL UNDERSTANDING REGARDING PURCHASER PROPOSED AMENDMENTS.
(1) The parties agree that if the Purchaser proposes any amendment or
amendments to this Agreement or to the Plan of Arrangement, or proposes an
alternative transaction such as an amalgamation or take-over bid, the
Company will act reasonably in considering such amendment or alternative
transaction and, if the Company and the Company Securityholders are not
prejudiced by reason of any such amendment and if it would not result in
extending the closing beyond the Outside Date, the Company will co-operate
in a reasonable fashion with the Purchaser so that such amendment or
alternative transaction can be effected subject to applicable Laws and the
rights of the Company Securityholders.
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(2) The parties agree that if the Company proposes any amendment or amendments
to this Agreement or to the Plan of Arrangement, the Purchaser will act
reasonably in considering such amendment and, if none of the Company or
any of its subsidiaries, the Purchaser or any of its subsidiaries, or the
holders of the Purchaser Shares or the Purchaser ADSs are prejudiced by
reason of any such amendment and if it would not result in extending the
closing beyond the Outside Date, the Purchaser will co-operate in a
reasonable fashion with the Company so that such amendment can be effected
subject to applicable Laws and the rights of the Purchaser, Purchaser
Subco, the Company and the holders of the Purchaser Shares and the
Purchaser ADSs.
SECTION 6.3 TERMINATION.
(1) If any condition contained in Sections 5.1 or 5.2 is not satisfied at or
before the Effective Date to the satisfaction of the Purchaser, then the
Purchaser may, subject to Section 5.4, by notice to the Company, terminate
this Agreement and the obligations of the parties hereunder (except as
expressly otherwise herein provided, including under Section 6.4), but
without detracting from the rights of the Purchaser arising from any
breach by the Company but for which the condition would have been
satisfied, provided, however, that the right to terminate this Agreement
under this Section 6.3(1) shall not be available if the Purchaser's
actions or failure to act has been a principal cause of or resulted in the
failure of the Closing to occur on or before such date and such actions or
failure to act constitutes a material breach of this Agreement.
(2) If any condition contained in Sections 5.1 or 5.3 is not satisfied at or
before the Effective Date to the satisfaction of the Company, then the
Company may, subject to Section 5.4, by notice to the Purchaser terminate
this Agreement and the obligations of the parties hereunder (except as
otherwise expressly herein provided, including under Section 6.4), but
without detracting from the rights of the Company arising from any breach
by the Purchaser but for which the condition would have been satisfied,
provided, however, that the right to terminate this Agreement under this
Section 6.3(2) shall not be available if the Company's actions or failure
to act has been a principal cause of or resulted in the failure of the
Closing to occur on or before such date and such actions or failure to act
constitutes a material breach of this Agreement.
(3) This Agreement may:
(a) be terminated by the mutual agreement of the Company and the
Purchaser (for greater certainty, without further action on the part
of the Company Securityholders if terminated after the holding of
the Company Meeting); or
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(b) be terminated by either the Company or the Purchaser if there shall
be passed any Law that makes consummation of the transactions
contemplated by this Agreement illegal or otherwise prohibited or if
any final and non-appealable judgement or decision of a Governmental
Entity prevents completion of the transactions contemplated by this
Agreement; or
(c) be terminated by the Purchaser if (A) the Board of Directors of the
Company shall have failed to recommend or shall have withdrawn,
modified or changed in a manner adverse to the Purchaser its
approval or recommendation of this Agreement or the Arrangement
(unless as a result of the Purchaser having made a material
misrepresentation at the date hereof or materially breached a
covenant in this Agreement in such a manner that, taking into
account Section 5.4, the Company would be entitled to rely on the
failure of a condition set forth in Sections 5.3(a) or (b) as a
reason not to complete the Arrangement), or (B) the Board of
Directors of the Company shall have approved or recommended any
Acquisition Proposal, or (C) the Company has entered into an
agreement, understanding or arrangement with respect to a Superior
Proposal; or
(d) be terminated by the Company at any time prior to the Effective Date
if, on the third day prior to the Effective Date, the product of the
Exchange Ratio by the Effective Date Average ADS Price is less than
U.S.$1.00;
in each case (subject to the applicable time limits in the case of (d)
above) on or prior to the Effective Date.
(4) If this Agreement is terminated in accordance with the foregoing
provisions of this Section 6.3, no party shall have any further liability
to perform its obligations hereunder except as provided in Section 6.4 and
as otherwise expressly contemplated hereby, and provided that neither the
termination of this Agreement nor anything contained in this Section
6.3(4) shall relieve any party from any liability for any breach by it of
this Agreement, including from any inaccuracy in its representations and
warranties and any non-performance by it of its covenants made herein,
except as expressly provided in Section 6.5(2).
(5) If the Effective Date does not occur on or prior to the Outside Date,
then, unless otherwise agreed by the parties, this Agreement shall
terminate, provided that no party shall have any further liability to
perform its obligations hereunder except as provided in Section 6.4 and as
otherwise expressly contemplated hereby, and neither the termination of
this
-39-
Agreement nor anything contained in this Section 6.3(5) shall relieve any
party from any liability for any breach by it of this Agreement, including
from any inaccuracy in its representations and warranties and any
non-performance by it of its covenants made herein, except as expressly
provided in Section 6.5(2).
SECTION 6.4 BREAK AND OTHER FEES.
(1) If:
(a) the Purchaser shall terminate this Agreement pursuant to Section
6.3(3)(c); or
(b) the Agreement has been terminated by the Purchaser, the Company or
automatically as a result of the requisite approval by the Company
Securityholders (and/or the holders of Company Common Shares
pursuant to OSC Rule 61-501) not being obtained at the Company
Meeting, or the Effective Date not occurring on or prior to the
Outside Date, and in either case an Acquisition Proposal has been
made by any Person prior to the holding of the Company Meeting
(unless the Purchaser has made a material misrepresentation on the
date hereof or materially breached a covenant in this Agreement in
such a manner that, taking into account Section 5.4, the Company
would be entitled to rely on the failure of a condition set forth in
Sections 5.3(a) or (b) as a reason not to complete the Arrangement);
then in any such case the Company shall pay to the Purchaser a "break fee"
of U.S. $625,000, together with reimbursement of the Purchaser's
out-of-pocket costs and expenses, to an aggregate cap of U.S. $1.25
million, in immediately available funds to an account designated by the
Purchaser. Such payment shall be due (A) in the case of a termination
specified in clause (a), within two Business Days after written notice of
termination by the Purchaser or (B) in the case specified in clause (b),
within two Business Days after the earlier of the Outside Date or the
termination of the Agreement, as applicable. The Company shall not be
obligated to make more than one payment pursuant to this Section 6.4(1).
(2) If either the Company or the Purchaser shall terminate this Agreement
pursuant to Section 6.3(1) or (2), or this Agreement shall terminate under
Section 6.3(5), in each case as a result of not having obtained the
requisite approval by the Company Securityholders (and/or by the holders
of Company Common Shares pursuant to OSC Rule 61-501) at the Company
Meeting, then, except in the circumstances contemplated in Section 6.4(1)
above, within two Business Days after written notice of termination by the
Purchaser or contemporaneously with or prior to written notice of
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termination by the Company, respectively, as a result thereof, the Company
shall reimburse to the Purchaser the Purchaser's out-of-pocket costs and
expenses in connection with the transaction contemplated by this
Agreement, to a maximum of U.S. $1,000,000, in immediately available funds
to an account designated by the Purchaser (unless the termination is as a
result of the Purchaser having made a material misrepresentation at the
date hereof or materially breached a covenant in this Agreement in such a
manner that, taking into account Section 5.4, the Company would be
entitled to rely on the failure of a condition set forth in Sections
5.3(a) or (b) as a reason not to complete the Arrangement).
(3) Despite anything to the contrary contained in this Section 6.4, in the
event that this Agreement is terminated solely as a result of the failure
to satisfy a condition in respect of any of the Regulatory Approvals,
without any default of either party, then no fees shall be payable under
this Section 6.4 and each party shall bear their own expenses.
(4) Despite anything to the contrary contained in this Section 6.4, in the
event that this Agreement is terminated pursuant to Section 6.3(3)(d),
then no fees shall be payable under this Section 6.4 and each party shall
bear their own expenses.
(5) Any obligation to make a payment as a result of this Section 6.4 (and
Section 6.5(2)) shall survive the termination of this Agreement.
(6) This Section 6.4 is subject to Section 6.5(2) hereof.
SECTION 6.5 REMEDIES.
(1) The parties hereto acknowledge and agree that an award of money damages
would be inadequate for any breach of this Agreement by any party or its
representatives and any such breach would cause the non-breaching party
irreparable harm. Accordingly, the parties hereto agree that, in the event
of any breach or threatened breach of this Agreement by one of the
parties, the non-breaching party will also be entitled, without the
requirement of posting a bond or other security, to equitable relief,
including injunctive relief and specific performance. Such remedies will
not be the exclusive remedies for any breach of this Agreement but will be
in addition to all other remedies available at law or equity to each of
the parties.
(2) Despite the foregoing, the Purchaser shall not be entitled to seek money
damages in circumstances where an amount is owing and has been paid to it
under Section 6.4 unless it has first returned the amount previously paid
to it under Section 6.4, to the intent that the Purchaser must in such
circumstances
-41-
elect to either ▇▇▇ for money damages or accept the fees paid under
Section 6.4, but not both.
ARTICLE 7
GENERAL
SECTION 7.1 NOTICES.
All notices and other communications which may or are required to be given
pursuant to any provision of this Agreement shall be given or made in writing
and shall be deemed to be validly given if served personally or by telecopy, in
each case addressed to the particular party at:
(a) If to the Purchaser, at:
▇/▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Attention: General Counsel
Telecopier No.: 011-331-4076-1435
with a copy to:
Stikeman ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Company at:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Chief Executive Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇, ▇▇▇▇▇▇▇ Dominion Bank Tower
-42-
Toronto Dominion Centre, 47th Floor
Toronto, Ontario, Canada M5K 1E6
Attention: ▇▇▇▇ ▇▇▇▇▇▇ and Ian Palm
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address of which any party may, from time to time, advise the
other parties by notice in writing given in accordance with the foregoing. The
date of receipt of any such notice shall be deemed to be the date of delivery or
telecopying thereof.
SECTION 7.2 ASSIGNMENT.
No party hereto may assign its rights or obligations under this Agreement
or the Arrangement, except that the Purchaser may assign all or part of its
rights, without reducing its own obligations hereunder, to a subsidiary.
SECTION 7.3 BINDING EFFECT.
This Agreement and the Arrangement shall be binding upon and shall enure
to the benefit of the parties hereto and their respective successors and
permitted assigns and no third party shall have any rights hereunder.
SECTION 7.4 WAIVER AND MODIFICATION.
The Company and the Purchaser may waive or consent to the modification of,
in whole or in part, any inaccuracy of any representation or warranty made to
them hereunder or in any document to be delivered pursuant hereto and may waive
or consent to the modification of any of the covenants herein contained for
their respective benefit or waive or consent to the modification of any of the
obligations of the other parties hereto. Any waiver or consent to the
modification of any of the provisions of this Agreement, to be effective, must
be in writing executed by the party granting such waiver or consent. No waiver
shall operate as a waiver of any other matter whatsoever.
SECTION 7.5 FURTHER ASSURANCES.
Each party hereto shall, from time to time, and at all times hereafter, at
the request of the other party hereto, but without further consideration, do all
such further acts and execute and deliver all such further documents and
instruments as shall be reasonably required in order to fully perform and carry
out the terms and intent hereof.
SECTION 7.6 EXPENSES.
(1) Subject to Section 6.4(2), the parties agree that all out-of-pocket
expenses of the parties relating to the Arrangement and the transactions
contemplated hereby, including legal fees, accounting fees, financial
advisory fees,
-43-
regulatory filing fees, stock exchange fees, all disbursements of advisors
and printing and mailing costs, shall be paid by the party incurring such
expenses, except that, subject to Section 6.4(2), all competition or
anti-trust filing or similar fees shall be shared 50/50 by the parties.
(2) The Company represents and warrants to the Purchaser that, except for any
amounts owing to CIBC World Markets Inc. by the Company pursuant to and in
accordance with the terms of a written and executed agreement existing as
at the date hereof and disclosed to the Purchaser on or prior to the date
hereof, no broker, finder or investment banker is or will be entitled to
any brokerage, finder's or other fee or commission from the Company or any
subsidiary of the Company in connection with the transactions contemplated
hereby or by the Arrangement.
(3) Nothing in this Agreement will prevent or limit the Company from paying
the reasonable (and previously agreed, if applicable) professional fees
and disbursements (plus applicable taxes, if any) of CIBC World Markets
Inc., ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP incurred by the
Company in connection with the Arrangement and the transactions
contemplated hereby.
SECTION 7.7 CONSULTATION.
The Purchaser and the Company agree to consult with each other as to the
general nature of any news releases or public statements with respect to this
Agreement or the Arrangement, and to use their respective commercially
reasonable efforts, subject to applicable Laws, not to issue any news releases
or public statements inconsistent with the results of such consultations. Each
party shall use its commercially reasonable efforts to enable the other parties
to review and comment on all such news releases prior to the release thereof.
The parties agree to issue a joint news release in the agreed form with respect
to this Arrangement as soon as practicable following the execution of this
Agreement. The Purchaser and the Company also agree to consult with each other
in preparing and making any filings and communications in connection with any
Regulatory Approvals or other regulatory approvals and in seeking any third
party consents under leases, licenses or other agreements.
SECTION 7.8 GOVERNING LAWS.
This Agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable therein and
shall be treated in all respects as a Ontario contract. Each party hereby
irrevocably attorns to the jurisdiction of the courts of the Province of Ontario
in respect of all matters arising under or in relation to this Agreement.
-44-
SECTION 7.9 JUDGEMENT CURRENCY.
If, for the purposes of obtaining judgment in any court, it is necessary
to convert a sum due to a party in any currency (the "ORIGINAL CURRENCY") into
another currency (the "OTHER CURRENCY"), the parties agree, to the fullest
extent that they may effectively do so, that the rate of exchange used shall be
that at which, in accordance with normal banking procedures, such party could
purchase the Original Currency with the Other Currency on the Business Day
preceding the day on which final judgment is given or, if permitted by
applicable law, on the day on which the judgment is paid or satisfied.
SECTION 7.10 TIME OF ESSENCE.
Time shall be of the essence in this Agreement.
SECTION 7.11 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this Arrangement
Agreement as of the date first written above.
ALCATEL
By:
----------------------------------------
Authorized Signing Officer
IMAGICTV INC.
By:
----------------------------------------
Authorized Signing Officer
By:
----------------------------------------
Authorized Signing Officer
-45-
By:
SCHEDULE A
ARRANGEMENT RESOLUTION
SPECIAL RESOLUTION OF THE COMPANY'S SECURITYHOLDERS
BE IT RESOLVED THAT:
1. The arrangement (the "Arrangement") under Section 192 of the Canada
Business Corporations Act (the "CBCA") involving I CO ("the Company"), as
more particularly described and set forth in the Management Information
Circular (the "Circular") of the Company accompanying the notice of this
meeting (as the Arrangement may be or may have been modified or amended)
is hereby authorized, approved and adopted.
2. The plan of arrangement (the "Plan of Arrangement") involving the Company,
the full text of which is set out as Schedule B to the Arrangement
Agreement (the "Arrangement Agreement") made between A CO (the
"Purchaser") and the Company (as the Plan of Arrangement may be or may
have been modified or amended) is hereby authorized, approved and adopted.
3. Notwithstanding that this resolution has been passed (and the Arrangement
adopted) by the securityholders of the Company or that the Arrangement has
been approved by the Courts, the directors of the Company are hereby
authorized and empowered without further notice to or approval of the
securityholders of the Company (i) to amend (in a non-material way) the
Arrangement Agreement or the Plan of Arrangement to the extent permitted
by the Arrangement Agreement, and (ii) subject to the terms of the
Arrangement Agreement, not to proceed with the Arrangement.
4. Any officer or director of the Company is hereby authorized and directed
for and on behalf of the Company to execute, under the seal of the Company
or otherwise, and to deliver articles of arrangement and such other
documents as are necessary or desirable to the Director under the CBCA in
accordance with the Arrangement Agreement for filing.
5. Any officer or director of the Company is hereby authorized and directed
for and on behalf of the Company to execute or cause to be executed, under
the seal of the Company or otherwise, and to deliver or cause to be
delivered, all such other documents and instruments and to perform or
cause to be performed all such other acts and things as may be necessary
or desirable to give full effect to the foregoing resolution and the
matters authorized hereby.
---------------------------
SCHEDULE C
REGULATORY APPROVALS
CANADA
- receipt of an advance ruling certificate ("ARC") in accordance with
section 102 of the Competition Act (Canada); or receipt of a waiver of the
notification requirement under Part IX of the Competition Act (Canada)
pursuant to section 113(c) of the Competition Act (Canada) as well as
written confirmation from the Commissioner of Competition that he has no
intention to file an application under section 92 of the Competition Act
(Canada) in connection with the transactions contemplated by this
Agreement (a "NO ACTION LETTER"); or receipt of a no action letter and the
expiry of the statutory waiting period under section 123 of the
Competition Act (Canada)
- exemption orders or approvals from Canadian provincial and territorial
securities regulators on terms and conditions satisfactory to the
Purchaser with respect to all of the matters referred to in Sections
2.7(1), 2.7(2) and 2.7(4) of the Agreement, and on terms and conditions
satisfactory to the Company with respect to the matters referred to in
Sections 2.7(1) and 2.7(3) of the Agreement to the extent that they relate
to the Company Shareholders
UNITED STATES
- approval of the NYSE to the listing of the Purchaser ADSs to be issued
under the Arrangement, subject to official notice of issuance, on terms
and conditions satisfactory to the Purchaser
FRANCE
- the filing of a prospectus (note d'operation) issued in connection with
the transactions related to the Arrangement with the COB and the approval
(visa) of such prospectus by the COB on terms and conditions satisfactory
to the Purchaser
- approval of the COB to the listing of the additional Purchaser Shares to
be issued under the Arrangement and upon the exercise of the Revised
Options and related matters on terms and conditions satisfactory to the
Purchaser
---------------------
SCHEDULE D
COMPANY'S REPRESENTATIONS AND WARRANTIES
(a) Organization. Each of the Company and its subsidiaries has been duly
incorporated or formed under all applicable Laws, is validly
subsisting and has full corporate or legal power and authority to
own its properties and conduct its businesses as currently owned and
conducted. The only subsidiaries of the Company are the following:
iMagicTV (US), Inc. and iMagicTV (UK) Limited. All of the
outstanding shares and other ownership interests of the Company's
subsidiaries are validly issued, fully paid and non-assessable and
all such shares and other ownership interests are owned directly or
indirectly by the Company, free and clear of all material liens,
claims or encumbrances, except as has been set forth in the Company
Disclosure Letter or pursuant to restrictions on transfers contained
in articles or similar documents, and except as aforesaid there are
no outstanding options, rights, entitlements, understandings or
commitments (contingent or otherwise) regarding the right to acquire
any such shares or other ownership interests in any of the Company's
subsidiaries. The Company Disclosure Letter sets out the
jurisdictions of incorporation of each of the Company's subsidiaries
and all jurisdictions in which each of it and its subsidiaries carry
on business. Except as set out in the Company Disclosure Letter, the
Company and its subsidiaries are duly qualified, licensed or
registered to carry on business and in good standing in all required
jurisdictions. Other than the Company's subsidiaries described
above, and other than as set forth in the Company Disclosure Letter,
neither the Company nor its subsidiaries owns, directly or
indirectly, any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or
similar interest in, any Person (including any corporation,
partnership, joint venture, limited liability company or other
business association or entity, whether incorporated or
unincorporated).
(b) Capitalization. The authorized capital of the Company consists of an
unlimited number of Company Common Shares and an unlimited number of
preferred shares, issuable in series. As of the date hereof, there
are 24,731,607 Company Common Shares (and no more) and no preferred
shares issued and outstanding. In addition, as at the date hereof,
options to acquire an aggregate of not more than 2,729,172 Company
Common Shares are granted and outstanding under the Company Share
Option Plans, and apart from such 2,729,172 Company Common Shares,
no shares are reserved for any other purpose. Except
- 2 -
as described in the preceding sentences of this paragraph (b) and in
paragraph (a), there are no options, warrants, conversion privileges
or other rights, agreements, arrangements or commitments
(pre-emptive, contingent or otherwise) obligating the Company or any
of the Company's subsidiaries to issue or sell any shares of the
Company or any of the Company's subsidiaries or securities or
obligations of any kind convertible into or exchangeable for any
shares of the Company or any of the Company's subsidiaries. The
Company Disclosure Letter contains a true and complete list of each
Person who holds a Company Option and their location as of the date
hereof, together with the number of Company Common Shares subject to
such Company Option, the date of grant of such Company Option, the
exercise price of such Company Option, the expiration date of such
Company Option, the vesting schedule for such Company Option and
whether or not such Company Option is intended to qualify as an
"incentive stock option" within the meaning of section 422(b) of the
US Code. All Company Common Shares subject to issuance under the
Company Share Option Plans, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are
issuable, would be duly authorized, validly issued, fully paid and
non-assessable. Except as set forth in the Company Disclosure Letter
by name of optionholder, and subject in all events to the terms of
the Arrangement and any waiver thereof by such optionholder, there
are no commitments or agreements of any character to which the
Company is bound obligating the Company to accelerate the vesting of
any Company Option as a result of the Arrangement (whether alone or
upon the occurrence of any additional or subsequent events). All
outstanding Company Common Shares have been duly authorized and are
validly issued and outstanding as fully paid and non-assessable
shares, free of pre-emptive rights in the articles of the Company or
otherwise. Except as described in the preceding sentences of this
paragraph (b), there are no outstanding bonds, debentures or other
evidences of indebtedness of the Company or any subsidiary having
the right to vote (or that are convertible for or exercisable into
securities having the right to vote) with the Company Shareholders
on any matter. Except as has been set forth in the Company
Disclosure Letter, there are no outstanding contractual obligations
of the Company or any of the Company's subsidiaries to repurchase,
redeem or otherwise acquire any of its outstanding securities or
with respect to the voting or disposition of any outstanding
securities of any of the Company's subsidiaries. There are no
obligations, contingent or otherwise, of the Company or any of its
subsidiaries to provide funds to or make any investment (in the form
of a loan, capital contribution
- 3 -
or otherwise) in the Company, any subsidiary or any other Person,
other than as set forth in the Company Disclosure Letter and other
than guarantees of bank obligations of subsidiaries entered into in
the ordinary course of business.
(c) Corporate Documents. The Company has heretofore furnished to
Purchaser a complete and correct copy of its Articles of
Incorporation (as amended, the "COMPANY ARTICLES OF INCORPORATION")
and By-Laws (as amended, the "COMPANY BY-LAWS"), and a complete and
correct copy of the equivalent organizational documents of each of
the Company's subsidiaries, each as amended to date. Such Company
Articles of Incorporation and Company By-Laws, and such equivalent
organizational documents of each of the Company's subsidiaries, are
in full force and effect, provided however that the current version
of By-law No. 1 of the Company is subject to confirmation by the
Company Shareholders at the next meeting of the Company Shareholders
(and thus will occur at the Company Meeting, failing which the prior
version shall be in force). The Company is not in violation of any
of the provisions of the Company Articles of Incorporation or
Company By-Laws, and none of the Company's subsidiaries is in
violation of any of the provisions of its equivalent organizational
documents.
(d) Authority and No Violation.
(i) The Company has the requisite corporate power and authority to
enter into this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the
transactions contemplated by this Agreement have been duly
authorized by its Board of Directors and no other corporate
proceedings on its part are necessary to authorize this
Agreement or the transactions contemplated hereby, other than:
(A) with respect to the Company Meeting, the Company
Circular and other documents and matters relating solely
thereto, the approval of the Board of Directors of the
Company; and
(B) with respect to the completion of the Arrangement, the
requisite approval of the Company Securityholders.
(ii) This Agreement has been duly executed and delivered by the
Company and constitutes its legal, valid and binding
obligation,
- 4 -
enforceable against it in accordance with its terms, subject
to bankruptcy, insolvency and other applicable Laws affecting
creditors' rights generally, to the limitation on Canadian
courts awarding judgements in foreign currencies, and to
general principles of equity.
(iii) The Board of Directors of the Company has (A) determined as of
the date hereof unanimously (among all directors not excluded
from the vote due to conflict) that the Arrangement is fair to
the Company Securityholders and is in the best interests of
the Company, (B) received an opinion from CIBC World Markets
Inc. to the effect that, as of the date of this Agreement, the
consideration to be offered to the Company Securityholders
pursuant to the Arrangement is fair from a financial point of
view to the Company Securityholders, and (C) determined as of
the date hereof to unanimously (among all directors not
excluded from the vote due to conflict) recommend that the
Company Securityholders vote in favour of the Arrangement. The
directors of the Company that hold Company Common Shares or
Company Options have advised the Company that, as of the date
hereof, they intend to vote their Company Common Shares and/or
their Company Options, if any, in favour of the Arrangement
and will so represent in the Company Circular. The Company is
not subject to a shareholder rights plan or "poison pill" or
similar plan.
(iv) The approval of this Agreement, the execution and delivery by
the Company of this Agreement and the performance by it of its
obligations hereunder and the completion of the Arrangement
and the transactions contemplated thereby, will not, except as
set out in the Company Disclosure Letter:
(A) result (with or without notice or the passage of time)
in a violation or breach of or default under, require
any consent to be obtained under or give rise to any
termination, purchase or sale rights, acceleration or
payment obligation under any provision of:
(I) The Company Articles of Incorporation, the Company
By-Laws or the equivalent organizational documents
of each of the Company's subsidiaries (including
any unanimous shareholder agreement or
declaration, if applicable);
- 5 -
(II) any Laws, judgement or decree (subject to
obtaining the Regulatory Approvals relating to the
Company); or
(III) except as could not reasonably be expected to
individually or in the aggregate have a Material
Adverse Effect on the Company, any contract,
agreement, lease, license, franchise or permit to
which the Company or any subsidiary is party or by
which it is bound or subject or is the
beneficiary;
(B) give rise to any right of termination or acceleration of
indebtedness of the Company or any subsidiary, or cause
any such indebtedness to come due before its stated
maturity, or cause any available credit of the Company
or any subsidiary to cease to be available;
(C) result in the imposition of any encumbrance, charge or
lien upon any of its assets or the assets of any of its
subsidiaries; or
(D) restrict, hinder, impair or limit the ability of the
Company or any subsidiary to carry on the business of
the Company or any subsidiary as and where it is now
being carried on.
No consent, approval, order or authorization of, or
declaration or filing with, any Governmental Entity is
required to be obtained by the Company and its subsidiaries in
connection with the execution and delivery of this Agreement
or the consummation by the Company of the transactions
contemplated hereby other than (A) any approvals required by
the Interim Order, (B) the Final Order, (C) filings with the
Director under the CBCA, (D) the Regulatory Approvals relating
to the Company, and (E) any other consents, approvals, orders,
authorizations, declarations or filings of or with a
Governmental Entity which have been set forth in the Company
Disclosure Letter.
(e) No Defaults. Subject to obtaining the Regulatory Approvals relating
to the Company and except as has been disclosed in the Company
Disclosure Letter, neither the Company nor any of its subsidiaries
is in default under, and there exists no event, condition or
occurrence
- 6 -
which, after notice or lapse of time or both, would constitute such
a default under, any contract, agreement, license or franchise to
which it is a party, nor, to the knowledge of the Company, of any
other party to any such contract, agreement, license or franchise,
which in either case could reasonably be expected to individually or
in the aggregate have a Material Adverse Effect on the Company.
(f) Absence of Certain Changes or Events. Except as has been disclosed
in the Company Disclosure Letter or Publicly Disclosed by the
Company, from February 28, 2002 through to the date hereof, each of
the Company and its subsidiaries has conducted its business only in
the ordinary and regular course of business consistent with past
practice and there has not occurred:
(i) a Material Adverse Change (determined without regard to the
higher numerical threshold in the definition of "material")
with respect to the Company;
(ii) any damage, destruction or loss not fully covered by insurance
that could reasonably be expected to have a Material Adverse
Effect (determined without regard to the higher numerical
threshold in the definition of "material") on the Company;
(iii) any redemption, repurchase or other acquisition of the Company
Common Shares by the Company or any declaration, setting aside
or payment of any dividend or other distribution (whether in
cash, stock or property) with respect to the Company Common
Shares;
(iv) any material increase in or modification of the compensation
payable or to become payable by it to any of its or its
subsidiaries' directors or officers, or any grant to any such
director or officer any increase in severance or termination
pay;
(v) any material increase in or modification of any bonus,
pension, insurance or benefit arrangement (including the
granting of stock options, restricted stock awards or stock
appreciation rights), supplemental pension arrangement, profit
sharing arrangement, retirement allowance, deferred
compensation or incentive compensation arrangement, or any
other form of compensation or benefits payable to, or any loan
to, any officers or directors of the Company or any
subsidiary;
- 7 -
(vi) any increase in or modification of the compensation payable or
benefits of its employees or independent contractors either
generally or in respect of a substantial proportion of the
outstanding employees or independent contractors;
(vii) any acquisition or sale of its property or assets aggregating
1% or more of the Company's total consolidated property and
assets as at February 28, 2002 other than in the ordinary and
regular course of business consistent with past practice, and
other than in respect of the sale of approximately U.S.
$200,000 of furniture and equipment at cost in conjunction
with the closing of the Company's offices in Raleigh, North
Carolina;
(viii) any capital expenditure or commitment therefor which
individually or in the aggregate exceeded U.S. $250,000 or was
out of the ordinary course;
(ix) any compromise or settlement of any proposed or actual
litigation, other than in respect of a settlement reached by
the Company and a former customer, Integrated Homes, pursuant
to which the Company was not required to make any payment to
Integrated Homes;
(x) the cancellation of any insurance coverage;
(xi) any entering into, amendment of, relinquishment, termination
or non-renewal by it of any contract, agreement, license,
franchise, lease transaction, commitment or other right or
obligation that could reasonably be expected to have a
Material Adverse Effect (determined without regard to the
higher numerical threshold in the definition of "material") on
the Company;
(xii) any resolution to approve a split, consolidation or
reclassification of any of its outstanding shares;
(xiii) any material change in its accounting methods, principles or
practices;
(xiv) any guarantee of the payment of indebtedness or any incurrence
of indebtedness for borrowed money or any issue or sale of any
debt securities except in the ordinary and regular course of
business consistent with past practice;
- 8 -
(xv) except in the usual, ordinary and regular course of business
and consistent with past practice: (A) any satisfaction or
settlement of any claims or liabilities prior to the same
being due, which were, individually or in the aggregate, in
excess of U.S. $250,000; or (B) any grant of any waiver,
exercise of any option (not including Company Options) or
relinquishment of any contractual rights which were,
individually or in the aggregate, material; or (C) entered
into any interest rate, currency or commodity swaps, ▇▇▇▇▇▇ or
other similar financial instruments, or any other derivatives;
(xvi) any revaluation by the Company or any of its subsidiaries of
any of its assets, including, without limitation, writing down
the value of capitalized software or inventory or writing off
notes or accounts receivable, except as has been provided for
in the financial statements of the Company for the fiscal year
ended February 28, 2002;
(xvii) any material adverse change in any customer, supplier,
licensee or licensor relationship, including any material
cancellation, termination or adverse modification or
threatened material cancellation, termination or adverse
modification of any such relationship; or
(xviii) any agreement or commitment to do any of the foregoing,
whether or not in writing.
(g) Employment Matters.
(i) Except as has been disclosed in the Company Disclosure Letter,
neither the Company nor any subsidiary is a party to any
agreement, obligation or understanding providing for severance
or termination payments to, or any employment agreement with,
any director or officer, other than any common law obligations
of reasonable notice of termination or pay in lieu thereof and
any statutory obligations.
(ii) Except as has been set forth in the Company Disclosure Letter,
the Company or its subsidiaries are not subject to any
collective bargaining agreements, and there are no current,
pending or, to the knowledge of the Company, threatened
strikes or lockouts at the Company or any subsidiary.
- 9 -
(iii) Except as has been set forth in the Company Disclosure Letter,
neither the Company nor any subsidiary is subject to any
litigation, actual or, to the knowledge of the Company,
threatened, relating to employment or termination of
employment of employees or independent contractors.
(iv) The Company and its subsidiaries have operated in accordance
with all applicable Laws with respect to employment and
labour, including, but not limited to, employment and labour
standards, occupational health and safety, employment equity,
pay equity, workers' compensation, human rights and labour
relations and there are no current, pending or, to the
knowledge of the Company, threatened proceedings before any
board or tribunal with respect to any of the above areas,
other than as has been set forth in the Company Disclosure
Letter.
(v) There are no outstanding stock appreciation rights, phantom
equity or similar rights, agreements, arrangements or
commitments based upon the book value, income or any other
attribute of the Company or any subsidiary.
(h) Financial Statements; Contingent Liabilities. The audited
consolidated financial statements for the Company as at and for each
of the 12-month periods ended on or about February 28, 2002 and 2001
and February 29, 2000 and the unaudited consolidated financial
statements for the 3-, 6- and 9- month periods ended May 31, August
31 and November 30, 2002 and 2001 have been prepared in accordance
with Canadian generally accepted accounting principles (subject, in
the case of such unaudited financial statements, to the absence of
notes and to usual and non-material year-end adjustments), and such
financial statements present fairly, in all material respects, the
consolidated financial position and results of operations of the
Company and its subsidiaries as of the respective dates thereof and
for the respective periods covered thereby, subject, in the case of
such unaudited financial statements, to usual and non-material
year-end adjustments. Such financial statements complied as to form
in all material respects with the published rules and regulations of
the SEC and all Canadian securities regulatory authorities
applicable as at the date of their publication by the Company, and
the audited financial statements have also been reconciled to U.S.
generally accepted accounting principles in accordance with the
requirements of the SEC applicable as at the date of their
publication by the Company. Except as Publicly Disclosed by the
Company in disclosure documents filed by the Company and available
on ▇▇▇.▇▇▇▇▇.▇▇▇ (the "COMPANY
- 10 -
DOCUMENTS") filed after February 28, 2002 and prior to the date
hereof, and except for liabilities and obligations incurred in the
ordinary course of business since the date of the most recent
consolidated balance sheet included in the Company Documents,
neither the Company nor any of its subsidiaries has any liabilities
or obligations of any nature (whether accrued, absolute, contingent
or otherwise) except for those that would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect (determined
without regard to the higher numerical threshold in the definition
of "material") on the Company. All accounts receivable are bona
fide.
(i) Books and Records. The financial books, records and accounts of the
Company and its subsidiaries, in all material respects, (i) have
been maintained in accordance with Canadian generally accepted
accounting principles on a basis consistent with prior years, (ii)
are stated in reasonable detail and accurately and fairly reflect
the transactions and dispositions of the assets of the Company and
its subsidiaries and (iii) accurately and fairly reflect the basis
for the Company consolidated financial statements. The Company's and
the Company subsidiaries' corporate minute books contain minutes of
all meetings and resolutions of the directors and shareholders held,
and full access thereto has been provided to the Purchaser (except
in respect of 2002 board meetings). The Company and its subsidiaries
have ready access to all of their books, records and other
information.
- 11 -
(j) Litigation, Etc. Except as has been set forth in the Company
Disclosure Letter or Publicly Disclosed by the Company, there is no
claim, action, proceeding or investigation pending or, to the
knowledge of the Company, threatened against the Company or any
subsidiary or, to the knowledge of the Company, any of their
respective directors or officers in their capacities as such before
any court or Governmental Entity. Neither the Company nor any
subsidiary, nor any of their respective assets and properties, nor
to the knowledge of the Company any of their respective directors or
officers in their capacities as such, is subject to any outstanding
judgement, order, writ, injunction or decree. Except as has been set
forth in the Company Disclosure Letter, to their knowledge, the
Company and its subsidiaries are not subject to any warranty,
negligence, performance or other claims or disputes or potential
claims or disputes in respect of products or services currently
being delivered or previously delivered. To the knowledge of the
Company, there are no events or circumstances which could reasonably
be expected to give rise to any claims or disputes or potential
claims or disputes involving the Company or its subsidiaries, in
each case which could reasonably be expected to have a Material
Adverse Effect (determined without regard to the higher numerical
threshold in the definition of "material") on the Company.
(k) Bank Accounts; Powers of Attorney. The Company Disclosure Letter
sets out a list of all of the Company's and its subsidiaries' bank
accounts, with signing authorities, and of all powers of attorney
granted by any of them.
(l) Environmental. Except as has been set forth in the Company
Disclosure Letter:
(i) all operations of the Company and its subsidiaries have been
conducted, and are now, in compliance with all Environmental
Laws; and
(ii) none of the property currently or previously owned or used by
the Company or the subsidiaries (for greater certainty,
including any predecessors) is or was used as a waste disposal
or landfill site, contains or contained asbestos, PCBs, UFFI,
radioactive substances, or underground storage tanks, or is or
was contaminated.
(m) Tax Matters. Except as has been set forth in the Company Disclosure
Letter:
- 12 -
(i) The Company and each of its subsidiaries have 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), and have paid, or caused to be paid, all material
amounts of Taxes shown to be due and payable thereon or
otherwise required to be paid prior to or as of the date
hereof, and the Company's most recently published financial
statements contain an adequate provision in accordance with
Canadian generally accepted accounting principles for all
material amounts of Taxes payable in respect of each period
covered by such financial statements and all prior periods to
the extent such Taxes have not been paid, whether or not due
and whether or not shown as being due on any Tax Returns. The
Company and each of its subsidiaries have made adequate
provision in accordance with Canadian generally accepted
accounting principles in their books and records for any
material amounts of Taxes accruing in respect of any
accounting period which has ended subsequent to the period
covered by such financial statements. Neither the Company nor
any subsidiary is required to include in income for any period
after the Effective Time or for any prior period, to the
extent not adequately reflected on the Company's financial
statements, (i) any material items in respect of any change in
accounting methods or (ii) any material amount of gain with
respect to instalment sales. There are no outstanding
agreements, arrangements, waivers or objections extending the
statutory period or providing for an extension of time with
respect to the assessment or filing of any Tax Returns, or the
payment of any Taxes, involving the Company or any of its
subsidiaries.
(ii) Neither the Company nor any subsidiary has received any
written notification that any issues involving Taxes have been
raised (and are currently pending) by Canada Customs and
Revenue Agency, the United States Internal Revenue Service or
any other taxing authority, including, without limitation, any
sales tax authority, in connection with any of the Tax Returns
filed or required to be filed or any Taxes otherwise required
to be paid, and no waivers of statutes of limitations, or
objections to any assessments or reassessments, have been
given or requested or made with respect to the Company or any
subsidiary. All liability of the Company and its subsidiaries
for income taxes has been assessed for all fiscal years up to
and including the fiscal year ended February 28, 2002, except
as set
- 13 -
forth in the Company Disclosure Letter. Neither the Company
nor any subsidiary has received any written notice from any
taxing authority to the effect that any Tax Return is being
examined. To the best of the knowledge of the Company, there
are no proposed but unassessed additional Taxes involving the
Company or any subsidiary and none has been asserted in
writing. There are no proceedings (or, to the knowledge of the
Company, investigations) pending (or, to the knowledge of the
Company, threatened) against the Company or any subsidiaries
relating to taxes, and the Company has no knowledge of any
valid basis for any such proceeding. All required withholdings
in respect of Taxes have been made and paid to the appropriate
authority by the Company and its subsidiaries. No Tax liens
have been filed other than for Taxes not yet due and payable.
Neither the Company nor any of its subsidiaries is a party to
any Tax sharing or other similar agreement or arrangement of
any nature with any other person (other than the Company or
any of its subsidiaries) pursuant to which the Company or any
of its subsidiaries has or could have any liabilities in
respect of Taxes. Neither the Company nor any subsidiary has
received a refund of any Taxes to which it was not entitled.
The Company has not filed a consent pursuant to Section 341(f)
of the US Code.
(iii) Except as set forth in the Company Disclosure Letter, there
are no circumstances existing which could result in the
application of section 17, section 78, section 79 or sections
80 to 80.04 of the ITA, or any equivalent provision under
applicable provincial tax laws, to the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries
has claimed nor do any of them have a present intention to
claim any reserve under any provision of the ITA or any
equivalent provincial provision, if any amount could be
included in the income of the Company or any such subsidiary
for any period ending after the Effective Date.
(iv) Neither the Company nor any of its subsidiaries is subject to
any liability for Taxes of any other Person. For all
transactions between the Company, on the one hand, and any
non-resident Person with whom the Company was not dealing at
arm's length, for the purposes of the ITA, on the other hand,
during a taxation year commencing after 1998 and ending on or
before the Effective Date, the Company has made or obtained
records
- 14 -
or documents that satisfy the requirements of paragraphs
247(4)(a) to (c) of the ITA. The Company has not entered into
an agreement contemplated by section 191.3 of the ITA.
(iv) "TAX" and "TAXES" means, with respect to any entity, all
income taxes (including any tax on or based upon net income,
gross income, income as specially defined, earnings, profits
or selected items of income, earnings or profits) and all
capital taxes, gross receipts taxes, environmental taxes,
sales taxes, use taxes, ad valorem taxes, value added taxes,
transfer taxes, franchise taxes, license taxes, withholding
taxes or other withholding obligations, payroll taxes,
employment taxes, Canada or Quebec Pension Plan premiums,
excise, severance, social security premiums, workers'
compensation premiums, employment insurance or compensation
premiums, stamp taxes, occupation taxes, premium taxes,
property taxes, windfall profits taxes, alternative or add-on
minimum taxes, goods and services tax, customs duties or other
taxes of any kind whatsoever, together with any interest and
any penalties or additional amounts imposed by any taxing
authority (domestic or foreign) on such entity or for which
such entity is responsible, and any interest, penalties,
additional taxes, additions to tax or other amounts imposed
with respect to the foregoing.
(n) Pension and Employee Benefits.
(i) The Company Disclosure Letter contains a list of all employee
benefit, health, welfare, supplemental unemployment benefit,
bonus, pension, profit sharing, deferred compensation, stock
option, stock compensation, stock purchase, retirement,
hospitalization insurance, medical, dental, legal, disability
and similar plans or arrangements or practices, whether
written or oral, which are maintained by the Company and/or
any subsidiary (collectively referred to as the "COMPANY
PLANS"). The Company Disclosure Letter contains a statement as
to which of the Company Plans constitute "employee pension
benefit plans" (as defined in Section 3(2) of the United
States Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) or "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA).
(ii) There are no actions, suits, claims (other than non-material
routine claims for payment of benefits in the ordinary
course),
- 15 -
trials, demands, investigations, arbitrations or other
proceedings which are pending or, to the knowledge of the
Company, threatened in respect of any of the Company Plans or
their assets, any trustee or fiduciary of any Company Plan or
the Company or any of its subsidiaries (including any
director, officer or employee of any of them).
(iii) The Company has made available to the Purchaser true, correct
and complete copies of all of the Company Plans (or, in the
case of any unwritten Company Plan, a description thereof)
together with funding agreements, actuarial reports, funding
and financial information returns and statements with respect
to each Company Plan, and current plan summaries, booklets and
personnel manuals. The Company has made available to the
Purchaser a true and complete copy of the most recent report
filed with applicable Governmental Entities with respect to
each Company Plan in respect of which such a report was
required.
(iv) Other than as has been disclosed in the Company Disclosure
Letter, all of the Company Plans are in compliance in all
material respects with all applicable Laws and have been
maintained and operated in all material respects in accordance
with their terms, and all of the Company Plans are fully
insured or fully funded on both a going concern and solvency
basis.
(v) No commitments have been made to improve any Company Plans,
none of the Company Plans which is not a pension or retirement
savings plan provide benefits to retired employees or their
dependants or beneficiaries (except to the extent required
under section 4980B of the US Code), and all contributions or
premiums required to be paid pursuant to any Company Plan by
the Company or any of its subsidiaries have been made in a
timely fashion. All amounts not yet due have been accrued and
are reflected in the Company's financial books and records.
(vi) None of the Company Plans is a "multi-employer plan" or a
"multiple employer plan" within the meaning of ERISA or any
other plan subject to Title IV of ERISA (a "TITLE IV PLAN"),
nor has the Company or any subsidiary been obligated to
contribute to any such multi-employer plan or multiple
employer plan or Title IV Plan at any time within the past six
years.
- 16 -
(vii) Each Company Plan intended to qualify under Section 401(a) of
the US Code has been timely submitted to the U.S. Internal
Revenue Service for a favourable determination letter in
accordance with U.S. Internal Revenue Service Revenue
Procedure 97-41 and its progeny. No Company Plan is, or is
expected to be, under audit or investigation by the U.S.
Internal Revenue Service, the U.S. Department of Labor, or any
other Governmental Entity and no such completed audit, if any,
has resulted in the imposition of any tax or penalty. No
amounts payable under any Company Plan (whether in cash, in
property or in the form of benefits) will, or could reasonably
be expected to, fail to be deductible for federal income tax
purposes by virtue of section 162(m) of the US Code. Other
than the subsidiaries disclosed in writing to the Purchaser by
the Company in the Company Disclosure Letter, there are no,
nor have there ever been, entities related to the Company that
would be deemed a "single employer" with the Company under
section 414(b), (c), (m) or (o) of the US Code or section 4001
of ERISA.
(viii) Except as has been set forth in writing by the Company to the
Purchaser in the Company Disclosure Letter, the entry into or
performance by the Company of this Agreement and the
completion of the Arrangement and the transactions
contemplated thereby will not result in any payment (including
severance, unemployment compensation, golden parachute, bonus
or otherwise) becoming due to any director, officer or
employee of the Company or any subsidiary, or increase any
benefits otherwise payable under any Company Plan or result in
the acceleration of time of payment or vesting of any such
benefits.
(o) Reports. The Company has filed with the OSC and/or the SEC and/or
the TSE and/or NASDAQ true and complete copies of all forms,
reports, schedules, statements and other documents required to be
filed by it since February 28, 2001. The Company Documents and any
other such documents (the "OTHER DOCUMENTS") at the time filed (i)
did not contain any misrepresentation of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, and (ii) complied in all
material respects with the requirements of applicable securities
Laws. The Company has not filed any confidential material change
report with
- 17 -
the OSC or any other securities authority or regulator or any stock
exchange or other self-regulatory authority which at the date hereof
remains confidential. There are no material facts or material
changes (each as defined in the Ontario Securities Act) relating to
the Company or its subsidiaries or the Company Common Shares that
have not been generally disclosed.
(p) Compliance with Laws. Except as disclosed in the Company Disclosure
Letter or Publicly Disclosed by the Company, the Company and its
subsidiaries have complied at all times with and are not in
violation of any applicable Laws, orders, judgements and decrees,
other than non-compliance or violations which could not reasonably
be expected to individually or in the aggregate have a Material
Adverse Effect (determined without regard to the higher numerical
threshold in the definition of "material") on the Company. Without
limiting the generality of the foregoing, all securities of the
Company (including, all options, rights or other convertible or
exchangeable securities) have been issued in compliance with all
applicable securities Laws. Neither the Company nor any of its
subsidiaries has received any notice or other communication (whether
written or oral) from any Governmental Entity regarding any actual,
alleged, possible or potential violation of, or any failure to
comply with, any Law.
(q) Restrictions on Business Activities. Except as set forth in the
Company Disclosure Letter or Publicly Disclosed by the Company,
there is no agreement, judgement, injunction, order or decree
binding upon the Company or any subsidiary that has or could
reasonably be expected to have the effect of prohibiting,
restricting or impairing any business practice of the Company or any
subsidiary, any acquisition of property by the Company or any
subsidiary or the conduct of business by the Company or any
subsidiary as currently conducted (including following the
Arrangement). Except as set forth in the Company Disclosure Letter,
neither the Company nor any subsidiary has entered into any
agreement under which it is restricted in any material respect from
selling, licensing or otherwise distributing any of its technology
or products, or providing services to, customers or potential
customers of any class of customers, in any geographic area, during
any period of time or any segment of the market or line of business.
(r) Real Property. Except as has been disclosed in the Company
Disclosure Letter, the Company and each subsidiary have good and
sufficient title to the real property interests, including fee
simple estate of and in real property, leases, easements, rights of
way, permits or licences from land owners or authorities permitting
the use of land by the Company
- 18 -
or such subsidiary, necessary to permit the operation of its
businesses as presently owned and conducted. Except as has been
disclosed in writing by the Company to the Purchaser in the Company
Disclosure Letter, the Company and each subsidiary is not a party
to, or under any agreement to become a party to, any lease with
respect to real property. The real property which is owned, leased
or used by the Company and its subsidiaries, including the buildings
thereon, are structurally sound and in good condition and repair and
not in need of non-routine maintenance or repairs. All leases to
which the Company or its subsidiaries is a party are in good
standing.
(s) Permits. Except as has been disclosed in the Company Disclosure
Letter, the Company and each subsidiary owns, possesses, or has
obtained and is in compliance with, all licences, permits,
certificates, orders, grants and other authorizations of or from any
Governmental Entity necessary to conduct its businesses as now
conducted, all of which are in good standing and have been disclosed
in the Company Disclosure Letter. The Company has no reason to
believe that any Governmental Entity will revoke, cancel, rescind,
refuse to renew in the ordinary course or modify any of the
Company's or its subsidiaries' permits, nor is any proceeding
pending for any such purpose, which could reasonably be expected to
individually or in the aggregate have a Material Adverse Effect
(determined without regard to the higher numerical threshold in the
definition of "material") on the Company.
(t) Other Assets. Except as has been disclosed in the Company Disclosure
Letter, the Company and each subsidiary have good title to all of
the non-real property assets and property that they purport to own,
including those reflected in their financial books and records, free
and clear of all encumbrances whatsoever, other than Permitted
Encumbrances. The Company and its subsidiaries own all of the
assets, property and/or rights necessary to conduct their businesses
in the ordinary course, and will continue to do so immediately
following the Effective Date. The tangible assets and property,
other than real property, which are owned or used by the Company and
its subsidiaries are in good condition and repair and not in need of
non-routine maintenance or repairs.
(u) Material Contracts. All material contracts (other than oral
employment agreements) to which the Company or its subsidiaries are
party, including intellectual property or software license,
distribution, royalty or maintenance agreements (except for
"off-the-shelf" software licensed by the Company), leases of real or
personal property, loan or
- 19 -
security agreements, guarantees, non-competition or similar
agreements, and agreements which in the fiscal year ended February
28, 2003 are expected to require or entitle the Company or its
subsidiaries to payments of more than U.S. $250,000, are set forth
in the Company Disclosure Letter or were made available to the
Purchaser in the data room. Except as has been disclosed in the
Company Disclosure Letter and except for agreements referred to as
"inactive" in the data room, all such agreements are in good
standing, and the Company and its subsidiaries are in compliance in
all material respects with the terms thereof. To the knowledge of
the Company, no party to any of such material contracts has made,
asserted or has any defence, setoff or counterclaim thereunder or
has exercised any option granted to it to cancel, terminate or
shorten the term thereof.
(v) Registration Rights. The Company is not bound by any agreement with
any Company Securityholder granting any right to compel the Company
to register or otherwise qualify such securities for public sale in
Canada or the United States.
(w) Intellectual Property. The Company Disclosure Letter set forth a
complete and accurate list of all of the Intellectual Property
Rights of the Company and its subsidiaries (the "COMPANY IP"),
except that in the case of trade secrets only material trade secrets
(including those in connection with material Software) are listed.
All registrations and filings necessary to preserve the Company's or
its subsidiaries' rights in the Company IP have been made and are in
good standing. Except as disclosed in the Company Disclosure Letter,
the Company and its subsidiaries are the owners of and have the
exclusive right to use the Company IP, free of all encumbrances
whatsoever other than Permitted Encumbrances. Except as disclosed in
the Company Disclosure Letter, none of the Company nor its
subsidiaries has received written notice or is aware that its use of
the Company IP infringes upon or breaches the intellectual property
rights of any other Person. Neither the Company nor any of its
subsidiaries has granted any license to use the Company IP except as
part of product sales or licenses to customers in the normal course
of business. All employees of the Company and its subsidiaries, as
well as all contractors or other persons engaged in the development
of the Company IP, have executed assignments of all their rights in
the Company IP and waived all moral rights therein, as well as
undertaking to protect the confidentiality of Trade Secrets. The
Company and its subsidiaries have taken reasonable measures to
protect all Trade Secrets of the Company and its subsidiaries and
the Company is not aware of any
- 20 -
breaches thereof. Except as disclosed in the Company Disclosure
Letter, the Company is not aware of any state of facts that casts
doubt on the validity or enforceability of the Company IP, is not
aware that the Company or its subsidiaries are infringing upon any
Intellectual Property Rights of any other Person, domestic or
foreign, or using the same beyond the scope of any relevant
licensing rights, or have received notice of any such alleged
infringement, including a request to take a license under a patent
or a solicitation of interest in such a license. Except as disclosed
in the Company Disclosure Letter, neither the Company nor any of its
subsidiaries has commenced legal proceedings relating to an
infringement by any Person of the Company IP, nor is the Company
aware of any facts which might constitute such an infringement or
amount to an exercise of any rights beyond the scope of any licenses
or other rights granted by the Company or its subsidiaries. Except
as set forth in the Company Disclosure Letter, the Company and its
subsidiaries have or have rights to use all of the Intellectual
Property Rights necessary to conduct their business as currently
carried on. All contracts relating to the Company IP have been
provided to the Purchaser. The Company and its subsidiaries have not
licensed or otherwise distributed, transmitted or exported Company
IP or Software (as defined below) to a Person in a country to which
such licensing, distribution, transmission or export is restricted
by any Canadian (or, to the Company's knowledge, applicable foreign)
Laws, without first having obtained all necessary and appropriate
Canadian or foreign government licenses or permits. For the purposes
hereof, "INTELLECTUAL PROPERTY RIGHTS" means all rights arising from
or in respect of the following, whether protected, created or
arising under the laws of Canada or any other jurisdiction: (i)
business names, trade names, registered and unregistered
trade-marks, service marks, certification marks, distinguishing
guises, trade dress, get-up, logos and other indications of origin
(including any Internet domain names) (collectively, "TRADEMARKS"),
and all applications to register and registrations therefor, and all
renewals or extensions of such applications and registrations; (ii)
patents, including design patents and industrial designs
(collectively, "PATENTS"), and all applications therefor, including
continuation, divisional, continuation-in-part, or reissue patent
applications; (iii) writings and other copyrightable works of
authorship, including those forming part of software or
software-related materials, maskworks and integrated circuit
topographies (all rights arising from or in respect thereof,
collectively, "COPYRIGHTS"), and all applications to register and
registrations therefor, and all renewals or extensions of such
applications and registrations; and (iv) proprietary and non-public
business information
- 21 -
including know-how, inventions, discoveries, improvements, concepts,
ideas, methods, processes, designs, formulae, technical data,
drawings, specifications, research and development information,
customer lists, business plans and marketing plans, financial
information, and personal information (collectively, "TRADE
SECRETS").
(x) Software. All non-"off the shelf" software used in the Company's or
its subsidiaries' businesses or licensed by the Company or its
subsidiaries to other Persons (collectively, the "SOFTWARE") is set
forth in the Company Disclosure Letter. Except as set forth in the
Company Disclosure Letter, no Person other than the Company or its
subsidiaries has had access to the source code for any of the
Software. The source code for all of the Software is stored on the
Company's premises. Except as set forth in the Company Disclosure
Letter (none of which is material), the Company is not aware of any
operational failures, problems, bugs, logic errors or design flaws
with any of the Software. The development plans for the Software
have been made available to the Purchaser. Except as set forth in
the Company Disclosure Letter, all Persons who have participated in
the development of the Software have waived or assigned to the
Company all of their rights to the Software and any Intellectual
Property Rights relating thereto, and have waived all of their
rights to all of the Software (including all moral rights), and any
Intellectual Property Rights relating thereto belong entirely to the
Company or its subsidiaries, free and clear of all encumbrances
whatsoever, other than Permitted Encumbrances. The Company has duly
and validly exercised the option represented by the Technology
Transfer Option Agreement dated as of January 5, 1998 between the
Company and The New Brunswick Telephone Company. Except as set forth
in the Company Disclosure Letter, no Person has any distribution,
sales agent, sales representative, license or other rights to any of
the Software. Except as set forth in the Company Disclosure Letter,
neither the Company nor its subsidiaries are a party to any royalty
agreements, license agreements, maintenance agreements, or other
agreements with any other Person, nor obliged to pay any royalties,
license fees, maintenance fees or other fees to any other Person, in
respect of any of the Software. Except as set forth in the Company
Disclosure Letter, the Software neither embodies, uses nor requires
for its full and proper operation any third party software. All such
third party Software, and all "off the shelf" software, has been
used only within the permitted scope of the licenses provided to the
Company or its subsidiaries. Except as set forth in the Company
Disclosure Letter, none of the Company nor its subsidiaries has
received written notice
- 22 -
or is aware that its use of the Software infringes upon or breaches
the rights of any other Person. The Company and its subsidiaries
have complied with all applicable export control laws in respect of
the Software.
(y) Non-Arm's Length Transactions. Except as set forth in the Company
Disclosure Letter, there are no contracts, commitments, agreements,
arrangements or other transactions between the Company or any of its
subsidiaries, on the one hand, and any (i) officer or director of
the Company or any of its subsidiaries, (ii) record or beneficial
owner of five percent or more of the voting securities of the
Company or (iii) affiliate of any such officer, director or
beneficial owner, on the other hand.
(z) Insurance. The Company has provided or made available to the
Purchaser true, correct and complete copies of all policies of
insurance to which each of the Company and its subsidiaries are a
party or are a beneficiary or named insured. The Company and its
subsidiaries maintain insurance coverage with reputable insurers in
such amounts and covering such risks as are in accordance with
normal industry practice for companies engaged in businesses similar
to that of the Company and its subsidiaries (taking into account the
cost and availability of such insurance). There has not been any
material adverse change, since February 28, 2001, in the
relationship between the Company or its subsidiaries and their
insurers, the availability of coverage, or the premiums payable.
Except as has been set forth in writing by the Company to the
Purchaser in the Company Disclosure Letter, there have been no
claims made since February 28, 2001 under any insurance policies.
(aa) Investment Canada. The Company and its subsidiaries do not carry on
a "cultural business" within the meaning of the Investment Canada
Act (Canada).
(bb) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇, etc. The transactions contemplated by the
Agreement are exempt from the merger pre-notification requirements
of the U.S. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended.
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SCHEDULE E
PURCHASER'S REPRESENTATIONS AND WARRANTIES
(a) Organization. The Purchaser has been duly incorporated or formed
under applicable Laws, is validly subsisting and has full corporate
or legal power and authority to own its properties and conduct its
businesses as currently owned and conducted.
(b) Authority and No Violation.
(i) The Purchaser has the requisite corporate power and authority
to enter into this Agreement and to perform its obligations
hereunder. The consummation by the Purchaser of the
transactions contemplated by this Agreement has been duly
authorized by its Board of Directors and no other corporate
proceedings on its part are necessary to authorize this
Agreement or the transactions contemplated hereby or thereby.
(ii) The Purchaser has all necessary authority to increase capital
in the amount contemplated to be issued in accordance with
this transaction.
(iii) This Agreement has been duly executed and delivered by the
Purchaser and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency and other applicable
Laws affecting creditors' rights generally, to the limitation
on Canadian courts awarding judgements in foreign currencies,
and to general principles of equity.
(iv) The approval of this Agreement, the execution and delivery by
the Purchaser of this Agreement and the performance by it of
its obligations hereunder and the completion of the
Arrangement and the transactions contemplated thereby, will
not result (with or without notice or the passage of time) in
a violation or breach of, require any consent to be obtained
under or give rise to any termination, purchase or sale rights
or payment obligation under any provision of:
(I) its charter documents; or
(II) any Laws, judgement or decree (subject to
obtaining the Regulatory Approvals relating to the
Purchaser), except to the extent that the
violation
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or breach of, or failure to obtain any consent
under, any Laws, judgement or decree would not,
individually or in the aggregate, have a Material
Adverse Effect on the Purchaser.
(v) No consent, approval, order or authorization of, or
declaration or filing with, any Governmental Entity is
required to be obtained by the Purchaser in connection with
the execution and delivery of this Agreement or the
consummation by the Purchaser of the transactions contemplated
hereby or thereby other than (A) the Regulatory Approvals
relating to the Purchaser, (B) any filings required in
connection with the issuance of the Purchaser Shares, and (C)
any other consents, approvals, orders, authorizations,
declarations or filings of or with a Governmental Entity which
have been set forth in writing by the Purchaser to the Company
in a form acceptable to the Company or which, if not obtained,
would not, individually or in the aggregate, have a Material
Adverse Effect on the Purchaser.
(c) Financial Statements. The audited consolidated financial statements
for the Purchaser as at and for the 12-month period ended December
31, 2001 have been prepared in accordance with French generally
accepted accounting principles, and complied as to form in all
material respects with the published rules and regulations of the
SEC and the COB with respect thereto that were applicable as the
date of their filing by the Purchaser; such financial statements
present fairly, in all material respects, the consolidated financial
position and results of operations of the Purchaser and its
subsidiaries as of the respective date thereof and for the
respective period covered thereby.
(d) Reports. The Purchaser has filed with the PSE and/or the COB and/or
the NYSE and/or the SEC true and complete copies of all material
forms, reports, schedules, statements and other documents required
to be filed by it since January 1, 2002 pursuant to the U.S.
Securities Exchange Act of 1934, as amended, and applicable French
securities Laws, and such documents, at the time filed, complied in
all material respects with the requirements of the U.S. Securities
Exchange Act of 1934, as amended, and applicable French securities
Laws, and did not contain any misrepresentation of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
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(e) Purchaser Shares. The Purchaser Shares and the Purchaser ADSs to be
issued in connection with the Arrangement and the Purchaser Shares
to be provided upon the exchange from time to time upon the exercise
of the Revised Options will, in all cases, be duly and validly
issued by the Purchaser on their respective dates of issue as fully
paid and non-assessable securities.
(f) Compliance with Laws. Except as has been disclosed in writing by the
Purchaser to the Company in a form acceptable to the Company or
Publicly Disclosed by the Purchaser, the Purchaser has complied with
and are not in violation of any applicable Laws, orders, judgements
and decrees other than non-compliance or violations which would not,
individually or in the aggregate, have a Material Adverse Effect on
the Purchaser.
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