EXHIBIT 2.1
ARRANGEMENT AGREEMENT
BETWEEN:
▇▇▇▇▇▇ INDUSTRIES LTD., an exempted company
incorporated under the laws of Bermuda,
- and -
▇▇▇▇ ENERGY TECHNOLOGIES INC., a
corporation incorporated under the laws of Alberta.
August 12, 2002
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
1.1 Definitions........................................................1
1.2 Singular, Plural, etc..............................................8
1.3 Deemed Currency....................................................8
1.4 Date for Any Action................................................8
1.5 Decision by Board of Directors.....................................8
1.6 Interpretation Not Affected by Party Drafting......................9
1.7 Statutes...........................................................9
ARTICLE 2
THE ARRANGEMENT
2.1 Implementation Steps by the Corporation............................9
2.2 Implementation Steps by Acquiror...................................9
2.3 Interim Order.....................................................10
2.4 Dissenting Securities.............................................10
2.5 Articles of Arrangement...........................................10
2.6 Corporation Approval of the Arrangement...........................10
2.7 Proxy Circular....................................................11
2.8 Securities Compliance.............................................11
2.9 Preparation of Filings............................................12
2.10 Cooperation.......................................................14
2.11 Press Release and Public Disclosure...............................17
2.12 Outstanding Rights to Acquire Shares..............................17
ARTICLE 3
COVENANTS OF THE CORPORATION
3.1 Ordinary Course of Business.......................................19
3.2 Non-Solicitation..................................................22
3.3 Notice of Material Change.........................................25
3.4 Access to Information.............................................26
3.5 Public Filings....................................................26
ARTICLE 4
FEES AND OTHER ARRANGEMENTS
4.1 Fees..............................................................26
ARTICLE 5
COVENANTS OF ACQUIROR
5.1 Officers' and Directors' Insurance................................28
5.2 Indemnities.......................................................28
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5.3 Employment Agreements.............................................28
5.4 Third Party Beneficiaries.........................................28
5.5 Availability of Funds.............................................29
5.6 Availability of Personnel.........................................29
ARTICLE 6
MUTUAL COVENANTS
6.1 Consultation......................................................29
6.2 Other Filings.....................................................29
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
7.1 Representations...................................................29
7.2 Investigation.....................................................39
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
8.1 Representations...................................................39
8.2 Investigation.....................................................44
ARTICLE 9
CONDITIONS
9.1 Conditions Precedent to Obligations of Each Party.................44
9.2 Acquiror Conditions...............................................45
9.3 Corporation Conditions............................................47
ARTICLE 10
TERMINATION
10.1 Termination.......................................................48
ARTICLE 11
MISCELLANEOUS
11.1 Amendment or Waiver...............................................49
11.2 Entire Agreement..................................................49
11.3 Headings..........................................................49
11.4 Notices...........................................................49
11.5 Counterparts and Facsimiles.......................................50
11.6 Expenses..........................................................50
11.7 Assignment........................................................51
11.8 Severability......................................................51
11.9 Choice of Law.....................................................51
11.10 Attornment........................................................51
11.11 Remedies..........................................................51
11.12 Survival of Representations and Warranties........................52
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11.13 Time of Essence...................................................52
ARTICLE 1
INTERPRETATION
1.1 Definitions........................................................1
1.2 Sections and Headings..............................................5
1.3 Number, Gender and Persons.........................................5
1.4 Date for any Action................................................5
1.5 Currency...........................................................5
1.6 Statutory References...............................................5
ARTICLE 2
ARRANGEMENT
2.1 Binding Effect.....................................................5
2.2 Arrangement........................................................5
2.3 Holdco Alternative.................................................7
2.4 Elections..........................................................8
2.5 Adjustments To Exchange Ratio......................................9
2.6 Restriction on Redemption of Exchangeable Shares...................9
ARTICLE 3
RIGHTS OF DISSENT
3.1 Rights of Dissent.................................................10
ARTICLE 4
CERTIFICATES AND FRACTIONAL SHARES
4.1 Payment of Cash...................................................10
4.2 Issuance of Certificates Representing Exchangeable Shares.........11
4.3 Distributions With Respect To Unsurrendered Certificates..........12
4.4 No Fractional Shares..............................................12
4.5 Lost Certificates.................................................13
4.6 Extinguishment Of Rights..........................................13
4.7 Withholding Rights................................................13
4.8 Termination of Depositary.........................................14
ARTICLE 5
CERTAIN RIGHTS OF CALLCO TO ACQUIRE EXCHANGEABLE SHARES
5.1 Callco Liquidation Call Right.....................................14
5.2 Callco Redemption Call Right......................................15
5.3 Change of Law Call Right..........................................17
ARTICLE 6
AMENDMENT
6.1 Plan of Arrangement Amendment.....................................18
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SCHEDULE A - Arrangement Resolution
SCHEDULE B - Plan of Arrangement
SCHEDULE C - Form of Lock-up Agreement
THIS ARRANGEMENT AGREEMENT made as of the 12th day of August, 2002.
BETWEEN:
▇▇▇▇▇▇ INDUSTRIES LTD., an exempted company incorporated under
the laws of Bermuda,
("ACQUIROR")
- and -
▇▇▇▇ ENERGY TECHNOLOGIES INC., a corporation incorporated
under the laws of Alberta,
(the "CORPORATION")
RECITALS
WHEREAS:
A. The Acquiror has made a proposal to acquire all of the outstanding Shares
at a price of $1.85 per Share (payable, at the election of each Shareholder, in
cash or in exchangeable shares of Canco) pursuant to the Plan of Arrangement;
B. The Board of Directors has determined that it would be in the best
interests of the Corporation, its Shareholders and the Optionholders to
recommend acceptance of the Arrangement to the Shareholders, to cooperate with
Acquiror and to take all reasonable action to support the Arrangement; and
C. The Board of Directors has determined that it would be in the best
interests of the Corporation, the Shareholders and the Optionholders to enter
into this Agreement;
NOW THEREFORE IN CONSIDERATION of the mutual covenants set out below,
Acquiror and the Corporation agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS
In this Agreement, unless the context otherwise requires, the following
terms have the meanings specified:
"ACQUIROR SHARES" means shares in the common stock of Acquiror;
"ACQUISITION PROPOSAL" means a proposal or offer by any Person (other
than Acquiror or an affiliate of Acquiror), whether or not subject to
conditions and whether or not in
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writing, to acquire in any manner, directly or indirectly, beneficial
ownership of all or a material portion of the assets of the Corporation
or any Subsidiary of the Corporation or to acquire in any manner,
directly or indirectly, beneficial ownership of or control or direction
over more than 20% of the outstanding voting shares of the Corporation,
whether by means of an arrangement or amalgamation, a merger,
consolidation or other business combination, a sale of shares or
assets, a take-over bid, tender offer or exchange offer, or any other
transaction involving the Corporation or any Subsidiary of the
Corporation, including, without limitation, any single or multi-step
transaction or series of related transactions structured to permit such
Person to acquire beneficial ownership of all or a material portion of
the assets of the Corporation or any Subsidiary of the Corporation or
to acquire in any manner, directly or indirectly, more than 20% of the
outstanding voting shares of the Corporation (other than the
transaction contemplated by this Agreement);
"ACT" means the Business Corporations Act (Alberta);
"AFFILIATE" has the meaning set forth in the Securities Act (Alberta);
"AGREEMENT", and "THIS AGREEMENT", and similar expressions refer to
this Agreement, as the same may be amended, restated or supplemented
from time to time and, where applicable, to the appropriate Schedules
to this Agreement;
"ARRANGEMENT" means the arrangement under Section 193 of the Act on the
terms and conditions set out in the Plan of Arrangement;
"ARRANGEMENT RESOLUTION" means the special resolution of the
Shareholders and Optionholders to be substantially as set forth in
Schedule A hereto;
"ARTICLES OF ARRANGEMENT" means the articles of arrangement of the
Corporation in respect of the Arrangement that are required by the Act
to be sent to the Registrar after the Final Order;
"BOARD OF DIRECTORS" means the board of directors of the Corporation as
constituted from time to time;
"BUSINESS DAY" means any day excepting a Saturday, Sunday or statutory
holiday in Calgary, Alberta or Houston, Texas;
"CALLCO" means 3064297 Nova Scotia Company, an unlimited liability
company incorporated under the laws of the Province of Nova Scotia;
"CANCO" means Nabors Exchangeco (Canada) Inc., an indirect wholly-owned
Subsidiary of Acquiror incorporated under the Canada Business
Corporations Act;
"CLOSING" means the closing of the Arrangement and the transactions
contemplated hereby;
"CLOSING DATE" means the date of Closing;
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"CONFIDENTIALITY AGREEMENT" means the confidentiality agreement made as
of March 19, 2002 between Acquiror and the Corporation;
"COURT" means the Court of Queen's Bench of Alberta;
"DATE HEREOF", "DATE OF THIS AGREEMENT" and other similar terms mean,
unless the context otherwise requires, August 12th, 2002;
"DILUTED BASIS" means, with respect to the number of outstanding Shares
at any time, such number of outstanding Shares calculated assuming that
all outstanding in-the-money Options and other securities entitling the
holder to acquire Shares are exercised;
"DISCLOSURE LETTER" means the letter delivered by the Corporation to
Acquiror on the date of this Agreement, in each case referencing the
Section or subsection of this Agreement in respect of which disclosure
is being made;
"DISSENT RIGHTS" means the rights of dissent in respect of the
Arrangement Resolution provided in Section 3.1 of the Plan of
Arrangement;
"EFFECTIVE DATE" means the effective date of the Arrangement, being the
date on which the Articles of Arrangement are filed under the Act
giving effect to the Arrangement;
"EFFECTIVE TIME" means the time on the Effective Date at which the
Articles of Arrangement are filed under the Act;
"EMPLOYEE OBLIGATIONS" means any obligations or liabilities of the
Corporation or any Subsidiary of the Corporation to pay, whether or not
on condition, any amount to its officers, directors, or employees,
(other than for salary, bonuses under their existing bonus arrangements
and directors' fees in each case in the ordinary and regular course of
business consistent with past practice and obligations or liabilities
in respect of insurance or indemnification contemplated in Article 5)
and, without limiting the generality of the foregoing, Employee
Obligations shall include the obligations or liabilities of the
Corporation or any of its Subsidiaries to officers or employees (i) for
severance or termination payments on the change of control of the
Corporation pursuant to any executive involuntary severance and
termination agreements in the case of officers and pursuant to the
Corporation's severance policy in the case of employees and (ii) for
retention bonus payments pursuant to any retention bonus program, but
shall exclude any statutory or common law obligations or liabilities in
respect of termination or severance;
"ENCUMBRANCE" includes, without limitation, any mortgage, pledge,
assignment, charge, lien, security interest or trust, royalty, carried,
working, participation or net profits interest or other third party
interest and any agreement, option, right or privilege (whether by law,
contract or otherwise) capable of becoming any of the foregoing;
"ENVIRONMENTAL LAWS" means all applicable statutes, regulations,
ordinances, by-laws, and codes and all international treaties and
agreements, in Canada and the United States (whether federal,
provincial, state or municipal) relating to pollution or the protection
and preservation of the environment, occupational health and safety,
product safety, product
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liability or Hazardous Substances, including, without limitation, laws
relating to Releases or threatened Releases of Hazardous Substances
into the indoor or outdoor environment (including, without limitation,
ambient air, surface water, groundwater, land, surface and subsurface
strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, Release, transport or handling
of Hazardous Substances and all laws and regulations with regard to
recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Substances, and all laws relating to endangered or
threatened species of fish, wildlife and plants and the management or
use of natural resources, including, without limitation, the
Environmental Protection and Enhancement Act (Alberta), and the
Canadian Environmental Protection Act;
"ENVIRONMENTAL PERMITS" includes all orders, permits, certificates,
approvals, consents, registrations and licences issued by any competent
authority under Environmental Laws;
"EXCHANGE" means The Toronto Stock Exchange;
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges,
restrictions and conditions attaching to the Exchangeable Shares as set
forth in the articles of Canco;
"EXCHANGEABLE SHARES" means exchangeable shares of Canco as constituted
on the date hereof and governed by the Exchangeable Share Provisions;
"FEE EVENT" has the meaning set forth in Section 4.1;
"FINAL ORDER" has the meaning set forth in Section 2.1;
"FINANCIAL STATEMENTS" means the audited consolidated balance sheet and
related consolidated statement of earnings and retained earnings and
consolidated statement of cash flow of the Corporation for the fiscal
years ending December 31, 2001 and 2000 and the unaudited consolidated
balance sheets and consolidated statements of earnings and retained
earnings and consolidated statements of cash flow for the periods ended
March 31, 2002 and 2001, in each case as set forth in the Public
Record;
"GOVERNING DOCUMENTS" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, articles of
organization, limited liability company agreement, partnership
agreement, formation agreement, joint venture agreement, unanimous
shareholder agreement or declaration or other similar governing
documents of such Person;
"GOVERNMENTAL ENTITY" means any (i) multinational, federal, provincial,
state, municipal, local or other governmental or public department,
central bank, court, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) any subdivision or authority
of any of the foregoing, or (iii) any quasi-governmental or private
body exercising any regulatory, expropriation or taxing authority under
or for the account of any of the above.
"HAZARDOUS SUBSTANCE" means, collectively, any contaminant (as defined
in the Environmental Protection and Enhancement Act (Alberta)), toxic
substance (as defined
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in the Canadian Environmental Protection Act), dangerous goods (as
defined in the Transportation of Dangerous Goods Act (Canada), or
pollutant or any other substance that when Released to the natural
environment is likely to cause, at some immediate or future time,
material harm or degradation to the natural environment or material
risk to human health, including without limitation, (a) any
petrochemical or petroleum products, radioactive materials, asbestos in
any form that is or could become friable, urea formaldehyde foam
insulation, transformers or other equipment that contains dielectric
fluid containing polychlorinated biphenyls, and radon gas; (b) any
chemicals, materials or substances defined as or included in the
definition of "hazardous substances", "hazardous wastes", "hazardous
materials", "restricted hazardous materials", "extremely hazardous
substances", "toxic substances", "contaminants" or "pollutants" or
words of similar meaning and regulatory effect; or (c) any other
chemical, material or substance, exposure to which is prohibited,
limited, or regulated by any applicable Environmental Law;
"INTERIM ORDER" has the meaning set forth in Section 2.1;
"IN-THE-MONEY" means, in respect of Options, such of them as have an
exercise price per Share less than the Per Share Price;
"MATERIAL ADVERSE CHANGE", in respect of the Corporation or the
Acquiror, means any change (or changes which in the aggregate would be
material) (or any condition, event or development involving a
prospective material change) in the business, operations, results of
operations, assets, capitalization, financial condition, rights,
liabilities, prospects or privileges, whether contractual or otherwise,
of the Corporation or the Acquiror, as the case may be, or any of its
Subsidiaries which is materially adverse to the business thereof
considered as a whole, other than a change: (i) resulting from
conditions affecting the oil and gas industry as a whole or the oil and
gas services industry as a whole; (ii) resulting from general economic,
financial, currency exchange, securities or commodity market conditions
in Canada or elsewhere; (iii) previously disclosed publicly or in the
Disclosure Letter; or (iv) resulting from changes in the market price
of crude oil or natural gas; provided that such change or changes shall
be considered to be material if its or their value or financial effect
(net of reasonably anticipated insurance recoveries in respect of such
change) exceeds, in the aggregate, $2 million in respect of the
Corporation and its Subsidiaries or $165 million in respect of Acquiror
and its Subsidiaries;
"MATERIAL ADVERSE EFFECT" means, where used in relation to the
Corporation or the Acquiror and a fact or circumstance, such fact or
circumstance (together with all other facts or circumstances) has or is
reasonably expected to: (i) have a material adverse effect on the
business, operations, results of operations, assets, capitalization,
condition (financial or otherwise), licenses, permits, concessions,
rights, liabilities (contingent or otherwise), prospects or privileges,
whether contractual or otherwise, of the Corporation and its
Subsidiaries considered as a whole or the Acquiror and its Subsidiaries
considered as a whole, as the case may be, excluding any such effect:
(A) resulting from conditions affecting the oil and gas industry as a
whole or the oil and gas services industry as a whole; (B) resulting
from general economic, financial, currency exchange, securities or
commodity market conditions in Canada or elsewhere; (C) previously
disclosed publicly or in the Disclosure Letter; or (D) resulting from
changes in the market price of crude oil
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or natural gas; provided that such change or changes shall be
considered to be material if its or their value or financial effect
(net of reasonably anticipated insurance recoveries in respect of such
change) exceeds, in the aggregate, $2 million in respect of the
Corporation and its Subsidiaries or $165 million in respect of Acquiror
and its Subsidiaries; (ii) prevent, materially delay or materially
affect the consummation of the transactions contemplated by this
Agreement; or (iii) materially affect the ability of the Corporation or
the Acquiror, as the case may be, to perform its obligations hereunder
or under the Arrangement;
"MATERIAL CONTRACT" means an agreement or understanding (whether or not
in writing) to which the Corporation or any of its Subsidiaries is a
party or by which any thereof is bound: pursuant to which the
Corporation or any of its Subsidiaries has or may have an obligation in
excess of, or having a value in excess of, $150,000 annually and which
has a term in excess of 90 days without being terminable by the
Corporation or its Subsidiary without penalty;
"MISREPRESENTATION" has the meaning set forth in the Securities Act
(Alberta);
"OPTIONHOLDERS" means the holders of Options from time to time;
"OPTIONS" means the outstanding options to acquire Shares under the
Stock Option Plan;
"PER SHARE PRICE" means $1.85;
"PERSON" includes an individual, partnership, trust, firm, body
corporate, government, governmental body, agency or instrumentality,
unincorporated body of persons or association;
"PLAN OF ARRANGEMENT" means the plan of arrangement substantially in
the form attached hereto as Schedule B and any amendments or variations
thereto made in accordance with Article 6 of the Plan of Arrangement or
made at the direction of the Court in the Final Order;
"PREDECESSOR CORPORATIONS" means those corporations which merged with
the Corporation pursuant to various amalgamations including, without
limitation, Adesso Corporation and 747253 Alberta Ltd.;
"PROXY CIRCULAR" means the management information circular of the
Corporation to be sent to the Shareholders and the Optionholders in
connection with the Shareholder Meeting (including, without limitation,
information incorporated by reference);
"PUBLIC RECORD" means all information and materials filed by, or on
behalf of, the Corporation or any of the Predecessor Corporations with
any of the Securities Authorities available through the SEDAR website;
"REAL PROPERTY" has the meaning set forth in Section 7.1(o);
"REGISTRAR" means the Registrar appointed pursuant to Section 263 of
the Act;
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"REGULATORY APPROVALS" means all approvals, consents and authorizations
of all Governmental Entities and other regulators (including stock
exchanges) reasonably necessary or desirable in connection with the
Arrangement and the other transactions contemplated hereby;
"RELEASE" means any release, spill, emission, discharge, leaking,
pumping, dumping, escape, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the indoor or outdoor environment
(including, without limitation, ambient air, surface water,
groundwater, and surface or subsurface strata) or into or out of any
property, including the movement of Hazardous Substances through or in
the air, soil, surface water, groundwater or property;
"RETURNS" means all reports, estimates, declarations of estimated tax,
information statements and returns relating to, or required to be filed
in connection with, any Taxes;
"SEC" means the Securities and Exchange Commission of the United
States;
"SECURITIES AUTHORITIES" means the appropriate securities commission or
similar regulatory authorities in Canada and each of the provinces and
territories thereof and in the United States and each of the states
thereof;
"SECURITIES LAWS" means, collectively, all applicable Canadian
provincial and territorial corporate and securities laws, United States
securities laws, the "blue sky" or securities laws of the states of the
United States and any other applicable securities laws;
"SHAREHOLDERS" means the holders of Shares from time to time;
"SHAREHOLDER MEETING" means the special meeting of the Shareholders and
Optionholders, including any adjournments or postponement thereof, to
be called and held in accordance with the Interim Order to consider
and, if deemed advisable, approve the Arrangement Resolution;
"SHARES" means common shares in the share capital of the Corporation;
"STOCK OPTION PLAN" means the stock option plan of the Corporation
approved by the shareholders of the Corporation on September 18, 1996
and amended with approval of such shareholders given at the 1997, 1998,
2000 and 2001 Annual and Special Meetings of the Corporation;
"SUBSIDIARY" has the meaning set forth in the Act and, in respect of
the Corporation, includes (without limitation) ▇▇▇▇ Energy Technologies
USA, Inc. (Delaware); ▇▇▇▇ Energy Technologies de Venezuela, C.A.
(Venezuela); Data Wise Solutions Inc. (Delaware); Data Wise Solutions
Inc. (Canada); ▇▇▇▇ Energy Technologies International Inc. (Barbados),
▇▇▇▇ Financial Services Company LLC (Delaware), ▇▇▇▇ Investment
Partners (Delaware) and each other partnership or other entity
controlled, directly or indirectly, by the Corporation;
"SUPERIOR PROPOSAL" has the meaning set forth in section 3.2(a);
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"SUPPORT AGREEMENT" means the agreement so entitled among ▇▇▇▇▇▇
Industries, Inc., Callco and Canco dated April 26, 2002, as
supplemented by an Acknowledgement of Novation between ▇▇▇▇▇▇
Industries, Inc., Callco, Canco, Computershare Trust Company of Canada
and Acquiror;
"TAXES" shall mean all taxes, however denominated, including any
interest, penalties or other additions that may become payable in
respect thereof, imposed by any federal, territorial, provincial,
state, local or foreign government or any agency or political
subdivision of any such government, which taxes shall include, without
limiting the generality of the foregoing, all income or profits taxes
(including, but not limited to, federal income taxes and provincial
income taxes), payroll and employee withholding taxes, unemployment
insurance, social insurance taxes, sales and use taxes, ad valorem
taxes, excise taxes, franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property taxes,
stamp taxes, environmental taxes, transfer taxes, workers' compensation
and other governmental charges, and other obligations of the same or of
a similar nature to any of the foregoing, which the Corporation or any
of its Subsidiaries is required to pay, withhold or collect;
"U.S. SECURITIES ACT" means the United States Securities Act of 1933,
as amended; and
"VOTING AND EXCHANGE TRUST AGREEMENT" means the agreement so entitled
among ▇▇▇▇▇▇ Industries, Inc., Canco and Computershare Trust Company of
Canada dated April 26, 2002, as supplemented by an Acknowledgement of
Novation between ▇▇▇▇▇▇ Industries, Inc., Callco, Canco, Computershare
Trust Company of Canada and Acquiror.
1.2 SINGULAR, PLURAL, ETC.
Words importing the singular number include the plural and vice versa
and words importing gender include the masculine, feminine and neuter genders.
1.3 DEEMED CURRENCY
In the absence of a specific designation of any currency, any
undescribed dollar amount herein shall be deemed to refer to Canadian dollars.
1.4 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 hereunder is not a Business Day, such action
shall be required to be taken on the next succeeding day which is a Business
Day.
1.5 DECISION BY BOARD OF DIRECTORS
Any reference herein to a decision or determination, unanimous or
otherwise, of the Board of Directors means a decision or determination by a
quorum of the directors of the Corporation entitled to vote under the Act and
the constating documents of the Corporation.
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1.6 INTERPRETATION NOT AFFECTED BY PARTY DRAFTING
The parties hereto acknowledge that their respective legal counsel have
reviewed and participated in settling the terms of this Agreement, and the
parties hereby agree that any rule of construction to the effect that any
ambiguity is to be resolved against the drafting party will not be applicable in
the interpretation of this Agreement.
1.7 STATUTES
Any reference to a statute herein shall include any and all rules or
regulations promulgated thereunder and any and all amendments made to such
statute, rules or regulations prior to the date hereof and hereafter from time
to time.
ARTICLE 2
THE ARRANGEMENT
2.1 IMPLEMENTATION STEPS BY THE CORPORATION
The Corporation agrees that it shall use its commercially reasonable
efforts to:
(a) as soon as reasonably practicable, and in any event, on or
before September 16, 2002, apply to the Court in a manner
acceptable to Acquiror acting reasonably, under Section 193 of
the Act for an interim order (the "INTERIM ORDER") providing
for, among other things, the calling and holding of the
Shareholder Meeting, and thereafter proceed with and
diligently seek the Interim Order, in form and substance
satisfactory to the Corporation and Acquiror, acting
reasonably;
(b) lawfully convene and hold the Shareholder Meeting as soon as
reasonably practicable and, in any event, on or before October
31, 2002;
(c) subject to obtaining the approvals as are required by the
Interim Order, proceed with and diligently pursue the
application to the Court for a final order of the Court
approving the Arrangement in form and substance satisfactory
to the Corporation and Acquiror, acting reasonably, (the
"FINAL ORDER"); and
(d) 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 Registrar, for filing under the Act,
the Articles of Arrangement and such other documents as may be
required in connection therewith under the Act to give effect
to the Arrangement.
2.2 IMPLEMENTATION STEPS BY ACQUIROR
Acquiror agrees that, on or prior to the Effective Date and subject to
the satisfaction or waiver of the conditions herein contained in favour of
Acquiror, Acquiror shall issue to the trustee under the Voting and Exchange
Trust Agreement such share or shares as required by the
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Voting and Exchange Trust Agreement, if any, in respect of the Exchangeable
Shares to be issued pursuant to the Arrangement.
2.3 INTERIM ORDER
The notice of motion for the application referred to in Section 2.1
shall request that the Interim Order provide, among other things:
(a) for the class of persons to whom notice is to be provided in
respect of the Arrangement and the Shareholder 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 Shareholders and Optionholders, voting together
as a single class, present in person or by proxy at the
Shareholder Meeting (such that each holder of Shares is
entitled to one vote for each Share held and each Optionholder
is entitled to one vote for each Share such holder would have
received on a valid exercise of such Option, as the case may
be);
(c) that, in all other respects, the terms, restrictions and
conditions of the governing documents of the Corporation,
including quorum requirements and all other matters, shall
apply in respect of the Shareholder Meeting; and
(d) for the grant of the Dissent Rights.
2.4 DISSENTING SECURITIES
Each Shareholder and each Optionholder may exercise Dissent Rights in
connection with the Arrangement pursuant to and in the manner set forth in
Section 191 of the Act and the Interim Order (such holders referred to as
"DISSENTERS" or as "DISSENTING SHAREHOLDERS" when referring exclusively to
Shareholders). The Corporation shall give Acquiror (i) prompt notice of any
written notices of exercise of rights of dissent, withdrawals of such notices,
and any other instruments served pursuant to the Act and received by the
Corporation and (ii) the opportunity to participate in all negotiations and
proceedings with respect to such rights. Without the prior written consent of
Acquiror, except as required by applicable law, the Corporation shall not make
any payment with respect to any such rights or offer to settle or settle any
such rights.
2.5 ARTICLES OF ARRANGEMENT
The Articles of Arrangement shall, together with such other matters as
are necessary to effect the Arrangement, implement the Plan of Arrangement.
2.6 CORPORATION APPROVAL OF THE ARRANGEMENT
(a) The Corporation represents that the Board of Directors, upon
consultation with its advisors, has unanimously determined
that:
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(i) the Arrangement is fair from a financial point of
view to the Shareholders and Optionholders and is in
the best interests of the Corporation, the
Shareholders and Optionholders; and
(ii) the Board of Directors will unanimously recommend
that Shareholders and Optionholders vote in favour of
the Arrangement, which recommendation may not be
withdrawn, modified or changed in any manner except
(A) as provided in Section 3.2; (B) pursuant to the
exercise by the Board of Directors of their fiduciary
duties, provided the fee provided for in Section 4.1
is paid; or (C) in the event of the termination of
this Agreement pursuant to Section 10.1.
(b) The Corporation represents that the Board of Directors has
received an oral opinion from the Corporation's financial
advisor, ▇▇▇▇▇▇ & Co. Limited, that the consideration under
the Arrangement is fair from a financial point of view to the
Shareholders and that such financial advisor has advised it
that it will provide a written opinion to such effect on or
before the application referred to in Section 2.1(a).
(c) The Corporation represents that its senior officers and
directors have advised the Corporation that, at the date
hereof, they intend to vote any Shares and Options held by
them in favour of the Arrangement Resolution and will so
represent in the Proxy Circular.
2.7 PROXY CIRCULAR
As promptly as reasonably practicable, the Corporation shall prepare
the Proxy Circular (setting forth inter alia the recommendation of the Board of
Directors set forth in Section 2.6(a) and the opinion of the Corporation's
financial advisors referred to in Section 2.6(b) and reflecting the execution of
the lock-up agreements referred to in Section 9.2(e) and the intention of the
senior officers and directors referred to in Section 2.6(c)) together with any
other documents required by Securities Laws or other applicable laws in
connection with the approval of the Arrangement by the Shareholders and
Optionholders and the Corporation shall, on a confidential basis, provide
Acquiror timely opportunity to review and a reasonable period of time in the
circumstances to comment on all such documentation and all such documentation
shall be reasonably satisfactory to Acquiror before it is filed or distributed
to the Shareholders and Optionholders. As promptly as practicable after
obtaining the Interim Order and, in any event on or before September 30, 2002,
the Corporation shall use its commercially reasonable efforts to cause the Proxy
Circular and other documentation required in connection with the Shareholder
Meeting to be sent to each Shareholder and each Optionholder and filed as
required by the Interim Order and applicable laws.
2.8 SECURITIES COMPLIANCE
(a) Acquiror shall, or shall cause its Subsidiaries (and the
Corporation agrees to cooperate in respect thereof) to use
commercially reasonable efforts to obtain all orders required
from the applicable Canadian Governmental Entities to permit
the
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issuance and first resale of (i) the Exchangeable Shares
issuable pursuant to the Arrangement, and (ii) Acquiror Shares
issuable upon exchange of the Exchangeable Shares from time to
time without qualification with, or approval of, or the filing
of any prospectus or similar document, or undertaking, from,
any Canadian Governmental Entity under any Canadian federal,
provincial or territorial securities or other laws or pursuant
to the rules and regulations of any Governmental Entity
administering such laws, or the fulfilment of any other legal
requirement in any such jurisdiction (other than, with respect
to such first resale being from the holdings of a "CONTROL
PERSON" for purposes of Canadian Securities Laws).
(b) Acquiror agrees to file a registration statement on Form S-3
(or other applicable form) (the "S-3 REGISTRATION STATEMENT")
with the SEC in order to register under the U.S. Securities
Act the Acquiror Shares issuable from time to time after the
Effective Time upon exchange of the Exchangeable Shares, and
shall use all commercially reasonable efforts to cause the S-3
Registration Statement to become effective and to maintain the
effectiveness of such registration so long as any Exchangeable
Shares remain outstanding (other than those Exchangeable
Shares held by Acquiror or any of its affiliates).
2.9 PREPARATION OF FILINGS
(a) Acquiror and the Corporation shall, acting reasonably and
promptly in the circumstances, cooperate in:
(i) the preparation of the Proxy Circular and any
application for the orders and the preparation of any
required registration statements and any other
documents reasonably deemed by Acquiror or the
Corporation to be necessary to discharge their
respective obligations under Securities Laws in
connection with the Arrangement and the other
transactions contemplated hereby;
(ii) the taking of all such action as may be required
under any applicable Securities Laws (including "blue
sky laws") in connection with the issuance of the
Exchangeable Shares and Acquiror Shares in connection
with the Arrangement; provided, however, that with
respect to the United States "blue sky" and Canadian
provincial qualifications neither Acquiror nor the
Corporation shall be required to register or qualify
as a foreign corporation or to take any action that
would subject it to service of process in any
jurisdiction where such entity is not now so subject,
except as to matters and transactions arising solely
from the offer and sale of the Exchangeable Shares
and Acquiror Shares; and
(iii) the taking of all such action as may be required
under the Act in connection with the transactions
contemplated by this Agreement and the Plan of
Arrangement.
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(b) Each of Acquiror and the Corporation agree to promptly furnish
to the other all information concerning it, Canco, the
Shareholders and the Optionholders as may be required to give
effect to the actions described in Sections 2.7 and 2.8 and
the foregoing provisions of this Section 2.9, 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 or otherwise in
connection with the consummation of the Arrangement and the
other transactions contemplated by this Agreement will contain
any misrepresentation or 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.
(c) Each of Acquiror and the Corporation agree to promptly notify
the other if at any time before or after the Effective Time it
becomes aware that the Proxy Circular or an application for an
order or a registration statement described in Section 2.8
contains any misrepresentation or any untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements contained
therein not misleading in light of the circumstances in which
they are made, or that otherwise requires an amendment or
supplement to the Proxy Circular or such application or
registration statement. In any such event, Acquiror and the
Corporation agree to cooperate in the preparation of a
supplement or amendment to the Proxy Circular or such other
document, as required and as the case may be, and, if
required, shall cause the same to be distributed to the
Shareholders and Optionholders or filed with the relevant
securities regulatory authorities.
(d) The Corporation shall ensure that the Proxy Circular complies
with all applicable laws and, without limiting the generality
of the foregoing, that the Proxy Circular does not contain any
misrepresentation or 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 there not
misleading in light of the circumstances in which they are
made (other than with respect to any information relating to
and provided by Acquiror). Without limiting the generality of
the foregoing, the Corporation shall ensure that the Proxy
Circular complies with OSC Rule 54-501 and the Interim Order
and provides Shareholders and Optionholders with information
in sufficient detail to permit them to form a reasoned
judgement concerning the matters to be placed before them at
the Shareholder Meeting. The Corporation shall ensure that
none of the information supplied or to be supplied by the
Corporation for inclusion or incorporation by reference in the
S-3 Registration Statement will at the time such registration
statement is declared or becomes effective contain any untrue
statement of material fact or omit to state a material fact
required to be stated therein or necessary in order to make
the statements made therein in light of the circumstances
under which they were made not misleading. The Corporation
will take all reasonable steps within its control to ensure
that the Proxy Circular is prepared as to form in all material
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respects in compliance with the provisions of the Act and
Canadian Securities Laws.
(e) Acquiror shall ensure that the S-3 Registration Statement
complies with all U.S. Securities Laws and, without limiting
the generality of the foregoing, that such documents do 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 relating to
and provided by the Corporation).
2.10 COOPERATION
(a) The Corporation agrees to use its commercially reasonable
efforts to, and shall use its commercially reasonable efforts
to cause its Subsidiaries to, perform all obligations required
to be performed by the Corporation or any of its Subsidiaries
under this Agreement, cooperate with Acquiror 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 Corporation shall:
(i) subject to Section 3.2, at the request of Acquiror,
solicit from the Shareholders and Optionholders
proxies in favour of approval of the Arrangement
Resolution and use commercially reasonable efforts to
obtain the approval by such Shareholders and
Optionholders of the Arrangement Resolution, voting
as a single class;
(ii) not adjourn, postpone or cancel (or propose
adjournment, postponement or cancellation of) the
Shareholder Meeting without Acquiror's prior written
consent except as required by applicable laws, or in
the case of adjournment, if a Material Adverse Change
or Material Adverse Effect occurs in the affairs of
Acquiror on or after the day which is two Business
Days preceding the commencement of the Measurement
Period (as defined in the Plan of Arrangement) or as
may be required by Shareholders and Optionholders as
expressed by majority resolution, voting as a single
class;
(iii) use commercially reasonable efforts to satisfy or
cause to be satisfied as soon as reasonably
practicable all the conditions precedent that are set
forth in Article 9;
(iv) apply for and use commercially reasonable efforts to
obtain as promptly as practicable all Regulatory
Approvals relating to the Corporation or any of its
Subsidiaries and, in doing so, to keep Acquiror
reasonably informed as to the status of the
proceedings related to obtaining the Regulatory
Approvals, including, but not limited to, providing
Acquiror the
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opportunity to be present for or participate in all
communications with any Governmental Entity and
providing Acquiror with copies of all related
applications and notifications, in draft form, in
order for Acquiror to provide its reasonable
comments;
(v) apply for and use commercially reasonable efforts to
obtain the Interim Order and the Final Order;
(vi) carry out the terms of the Interim Order and the
Final Order applicable to it and use commercially
reasonable efforts to comply promptly with all
requirements which applicable laws may impose on the
Corporation or its Subsidiaries with respect to the
transactions contemplated hereby and by the
Arrangement;
(vii) use commercially reasonable efforts to defend 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;
(viii) use commercially reasonable efforts to have lifted or
rescinded any injunction or restraining order or
other order which may adversely affect the ability of
the parties to consummate the transactions
contemplated hereby;
(ix) effect all necessary registrations, filings and
submissions of information required by Governmental
Entities from the Corporation or any of its
Subsidiaries in connection with the transactions
contemplated hereby;
(x) consult with Acquiror prior to making publicly
available its financial results for any period after
the date of this Agreement provided that the
Corporation is not unreasonably impaired in
satisfying all disclosure requirements under
Securities Laws in respect thereof; and
(xi) use commercially reasonable efforts to obtain all
waivers, consents and approvals from other parties to
loan agreements, leases or other contracts required
to be obtained by the Corporation or a Subsidiary of
the Corporation to consummate the transactions
contemplated hereby which the failure to obtain would
have a Material Adverse Effect.
(b) Acquiror agrees that, until the earlier of the Effective Date
and the termination of this Agreement pursuant to its terms,
in each case except (i) with the consent of the Corporation to
any deviation therefrom, or (ii) as expressly contemplated by
this Agreement or the Plan of Arrangement, Acquiror shall and
will cause its Subsidiaries to:
(i) subject to Section 2.10(c)(vii), not adopt or propose
to adopt any amendments to its governing documents or
the governing documents of Canco or Acquiror or to
the Support Agreement or the Voting and
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Exchange Trust Agreement which would have a material
adverse impact on the consummation of the
transactions contemplated hereby or the economic
terms of, or the form of, consideration to be
provided pursuant to the Arrangement; and
(ii) not take any action which may jeopardize the exchange
of the Shares by Shareholders who are resident in
Canada for the purposes of the Income Tax Act
(Canada) from being treated on a tax deferred basis
under the Income Tax Act (Canada) for holders who are
otherwise eligible for such treatment.
(c) Acquiror agrees to use its commercially reasonable efforts to,
and shall use its commercially reasonable efforts to cause its
Subsidiaries to, perform all obligations required to be
performed by it or any of its Subsidiaries under this
Agreement, cooperate with the Corporation 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 by this Agreement and, without limiting the
generality of the following:
(i) use commercially reasonable efforts to satisfy or
cause to be satisfied as soon as reasonably
practicable all conditions precedent that are set
forth in Article 9 hereof;
(ii) apply for and use commercially reasonable efforts to
obtain promptly all Regulatory Approvals relating to
Acquiror or any of its Subsidiaries, and, in doing
so, to keep the Corporation reasonably informed as to
the status of the proceedings related to obtaining
the Regulatory Approvals, including, but not limited
to, providing the Corporation with copies of all
related applications and notifications, in draft
form, in order for the Corporation to provide its
reasonable comments;
(iii) 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
Acquiror with respect to the transactions
contemplated hereby and by the Arrangement;
(iv) in respect of holders of Shares who are resident in
Canada for the purposes of the Income Tax Act
(Canada) and are not exempt from tax under Part 1 of
the Income Tax Act (Canada) and who receive
Exchangeable Shares under the Arrangement, to cause
Canco to enter into elections with any such holders
who make elections under Section 85 of the Income Tax
Act (Canada) and any equivalents thereof under
provincial laws;
(v) use commercially reasonable efforts to defend all
lawsuits or other legal, regulatory or other
proceedings to which it is a party challenging or
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affecting this Agreement or the consummation of the
transactions contemplated hereby;
(vi) use commercially reasonable efforts to have lifted or
rescinded any injunction or restraining order or
other order relating to Acquiror or any of its
Subsidiaries which may adversely affect the ability
of the parties to consummate the transactions
contemplated hereby;
(vii) effect all necessary registrations, filings and
submissions of information required by Governmental
Entities from Acquiror or any of its Subsidiaries in
connection with the transactions contemplated hereby;
(viii) reserve or have available a sufficient number of
Acquiror Shares for issuance upon the exchange from
time to time of Exchangeable Shares issued pursuant
to the Arrangement, and use commercially reasonable
efforts to cause such Acquiror Shares to be approved
for listing on the American Stock Exchange, subject
to official notice of issuance, prior to the
Effective Time;
(ix) use commercially reasonable efforts (A) to cause the
Exchangeable Shares issued pursuant to the
Arrangement to be listed for trading on the Exchange
by the Effective Date and (B) to ensure that Canco
remains a "public corporation" within the meaning of
the Income Tax Act (Canada) for so long as any
Exchangeable Shares are outstanding (other than those
Exchangeable Shares held by Acquiror or any of its
affiliates); and
(x) not, during the Measurement Period (as defined in the
Plan of Arrangement) buy back any of its outstanding
Acquiror Shares.
2.11 PRESS RELEASE AND PUBLIC DISCLOSURE
Each of Acquiror and the Corporation agrees to issue a joint press
release in the form agreed to between them and the Corporation agrees to file a
copy of this Agreement, as an attachment to a material change report with
respect to the Arrangement, as soon as possible with the Securities Authorities
having jurisdiction over the Corporation.
2.12 OUTSTANDING RIGHTS TO ACQUIRE SHARES
The Corporation agrees and represents that the Board of Directors has
unanimously resolved that:
(a) The Corporation shall use all commercially reasonable efforts
to provide that Persons holding Options who may do so under
Securities Laws and in accordance with the Stock Option Plan
or the relevant agreements governing such Options (or pursuant
to this Section 2.12) shall be entitled to exercise all of
their Options and vote all Shares issued in connection
therewith at the Shareholder Meeting. It is agreed by Acquiror
that all Options that are duly surrendered for exercise,
conditional on Closing and with appropriate instructions that
the Options are to be
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voted in favour of the Arrangement (the "CONDITIONAL OPTION
EXERCISE"), shall be exercised immediately prior to the
Effective Time. Furthermore, Acquiror shall accept as validly
issued all Shares that are to be issued pursuant to the
Conditional Option Exercise. The Corporation may make
arrangements to loan Optionholders who elect to receive cash
pursuant to the Arrangement, the exercise price thereof with
repayment of the loan to be made from the proceeds received
under the Arrangement for the Shares acquired on such
exercise.
(b) Prior to the Effective Time, the Corporation shall use all
commercially reasonable efforts to enter into releases, in a
form approved by Acquiror, acting reasonably, with each
Optionholder pursuant to which the parties thereto shall agree
that, upon Closing, each holder that has not previously
exercised such Options, as the case may be, will receive from
the Corporation, in consideration of the termination of all
such holder's unexercised Options, the greater of:
(i) the positive difference, if any, between the Per
Share Price and the exercise price of the holder's
Options, as the case may be, per Share, regardless of
the vesting of any such Options under the Stock
Option Plan and the agreements governing such
Options, as applicable; and
(ii) $0.10,
for each Share that is subject to such issuance.
The Corporation shall make appropriate withholdings of taxes
or other applicable source deductions from any such payments
made to any Optionholders as required by applicable law.
(c) The Corporation shall use all commercially reasonable efforts
to ensure that, at the Effective Time, all of the Options have
been exercised or surrendered for termination as contemplated
by this Section 2.12, and without limiting the generality of
the forgoing, the Corporation shall:
(i) encourage and facilitate all persons holding Options
to exercise those Options and vote all Shares issued
in connection therewith in favour of the Arrangement
at the Shareholder Meeting pursuant to the
Conditional Option Exercise or otherwise or surrender
their Options in the manner provided for in this
Section 2.12; and
(ii) cause the vesting of option entitlements under the
Stock Option Plan to accelerate prior to or
concurrently with the completion of the Arrangement,
such that all outstanding Options shall be
exercisable and fully vested prior to the Effective
Time.
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ARTICLE 3
COVENANTS OF THE CORPORATION
3.1 ORDINARY COURSE OF BUSINESS
The Corporation covenants and agrees that, from the date hereof until
the earlier of the Effective Time and the date this Agreement is terminated
pursuant to its terms, unless Acquiror otherwise agrees in writing or except as
otherwise expressly contemplated or permitted by this Agreement or the
Disclosure Letter:
(a) the Corporation shall, and shall cause each of its
Subsidiaries to, conduct its and their respective business
only in, and not take action except in, the usual, ordinary
and regular course of business and consistent with past
practice;
(b) the Corporation shall not directly or indirectly do or permit
to occur any of the following:
(i) (other than transactions solely among the Corporation
and its Subsidiaries) issue, sell, pledge, lease,
dispose of, encumber or agree to issue, sell, pledge,
lease, dispose of or encumber (or permit any of its
Subsidiaries to issue, sell, pledge, lease, dispose
of, encumber or agree to issue, sell, pledge, lease,
dispose of or encumber):
(A) any additional shares of, or any options,
warrants, calls, conversion privileges or
rights of any kind to acquire any shares of,
any capital stock of the Corporation or any
of its Subsidiaries (other than pursuant to
the exercise of outstanding Options), or
(B) except in the ordinary and regular course of
business, consistent with past practice and
not exceeding $50,000 individually and
$150,000 in the aggregate any assets of the
Corporation or any of its Subsidiaries;
(ii) amend or propose to amend its governing documents or
those of any of its Subsidiaries;
(iii) split, combine or reclassify any outstanding Shares,
or declare, set aside or pay any dividend or other
distribution payable in cash, stock, property or
otherwise with respect to the Shares;
(iv) except as set forth in Section 2.12, redeem, purchase
or offer to purchase (or permit any of its
Subsidiaries to redeem, purchase or offer to
purchase) any Shares or other securities of the
Corporation or any of its Subsidiaries;
(v) reorganize, amalgamate or merge the Corporation or
any of its Subsidiaries with any other Person;
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(vi) acquire or agree to acquire (by merger, amalgamation,
acquisition of stock or assets or otherwise) any
Person or acquire or agree to acquire any assets,
except in the ordinary and regular course of
business, consistent with past practice and not
exceeding $50,000 individually or $150,000 in the
aggregate;
(vii) except in the ordinary and regular course of
business, consistent with past practice: (A) pay,
discharge or satisfy any material claims, liabilities
or obligations; or (B) except such as have been
reserved against in the Financial Statements,
relinquish any material contractual rights;
(viii) enter into any interest rate, currency or commodity
swaps, ▇▇▇▇▇▇ or other similar financial instruments;
(ix) waive, release, grant or transfer any rights of
material value or modify or change in any material
respect any existing material licence, lease,
contract or other document, other than in the
ordinary and regular course of business, consistent
with past practice;
(x) authorize, recommend or propose any release or
relinquishment of any material contract right other
than in the ordinary and regular course of business,
consistent with past practice;
(xi) (other than the rollover of presently outstanding
bankers' acceptances or the conversion of prime rate
advances to bankers' acceptances) incur or commit to
incur any indebtedness for borrowed money or any
other material liability or obligation or issue any
debt or assume, guarantee, endorse or otherwise as an
accommodation become responsible for, the obligations
of any other person, or make loans (other than as
contemplated in Section 2.12) or advances, except, in
either case, in the ordinary and regular course of
business consistent with past practice under
facilities currently outstanding; and
(xii) authorize or propose any of the foregoing, or enter
into or modify any contract, agreement, commitment or
arrangement to do any of the foregoing;
(c) the Corporation shall not, and shall cause each of its
Subsidiaries to not:
(i) take any action with respect to the entering into,
assuming or modifying of any employment, severance,
collective bargaining or similar agreements, policies
or arrangements with respect to the grant of any
bonuses, salary increases, stock options, pension
benefits, retirement allowances, deferred
compensation, severance or termination pay or any
other form of compensation or profit sharing or with
respect to any increase of benefits payable, provided
that the Corporation shall be permitted to modify the
number, types and salary of non-executive employees
in the employment
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of the Corporation, acting reasonably, to reflect
changing industry conditions from time to time; or
(ii) without limiting the foregoing, create, enter into,
assume or modify any Employee Obligations;
(d) the Corporation shall use its reasonable efforts to cause its
current insurance (or re-insurance) policies not to be
cancelled or terminated or any of the coverage thereunder to
lapse, unless simultaneously with such termination,
cancellation or lapse, replacement policies underwritten by
insurance and re-insurance companies of nationally recognized
standing providing commercially reasonable coverage in
accordance with industry practice for similar entities
carrying on comparable business are obtained;
(e) the Corporation shall:
(i) in the context of the transactions contemplated
hereby, use its commercially reasonable efforts, and
cause each of its Subsidiaries to use its
commercially reasonable efforts, to preserve intact
their respective business organizations and goodwill,
to keep available the services of its officers and
employees as a group and to maintain satisfactory
relationships with suppliers, agents, distributors,
customers and others having business relationships
with it or its Subsidiaries, provided that the
Corporation shall be permitted to modify the number
and types of non-executive employees in the
employment of the Corporation, acting reasonably, to
reflect changing industry conditions from time to
time;
(ii) not take any action, or permit any of its
Subsidiaries to take any action, that would render,
or that reasonably may be expected to render, any
representation or warranty made by it in this
Agreement untrue in any material respect at any time
prior to the Effective Time if then made; and
(iii) confer on a regular basis with Acquiror with respect
to material operational matters;
(f) the Corporation shall not settle or compromise any claim
brought by any present, former or purported holder of any
securities of the Corporation in connection with the
transactions contemplated by this Agreement or the
Arrangement;
(g) except as set forth in Section 2.12, the Corporation shall not
enter into or modify any contract, agreement, commitment or
arrangement inconsistent with any of the matters set forth in
this Section 3.1 without the prior written consent of
Acquiror; and
(h) the Corporation shall use all commercially reasonable efforts
to obtain receipt of the consents of any and all lenders to
the Corporation whose consent is required to prevent a default
or any event that with the passage of time may constitute an
event of default thereunder, to the transactions contemplated
herein.
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3.2 NON-SOLICITATION
(a) The Corporation shall not, directly or indirectly, through any
officer, director, employee, representative or agent of the
Corporation or any of its Subsidiaries, (i) solicit, initiate
or encourage (including by way of furnishing information or
entering into any form of agreement, arrangement or
understanding) the initiation of any inquiries, discussions,
negotiations, proposals or offers from any Person or other
entity or group (other than Acquiror) in respect of any matter
or thing inconsistent with the successful completion of the
Arrangement, including, without limitation, any Acquisition
Proposal or (ii) provide any non-public information to,
participate in any discussions or negotiations relating to any
such matter or thing with, or otherwise cooperate with or
assist or participate in any effort to take such action by,
any Person or other entity or group; provided nothing
contained in this Section 3.2 or otherwise in this Agreement
shall prevent the Board of Directors from:
(i) considering, negotiating or providing information in
connection with, or otherwise (except as provided for
in (iii) below) responding to, an unsolicited bona
fide written Acquisition Proposal in respect of
which:
(A) the funds or other consideration provided
for in the Acquisition Proposal are
demonstrably available and the Acquisition
Proposal is not subject to any due diligence
condition other than confirmatory due
diligence;
(B) the Board of Directors has determined in
good faith (after receiving the advice of
its financial advisors that is reflected in
the minutes of the Board of Directors) to be
a commercially feasible transaction that
could be carried out within a time frame
that is reasonable in the circumstances and
would, if consummated in accordance with its
terms, result in a transaction demonstrably
superior to the Arrangement from a financial
point of view to the Shareholders; and
(C) after consultation with its financial
advisors, and after receiving advice of
outside counsel that is reflected in the
minutes of the Board of Directors, the Board
of Directors concludes in good faith such
action is necessary for the Board of
Directors to discharge properly its
fiduciary duties under applicable law;
(any such Acquisition Proposal that meets such
requirements being referred to herein as a "SUPERIOR
PROPOSAL"), provided that the Corporation is in
compliance with Sections 3.2(c) and (d) in respect of
the Acquisition Proposal;
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(ii) complying with Securities Laws relating to the
provision of directors' circulars and making
appropriate disclosure with respect thereto to
Shareholders; and
(iii) accepting, recommending, approving or implementing
any Superior Proposal if the Corporation has complied
with Sections 3.2(c) and (d) in respect of the
Superior Proposal and prior to such acceptance,
recommendation, approval or implementation:
(A) after consultation with its financial
advisors, and after receiving advice of
outside counsel that is reflected in the
minutes of the Board of Directors, the Board
of Directors concludes in good faith such
action is necessary for the Board of
Directors to discharge properly its
fiduciary duties under applicable law; and
(B) in arriving at such conclusion, the Board of
Directors gives consideration to any
amendment proposed by Acquiror in writing in
the three Business Day period referred to in
Section 3.2(d); and
(C) the Corporation concurrently pays the fee
provided in Section 4.1 to Acquiror.
(b) The Corporation shall, and shall direct and use reasonable
efforts to cause its officers, directors, employees,
representatives and agents to, immediately cease and cause to
be terminated any existing discussions or negotiations with
any parties (other than Acquiror or an affiliate of Acquiror)
with respect to any potential Acquisition Proposal. To the
extent not already done so, the Corporation shall immediately
close any and all data rooms which may have been opened. The
Corporation agrees not to waive, in whole or in part, or
release, in whole or in part, any third party from, or consent
to any action pursuant to, any confidentiality or standstill
obligation to which the Corporation and such third party is a
party except in respect of a Superior Proposal in accordance
with Section 3.2(d). The Corporation shall immediately request
the return or destruction of all confidential non-public
information provided to any third parties who have entered
into a confidentiality agreement with the Corporation relating
to a potential Acquisition Proposal, shall use all reasonable
efforts to ensure that such requests are honoured and shall
immediately advise Acquiror orally and in writing of any
responses or action (actual or threatened) by any recipient of
such request which could hinder, prevent, delay or otherwise
adversely affect the completion of the Arrangement.
(c) The Corporation shall immediately notify Acquiror of any
Acquisition Proposal (including, without limitation any
amended, supplemented, replaced or renewed Acquisition
Proposal previously made) or any request for non-public
information relating to the Corporation or any of its
Subsidiaries or for access to the properties, books or records
of the Corporation or any Subsidiary by any Person or other
entity or group that informs the Corporation or such
Subsidiary that it is
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considering making, or has made, an Acquisition Proposal. Such
notice to Acquiror shall be made, from time to time, orally
and in writing, and shall indicate such details of the
proposal, inquiry or contact known to such person as Acquiror
may reasonably request including, without limitation, the
identity of the Person or other entity or group making such
proposal, inquiry or contact and shall include a copy of any
written form of Acquisition Proposal (all of which information
shall be subject to the provisions of the Confidentiality
Agreement as if it were Confidential Information as referred
to in that agreement).
(d) If the Board of Directors determines that an Acquisition
Proposal constitutes a Superior Proposal pursuant to Section
3.2(a), the Corporation shall give immediate notice of such
determination to the Acquiror (together with a copy of any
written advice of outside counsel that is reflected in the
minutes of the Board of Directors, referred to in Section
3.2(a)) and shall give Acquiror not less than three Business
Days advance notice of any action to be taken by the Board of
Directors to withdraw, modify or change any recommendation
regarding the Arrangement or to enter into any agreement to
implement the Superior Proposal, and provide to Acquiror the
right, during such three Business Days, to advise the Board of
Directors that Acquiror will, within such period, announce its
intention to, and, as soon as practicable in the circumstances
and, in any event, within three Business Days of such
announcement, amend the terms of the Arrangement to provide
that the holders of Shares shall, pursuant to the Arrangement
as amended, receive a value per Share equal to or greater than
the value per Share provided in the Superior Proposal. If
Acquiror so advises the Board of Directors and so amends the
Arrangement, the Board of Directors shall not withdraw, modify
or change any recommendation with respect to the Arrangement,
as so amended, and neither the Corporation nor the Board of
Directors shall take any action to accept, recommend, approve
or implement the Superior Proposal, including, without
limitation, any release of the party making the Superior
Proposal from any standstill or confidentiality obligation,
any further consideration or negotiation of the Superior
Proposal or entry into of any agreement regarding the Superior
Proposal and the Corporation agrees to amend this Agreement to
provide for the Arrangement as so amended.
(e) If the Board of Directors receives a request for non-public
information from a party who has made or is considering making
an unsolicited bona fide Acquisition Proposal and the Board of
Directors determines that such Acquisition Proposal
constitutes a Superior Proposal pursuant to Section 3.2(a),
then, and only in such case, the Corporation may, subject to
the execution of a confidentiality agreement substantially
similar to the Confidentiality Agreement, provide such party
with access to information regarding the Corporation provided
that the Corporation complies with its obligations pursuant to
Section 3.2(c), sends a copy of any such confidentiality
agreement to Acquiror immediately upon its execution and
provides copies to Acquiror of any information provided to
such party (that has not been previously provided to Acquiror)
concurrently with its provision to such party.
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(f) The Corporation shall ensure that the officers, directors and
employees of the Corporation and its Subsidiaries and any
investment bankers or other advisors or representatives
retained by the Corporation are aware of the provisions of
this Section, and the Corporation shall be responsible for any
breach of this Section 3.2 by such investment bankers,
advisors or other representatives.
3.3 NOTICE OF MATERIAL CHANGE
(a) From the date hereof until the earlier of the Effective Time
and the date this Agreement is terminated pursuant to its
terms, the Corporation shall promptly notify Acquiror in
writing of:
(i) any Material Adverse Change (as defined but without
regard to the dollar amount proviso in such
definition) with respect to the Corporation;
(ii) any change in information relating to any
representation or warranty of the Corporation set
forth in this Agreement which is or may be of such a
nature as to render any such representation or
warranty misleading or untrue in a material respect;
(iii) any material fact that arises and which would have
been required to be stated herein or disclosed to
Acquiror had such fact arisen on or prior to the date
of this Agreement;
(iv) any claim, action, proceeding or investigation
pending or, to the knowledge of the Corporation,
threatened referred to in Section 7.1(n) or any basis
for any such claim, action, proceeding or
investigation; and
(v) any claim under policies of insurance referred to in
Section 7.1(r).
The Corporation shall in good faith discuss with Acquiror any
change in circumstances (actual, anticipated, contemplated or,
to the knowledge of the Corporation, threatened), financial or
otherwise, which is of such a nature that there may be a
reasonable question as to whether notice is required to be
given pursuant to this Section.
(b) From the date hereof until the earlier of the Effective Time
and the date this Agreement is terminated pursuant to its
terms, Acquiror shall promptly notify the Corporation in
writing of any change in information relating to any
representation or warranty of Acquiror set forth in this
Agreement which is or may be of such a nature as to render any
such representation or warranty misleading or untrue in a
material respect. Acquiror shall in good faith discuss with
the Corporation any change in circumstances (actual,
anticipated, contemplated or, to the knowledge of Acquiror,
threatened), financial or otherwise, which is of such a nature
that there may be a reasonable question as to whether notice
is required to be given pursuant to this Section.
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3.4 ACCESS TO INFORMATION.
Subject to the Confidentiality Agreement, upon reasonable notice, the
Corporation shall, and shall cause each of its Subsidiaries to, afford
Acquiror's officers, employees, counsel, accountants and other authorized
representatives and advisors ("REPRESENTATIVES") reasonable access, during
normal business hours from the date hereof and until the earlier of the
Effective Time and the date this Agreement is terminated pursuant to its terms,
to its facilities (including the ability to conduct reasonable environmental
tests in respect of any of the properties of the Corporation or its
Subsidiaries, at Acquiror's cost) properties, books, contracts and records as
well as to its management personnel, and, during such period, the Corporation
shall, and shall cause such of its Subsidiaries to, furnish promptly to Acquiror
all information concerning its business, properties and personnel as Acquiror
may reasonably request, provided that the Acquiror shall make reasonable efforts
to minimize the number of Representatives attending at the Corporation's offices
and facilities and to work cooperatively with the Corporation to minimize
disruptions in the business of the Corporation. All such access and all requests
for information shall be coordinated through the Vice-President, Finance of the
Corporation.
3.5 PUBLIC FILINGS
The Corporation shall deliver to Acquiror as soon as they become
available true and complete copies of any report or statement filed by it with
Securities Authorities or provided to its Shareholders subsequent to the date of
this Agreement. As of their respective dates, such reports and statements
(excluding any information therein provided by Acquiror, as to which the
Corporation makes no representation) will 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 therein, in light of the circumstances under
which they are made, not misleading and will comply in all material respects
with the requirements of applicable law and stock exchange rules. The
consolidated financial statements of the Corporation issued by the Corporation
or to be included in such reports and statements (excluding any information
therein provided by Acquiror, as to which the Corporation makes no
representation) will be prepared in accordance with generally accepted
accounting principles applicable in Canada (except as otherwise indicated in
such financial statements and the notes thereto or, in the case of audited
statements, in the related report of the auditor), and will present fairly the
consolidated financial position, results of operations and changes in financial
position of the Corporation as of the dates thereof and for the periods
indicated therein (subject, in the case of any unaudited interim financial
statements, to normal year-end audit adjustments).
ARTICLE 4
FEES AND OTHER ARRANGEMENTS
4.1 FEES.
Provided Acquiror has not breached in any material respect its
representations, warranties or covenants in this Agreement, if at any time after
the execution of this Agreement:
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(a) the Board of Directors has withdrawn, modified or changed,
prior to the Effective Date, any of its recommendations or
determinations referred to in Section 2.6 in a manner adverse
to Acquiror or shall have resolved to do so;
(b) the Board of Directors shall have failed to reaffirm its
recommendation of the Arrangement by press statement within
three Business Days after the expiry of the period set forth
in Section 3.2(d) for Acquiror to advise whether it will amend
the terms of the Arrangement, in the case of a Superior
Proposal, and three Business Days after the public
announcement or commencement of any other Acquisition
Proposal;
(c) the Board of Directors recommends that any of its Shareholders
deposit their Shares under, vote in favour of, or otherwise
accept, an Acquisition Proposal;
(d) the Corporation enters into any agreement, commitment or
understanding with any Person or other entity or group with
respect to an Acquisition Proposal prior to the Closing,
excluding a confidentiality agreement entered into in
compliance with Section 3.2(e);
(e) any Acquisition Proposal is publicly announced or made to the
Shareholders or to the Corporation; on the date of the
Shareholder Meeting any such Acquisition Proposal has either
been accepted or has not expired or been withdrawn; the
Shareholders do not approve the Arrangement at the Shareholder
Meeting; this Agreement is terminated pursuant to Section
10.1(b) or (d); and within 24 months of such termination an
Acquisition Proposal is consummated; or
(f) at any time prior to the Effective Time, the Corporation has
breached any of its representations, warranties, agreements or
obligations herein which breach would result in the failure to
satisfy one or more conditions set forth in Section 9.2(a) or
(b) and such breach is: (i) in relation to Section 3.2; (ii)
an intentional breach by the Corporation; (iii) not curable;
or (iv) curable, but is not cured within 5 days after notice
thereof has been received by the Corporation;
(each of the above being a "FEE EVENT"), then the Corporation shall pay to
Acquiror $1.75 million in immediately available funds to an account designated
by Acquiror within one Business Day and interest thereon at a rate of 8% per
annum, if payment is not made when due after the first to occur of the events
described above, provided that the Corporation shall only be obligated to make
one payment pursuant to this Section 4.1.
Any payment pursuant to this Section shall be without prejudice to the
rights or remedies available to Acquiror upon the breach of any provision of
this Agreement.
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ARTICLE 5
COVENANTS OF ACQUIROR
5.1 OFFICERS' AND DIRECTORS' INSURANCE
Acquiror agrees that for the entire period from the Effective Time
until six years after the Effective Time, Acquiror will cause the Corporation or
any successor to the Corporation to maintain the Corporation's current
directors' and officers' insurance policy or an equivalent policy, subject in
either case to terms and conditions no less advantageous to the directors and
officers of the Corporation than those contained in the policy in effect on the
date hereof, providing coverage on a "trailing" or "run-off" basis for all
present and former directors and officers of the Corporation, covering claims
made prior to or within six years after the Effective Time.
5.2 INDEMNITIES
Acquiror agrees that, if the Arrangement is completed, it shall cause
each of the Corporation and its Subsidiaries to fulfil their obligations
pursuant to indemnities provided or available to present officers and directors
of the Corporation and its Subsidiaries pursuant to the provisions of the
articles, bylaws or similar constating documents of the Corporation and its
Subsidiaries, applicable corporate legislation and the written indemnity
agreements between the Corporation or its Subsidiaries and its present directors
and officers, copies of which are attached to the Disclosure Letter.
5.3 EMPLOYMENT AGREEMENTS
Acquiror covenants and agrees, and after the Effective Time Acquiror
will cause the Corporation and any successor to the Corporation, to honour and
comply with the terms of those existing employment agreements, termination,
severance and retention plans or policies of the Corporation which the
Corporation has disclosed to Acquiror in the Disclosure Letter including,
without limitation, the Employee Obligations.
5.4 THIRD PARTY BENEFICIARIES
The provisions of Sections 5.1, 5.2 and 5.3 are (i) intended for the
benefit of all present and former directors, officers and employees of the
Corporation and its Subsidiaries, as and to the extent applicable in accordance
with their terms, and shall be enforceable by each of such persons and each such
person's heirs, executors, administrators and other legal representatives
(collectively, the "THIRD PARTY BENEFICIARIES") and the Corporation shall hold
the rights and benefits of Sections 5.1, 5.2 and 5.3 in trust for and on behalf
of the Third Party Beneficiaries and the Corporation hereby accepts such trust
and agrees to hold the benefit of and enforce performance of such covenants on
behalf of the Third Party Beneficiaries, and (ii) are in addition to, and not in
substitution for, any other rights that the Third Party Beneficiaries may have
by contract or otherwise.
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5.5 AVAILABILITY OF FUNDS
At all times from the date of this Agreement to the Effective Time,
Acquiror will not take any action which would or could result in the
representation and warranty set out in Section 8.1(j) being untrue or inaccurate
in any material respect.
5.6 AVAILABILITY OF PERSONNEL
Acquiror agrees to make appropriate personnel available to the
Corporation on a timely basis for consultation, meetings or discussions with the
Corporation as contemplated by the provisions of this Agreement including,
without limitation, Section 3.1(e)(iii). Acquiror agrees to designate in writing
to the Corporation those persons upon whom the Corporation may rely in respect
of any consent, approval or authorization required of Acquiror pursuant to this
Agreement.
ARTICLE 6
MUTUAL COVENANTS
6.1 CONSULTATION
Acquiror and the Corporation agree to consult with each other in
issuing any press releases or otherwise making public statements with respect to
the Arrangement and in making any filings with any federal, provincial or state
governmental or regulatory agency or with any securities exchange with respect
thereto. Each party shall use all commercially reasonable efforts to enable the
other party to review and comment on all such press releases prior to release
thereof.
6.2 OTHER FILINGS
Acquiror and the Corporation shall, as promptly as practicable
hereafter, prepare and file any filings required under the Competition Act
(Canada), any Securities Laws, the rules of the Exchange and the American Stock
Exchange, the United States Securities Exchange Act of 1934, as amended, state
securities or "blue sky" laws of the states of the United States, as amended, or
any other applicable law or rule of applicable stock exchange relating to the
transactions contemplated in this Agreement.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
7.1 REPRESENTATIONS
The Corporation hereby represents and warrants, except as otherwise set
forth in the Disclosure Letter, to Acquiror (and acknowledges that Acquiror is
relying upon such representations and warranties in connection with entering
into this Agreement):
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(a) Organization
The Corporation and each of its Subsidiaries has been duly
incorporated or formed under applicable law, is validly
existing and has full corporate or legal power and authority
to own its properties and conduct its business as presently
owned and conducted. The Corporation and each of its
Subsidiaries is duly registered to do business and is in good
standing in each jurisdiction in which the character of its
properties, owned or leased, or the nature of its activities
makes such registration necessary, except where the failure to
be so registered or in good standing would not have a Material
Adverse Effect in respect of the Corporation. All of the
outstanding shares of capital stock and other ownership
interests of the Subsidiaries are validly issued, fully paid
and non-assessable and all such shares and other ownership
interests owned directly or indirectly by the Corporation are,
except in connection with the Corporation's existing banking
arrangements, owned free and clear of all material liens,
claims or encumbrances, and there are no outstanding options,
rights, entitlements, understandings or commitments
(contingent or otherwise) regarding the right to acquire any
shares of capital stock or other ownership interests in any of
its Subsidiaries. The Corporation has no Subsidiaries except
those Persons listed in the Disclosure Letter.
(b) Capitalization
As of the date hereof, the authorized capital of the
Corporation consists of an unlimited number of Shares; there
are only 22,716,848 Shares issued and outstanding; up to a
maximum of 565,566 Shares may be issued pursuant to
outstanding in-the-money Options; and up to a maximum of
1,731,450 Shares may be issued pursuant to outstanding Options
that are not in-the-money; and the details of such Options are
as set forth in the Disclosure Letter. Except as described in
the immediately preceding sentence or as set forth in the
Disclosure Letter, there are no other issued or outstanding
securities of the Corporation or (other than those owned by
the Corporation and its Subsidiaries) its Subsidiaries and,
without limitation, there are no options, warrants, conversion
privileges or other rights, agreements, arrangements or
commitments obligating the Corporation or any of its
Subsidiaries to issue or sell any shares of any capital stock
of the Corporation or any of its Subsidiaries or securities or
obligations of any kind convertible into or exchangeable for
any shares of capital stock of the Corporation or any of its
Subsidiaries, nor, is there outstanding any stock appreciation
rights, phantom equity or similar rights, agreements,
arrangements or commitments based upon the book value, income
or any other attribute of the Corporation or any of its
Subsidiaries.
(c) Authority
The Corporation has the requisite corporate power and
authority to enter into this Agreement and to perform its
obligations hereunder and to complete the transactions
contemplated hereby. The execution and delivery of this
Agreement by the Corporation and the consummation by the
Corporation of the transactions
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contemplated by this Agreement have been duly authorized by
the Board of Directors and no other corporate proceedings on
the part of the Corporation are necessary to authorize this
Agreement or the transactions contemplated hereby other than
the approval of the Shareholders and Optionholders and the
approval of the Court as provided in this Agreement. This
Agreement has been duly executed and delivered by the
Corporation and constitutes a valid and binding obligation of
the Corporation, enforceable against the Corporation in
accordance with its terms subject to bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and other laws
relating to or affecting creditors' rights generally, to
general principles of equity and the qualifications that the
consummation of the Arrangement is subject to approval of
Shareholders and Optionholders and the Court as provided in
this Agreement. Except as disclosed in the Disclosure Letter,
the execution and delivery by the Corporation of this
Agreement and performance by it of its obligations hereunder
and the completion of the Arrangement and the transactions
contemplated thereby, will not:
(i) result in a violation or breach of, require any
consent to be obtained under or give rise to any
termination rights under any provision of:
(A) its or any of its Subsidiaries' certificate
of incorporation, articles, by-laws or other
charter documents, including any unanimous
shareholder agreement or any other agreement
or understanding with any party holding an
ownership interest in any Subsidiary;
(B) any law, regulation, order, judgment or
decree; or
(C) any Material Contract;
(ii) give rise to any right of termination or acceleration
of indebtedness, or cause any indebtedness to come
due before its stated maturity or cause any available
credit to cease to be available;
(iii) result in the imposition of any Encumbrance upon any
of its assets or the assets of any Subsidiary, or
restrict, hinder, impair or limit the ability of the
Corporation or any Subsidiary to carry on the
business of the Corporation or any Subsidiary as and
where it is now being carried on or as and where it
may be carried on in the future; or
(iv) result (alone or together with other adverse changes)
in a Material Adverse Change.
(d) Impediments
Other than in connection with or in compliance with the
provisions of Securities Laws and the rules of the Exchange
and the receipt of the applicable approvals under the
Competition Act, (i) there is no legal restrictions to the
consummation by the Corporation of the transactions
contemplated by this Agreement or the performance by the
Corporation of its obligations hereunder and (ii) no filing or
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registration by the Corporation with, or authorization,
consent or approval of, any domestic or foreign public body or
authority is necessary in connection with the consummation of
the Arrangement, except for such filings or registrations
which, if not made, or such authorizations, consents or
approvals, which, if not received, would not have a Material
Adverse Effect in respect of the Corporation.
(e) Public Record
As of their respective dates, the documents and materials
comprising the Public Record (including all exhibits and
schedules thereto and documents incorporated by reference
therein) did 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 therein, in light
of the circumstances under which they were made, not
misleading, and complied in all material respects with all
applicable legal and stock exchange requirements.
(f) Books and Records
All financial transactions of the Corporation and its
Subsidiaries have been recorded in the financial books and
records of the Corporation and each Subsidiary, as applicable,
in accordance with good business practice, and such financial
books and records accurately reflect the basis for the
financial condition and the revenues, expenses and results of
operations of the Corporation and its Subsidiaries shown in
the Financial Statements. The Corporation and its Subsidiaries
have not entered into and are not parties to any material
financial transactions which are not reflected in the
Financial Statements. No information, records or systems
pertaining to the operation or administration of the business
of the Corporation and its Subsidiaries are in the possession
of, recorded, stored, maintained by or otherwise dependent
upon any Person other than the Corporation and its
Subsidiaries, other than information relating to payroll
services which are handled by a contractor and corporate
minute books held by outside counsel.
(g) Absence of Changes
Since January 1, 2002 and except as has been publicly
disclosed in any document filed with the Alberta Securities
Commission: (i) the Corporation, the Subsidiaries and the
Predecessor Corporations have conducted their respective
businesses only in the ordinary course, (ii) no liability or
obligation of any nature (whether absolute, accrued,
contingent or otherwise) material to the Corporation (on a
consolidated basis) has been incurred, and (iii) there has not
been any (alone or together with other adverse changes)
Material Adverse Change.
(h) Employment Agreements and Benefit Plans
Except as set forth in the Disclosure Letter, neither the
Corporation nor any Subsidiary is a party to any written or
oral policy, agreement, obligation or understanding providing
for severance or termination payments to, or any
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employment agreement or, without limitation, any Employee
Obligation, with, any Person; all benefit plans covering
active, former or retired employees, officers or Directors of
the Corporation or any of its Subsidiaries are listed in the
Disclosure Letter; the Corporation has made available to
Acquiror true and complete copies of all of the respective
terms thereof and: each such plan has been maintained and
administered in material compliance with its terms and is, to
the extent required by applicable law or contract, fully
funded without any deficit or unfunded actuarial liability or
adequate provision therefor having been made; all such plans
are in compliance with applicable laws, rules, regulations and
policies (including those as to registration or other
qualification); to the knowledge of the Corporation there are
no pending, anticipated or threatened claims against or
involving any of the plans; and all contributions, reserves or
premium payments required or provided for have been made.
(i) Disclosure
There is no information known to the officers of the
Corporation regarding any event, circumstance or action taken
or failed to be taken which may reasonably be expected to
result in (alone or together with other adverse changes) a
Material Adverse Change.
(j) Material Contracts
The Corporation has provided Acquiror with access to true and
complete copies of all Material Contracts and all Material
Contracts are listed in the Disclosure Letter. Except as
disclosed in the Disclosure Letter, such agreements do not
contain any "change of control" provisions which would be
triggered or affected by the Arrangement. Each of the
Corporation and its Subsidiaries has performed in all material
respects the obligations required to be performed by it and is
entitled to all benefits under the Material Contracts. None of
the Corporation or its Subsidiaries has violated or breached,
in any material respect, any of the terms or conditions of the
Material Contracts and there exists no default or event of
default or event, occurrence, condition or act which, with the
giving of notice, the lapse of time or the happening of any
other event or condition, would become a default or event of
default by the Corporation or any of its Subsidiaries under
any of the Material Contracts. Except as disclosed in the
Disclosure Letter, none of the Corporation or the Subsidiaries
is a party to or bound by any agreement containing any
standstill, restrictive covenant or similar provision that
would restrict or limit its right to acquire or hold any
asset, carry on any business or activity, solicit business
from any Person or in any geographical area, or otherwise to
conduct its business as it may determine.
(k) Financial Statements
The Financial Statements were prepared in accordance with
generally accepted accounting principles in Canada
consistently applied, and fairly present the consolidated
financial condition of the Corporation at the respective dates
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indicated and the results of operations of the Corporation (on
a consolidated basis) for the periods covered (subject, in the
case of unaudited interim financial statements, to normal
year-end adjustments). Except (a) as disclosed or reflected in
the Financial Statements or (b) liabilities and obligations
(i) incurred in the ordinary course of business and consistent
with past practice or (ii) pursuant to the terms of this
Agreement, neither the Corporation nor any of its Subsidiaries
has incurred any liabilities of any nature, whether accrued,
contingent or otherwise (or which would be required by
generally accepted accounting principles applicable in Canada
to be reflected on a consolidated balance sheet of the
Corporation) that have constituted or would be reasonably
likely to constitute (alone or together with other adverse
changes) a Material Adverse Change. Without limiting the
generality of the foregoing provisions of this Section and
except as set forth in the Disclosure Letter, the Corporation
has not committed to make any capital expenditures, nor have
any capital expenditures been authorized by the Corporation at
any time since December 31, 2001, except for capital
expenditures, made in the ordinary and regular course of
business consistent with past practice and not exceeding
$50,000 individually and $150,000 in the aggregate.
(l) Employee Obligations, Etc.
The Employee Obligations (all of which are listed in the
Disclosure Letter) do not exceed the amounts set forth in the
Disclosure Letter in respect of each of the persons listed
therein in respect of this subsection nor exceed in aggregate
$1,800,000.
(m) Compliance with Law
Each of the Corporation, its Subsidiaries and the Predecessor
Corporations has complied with and is in compliance with all
laws and regulations applicable to the operation of its
business, except where such non-compliance, considered
individually or in the aggregate, would not constitute (alone
or together with other adverse changes) a Material Adverse
Change or have a Material Adverse Effect in respect of the
Corporation.
(n) Litigation, etc.
Except as set forth in the Disclosure Letter, there is no
claim, action, proceeding or investigation pending or, to the
knowledge of the Corporation threatened against or relating to
the Corporation or any of its Subsidiaries or affecting any of
their properties or assets before any court or governmental or
regulatory authority or body, for an amount in excess of
$150,000, nor is the Corporation aware of any basis for any
such claim, action, proceeding or investigation. Neither the
Corporation nor any of its Subsidiaries is subject to any
outstanding order, writ, injunction or decree that has had or
is reasonably likely to have a Material Adverse Effect in
respect of the Corporation.
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(o) Real Property
Except such property as is described in the Disclosure Letter
(the "REAL PROPERTY"), the Corporation does not own or lease
and has not agreed to acquire or lease any real property or
interest in real property other than the Real Property. The
Corporation has the exclusive right to possess, use and
occupy, and as applicable, has good and marketable title in
fee simple to, all the Real Property, free and clear of all
Encumbrances, easements or other restrictions of any kind
other than as set forth in the Disclosure Letter. All
buildings, structures, improvements and appurtenances situated
on the Real Property are in good operating condition and in a
state of good maintenance and repair, except as set out in the
Disclosure Letter, are adequate and suitable for the purposes
for which they are currently being used and the Corporation
has adequate rights of ingress and egress for the operation of
its business in the ordinary course with such exceptions as
would not have a Material Adverse Effect in respect of the
Corporation. None of the buildings, structures, improvements
or appurtenances located on the Real Property (or any
equipment therein), nor the operation or maintenance thereof,
violates any restrictive covenant or any provision of any
federal, provincial or municipal law, ordinance, rule or
regulation, or encroaches on any property owned by others,
other than violations or encroachments that do not,
individually or in the aggregate, have a material adverse
effect on the current use of such property or a Material
Adverse Effect in respect of the Corporation.
(p) Environmental
(i) The operation of the business of each of the
Corporation and its Subsidiaries, the property and
assets owned or used by the Corporation and its
Subsidiaries and the use, maintenance and operation
thereof have been and are in compliance with all
Environmental Laws (except where non-compliance would
not have a Material Adverse Effect in respect of the
Corporation). Each of the Corporation and its
Subsidiaries have complied with all reporting and
monitoring requirements under all Environmental Laws
(except where non-compliance would not have a
Material Adverse Effect in respect of the
Corporation). None of the Corporation and its
Subsidiaries has received any notice of any
non-compliance with any Environmental Laws or
Environmental Permits, and none of the Corporation
and its Subsidiaries have been convicted of an
offence for non-compliance with any Environmental
Laws or Environmental Permits or been fined or
otherwise sentenced or settled such prosecution short
of conviction, (except where such non-compliance
would not have a Material Adverse Effect in respect
of the Corporation). There is no civil, criminal or
administrative action, suit, demand, claim, hearing,
notice of violation, investigation, proceeding,
notice or demand letter existing or pending, or to
the best knowledge of the Corporation, threatened,
relating to the property or assets owned or used by
the Corporation or any of its Subsidiaries, relating
in any way to the Environmental Laws.
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(ii) Each of the Corporation and its Subsidiaries has
obtained all Environmental Permits necessary to
conduct its business and to own, use and operate its
properties and assets (except where the failure to
obtain any such permit would not have a Material
Adverse Effect in respect of the Corporation), all
such Environmental Permits are in effect, no appeal
and no other action is pending to revoke any such
permit, license or authorization (except where
revocation of any such permit would not have a
Material Adverse Effect in respect of the
Corporation) and the operation of the business of
each of the Corporation and its Subsidiaries, the
property and assets owned by each the Corporation and
its Subsidiaries and the use, maintenance and
operation thereof have been and are in compliance
with all Environmental Permits (except where such
non-compliance would not have a Material Adverse
Effect in respect of the Corporation). To the extent
required by applicable Environmental Laws, each of
the Corporation and its Subsidiaries has filed all
applications necessary to renew or obtain any
necessary permits, licenses, or authorizations in a
timely fashion so as to allow it to continue to
operate its business in compliance with applicable
Environmental Laws, and the Corporation does not
expect such new or renewed licenses, permits or other
authorizations to include any terms or conditions
that will have a Material Adverse Effect in respect
of the Corporation.
(iii) Each of the Corporation and its Subsidiaries has, at
all times, used, generated, treated, stored,
transported, disposed of or otherwise handled its
Hazardous Substances in compliance with all
Environmental Laws and Environmental Permits (except
where such non-compliance would not have a Material
Adverse Effect in respect of the Corporation).
(iv) None of the Corporation and its Subsidiaries is, and,
to the knowledge of the Corporation, there is no
reasonable basis upon which the Corporation or any of
its Subsidiaries could become, responsible for any
material clean-up or corrective action under any
Environmental Laws. All audits, assessments and
studies with respect to environmental matters
relating to the Corporation or any of its
Subsidiaries have been referenced in the Disclosure
Letter.
(v) There are no past or present (or, to the best of the
Corporation's knowledge, future) events, conditions,
circumstances, activities, practices, incidents,
actions or plans which may interfere with or prevent
compliance or continued compliance with the
Environmental Laws as in effect on the date hereof or
which may give rise to any common law or legal
liability under the Environmental Laws, or otherwise
form the basis of any claim, action, demand, suit,
proceeding, hearing, notice of violation, study or
investigation, based on or related to the
manufacture, generation, processing, distribution,
use, treatment, storage, disposal, transport or
handling, or the Release or threatened Release into
the indoor or outdoor environment by the Corporation
or any of its Subsidiaries of any
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Hazardous Substances (except, in any event, where it
would not have a Material Adverse Effect in respect
of the Corporation).
(vi) Prior to the Effective Time, the Corporation shall
allow the Acquiror to conduct at its expense such
audits, assessments and studies deemed necessary by
the Acquiror to satisfy itself of the status of the
environmental matters and accuracy of the
representations and warranties contained in this
Agreement.
(q) Patent, Trademark and Related Matters
All of the patents, registered trademarks and service marks,
trade names and licenses owned or used by the Corporation or
any of its Subsidiaries are in good standing, valid and
adequate to permit the Corporation and its Subsidiaries to
conduct its business as presently conducted (except, in any
event, where it would not have a Material Adverse Effect in
respect of the Corporation). To the knowledge of the
Corporation, neither the Corporation nor any of its
Subsidiaries is infringing or is alleged to be infringing on
the rights of any Person with respect to any patent,
trademark, service ▇▇▇▇, trade name, copyright (or any
application or registration in respect thereof), licence,
discovery, improvement, process, formula, know-how, data, plan
or specification where the infringement or alleged
infringement could reasonably be expected to have a Material
Adverse Effect. Without limiting the generality of the
foregoing, Data Wise Solutions Inc. (Delaware) is the owner
free and clear of any Encumbrances or other restrictions of
all intellectual property, including trademarks, trade names,
service marks, copyrights, patents and licenses, all software
(including source codes, object codes and other computer files
and objects) and firmware and all hardware designs of or
relating to the Tru Vu product line and has all rights to
license, use, modify, fix, improve, enhance and/or create
derivative works of the software and hardware of the Tru Vu
product line.
(r) Insurance
Policies of insurance in force as of the date hereof naming
the Corporation or any of its Subsidiaries as an insured
adequately cover all risks reasonably and prudently
foreseeable in the operation and conduct of the business of
the Corporation and its Subsidiaries as would be customary in
respect of the businesses carried on by the Corporation and
all such policies of insurance are as listed in the Disclosure
Letter. All such policies of insurance shall remain in force
and effect and shall not be cancelled or otherwise terminated
as a result of the transactions contemplated hereby. There are
no outstanding claims under any such policies of insurance,
for an amount in excess of $150,000, except as set forth in
the Disclosure Letter.
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(s) Tax Matters
(i) RETURNS FILED AND TAXES PAID. All Returns required to
be filed prior to the date hereof by or on behalf of
the Corporation or any Subsidiaries have been duly
filed on a timely basis and such Returns are true,
complete and correct in all material respects. All
taxes shown to be payable on the Returns or on
subsequent assessments or reassessments with respect
thereto have been paid in full or objected to on a
timely basis, and no other Taxes are payable by the
Corporation or any of its Subsidiaries with respect
to items or periods covered by such Returns.
(ii) TAX RESERVES. The Corporation has paid or provided
adequate accruals in its financial statements for
Taxes, including income taxes and related future
taxes, in conformity with generally accepted
accounting principles applicable in Canada.
(iii) RETURNS FURNISHED. For all periods ending on and
after January 1, 2000, Acquiror has been provided
access by the Corporation to true and complete copies
of all federal and provincial income tax returns for
the Corporation or any of its Subsidiaries.
(iv) TAX DEFICIENCIES; AUDITS; STATUTES OF LIMITATIONS.
Except as disclosed in the Disclosure Letter: (i) no
deficiencies exist or have been asserted with respect
to Taxes of the Corporation or any of its
Subsidiaries; (ii) neither the Corporation nor any of
its Subsidiaries is a party to any action or
proceeding for assessment or collection of Taxes, nor
has such event been asserted or threatened against
the Corporation or any of its Subsidiaries or any of
their respective assets which, if successful, would
constitute (alone or together with other adverse
changes) a Material Adverse Change; (iii) no waiver
or extension of any statute of limitations is in
effect with respect to Taxes or Returns of the
Corporation or any Subsidiary; and (iv) the Returns
of the Corporation and any Subsidiary have never been
audited by a government or taxing authority, nor is
any such audit in process, pending or threatened.
(t) Pension and Termination Benefits
The Corporation has provided adequate accruals in its
financial statements (or such amounts are fully funded) for
all pension or other employee benefit obligations of the
Corporation arising under or relating to each of the pension
or retirement income plans or other employee benefit plans or
agreements or policies maintained by or binding on the
Corporation or any of its Subsidiaries as well as for any
other payment required to be made by the Corporation in
connection with the termination of employment or retirement of
any employee of the Corporation or any of its Subsidiaries.
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(u) Reports
All forms, reports, schedules, statements and other documents
filed by the Corporation in compliance, or purported
compliance, with Securities Laws, at the time of filing, (i)
did not contain any misrepresentation and (ii) complied in all
material respects with the applicable requirements of the
Securities Laws.
(v) United States Relationships
The Corporation's shares are not traded on a United States
national securities exchange or quoted on the NASDAQ Stock
Market in the United States nor are any of its securities
registered under the United States Securities Exchange Act of
1934, as amended, or any state securities laws.
(w) Confidentiality Agreements
All agreements entered into by the Corporation with Persons
other than Acquiror regarding the confidentiality of
information provided to such Persons or reviewed by such
Persons with respect to any Acquisition Proposal are in
substantially the form of the Confidentiality Agreement. The
Corporation has not negotiated any Acquisition Proposal with
any Person who has not entered into such a confidentiality
agreement and has not waived any "standstill" provisions in
any such agreement.
(x) Corrupt Practices
There have been no actions taken by the Corporation, any of
its Subsidiaries or any of their Affiliates which are in
violation of the Foreign Corrupt Practices Act (United States)
or the Corruption of Foreign Public Officials Act (Canada).
7.2 INVESTIGATION.
Any investigation by Acquiror and its advisors shall not mitigate,
diminish or affect the representations and warranties of the Corporation
provided pursuant to this Agreement. Where the provisions of Section 7.1 refer
to disclosure in writing, such disclosure shall be made expressly in response to
the applicable provision and shall be signed by a senior officer of the
Corporation.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
8.1 REPRESENTATIONS.
Acquiror hereby represents and warrants to the Corporation (and
acknowledges that the Corporation is relying upon such representations and
warranties in connection with entering into this Agreement):
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(a) Organization
Each of Acquiror and Canco has been duly incorporated and
organized, and is validly existing, as an exempted company
under the laws of Bermuda and a corporation under the laws of
Canada respectively, and has the requisite corporate power and
authority to carry on its business as it is now being
conducted.
(b) Capitalization
As of the date hereof, the authorized share capital of
Acquiror is $425,000, which consists of 425,000,000 shares of
stock, par value U.S. $0.0001 per share, of which 400,000,000
are Acquiror Shares and 25,000,000 are shares of preferred
stock. As of July 31, 2002, there are 144,429,630 Acquiror
Shares and 1 preferred share issued and outstanding and, up to
a maximum of approximately 50,000,000 Acquiror Shares are
reserved for issuance pursuant to stock option plans or upon
exchange or conversion of outstanding Acquiror debt securities
or warrants or previously issued Exchangeable Shares. The
authorized capital of Canco is an unlimited number of common
shares and an unlimited number of Exchangeable Shares. As at
the date hereof, all of the common shares of Canco and, except
for 670,545 Exchangeable Shares, all of the Exchangeable
Shares are owned by Acquiror and its Subsidiaries. Except as
described in the immediately preceding sentences, there are no
other issued or outstanding securities of Acquiror or (other
than those owned by Acquiror) its Subsidiaries and, without
limitation, there are no options, warrants, conversion
privileges or other rights, agreements, arrangements or
commitments obligating Acquiror or any of its Subsidiaries to
issue or sell any shares of any capital stock of Acquiror or
any of its Subsidiaries or securities or obligations of any
kind convertible into or exchangeable for any shares of
capital stock of Acquiror or any of its Subsidiaries, nor, is
there outstanding any stock appreciation rights, phantom
equity or similar rights, agreements, arrangements or
commitments based upon the book value, income or any other
attribute of Acquiror or any of its Subsidiaries.
(c) Authority
Acquiror has the requisite corporate power and authority to
enter into this Agreement and to perform its obligations
hereunder and to complete the transactions contemplated
hereby. Canco has the requisite corporate power and authority
to complete the transactions contemplated in the Arrangement,
including the issue of the Exchangeable Shares pursuant to the
transactions contemplated by this Agreement. The execution and
delivery of this Agreement by the Acquiror and the
consummation by the Acquiror and Canco of the transactions
contemplated by this Agreement and the Arrangement have been
duly authorized and no other corporate proceedings on the part
of Acquiror or Canco are necessary to authorize this Agreement
or the transactions contemplated hereby and by the
Arrangement. This Agreement has been duly executed and
delivered by Acquiror and constitutes a valid and binding
obligation of Acquiror, enforceable against Acquiror in
accordance with its terms, subject to bankruptcy,
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insolvency, reorganization, fraudulent transfer, moratorium
and other laws relating to or affecting creditors' rights
generally and to general principles of equity. The execution
and delivery by Acquiror of this Agreement and performance by
it of its obligations hereunder and the completion of the
Arrangement and the transactions contemplated thereby, will
not:
(i) result in a violation or breach of, require any
consent to be obtained under or give rise to any
termination rights under any provision of:
(A) its or any of its Subsidiaries' certificate
of incorporation, articles, by-laws or other
charter documents, including any unanimous
shareholder agreement or any other agreement
or understanding with any party holding an
ownership interest in any Subsidiary;
(B) any law, regulation, order, judgment or
decree; or
(C) any material contract, agreement, license,
franchise or permit to which the Acquiror or
any Subsidiary is bound or is subject or is
the beneficiary;
(ii) give rise to any right of termination or acceleration
of indebtedness, or cause any indebtedness to come
due before its stated maturity or cause any available
credit to cease to be available;
(iii) result in the imposition of any Encumbrance, upon any
of its assets or the assets of any Subsidiary, or
restrict, hinder, impair or limit the ability of
Acquiror or any Subsidiary to carry on the business
of Acquiror or any Subsidiary as and where it is now
being carried on or as and where it is currently
intended to be carried on in the future; or
(iv) result (alone or together with other adverse changes)
in a Material Adverse Change.
(d) Impediments
Other than in connection with or in compliance with the
provisions of Securities Laws and the rules of The Toronto
Stock Exchange and the American Stock Exchange and the receipt
of the applicable approvals under the Competition Act, (i)
there are no legal restrictions to the consummation by
Acquiror and Canco of the transactions contemplated by this
Agreement or the performance by each of Acquiror and Canco of
its obligations hereunder and (ii) no filing or registration
by Acquiror or Canco with, or authorization, consent or
approval of, any domestic or foreign public body or authority
is necessary in connection with the consummation of the
Arrangement, except for such filings or registrations which,
if not made, or such authorizations, consents or approvals,
which, if not received, would not have a Material Adverse
Effect in respect of Acquiror.
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(e) Public Record
As of their respective dates, the documents and materials
comprising the public record of Acquiror (including all
exhibits and schedules thereto and documents incorporated by
reference therein) did 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 therein, in
light of the circumstances under which they were made, not
misleading, and complied in all material respects with all
applicable legal and stock exchange requirements.
(f) Books and Records
All financial transactions of Acquiror and its Subsidiaries
have been recorded in the financial books and records of
Acquiror and each Subsidiary, as applicable, in accordance
with good business practice, and such financial books and
records accurately reflect the basis for the financial
condition and the revenues, expenses and results of operations
of Acquiror and its Subsidiaries shown in the audited
financial statements of Acquiror for the year ended December
31, 2001 and the unaudited interim financial statements of
Acquiror for the periods ended March 31, 2002 and 2001
(collectively, the "ACQUIROR FINANCIAL STATEMENTS"). Acquiror
and its Subsidiaries have not entered into and are not parties
to any material financial transactions which are not reflected
in such financial statements.
(g) Absence of Changes
Since January 1, 2002 and except as has been publicly
disclosed in any document filed with the SEC: (i) Acquiror and
its Subsidiaries have conducted their respective businesses
only in the ordinary course, (ii) no extraordinary liability
or obligation of any nature (whether absolute, accrued,
contingent or otherwise) material to Acquiror (on a
consolidated basis) has been incurred, and (iii) there has not
been any (alone or together with other adverse changes)
Material Adverse Change.
(h) Disclosure
There is no information known to the officers of Acquiror
regarding any event, circumstance or action taken or failed to
be taken which may reasonably be expected to result in (alone
or together with other adverse changes) a Material Adverse
Change.
(i) Acquiror Financial Statements
The Acquiror Financial Statements were prepared in accordance
with generally accepted accounting principles in the United
States consistently applied, and fairly present the
consolidated financial condition of Acquiror at the respective
dates indicated and the results of operations of Acquiror (on
a consolidated basis) for the periods covered. Except (a) as
disclosed or reflected in the Acquiror
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Financial Statements and (b) liabilities and obligations (i)
incurred in the ordinary course of business and consistent
with past practice or (ii) pursuant to the terms of this
Agreement, neither Acquiror nor any of its Subsidiaries has
incurred any liabilities of any nature, whether accrued,
contingent or otherwise (or which would be required by
generally accepted accounting principles applicable in the
United States to be reflected on a consolidated balance sheet
of Acquiror) that have constituted or would be reasonably
likely constitute (alone or together with other adverse
changes) a Material Adverse Change.
(j) Financing
Acquiror has access to cash balances and available credit
facilities sufficient to fund all amounts that may be required
by it and Canco in connection with and pursuant to the
Arrangement.
(k) Compliance with Law
Each of Acquiror and its Subsidiaries has complied with and is
in compliance with all laws and regulations applicable to the
operation of its business, except where such non-compliance,
considered individually or in the aggregate, would not
constitute (alone or together with other adverse changes) a
Material Adverse Change and would not materially affect the
consummation of the transactions contemplated hereby or the
ability of Acquiror to perform its obligations hereunder.
(l) Information Supplied
None of the information supplied or to be supplied by Acquiror
for inclusion or incorporation by reference in the Proxy
Circular will, at the time the Proxy Circular is mailed to the
Shareholders and at the time of the Shareholder Meeting, as
may be adjourned from time to time, contain any untrue
statement which, at the time and in light of the circumstances
under which it is made, is false or misleading with respect to
any material fact or omit to state any material fact required
to be stated therein or necessary in order to make the
statements therein not false or misleading or necessary to
correct any statement in any earlier communication with
respect to the solicitation of a proxy for the same meeting or
subject matter which has become false or misleading. None of
the information supplied or to be supplied by Acquiror for
inclusion or incorporation by reference in the S-3
Registration Statement will at the time such registration
statement is declared or becomes effective contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make
the statements made therein, in light of the circumstances
under which they were made, not misleading.
(m) Support Agreement and Voting and Exchange Trust Agreement
The Support Agreement and the Voting and Exchange Trust
Agreement are in full force and effect unamended and are valid
and binding obligations of Acquiror,
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▇▇▇▇▇▇ Industries, Inc. and Canco. Each of Acquiror, ▇▇▇▇▇▇
Industries, Inc. and Canco has performed in all material
respects the obligations required to be performed by it under
the Support Agreement and the Voting and Exchange Trust
Agreement and is entitled to all benefits thereunder. None of
Acquiror, ▇▇▇▇▇▇ Industries, Inc. or Canco has violated or
breached, in any material respect, any of the terms or
conditions of the Support Agreement or the Voting and Exchange
Trust Agreement and there exists no default or event of
default or event, occurrence, condition or act which, with the
giving of notice, the lapse of time or the happening of any
other event or condition, would become a default or event of
default by any of Acquiror, ▇▇▇▇▇▇ Industries, Inc. or Canco
under the Support Agreement and Voting and Exchange Trust
Agreement.
8.2 INVESTIGATION
Any investigation by the Corporation and its advisors shall not
mitigate, diminish or affect the representations and warranties of Acquiror
provided pursuant to this Agreement. Where the provisions of Section 8.1 refer
to disclosure in writing, such disclosure shall be made expressly in response to
the applicable provision and shall be signed by a senior officer of Acquiror.
ARTICLE 9
CONDITIONS
9.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY
The obligations of the parties hereto to consummate and effect the
transactions contemplated hereunder shall be subject to the satisfaction or
waiver by both parties on or before the Effective Date of the following
conditions:
(a) the Arrangement and the other transactions contemplated hereby
shall have been approved and adopted by the Shareholders and
Optionholders, voting as a single class, in accordance with
applicable law (including the Interim Order) and the
Corporation's articles and bylaws;
(b) the Court shall have issued the Interim Order and Final Order
approving the Arrangement each in form and substance
reasonably satisfactory to Acquiror and the Corporation (such
approvals not to be unreasonably withheld or delayed by
Acquiror or the Corporation) reflecting the terms hereof and
such orders shall not have been set aside or modified in a
manner unacceptable to either thereof, acting reasonably, on
appeal or otherwise;
(c) the S-3 Registration Statement shall have been declared or
become effective under the U.S. Securities Act on or before
the Effective Date, and, such registration statement, at its
effective date and on the Closing Date shall not be the
subject of any SEC stop-order or SEC proceedings seeking a
stop-order, and the Arrangement shall, on the Closing Date,
not be subject to any similar proceedings commenced or
threatened by the Securities Authorities;
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(d) the Acquiror Shares to be issued from time to time after the
Effective Time upon exchange of the Exchangeable Shares issued
pursuant to the Arrangement shall have been approved for
listing on the American Stock Exchange;
(e) all Regulatory Approvals shall have been obtained on
reasonably satisfactory terms and conditions and shall be in
full force and effect and all applicable statutory or
regulatory waiting periods shall have expired or been
terminated and no objection or opposition shall have been
filed, initiated or made during any applicable statutory or
regulatory waiting period which would adversely affect
Acquiror's ability to consummate the Arrangement or the
transactions contemplated hereby or which is or would be
materially adverse to the business of the Corporation and its
Subsidiaries considered on a consolidated basis or to the
value of the Shares to Acquiror;
(f) there shall not exist any prohibition at law against the
consummation of the Arrangement or the transactions
contemplated hereby; and
(g) (i) the Commissioner of Competition (the "COMMISSIONER")
appointed under the Competition Act shall have issued an
advance ruling certificate under Section 102 of the
Competition Act in respect of the acquisition of the Shares by
Acquiror under the Arrangement (the "TRANSACTION"); or (ii)
the applicable waiting period under Section 123 of the
Competition Act shall have expired or the requirements of Part
IX of the Competition Act shall have been waived and the
Commissioner shall have issued a written opinion, in terms
satisfactory to the Acquiror in its sole discretion, to the
effect that he is satisfied that there are no grounds upon
which to seek an order from the Competition Tribunal under
Section 92 of the Competition Act in respect of the
Transaction.
9.2 ACQUIROR CONDITIONS
The obligations of Acquiror to consummate and effect the transactions
contemplated hereunder shall be subject to the following conditions:
(a) the Corporation shall have performed or complied with, in all
material respects, each of its obligations, covenants and
agreements hereunder to be performed and complied with by it
on or before the Effective Time;
(b) each of the representations and warranties of the Corporation
in this Agreement (which for purposes of this clause (b) shall
be read as though none of them contained any material adverse
effect or other materiality qualification), shall be true and
correct in all respects on the date of this Agreement and as
of the Effective Date as if made on and as of such date
(except for such representations and warranties made as of a
specified date, which shall be true and correct as of such
specified date) except where the failure of such
representations and warranties in the aggregate to be true and
correct in all respects is not and would not be reasonably
expected to result in a Material Adverse Effect;
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(c) no act, action, suit or proceeding shall have been taken
before or by any Canadian or United States federal,
provincial, state or foreign court or other tribunal or
governmental agency or other regulatory or administrative
agency or commission or by any elected or appointed public
official or other Person in Canada, the United States or
elsewhere, whether or not having the force of law, and no law,
regulation or policy have been proposed, enacted, promulgated
or applied, whether or not having the force of law, which
could reasonably be expected to have the effect of:
(i) making illegal, or otherwise directly or indirectly
restraining or prohibiting the Arrangement, the
acceptance for payment of, payment for, or ownership,
directly or indirectly, of some or all of the Shares
by Acquiror, or the consummation of any of the
transactions contemplated by the Arrangement;
(ii) prohibiting or materially limiting the ownership or
operation by the Corporation or any of its
Subsidiaries, or by Acquiror, directly or indirectly,
of all or any material portion of the business or
assets of the Corporation, on a consolidated basis,
or Acquiror, directly or indirectly, or compelling
Acquiror, directly or indirectly, to dispose of or
hold separate all or any material portion of the
business or assets of the Corporation, on a
consolidated basis, or Acquiror, directly or
indirectly, as a result of the transactions
contemplated by the Arrangement;
(iii) imposing or confirming limitations on the ability of
Acquiror, directly or indirectly, effectively to
acquire or hold or to exercise full rights of
ownership of the Shares, including without limitation
the right to vote any Shares acquired or owned by
Acquiror, directly or indirectly, on all matters
properly presented to the Shareholders of the
Corporation, including without limitation the right
to vote any shares of capital stock of any Subsidiary
(other than immaterial Subsidiaries) directly or
indirectly owned by the Corporation materially
adversely affecting the business, financial condition
or results of operations of the Corporation and its
Subsidiaries taken as a whole or the value of the
Shares to Acquiror; or
(iv) requiring divestiture by Acquiror, directly or
indirectly, of any Shares or any Subsidiary;
(d) Acquiror shall not have received on or prior to the Effective
Time from the Corporation notices by the holders of more than
5% of the issued and outstanding securities entitled to vote
at the Shareholder Meeting of their intention to exercise
their dissent rights, as granted in the Interim Order, under
section 193 of the Act;
(e) holders of not less than 4,395,000 Shares and Options to
purchase not less than 400,000 Shares shall have entered into,
and continue to be bound by and not to have breached, lock-up
agreements in the form attached as Schedule C hereto;
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(f) Acquiror shall be satisfied, acting reasonably, that, after
giving effect to the Arrangement and other than as set forth
in the Disclosure Letter, none of Acquiror or its then
Subsidiaries will be subject to any limitations, either: (A)
in the ownership, licensing, use, modification, fixing,
improvement, enhancement and/or creation of derivative works
of the intellectual property, including trademarks, trade
names, service marks, copyrights, patents and licenses, all
software (including source codes, object codes and other
computer files and objects) and firmware and all hardware
designs of or relating to (i) the Tru Vu product line or (ii)
any system owned or licensed by Acquiror or its current
Subsidiaries; or (B) (other than Data Wise Solutions, Inc.
(Delaware)) in the ownership, licensing, use, modification,
fixing, improvement, enhancement and/or creation of products
for drilling, workover or well servicing rigs; and
(g) all holders of options to purchase shares of Date Wise
Solutions Inc. (Delaware) shall have fully relinquished all
rights under, and released such corporation from and in
respect of, such options;
which conditions are for the exclusive benefit of Acquiror and may be waived by
Acquiror in whole or in part at any time and from time to time, before the
Effective Time.
9.3 CORPORATION CONDITIONS
The obligations of the Corporation to consummate and effect the
transactions contemplated hereunder shall be subject to the following
conditions:
(a) Acquiror shall have performed or complied with, in all
material respects, each of its obligations, covenants and
agreements hereunder to be performed and complied with by it
on or before the Effective Time;
(b) each of the representations and warranties of Acquiror in this
Agreement (which for purposes of this clause (b) shall be read
as though none of them contained any material adverse effect
or other materiality qualification), shall be true and correct
in all respects on the date of this Agreement and as of the
Effective Date as if made on and as of such date (except for
such representations and warranties made as of a specified
date, which shall be true and correct as of such specified
date) except where the failure of such representations and
warranties in the aggregate to be true and correct in all
respects is not and would not be reasonably expected to result
in a Material Adverse Effect;
(c) no act, action, suit or proceeding shall have been taken
before or by any Canadian or United States federal,
provincial, state or foreign court or other tribunal or
governmental agency or other regulatory or administrative
agency or commission or by any elected or appointed public
official or other Person in Canada, the United States or
elsewhere, whether or not having the force of law, and no law,
regulation or policy have been proposed, enacted, promulgated
or applied, whether or not having the force of law, which
could reasonably be expected to have the effect of making
illegal, or otherwise directly or indirectly restraining or
-48-
prohibiting the Arrangement, the acceptance for payment of,
payment for, or ownership, directly or indirectly, of some or
all of the Shares by Acquiror, or the consummation of any of
the transactions contemplated by the Arrangement; and
(d) the Exchangeable Shares to be issued pursuant to the
Arrangement shall be listed on the Exchange and shall be
freely tradeable,
which conditions are for the exclusive benefit of the Corporation and may be
waived by the Corporation in whole or in part at any time and from time to time,
before the Effective Time.
ARTICLE 10
TERMINATION
10.1 TERMINATION
This Agreement may be terminated at any time prior to the Effective
Time (notwithstanding any approval of the Arrangement Resolution):
(a) by mutual written consent of Acquiror and the Corporation;
(b) by either Acquiror or the Corporation if the Shareholders and
Optionholders do not approve the Arrangement Resolution at the
Shareholder Meeting;
(c) by Acquiror, if a fee as provided in Section 4.1 becomes
payable, or, by the Corporation, if a fee as provided in
Section 4.1 becomes payable, other than pursuant to Section
4.1(f), and is paid;
(d) by either the Corporation or Acquiror, if the Effective Date
does not occur on or before December 15, 2002 provided that
the failure is not due to the party seeking to terminate this
Agreement to perform the obligations required to be performed
by it under this Agreement;
(e) by Acquiror, if the Corporation has breached any of its
representations, warranties, agreements or obligations herein
which breach would result in the failure to satisfy one or
more conditions set forth in Section 9.2(a) or (b); or
(f) by the Corporation, if Acquiror has breached any of its
representations, warranties, agreements or obligations herein
which breach would result in the failure to satisfy one or
more conditions set forth in Section 9.3(a) or (b),
except that the obligations set forth in Section 4.1 (in respect of any
Fee Event occurring prior to the termination) shall survive the
termination of this Agreement.
-49-
ARTICLE 11
MISCELLANEOUS
11.1 AMENDMENT OR WAIVER
This Agreement, may be amended, modified or superseded, and any of the
terms, covenants, representations, warranties or conditions hereof may be
waived, but only by written instrument executed by Acquiror and the Corporation;
provided, however, that either Acquiror or the Corporation may in its discretion
waive a condition herein which is solely for its benefit without the consent of
the other. No waiver of any nature, in any one or more instances, shall be
deemed or construed as a further or continued waiver of any condition or any
breach of any other term, representation or warranty in this Agreement.
11.2 ENTIRE AGREEMENT
This Agreement, the Confidentiality Agreement and the other documents
referred to herein constitute the entire agreement between the parties with
respect to the subject matter hereof and supersede all prior agreements,
arrangement or understandings with respect thereto.
11.3 HEADINGS
The division of the Agreement into Articles, Sections and other
partitions and the insertion of headings are for convenience of reference only
and shall not control or affect the meaning or construction of any provisions of
this Agreement.
11.4 NOTICES
All notices or other communication which are required or permitted
hereunder shall be communicated confidentially and in writing and shall be
sufficient if delivered personally, or sent by confidential telecopier addressed
as follows:
To Acquiror:
▇▇▇▇▇▇ Industries Ltd.
c/o The Corporate Secretary Limited
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Attention: Vice-President and Corporate Secretary
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
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▇▇▇▇▇▇ Corporate Services, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
And a copy to:
Stikeman Elliott
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To the Corporation:
▇▇▇▇ Energy Technologies Inc.
▇▇▇▇▇ ▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: President and Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
11.5 COUNTERPARTS AND FACSIMILES
This Agreement may be executed in any number of counterparts and each
such counterpart shall be deemed to be an original instrument but all such
counterparts together shall constitute but one Agreement. The parties hereto
shall be entitled to rely upon delivery of an executed facsimile copy of the
Agreement, and such facsimile copy shall be legally effective to create a valid
and binding agreement between the parties hereto.
11.6 EXPENSES
Each party will pay its own expenses. The Corporation represents and
warrants that, except for fees payable to Growth Capital Partners pursuant to
the engagement letter dated July 16, 2002 and ▇▇▇▇▇▇ & Co. Limited pursuant to
the engagement letter dated July 16, 2002, a copy of each of which has been
provided to Acquiror, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission, or to the reimbursement of any
-51-
of its expenses, in connection with the Arrangement. Notwithstanding anything
provided in this Agreement, the Corporation may pay to Growth Capital Partners
and ▇▇▇▇▇▇ & Co. Limited the fees (not in excess, with all amounts previously
paid, of U.S. $600,000 plus GST where applicable) and expenses pursuant to and
in accordance with such engagement letters. The Corporation has provided to
Acquiror a correct and complete copy of all agreements between the Corporation
and its financial advisors as are in existence at the date hereof. The
Corporation covenants not to amend the terms of any such agreements relating to
the payment of fees and expenses without the prior written approval of Acquiror.
11.7 ASSIGNMENT
Acquiror may assign all or any part of its rights or obligations under
this Agreement to a direct or indirect wholly-owned Subsidiary of Acquiror or
any other party related to Acquiror, but, if such assignment takes place,
Acquiror shall continue to be liable to the Corporation for any default in
performance by the assignee. This Agreement shall not otherwise be assignable by
either party without the prior written consent of the other party.
11.8 SEVERABILITY
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated and the parties shall negotiate in good faith to modify
this Agreement to preserve each party's anticipated benefits under this
Agreement.
11.9 CHOICE OF LAW
This Agreement shall be governed by, construed and interpreted in
accordance with the laws of the Province of Alberta.
11.10 ATTORNMENT
The parties hereby irrevocably and unconditionally consent to and
submit to the courts of the Province of Alberta for any actions, suits or
proceedings arising out of or relating to this Agreement or the matters
contemplated hereby (and agree not to commence any action, suit or proceeding
relating thereto except in such courts) and further agree that service of any
process, summons, notice or document by single registered mail to the addresses
of the parties set forth in this Agreement shall be effective service of process
for any action, suit or proceeding brought against either party in such court.
The parties hereby irrevocably and unconditionally waive any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the matters contemplated hereby in the courts of the Province of Alberta and
hereby further irrevocably and unconditionally waive and agree not to plead or
claim in any such court that any such action, suit or proceeding so brought has
been brought in an inconvenient forum.
11.11 REMEDIES
The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were
-52-
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to remedy or prevent non-compliance with or
breaches of the terms of this Agreement and to enforce specifically the terms
and provisions hereof in any court of the Province of Alberta having
jurisdiction; provided that such remedies shall be in addition to, and not in
substitution for, any other remedy to which the parties may be entitled at law
or in equity.
11.12 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Corporation and Acquiror
contained in this Agreement shall not survive the completion of the Arrangement
and shall expire and be terminated at the earlier of the Effective Time and
(except in respect of a termination pursuant to Sections 10.1(e) or (f) in which
respect the covenants, representations and warranties of the Corporation or
Acquiror, respectively, shall survive the termination of this Agreement) the
date on which this Agreement is terminated in accordance with its terms.
11.13 TIME OF ESSENCE
Time shall be of the essence in this Agreement.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed on their behalf by their officers thereunto duly authorized as of the
date first written above.
▇▇▇▇▇▇ INDUSTRIES LTD.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ENERGY TECHNOLOGIES INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE A
ARRANGEMENT RESOLUTION
SPECIAL RESOLUTION OF THE SHAREHOLDERS
BE IT RESOLVED THAT:
1. The arrangement (the "ARRANGEMENT") under Section 193 of the Business
Corporations Act (Alberta) (the "ACT") involving ▇▇▇▇ Energy
Technologies Inc. (the "CORPORATION"), substantially as set out in the
plan of arrangement (the "PLAN OF ARRANGEMENT") attached as Schedule B
to the Arrangement Agreement dated August 12, 2002 between ▇▇▇▇▇▇
Industries Ltd. and the Corporation (as amended and restated from time
to time, the "ARRANGEMENT AGREEMENT") is hereby authorized, approved
and adopted.
2. The Plan of Arrangement is hereby authorized, approved and adopted.
3. Notwithstanding that this resolution has been passed (and the
Arrangement adopted) by the shareholders and optionholders of the
Corporation or that the Arrangement has been approved by the Court of
Queen's Bench of Alberta, the directors of the Corporation are hereby
authorized and empowered (i) to amend the Arrangement Agreement or the
Plan of Arrangement to the extent permitted by the Arrangement
Agreement, and (ii) not to proceed with the Arrangement without further
approval of the shareholders and optionholders of the Corporation, but
only if the Arrangement Agreement is terminated in accordance with
Section 10.1 thereof.
4. Any officer or director of the Corporation is hereby authorized and
directed for and on behalf of the Corporation to execute, under the
seal of the Corporation or otherwise, and to deliver articles of
arrangement, and such other documents as are necessary or desirable, to
the Registrar under the Act in accordance with the Arrangement
Agreement for filing.
5. Any officer or director of the Corporation is hereby authorized and
directed for and on behalf of the Corporation to execute or cause to be
executed, under the seal of the Corporation 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 in such person's opinion may be necessary or desirable to
give full effect to the foregoing resolution and the matters authorized
thereby, such determination to be conclusively evidenced by the
execution and delivery of such document, agreement or instrument or the
doing of any such act or thing.
SCHEDULE B
FORM OF PLAN OF ARRANGEMENT
UNDER SECTION 193
OF THE BUSINESS CORPORATIONS ACT (ALBERTA)
INVOLVING AND AFFECTING
▇▇▇▇ ENERGY TECHNOLOGIES INC. AND
ITS SECURITYHOLDERS
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Plan of Arrangement, unless there is something in the subject matter or
context inconsistent therewith, the following terms shall have the respective
meanings set out below (and grammatical variations of such terms shall have
corresponding meanings):
"ACQUIROR" means ▇▇▇▇▇▇ Industries Ltd., an exempted company incorporated under
the laws of Bermuda;
"ACQUIROR AVERAGE PRICE" means the weighted average trading price of Acquiror
Shares on the American Stock Exchange (as reported by the American Stock
Exchange and converted, as hereinafter provided, to Canadian dollars and
expressed to the fourth decimal place) for the Measurement Period. For these
purposes, (i) the U.S. dollar/Canadian dollar exchange rate for determining the
Acquiror Average Price shall be the average of the Canadian Dollar Exchange Rate
(expressed to the fourth decimal place) for each of the trading days in the
Measurement Period; and (ii) the "weighted average trading price" shall be
determined by dividing the aggregate sale price of all Acquiror Shares sold on
the American Stock Exchange during the Measurement Period by the total number of
Acquiror Shares sold during such period;
"ACQUIROR CONTROL TRANSACTION" has the meaning provided in the Exchangeable
Share Provisions;
"ACQUIROR SHARES" has the meaning provided in the Exchangeable Share Provisions
and any other securities into which such shares may be changed, exchanged or
converted;
"ACT" means the Business Corporations Act (Alberta), as the same has been and
may hereafter from time to time be amended;
"ANCILLARY RIGHTS" means the interest of a holder of Holdco Shares or Shares who
elects to receive Exchangeable Shares as a beneficiary of the trust created
under the Voting and Exchange Trust Agreement;
"ARRANGEMENT" means the arrangement under Section 193 of the Act on the terms
and subject to the conditions set out in this Plan of Arrangement, subject to
any amendments thereto made (i) in accordance with Section 3.2 of the
Arrangement Agreement; (ii) in accordance with Section 6.1 hereof, or (iii) at
the direction of the Court in the Final Order;
B-2
"ARRANGEMENT AGREEMENT" means the arrangement agreement by and between Acquiror
and the Corporation dated August 12, 2002, as amended and restated from time to
time, providing for, among other things, this Plan of Arrangement and the
Arrangement;
"ARRANGEMENT RESOLUTION" means the special resolution passed by the Shareholders
and Optionholders at the Shareholder Meeting, such resolution to be
substantially in the form and content of Schedule A to the Arrangement
Agreement;
"BUSINESS DAY" has the meaning provided in the Exchangeable Share Provisions;
"CALLCO" means 3064297 Nova Scotia Company, an unlimited liability company
incorporated under the laws of the Province of Nova Scotia;
"CANADIAN DOLLAR EXCHANGE RATE" means, with respect to determining the exchange
rate from U.S. dollars to Canadian dollars on a particular day, the amount
expressed in U.S. dollars as the noon buying rate (expressed to the fourth
decimal place) in New York City for cable transfers in Canadian dollars as
certified for customs purposes by the Federal Reserve Bank of New York on such
day;
"CANCO" means ▇▇▇▇▇▇ Exchangeco (Canada) Inc., a corporation incorporated under
the laws of Canada;
"CCRA" means the Canada Customs and Revenue Agency;
"CHANGE OF LAW" means any amendment to the ITA and other applicable provincial
income tax laws that permits holders of Exchangeable Shares who are resident in
Canada, hold the Exchangeable Shares as capital property and deal at arm's
length with Acquiror and the Corporation (all for the purposes of the ITA and
other applicable provincial income tax laws) to exchange their Exchangeable
Shares for Acquiror Shares on a basis that will not require such holders to
recognize any gain or loss or any actual or deemed dividend in respect of such
exchange for the purposes of the ITA or applicable provincial income tax laws;
"CHANGE OF LAW CALL DATE" has the meaning provided in Section 5.3(b);
"CHANGE OF LAW CALL PURCHASE PRICE" has the meaning provided in Section 5.3(a);
"CHANGE OF LAW CALL RIGHT" has the meaning provided in Section 5.3(a);
"CODE" means the United States Internal Revenue Code of 1986, as amended;
"CORPORATION" means ▇▇▇▇ Energy Technologies Inc., a corporation incorporated
under the laws of Alberta;
"COURT" means the Court of Queen's Bench of Alberta;
"DEPOSITARY" means the duly appointed depositary in respect of the Arrangement
at its principal transfer offices in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇;
B-3
"EFFECTIVE DATE" means the effective date of the Arrangement, being the date on
which the articles of arrangement are filed under the Act giving effect to the
Arrangement;
"EFFECTIVE TIME" means the time on the Effective Date at which the articles of
arrangement are filed under the Act;
"ELECTION DEADLINE" means 5:00 p.m. (local time) at the place of deposit on the
date that is the Business Day immediately prior to the commencement of the
Measurement Period;
"EXCHANGE RATIO" means, subject to adjustment, if any, as provided in Section
2.5, the number, calculated to four decimal places, equal to the Per Share Price
divided by the Acquiror Average Price;
"EXCHANGEABLE SHARE CONSIDERATION" has the meaning provided in the Exchangeable
Share Provisions;
"EXCHANGEABLE SHARE PRICE" has the meaning provided in the Exchangeable Share
Provisions;
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges, restrictions and
conditions attaching to the Exchangeable Shares, as set forth in the articles of
Canco;
"EXCHANGEABLE SHARES" means the exchangeable shares in the capital of Canco
governed by the Exchangeable Share Provisions;
"FINAL ORDER" means the final order of the Court approving the Arrangement, as
such order may be amended by the Court at any time and from time to time prior
to the Effective Time;
"HOLDCO" has the meaning ascribed in Section 2.3;
"HOLDCO LETTER OF TRANSMITTAL AND ELECTION FORM" means the letter of transmittal
and election form for use by holders of Holdco Shares in connection with the
Arrangement;
"HOLDCO SHAREHOLDERS" means the holders at the relevant time of Holdco Shares;
"HOLDCO SHARES" means all issued and outstanding shares of any particular
Holdco;
"INTERIM ORDER" means the interim order of the Court in relation to the
Arrangement, as such order may be amended by the Court at any time and from time
to time;
"ITA" means the Income Tax Act (Canada), as amended;
"LETTER OF TRANSMITTAL AND ELECTION FORM" means the letter of transmittal and
election form provided for use by holders of Shares (other than Holdcos) in
connection with the Arrangement;
"LIQUIDATION AMOUNT" has the meaning provided in the Exchangeable Share
Provisions;
"LIQUIDATION CALL PURCHASE PRICE" has the meaning provided in Section 5.1(a);
"LIQUIDATION CALL RIGHT" has the meaning provided in Section 5.1(a);
B-4
"LIQUIDATION DATE" has the meaning provided in the Exchangeable Share
Provisions;
"MEASUREMENT PERIOD" means the period of 3 consecutive trading days ending on
the third Business Day prior to the date of the Shareholder Meeting (including
any adjournment thereof);
"OPTIONHOLDERS" means holders of Options from time to time;
"OPTIONS" means the outstanding options to acquire Shares under the Stock Option
Plan;
"PER SHARE PRICE" means $1.85;
"PREDECESSOR CORPORATIONS" means those corporations which merged with the
Corporation pursuant to various amalgamations including, without limitation,
Adesso Corporation and 747253 Alberta Ltd.;
"REDEMPTION CALL PURCHASE PRICE" has the meaning provided in Section 5.2(a);
"REDEMPTION CALL RIGHT" has the meaning provided in Section 5.2(a);
"REDEMPTION DATE" has the meaning provided in the Exchangeable Share Provisions;
"REDEMPTION PRICE" has the meaning provided in the Exchangeable Share
Provisions;
"SHAREHOLDER MEETING" means the special meeting of the Shareholders and
Optionholders to be held to consider this Plan of Arrangement;
"SHAREHOLDERS" means holders of Shares from time to time;
"SHARES" means the common shares in the capital of the Corporation;
"STOCK OPTION PLAN" means the stock option plan of the Corporation approved by
the Shareholders of the Corporation on September 18, 1996 and amended with
approval of such Shareholders given at the 1997, 1998, 2000 and 2001 Annual and
Special Meeting of the Corporation;
"SUPPORT AGREEMENT" means the agreement so entitled among ▇▇▇▇▇▇ Industries,
Inc., Callco and Canco dated April 26, 2002, as supplemented by an
Acknowledgement of Novation between ▇▇▇▇▇▇ Industries, Inc., Callco, Canco,
Computershare Trust Company of Canada and Acquiror;
"TRANSFER AGENT" means the duly appointed transfer agent for the time being of
the Exchangeable Shares, and, if there is more than one such transfer agent,
then the principal Canadian transfer agent; and
"VOTING AND EXCHANGE TRUST AGREEMENT" means the agreement so entitled among
▇▇▇▇▇▇ Industries, Inc., Canco and Computershare Trust Company of Canada dated
April 26, 2002, as supplemented by an Acknowledgement of Novation between ▇▇▇▇▇▇
Industries, Inc., Callco, Canco, Computershare Trust Company of Canada and
Acquiror.
B-5
1.2 SECTIONS AND HEADINGS
The division of this Plan of Arrangement into sections and the insertion of
headings are for reference purposes only and shall not affect the interpretation
of this Plan of Arrangement. Unless otherwise indicated, any reference in this
Plan of Arrangement to a Section refers to the specified Section of this Plan of
Arrangement.
1.3 NUMBER, GENDER AND PERSONS
In this Plan of Arrangement, unless the context otherwise requires, words
importing the singular number include the plural and vice versa, words importing
any gender include all genders and words importing persons include individuals,
bodies corporate, partnerships, associations, trusts, unincorporated
organizations, governmental bodies and other legal or business entities of any
kind.
1.4 DATE FOR ANY ACTION
In the event that any date on or by which any action is required or permitted to
be taken hereunder is not a Business Day, such action shall be required or
permitted to be taken on or by the next succeeding day which is a Business Day.
1.5 CURRENCY
Unless otherwise expressly stated herein, all references to currency and
payments in cash or money in this Plan of Arrangement are to Canadian dollars.
1.6 STATUTORY REFERENCES
Any reference in this Plan of Arrangement to a statute includes such statute as
amended, consolidated or re-enacted from time to time, all regulations made
thereunder, all amendments to such regulations from time to time, and any
statute or regulation which supersedes such statute or regulations.
ARTICLE 2
ARRANGEMENT
2.1 BINDING EFFECT
This Plan of Arrangement will become effective at, and be binding at and after,
the Effective Time on (i) Acquiror, Canco and Callco; (ii) the Corporation;
(iii) all holders and all beneficial owners of Shares; (iv) all Holdcos and all
holders and all beneficial owners of Holdco Shares; and (v) all holders and all
beneficial owners of Options.
2.2 ARRANGEMENT
At the Effective Time, the following transactions shall occur and shall be
deemed to occur in the following order without any further act or formality:
B-6
(a) Each Holdco Share will be transferred to, and acquired by,
Canco without any act or formality on the part of the holder
of such Holdco Share or the entity which acquires such Holdco
Share, free and clear of all liens, claims and encumbrances,
in exchange for, at the holder's election (or deemed
election), (w) the Per Share Price in cash without interest;
(x) such number of fully paid and non-assessable Exchangeable
Shares (and the Ancillary Rights) as is equal to the Exchange
Ratio; or (y) such amount of cash, less than the Per Share
Price, as is specified by the holder in the holder's election
(whether as a specific dollar amount or a percentage of the
Per Share Price) (the "CASH PORTION") plus such number of
fully paid and non-assessable Exchangeable Shares (and the
Ancillary Rights) as is equal to the positive difference
between the Per Share Price and the Cash Portion, divided by
the Acquiror Average Price calculated to four decimal places,
in each case multiplied by a fraction having as its numerator
the number of Shares held by the Holdco and as its denominator
the number of issued and outstanding Holdco Shares of the
Holdco; payable, in each case, in accordance with Article 4
hereof, and the name of each such holder of Holdco Shares will
be removed from the register of holders of Holdco Shares and
added to the register of holders of the Exchangeable Shares
comprising all or part of the consideration to be received by
such holder for such transfer, and Canco will be recorded as
the registered holder of each such Holdco Share so exchanged
and will be deemed to be the legal and beneficial owner
thereof.
(b) Each Share (other than Shares owned by Holdcos in respect of
which Section 2.2(a) applies) that is not held by (i) a
Shareholder who has exercised its right to dissent in
accordance with Article 3 hereof and who is ultimately
entitled to be paid the fair value of its Shares, or (ii)
Acquiror or any affiliate (within the meaning of the Act)
thereof (which Share shall not be exchanged under the
Arrangement and shall remain outstanding as a Share held by
Acquiror or any affiliate thereof), will be transferred to,
and acquired by, Canco without any act or formality on the
part of the holder of such Share or the entity which acquires
such Share, free and clear of all liens, claims and
encumbrances, in exchange for, at the holder's election (or
deemed election), (w) the Per Share Price in cash without
interest; (x) such number of fully paid and non-assessable
Exchangeable Shares (and the Ancillary Rights) as is equal to
the Exchange Ratio; or (y) such amount of cash, less than the
Per Share Price, as is specified by the holder in the holder's
election (whether as a specific dollar amount or a percentage
of the Per Share Price) (the "CASH PORTION") plus such number
of fully paid and non-assessable Exchangeable Shares (and the
Ancillary Rights) as is equal to the positive difference
between the Per Share Price and the Cash Portion, divided by
the Acquiror Average Price calculated to four decimal places,
payable, in each case, in accordance with Article 4 hereof,
and the name of each such holder of Shares will be removed
from the register of holders of Shares and added to the
register of holders of the Exchangeable Shares comprising all
or part of the consideration to be received by such holder for
such transfer, and Canco will be recorded as the registered
holder of each such Share so exchanged and will be deemed to
be the legal and beneficial owner thereof.
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(c) Each Share (other than Shares owned by Holdcos in respect of
which Section 2.2(a) applies) in respect of which no election
has been made by the holder thereof or in respect of which an
effective election has not been made (other than Shares held
by (i) a Shareholder who has exercised its right to dissent in
accordance with Article 3 hereof and who is ultimately
entitled to be paid the fair value of its Shares, or (ii)
Acquiror or any affiliate (within the meaning of the Act)
thereof (which Share shall not be exchanged under the
Arrangement and shall remain outstanding as a Share held by
Acquiror or any affiliate thereof)) will be transferred to,
and acquired by, Canco, without any act or formality on the
part of the holder of such Share or Canco, free and clear of
all liens, claims and encumbrances, and the holder shall be
deemed to have elected to receive in exchange therefor the Per
Share Price in cash without interest, payable in accordance
with Article 4 hereof, and the name of each such holder of
Shares will be removed from the register of holders of Shares
and Canco will be recorded as the registered holder of each
such Share so exchanged and will be deemed to be the legal and
beneficial owner thereof.
(d) Each Option that has not been duly exercised or surrendered
for termination prior to the Effective Time (whether in
accordance with Section 2.12 of the Arrangement Agreement or
otherwise) shall be terminated and, in consideration for such
termination, each holder of such Option shall receive cash,
without interest, in an amount equal to the greater of: (A)
the positive difference, if any, between (i) the Per Share
Price and (ii) the exercise price per share of such Option;
and (B) $0.10, for each Share subject to issuance pursuant to
such Option.
2.3 HOLDCO ALTERNATIVE
Each Shareholder shall be entitled to transfer its Shares to a
newly-incorporated corporation (a "Holdco") and transfer the Holdco Shares to
Canco as provided in Section 2.2(a) provided that each of the following
conditions are satisfied on or prior to and as of the Effective Date:
(a) the Shareholder is a resident of Canada for the purposes of
the ITA;
(b) Holdco is incorporated no earlier than August 31, 2002, under
the Act;
(c) the Shareholder transfers its Shares to Holdco solely in
consideration for the Holdco Shares;
(d) Holdco has no indebtedness or liabilities and owns no assets
other than the Shares;
(e) the Shareholder indemnifies Acquiror, the Corporation, Canco
and Callco for any and all liabilities of Holdco (other than
tax liabilities of Holdco that arise solely as a result of the
tax status of Acquiror, Canco or Callco as a "financial
institution" for purposes of the ITA) in a form satisfactory
to Acquiror in its sole discretion, and such Shareholder
either has net assets as reflected on its audited financial
statements for its most recently ended fiscal year which are
satisfactory to Acquiror or provides Acquiror with security
satisfactory to Acquiror in respect of such shareholder's
indemnification obligations as set out above;
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(f) prior to the Effective Date, Holdco (i) declares one or more
stock dividends which (if the Holdco Shares are to be acquired
by Canco) may be in the form of preferred shares of Holdco
that are converted into common shares of Holdco prior to the
Effective Date, (ii) increases the stated capital of the
Holdco Shares; or (iii) (if the Holdco Shares are to be
acquired by Canco) declares one or more cash dividends,
provided that such cash is used to subscribe, directly or
indirectly, for shares of Holdco;
(g) on the Effective Date, Holdco has no issued shares outstanding
other than the Holdco Shares and such shares will be owned by
the Shareholder;
(h) on or prior to the Effective Date, Holdco has never entered
into any transaction (or conducted any business or operations
or engaged in any activity) other than those described herein
or such other transactions as are necessary to facilitate
those transactions described herein with Acquiror's consent,
acting reasonably;
(i) other than as provided in (f) above, Holdco will not declare
or pay any dividends or other distributions;
(j) the Shareholder shall prepare and file all income tax returns
of its Holdco in respect of the taxation year-end of such
Holdco ending immediately prior to the acquisition of such
Holdco Shares by Canco subject to Acquiror's right to approve
all such returns as to form and substance;
(k) the Shareholder provides the Corporation and Acquiror with
copies of all documents necessary to effect the transactions
contemplated in this Section 2.3 at least ten days prior to
the Effective Date which documents must be approved by both
the Corporation and Acquiror in their sole discretion; and
(l) the Shareholder and its Holdco execute a share purchase
agreement in the form required by Acquiror, acting reasonably,
providing for, among other things, the sale of the Holdco
Shares to Canco and containing the terms and conditions, among
others, set out in this Section 2.3.
2.4 ELECTIONS
(a) Each person who, at or prior to the Election Deadline, is a
holder of Shares or Holdco Shares will be entitled, with
respect to all or a portion of their shares, to make an
election at or prior to the Election Deadline to receive (i)
cash, (ii) Exchangeable Shares (and the Ancillary Rights), or
(iii) a combination thereof, in exchange for such holder's
Shares or Holdco Shares on the basis set forth herein and in
the Letter of Transmittal and Election Form or the Holdco
Letter of Transmittal and Election Form, as the case may be,
failing which election such persons shall be deemed to have
elected to receive cash.
(b) Holders of Shares and holders of Holdco Shares who are
resident in Canada for purposes of the ITA, other than any
such holders who are exempt from tax under Part I of the ITA,
and who have elected to receive Exchangeable Shares (and the
Ancillary Rights) or a combination of cash and Exchangeable
Shares (and the
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Ancillary Rights) shall be entitled to make an income tax
election pursuant to subsection 85(1) of the ITA or, if the
holder is a partnership, subsection 85(2) of the ITA (and in
each case, where applicable, the analogous provisions of
provincial income tax law) with respect to the transfer of
their Shares or Holdco Shares, as the case may be, to Canco by
providing two signed copies of the necessary prescribed
election forms to the Depositary within 90 days following the
Effective Date, duly completed with the details of the number
of Shares or Holdco Shares, as the case may be, transferred
and the applicable agreed amounts for the purposes of such
elections. Thereafter, subject to the election forms being
correct and complete and complying with the provisions of the
ITA (or any applicable provincial income tax law), the forms
will be signed by Canco and returned to such holders within 30
days after the receipt thereof by the Depositary for filing
with CCRA (or the applicable provincial taxing authority).
Canco will not be responsible for the proper completion of any
election form and, except for Canco's obligation to return
duly completed election forms which are received by the
Depositary within 90 days following the Effective Date, within
30 days after the receipt thereof by the Depositary, Canco
will not be responsible for any taxes, interest, penalties or
any other costs or damages resulting from the failure by a
holder of Shares or Holdco Shares to properly complete or file
the election forms in the form and manner and within the time
prescribed by the ITA (or any applicable provincial income tax
law). In its sole discretion, Canco may choose to sign and
return an election form received more than 90 days following
the Effective Date, but Canco will have no obligation to do
so.
2.5 ADJUSTMENTS TO EXCHANGE RATIO
The Exchange Ratio shall be proportionately and appropriately adjusted to
reflect fully the effect of (a) any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into Acquiror
Shares or Shares), reorganization, recapitalization or other like change with
respect to Acquiror Shares or Shares, and (b) any extraordinary dividend or
distribution with respect to Acquiror Shares (other than a dividend or
distribution referenced in clause (a)); provided that the foregoing adjustments
shall not be made if the record date for the stock split, reverse split, stock
dividend, reorganization, recapitalization, other like change or extraordinary
dividend or distribution referred to in clauses (a) and (b) above does not occur
after the date of the Arrangement Agreement and prior to the Effective Time. In
any case where the Exchange Ratio is adjusted in accordance with the foregoing,
a corresponding adjustment shall be made to the number of Exchangeable Shares
(and Ancillary Rights) that are acquired by holders of Shares or Holdco Shares
who have elected to receive a combination of cash and Exchangeable Shares (and
Ancillary Rights).
2.6 RESTRICTION ON REDEMPTION OF EXCHANGEABLE SHARES
Canco and its Board of Directors shall not establish a Redemption Date for any
Exchangeable Shares pursuant to subsection (a) of the definition of Redemption
Date prior to: (i) if holders of Shares and Holdco Shares elect in accordance
with Section 2.4 to receive, in aggregate, not less than 300,000 Exchangeable
Shares, January 1, 2004; or (ii) otherwise, January 1, 2003.
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ARTICLE 3
RIGHTS OF DISSENT
3.1 RIGHTS OF DISSENT
Holders of Shares or Options may exercise rights of dissent with respect to such
Shares or Options, as the case may be, pursuant to and in the manner set forth
in Section 191 of the Act as modified by the Interim Order and this Section 3.1
in connection with the Arrangement; provided that, notwithstanding subsection
191(5) of the Act, the written objection to the Arrangement Resolution referred
to in subsection 191(5) of the Act must be received by the Corporation not later
than 2:00 p.m. (Calgary time) on the Business Day preceding the Shareholder
Meeting. Holders of Shares or Options, as the case may be, who duly exercise
such rights of dissent and who:
(a) are ultimately determined to be entitled to be paid fair value
for their Shares or Options, as the case may be, shall be
deemed to have transferred such Shares or Options, as the case
may be, as of the Effective Time, without any further act or
formality and free and clear of all liens, claims and
encumbrances, to Canco, in consideration for a payment of cash
from Canco equal to such fair value; or
(b) are ultimately determined not to be entitled, for any reason,
to be paid fair value for their Shares or Options, as the case
may be, shall be deemed to have participated in the
Arrangement, as of the Effective Time, on the same basis as a
non-dissenting holder of Shares or Options, as the case may
be, who did not make an election and shall receive cash on the
same basis as holders of Shares or Options in respect of which
no election has been made,
but in no case shall Acquiror, the Corporation, Canco, Callco or any other
person be required to recognize any holder of Shares or Options who exercises
rights of dissent as a holder of Shares or Options after the Effective Time and
the names of each such holder shall be deleted from the register of holders of
Shares or Options at the Effective Time.
ARTICLE 4
CERTIFICATES AND FRACTIONAL SHARES
4.1 PAYMENT OF CASH
At or promptly after the Effective Time, Canco shall deposit with the
Depositary, for the benefit of the holders of Holdco Shares, Shares and Options
who will receive cash in connection with the Arrangement, cash in an amount
sufficient to satisfy all of the cash payment obligations to Holdco Shareholders
and Shareholders in connection with the acquisition of Holdco Shares and Shares
pursuant to the Arrangement (together with any unpaid dividends or distributions
declared on the Shares, if any, prior to the Effective Time) and to
Optionholders required pursuant to Section 2.2(d) or otherwise under this Plan
of Arrangement. Upon surrender to the Depositary for transfer to Canco of a
certificate which immediately prior to or upon the Effective Time represented
Holdco Shares or Shares in respect of which the holder is entitled to receive
cash under the Arrangement, together with (i) a duly completed Letter of
Transmittal and Election Form or Holdco Letter of Transmittal and Election Form
, (ii) such other documents and
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instruments as would have been required to effect the transfer of the Holdco
Shares or Shares formerly represented by such certificate under the Act and the
by-laws of the Corporation, and (iii) such additional documents and instruments
as the Depositary may reasonably require, the holder of such surrendered
certificate shall be entitled to receive in exchange therefor, and after the
Effective Time the Depositary shall deliver to such holder, the amount of cash
such holder is entitled to receive under the Arrangement (together with any
unpaid dividends or distributions declared on the surrendered Shares or Shares
owned by the relevant Holdco, if any, prior to the Effective Time), and any
certificate so surrendered shall forthwith be transferred to Canco. No interest
shall be paid or accrued on unpaid dividends and distributions, if any, payable
to holders of certificates that formerly represented Shares. In the event of a
transfer of ownership of such Shares or Holdco Shares that was not registered in
the securities register of the Corporation or Holdco, as the case may be, the
amount of cash payable for such Shares under the Arrangement may be delivered to
the transferee if the certificate representing such Shares or Holdco Shares is
presented to the Depositary as provided above, accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 4.1, each certificate which immediately prior to or
upon the Effective Time represented one or more outstanding Shares or Holdco
Shares that, under the Arrangement, were exchanged or were deemed to be
exchanged for cash pursuant to Section 2.2 shall be deemed at all times after
the Effective Time to represent only the right to receive upon such surrender
the cash payment contemplated by this Section 4.1.
4.2 ISSUANCE OF CERTIFICATES REPRESENTING EXCHANGEABLE SHARES
At or promptly after the Effective Time, Canco shall deposit with the
Depositary, for the benefit of the holders of Holdco Shares and Shares who will
receive Exchangeable Shares (and the Ancillary Rights) in connection with the
Arrangement, certificates representing the number of Exchangeable Shares
sufficient to satisfy all of the Exchangeable Share payment obligations to
Holdco Shareholders and Shareholders in connection with the acquisition of
Holdco Shares and Shares pursuant to the Arrangement (together with cash in an
amount equal to the sum of any unpaid dividends or distributions declared on the
surrendered Shares or Shares owned by the relevant Holdco, if any, prior to the
Effective Time, and any payments for fractional shares required by Section 4.4).
Upon surrender to the Depositary for transfer to Canco of a certificate which
immediately prior to or upon the Effective Time represented Holdco Shares or
Shares in respect of which the holder is entitled to receive Exchangeable Shares
under the Arrangement, together with (i) a duly completed Letter of Transmittal
and Election Form or Holdco Letter of Transmittal and Election Form, (ii) such
other documents and instruments as would have been required to effect the
transfer of the Holdco Shares or Shares formerly represented by such certificate
under the Act and the by-laws of the relevant Holdco or the Corporation, and
(iii) such additional documents and instruments as the Depositary may reasonably
require, the holder of such surrendered certificate shall be entitled to receive
in exchange therefor, and after the Effective Time the Depositary shall deliver
to such holder, a certificate representing that number (rounded down to the
nearest whole number) of Exchangeable Shares which such holder has the right to
receive (together with any unpaid dividends or distributions declared on the
surrendered Shares or Shares owned by the relevant Holdco prior to the Effective
Time), and any certificate so surrendered shall forthwith be transferred to
Canco. No interest shall be paid or accrued on the cash in lieu of fractional
shares, if any, or on unpaid dividends and distributions, if any, payable to
holders of certificates that formerly represented Shares. In the event of a
transfer of ownership of Holdco Shares or Shares that was not registered in the
securities register of the
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relevant Holdco or the Corporation, as the case may be, a certificate
representing the proper number of Exchangeable Shares (together with any unpaid
dividends or distributions declared on the surrendered Shares prior to the
Effective Time) may be issued to the transferee if the certificate representing
such Holdco Shares or Shares is presented to the Depositary as provided above,
accompanied by all documents required to evidence and effect such transfer and
to evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 4.2, each certificate which
immediately prior to or upon the Effective Time represented one or more Holdco
Shares or Shares that, under the Arrangement, were exchanged or were deemed to
be exchanged for Exchangeable Shares pursuant to Section 2.2 shall be deemed at
all times after the Effective Time, but subject to Section 4.3, to represent
only the right to receive upon such surrender a certificate representing that
number (rounded down to the nearest whole number) of Exchangeable Shares
(together with any unpaid dividends or distributions declared on the surrendered
Shares, or Shares owned by the relevant Holdco, prior to the Effective Time)
which such holder has the right to receive.
4.3 DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES
No dividends or other distributions paid, declared or made with respect to
Exchangeable Shares, in each case with a record date after the Effective Time,
shall be paid to the holder of any unsurrendered certificate which immediately
prior to the Effective Time represented outstanding Holdco Shares or Shares that
were exchanged for Exchangeable Shares pursuant to Section 2.2 unless and until
the holder of such certificate shall comply with the provisions of Section 4.2.
Subject to applicable law, at the time such holder shall have complied with the
provisions of Section 4.2 (or, in the case of clause (ii) below, at the
appropriate payment date), there shall be paid to the holder of the certificates
formerly representing Holdco Shares or Shares, without interest, (i) the amount
of dividends or other distributions with a record date after the Effective Time
paid with respect to the Exchangeable Shares to which such holder is entitled
pursuant hereto, and (ii) on the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to the date of compliance by such holder with the provisions of Section
4.2 and a payment date subsequent to the date of such compliance and payable
with respect to such Exchangeable Shares.
4.4 NO FRACTIONAL SHARES
No certificates representing fractional Exchangeable Shares shall be issued upon
compliance with the provisions of Section 4.2 and no dividend, stock split or
other change in the capital structure of Canco shall relate to any such
fractional security and such fractional interests shall not entitle the owner
thereof to exercise any rights as a security holder of Canco. In lieu of any
such fractional securities, each holder otherwise entitled to a fractional
interest in an Exchangeable Share will be entitled to receive a cash payment
from the Depositary equal to the product of such fractional interest and the
Acquiror Average Price, such amount to be provided to the Depositary by Canco,
upon request. Such payment with respect to fractional shares is merely intended
to provide a mechanical rounding off of, and is not separately bargained for,
consideration. If more than one certificate formerly representing Holdco Shares
or Shares is surrendered for the account of the same holder, the number of
Exchangeable Shares for which such certificates have been surrendered shall be
computed on the basis of the aggregate number of Holdco Shares or Shares
represented by the certificates so surrendered. On the date of the notice
referred to in Section 7.2 of the Exchangeable Share Provisions, the aggregate
number of
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Exchangeable Shares for which no certificates were issued as a result of the
foregoing provisions of this Section 4.4 shall be deemed to have been
surrendered by the Depositary for no consideration to Canco.
4.5 LOST CERTIFICATES
In the event any certificate which immediately prior to the Effective Time
represented one or more outstanding Holdco Shares or Shares that were exchanged
pursuant to Section 2.2 shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the holder of Holdco Shares or Shares
claiming such certificate to be lost, stolen or destroyed, the Depositary will
issue in exchange for such lost, stolen or destroyed certificate, any cash
pursuant to Section 4.1 and/or one or more certificates representing one or more
Exchangeable Shares pursuant to Section 4.2 (and any dividends or distributions
with respect thereto) in each case deliverable in accordance with Section 2.2.
When authorizing such payment in exchange for any lost, stolen or destroyed
certificate, the holder to whom cash and/or certificates representing
Exchangeable Shares are to be issued shall, as a condition precedent to the
issuance thereof, give a bond satisfactory to the Corporation and Canco and
their respective transfer agents in such sum as any of them may direct or
otherwise indemnify the Corporation and Canco in a manner satisfactory to the
Corporation and Canco against any claim that may be made against any of them
with respect to the certificate alleged to have been lost, stolen or destroyed.
4.6 EXTINGUISHMENT OF RIGHTS
Any certificate which immediately prior to the Effective Time represented
outstanding Shares that are not held by a Shareholder who has exercised its
right to dissent in accordance with Article 3 hereof and who is ultimately
entitled to be paid fair value of the Shares held by such Shareholder but was
exchanged or was deemed to have been exchanged pursuant to Section 2.2, that has
not been deposited with all other instruments required by Section 4.1 or Section
4.2, on or prior to the sixth anniversary of the Effective Date shall cease to
represent a claim or interest of any kind or nature to such cash payment and/or
as a holder of Exchangeable Shares or Acquiror Shares. On such date, the cash
payment and/or the Exchangeable Shares or Acquiror Shares (and any dividends or
distributions with respect thereto) to which the former holder of the
certificate referred to in the preceding sentence was ultimately entitled shall
be deemed to have been surrendered for no consideration to Callco or Canco, as
the case may be, together with all entitlements to dividends, distributions,
cash and interest in respect thereof held for such former holder. None of
Acquiror, the Corporation, Canco, Callco or the Depositary shall be liable to
any person in respect of any cash payment or Exchangeable Shares or Acquiror
Shares (or dividends, distributions and/or cash in lieu of fractional shares)
delivered to a public official pursuant to and in compliance with any applicable
abandoned property, escheat or similar law.
4.7 WITHHOLDING RIGHTS
Acquiror, the Corporation, Canco, Callco and the Depositary shall be entitled to
deduct and withhold from any dividend or consideration otherwise payable to any
holder of Shares or Exchangeable Shares such amounts as the Corporation, Canco,
Callco or the Depositary is required to deduct and withhold with respect to such
payment under the ITA, the Code or any provision of federal, provincial,
territorial, state, local or foreign tax law, in each case, as amended. To the
extent that amounts are so withheld, such withheld amounts shall be treated for
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all purposes hereof as having been paid to the holder of the shares in respect
of which such deduction and withholding was made, provided that such withheld
amounts are actually remitted to the appropriate taxing authority. To the extent
that the amount so required to be deducted or withheld from any payment to a
holder exceeds the cash portion of the consideration otherwise payable to the
holder, the Corporation, Canco, Callco and the Depositary are hereby authorized
to sell or otherwise dispose of such portion of the consideration as is
necessary to provide sufficient funds to the Corporation, Canco, Callco or the
Depositary, as the case may be, to enable it to comply with such deduction or
withholding requirement and the Corporation, Canco, Callco or the Depositary
shall notify the holder thereof and remit any unapplied balance of the net
proceeds of such sale.
4.8 TERMINATION OF DEPOSITARY
Any Exchangeable Shares, together with any funds held by the Depositary, that
remain undistributed to former holders of Shares nine months after the Effective
Date shall be delivered to Canco or Callco upon demand therefor, and holders of
certificates previously representing Shares who have not theretofore complied
with Section 4.1 or Section 4.2 shall thereafter, subject to Section 4.6, look
only to Canco or Callco for payment of any claim to cash, Exchangeable Shares,
cash in lieu of fractional shares thereof, Acquiror Shares or dividends or
distributions, if any, in respect thereof.
ARTICLE 5
CERTAIN RIGHTS OF CALLCO TO ACQUIRE EXCHANGEABLE SHARES
5.1 CALLCO LIQUIDATION CALL RIGHT
(a) Callco shall have the overriding right (the "Liquidation Call
Right"), in the event of and notwithstanding the proposed
liquidation, dissolution or winding-up of Canco or any other
distribution of the assets of Canco among its shareholders for
the purpose of winding-up its affairs, pursuant to Article 5
of the Exchangeable Share Provisions, to purchase from all but
not less than all of the holders of Exchangeable Shares (other
than any holder of Exchangeable Shares which is an affiliate
of Acquiror) on the Liquidation Date all but not less than all
of the Exchangeable Shares held by each such holder upon
payment by Callco to each such holder of the Exchangeable
Share Price applicable on the last Business Day prior to the
Liquidation Date (the "Liquidation Call Purchase Price") in
accordance with Section 5.1(c). In the event of the exercise
of the Liquidation Call Right by Callco, each holder shall be
obligated to sell all the Exchangeable Shares held by such
holder to Callco on the Liquidation Date upon payment by
Callco to such holder of the Liquidation Call Purchase Price
for each such Exchangeable Share, whereupon Canco shall have
no obligation to pay any Liquidation Amount to the holders of
such shares so purchased by Callco.
(b) To exercise the Liquidation Call Right, Callco must notify
Canco and the Transfer Agent of Callco's intention to exercise
such right at least 45 days before the Liquidation Date, in
the case of a voluntary liquidation, dissolution or winding-up
of Canco or any other voluntary distribution of the assets of
Canco among its
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shareholders for the purpose of winding-up its affairs, and at
least five Business Days before the Liquidation Date, in the
case of an involuntary liquidation, dissolution or winding-up
of Canco or any other involuntary distribution of the assets
of Canco among its shareholders for the purpose of winding up
its affairs. The Transfer Agent will notify the holders of
Exchangeable Shares as to whether Callco has exercised the
Liquidation Call Right forthwith after the expiry of the
period during which the same may be exercised by Callco. If
Callco exercises the Liquidation Call Right, then on the
Liquidation Date, Callco will purchase and the holders of
Exchangeable Shares will sell all of the Exchangeable Shares
then outstanding for a price per share equal to the
Liquidation Call Purchase Price.
(c) For the purposes of completing the purchase of the
Exchangeable Shares pursuant to the Liquidation Call Right,
Callco shall deposit or cause to be deposited with the
Transfer Agent, on or before the Liquidation Date, the
Exchangeable Share Consideration representing the total
Liquidation Call Purchase Price. Provided that such
Exchangeable Share Consideration has been so deposited with
the Transfer Agent, on and after the Liquidation Date, the
holders of the Exchangeable Shares shall cease to be holders
of the Exchangeable Shares and shall not be entitled to
exercise any of the rights of holders in respect thereof
(including any rights under the Voting and Exchange Trust
Agreement ), other than the right to receive their
proportionate part of the total Liquidation Call Purchase
Price payable by Callco, without interest, upon presentation
and surrender by the holder of certificates representing the
Exchangeable Shares held by such holder and the holder shall
on and after the Liquidation Date be considered and deemed for
all purposes to be the holder of Acquiror Shares to which such
holder is entitled. Upon surrender to the Transfer Agent of a
certificate or certificates representing Exchangeable Shares,
together with such other documents and instruments as may be
required to effect a transfer of Exchangeable Shares under the
Act and the by-laws of Canco and such additional documents and
instruments as the Transfer Agent may reasonably require, the
holder of such surrendered certificate or certificates shall
be entitled to receive in exchange therefor, and the Transfer
Agent on behalf of Callco shall deliver to such holder, the
Exchangeable Share Consideration to which such holder is
entitled. If Callco does not exercise the Liquidation Call
Right in the manner described above, on the Liquidation Date
the holders of the Exchangeable Shares will be entitled to
receive in exchange therefor the Liquidation Amount otherwise
payable by Canco in connection with the liquidation,
dissolution or winding-up of Canco pursuant to Article 5 of
the Exchangeable Share Provisions.
5.2 CALLCO REDEMPTION CALL RIGHT
In addition to Callco's rights contained in the Exchangeable Share Provisions,
including the Retraction Call Right (as defined in the Exchangeable Share
Provisions), Callco shall have the following rights in respect of the
Exchangeable Shares:
(a) Callco shall have the overriding right (the "Redemption Call
Right"), in the event of and notwithstanding the proposed
redemption of the Exchangeable Shares by Canco pursuant to
Article 7 of the Exchangeable Share Provisions, to purchase
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from all but not less than all of the holders of Exchangeable
Shares (other than any holder of Exchangeable Shares which is
an affiliate of Acquiror) on the Redemption Date all but not
less than all of the Exchangeable Shares held by each such
holder upon payment by Callco to each such holder of the
Exchangeable Share Price applicable on the last Business Day
prior to the Redemption Date (the "Redemption Call Purchase
Price") in accordance with 5.2(c). In the event of the
exercise of the Redemption Call Right by Callco, each holder
of Exchangeable Shares shall be obligated to sell all the
Exchangeable Shares held by such holder to Callco on the
Redemption Date upon payment by Callco to such holder of the
Redemption Call Purchase Price for each such Exchangeable
Share, whereupon Canco shall have no obligation to redeem, or
to pay the Redemption Price in respect of, such shares so
purchased by Callco.
(b) To exercise the Redemption Call Right, Callco must notify the
Transfer Agent of Callco's intention to exercise such right at
least 60 days before the Redemption Date, except in the case
of a redemption occurring as a result of an Acquiror Control
Transaction, a Exchangeable Share Voting Event or an Exempt
Exchangeable Share Voting Event (each as defined in the
Exchangeable Share Provisions), in which case Callco shall so
notify the Transfer Agent and Canco on or before the
Redemption Date. The Transfer Agent will notify the holders of
the Exchangeable Shares as to whether Callco has exercised the
Redemption Call Right forthwith after the expiry of the period
during which the same may be exercised by Callco. If Callco
exercises the Redemption Call Right, then, on the Redemption
Date, Callco will purchase and the holders of Exchangeable
Shares will sell all of the Exchangeable Shares then
outstanding for a price per share equal to the Redemption Call
Purchase Price.
(c) For the purposes of completing the purchase of the
Exchangeable Shares pursuant to the exercise of the Redemption
Call Right, Callco shall deposit or cause to be deposited with
the Transfer Agent, on or before the Redemption Date, the
Exchangeable Share Consideration representing the total
Redemption Call Purchase Price. Provided that such
Exchangeable Share Consideration has been so deposited with
the Transfer Agent, on and after the Redemption Date the
holders of the Exchangeable Shares shall cease to be holders
of the Exchangeable Shares and shall not be entitled to
exercise any of the rights of holders in respect thereof
(including any rights under the Voting and Exchange Trust
Agreement ), other than the right to receive their
proportionate part of the total Redemption Call Purchase Price
payable by Callco, without interest, upon presentation and
surrender by the holder of certificates representing the
Exchangeable Shares held by such holder and the holder shall
on and after the Redemption Date be considered and deemed for
all purposes to be the holder of Acquiror Shares to which such
holder is entitled. Upon surrender to the Transfer Agent of a
certificate or certificates representing Exchangeable Shares,
together with such other documents and instruments as may be
required to effect a transfer of Exchangeable Shares under the
Act and the by-laws of Canco and such additional documents and
instruments as the Transfer Agent may reasonably require, the
holder of such surrendered certificate or certificates shall
be entitled to receive in exchange therefor, and the Transfer
Agent on behalf of Callco shall deliver to
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such holder, the Exchangeable Share Consideration to which
such holder is entitled. If Callco does not exercise the
Redemption Call Right in the manner described above, on the
Redemption Date the holders of the Exchangeable Shares will be
entitled to receive in exchange therefor the Redemption Price
otherwise payable by Canco in connection with the redemption
of the Exchangeable Shares pursuant to Article 7 of the
Exchangeable Share Provisions.
5.3 CHANGE OF LAW CALL RIGHT
(a) Acquiror shall have the overriding right (the "Change of Law
Call Right"), in the event of a Change of Law, to purchase (or
to cause Callco to purchase) from all but not less than all of
the holders of Exchangeable Shares (other than any holder of
Exchangeable Shares which is an affiliate of Acquiror) all but
not less than all of the Exchangeable Shares held by each such
holder upon payment by Acquiror or Callco, as the case may be,
of an amount per share (the "Change of Law Call Purchase
Price") equal to the Exchangeable Share Price applicable on
the last Business Day prior to the Change of Law Call Date, in
accordance with Section 5.3(c). In the event of the exercise
of the Change of Law Call Right by Acquiror or Callco, as the
case may be, each holder of Exchangeable Shares shall be
obligated to sell all the Exchangeable Shares held by such
holder to Acquiror or Callco, as the case may be, on the
Change of Law Call Date upon payment by Acquiror to such
holder of the Change of Law Call Purchase Price for each such
Exchangeable Share.
(b) To exercise the Change of Law Call Right, Acquiror or Callco
must notify the Transfer Agent of its intention to exercise
such right at least 45 days before the date on which Acquiror
or Callco intends to acquire the Exchangeable Shares (the
"Change of Law Call Date"). If Acquiror or Callco exercises
the Change of Law Call Right, then, on the Change of Law Call
Date, Acquiror or Callco, as the case may be, will purchase
and the holders of Exchangeable Shares will sell all of the
Exchangeable Shares then outstanding for a price per share
equal to the Change of Law Call Purchase Price.
(c) For the purposes of completing the purchase of the
Exchangeable Shares pursuant to the exercise of the Change of
Law Call Right, Acquiror or Callco, as the case may be, shall
deposit or cause to be deposited with the Transfer Agent, on
or before the Change of Law Call Date, the Exchangeable Share
Consideration representing the total Change of Law Call
Purchase Price. Provided that such Exchangeable Share
Consideration has been so deposited with the Transfer Agent,
on and after the Change of Law Call Date the holders of the
Exchangeable Shares shall cease to be holders of the
Exchangeable Shares and shall not be entitled to exercise any
of the rights of holders in respect thereof (including any
rights under the Voting and Exchange Trust Agreement ), other
than the right to receive their proportionate part of the
total Change of Law Purchase Price payable by Acquiror or
Callco, as the case may be, without interest, upon
presentation and surrender by the holder of certificates
representing the Exchangeable Shares held by such holder and
the holder shall on and after the Change of Law Call Date be
considered and deemed for all purposes to be the holder of
Acquiror Shares to
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which such holder is entitled. Upon surrender to the Transfer
Agent of a certificate or certificates representing
Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of
Exchangeable Shares under the Act and the by-laws of Canco and
such additional documents and instruments as the Transfer
Agent may reasonably require, the holder of such surrendered
certificate or certificates shall be entitled to receive in
exchange therefor, and the Transfer Agent on behalf of
Acquiror or Callco, as the case may be, shall deliver to such
holder, the Exchangeable Share Consideration to which such
holder is entitled.
ARTICLE 6
AMENDMENT
6.1 PLAN OF ARRANGEMENT AMENDMENT
The Corporation and Acquiror reserve the right to amend, modify and/or
supplement this Plan of Arrangement from time to time at any time prior to the
Effective Time provided that any such amendment, modification or supplement must
be contained in a written document that is (a) agreed to by Acquiror, (b) filed
with the Court and, if made following the Shareholder Meeting, approved by the
Court, and (c) communicated to Shareholders and Optionholders in the manner
required by the Court (if so required).
Any amendment, modification or supplement to this Plan of Arrangement may be
proposed by the Corporation and Acquiror at any time prior to or at the
Shareholder Meeting (provided that Acquiror shall have consented thereto) with
or without any other prior notice or communication, and if so proposed and
accepted by the persons voting at the Shareholder Meeting (other than as may be
required under the Interim Order), shall become part of this Plan of Arrangement
for all purposes.
Any amendment, modification or supplement to this Plan of Arrangement which is
approved or directed by the Court following the Shareholder Meeting shall be
effective only if it is consented to by each of the Corporation and Acquiror,
and if required by the Court or applicable law, it is consented to by the
Shareholders and Optionholders or the holders of the Exchangeable Shares, as the
case may be.
Subject to applicable law, any amendment, modification or supplement to this
Plan of Arrangement may be made following the Effective Time unilaterally by
Acquiror; provided that it concerns a matter which, in the reasonable opinion of
Acquiror, is of an administrative nature required to better give effect to the
implementation of this Plan of Arrangement and is not adverse to the financial
or economic interests of any Shareholders or Optionholders.
SCHEDULE C
LOCK-UP AGREEMENT
August 12, 2002
BETWEEN
▇▇▇▇▇▇ INDUSTRIES LTD., an exempted company, incorporated under the
laws of Bermuda (hereinafter called "NABORS"); and
-----------------------------------------------------------------------------------------------
Name of (hereinafter called the
Securityholder: "Securityholder")
-----------------------------------------------------------------------------------------------
Nabors understands that the Securityholder is the beneficial owner of or
exercises control and direction over that number of common shares (the "▇▇▇▇
SHARES") of ▇▇▇▇ Energy Technologies Inc. ("▇▇▇▇") and that number of options to
purchase further ▇▇▇▇ Shares (collectively referred to as "OPTIONS") as set
forth below:
------------------------------------------------------------------------------------------------------------
Number of Options Registration of
Number of ▇▇▇▇ Shares to Acquire ▇▇▇▇ Shares ▇▇▇▇ Shares(1)
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Note:
(1) Include any nominee or nominee account information, as applicable.
Nabors and ▇▇▇▇ have entered into an agreement dated August 12, 2002,
as amended from time to time thereafter, (the "ARRANGEMENT AGREEMENT") which
contemplates a plan of arrangement under the Business Corporations Act (Alberta)
pursuant to which each holder of ▇▇▇▇ Shares will receive, in exchange for such
▇▇▇▇▇▇'▇ ▇▇▇▇ Shares, $1.85 (Canadian) per ▇▇▇▇ Share payable, at the election
of each holder, in cash or in exchangeable shares of Nabors Exchangeco (Canada)
Inc., in each case as provided in the Arrangement Agreement (the "ARRANGEMENT").
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, this document, which includes Appendix "A"
attached, sets forth the agreement (this "AGREEMENT") between the Securityholder
and Nabors relating to the Securityholder
C-2
exercising the votes attached to all of the ▇▇▇▇ Shares and Options that the
Securityholder beneficially owns, or over which it exercises control or
direction, as set forth above (the "PRESENTLY HELD ▇▇▇▇ SECURITIES"), and any
additional ▇▇▇▇ Shares that the Securityholder may hereafter become the
beneficial owner of or exercise control or direction over (the "AFTER ACQUIRED
▇▇▇▇ SHARES") (the Presently Held ▇▇▇▇ Securities and the After Acquired ▇▇▇▇
Shares collectively referred to as the "SUBJECT SECURITIES"), in favour of the
Arrangement. Subject Securities excludes ▇▇▇▇ Shares and Options in respect of
which the Securityholder's only control or direction is pursuant to a proxy
appointing the Securityholder as proxy to vote such securities.
The Terms and Conditions contained in Appendix "A" are incorporated
into and form a part of this Agreement.
ACKNOWLEDGED AND AGREED TO:
------------------------------------------------
Name of Securityholder
-------------------------------------------------- ------------------------------------------------
Witness as to the signature of the Securityholder (Signature of Securityholder)
------------------------------------------------
(address, including postal or zip code)
------------------------------------------------
------------------------------------------------
▇▇▇▇▇▇ INDUSTRIES LTD.
Per:
-------------------------------------------
Authorized Signing Officer
APPENDIX "A"
TERMS AND CONDITIONS
1. AGREEMENT TO VOTE
Subject to the terms and conditions hereof, the Securityholder hereby
irrevocably agrees to exercise all voting rights attached to the Subject
Securities, or cause the registered holder thereof to exercise all voting rights
attached to Subject Securities, in approval of the Arrangement at any meeting of
the Shareholders and Optionholders of ▇▇▇▇ called to consider the Arrangement
and any adjournment thereof (the "Shareholders Meeting") and, with respect to
any other matter that may be put before the Shareholders and Optionholders of
▇▇▇▇, as Nabors may direct.
2. AGREEMENT REGARDING OPTIONS
The parties acknowledge and agree that ▇▇▇▇ will, in accordance with
the Arrangement Agreement, use all commercially reasonable efforts to enter into
Option releases, in a form approved by Nabors, acting reasonably, with the
Securityholder in respect of his or her Options, pursuant to which ▇▇▇▇ and the
Securityholder agree that, upon the Arrangement becoming effective, the
Securityholder will receive from ▇▇▇▇, in consideration of the termination of
all (or the Securityholder's agreement not to exercise) the Securityholder's
unexercised Options the greater of: (iv) the positive difference, if any,
between the Per Share Price (as defined in the Arrangement Agreement) and the
exercise price of each Option for each ▇▇▇▇ Share subject to issuance upon the
exercise of such Options regardless of the vesting of those Options under Ryan's
stock option plan and/or the agreements governing those Options; and (v) $0.10
for each ▇▇▇▇ Share subject to such issuance. The parties further acknowledge
and agree that, in such ▇▇▇▇, ▇▇▇▇ will make appropriate withholdings of taxes
and other applicable source deductions from any such payments made to the
Securityholder as required by applicable law.
3. OPTION TO PURCHASE
The Securityholder hereby grants to Nabors, exercisable at any time
after the Trigger Event and on or before 120 days following the date of this
Agreement, an irrevocable option to purchase the ▇▇▇▇ Shares for the amount
equal to $1.85 for each ▇▇▇▇ Share by notice of exercise by Nabors to the
Securityholder. Upon such notice, the purchase shall be completed on the 2nd
Business Day (as defined in the Arrangement Agreement) following the delivery of
such notice of exercise. For this purpose, "Trigger Event" means (i) a Fee Event
as set forth in subsections (a), (b), (c), (d) or (f) of the Arrangement
Agreement; (ii) any notice by ▇▇▇▇ to Nabors pursuant to subsection 3.2 (c) of
the Arrangement Agreement or (iii) any Acquisition Proposal as defined in the
Arrangement Agreement is publicly announced or made to the shareholders of ▇▇▇▇.
Notwithstanding the foregoing, Nabors cannot exercise the foregoing option if it
has breached in any material respect its representations, warranties or
covenants in the Arrangement Agreement or this Agreement. In addition, the
Securityholder may elect, by notice to Nabors by the close of business on the
Business Day (as defined in the Arrangement Agreement) following the delivery of
such notice of exercise, to transfer its ▇▇▇▇ Shares to a Holdco (as defined in
the Plan of Arrangement) and transfer the Holdco Shares (as defined in the Plan
of Arrangement) to Nabors in lieu of its ▇▇▇▇ Shares and in exchange for the
same aggregate purchase price, provided the conditions set forth in Section 2.3
of the Plan of
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Arrangement are satisfied, to the extent reasonably applicable, on or prior to
and as of the date the purchase is to be completed.
4. OBLIGATION OF NABORS TO PURCHASE THE SECURITIES
Nabors agrees to comply with the terms and conditions of the
Arrangement Agreement.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SECURITYHOLDER
(a) The Securityholder represents and warrants to Nabors, and
acknowledges that Nabors is relying upon such representations
and warranties in entering into this Agreement, that:
(i) the Securityholder has good and sufficient power,
authority and right to enter into this Agreement and
to complete the transactions contemplated hereby;
(ii) assuming the due execution and delivery of this
Agreement by Nabors, upon the execution and delivery
hereof by the Securityholder, this Agreement shall be
a legal, valid and binding obligation of the
Securityholder enforceable by Nabors against the
Securityholder in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium and other laws relating to or
affecting creditors' rights generally and to general
principles of equity and the consummation by the
Securityholder of the transactions contemplated
hereby will not constitute a violation of or default
under, or conflict with, any contract, commitment,
agreement, arrangement, understanding or restriction
of any kind to which the Securityholder is a party or
by which the Securityholder is bound;
(iii) the Securityholder is the beneficial owner of or
exercises control or direction over the Presently
Held ▇▇▇▇ Securities (and the Presently Held ▇▇▇▇
Securities represent all of the ▇▇▇▇ Shares and
Options beneficially owned or over which control or
direction is exercised by the Securityholder) free
and clear of all liens, charges, encumbrances,
security interests and other rights of others
whatsoever (except in favour of Nabors hereunder) and
has good and sufficient power, authority and right to
transfer or cause to be transferred the legal and
beneficial title to such ▇▇▇▇ Shares to Nabors with
good and marketable title thereto;
(iv) neither the Securityholder nor any associate or
affiliate (each as defined in the Securities Act
(Alberta) (the "ASA")) of the Securityholder is
directly or indirectly a party to any contract or
agreement with ▇▇▇▇ or any subsidiary thereof,
whether written or oral, other than agreements of
indemnity, agreements granting the Options to the
Securityholder, and employment and related
agreements, copies of which have previously been
provided to Nabors, nor, to the knowledge of the
Securityholders,
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does the Securityholder have, as of the date hereof,
any cause of action or other claim (except for
accruing remuneration) whatsoever against, or owe any
amount to, ▇▇▇▇ or its subsidiaries;
(v) the Securityholder is not a non-resident of Canada
within the meaning of the Income Tax Act (Canada);
and
(vi) the foregoing representations and warranties will be
true, correct and complete on the date of closing of
the Arrangement.
(b) The Securityholder covenants and agrees with Nabors that so
long as the Securityholder is subject to the terms of this
Agreement, the Securityholder will not, and will use its
commercially reasonable efforts to cause any representatives,
affiliates (as defined in the ASA) or advisors it may have not
to, directly or indirectly:
(i) solicit, initiate, invite, encourage or continue
(including, without limitation, by way of furnishing
information) any inquiries or proposals from, or
negotiations with, any person, company or other
entity other than Nabors or any of its affiliates
which constitutes, or may reasonably be expected to
lead to (in either case whether in one transaction or
a series of transactions): (A) an acquisition from
▇▇▇▇ or its securityholders of any securities of ▇▇▇▇
or its subsidiaries; (B) any acquisition of a
substantial amount of assets of any of ▇▇▇▇ or its
subsidiaries; (C) any amalgamation, arrangement,
merger, or consolidation of any of ▇▇▇▇ or its
subsidiaries; or (D) any take-over bid, issuer bid,
exchange offer, recapitalization, liquidation,
dissolution, reorganization into a royalty trust or
income fund or similar transaction involving any of
▇▇▇▇ or its subsidiaries or any other transaction,
the consummation of which would or could reasonably
be expected to impede, interfere with, prevent or
delay the completion of the Arrangement or which
would or could reasonably be expected to materially
reduce the benefits to Nabors under the Arrangement
(any such inquiry or proposal in respect of any of
the foregoing being an "▇▇▇▇ ACQUISITION PROPOSAL");
(ii) enter into or participate in any discussions or
negotiations regarding an ▇▇▇▇ Acquisition Proposal,
or, except in the ordinary course of business,
furnish, or cause to be furnished, to any person
(other than Nabors) any information with respect to
the business, properties, operations, prospects or
conditions (financial or otherwise) of ▇▇▇▇ or any of
its subsidiaries or an ▇▇▇▇ Acquisition Proposal or
otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort
or attempt of any other person to do or seek to do
any of the foregoing; or
(iii) take any action that might reasonably be expected to
reduce the likelihood of completion of the
Arrangement;
-4-
provided that the foregoing shall, in the case of any person
who is a director or officer of ▇▇▇▇, be subject to the
fiduciary duties of such person in respect of ▇▇▇▇ and,
without limiting the generality of the foregoing, the
Securityholder, in the case of a person who is a director of
▇▇▇▇, shall be entitled to recommend to Shareholders (as
defined in the Arrangement Agreement) acceptance of a Superior
Proposal (as defined in the Arrangement Agreement) provided
that the Securityholder shall remain obligated to vote the
Subject Securities pursuant to this Agreement.
(c) The Securityholder covenants and agrees with Nabors, so long
as the Securityholder is subject to the terms of this
Agreement, that:
(i) it shall provide Nabors immediate notice of any
additional ▇▇▇▇ Shares that the Securityholder may
hereafter become the beneficial owner of or exercise
control or direction over;
(ii) it shall not, without the prior consent of Nabors
sell, assign, convey or otherwise dispose of any of
the Subject Securities (except to an affiliate of the
Securityholder, provided that such affiliate agrees
to be bound by the terms of this Agreement and
provided that the Securityholder remains liable for
the performance by such affiliate of all terms and
obligations of the Securityholder hereunder); and
(iii) it shall not exercise any statutory rights of dissent
or appraisal in respect of any resolution approving
the Arrangement, or any aspect thereof and it shall
not exercise any shareholder rights or remedies
available at common law or pursuant to applicable
securities or corporate laws to delay, hinder, upset
or challenge the Arrangement.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF NABORS
Nabors represents and warrants to the Securityholder, and acknowledges
that the Securityholder is relying upon such representations and warranties in
entering into this Agreement, that:
(a) it has good and sufficient power, authority and right to enter
into this Agreement and to complete the transactions
contemplated hereby;
(b) upon the due execution and delivery of this Agreement by the
Securityholder, this Agreement shall be a legal, valid and
binding obligation of Nabors enforceable by the Securityholder
against Nabors in accordance with its terms subject to
bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium and other laws relating to or affecting creditors'
rights generally and to general principles of equity, and the
consummation by Nabors of the transactions contemplated hereby
will not constitute a violation of or default under, or
conflict with, the constating documents of Nabors or any
contract, commitment, agreement, arrangement,
-5-
understanding or restriction of any kind to which Nabors is a
party or by which Nabors is bound; and
(c) the foregoing representations and warranties will be true,
correct and complete on the date of closing of the
Arrangement.
7. TERMINATION
This Agreement may be terminated:
(a) at the option of the Securityholder:
(i) upon written notice given by the Securityholder to
Nabors, if the Arrangement has not, for any reason
whatsoever, become effective by December 15, 2002; or
(ii) upon written notice given by the Securityholder to
Nabors, if Nabors has breached or failed to perform
any of its covenants or agreements herein contained
in a material respect or any of the representations
and warranties of Nabors set forth herein are not
true and correct in any material respect;
(b) at the option of Nabors upon written notice given by Nabors to
the Securityholder if ▇▇▇▇ has breached the terms of the
Arrangement Agreement;
(c) at the option of the Securityholder if the Arrangement
Agreement is terminated pursuant to Sections 10.1(a), (d) or
(f) of the Arrangement Agreement;
(d) at the option of the Securityholder, at any time after 15 days
following termination of the Arrangement Agreement pursuant to
Sections 10.1(b), (c) or (e) of the Arrangement Agreement; and
(e) by the mutual written consent of each of the Securityholder
and Nabors.
In the event of the termination of this Agreement as provided above,
this Agreement shall forthwith become void and of no further force or effect and
there shall be no liability on the part of any party hereto, provided that the
foregoing shall not relieve any party from any liability for any breach of this
Agreement prior to such termination.
8. DUTY TO DISCLOSE COMPETING TRANSACTIONS
The Securityholder will promptly (but in no case later than 24 hours)
notify Nabors in writing of the existence of any proposal, discussion,
negotiation or inquiry received by the Securityholder in its capacity as such
regarding any ▇▇▇▇ Acquisition Proposal, and the Securityholder will promptly
communicate to Nabors the terms of any proposal, discussion, negotiation or
inquiry received regarding any ▇▇▇▇ Acquisition Proposal (and promptly provide
to Nabors copies of any written materials received by the Securityholder in its
capacity as such in connection with such proposal, discussion, negotiation or
inquiry) and the identity of the party making such proposal or inquiry or
engaging in such discussion or negotiation.
-6-
For greater certainty, this Section 8 shall not apply to any person(s)
in his or her fiduciary capacity as a director or officer of ▇▇▇▇.
9. NOTICE
Any notice or other communication required or permitted to be given
hereunder shall be sufficiently given if delivered in person or sent by fax:
(a) in the case of the Securityholder, to the address appearing on
the second page of this Agreement; or
(b) in the case of Nabors to:
▇▇▇▇▇▇ Industries, Ltd.
c/o The Corporate Secretary Limited
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Attention: Vice-President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ Corporate Services Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as the party to which such notice or other
communication is to be given has last notified the party giving the same in the
manner provided in this Section 9.
10. EXPENSES
Each party hereto agrees to pay its own expenses incurred in connection
with this Agreement.
11. PUBLIC DISCLOSURE
No disclosure of the subject matter of this Agreement shall be made by
the Securityholder or by Nabors except to affiliates and associates of the
Securityholder and to their respective counsel or to any other professional
advisor engaged by them or to their respective counsel or as may be required by
applicable law or regulatory authorities; provided, however, that the foregoing
shall not prevent Nabors or ▇▇▇▇ from disclosing the terms of this Agreement in
any disclosure document required to be delivered by Nabors or ▇▇▇▇ in relation
to the Arrangement, as required under applicable securities legislation and
further provided that this
-7-
Section 11 shall not apply to any disclosure which a party is advised by legal
counsel is required or advisable to be made by applicable laws, stock exchange
rules or policies of regulatory authorities having jurisdiction.
12. AMENDMENTS
This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by Nabors
and the Securityholder.
13. TIME
Time shall be of the essence of this Agreement.
14. SUCCESSORS AND ASSIGNS
This Agreement shall not be assignable by any party hereto, provided
that Nabors may assign all of the rights and benefits under this Agreement to
any of its affiliates but Nabors shall remain liable to the Securityholder for
the full performance by such affiliate under this Agreement. Subject to the
foregoing, this Agreement shall be binding upon, enure to the benefit of and be
enforceable by the Securityholder and Nabors and their respective successors and
permitted assigns.
15. REMEDIES
The Securityholder and Nabors agree that if this Agreement is breached,
or if a breach hereof is threatened, damages may be an inadequate remedy, and,
therefore, without limiting any other remedy available at law or in equity, an
injunction, restraining order, specific performance, and other forms of
equitable relief for damages, or any combination thereof shall be available to
the Securityholder and Nabors.
16. FURTHER ASSURANCES
Nabors and the Securityholder shall from time to time and at all times
hereafter at the request of the other party but without further consideration,
do and perform all such further acts, matters and things and execute and deliver
all such further documents, deeds, assignments, agreements, notices and writings
and give such further assurances as shall be reasonably required for the purpose
of giving effect to this Agreement.
17. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Alberta and the parties irrevocably attorn to the
jurisdiction of the courts of the Province of Alberta.
18. EXECUTION
This Agreement may be signed in one or more counterparts, by either
original or facsimile execution, which together shall be deemed to constitute
one valid and binding
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agreement, and delivery of the counterparts may be effected by means of
telecopier among the parties.
19. SEVERABILITY
If any term, condition or provision in this Agreement is determined to
be void or unenforceable in whole or in part, such term, condition or provision
shall be severable from all other terms, conditions and provisions hereof and
shall not affect or impair the validity of any other term, condition or
provisions hereof.