EXHIBIT 4.3
AGREEMENT OF MERGER
DATED AS OF AUGUST 20, 2001,
BY AND AMONG
EXFO ELECTRO-OPTICAL ENGINEERING INC.
BUYER SUB
AND
AVANTAS NETWORKS CORPORATION
AND
SHAREHOLDERS OF AVANTAS NETWORKS CORPORATION
TABLE OF CONTENTS
PAGE
Article I MERGER.......................................................2
1.1 The Merger...................................................2
1.2 Taking of Necessary Action...................................2
1.3 Effect of Merger.............................................2
1.4 Effective Time...............................................2
1.5 Prior Investments............................................2
1.6 The Closing..................................................3
1.7 Merger Consideration, Conversion of Securities...............4
1.8 Escrow Arrangements..........................................4
1.9 Appointment of Shareholder Representatives...................5
1.10 Adjustment to Purchase Price.................................5
Article II REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE FOUNDING SHAREHOLDERS....................................5
2.1 Organization and Authority...................................5
2.2 Capitalization...............................................6
2.3 No Breach....................................................7
2.4 Share Ownership..............................................7
2.5 Consents and Approvals.......................................7
2.6 Litigation; Proceedings......................................8
2.7 Financial Statements.........................................8
2.8 No Undisclosed Liabilities...................................9
2.9 Absence of Certain Changes or Events.........................9
2.10 Compliance with Laws.........................................9
2.11 Taxes........................................................9
2.12 Intellectual Property.......................................10
2.13 Title to and Condition of Properties........................11
2.14 Contracts and Agreements....................................11
2.15 Insurance...................................................12
2.16 Employees...................................................13
2.17 Employee Benefits...........................................13
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(continued)
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2.18 Facilities..................................................14
2.19 Environmental Matters.......................................14
2.20 Transactions with the Shareholders..........................15
2.21 Capital Expenditures........................................15
2.22 Use of Name.................................................15
2.23 Brokers, Finders or Financial Advisors......................16
2.24 Exclusivity of Representations..............................16
2.25 Full Disclosure.............................................16
Article III REPRESENTATION AND WARRANTY OF THE SHAREHOLDERS AS
TO SECURITIES MATTERS.......................................16
3.1 Securities Matters..........................................16
Article IV REPRESENTATIONS AND WARRANTY OF THE OTHER SHAREHOLDERS......18
4.1 Authorisation...............................................19
4.2 Ownership of Company Shares.................................19
4.3 Consents and Approvals......................................19
Article V REPRESENTATIONS AND WARRANTY OF THE BUYER AND BUYER SUB.....19
5.1 Organization and Qualifications.............................20
5.2 Capitalization..............................................20
5.3 Authorization...............................................20
5.4 Noncontravention............................................21
5.5 Consents and Approvals......................................21
5.6 Litigation; Proceedings.....................................22
5.7 Authorization for Buyer Shares..............................22
5.8 Canadian Documents..........................................22
5.9 No Undisclosed Liabilities..................................22
5.10 Absence of Certain Changes or Events........................23
5.11 Form F-3....................................................23
5.12 Investment Intent...........................................23
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TABLE OF CONTENTS
(continued)
PAGE
5.13 Experience of the Buyer.....................................23
5.14 Financial Ability...........................................23
5.15 Brokers, Finders or Financial Advisors......................23
5.16 Reporting Issuer Status.....................................23
Article VI COVENANTS OF THE PARTIES....................................23
6.1 Conduct of Business by the Company..........................23
6.2 Public Announcements........................................25
6.3 Access to Information, Due Diligence Investigation;
Confidentiality.............................................25
6.4 Regulatory Requirements.....................................26
6.5 Shareholder Approvals.......................................27
6.6 Modification of Disclosure Schedules........................27
6.7 Contact with Customers and Suppliers........................28
6.8 Other Actions...............................................28
6.9 Securities Law and Stock Exchange Requirements..............28
6.10 Idemnification of Directors and Officers of the Company.....28
Article VII CONDITIONS TO CLOSING.......................................29
7.1 Conditions to Each Party's Obligations......................29
7.2 Conditions to Obligations of the Buyer......................29
7.3 Conditions to Obligations of the Shareholders and
the Company.................................................32
Article VIII OTHER AGREEMENTS............................................34
8.1 Confidentiality.............................................34
8.2 Expenses....................................................34
8.3 Non-Competition.............................................34
8.4 Support Obligation..........................................35
8.5 Employees...................................................36
8.6 Covenants Reasonable........................................37
8.7 Registration of Buyer Shares................................37
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TABLE OF CONTENTS
(continued)
PAGE
Article IX SURVIVAL AND INDEMNIFICATION................................43
9.1 Survival Notwithstanding Investigation......................43
9.2 General Indemnification by the Shareholders.................43
9.3 Indemnification by the Buyer................................44
9.4 Tax Indemnification.........................................44
9.5 Indemnification to be after Tax, Insurance, Etc.............45
9.6 Expiry and Limits of Liability of Shareholders..............45
9.7 Expiry and Limits of Liability of Buyer.....................46
9.8 Procedure...................................................47
9.9 Special Indemnity/Anritsu...................................48
Article X TERMINATION, AMENDMENT AND WAIVER...........................48
10.1 Termination.................................................48
10.2 Effect of Termination.......................................49
10.3 Waiver......................................................49
Article XI MISCELLANEOUS...............................................49
11.1 Entire Agreement; Amendments................................49
11.2 Notices.....................................................49
11.3 Amendments; Waivers.........................................51
11.4 Headings....................................................51
11.5 Successors and Assigns......................................51
11.6 No Third-Party Beneficiaries................................51
11.7 Governing Law; Consent to Jurisdiction; Language............51
11.8 Execution...................................................52
11.9 Severability................................................52
11.10 Interpretation; Currency....................................52
11.11 Effectiveness...............................................52
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INDEX OF DEFINED TERMS
AGREEMENT......................................................................1
AMALCO.........................................................................1
ANRITSU CLAIM.................................................................49
ARTICLES OF AMALGAMATION.......................................................2
AUDITED FINANCIAL STATEMENTS...................................................9
BUYER..........................................................................1
BUYER BALANCE SHEET DATE......................................................23
BUYER FINANCIAL STATEMENTS....................................................23
BUYER INDEMNIFIED PERSON......................................................44
BUYER INDEMNIFIED PERSONS.....................................................44
BUYER MATERIAL ADVERSE EFFECT.................................................20
BUYER SHARES...................................................................4
BUYER STOCK PLANS.............................................................21
BUYER SUB......................................................................1
CANADIAN DOCUMENTS............................................................22
CASH CONSIDERATION.............................................................3
CBCA...........................................................................1
CLAIM.........................................................................53
CLOSING........................................................................3
CLOSING PRICE..................................................................4
COMPANY........................................................................1
COMPANY CONTRACTS.............................................................12
COMPANY INTELLECTUAL PROPERTY.................................................10
COMPANY MATERIAL ADVERSE EFFECT................................................6
COMPANY PLANS.................................................................13
COMPANY SHARES.................................................................1
COPYRIGHTS....................................................................11
DIRECTOR.......................................................................2
DISCHARGE.....................................................................15
DUE DILIGENCE INVESTIGATIONS..................................................26
EFFECTIVE TIME.................................................................2
ENVIRONMENT...................................................................15
ENVIRONMENTAL LAW.............................................................15
ENVIRONMENTAL PERMITS.........................................................15
ESCROW AGREEMENT...............................................................4
ESCROW FUND....................................................................4
ESCROW SHARES..................................................................3
EXPENSES......................................................................35
FACILITIES....................................................................14
FINANCIAL STATEMENTS...........................................................9
FOUNDING SHAREHOLDERS..........................................................1
GAAP...........................................................................9
GOVERNMENTAL ENTITY............................................................8
INCONSISTENT TRANSACTION......................................................35
INDEMNIFIED PARTY.............................................................48
INTERIM FINANCIAL STATEMENTS...................................................9
KNOWLEDGE.....................................................................53
LIENS.........................................................................11
MERGER.........................................................................1
MERGER CONSIDERATION...........................................................4
NON-COMPETE PERIOD............................................................35
ORDER.........................................................................27
OTHER SHAREHOLDERS............................................................19
PATENTS.......................................................................10
PERMITS........................................................................9
PERSON.........................................................................8
PRIOR INVESTMENTS..............................................................1
PROSPECTUS....................................................................40
PWC...........................................................................32
REGISTRATION STATEMENT........................................................37
RESTRICTED SECURITIES.........................................................39
SEC FINANCIAL STATEMENTS......................................................32
SECURITIES ACT................................................................17
SHAREHOLDER AFFILIATE......................................................16,40
SHAREHOLDER REPRESENTATIVE.....................................................5
SHAREHOLDER'S AGREEMENT........................................................7
SHAREHOLDERS...................................................................2
SHAREHOLDERS INDEMNIFIED PERSON...............................................44
SHAREHOLDERS INDEMNIFIED PERSONS..............................................44
SOFTWARE......................................................................11
SPECIAL MEETING...............................................................27
STRADDLE PERIOD...............................................................45
SUBSTANCE.....................................................................15
TAX CLAIMS....................................................................45
TAX LOSSES....................................................................45
TAX RETURNS...................................................................10
TAXES.........................................................................10
TECHNOLOGY....................................................................11
TOTAL CONSIDERATION............................................................4
TRADEMARKS....................................................................11
WITHDRAWN SHARES...............................................................5
LIST OF EXHIBITS
Exhibit A Company Shares
Exhibit B Buyer Shares
Exhibit C Proportionate Total Consideration Payable and
Exchange Ratios for Buyer Shares
Exhibit D Form of Escrow Agreement
Exhibit E Intentionally Deleted
Exhibit F Form of Employment Agreements
Exhibit G Form of Lock-up Agreement
Exhibit H Intentionally Deleted
Exhibit I Stock Option Plan
Exhibit J Shareholders covered by Non-Competition
Exhibit K Intentionally Deleted
Exhibit L "In the money" options
Exhibit M Intentionally Deleted
Exhibit N Intervention by Other Shareholders
Exhibit O Shareholders' Resolution
Exhibit P Special Indemnification
LIST OF SCHEDULES
Schedule 2.1 Organizational Authority
Schedule 2.2 Capitalization
Schedule 2.3 No Breach
Schedule 2.4 Share Ownership
Schedule 2.5 Consents and Approvals
Schedule 2.6 Litigation; Proceedings
Schedule 2.7 Financial Statements
Schedule 2.8 No Undisclosed Liabilities
Schedule 2.9 Absence of Certain Changes or Events
Schedule 2.10 Compliance with Laws
Schedule 2.11 Taxes
Schedule 2.12(a) Patents, trademarks, copyrights and software
Schedule 2.12(b) Material Licences
Schedule 2.13 Title to and Condition of Properties
Schedule 2.14 Contracts and Agreements
Schedule 2.15 Insurance
Schedule 2.16 Employees
Schedule 2.17 Employee Benefits
Schedule 2.18 Facilities
Schedule 2.19 Environmental Matters
Schedule 2.20 Transaction with the Shareholders
Schedule 2.21 Capital Expenditures
Schedule 2.22 Use of Name
Schedule 4.2 Proxies
Schedule 6.1 Conduct of Business by the Company
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (this "AGREEMENT") is dated as of August 20,
2001 by and among EXFO Electro-Optical Engineering Inc., a corporation organized
under the laws of Canada (the "BUYER"), a corporation to be incorporated under
the laws of Canada ("BUYER SUB"), Avantas Networks Corporation, a corporation
incorporated under the laws of Canada (the "COMPANY"), Xxxx Xxxxx, Xxxxxxxx
Xxxxx, Xxxxx Xxxxxxxxxxxxxx, Xxxxxx Xxxxxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxxxx
Xxxxxxxxx, Xxxxxx Xxxxxx and Xxxxxxx Xxxxxxx (together, the "FOUNDING
SHAREHOLDERS") and the Other Shareholders who have executed an intervention in
the form of Exhibit N.
RECITALS
WHEREAS, the respective Board of Directors of Buyer Sub and the
Company, and Buyer, as the sole shareholder of Buyer Sub have determined that it
is advisable and in the best interests of the respective corporations and their
shareholders that Buyer Sub be amalgamated with the Company in accordance with
the CANADA BUSINESS CORPORATIONS ACT ("CBCA") and Section 87(9) of the INCOME
TAX ACT (Canada) and the terms of this Agreement (the "MERGER");
WHEREAS, in furtherance thereof, the parties hereto wish to proceed to
an amalgamation pursuant to which Buyer shall become the owner of all of the
issued and outstanding shares of the amalgamated corporation ("Amalco") and
issue Buyer Shares to former holders of Company Shares in exchange for the
shares they will hold in the Company immediately prior to the Effective Time;
WHEREAS, it is intended that following the Merger, the Company will be
a wholly-owned subsidiary of the Buyer;
WHEREAS, prior to the Effective Time, Buyer Sub will have subscribed to
shares in the share capital of the Company and will have acquired some of the
shares held by JDS Uniphase Inc. in the share capital of the Company all for a
total amount of $36 million (the "PRIOR INVESTMENTS");
WHEREAS, 100% of the issued and outstanding shares of the Company,
consisting of common shares, Series A Preferred Shares, Series B1 Voting
Preferred Shares and Series B2 Non-Voting Preferred Shares (the "COMPANY
Shares") are held by the shareholders of the Company in the respective numbers
set forth on Exhibit A;
WHEREAS, the Company will agree to acquire certain of the "in the
money" options held by option-holders in the respective numbers set forth in
Exhibit L, prior to the Effective Time for a value equal to the difference
between the exercise price of such options and the per share consideration paid
under this Agreement;
WHEREAS the remaining "in the money" options held by option holders in
the respective numbers set forth in Exhibit L shall be vested and become
immediately exercisable and the Company will permit the cashless exercise of the
remaining "in the money" options;
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WHEREAS, in consideration of the mutual covenants contained in this
Agreement, and for good and valuable consideration the receipt and adequacy of
which are hereby acknowledged the parties agree as follows:
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth in this Agreement, the parties hereto hereby
agree as follows:
ARTICLE I
MERGER
1.1 THE MERGER. At the Closing, subject to the terms and
conditions of this Agreement, the Company Shares shall be acquired by the Buyer
Sub from the Founding Shareholders and the Other Shareholders (collectively, the
"SHAREHOLDERS").
1.2 TAKING OF NECESSARY ACTION. Buyer, Buyer Sub, the Company and
the Founding Shareholders, respectively, shall each use all commercially
reasonable efforts to take all such action as may be necessary or appropriate to
effectuate the Merger.
1.3 EFFECT OF MERGER. The effect of the Merger shall be as set
forth in Section 186 of the CBCA, and Amalco shall succeed to and, without
limiting the generality of the foregoing, shall possess all the properties,
rights, privileges, immunities, powers, franchises and purposes, and be subject
to all the duties, liabilities, debts, obligations, restrictions and
disabilities, of the Company, all without further act or deed.
1.4 EFFECTIVE TIME. The consummation of the Merger shall be
effected as promptly as practicable, but in no event more than three business
days after the satisfaction or waiver of the conditions set forth in Article VII
of this Agreement (other than those conditions which by their nature are to be
satisfied at the Closing, but subject to satisfaction of those conditions), and
the parties hereto will cause a copy of the articles of amalgamation and an
amalgamation agreement in compliance with section 182 of the CBCA (the "ARTICLES
OF AMALGAMATION") to be executed, delivered and filed with Industry Canada in
accordance with the CBCA along with all other documents required thereunder. The
Merger shall become effective on the date the director appointed pursuant to
section 260 of the CBCA (the "DIRECTOR") receives the Articles of Amalgamation.
The date and time on which the Merger shall become effective is referred to
herein as the "EFFECTIVE TIME".
1.5 PRIOR INVESTMENTS.
(i) Prior to the Effective Time, the Company
shall acquire for a consideration payable in cash only,
certain of the "in the money" options from their respective
holders as set forth in Exhibit L which have exercised the
election, using funds obtained from the Prior Investments,
representing the difference between the exercise price of such
options and $2.79 and the Company will permit the cashless
exercise of certain of the "in the money" options from the
respective holders as set forth in Exhibit L. In order to give
effect to the foregoing, the stock option plan of the Company
shall be amended in order to permit the option holders to
elect to receive the cash consideration and the
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Company Shares, as set forth in Exhibit L and such
option-holders shall agree to so elect the cash consideration
or to effect the cashless options in conformity with Exhibit
L. In addition the stock option plan of the Company shall be
amended to ensure that in the case of a "take-over" or change
in the control of the Company, to the extent that such
shareholders have not so elected, as above, the Company shall
have the right to purchase any option for its respective "in
the money amount". In this respect, the Buyer agrees to
provide sufficient funds by a subscription of shares so that
the Company may acquire the aforesaid options.
(ii) Prior to the Effective Time, the Buyer Sub,
by way of the Prior Investments, shall also acquire Company
Shares from JDS Uniphase Inc. which shall execute a separate
share purchase and sale agreement containing representations,
warranties, indemnifications and covenants in favour of the
Buyer equivalent to, and not more onerous than those being
provided by the Other Shareholders herein.
The aggregate consideration payable under sections 1.5(i) and
1.5(ii) is $36 million (the "CASH CONSIDERATION"), subject to
the payment of the Expenses by Buyer on behalf of the
Shareholders as provided under Section 8.2 hereof.
1.6 THE CLOSING.
(a) The closing of the transactions contemplated by this
Agreement (the "CLOSING") will take place at the offices of Fasken
Xxxxxxxxx XxXxxxxx LLP, Stock Exchange Tower, Suite 3400, 000 Xxxxx
Xxxxxxxx, Xxxxxxxx, Xxxxxx.
(b) At the Closing, the parties shall deliver or shall
cause to be delivered to each other the documents required to be
delivered pursuant to this Agreement, including the following:
(i) Buyer shall deliver to each Shareholder: (i)
stock certificates representing the Buyer Shares (other than
Escrow Shares) registered in each Shareholder's name and in
such denominations as set forth on Exhibit C; and (ii) all
documents, instruments and writings required to have been
delivered at or prior to the Closing by the Buyer pursuant to
this Agreement;
(ii) Buyer shall deliver to the Escrow Agent
stock certificates representing the Buyer Shares as
contemplated in Section 1.8 to be held in escrow by the Escrow
Agent which Buyer Shares shall not include any Buyer Shares
registered in the name of JDS Uniphase Inc. (the "ESCROW
SHARES");
(iii) Each shareholder of the Company shall
deliver and surrender to the Buyer his certificate or
certificates representing Company Shares, and the Company and
the Shareholders shall deliver to the Buyer all other
documents, instruments and writings required to have been
delivered at or prior to the Closing by the Company or the
Shareholders pursuant to this Agreement.
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1.7 MERGER CONSIDERATION, CONVERSION OF SECURITIES. The
consideration to be paid by Buyer to all shareholders of the Company listed in
Exhibit A, including the Shareholders, (other than the Cash Consideration paid
under Section 1.5) (the "MERGER CONSIDERATION"), shall be $64 million, payable
in the form of subordinate voting shares of the Buyer (the "BUYER SHARES"). The
aggregate number of Buyer Shares payable shall be determined by dividing the
Merger Consideration by the Closing Price. The "CLOSING PRICE" shall be $14.63,
representing the closing price of the Buyer Shares, as reported by the Nasdaq
National Market on July 20, 2001. If, prior to the Closing, there is any stock
dividend, stock split or other change in the character or amount of the
outstanding Buyer Shares, then in such event any and all new, substituted or
additional securities to which the Shareholders would have been entitled by
reason of their ownership of the Buyer Shares had the Closing occurred prior to
such event shall be considered Buyer Shares for purposes of this Agreement and
the consideration to be received by each Shareholder shall be adjusted
accordingly. At the Effective Time, the Merger shall effect an amalgamation
pursuant to the terms of which the holders of Company Shares, will receive Buyer
Shares for each of the Company Shares held by each of them immediately prior to
the Effective Date based on the respective exchange ratios set forth in Exhibit
C. The number of Company Shares held by each shareholder of the Company listed
in Exhibit A, including the Shareholders, and the number of Buyer Shares issued
under the Merger Consideration is set forth opposite each such shareholder's
name on Exhibit C, subject to the escrow provisions of Section 1.8. No fraction
of a Buyer Share shall be issued, and each fractional share thereof shall be
rounded up to the nearest whole number. Buyer shall be authorized to pay Merger
Consideration attributable to any certificate theretofore issued which has been
lost or destroyed, upon receipt of satisfactory evidence of ownership of the
shares of Company Shares represented thereby and of appropriate indemnification.
1.8 ESCROW ARRANGEMENTS. Simultaneously with and at the Closing
10% of the sum of the Cash Consideration and the Merger Consideration namely,
$100 million (the "TOTAL CONSIDERATION") will be delivered to the Escrow Agent
(as such term is defined in the Escrow Agreement attached hereto as Exhibit D a
separate version of which will be signed by each Shareholder) in the form of
Buyer Shares and an amount of $300,000 in cash from the Expenses as provided in
Section 8.2 hereof (the "ESCROW AGREEMENT"). For greater certainty, no Buyer
Shares to be registered in the name of JDS Uniphase Inc. shall be required to be
delivered in escrow. Such Buyer Shares and cash shall constitute an escrow fund
(the "ESCROW FUND") to be governed by the terms set forth in the Escrow
Agreement. The portion of the Escrow Fund contributed on behalf of each of the
Shareholders, except JDS Uniphase Inc., shall be in proportion to the Total
Consideration to which such holder would otherwise be entitled under Section
1.8. The Escrow Fund shall terminate 24 months after the Closing with 50% of the
Escrow Fund being released after 12 months of Closing, except to the extent that
any timely made claims of any Buyer Indemnified Parties pursuant to Section 9.2
hereof remain unsatisfied at such time. The provisions of the Escrow Agreement
shall govern in the event of any conflict between the Escrow Agreement and this
Section 1.8. Any Shareholder may withdraw a number of Buyer Shares deposited by
him (the "WITHDRAWN SHARES") and substitute cash in lieu thereof at any time,
provided that the amount deposited in substitution for the Withdrawn Shares is
equal to the product of (i) the Closing Price, and (ii) the number of Withdrawn
Shares.
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1.9 APPOINTMENT OF SHAREHOLDER REPRESENTATIVES. Each Shareholder
other than JDS Uniphase Inc., Business Development Bank of Canada, Societe
Innovatech du Grand Montreal, Ventures West VI Limited Partnership, Ventures
West 7 Limited Partnership, Venture West 7 U.S. Limited Partnership, Bank of
Montreal Capital Corporation, Skypoint Capital Corporation and such Other
Shareholder which at law or pursuant to any corporate policy may not grant such
appointment, hereby appoints Xxxx Xxxxx (the "SHAREHOLDER REPRESENTATIVE") the
attorney-in-fact of such Shareholder, with full power and authority, including
power of substitution, acting in the name of and for and on behalf of such
Shareholder to, in his sole discretion: (i) amend or waive any provision of this
Agreement; (ii) terminate this Agreement pursuant to the provisions of Article
X; (iii) do all other things and take all other action under or related to this
Agreement which he may consider necessary or proper to effectuate the
transactions contemplated by this Agreement; (iv) resolve any dispute with Buyer
over any aspect of this Agreement or any instrument or document delivered
hereunder; (v) execute and take any actions under the Escrow Agreement; and (vi)
on behalf of such Shareholder to enter into any agreement to effectuate any of
the foregoing items (i)-(vi) which shall have the effect of binding such
Shareholder as if such Shareholder had personally entered into such
agreement(s), taken such actions or refrained from taking such actions described
in Sections (i)-(vi) above. Notwithstanding the foregoing, all actions taken or
decisions made by the Shareholder Representative on behalf of the Shareholders
shall be taken or made in a manner which is ratable and equitable among all
Shareholders. This appointment and power of attorney shall be deemed as coupled
with an interest and all authority conferred hereby shall be irrevocable and
shall not be subject to termination by operation of law, whether by the death or
incapacity or liquidation or dissolution of any Shareholder or the occurrence of
any other event or events and the Shareholder Representative may not terminate
this power of attorney with respect to any Shareholder or such Shareholder's
successors or assigns without the consent of Buyer. Each Shareholder agrees to
hold the Shareholder Representative harmless and indemnify the Shareholder
Representative, for itself and not for the other Shareholders in accordance with
the Total Consideration received by such indemnifying Shareholder with respect
to any and all loss, damage or liability and expenses (including legal fees)
which such Shareholder may sustain as a result of any action taken in good faith
by the Shareholder Representative.
1.10 ADJUSTMENT TO PURCHASE PRICE. It is agreed that the portion of
the Total Consideration received by Xxxx Xxxxx shall be reduced by the amount of
$750,000, payable in cash, in the event that Xxxx Xxxxx terminates his
employment agreement with the Company prior to the third anniversary of Closing
and without the prior written consent of Buyer.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
FOUNDING SHAREHOLDERS
The Founding Shareholders and the Company hereby solidarily represent
and warrant to Buyer, as of the date hereof (except as to any representation or
warranty which specifically relates to an earlier date) as follows and which
shall be true on the date hereof and, except as contemplated herein, on the
Closing Date:
2.1 ORGANIZATION AND AUTHORITY. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of Canada.
The Company has the requisite
6
corporate power and authority: (a) to carry on its business as currently
conducted; (b) to own and use the properties owned and used by it; and (c) to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. Except as set forth in Schedule 2.1, the Company is duly
qualified to do business as a foreign corporation and in good standing in each
jurisdiction where the nature of its business or the ownership or leasing of its
properties makes such qualification necessary, except where the failure to be so
qualified or in good standing could not reasonably be expected to have a Company
Material Adverse Effect. For purposes of this Agreement, "COMPANY MATERIAL
ADVERSE EFFECT" means any change, effect, event, occurrence or state of facts
(or any development that has had or is reasonably likely to have any change or
effect) that is materially adverse to the business, financial condition or
results of operations of the Company, taken as a whole, PROVIDED, HOWEVER, any
adverse change, effect or circumstance (a) primarily arising out of or resulting
primarily from actions contemplated by the parties hereto in connection with
this Agreement, (b) that is primarily attributable to the announcement or
performance of this Agreement or the transactions contemplated hereby, (c)
resulting from economic factors affecting the economy as a whole or (d)
resulting from factors generally affecting the specific markets in which the
Company competes shall not be deemed in themselves, either alone or in
combination, to constitute, and shall not be taken into account in determining
whether there has been, a Company Material Adverse Effect. The execution and
delivery by the Company of this Agreement and the consummation by the Company of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions so contemplated by this Agreement. This
Agreement has been duly and validly executed and delivered by the Company and
the Founding Shareholders, and assuming this Agreement constitutes a valid and
binding obligation of the Buyer and Buyer Sub, this Agreement constitutes a
valid and binding agreement of the Company and the Founding Shareholders
enforceable against the Company and the Founding Shareholders in accordance with
its terms, subject, however, as to enforcement, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditor's rights and to general
principles of equity, regardless of whether such enforceability is considered in
equity or at law. The Company is not in violation of any of the provisions of
its articles of incorporation or bylaws, except for violations which could not
reasonably be expected to have a Company Material Adverse Effect.
2.2 CAPITALIZATION. The authorized, issued and outstanding shares
of capital stock of the Company are as set forth on Schedule 2.2. The
outstanding Company Shares are duly and validly authorized and issued, represent
100% of the issued and outstanding share capital of the Company, are paid and
nonassessable and are owned of record by the shareholders as set forth on
Exhibit A. Except as set forth on Schedule 2.2, the Company does not have
outstanding any options, warrants or other rights to acquire, directly or
indirectly, capital stock from the Company, and the Company does not have any
obligation to repurchase or redeem any capital stock of the Company. The Company
has no Subsidiaries. Except as set forth in the Shareholders' Agreement, the
Company is not party to any agreement and to the Founding Shareholders'
Knowledge, there is no agreement between any Persons, which grants any rights of
first refusal or pre-emptive rights, or relates to the voting or giving of
written consents with respect to any security or by a director of the Company.
7
2.3 NO BREACH. Except as set forth on Schedule 2.3, the execution
and delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not conflict with, or result in any violation of or default (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation, or result in the
creation of any Lien upon any of the properties or assets of the Company
pursuant to, any provision of: (i) the articles of incorporation or by-laws of
the Company; (ii) any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise or license
applicable to the Company or its properties or assets or (iii) subject to the
governmental filings and other matters referred to in Section 2.5, any statute,
law, rule, regulation, judgment, order or decree applicable to the Company or
its properties or assets, other than, with respect to any of the matters
described above, any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not reasonably be expected to have a
Company Material Adverse Effect, or prevent or materially delay the consummation
of any of the transactions contemplated by this Agreement.
2.4 SHARE OWNERSHIP. Except as set forth on Schedule 2.4, each
Founding Shareholder has full right, power and authority to sell, transfer,
assign, vote and deliver the Shares being sold by such Shareholder hereunder.
Immediately prior to the delivery of the Company Shares, each shareholder of the
Company listed in Exhibit A was the sole registered and, to the Founding
Shareholders' Knowledge, beneficial owner of the Company Shares listed opposite
his name on Exhibit A. Except as set forth on Schedule 2.4, each Founding
Shareholder had good and valid title to such Company Shares and is the
beneficial owner thereof, free and clear of all Liens and restrictions on
transfer (other than restrictions on transfer imposed by applicable securities
laws). Except for the shareholder's agreement dated as of December 21, 2000 (the
"SHAREHOLDER'S AGREEMENT") and to the Founding Shareholders' Knowledge, there
are no outstanding options, warrants, convertible securities, calls, rights,
commitments, preemptive rights or agreements or instruments or understandings of
any character to which any shareholder of the Company is a party, obligating
such shareholder to deliver or sell, or cause to be delivered or sold,
contingently or otherwise, such Company Shares. Except as set forth in Schedule
2.4 and except for the Shareholder's Agreement, there are no voting trust
agreements or other contracts, agreements, arrangements, commitments, plans or
understandings to which any shareholder of the Company is a party restricting or
otherwise relating to voting, dividend or other rights with respect to such
Company Shares.
2.5 CONSENTS AND APPROVALS. Except as set forth in Schedule 2.5,
no consent, approval, order or authorization of, or registration, declaration or
filing with, any federal, provincial or local government or any court,
administrative agency, commission or other governmental authority or agency,
domestic or foreign (each, a "GOVERNMENTAL ENTITY"), is required by or with
respect to the Company in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the transactions
contemplated by this Agreement, except for (a) the filing of a premerger
notification under the COMPETITION ACT (Canada), (b) such filings as may be
required under applicable Canadian provincial securities laws, (c) such filings,
consents, approvals, orders, registrations and declarations as
8
may be required under the laws of any foreign country in which the Company
conducts any business or owns any assets, (d) such filings, consents, approvals,
orders, registrations and declarations as may be necessary as a result of the
facts or circumstances relating solely to the Buyer, and (e) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made would not, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect or prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement. Neither the execution and delivery
of this Agreement by any Founding Shareholder or the Company nor the
consummation of the transactions contemplated hereby by any Founding Shareholder
or the Company will (1) conflict with, result in a breach or violation of or
constitute (or with notice or lapse of time or both constitute) a default under
any law, statute, regulation, order, judgment or decree or any instrument,
contract or other agreement to which any Founding Shareholder or the Company is
a party or by which any Founding Shareholder or the Company is bound, or (2)
require such Founding Shareholder or the Company to obtain any authorization,
consent, approval or waiver from, give notification to, or make any filing with,
any Governmental Entity, or to obtain the approval or consent of any other
Person, except for such conflicts, breaches, violations or defaults, or any
authorization, consent, approval, waiver, notification or filing the failure of
which to obtain or make, will not (x) impair in any material respect the ability
of such Founding Shareholder or the Company to perform their respective
obligations under this Agreement or (y) prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement. For
purposes of this Agreement, "PERSON" means an individual or corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
2.6 LITIGATION; PROCEEDINGS. Except as set forth in Schedule 2.6,
there is no action, suit or proceeding, governmental or otherwise, pending or,
to the Company's Knowledge, overtly threatened against the Company or any of its
properties or business that, individually or in the aggregate, would reasonably
be expected to have a Company Material Adverse Effect. There is no judgment,
decree, injunction, rule or order of any Governmental Entity outstanding against
the Company having or reasonably likely to have, in the future, any such effect.
2.7 FINANCIAL STATEMENTS. The Company has delivered to the Buyer
(a) complete and correct copies of the Company's audited balance sheet as of
December 31, 2000, and the related statements of loss, deficit and cash flows
(together with the auditors' report thereon) for the year ended December 31,
2000, together with notes to such financial statements, (b) complete and correct
copies of the Company's balance sheet as of December 31, 1999, and the related
statements of loss, deficit and cash flows for the year ended December 31, 1999,
together with notes to such financial statements, (the "AUDITED FINANCIAL
STATEMENTS"), and (c) complete and correct copies of the Company's unaudited
balance sheet as at June 30, 2001, and the related statements of loss, deficit
and cash flows for the six month period ended June 30, 2001 (the "INTERIM
FINANCIAL STATEMENTS"). The Audited Financial Statements and Interim Financial
Statements are herein collectively referred to as the "FINANCIAL STATEMENTS".
The Financial Statements are in accordance with the books and records of the
Company and have been prepared in accordance with generally accepted accounting
principles in Canada ("GAAP") consistently applied throughout the periods
covered thereby and except as set forth in Schedule 2.7 present fairly in all
material respects, as of their respective dates, the financial condition and
results of operations of the Company (subject, in the case of Interim Financial
9
Statements, to normal, recurring year-end adjustments that may be required upon
audit). It being agreed that the Interim Financial Statements for the seven (7)
month period ended July 31, 2001 shall be provided to Buyer prior to Closing and
shall be subject to the representations set forth herein as applicable.
2.8 NO UNDISCLOSED LIABILITIES. Except as set forth in Schedule
2.8, to the Knowledge of the Company and the Founding Shareholders, the Company
does not have any liability (whether absolute or contingent, whether liquidated
or unliquidated and whether due or to become due) which is material to the
Company, taken as a whole, except for: (a) liabilities shown in the latest
Financial Statements; (b) liabilities which have arisen in the ordinary course
of business since the date of the latest balance sheet included in the Financial
Statements; or (c) contractual liabilities incurred in the ordinary course of
business which are not required by GAAP to be reflected in the Financial
Statements.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Schedule 2.9, since May 31, 2001, the Company has conducted its business only in
the ordinary course and (a) there has not occurred any events or changes that
have had, or would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect and (b) there has not been any
change in the accounting principles, policies, practices or procedures of the
Company or their application to the Company and (c) the Company has not taken
any action that would have been prohibited under Section 6.1 hereof.
2.10 COMPLIANCE WITH LAWS. Except as set forth in Schedule 2.10,
the Company is in compliance with all applicable statutes, laws, ordinances,
regulations, rules, judgments, decrees and orders of any Governmental Entity
applicable to its business or operations, except for matters which, individually
or in the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect. The Company has in effect all federal, provincial, local and
foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights ("PERMITS") necessary for it
to own, lease or operate its properties and assets and to carry on its business
as now conducted, and there has occurred no default under any such Permit,
except for the lack of any Permits and for defaults under Permits which,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect.
2.11 TAXES. Except as set forth in Schedule 2.11, the Company has
timely filed all Tax Returns required to be filed by it, or requests for
extensions to file such Tax Returns have been timely filed and granted and have
not expired, and all such filed Tax Returns are complete and accurate in all
respects, except to the extent that any failures to (a) file, (b) have
extensions granted that remain in effect or (c) be complete and accurate in all
respects, as applicable, individually or in the aggregate, would not reasonably
be expected to have a Company Material Adverse Effect. Except as set forth in
Schedule 2.11, the Company has paid all Taxes required to be paid by it, except
to the extent that a failure to pay all Taxes required to be paid by it,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect. Except as set forth in Schedule 2.11, the most
recent financial statements contained in the Financial Statements reflect an
adequate reserve for all Taxes payable by the Company for all taxable periods
and portions thereof accrued through the date of such financial statements,
except to the extent that any failures to reflect such reserves, individually or
in the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect. No
10
deficiencies for any Taxes have been proposed, asserted or assessed against the
Company that are not adequately reserved for on the Company's financial
statements in accordance with GAAP except to the extent that such Taxes,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect. To the Company's Knowledge, there is no pending
dispute with any taxing authority relating to any of the Company's Tax Returns
and there is no tax audit, assessment or reassessment of any Tax Return of the
Company pending or currently in process. All Taxes that the Company is or was
required by law to withhold or collect have been duly withheld or collected and,
to the extent required, have been paid to the proper Governmental Entity except
for any such Taxes with respect to which the failure to withhold, collect or pay
would not reasonably be expected to have a Company Material Adverse Effect.
There are no Liens for Taxes upon any of the assets of the Company, except Liens
for current Taxes not yet due and payable. For purposes of this Agreement,
"TAXES" means all taxes, including without limitation income, gross receipts,
goods and services, ad valorem, value-added, excise, real property, personal
property, sales, use, transfer, withholding, employment, payroll and franchise
taxes imposed by Canada or any provincial, local or foreign government, or any
agency thereof, or any such government, and any interest, fines, penalties,
assessments or additions to tax resulting from, attributable to or incurred in
connection with any tax or any contest or dispute thereof. For purposes of this
Agreement, "TAX RETURNS" means all reports, returns, declarations, statements or
other information required to be supplied to a taxing authority in connection
with Taxes.
2.12 INTELLECTUAL PROPERTY.
(a) Schedule 2.12(a) includes a list of all patents,
trademarks, copyrights and software owned or licensed by the Company.
"COMPANY INTELLECTUAL PROPERTY" shall mean all (i) Canadian and foreign
patents, patent applications, and other patent rights ("PATENTS"); (ii)
Canadian and foreign trademarks, service marks, trade dress, trade
names, brand names, Internet domain names, designs, logos, or corporate
names, whether registered or unregistered, and all registrations and
applications for registration thereof ("TRADEMARKS"); (iii) Canadian
and foreign copyrights, including all renewals and extensions thereof,
copyright registrations and applications for registration thereof, and
non-registered copyrights ("COPYRIGHTS"); (iv) trade secrets, concepts,
ideas, designs, research, processes, procedures, techniques, methods,
know-how, data, mask works, discoveries, inventions, modifications,
extensions, improvements, and other proprietary rights (whether or not
patentable or subject to copyright, mask work, or trade secret
protection) ("TECHNOLOGY"); and (v) computer software programs,
including, without limitation, all source code, object code, and
documentation related thereto ("SOFTWARE"), but not including
mass-marketed software with a price of less than $1,000 per copy. The
Company owns or is licensed or otherwise possesses legally enforceable
rights to use, sell, and license, free and clear of any and all Liens
or material restrictions, any and all Company Intellectual Property,
except where any failure to own, license or otherwise possess legally
enforceable rights to use such Company Intellectual Property would not
reasonably be expected to have a Company Material Adverse Effect.
11
(b) Schedule 2.12(b) sets forth all material licenses,
sublicenses, and other agreements or permissions under which the
Company is a licensor of Company Intellectual Property.
(c) The Company has not been named in any suit, action
or proceeding which involves a claim of infringement of any Patents,
except as may be evidenced by third-party patents issued after the date
hereof, Trademarks, Copyrights, Technology or Software of any third
party. To the Company's Knowledge, the manufacturing, marketing,
licensing or sale of the products of the Company as presently conducted
do not infringe any valid Patents, Trademarks, Copyrights, Technology
or Software of any third party, except for any such infringement that
would not reasonably be expected to have a Company Material Adverse
Effect. The Company has taken all necessary and reasonable action to
maintain and protect each item of Company Intellectual Property.
(d) All material Software used, sold, or licensed by the
Company is free from any material software defect, performs materially
in conformance with its technical user documentation, and does not
contain any code or mechanism that could be used to interfere with the
operation of the Software.
(e) The Company is not nor, as a result of the execution
and delivery of this Agreement or the performance of its obligations
hereunder, will be, in violation of any agreement relating to any
Company Intellectual Property.
2.13 TITLE TO AND CONDITION OF PROPERTIES. Except as set forth on
Schedule 2.13, the Company has good and marketable title to or a valid leasehold
interest under a capitalized lease in all assets recorded on the Company's
balance sheet as of May 31, 2001, free and clear of all pledges, claims, liens,
charges, encumbrances or security interests of any kind or nature whatsoever
(collectively, "LIENS"), except for (a) assets no longer used or useful in the
conduct of the business or disposed of in the ordinary course of business since
such date, (b) Liens disclosed in the Financial Statements, (c) Liens or
imperfections of title which are not, individually or in the aggregate, material
in character, amount or extent and which do not materially detract from the
value or materially interfere with the present or presently contemplated use of
the assets subject thereto or affected thereby, and (d) Liens for current Taxes
not yet due and payable. The Company has a valid leasehold or other interest in
all other assets used by it in its business, other than exceptions that would
not reasonably be expected to have a Company Material Adverse Effect. All of the
machinery, equipment and other tangible personal property and assets owned or
used by the Company are in good condition and repair, except for ordinary wear
and tear, and are usable in the ordinary course of business, except for any
matter otherwise covered by this sentence which would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.
2.14 CONTRACTS AND AGREEMENTS. Schedule 2.14 sets forth a list of:
(a) each contract, agreement or commitment of the Company
which requires total payments to or by the Company of at least $50,000
annually;
12
(b) each contract, agreement or commitment of the Company
which has a remaining term longer than one (1) year, which requires
total payments to or by the Company of at least $100,000 during the
remaining term and which is not terminable on thirty (30) or fewer
days' notice without penalty;
(c) each contract, agreement or commitment to which the
Company is a party or by which any of its assets are bound relating to
indebtedness for borrowed money, including capital leases and security
agreements relating thereto;
(d) each lease of real property by the Company;
(e) any collective bargaining agreement, union agreement,
employment agreement, consulting agreement, management service
agreement or substantially similar type of contract or agreement to
which the Company is a party;
(f) any consent decree and other judgment, decree or
order, settlement agreement or other agreement limiting the ability of
the Company to compete in any line of business or with any Person in
any geographic areas;
(g) any joint venture agreement or other contract,
agreement or commitment to which the Company is a party involving a
sharing of profits or expenses; and
(h) any outstanding loan or advance by the Company to, or
investment by the Company in, any Person, or any agreement, contract,
commitment or understanding relating to the making of any such loan,
advance or investment.
All of the contracts, agreements, leases, licenses, arrangements,
commitments and documents listed on Schedule 2.14 (collectively, the "COMPANY
CONTRACTS") are valid obligations of the Company and, to the Company's
Knowledge, each other party thereto, and are binding and in full force and
effect in accordance with their terms and conditions. Except as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, to the Company's Knowledge there is no existing default
thereunder or breach thereof by the Company or by any other party thereto, or
any conditions which, with the passage of time or the giving of notice or both,
might reasonably constitute such a default by the Company, or by any other party
to a Company Contract. There are no pending or, to the Company's Knowledge,
threatened disputes with respect to the Company Contracts.
2.15 INSURANCE. Schedule 2.15 sets forth a list of all policies of
fire, extended coverage, liability and all other kinds of insurance held by the
Company in connection with the conduct of its business and operations (other
than policies relating to Company Plans). Such policies are in full force and
effect and, to the Company's Knowledge, the Company is not in default with
respect to its obligations under any of such insurance policies, except for any
failures to be in full force and effect or defaults that would not reasonably be
expected to have a Company Material Adverse Effect. The Company maintains the
type and amount of insurance which the Company believes is adequate in coverage
and amount to insure fully against the risks to which the Company and its
employees, business, properties and other assets would reasonably be expected to
be exposed in the operation of its business.
13
2.16 EMPLOYEES. Schedule 2.16 sets forth the names, the rate of
compensation (and the portions thereof attributable to salary and bonuses,
respectively), accrued vacation and location of all current employees of the
Company. To the Company's Knowledge, no key employee or group of employees has
any plans to terminate employment with the Company. The Company is not a party
to or bound by any collective bargaining agreement, nor has it experienced any
strikes, grievances, claims of unfair labor practices or other collective
bargaining disputes. To the Company's Knowledge, no organizational effort has
been made or threatened, either currently or within the past two years, by or on
behalf of any labor union or trade union with respect to employees of the
Company.
2.17 EMPLOYEE BENEFITS.
(a) Schedule 2.17 lists all material employee benefit
plans and collective bargaining, employment or severance agreements or
other similar arrangements which the Company, sponsors, maintains, or
to which contributions are made, for the benefit of employees of the
Company or any Subsidiary, including, without limitation, any
profit-sharing, deferred compensation, bonus, stock option, stock
purchase, pension, retainer, consulting, retirement, severance, welfare
or incentive plan, agreement or arrangement, and (2) any plan,
agreement or arrangement providing for "fringe benefits." The plans,
agreements and arrangements described in this Section 2.17 are referred
to herein as the "COMPANY Plans".
(b) The Company has delivered or made available to Buyer
true and complete copies of all documents and summary plan descriptions
of the Company Plans or summary descriptions of any such Company Plan
not otherwise in writing.
(c) Each Company Plan has been administered in accordance
with its terms, except for any failure to so administer that would not
reasonably be expected to have a Company Material Adverse Effect.
(d) All reports, returns and similar documents with
respect to each Company Plan required to be filed with any Governmental
Entity or distributed to any participant of each Company Plan have been
duly and timely filed or distributed.
(e) No actions, suits, disputes or claims (other than
routine claims for benefits in the ordinary course) are pending or, to
the Company's Knowledge, threatened with respect to any Company Plan.
To the Company's Knowledge, no audits, inquiries, reviews, proceedings,
claims, or demands are pending with any Governmental Entity with
respect to any Company Plan.
(f) No Company Plan provides for or continues medical or
health benefits, or life insurance or other death benefits (through
insurance or otherwise) for any employee or any dependent or
beneficiary of any employee after such employee's retirement or other
termination of employment except as required by applicable provincial
law, and there has been no communication to any employee that could
reasonably be expected to promise or guarantee any such benefits.
14
(g) Except as set forth in the Company Plans, the
consummation of the transactions contemplated by this Agreement will
not entitle any individual to severance pay, and will not accelerate
the time of payment or vesting, or increase the amount of compensation
due to any individual.
(h) With respect to any Company Plan, all required or
discretionary (in accordance with historical practices) payments,
premiums, contributions, reimbursements, or accruals for all periods
ending prior to or as of Closing shall have been made or properly
accrued on the current balance sheets or will be properly accrued on
the books and records of the Company as of the Closing Date. None of
the Company Plans has any unfunded liabilities which are not reflected
on the current balance sheet or the books and records of the Company.
2.18 FACILITIES. The Company does not own any real property.
Schedule 2.18 sets forth a list of all real property currently leased or
occupied by the Company or leased or occupied by the Company since its inception
(collectively, the "FACILITIES"). Except as set forth on Schedule 2.18, the
Facilities are not subject to any encumbrances, encroachments, building or use
restrictions, exceptions, reservations or limitations, except those which do
not, taken as a whole, result in a Company Material Adverse Effect or which
prevent any continued use thereof in the usual and normal conduct of the
Company's business. There are no pending or, to the Company's Knowledge,
threatened condemnation proceedings relating to any of the Facilities.
2.19 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 2.19,
(a) to the Company's Knowledge, the business of the
Company is and has been operated in compliance with Environmental Law.
The Company has not received any notice of non-compliance with
Environmental Law;
(b) the Company has not Discharged or caused or permitted
to be Discharged, any Substances on, to or from the Facilities, or in
connection with the operation of the Company's businesses, except in
compliance with Environmental Law;
(c) to the Company's Knowledge, the Company has not
permitted the Facilities to be used for the disposal of any Substance;
(d) the Company has obtained all Environmental Permits
necessary for the lawful operation of the business, except where the
failure to have any such Environmental Permit would not have a Company
Material Adverse Effect.
(e) there are no claims, actions, proceedings or demands
against or involving the Company either in progress, pending or, to the
Company's Knowledge, threatened which allege the violation of, or
non-compliance with, any Environmental Law; and
(f) copies of all environmental reports or audits
performed or prepared since its inception within the possession of the
Company with respect to the Facilities have been made available to the
Buyer.
15
For purposes of this Section 2.19, the following defined terms
have the meanings set forth below:
"DISCHARGE" means any discharge, emission, release, deposit, issuance,
spray, escape, spill, leak and shall also have the various meanings
attributed to such term in Environmental Law.
"ENVIRONMENT" means soil, surface waters, ground waters, land, stream
sediments, surface or subsurface strata, ambient air and any
environmental medium.
"ENVIRONMENTAL LAW" means all federal, provincial or municipal
statutes, regulations order or rules, and any policies or guidelines of
any governmental or regulatory body or agency, relating to the
Environment, the transportation of dangerous goods and occupational
health and safety.
"ENVIRONMENTAL PERMITS" means any and all federal, provincial and
foreign governmental permits, licenses and other authorizations and
approvals issued by or provided to, as the case may be, any
governmental, governmental or regulatory body or agency pursuant to an
Environmental Law.
"SUBSTANCE" means any substance or material which is regulated under
any Environmental Law, including any substance defined under
Environmental Law to be "hazardous", "toxic", "deleterious", "caustic",
"dangerous", a "contaminant", a "dangerous good", a "waste", a "source
of contamination" or a "pollutant".
2.20 TRANSACTIONS WITH THE SHAREHOLDERS. Except as set forth in
Schedule 2.20, the Company does not owe any amount to any of its shareholders or
the Shareholder Affiliates for money loaned to the Company and none of the
shareholders of the Company nor the Shareholder Affiliates owe any amount to the
Company for money loaned to any of the shareholders of the Company or the
Shareholder Affiliates. Except as set forth in Schedule 2.20, the Company, the
shareholders of the Company and the Shareholder Affiliates have not entered into
and do not have any obligation, directly or indirectly, to enter into any
transaction, including, without limitation, the purchase from, sale to or
exchange of property with, or the rendering of any service by or for the
Company, the shareholders of the Company or the Shareholder Affiliates, as the
case may be. For purposes hereof, the term "SHAREHOLDER AFFILIATE" shall mean
any officer, director, trustee or other person who controls any shareholder of
the Company or any affiliate of the shareholder of the Company within the
meaning of section 2 of the CBCA or any associate of any shareholder of the
Company within the meaning of section 5 of the SECURITIES ACT (Quebec).
2.21 CAPITAL EXPENDITURES. Schedule 2.21 sets forth all of the
completed and planned capital expenditures.
2.22 USE OF NAME. Except as set forth in Schedule 2.22, the Company
has full exclusive right and title to use its corporate name as set forth in its
certificate of incorporation.
16
2.23 BROKERS, FINDERS OR FINANCIAL ADVISORS. No broker, investment
banker, financial advisor or other person, other than Wit SoundView Corporation,
is entitled to any broker's, finder's, financial advisor's or other similar fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company or any shareholder
of the Company.
2.24 EXCLUSIVITY OF REPRESENTATIONS. THE REPRESENTATIONS AND
WARRANTIES MADE BY THE COMPANY AND THE FOUNDING SHAREHOLDERS IN THIS AGREEMENT
ARE IN LIEU OF AND ARE EXCLUSIVE OF ALL OTHER REPRESENTATIONS AND WARRANTIES,
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES. THE COMPANY AND THE
FOUNDING SHAREHOLDERS HEREBY DISCLAIM ANY SUCH OTHER OR IMPLIED REPRESENTATIONS
OR WARRANTIES, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE BUYER OR ITS
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES OF ANY DOCUMENTATION
OR OTHER INFORMATION, INCLUDING ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL
DATA.
2.25 FULL DISCLOSURE. Each of the Founding Shareholders has made or
caused to be made due enquiry with respect to each of the representations,
warranties and statements contained in this Agreement and in each of the
schedules, certificates, documents and other writings referred to herein or
furnished to the Buyer hereunder, and none of the same contains any untrue
statement of a material fact or omits a material fact necessary to make the
statements contained therein not misleading, and all such statements, taken as a
whole, together with this Agreement, do not contain any untrue statement of a
material fact or omit a material fact necessary to make the statements contained
herein and therein not misleading. Save and except for those matters disclosed
herein, the Founding Shareholders have no knowledge of any facts which should
reasonably be made known to the Buyer relating to the Company not herein
disclosed which would be likely to affect the value of the Company Shares.
ARTICLE III
REPRESENTATION AND WARRANTY OF THE SHAREHOLDERS AS TO
SECURITIES MATTERS
Each of the Shareholders jointly (where such term is used herein it has
the meaning given to it in section 1518 of the Civil Code of Quebec) represents,
for itself and not for any other Shareholders or the Company, to the Buyer as of
the date hereof as follows:
3.1 SECURITIES MATTERS.
(a) Each Shareholder alone, or through its personal
representative, has such knowledge and experience in financial and
business matters and such experience in evaluating and investing in
companies such as Buyer as to be capable of evaluating the merits and
risks of an investment in the Buyer Shares. Such Shareholder has the
financial ability to bear the economic risk of his investment in the
Buyer Shares being acquired hereunder, has adequate means for providing
for his current needs and contingencies and has no need for liquidity
with respect to his investment in Buyer.
17
(b) Each Shareholder is acquiring the Buyer Shares for
its own account, for investment purposes only, and not with the view
to, or for resale in connection with, any distribution thereof. Such
Shareholder understands that the Buyer Shares have not been registered
under the United States Securities Act of 1933, as amended (the
"SECURITIES ACT"), or under the securities laws of various states of
the United States, by reason of a specified exemption from the
registration provisions thereunder which depends upon, among other
things, the bona fide nature of such Shareholder's investment intent as
expressed herein. Such Shareholder acknowledges that his
representations and warranties contained herein are being relied upon
by Buyer as a basis for the exemption of the issuance of the Buyer
Shares hereunder from the registration requirements of the Securities
Act and any applicable state securities laws.
(c) Each Shareholder acknowledges, with respect to the
sale of its Buyer Shares in the United States, that the Buyer Shares
must be held indefinitely until they are subsequently registered under
the Securities Act and under applicable state securities laws or an
exemption from such registration is available. Such Shareholder has
been advised or is aware of the provisions of Rule 144 promulgated
under the Securities Act which permits limited resale of the securities
purchased in a private placement subject to the satisfaction of certain
conditions including, among other things, the availability of certain
current public information about Buyer and compliance with applicable
requirements regarding the holding period and the amount of securities
to be sold and the manner of sale. Each Shareholder understands that
only Buyer can take action to register the Buyer Shares under the
SECURITIES ACT.
(d) Each Shareholder or its representative has had an
opportunity to discuss the Buyer's business, management, financial
affairs and acquisition plans with its management, to review the
Buyer's facilities, and to obtain such additional information
concerning such Shareholder's investment in the Buyer Shares in order
for such Shareholder to evaluate its merits and risks, and such
Shareholder has determined that the Buyer Shares are a suitable
investment for such Shareholder and that at this time such Shareholder
could bear a complete loss of his investment.
(e) Each Shareholder is aware that no U.S., Canadian,
federal, state, provincial or other agency has passed upon or made any
finding or determination concerning the fairness of the transactions
contemplated by this Agreement or the adequacy of the disclosure of the
exhibits and schedules hereto or thereto.
(f) Each Shareholder understands that all certificates
for the Buyer Shares issued to such Shareholder shall bear a legend in
substantially the following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT SUCH
REGISTRATION OR THE DELIVERY TO THE ISSUER OF AN OPINION OF
COUNSEL, OR SUCH OTHER
18
DOCUMENTATION REASONABLY SATISFACTORY TO THE ISSUER, THAT SUCH
DISPOSITION WILL NOT REQUIRE REGISTRATION OF SUCH SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS.
A NEW CERTIFICATE BEARING NO LEGEND MAY BE OBTAINED FROM THE
TRANSFER AGENT UPON DELIVERY OF THIS CERTIFICATE AND A DULY
EXECUTED DECLARATION, IN A FORM SATISFACTORY TO THE TRANSFER
AGENT AND THE ISSUER, TO THE EFFECT THAT THE SALE OF THE
SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH
RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT OF
1933."
provided that if the Buyer Shares are being sold in compliance
with the requirements of Rule 904 of Regulation S of the Securities
Act, the legend may be removed by providing a declaration to the
transfer agent or the Buyer to the following effect:
"The undersigned (a) acknowledges that the sale of the
securities to which this declaration relates is being made in reliance
on Rule 904 of Regulation S under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and (b) certifies that (1) it is not an
"affiliate" (as defined in Rule 405 under the Securities Act) of EXFO
Electro-Optical Engineering Inc., (2) the offer of such securities was
not made to a person in the United States and either (a) at the time
the buy order was originated, the buyer was outside the United States,
or the seller and any person acting on its behalf reasonably believe
that the buyer was outside the United States or (b) the transaction was
executed on or through the facilities of The Toronto Stock Exchange and
neither the seller nor any person acting on its behalf knows that the
transaction has been prearranged with a buyer in the United States and
(3) neither the seller nor any person acting on its behalf engaged in
any directed selling efforts in connection with the offer and sale of
such securities. Terms used herein have the meanings given to them by
Regulation S."
(g) Each Shareholder understands that the Buyer Shares
will not be registered at the time of their issuance under the
Securities Act for the reason that the sale provided for in this
Agreement is exempt pursuant to Section 4(2) of the Securities Act and
that the reliance of the Buyer on such exemption is predicated in part
on the Shareholders' representations set forth herein.
ARTICLE IV
REPRESENTATIONS AND WARRANTY OF THE OTHER SHAREHOLDERS
In order to induce the Buyer to enter into this Agreement, each
shareholder of the Company signing the intervention attached hereto as Exhibit N
(the "OTHER SHAREHOLDERS"),
19
jointly represents and warrants, for itself and not for the other Shareholders,
to Buyer the matters set forth below, which shall be true on the date of
execution hereof and on the Closing Date:
4.1 AUTHORISATION. Each Other Shareholder has the requisite
corporate (where applicable) power and authority to enter into and to consummate
the transactions contemplated by this Agreement and otherwise to carry out its
obligations hereunder. The execution and delivery of this Agreement by each
Other Shareholder and the consummation by it of the transactions contemplated
hereby have been duly authorised by all necessary action on the part of such
Other Shareholder, and no further action is required by such Other Shareholder.
This Agreement has been duly executed by each Other Shareholder and, assuming
this Agreement constitutes a valid and binding obligation of the Buyer, Buyer
Sub, the Company and the other Shareholders, this Agreement constitutes a valid
and binding agreement of the Other Shareholder enforceable against the Other
Shareholder in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, fraudulent transfer, reorganisation, moratorium and
similar laws of general applicability relating to or affecting creditor's rights
and to general principles of equity, regardless of whether such enforceability
is considered in equity or at law. Each Other Shareholder, as a result of
executing this Agreement and performing its obligations hereunder, is not in
violation of any of the provisions of its certificate or incorporation, bylaws
or other organisational documents.
4.2 OWNERSHIP OF COMPANY SHARES. Such Other Shareholder has the
right, power and authority to sell, transfer, assign, vote and deliver the
Company Shares being sold by it hereunder. Immediately prior to the delivery of
the Company Shares to the Buyer, each Other Shareholder will be the sole
registered and beneficial owner of the Company Shares it holds respectively and
have good and valid title to such Company Shares, free and clear of all Liens
and restrictions on transfer other than those in the articles of the Company and
which shall have been complied with at Closing. Except for the Shareholders'
Agreement, there are no outstanding options, warrants, convertible securities,
calls, rights, commitments, preemptive rights or agreements or instruments or
understandings of any character to which each Other Shareholder is a party,
obligating the Other Shareholder to deliver or sell, or cause to be delivered or
sold, contingently or otherwise, such Company Shares. Except for the
Shareholders' Agreement and as set forth in Schedule 4.2, there are no voting
trust agreements or other contracts, agreements, arrangements, commitments,
plans or understandings to which the Other Shareholder is a party restricting or
otherwise relating to voting, dividend or other rights with respect to the
Company Shares.
4.3 CONSENTS AND APPROVALS. No consent, approval, order or
authorisation of, or registration, declaration or filing, is required by or with
respect to the Other Shareholder in connection with the execution and delivery
of this Agreement by the Other Shareholder or the consummation by it of the
transactions contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTY OF THE BUYER AND BUYER SUB
Buyer and Buyer Sub hereby solidarily represent and warrant to the
Company and the Shareholders, as of the date hereof (except as to any
representation or warranty which specifically relates to an earlier date), as
follows:
20
5.1 ORGANIZATION AND QUALIFICATIONS. Each of Buyer and its
subsidiaries, including Buyer Sub is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, with the requisite corporate power and authority to own and use
its properties and assets and to carry on its business as currently conducted.
Each of Buyer and Buyer Sub is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
their respective businesses conducted or property owned by each makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not reasonably be expected to have a Buyer
Material Adverse Effect. For purposes of this Agreement, "BUYER MATERIAL ADVERSE
EFFECT" means any change, effect, event, occurrence or state of facts (or any
development that has had or is reasonably likely to have any change or effect)
that is materially adverse to the business, financial condition or results of
operations of the Buyer and its subsidiaries, taken as a whole, PROVIDED,
HOWEVER, any adverse change, effect or circumstance (a) primarily arising out of
or resulting primarily from actions contemplated by the parties hereto in
connection with this Agreement; (b) that is primarily attributable to the
announcement or performance of this Agreement or the transactions contemplated
hereby; (c) resulting from economic factors affecting the economy as a whole;
(d) resulting in changes from the market price or trading volume of the Buyer
Shares; or (e) resulting from factors generally affecting the specific markets
in which the Buyer and its subsidiaries compete, shall not be deemed in
themselves, either alone or in combination, to constitute, and shall not be
taken into account in determining whether there has been, a Buyer Material
Adverse Effect.
5.2 CAPITALIZATION. The authorized, issued and outstanding shares
of each class of capital stock of Buyer and Buyer Sub are as set forth in
Exhibit B. Exhibit B also sets forth the number of shares reserved for issuance
pursuant to each of the Buyer's duly approved stock plans (collectively, the
"BUYER STOCK PLANS"), and the total number of shares reserved for issuance under
Buyer Stock Plans or otherwise. All of the issued and outstanding shares of
capital stock of Buyer and Buyer Sub have been duly authorized and validly
issued and are fully paid and nonassessable. Except as provided in this
Agreement and pursuant to the Buyer Stock Plans: (a) no subscription, warrant,
option, convertible security or other right (contingent or otherwise) to
purchase or acquire any shares of capital stock of Buyer or Buyer Sub is
authorized or outstanding; (b) Buyer and Buyer Sub have no obligation
(contingent or otherwise) to issue any subscription, warrant, option,
convertible security or other such right or to issue or distribute to holders of
any shares of their capital stock any evidences of indebtedness or assets of
Buyer; and (c) Buyer and Buyer Sub have no obligation (contingent or otherwise)
to purchase, redeem or otherwise acquire any shares of their capital stock or
any interest therein or to pay any dividend or make any other distribution in
respect thereof. All of the issued and outstanding shares of capital stock of
Buyer have been offered, issued and sold by Buyer in compliance with applicable
federal, provincial and United States securities laws or pursuant to valid
exemptions therefrom.
5.3 AUTHORIZATION. Each of Buyer and Buyer Sub has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder. The execution and delivery of this Agreement by the Buyer and Buyer
Sub and the consummation by them of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of the Buyer and Buyer
Sub
21
and no further action is required by the Buyer or Buyer Sub, subject to
regulatory approval under applicable securities laws and regulations. This
Agreement has been duly executed by the Buyer and Buyer Sub and, assuming this
Agreement constitutes a valid and binding obligation of the Company and the
Shareholders, this Agreement constitutes a valid and binding agreement of the
Buyer and Buyer Sub enforceable against them in accordance with its terms,
subject, however, as to enforcement, to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general principles of equity,
regardless of whether such enforceability is considered in equity or at law.
Neither Buyer nor Buyer Sub is in violation of any of the provisions of its
Certificate of Incorporation, bylaws or other organizational documents except
for violations which could not reasonably be expected to have a Buyer Material
Adverse Effect.
5.4 NONCONTRAVENTION. Subject to regulatory approval under
applicable securities laws and regulations, including those of any stock
exchanges, the execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or the loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of the Buyer or any of
its subsidiaries pursuant to, any provision of: (a) the articles of
incorporation or by-laws of the Buyer or any provision of the comparable
organizational documents of Buyer or any of its subsidiaries; (b) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to the Buyer or
any of its subsidiaries or their respective properties or assets; or (c) subject
to the governmental filings and other matters referred to in Section 5.5, any
statute, law, rule, regulation, judgment, order or decree applicable to the
Buyer or any of its subsidiaries or their respective properties or assets, other
than with respect to any of the matters described in this Section 5.4, any such
conflicts, violations, defaults, rights or Liens that individually or in the
aggregate would not reasonably be expected to have a Buyer Material Adverse
Effect or prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement.
5.5 CONSENTS AND APPROVALS. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to the Buyer or any of its subsidiaries in
connection with the execution and delivery of this Agreement by the Buyer or the
consummation by the Buyer of the transactions contemplated by this Agreement,
except for: (a) the filing of a premerger notification and report form under the
COMPETITION ACT (Canada); (b) approval for the listing of the shares to be
issued in furtherance of the transactions set forth herein on The Toronto Stock
Exchange and for a quotation on the Nasdaq National Market; (c) such filings,
consents, exemptions, approvals, orders, registrations and declarations as may
be required under the laws of any foreign country in which the Buyer or any of
its subsidiaries conducts any business or owns any assets; (d) such filings,
consents, approvals, orders, registrations and declarations as may be necessary
as a result of the issuance of the Buyer Shares including any orders pursuant to
any applicable securities law or any facts or circumstances relating solely to
the Company; and (e) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made would not, individually or in the aggregate, reasonably be expected to have
a Buyer Material
22
Adverse Effect or prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement.
5.6 LITIGATION; PROCEEDINGS. There is no action, suit or
proceeding, governmental or otherwise, pending or, to the Buyer's Knowledge,
overtly threatened against the Buyer, any of its subsidiaries or any of their
respective properties or business, that, individually or in the aggregate, would
reasonably be expected to have a Buyer Material Adverse Effect. There is no
judgment, decree, injunction, rule or order of any Governmental Entity
outstanding against the Buyer or any of its subsidiaries having, or which,
insofar as reasonably can be foreseen, in the future would have, any such
effect.
5.7 AUTHORIZATION FOR BUYER SHARES. Buyer has taken all necessary
action to issue the Buyer Shares. The Buyer Shares have been duly authorized
and, when issued and delivered in accordance with the terms of this Agreement,
will be validly issued, fully paid and nonassessable and free and clear of all
Liens (other than restrictions on transfer imposed by applicable securities
laws) and will not be issued in violation of any preemptive rights, rights of
first refusal or similar rights.
5.8 CANADIAN DOCUMENTS. The Company and each Shareholder has been
made aware by the Buyer that each statement and report, as may be required to
have been filed as of the date hereof under Canadian securities laws (the
"CANADIAN DOCUMENTS") is available through the Internet on the System for
Electronic Document Analysis and Retrieval (or SEDAR) which can be accessed at
xxx.xxxxx.xxx. As of their respective filing dates, the Canadian Documents
complied in all material respects with the requirements of the securities laws
in force in Canada, and none of the Canadian Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, except to the extent
corrected by a subsequently filed Canadian Document. The financial statements of
Buyer, being the audited consolidated balance sheets as at August 31, 2000 and
1999 and the audited consolidated statements of earnings, retained earnings and
cash flows for each of the years in the three-year period ended August 31, 2000,
and the unaudited interim consolidated balance sheet as at May 31, 2001 and the
unaudited interim consolidated statements of earnings, retained earnings and
cash flows of the Buyer for the nine months ended May 31, 2001 and May 31, 2000,
including the notes thereto (the "BUYER FINANCIAL STATEMENTS") were complete and
correct in all material respects as of their respective dates, complied as to
form in all material respects with applicable accounting requirements with
respect thereto as of their respective dates, and have been prepared in
accordance with GAAP applied on a basis consistent throughout the periods
indicated and consistent with each other (except as may be indicated in the
notes thereto or, in the case of unaudited statements included in the Buyer's
interim reports). The balance sheets included in the Buyer Financial Statements
present fairly in all material respects as of their respective dates the
financial condition of the Buyer (subject, in the case of interim financial
statements, to normal, recurring year-end adjustments that may be required upon
audit).
5.9 NO UNDISCLOSED LIABILITIES. To the Knowledge of the Buyer,
none of the Buyer and its subsidiaries has any liability (whether absolute or
contingent, whether liquidated or unliquidated and whether due or to become due)
which is material to the Buyer and its subsidiaries, taken as a whole, except
for: (a) liabilities shown on the Buyer Financial Statements
23
included in the Canadian Documents filed with the Canadian securities regulators
prior to the date of this Agreement (the "BUYER BALANCE SHEET DATE"); (b)
liabilities which have arisen in the ordinary course of business since the Buyer
Balance Sheet Date; and (c) contractual liabilities incurred in the ordinary
course of business which are not required by GAAP to be reflected on the Buyer
Financial Statements.
5.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Buyer Balance
Sheet Date, the Buyer has conducted its business only in the ordinary course and
there has not occurred any events or changes that have had, or would reasonably
be expected to have, individually or in the aggregate, a Buyer Material Adverse
Effect.
5.11 FORM F-3. Buyer is a registrant qualified and entitled to use
a registration statement on Form F-3 pursuant to the Securities Act.
5.12 INVESTMENT INTENT. The Buyer is acquiring the Company Shares
for its own account for investment purposes only and not with a view to or for
distributing or reselling such Company Shares or any part thereof or interest
therein.
5.13 EXPERIENCE OF THE BUYER. The Buyer, through its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Company Shares and has so evaluated the merits
and risks of such investment.
5.14 FINANCIAL ABILITY. The Buyer has cash or has existing
borrowing facilities or unconditional, binding firm commitments that are
sufficient to enable it to consummate the transactions contemplated by this
Agreement.
5.15 BROKERS, FINDERS OR FINANCIAL ADVISORS. Other than CIBC World
Markets Inc., no broker, investment broker, financial advisor or other person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission from Buyer in connection with the transactions contemplated by this
Agreement.
5.16 REPORTING ISSUER STATUS. The Buyer is a reporting issuer in
the Province of Ontario (as such term is defined in Rule 45-501 under the
SECURITIES ACT (Ontario)) and of equivalent status under the securities laws of
all other Canadian provinces, and has been of such status for at least 12 months
prior to the date hereof.
ARTICLE VI
COVENANTS OF THE PARTIES
6.1 CONDUCT OF BUSINESS BY THE COMPANY. Except as set forth on
Schedule 6.1, and except to the extent consented to in writing by Buyer or as
expressly permitted or contemplated by this Agreement, during the period from
the date of this Agreement to the Closing, the Company shall carry on its
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and, to the extent consistent therewith, use
reasonable efforts to preserve intact its current business organizations, keep
available the services of its current officers and employees and preserve its
relationships with customers, suppliers, licensors,
24
licensees, distributors and others having business dealings with it. Without
limiting the generality of the foregoing, without Buyer's written consent (which
consent shall not be unreasonably withheld), during the period from the date of
this Agreement to the Closing, the Company shall not:
(a) (i) declare, set aside or pay any dividends on, or
make any other distributions in respect of, any of its capital stock,
(ii) split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (iii)
purchase, redeem or otherwise acquire any shares of its capital stock
or any other securities, or any rights, warrants or options to acquire
any such shares or other securities;
(b) issue, deliver, sell, pledge or otherwise encumber
any shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities;
(c) amend its articles of incorporation or by-laws;
(d) acquire or agree to acquire (i) by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other business organization
or division thereof, or (ii) any assets that are material, individually
or in the aggregate, to the Company, except purchases in the ordinary
course of business consistent with past practice;
(e) sell, lease, license, mortgage or otherwise encumber
or subject to any Lien (other than Liens pursuant to its existing
credit facilities) or otherwise dispose of any of its properties or
assets, except in the ordinary course of business consistent with past
practice;
(f) (i) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any
debt securities or warrants or other rights to acquire any debt
securities, or guarantee any debt securities of another person, except
for borrowings under its existing credit facilities for working capital
purposes, in an aggregate amount of less than $250,000, the endorsement
of checks in the normal course of business and the extension of credit
in the normal course of business, or (ii) make any loans, advances or
capital contributions to, or investments in, any other Person;
(g) except for the items currently contracted for by the
Company, make or agree to make any new capital expenditure or
expenditures which, individually, is in excess of $50,000 or, in the
aggregate, are in excess of $250,000;
(h) make any material Tax election or settle or
compromise any material income Tax liability;
25
(i) pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued or contingent, asserted
or unasserted), other than the payment, discharge or satisfaction, in
the ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved
against in, or contemplated by, the most recent consolidated financial
statements (or the notes thereto) included in the Financial Statements
or incurred in the ordinary course of business consistent with past
practice;
(j) except in the ordinary course of business, modify,
amend or terminate any Company Contract, or waive, release or assign
any material rights or claims;
(k) except as required to comply with applicable law, (i)
adopt, enter into or amend any Company Plan, (ii) increase in any
material manner the compensation or fringe benefits of, or pay any
bonus to, any director, officer or employee of the Company or (iii)
grant any awards under any Company Plan (including the grant of stock
options, stock appreciation rights, stock based or stock related
awards, performance units or restricted stock, or the removal of
existing restrictions in any Company Plan or agreement or awards made
thereunder);
(l) other than as required by law or GAAP, make any
material change to its accounting policies or procedures; or
(m) authorize any of, or commit or agree to take any of,
the foregoing actions.
6.2 PUBLIC ANNOUNCEMENTS. From the date of this Agreement until
the earlier of the Closing or the termination of this Agreement, no party hereto
will issue or cause the publication of any press release or other public
announcement with respect to this Agreement or the transactions contemplated
hereby without the prior consent of Buyer (in the case of the Shareholders or
the Company) or the Shareholder Representative (in the case of Buyer), which
consent shall not be unreasonably withheld; PROVIDED, HOWEVER, that: (a) nothing
herein will prohibit either party from issuing or causing publication of any
such press release or public announcement to the extent that such party's
counsel reasonably determines such action to be required by law, or the
regulations of any government agency or the exchanges or markets on which Buyer
Shares are traded, in which case the party making such determination will, to
the greatest extent practicable in light of the circumstances, use best efforts
to allow the other party reasonable time to comment on such release or
announcement in advance of its issuance; and (b) Buyer, the Company and the
Shareholders may disclose this Agreement and the transactions contemplated
hereby to third parties in connection with securing consents of such third
parties and in connection with any permits, approvals, filings or consents
required by law to be obtained. To the extent feasible, prior to the Closing,
all press releases or other announcements or notices regarding the transactions
contemplated by this Agreement shall be made jointly by Buyer and the Company.
6.3 ACCESS TO INFORMATION, DUE DILIGENCE INVESTIGATION;
CONFIDENTIALITY. The Founding Shareholders shall afford to the officers,
employees, accountants, counsel, financial advisors and other representatives of
Buyer access during the period prior to the Closing, to such of the properties,
books, contracts, commitments, records, officers and employees as Buyer may
26
reasonably request for the purpose of conducting a full and complete due
diligence investigation (the "DUE DILIGENCE INVESTIGATIONS") of all aspects of
the Company, including, without limitation, financial, legal and accounting and,
during such period, the Founding Shareholders shall furnish promptly to Buyer
and its representatives all information concerning the Company and its business,
properties and personnel as Buyer may request. Buyer shall hold any such
information which is non-public in confidence. Buyer shall make all reasonable
best efforts to minimize disruption to the business of the Company which may
result from the requests for data and information hereunder. All requests for
access and information shall be co-ordinated through senior executives of the
parties to be designated. Any investigation by the Buyer shall not affect the
representations and warranties of any of the Shareholders.
6.4 REGULATORY REQUIREMENTS.
(a) Each of the Company and the Buyer shall (i) prepare
and file as promptly as practicable any filings with, or submissions to
the Director or other representative of the Competition Tribunal
(Canada), and any antitrust, competition, investment or other similar
authority in any foreign jurisdiction where such filing is required in
connection with the transactions contemplated hereby, and (ii) respond
promptly to inquiries, if any, from the Competition Tribunal (Canada)
or the antitrust, competition, investment or comparable Governmental
Entity of any foreign jurisdiction in connection with such filing. The
Buyer will be responsible for all filing fees in connection with the
filings required by the antitrust, competition or comparable laws of
any foreign jurisdiction and each party shall bear the expenses for the
preparation of their documentation for the filing.
(b) Without limiting the generality of the foregoing, the
Company and the Buyer each agree to cooperate and to use their
respective commercially reasonable efforts to obtain any government
clearances required to consummate the transactions contemplated by this
Agreement (including through the COMPETITION ACT (Canada)), to respond
to any requests for information from Governmental Entities, and to
contest and resist any action, including any legislative,
administrative or judicial action, and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order
(whether temporary, preliminary or permanent (an "ORDER")) that
restricts, prevents or prohibits the consummation of the transactions
contemplated by this Agreement, including, without limitation, by
vigorously pursuing all available avenues of administrative and
judicial appeal and all available legislative action. The parties also
agree to take any and all of the following actions to the extent
commercially reasonable in the entire discretion of the respective
party to obtain the approval of any Governmental Entity with
jurisdiction over the enforcement of any applicable laws regarding the
transactions contemplated by this Agreement: entering into
negotiations; providing information; substantially complying with any
second request for information pursuant to the COMPETITION ACT
(Canada); making proposals; entering into and performing agreements or
submitting to judicial or administrative orders; selling or otherwise
disposing of, or holding separate (through the establishment of a trust
or otherwise) particular assets or categories of assets, or businesses
of the Company or the Buyer; and withdrawing from doing business in a
particular jurisdiction. The parties hereto will, to the extent
permitted
27
by applicable law, consult and cooperate with one another, and consider
in good faith the views of one another, in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments,
opinions and proposals made or submitted by or on behalf of any party
hereto in connection with proceedings under or relating to the
COMPETITION ACT (Canada) or any other federal, provincial, state or
foreign antitrust or fair trade law. Notwithstanding anything to the
contrary in this section, neither the Company nor the Buyer shall be
required to take any action that would reasonably be expected to impair
the overall benefits expected, as of the date hereof, to be realized
from the consummation of the transactions contemplated by this
Agreement.
6.5 SHAREHOLDER APPROVALS.
(a) The Company and the Founding Shareholders will use
their best efforts to cause all of the shareholders of the Company
listed in Exhibit A to execute an intervention in the form of Exhibit
N, and the written resolution approving the transactions set forth
herein in the form attached hereto as Exhibit O shall have also been
executed by all shareholders of the Company within 15 days, or such
longer period as the Buyer may agree, from the execution of this
Agreement by the Founding Shareholders;
(b) Should the Agreement and the resolution set forth in
paragraph (a) not be executed within the delay set forth therein, then
the Company shall convene and hold a special meeting of the
shareholders of the Company (the "SPECIAL MEETING") to consider and, if
deemed advisable, to approve the Merger and to prepare, at its costs,
the notice of the Special Meeting and the accompanying management proxy
circular, including all schedules thereto, to be sent to the
Shareholders in connection with the Special Meeting. The Buyer shall
cooperate in the preparation of such management proxy circular by
making available to the Company information reasonably required to be
incorporated therein in relation to Buyer and Buyer Sub.
Notwithstanding that a Special Meeting is called and held this
Agreement shall continue to be in full force and effect and shall
survive such Special Meeting, in accordance with its terms;
(c) Should a Special Meeting be held, any shareholder of
the Company (other than a shareholder of the Company exercising dissent
rights under the CBCA) who has not executed this Agreement or the
intervention in the form of Exhibit N shall be required to deposit the
Company Shares it holds with the Buyer and shall be required to be
bound by all the terms and conditions, representations, warranties and
covenants of this Agreement, including those set forth in Article III,
Article IV and Article IX.
6.6 MODIFICATION OF DISCLOSURE SCHEDULES. At any time prior to
four business days before the Closing, the Company and the Founding Shareholders
may amend or supplement the Disclosure Schedules attached to this Agreement with
respect to any matter that, if existing or occurring at or prior to the Closing,
would have been required to be set forth or described in the Disclosure
Schedules or that is necessary to complete or correct any information in any
representation or warranty contained in Article II. If such amendment or
supplement is considered by the Buyer, acting reasonably, as a Company Material
Adverse Effect, then the Buyer shall have the right to terminate this Agreement
as described in Section 10.1. The Buyer shall have two business days to object
in writing to such amendment or supplement. If the Buyer
28
does not object within such two business day period, then such amendment or
supplement shall be given effect for all purposes of this Agreement.
6.7 CONTACT WITH CUSTOMERS AND SUPPLIERS. The Buyer (and all of
its agents and affiliates and any employees, directors or officers thereof) will
not contact and communicate with the employees, customers, suppliers and
licensors of the Company in connection with the transactions contemplated hereby
unless it has received the prior written consent of the Company, which consent
shall not be unreasonably withheld but may be conditioned in any reasonable
manner.
6.8 OTHER ACTIONS. No party shall take any action, except in every
case as may be required by applicable law, that would or is intended to result
in: (a) any of its representations and warranties set forth in this Agreement
that are qualified as to materiality being or becoming untrue; (b) any of such
representations and warranties that are not so qualified becoming untrue in any
manner having a Company Material Adverse Effect or Buyer Material Adverse
Effect, as the case may be; (c) any of the conditions set forth in this
Agreement not being satisfied or in a violation of any provision of this
Agreement; or (d) adversely affecting the ability of any of them to obtain any
of the consents or approvals required from any Governmental Entity as a
condition to Closing.
6.9 SECURITIES LAW AND STOCK EXCHANGE REQUIREMENTS. The Buyer
shall do all things as are required to ensure that, as of the time of Closing,
the Buyer Shares are listed on The Toronto Stock Exchange and that the holders
of the Buyer Shares may resell the Buyer Shares in compliance with exemptions
from the prospectus and registration requirements of the securities laws of each
of the Provinces of Canada in which the Buyer is a reporting issuer or of
equivalent status, subject to: (i) the holders of Buyer Shares fulfilling the
requirements of Section 6.6 of Rule 45-501 of the Ontario Securities Commission
and similar requirements of other securities commissions in Canada, as the case
may be, applicable to such holders of Buyer shares and (ii) in the case of
holders of Buyer Shares resident in British Columbia, the obtaining of an
appropriate exemption order from the British Columbia Securities Commission.
6.10 IDEMNIFICATION OF DIRECTORS AND OFFICERS OF THE COMPANY.
(a) From and after the Effective Time, the Buyer will,
and will cause the Buyer Sub to, fulfill and honour in all respects the
obligations of the Company pursuant to any indemnification provisions
under the Company's articles of incorporation or by-laws as in effect
on the date hereof for the benefit of its present and former directors
and officers in effect on the date hereof (the "Insured Parties") and
pursuant to the indemnification agreements between the Company and such
Insured Parties, copies of which have been delivered to the Buyer prior
to the date hereof. The articles of incorporation and by-laws of the
Buyer Sub will contain provisions with respect to exculpation and
indemnification that are at least as favourable to the Insured Parties
as those contained in the articles of incorporation or by-laws of the
Company as in effect on the date hereof, which provisions will not be
amended, repealed or otherwise modified for a period of six years from
the Closing Date in any manner that would adversely affect the rights
thereunder of individuals who, immediately prior to the Closing Date,
were directors or officers of the Company, unless such modification is
required by law.
29
(b) For a period of six years after the Closing Date, the
Buyer will, or will cause the Buyer Sub to, use all commercially
reasonable efforts to maintain in effect, if available at a premium
which is not more than twice the premium currently paid by the Company,
directors' and officers' liability insurance covering those persons who
are currently covered by the Company's directors' and officers'
liability insurance policy on terms substantially similar to those
applicable to the current directors and officers of the Company, and if
such premium during the six years equals or exceeds twice the premium
currently paid by the Company, the Buyer will, or will cause the Buyer
Sub to maintain such insurance as is available for such maximum premium
as Buyer is obligated to pay hereunder.
(c) The provisions of this section are intended to be in
addition to the rights otherwise available to the Insured Parties by
law, charter, statute, bylaw, resolution of the Board of Directors of
the Company, and shall operate for the benefit of, and shall be
enforceable by, each of the Insured Parties, their heirs and their
representatives.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each party to consummate the transactions contemplated hereby at
the Closing are subject to the fulfillment to each party's reasonable
satisfaction on or prior to the Closing Date of each of the following
conditions:
(a) COMPETITION ACT (CANADA). The waiting period (and any
extension thereof) applicable to the Merger under the COMPETITION ACT
(Canada) and any other applicable antitrust and competition laws shall
have been terminated or shall have expired.
(b) PRIOR INVESTMENTS. The Prior Investments described in
Section 1.5 hereof shall have been completed in accordance with the
provisions of this Agreement, all to the satisfaction of the parties.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary
restraining order, preliminary or permanent injunction or other
judgment or order issued by any Government Entity, court of competent
jurisdiction or other statute, law, rule, legal restraint or
prohibition shall be in effect preventing the consummation of the
transactions contemplated hereby.
7.2 CONDITIONS TO OBLIGATIONS OF THE BUYER. The obligation of
Buyer to consummate the transactions contemplated by this Agreement at the
Closing is subject to the fulfillment to the Buyer's reasonable satisfaction on
or prior to the Closing of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each representation
and warranty of the Company, and of each of the Shareholders, as
applicable, contained in this Agreement shall be true and correct in
all respects as of the date of this Agreement and as of the Closing as
though made as of the Closing, except to the extent such
representations and warranties expressly relate to an earlier date, in
which case as of such earlier date. Buyer shall have received a
certificate signed by a duly authorized officer of the Company and
30
by each Founding Shareholder to such effect with respect to the
representations and warranties set forth in Article II.
(b) PERFORMANCE. All covenants, agreements and conditions
contained in this Agreement to be performed or complied with by the
Company and each Shareholder, as applicable, at or prior to the Closing
shall have been performed or complied with by the Company and each
Shareholder, as applicable, in all material respects. Buyer shall have
received a certificate signed by a duly authorized officer of the
Company and by each Founding Shareholder to such effect.
(c) SECURITIES REGULATORY APPROVALS. The regulatory
approval required under United States and Canadian securities laws and
under the by-laws, regulations or policies of the United States and
Canadian securities regulatory authorities and stock exchanges and if
such regulatory authorities or stock exchanges require so, any approval
of the Buyer's shareholders, shall have been obtained. (d) CONSENTS.
All consents, the absence of which, in the aggregate, would be
reasonably likely to have a Company Material Adverse Effect, shall have
been obtained. The articles of amalgamation and all supporting
documents have been filed with the Director under the CBCA.
(e) RESIGNATIONS. Buyer shall have received the
resignations, effective as of the Closing, of each director of the
Company specified by the Buyer in writing at least five business days
prior to the Closing, along with a release of all claims against the
Company.
(f) NO MATERIAL ADVERSE EFFECT. No fact or development
shall have occurred since the date of this Agreement and be continuing
which has had or would be reasonably likely to result in any change,
effect, event, occurrence or state of facts (or any development that
has had or is reasonably likely to have any change or effect) that,
individually or in the aggregate, has had or would reasonably be
expected to have a Company Material Adverse Effect. Buyer shall have
received a certificate signed by a duly authorized officer of the
Company to such effect.
(g) DELIVERY OF SHARE CERTIFICATES. Each Shareholder
shall have delivered to Buyer for cancellation share certificates
representing the shares of the Company Shares duly endorsed for
transfer.
(h) LEGAL OPINION. The Buyer shall have received an
opinion of XxXxxxxx Xxxxxxxx LLP, the Company's counsel, reasonably
satisfactory to Buyer's counsel containing the customary opinions and
qualifications.
(i) CERTIFICATES AND DOCUMENTS. The Company shall have
delivered at or prior to the Closing:
(i) A copy of the Company's Certificate of
Incorporation, with all amendments to date, certified by the
Director appointed under the CBCA as of a
31
date within three business days prior to the Closing, together
with Bylaws of the Company, certified by its secretary as of
Closing;
(ii) resolutions of the Board of Directors of the
Company authorizing and approving all matters in connection
with this Agreement and the transactions contemplated herein,
certified by a duly authorized officer of the Company as of
the Closing; and
(iii) such other documents relating to the
transactions contemplated in this Agreement as the Buyer may
reasonably request.
(j) EMPLOYMENT AGREEMENTS. Each of the Persons listed on
Exhibit F shall have entered into and delivered to the Buyer an
employment agreement in the form of Exhibit F hereof.
(k) ESCROW AGREEMENT. The Buyer and each of the
Shareholders, except for JDS Uniphase Inc., shall have entered into and
delivered to the Buyer the Escrow Agreement.
(l) LOCK-UP AGREEMENT. Each of the Founding Shareholders,
the Xxxxx Family Trust and X.X. Xxxxxxx shall have entered into and
delivered to the Buyer a lock-up agreement in the form of Exhibit G
hereto.
(m) SHAREHOLDERS' AGREEMENT. The Buyer shall have
received evidence satisfactory to it that the Shareholders' Agreement
referred to in Schedule 2.4 has been terminated and all rights of all
parties thereto have been expressly waived.
(n) STOCK OPTION PLAN. Options which are "not in the
money" shall be cancelled and new options of the Buyer under the stock
option plan of the Buyer will be issued to such Persons and in such
amounts as set forth in Exhibit I, all in accordance with Buyer's
policies.
(o) SEC FINANCIAL STATEMENTS. The Company shall have
delivered (i) audited balance sheets of the Company as of the end of
the two most recent fiscal years, (ii) an unaudited balance sheet as of
the end of the most recent quarter preceding the Closing, (iii) audited
statements of loss, deficit and cash flows for each of the two fiscal
years preceding the Closing, and (iv) unaudited comparative statements
of loss, deficit and cash flows for the interim period between the
latest audited balance sheet date and the date of the interim balance
sheet being provided pursuant to clause (ii), in each case meeting the
requirements of the SEC that would be applicable to the Company as if
its securities were registered under Section 12 of the SECURITIES AND
EXCHANGE ACT OF 1934, as amended (collectively, the "SEC FINANCIAL
STATEMENTS") or as if the SEC Financial Statements were being
incorporated into a registration statement, annual report or other
publicly filed document with the SEC.
(p) ACCOUNTANTS. The Buyer shall have received
confirmation that PricewaterhouseCoopers LLP ("PWC"), the Company's
auditors, are independent certified public accountants qualified to
deliver the accountant's report on the XXX
00
Xxxxxxxxx Xxxxxxxxxx as required by the SEC. In addition, the Company
shall have entered into an agreement on terms satisfactory to the Buyer
with PWC pursuant to which PWC shall (A) deliver to the Buyer any
consents with respect to the Buyer's use of the SEC Financial
Statements and the use of PWC's name in connection with the Buyer's
filings with the SEC and (B) deliver customary "comfort letters" with
respect to the SEC Financial Statements and required reconciliations,
as may be reasonably requested by the Buyer.
(q) APPROVAL BY SHAREHOLDERS. All shareholders of the
Company shall have (a) approved the Merger by way of a signed
resolution in the form attached hereto as Exhibit O or by way of a
special resolution of the holders of Company Shares adopted at the
Special Meeting; and (b) waived their statutory, and contractual (if
any), right of dissent pursuant to the transactions contemplated
herein, the whole to the satisfaction of Buyer, or the Buyer shall be
otherwise satisfied that no dissent rights under the CBCA are to be
exercised, it being agreed that should a Special Meeting be required
and if such holders of Company Shares exercise dissent rights under the
CBCA, the Buyer shall not be required to file the articles of
amalgamation required under the CBCA to be sent to the Director under
the CBCA. In such an event, the Buyer shall have a delay of 30 days
from the date of the Special Meeting to negotiate and settle with any
such holders of Company Shares exercising dissent rights under the
CBCA. Upon the expiration of said 30 day delay, the Buyer, at its sole
discretion, shall have the right to either file the articles of
amalgamation with the Director or to terminate this Agreement.
(r) RELEASE FROM WIT SOUNDVIEW CORPORATION. The Company
shall have received a letter from Wit Soundview Corporation releasing
and discharging the Company and the Buyer from any claim Wit Soundview
Corporation may have against them.
7.3 CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS AND THE COMPANY.
Each Shareholder's and the Company's obligation to consummate the transactions
contemplated by this Agreement at the Closing is subject to the fulfillment to
its reasonable satisfaction or waiver on or prior to the Closing of each of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each representation
and warranty of Buyer and Buyer Sub contained in this Agreement shall
be true and correct in all respects as of the date of this Agreement
and as of the Closing as though made as of the Closing, except to the
extent such representations and warranties expressly relate to an
earlier date, in which case as of such earlier date. Each Shareholder
and the Company shall have received a certificate signed on behalf of
Buyer and Buyer Sub by duly authorized executive officers of Buyer and
Buyer Sub to such effect.
(b) PERFORMANCE. All covenants, agreements and conditions
contained in this Agreement to be performed or complied with by the
Buyer or Buyer Sub on or prior to the Closing shall have been performed
or complied with by the Buyer in all material respects. Each
Shareholder and the Company shall have received a certificate signed on
behalf of Buyer by duly authorized executive officers of Buyer to such
effect.
33
(c) PAYMENT OF MERGER CONSIDERATION. Buyer shall have
delivered to each Shareholder certificates representing the Buyer
Shares other than Escrow Shares in payment of the Merger Consideration
to be received by such Shareholder for its shares of Company Shares.
Buyer shall have delivered certificates representing the Escrow Shares
to the Escrow Agent.
(d) CONSENTS. All consents, the absence of which, in the
aggregate, would be reasonably likely to have a Buyer Material Adverse
Effect, shall have been obtained.
(e) NO MATERIAL ADVERSE EFFECT. No fact or development
shall have occurred since the date of this Agreement and be continuing
which has had or would be reasonably likely to result in any change,
effect, event, occurrence or state of facts (or any development that
has had or is reasonably likely to have any change or effect) that,
individually or in the aggregate, has had or would reasonably be
expected to have a Buyer Material Adverse Effect. The Company and each
Shareholder shall have received a certificate signed on behalf of Buyer
by duly authorized officers of Buyer to such effect.
(f) LEGAL OPINION. The Company and the Shareholders shall
have received an opinion of Fasken Xxxxxxxxx XxXxxxxx LLP, the Buyer's
counsel, reasonably satisfactory to the Company's counsel containing
the customary opinions and qualifications.
(g) CERTIFICATES AND DOCUMENTS. Buyer shall have
delivered at or prior to the Closing to the Company and each of the
Shareholders:
(i) A copy of Buyer's and Buyer Sub's respective
Certificate of Incorporation, with all amendments to date,
together with Bylaws of the Buyer, certified by the Secretary
as of the Closing;
(ii) resolutions of the Board of Directors of
Buyer and Buyer Sub, authorizing and approving all matters in
connection with this Agreement and the transactions
contemplated herein, certified by the Secretary of Buyer and
Buyer Sub as of the Closing; and
(iii) such other documents relating to the
transactions contemplated in this Agreement as the Company
and/or any Shareholder may reasonably request.
(h) AUTHORIZATIONS. All authorizations, approvals or
permits, if any, of any Governmental Entity or regulatory body that are
required in connection with the lawful issuance and sale of the Buyer
Shares pursuant to this Agreement, including the matters set forth in
Section 6.9 hereof, shall have been duly obtained and shall be
effective on and as of the Closing.
34
ARTICLE VIII
OTHER AGREEMENTS
8.1 CONFIDENTIALITY. After the Closing, and for a period of 5
years after Closing, Buyer and each Shareholder shall strictly maintain the
confidentiality of all information, documents and materials relating to the
Company or the transactions contemplated by this Agreement, including without
limitation the terms hereof, except to the extent disclosure of any such
information is reasonably believed by the disclosing party to be required by law
or authorized by the other party, or otherwise made publicly available by the
other party, or reasonably occurs in connection with disputes over the terms of
this Agreement. In the event that any party hereto reasonably believes after
consultation with counsel that it is required by law to disclose any
confidential information described in this Section 8.1, such disclosing party
will (a) provide the other party with prompt notice before such disclosure prior
to the expiry of such 5 year period in order that the other party may attempt to
obtain a protective order or other assurance that confidential treatment will be
accorded to confidential information, and (b) cooperate with the other party in
attempting to obtain such order or assurance. The provisions of this Section 8.1
shall not apply to any information, documents or materials which are in the
public domain or shall come into the public domain, other than by reason of
default by the disclosing party of this Agreement or becomes known in the
industry through no wrongful act on the part of such disclosing party.
8.2 EXPENSES. Except as otherwise expressly provided herein, each
party hereto will pay its own expenses incurred in connection with the
negotiation of this Agreement, the performance of their respective obligations
hereunder and the consummation of the transactions contemplated hereby, whether
or not consummated. At the Closing, the Buyer agrees to pay directly, on behalf
of the Shareholders, Wit Soundview Corporation's investment banking fees, in the
amount of $3 million, incurred by or on behalf of the Shareholders in connection
with the transactions contemplated hereby (the "EXPENSES"). At the Closing, the
Buyer shall pay the Expenses in cash by wire transfer of immediately available
funds as to 90% to Wit Soundview Corporation and as to 10% to the Escrow Fund
for the proportionate benefit of each Shareholder other than JDS Uniphase Inc..
Such payment of Expenses made by the Buyer shall be deducted from the Cash
Consideration. The Shareholders shall, at least two business days prior to the
Closing Date, provide to the Buyer, in writing, wire transfer instructions for
such payment.
8.3 NON-COMPETITION. Each Shareholder listed in Exhibit J shall
not, for a period of three years from Closing ("NON-COMPETE PERIOD"), within
Canada, the United States and the European Union and in any country in which the
Buyer or the Company presently conducts or may conduct business during the
Non-Compete Period, without the prior written consent of the Buyer, directly or
indirectly, in any manner whatsoever, including, without limitation, either
individually or in partnership or jointly or in conjunction with any other
person, as principal, agent, shareholder or in any other manner whatsoever,
carry on or be engaged in or be concerned with or lend money to, guarantee the
debts or obligations of, or permit their names to be used or employed by any
person or entity engaged or concerned with or interested in the business of any
business which develops, manufactures and sells high-performance test,
measurement and automation instruments that are used in a variety of
applications in the telecommunications and data communications networking
industries and includes any other technologies and/or
35
applications which are directly competitive with the business of the Company as
the business of the Company may change from time to time during the Non-Compete
Period.
8.4 SUPPORT OBLIGATION.
(a) COMMITMENT IN FAVOUR OF THE AGREEMENT OF MERGER.
(i) Each Shareholder and the Company irrevocably
covenant and agree in favour of Buyer and Buyer Sub that they
will use commercially reasonable efforts, in the case of each
Shareholder without incurring any out-of-pocket expenses, to
and they will use commercially reasonable efforts to cause
their representatives, agents or employees acting on their
behalf to assist Buyer and Buyer Sub to complete successfully
the transactions contemplated hereby.
(ii) Each Shareholder and the Company shall not,
directly or indirectly, solicit, initiate, assist, negotiate,
discuss or encourage (including by way of furnishing
information or entering into any form of agreement or
arrangement) any inquiries, proposals or offers regarding any
merger, amalgamation, exchange offer, business combination,
take-over bid, sale of material assets (or any lease,
long-term supply agreement or other arrangement having the
same economic effect as a sale) or material sale of shares of
the Company, or a proposal to do so, other than with Buyer and
Buyer Sub (each, an "INCONSISTENT TRANSACTION").
(iii) Each Shareholder and the Company shall
promptly notify Buyer in writing of any contact, inquiry,
submission, proposal or offer of which it becomes aware for an
Inconsistent Transaction and of any request in connection with
such a proposal for non-public information relating to the
Company and of the relevant details relating to such a
proposal (including the identity of any prospective party and
the proposed terms and conditions) known at such time.
(iv) Each Shareholder and the Company shall
promptly advise Buyer in writing of any breach by the
Shareholder or the Company of any covenant or agreement
contained herein.
(v) Subject to the terms and conditions herein,
each of the Shareholders, the Buyer and Buyer Sub hereto
agrees to use all commercially reasonable efforts to take, or
cause to be taken, all action, and to do, or cause to be done
as promptly as practicable, all things necessary, proper and
advisable under applicable laws and regulations to consummate
and make effective the transactions contemplated by this
Agreement, including without limitation, fulfillment of the
conditions to closing set forth herein. If at any time after
the Closing any further action is necessary or desirable to
carry out the purposes of this Agreement, including, without
limitation, the execution of additional instruments, the
proper officers and directors of the Buyer and the Company,
and the Shareholder Representative, on behalf of the
Shareholders, and the proper
36
officers and directors of Shareholders not represented by the
Shareholder Representative, if any, shall take all such
necessary action.
(vi) From the date of this Agreement until the
earlier of the Closing or the termination of this Agreement,
each of the Shareholders, the Buyer and Buyer Sub covenants
and agrees that it shall take no action which would: (a)
materially adversely affect the ability of any party to this
Agreement to obtain any consents required for the transactions
contemplated hereby; or (b) materially adversely affect the
ability of any party to perform its covenants and agreements
under this Agreement.
(b) VOTING.
(i) Each Shareholder irrevocably covenants and
agrees in favour of Buyer and Buyer Sub to vote or to cause to
be voted the shares of the Company owned by it, including any
shares acquired by or issued to it after the date hereof, in
favour of the transactions contemplated herein, at any Special
Meeting(s) or, as the case may be, to sign a resolution in
lieu of a meeting, including in connection with any separate
vote of any sub-group of shareholders that may be required to
be taken and of which sub-group that Shareholder forms a part.
(ii) Each Shareholder irrevocably covenants and
agrees that it will not exercise any rights of dissent
provided under section 190 of the CBCA or under any order
granted relating to the transactions contemplated in this
Agreement or otherwise in connection with the transactions
contemplated in this Agreement.
(c) TRANSFER OF SHARES. Each Shareholder irrevocably
covenants and agrees in favour of Buyer and Buyer Sub that it will not,
except under the transactions contemplated in this Agreement, directly
or indirectly, sell, transfer or assign any of the shares of the
Company or any interest therein, whether pursuant to an Inconsistent
Transaction or otherwise, without the prior consent of Buyer prior to
the earlier of (i) completion of the transactions contemplated herein
and (ii) termination of this Agreement in accordance with its terms.
8.5 EMPLOYEES. Each Shareholder listed in Exhibit J agrees with
the Buyer that:
(a) they shall not during the Non-Compete Period,
directly or indirectly, induce any employee to leave or hire any
employee of the Company or of the Buyer, except in the cases of a
response of such employee to a general solicitation by the Shareholder
or of an unsolicited hire of such employee;
(b) they shall not ever, directly or indirectly, use or
divulge to any Person any information which is confidential information
of the Company or of the Buyer or relating to the customers, processes
or products or services or intended processes or intended products and
services of the Company or of the Buyer, including those relating to
research, development, manufacturing, purchasing or selling of products
and services, provided that this obligation of confidentiality shall
not apply to information that is or
37
becomes generally available to the public other than as a result of a
disclosure in breach of the Agreement.
8.6 COVENANTS REASONABLE. Each Shareholder listed in Exhibit J
acknowledges and agrees with the Buyer that the covenants set forth in Section
8.3 and Section 8.5 are reasonable in the circumstances and are necessary to
protect the Buyer and the Company and the value of the business described in
Section 8.3 and that the breach by them of any of the provisions of this
Agreement would cause serious and irreparable harm to the Buyer which could not
be adequately be compensated for in damages. Such Shareholder consents to an
order specifically enforcing the provisions of this Agreement, or an order of
injunction being issued against it restraining them from any further breach of
such provisions. The provisions of this section shall not derogate from any
other remedy which Buyer may have in the event of such a breach.
8.7 REGISTRATION OF BUYER SHARES.
(a) SHELF PROSPECTUS. The Buyer shall:
(i) prior to February 28, 2002, prepare and file
with the SEC a registration statement on Form F-3 or F-10 or
any comparable registration form then in effect (the
"REGISTRATION STATEMENT") relating to the resale of the Buyer
Shares by the Shareholders from time to time on the Nasdaq
National Market or the facilities of any U.S. national
securities exchange or market on which the Buyer Shares
(issued pursuant to this Agreement) are then traded or in
privately-negotiated transactions in the United States;
(ii) use its reasonable efforts, subject to
receipt of necessary information from the Shareholders, to
cause the SEC to declare the Registration Statement effective
within 60 days after the Registration Statement is filed by
the Buyer;
(iii) promptly prepare and file with the SEC (and
provide notice to the Shareholders of any such filing) such
amendments and supplements to the Registration Statement and
the prospectus used in connection therewith as may be
necessary to keep the Registration Statement effective until
the earlier of (i) two years after the effective date of the
Registration Statement, or (ii) the date on which the Buyer
Shares may be resold by the Shareholders without registration
by reason of Rule 144(k) under the Securities Act or any other
rule of similar effect;
(iv) furnish to each Shareholder with respect to
the Buyer Shares registered under the Registration Statement
(and to each underwriter, if any, of such Buyer Shares) such
number of copies of prospectuses and such other documents as
the Shareholder may reasonably request, in order to facilitate
the public sale or other disposition of all or any of the
Buyer Shares by the Shareholder;
(v) file documents required of the Buyer for
normal "blue sky" clearance in states specified in writing by
the Shareholders; provided, however,
38
that the Buyer shall not be required to qualify to do business
or consent to service of process in any jurisdiction in which
it is not now so qualified or has not so consented;
(vi) notify each holder of Buyer Shares covered
by such Registration Statement at any time when a prospectus
relating thereto is required to be delivered under the
Securities Act of the happening of any event as a result of
which the prospectus included in such Registration Statement,
as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
The Buyer will use reasonable best efforts to amend or
supplement such prospectus in order to cause such prospectus
not to include 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 not misleading in the
light of the circumstances then existing;
(vii) use its reasonable best efforts to furnish,
on the date that such Buyer Shares are delivered to the
underwriters for sale, if such securities are being sold
through underwriters selected by the Buyer, (i) an opinion,
dated as of such date, of the counsel representing the Buyer
for the purposes of such registration, in form and substance
as is customarily given to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and
(ii) a letter dated as of such date, from the independent
certified public accountants of the Buyer, in form and
substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public
offering addressed to the underwriters;
(viii) bear all expenses in connection with the
procedures in paragraphs (i) through (ix) of this Section, and
the registration of the Buyer Shares pursuant to the
Registration Statement, other than fees and expenses, if any,
of counsel and other advisers to the Shareholders or
underwriting discounts, brokerage fees, Taxes payable and
commissions incurred by the Shareholders, if any; and
(ix) in the event of any underwritten public
offering with an underwriter selected by the Buyer, enter into
and perform its obligations under an underwriting agreement,
in usual and customary form, with the managing underwriter(s)
of such offering. Each Shareholder participating in such
underwriting shall also enter into and perform its obligations
under such an agreement.
The Buyer understands that the Shareholders disclaim being
underwriters, and that the Shareholders being deemed an
underwriter shall not relieve the Buyer of any obligations it
has hereunder.
(b) DISPOSITION. Notwithstanding the generality of
Section 8.7(a), each Shareholder agrees that upon notice from Buyer at
any time or from time to time during the time the prospectus relating
to the securities proposed to be sold by such Shareholder
39
is required to be delivered under the Securities Act of the happening
of any event as a result of which, in Buyer's opinion, the prospectus
included in the Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing,
such Shareholder will forthwith discontinue such Shareholder's
disposition of such securities pursuant to the Registration Statement
until the time of such Shareholder's receipt of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall
not include, in Buyer's opinion, an 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 not misleading in light of the
circumstances then existing. It is understood and agreed that, after
the Registration Statement has been declared effective, its
effectiveness may be suspended on or one more occasions for up to an
aggregate of 90 days in a twelve-month period, provided that no single
suspension of such effectiveness shall be in effect for more than 30
consecutive days.
(c) PUBLIC INFORMATION. For so long as Buyer is subject
to the reporting requirements of Section 13 or 15 of the Exchange Act
and any of the Buyer Shares are deemed "RESTRICTED SECURITIES" under
Rule 144 promulgated under the Securities Act, Buyer will file the
reports required to be filed by it under the Securities Act and Section
13(a) or 15(d) of the Exchange Act and the rules and regulations
adopted by the SEC thereunder, or, if it ceases to be so required to
file such reports, it will, upon the request of the Shareholders (i)
make publicly available such information as is necessary to permit
sales of Buyer Shares pursuant to Rule 144 under the Securities Act,
and (ii) take such further action that is reasonable in the
circumstances, in each case to the extent required from time to time to
enable the Shareholders to sell their Buyer Shares without registration
under the Securities Act within the limitation of the exemptions
provided by Rule 144 under the Securities Act, as such rule may be
amended from time to time, or any similar rules or regulations
hereafter adopted by the SEC.
(d) LISTING. Buyer will use its reasonable best efforts
to cause the Buyer Shares to be sold pursuant to the Registration
Statement to be listed on the Nasdaq National Market or any other
securities exchanges or markets on which Buyer Shares are then listed.
(e) INDEMNIFICATION AND CONTRIBUTION.
(i) In the event of a registration of any of the
Buyer Shares under the Securities Act pursuant to this Section
8.7, Buyer will indemnify and hold harmless each Shareholder
and each Shareholder Affiliate against any losses, claims,
damages or liabilities, joint or solidary, to which such
Shareholder or Shareholder Affiliate may become subject under
the Securities Act, the Exchange Act, or any other federal or
state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Buyer),
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material
fact contained in the
40
Registration Statement, including the prospectus, financial
statements and schedules, and all other documents filed as a
part thereof, as amended at the time of effectiveness of the
Registration Statement, including any information deemed to be
a part thereof as of the time of effectiveness pursuant to
paragraph (b) of SEC Rule 430A, or pursuant to SEC Rule 434,
or the prospectus, in the form first filed with the SEC
pursuant to SEC Rule 424(b), or filed as part of the
Registration Statement at the time of effectiveness if no Rule
424(b) filing is required (the "PROSPECTUS"), or any amendment
or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each
such Shareholder and each such Shareholder Affiliate for any
legal or other expenses reasonably incurred by such
Shareholder or Shareholder Affiliate in connection with
investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability or action; provided,
however, that Buyer will not be liable in any such case if and
to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in
connection with the business financial information relating to
the Company prior to the Closing or so made in conformity with
information furnished by such Shareholder specifically for use
in such Registration Statement. For purposes of this Section
8.7 only, the term "SHAREHOLDER AFFILIATE" shall mean any
affiliates of the Shareholder and any officer, director,
trustee or other person who controls the Shareholder or any
affiliate of the Shareholder within the meaning of Section 15
of the SECURITIES ACT or Section 20 of the EXCHANGE ACT, and
the term "Registration Statement" shall include any final
prospectus, exhibit, supplement or amendment included in or
relating to, and any document incorporated by reference in,
the Registration Statement.
(ii) In the event of a registration of any of the
Buyer Shares under the Securities Act pursuant to this Section
8.7, each Shareholder having Buyer Shares registered
thereunder, jointly, for itself and not for the other
Shareholders, will indemnify and hold harmless Buyer and each
affiliate of Buyer, each underwriter and each person who
controls any underwriter within the meaning of the Securities
Act, against all losses, claims, damages or liabilities, joint
or solidary, to which Buyer or such Buyer Affiliate,
underwriter or person may become subject under the Securities
Act or otherwise, insofar as such loses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration
Statement or any amendment or supplement thereof, or arise out
of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and
will reimburse Buyer and each such officer, director,
underwriter and controlling person for any legal or other
expenses reasonably incurred by them in connection with
investigating or defending any such loss,
41
claim, damage, liability or action; provided, however, that
such Shareholder will be liable under the Section 8.7(e)(ii)
in any such case if and only to the extent that any such loss,
claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement of a material
fact or omission or alleged omission of a material fact made
in reliance upon and in conformity with information pertaining
to such Shareholder furnished in writing to Buyer by such
Shareholder specifically for use in the Registration
Statement; and provided further, however, that the liability
of each Shareholder hereunder shall not in any event exceed
the net proceeds received from the sale of his, her or its
Buyer Shares covered by such Registration Statement.
(iii) Promptly after receipt by an indemnified
party under this Section 8.7(e) of notice of the threat or
commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying
party under this Section 8.7(e), promptly notify the
indemnifying party in writing thereof; but the omission to so
notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party for
contribution or otherwise under the indemnity agreement
contained in this Section 8.7(e) to the extent it is not
prejudiced as a result of such failure. In case any such
action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly
with all other indemnifying parties similarly notified, to
assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, if
the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be a conflict
between the positions of the indemnifying party and the
indemnified party in conducting the defense of any such action
or that there may be legal defenses available to it and/or
other indemnified parties which are different from or
additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select
separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf
of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval
by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this
Section 8.7(e) for any legal or other expenses subsequently
incurred by such indemnified party in connection with the
defense thereof unless (1) the indemnified party shall have
employed such counsel in connection with the assumption of
legal defenses in accordance with the proviso to the preceding
sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one
separate counsel, approved by such indemnifying party in the
case of paragraph (i), representing all of the indemnified
parties who are parties to such action) or (2) the indemnified
party shall not have employed counsel reasonably satisfactory
to the indemnifying party to represent the indemnified party
within a reasonable time after notice of commencement of
action, in each of which cases the reasonable fees and
expenses of counsel shall be at the expense of the
indemnifying party.
42
(iv) In order to provide for just and equitable
contribution to joint liability under the Securities Act in
any case in which either (1) any indemnified party exercising
rights under this Agreement makes a claim for indemnification
pursuant to this Section 8.7(e) but it is judicially
determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case
notwithstanding the fact that this Section 8.7(e) provides for
indemnification in such case, (2) contribution under the
Securities Act may be required on the part of any such
Shareholder in circumstances for which indemnification is
provided under this Section 8.7, or (3) the indemnification
provided for by this Section 8.7 is insufficient to hold
harmless an indemnified party, other than by reason of the
exceptions provided therein, then, and in each such case,
Buyer and the Shareholders will contribute to the aggregate
losses, claims, damages or liabilities to which they may be
subject (after contribution from others) (x) in such
proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and the indemnified
party on the other or (y) if the allocation provided by clause
(x) above is not permitted by applicable law, or provides a
lesser sum to the indemnified party than the amount
hereinafter calculated, in such proportion as is appropriate
to reflect not only the relative fault referred to in clause
(x) above but also the relative benefits received by the
indemnifying party and the indemnified party from the
registration of the securities as well as the statements or
omissions which resulted in such losses, claims, damages or
liabilities and any other relevant equitable considerations.
No Shareholder will be required to contribute any amount in
excess of the net proceeds received from the sale of his, her
or its Buyer Shares covered by such Registration Statement and
no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 12 of the Securities Act) will
be entitled to contribution from any person or entity who was
not guilty of such fraudulent misrepresentation.
(v) The obligations of the Buyer and the
Shareholders under this Section 8.7(e) shall survive
completion of any offering of Buyer Shares pursuant to a
Registration Statement and the termination of Buyer's
obligations under Section 8.7(a). No indemnifying party, in
the defense of any such claim or litigation, shall, except
with the consent of each indemnified party, consent to entry
of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release
from all liability in respect to such claim or litigation.
(f) INFORMATION AVAILABLE. So long as the Registration
Statement is effective covering the resale of Buyer Shares owned by the
Shareholders, the Buyer will furnish to each Shareholder:
(i) as soon as practicable after (A) its Annual
Report on Form 10-K, 20-F or 40-F, (B) its interim reports,
(C) its material change reports, (D) its proxy
43
statement, (E) a full copy of the particular Registration
Statement covering the Buyer Shares, and (F) a copy of each
other registration statement covering Buyer Subordinate Voting
Shares filed with the SEC (the foregoing, in each case,
excluding exhibits unless requested by such Shareholder); and
(ii) a reasonable number of copies of the
prospectuses to supply to any other party requiring such
prospectuses; and the Buyer, upon the reasonable request of
the Shareholder, will meet with the Shareholder or a
representative thereof at the Buyer's headquarters to discuss
information relevant for disclosure in the Registration
Statement covering the Buyer Shares and will otherwise
cooperate with any Shareholder conducting an investigation for
the purpose of reducing or eliminating such Shareholder's
exposure to liability under the Securities Act, including the
reasonable production of information at the Buyer's
headquarters, subject to appropriate confidentiality
limitations.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1 SURVIVAL NOTWITHSTANDING INVESTIGATION. Notwithstanding any
investigation conducted before the Closing and notwithstanding implied knowledge
or notice of any fact or circumstance which any Person may have as a result of
such investigation or otherwise, the parties hereto shall be entitled to rely
upon the representations and warranties set forth herein and the obligations of
the parties hereto with respect thereto shall survive the Closing and shall
continue in full force and effect in accordance with and subject to the terms of
this Article IX.
9.2 GENERAL INDEMNIFICATION BY THE SHAREHOLDERS. Subject to the
provisions contained herein, each of the Shareholders shall be liable to the
Buyer and their respective directors, officers and employees (collectively, the
"BUYER INDEMNIFIED PERSONS" and each a "BUYER INDEMNIFIED PERSON") and shall
defend, indemnify and hold harmless all of the Buyer Indemnified Persons against
any and all Claims incurred or suffered by or imposed upon any of the Buyer
Indemnified Persons arising directly or indirectly out of:
(a) the breach of any agreement, covenant, representation
or warranty of any of the Shareholders or the Company contained in or
contemplated by this Agreement or in any other agreement or document
required to be furnished by any of the Shareholders or the Company to
the Buyer hereunder; and
(b) the non-fulfilment of any agreement, covenant or
obligation of any of the Shareholders or the Company contained in this
Agreement or in any other agreement or document required to be entered
into by any of the Shareholders or the Company pursuant hereto to the
extent not waived in writing by the Buyer.
The obligation of indemnification of the Founding Shareholders
hereunder shall be solidary and the obligation of indemnification of
the Other Shareholders shall be joint and not solidary and each Other
Shareholder shall only be liable hereunder with respect to the
agreements, covenants, representations and warranties made by such
Other Shareholder in this Agreement. For greater certainty, the Buyer
shall have recourse to the
44
Escrow Shares of an Other Shareholder only for Claims against such
Other Shareholder for a breach or failure of agreements, covenants,
representations and warranties made by such Other Shareholder in this
Agreement.
9.3 INDEMNIFICATION BY THE BUYER. The Buyer shall be liable to
each of the Shareholders and their respective heirs and assigns (collectively
the "SHAREHOLDERS INDEMNIFIED PERSONS" and each a "SHAREHOLDERS INDEMNIFIED
PERSON") and shall defend, indemnify and hold harmless all of the Shareholders
Indemnified Persons against any and all Claims incurred or suffered by or
imposed upon any of the Shareholders Indemnified Persons arising directly or
indirectly out of:
(a) the breach of any agreement, covenant, representation
or warranty of the Buyer contained in or contemplated by this Agreement
or in any other agreement or document required to be furnished by the
Buyer to the Shareholders hereunder; and
(b) the non-fulfilment of any agreement, covenant or
obligation of the Buyer contained in this Agreement or in any agreement
or document required to be entered into by the Buyer pursuant hereto,
to the extent not waived in writing by the Shareholders;
provided that the amount of indemnification in relation to such Claims
to be made by the Shareholder Indemnified Person pursuant to the
provisions hereof shall be limited to a fraction of the total Claims
resulting from the applicable breach determined by dividing the number
of Buyer Shares of the share capital of the Buyer held by such
Shareholder immediately after the Closing divided by the total number
of Buyer Shares issued pursuant to this Agreement.
9.4 TAX INDEMNIFICATION.
(a) The Founding Shareholders agree, solidarily, to
indemnify and hold harmless the Buyer Indemnified Parties against any
Losses incurred or paid by a Buyer Indemnified Party, which arise as a
result of (i) any liability for any Taxes imposed on the Company
pursuant to federal, state, local or foreign law attributable to any
periods ending on or before the date of the Closing, (ii) with respect
to any Straddle Period, the portion of Taxes payable by or assessed
against the Company which are properly allocable to the part of such
Straddle Period ending on the date of the Closing, pursuant to Section
9.4(b) and (iii) any breach of the representations or warranties made
by the Company and the Founding Shareholders in Section 2.11 (all such
Losses being "TAX LOSSES"). Any indemnity payments to or from the
Shareholders or to or from the Buyer pursuant to this Agreement,
whether under this Section 9.4 or otherwise, shall be treated by the
Buyer and the Shareholders as purchase price adjustments for all tax
purposes. All indemnification obligations set forth in this Section
9.4(a) shall be treated as "TAX CLAIMS" for purposes of this Agreement.
(b) For purposes of this Section 9.4, with respect to any
taxable year or period beginning before and ending after the date of
the Closing (a "STRADDLE PERIOD"), an allocation of Taxes shall be made
to the part of such Straddle Period which ends on the date of the
Closing based on (i) the closing of the books method, in the case of
income or any similar Taxes, (ii) the number of days elapsed between
the beginning of such
45
Straddle Period to and including the date of the Closing in the case of
property Taxes, and (iii) when the relevant transaction occurs, in the
case of sales and gross receipts Taxes.
9.5 INDEMNIFICATION TO BE AFTER TAX, INSURANCE, ETC. The amount of
the indemnification for any Claim which the Buyer Indemnified Persons and the
Shareholder Indemnified Persons shall be entitled to receive pursuant to this
Agreement shall be payable on demand and shall be determined after giving effect
to any insurance recoveries, tax savings and recoveries from third parties.
9.6 EXPIRY AND LIMITS OF LIABILITY OF SHAREHOLDERS.
(a) The representations and warranties of the
Shareholders herein (other than those of the Shareholders with respect
to the matters set forth in Section 9.6(b)), shall terminate on the
date which is 90 days after the date the Buyer has publicly released
its audited financial statements for the year ended August 31, 2003
except to the extent that, during such period, any Buyer Indemnified
Person shall have given detailed notice (to the extent feasible) to the
Shareholders of a specified Claim in respect of any representation or
warranty in which case such representation and warranty with respect to
such Claim shall continue in full force and effect until the final
determination of such Claim.
(b) Notwithstanding the foregoing provisions of Section
9.6(a):
(i) representations and warranties herein of the
Founding Shareholders with respect to the share capital and
the share ownership of the Company as set forth in Sections
2.1, 2.2. and 2.4 and of the Other Shareholders under Article
IV shall survive indefinitely;
(ii) representations and warranties herein of the
Founding Shareholders relating to any liability of the Company
for the payment of Taxes shall survive so long as any claim
may be made in respect of such matters under any applicable
statute of limitations; and
(iii) notwithstanding the foregoing, there shall
be no limit of time on the representations and warranties of
any Shareholder relating to any matter in the case of fraud,
gross negligence, voluntary omission or bad faith on the part
of that Shareholder.
(c) Notwithstanding the other provisions of this Article
IX, no Claims with respect to breaches or failure of representations
and warranties contemplated by Sections 9.6(b)(i) and 9.6(b)(iii) or
contained in Article III may be made against the Founding Shareholders
hereunder unless and until the aggregate amount of all Claims which may
be made pursuant to this Agreement exceeds $250,000, in which event the
Founding Shareholders shall become liable for the full amount of all
Claims on a dollar for dollar basis, up to a maximum amount equal to:
46
(i) the Total Consideration received by such
Founding Shareholders in the event of a Claim or Claims
arising from a breach of a representation and warranty with
respect to the matters set forth in Sections 2.1, 2.2 and 2.4
or Article III;
(ii) $10,000,000, in the event of a Claim or
Claims arising from a breach of any representation and
warranty set forth in Sections 2.3, 2.5, 2.7, 2.9, 2.10, 2.11,
2.13, 2.14, 2.15, 2.16, 2.17, 2.18, 2.19, 2.21 2.22 and 2.23;
or
(iii) $21,102,432 in the event of a Claim or
Claims arising from a breach of any representation and
warranty set forth in Sections 2.6, 2.8, 2.12 (but subject to
the provisions of Exhibit P), 2.20 and 2.25;
provided that in no event shall such liability exceed the Total
Consideration received by such Founding Shareholders.
(d) Notwithstanding the other provision of this Article
IX, no Claims with respect to breaches or failure of representations
and warranties made by such Other Shareholder contemplated by Section
9.6(b)(i) and 9.6(b)(iii) or contained in Article III may be made
against any Other Shareholder hereunder unless and until the aggregate
amount of all Claims which may be made pursuant to this Agreement
against such Other Shareholder exceeds $50,000, in which event such
Other Shareholder shall become liable for the full amount of all Claims
on a dollar for dollar basis, up to a maximum amount equal to the Total
Consideration received by such Other Shareholder in the event of a
Claim or Claims arising from a breach of a representation and warranty
made by such Other Shareholder with respect to the matters set forth in
Article III or Article IV.
(e) Any claims for which the Shareholders shall become
liable shall be payable to the Buyer from the Escrow Fund on a dollar
for dollar basis. In the event the Claims exceed the amount contained
in the Escrow Fund, the Shareholders shall become liable for such
further amount on a dollar for dollar basis, subject to Section 9.6(c)
or (d), as the case may be. Without prejudice to the solidary
obligations of the Founding Shareholders, to the extent that any Claims
can be satisfied from the Escrow Funds, the Buyer will prorate its
notices of Claim to the Escrow Agent in respect of the Founding
Shareholders proportionally to their Escrowed Shares.
9.7 EXPIRY AND LIMITS OF LIABILITY OF BUYER.
(a) The representations and warranties of the Buyer shall
terminate on the date which is 90 days after the date on which the
Buyer has publicly released its audited financial statements for the
year ended August 31, 2003 except to the extent that, during such
period any Shareholders Indemnified Person shall have given detailed
notice to the Buyer of a specified Claim in respect of any
representation or warranty in which case such representation and
warranty shall continue in full force and effect until the final
determination of such Claim.
47
(b) Notwithstanding the foregoing provisions of Section
9.7(a):
(i) representations and warranties herein of the
Buyer and Buyer Sub with respect to the Buyer Shares and the
share capital of the Buyer shall survive in accordance with
the applicable statute of limitations under the securities
laws in Canada and the United States; and
(ii) notwithstanding the foregoing, there shall
be no limit of time on the representations and warranties of
the Buyer relating to any matter in the case of fraud, gross
negligence, voluntary omission or bad faith on the part of the
Buyer and Buyer Sub.
(c) Notwithstanding the other provisions of this Section
9.7, no Claims with respect to breaches or failure of representations
and warranties contemplated by Section 9.6(b) may be made against the
Buyer and Buyer Sub hereunder unless and until the aggregate amount of
all Claims which may be made pursuant to this Agreement exceed
$250,000, in which event the Buyer and Buyer Sub shall become liable
for the full amount of all Claims on a dollar for dollar basis, up to a
maximum amount equal to:
(i) the Total Consideration, in the event of a
Claim or Claims arising from a breach of a representation and
warranty with respect to the matters set forth in Sections
5.1, 5.2, 5.7 and 5.10, and;
(ii) $10,000,000 in the event of a Claim or
Claims arising from a breach of any other representation and
warranty set forth in this Agreement.
9.8 PROCEDURE. Promptly (but in no event more than 15 days) after
receipt by a Buyer Indemnified Person or a Shareholder Indemnified Person (an
"INDEMNIFIED PARTY") as the case may require) of notice of the commencement of
any action, such Indemnified Party shall, if a claim in respect thereof is to be
made against the indemnifying party under this Section 9.8, notify in writing
the indemnifying party of the commencement thereof. In case any such action is
brought against any Indemnified Party, and such Indemnified Party notifies the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
subject to the provisions hereof, with counsel reasonably satisfactory to such
Indemnified Party. Following notification to the Indemnified Party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such Indemnified Party under this Section 9.8 for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with the
defense there, other than reasonable costs of investigation. The Indemnified
Party shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action, within a reasonable time after notice of
commencement of the action, with counsel reasonably satisfactory to the
Indemnified Party; PROVIDED HOWEVER, that the indemnifying party shall be
required to pay for Indemnified Party's counsel, if, such Indemnified Party
shall have reasonably concluded, on reliance of the written opinion of counsel
experienced in such matters, that there may be defenses available to it or him
which are different from or additional to those
48
available to the indemnifying party (in which case indemnifying parties shall
not have the right to direct the defense of action). No settlement of any action
against an Indemnified Party shall be made without the consent of the
Indemnifying Party, which shall not be unreasonably withheld. In the event that
any Indemnified Party should have a direct claim against any indemnifying party
hereunder that does not involve any third-party claim or claims asserted against
the Indemnified Party, the Indemnified Party shall transmit to the indemnifying
party a written notice describing in reasonable detail the nature of the claim,
an estimate of the amount of damages attributable to such claim to the extent
feasible (which estimate shall not be conclusive of the final amount of such
claim) and the basis of the Indemnified Party's request for indemnification
under this Article IX. If the indemnifying party does not notify the Indemnified
Party within 90 days from its receipt of such notice that the indemnifying party
disputes such claim, the claim specified by the Indemnified Party in the
indemnity notice shall be deemed a liability of the indemnifying party
hereunder. If the indemnifying party has timely disputed such claim, as provided
above, such dispute shall be resolved by litigation in an appropriate court of
competent jurisdiction. The parties agree that the sole and exclusive remedy
which any party hereto shall have against any other party hereto under this
Agreement shall be the right to proceed for indemnification in the manner and
only to the extent provided in this Article IX.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing (except as limited as to time in paragraph (b) below):
(a) by the mutual written consent of the Buyer and the
Shareholder Representative;
(b) by the Buyer or the Shareholder Representative, if
the Closing shall not have occurred prior to the 90th day following the
date hereof; PROVIDED, HOWEVER, that the right to terminate this
Agreement under this Section 10.1(b) shall not be available to any
party if such party's failure to fulfill any obligation under this
Agreement shall have been the cause of, or shall have resulted in, the
failure of the Closing to occur prior to such date;
(c) by the Shareholder Representative in the event a
condition set forth in Section 7.1 or 7.3 becomes incapable of being
fulfilled;
(d) by the Buyer in the event a condition set forth in
Section 7.1 or 7.2 becomes incapable of being fulfilled and in
particular by the Buyer pursuant to Section 7.2(q);
(e) by the Buyer in the event that a schedule of
disclosure is amended or supplemented by the Company and which
amendment or supplement is considered by the Buyer, acting reasonably,
to have a Company Material Adverse Effect; or
(f) by the Shareholder Representative in the event that a
schedule of disclosure is amended or supplemented by the Buyer and
which amendment or supplement is considered by the Shareholder
Representative, acting reasonably, to have a Buyer Material Adverse
Effect.
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10.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 10.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto; PROVIDED,
HOWEVER, that nothing herein shall relieve either the Shareholders or the Buyer
from liability for any breach of this Agreement or failure to perform hereunder.
If this Agreement is terminated as provided herein, upon request therefore, each
party will re-deliver all documents, workpapers and other material of any other
party relating to the transactions contemplated hereby, whether obtained before
or after the execution hereof, to the party furnishing the same.
10.3 WAIVER. At any time prior to Closing, any party may (a) extend
the time for the performance of any of the obligations or other acts of any
other party hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or (c)
waive compliance with any of the agreements or conditions contained herein. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party to be bound thereby.
ARTICLE XI
MISCELLANEOUS
11.1 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together with
the Exhibits and Schedules hereto, contain the entire understanding of the
parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into this Agreement and the
Exhibits and Schedules hereto.
11.2 NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed effectively
given: (a) upon personal delivery to the party to be notified, (b) when sent by
confirmed facsimile if sent during normal business hours of the recipient; if
not, then on the next business day, (c) three business days after having been
sent by registered or certified mail, return receipt requested, postage prepaid,
or (d) two business days after deposit with recognized overnight courier,
specifying next day delivery, with written verification of receipt. The address
for all notices, requests, consents and other communications hereunder to the
parties to this Agreement shall be delivered or sent to the following:
The Company:
Avantas Networks Corporation
0000 Xxxxx-Xxxxx
Xx. Xxxxxxx, Xxxxxx
X0X 0X0
ATTENTION: XXXX XXXXX, PRESIDENT
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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With a copy (which shall not constitute notice) to:
XxXxxxxx Xxxxxxxx
0000-00 Xxxxx Xx.
Xxxxxx, Xxxxxxx
X0X 0X0
ATTENTION: XXXXXX X. XXXXXXX
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
The Buyer:
EXFO Electro-Optical Engineering Inc.
000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxx
X0X 0X0
ATTENTION: XXXXXXX XXXXXXX, PRESIDENT
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy (which shall not constitute notice) to:
Fasken Xxxxxxxxx DuMoulin LLP
Stock Exchange Tower
000 Xxxxx Xxxxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
ATTENTION: XXXXXX XXXX
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to any of the Shareholders:
Xxxx Xxxxx, as Shareholder and Shareholder
Representative
c/o Avantas Networks Corporation
0000 Xxxxx-Xxxxx
Xx. Xxxxxxx, Xxxxxx
X0X 0X0
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Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
11.3 AMENDMENTS; WAIVERS. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by each party to this Agreement, or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
11.4 HEADINGS. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
11.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns. The Company and the Shareholders may not assign this Agreement or any
rights or obligations hereunder without the prior written consent of the Buyer.
The Buyer may not assign this Agreement or any of the rights or obligations
hereunder without the prior written consent of the Company and the Shareholder
Representative.
11.6 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for
the benefit of the parties hereto and their respective successors and permitted
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
11.7 GOVERNING LAW; CONSENT TO JURISDICTION; LANGUAGE. This
Agreement shall be governed by and construed and enforced in accordance with the
internal laws the Province of Quebec without regard to the principles of
conflicts of law thereof. Each party hereby irrevocably consents to the
jurisdiction of the courts located in the Province of Quebec, to adjudicate any
dispute arising pursuant to this Agreement or the transactions contemplated
hereby, and waives any objections thereto. Les parties ont expressement exige
que cette convention ainsi que tous documents y afferents soient rediges en
anglais. The parties have expressly requested that this Agreement and all
notices related thereto be drafted in English only.
11.8 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
52
11.9 SEVERABILITY. In case any one or more of the provisions of
this Agreement shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Agreement shall
not in any way be affected or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
11.10 INTERPRETATION; CURRENCY. The Section headings in this
Agreement are for convenience of reference only and shall not be deemed to alter
or affect the meaning or interpretation of any provision hereof. The language
used in this Agreement will be deemed to be the language chosen by the parties
hereto to express their mutual intent, and no rule of strict construction will
be applied against any party hereto. Any references to the "KNOWLEDGE" of the
Company or the Company's "KNOWLEDGE" or any similar formulation shall mean the
actual knowledge of Xxxx Xxxxx, the Company's Chief Executive Officer and/or any
officer of the Company. Any references to the "KNOWLEDGE" of the Buyer or the
Buyer's "KNOWLEDGE" or any similar formulation shall mean the actual knowledge
of the officers (as defined in Rule 16a-1(f) of the Exchange Act) of Buyer. Any
references to "CLAIM" or "CLAIM" shall mean any claim, demand, action, cause of
action, damage, loss, cost, liability or expense, including reasonable
professional fees and all costs incurred in investigating or pursuing any of the
foregoing or any proceeding relating to any of the foregoing. The disclosure of
any matter in any portion of the Disclosure Schedules hereto shall be deemed to
be a disclosure for all purposes of this Agreement to which such matter could
reasonably be likely to be pertinent, but shall expressly not be deemed to
constitute an admission by the Company, the Shareholders or the Buyer, as the
case may be, or to otherwise imply, that any such matter is material for the
purposes of this Agreement. All currency amounts herein are expressed in United
States dollars unless otherwise specified.
11.11 EFFECTIVENESS. This Agreement shall become effective on the
date at which Buyer shall have received a counterpart of this Agreement or an
intervention in the form of Exhibit N executed by the Founding Shareholders and
Other Shareholders of the Company holding in the aggregate at least two-thirds
of the issued and outstanding shares of each of (i) Series A Preferred Shares,
(ii) Series B1 Voting Preferred Shares, (iii) Series B2 Non-Voting Preferred
Shares and (iv) common shares of the Company including for purposes of
calculating such level of two thirds of the common shares of the Company, all
common shares issuable upon the exercise of the in the money options as
described in Section 1.5(i).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement of
Merger to be duly executed by their respective authorized signatories as of the
date first indicated above.
AVANTAS NETWORKS CORPORATION
By: /s/ Xxxx Xxxxx
---------------------------------------
Name: Xxxx Xxxxx
---------------------------------------
Title: President and Chief Executive Officer
---------------------------------------
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EXFO ELECTRO-OPTICAL ENGINEERING INC.
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxxx
---------------------------------------
Title: President
---------------------------------------
EXFO ELECTRO-OPTICAL ENGINEERING INC. FOR A
WHOLLY-OWNED CORPORATION TO BE INCORPORATED
UNDER THE LAWS OF CANADA
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxxx
---------------------------------------
Title: President
---------------------------------------
/s/ Xxxx Xxxxx
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XXXX XXXXX
/s/ Xxxxxxxx Xxxxx
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XXXXXXXX XXXXX
/s/ Xxxxx XxXxxxxxxxxxxx
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XXXXX XXXXXXXXXXXXXX
/s/ Xxxxxx Xxxxxxxxxx
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XXXXXX XXXXXXXXXX
/s/ Xxxxxx Xxxxxxx
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XXXXXX XXXXXXX
/s/ Xxxxxxxx Xxxxxxxxx
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XXXXXXXX XXXXXXXXX
/s/ Xxxxxx Xxxxxx
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XXXXXX XXXXXX
/s/ Xxxxxxx Xxxxxxx
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XXXXXXX XXXXXXX
