SUPPORT AGREEMENT
THIS AGREEMENT is made as of September 26th, 1996.
BETWEEN:
TOTAL CONTROL PRODUCTS, INC., a corporation existing under
the laws of the State of Illinois, (hereinafter referred to
as the "Parent")
- and -
XXXXXX INDUSTRIAL SOFTWARE INC., a corporation existing
under the laws of the Province of Alberta, (hereinafter
referred to as the "Corporation")
WHEREAS pursuant to articles of amendment of the Corporation filed
pursuant to the BUSINESS CORPORATIONS ACT (Alberta), the Corporation created a
new class of Exchangeable Non-Voting Shares of the Corporation (the
"Exchangeable Shares"), and thereafter, the Corporation and Parent entered into
an Exchange Agreement (the "Exchange Agreement") with each of the holders of
Class B Common Shares of the Corporation (the "Class B Shares") pursuant to
which such holders exchanged their Class B Shares for Exchangeable Shares and
Parent agreed, among other things, to provide such holders with certain exchange
privileges including the right to exchange each Exchangeable Share directly with
Parent for one share in the common stock of Parent upon an insolvency event
occurring with respect to the Parent or the Corporation (the "Parent Common
Stock") (such articles of amendment and the Exchange Agreement are herein
referred to as the "Reorganization");
AND WHEREAS the above-mentioned articles of amendment set forth the
rights, privileges, restrictions and conditions (collectively the "Exchangeable
Share Provisions") attaching to the Exchangeable Shares;
AND WHEREAS the parties hereto desire to make appropriate provision
and to establish a procedure whereby the Parent will take certain actions and
make certain payments and deliveries necessary to ensure that the Corporation
will be able to make certain payments and to deliver or cause to be delivered
shares of Parent Common Stock or notes of the Corporation in satisfaction of the
obligations of the Corporation under the Exchangeable Share Provisions with
respect to the payment and satisfaction of Purchase Prices and Special Purchase
Prices, all in accordance with the Exchangeable Share Provisions;
NOW THEREFORE in consideration of the respective covenants and
agreements provided in this agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties agree as follows:
-2-
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINED TERMS. Each term denoted herein by initial capital letters
and not otherwise defined herein shall have the meaning ascribed thereto in the
Exchangeable Share Provisions, unless the context requires otherwise.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this
agreement into articles, sections and paragraphs and the insertion of headings
are for convenience of reference only and shall not affect the construction or
interpretation of this agreement.
1.3 NUMBER, GENDER, ETC. Words importing the singular number only shall
include the plural and vice versa. Words importing the use of any gender shall
include all genders.
1.4 DATE FOR ANY ACTION. If any date on which any action is required to
be taken under this agreement is not a Business Day, such action shall be
required to be taken on the next succeeding Business Day.
ARTICLE 2
COVENANTS OF THE PARENT AND THE CORPORATION
2.1 COVENANTS OF PARENT REGARDING EXCHANGEABLE SHARES. So long as any
Exchangeable Shares are outstanding the Parent will take all such actions and do
all such things as are necessary or desirable to enable and permit the
Corporation, in accordance with applicable law, to pay and otherwise perform its
obligations with respect to the satisfaction of the Retraction Price and the
Special Retraction Price, including without limitation all such actions and all
such things as are necessary or desirable to enable and permit the Corporation
to cause to be delivered shares of Parent Common Stock to the holders of
Exchangeable Shares, upon the retraction or redemption of the Exchangeable
Shares or Special Retraction Notes, as applicable, in accordance with the
provisions of Article 4 or Article 5 of the Exchangeable Share Provisions, as
the case may be and, without limiting the generality of the foregoing, (a) if
required by any law, regulation or stock exchange rule, the Parent will cause
the filing of a prospectus and any other steps necessary to qualify distribution
of the shares of Parent Common Stock and (b) the Parent will provide its
unconditional guarantee in support of the obligations of the Corporation
pursuant to the Special Retraction Notes.
2.2 RESERVATION OF SHARES OF PARENT COMMON STOCK. The Parent hereby
represents, warrants and covenants that it has irrevocably reserved for issuance
and will at all times keep available, free from pre-emptive and other rights,
out of its authorized and unissued capital stock such number of shares of Parent
Common Stock (or other shares of securities into which the Parent Common Stock
may be reclassified or changed as contemplated by section 2.5 hereof) (a) as is
equal to the sum of (i) the number of Exchangeable Shares issued and outstanding
from time to time and (ii) the number of Exchangeable Shares issuable upon the
exercise of all rights to acquire Exchangeable Shares outstanding from time to
time and (b) as are now and may hereafter be required
-3-
to enable and permit the Corporation to meet its obligations hereunder, under
the Exchange Agreement or under the Exchangeable Share Provisions.
2.3 NOTIFICATION OF CERTAIN EVENTS. In order to assist the Parent to
comply with its obligations hereunder, the Corporation will give the Parent
notice of each of the following events at the time set forth below:
(a) immediately, upon receipt by the Corporation of a Retraction Request
or a Special Retraction Request (as defined in the Exchangeable Share
Provisions); and
(b) as soon as practicable upon the issuance by the Corporation of any
Exchangeable Shares or rights to acquire Exchangeable Shares.
2.4 DELIVERY OF SHARES OF PARENT COMMON STOCK. In furtherance of its
obligations under section 2.1 hereof, upon notice of any event which requires
the Corporation to cause to be delivered shares of Parent Common Stock to any
holder of Exchangeable Shares, the Parent shall forthwith issue and deliver the
requisite shares of Parent Common Stock to or to the order of the former holder
of the surrendered Exchangeable Shares, as the Corporation shall direct. All
such shares of Parent Common Stock shall be duly issued as fully paid and non-
assessable and shall be free and clear of any lien, claim, encumbrance, security
interest or adverse claim.
2.5 ECONOMIC EQUIVALENCE.
(a) The Parent will not without the prior approval of the Corporation and
the prior approval of the holders of the Exchangeable Shares given in
accordance with Section 6.2 of the Exchangeable Share Provisions:
(i) issue or distribute shares of Parent Common Stock (or securities
exchangeable for or convertible into or carrying rights to
acquire shares of Parent Common Stock) to the holders of all or
substantially all of the then outstanding Parent Common Stock by
way of stock dividend or other distribution, other than an issue
of shares of Parent Common Stock (or securities exchangeable for
or convertible into or carrying rights to acquire shares of
Parent Common Stock) to holders of shares of Parent Common Stock
who exercise an option to receive dividends in Parent Common
Stock (or securities exchangeable for or convertible into or
carrying rights to acquire shares of Parent Common Stock) in lieu
of receiving cash dividends; or
(ii) issue or distribute rights, options or warrants to the holders of
all or substantially all of the then outstanding shares of Parent
Common Stock entitling them to subscribe for or to purchase
shares of Parent Common Stock (or securities exchangeable for or
convertible into or carrying rights to acquire shares of Parent
Common Stock); or
-4-
(iii) issue or distribute to the holders of all or substantially
all of the then outstanding shares of Parent Common Stock
(A) shares or securities of the Parent of any class other
than Parent Common Stock (other than shares convertible into
or exchangeable for or carrying rights to acquire shares of
Parent Common Stock ), (B) rights, options or warrants other
than those referred to in subsection 2.5(a)(ii) above,
(C) evidences of indebtedness of the Parent or (D) assets of
the Parent other than cash dividends;
unless (i) the Corporation is permitted under applicable law to issue
or distribute the economic equivalent on a per share basis of such
rights, options, securities, shares, evidences of indebtedness or
other assets to holders of the Exchangeable Shares and (ii) (A) the
Corporation shall issue or distribute such rights, options,
securities, shares, evidences of indebtedness or other assets
simultaneously to holders of the Exchangeable Shares or (B) the
Liquidation Amount, Liquidation Call Purchase Price, Purchase Price
and Retraction Price in the Exchangeable Share Provisions and the
purchase price of the Exchangeable Shares under Sections 4.3 and 4.9
of the Exchange Agreement are all equitably adjusted.
(b) The Parent will not without the prior approval of the Corporation and
the prior approval of the holders of the Exchangeable Shares given in
accordance with Section 6.2 of the Exchangeable Share Provisions:
(i) subdivide, redivide or change the then outstanding shares of
Parent Common Stock into a greater number of shares of Parent
Common Stock; or
(ii) reduce, combine or consolidate or change the then outstanding
shares of Parent Common Stock into a lesser number of shares of
Parent Common Stock;
unless (i) the Corporation is permitted under applicable law to
simultaneously make the same or an economically equivalent change to,
or in the rights of holders of, the Exchangeable Shares and
(ii) (A) the same or an economically equivalent change is made to, or
in the rights of the holders of, the Exchangeable Shares or (B) the
Liquidation Amount, Liquidation Call Purchase Price, Purchase Price
and Retraction Price in the Exchangeable Share Provisions and the
purchase price of the Exchangeable Shares under Sections 4.3 and 4.9
of the Exchange Agreement are all equitably adjusted;
(c) Parent will not reclassify the shares of Parent Common Stock or effect
an amalgamation, merger or reorganization unless, at least ten
Business Days prior to such amalgamation, merger or reorganization,
the Parent shall deliver written notice of such event to each of the
holders of Exchangeable Shares who shall have the right to exchange
their Exchangeable Shares for shares of Parent Common Stock
immediately prior to such amalgamation, merger or reorganization.
-5-
(d) The Parent will ensure that the record date for any event referred to
in Section 2.5(a) or 2.5(b) above, or if no record date is applicable
for such event the effective date for any such event, is not less than
five Business Days after the date on which such event is declared or
announced by the Parent (with simultaneous notice thereof to be given
by the Parent to the Corporation).
(e) The Board of Directors of the Corporation shall determine, in good
faith and in its sole discretion (with the assistance of such
reputable and qualified independent financial advisors and/or other
experts as the board may require), economic equivalence for the
purposes of any event referred to in subsection 2.5(a) or 2.5(b) above
and each such determination shall be conclusive and binding on the
Parent. In making each such determination, the following factors
shall, without excluding other factors determined by the board to be
relevant, be considered by the Board of Directors of the Corporation:
(i) in the case of any stock dividend or other distribution
payable in shares of Parent Common Stock, the number of
such shares issued in proportion to the number of shares of
Parent Common Stock previously outstanding;
(ii) in the case of the issuance of distribution of any rights,
options or warrants to subscribe for or purchase shares of
Parent Common Stock (or securities exchangeable for or
convertible into or carrying rights to acquire shares of
Parent Common Stock), the relationship between the exercise
price of each such right, option or warrant and the current
market value (as determined by the Board of Directors of the
Corporation in the manner above contemplated) of a share of
Parent Common Stock;
(iii) in the case of the issuance or distribution of any other
form of property (including without limitation any shares or
securities of the Parent of any class other than Parent
Common Stock, any rights, options or warrants other than
those referred to in subsection 2.5(d)(ii) above, any
evidences of indebtedness of the Parent or any assets of the
Parent), the relationship between the fair market value (as
determined by the Board of Directors of the Corporation in
the manner above contemplated) of such property to be issued
or distributed with respect to each outstanding share of
Parent Common Stock and the current market value (as
determined by the Board of Directors of the Corporation in
the manner above contemplated) of a shares of Parent Common
Stock;
(iv) in the case of any subdivision, redivision or change of the
then outstanding shares of Parent Common Stock into a
greater number of shares of Parent Common Stock or the
reduction, combination or consolidation or change of the
then outstanding shares of Parent Common Stock into a lesser
number of shares of Parent Common Stock, the effect thereof
upon the then outstanding shares of Parent Common Stock; and
-6-
(v) in all such cases, the general taxation consequences of the
relevant event to holders of Exchangeable Shares to the extent
that such consequences may differ from the taxation consequences
to holders of shares of Parent Common Stock as a result of
differences between taxation laws of Canada and the United States
(except for any differing consequences arising as a result of
differing marginal taxation rates and without regard to the
individual circumstances of holders of Exchangeable Shares).
2.6 TENDER OFFERS, ETC. In the event that a tender offer, share exchange
offer, issuer bid, take-over bid or similar transaction with respect to Parent
Common Stock (and "Offer") is proposed by the Parent or is proposed to the
Parent or its shareholders and is recommended by the Board of Directors of the
Parent, or is otherwise effected or to be, effected with the consent or approval
of the Board of Directors of the Parent, the Parent will use commercially
reasonable efforts in good faith to take all such actions and do all such things
as are necessary or desirable to enable and permit holders of Exchangeable
Shares to participate in such Offer to the same extent and on an economically
equivalent basis as the holders of shares of Parent Common Stock, without
discrimination. Without limiting the generality of the foregoing, the Parent
will use commercially reasonable efforts expeditiously and in good faith to
ensure that holders of Exchangeable Shares may participate in all such Offers
without being required to retract Exchangeable Shares as against the Corporation
(or, if so required, to ensure that any such retraction shall be effective only
upon, and shall be conditional upon, the closing of the Offer and only to the
extent necessary to tender or deposit to the Offer).
ARTICLE 3
GENERAL
3.1 TERM. This agreement shall come into force and be effective as of the
date hereof and shall terminate and be of no further force and effect at such
time as no Exchangeable Shares (or securities or rights convertible into or
exchangeable for or carrying rights to acquires Exchangeable Shares) are held by
any party other than the Parent.
3.2 CHANGES IN CAPITAL OF PARENT AND THE CORPORATION. Notwithstanding the
provisions of Section 3.4 hereof, at all times after the occurrence of any event
effected pursuant to Section 2.5 or 2.6 hereof, as a result of which either the
Parent Common Stock or the Exchangeable Shares or both in any way changed, this
agreement shall forthwith be amended and modified as necessary in order that it
shall apply with full force and effect, mutatis mutandis, to all new securities
into which the Parent Common Stock or the Exchangeable Shares or both are so
changed and the parties hereto shall execute and deliver an agreement in writing
giving effect to and evidencing such necessary amendments and modifications.
3.3 SEVERABILITY. If any provision of this agreement is held to be
invalid, illegal or unenforceable, the validity, legality or enforceability of
the remainder of this agreement shall not in any way be affected or impaired
thereby and this agreement shall be carried out as nearly as possible in
accordance with its original terms and conditions.
-7-
3.4 AMENDMENTS, MODIFICATIONS, ETC. This agreement may not be amended or
modified except by an agreement in writing executed by the Corporation and the
Parent and approved by the holders of the Exchangeable Shares in accordance with
Section 6.2 of the Exchangeable Shares Provisions.
3.5 PERMITTED AMENDMENTS. Notwithstanding the provisions of Section 3.4,
the parties to this agreement may in writing, at any time and from time to time,
without the approval of the holders of the Exchangeable Shares, amend or modify
this agreement for the purposes of:
(a) adding to the covenants of either or both parties for the protection
of the holders of the Exchangeable Shares;
(b) making such amendments or modifications not inconsistent with this
agreement as may be necessary or desirable with respect to matters or
questions which, in the opinion of the Board of Directors of each of
the Corporation and the Parent, it may be expedient to make, provided
that each such board of directors shall be of the opinion that such
amendments or modifications will not be prejudicial to the interests
of the holders of the Exchangeable Shares; or
(c) making such changes or corrections with, on the advise of counsel to
the Corporation and the Parent, are required for the purpose of curing
or correcting any ambiguity or defect or inconsistent provision or
clerical omission or mistake of manifest error.
3.6 MEETING TO CONSIDER AMENDMENTS. The Corporation, at the request of
the Parent, shall call a meeting or meetings of the holders of the Exchangeable
Shares for the purpose of considering any proposed amendment or modification
requiring approval pursuant to Section 3.4 hereof. Any such meeting or meetings
shall be called and held in accordance with the by-laws of the Corporation, the
Exchangeable Shares Provisions and all applicable laws.
3.7 AMENDMENTS ONLY IN WRITING. No amendment to or modification or waiver
of any of the provisions of this agreement otherwise permitted hereunder shall
be effective unless made in writing and signed by both of the parties hereto.
3.8 INUREMENT. This agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
3.9 NOTICES TO PARTIES. All notices and other communications between the
parties shall be in writing and shall be deemed to have been given if delivered
personally or by confirmed telecopy to the parties at the following addresses
(or at such other address for either such party as shall be specified in like
notice):
-8-
(a) if to the Parent at: Total Control Products, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx Xxxx, Xxxxxxxx
00000
Attention: Xxxxxxxx Xxxx, President
Telecopy: (000) 000-0000
(b) if to the Corporation at: Xxxxxx Industrial Software Inc.
0000, 00000-000 Xxxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: President
Telecopy: (000) 000-0000
Any notice or other communication given personally shall be deemed to have been
given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the date of confirmed receipt thereof
unless such day is not a Business Day in which case it shall be deemed to have
been given and received upon the immediately following Business Day.
3.10 COUNTERPARTS. This agreement may be executed in counterparts, each of
which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.
3.11 APPLICABLE LAW. This agreement shall be construed and enforced in
accordance with the laws of the Province of Alberta and the laws of Canada
applicable therein.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to
be duly executed as of the date first above written.
TOTAL CONTROL PRODUCTS, INC.
By: /s/ Xxxxxxxx Xxxx
------------------------------------
---------------------------------------
XXXXXX INDUSTRIAL SOFTWARE INC.
By: /s/ Xxxxxxxx Xxxx
------------------------------------
---------------------------------------
