ARRANGEMENT AGREEMENT
among
MOBILE INTEGRATED SYSTEMS, INC.
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QUANTITATIVE ALPHA TRADING INC.
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2338584 ONTARIO INC.
August 20, 2012
TABLE OF CONTENTS
Page
ARTICLE 1 INTERPRETATION ..................................................................................................................1
ARTICLE 2 THE ARRANGEMENT ...........................................................................................................10
2.1
Plan of Arrangement ........................................................................................................10
2.2
Interim Order ....................................................................................................................10
2.3
Information Circular and the QAT Meeting ......................................................................10
2.4
Preparation of Filings .......................................................................................................11
2.5
Employees and QAT Options ..........................................................................................11
2.6
Effective Date...................................................................................................................12
2.7
Recommendation of the QAT Board of Directors ............................................................12
2.8
Dissenting Shareholders ..................................................................................................12
2.9
Support Agreements ........................................................................................................12
2.10
Disclosure Letter ..............................................................................................................12
2.11
Tax Withholdings..............................................................................................................13
ARTICLE 3 COVENANTS .........................................................................................................................13
3.1
Covenants of Purchaser and Newco ...............................................................................13
3.2
Additional Covenants of Purchaser..................................................................................16
3.3
Covenants of QAT............................................................................................................16
3.4
Mutual Covenants Regarding the Arrangement ..............................................................20
3.5
Covenants Regarding Non-Solicitation ............................................................................21
3.6
Provision of Information ...................................................................................................24
ARTICLE 4 REPRESENTATIONS AND WARRANTIES .........................................................................24
4.1
Representations and Warranties of Purchaser and Newco.............................................24
4.2
Representations and Warranties of QAT .........................................................................29
4.3
Privacy Issues ..................................................................................................................39
ARTICLE 5 CONDITIONS PRECEDENT..................................................................................................39
5.1
Mutual Conditions Precedent...........................................................................................39
5.2
Additional Conditions to Obligations of Purchaser and Newco .......................................41
5.3
Additional Conditions to Obligations of QAT....................................................................43
5.4
Notice and Effect of Failure to Comply with Conditions...................................................44
5.5
Satisfaction of Conditions ................................................................................................44
ARTICLE 6 AMENDMENT ........................................................................................................................44
ARTICLE 7 TERMINATION.......................................................................................................................45
ARTICLE 8 NOTICES................................................................................................................................47
ARTICLE 9 GENERAL ..............................................................................................................................48
SCHEDULE "A" - Plan of Arrangement
SCHEDULE "B" – Form of Support Agreement
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THIS ARRANGEMENT AGREEMENT is dated as of the 20th day of August, 2012,
AMONG:
MOBILE INTEGRATED SYSTEMS, INC., a corporation existing under the laws of the State of
Nevada (hereinafter referred to as "MOBI" or "Purchaser")
AND:
QUANTITATIVE ALPHA TRADING INC., a corporation continued and existing under the laws of
the Province of Ontario (hereinafter referred to as "QAT")
AND:
2338584 ONTARIO INC., a corporation incorporated and existing under the laws of the Province
of Ontario (hereinafter referred to as "Newco")
WHEREAS:
A.
MOBI wishes to acquire all of the issued and outstanding shares of QAT;
B.
MOBI, QAT and Newco wish to propose an arrangement involving, among other things, the
acquisition by MOBI of all of the issued and outstanding shares of QAT and the amalgamation of
QAT and Newco;
C.
the Parties intend to carry out the transactions contemplated herein by way of an arrangement
under the provisions of the Business Corporations Act (Ontario); and
D.
the Parties have entered into this Agreement to provide for the matters referred to in the
foregoing recitals and for other matters relating to such arrangement;
NOW THEREFORE, in consideration of the covenants and agreements herein contained and other good
and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Parties
hereto do hereby covenant and agree as follows:
ARTICLE 1
INTERPRETATION
1.1
Definitions
In this Agreement, unless there is something in the context or subject matter inconsistent therewith, the
following defined terms have the meanings hereinafter set forth:
(a)
"1934 Act" means the Securities Exchange Act of 1934 of the United States, as
amended from time to time;
(b)
"Acquisition Proposal" means any proposal or offer in writing, or by public
announcement, made to QAT or the QAT Shareholders (including any take-over bid
initiated by advertisement or circular) relating to: (i) any merger, amalgamation, take-over
bid, tender offer, arrangement, share exchange, dissolution, liquidation, recapitalization
or other business combination (including without limitation any single or multi-step
transaction or series of related transactions) involving any purchase by a single Person
(other than Purchaser or any of its subsidiaries) or combination of Persons (other than
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Purchaser or any of its subsidiaries) of QAT Shares that, if consummated, would result in
any Person (other than Purchaser or any of its subsidiaries) beneficially owning more
than 20% of the voting rights attached to the QAT Shares, or any liquidation or winding-
up in respect of QAT or any material QAT subsidiary; (ii) any purchase or sale of QAT or
its subsidiaries or any assets, where such assets represent more than 20% of the fair
market value of the consolidated assets of QAT or contribute more than 20% of the
revenues of QAT (on a consolidated basis) (or other arrangement having the same
economic effect as a purchase or sale of assets); (iii) any sale or acquisition of 20% or
more of the QAT Shares or rights or interests therein or thereto; or (iv) any similar
business combination or transaction, of or involving QAT and/or any subsidiary of QAT,
that if consummated, would result in any Person (other than Purchaser or any of its
subsidiaries) beneficially owning more than 20% of the voting rights attached to the QAT
Shares;
(c)
"Agreement", "herein", "hereof", "hereto", "hereunder" and similar expressions mean
and refer to this arrangement agreement (including the schedules hereto) as
supplemented, modified or amended, and not to any particular article, section, schedule
or other portion hereof;
(d)
"Amalgamation" means the amalgamation of QAT and Newco pursuant to the Plan of
Arrangement;
(e)
"Applicable Canadian Securities Laws" means, collectively, and as the context may
require, the applicable securities legislation of each of the provinces and territories of
Canada, and the rules, regulations, instruments, orders and policies published and/or
promulgated thereunder, as such may be amended from time to time prior to the Effective
Date;
(f)
"Applicable Laws", in the context that refers to one or more Persons, means the Laws
that apply to such Person or Persons or its or their business, undertaking, property or
securities and emanate from a Person having jurisdiction over the Person or Persons or
its or their business, undertaking, property or securities;
(g)
"Arrangement" means the arrangement under the provisions of Section 182 of the
OBCA, on the terms and conditions set forth in the Plan of Arrangement as
supplemented, modified or amended;
(h)
"Arrangement Resolution" means the special resolution to be attached as an appendix
to the Information Circular in respect of the Arrangement;
(i)
"Articles of Amalgamation" means the articles of amalgamation to be filed pursuant to
the OBCA to give effect to the Amalgamation;
(j)
"Articles of Arrangement" means the articles of arrangement in respect of the
Arrangement required under Section 183 of the OBCA to be filed with the Director to
give effect to the Arrangement;
(k)
"Bridge Loan" means the first priority secured bridge loan in the amount of up to CDN
$800,000 granted by MOBI to QAT pursuant to the terms of the bridge loan agreement
dated August 20, 2012;
(l)
"Business Day" means a day other than a Saturday, Sunday or other day when banks in
the City of Calgary, Alberta or the City of Toronto, Ontario are not generally open for
business;
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(m)
"Canadian GAAP" means Canadian generally accepted accounting principles applicable
to publicly accountable enterprises;
(n)
"Closing Time" shall be 8:00 a.m. (Calgary time) on the Effective Date, or such other
time on the Effective Date as is agreed to by Purchaser and QAT;
(o)
"CNSX" means the Canadian National Stock Exchange;
(p)
"Commercialization Agreement" means the agreement between Purchaser and QAT
dated August 17, 2012 in respect of commercializing the assets of QAT;
(q)
"Confidential Information" has the meaning ascribed thereto in subsection 3.5(j);
(r)
"Confidentiality Agreement" means the non-disclosure agreement dated June 29, 2012
between QAT and Purchaser;
(s)
"Contract" means, with respect to a Party, a contract, lease, instrument, note, bond,
debenture, mortgage, agreement, arrangement or understanding, written or oral, to which
such Party, or any of its subsidiaries, is a party or under which such Party or any of its
subsidiaries is bound, has unfulfilled obligations or contingent liabilities or is owed
unfulfilled obligations, whether known or unknown, and whether asserted or not;
(t)
"Court" means the Superior Court of Justice of Ontario;
(u)
"Director" means the Director appointed pursuant to Section 278 of the OBCA;
(v)
"Disclosing Party" has the meaning ascribed thereto in subsection 1.1(dddd);
(w)
"Disclosure Letter" means the disclosure letter dated as of the date hereof from QAT to
Purchaser as amended, supplemented or otherwise agreed to between QAT and
Purchaser prior to the Effective Time;
(x)
"Dissent Procedures" means the procedures set forth in section 185 of the OBCA
required to be taken by a registered holder of QAT Shares to exercise its right of dissent
in respect of such QAT Shares in connection with the Arrangement;
(y)
"Dissent Rights" means the rights of dissent granted in favour of registered QAT
Shareholders in respect of the Arrangement in strict compliance with the Dissent
Procedures, as described in the Plan of Arrangement;
(z)
"Effective Date" means the date the Arrangement becomes effective under the OBCA,
provided that such date shall not be later than the Outside Date, unless otherwise agreed
to by Purchaser and QAT;
(aa)
"Effective Time" means the time at which the Articles of Arrangement are filed with the
Director on the Effective Date;
(bb)
"Employee Obligations" means any obligations or liabilities of QAT to pay any amount
to or on behalf of its officers, directors, consultants or employees, other than for salary,
vacation pay and directors' fees in the ordinary course, in each case in amounts
consistent with historic practices and, without limiting the generality of the foregoing,
Employee Obligations shall include the obligations of QAT to officers or employees: (i) for
severance or termination payments on the change of control of QAT pursuant to QAT's
severance policies and any voluntary or involuntary severance, termination and
employment offer agreements; (ii) for retention bonus payments pursuant to any retention
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bonus program or executive employment agreement; (iii) for payments with respect to
any options, share appreciation rights, participating performance units, deferred share
units, or similar plans; and (iv) payments with respect to any pension or retirement
savings plan of QAT or the QAT Group;
(cc)
"Encumbrances" means, in the case of property or an asset, all mortgages, pledges,
charges, liens, debentures, hypothecs, trust deeds, outstanding demands, burdens,
capital leases, assignments by way of security, security interests, conditional sales
contracts or other title retention agreements or similar interests or instruments charging,
or creating a security interest in, or against title to, such property or asset, or any part
thereof or interest therein, and any agreements, leases, options, easements, rights of
way, restrictions, executions or other charges or encumbrances (including notices or
other registrations in respect of any of the foregoing) against title to any of the property or
asset or any part thereof or interest therein;
(dd)
"Environmental Laws" means, with respect to any Person or its business, activities,
property, assets or undertaking, all federal, provincial, territorial, state, municipal, local or
foreign Laws of any Governmental Authority or of any court, tribunal or other similar body,
relating to environmental or health and safety matters in the jurisdictions applicable to
such Person or its business, activities, property, assets or undertaking;
(ee)
"Final Order" means the final order of the Court approving the Arrangement under
subsection 182(5) of the OBCA, as such order may be affirmed, amended or modified by
any court of competent jurisdiction;
(ff)
"Governmental Authority" means any (a) multinational, federal, provincial, state,
regional, municipal, local or other government or any governmental or public department,
court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign,
(b) any subdivision, agent, commission, board or authority of any of the foregoing, or (c)
any quasi-governmental or private body exercising any regulatory, expropriation or taxing
authority under or for the account of any of the foregoing;
(gg)
"Governmental Authorization" has the meaning ascribed thereto in subsection 4.2(o);
(hh)
"Information Circular" means the management proxy circular of QAT, together with all
appendices thereto, to be mailed or otherwise distributed by QAT to the QAT
Shareholders pursuant to the Interim Order in connection with the QAT Meeting;
(ii)
"Intellectual Property" shall mean and include all QAT algorithms, application keys,
application programming interfaces, apparatus, databases and data collections,
diagrams, formulae, graphics, inventions (whether or not patentable), know-how, logos,
marks (including brand names, product names, logos, and slogans), methods, network
configurations and architectures, net lists, processes, proprietary information, protocols,
psd source files, schematics, specifications, software, software code (in any form
including source code and executable or object code), subroutines, techniques, three-
dimensional models, URLs, user interfaces, web sites, works of authorship, and other
forms of technology (whether or not embodied in any tangible form and including all
tangible embodiments of the foregoing such as instruction manuals, prototypes, samples,
studies, and summaries);
(jj)
"Intellectual Property Rights" shall mean and include all rights of the following types,
which may exist or be created under the laws of any jurisdiction in the world: (a) rights
associated with works of authorship, including exclusive exploitation rights, copyrights
and moral rights; (b) trademark and trade name rights and similar rights; (c) trade secret
rights; (d) patents and industrial property rights; (e) other proprietary rights in Intellectual
Property of every kind and nature; and (f) all registrations, renewals, extensions,
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continuations, divisions, or reissues of, and applications for, any of the rights referred to
in clauses (a) through (e) above;
(kk)
"Interim Order" means the interim order of the Court under subsection 182(5) of the
OBCA containing declarations and directions with respect to the Arrangement and the
holding of the QAT Meeting, as such order may be affirmed, amended or modified by any
court of competent jurisdiction;
(ll)
"Laws" means all laws, statutes, regulations, by-laws, statutory rules, orders, ordinances,
protocols, treaties, conventions, codes, guidelines, notices, directions (including all
Applicable Canadian Securities Laws and U.S. Securities Laws), and terms and
conditions of any grant of approval, permission, authority or license of any court,
Governmental Authority, statutory body or self-regulatory authority (including the CNSX);
(mm) "Liabilities" means any and all debts, liabilities and obligations of any nature whatsoever,
whether accrued or fixed, absolute or contingent, including those arising under any Law,
Contract, permit, license or other undertaking and as a result of any act or omission;
(nn)
"OBCA" means the Business Corporations Act, R.S.O. 1990, c. B.16, as amended,
including the regulations promulgated thereunder;
(oo)
"Mailing Date" has the meaning ascribed thereto in subsection 3.4(e);
(pp)
"Material Adverse Change" or "Material Adverse Effect" means, with respect to either
QAT or Purchaser, any matter, action or event that has an effect or change that is, or
would reasonably be expected to be, material and adverse to the business, operations,
results of operations, assets, capital or financial condition of such Party and its
subsidiaries, taken as a whole, other than any matter, action, effect or change relating to
or resulting from: (i) general economic, financial, currency exchange, securities, credit or
commodity market conditions in Canada or the U.S. or elsewhere; (ii) conditions affecting
the software development industry as a whole, and not having a materially
disproportionate effect with respect to such Party and its subsidiaries (on a consolidated
basis), including changes in Laws; (iii) any change in the trading price or trading volume
of a Party's shares (it being understood that the causes underlying such changes in
trading price or trading volume may be taken into account in determining whether a
Material Adverse Change or Material adverse Effect has occurred); (iv) changes in
applicable accounting principles; (v) any act of God or other calamity, national or
international, political conditions (including the engagement by any country in hostilities,
whether commenced before or after the date hereof, and whether or not pursuant to the
declaration of a national emergency or war) or the occurrence of any military or terrorist
attack (or any escalation or worsening thereof); (vi) any matter which has been publicly
disclosed or has been communicated in writing (which includes, without limitation, the
Disclosure Letter), in the case of Purchaser, to QAT, and in the case of QAT, to
Purchaser, as of the date of this Agreement; (vii) any changes arising from matters
consented to or approved in writing by QAT, in the case of changes relating to Purchaser,
or by Purchaser, in the case of changes relating to QAT; or (viii) that results from the
announcement of the execution of this Agreement or the transactions contemplated
hereby;
(qq)
"Newco Common Shares" means the common shares in the capital of Newco;
(rr)
"Outside Date" has the meaning ascribed thereto in subsection 3.4(e);
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(ss)
"Parties" means, collectively, the parties to this Agreement, and "Party" means any one
of them, or where implied by the context, means Purchaser, Newco or QAT, as the case
may be;
(tt)
"Person" includes any individual, firm, partnership, joint venture, venture capital fund,
association, trust, trustee, executor, administrator, legal personal representative, estate
group, body corporate, corporation, unincorporated association or organization,
Governmental Authority, syndicate or other entity, whether or not having legal status;
(uu)
"Plan of Arrangement" means the plan of arrangement substantially in the form set out
in Schedule "A" hereto as amended or supplemented from time to time in accordance
with the terms thereof and hereof;
(vv)
"Publicly Disclosed by Purchaser" means disclosed by Purchaser in its Public Record
from January 1, 2011 to and including the date hereof;
(ww)
"Public Record" means all publicly available information filed by or on behalf of QAT or
Purchaser, as the case may be, with the applicable Securities Authorities, in compliance,
or intended compliance, with any Laws;
(xx)
"Purchaser Balance Sheet" has the meaning ascribed thereto in paragraph 4.1(t);
(yy)
"Purchaser Board of Directors" means the board of directors of Purchaser, as it may be
comprised from time to time;
(zz)
"Purchaser Financial Statements" means the audited financial statements of Purchaser
as at and for the fiscal year ended May 31, 2012, together with the notes thereto and the
auditors' report thereon;
(aaa) "Purchaser Group" has the meaning ascribed thereto in subsection 4.1(c);
(bbb) "Purchaser Information" means the information included in the Information Circular
describing Purchaser, Newco and the business, operations and affairs of each of
Purchaser and Newco;
(ccc) "Purchaser Option" means the right to purchase a Purchaser Share granted by the
Purchaser Board of Directors from time to time;
(ddd) "Purchaser Shareholders" means holders of Purchaser Shares;
(eee) "Purchaser Shares" means the shares of Purchaser common stock;
(fff)
"QAT Balance Sheet" has the meaning ascribed thereto in paragraph 4.2(v);
(ggg) "QAT Board of Directors" means the board of directors of QAT as it may be comprised
from time to time;
(hhh) "QAT Class B Shares" means the Class B preferred shares in the capital of QAT;
(iii)
"QAT Financial Statements" means the audited consolidated financial statements of
QAT as at and for the fiscal year ended December 31, 2011, together with the notes
thereto and the auditors' report thereon and the unaudited consolidated condensed
financial statements of QAT as at and for the six months ended June 30, 2012, together
with the notes thereto;
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(jjj)
"QAT Group" has the meaning ascribed thereto in subsection 4.2(c);
(kkk) "QAT Information" means the information included in the Information Circular describing
the QAT Group and the business, operations and affairs of the QAT Group;
(lll)
"QAT Meeting" means the special meeting of QAT Shareholders to be held to consider
the Arrangement Resolution and related matters, and any adjournment(s) thereof;
(mmm) "QAT Option" means the right to purchase a QAT Share granted pursuant to the QAT
Option Plan;
(nnn) "QAT Option Plan" means the QAT Stock Option Plan approved by the QAT
Shareholders on May 14, 2012, together with the agreements thereunder;
(ooo) "QAT Plans" has the meaning ascribed thereto in subsection 4.2(w);
(ppp) "QAT Shareholders" means holders of QAT Shares;
(qqq) "QAT Shares" means the common shares in the capital of QAT;
(rrr)
"Recipient" has the meaning ascribed thereto in subsection 1.1(dddd);
(sss) "SEC" means the United States Securities and Exchange Commission;
(ttt)
"Securities Act" means the Securities Act, R.S.O. 1990, c. S.5, as amended;
(uuu) "Securities Authorities" means the securities commissions or similar securities
regulatory authorities in each of the provinces or territories of Canada and the SEC in the
United States;
(vvv) "subsidiary" has the meaning ascribed thereto in the Securities Act (and shall include all
trusts or partnerships directly or indirectly owned by QAT or Purchaser, as the case may
be);
(www) "Superior Proposal" means an unsolicited bona fide Acquisition Proposal made after the
date hereof that: (i) involves the purchase or acquisition of or offer by such Person to
purchase all of the outstanding QAT Shares or all or substantially all of the assets of QAT
and its subsidiaries; (ii) is made available to all or substantially all QAT Shareholders and
offers or makes available substantially equivalent consideration in form and amount per
QAT Share to be purchased or otherwise acquired; (iii) is not subject to a due diligence
and/or access condition that would allow access to the books, records or personnel of
QAT or its subsidiaries beyond 5:00 p.m. (Toronto time) on the tenth Business Day after
which access is first afforded to the Person making the Acquisition Proposal (provided
that the foregoing shall not restrict the ability of such third party to continue to review
information provided to it by QAT during such ten Business Day period or thereafter); (iv)
is reasonably capable of being completed without undue delay, taking into account all
legal, financial, regulatory and other aspects of such proposal and the Person making
such proposal; (v) in respect of which any required financing to complete such Acquisition
Proposal has been obtained or is reasonably likely to be obtained; and (vi) in respect of
which the QAT Board of Directors determines in good faith (after consultation with its
financial advisors and outside counsel) would, if consummated in accordance with its
terms (but not disregarding any risk of non-completion), result in a transaction more
favourable to the QAT Shareholders from a financial point of view than the transactions
contemplated by this Agreement, provided that no Acquisition Proposal shall be a
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Superior Proposal if the Person making the Acquisition Proposal is in default of any
standstill obligation with QAT;
(xxx) "Support Agreements" means the support and lock-up agreements executed and
delivered as contemplated in subsection 3.3(z), which shall be substantially in the form
set out in Schedule "B" hereto;
(yyy) "Tax" or "Taxes" shall mean all taxes, however denominated, including any interest,
penalties or other additions that may become payable in respect thereof, imposed by any
Taxing Authority, which taxes shall include, without limiting the generality of the
foregoing, all income or profits taxes (including, but not limited to, federal income taxes
and provincial income taxes), payroll and employee withholding taxes, employment
insurance premiums, unemployment insurance, social insurance taxes, Canada Pension
Plan contributions, sales and use taxes, goods and services tax, value added taxes, ad
valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business license
taxes, occupation taxes, real and personal property taxes, stamp taxes, environmental
taxes, transfer taxes, workers compensation and other governmental charges, and other
obligations of the same or of a similar nature to any of the foregoing, which QAT or
Purchaser, as applicable (or any of their respective subsidiaries), as the case may be, is
required to pay, withhold, remit or collect;
(zzz) "Tax Returns" shall mean all reports, estimates, elections, designations, forms,
declarations of estimated Tax, information statements and returns relating to, or required
to be supplied to any Taxing Authority in connection with, any Taxes;
(aaaa) "Taxing Authority" shall mean any Governmental Authority responsible for the
imposition of any Tax (domestic or foreign);
(bbbb) "Third Party Approvals" has the meaning ascribed thereto in subsection 5.1(g);
(cccc) "Third Party Beneficiaries" has the meaning ascribed thereto in Section 9.10;
(dddd) "Transferred Information" means the personal information (namely, information about
an identifiable individual other than their business contact information when used or
disclosed for the purpose of contacting such individual in that individual's capacity as an
employee or an official of an organization and for no other purpose) to be disclosed or
conveyed to one Party or any of its representatives or agents ("Recipient") by or on
behalf of the other Party ("Disclosing Party") as a result of or in conjunction with the
transactions contemplated herein, and includes all such personal information disclosed to
the Recipient prior to the execution of this Agreement;
(eeee) "United States" means the United States of America, its territories and possessions, any
state of the United States, and the District of Columbia;
(ffff)
"U.S. Exchange Act" means the United States Securities Exchange Act of 1934, as
amended;
(gggg) "U.S. GAAP" means generally accepted accounting principles in the United States that
the SEC has identified as having substantial authoritative support, as supplemented by
Regulation S-X under the 1934 Act, as amended from time to time; and
(hhhh) "U.S. Securities Laws" means the federal and state securities legislation of the United
States and all rules, regulations and orders promulgated thereunder, as amended from
time to time.
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1.2
Interpretation Not Affected by Headings, etc.
The division of this Agreement into articles, sections, subsections and paragraphs is for convenience of
reference only and does not affect the construction or interpretation of this Agreement.
1.3
Number and Gender
Words importing the singular number include the plural and vice versa, words importing the use of any
gender include all genders.
1.4
Date for any Action
If any date on which any action is required to be taken hereunder by any of the Parties is not a Business
Day and a business day in the place where an action is required to be taken, such action is required to be
taken on the next succeeding day which is a Business Day and a business day, as applicable, in such
place.
1.5
Entire Agreement
This Agreement, the Confidentiality Agreement, the Disclosure Letter, the Commercialization Agreement
and the Bridge Loan constitute the entire agreement among the Parties pertaining to the subject matter
hereof and supersede all prior agreements, understandings, negotiations and discussions, whether oral
or written, among the Parties with respect to the subject matter hereof, including the confidential binding
term sheet between Purchaser and QAT dated July 27, 2012.
1.6
Currency
All sums of money that are referred to in this Agreement are expressed in lawful money of Canada.
1.7
Accounting Matters
Unless otherwise stated, all accounting terms used in this Agreement shall have the meanings
attributable thereto under Canadian GAAP and all determinations of an accounting nature are required to
be made shall be made in a manner consistent with Canadian GAAP.
1.8
Disclosure in Writing
Reference to disclosure in writing herein shall, in the case of disclosure to Purchaser, include disclosure
in writing to Purchaser or its representatives or, in the case of disclosure to QAT, include disclosure in
writing to QAT or its representatives.
1.9
Interpretation Not Affected by Party Drafting
The Parties hereto acknowledge that their respective legal counsel have reviewed and participated in
settling the terms of this Agreement, and the Parties agree that any rule of construction to the effect that
any ambiguity is to be resolved against the drafting party will not be applicable in the interpretation of this
Agreement.
1.10
Knowledge
Where any representation or warranty contained in this Agreement is expressly qualified by reference to
the knowledge of QAT, MOBI or Newco, as applicable, it refers to the actual knowledge of Xxxxx
XxXxxxxx and Xx. Xxxx Xxxxxx, in respect of QAT, and Xxxxxx P.J.B. Xxxxxx and Emlyn David, in
respect of MOBI and Newco, in each case after reasonable inquiry.
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1.11
Schedules
The following schedules attached hereto are incorporated into and form an integral part of this
Agreement:
Schedule "A" – Plan of Arrangement
Schedule "B" – Form of Support Agreement
ARTICLE 2
THE ARRANGEMENT
2.1
Plan of Arrangement
(a)
As soon as is reasonably practicable, QAT will forthwith file, proceed with and diligently
prosecute an application for an Interim Order providing for, among other things, the
calling and holding of the QAT Meeting for the purpose of considering and, if deemed
advisable, approving the Arrangement Resolution and any other matters to be considered
at the QAT Meeting.
(b)
Provided all necessary approvals for the Arrangement Resolution are obtained from the
QAT Shareholders, QAT shall submit the Arrangement to the Court and apply for the
Final Order.
(c)
Upon issuance of the Final Order and subject to the conditions precedent in Article 5,
QAT and Newco shall forthwith jointly file the Articles of Arrangement and Articles of
Amalgamation and such other documents as may be required to give effect to the
Arrangement with the Director pursuant to Section 183 of the OBCA, whereupon the
transactions comprising the Arrangement shall occur and shall be deemed to have
occurred in the order set out therein without any further act or formality.
2.2
Interim Order
The Interim Order shall provide that:
(a)
the securities of QAT for which holders shall be entitled to vote on the Arrangement
Resolution shall be the QAT Shares;
(b)
the QAT Shareholders shall be entitled to vote on the Arrangement Resolution with each
QAT Shareholder being entitled to one vote for each QAT Share held by such holder; and
(c)
the requisite majority for the approval of the Arrangement Resolution shall be two-thirds
of the votes cast by the QAT Shareholders present in person or represented by proxy at
the QAT Meeting.
2.3
Information Circular and the QAT Meeting
As soon as practicable following the execution of this Agreement, and in compliance with the Interim
Order and Applicable Laws (including Applicable Canadian Securities Laws and U.S. Securities Laws):
(a)
Purchaser shall prepare the Purchaser Information for inclusion in the Information
Circular and provide the Purchaser Information to QAT in a timely and expeditious
manner;
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(b)
QAT shall prepare the Information Circular and ensure, in conformance with subsection
3.4(a), that the Information Circular (other than in respect of the Purchaser Information)
provides QAT Shareholders with information in sufficient detail to permit them to form a
reasoned judgment concerning the matters before them, in all cases ensuring compliance
with all Applicable Laws on the date of issue thereof;
(c)
QAT shall convene the QAT Meeting in accordance with the Interim Order and Applicable
Laws; and
(d)
QAT shall cause the Information Circular to be mailed to the QAT Shareholders and such
other third parties as may be required pursuant to the Interim Order, and filed with
applicable regulatory authorities and other Governmental Authorities in all jurisdictions
where the same are required to be mailed and filed.
2.4
Preparation of Filings
(a)
Purchaser, Newco and QAT shall cooperate in:
(i)
the preparation of any application for the orders and the preparation of any
required registration statements and any other documents reasonably deemed
by Purchaser or QAT to be necessary to discharge their respective obligations
under applicable Laws in connection with the Arrangement and the other
transactions contemplated hereby;
(ii)
the taking of all such action as may be required under any Applicable Canadian
Securities Laws and U.S. Securities Laws (including "blue sky laws") in
connection with the issuance of the Purchaser Shares in connection with the
Arrangement; provided, however, that with respect to the United States "blue
sky" and Canadian provincial qualifications, none of Purchaser, Newco or QAT
shall be required to register or qualify as a foreign corporation or to take any
action that would subject it to service of process in any jurisdiction where such
entity is not now so subject, except as to matters and transactions arising solely
from the offer of the Purchaser Shares in connection with the Arrangement; and
(iii)
the taking of all such action as may be required under the OBCA, Applicable
Canadian Securities Laws and U.S. Securities Laws in connection with the
transactions contemplated by this Agreement and the Plan of Arrangement.
(b)
Each of Purchaser, Newco and QAT shall promptly furnish to the other all information
concerning it and its securityholders as may be required for the effectuation of the actions
described in Sections 2.1, 2.2, 2.3 and the foregoing provisions of this Section 2.4, and
each covenants that no information furnished by it (to its knowledge in the case of
information concerning its shareholders) in connection with such actions or otherwise in
connection with the consummation of the Arrangement and the other transactions
contemplated by this Agreement will contain any misrepresentation or any untrue
statement of a material fact or omit to state a material fact required to be stated in any
such document or necessary in order to make any information so furnished for use in any
such document not misleading in the light of the circumstances in which it is furnished.
2.5
Employees and QAT Options
(a)
The Parties acknowledge that at the Effective Time, all outstanding QAT Options shall be
exercised, terminated or surrendered such that no options to purchase or receive QAT
Shares remain outstanding as at the Effective Date.
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(b)
QAT shall use its reasonable commercial efforts to cause all QAT Shares issued upon
the exercise of QAT Options (if any) to be voted in favour of the Arrangement Resolution
by those persons who continue to hold such QAT Shares as of the record date for the
QAT Meeting.
(c)
Purchaser shall assume the employment of all employees of QAT, subject to negotiating
any modifications to existing QAT contractual arrangements deemed necessary by
Purchaser, in its sole judgment.
(d)
As at the Effective Time, no officers, employees or consultants of QAT shall be entitled to
change of control, termination or severance payments (or both), except such payments
the particulars of which are disclosed in writing to Purchaser by QAT. The Employee
Obligations of QAT shall not exceed the amount set forth in the Disclosure Letter.
2.6
Effective Date
The Arrangement shall become effective at the Effective Time on the Effective Date.
2.7
Recommendation of the QAT Board of Directors
All of the directors present and entitled to vote at the meeting of the QAT Board of Directors held
August 15, 2012 and adjourned to and reconvened August 17, 2012 unanimously determined that the
Arrangement is in the best interests of QAT and the QAT Shareholders. At such meeting, the QAT Board
of Directors, based upon, among other things, the verbal opinion of QAT's financial advisor, unanimously
determined that the consideration in respect of the Arrangement is fair, from a financial point of view, to
QAT Shareholders, approved the Arrangement and the entering into of the Arrangement Agreement and
has resolved to recommend QAT Shareholders vote in favour of the Arrangement. Notice of such
approvals, determinations and resolution shall, subject to the terms hereof, be included, along with the
written fairness opinion of QAT's financial advisor, confirming the aforementioned opinion of such
financial advisor, in the Information Circular.
2.8
Dissenting Shareholders
Registered QAT Shareholders entitled to vote at the QAT Meeting may exercise Dissent Rights with
respect to their QAT Shares in connection with the Arrangement pursuant to and in the manner set forth
in the Plan of Arrangement and the Interim Order. QAT shall give Purchaser prompt notice of any written
notice of a dissent, withdrawal of such notice, and any other instruments served pursuant to such Dissent
Rights and received by QAT and shall provide Purchaser with copies of such notices and written
objections.
2.9
Support Agreements
The Information Circular shall reflect the execution and delivery of the Support Agreements and the
agreement and covenant of the directors, officers and QAT Shareholders who execute such agreements
to vote in favour of the Arrangement at the QAT Meeting.
2.10
Disclosure Letter
Notwithstanding anything in the Disclosure Letter to the contrary, all disclosures in the Disclosure Letter
must reference a particular section or subsection in this Agreement in order to be deemed to relate to or
modify such section or subsection of this Agreement. The inclusion of any item in the Disclosure Letter
by QAT shall not be construed as an admission or opinion by QAT of the materiality of such item.
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2.11
Tax Withholdings
Purchaser shall be entitled to deduct and withhold from any consideration otherwise payable to any QAT
Shareholder and, for greater certainty, from any amount payable to a Dissenting Shareholder, as the case
may be, under the Plan of Arrangement such amounts as Purchaser is required or reasonably believed to
be required to deduct and withhold from such consideration in accordance with applicable Tax Laws. Any
such amounts will be deducted and withheld from the consideration payable pursuant to the Plan of
Arrangement and shall be treated for all purposes as having been paid to the QAT Shareholder in respect
of which such deduction and withholding was made, provided that such withheld amounts are actually
remitted to the appropriate Taxing Authority.
ARTICLE 3
COVENANTS
3.1
Covenants of Purchaser and Newco
Each of Purchaser and Newco covenants and agrees that, from the date of this Agreement until the
earlier of the Effective Date or termination of this Agreement, except with the prior written consent of QAT
(such consent not to be unreasonably withheld or delayed), and except as otherwise expressly permitted
or specifically contemplated by this Agreement (including the Plan of Arrangement) or required by
Applicable Laws:
(a)
the business of Purchaser shall be conducted only in the usual and ordinary course
consistent with past practices and it shall use all commercially reasonable efforts to
maintain and preserve its business, assets and advantageous business relationships;
(b)
Newco shall not conduct any business or incur any debt except as may be required to
implement the Arrangement;
(c)
Purchaser shall issue such number of Purchaser Shares as shall be required in order for
Newco to deliver to the QAT Shareholders the consideration payable pursuant to the
Plan of Arrangement;
(d)
Purchaser will have sufficient working capital available at the Effective Date to cover the
anticipated working capital requirements of Purchaser and Amalco for the twelve-month
period following the Effective Date;
(e)
Purchaser shall amend the terms of all Purchaser Options granted to directors and
officers of Purchaser which are outstanding at the Effective Time, such that the
Purchaser Options will vest as to 1/5 on each of the 12, 15, 18, 21 and 24 month
anniversaries of the Effective Date;
(f)
Purchaser: (i) shall cause each of the directors and officers of Purchaser and 2238646
Ontario Inc, and shall use reasonable commercial efforts to cause each Purchaser
Shareholder holding more than 10% of the outstanding Purchaser Shares, to deposit with
Purchaser, prior to the Effective Date, the certificates representing all of the Purchaser
Shares held by such persons; and (ii) shall, following the Effective Date, cause such
certificates to be exchanged for certificates representing Purchaser Shares that will be
collectively legended as follows:
(i)
1/5 of the Purchaser Shares to be released on the date which is 12 months after
the Effective Date;
(ii)
1/5 of the Purchaser Shares to be released on the date which is 15 months after
the Effective Date;
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(iii)
1/5 of the Purchaser Shares to be released on the date which is 18 months after
the Effective Date;
(iv)
1/5 of the Purchaser Shares to be released on the date which is 21 months after
the Effective Date; and
(v)
1/5 of the Purchaser Shares to be released on the date which is 24 months after
the Effective Date.
(g)
Purchaser and Newco will each use its reasonable commercial efforts to satisfy or cause
the satisfaction of the conditions set forth in Sections 5.1 and 5.3 as soon as reasonably
practicable, to the extent the fulfillment of the same is within the control of Purchaser or
Newco, as applicable;
(h)
Neither Purchaser nor Newco shall directly or indirectly do, or permit to occur, any of the
following: (i) except as may be necessary to facilitate the Arrangement, amend its
constating documents; (ii) declare, set aside or pay any dividend or other distribution or
payment (whether in cash, shares or property) in respect of outstanding Purchaser
Shares; (iii) adopt a plan of liquidation or resolutions providing for the liquidation,
dissolution, merger, consolidation or reorganization of Purchaser; (iv) split, combine or
reclassify any of the outstanding Purchaser Shares; or (iv) enter into or modify any
contract, agreement, commitment or arrangement with respect to any of the foregoing;
(i)
Purchaser and Newco will forthwith carry out the terms of the Interim Order and the Final
Order to the extent applicable to each of them and each will use its reasonable
commercial efforts to assist QAT in obtaining such orders and to carry out the intent or
effect of this Agreement and the Arrangement;
(j)
Purchaser and Newco will cooperate with QAT in the preparation of the application for
the Final Order, which will be used to exempt Purchaser from the requirement to register
the Purchaser Shares issuable under the Arrangement with the SEC such that the
Purchaser Shares shall be, subject to Article 4 of the Plan of Arrangement, freely tradable
immediately after the Closing Time without restrictions or hold periods under Applicable
Canadian Securities Laws and U.S. Securities Laws;
(k)
Purchaser will make all other necessary filings and applications under Applicable Laws,
including U.S. Securities Laws, required on the part of Purchaser in connection with the
transactions contemplated herein and take all reasonable action necessary to be in
compliance with such Applicable Laws;
(l)
Neither Purchaser nor Newco shall take any action, refrain from taking any action, or
permit any action to be taken or not taken, inconsistent with this Agreement, which might
directly or indirectly interfere or affect the consummation of the Arrangement in
accordance with the terms and conditions herein;
(m)
Purchaser shall indemnify and save harmless QAT, its subsidiaries and their respective
directors, officers, employees, advisors and agents from and against any and all
liabilities, claims, demands, losses, costs, damages and expenses (excluding any loss of
profits or consequential damages) to which QAT, its subsidiaries or their respective
directors, officers, employees, advisors or agents may be subject or which QAT, its
subsidiaries or their respective directors, officers, employees, advisors or agents may
suffer, whether under the provisions of any statute or otherwise, in any way caused by, or
arising, directly or indirectly, from or in consequence of:
(i)
any misrepresentation or alleged misrepresentation in the Purchaser Information;
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(ii)
any order made or any inquiry, investigation or proceeding by any securities
commission or other competent authority based upon any untrue statement or
omission or alleged untrue statement or omission of a material fact or any
misrepresentation or any alleged misrepresentation in any material filed by or on
behalf of Purchaser in compliance or intended compliance with Applicable Laws,
which prevents or restricts the trading in the Purchaser Shares; and
(iii)
Purchaser not complying with any requirement of Applicable Laws in connection
with the transactions contemplated in this Agreement;
except that Purchaser shall not be liable in any such case to the extent that any such
liabilities, claims, demands, losses, costs, damages and expenses arise out of or are
based upon any misrepresentation or alleged misrepresentation of a material fact based
on the QAT Information, the negligence of QAT or the non-compliance by QAT with any
requirement of Applicable Laws in connection with the transactions contemplated in this
Agreement;
(n)
subject to Section 9.3, except for non-substantive communications with third parties and
communications to legal and other advisors of Purchaser, Purchaser will furnish promptly
to QAT: (i) a copy of each notice, report, schedule or other document delivered, filed or
received by Purchaser or Newco in connection with the Arrangement from any
Governmental Authority; (ii) any filings under Applicable Laws in connection with the
Arrangement; and (iii) any documents related to dealings with Governmental Authorities
in connection with the transactions contemplated herein;
(o)
except as contemplated herein, Purchaser shall not take any action that would render, or
may reasonably be expected to render, any representation or warranty made by
Purchaser in this Agreement untrue in any material respect;
(p)
Purchaser shall promptly notify QAT in writing of any material changes (actual,
anticipated, contemplated or, to the knowledge of Purchaser, threatened, financial or
otherwise) in the business, operations, affairs, assets, capitalization, financial condition,
prospects, licenses, permits, rights, privileges or Liabilities of Purchaser, whether
contractual or otherwise, of Purchaser or any of its subsidiaries or of any change in any
representation or warranty provided by Purchaser in this Agreement which change is or
may be of such a nature as to render any representation or warranty misleading or untrue
in any material respect and Purchaser shall in good faith discuss with QAT any change in
circumstances which is of such a nature that there may be a reasonable question as to
whether notice need be given to QAT pursuant to this provision;
(q)
Purchaser shall use its reasonable commercial efforts to obtain the consent of any third
parties required by Purchaser for the transactions contemplated hereby and provide the
same to QAT on or prior to the Effective Date;
(r)
Purchaser shall take all commercially reasonable actions to give effect to the transactions
contemplated by this Agreement and the Plan of Arrangement; and
(s)
Purchaser shall cause Newco to take all steps, to do and perform all such acts and things
and to execute and deliver all such agreements, documents and other instruments as are
necessary or desirable to effect and complete the transactions contemplated herein and
in the Plan of Arrangement in accordance with the terms and conditions hereof and
thereof and any and all covenants and agreements of Purchaser contained herein and in
the Plan of Arrangement shall, to the extent that they are required to be performed by
Newco, shall be and be deemed to be covenants and agreements of both Purchaser and
Newco.
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3.2
Additional Covenants of Purchaser
Purchaser further covenants and agrees that:
(a)
all rights to indemnification existing in favour of present and former directors and officers
of (i) QAT or (ii) any corporation of which QAT is or was a shareholder or creditor and
who are serving or did serve at QAT's request, as provided by contract, in QAT's articles
or by-laws or in similar documents of any of QAT's subsidiaries in effect as of the date of
this Agreement with respect to matters occurring prior to the Effective Date, shall survive
the completion of the Arrangement and shall continue in full force and effect without
modification for a period of not less than the later of their terms, if any, or the statutes of
limitations applicable to such matters, and Purchaser further unconditionally and
irrevocably covenants and agrees to be jointly and severally liable with QAT for the
performance of this covenant following the Effective Date; and
(b)
QAT shall be permitted to secure "run off" directors' and officers' liability insurance for
QAT's and its subsidiaries' current and former directors and officers, covering claims
made prior to or within six years after the Effective Date which has a scope and coverage
substantially equivalent in scope and coverage to that provided pursuant to QAT's and its
subsidiaries' current directors' and officers' insurance policies and Purchaser agrees to
not take any action to terminate or otherwise adversely affect or alter such directors' and
officers' insurance.
3.3
Covenants of QAT
QAT covenants and agrees that, from the date of this Agreement until the earlier of the Effective Date or
termination of this Agreement, except with the prior written consent of Purchaser and Newco (such
consent not to be unreasonably withheld or delayed), and except as otherwise expressly permitted or
specifically contemplated by this Agreement (including the Plan of Arrangement) or required by
Applicable Laws:
(a)
QAT will use its reasonable commercial efforts to satisfy or cause the satisfaction of the
conditions set forth in Sections 5.1 and 5.2 as soon as practicable, to the extent the
fulfillment of the same is within the control of QAT;
(b)
QAT will forthwith carry out the terms of the Interim Order and the Final Order to the
extent applicable to it;
(c)
QAT will make all necessary filings and applications under Applicable Laws, including
U.S. Securities Laws, if applicable, reasonably required to be made on the part of QAT in
connection with the transactions contemplated herein and shall take all reasonable action
necessary to be in compliance with such Applicable Laws;
(d)
QAT shall not take any action, refrain from taking any action, or permit any action to be
taken or not taken, inconsistent with this Agreement, which might directly or indirectly
interfere or affect the consummation of the Arrangement in accordance with the terms
and conditions herein;
(e)
the business of QAT and of its subsidiaries shall be conducted only in the usual and
ordinary course consistent with past practices and it shall use all commercially
reasonable efforts to maintain and preserve its business, assets (including Intellectual
Property), relationships, customers, clients and employees and to preserve for Purchaser
the integrity and reputation of QAT;
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(f)
QAT shall not directly or indirectly do, or permit to occur, any of the following: (i) amend
its constating documents or those of any of its subsidiaries; (ii) declare, set aside or pay,
or permit any of its subsidiaries to declare, set aside or pay, any dividend or other
distribution or payment (whether in cash, shares or property) in respect of outstanding
QAT Shares or shares of any of QAT's subsidiaries; (iii) issue, grant, sell or pledge or
agree to issue, grant, sell or pledge any QAT Shares or QAT Class B Shares or other
securities of QAT or any of its subsidiaries, including, without limitation, securities
convertible into or exchangeable or exercisable for, or otherwise evidencing a right to
acquire, QAT Shares (other than on exercise of QAT Options or conversion of the QAT
Class B Shares); (iv) redeem, purchase or otherwise acquire any of the outstanding QAT
Shares or other securities or securities of any of QAT's subsidiaries; (v) split, combine or
reclassify any of the outstanding QAT Shares or shares of any of QAT's subsidiaries; (vi)
adopt a plan of liquidation or resolutions providing for the liquidation, dissolution, merger,
consolidation or reorganization of QAT or any of its subsidiaries; or (vii) enter into or
modify any contract, agreement, commitment or arrangement with respect to any of the
foregoing;
(g)
QAT shall not directly or indirectly: (i) sell, pledge, dispose of or encumber any assets
(including Intellectual Property) except in the ordinary course of business and consistent
with QAT's current practices; (ii) expend or commit to expend any amounts with respect
to any operating expenses other than in the ordinary course of business or pursuant to
the Arrangement; (iii) reorganize, amalgamate, merge or otherwise continue QAT or any
of its subsidiaries with any other Person or other business organization whatsoever; (iv)
acquire (by merger, amalgamation, consolidation or acquisition of shares or assets or
otherwise) any corporation, trust, partnership or other business organization or division
thereof, or make any investment therein either by purchase of shares or securities,
contributions of capital or property transfer; (v) acquire any assets (other than purchases
of inventories in the ordinary course of business); (vi) incur any indebtedness for
borrowed money or any other material liability or obligation (other than the Bridge Loan)
or issue any debt securities or assume, guarantee, endorse or otherwise become
responsible for, the obligations of any other individual or entity, or make any loans or
advances (except to a subsidiary of QAT), or amend the terms of any of its office leases
or existing credit facilities; (vii) except for Employee Obligations, pay, discharge or satisfy
any material claims, liabilities or obligations other than the payment, discharge or
satisfaction in the ordinary course of business, consistent with past practice, of liabilities
reflected or reserved against in the QAT Financial Statements or incurred in the ordinary
course of business consistent with past practice; (viii) authorize, recommend or propose
any release or relinquishment of any material Contracts; (ix) waive, release, grant or
transfer any material rights of value or modify or change in any material respect any
existing material license, lease, contract or other material document; (x) enter into or
terminate any xxxxxx, swaps or other financial instruments or like transactions; or (xi)
authorize or propose any of the foregoing, or enter into or modify any contract,
agreement, commitment or arrangement to do any of the foregoing;
(h)
QAT shall not make any payment to any employee, officer or director outside of their
ordinary and usual compensation for services provided, except to the extent that any
such entitlement to payment to a former employee or officer has accrued prior to the date
hereof and the details of which payments, if any are set forth in the Disclosure Letter;
(i)
except as may be agreed to by Purchaser, neither QAT nor any of its subsidiaries shall:
(i) grant any officer, director, employee or consultant an increase in compensation in any
form; (ii) grant any general salary increase; (iii) take any action with respect to the
amendment or grant of any severance or termination pay policies or arrangements for
any directors, officers, employees or consultants; (iv) adopt or amend or make any
contribution to any bonus, option, pension, retirement, deferred compensation, insurance,
incentive compensation, other compensation or other similar plan, agreement, share
- 18 -
incentive or purchase plan, trust fund or arrangements for the benefit of directors,
officers, employees or consultants, except as is necessary to comply with Applicable
Laws or with respect to existing provisions of or commitments in respect of any such
plans, programs, arrangements or agreements; or (v) advance any loan to any officer or
director of QAT or any of its subsidiaries or any other party not at arm's length to QAT or
any of its subsidiaries;
(j)
QAT shall use its reasonable commercial efforts to cause its current insurance (or re-
insurance) policies for QAT and any of its subsidiaries not to be cancelled or terminated
or any of the coverage thereunder to lapse, unless simultaneously with such termination,
cancellation or lapse, replacement policies underwritten by insurance or re-insurance
companies of nationally recognized standing satisfactory to Purchaser providing
coverage equal to or greater than the coverage under the cancelled, terminated or lapsed
policies for substantially similar premiums are in full force and effect;
(k)
no amendments shall be made to outstanding QAT Options without the prior written
consent of Purchaser other than as permitted pursuant to subsection 3.3(m) hereof;
(l)
QAT shall use its commercially reasonable efforts to cause the resignation of all of the
directors and officers of QAT and QAT's subsidiaries as requested by Purchaser
pursuant to subsection 5.2(n) as of the Effective Time (and for mutual releases in form
and substance satisfactory to Purchaser and QAT, each acting reasonably, to be
provided);
(m)
QAT shall use its commercially reasonable efforts to ensure that all outstanding QAT
Options are either exercised, terminated, expired or surrendered prior to the Effective
Time; provided that QAT shall not pay the holders any amount of consideration therefor
other than as set out herein, nor shall QAT make any amendment to outstanding QAT
Options without the prior written consent of Purchaser;
(n)
QAT shall not take any action that would render, or may reasonably be expected to
render, any representation or warranty made by it in this Agreement untrue in any
material respect at any time prior to the Effective Date or termination of this Agreement,
whichever first occurs;
(o)
QAT shall promptly notify Purchaser in writing of any changes (actual, anticipated,
contemplated or, to the knowledge of QAT, threatened, financial or otherwise) in the
business, operations, affairs, assets (including Intellectual Property), capitalization,
financial condition, prospects, licenses, permits, rights, privileges or Liabilities, whether
contractual or otherwise, of QAT or any of its subsidiaries or of any change in any
representation or warranty provided by QAT in this Agreement which change is or may
be of such a nature as to render any representation or warranty misleading or untrue in
any material respect and QAT shall in good faith discuss with Purchaser any change in
circumstances which is of such a nature that there may be a reasonable question as to
whether notice need be given to Purchaser pursuant to this provision;
(p)
QAT shall use its reasonable commercial efforts to obtain the consents of its bankers,
surety providers, landlord and any other third party consents required for the transactions
contemplated hereby and provide the same to Purchaser on or prior to the Effective Date;
(q)
QAT shall provide notice to Purchaser of the QAT Meeting and allow Purchaser's
representatives and legal counsel to attend such QAT Meeting;
(r)
QAT shall indemnify and save harmless Purchaser, its subsidiaries and their directors,
officers, employees, advisors and agents from and against any and all liabilities, claims,
- 19 -
demands, losses, costs, damages and expenses (excluding any loss of profits or
consequential damages) to which Purchaser, its subsidiaries or their directors, officers,
employees, advisors or agents may be subject or which Purchaser, its subsidiaries or
their directors, officers, employees, advisors or agents may suffer, whether under the
provisions of any statute or otherwise, in any way caused by, or arising, directly or
indirectly, from or in consequence of:
(i)
any misrepresentation or alleged misrepresentation in the QAT Information;
(ii)
any order made or any inquiry, investigation or proceeding by any securities
commission or other competent authority based upon any untrue statement or
omission or alleged untrue statement or omission of a material fact or any
misrepresentation or any alleged misrepresentation in any material filed by or on
behalf of QAT in compliance or intended compliance with Applicable Canadian
Securities Laws; and
(iii)
QAT not complying with any requirement of Applicable Laws in connection with
the transactions contemplated in this Agreement;
except that QAT shall not be liable in any such case to the extent that any such liabilities,
claims, demands, losses, costs, damages and expenses arise out of or are based upon
any misrepresentation or alleged misrepresentation of a material fact based on the
Purchaser Information, the negligence of Purchaser or the non-compliance by Purchaser
with any requirement of Applicable Laws in connection with the transactions
contemplated by this Agreement;
(s)
subject to Section 9.3, except for proxies and other non-substantive communications with
securityholders, QAT will furnish promptly to Purchaser or Purchaser's counsel, a copy of
each notice, report, schedule or other document delivered, filed or received by QAT in
connection with: (i) the Arrangement; (ii) the QAT Meeting; (iii) any filings under
Applicable Laws; and (iv) any dealings with Governmental Authorities in connection with
the transactions contemplated hereby;
(t)
management of QAT shall solicit proxies to be voted at the QAT Meeting in favour of
matters to be considered at the QAT Meeting, including the Arrangement Resolution;
(u)
QAT shall conduct the QAT Meeting in accordance with the by-laws of QAT, the OBCA,
Applicable Canadian Securities Laws and any instrument governing the QAT Meeting
(including, without limitation, the Interim Order), as applicable, and as otherwise required
by Applicable Laws;
(v)
QAT shall take all commercially reasonable actions to give effect to the transactions
contemplated by this Agreement and the Plan of Arrangement;
(w)
QAT shall promptly advise Purchaser of the number of QAT Shares for which QAT
receives notices of dissent or written objections to the Arrangement and provide
Purchaser with copies of such notices and written objections;
(x)
except as disclosed in the Disclosure Letter, the QAT Group shall: (i) duly and on a timely
basis file all Tax Returns required to be filed by it on or after the date hereof and all such
Tax Returns will be true, complete and correct in all material respects; (ii) timely pay all
Taxes shown on such Tax Returns; (iii) except as required by Tax Laws, not make or
rescind any material express or deemed election relating to Taxes, or file any amended
Tax Returns where the result of such action is inconsistent with past practice; (iv) not
make a request for a Tax ruling or enter into an agreement with any Governmental
- 20 -
Authority related to the payment or postponement of Tax or any filing requirement; (v) not
settle any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or
controversy relating to a material amount of Taxes; (vi) not change in any material
respect any of its methods of reporting income, deductions or accounting for Tax
purposes from those employed in the preparation of its Tax Return for the taxation years
ending December 31, 2011 and December 31, 2010, except where such change is as a
result of changes to Canadian GAAP or Tax Laws made after December 31, 2011; and
(vii) properly reserve (and reflect such reserves in its books and records and financial
statements) in accordance with Canadian GAAP, for all Taxes accruing in respect of QAT
which are not due or payable prior to the Effective Date;
(y)
the QAT Group shall not make any Tax filings outside the ordinary course of business,
including making, amending or rescinding any Tax Return, election or designation,
without the consent of Purchaser, such consent not to be unreasonably withheld; and
(z)
on or prior to August 23, 2012, deliver executed Support Agreements from each of the
directors and officers of QAT and each QAT Shareholder holding more than 5% of the
outstanding QAT Shares, together with each of their respective "associates" and
"affiliates" (as such terms are defined in the Securities Act) will be delivered to Purchaser.
3.4
Mutual Covenants Regarding the Arrangement
From the date of this Agreement until the Effective Date or termination of this Agreement, each of
Purchaser, Newco and QAT will use its reasonable commercial efforts to: (i) satisfy (or cause the
satisfaction of) the conditions precedent to its obligations (and those of any of its subsidiaries) hereunder;
(ii) not take, or cause to be taken, any action or cause anything to be done that would cause such
obligations not to be fulfilled in a timely manner; and (iii) take, or cause to be taken, all other actions and
to do, or cause to be done, all other things necessary, proper or advisable under Applicable Laws to
complete the Arrangement, including using reasonable commercial efforts:
(a)
to ensure that the Information Circular provides QAT Shareholders with information in
sufficient detail to permit them to form a reasoned judgment concerning the matters
before them, and, in that regard, the Information Circular will set out the Purchaser
Information in the form approved by Purchaser and Newco and the QAT Information in
the form approved by QAT and shall include, without limitation: (i) any financial
statements (including pro forma financial statements) that are required to be included
therein in accordance with Applicable Laws; (ii) the unanimous determination of the QAT
Board of Directors by all of the directors present and entitled to vote at the meeting of the
QAT Board of Directors that the Arrangement is fair, from a financial point of view, to
QAT Shareholders and is in the best interests of QAT and QAT Shareholders (and
include the unanimous recommendation of the QAT Board of Directors that the QAT
Shareholders vote in favour of the Arrangement Resolution); and (iii) the written fairness
opinion of QAT's financial advisor that the consideration in respect of the Arrangement is
fair, from a financial point of view, to QAT Shareholders;
(b)
to obtain all necessary consents, assignments, waivers and amendments to or
terminations of any agreements and take such measures as may be appropriate to fulfill
its obligations hereunder and to carry out the transactions contemplated hereby;
(c)
to effect all necessary registrations, filings and submissions of information requested by
Governmental Authorities required to be effected by it in connection with the
Arrangement;
(d)
reasonably cooperate with the other Party and its tax advisors in structuring the
Arrangement in a tax effective manner and making such amendments to this Agreement
or the Plan of Arrangement, as the other Party and its tax advisors shall consider
- 21 -
necessary, acting reasonably, and assist the other Party and its tax advisors in making
such investigations and inquiries with respect to such Party in that regard, as the other
Party and its tax advisors shall consider necessary, acting reasonably, provided that QAT
shall not be obligated to consent or agree to any structuring contemplated by this
subsection 3.4(d) that has the effect of reducing the consideration to be received under
the Arrangement by the QAT Shareholders; and
(e)
subject to receipt of required regulatory and court approvals, to cause the Effective Date
to occur on or before December 31, 2012 (the "Outside Date") and, subject to receipt of
required regulatory approvals, to cause the mailing of the Information Circular to QAT
Shareholders to occur by October 15, 2012 (the "Mailing Date").
Each of Purchaser, Newco and QAT will use its reasonable commercial efforts to cooperate with the other
in connection with the performance by the other of their obligations under this Section 3.4 and this
Agreement including, without limitation, continuing to provide reasonable access to information and to
maintain ongoing communications as between officers of Purchaser and QAT, subject in all cases to the
Confidentiality Agreement.
3.5
Covenants Regarding Non-Solicitation
(a)
QAT shall, and shall cause the officers, directors, employees, representatives and agents
of it and of its subsidiaries to immediately cease any existing discussions or negotiations
with any Person (other than Purchaser) with respect to any proposal that constitutes, or
may reasonably be expected to constitute, an Acquisition Proposal and request, in
accordance with the terms of any applicable confidentiality agreement (other than the
Confidentiality Agreement), the return or destruction of all confidential information
provided in connection therewith.
(b)
Except as otherwise provided in this Section 3.5, QAT shall not, directly or indirectly,
through any of its subsidiaries or through any officer, director, employee, investment
banker, attorney or other representative or agent of it or any of its subsidiaries:
(i)
solicit, initiate, knowingly facilitate or knowingly encourage (including by way of
furnishing information) the initiation of any inquiries or proposals regarding an
Acquisition Proposal;
(ii)
participate in any discussions or negotiations regarding an Acquisition Proposal;
(iii)
withdraw or modify, or propose publicly to withdraw or modify, in any manner
adverse to Purchaser, the approval of the QAT Board of Directors of the
Arrangement or the recommendation of the QAT Board of Directors to vote in
favour of the Arrangement;
(iv)
furnish or provide access to any information concerning QAT, its subsidiaries or
their respective businesses, properties or assets to any Person in connection
with, or that could reasonably be expected to lead to or facilitate, an Acquisition
Proposal;
(v)
waive any provisions of or release or terminate any confidentiality or standstill
agreement between QAT and any Person relating to an actual or potential
Acquisition Proposal, or amend any such agreement or consent to the making of
an Acquisition Proposal in accordance with the terms of such agreement; or
(vi)
accept, recommend, approve or enter into or propose publicly to accept,
recommend, approve or enter into any agreement, arrangement or
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understanding (other than a confidentiality agreement as permitted hereunder)
related to any Acquisition Proposal.
(c)
Prior to the Effective Date, QAT and its officers, directors, employees, advisors or other
representatives or agents may enter into, or participate in, any discussions or
negotiations with a Person who seeks to initiate such discussions or negotiations and,
subject to the entering into by such Person of a confidentiality agreement substantially
similar to the Confidentiality Agreement (and QAT shall use its reasonable commercial
efforts to cause the confidentiality agreement to, among other things, contain details
regarding shareholdings of such Person in QAT), may furnish to such Person information
concerning QAT and its business, properties and assets, in each case if, and only to the
extent that:
(i)
such Person has first made an unsolicited bona fide Acquisition Proposal which
the QAT Board of Directors determines in good faith (after consultation with its
financial advisors) would, if consummated in accordance with its terms, be
reasonably expected to result in, a Superior Proposal;
(ii)
the QAT Board of Directors, after receiving the advice of outside legal counsel,
has determined in good faith that the failure to take such action would be
inconsistent with the fiduciary duties of the QAT Board of Directors; and
(iii)
QAT has provided to Purchaser the information required to be provided under
subsection 3.5(e) in respect of such Acquisition Proposal and has promptly
notified Purchaser in writing of the determinations in paragraphs 3.5(c)(i) and
3.5(c)(ii) above.
(d)
If, prior to the Effective Time, QAT receives a request from a Person who is subject to a
standstill obligation to waive or release such Person from its standstill obligation in order
to make an unsolicited bona fide Acquisition Proposal or to implement a Superior
Proposal, QAT may release such Person from its standstill obligation only to the extent
required to allow such Person to provide the Acquisition Proposal for consideration by the
QAT Board of Directors in accordance with this Section 3.5 and to enter into, or
participate in, any discussions or negotiations with QAT and be furnished with information
concerning QAT, to the extent permitted pursuant to subsection 3.5(c), or to implement a
Superior Proposal.
(e)
QAT shall promptly notify Purchaser, at first orally and then in writing, of any Acquisition
Proposal received after the date hereof, of any confidentiality agreement entered into in
respect of any such Acquisition Proposal and any inquiry or contact received after the
date hereof that could lead to an Acquisition Proposal, or any request for non-public
information relating to QAT received after the date hereof or for access to the properties,
books or records of QAT by any Person that informs QAT that it is considering making, or
has made, an Acquisition Proposal after the date hereof; which notice will include any
known material terms and conditions of such Acquisition Proposal (including any form of
agreement proposed to be entered into) and shall indicate such details, to the extent
known, of the Acquisition Proposal, inquiry or contact as Purchaser may reasonably
request, including the identity of the Person making such proposal, inquiry or contact.
QAT shall keep Purchaser informed of the status, including any change to the material
terms, of any such Acquisition Proposal or inquiry. In addition, QAT shall provide
Purchaser with a list of or copies of the information provided to any Person in respect of
which a confidentiality agreement is entered into in respect of any Acquisition Proposal
pursuant to subsection 3.5(c) and shall provide Purchaser with access to any information
provided to any such Person to the extent Purchaser did not previously have access to
such information.
- 23 -
(f)
QAT shall give Purchaser, orally and in writing, at least three (3) Business Days advance
notice of any decision by the QAT Board of Directors to accept, recommend, approve or
enter into an agreement to implement a Superior Proposal, which notice shall confirm
that the QAT Board of Directors has determined that such Acquisition Proposal
constitutes a Superior Proposal, shall identify the Person making the Superior Proposal
and shall provide a true and complete copy thereof and any amendments thereto. During
such three (3) Business Day period, QAT agrees not to accept, recommend, approve or
enter into any agreement to implement such Superior Proposal and shall not withdraw,
modify or change its recommendation in respect of the Arrangement or waive any
provision of any standstill obligation with respect thereto. In addition, during such three
(3) Business Day period, the QAT Board of Directors: (i) shall, and shall cause its
financial and legal advisors to, negotiate in good faith with Purchaser and its financial and
legal advisors, in a manner consistent with its fiduciary duties, to make such adjustments
in the terms and conditions of this Agreement and the Arrangement as would cause the
Acquisition Proposal to cease to be a Superior Proposal and enable QAT to proceed with
the Arrangement as amended rather than the Acquisition Proposal; and (ii) shall review
any proposal by Purchaser to amend the terms and conditions of this Agreement and the
Arrangement in order to determine in good faith in the exercise of its fiduciary duties
whether such proposal would result in the Acquisition Proposal ceasing to be a Superior
Proposal. If the QAT Board of Directors determines that the Acquisition Proposal is not a
Superior Proposal as compared to the proposed amendments to the terms and
conditions of this Agreement and the Arrangement, QAT will promptly enter into an
amended agreement with Purchaser and Newco and the QAT Board of Directors shall
not accept, recommend, approve or enter into any agreement to implement such
Acquisition Proposal and shall not release the party making the Acquisition Proposal from
any standstill provisions and shall not withdraw, modify or change its recommendation in
respect of the Arrangement. If the QAT Board of Directors continues to believe that such
Acquisition Proposal remains a Superior Proposal and therefore rejects Purchaser's
amended proposal, QAT may terminate this Agreement pursuant to Section 7.1(a)(v). In
the event that QAT provides Purchaser with a copy of the notice referred to in this
subsection 3.5(f) on a date that is three (3) Business Days or fewer prior to the QAT
Meeting, QAT shall adjourn the QAT Meeting to a date that is not less than three (3)
Business Days and not more than ten (10) Business Days after the date of the notice.
(g)
Nothing contained in this Section 3.5 shall prohibit the QAT Board of Directors from: (i)
making any disclosure of an Acquisition Proposal to the QAT Shareholders prior to the
Effective Time if, in the good faith judgment of the QAT Board of Directors after receiving
the advice of outside counsel, such disclosure is necessary for the QAT Board of
Directors to act in a manner consistent with its fiduciary duties or is otherwise required
under Applicable Law; (ii) taking any other action with regard to an Acquisition Proposal
to the extent ordered or otherwise mandated by any court of competent jurisdiction; (iii)
considering or responding to a bona fide request for information that could reasonably be
expected to lead to an Acquisition Proposal solely by advising that no information can be
provided unless a bona fide written Acquisition Proposal is made and then only in
compliance with subsection 3.5(c); and (iv) complying with those provisions under
Applicable Laws relating to the provision of directors' circulars and making appropriate
disclosure with respect thereto to QAT Shareholders.
(h)
QAT also acknowledges and agrees that each successive material modification of any
Acquisition Proposal shall constitute a new Acquisition Proposal for purposes of the
requirement under Subsection 3.5(f) to initiate an additional three (3) Business Day
notice period.
(i)
The QAT Board of Directors shall promptly reaffirm its recommendation in respect of the
Arrangement by press release after any Acquisition Proposal (which is determined not to
be a Superior Proposal) is publicly announced or made.
- 24 -
(j)
Purchaser agrees that all information that may be provided to it by QAT with respect to
any Acquisition Proposal pursuant to this Section 3.5 shall be treated as if it were
"Confidential Information" as that term is defined in the Confidentiality Agreement and
shall not be disclosed or used except in accordance with the provisions of the
Confidentiality Agreement or in order to enforce its rights under this Agreement in legal
proceedings.
3.6
Provision of Information
Until the Effective Date or termination of this Agreement, each Party agrees to keep the other Party fully
appraised in a timely manner of every circumstance, action, occurrence or event occurring or arising after
the date hereof that would be relevant and material to a prudent operator of the business and operations
of QAT and Purchaser. Each Party shall confer with and obtain the approval of the other Party (not to be
unreasonably withheld or delayed), prior to taking action (other than in emergency situations) with respect
to any material operational matters involved in its business.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1
Representations and Warranties of Purchaser and Newco
Purchaser and Newco represent and warrant to and in favour of QAT and acknowledges that QAT is
relying upon such representations and warranties in connection with the matters contemplated by this
Agreement:
(a)
Organization and Qualification. Each company in the Purchaser Group has been duly
incorporated, amalgamated or created, as the case may be, and is validly subsisting
under the Laws of its jurisdiction of formation and has the requisite power and authority to
own its assets and properties as now owned and to carry on its business as now
conducted. Each member of the Purchaser Group is duly registered or authorized to
conduct its affairs or do business, as applicable, and is in good standing in each
jurisdiction in which the character of its assets and properties, owned or leased, or the
nature of its activities makes such registration or authorization necessary, except where
the failure to be so registered or authorized would not, individually or in the aggregate,
have a Material Adverse Effect on Purchaser or Newco. Copies of the constating
documents of each of Purchaser and Newco provided to QAT, together with all
amendments to date, are accurate and complete as of the date hereof and have not been
amended or suspended.
(b)
Authority Relative to this Agreement. each of Purchaser and Newco has the requisite
corporate power and authority to execute this Agreement and to carry out its obligations
hereunder (including, without limitation, the issuance of the Purchaser Shares under the
Arrangement). The execution and delivery of this Agreement and the consummation by
Purchaser and Newco of the transactions contemplated by the Arrangement have been
duly authorized by the Purchaser Board of Directors and the board of directors of Newco,
respectively, and no other proceedings on the part of either Purchaser or Newco are
necessary to authorize this Agreement or the Arrangement. This Agreement has been
duly executed and delivered by each of Purchaser and Newco and constitutes a legal,
valid and binding obligation of each of Purchaser and Newco enforceable against them in
accordance with its terms, subject to the qualification that such enforceability may be
limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other Laws of general application relating to or affecting rights of creditors and that
equitable remedies, including specific performance, are discretionary and may not be
ordered.
- 25 -
(c)
Subsidiaries. Purchaser has no subsidiaries other than Mobilotto Inc. and Newco
(collectively, with Purchaser, the "Purchaser Group") and Purchaser owns, directly or
indirectly, 100% of the outstanding securities of each of such subsidiaries. All of the
outstanding shares and all other ownership interests in the subsidiaries of Purchaser are
duly authorized, validly issued, fully paid and non-assessable, and all such shares and
other ownership interests held directly by Purchaser, are owned by Purchaser free and
clear of all Encumbrances, except pursuant to restrictions on transfer contained in the
articles of such subsidiary. There are no rights of first refusal and similar rights restricting
transfer of Purchaser Shares contained in shareholders, partnership, joint venture or
similar agreements or pursuant to existing financing arrangements and there are no
outstanding contractual or other obligations of any member of the Purchaser Group to
repurchase, redeem or otherwise acquire any of their respective securities or with respect
to the voting or disposition of any outstanding securities of any of them.
(d)
No Conflict. Except as disclosed by Purchaser or Newco to QAT in writing prior to the
date of this Agreement, or as contemplated by this Agreement:
(i)
the execution, delivery and performance by Purchaser and Newco of this
Agreement and the consummation of the Arrangement do not and will not (or
would not with the giving of notice, the lapse of time or the happening of any
other event or condition), violate, conflict with or result in a breach of (i) any of
the articles, by-laws or other constating documents of Purchaser or Newco, or (ii)
any Law applicable to Purchaser or Newco, with such exceptions, in the case of
clause (ii), as would not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on Purchaser or Newco; and
(ii)
other than in connection with or in compliance with the provisions of Applicable
Laws in relation to the completion of the Arrangement or which are required to be
fulfilled post Arrangement: (A) there is no legal impediment to Purchaser's or
Newco's consummation of the Arrangement; and (B) no filing or registration with,
or authorization, consent or approval of, any Governmental Authority is required
of Purchaser or Newco in connection with the consummation of the Arrangement,
except for such filings or registrations which, if not made, or for such
authorizations, consents or approvals which, if not received, would not,
individually or in the aggregate, have a Material Adverse Effect on Purchaser or
Newco, or significantly impede the ability of Purchaser or Newco to consummate
the Arrangement.
(e)
No Business. Newco is not engaged in any business nor is it a party to or bound by any
Contract, agreement, arrangement, instrument, license, permit or authority; nor does it
have any liability, contingent or otherwise, other than pursuant to or as completed by this
Agreement.
(f)
Litigation. Except as Publicly Disclosed by Purchaser, there are no claims, actions, suits,
proceedings or investigations by Governmental Authorities in existence or pending or, to
the knowledge of Purchaser or Newco, threatened or for which there is a reasonable
basis, affecting or that would reasonably be expected to affect the Purchaser Group or
affecting or that would reasonably be expected to affect any of its property or assets at
law or equity or before or by any court or Governmental Authority which claim, action,
suit, proceeding or investigation involves a possibility of any judgment against or liability
of the Purchaser Group which, if successful, would have a Material Adverse Effect on
Purchaser or Newco, or would significantly impede the ability of Purchaser or Newco to
consummate the transactions contemplated in this Agreement. Neither Purchaser nor or
Newco is subject to any outstanding order, writ, injunction or decree that has had or
would have a Material Adverse Effect on Purchaser or Newco or would significantly
- 26 -
impede the ability of Purchaser or Newco to consummate the transactions contemplated
in this Agreement.
(g)
Registration Status. Purchaser Shares are registered pursuant to the U.S. Exchange Act
and Purchaser is in material compliance with all applicable U.S. Securities Laws.
Purchaser Shares trade through the over the counter United States quotation system.
(h)
Capitalization of Purchaser. The authorized capital of Purchaser consists of 300,000,000
Purchaser Shares, with a par value of $0.0001 per share. As of the date hereof, there
are issued and outstanding 152,379,630 Purchaser Shares and no other shares are
issued and outstanding. Other than outstanding Purchaser Options and warrants to
acquire additional Purchaser Shares as has been disclosed by Purchaser to QAT during
its due diligence process, there are no options, warrants or other rights, plans,
agreements or commitments of any nature whatsoever requiring the issuance, sale or
transfer by Purchaser of any securities of Purchaser (including Purchaser Shares) or any
securities convertible into, or exchangeable or exercisable for, or otherwise evidencing a
right to acquire, any securities of Purchaser (including Purchaser Shares).
All
outstanding Purchaser Shares have been duly authorized and validly issued, are fully
paid and non-assessable and are not subject to, nor were they issued in violation of, any
pre-emptive rights and all Purchaser Shares issuable in accordance with the Plan of
Arrangement will be duly authorized and validly issued as fully paid and non-assessable
and will not be subject to any pre-emptive rights.
(i)
Capitalization of Newco. The authorized capital of Newco consists of an unlimited
number of Newco Common Shares. As of the date hereof, there are issued and
outstanding 10 Newco Shares and no other shares are issued and outstanding. All
outstanding Newco Shares have been duly authorized and validly issued, are fully paid
and non-assessable and are not subject to, nor were they issued in violation of, any pre-
emptive rights.
(j)
Equity Monetization Plans. Other than in respect of stock options, there are no
outstanding stock appreciation rights, phantom equity, profit sharing plans or similar
rights, agreements, arrangements or commitments payable to any employee of
Purchaser and which are based upon the revenue, value, income or any other attribute of
any member of the Purchaser Group.
(k)
Purchaser Financial Statements. As of their respective dates, the Purchaser Financial
Statements did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading and complied in all
material respects with all Applicable Laws. The Purchaser Financial Statements were
prepared in accordance with accounting principles generally accepted in the United
States, except as otherwise indicated in such financial statements and the notes thereto
or, in the case of audited statements, in the related report of Purchaser's independent
auditors, and present fairly, in accordance with accounting principles generally accepted
in the United States, the consolidated financial position, statements of operations,
stockholders' equity and cash flows of Purchaser on a consolidated basis as of the dates
thereof and for the periods indicated therein, and that the Purchaser Financial
Statements be identified as those of a development stage company. There has been no
material change in Purchaser's accounting policies, except as described in the notes to
the Purchaser Financial Statements, since May 31, 2012.
(l)
Public Record. Since May 31, 2012, the information and statements set forth in the
Public Record were true, correct and complete in all material respects as of the date of
such information and statements and did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make the
- 27 -
statements therein, in light of the circumstances in which they were made, not
misleading.
(m)
Absence of Certain Changes or Events. Except as Publicly Disclosed by Purchaser, and
except for the Arrangement or any action taken in accordance with this Agreement, since
May 31, 2012, Purchaser has conducted its business only in the ordinary course of
business substantially consistent with past practice; and, without limiting the generality of
the foregoing, except as Publicly Disclosed by Purchaser, there has not occurred:
(i)
an amendment or proposed amendment to the articles or by-laws of Purchaser;
(ii)
a Material Adverse Change with respect to Purchaser;
(iii)
any material damage, destruction or loss not fully covered by insurance (subject
to normal deductibles);
(iv)
any redemption, repurchase or other acquisition of Purchaser Shares by
Purchaser, or any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, shares or property) with respect to the Purchaser
Shares;
(v)
any resolution to approve a split, consolidation or reclassification of any of its
outstanding Purchaser Shares;
(vi)
any change in its financial accounting methods, policies or practices, other than
changes required by accounting principles generally accepted in the United
States or official interpretations thereof and except for changes in practices in the
ordinary course of business consistent with past practice; or
(vii)
any agreement by Purchaser to do any of the foregoing.
(n)
Governmental Approvals. The execution, delivery and performance by Purchaser of the
Arrangement require no consent, waiver or approval or any action by or in respect of, or
filing with, or notification to, any Governmental Authority other than: (i) the Interim Order
and any approvals required by the Interim Order; (ii) the Final Order; (iii) disclosures on
Form 8-K in accordance with the U.S. Exchange Act; (iv) compliance with any applicable
U.S. Securities Laws and stock exchange rules and policies; and (v) any consents,
waivers, approvals, actions, filings or notifications, the absence of which would not be
reasonably expected to materially impair or delay the ability of Purchaser to consummate
the transactions contemplated by this Agreement.
(o)
Compliance with Laws. Except as Publicly Disclosed by Purchaser, the operations and
business of Purchaser are and have been carried out in compliance and not in violation
of any Applicable Laws, other than non-compliance or violation which, individually and in
the aggregate, would not reasonably be expected to have a Material Adverse Effect on
Purchaser, and Purchaser has not received any notice of any alleged violation of any
such Laws except where such notice would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Purchaser.
(p)
Taxes, etc.
(i)
All material Tax Returns required to be filed by or on behalf of Purchaser for
periods ended on and prior to the date of this Agreement by Purchaser have
been duly filed on a timely basis and such tax returns are or shall be at the time
of filing, complete and correct in all material respects;
- 28 -
(ii)
Purchaser has, in all material respects, paid or has withheld and remitted to the
appropriate Taxing Authority all Taxes, including any instalments or prepayments
of Taxes, that are due and payable whether or not shown as being due on any
Tax Return, or, where payment is not yet due, Purchaser has established
adequate accruals in conformity with U.S. GAAP in the Purchaser Financial
Statements for the period covered by such financial statements for any Taxes,
including income Taxes and related future Taxes, if applicable, that have not
been paid, whether or not shown as being due on any Tax Return. Purchaser
has, in all material respects, made adequate provision in its books and records
for any Taxes accruing in respect of any period subsequent to the period covered
by such financial statements, whether or not shown as being due on any Tax
Return;
(iii)
no material deficiencies exist or have been asserted with respect to Taxes of
Purchaser or any of its subsidiaries that have not yet been settled; and
(iv)
none of Purchaser or its subsidiaries is a party to any action or proceeding for
assessment or collection of Taxes, nor, to the knowledge of Purchaser, has such
an event been asserted or threatened against Purchaser or its subsidiaries or
any of their respective assets that would have a Material Adverse Effect on
Purchaser.
(q)
No Orders. No order, ruling or determination having the effect of suspending the sale of,
or ceasing the trading of, the Purchaser Shares or any other securities of Purchaser has
been issued by any Governmental Authority and is continuing in effect and no
proceedings for that purpose have been instituted, are pending or, to the knowledge of
Purchaser, are contemplated or threatened under any Applicable Laws or by any
Governmental Authority.
(r)
Books and Records. The records and minute books of each of Purchaser and Newco
have been maintained substantially in accordance with all Applicable Laws and are
complete and accurate in all material respects.
(s)
Cash on Hand. As at July 31, 2012, the amount of Purchaser's cash was not less than
US $640,000.
(t)
Absence of Undisclosed Liabilities. Except as Publicly Disclosed by Purchaser, none of
Purchaser or any of its subsidiaries has any material liabilities of any nature (matured or
unmatured, fixed or contingent), other than:
(i)
those set forth or adequately provided for or disclosed in the most recent balance
sheet and associated notes thereto included in the Purchaser Financial
Statements (the "Purchaser Balance Sheet");
(ii)
those incurred in the ordinary course of business and not required to be set forth
in the Purchaser Balance Sheet under U.S. GAAP;
(iii)
those incurred in the ordinary course of business since the date of the Purchaser
Balance Sheet and consistent with past practice; or
(iv)
those incurred in connection with the execution of this Agreement.
(u)
Registration, Exemption Orders, Licenses, etc. Purchaser has obtained and is in
compliance with all licenses, permits, certificates, consents, orders, grants, registrations,
recognition orders, exemptive relief orders, no-action relief and other authorizations of or
- 29 -
from any Governmental Authority necessary in connection with the conduct of its
business as it is now, individually or in the aggregate, being or proposed to be conducted
(collectively, the "Governmental Authorizations"), except where the failure to obtain or
be in compliance could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Purchaser. Such Governmental Authorizations are in
full force and effect in accordance with their terms, and no event has occurred or
circumstance exists that (with or without notice or lapse of time) may constitute or result
in a violation of any such Governmental Authorization, except where the violation would
not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect on Purchaser. No proceedings are pending or, to the knowledge of Purchaser,
threatened, which could result in the revocation or limitation of any Governmental
Authorization, and all steps have been taken and filings made on a timely basis with
respect to each Governmental Authorization and its renewal, except where the failure to
take such steps and make such filings would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Purchaser.
(v)
Restrictions on Business Activities. There is no judgment, injunction or order binding
upon any member of the Purchaser Group that has or could reasonably be expected to
have the effect of prohibiting, restricting or impairing its business in any material respect
or, individually or in the aggregate, have a Material Adverse Effect on Purchaser.
(w)
Insurance. Purchaser Group maintains insurance policies with recognized insurers as
are appropriate to its business in such amounts and against such risks as are customarily
carried and insured against by prudent owners of comparable business. All such policies
are in all material respects in full force and effect in accordance with their terms.
(x)
Board Approval. The Purchaser Board of Directors has endorsed the Arrangement and
approved this Agreement and the Arrangement.
4.2
Representations and Warranties of QAT
QAT represents and warrants to and in favour of each of Purchaser and Newco and acknowledges that
Purchaser and Newco are relying upon such representations and warranties in connection with the
matters contemplated by this Agreement and the Arrangement.
(a)
Organization and Qualification. Each member of the QAT Group has been duly
incorporated, amalgamated or created, as the case may be, and is validly subsisting
under the Laws of its jurisdiction of formation and has the requisite power and authority to
own its assets and properties as now owned and to carry on its business as now
conducted. Each member of the QAT Group is duly registered or authorized to conduct
its affairs or do business, as applicable, and each is in good standing in each jurisdiction
in which the character of its assets and properties, owned, leased, licensed or otherwise
held, or the nature of its activities makes such registration or authorization necessary,
except where the failure to be so registered or authorized would not, individually or in the
aggregate, have a Material Adverse Effect on QAT. Copies of the constating documents
of each member of the QAT Group provided to Purchaser, together with all amendments
to date, are accurate and complete as of the date hereof and have not been amended or
superseded.
(b)
Authority Relative to this Agreement. QAT has the requisite corporate power and
authority to execute this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation by QAT of the
transactions contemplated by the Arrangement has been duly authorized by the QAT
Board of Directors and, subject to the requisite approval of the QAT Shareholders and
the obtaining of the Final Order, no other proceedings on the part of QAT are necessary
to authorize this Agreement or the Arrangement. This Agreement has been duly
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executed and delivered by QAT and constitutes a legal, valid and binding obligation of
QAT enforceable against it in accordance with its terms, subject to the qualification that
such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other Laws of general application relating to or affecting
rights of creditors and that equitable remedies, including specific performance, are
discretionary and may not be ordered.
(c)
Subsidiaries. QAT has no subsidiaries other than as disclosed in the Disclosure Letter
(collectively, with QAT, the "QAT Group") and QAT owns, directly or indirectly, 100% of
the outstanding securities of each of such subsidiaries. All of the outstanding shares and
all other ownership interests in the subsidiaries of QAT are duly authorized, validly
issued, fully paid and non-assessable, and all such shares and other ownership interests
held directly by QAT, are owned by QAT free and clear of all Encumbrances, except
pursuant to restrictions on transfer contained in the articles of such subsidiary. There are
no rights of first refusal and similar rights restricting transfer of QAT Shares contained in
shareholders, partnership, joint venture or similar agreements or pursuant to existing
financing arrangements and there are no outstanding contractual or other obligations of
any member of the QAT Group to repurchase, redeem or otherwise acquire any of their
respective securities or with respect to the voting or disposition of any outstanding
securities of any of them.
(d)
No Conflict. Except as disclosed by QAT to Purchaser in the Disclosure Letter, or as
contemplated by this Agreement:
(i)
the execution, delivery and performance by QAT of this Agreement and the
consummation of the Arrangement do not and will not (or would not with the
giving of notice, the lapse of time or the happening of any other event or
condition), violate, conflict with or result in a breach of (i) any of the articles, by-
laws or other constating documents of QAT, or (ii) any Law applicable to QAT,
with such exceptions, in the case of clause (ii), as would not reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
QAT; and
(ii)
other than in connection with or in compliance with the provisions of Applicable
Laws in relation to the completion of the Arrangement or which are required to be
fulfilled post Arrangement, and except for the requisite approval of QAT
Shareholders and the obtaining of the Final Order: (A) there is no legal
impediment to QAT's consummation of the Arrangement; and (B) no filing or
registration with, or authorization, consent or approval of, any Governmental
Authority is required of QAT in connection with the consummation of the
Arrangement, except for such filings or registrations which, if not made, or for
such authorizations, consents or approvals which, if not received, would not,
individually or in the aggregate, have a Material Adverse Effect on QAT, or
significantly impede the ability of QAT to consummate the Arrangement.
(e)
Litigation. Except as set forth in the Disclosure Letter, there are no claims, actions, suits,
proceedings or investigations by Governmental Authorities in existence or pending or, to
the knowledge of QAT, threatened or for which there is a reasonable basis, affecting or
that would reasonably be expected to affect the QAT Group or affecting or that would
reasonably be expected to affect any of its property or assets at law or equity or before or
by any court or Governmental Authority which claim, action, suit, proceeding or
investigation involves a possibility of any judgment against or liability of the QAT Group
which, if successful, would have a Material Adverse Effect on QAT, or would significantly
impede the ability of QAT to consummate the transactions contemplated in this
Agreement. QAT is not subject to any outstanding order, writ, injunction or decree that
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has had or would have a Material Adverse Effect on QAT or would significantly impede
the ability of QAT to consummate the transactions contemplated in this Agreement.
(f)
Taxes, etc.
(i)
All material Tax Returns required to be filed by or on behalf of any member of the
QAT Group for periods ended on and prior to the date of this Agreement have
been duly filed on a timely basis and such Tax Returns are or shall be at the time
of filing, correct in all material respects. All Taxes shown to be payable on such
Tax Returns or on subsequent assessments with respect thereto have been paid
in full on a timely basis, and no other material Taxes are payable by any member
of the QAT Group with respect to items or periods covered by such Tax Returns;
(ii)
except as set forth in the Disclosure Letter, each member of the QAT Group has,
in all material respects, paid or has withheld and remitted to the appropriate
Taxing Authority all Taxes, including any instalments or prepayments of Taxes,
that are due and payable whether or not shown as being due on any Tax Return,
or, where payment is not yet due, the QAT Group has established adequate
accruals in conformity with Canadian GAAP in the QAT Financial Statements for
the period covered by such financial statements for any Taxes, including income
Taxes and related future Taxes, if applicable, that have not been paid, whether or
not shown as being due on any Tax Return. The QAT Group has, in all material
respects, made adequate provision or disclosure in its books and records for any
Taxes accruing in respect of any period subsequent to the period covered by
such financial statements, whether or not shown as being due on any Tax
Return;
(iii)
except as set forth in the Disclosure Letter, Purchaser has been furnished by
QAT with true and complete copies of: (A) material portions of income tax audit
reports, statement of deficiencies, closing or other agreements received by any
member of the QAT Group relating to the Taxes for any taxable period beginning
within three (3) years from the date hereof; and (B) any material Tax Returns for
each member of the QAT Group for any taxable period beginning within three (3)
years from the date hereof;
(iv)
no material deficiencies exist or have been asserted with respect to Taxes of
QAT or any of its subsidiaries that have not yet been settled, including without
limitation any Taxes which may arise from transactions amongst parties who do
not deal with each other at arm's length for purposes of applicable Tax Laws;
(v)
no member of the QAT Group is a party to any tax sharing, tax indemnity or tax
allocation agreement or arrangement and no member of the QAT Group has or
could have any material liabilities or obligations in respect of Taxes under any
such tax sharing, tax indemnity or tax allocation agreement. No material liability
(or reasonable claim of material liability) shall arise under any tax sharing, tax
indemnity or tax allocation agreement or arrangement or as a result of this
transaction;
(vi)
no member of the QAT Group is a party to any action or proceeding for
assessment or collection of a material amount of Taxes, nor, to the knowledge of
QAT, has such an event been asserted in writing by any Governmental Authority
or threatened against QAT or its subsidiaries or any of their respective assets
that would have, individually or in the aggregate, a Material Adverse Effect on
QAT. No waiver or extension of any statute of limitations is in effect with respect
to material Taxes or material Tax Returns of QAT or its subsidiaries. No audit by
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Taxing Authorities of QAT or its subsidiaries is in process or, to the knowledge of
QAT, pending; and
(vii)
the Disclosure Letter contains a list of all jurisdictions (whether foreign or
domestic) in which any member of the QAT Group has filed a Tax Return.
(g)
Reporting Issuer Status. QAT is a "reporting issuer" in the provinces of Ontario, Alberta
and British Columbia and is in material compliance with all Applicable Canadian
Securities Laws therein and the outstanding QAT Shares are listed and posted for trading
on the CNSX and trade through the over the counter United States bulletin board
quotation system.
(h)
Capitalization. As of the date hereof, the authorized capital of QAT consists of an
unlimited number of QAT Shares and an unlimited number of QAT Class B Shares. As of
the date hereof, there are issued and outstanding 267,857,344 QAT Shares, 299,465
QAT Class B Series 1 Shares and no other shares are issued and outstanding. Other
than QAT Options to acquire up to 33,463,099 QAT Shares, there are no options,
warrants or other rights, plans, agreements or commitments of any nature whatsoever
requiring the issuance, sale or transfer by QAT of any securities of QAT (including QAT
Shares) or any securities convertible into, or exchangeable or exercisable for, or
otherwise evidencing a right to acquire, any securities of QAT (including QAT Shares).
All outstanding QAT Shares have been duly authorized and validly issued, are fully paid
and non-assessable and are not subject to, nor were they issued in violation of, any pre-
emptive rights and all QAT Shares issuable upon the exercise of QAT Options in
accordance with the terms of such options will be duly authorized and validly issued as
fully paid and non-assessable and will not be subject to any pre-emptive rights. Other
than the QAT Shares, there are no securities of any member of the QAT Group
outstanding which have the right to vote generally (or, except for the QAT Options, are
exercisable or convertible into or exchangeable for securities having the right to vote
generally) with the QAT Shareholders on any matter.
(i)
Equity Monetization Plans. Except as set forth in the Disclosure Letter and other than the
QAT Options, there are no outstanding stock appreciation rights, phantom equity, profit
sharing plans or similar rights, agreements, arrangements or commitments payable to
any employee of QAT and which are based upon the revenue, value, income or any other
attribute of any member of the QAT Group.
(j)
No Orders. No order, ruling or determination having the effect of suspending the sale of,
or ceasing the trading of, the QAT Shares or any other securities of QAT has been issued
by any Governmental Authority and is continuing in effect and no proceedings for that
purpose have been instituted, are pending or, to the knowledge of QAT, are
contemplated or threatened under any Applicable Laws or by any other Governmental
Authority.
(k)
Reports. As of their respective dates: (i) the QAT Financial Statements; (ii) QAT's
information circular dated April 9, 2012; and (iii) all QAT press releases, material change
reports and business acquisition reports filed with the Securities Authorities since
December 31, 2011, did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading and
complied in all material respects with all Applicable Laws. The QAT Financial Statements
were prepared in accordance with IFRS (except (i) as otherwise indicated in such
financial statements and the notes thereto or, in the case of audited statements, in the
related report of QAT's independent auditors or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes, are subject to normal year-end
adjustments or may be condensed or summary statements), and present fairly, in
- 33 -
accordance with IFRS, the consolidated financial position, results of operations and
changes in financial position of QAT on a consolidated basis as of the dates thereof and
for the periods indicated therein (subject, in the case of any unaudited interim financial
statements, to normal year-end audit adjustments) and reflect appropriate and adequate
reserves in respect of contingent liabilities, if any, of QAT on a consolidated basis. There
has been no material change in QAT accounting policies, except as described in the
notes to the QAT Financial Statements, since December 31, 2011. QAT has not
prepared any financial statements subsequent to the most recent QAT Financial
Statements. QAT has not filed any prospectuses or other offering document used by
QAT in the offering of its securities with the Securities Authorities since December 31,
2011.
(l)
Books and Records. The financial books, records and accounts of each member of the
QAT Group, in all material respects, (i) have been maintained in accordance with good
business practices on a basis consistent with prior years, (ii) are stated in reasonable
detail and accurately and fairly reflect the material transactions and dispositions of the
assets of the QAT Group and (iii) accurately and fairly reflect the basis for the QAT
Financial Statements. The corporate records and minute books of each member of the
QAT Group have been maintained substantially in compliance with Applicable Laws and
are complete and accurate in all material respects, and full access thereto has been
provided to Purchaser.
(m)
Cash and Accounts Receivable. As at July 31, 2012 the amount of QAT's cash was not
less than $234,000 and the amount of QAT's accounts receivable was not less than
$9,000.
(n)
Absence of Certain Changes or Events. Except as set forth in the Disclosure Letter, and
except for the Arrangement or any action taken in accordance with this Agreement, since
June 30, 2012, the business of QAT Group has been conducted in the ordinary course of
business consistent with past practice, except for the transactions contemplated by this
Agreement, and there has not been any event, occurrence, fact, effect or circumstance
that has had or would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(o)
Registration, Exemption Orders, Licenses, etc. QAT has obtained and is in compliance
with all licenses, permits, certificates, consents, orders, grants, registrations, recognition
orders, exemptive relief orders, no-action relief and other authorizations of or from any
Governmental Authority necessary in connection with the conduct of its business as it is
now, individually or in the aggregate, being or proposed to be conducted (collectively, the
"Governmental Authorizations"), except where the failure to obtain or be in compliance
could not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on QAT. Such Governmental Authorizations are in full force and effect in
accordance with their terms, and no event has occurred or circumstance exists that (with
or without notice or lapse of time) may constitute or result in a violation of any such
Governmental Authorization, except where the violation would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on QAT. No
proceedings are pending or, to the knowledge of QAT, threatened, which could result in
the revocation or limitation of any Governmental Authorization, and all steps have been
taken and filings made on a timely basis with respect to each Governmental Authorization
and its renewal, except where the failure to take such steps and make such filings would
not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect on QAT.
(p)
Compliance with Laws. The operations and business of each member of the QAT Group
is and has been carried out in compliance with and not in violation of any Applicable
Laws, other than non-compliance or violation which would not, individually or in the
- 34 -
aggregate, reasonably be expected to have a Material Adverse Effect on QAT, and QAT
has not received any notice of any alleged violation of any such Laws other than where
such notice would not reasonably be expected to have a Material Adverse Effect on QAT.
(q)
Restrictions on Business Activities. There is no judgment, injunction or order binding
upon any member of the QAT Group that has or could reasonably be expected to have
the effect of prohibiting, restricting or impairing its business in any material respect or,
individually or in the aggregate, have a Material Adverse Effect on QAT.
(r)
Non-Arm's Length Transactions. Except as set forth in the Disclosure Letter, there are no
material Contracts or other material transactions currently in place between any member
of the QAT Group, on the one hand, and (i) any officer or director of a member of QAT,
(ii) any holder of record or beneficial owner of 10% or more of the voting securities of
QAT or (iii) any affiliate of any such officer, director or beneficial owner, on the other
hand.
(s)
Intellectual Property.
(i)
Other than as set forth in the Disclosure Letter, QAT either owns exclusively or
has all requisite rights and licenses in and to the Intellectual Property and the
Intellectual Property Rights relating thereto, free and clear of all encumbrances,
liens, charges, security interests, claims and restrictions.
(ii)
QAT has taken all commercially reasonable steps to maintain the confidentiality
of and otherwise protect and enforce its rights in all proprietary information
pertaining to QAT and the Intellectual Property and the Intellectual Property
Rights relating thereto.
(iii)
Neither the Intellectual Property, nor any activity of QAT and/or of its subsidiaries
in relation to the Intellectual Property, including the development, reproduction,
use, and sale or distribution, of all or any part thereof, infringes upon, or
misappropriates, the Intellectual Property Rights of any Person.
(iv)
No proprietary technology, trade secrets or Intellectual Property Rights of any
third Person from which QAT has not secured a subsisting, valid and enforceable
license are incorporated in the Intellectual Property.
(v)
No claim has been made or threatened, and there are no claims that are
anticipated, against QAT, or any subsidiary or predecessor of QAT, that the
Intellectual Property Rights of any third Person, have been infringed by QAT, by
any subsidiary or predecessor of QAT, or by any person for whom QAT or its
subsidiaries are legally or contractually responsible, nor has any claim been
made or threatened seeking to challenge, deny or restrict the development, use,
license, sublicense, distribution, display, copying, transmission or creation of
derivative works of any of the Intellectual Property, or the making, using,
licensing, selling or exploiting of the Intellectual Property or the Intellectual
Property Rights relating thereto by QAT, or by its subsidiaries.
(vi)
QAT is not, and has never been, a member or promoter of, or contributor to, any
industry standard body or similar organization that could require or obligate QAT
to grant or offer to any other Person any license or right to the Intellectual
Property.
- 35 -
(vii)
QAT has never infringed (directly, contributorily, by inducement or otherwise),
misappropriated, or otherwise violated or made unlawful use of any Intellectual
Property Right of any other Person or engaged in unfair competition.
(viii)
Neither QAT nor any of its subsidiaries have received notice of, nor does QAT
nor any of its subsidiaries have any knowledge of, any registrar proceeding or
third Person oppositions having been commenced or threatened against the
Intellectual Property or the Intellectual Property Rights registrations or
applications related thereto. All fees to maintain such Intellectual Property Rights
related thereto, including registration, maintenance and prosecution fees, and all
invoiced professional fees incurred in connection therewith, have been paid.
(ix)
The Intellectual Property includes all of the Intellectual Property used in, or
reasonably required to utilize, the Intellectual Property as now utilized and as
currently planned to be utilized, and all Intellectual Property required for any
products or services under development by QAT as of the date hereof.
(x)
Except as set forth in the Disclosure Letter, all of the employees and past
employees of QAT and its subsidiaries and all of the present and past
consultants, contractors and agents of QAT and its subsidiaries performing
services relating to the development, modification or support of the Intellectual
Property have entered into a written agreement assigning to QAT all right, title
and interest in and to all such Intellectual Property and the Intellectual Property
Rights relating thereto and providing a waiver of all moral rights to such
Intellectual Property and related Intellectual Property Rights, developed, created,
conceived or reduced to practice in the course of their employment or, in the
case of consultants, contractors and agents, in the course of their performance of
services on behalf of QAT or its subsidiaries. Each of the employees, and each
of such consultants, contractors and agents, has executed a proprietary rights
agreement in QAT's standard form, a true and complete copy of which has been
provided to Purchaser. All above referenced agreements constitute valid and
binding obligations of the parties thereto.
(xi)
No Person has interfered with, infringed upon, misappropriated, illegally
exported, or violated any rights with respect to the Intellectual Property or the
Intellectual Property Rights relating thereto.
(xii)
All Intellectual Property Rights owned by or licensed to QAT, or associated with
the Intellectual Property, are subsisting, valid and enforceable and have not been
abandoned, adjudged invalid or unenforceable, in whole or in part. Neither QAT,
nor any of its subsidiaries, have received any notice, demand, advice or any
opinion that any of their respective Intellectual Property Rights, are invalid,
infringe, or may infringe, the rights of third parties, or are unregistrable or
unenforceable, in whole or in part.
(xiii)
No funding, facilities, or personnel of any Governmental Authority or any public or
private university, college, or other educational or research institution were used,
directly or indirectly, to develop or create, in whole or in part, the Intellectual
Property.
(xiv)
QAT is entitled to make, use, sell, transmit, display, copy, reproduce, develop,
distribute, bundle, modify, create derivative works, market, license, sublicense
and assign the Intellectual Property, and otherwise fully exploit the Intellectual
Property and all rights related thereto. With respect to each license or
agreement by which QAT has obtained the rights to exploit, in any way, the
Intellectual Property Rights of any other person, including the rights to make,
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use, sell, transmit, display, copy, reproduce, develop, distribute, bundle, modify,
create derivative works, market, license, sublicense or assign Intellectual
Property or by which QAT has granted to any third Person the right to so exploit
Intellectual Property:
(A)
such license or agreement is in full force and effect and is legal, valid,
binding and enforceable in accordance with its terms, and represents the
entire agreement between the parties thereto with respect to the subject
matter thereof;
(B)
such license or agreement will not cease to be legal, valid, binding and
enforceable and in full force and effect on the terms identical to those
currently in effect as a result of the consummation of the transactions
contemplated by this Agreement, nor will the consummation of the
transactions contemplated by this Agreement constitute a breach or
default under such license or agreement, or otherwise give any party
thereto a right to terminate or amend such license or agreement;
(C)
with respect to each such license or agreement:
(1)
QAT has not received any notice of termination or cancellation
under such license or agreement, and no party thereto has any
right of termination or cancellation thereunder except in
accordance with its terms;
(2)
neither QAT nor its subsidiaries have received any notice of a
breach or default under such license or agreement which breach
or default has not been cured; and
(3)
neither QAT nor its subsidiaries have granted to any other
person any rights adverse to, or in conflict with, such license or
agreement;
(D)
no person has revoked the right of QAT to so exploit the intellectual
property owned or controlled by such person, including any such
intellectual property associated with or incorporated in the Intellectual
Property;
(E)
Other than in respect of the memorandum of understanding dated
June 15, 2012 between Purchaser and QAT to jointly commercialize a
family of securities tracking mobile applications called Market Sentiment
Navigator ('MSNav') and other than in respect of the Commercialization
Agreement, QAT does not have any obligation to compensate any
person for the development, use, sale or full exploitation of the
Intellectual Property and has not granted to any person any license,
option or other rights to develop, use, sell, license, sub-license or
otherwise exploit in any manner the Intellectual Property; and
(F)
no other party to such license or agreement is in breach or default
thereof and no event has occurred that, with notice or lapse of time
would constitute such a breach or default or permit termination,
modification or acceleration under such license or agreement.
(xv)
Neither QAT nor any of its subsidiaries have received notice of, nor does QAT
nor any of its subsidiaries have any knowledge of, any law, regulation, order,
- 37 -
action or proceeding that restricts, or that is reasonably expected to restrict in
any manner, the development, use, export, import, transfer or licensing of any of
the Intellectual Property or that could reasonably be expected to affect the
validity, use, registration or enforceability of any of the same.
(xvi)
There is no outstanding claim to ownership, contract, commitment, option or any
other right of any Person, either written or oral, express or implied, binding upon,
or which at any time in the future may become binding upon, QAT to sell,
transfer, assign, or in any other way dispose of, or subject to any lien, pledge,
charge, security interest or other encumbrance, any of its Intellectual Property
Rights in and to the Intellectual Property.
(t)
Property. Each of QAT and its subsidiaries has good and marketable title to all personal
property owned by it and used in its business as currently conducted, in each case free
and clear of all Encumbrances except as set forth in the Disclosure Letter and other than
such security interests and pledges as have been granted to QAT's principal lender or as
would not materially affect the value of such property, and do not interfere with the use
made and proposed to be made of such property by QAT and its subsidiaries, taken as a
whole; and any real property and buildings held under lease by QAT or any of its
subsidiaries is held by it under valid, subsisting and enforceable leases with such
exceptions as are not material and do not materially interfere with the use made or
proposed to be made of such property and buildings by QAT and its subsidiaries.
(u)
Public Record. The information and statements set forth in QAT's Public Record since
December 31, 2011 were true, correct and complete in all material respects as of the
date of such information and statements and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were made, not
misleading.
(v)
Absence of Undisclosed Liabilities. None of QAT or any of its subsidiaries has any
material liabilities of any nature (matured or unmatured, fixed or contingent), other than:
(i)
those set forth or adequately provided for in the most recent balance sheet and
associated notes thereto included in the QAT Financial Statements (the "QAT
Balance Sheet");
(ii)
those incurred in the ordinary course of business and not required to be set forth
in the QAT Balance Sheet under Canadian GAAP;
(iii)
those incurred in the ordinary course of business since the date of the QAT
Balance Sheet and consistent with past practice; and
(iv)
those incurred in connection with the execution of this Agreement.
(w)
Employee Benefit Plans. QAT has provided to Purchaser true, complete and correct
copies of all of the employee benefits plans (collectively, the "QAT Plans") covering
active, former or retired employees of each member of the QAT Group, any related trust
agreement, annuity or insurance contract or other funding vehicle, and: (i) each QAT Plan
has been maintained and administered in material compliance with its terms and is, to the
extent required by Applicable Law or contract, fully funded without having any deficit or
unfunded actuarial liability or adequate provision has been made therefor; (ii) all required
employer contributions under any such plans have been made and the applicable funds
have been funded in accordance with the terms thereof; (iii) each QAT Plan that is
required or intended to be qualified under Applicable Law or registered or approved by a
- 38 -
Governmental Authority has been so qualified, registered or approved by the appropriate
Governmental Authority, and to the knowledge of QAT, nothing has occurred since the
date of the last qualification, registration or approval to adversely affect, or cause, the
appropriate Governmental Authority to revoke such qualification, registration or approval;
(iv) to the knowledge of QAT, there are no pending or anticipated material claims against
or otherwise involving any of the QAT Plans and no suit, action or other litigation
(excluding claims for benefits incurred in the ordinary course of QAT Plan activities) has
been brought against or with respect to any QAT Plan; (v) all material contributions,
reserves or premium payments required to be made to the QAT Plans have been made
or provided for; and (vi) no member of the QAT Group has any material obligations for
retiree health and life benefits under any QAT Plan.
(x)
Brokers and Finders. QAT has not retained nor will it retain any financial advisor, broker,
agent or finder or paid or agreed to pay any financial advisor, broker, agent or finder on
account of this Agreement, any transaction contemplated hereby or any transaction
presently ongoing or contemplated, except that Lorovest Corp. has been retained as
QAT's financial advisor to provide the fairness opinion referred to in subsection 4.2(z).
QAT has delivered to Purchaser a true and complete copy of its agreements with
Lorovest Corp. and QAT hereby agrees not to amend such agreements without
Purchaser's consent. There are no fees payable to such advisor other than those
disclosed in such agreements.
(y)
Employment and Officer Obligations. Other than as disclosed in the Disclosure Letter,
there are no existing health plan or pension obligations or other employment or
consulting services agreements, termination, severance and retention plans or policies of
any member of the QAT Group. The obligations of the QAT Group under all such
employment or consulting services agreements, termination, severance plans or policies
for severance, termination or bonus payments or any other payments related to any QAT
incentive plan, arising out of or in connection with the Arrangement, shall not exceed the
amounts set forth in the Disclosure Letter.
(z)
Fairness Opinion. The QAT Board of Directors has received a verbal opinion as of
August 17, 2012 from Lorovest Corp. that the consideration to be received from
Purchaser by QAT Shareholders in connection with the Arrangement is fair, from a
financial point of view, to the QAT Shareholders.
(aa)
Insurance. QAT Group maintains insurance policies with recognized insurers as are
appropriate to its business in such amounts and against such risks as are customarily
carried and insured against by prudent owners of comparable business. All such policies
are in all material respects in full force and effect in accordance with their terms.
(bb)
Board Approval. All of the directors present and entitled to vote at the meeting of the
QAT Board of Directors held August 15, 2012 and adjourned to and reconvened
August 17, 2012 unanimously: (i) endorsed the Arrangement and approved this
Agreement; (ii) determined that the Arrangement is in the best interests of QAT and the
QAT Shareholders; (iii) determined, based on, among other things, the verbal opinion of
its financial advisor, that the consideration in respect of the Arrangement is fair, from a
financial point of view, to QAT Shareholders; and (iv) resolved to recommend approval of
the Arrangement by QAT Shareholders.
(cc)
Shareholder Rights Plan. QAT does not have in effect a shareholder rights plan.
(dd)
Disclosure Letter. The matters disclosed to Purchaser in the Disclosure Letter remain
true and correct as of the date hereof.
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(ee)
Material Contracts. QAT has provided to Purchaser an index as disclosed in the
Disclosure Letter which lists the various Contracts regarding the QAT Group which have
been provided to Purchaser. Except as disclosed in the Disclosure Letter, such
Contracts include all Contracts material to the conduct of the business and affairs of the
QAT Group and all such material Contracts are valid and subsisting. To the knowledge
of QAT, it is not, nor is it alleged to be (with or without the lapse of time or the giving of
notice, or both), in breach or default in any material respect of any such material Contract
and, to the knowledge of QAT, no other party to any such material Contract is (with or
without the lapse of time or the giving of notice or both) in breach or default in any
material respect thereunder.
4.3
Privacy Issues
(a)
Each Disclosing Party covenants and agrees to, upon request, using reasonable efforts
to advise the Recipient of all documented purposes for which the Transferred Information
was initially collected from or in respect of the individual to which such Transferred
Information relates and all additional documented purposes where the Disclosing Party
has notified the individual of such additional purpose, and where required by law,
obtained the consent of such individual to such use or disclosure.
(b)
In addition to its other obligations hereunder, Recipient covenants and agrees to: (i) prior
to the completion of the transactions contemplated herein, collect, use and disclose the
Transferred Information solely for the purpose of reviewing and completing the
transactions contemplated herein, including for the purpose of determining to complete
such transactions; (ii) after the completion of the transactions contemplated herein,
collect, use and disclose the Transferred Information only for those purposes for which
the Transferred Information was initially collected from or in respect of the individual to
which such Transferred Information relates or for the completion of the transactions
contemplated herein, unless (a) the Disclosing Party or Recipient have first notified such
individual of such additional purpose, and where required by Laws, obtained the consent
of such individual to such additional purpose, or (b) such use or disclosure is permitted or
authorized by law, without notice to, or consent from, such individual; (iii) where required
by law, promptly notify the individuals to whom the Transferred Information relates that
the transactions contemplated herein have taken place and that the Transferred
Information has been disclosed to Recipient; (iv) return or destroy the Transferred
Information, at the option of the Disclosing Party, should the transactions contemplated
herein not be completed; and (v) notwithstanding any other provision herein, where the
disclosure or transfer of Transferred Information to Recipient requires the consent of, or
the provision of notice to, the individual to which such Transferred Information relates, to
not require or accept the disclosure or transfer of such Transferred Information until the
Disclosing Party has first notified such individual of such disclosure or transfer and the
purpose for same, and where required by Laws, obtained the individual's consent to
same and to only collect, use and disclose such information to the extent necessary to
complete the transactions contemplated herein and as authorized or permitted by Laws.
ARTICLE 5
CONDITIONS PRECEDENT
5.1
Mutual Conditions Precedent
The respective obligations of the Parties to consummate the transactions contemplated hereby, and in
particular the Arrangement, are subject to the satisfaction, on or before the Effective Date or such other
time specified, subject to receipt of required regulatory approvals, of the following conditions, any of which
may be waived by the mutual consent of such Parties without prejudice to their right to rely on any other
of such conditions:
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(a)
on or prior to October 5, 2012, the Interim Order shall have been granted in form and
substance satisfactory to each of Purchaser and QAT, acting reasonably, and such order
shall not have been set aside or modified in a manner unacceptable to Purchaser and
QAT, acting reasonably, on appeal or otherwise;
(b)
the Mailing Date shall occur not later than October 15, 2012;
(c)
the Arrangement Resolution shall have been passed by the QAT Shareholders, on or
prior to November 8, 2012 in accordance with the Interim Order and in form and
substance satisfactory to each of Purchaser and QAT, acting reasonably;
(d)
on or prior to November 12, 2012, the Final Order shall have been granted in form and
substance satisfactory to Purchaser and QAT, acting reasonably, and such order shall
not have been set aside or modified in a manner unacceptable to Purchaser and QAT,
acting reasonably, on appeal or otherwise;
(e)
the Articles of Arrangement and Articles of Amalgamation to be filed with the Director in
accordance with the Arrangement shall be in form and substance satisfactory to each of
Purchaser, Newco and QAT, acting reasonably;
(f)
the Effective Date shall have occurred not later than the Outside Date;
(g)
Purchaser and QAT shall have obtained all consents, waivers, permissions and
approvals necessary to complete the Arrangement by or from relevant Governmental
Authorities, on terms and conditions satisfactory to the Parties, acting reasonably,
including without limitation:
(i)
the approval of the QAT Shareholders required for the Arrangement pursuant to
the OBCA or as required by the Court and other matters relating to the
Arrangement; and
(ii)
the approval of the Court,
(collectively, the "Third Party Approvals");
(h)
all domestic and foreign statutory and regulatory waiting periods applicable to the
transactions contemplated by the Arrangement shall have expired or have been
terminated and no unresolved material objection or opposition shall have been filed,
initiated or made during any applicable statutory or regulatory period; and
(i)
there shall be no action taken under any existing Applicable Law, nor any statute, rule,
regulation or order which is enacted, enforced, promulgated or issued by any
Governmental Authority, that:
(i)
makes illegal or otherwise directly or indirectly restrains, enjoins or prohibits the
Arrangement or any other transactions contemplated herein; or
(ii)
results in a judgment or assessment of material damages directly or indirectly
relating to the transactions contemplated herein.
The foregoing conditions are for the mutual benefit of Purchaser, Newco and QAT and may be asserted
by Purchaser, Newco or QAT regardless of the circumstances and may be waived by Purchaser, Newco
and QAT (with respect to such Party) in their sole discretion, in whole or in part, at any time and from time
to time without prejudice to any other rights which Purchaser, Newco or QAT may have. If any of the
foregoing conditions are not satisfied or waived, QAT or Purchaser, as the case may be, may, subject to
- 41 -
Section 7.1, terminate this Agreement, provided that, prior to the filing of the Articles of Arrangement and
the Articles of Amalgamation for the purpose of giving effect to the Arrangement, the Party intending to
rely thereon has delivered a written notice to the other Party specifying in reasonable detail all breaches
of covenants, representations and warranties or other matters which the Party delivering such notice is
asserting as the basis for the non-fulfillment of the applicable conditions precedent. More than one such
notice may be delivered by a Party.
5.2
Additional Conditions to Obligations of Purchaser and Newco
The obligations of Purchaser and Newco to consummate the transactions contemplated hereby, and in
particular the Arrangement, are subject to the satisfaction, on or before the Effective Date or such other
time specified, of the following conditions:
(a)
Representations and Warranties. The representations and warranties of QAT set forth
herein (i) that are qualified by a reference to Material Adverse Effect shall be true and
correct in all respects as of the Effective Date as if made on and as of such date, and (ii)
that are not qualified by a reference to a Material Adverse Effect shall be true and correct
in all respects as of the Effective Date as if made on and as of such date unless the
failure to be true or correct has not had or would not reasonably be expected to have, a
Material Adverse Effect (and, for this purpose, any reference to "material" or other
concepts of materiality in such representations and warranties shall be ignored) except,
in each case (i) to the extent such representations and warranties speak as of an earlier
date (in which case such representations and warranties shall be true and correct in all
respects as of such date) or (ii) as affected by transactions contemplated or permitted by
this Agreement, and QAT shall have provided to each of Purchaser and Newco a
certificate of two senior officers certifying such accuracy on the Effective Date.
(b)
Covenants. QAT shall have complied in all material respects with its covenants herein,
except where the failure to comply with such covenants would not reasonably be
expected to have a Material Adverse Effect on QAT or materially impede the completion
of the Arrangement, and QAT shall have provided to each of Purchaser and Newco a
certificate of two senior officers certifying compliance with such covenants.
(c)
No Actions. No act, action, suit, proceeding, objection or opposition shall have been
threatened or taken before or by any Governmental Authority or by any elected or
appointed public official or private Person in Canada or elsewhere, whether or not having
the force of law and no law, regulation, policy, judgment, decision, order, ruling or
directive (whether or not having the force of law) shall have been proposed, enacted,
promulgated, amended or applied, which in the sole judgment of Purchaser, acting
reasonably, in either case has had or, if the Arrangement was consummated, would
result in a Material Adverse Effect on QAT or would have a material adverse effect on the
ability of the Parties to complete the Arrangement.
(d)
Board and Shareholder Authorization. QAT shall have furnished each of Purchaser and
Newco with:
(i)
certified copies of the resolutions duly passed by the QAT Board of Directors
approving this Agreement and the consummation of the transactions
contemplated hereby; and
(ii)
certified copies of the resolutions of QAT Shareholders, duly passed at the QAT
Meeting, approving the Arrangement Resolution.
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(e)
Related Party Indebtedness. Any director, officer, insider or other non-arm's length party
that is indebted to QAT shall have repaid such indebtedness on or prior to completion of
the Arrangement.
(f)
QAT Meeting. The QAT Meeting shall have been held on or before on or prior to
November 8, 2012.
(g)
Material Adverse Change. Between the date hereof and the Effective Time, there shall
not have occurred or have been disclosed to Purchaser or the public, if not previously
disclosed to Purchaser or the public, any Material Adverse Change with respect to QAT.
(h)
Dissent Rights. Holders of QAT Shares representing not more than five percent (5%) of
the QAT Shares then outstanding shall have validly exercised, and not withdrawn,
Dissent Rights.
(i)
QAT Shares and QAT Class B Shares. 1,666,667 QAT Shares shall have been
surrendered and cancelled and all QAT Class B Shares shall have been converted into
QAT Shares or surrendered and cancelled such that, immediately prior to the Effective
Time, no more than 302,648,426 QAT Shares and no other shares of QAT shall be
issued and outstanding.
(j)
QAT Options. All QAT Options shall have been exercised or surrendered and cancelled
or terminated.
(k)
Approval. The QAT Board of Directors shall not have: (i) amended its affirmative
recommendation to the QAT Shareholders in a manner adverse to Purchaser; or (ii)
withdrawn its affirmative recommendation to the QAT Shareholders to vote in favour of
the Arrangement Resolution.
(l)
Third Party Approvals. QAT shall have obtained all consents, waivers, permissions and
approvals from third parties necessary to complete the Arrangement and the transactions
contemplated thereby and the transactions contemplated therein, subject only to the filing
of final documentation in respect thereof.
(m)
Employment. Contractual employment arrangements deemed necessary by Purchaser
to be modified shall have been modified on or prior to the Effective Date to the
satisfaction of Purchaser in its sole judgement.
(n)
Releases. Executed mutual releases in a form acceptable to each of Purchaser and QAT
shall have been received by Purchaser on or prior to the Effective Date from the directors
and officers of QAT and QAT's subsidiaries as designated in writing by Purchaser at least
two Business Days prior to the Effective Date, provided however, that such releases shall
only be required from each such individual who, as a consequence of the Arrangement,
is no longer a director or officer of QAT.
The conditions in this Section 5.2 are for the exclusive benefit of Purchaser and Newco and may be
asserted by Purchaser or Newco regardless of the circumstances or may be waived by Purchaser or
Newco in its sole discretion, in whole or in part, at any time and from time to time without prejudice to any
other rights which Purchaser and Newco may have. If any of the foregoing conditions are not satisfied or
waived, Purchaser may, subject to Section 7.1, terminate this Agreement provided that, prior to the filing
of the Articles of Arrangement and Articles of Amalgamation for the purpose of giving effect to the
Arrangement, Purchaser has delivered a written notice to QAT, specifying in reasonable detail all
breaches of covenants, representations and warranties or other matters which Purchaser is asserting as
the basis for the non-fulfillment of the applicable conditions precedent. More than one such notice may
be delivered by Purchaser.
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5.3
Additional Conditions to Obligations of QAT
The obligation of QAT to consummate the transactions contemplated hereby, and in particular the
Arrangement, is subject to the satisfaction, on or before the Effective Date or such other time specified, of
the following conditions:
(a)
Representations and Warranties. The representations and warranties of Purchaser and
Newco set forth herein (i) that are qualified by a reference to Material Adverse Effect shall
be true and correct in all respects as of the Effective Date as if made on and as of such
date, and (ii) that are not qualified by a reference to a Material Adverse Effect shall be
true and correct in all respects as of the Effective Date as if made on and as of such date
unless the failure to be true or correct has not had or would not reasonably be expected
to have, a Material Adverse Effect (and, for this purpose, any reference to "material" or
other concepts of materiality in such representations and warranties shall be ignored),
except in each case (i) to the extent such representations and warranties speak as of an
earlier date (in which case such representations and warranties shall be true and correct
in all respects as of such date) or (ii) as affected by transactions contemplated or
permitted by this Agreement, and each of Purchaser and Newco shall have provided to
QAT a certificate of two senior officers certifying such accuracy on the Effective Date.
(b)
Covenants. Purchaser and Newco shall have complied in all material respects with its
respective covenants herein, except where the failure to comply with such covenants
would not reasonably be expected to have a Material Adverse Effect on Purchaser or
Newco or materially impede the Effective Date, and each of Purchaser and Newco shall
have provided to QAT a certificate of two senior officers certifying compliance with such
covenants.
(c)
No Actions. no act, action, suit, proceeding, objection or opposition shall have been
threatened or taken before or by any Governmental Authority or by any elected or
appointed public official or private person in Canada or the United States or elsewhere,
whether or not having the force of law, and no law, regulation, policy, judgment, decision,
order, ruling or directive (whether or not having the force of law) shall have been
proposed, enacted, promulgated, amended or applied, which in the sole judgment of
QAT, acting reasonably, in either case has had or, if the Arrangement was
consummated, would result in a Material Adverse Effect on Purchaser or Newco or would
have a material adverse effect on the ability of the Parties to complete the Arrangement.
(d)
Third Party Approvals. Purchaser shall have obtained all consents, waivers, permissions
and approvals from third parties necessary to complete the Arrangement and the
transactions contemplated thereby and the transactions contemplated therein, subject
only to the filing of final documentation in respect thereof.
(e)
SEC Approvals. Purchaser shall have obtained all required consents and approvals from
the SEC as shall be necessary to exempt Purchaser from the requirement to register the
Purchaser Shares issuable under the Arrangement with the SEC.
(f)
Board Authorization. Each of Purchaser and Newco shall have furnished QAT with
certified copies of the resolutions duly passed by their respective board of directors
approving this Agreement and the consummation of the transactions contemplated
hereby.
(g)
Shareholder Authorization. Newco shall have furnished QAT with certified copies of the
resolution of Purchaser, as the sole shareholder of Newco, approving the Arrangement
Resolution.
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(h)
Material Adverse Change. Between the date hereof and the Effective Time, there shall
not have occurred or have been disclosed to QAT or the public, if not previously
disclosed to QAT or the public, any Material Adverse Change with respect to Purchaser.
The conditions in this Section 5.3 are for the exclusive benefit of QAT and may be asserted by QAT
regardless of the circumstances or may be waived by QAT in its sole discretion, in whole or in part, at any
time and from time to time without prejudice to any other rights which QAT may have. If any of the
foregoing conditions are not satisfied or waived, QAT may, subject to Section 7.1, terminate this
Agreement provided that, prior to the filing of the Articles of Arrangement for the purpose of giving effect
to the Arrangement, QAT has delivered a written notice to Purchaser, specifying in reasonable detail all
breaches of covenants, representations and warranties or other matters which QAT is asserting as the
basis for the non-fulfillment of the applicable conditions precedent. More than one such notice may be
delivered by QAT.
5.4
Notice and Effect of Failure to Comply with Conditions
Each of Purchaser and QAT shall give prompt notice to the other of the occurrence, or failure to occur, at
any time from the date hereof to the Effective Date of any event or state of facts which occurrence or
failure would, or would be likely to: (a) cause any of the representations or warranties of such Party
contained herein to be untrue or inaccurate in any material respect; or (b) result in the failure to comply
with or satisfy any covenant, condition or agreement to be complied with or satisfied by such Party
hereunder; provided, however, that no such notification will affect the representations or warranties of the
Parties or the conditions to the obligations of the Parties hereunder.
5.5
Satisfaction of Conditions
The conditions set out in this Article 5 are conclusively deemed to have been satisfied, waived or
released when, with the agreement of the Parties, Articles of Arrangement and Articles of Amalgamation
are filed under the OBCA to give effect to the Arrangement.
ARTICLE 6
AMENDMENT
6.1
Amendment
This Agreement may at any time and from time to time before or after the holding of the QAT Meeting be
amended by written agreement of the Parties hereto without, subject to Applicable Law, further notice to
or authorization on the part of their respective securityholders and any such amendment may, without
limitation:
(a)
change the time for performance of any of the obligations or acts of the Parties;
(b)
waive any inaccuracies or modify any representation or warranty contained herein or in
any document delivered pursuant hereto;
(c)
waive compliance with or modify any of the covenants herein contained and waive or
modify performance of any of the obligations of the Parties; or
(d)
waive compliance with or modify any other conditions precedent contained herein;
provided that no such amendment reduces or materially adversely affects the consideration to be
received by a QAT Shareholder without approval by the affected securityholders given in the same
manner as required for the approval of the Arrangement or as may be ordered by the Court.
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ARTICLE 7
TERMINATION
7.1
Termination
(a)
This Agreement may be terminated at any time prior to the Effective Date:
(i)
by mutual written consent of Purchaser and QAT;
(ii)
if any of the conditions in Sections 5.1, 5.2 and 5.3 for the benefit of the
terminating party is not satisfied or waived in accordance with the respective
section;
(iii)
by Purchaser as provided in subsection 7.1(b);
(iv)
by QAT as provided in subsection 7.1(c); or
(v)
if the QAT Board of Directors believes that a Superior Proposal remains a
Superior Proposal and therefore rejects Purchaser's amended proposal pursuant
to subsection 3.5(f).
(b)
Provided that there is no material breach of a representation or warranty by Purchaser or
material non-performance by Purchaser of any covenant by the date specified herein
(excluding the breach of a covenant where Purchaser is precluded from satisfying its
obligations through action or omission of QAT), if at any time after the execution of this
Agreement and prior to its termination:
(i)
the QAT Board of Directors fails to make or has withdrawn, modified or publicly
proposes to withdraw or modify the approvals, recommendation or
determinations referred to in Section 2.7 in a manner adverse to Purchaser or
shall have resolved to do so prior to the Effective Date;
(ii)
an Acquisition Proposal is publicly announced, proposed, offered or made to the
QAT Shareholders and the QAT Shareholders do not approve the Arrangement
or the Arrangement is not submitted for their approval prior to the Outside Date
and any Acquisition Proposal is consummated within twelve months from the
termination of this Agreement;
(iii)
QAT accepts, recommends, approves or enters into or publicly proposes to
accept, recommend or approve an agreement to implement a Superior Proposal
subject to compliance with Section 3.5;
(iv)
QAT breaches the provisions of Section 3.5 in any material respect and
Purchaser is not successful in completing the Arrangement,
(v)
QAT is in breach of any of its covenants made in this Agreement which breach
individually or in the aggregate causes or would reasonably be expected to have
a Material Adverse Effect on the affairs, operations or business of QAT or
materially impedes the completion of the Arrangement and the transactions
contemplated herein, and QAT fails to cure or cause the cure of such breach
within five Business Days after receipt of written notice thereof from Purchaser
(except that no cure period shall be provided for a breach which by its nature
cannot be cured and, in no event, shall any cure period extend beyond the
Outside Date); or
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(vi)
QAT is in breach of any of its representations or warranties made in this
Agreement (i) that are qualified by a reference to Material Adverse Effect or (ii)
that are not qualified by a reference to a Material Adverse Effect and the breach
thereof has or would reasonably be expected to have, a Material Adverse Effect
(and, for this purpose, any reference to "material" or other concepts of materiality
in such representations and warranties shall be ignored) on QAT or, in either
case, such breach materially impedes the completion of the Arrangement, and
QAT fails to cure or cause the cure of such breach within five Business Days
after receipt of written notice thereof from Purchaser (except that no cure period
shall be provided for a breach which by its nature cannot be cured and, in no
event, shall any cure period extend beyond the Outside Date),
Purchaser may terminate this Agreement and xxx for damages and seek injunctive relief
to restrain any breach or threatened breach of the covenants or agreements set forth in
this Agreement, the Confidentiality Agreement or otherwise to obtain specific
performance of any of such act, covenants or agreements, without the necessity of
posting bond or security in connection therewith.
(c)
Provided that there is no material breach of a representation or warranty by QAT or
material non-performance by QAT of any covenant by the date specified herein
(excluding the breach of a covenant where QAT is precluded from satisfying its
obligations through action or omission of Purchaser), if at any time after the execution of
this Agreement and prior to its termination:
(i)
Purchaser is in breach of any of its covenants made in this Agreement which
breach individually or in the aggregate causes or would reasonably be expected
to have a Material Adverse Effect on the affairs, operations or business of
Purchaser or materially impedes the completion of the Arrangement and the
transactions contemplated herein, and Purchaser fails to cure or cause the cure
of such breach within five Business Days after receipt of written notice thereof
from QAT (except that no cure period shall be provided for a breach which by its
nature cannot be cured and, in no event, shall any cure period extend beyond the
Outside Date); or
(ii)
Purchaser is in breach of any of its representations or warranties made in this
Agreement (i) that are qualified by a reference to Material Adverse Effect or (ii)
that are not qualified by a reference to a Material Adverse Effect and the breach
thereof has or would reasonably be expected to have, a Material Adverse Effect
(and, for this purpose, any reference to "material" or other concepts of materiality
in such representations and warranties shall be ignored) on Purchaser or, in
either case, such breach materially impedes the completion of the Arrangement,
and Purchaser fails to cure or cause the cure of such breach within five Business
Days after receipt of written notice thereof from QAT (except that no cure period
shall be provided for a breach which by its nature cannot be cured and, in no
event, shall any cure period extend beyond the Outside Date),
QAT may terminate this Agreement and xxx for damages and seek injunctive relief to
restrain any breach or threatened breach of the covenants or agreements set forth in this
Agreement, the Confidentiality Agreement or otherwise to obtain specific performance of
any of such act, covenants or agreements, without the necessity of posting bond or
security in connection therewith.
(d)
If this Agreement is terminated in accordance with the foregoing provisions of this Section
7.1, this Agreement shall forthwith become void and no Party shall have any further
liability to perform its obligations hereunder except as provided in Section 4.3 and
subsections 3.1(m) and 3.3(r) and in respect of each Party's obligations under the
- 47 -
Confidentiality Agreement, which shall survive termination, and provided that neither the
termination of this Agreement nor anything contained in this Subsection 7.1(d) shall
relieve any Party from any liability for any breach by it of this Agreement, including from
any inaccuracy in any of its representations and warranties and any non-performance by
it of its covenants made herein prior to the date of such termination.
ARTICLE 8
NOTICES
8.1
Notices
All notices that may or are required to be given pursuant to any provision of this Agreement are to be
given or made in writing and served personally, delivered by overnight courier or sent by facsimile
transmission:
(a)
in the case of Purchaser and Newco, to:
Mobile Integrated Systems, Inc.
00 Xxxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX X0X 0X0
Attention: Xxxxxx P.J.B. Xxxxxx, President and Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxx Canada LLP
0000, 000 - 0xx Xxxxxx XX
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxxxxxxx X. Xxxxxxxxxx
Facsimile: (000) 000-0000
and a copy to:
Wuersch & Xxxxxx LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
(b)
in the case of QAT, to:
Quantitative Alpha Trading Inc.
000 - 00 Xxxxxxx Xxxxxx
Xxxxxxx, XX X0X 0X0
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
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with a copy to:
Xxxx & Berlis LLP
Brookfield Place
000 Xxx Xxxxxx
Xxxxx 0000, Xxx 000
Xxxxxxx, XX X0X 0X0
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
or such other address as the Parties may, from time to time, advise to the other Parties hereto by notice
in writing. The date or time of receipt of any such notice will be deemed to be the date of delivery or the
time such facsimile transmission is received.
ARTICLE 9
GENERAL
9.1
Binding Effect
This Agreement shall be binding upon and enure to the benefit of the Parties hereto and their respective
successors and permitted assigns.
9.2
Assignment
Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any
of the Parties hereto without the prior written consent of the other Parties hereto.
9.3
Public Communications
Each of Purchaser and QAT agree to consult with each other prior to issuing any press releases or
otherwise making public statements with respect to this Agreement or the Arrangement or making any
filing with any Governmental Authority with respect thereto. Without limiting the generality of the
foregoing, no Party shall issue any press release regarding the Arrangement, this Agreement or any
transaction relating to this Agreement without first providing a draft of such press release to the other
Party and reasonable opportunity for comment; provided, however, that the foregoing shall be subject to
each Party's overriding obligation to make any such disclosure required in accordance with Applicable
Laws. If such disclosure is required and the other Party has not reviewed or commented on the
disclosure, the Party making such disclosure shall use all commercially reasonable efforts to give prior
oral or written notice to the other Party, and if such prior notice is not possible, to give such notice
promptly following such disclosure.
9.4
Costs
Except as otherwise provided in Section 7.1, all fees, costs and expenses (including Taxes) incurred in
connection with this Agreement and the transactions contemplated hereby shall be paid by the Party
incurring such cost or expense, whether or not the Arrangement is completed.
9.5
Severability
If any one or more of the provisions or parts thereof contained in this Agreement should be or become
invalid, illegal or unenforceable in any respect, the remaining provisions or parts thereof contained herein
shall be and shall be conclusively deemed to be severable therefrom and the validity, legality or
enforceability of such remaining provisions or parts thereof shall not in any way be affected or impaired by
the severance of the provisions or parts thereof severed. Upon such determination that any term or other
- 49 -
provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the Parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
9.6
Further Assurances
Each Party hereto shall, from time to time and at all times hereafter, at the request of the other Party
hereto, but without further consideration, do all such further acts, execute and deliver all such further
documents and instruments and provide all such further assurances as may be reasonably necessary or
desirable in order to fully perform and carry out the terms and intent hereof.
9.7
Time of Essence
Time shall be of the essence of this Agreement.
9.8
Governing Law
This Agreement shall be governed by and construed in accordance with the Laws of the Province of
Ontario and the Parties hereto irrevocably attorn to the exclusive jurisdiction of the courts of the Province
of Ontario.
9.9
Waiver
Any Party may, on its own behalf only, (i) extend the time for the performance of any of the obligations or
acts of the other Party, (ii) waive compliance with the other Party's agreements or the fulfillment of any
conditions to its own obligations contained herein, or (iii) waive inaccuracies in the other Party's
representations or warranties contained herein or in any document delivered by the other Party; provided,
however, that any such extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such Party and, unless otherwise provided in the written waiver, will be limited to the
specific breach or condition waived.
9.10
Third Party Beneficiaries
The provisions of subsection 3.1(m) and Section 3.2 will survive the completion of the Arrangement and
are: (i) intended for the benefit of all such present and former directors, officers and employees and shall
be enforceable by each of such persons and his or her heirs, executors, administrators and other legal
representatives (collectively, the "Third Party Beneficiaries") and QAT shall hold the rights and benefits
of such subsections in trust for and on behalf of the Third Party Beneficiaries and QAT hereby accepts
such trust and agrees to hold the benefit of and enforce performance of such covenants on behalf of the
Third Party Beneficiaries; and (ii) are in addition to, and not in substitution for, any other rights that the
Third Party Beneficiaries may have by contract or otherwise.
9.11
Counterparts
This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of
which together constitute one and the same instrument.
[The remainder of this page is left blank intentionally]
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IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
MOBILE INTEGRATED SYSTEMS, INC.
By:
(signed) "Xxxxxx P.J.B. Xxxxxx"
Xxxxxx P.J.B. Xxxxxx
President and Chief Executive Officer
2338584 ONTARIO INC.
By:
(signed) "Xxxxxx P.J.B. Xxxxxx"
Xxxxxx P.J.B. Xxxxxx
President and Secretary
QUANTITATIVE ALPHA TRADING INC.
By:
(signed) "Xxxxx XxXxxxxx"
Xxxxx XxXxxxxx
Chief Executive Officer
SCHEDULE "A"
PLAN OF ARRANGEMENT UNDER SECTION 182
OF THE
BUSINESS CORPORATIONS ACT (ONTARIO)
ARTICLE 1
INTERPRETATION
1.1
In this Plan of Arrangement, the following terms have the following meanings:
(a)
"Amalco" means the continuing corporation constituted upon the Amalgamation;
(b)
"Amalco Shares" means the common shares in the capital of Amalco;
(c)
"Amalgamating Corporations" means QAT and Newco, collectively, and
"Amalgamating Corporation" means either one of them;
(d)
"Amalgamation" means the amalgamation of QAT and Newco as contemplated by this
Plan of Arrangement;
(e)
"Arrangement", "herein", "hereof", "hereto", "hereunder" and similar expressions mean
and refer to the arrangement of QAT and Newco under the provisions of Section 182 of
the OBCA set forth in this Plan of Arrangement as supplemented, modified or amended,
and not to any particular article, section or other portion hereof;
(f)
"Arrangement Agreement" means the agreement dated August 20, 2012 among
Purchaser, QAT and Newco, as amended or supplemented prior to the Effective Date,
entered into in connection with the Arrangement;
(g)
"Arrangement Resolution" means the special resolution to be attached as an appendix
to the Information Circular in respect of the Arrangement;
(h)
"Articles of Arrangement" means the articles of arrangement in respect of the
Arrangement required under Section 183 of the OBCA to be filed with the Director to give
effect to the Arrangement;
(i)
"Business Day" means a day other than a Saturday, Sunday or other day when banks in
the City of Calgary, Alberta and the City of Toronto, Ontario are not generally open for
business;
(j)
"Certificates" means the certificates or other confirmations of filing to be issued by the
Director pursuant to subsections 178(4) and 183(2) of the OBCA giving effect to the
Arrangement;
(k)
"Court" means the Superior Court of Justice of Ontario;
(l)
"Depositary" means Olde Monmouth Stock Transfer Co., Inc. at its principal office in the
State of New Jersey;
(m)
"Director" means the Director appointed pursuant to Section 278 of the OBCA;
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(n)
"Dissent Procedures" means the procedures set forth in section 185 of the OBCA
required to be taken by a registered holder of QAT Shares to exercise its right of dissent
in respect of such QAT Shares in connection with the Arrangement;
(o)
"Dissenting Shareholders" means registered QAT Shareholders who exercise rights of
dissent provided to them under the Interim Order which remain valid immediately prior to
the Effective Time;
(p)
"Effective Date" means the date the Arrangement becomes effective under the OBCA;
(q)
"Effective Time" means the time at which the Articles of Arrangement are filed with the
Director on the Effective Date;
(r)
"Final Order" means the final order of the Court approving the Arrangement under
subsection 182(5) of the OBCA, as such order may be affirmed, amended or modified by
any court of competent jurisdiction;
(s)
"Information Circular" means the management proxy circular of QAT together with all
appendices thereto, to be mailed or otherwise distributed by QAT to the QAT
Shareholders pursuant to the Interim Order in connection with the QAT Meeting;
(t)
"Interim Order" means the interim order of the Court under subsection 182(5) of the
OBCA containing declarations and directions with respect to the Arrangement and the
holding of the QAT Meeting, as such order may be affirmed, amended or modified by any
court of competent jurisdiction;
(u)
"Letter of Transmittal" means the letter of transmittal pursuant to which a QAT
Shareholder is required to deliver certificates representing QAT Shares;
(v)
"Newco" means 2338584 Ontario Inc., a corporation incorporated and existing under the
laws of the Province of Ontario;
(w)
"Newco Shares" means the common shares in the capital of Newco;
(x)
"OBCA" means the Business Corporations Act, R.S.O. 1990, c. B.16, as amended,
including the regulations promulgated thereunder;
(y)
"Purchaser" means Mobile Integrated Systems, Inc., a corporation existing under the
laws of the State of Nevada;
(z)
"Purchaser Shares" means the shares of Purchaser common stock;
(aa)
"QAT" means Quantitative Alpha Trading Inc., a corporation continued and existing under
the OBCA;
(bb)
"QAT Meeting" means the special meeting of QAT Shareholders to be held to consider
the Arrangement Resolution, and any adjournment(s) thereof;
(cc)
"QAT Shareholders" means holders of QAT Shares;
(dd)
"QAT Shares" means the common shares in the capital of QAT; and
(ee)
"Restricted Shares" means Purchaser Shares that have contractual restrictions on
resale and therefore cannot be traded until the period of restriction has ended, as
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evidenced by the legend inscribed on the back of the share certificate evidencing such
shares.
1.2
The division of this Plan of Arrangement into articles, sections, subsections and paragraphs and
the insertion of headings are for convenience of reference only and shall not affect the
construction or interpretation of this Plan of Arrangement.
1.3
Unless reference is specifically made to some other document or instrument, all references
herein to articles, sections and subsections are to articles, sections and subsections of this Plan
of Arrangement.
1.4
Unless the context otherwise requires, words importing the singular number shall include the
plural and vice versa; words importing any gender shall include all genders; and words importing
persons shall include individuals, partnerships, associations, corporations, funds, unincorporated
organizations, governments, regulatory authorities, and other entities.
1.5
Unless otherwise specified, all references to "dollars" or "$" shall mean Canadian dollars.
1.6
In the event that the date on which any action is required to be taken hereunder by any of the
parties is not a business day in the place where the action is required to be taken, such action
shall be required to be taken on the next succeeding day which is a business day in such place.
1.7
References in this Plan of Arrangement to any statute or sections thereof shall include such
statute as amended or substituted and any regulations promulgated thereunder from time to time
in effect.
ARTICLE 2
2.1
This Plan of Arrangement is made pursuant and subject to the provisions of the Arrangement
Agreement.
2.2
This Plan of Arrangement, upon the filing of the Articles of Arrangement and the issue of the
Certificates, will become effective on, and be binding on and after, the Effective Time on the QAT
Shareholders, QAT, Purchaser, Newco and Amalco.
2.3
The Articles of Arrangement and Certificates shall be filed and issued, respectively, with respect
to this Arrangement in its entirety. The Certificates shall be conclusive evidence that the
Arrangement has become effective and that each of the provisions of Article 3 has become
effective in the sequence and at the times set out therein.
ARTICLE 3
ARRANGEMENT
3.1
Commencing at the Effective Time, the events set out below shall occur and shall be deemed to
occur in the following sequence without any further act or formality except as otherwise provided
herein:
(a)
the QAT Shares held by Dissenting Shareholders shall, as of the Effective Time, be
transferred to, and acquired by, QAT, and shall be cancelled and shall cease to be
outstanding and each Dissenting Shareholder shall cease to have any rights as a QAT
Shareholder other than the right to be paid the fair value of their QAT Shares in
accordance with Article 5;
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(b)
all of the issued and outstanding QAT Shares will be exchanged with Newco for
Purchaser Shares on the basis that each QAT Shareholder (other than Dissenting
Shareholders at the Effective Time) shall receive for each QAT Share registered in the
QAT Shareholder’s name immediately prior the Effective Time, 0.2222 of a Purchaser
Share, provided that the Purchaser Shares received by each QAT Shareholder shall be
Restricted Shares as set out in Article 4;
(c)
the Amalgamating Corporations shall amalgamate pursuant to the provisions of the
OBCA to form Amalco and shall continue as one corporation on the terms prescribed in
this Plan of Arrangement, and:
(i)
the property of each Amalgamating Corporation shall continue to be the property
of Amalco;
(ii)
Amalco shall continue to be liable for the obligations of each Amalgamating
Corporation;
(iii)
any existing cause of action, claim or liability to prosecution shall be unaffected;
(iv)
any civil, criminal or administrative action or proceeding pending by or against an
Amalgamating Corporation may be continued to be prosecuted by or against
Amalco;
(v)
any conviction against, or ruling, order or judgment in favour of or against, an
Amalgamating Corporation may be enforced by or against Amalco;
(vi)
except as may be prescribed, the articles of amalgamation shall be the same as
the articles of Newco and the articles of amalgamation are deemed to be the
articles of incorporation of Amalco and the certificate of amalgamation is deemed
to be the certificate of incorporation of Amalco; and
(vii)
the by-laws of Amalco shall be the same as the by-laws of Newco;
(d)
on the Amalgamation:
(i)
all Newco Shares shall be converted on a share for share basis into fully paid
and non-assessable Amalco Shares on the basis of one fully paid and non-
assessable Amalco Share for each one Newco Share;
(ii)
all QAT Shares shall be cancelled without any repayment of capital in respect
thereof;
(iii)
the paid-up capital of the Amalco Shares shall, for the purposes of the Income
Tax Act (Canada), be the paid-up capital of the Newco Shares immediately
before the Amalgamation; and
(iv)
the stated capital of the Amalco Shares shall, for the purposes of the Income Tax
Act (Canada), be equal to the paid-up capital of the Newco Shares immediately
before the Amalgamation.
3.2
In connection with the exchanges described in subsection 3.1(b), each QAT Shareholder shall
cease to be a holder of QAT Shares and shall be a holder of the number of Purchaser Shares to
which such holder is entitled and, if a registered holder, such holder's name shall be removed
from the register of QAT Shareholders and shall be added to the register of holders of Purchaser
Shares.
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ARTICLE 4
RESTRICTED SHARES
4.1
The Purchaser Shares received by each QAT Shareholder pursuant to subsection 3.1(b) will be
Restricted Shares and the certificates representing such Purchaser Shares will be collectively
legended as follows:
(a)
to provide that:
(i)
1/5 of the Purchaser Shares will be released on the date which is 12 months after
the Effective Date;
(ii)
1/5 of the Purchaser Shares to be released on the date which is 15 months after
the Effective Date;
(iii)
1/5 of the Purchaser Shares to be released on the date which is 18 months after
the Effective Date;
(iv)
1/5 of the Purchaser Shares to be released on the date which is 21 months after
the Effective Date; and
(v)
1/5 of the Purchaser Shares to be released on the date which is 24 months after
the Effective Date; and
(b)
to provide that:
(i)
in the event that a take-over bid (as such term is defined in the Securities Act
(Ontario)) is made to all or substantially all of the holders of Purchaser Shares,
provided such take-over bid is approved by and recommended to shareholders of
Purchaser by a majority of the independent directors of Purchaser, each holder
of Restricted Shares will be permitted to tender any or all of such holder's
Restricted Shares to the offer under the take-over bid.
4.2
Following the deposit by a former holder of QAT Shares acquired by Purchaser under the
Arrangement of a duly completed Letter of Transmittal and the certificates representing such QAT
Shares in accordance with Article 6 such former holder of QAT Shares will receive from the
Depositary five certificates, and each certificate will represent 1/5 of the total number of
Purchaser Shares which such former QAT Shareholder is entitled to receive pursuant to
subsection 3.1(b) and each such certificate will bear a legend denoting one of the restricted
periods noted in Section 4.1.
ARTICLE 5
DISSENTING SHAREHOLDERS
5.1
Holders of QAT Shares may exercise a right of dissent in connection with the Arrangement in
accordance with the Dissent Procedures provided that, notwithstanding the provisions of
subsection 185(6) of the OBCA, the written objection to the special resolution to approve the
Arrangement contemplated by subsection 185(6) of the OBCA is received by QAT not later than
5:00 p.m. (Toronto time) on the Business Day immediately prior to the date of the QAT Meeting
and provided further that holders who exercise such right of dissent and who:
(a)
are ultimately entitled to be paid fair value for their QAT Shares, which fair value,
notwithstanding anything to the contrary contained in Section 185 of the OBCA, shall be
determined as of the Effective Time, shall be deemed to have transferred such QAT
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Shares to QAT for cancellation at the Effective Time, effective immediately before the first
transaction provided for in Section 3.1; or
(b)
are ultimately not entitled, for any reason, to be paid fair value for their QAT Shares shall
be deemed to have participated in the Arrangement on the basis set forth in Section 3.1
hereof;
but further provided that in no case shall MOBI, Amalco the Depositary or any other person be
required to recognize Dissenting Shareholders as holders of QAT Shares after the Effective Time
and the names of such Dissenting Shareholders (or the names of the applicable registered
holders holding on behalf of such Dissenting Shareholders) shall, in respect of such QAT Shares,
be deleted from the register of holders of QAT Shares at the Effective Time, effective immediately
before the first transaction provided for in Section 3.1.
ARTICLE 6
OUTSTANDING CERTIFICATES AND FRACTIONAL SECURITIES
6.1
From and after the Effective Time, certificates formerly representing QAT Shares acquired by
Purchaser under the Arrangement shall represent only the right to receive the consideration to
which the holders are entitled under the Arrangement, or as to those held by Dissenting
Shareholders, other than those Dissenting Shareholders deemed to have participated in the
Arrangement pursuant to Section 5.1, to receive the fair value of the QAT Shares represented by
such certificates.
6.2
Purchaser shall, as soon as practicable following the later of the Effective Date and the date of
deposit by a former holder of QAT Shares acquired by Purchaser under the Arrangement of a
duly completed Letter of Transmittal and the certificate(s) representing such QAT Shares, either:
(a)
forward or cause to be forwarded by first class mail (postage prepaid) to such former
holder at the address specified in the Letter of Transmittal; or
(b)
if requested by such holder in the Letter of Transmittal, make available or cause to be
made available at the Depositary for pickup by such holder,
the certificates representing in the aggregate the number of Purchaser Shares issued to such
holder under the Arrangement.
6.3
If any certificate which immediately prior to the Effective Time represented an interest in
outstanding QAT Shares that were exchanged pursuant to Section 3.1 has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming such certificate to
have been lost, stolen or destroyed, the Depositary will issue and deliver in exchange for such
lost, stolen or destroyed certificate the consideration to which the holder is entitled pursuant to the
Arrangement as determined in accordance with the Arrangement. The person who is entitled to
receive such consideration shall as a condition precedent to the receipt thereof give a bond
satisfactory to Purchaser and its transfer agent in such form as is satisfactory to Purchaser and
such transfer agent or otherwise indemnify Purchaser, Purchaser and the transfer agent, to the
reasonable satisfaction of such parties, against any claim that may be made against any of them
with respect to the certificate alleged to have been lost, stolen or destroyed.
6.4
Any certificate formerly representing QAT Shares that is not deposited with all other documents
as required by this Plan of Arrangement on or before the fifth anniversary of the Effective Date
shall cease to represent a right or claim of any kind or nature and the right of the holder of such
QAT Shares to receive the certificates representing Purchaser Shares and shall be deemed to be
surrendered to Purchaser.
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6.5
No certificates representing fractional Purchaser Shares shall be issued upon the exchange of
the QAT Shares for Purchaser Shares. In lieu of any fractional Purchaser Share, each registered
QAT Shareholder otherwise entitled to a fractional interest in a Purchaser Share will receive the
nearest whole number of Purchaser Shares. For greater certainty, where such fractional interest
is greater than or equal to 0.5, the number of Purchaser Shares to be issued will be rounded up
to the nearest whole number of Purchaser Shares and where such fractional interest is less than
0.5, the number of Purchaser Shares to be issued will be rounded down to the nearest whole
number of Purchaser Shares.
ARTICLE 7
AMENDMENTS
7.1
QAT, Newco and Purchaser may amend, modify and/or supplement this Plan of Arrangement at
any time and from time to time prior to the Effective Time, provided that each such amendment,
modification and/or supplement must be (i) set out in writing, (ii) approved by QAT, Newco and
Purchaser, (iii) filed with the Court and, if made following the QAT Meeting, approved by the
Court, and (iv) communicated to holders of QAT Shares, if and as required by the Court.
7.2
Any amendment of, or modification or supplement to, this Plan of Arrangement may be proposed
by QAT, Newco or Purchaser at any time prior to or at the QAT Meeting (provided that the other
parties shall have consented thereto) with or without any other prior notice or communication, and
if so proposed and accepted by the persons voting at the QAT Meeting (other than as may be
required under the Interim Order), shall become part of this Plan of Arrangement for all purposes.
7.3
Any amendment of, or modification or supplement to, this Plan of Arrangement that is approved
by the Court following the QAT Meeting shall be effective only if it is consented to by each of
QAT, Newco and Purchaser and, if required by the Court, by QAT Shareholders voting in the
manner directed by the Court.
7.4
Any amendment of, or modification or supplement to, this Plan of Arrangement may be made
following the Effective Time unilaterally by Amalco, provided that it concerns a matter which, in
the reasonable opinion of Amalco, is of an administrative nature required to better give effect to
the implementation of this Plan of Arrangement and is not adverse to the financial or economic
interests of Amalco or any former holder of QAT Shares.
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SCHEDULE "B"
QUANTITATIVE ALPHA TRADING INC.
SUPPORT AGREEMENT FOR DIRECTORS AND OFFICERS
THIS AGREEMENT is dated as of August 20, 2012.
BETWEEN:
THE PERSON SET FORTH ON THE SIGNATURE PAGE OF THIS
AGREEMENT AS SHAREHOLDER
(the "Shareholder")
AND
MOBILE INTEGRATED SYSTEMS, INC., a corporation existing under
the laws of Nevada
("MOBI")
WHEREAS Quantitative Alpha Trading Inc. ("QAT"), MOBI and 2338584 Ontario Inc. ("Newco")
have entered into an agreement dated August 20, 2012 (the "Arrangement Agreement") providing for a
plan of arrangement under the Business Corporations Act (Ontario) (the "OBCA"), pursuant to which,
among other things, MOBI will acquire all of the issued and outstanding shares of QAT and QAT and
Newco will amalgamate and continue as one corporation (the "Arrangement");
AND WHEREAS as of the date hereof, the Shareholder is the beneficial owner of the number of
common shares in the capital of QAT (the "QAT Shares") set forth on the signature page of this
Agreement;
AND WHEREAS any shares of QAT purchased or as to which the Shareholder acquires
beneficial ownership after the execution of this Agreement, including, without limitation, any shares of
QAT acquired by the Shareholder as a consequence of the exercise of any stock options or conversion of
any other securities or compensation arrangement of QAT prior to the Effective Time are referred to in
this Agreement as the "New QAT Shares";
AND WHEREAS MOBI has requested that the Shareholder enter into this Agreement with
respect to the QAT Shares and any New QAT Shares;
AND WHEREAS this Agreement sets out the terms and conditions of the agreement of the
Shareholder to support the Arrangement and to vote the QAT Shares and any New QAT Shares in favour
of the Arrangement;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the sum of $1.00
paid by each of the parties hereto to the other, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as follows.
1.
Representations of the Shareholder. The Shareholder represents that, as of the date hereof:
(a)
it is the legal and/or beneficial owner of, or exercises control or direction over, the QAT
Shares, free and clear of all claims, liens, charges, encumbrances and security interests;
B-1
(b)
it has full power and authority to make, enter into and carry out the terms of this
Agreement, and this Agreement is a valid and binding agreement, enforceable against
the Shareholder in accordance with its terms, and the consummation by the Shareholder
of the transaction contemplated hereby will not constitute a material violation or breach of
or default under, or conflict with, any contract, commitment, agreement, understanding or
arrangement of any kind to which the Shareholder will be a party and by which the
Shareholder will be bound at the time of such consummation; and
(c)
other than in respect of the Deed of Settlement and Declaration of Trust dated effective
February 28, 2011 between Alpha Voting Trust and certain shareholders of QAT, if
applicable, and other than in respect of this Agreement, the QAT Shares are not subject
to any voting agreement or adverse claim.
2.
Agreement to Vote QAT Shares. From the date hereof until this Agreement is terminated in
accordance with its terms, the Shareholder hereby agrees that, except for all such actions which
are permitted pursuant to Section 3 hereof, at any meeting of the holders of QAT Shares,
however called, the Shareholder shall (or cause the holder of record to, if the Shareholder is the
beneficial owner but not the holder of record of the QAT Shares):
(a)
vote all of the QAT Shares, including the New QAT Shares, if any, acquired by the
Shareholder prior to such action, in favour of the Arrangement and any actions required
in furtherance of the actions contemplated thereby; and
(b)
vote all of the QAT Shares, including the New QAT Shares, if any, acquired by the
Shareholder prior to such action, to oppose any proposed action by QAT or any other
party the result of which could be reasonably expected to impede, interfere with or delay
the completion of the Arrangement.
3.
No Limit on Fiduciary Duty. Nothing contained in this Agreement will:
(a)
restrict, limit or prohibit the Shareholder from exercising (in his capacity as a director or
officer) his fiduciary duties to QAT under applicable law; or
(b)
require the Shareholder, in his capacity as an officer of QAT, if applicable, to take any
action in contravention of, or omit to take any action pursuant to, or otherwise take or
refrain from taking any actions which are inconsistent with, instructions or directions of
QAT's board of directors undertaken in the exercise of their fiduciary duties,
provided that such action is not in contravention of QAT's covenants regarding non solicitation
contained in the Arrangement Agreement and provided that nothing in this Section 3 will be
deemed to relieve the Shareholder from his obligations under any other provision of this
Agreement other than Sections 2 and 6 hereof as they relate to actions taken by the Shareholder
solely in his capacity as a director or officer of QAT.
4.
Control over Corporation or Trust. If any of the QAT Shares, including the New QAT Shares, if
any, are held through a corporation or trust over which the Shareholder has control, as defined in
the OBCA (either alone or in conjunction with any other person) ("Control"), the Shareholder
shall act, vote and exercise its power and authority to ensure that this Agreement is complied with
by such corporation or trust.
5.
No Voting Trusts. The Shareholder will not, and will not permit any entity under the
Shareholder's Control to, deposit any of the QAT Shares or New QAT Shares, if any, in a voting
trust or subject any of the QAT Shares or New QAT Shares, if any, to any arrangement or
agreement with respect to the voting of such shares, other than agreements entered into with
MOBI.
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6.
No Proxy Solicitations. The Shareholder will not, and will not permit any entity under the
Shareholder's Control to:
(a)
solicit proxies or become a participant in a solicitation in opposition to or competition with
MOBI in connection with the Arrangement;
(b)
solicit, initiate or encourage inquiries, submissions, proposals or offers from any other
person relating to, or participate in any negotiations regarding, or furnish to any other
person any information with respect to, or otherwise cooperate in any way with or assist
or participate in or facilitate or encourage any effort or attempt with respect to an
Acquisition Proposal (as defined in the Arrangement Agreement), subject to Section 3
hereof and except as otherwise permitted under the Arrangement Agreement;
(c)
assist any person, entity or group in taking or planning any action that would compete
with, restrain or otherwise serve to interfere with or inhibit the Arrangement; or
(d)
act jointly or in concert with others with respect to voting securities of QAT for the
purpose of opposing or competing with MOBI in connection with the Arrangement.
7.
Transfer and Encumbrance. MOBI and the Shareholder agree that except with the prior written
consent of MOBI, the Shareholder shall not be permitted to transfer, sell or offer to transfer or sell
or otherwise dispose of or encumber any of the QAT Shares or New QAT Shares, if any, prior to
the earlier of the Effective Time (as defined in the Arrangement Agreement) and the termination
of this Agreement.
8.
Covenants, Representations and Warranties of MOBI. MOBI covenants to comply with all the
terms of the Arrangement Agreement. MOBI represents and warrants that it is duly authorized to
execute and deliver this Agreement and this Agreement is a valid and binding agreement
enforceable by the Shareholder in accordance with its terms, subject to the usual exceptions as
to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and the availability of equitable remedies. MOBI further represents and
warrants that the execution and delivery of this Agreement and the fulfilment of the terms hereof
by MOBI does not and will not result in a breach of any agreement or instrument to which it is a
party or by which it is contractually bound.
9.
Termination. Unless otherwise provided for herein, this Agreement shall terminate on the earlier
of:
(a)
immediately upon MOBI providing written notice of termination to the Shareholder;
(b)
the Effective Time; and
(c)
the date on which the Arrangement Agreement is terminated in accordance with its
terms.
10.
Specific Performance. The Shareholder acknowledges that it will be impossible to measure in
money the damage to MOBI if the Shareholder fails to comply with any of its obligations under
this Agreement, that every such obligation is material and that, in the event of any such failure,
MOBI will not have an adequate remedy at law or in damages, and accordingly, the Shareholder
agrees that the issuance of an injunction or other equitable remedy is the appropriate remedy for
any such failure.
11.
Successors and Assigns. This Agreement and all obligations of the Shareholder hereunder
shall be binding upon and shall enure to the benefit of the parties hereto and their respective
successors and assigns.
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12.
Entire Agreement. This Agreement supersedes all prior agreements between the parties hereto
with respect to the subject matter hereof and contains the entire agreement among the parties
with respect to the subject matter hereof. This Agreement may not be modified or waived, except
expressly by an instrument in writing signed by all the parties hereto. No waiver of any provision
hereof by any party shall be deemed a waiver by any other party nor shall any such waiver be
deemed a continuing wavier of any matter by such party.
13.
Notice. Any notice or other communication required or contemplated under this Agreement to be
given by one party to the other shall be delivered, telecopied or mailed by prepaid registered post
to the party to receive same at the undernoted address, namely:
if to the Shareholder at the address set forth on the signature page of this Agreement; and
if to MOBI:
Mobile Integrated Systems, Inc.
00 Xxxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX X0X 0X0
Attention: Xxxxxx P.J.B. Xxxxxx, President and Chief Executive Officer
Facsimile: (000) 000-0000
Any notice delivered or telecopied shall be deemed to have been given and received on the
business day next following the date of delivery or telecopying, as the case may be. Any notice
mailed as aforesaid shall be deemed to have been given and received on the third business day
following the date it is posted, provided that if between the time of mailing and actual receipt of
the notice there shall be a mail strike, slow-down or other labour dispute which might affect
delivery of the notice by mail, then the notice shall be effective only if actually delivered.
14.
Further Assurances. Each of the parties hereto agrees to execute such further and other
deeds, documents and assurances and do such further and other acts as may be necessary to
carry out the true intent and meaning of this Agreement fully and effectually.
15.
Severability. Each of the covenants, provisions, sections, subsections and other subdivisions
hereof is severable from every other covenant, provision, section, subsection and subdivision and
the invalidity or unenforceability of any one or more covenants, provisions, sections, subsections
and other subdivisions hereof shall not affect the validity or enforceability of the remaining
covenants, provisions, sections, subsections or subdivisions hereof.
16.
Expenses. The parties hereto agree to pay their own respective expenses incurred in
connection with this Agreement. This section shall survive the termination of this Agreement
pursuant to Section 10.
17.
Disclosure.
(a)
Prior to the first public disclosure of the existence and terms and conditions of this
Agreement by MOBI or QAT, the Shareholder shall not disclose the existence of this
Agreement or any details hereof or the possibility of the Arrangement being effected or
any terms or conditions or other information concerning the Arrangement to any person
other than the Shareholder's advisors, provided that the Shareholder's advisors shall be
required to comply with the foregoing disclosure obligations and the Shareholder agrees
to be responsible for any breach of such disclosure obligations by any of the
Shareholder's advisors.
(b)
The parties hereby consent to the disclosure of the substance of this Agreement in any
press release required by applicable laws and in any circular relating to the meeting to
approve the Arrangement Resolution (as defined in the Arrangement Agreement) or the
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share issuance and to the filing of this Agreement as may be required pursuant to
applicable laws.
18.
Miscellaneous.
(a)
This Agreement shall be construed in accordance with the laws of Ontario and the parties
hereto agree to attorn to the jurisdiction of the courts thereof.
(b)
This Agreement may be executed in one or more counterparts and delivered by facsimile,
each of which shall be deemed to be an original but all of which together shall constitute
one and the same instrument.
(c)
All section headings herein are for convenience of reference only and are not part of this
Agreement and no construction or interference shall be derived there from.
(d)
References to "he" and "they" shall be interpreted to include "her", "it" and other gender
variations thereof.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first
above written.
(Signature of Shareholder)
(Signature of Witness)
(Print Name of Shareholder)
______________________ QAT Shares
Address of Shareholder:
MOBILE INTEGRATED SYSTEMS, INC.
Per:
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