SUPPORT AGREEMENT
Exhibit
2.1
THIS
AGREEMENT made the 12th day of June, 2006,
BETWEEN:
VEDANTA
RESOURCES PLC,
a
corporation existing under the laws
of
the United Kingdom,
(hereinafter
called the “Offeror”)
-
and -
STERLITE
GOLD LTD.,
a
corporation existing under the laws
of
the Yukon,
(hereinafter
called the “Target”).
THIS
AGREEMENT WITNESSES THAT, in consideration of the covenants and
agreements herein contained and for other good and valuable consideration,
the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
covenant and agree as follows:
ARTICLE
1
INTERPRETATION
|
1.1
|
Definitions
|
For
the purposes of this Agreement, unless the context otherwise
requires:
“Acquisition
Proposal” has the meaning set out in Section
6.1(a);
“affiliate”
has
the meaning ascribed thereto in the OSA;
“AMF”
means
the Autorité des marchés financiers (Québec);
“Applicable
Securities Laws” means the provisions of the OSA and the YBCA
and all other applicable corporate and securities laws, rules, regulations
and
published policies of the provinces and territories Canada and applicable
securities laws, rules, regulations and published policies of the United
States
and the rules, regulations and published policies of stock exchanges on which
the Target Shares are listed or posted for trading;
“Benefit
Plans” has the meaning set out in Section 3.24(a);
“Bid
Circular” has the meaning set out in Section 2.1(d);
-
2 -
“Board
of Directors” means the board of directors of the
Target;
“business
day” means any day other than a Saturday, Sunday or statutory
holiday on which chartered banks in the cities of Toronto, Ontario or London,
England are not open for business;
“Canadian
GAAP” means Canadian generally accepted accounting principles
applied on a consistent basis;
“Claim”
means
any act, omission or state of facts and any demand, action,
suit, proceeding, claim, assessment, judgment or settlement relating thereto
which gives rise pursuant to Section 6.5 to a right to indemnification upon
the
indemnified party giving notice of such claim in respect thereof to the
indemnifying party;
“Confidentiality
Agreement” means the confidentiality agreement dated
January 9, 2006 among Twin Star International Limited, the Offeror and the
Target;
“Contract”
has
the meaning set out in Section 3.8;
“Directors’
Circular”
has
the meaning set out in Section
2.2(b);
“Effective
Time” has the meaning set out in Section 5.1;
“Employees”
means
all individuals who are full-time or part-time
employees and individuals engaged on contract to provide employment services
or
sales and other agents or representatives of the Target and/or each of the
Subsidiaries;
“Environmental
Laws” means all applicable Laws including applicable
common law, imposing liability or standards of conduct for or relating to
the
regulation of activities, materials, substances or wastes in connection with
or
for or to the protection of human health, safety, the environment or natural
resources (including ambient air, surface water, groundwater, wetlands, land
surface or subsurface strata, wildlife, aquatic species and vegetation) and
under common law;
“Environmental
Permits” means all permits, licenses, written
authorizations, certificates, approvals or registrations required by or
available with or from any Governmental Entity under any Environmental
Laws;
“Equivalent
Insurance” has the meaning set out in Section
6.4;
“Exchange
Act” means the Unites States Securities Exchange Act of 1934,
as amended;
“Expiry
Date” means the expiry date for the Offer, as it may be extended
from time to time;
“Expiry
Time” means the time on the Expiry Date at which the Offer
expires;
-
3 -
“Formal
Valuation” means the independent formal valuation of the Target
Shares prepared in accordance with Rule 61-501 and Policy Statement Q-27
by the
Independent Valuator;
“fully-diluted
basis” means, with respect to the number of outstanding
Target Shares at any time, such number of outstanding Target Shares calculated
assuming that: (a) all outstanding options, warrants or other rights to acquire
Target Shares are exercised and Target Shares are issued pursuant thereto,
whether or not such warrants, options or other rights are exercisable by
the
holder; and (b) all outstanding securities of the Target that are convertible
or
exchangeable into Target Shares are converted or exchanged, as applicable,
whether or not such convertible or exchangeable securities are exercisable
by
the holder;
“Governmental
Entity” means: (a) any multinational, federal, provincial,
state, regional, municipal, local or other government, 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; (c) any quasi-governmental or private body exercising
any regulatory, expropriation or taxing authority under or for the account
of
any of the foregoing or (d) any self-regulatory organization;
“Guarantees”
has
the meaning set out in Section 3.25;
“Independent
Committee” means the special committee of the Board of
Directors comprised of an independent director of the Board of Directors
established to consider the Offer in accordance with Applicable Securities
Laws;
“Independent
Valuator” means PricewaterhouseCoopers LLP, the professional
advisor retained by the Independent Committee to prepare the Formal
Valuation;
“Joint
Venture” of a Person means a joint venture in which the Person
participates, directly or indirectly, whether as a partner, shareholder,
interestholder or otherwise, that has a substantial impact on the financial
condition, operations or prospects of the Person on a consolidated
basis;
“Latest
Mailing Time” means July 7, 2006 or such other date as may be
agreed to by the parties, provided that in the event: (a) the Offeror shall
not have been provided with the lists referred to in Section 2.2(e) in order
to
permit the Offeror to mail the Offer to the Shareholders by such date, the
Latest Mailing Time shall be extended to the second business day following
the
obtaining of such lists; (b) the mailing of the Offer is delayed by reason
of (i) an injunction or order made by a Governmental Entity of competent
jurisdiction, (ii) the Offeror not having obtained any waiver, consent,
approval, ruling or order of any Governmental Entity which is necessary or
required by the Offeror for the making of the Offer or to mail the Bid Circular
to the Shareholders, then, provided that such injunction or order is being
contested or appealed or such waiver, consent, approval, ruling or order
is
being actively sought, as applicable, the Latest Mailing Time shall be
automatically extended to the second business day following the date on which
such
-
4 -
injunction
or order ceases to be in effect or such regulatory authority
waiver, consent, approval, ruling or order is obtained, as
applicable;
“Laws”
means
all international trade agreements, codes and conventions,
laws (including common law), by-laws, statutes, rules, regulations, policies,
principles of law and equity, orders, rulings, ordinances, judgments,
injunctions, determinations, awards, decrees or other requirements, whether
domestic or foreign, and the terms and conditions of any grant of approval,
permission, authority or license of or from any Governmental Entity and the
term
“applicable” with respect to such Laws and in a context that refers to one or
more parties, means such Laws as are applicable to such party or its business,
undertaking, property or securities and emanate from a Person having
jurisdiction over the party or parties or its or their business, undertaking,
property or securities;
“Loss”
means
any and all loss, liability, damage, cost or expense
actually suffered or incurred by a party resulting from any claim, including
the
reasonable costs and expenses of any action, suit, proceeding, demand,
assessment, judgment or settlement relating thereto, but: (a) excluding loss
of
profits and other consequential damages and excluding any contingent liability
until it becomes actual; (b) reduced by any tax benefit to the indemnified
party; and (c) further reduced by any recovery or settlement under any insurance
coverage, or pursuant to any claim, recovery, settlement or payment by or
against any other Person;
“Minimum
Tender Condition” has the meaning set out in paragraph 2(a) of
Schedule A hereto;
“Offer”
has
the meaning set out in Section 2.1(a);
“Offer
Price” has the meaning set out in Section 2.1(c);
“Offeror
Material Adverse Effect” means a change, effect, event,
occurrence or state of facts (or any development involving a prospective
change)
which materially and adversely affects, or would reasonably be expected to
materially and adversely affect: (a) the business, operations, assets,
liabilities (including any contingent liabilities that may arise through
outstanding, pending or threatened litigation or otherwise), capitalization,
financial condition, results of operations, rights or prospects of the Offeror
and/or any of its Subsidiaries, taken as a whole; or (b) the ability of the
Offeror to (i) complete the Offer or a Subsequent Acquisition Transaction;
or
(ii) perform its obligations hereunder or consummate the transactions
contemplated herein, in each case other than any change, effect, event or
occurrence or state of facts (or any development involving a prospective
change)
relating to the global economy or securities markets in general;
“OSA”
means
the Securities Act (Ontario);
“OSC”
means
the Ontario Securities Commission;
-
5 -
“Outside
Time” means 5:00 p.m. (Toronto time) on September 30, 2006,
provided that the Outside Time may be extended by the Offeror to such later
date
and time as may be agreed in writing by the Offeror and the Target
or:
|
|
(a)
|
to
no later than 5:00 p.m. (Toronto time) on the 20th
business day after the original Outside Time if (i) the Offeror’s take-up
and payment for Target Shares deposited under the Offer is delayed
by (A)
an injunction or order made by a Governmental Entity of competent
jurisdiction, or (B) the Offeror not having obtained any waiver,
consent,
approval, ruling or order of any Governmental Entity which is necessary
to
permit the Offeror to take-up and pay for the Target Shares deposited
under the Offer; and (ii) written notice is provided to the Target
to such
effect no later than 5:00 p.m. (Toronto time) on the date that is
10
business days prior to the original Outside Time, or such later date
and
time as may be agreed in writing by the Offeror and the Target;
or
|
|
|
(b)
|
to
no later than 5:00 p.m. (Toronto time) on the 20th
business day after the original Outside Time if (i) written notice
is
provided to the Target to such effect no later than 5:00 p.m. (Toronto
time) on the date that is 10 business days prior to the original
Outside
Time or such later date and time as may be agreed in writing by the
Offeror and the Target, and (ii) on the date of such notice (A) at
least
90% of the Target Shares outstanding have not been tendered to the
Offer,
(B) the Minimum Tender Condition has been satisfied, (C) all other
conditions to the Offer have been satisfied or waived, and (D) the
Offeror
has taken up and paid for all Target Shares tendered to the Offer
as at
such date;
|
“Person”
means
an individual, partnership, association, body corporate,
Joint Venture, business organization, trust, trustee, executor, administrator,
legal representative, government or any other entity, whether or not having
legal status;
“Policy
Statement Q-27” means Policy Statement Q-27 – Protection of
Minority Securityholders in the Course of Certain Transactions of the
AMF;
“Proposed
Agreement” has the meaning set out in Section
6.1(e);
“Public
Documents” has the meaning set out in Section
3.10(b);
“Rule
61-501” means OSC Rule 61-501 – Insider Bids, Issuer Bids, Business
Combinations and Related Party Transactions;
“SEDAR”
means
the System for Electronic Document Analysis and Retrieval
maintained by the Canadian Securities Administrators;
“Shareholders”
means
holders of Target Shares;
“Stock
Option Plan” means the stock option plan of the Target dated June 25, 1998;
“Subsequent
Acquisition Transaction” has the meaning set out in Section
2.7;
-
6 -
“subsidiary”
means,
with respect to a specified body corporate, any body
corporate of which more than 50% of the outstanding shares ordinarily entitled
to elect a majority of the board of directors thereof (whether or not shares
of
any other class or classes shall or might be entitled to vote upon the happening
of any event or contingency) are at the time owned, directly or indirectly,
by
such specified body corporate and shall include any body corporate, partnership,
Joint Venture or other entity over which such specified body corporate exercises
direction or control or which is in a like relation to a
subsidiary;
“Subsidiary”
means
a subsidiary of the Target,
whether direct or indirect, whose consolidated assets or revenues represent
5%
or more of the consolidated assets or revenues, as the case may be, of the
Target;
“Superior
Proposal” has the meaning set out in Section
6.1(a);
“Target
Governing Documents” has the meaning set out in Section
3.2;
“Target
Information” means the information about the Target to be
included in the Bid Circular;
“Target
Material Adverse Effect” means a change, effect, event,
occurrence or state of facts (or any development involving a prospective
change)
which materially and adversely affects, or would reasonably be expected to
materially and adversely affect, (a) the business, operations, assets,
liabilities (including any contingent liabilities that may arise through
outstanding, pending or threatened litigation or otherwise), capitalization,
financial condition, results of operations, rights or prospects of the Target
and/or any of its Subsidiaries, taken as a whole, or (b) the ability of the
Target to perform its obligations hereunder or consummate the transactions
contemplated herein, in each case other than any change, effect, event,
occurrence or state of facts (or any development including a prospective
change)
relating to the global economy or securities markets in general;
“Target
Shares” means common shares in the share capital of the
Target;
“Tax”
and
“Taxes”
means,
with respect to any entity, all income taxes
(including any tax on or based upon net income, gross income, income as
specially defined, earnings, profits or selected items of income, earnings
or
profits) and all capital taxes, gross receipts taxes, environmental taxes,
sales
taxes, use taxes, ad valorem taxes, value added taxes, transfer taxes, franchise
taxes, licence taxes, royalties, withholding taxes, payroll taxes, employment
taxes, Canada Pension Plan premiums, excise, social security, workers’
compensation, employment insurance, stamp taxes, business taxes, property
taxes,
alternative minimum taxes, goods and services tax, customs duties or other
taxes, fees, imposts, assessments or charges of any kind whatsoever, together
with any interest and any penalties or additional amounts imposed by any
taxing
authority (domestic or foreign) on such entity, and any interest, penalties,
additional taxes and additions to tax imposed with respect to the
foregoing;
-
7 -
“Tax
Act” means the Income Tax Act (Canada);
“Tax
Returns” includes all returns, reports, declarations, elections,
notices, filings, forms, statements and other documents (whether in tangible,
electronic or other form) and including any amendments, schedules, attachments,
supplements, appendices and exhibits thereto, made, prepared, filed or required
to be made, prepared or filed by Law in respect of Taxes;
“Termination
Fee” has the meaning set out in Section 7.5(a);
“Termination
Fee Event” has the meaning set out in Section 7.5(a);
and
“YBCA”
means
the Business Corporations Act (Yukon).
|
1.2
|
Construction
|
In
this Agreement, unless otherwise expressly stated or the context
otherwise requires:
|
|
(a)
|
references
to “herein”, “hereby”, “hereunder”, “hereof’ and similar
expressions are references to this Agreement and not to any particular
Section of or Schedule to this Agreement;
|
|
|
(b)
|
references
to a “Section” or a “Schedule” are references to a
section or schedule of this Agreement;
|
|
|
(c)
|
words
importing the singular shall include the plural and vice
versa, and words importing gender shall include the masculine, feminine
and neuter genders;
|
|
|
(d)
|
the
use of headings is for convenience of reference only and shall
not affect the construction or interpretation
hereof;
|
|
|
(e)
|
wherever
the term “includes” or “including” is used, it shall be
deemed to mean “includes, without limitation” or “including, without
limitation”, respectively;
|
|
|
(f)
|
references
to “the knowledge” of a party means the actual knowledge
of the directors and executive officers of such party after reasonable
inquiry; and
|
|
|
(g)
|
all
sums of money referred to herein are stated in Canadian
dollars.
|
-
8 -
ARTICLE
2
THE
OFFER
|
2.1
|
The
Offer
|
(a) The
Offeror shall, either directly or through a wholly-owned subsidiary,
subject to the terms and conditions set forth herein, on or before the Latest
Mailing Time, make an offer to all holders in Canada and such other
jurisdictions as the Offeror may determine, to purchase all of the outstanding
Target Shares not owned by the Offeror or any of its
affiliates, including any Target Shares that may become
outstanding pursuant to the exercise of any currently outstanding convertible
or
exchangeable securities on substantially the terms and conditions summarized
in
this Agreement (the “Offer”). The term “Offer” shall include any amendments to,
or extensions of, such Offer, made in accordance with the terms and conditions
of this Agreement.
(b) The
Offeror and the Target shall each publicly
announce the transactions contemplated hereby following the execution of
this
Agreement by the Offeror and the Target, the text of each
such announcement to be approved by the Offeror and the Target in advance, acting reasonably.
(c) The
Offer shall be made to the Shareholders for cash consideration of
$0.258 per Target Share (the “Offer Price”).
(d) The
Offeror shall mail the Offer and accompanying take-over bid circular
(such circular, together with the Offer, being referred to herein as the
“Bid
Circular”) in accordance with Applicable Securities Laws to Shareholders as soon
as reasonably practicable and, in any event, not later than the Latest Mailing
Time.
(e) Prior
to printing the Bid Circular, the Offeror shall provide the
Target and its counsel with an opportunity to review and
comment on the Bid Circular, recognizing that whether or not such comments
are
appropriate will be determined by the Offeror, acting reasonably. The Offeror
shall provide the Target with a final copy of the Bid
Circular concurrently with the mailing of the Bid Circular to Shareholders.
The
Offeror shall file the Bid Circular and any other documents required by
Applicable Securities Laws in connection with the Bid Circular with the
appropriate securities commissions and other regulatory authorities in Canada
and the United States within the times and in the manner required by Applicable
Securities Laws.
(f) The
Offeror agrees that, provided all of the conditions to the Offer set
out in Schedule A have been satisfied, the Offeror shall take-up and pay
for all
of the Target Shares validly tendered (and not validly
withdrawn) under the Offer promptly and in any event no later than 10
daysfollowing the time at which it becomes entitled to
take-up such Target Shares under the Offer pursuant to
Applicable Securities Laws.
(g) The
Offer will be made in accordance with Applicable Securities Laws and
shall expire at the Expiry Time or such longer minimum period as may be
prescribed under
-
9 -
Applicable
Securities Laws, subject to the right of the Offeror to, in
its sole discretion, extend the period during which Target
Shares may be deposited under the Offer.
(h) It
is understood and agreed that the Offeror may, in its sole discretion,
modify, waive or reduce the Minimum Tender Condition or any other term or
condition of the Offer; provided that the Offeror will not, except as
specifically permitted herein,
|
|
(i)
|
increase
the Minimum Tender
Condition,
|
|
|
(ii)
|
decrease
the consideration per Target
Share,
|
|
|
(iii)
|
change
the form of consideration payable under the Offer (other
than to add or increase consideration),
|
|
|
(iv)
|
modify
the conditions to the Offer in a manner which is adverse to
the Shareholders, or
|
|
|
(v)
|
impose
additional conditions to the
Offer,
|
without
the consent of the Target, not to be
unreasonably withheld or delayed.
(i) The
obligation of the Offeror to make the Offer and to mail the Bid
Circular to Shareholders is conditional on the prior satisfaction of the
following conditions as determined by the Offeror, in its sole judgment,
all of
which conditions are included for the sole benefit of the Offeror and any
or all
of which may be waived by the Offeror in whole or in part in its sole discretion
without prejudice to any other right it may have under this
Agreement:
|
|
(i)
|
this
Agreement shall not have been terminated pursuant to Section
7.2;
|
|
|
(ii)
|
no
circumstance, fact, change, event or occurrence caused by a
Person other than the Offeror shall have occurred that would render
it
impossible for one or more of the conditions set out on Schedule
A to be
satisfied;
|
|
|
(iii)
|
the
Independent Committee and the Board of Directors shall have
unanimously (with the exception of certain directors, who, although
concurring with the approval and recommendation have abstained from
voting
solely due to their positions as directors, officers or significant
shareholders of parties who have an interest in the Offer), recommended
in
writing that all Shareholders accept the Offer and shall not have
withdrawn such recommendation, nor changed, modified or qualified
such
recommendation in a manner adverse to the Offeror, nor taken any
other
action or made any other public statement in connection with the
Offer
inconsistent with such recommendation;
|
|
|
(iv)
|
the
Independent Valuator shall have provided the Formal Valuation
and shall not have withdrawn such Formal Valuation, nor changed,
modified
|
-
10 -
or
qualified such Formal Valuation nor taken any other action or made any
other public statement inconsistent with the Formal Valuation;
|
|
(v)
|
there
shall not exist any cease trade order, injunction or
prohibition in respect of the making of the Offer or the purchase
by or
sale of Target Shares to the Offeror under the Offer or the rights
of the
Offeror to own or exercise full rights of ownership of Target Shares
or to
complete a Subsequent Acquisition Transaction, nor shall there have
been
imposed any material limitations or conditions by a Governmental
Entity
which has the effect of materially increasing the costs of the Offeror
in
relation to the Offer or any Subsequent Acquisition
Transaction;
|
|
|
(vi)
|
the
Offeror shall have received any and all waivers, consents,
approvals, rulings or orders necessary for the making of the Offer
or to
mail the Bid Circular to the
Shareholders;
|
|
|
(vii)
|
all
representations and warranties of the Target in this Agreement
qualified as to materiality shall be true and correct and those not
so
qualified shall be true and correct in all material respects, in
each case
as of the date of the making of the Offer and the mailing of the
Bid
Circular to Shareholders as if made on and as of such date (except
to the
extent that such representations and warranties speak as of an earlier
date which representations and warranties shall remain true and correct
in
all material respects or in all respects, as appropriate, as of that
date)
and the Target shall have performed in all material respects all
covenants
and complied in all material respects with all obligations to be
performed
or complied with by it as applicable under this Agreement;
and
|
|
|
(viii)
|
no
Target Material Adverse Effect or Offeror Material Adverse
Effect shall have occurred.
|
(j) The
Target
hereby agrees to provide the Offeror with
certificates acceptable to the Offeror from the Target’s
Chief Executive Officer and Chief Financial Officer, in each such officer’s
capacity as an officer of the Target and not in such
officer’s personal capacity, dated the date of each of the mailing of the Bid
Circular and the first date the Offeror takes-up and pays for Target Shares tendered under the Offer to the effect that
as of such date, the
Target has performed in all material respects all covenants
to be performed by it under this Agreement, has complied in all material
respects with all obligations to be complied with by it under this Agreement
and
that the representations and warranties of the Target
contained in this Agreement qualified as to materiality are true and correct
in
all respects, and that the representations and warranties of the
Target contained in this Agreement not so qualified are
true
and correct in all material respects, in each case as of such date, with
the
same force and effect as if given on and as of the date of such
certificate.
-
11 -
|
2.2
|
Actions
by the Target
|
(a) The
Target
hereby represents and warrants to and in
favour of the Offeror and hereby acknowledges that the Offeror is relying
upon
such representations and warranties in entering into this Agreement, that
(i)
the Independent Valuator has been retained by the Independent Committee as
an
independent and qualified valuator within the meaning of Rule 61-501 and
Policy
Statement Q-27, and has delivered to the Independent Committee a written
Formal
Valuation to the effect that the fair market value of the Target Shares is
in
the range of $0.240 to $0.275 per share and that (ii) the Target has, in
accordance with Rule 61-501 and Policy Statement Q-27, delivered to the Offeror
a true and complete copy of the Formal Valuation prepared by the Independent
Valuator for inclusion in the Bid Circular
(b) The
Target shall prepare and make available for distribution
contemporaneously and together with the Bid Circular sufficient copies of
a
directors’ circular relating to the Offer together with any other documents
required of the Target or the Board of Directors by Applicable Securities
Laws
in connection with the Offer (the “Directors’ Circular”), prepared in accordance
with Applicable Securities Laws, which shall reflect the determinations and
recommendation referred to in Section 3.1. The Target shall take (subject
to the
exercise by the Board of Directors of its fiduciary duties pursuant to, and
as
permitted under, Section 6.1) all other reasonable actions to support the
Offer and ensure the success of the Offer. The Target shall provide the Offeror
and its counsel with a reasonable opportunity to review and comment on the
Directors’ Circular prior to printing it, recognizing that whether or not such
comments are appropriate will be determined by the Target and the Board of
Directors, acting reasonably and shall use commercially reasonable efforts
to
cause the Directors’ Circular to be sent to Shareholders together with the Bid
Circular prepared and sent by the Offeror. The Target shall provide the Offeror
with a final copy of the Directors’ Circular concurrently with the mailing of
the Directors’ Circular to Shareholders. The Target shall file the Directors’
Circular and any other documents required by Applicable Securities Laws in
connection with the Directors’ Circular with applicable securities regulatory
authorities within the times and in the manner required by Applicable Securities
Laws.
(c) The
Target will consent to its transfer agent mailing the Bid Circular
and Directors’ Circular to Shareholders and to acting as depositary under the
Offer.
(d) The
Target shall provide to the Offeror any and all information regarding
the Target and the Subsidiaries that is reasonably required for the preparation
of the Target Information and shall provide the Offeror with such other
assistance in the preparation of the Bid Circular as may be reasonably requested
by the Offeror. The Target hereby represents, warrants and covenants that
the
Target Information will be accurate and complete in all material respects
as at
the date of the Bid Circular and will not contain any untrue statement of
a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(e) The
Target shall provide the Offeror, as soon as practicable and in any
event within five business days after the execution and delivery of this
Agreement, with a list of the holders of all Target Shares and of any other
classes and series of securities of the Target, and a
-
12 -
list
of participants in book based nominee registrants such as CDS &
Co. and CEDE & Co. in each case together with their addresses and respective
holdings of Target Shares. The Target shall concurrently provide the Offeror
with a list of the names, addresses and holdings of any and all Persons having
rights to acquire securities of the Target and the details of such rights.
The
Target shall from time to time promptly furnish the Offeror with such additional
information, including updated or additional lists of Shareholders or Persons
having rights to acquire Target Shares, mailing labels and lists of securities
positions and other assistance as the Offeror may reasonably request including
in order to be able to communicate the Offer to Shareholders and to such
other
Persons as are entitled to receive the Offer under Applicable Securities
Laws.
(f) As
soon as practicable following execution of this Agreement, the Target
will convene a meeting of the Board of Directors to approve the Directors’
Circular, which Directors’ Circular shall reflect the determinations and
recommendation in Section 3.1, including the unanimous recommendation of
the
Independent Committee and the Board of Directors (except for certain directors,
who, although concurring with the approval and recommendation have abstained
from voting solely due to their positions as directors, officers or significant
shareholders of parties who have an interest in the Offer) that Shareholders
deposit their Target Shares under the Offer and accept the Offer and a statement
that each director of the Target intends to deposit his Target Shares (if
any)
under the Offer and accept the Offer, subject to the other terms of this
Agreement.
|
2.3
|
Preparation
of Filings
|
(a) The
Offeror and the Target shall co-operate in the preparation of any
application for regulatory approvals and any other orders, registrations,
consents, filings, rulings, exemptions, no-action letters and approvals and
the
preparation of any documents reasonably deemed by either of the parties to
be
necessary to discharge its respective obligations or otherwise advisable
under
applicable Laws in connection with this Agreement, the Offer, or any Subsequent
Acquisition Transaction as promptly as practicable hereafter.
(b) The
Offeror shall ensure that the Bid Circular complies with Applicable
Securities Laws and, without limiting the generality of the foregoing, that
the
Bid Circular does not contain any untrue statement of a material fact or
omit to
state a material fact required to be stated therein or necessary to make
the
statements contained therein not misleading in light of the circumstances
in
which they are made (other than with respect to Target Information and any
information relating to and provided by any third party that is not an affiliate
of the Offeror).
(c) The
Target shall ensure that the Directors’ Circular complies with
Applicable Securities Laws and, without limiting the generality of the
foregoing, that the Directors’ Circular does not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements contained therein not misleading in light
of
the circumstances in which they are made (other than with respect to any
information relating to and provided by the Offeror or any third party that
is
not an affiliate of the Target).
(d) Each
of the Target and the Offeror shall promptly notify the other if at
any time before the Effective Time it becomes aware that the Bid Circular
or the
Directors’ Circular, an
-
13 -
application
for a regulatory approval or any other order, registration,
consent, ruling, exemption, no-action letter or approval, any registration
statement or any circular or other filing under applicable Laws contains
an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements contained therein
not
misleading in light of the circumstances in which they are made, or that
otherwise requires an amendment or supplement to the Bid Circular or the
Directors’ Circular, such application, registration statement, circular or
filing, and the parties shall co-operate in the preparation of such amendment
or
supplement as required.
(e) Subject
to any limitations imposed by Applicable Securities Laws, each of
the Target and the Offeror agrees to provide the other and their respective
counsel in writing with any written comments, notice or communications either
of
them or their respective counsel may receive from the securities commissions
and
other regulatory authorities in Canada or the United States or any other
relevant Governmental Entity, with respect to the Offer, the Bid Circular
and
the Directors’ Circular promptly after the receipt of such
comments.
|
2.4
|
Shareholder
Communications and Regulatory
Filings
|
The
Target and the Offeror agree to co-operate in the preparation of
presentations, if any, to Shareholders regarding the Offer, and no party
shall
issue any press release or otherwise make public statements with respect
to this
Agreement, the Offer or any Subsequent Acquisition Transaction without the
consent of the other party and the Target shall not make any filing with
any
Governmental Entity without the consent of the Offeror, not to be unreasonably
withheld or denied and the Offeror shall not make any filing with any
Governmental Entity without advising the Target prior thereto; provided,
however, that the foregoing shall be subject to each party’s overriding
obligation to make any disclosure or filing required under applicable Laws,
and
the party making such disclosure shall use all commercially reasonable efforts
to give prior notice to the other party and reasonable opportunity to review
or
comment on the disclosure or filing, and if such prior notice is not possible,
to give such notice immediately following the making of such disclosure or
filing.
|
2.5
|
Withholding
|
The
Offeror shall be entitled to deduct and withhold from the amount
otherwise payable pursuant to this Agreement or the Offer or any Subsequent
Acquisition Transaction to any Shareholder such amounts as are required to
be
deducted and withheld with respect to the making of such payment under the
Tax
Act, or any other provision of domestic or foreign (whether national, federal,
state, provincial, local or otherwise) Law relating to Taxes. To the extent
the
amounts are so deducted and withheld and paid to the appropriate taxing
authorities by the Offeror or its affiliates, such deducted and withheld
amounts
shall be treated for all purposes of this Agreement, the Offer or any Subsequent
Acquisition Transaction, as applicable, as having been paid to the Shareholder
in respect of which such deduction and withholding was made by the
Offeror.
-
14 -
|
2.6
|
Directors
of the Target
|
Promptly
upon the initial take-up and payment by the Offeror of the
Target Shares as contemplated herein, the Target shall cooperate with the
Offeror in taking such action as may be necessary to ensure the Board of
Directors is comprised of directors selected by the Offeror and the Target
acknowledges that the Offeror shall be entitled to designate such number
of
members of the Board of Directors, and any committee thereof, as is
proportionate to the percentage of the outstanding Target Shares owned by
the
Offeror and the Target, shall not frustrate the Offeror’s attempts to do so and
hereby covenants to cooperate with the Offeror, subject to applicable Laws,
to
enable the Offeror’s designees to be elected or appointed to the Board of
Directors and any committee thereof and to constitute a majority of the Board
of
Directors, including, at the request of the Offeror, to increase the size
of the
Board of Directors and/or to secure the resignations of such number of directors
as is necessary to enable the Offeror’s designees to be elected or appointed to
the Board of Directors.
|
2.7
|
Subsequent
Acquisition
Transaction
|
If,
within 120 days after the date of the Offer, the Offer has been
accepted by Shareholders holding not less than 90% of the outstanding Target
Shares as at the Expiry Time, excluding Target Shares held at the date of
the
Offer by or on behalf of the Offeror, or an affiliate or an associate (as
such
term is defined in the OSA) of the Offeror, the Offeror may, at its option,
acquire the remainder of the Target Shares from those Shareholders who have
not
accepted the Offer pursuant to Part 16 of the YBCA. If that statutory right
of acquisition is not available or the Offeror chooses not to avail itself
of
such statutory right of acquisition, the Offeror currently intends to pursue
other means of acquiring the remaining Target Shares not tendered to the
Offer,
although the Offeror shall not be under any obligation to do so. The Target
agrees that, in the event the Offeror takes up and pays for Target Shares
tendered under the Offer in such number that satisfies at least the Minimum
Tender Condition, it will assist the Offeror in connection with any proposed
amalgamation, statutory arrangement, merger, reorganization, amendment to
articles, consolidation, capital reorganization or other transaction involving
the Target, and/or its Subsidiaries, and the Offeror or an affiliate of the
Offeror, that the Offeror may, in its sole discretion, undertake to pursue
(a
“Subsequent Acquisition Transaction” which, for the purposes of this Agreement,
shall include a compulsory acquisition under Part 16 of the YBCA) to acquire
the
remaining Target Shares.
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES OF THE TARGET
The
Target hereby represents and warrants to the Offeror, and
acknowledges that the Offeror is relying upon such representations and
warranties in connection with the entering into of this Agreement,
that:
-
15 -
|
3.1
|
Board
Approval
|
The
Independent Committee and the Board of Directors, by resolutions
passed unanimously (with the exception of certain directors, who, although
concurring with the approval and recommendation have abstained from voting
solely due to their positions as directors, officers or significant shareholders
of parties who have an interest in the Offer), have approved the entering
into
of this Agreement, and determined that the Offer Price is at the mid-point
of
the Formal Valuation and is fair to the Shareholders (other than the Offeror
and
its affiliates) and that the Offer is advisable and in the best interests
of the
Target and the Shareholders and accordingly the Board of Directors approved
the
Offer and resolved to recommended to Shareholders that they tender their
Target
Shares to the Offer. Accordingly, the Board of Directors will co-operate
with
the Offeror and to support the Offer, to use its commercially reasonable
efforts
to permit the Offer to be successful and recommend in writing to the
Shareholders that they accept the Offer and deposit their Target Shares to
the
Offer. The Independent Committee has received a formal valuation from the
Independent Valuator prepared in accordance with Rule 61-501 and Policy
Statement Q-27 that the fair market value of the Target Shares is in the
range
of $0.240 to $0.275 per share.
|
3.2
|
Organization
and
Qualification
|
The
Target is a corporation duly incorporated, validly existing and in
good standing under the Laws of the Yukon and has full corporate power,
authority, capacity and right to own its properties and other assets and
conduct
its businesses as now owned and conducted. The Target is duly registered
or
otherwise authorized to carry on business, and is in good standing, in each
jurisdiction in which the character of its 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
otherwise authorized will not, individually or in the aggregate, have a Target
Material Adverse Effect. Copies of the articles of incorporation dated April
22,
1949, articles of amalgamation dated July 20, 1989, articles of continuance
dated July 27, 1994 and August 11, 1994, articles of amendment dated August
11,
1994, July 11, 1996 and June 17, 2002, articles of amalgamation dated January
1,
2005 and the by-laws of the Target, as amended on June 29, 1999 and May 30,
2005
(collectively, the “Target Governing Documents”) posted and available for
viewing on SEDAR are accurate and complete as of the date hereof and have
not
been amended, supplemented or superseded, and the Target has not taken, and
is
not contemplating, any action to amend, supplement, supersede, surrender
or
cancel such documents.
|
3.3
|
Subsidiaries
and Joint
Ventures
|
(a) Except
for the Subsidiaries disclosed in the Public Documents, the Target
does not have any material, direct or indirect, interest in any Person. Each
Person in which the Target has an ownership interest is duly organized and
is
validly existing under the Laws of its jurisdiction of incorporation,
continuance or creation, has all necessary corporate or other power and
authority, capacity and right to own its property and other assets and to
conduct its businesses as now owned and conducted by it and is duly registered
or otherwise qualified to carry on business in each jurisdiction in which
the
character of its properties or the nature of its
-
16 -
activities
makes such registration or authorization necessary, except
where the failure to be so registered or otherwise qualified would not,
individually or in the aggregate, have a Target Material Adverse Effect.
The
Target beneficially owns, directly or indirectly, all of the issued and
outstanding securities of each of the Subsidiaries representing the Target’s
ownership interest disclosed in the Public Documents. All of the outstanding
shares in the capital of each of the Subsidiaries that is a corporation and
other ownership interests are: (i) duly authorized, validly issued,
fully-paid and non-assessable and, all such shares and other ownership interests
are owned free and clear of all pledges, security interests, liens, claims
or
encumbrances of any kind or nature whatsoever, (ii) there are no outstanding
options, rights, entitlements, understandings or commitments (contingent
or
otherwise) regarding the right to acquire any such shares or other ownership
interests in, or material assets or properties of, any Subsidiary, and (iii)
free of any other restrictions including any restriction on the right to
vote,
sell or otherwise dispose of such shares.
|
|
(b)
|
The
Target is not a party to any Joint
Venture.
|
|
3.4
|
Compliance
with Laws and Licences; and
Defaults
|
Except
as disclosed in the Public Documents, the Target and each of the
Subsidiaries has complied with and is in compliance with all applicable Laws,
each of them has all licenses, permits, orders or approvals of, and has made
all
required registrations with, any Governmental Entity that is required in
connection with the ownership of their respective assets or the conduct of
their
respective businesses and operations and the Target and each of the Subsidiaries
has fully complied with and is in compliance with all such licences, permits,
orders, approvals and registrations, except where failure to so comply would
not, individually or in the aggregate, have a Target Material Adverse Effect.
Except as disclosed in the Public Documents, there are no licenses material
to
the conduct of the business of the Target and/or the Subsidiaries. Except
as
disclosed in the Public Documents, none of the Target or any of the Subsidiaries
has received any notice, whether written or oral, of termination, withdrawal,
suspension, revocation, refusal, non-renewal, or imposition of terms and
conditions upon renewal of any such licenses, permits, orders, approvals
or
registrations, or of any intention of any Governmental Entity to terminate,
withdraw, suspend, revoke, refuse to renew or impose terms or conditions
upon
renewal of any of such licences, permits, orders, approvals or registrations,
except where the termination, withdrawal, suspension, revocation, refusal,
non-renewal, or imposition of terms and conditions on renewal, individually
or
in the aggregate, would not have and is not reasonably expected to have a
Target
Material Adverse Effect. The execution and delivery by the Target of this
Agreement and performance by it of its obligations hereunder (other than
any
obligations under a Subsequent Acquisition Transaction)and
the initial take-up and payment by the Offeror for the Target Shares as
contemplated herein and the completion of the Offer will not give rise to
the
termination, withdrawal, suspension, revocation, refusal, non-renewal, or
imposition of material terms or conditions on renewal, of any license, permit,
order, approval or registration of the Target and the Subsidiaries. None
of the
Target or any of the Subsidiaries is in conflict with, or in default (including
cross-defaults) under or in violation of: (a) its articles or by-laws or
equivalent organizational documents, or (b) any agreement or understanding
to
which it or by
-
17 -
which
any of its properties is bound or affected, except for any
conflict, default or breach, which would not, individually or in the aggregate,
have a Target Material Adverse Effect.
|
3.5
|
Capitalization
|
The
authorized capital of the Target consists of an unlimited number of
common shares, and an unlimited number of preferred shares, issuable in series.
As at the date hereof, 265,290,997 Target Shares, and no preferred shares
of
Target (and no other equity, convertible or exchangeable securities of Target
of
any class or series) are issued and outstanding, and all such Target Shares
have
been duly authorized and validly issued and are fully paid and non-assessable
shares in the share capital of the Target and are not subject to nor are
they
issued in violation of any pre-emptive rights. All securities of the Target
have
been issued in compliance with Applicable Securities Laws. There are no options,
warrants, conversion privileges, calls or other rights, shareholder rights
plans, agreements, arrangements, commitments or obligations of any character
whatsoever requiring or which may require the Target or any Subsidiary to
issue
or sell or transfer any shares of any capital stock of the Target, including
Target Shares, or of any of the Subsidiaries or securities or obligations
of any
kind convertible into or exchangeable for or otherwise evidencing a requirement
to acquire any shares of capital stock of the Target, including Target Shares,
or any of the Subsidiaries, nor are there outstanding any stock appreciation
rights, phantom equity or similar rights, agreements, arrangements or
commitments based upon the book value, income or any other attribute of the
Target or any of the Subsidiaries. There are no outstanding contractual
obligations of the Target or any of the Subsidiaries to repurchase, redeem
or
otherwise acquire any outstanding Target Shares or with respect to the voting
or
disposition of any outstanding Target Shares. The holders of outstanding
Target
Shares are not entitled to pre-emptive or other similar rights. There are
no
securities of the Target or of any of its Subsidiaries outstanding which
have
the right to vote generally (or are convertible into or exchangeable for
securities having the right to vote generally) with the Shareholders on any
matter.
|
3.6
|
Authority
Relative to this
Agreement
|
The
Target has all necessary corporate power, authority, capacity and
right and has received all requisite corporate power and authority or other
required approvals, to enter into this Agreement and to carry out each of
its
obligations under this Agreement. The execution and delivery of this Agreement
by the Target and the consummation by the Target of the transactions
contemplated by this Agreement have been duly authorized by the Board of
Directors and no other corporate proceedings on the part of the Target are
necessary to authorize this Agreement and the performance by the Target of
its
obligations hereunder. This Agreement has been duly executed and delivered
by
the Target and constitutes a legal, valid and binding obligation enforceable
by
the Offeror against the Target in accordance with its terms subject, however,
to
the usual limitations with respect to enforcement imposed by Law in connection
with bankruptcy, insolvency or similar proceedings, the equitable power of
the
courts to stay proceedings before them, the execution of judgments and to
the
extent that equitable remedies such as specific performance and injunction
are
in the discretion of the court from which they are sought.
-
18 -
|
3.7
|
No
Violations
|
The
execution and delivery by the Target of this Agreement, performance
by it of its obligations hereunder, initial take-up and payment by the Offeror
for the Target Shares as contemplated herein and the completion of the Offer
will not:
(a) result
(with or without notice or the passage of time) in a violation,
conflict, breach of or constitute a default or result in a right of termination
or acceleration under, or permit any Person to exercise rights against the
Target or any of its Subsidiaries, or have an adverse effect on the Target
or
any of its Subsidiaries, or result in the creation of any lien, charge,
encumbrance, claim or right of others upon any of the properties or assets
of
the Target or any of its Subsidiaries or cause any indebtedness to come due
before its stated maturity or cause any credit to cease to be available,
under
any of the terms, conditions or provisions of (i) the Target Governing Documents
or the certificate of incorporation or equivalent or by-laws or equivalent
of
any of the Subsidiaries; (ii) any agreement, contract, indenture, deed of
trust, note, mortgage, bond, instrument, licence, permit, government grant
or
any other instrument or obligation to which the Target or any of its
Subsidiaries is a party or by which the Target or any of its Subsidiaries
is
bound or to which any of them, or any of their respective properties or assets
may be subject; or (iii) any applicable Law to which the Target or any of
its
Subsidiaries is subject or by which the Target or any of its Subsidiaries
is
bound or to which any of them, or any of their respective properties or assets
may be subject, except in each case for any violation, conflict, breach or
default which would not have or reasonably be expected to have, individually
or
in the aggregate, a Target Material Adverse Effect;
(b) cause
the termination, withdrawal, suspension, revocation, refusal,
non-renewal, or imposition of terms or conditions on renewal of any
authorization, consent, approval or licence currently in effect which could
reasonably be expected to have a Target Material Adverse Effect or prevent
or
materially delay the making and completion of the Offer by the Offeror or
any of
the other transactions contemplated hereby (other than a Subsequent Acquisition
Transaction); or
(c) result
in any payment (including severance, unemployment compensation,
golden parachute, bonus or otherwise) becoming due to any director or employee
of the Target or any of its Subsidiaries or result in any increase or
acceleration of contributions, liabilities or benefits, or acceleration of
vesting, under any Benefit Plan or restriction imposed or any asset held
in
connection with a Benefit Plan.
Except
for complying with the provisions of Applicable Securities Law:
(1) there is no legal impediment to the execution and delivery of this Agreement
by the Target and the delivery of the Directors’ Circular, and (2) no filing or
registration with, or authorization, consent or approval of, any Governmental
Entity is required of the Target or its Subsidiaries in connection with the
execution and delivery of this Agreement by the Target, the making or completion
of the Offer or the delivery of the Directors’ Circular or otherwise with a
change of control of the Target and/or the Subsidiaries, except for such
filings
or registrations which, if not made, or for such authorizations, consents
or
approvals which, if not received, would not have a Target
-
19 -
Material
Adverse Effect or an Offeror Material Adverse Effect and would
not prevent or materially delay the making and completion of the Offer by
the
Offeror.
|
3.8
|
Material
Contracts
|
Except
as disclosed in the Public Documents, there are no Contracts (as
defined below) material to the conduct of the business of the Target and/or
the
Subsidiaries. Except as disclosed in the Public Documents, no right or benefit
under any contract, agreement, license, Guarantee, franchise, lease,
arrangement, commitment, understanding or other right or obligation to which
the
Target or any of its Subsidiaries is bound or affected or to which any of
their
respective properties or assets is subject (collectively, a “Contract”),
including any Contract of or with the Government of the Republic of Armenia,
will be materially and adversely affected by the transactions contemplated
by
this Agreement or otherwise be materially and adversely affected by a change
of
control of the Target and/or the Subsidiaries. No approval or consent of
any
Person is needed in order that such Contracts continue in full force and
effect
following the transactions contemplated by this Agreement (other than any
Subsequent Acquisition Transaction) or otherwise pursuant to a change of
control
of the Target and/or the Subsidiaries. None of the Target, its Subsidiaries
nor,
to the knowledge of the Target, any of the other parties thereto, is in default
or breach of, nor has the Target or its Subsidiaries received any notice
of
default or breach of, or termination under, any Contract and, to the knowledge
of the Target, there exists no state of facts which after notice or lapse
of
time or both would constitute a default or breach of any such Contract except
as
would not, individually or in the aggregate, have a Target Material Adverse
Effect.
|
3.9
|
Shareholder
and Similar Agreements; Agreements with Directors and
Officers
|
Neither
the Target nor any Subsidiary is party to any (a) shareholder,
pooling, voting trust or other agreements relating to the issued and outstanding
Target Shares or any voting or equity securities of any of the Subsidiaries,
or
(b) written agreements or understandings with any director or officer of
the
Target or any of the Subsidiaries or, to the best knowledge of the Target
and
the Subsidiaries, oral agreements or understandings with such
individuals.
|
3.10
|
Filings
|
(a) The
Target is a reporting issuer in all of the provinces and territories
of Canada where such a concept exists and a foreign private issuer under
United
States federal securities laws (and in no other jurisdiction) as of the date
hereof and is not in default in the performance of its obligations under
the
Applicable Securities Laws of such jurisdictions. No delisting, suspension
of
trading in or cease trading order with respect to any securities of the Target,
and, to the knowledge of the Target, no inquiry, review or investigation
(formal
or informal) of any Governmental Entity, is in effect or ongoing or, to the
knowledge of the Target, expected to be implemented or undertaken. Less than
40%
(calculated on the date and in accordance with Rules 13e-4 and 14d-1 of the
Exchange Act and Schedules 13E-4F and 14D-1F thereunder, as applicable) of
outstanding Target Shares are held by U.S. holders (as defined in the Exchange
Act), and all other eligibility criteria for use of Schedules 13E-4F and
14D-1F
for the Offer as set
-
20 -
forth
in Rules 13e-4 and 14d-1 of the Exchange Act, as applicable, have
been met. The Target is not an investment company registered or required
to be
registered under the U.S. Investment Company Act of 1940, as amended. Target
has
complied with Applicable Securities Laws governing the conduct of the
Offer.
(b) Except
as set forth in the Bid Circular, the Target has filed all
documents or information (collectively, the “Public Documents”) required to be
filed by it under Applicable Securities Laws since January 1, 2003. All such
documents or information filed by the Target under Applicable Securities
Laws
since January 1, 2003 (inclusive), as of their respective dates, did not
contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in
light of the circumstances under which they were made, not misleading as
at the
time at which they were filed with applicable securities regulatory authorities.
Except as set forth in the Bid Circular, all of the Public Documents, as
of
their respective dates (and as of the dates of any amendments thereto), complied
in all material respects with the requirements of applicable Laws or were
amended on a timely basis to correct deficiencies identified by Governmental
Entities. The Target has not filed any confidential material change report
or
similar document with any Governmental Entity that at the date hereof remains
confidential. For the purposes of this Agreement, the Formal Valuation will
be
deemed to be included in the Public Documents, notwithstanding that it may
be
filed under Applicable Securities Laws after the date hereof.
|
3.11
|
Books
and Records
|
The
corporate records and minute books of the Target and similar records
of each of the Subsidiaries have been maintained substantially in accordance
with applicable Laws and are complete and accurate in all material respects.
The
books, records and accounts of the Target and each of the Subsidiaries (a)
have
been maintained in accordance with good business practices; (b) are stated
in
reasonable detail and accurately and fairly reflect the transactions and
dispositions of the assets of the Target and each of the Subsidiaries; and
(c)
accurately and fairly reflect the basis for the consolidated financial
statements of the Target, in each case, in all material respects. The Target
and
its Subsidiaries have devised and maintain a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions
are
executed in accordance with management’s general or specific authorization; and
(ii) transactions are recorded as necessary (A) to permit preparation of
financial statements in conformity with Canadian GAAP and (B) to maintain
accountability for assets and liabilities in all material respects.
|
3.12
|
Financial
Statements and
Controls
|
(a) The
audited consolidated financial statements for the Target for the
fiscal years ended December 31, 2005, December 31, 2004 and December 31,
2003
and any other financial statements included in the Public Documents during
such
fiscal years including, in each case, the related notes thereto and the report
by the Target’s auditors thereon and the related Management’s Discussion and
Analysis for such periods and all financial statements and Management’s
Discussion and Analysis of the Target which are or have been publicly
disseminated by the Target in respect of any subsequent periods prior to
the
Effective Time will
-
21 -
be
or have been, as the case may be, prepared in accordance with all
applicable Laws and Canadian GAAP applied on a basis consistent with prior
periods and present fairly, in all material respects, the assets, liabilities
(whether accrued, absolute, contingent or otherwise) and financial condition
of
the Target and the Subsidiaries on a consolidated basis as at the respective
dates indicated and the results of operation of the Target and its Subsidiaries,
taken as a whole (on a consolidated basis) as of the respective dates thereof
and for the periods covered thereby and reflect reserves required by Canadian
GAAP in respect of all material contingent liabilities, if any, of the Target
and its Subsidiaries on a consolidated basis. There has been no material
change
in the Target’s accounting policies, except as described in the notes to the
Target’s financial statements, since December 31, 2005.
(b) The
management of the Target has: (i) implemented disclosure controls and
procedures to ensure that information material to the Target, including
information relating to its Subsidiaries, is made known to the management
of the
Target by others within those entities, which disclosure controls and procedures
are, given the size of the Target and the nature of its business, effective
at
the reasonable assurance level in timely alerting the Target’s principal
executive officer and its principal financial officer to material information
required to be included in the Public Documents, and (ii) not, based on its
most
recent evaluation, determined there to be any materially fraudulent action
that
involves management or other employees who have a significant role in the
Target’s internal control over financial reporting or reported on such fraud to
the Target’s outside auditors or the audit committee of the Board of
Directors.
(c) Since
December 31, 2002: (i) neither the Target nor any of the
Subsidiaries nor, to the Target’s knowledge, any director, officer, employee,
auditor, accountant or representative of the Target or any of the Subsidiaries
has received or otherwise had or obtained knowledge of any material complaint,
allegation, assertion or claim, whether written or oral, regarding the
accounting or auditing practices, procedures, methodologies or methods of
the
Target or any of the Subsidiaries or their respective internal accounting
controls, including any complaint, allegation, assertion, or claim that the
Target or any of the Subsidiaries has engaged in questionable accounting
or
auditing practices; and (ii) to the Target’s knowledge, no attorney
representing the Target or any of the Subsidiaries, whether or not employed
by
the Target or any of its Subsidiaries, has reported evidence of a material
violation of applicable Laws, material breach of fiduciary duty or similar
violation by the Target, any of the Subsidiaries or any of their respective
officers, directors, employees or agents to the Board of Directors or any
committee thereof or to any director or officer of the Target.
|
3.13
|
Undisclosed
Liabilities
|
Except
as disclosed in the audited consolidated financial statements of
the Target and its Subsidiaries for the financial year ended December 31,
2005,
neither the Target nor any of the Subsidiaries has any liabilities or
obligations of any nature required to be set forth in a consolidated balance
sheet or in the notes to the consolidated financial statements of the Target
and
the Subsidiaries under applicable Law or Canadian GAAP whether or not accrued,
absolute, contingent or otherwise, and there is no existing condition, situation
or set of circumstances which could be expected to result in such a liability
or
obligation.
-
22 -
|
3.14
|
Property
and Title
|
Except
as disclosed in the Public Documents, each of the Target and its
Subsidiaries has sufficient title, clear of any defect, material claims or
encumbrance, to its operating properties and properties with estimated proven
and probable mineral reserves and/or estimated mineral resources (other than
property to which it is lessee, in which case it has a valid leasehold interest)
and has good and valid title to the real property interests including, without
limitation, fee simple estate of and in real property, leases, easements,
rights
of way, permits or licenses from landowners or authorities permitting the
use of
land by the Target and/or its Subsidiaries, necessary to permit the operation
of
their respective businesses as they are now being or are proposed to be owned
and conducted, except for such failures of title that would, individually
or in
the aggregate, not have a Target Material Adverse Effect. The Target and
its
Subsidiaries hold all mineral rights required to continue their respective
businesses and operations as currently conducted and as proposed to be conducted
as disclosed in the Public Documents, except to the extent that a failure
to do
so would not individually or in the aggregate cause a Target Material Adverse
Effect. All mineral rights held by the Target and its Subsidiaries are free
and
clear of all encumbrances and royalty burdens (other than as disclosed in
the
Public Documents), and none of such mineral rights are subject to reduction
by
reference to mine payouts or otherwise except for those created in the ordinary
course of business and which would not have a Target Material Adverse Effect.
Global Gold Corporation has not made or indicated to the Target, directly
or
indirectly, an intention to make any claim against the Target in respect
of
participation or other purported rights. With respect to the claim by Azeri
government authorities that part of the Zod mine is located on Azeri territory,
as disclosed in the Public Documents, as of the date hereof, there have been
no
legal or other proceedings launched by the Azerbaijan government or government
authority, there has been no conclusive determination of this issue and the
Target is not aware of any information which has not been disclosed in the
Public Documents which suggests that the claim will be resolved in favour
of
Azerbaijan. The Government of the Republic of Armenia has not and has not
indicated to the Target, directly or indirectly, any intention to withdraw
or
modify its position that the Zod mine is under Target control.
|
3.15
|
Absence
of Certain Changes or
Events
|
(a) Since
December 31, 2005, (a) the Target and the Subsidiaries have
conducted their respective businesses only in the usual, ordinary and regular
course and consistent with past practice including as to the making of forward
commitments; and (b) there has not been any event, change or occurrence which
has had or is reasonably expected to have a Target Material Adverse
Effect.
(b) Since
December 31, 2004, neither the Target nor any Subsidiary has
engaged in any hedging activities. Neither the Target nor any Subsidiary
has
entered into any agreement regarding hedging or otherwise has any plans to
engage in hedging activities of any kind.
-
23 -
|
3.16
|
No
Defaults
|
Neither
the Target nor any of the Subsidiaries is in default under, and
there exists no event, condition or occurrence which, after notice or lapse
of
time or both, would constitute such a default under any material contract
or
agreement to which it is a party which would, if terminated due to such default,
individually or in the aggregate, have a Target Material Adverse
Effect.
|
3.17
|
Employment
Matters
|
(a) Neither
the Target nor any of the Subsidiaries has entered into any
written or oral agreement or understanding providing for retention, severance,
termination or other payments in connection with the termination of employment,
engagement, or resignation, of any director, officer, employee or consultant
following a change in control of the Target or any Subsidiary.
(b) Neither
the Target nor any of the Subsidiaries is a party to any
collective bargaining agreement or subject to any application for certification
nor are there any current, pending or, to the best of the knowledge of the
Target, threatened strikes, lock-outs, slowdowns or work stoppages affecting
either the Target or any of the Subsidiaries.
(c) Neither
the Target nor any of the Subsidiaries is subject to any claim
for wrongful dismissal, constructive dismissal or any other tort claim, actual
or, to the best of the knowledge of the Target, threatened, or any litigation,
actual or, to the best of the knowledge of the Target, threatened, relating
to
employment or termination of employment of employees or
consultants.
(d) Each
of the Target and the Subsidiaries has, in all material respects,
operated in accordance with all applicable Laws with respect to employment
and
labour, including employment and labour standards, occupational health and
safety, employment equity, pay equity, workers’ compensation, human rights and
labour relations and there are no current, pending or, to the best of the
knowledge of the Target, threatened proceedings before any board or tribunal
with respect to any of the areas listed herein.
(e) Neither
the Target nor any of the Subsidiaries has made any commitment to
provide, or any representation in respect of, any increase in the compensation
of any Employees (including any increase pursuant to a Benefit Plan) or any
increase in any such compensation or bonus payable to any Employee, or to
make
any loan to, or to engage in any transaction with, any Employee, except in
the
usual, ordinary and regular course of business and consistent with past
practice.
(f) All
accruals for unpaid vacation pay, premiums for unemployment
insurance, health premiums, accrued wages, salaries and commissions, severance
pay and Employee Benefit Plan payments have been reflected in the books and
records of the Target. Neither the Target nor any of the Subsidiaries has
any
material liabilities or any obligations whatsoever in respect of any retired
or
former Employee.
-
24 -
|
3.18
|
Litigation,
Etc.
|
(a) There
is no suit, claim, action, proceeding or investigation pending,
commenced or, to the knowledge of the Target, threatened against or relating
to
the Target or any of the Subsidiaries or affecting any of their respective
properties or assets before or by any Governmental Entity which, if determined
adversely to the Target or any of the Subsidiaries, as the case may be,
individually or in the aggregate, would reasonably be expected to have a
Target
Material Adverse Effect, nor is the Target aware of any existing ground on
which
any such suit, claim, action, proceeding or investigation may be commenced
with
any reasonable likelihood of success.
(b) Neither
the Target nor any of the Subsidiaries is subject to any
outstanding judgment, order, writ, injunction, decree or arbitration order
or
award which has had or is reasonably expected to have a Target Material Adverse
Effect, nor is the Target aware of any existing ground on which any such
judgment, order, writ, injunction, decree or arbitration order or award may
be
issued or imposed or issued with any reasonable likelihood of
success.
|
3.19
|
Environmental
|
Each
of the Target and the Subsidiaries and their respective businesses,
operations, and properties:
(a) except
as disclosed in the Public Documents, has obtained and currently
holds all Environmental Permits which are required under all Environmental
Laws
except where the absence of same would not individually, or in the aggregate,
reasonably be expected to have a Target Material Adverse Effect. With respect
to
the environmental clearance required from the Government of the Republic
of
Armenia to move the Ararat plant to the Zod mine site as disclosed in the
Public
Documents, the Target is currently in negotiations with certain Armenian
government agencies to obtain Environmental Impact Assessment Clearance and
as
of the date hereof is not aware of any information which has not been disclosed
in the Public Documents which indicates that the Government of the Republic
of
Armenia will not grant the requested clearance or that the granting of same
will
be unduly delayed or will have material conditions imposed thereon or will
otherwise have a Target Material Adverse Effect;
(b) except
as disclosed in the Public Documents, is in compliance with all
Environmental Laws and all terms and conditions of all Environmental Permits
except where the failure to be in compliance would not individually, or in
the
aggregate, reasonably be expected to have a Target Material Adverse
Effect;
(c) except
as disclosed in the Public Documents, has not received any order,
request or notice from any Person alleging a material violation of, or providing
notice of any changes to the terms of, any Environmental Laws except where
any
such order, request or notice would not individually, or in the aggregate,
reasonably be expected to have a Target Material Adverse Effect;
-
25 -
(d) except
where the same would not individually, or in the aggregate,
reasonably be expected to have a Target Material Adverse Effect, (a) is not
a
party to any litigation or administrative proceeding, nor so far as it is
aware,
is any litigation or administrative proceeding threatened against it or its
property or assets, which (1) asserts or alleges that it violated any
Environmental Laws, (2) asserts or alleges that it is required to clean up,
remove or take remedial or other response action due to the release of any
hazardous substances, or (3) asserts or alleges that it is required to pay
all
or a portion of the cost of any past, present or future cleanup, removal
or
remedial or other response action which arises out of or is related to the
release of any hazardous substances, (b) is not aware of any conditions existing
currently or likely to exist which could reasonably be expected to subject
it to
damages, penalties, injunctive relief or cleanup costs under any Environmental
Laws or which require or are likely to require cleanup, removal, remedial
action
or other response pursuant to applicable Environmental Laws by it; and (c)
is
not subject to any judgment, decree, order or citation related to or arising
out
of applicable Environmental Laws and has not been named or listed as a
potentially responsible party by any Governmental Entity in a matter arising
under any Environmental Laws;
(e) has
not used, owned, operated, occupied or managed, had charge of or
control over, now or in the past, any real property that is not free of
contamination from any hazardous material except for such contamination that
could not reasonably be expected to result in environmental liabilities except
where the same would not individually or in the aggregate have a Target Material
Adverse Effect;
(f) has
not caused, suffered or permitted to occur any release of hazardous
materials on, at, in, under, above, to, from or about any of the real property
used, owned, operated, occupied or managed by the Target or any of its
Subsidiaries or over which any of them had charge of or control now or in
the
past, contrary to any Environmental Laws except where the same would not
individually, or in the aggregate, reasonably be expected to have a Target
Material Adverse Effect; and
(g) is
not involved in operations or does not know of any facts,
circumstances or conditions, including, any release of hazardous material,
that
could reasonably be expected to result in any environmental liabilities except
where the same would not individually, or in the aggregate, reasonably be
expected to have a Target Material Adverse Effect.
|
3.20
|
Taxes
|
(a) Except
as disclosed in the Public Documents, the Target and each of its
Subsidiaries has timely filed, or caused to be filed, all Tax Returns required
to be filed by it, (all of which returns were correct and complete in all
material respects), and have paid, collected, withheld or remitted, or caused
to
be paid, collected, withheld or remitted, all Taxes that are due and payable
(including all instalments on account of Taxes for the current year, that
are
due and payable by the Target and each of the Subsidiaries whether or not
assessed (or reassessed) by the appropriate Governmental Entity), in each
case
except for any such Tax Returns or Taxes the non-filing or non-payment of
which
have not or would not reasonably be expected to have, individually or in
the
aggregate, a Target Material Adverse Effect, and the Target has provided
adequate accruals in accordance with Canadian GAAP in its most recently
published
-
26 -
consolidated
financial statements for any Taxes for the period covered by
such financial statements that have not been paid, whether or not shown as
being
due on any Tax Returns. Since such publication date, no material Tax liability
not reflected in such statements or otherwise provided for has been assessed,
proposed to be assessed, incurred or accrued other than in the in the usual,
ordinary and regular course. There is no assessment or reassessment under
review
or appeal with any Governmental Entity.
(b) Except
as disclosed in the Public Documents, there are no proceedings,
investigations, audits or claims now pending or, to the best of the knowledge
of
the Target, threatened against the Target or any Subsidiary in respect of
any
Taxes and there are no matters under discussion, audit or appeal with any
Governmental Entity relating to Taxes.
(c) There
are no material proposed (but unassessed) additional Taxes and none
has been asserted in writing by the Canada Revenue Agency or any other taxing
authority, including any sales tax authority, in connection with any of the
Tax
Returns referred to in (a) above, and no waivers of statutes of limitations
have
been given or requested with respect to the Target or any of the Subsidiaries,
in each case except for any such written notices or waivers which, individually
or in the aggregate, have not had a Target Material Adverse Effect. No Tax
liens
have been filed other than for Taxes not yet due and payable which, individually
or in the aggregate, would have a Target Material Adverse Effect.
(d) For
all periods ended on or before December 31, 2005, true and complete
copies of (i) all relevant portions of material income tax audit reports,
statements of deficiencies, settlements or other agreements relating to Taxes
received by the Target or its Subsidiaries or on behalf of the Target or
any of
its Subsidiaries from a Governmental Entity, and (ii) all material federal,
provincial, state, local or foreign income or franchise returns for the Target
or any of its Subsidiaries have been made available by the Target for inspection
by the Offeror.
(e) Neither
the Target nor any of its Subsidiaries is party to or bound by
any material agreement, arrangement or practice with respect to Taxes (including
Tax sharing agreements with any taxing authority).
|
3.21
|
Withholdings
|
The
Target and each of the Subsidiaries have withheld from each payment
made to any of their present or former employees, officers and directors
all
Taxes required by applicable Laws and have duly and timely remitted to the
appropriate Governmental Entity such Taxes, and will continue to do so until
the
Effective Time.
|
3.22
|
Intellectual
Property
|
Except
to the extent that could not, individually or in the aggregate,
reasonably be expected to have a Target Material Adverse Effect, the Target
and
its Subsidiaries own, or are validly licensed or otherwise have the right
to
use, all patents, patent rights, industrial designs, trademarks, trade names,
service marks, copyrights, know-how and other proprietary intellectual property
rights that are used in their respective businesses.
-
27 -
|
3.23
|
Insurance
|
Policies
of insurance in force as of the date hereof naming the Target or
any of the Subsidiaries as an insured adequately cover all risks reasonably
and
prudently foreseeable in the operation and conduct of the businesses of the
Target and each of the Subsidiaries for which, having regard to the nature
of
such risk and the relative cost of obtaining insurance, it is in the opinion
of
the Target, acting reasonably, prudent to seek such insurance rather than
provide for self-insurance. All such policies of insurance shall remain in
force
and effect and shall not be cancelled, subject to non-renewal, renewed with
a
change in terms or conditions or otherwise terminated as a result of the
Offer
or any of the transactions contemplated by this Agreement other than such
cancellations, non-renewals, imposition of terms and conditions on renewal
and
terminations as would not individually or in the aggregate have a Target
Material Adverse Effect or as is agreed to or requested by the
Offeror.
|
3.24
|
Employee
Benefits
|
(a) Each
of the Target and the Subsidiaries has complied in all material
respects with all the terms of, and all applicable Laws in respect of, employee
compensation, health, welfare, supplemental unemployment benefit, bonus,
profit
sharing, deferred compensation, stock purchase, stock compensation, disability,
pension or retirement plans and other employee compensation or benefit
obligations of the Target and each of the Subsidiaries arising under or relating
to each of the employee compensation or benefit plans, agreements, policies,
programs, arrangements or practices, whether written or oral, which are
maintained by or binding upon the Target or any of the Subsidiaries
(collectively referred to as the “Benefit Plans”).
(b) All
of the Benefit Plans are and have been established, registered,
qualified, invested and administered, in all material respects, in accordance
with all applicable Laws, and in accordance with their terms and the terms
of
agreements between the Target and/or any of its Subsidiaries, as the case
may
be, and their respective Employees and former employees. To the knowledge
of the
Target, no fact or circumstance exists that could adversely affect the existing
Tax status of a Benefit Plan.
(c) All
current obligations of the Target or any of its Subsidiaries
regarding the Benefit Plans have been satisfied in all material respects
and no
Taxes are owing or exigible under any of the Benefit Plans except as would
not
have a Target Material Adverse Effect. All contributions or premiums required
to
be made by the Target or any of its Subsidiaries, as the case may be, under
the
terms of each Benefit Plan or by applicable Laws have been made in a timely
fashion in accordance with applicable Laws and the terms of the Benefit Plans
except as do not have a Target Material Adverse Effect.
(d) Each
Benefit Plan is insured or funded as required by applicable Law and
in good standing with such Governmental Entities as may be applicable and,
as of
the date hereof, no currently outstanding notice of under-funding,
non-compliance, failure to be in good standing or otherwise has been received
by
the Target or any of its Subsidiaries from any such Governmental Entities
other
than such breaches as in the aggregate do not have a Target Material Adverse
Effect. Each Benefit Plan which is required under its terms or pursuant to
applicable Law to be
-
28 -
funded
on an actuarial or other basis is fully funded on both a going
concern and solvency basis in accordance with the actuarial assumptions and
methods used in the most recent actuarial valuation report in respect of
each
such Benefit Plan filed with the applicable Governmental Entity.
(e) All
liabilities of the Target and each of its Subsidiaries (whether
accrued, absolute, contingent or otherwise) related to the Benefit Plans
have
been fully and accurately accrued and disclosed, and reported in accordance
with
Canadian GAAP in the Target’s financial statements. No changes have occurred or
are expected to occur to any Benefit Plan which would materially affect the
most
recent actuarial report prepared in respect of the applicable Benefit
Plan.
(f) There
are no actions, suits, claims (other than routine claims for
payment of benefits in the usual, ordinary and regular course), trials, demands,
investigations, arbitrations or other proceedings which are pending or
threatened in respect of any of the Benefit Plans which, individually or
in the
aggregate, have or would reasonably be expected to have a Target Material
Adverse Effect.
(g) Except
as disclosed in the Public Documents, the Target and the
Subsidiaries have no pension or retirement income plans, and have not made
any
agreements or promises with respect to same.
(h) The
Target and the Subsidiaries have no stock option plans or similar
arrangements other than the Stock Option Plan.
|
3.25
|
Guarantees
|
Except
as disclosed in the Public Documents, neither the Target, nor any
of the Subsidiaries has given or agreed to give, nor is it a party to or
bound
by, any guarantee of indebtedness, indemnity or suretyship of other obligations
of any Person (collectively, “Guarantees”) which, if enforced in accordance with
their terms, would individually or in the aggregate, have a Target Material
Adverse Effect. No claims have been made, nor, to the best of the knowledge
of
the Target and the Subsidiaries, are threatened, under or in respect of any
Guarantee of, or delivered by, the Target or the Subsidiaries, except for
such
claims which, individually or in the aggregate, do not exceed
$100,000.
|
3.26
|
Restrictions
on Business
Activities
|
There
is no agreement, judgment, injunction, order or decree binding upon
the Target or any of the Subsidiaries that has, or could reasonably be expected
to have, the effect of materially prohibiting, restricting or impairing any
activities of the Target or any of the Subsidiaries, any acquisition of property
by the Target or any of the Subsidiaries or the conduct of business by the
Target or any of the Subsidiaries as currently conducted.
-
29 -
|
3.27
|
Mineral
Reserves and
Resources
|
The
estimated proven and probable mineral reserves and estimated
indicated, measured and inferred mineral resources disclosed in the Public
Documents have been prepared and disclosed in all material respects in
accordance with accepted engineering practices and all applicable Laws. There
has been no material reduction in the aggregate amount of estimated mineral
reserves, estimated mineral resources or mineralized material of the Target
and
its Subsidiaries, taken as a whole, from the amounts disclosed in the Public
Documents. The independent review of the results of the Target’s drilling
program post the Phase III pre-feasibility study for Zod is not expected
to have
a material impact on the cash flow and other estimates of Target management
contained in the Formal Valuation.
|
3.28
|
Operational
Matters
|
Except
as would not, individually or in the aggregate, be reasonably
expected to have a Target Material Adverse Effect:
|
|
(a)
|
except
as disclosed in the Public Documents, all rentals,
royalties, overriding royalty interests, production payments, net profits,
interest burdens and other payments due or payable on or prior to
the date
hereof or with respect to the direct or indirect assets of the Target
and
its Subsidiaries have been properly and timely paid. With respect
to the
dispute with the Government of the Republic of Armenia in relation
to the
environmental payment for 2004 disclosed in the Public Documents,
the
Target is not aware of any information not disclosed in the Public
Documents which would indicate that the dispute may not be resolved
in
favour of the Target;
|
|
|
(b)
|
all
rentals and payment obligations due and payable or performable
on or prior to the date hereof under or on account of any of the
direct or
indirect assets of the Target and its Subsidiaries have been duly
paid,
performed, or provided for prior to the date hereof;
and
|
|
|
(c)
|
all
(i) mines where the Target or a Subsidiary is operator at the
relevant time and (ii) mines located in or on the lands of the Target
or any Subsidiary, have been developed in accordance with industry
standard mining practices and in compliance with all applicable
Laws.
|
|
3.29
|
Canadian
Assets and
Revenues
|
As
shown in the audited financial statements of the Target for its most
recently completed fiscal year immediately preceding the execution of this
Agreement, neither (i) the aggregate value of the assets in Canada owned
by the
Target and its Subsidiaries, nor (ii) the gross revenues from sales in or
from
Canada of the Target and its Subsidiaries exceeds $50,000,000.
-
30 -
|
3.30
|
Corrupt
Practices
Legislation
|
There
have been no actions taken by or, to the knowledge of the Target,
on behalf of the Target or its Subsidiaries that would cause the Target to
be in
violation of the Corruption of Foreign Public Officials Act (Canada) or similar
applicable laws of any other country.
|
3.31
|
Survival
of Representations and
Warranties
|
The
representations and warranties of the Target contained in this
Agreement shall not survive the completion of the Offer and shall expire
and be
terminated on the earlier of the Effective Time and the date on which this
Agreement is terminated in accordance with its terms.
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF THE OFFEROR
The
Offeror hereby represents and warrants to the Target and acknowledges
that the Target is relying upon such representations and warranties in
connection with the entering into of this Agreement, that:
|
4.1
|
Organization
and
Qualification
|
The
Offeror is validly existing under the Laws of its jurisdiction of
incorporation and has the requisite corporate power and authority to conduct
its
businesses as they are now being conducted.
|
4.2
|
Authority
Relative to this
Agreement
|
The
Offeror has the requisite corporate power and authority to enter into
this Agreement and to carry out its obligations under this Agreement. The
execution and delivery of this Agreement by the Offeror and the performance
by
the Offeror of its obligations hereunder have been duly authorized by the
board
of directors of the Offeror and no other corporate proceedings on the part
of
the Offeror are necessary to authorize this Agreement and the performance
of its
obligations hereunder. This Agreement has been duly executed and delivered
by
the Offeror and constitutes a legal, valid and binding obligation, enforceable
by the Target against the Offeror in accordance with its terms subject, however,
to the usual limitations with respect to enforcement imposed by law in
connection with bankruptcy, insolvency or similar proceedings, the equitable
power of the courts to stay proceedings before them, the execution of judgements
and to the extent that equitable remedies such as specific performance and
injunction are in the discretion of the court from which they are
sought.
|
4.3
|
No
Violations
|
The
Offeror has complied with Applicable Securities Laws governing the
conduct of the Offer. The execution and delivery by the Offeror of this
Agreement and the performance by the Offeror of its obligations hereunder
do
not:
-
31 -
(a) violate,
conflict with or result in a breach of any provision of (i) its
certificate of incorporation, or by-laws; (ii) any material agreement or
other
instrument to which it is a party or by which it is bound; or (iii) any
applicable Law to which it is subject or by which it is bound, except for
any
violation, conflict or breach which would not, individually or in the aggregate,
have an Offeror Material Adverse Effect; or
(b) other
than in connection with or in compliance with the provisions of
Applicable Securities Laws, no authorization, consent or approval of, or
filing
with any Governmental Entity is necessary on the part of the Offeror for
the
consummation of the transactions contemplated by this Agreement, except for
such
authorizations, consents, approvals and filings as to which the failure to
obtain or make would not, individually or in the aggregate, prevent or
materially delay consummation of the transactions contemplated by this
Agreement.
|
4.4
|
Financing
Arrangements
|
The
Offeror has made adequate arrangements to ensure that the required
funds are available to effect payment in full for all of the Target Shares
acquired pursuant to the Offer.
|
4.5
|
Survival
of Representations and
Warranties
|
The
representations and warranties of the Offeror contained in this
Agreement shall not survive the completion of the Offer and shall expire
and be
terminated on the earlier of the Effective Time and the date on which this
Agreement is terminated in accordance with its terms.
ARTICLE
5
COVENANTS
|
5.1
|
Covenants
of Target Regarding the Conduct of
Business
|
The
Target hereby covenants and agrees that during the period from the
date of this Agreement until the earlier of the time (the “Effective Time”) the
Offeror initially takes-up and pays for the Target Shares as contemplated
herein
and the time at which this Agreement is terminated in accordance with its
terms,
unless the Offeror shall otherwise agree in writing or as otherwise expressly
contemplated or permitted by this Agreement, the Target will, and will cause
each of its Subsidiaries to:
(a) conduct
its and their respective businesses only in and not take any
action or omit to take any action except in, the usual, ordinary and regular
course of business, consistent with past practice and to use commercially
reasonable efforts to preserve intact their present business organizations
and
goodwill, their respective assets, real property interests (including title
to
leasehold and other interests in respect of real property), mining leases,
mining concessions, mining claims, exploration permits or prospecting permits
or
other property, mineral or proprietary interests or rights in good standing,
to
keep available the services of its officers and
-
32 -
employees
as a group and to maintain satisfactory relationships with
suppliers, distributors, customers, Employees and others having business
relationships with them;
(b) not,
directly or indirectly: (i) amend or propose to amend its articles,
charter or by-laws or other comparable organizational documents; (ii) issue,
grant, sell or pledge or agree to issue, grant, sell or pledge any shares
or
other equity interests of the Target or its Subsidiaries, or options, warrants,
calls, rights or units to acquire any such shares or interests, securities
convertible into or exchangeable or exercisable for, or otherwise evidencing
a
right to acquire, shares or other equity interests of the Target or its
Subsidiaries, other than (A) in transactions solely between two or more Target
wholly-owned Subsidiaries or solely between the Target and a Target wholly-owned
Subsidiary, (B) pledges made pursuant to pledge commitments contained in
written
agreements entered into prior to the date hereof and described in the Public
Documents, and (C) as required under applicable Law, or contracts entered
into
prior to the date hereof and described in the Public Documents; (iii) split,
consolidate, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of
or in
substitution for shares of its capital stock, or declare, set aside or pay
any
dividends on, or make any other distributions or payments (whether in cash,
shares, property or otherwise) in respect of, any of its capital stock, other
than dividends and distributions by a direct or indirect wholly-owned Subsidiary
to the Target; (iv) redeem, purchase, offer to purchase or otherwise acquire
any
of its outstanding securities, unless otherwise required by the terms of
such
securities and other than in transactions solely between two or more Target
wholly-owned Subsidiaries or solely between the Target and a Target wholly-owned
Subsidiary; (v) amend the terms of, or reduce the stated capital of, any
of its
securities; (vi) adopt a plan of liquidation or resolution providing for
the
liquidation or dissolution of the Target or any of its Subsidiaries or undertake
any amalgamation, merger, consolidation, spin-off, demerger or a reorganization
of the Target or any of its Subsidiaries;
(c) conduct
itself so as to keep the Offeror informed as to the material
decisions or actions required to be made or taken by the Board of Directors
with
respect to the operation of the Target’s business; provided, in each case, that
such disclosure is not otherwise prohibited by reason of a confidentiality
obligation owed to any Person or otherwise prevented by applicable
Law;
(d) not,
and shall not permit any of its Subsidiaries to, (i) grant or
promise to grant to any officer or director, other than as disclosed to the
Offeror in writing prior to the date hereof, an increase or improvement in
compensation or benefits in any form; (ii) other than in the ordinary course
of
business consistent with past practice, grant or promise to grant to any
other
Employee any increase in compensation or benefits in any form other than
to the
extent required under any existing collective bargaining agreements or union
contracts; (iii) make any loan to any officer or director; (iv) take any
action
with respect to the grant or increase of any severance or termination pay
to, or
the entering into or amendment of any employment or consulting agreement
or
arrangement with, any Employee of the Target or any of its Subsidiaries,
or with
respect to any increase of benefits payable under its current severance or
termination pay policies; (v) adopt or amend any bonus, profit sharing,
incentive, compensation, option, pension, retirement, deferred compensation,
employment or other Benefit Plans, agreement, trust, fund or
-
33 -
arrangement
for the benefit or welfare of any Employee; (vi) take any
action to accelerate any rights or benefits, or make any material determinations
not in the ordinary course of business consistent with past practice under
any
Benefit Plan, collective bargaining agreement or union contract; or (vii)
except
as required by Law, establish, adopt, enter into or amend any collective
bargaining arrangement;
(e) not
directly or indirectly: (i) sell, pledge, lease, dispose of or
encumber any assets of the Target or of any Subsidiary, except in the ordinary
course of business consistent with past practice; (ii) acquire (by merger,
amalgamation, consolidation or acquisition of shares or assets or otherwise)
any
Person or division thereof, or, except for investments in securities made
in the
ordinary course of business consistent with past practice, make any investment
either by the purchase of securities, contributions of capital (other than
to
wholly-owned Subsidiaries), property transfer, or, except in the ordinary
course
of business consistent with past practice, purchase any property or assets
of
any other Person, if any of the foregoing would be material to the business
or
financial condition of the Target and its Subsidiaries taken as a whole;
(iii)
commence or undertake a substantial expansion of its business facilities
or
operations or an expansion that is out of the ordinary and regular course
of
business consistent with past practice in light of current market and economic
conditions; (iv) incur any indebtedness for borrowed money or any other
liability or obligation or issue any debt securities or assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other Person, or make any loans or advances, except (A) in the ordinary
course of business consistent with past practice, and (B) for refinancing
of
existing debt on substantially the same or more favourable terms; (v) pay,
discharge or satisfy any 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 Target’s financial statements or incurred in the ordinary course of business
consistent with past practice; (vi) authorize, recommend or propose any release
or relinquishment of any contractual right or other right under any license
or
permit, other than in the ordinary course of business consistent with past
practice; (vii) waive, release, grant or transfer any rights of material
value
or modify or change any existing licence, permit, lease, contract or other
document, other than in the ordinary course of business consistent with past
practice; (viii) abandon or fail to diligently pursue any application for
any
license, permit, order, authorization, consent, approval or registration,
except
where such abandonment or failure would not, individually or in the aggregate,
result in a Target Material Adverse Effect; (ix) except in the ordinary course
of business consistent with past practice or as required by applicable Law,
enter into or modify in any material respect any contract or series of
contracts, agreement, commitment or arrangement which new contract or series
of
related new contracts, agreement, commitment or arrangement or modification
to
an existing contract or series of related existing contracts, agreement,
commitment or arrangement could reasonably be expected to have a Target Material
Adverse Effect; or (x) authorize or propose any of the foregoing, or enter
into
or modify any contract or series of contracts, agreement, commitment or
arrangement to do any of the foregoing;
(f) use
commercially reasonable efforts to cause the current insurance (or
re-insurance) policies maintained by the Target or any of its Subsidiaries
not
to be cancelled or terminated or any of the coverage thereunder to lapse,
unless
simultaneously with such
-
34 -
termination,
cancellation or lapse, replacement policies underwritten by
insurance and re-insurance companies of nationally recognized standing, having
comparable deductions, 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;
(g) (i)
not settle or compromise any material action, claim or proceeding
brought against it or any of its Subsidiaries or any action, claim or proceeding
brought by any present, former or purported holder of its securities in
connection with the transactions contemplated by this Agreement or the Offer;
and (ii) notify the Offeror, first immediately orally and then promptly in
writing, of (A) any claim brought by any present, former or purported holder
of
any securities of the Target in connection with the transactions contemplated
by
this Agreement or the Offer; and (B) the occurrence of any Target Material
Adverse Effect or, subject to Applicable Securities Laws, any change in any
material fact set forth in the Public Documents;
(h) (i)
duly and timely 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 which are due
and
payable (including all instalments on account of Taxes for the current year,
that are due and payable by the Target or any of the Subsidiaries whether
or not
assessed (or reassessed) by the appropriate Governmental Entity) and timely
withhold and remit all Taxes required to be withheld and remitted; (iii)
not
make or rescind any material express or deemed election relating to Taxes;
(iv)
not make a request for a tax ruling or enter into a closing agreement with
any
taxing authorities; (v) not settle or compromise any material claim, action,
suit, litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes; (vi) not enter into, modify or terminate any agreement
with
respect to any of the foregoing or execute any waiver providing for an extension
of time within which any Governmental Entity may assess or collect Taxes
for
which the Target or any of the Subsidiaries is or may be liable or the Target
or
any of the Subsidiaries is required to pay or remit any Taxes or amounts
on
account of Taxes; and (vii) not amend any of its accounting policies or
practices or adopt new accounting policies or practices, in each case except
as
may be required by applicable Law or in accordance with Canadian GAAP;
and
(i) (i)
except as otherwise specifically described in this Agreement, not
directly or indirectly authorize or propose, or enter into or modify, any
contract, agreement, commitment or arrangement, to do any of the matters
prohibited by the other paragraphs of this Section 5.1 and (ii) not take
any
action (including, without limitation and for greater certainty, any action
that
would otherwise be permitted to be taken under the terms of this Agreement),
if
such action could reasonably be expected to prevent, materially impede or
make
more difficult or burdensome in any material respect, any of the transactions
contemplated hereby.
|
5.2
|
Covenants
of Target Regarding the Performance of
Obligations
|
(1) The
Target shall and shall cause its Subsidiaries to perform all
obligations required to be performed by the Target or any of its Subsidiaries
under this Agreement, co-operate with the Offeror in connection therewith,
and
do all such other acts and things as may be reasonably requested by the Offeror
and are necessary or desirable in order to consummate and make effective,
as
soon as reasonably practicable, the transactions contemplated in this
-
35 -
Agreement
and, without limiting the generality of the foregoing, the
Target shall and where appropriate shall cause its Subsidiaries to:
|
|
(a)
|
apply
for and use all commercially reasonable efforts to obtain all
appropriate regulatory approvals relating to the Target or any of
its
Subsidiaries (including promptly complying with all requests for
information) and, in doing so, to keep the Offeror reasonably informed
as
to the status of the proceedings related to obtaining the appropriate
regulatory approvals, including, but not limited to, providing the
Offeror
with copies of all related applications and notifications, in draft
form,
and requests for information in order for the Offeror to provide
its
comments;
|
|
|
(b)
|
defend
all lawsuits or other legal, regulatory or other proceedings
challenging or affecting this Agreement or the consummation of the
transactions contemplated hereby;
|
|
|
(c)
|
use
all commercially reasonable efforts to obtain all necessary
waivers, consents and approvals required to be obtained by the Target
or
its Subsidiaries from other parties to loan agreements, leases, licences
or other contracts, provided that such waivers, consents and approvals
may
be conditional on the Offeror taking up Target Shares under the Offer
and
to the extent such waivers, consents and approvals require an adverse
modification to the terms of such documents or prepayment of any
funds or
the incurring of additional obligations, shall be subject to the
Offeror’s
prior written consent; and
|
|
|
(d)
|
subject
to applicable Law and the fiduciary duties of the Board of
Directors, recommend that Shareholders accept the Offer in respect
of
their Target Shares and not act, or fail to act, in any way that
might
reasonably be expected to discourage Shareholders from accepting
the Offer
and, except as permitted hereby, not withdraw such
recommendation.
|
(2) The
Target shall give the Offeror the opportunity to participate, at its
own expense, in the defence or settlement of any shareholder litigation against
the Target relating to any transaction contemplated hereby; provided, however,
that no such settlement shall be agreed to without the Offeror’s prior written
consent (which consent shall not be unreasonably withheld or delayed if such
settlement only involves monetary payment).
|
5.3
|
Covenants
of the Offeror
|
The
Offeror shall, perform all obligations required to be performed by it
under this Agreement, co-operate with the Target in connection therewith,
and do
all such other acts and things as may be necessary or desirable in order
to
consummate and make effective, as soon as reasonably practicable, the
transactions contemplated in this Agreement and, without limiting the generality
of the foregoing:
-
36 -
(a) the
Offeror shall, subject to the terms and conditions of this Agreement,
make the Offer, which Offer shall be made by the Offeror in compliance with
Applicable Securities Laws;
(b) the
Offeror shall, subject to the terms and conditions of the Offer,
take-up the Target Shares validly deposited under the Offer and not withdrawn
and pay for such Target Shares in accordance with the Offer and Applicable
Securities Laws; and
(c) the
Offeror shall apply for and use all commercially reasonable efforts
to obtain all appropriate regulatory approvals relating to the Offeror or
any of
its subsidiaries and, in doing so, to keep the Target reasonably informed
as to
the status of the proceedings related to obtaining the appropriate regulatory
approvals, including providing the Target with copies of all related
applications and notifications, in draft form, in order for the Target to
provide its comments thereon.
|
5.4
|
Mutual
Covenants
|
Each
party covenants and agrees that, except as contemplated in this
Agreement, during the period from the date of this Agreement until the Effective
Time:
(a) it
shall, and shall cause its subsidiaries to use all commercially
reasonable efforts to satisfy (or cause the satisfaction of) the conditions
precedent to its obligations hereunder as set forth in Article 5 to the extent
the same is within its control and to take, or cause to be taken, all other
action and to do, or cause to be done, all other things reasonably requested
by
the other party and that are necessary, proper or advisable under all applicable
Laws to complete the Offer, any Subsequent Acquisition Transaction and any
of
the other transactions contemplated hereby as promptly as is practicable,
including using its commercially reasonable efforts to: (i) execute and deliver
such documents and instruments as the other party hereto may reasonably request;
(ii) obtain such information, document or consents required in connection
with
the preparation of the Bid Circular and shall use its commercially reasonable
best efforts to obtain all necessary waivers, consents and approvals and
to
effect all necessary registrations, filings (including filings under Applicable
Securities Law) and submissions of information requested by Governmental
Entities required to be effected by it in connection with the Offer or any
Subsequent Acquisition Transaction and any of the other transactions
contemplated hereby, as applicable; (iii) oppose, lift or rescind any injunction
or restraining order against it or other order or action against it seeking
to
stop, or otherwise adversely affecting its ability to make and complete the
Offer or any Subsequent Acquisition Transaction and any of the other
transactions contemplated hereby, as applicable; and (iv) reasonably co-operate
with each other party in connection with the performance by it and its
subsidiaries of their obligations hereunder;
(b) it
shall not take any action or permit any action to be taken which would
reasonably be expected to impede the making or completion of the Offer or
any
Subsequent Acquisition Transaction except as permitted by this Agreement,
or
refrain from taking any commercially reasonable action which is inconsistent
with this Agreement; and
(c) it
shall use its commercially reasonable efforts to conduct its affairs
so that all of its representations and warranties contained herein qualified
as
to materiality shall be true and
-
37 -
correct
and all of its representations and warranties contained herein
not so qualified shall be true and correct in all material respects, in each
case, on and as of the Expiry Date and the date on which a Subsequent
Acquisition Transaction is consummated as if made thereon (other than
representations and warranties specific to a particular date which shall
remain
true and correct in all material respects as of that date).
ARTICLE
6
MISCELLANEOUS
|
6.1
|
No
Solicitations, Opportunity to Match,
Etc.
|
(a) During
the period commencing on the date hereof and continuing until the
termination of this Agreement, the Target shall not, and shall cause each
of the
Subsidiaries not to, directly or indirectly, through any shareholder, officer,
director, Employee, advisor, representative or agent of the Target or any
of the
Subsidiaries, or otherwise, (A) make, solicit, assist, initiate or encourage
or
otherwise facilitate (including by way of furnishing information, permitting
any
visit to any facilities or properties of the Target or the Subsidiaries,
including material mineral properties, or entering into any form of agreement,
arrangement or understanding), any inquiries, proposals or offers relating
to,
or that may be reasonably expected to lead to, (i) any liquidation, dissolution
or winding-up, recapitalization, merger, amalgamation, take-over bid, tender
offer, arrangement, share exchange, issuer bid, business combination,
consolidation, or reorganization in respect of the Target or any of the
Subsidiaries; (ii) any dividend or distribution, sale, purchase (or any lease,
long term supply agreement or other arrangement having the same economic
effect
as a purchase), or other acquisition of all or a material portion of the
assets
of, or any equity interest (including securities or rights or interests
therewith or thereto) in the Target or any of the Subsidiaries; (iii) any
sale
by the Target or any of the Subsidiaries of an interest in any material mineral
property of the Target; (iv) any other similar transaction or business
combination of or involving the Target or any of the Subsidiaries other than
with the Offeror; or (v) any proposal or offer to, or public announcement
of an
intention to do, any of the foregoing from any Person other than the Offeror
(an
“Acquisition Proposal”); or (B) continue or participate in any discussions or
negotiations regarding, or furnish to any Person any information with respect
to, or otherwise co-operate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any Person to do or seek
to do
any Acquisition Proposal; or (C) withdraw the Board of Directors’ or the
Independent Committee’s recommendation of the Offer or change or qualify any
such recommendation in any manner adverse to the Offeror or propose publicly
to
withdraw, change or qualify any such recommendation; or (D) approve or
recommend, or propose publicly to approve or recommend, any Acquisition Proposal
or accept or enter into, or propose publicly to accept or enter into, any
letter
of intent, agreement in principle, agreement, understanding or arrangement
related to any Acquisition Proposal; provided, however, that nothing contained
in this Section 6.1(a) or any other provision of this Agreement shall prevent
the Board of Directors from approving any unsolicited bona fide written
Acquisition Proposal made by a third party after the date hereof, for which
financing or properties, to the extent required to complete such Acquisition
Proposal, is then committed (as determined reasonably and in good faith by
the
Board of Directors after
-
38 -
consultation
with the third party offeror and the Target’s financial
advisors and outside legal counsel), is not subject to a due diligence and/or
access condition that requires access to the books, records, personnel or
properties of the Target or any of its Subsidiaries or their representatives
beyond 5:00 p.m. (Toronto Time) on the tenth business day after which access
is
afforded to the third party making the Acquisition Proposal (provided, however,
the foregoing shall not restrict the ability of such Person to continue to
review information provided); involves all of the outstanding Target Shares
or
all of the consolidated assets of the Target; and that was not solicited
on or
after January 22, 2006 or in breach of this Agreement, in respect of which
the
Board of Directors determines reasonably and in good faith (after consultation
with its financial advisors and after receiving from its outside legal counsel
advice of such legal counsel, reflected in the board minutes, to the effect
that
the failure to do so would be inconsistent with the fiduciary duties of the
Board of Directors) that such Acquisition Proposal is reasonably capable
of
completion in accordance with its terms without undue delay taking into account
all legal, financial, regulatory and other aspects of such Acquisition Proposal
and the party making such Acquisition Proposal and such Acquisition Proposal
would, if consummated in accordance with its terms, result in a transaction
that
is more favourable financially to the Shareholders (other than the Offeror
and
its shareholders and affiliates) than the Offer on a cash equivalent basis,
including any adjustment to the terms and conditions of the Offer proposed
by
the Offeror pursuant to Section 6.1(e) below (any such Acquisition Proposal
being referred to herein as a “Superior Proposal”).
(b) The
Target shall, and shall cause its officers, directors, Employees,
representatives and agents of the Target and its Subsidiaries to immediately
terminate any existing solicitation, discussion or negotiation with any Person
(other than the Offeror and its affiliates) with respect to any potential
Acquisition Proposal or any proposal that constitutes, or may reasonably
be
expected to constitute, an Acquisition Proposal. The Target hereby agrees
not to
release any third party from any confidentiality or standstill agreement
to
which the Target and such third party are parties. The Target shall immediately
request the return or destruction of all confidential information provided
to
any third parties that have entered into a confidentiality agreement with
the
Target relating to any potential Acquisition Proposal and shall use all
reasonable efforts to ensure that such requests are honoured.
(c) The
Target shall as soon as practicable and in any event within 24 hours
provide notice in writing to the Offeror of, and provide to the Offeror a
copy
of any future Acquisition Proposal, any proposal, inquiry, offer or request
(or
any amendment thereto) relating to or constituting, or that may reasonably
be
expected to constitute, an Acquisition Proposal, or any request for non-public
information relating to the Target or any of the Subsidiaries or for access
to
the properties, books or records of the Target or any of the Subsidiaries
(or
any amendment thereto), by any Person of which the Target, any of the
Subsidiaries or any of their respective directors, officers Employees,
representatives or agents is or becomes aware. Such notice to the Offeror
shall
be made from time to time and shall indicate the identity of the Person making
such proposal, inquiry or contact, and all material terms and conditions
thereof, including any amendments thereto, and such other details of the
Acquisition Proposal known to the Target, as the Offeror may reasonably request.
The Target shall keep the Offeror promptly and fully informed of the status
including any change to the material terms of any such proposal, inquiry,
-
39 -
offer
or request (or any amendment thereto), and will respond promptly to
all reasonable inquiries by the Offeror with respect thereto.
(d) If
the Target receives a request for material non-public information from
a Person that proposes an unsolicited bona fide Acquisition Proposal and
the
Board of Directors determines, in the manner contemplated by Section 6.1(a),
that such proposal would, if consummated in accordance with its terms, result
in
a Superior Proposal and if, in the opinion of the Board of Directors, acting
in
good faith and upon the advice of its outside legal counsel that is reflected
in
the board minutes, the failure to provide such party with access to information
regarding the Target would be inconsistent with the fiduciary duties of the
Board of Directors, then, and only in such case, the Target may provide such
Person with access to information regarding the Target as was made available
to
the Offeror (unless such additional written information is contemporaneously
made available to the Offeror), subject to the execution of a confidentiality
and standstill agreement which is customary in such situations and which
is no
less favourable to the Target and no more favourable to the counterparty
than
the provisions of the Confidentiality Agreement, provided that the Target
delivers a copy of any such confidentiality and standstill agreement to the
Offeror immediately upon its execution and the Offeror is immediately provided
with a list and copies of all information provided to such Person not previously
provided to the Offeror and is immediately provided with access to similar
information to which such Person was provided.
(e) Notwithstanding
the provisions of Section 6.1(a) above, the Target
covenants that it will not accept, approve, recommend or enter into any
agreement, understanding or arrangement in respect of an Acquisition Proposal
(a
“Proposed Agreement”), other than a confidentiality and standstill agreement as
contemplated by Section 6.1(d), with any third party unless such Acquisition
Proposal would, if consummated in accordance with its terms, result in a
Superior Proposal and then will do so only after the Target has complied
with
its obligations under this Section 6.1 and the other provisions of this Article
6 and has provided the Offeror with a copy of any Proposed Agreement, together
with a written notice from the Board of Directors regarding the value in
financial terms that the Board of Directors has, in consultation with the
financial advisors, determined should be ascribed to any non-cash consideration
offered under the Proposed Agreement, not less than five clear business days
prior to the date on which the Board of Directors proposes to accept, approve
or
recommend or to enter into such Proposed Agreement. During such five clear
business day period, the Target hereby acknowledges and agrees that the Offeror
shall have the right but not the obligation, to offer to amend the terms
of the
Offer. The Board of Directors shall review any proposal by the Offeror to
amend
the terms of the Offer including an increase in, or modification of, the
consideration to be received by the Shareholders, to determine, acting
reasonably, in good faith and in accordance with its fiduciary duties, whether
the Acquisition Proposal to which the Offeror is responding would be a Superior
Proposal when assessed against the Offer as it is proposed by the Offeror
to be
amended. If the Board of Directors does not so determine, the Target and
the
Board of Directors hereby covenant and agree that (i) the Board of Directors
will not accept, approve or recommend and the Target will not enter into
the
Proposed Agreement and will not support in any way the Acquisition Proposal
reflected in the Proposed Agreement; (ii) the Board of Directors will not
withdraw, modify, qualify or change any recommendations regarding the Offer;
and
(iii) the Board of
-
40 -
Directors
will promptly reaffirm its recommendation of the Offer in the
same manner as described in Section 3.1 and (iv) the Target will enter into
an amending agreement to so amend this Agreement. If the Board of Directors
continues to believe, acting in good faith and in the proper discharge of
its
fiduciary duties (after consultation with its financial advisors and after
receiving a written opinion from its outside legal counsel) that the Acquisition
Proposal provided for in the Proposed Agreement continues to be a Superior
Proposal with respect to the amended Offer, and therefore rejects the amended
Offer, the Target shall be entitled to enter into the Proposed Agreement
upon
termination of this Agreement pursuant to Section 7.2(i) and payment to the
Offeror of the Termination Fee payable pursuant to Section 7.5. The Target
hereby acknowledges and agrees that each successive modification of any
Acquisition Proposal shall constitute a new Acquisition Proposal for purposes
of
the requirement of this Section 6.1(e) and the Offeror shall be afforded
an
additional five clear business day notice period in respect of each such
Acquisition Proposal.
(f) The
Target shall ensure that the directors, officers and Employees of the
Target and each of the Subsidiaries and any investment bankers, counsel or
other
advisors, representatives or agents retained by the Target are aware of the
provisions of this Section 6.1, and the Target shall be responsible for any
breach of this Section 6.1 by such directors, officers, Employees, investment
bankers, counsel, other advisors, representatives or agents.
|
6.2
|
Notification
of Certain
Matters
|
Each
party shall give prompt notice to the other of (a) the occurrence or
failure to occur at any time from the date hereof until the earlier to occur
of
the termination of this Agreement and the Effective Time of any event or
state
of facts, which occurrence or failure would cause or may cause any
representation or warranty of any party contained in this Agreement to be
untrue
or inaccurate in any respect at any time from the date hereof to the Effective
Time; and (b) any failure of such party, or any officer, director, employee
or
agent thereof, to comply with or satisfy any covenant, condition or agreement
to
be complied with or satisfied by it hereunder.
|
6.3
|
Access
to
Information
|
From
the date hereof until the earlier of the consummation of a
Subsequent Acquisition Transaction and the termination of this Agreement,
the
Target shall, and shall cause its Subsidiaries and all their respective
officers, directors, Employees, independent auditors, accounting advisors,
and
agents to, afford to the Offeror and to the officers, employees, agents and
representatives of the Offeror such access to all books, records, information,
corporate charts, tax documents, filings, memoranda, working papers and files
and all other materials in its possession and control, including material
contracts and access to the personnel of the Target and its Subsidiaries
on an
as reasonably requested basis as well as reasonable access to the properties
of
the Target and its Subsidiaries as the Offeror may reasonably require at
all
reasonable times, including for the purpose of facilitating integrated business
plans, to their officers, employees, agents, properties, books, records and
contracts, and shall furnish the Offeror with all data and information as
the
Offeror may reasonably request.
-
41 -
|
6.4
|
Directors’
and
Officers’
Insurance
|
In
the event that the Offeror purchases Target Shares under the Offer,
the Offeror hereby agrees that for the period from the Expiry Time until
six
years after the Effective Time, the Offeror will or will cause the Target
or any
successor to the Target to maintain the Target’s current directors’ and
officers’ insurance policy or equivalent protection without any reduction in
scope or coverage as compared to the policy in effect on the date hereof
(“Equivalent Insurance”), for all present and former directors and officers of
the Target, covering claims made prior to or within six years after the
Effective Time for alleged wrongful acts which occurred prior to the Effective
Time; provided that such protection remains available to the Target or such
successor on commercially reasonable terms. The Offeror also hereby agrees
that
after the expiration of such six year period, it will use reasonable commercial
efforts to cause such directors and officers to be covered under its then
existing directors’ and officers’ insurance policy, if any.
|
6.5
|
Directors’
and
Officers’
Indemnification
|
In
the event that the Offeror purchases Target Shares under the Offer,
the Offeror agrees that all rights to indemnification and exculpation now
existing in favour of present and former officers and directors of the Target
and its Subsidiaries shall survive the completion of the Offer and shall
continue in full force and effect for a period of not less than six years
from
the Effective Time.
ARTICLE
7
TERMINATION,
AMENDMENT AND WAIVER
|
7.1
|
Term
|
This
Agreement shall be effective from the date hereof until the earlier
of the Effective Time and the termination of this Agreement in accordance
with
its terms.
|
7.2
|
Termination
|
|
|
This
Agreement may be terminated:
|
|
|
(a)
|
by
mutual written consent of the Offeror and the
Target;
|
|
|
(b)
|
by
the Offeror if any securities regulatory authority waiver,
consent, approval, ruling or order which is necessary or required
under
Applicable Securities Law by the Offeror for the making of the Offer
or to
mail the Bid Circular to Shareholders is not obtained by 11:59 p.m.
(Toronto time) on the third business day prior to the Latest Mailing
Time;
|
|
|
(c)
|
by
the Target, if (i) the Offer has not been made by the Latest
Mailing Time; (ii) the Offer (or any amendment thereto other than
as
permitted in accordance with Section 2.1(h) or any amendment thereof
that
has been mutually agreed to by the
|
-
42 -
parties)
does not conform in all material respects with Schedule A or any
amendment thereof that has been mutually agreed by the parties; (iii) the
Offeror fails to exercise its right to make an amended Offer pursuant to
Section
6.1(e), or (iv) the Offer has been terminated, withdrawn or expires and the
Offeror has not taken-up any Target Shares pursuant to the Offer;
|
|
(d)
|
by
either the Offeror or the Target, if the Expiry Time does not
occur prior to the Outside Time, provided that the failure of the
Expiry
Time to so occur is not the result of the breach of a representation,
warranty or covenant by the party seeking to terminate this Agreement
pursuant to this Section 7.2(d);
|
|
|
(e)
|
by
the Offeror, (i) at any time on or prior to the Latest Mailing
Time, if any condition contained in Section 2.1(i) is not satisfied
or
waived by the Offeror by the Latest Mailing Time, or (ii) at any
time, if
any condition contained in Schedule A is not satisfied or waived
by the
Offeror at the Expiry Time and the Offeror has not elected to waive
such
condition or extend the Offer, including, for greater certainty,
if the
Offeror shall have determined in its reasonable judgment that there
shall
exist or have occurred a Target Material Adverse Effect in accordance
with
Section 2(e) of Schedule A hereto;
|
|
|
(f)
|
by
the Target, if (i) any representation or warranty of the Offeror
set out herein qualified as to materiality shall not be true and
correct
or any such representation or warranty not so qualified shall not
be true
and correct in all material respects as of the date of this Agreement
and
as of the date the Target Shares are taken up under the Offer as
if made
on and as of such date (except to the extent that any such representation
and warranty speaks as of an earlier date which shall remain true
and
correct in all material respects or in all respects, as appropriate,
as of
that date) or, (ii) the Offeror shall not have performed in all material
respects any covenant to be performed by it under this Agreement,
or (iii)
the Offeror shall not have complied in all material respects with
any
obligation to be complied with by it under this Agreement; in each
case
except as would not have a material adverse effect on the Offeror’s
ability to complete the Offer;
|
|
|
(g)
|
by
the Offeror, if the Board of Directors or Independent Committee
shall for any reason have (i) withdrawn, modified or qualified in
a manner
adverse to Offeror, its approval or recommendation of the Offer and
the
transactions contemplated by this Agreement or changed, or qualified
or
proposed publicly to change or qualify its recommendation in a manner
adverse to the Offeror or otherwise in a manner that has substantially
the
same effect as the withdrawal thereof; (ii) approved or recommended
or
proposed publicly to approve or recommend an Acquisition Proposal
or
entered into a binding written agreement in respect of an Acquisition
Proposal (other than a confidentiality agreement permitted by Section
6.1(d)), (iii) failed to reaffirm its approval or recommendation
of the
Offer by press release promptly after the public announcement or
commencement of any Acquisition Proposal in accordance with Section
6.1(e), or (iv) resolved to do any of the
foregoing;
|
-
43 -
|
|
(h)
|
by
the Offeror, if the Independent Valuator shall have withdrawn,
changed, modified or qualified the Formal Valuation or taken any
other
action or made any other public statement inconsistent with the Formal
Valuation;
|
|
|
(i)
|
by
the Target in order to enter into a binding written agreement
with respect to a Superior Proposal (other than a confidentiality
agreement permitted by Section 6.1(d)), subject to compliance with
Section
6.1 and provided that no termination under this Section 7.2(i) shall
be
effective unless and until the Target shall have paid to the Offeror
the
amount required to be paid pursuant to Section 7.5;
and
|
|
|
(j)
|
by
the Offeror if, prior to the Expiry Time, an Acquisition
Proposal is publicly announced or any Person has publicly announced
an
intention to make an Acquisition Proposal and such Acquisition Proposal
either has been accepted or has not expired, been withdrawn or been
publicly abandoned, and (A) the Offer is not completed as a result
of the
Minimum Tender Condition not having been met and (B) any Target Shares
or
assets are taken-up and paid for or otherwise acquired under such
Acquisition Proposal (as may be amended), or under another Acquisition
Proposal made while the first Acquisition Proposal is outstanding
or any
such Acquisition Proposal is completed.
|
If
this Agreement is terminated in accordance with the foregoing
provisions of this Section 7.2, this Agreement shall forthwith become void
and
of no further force or effect and no party shall have any further obligations
hereunder except as provided in the Confidentiality Agreement and as otherwise
expressly contemplated hereby, and provided that neither the termination
of this
Agreement nor anything contained in this Section 7.2 shall relieve any party
from any liability for any breach by it of this Agreement, including from
any
inaccuracy in its representations and warranties and any non-performance
by it
of its covenants made herein.
|
7.3
|
Amendment
|
This
Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by
all of
the parties hereto.
|
7.4
|
Waiver
|
Any
party may (i) extend the time for the performance of any of the
obligations or acts of the other party hereto, (ii) waive compliance with
any of
the other party’s agreements or the fulfilment of any conditions to its own
obligations contained herein, or (iii) waive inaccuracies in any of the other
party’s representations and 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 of condition waived.
-
44 -
|
7.5
|
Certain
Payments
|
(a) The
Offeror shall be entitled to the amount of US$2,500,000 (the
“Termination Fee”) upon the occurrence of any of the following events (each a
“Termination Fee Event”) which shall be paid to the Offeror by the Target at the
time or within the period of time, as the case may be, specified in respect
of
each such Termination Fee Event (provided there shall be no duplication of
the
Target’s obligation to pay the Termination Fee under this Section
7.5):
|
|
(i)
|
the
Offeror shall have failed to exercise its right to make an
amended Offer pursuant to Section 6.1(e), in which case the Termination
Fee shall be paid on the first Business Day after the earlier of
the day
on which this Agreement is terminated or the Expiry Time;
or
|
|
|
(ii)
|
the
Offeror shall have terminated this Agreement pursuant to
Section 7.2(g), in which case the Termination Fee shall be paid to
the
Offeror by 11:00 a.m. (Toronto time) on the first business day following
such action or inaction by the Board of Directors or Independent
Committee; or
|
|
|
(iii)
|
the
Offeror shall have terminated this Agreement pursuant to
Section 7.2(j), in which case the Termination Fee shall be paid to
the
Offeror by 11:00 a.m. (Toronto time) on the first business day following
the acquisition of any Target Shares or assets under any such Acquisition
Proposal; or
|
|
|
(iv)
|
the
Target shall have terminated this Agreement pursuant to Section
7.2(i), in which case the Termination Fee shall be paid to the Offeror
on
the day on which is the first Business Day after the date this Agreement
is so terminated.
|
(b) The
Termination Fee shall be paid by the Target by way of wire transfer
in immediately available funds to an account specified by the
Offeror.
(c) On
the date of the earliest event described above, the Target shall be
deemed to hold the Termination Fee in trust for the Offeror.
|
7.6
|
Reimbursement
of Expenses
|
If
the Offeror terminates this Agreement pursuant to Section 7.2(e), the
Target shall forthwith pay to the OfferorUS$1,000,000 as
reimbursement for the out-of-pocket expenses incurred by the Offeror in
connection with the transactions contemplated hereby, provided that if the
Target is required to pay the Termination Fee under Section 7.5, such
Termination Fee shall be reduced by any fees actually paid by the Target
to the
Offeror under this Section 7.6.
-
45 -
ARTICLE
8
GENERAL
PROVISIONS
|
8.1
|
Brokers
|
The
Offeror and the Target represent and warrant to each other that,
except for financial advisors to the Offeror for whose fees and expenses
the
Offeror shall be solely liable, no broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or commission, or to the
reimbursement of any of its expenses, in connection with the Offer or any
similar transaction based upon arrangements made by or on behalf of the
Target.
|
8.2
|
Public
Statements
|
Neither
the Offeror nor the Target shall make any public announcement or
statement with respect to the Offer or this Agreement without the approval
of
the Target or the Offeror, respectively, such approval not to be unreasonably
withheld or delayed, except to the extent necessary to comply with applicable
Law. Moreover, in any event, to the extent practicable given time constraints,
each party hereto hereby agrees, except to the extent necessary to comply
with
applicable Law, to give prior notice to the other of any public announcement
relating to the Offer or the affairs of the Target, and hereby agrees to
consult
with each other prior to issuing each such public announcement.
|
8.3
|
Notices
|
Any
notice, request, consent, waiver, agreement or approval which may or
is required to be given pursuant to this Agreement shall be in writing and
shall
be sufficiently given or made if delivered or telecopied to the Person at
the
address set forth below, or such other address as may be designated in writing
hereafter, in the same manner, by such Person. The date of receipt of any
such
notice, request, consent, waiver, agreement or approval shall be deemed to
be
the date of delivery or telecopy (if during normal business hours or, if
not,
the next business day).
If
to the Offeror:
Vedanta
Resources plc
00
Xxxxxxxx Xxxxxx
Xxxxxx,
XX
X0X
0XX
|
|
Attention:
|
Deputy
Chief Financial Officer
|
|
|
|
Fax:
|
x00
(0) 00 0000 0000
|
|
-
46 -
With
a copy to:
Blake,
Xxxxxxx & Xxxxxxx LLP
000
Xxx Xxxxxx
Xxxxxxxx
Xxxxx Xxxx
Xxxxx
0000
Xxxxxxx,
Xxxxxxx
X0X
0X0
|
|
Attention:
|
Xxxx
Xxxxxx
|
|
|
|
Fax:
|
000.000.0000
|
|
If
to the Target:
Sterlite
Gold Ltd.
00
Xxxx Xxxxxx,
Xxxxxx,
XX
X0X
0XX
|
|
Attention:
|
Chief
Financial Officer
|
|
|
|
Fax:
|
x00
(0) 00 0000 0000
|
|
With
a copy to:
Fasken
Xxxxxxxxx XxXxxxxx LLP
00
Xxxxxxxxxx Xxxxxx Xxxx
Xxxxx
0000
Xxxxxxx,
Xxxxxxx
X0X
0X0
|
|
Attention:
|
Xxxx
Xxxxxx
|
|
|
|
Fax:
|
000.000.0000
|
|
|
8.4
|
Severability
|
If
any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, void or unenforceable,
the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated and the parties hereto shall negotiate in good faith to modify
the Agreement to preserve each party’s anticipated benefits under this
Agreement.
|
8.5
|
Entire
Agreement, Assignment and Governing
Law
|
(a) This
Agreement (together with all other documents and instruments
referred to herein) including the Confidentiality Agreement constitute the
entire agreement and supersede
-
47 -
all
other prior agreements and undertakings, both written and oral, among
the parties hereto with respect to the subject matter hereof and thereof.
Notwithstanding the foregoing, in the event of any inconsistency between
the
terms and provisions of this Agreement and those contained in the
Confidentiality Agreement, the terms and provisions of this Agreement shall
prevail.
(b) This
Agreement (i) is not intended to confer upon Shareholders or any
other Person not a party hereto any rights or remedies; (ii) shall not be
assigned by operation of Law or otherwise, except that the Offeror may assign,
in its sole discretion, all or any portion of its rights, interests and/or
obligations under this Agreement to any affiliate of the Offeror, but, if
such
assignment takes place, (A) the Offeror shall continue to be liable jointly
and
severally with the assignee for the due and punctual performance of any
obligations assigned hereunder and such assignee shall be treated as if it
were
a party to this Agreement with effect from the date on which such assignment
takes effect, provided that any
assignment shall only become effective when the Target has received a copy
of an
assignment agreement from the Offeror indicating that such assignee agrees
to be
bound by this Agreement and to perform the obligations transferred to it;
(B)
the Target shall do or cause to be done all such actions and things in
connection with effecting an assignment pursuant to this Section 8.5(b)(ii)
that
the Offeror may reasonably request as being necessary or desirable in order
to
effectively carry out or better evidence such assignment, including if requested
by the Offeror, promptly executing and delivering an assignment agreement
pursuant to this Section 8.5(b)(ii); and (iii) shall be governed by and
construed in accordance with the laws of the Province of Ontario and the
federal
laws of Canada applicable therein.
|
8.6
|
Counterparts
|
This
Agreement may be executed in one or more counterparts which together
shall be deemed to constitute one valid and binding agreement and delivery
of
the counterparts may be effected by means of a telecopied or other similar
electronic transmission.
IN
WITNESS WHEREOF, the parties hereto have executed this
Agreement.
VEDANTA
RESOURCES PLC
By:
/s/Xxxx
Xxxxxxx
|
|
Name:
Xxxx Xxxxxxx
|
|
|
|
Title:
Deputy Chief Financial
Officer
|
|
STERLITE
GOLD LTD.
By:
/s/X.X.
Xxxxxx
|
|
Name:
X.X. Xxxxxx
|
|
|
|
Title:
Chief Executive Officer
|
|
SCHEDULE
A Terms of the Offer
|
1.
|
General
Terms
|
The
Offer shall be made by a Bid Circular to Shareholders and prepared in
compliance with Applicable Securities Laws and shall expire at the Expiry
Time
in accordance with Applicable Securities Laws or such longer minimum period
as
may be prescribed by Applicable Securities Laws subject to the right of the
Offeror to extend the period during which subject shares may be deposited
under
the Offer.
Upon
the terms and subject to the conditions of the Offer, the Offeror
will accept for payment, and take-up and pay for, all Target Shares validly
deposited and not validly withdrawn under the Offer when permitted under
Applicable Securities Laws.
The
Offeror shall have the right, in its sole discretion, to modify,
waive or reduce the Minimum Tender Condition or any other terms or conditions
of
the Offer; provided that the Offeror will not, except as specifically permitted
herein,
|
|
(i)
|
increase
the Minimum Tender
Condition,
|
|
|
(ii)
|
decrease
the consideration per Target
Share,
|
|
|
(iii)
|
change
the form of consideration payable under the Offer (other
than to add or increase consideration),
|
|
|
(iv)
|
modify
the conditions to the Offer in a manner which is adverse to
the Shareholders, or
|
|
|
(v)
|
impose
additional conditions to the
Offer,
|
without
the consent of the Target, not to be unreasonably withheld or
delayed.
|
2.
|
Conditions
of the Offer
|
Notwithstanding
any other provision of the agreement to which this
Schedule is attached (the “Agreement”) or of the Offer, the Offeror shall have
the right to withdraw or terminate the Offer (or amend the Offer to postpone
taking up and paying for any Target Shares deposited under the Offer), and
shall
not be required to accept for payment, take-up, purchase or pay for, or extend
the period of time during which the Offer is open and postpone taking up
and
paying for, any Target Shares deposited under the Offer, unless all of the
following conditions are satisfied or waived by the Offeror at or prior to
the
Expiry Time:
|
|
(a)
|
there
shall have been validly deposited under the Offer and not
validly withdrawn at the Expiry Time that number of Target Shares
constituting (the “Minimum Tender
Condition”):
|
|
|
(i)
|
at
least 66 2/3% of the Target Shares calculated on a fully-diluted
basis; and
|
-
2 -
|
|
(ii)
|
a
sufficient number of Target Shares to enable the Offeror to
complete a second stage business combination in accordance with applicable
Laws;
|
|
|
(b)
|
all
government or regulatory approvals, waivers, permits, consents,
reviews, orders, rulings, decisions and exemptions (including, without
limitation, those of any Governmental Entity including any stock
exchange
or other securities or regulatory authorities) which, in the Offeror’s
sole judgment, are necessary or desirable in connection with the
Offer
(including a Subsequent Acquisition Transaction) shall have been
obtained
or concluded on terms and conditions satisfactory to the Offeror
in its
sole judgment acting reasonably, and any waiting period with respect
to
such approvals and consents shall have expired or been
terminated;
|
|
|
(c)
|
the
Offeror shall have determined in its sole judgment acting
reasonably that (i) no act, action, suit or proceeding shall have
been
threatened or taken before or by any domestic or foreign Governmental
Entity or by any elected or appointed public official or private
person in
Canada or elsewhere, whether or not having the force of law, and
(ii) no
Law shall have been proposed, enacted, promulgated, amended or
applied:
|
|
|
(A)
|
to
cease trade, enjoin, prohibit or impose material limitations,
damages or conditions on the purchase by or the sale to the Offeror
of the
Target Shares or the right of the Offeror to own or exercise full
right of
ownership of the Target Shares;
|
|
|
(B)
|
which,
if the Offer were consummated, could have a Target Material
Adverse Effect or Offeror Material Adverse Effect;
or
|
|
|
(C)
|
which
challenges or would prevent the ability of the Offeror or its
affiliates to consummate the Offer or to effect a Subsequent Acquisition
Transaction.
|
|
|
(d)
|
the
Offeror shall have determined in its sole judgment acting
reasonably that there shall not exist any prohibition at law against
the
Offeror making the Offer or taking up and paying for any Target Shares
deposited under the Offer or completing a Subsequent Acquisition
Transaction;
|
|
|
(e)
|
the
Offeror shall have determined in its sole judgment acting
reasonably that there shall not exist or have occurred (or, if there
does
exist or shall have occurred prior to the date hereof, there shall
not
have been disclosed, generally by way of press release and material
change
report or to the Offeror in writing) any change (or any condition,
event,
circumstance or development involving a prospective change) in the
business, operations, assets, capitalization, condition (financial
or
otherwise), prospects, share or debt ownership, results of operations,
cash flow, properties, articles, by-laws, licenses, permits, rights
or
privileges, whether contractual or otherwise, or liabilities (including
any contingent liabilities that may arise through
|
-
3 -
outstanding,
pending or threatened litigation or otherwise), of the
Target or any of its Subsidiaries which would have or reasonably be expected
to
have a Target Material Adverse Effect or a material adverse effect on the
value
of the Target Shares;
|
|
(f)
|
the
Offeror shall have determined in its sole judgment acting
reasonably that no change (or any condition, event or development
involving a prospective change) shall have occurred or have been
threatened in the general economic, financial, currency exchange,
securities or commodity market conditions in Canada or elsewhere,
which is
or may be materially adverse to the value of the Target
Shares;
|
|
|
(g)
|
there
shall not have occurred any actual or threatened change to
the Income Tax Act (Canada) or the regulations thereunder or similar
tax
laws of any other jurisdiction (including any proposal to amend the
Income
Tax Act (Canada) or the regulations thereunder or such other tax
laws or
any announcement, governmental or regulatory initiative, issue of
an
interpretation bulletin, condition, event or development involving
a
change or a prospective change) that, in the sole judgment of the
Offeror
acting reasonably, directly or indirectly, has or may have a material
and
adverse effect on the Target, the Offeror or any of their respective
Subsidiaries, on any Subsequent Acquisition Transaction or on a subsequent
sale or disposition of assets of the Target or any of its
Subsidiaries;
|
|
|
(h)
|
the
Board of Directors and/or the Independent Committee shall for
any reason have (A) withdrawn its recommendation in favour of the
Offer or
changed or qualified or proposed publicly to change or qualify its
recommendation in a manner adverse to the Offeror or otherwise in
a manner
that has substantially the same effect as the withdrawal thereof,
or (B)
approved or recommended or proposed publicly to approve or recommend
acceptance of any Acquisition Proposal, or (C) resolved to do any
of the
foregoing;
|
|
|
(i)
|
(i)
all representations and warranties of the Target contained in
this Agreement that are qualified by a reference to a Target Material
Adverse Effect or materiality or words of similar import shall be
true and
correct in all respects, (ii) all representations and warranties
of the
Target contained in this Agreement that are not so qualified shall
be true
and correct in all material respects, (iii) the Target shall have
performed in all respects all covenants to be performed by it, and
complied in all respects with all obligations to be complied by it,
under
this Agreement at or prior to the Effective Time that are qualified
by a
reference to a Target Material Adverse Effect or materiality or words
of
similar import, (iv) the Target shall have performed in all material
respects all covenants to be performed by it, and complied in all
material
respects with all obligations to be complied by it, under this Agreement
at or prior to the Effective Time not so qualified, and (v) the Offeror
shall have received a certificate signed by the Target’s Chief Executive
Officer and Chief Financial Officer of the Target to the effect of
the
foregoing; and
|
-
4 -
|
|
(j)
|
the
Offeror will not have become entitled to terminate the Support
Agreement in accordance with its terms.
|
The
foregoing conditions are for the sole benefit of the Offeror and may
be asserted by the Offeror regardless of the circumstances giving rise to
any
such condition or may be waived by the Offeror in its sole discretion at
any
time in whole or in part at any time and from time to time in its sole
discretion, without prejudice to any other rights which the Offeror may have.
The failure by the Offeror at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall
be
deemed an ongoing right which may be asserted at any time and from time to
time.
Any determination by the Offeror concerning the events described in the
foregoing conditions shall be final and binding on all parties
hereto.
