Exhibit 10.3
SUPPORT AGREEMENT
AGREEMENT made as of the 4th day of April, 2000.
AMONG:
INTERNATIONAL BUSINESS MACHINES CORPORATION, a corporation
existing under the laws of the State of New York ("IBM")
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3040696 NOVA SCOTIA COMPANY, an unlimited company existing
under the laws of the Province of Nova Scotia ("Holdco")
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IBM ACQUISITION INC., a corporation existing under the laws of
Canada (the "Corporation")
WHEREAS pursuant to the terms of the offer by the Corporation
and IBM Acquisition II L.L.C. dated March 15, 2000, to purchase all of the Class
A Subordinate Voting Shares and all of the Class B Multiple Voting Shares of LGS
Group Inc., IBM and the Corporation agreed that IBM, Holdco and the Corporation
would execute and deliver a Support Agreement;
NOW THEREFORE, in consideration of the respective covenants
and agreements provided in this agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this agreement, unless something in the subject matter or content is
inconsistent therewith:
"APPLICABLE LAWS" has the meaning set out in Section 2.6 hereof.
"AUTOMATIC EXCHANGE RIGHT" has the meaning set out in Section 1.1 of
the Exchange Trust Agreement.
"BOARD OF DIRECTORS" means the board of directors of the Corporation.
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"BUSINESS DAY" means a day, other than a Saturday, a Sunday or a
statutory holiday, when banks are generally open in each of Xxxxxxxx,
Xxxxxx xxx Xxxxxxx, Xxxxxxx for the transaction of banking business.
"EXCHANGE RIGHT" has the meaning set out in Section 1.1 of the Exchange
Trust Agreement.
"EXCHANGE TRUST AGREEMENT" means the exchange trust agreement made as
of April 4, 2000 among IBM, Holdco, the Corporation and CIBC Mellon
Trust Company.
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges,
restrictions and conditions attaching to the Exchangeable Shares.
"EXCHANGEABLE SHARES" means the Exchangeable Shares in the capital of
the Corporation.
"IBM BOARD OF DIRECTORS" means the board of directors of IBM.
"IBM COMMON STOCK" means the shares of common stock of IBM, par value
US $0.20 per share, having voting rights of one vote per share, and any
other securities into which such shares may be changed or for which
such shares may be exchanged (whether or not IBM shall be the issuer of
such other securities) or any other consideration which may be received
by the holders of such shares, pursuant to a recapitalization,
reconstruction, reorganization or reclassification of, or amalgamation,
merger, liquidation or similar transaction, affecting such shares.
"IBM SUCCESSOR" has the meaning set out in Section 3.1 hereof.
"LIQUIDATION CALL RIGHT" has the meaning set out in Section 5.2(1) of
the Exchangeable Share Provisions.
"OFFER" has the meaning set out in Section 2.8 hereof.
"REDEMPTION CALL RIGHT" has the meaning set out in Section 7.2(1) of
the Exchangeable Share Provisions.
"RETRACTION CALL RIGHT" has the meaning set out in Section 6.2(1) of
the Exchangeable Share Provisions.
"SUBSIDIARY" of IBM means any corporation more than 50% of the
outstanding stock of which, by vote or value, is owned, directly or
indirectly, by IBM, by one or more other Subsidiaries of IBM or by IBM
and one or more other Subsidiaries of IBM.
"TRANSFER AGENT" has the meaning set out in Section 1.1 of the
Exchangeable Share Provisions.
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1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this agreement into articles and Sections and the insertion of
headings are for reference purposes only and shall not affect the interpretation
of this agreement. Unless otherwise indicated, any reference in this agreement
to an article or Section refers to the specified article or Section of this
agreement.
1.3 NUMBER, GENDER AND PERSONS
In this agreement, unless the context otherwise requires, words importing the
singular number include the plural and vice versa, words importing any gender
include all genders and words importing persons include individuals,
corporations, partnerships, companies, associations, trusts, unincorporated
organizations, governmental bodies and other legal or business entitles of any
kind.
1.4 DATE FOR ANY ACTION
If any date on which any action is required to be taken under this agreement is
not a Business Day, such action shall be required to be taken on the next
succeeding Business Day.
ARTICLE 2
COVENANTS, REPRESENTATIONS AND WARRANTIES
2.1 COVENANTS OF IBM REGARDING EXCHANGEABLE SHARES
So long as any Exchangeable Shares are outstanding IBM will:
(a) take all necessary actions to ensure that (i) if any dividend
is declared on the IBM Common Stock, the Corporation will
declare, and will have sufficient money or other assets or
authorized securities available to enable the due declaration
and the due and punctual payment in accordance with applicable
law, of an equivalent dividend on the Exchangeable Shares; and
(ii) if any dividend is paid on the IBM Common Stock, the
Corporation will simultaneously pay an equivalent dividend on
the Exchangeable Shares;
(b) advise the Corporation of the declaration by IBM of any
dividend on the IBM Common Stock and take all such other
actions as are necessary, in cooperation with the Corporation,
to ensure that the respective record date and payment date for
a dividend on the Exchangeable Shares shall be the same as the
record date and payment date for the corresponding dividend on
the IBM Common Stock;
(c) take all such actions and do all such things as are necessary
or desirable to enable and permit the Corporation, in
accordance with applicable law, to pay and otherwise perform
its obligations with respect to the satisfaction of the
Liquidation Amount in respect of each issued and outstanding
Exchangeable Share upon the liquidation, dissolution or
winding up of the Corporation,
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including without limitation all such actions and all such
things as are necessary or desirable to enable and permit the
Corporation to cause to be delivered shares of IBM Common
Stock to the holders of Exchangeable Shares in accordance with
the provisions of Article 5 of the Exchangeable Share
Provisions;
(d) take all such actions and do all such things as are necessary
or desirable to enable and permit the Corporation, in
accordance with applicable law, to pay and otherwise perform
its obligations with respect to the satisfaction of the
Retraction Price and the Redemption Price, including without
limitation all such actions and all such things as are
necessary or desirable to enable and permit the Corporation to
cause to be delivered shares of IBM Common Stock to the
holders of Exchangeable Shares, upon the retraction or
redemption of the Exchangeable Shares in accordance with the
provisions of Article 6 or Article 7 of the Exchangeable Share
Provisions as the case may be;
(e) take all such actions and do all such things as are necessary
or desirable to enable and permit Holdco, in accordance with
applicable law, to pay and otherwise perform its obligations
arising out of the exercise by it of the Liquidation Call
Right, the Retraction Call Right, the Redemption Call Right,
the Exchange Right or the Automatic Exchange Rights, including
without limitation all such actions and all such things as are
necessary or desirable to enable and permit Holdco to cause to
be delivered shares of IBM Common Stock to the holders of
Exchangeable Shares, upon the retraction or redemption of the
Exchangeable Shares in accordance with the provisions of
Article 6 or Article 7 of the Exchangeable Share Provisions as
the case may be;
(f) not exercise its vote as a shareholder to initiate the
voluntary liquidation, dissolution or winding-up of the
Corporation nor take any action or omit to take any action
that is designed to result in the liquidation, dissolution or
winding up of the Corporation; and
(g) as long as it is a "specified financial institution" (as such
term is defined in the INCOME TAX ACT (Canada)) or does not
deal at arm's length with such a person, take all such action
and do all such things as are reasonably necessary or
desirable to exercise (or, at IBM's election, to cause Holdco
to exercise), the Retraction Call Right, the Redemption Call
Right or the Liquidation Call Right if requested in writing to
do so by a holder of Exchangeable Shares.
2.2 AVAILABILITY OF FUNDS
IBM will cause the Corporation to have available to it from time to time
sufficient funds and other assets as are necessary to enable the Corporation to
satisfy its obligations (as they arise from time to time) to pay or otherwise
satisfy the applicable dividends, Liquidation Amount, Retraction Price or
Redemption Price, in each case for the benefit of Non-Affiliated Holders from
time to time of the Exchangeable Shares.
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2.3 CERTAIN REPRESENTATIONS
IBM will at all times keep available for delivery hereunder, under the Exchange
Trust Agreement or under the Exchangeable Share Provisions, free from
pre-emptive and other rights, out of its authorized capital stock such number of
shares of IBM Common Stock (or other shares or securities into which the IBM
Common Stock may be reclassified or changed as contemplated by Section 2.7
hereof) (i) as is equal to the sum of (x) the number of Exchangeable Shares
issued and outstanding from time to time and (y) the number of Exchangeable
Shares issuable upon the exercise of all rights to acquire Exchangeable Shares
outstanding from time to time, and (ii) as are now and may hereafter be required
to enable and permit each of the Corporation, IBM and Holdco to meet its
obligations hereunder, under the Exchange Trust Agreement and under the
Exchangeable Share Provisions.
2.4 NOTIFICATION OF CERTAIN EVENTS
In order to assist IBM to comply with its obligations hereunder, the Corporation
will give IBM notice of each of the following events at the time set forth
below:
(a) in the event of any determination by the Board of Directors to
institute voluntary liquidation, dissolution or winding up
proceedings with respect to the Corporation or to effect any
other distribution of the assets of the Corporation among its
shareholders for the purpose of winding up its affairs, at
least 60 days prior to the proposed effective date of such
liquidation, dissolution, winding up or other distribution;
(b) immediately, upon the earlier of (i) receipt by the
Corporation of notice of, and (ii) the Corporation otherwise
becoming aware of, any threatened or instituted claim, suit,
petition or other proceedings with respect to the involuntary
liquidation, dissolution or winding up of the Corporation or
to effect any other distribution of the assets of the
Corporation among its shareholders for the purpose of winding
up its affairs;
(c) immediately, upon receipt by the Corporation of a Retraction
Request (as defined in the Exchangeable Share Provisions);
(d) at least 60 days prior to any Optional Redemption Date
determined by the Board of Directors in accordance with the
Exchangeable Share Provisions; and
(e) as soon as practicable upon the issuance by the Corporation of
any Exchangeable Shares or rights to acquire Exchangeable
Shares.
2.5 DELIVERY OF SHARES OF IBM COMMON STOCK
Upon notice of any event that requires the Corporation to cause to be delivered
shares of IBM Common Stock to any holder of Exchangeable Shares, IBM or Holdco
shall, in any manner deemed appropriate by it, provide such shares or cause such
shares to be provided to the
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Corporation or Holdco, or as either may request, which shall forthwith deliver
or cause to be delivered the requisite shares of IBM Common Stock to or to the
order of the former holder of the surrendered Exchangeable Shares as the
Corporation shall direct. All such shares of IBM Common Stock shall be duly
issued as fully paid, non-assessable, free of pre-emptive rights and shall be
free and clear of any lien, claim, encumbrance, security interest or adverse
claim.
2.6 QUALIFICATION OF SHARES OF IBM COMMON STOCK
IBM covenants that if any shares of IBM Common Stock (or other shares or
securities into which IBM Common Stock may be reclassified or changed as
contemplated by Section 2.7 hereof) to be delivered hereunder, the Exchangeable
Share Provisions or the Exchange Right require registration or qualification
with or approval of or the filing of any document including any prospectus or
similar document or the taking of any proceeding with or the obtaining of any
order, ruling or consent from any governmental or regulatory authority under any
Canadian or United States federal, provincial or state law or regulation or
pursuant to the rules and regulations of any regulatory authority or the
fulfilment of any other legal requirement (collectively, the "Applicable Laws")
before such shares (or other shares or securities into which IBM Common Stock
may be reclassified or changed as contemplated by Section 2.7 hereof) may be
delivered by IBM to the initial holder thereof or in order that such shares may
be freely traded thereafter (other than any restrictions on transfer by reason
of a holder being a "control person" of IBM for purposes of Canadian federal or
provincial securities law or an "affiliate" of IBM), IBM will in good faith
expeditiously take all such actions and do all such things as are necessary to
cause such shares of IBM Common Stock (or other shares or securities into which
IBM Common Stock may be reclassified or changed as contemplated by Section 2.7
hereof) to be and remain duly registered, qualified or approved. IBM represents
and warrants that it has in good faith taken all actions and done all things
necessary under Applicable Laws as they exist on the date hereof to cause the
shares of IBM Common Stock (or other shares or securities into which IBM Common
Stock may be reclassified or changed as contemplated by Section 2.7 hereof) to
be delivered hereunder, including for greater certainty, pursuant to the Offer,
the Exchangeable Share Provisions or the Automatic Exchange Right or the
Exchange Right, to be freely tradable thereafter (other than restrictions on
transfer by reason of a holder being a "control person" of IBM for the purposes
of Canadian federal and provincial securities law or an "affiliate" of IBM). IBM
will in good faith expeditiously take all such actions and do all such things
necessary to cause all shares of IBM Common Stock (or other shares or securities
into which IBM Common Stock may be reclassified or changed as contemplated by
Section 2.7 hereof) to be delivered hereunder, including for greater certainty,
pursuant to the Offer, the Exchangeable Share Provisions or the Exchange Right,
to be listed, quoted or posted for trading on all United States stock exchanges
and quotation systems on which other outstanding shares of IBM Common Stock are
listed, quoted or posted for trading at such time.
2.7 ECONOMIC EQUIVALENCE
(a) Except with the prior approval of the Corporation and the
prior approval of the holders of the Exchangeable Shares given
in accordance with Section 9.2 of the Exchangeable Share
Provisions, in the event that IBM:
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(i) issues or distributes shares of IBM Common Stock (or
securities exchangeable for or convertible into or
carrying rights to acquire shares of IBM Common
Stock) to the holders of all or substantially all of
the then outstanding IBM Common Stock by way of stock
dividend or other distribution, other than an issue
of shares of IBM Common Stock (or securities
exchangeable for or convertible into or carrying
rights to acquire shares of IBM Common Stock) to
holders of shares of IBM Common Stock who exercise an
option to receive dividends in IBM Common Stock (or
securities exchangeable for or convertible into or
carrying rights to acquire shares of IBM Common
Stock) in lieu of receiving cash dividends;
(ii) issues or distributes rights, options or warrants to
the holders of all or substantially all of the then
outstanding shares of IBM Common Stock entitling them
to subscribe for or to purchase shares of IBM Common
Stock (or securities exchangeable for or convertible
into or carrying rights to acquire shares of IBM
Common Stock); or
(iii) issues or distributes to the holders of all or
substantially all of the then outstanding shares of
IBM Common Stock (i) shares or securities of IBM of
any class other than IBM Common Stock (other than
shares convertible into or exchangeable for or
carrying rights to acquire shares of IBM Common
Stock), (ii) rights, options or warrants other than
those referred to in Section 2.7(a)(ii) above, (iii)
evidences of indebtedness of IBM or (iv) assets of
IBM;
then IBM will take all necessary actions to ensure that the
Corporation shall issue or distribute the economic equivalent
(on a per share basis) of such rights, options, securities,
shares, evidences of indebtedness or other assets
simultaneously to holders of the Exchangeable Shares.
(b) Except with the prior approval of the Corporation and the
prior approval of the holders of the Exchangeable Shares
given in accordance with Section 9.2 of the Exchangeable
Share Provisions, in the event that IBM:
(i) subdivides, redivides or changes the then
outstanding shares of IBM Common Stock into a
greater number of shares of IBM Common Stock;
(ii) reduces, combines or consolidates or changes the
then outstanding shares of IBM Common Stock into a
lesser number of shares of IBM Common Stock; or
(iii) reclassifies or otherwise changes the shares of
IBM Common Stock or effects an amalgamation,
merger, reorganization or other transaction
affecting the shares of IBM Common Stock;
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then IBM will take all necessary actions to ensure that the
same or an economically equivalent change is made to, or in
the rights of the holders of, the Exchangeable Shares.
(c) IBM will ensure that prompt notice of any event referred to in
Section 2.7(a) or 2.7(b) above, is given by IBM to the
Corporation.
(d) The Board of Directors shall determine, in good faith and in
its sole discretion (with the assistance of such reputable and
qualified independent financial advisors and/or other experts
as the Board of Directors may require), economic equivalence
for the purposes of any event referred to in Section 2.7(a) or
2.7(b) and each such determination shall be conclusive and
binding on IBM. In making each such determination, the
following factors shall, without excluding other factors
determined by the Board of Directors to be relevant, be
considered by the Board of Directors:
(i) in the case of any stock dividend or other
distribution payable in shares of IBM Common Stock,
the number of such shares issued in proportion to the
number of shares of IBM Common Stock previously
outstanding;
(ii) in the case of the issuance or distribution of any
rights, options or warrants to subscribe for or
purchase shares of IBM Common Stock (or securities
exchangeable for or convertible into or carrying
rights to acquire shares of IBM Common Stock), the
relationship between the exercise price of each such
right, option or warrant and the current market value
(as determined by the Board of Directors in the
manner above contemplated) of a share of IBM Common
Stock;
(iii) in the case of the issuance or distribution of any
other form of property (including without limitation
any shares or securities of IBM of any class other
than IBM Common Stock, any rights, options or
warrants other than those referred to in Section
2.7(d)(ii) above, any evidences of indebtedness of
IBM or any assets of IBM), the relationship between
the fair market value (as determined by the Board of
Directors in the manner above contemplated) of such
property to be issued or distributed with respect to
each outstanding share of IBM Common Stock and the
current market value (as determined by the Board of
Directors in the manner above contemplated) of a
share of IBM Common Stock;
(iv) in the case of any subdivision, redivision or change
of the then outstanding shares of IBM Common Stock
into a greater number of shares of IBM Common Stock
or the reduction, combination or consolidation or
change of the then outstanding shares of IBM Common
Stock into a lesser number of shares of IBM Common
Stock or any amalgamation, merger, reorganization or
other transaction affecting IBM Common Stock, the
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effect thereof upon the then outstanding shares of
IBM Common Stock; and
(v) in all such cases, the general taxation consequences
in Canada of the relevant event to holders of
Exchangeable Shares in Canada to the extent that such
consequences may differ from the taxation
consequences to holders of shares of IBM Common Stock
as a result of differences between taxation laws of
Canada and those of the United States (except for any
differing consequences arising as a result of
differing marginal taxation rates and without regard
to the individual circumstances of holders of
Exchangeable Shares).
For purposes of the foregoing determinations, the current
market value of any security listed and traded or quoted on a
securities exchange shall be the weighted average of the daily
trading prices of such security during a period of not less
than five consecutive trading days ending not more than five
trading days before the date of determination on the principal
securities exchange on which such securities are listed and
traded or quoted; provided, however, that if in the opinion of
the Board of Directors the public distribution or trading
activity of such securities during such period does not create
a market that reflects the fair market value of such
securities, then the current market value thereof shall be
determined by the Board of Directors, in good faith and in its
sole discretion (with the assistance of such reputable and
qualified independent financial advisors and/or other experts
as the board may require), and provided further that any such
determination by the Board of Directors shall be conclusive
and binding on IBM.
2.8 TENDER OFFERS, ETC.
In the event that a tender offer, share exchange offer, issuer bid, take-over
bid or similar transaction with respect to IBM Common Stock (each, an "Offer")
is proposed by IBM or is proposed to IBM or its shareholders and is recommended
by the Board of Directors of IBM, or is otherwise effected or to be effected
with the consent or approval of the Board of Directors of IBM, IBM will use
reasonable efforts (to the extent, in the case of an Offer by a third party,
within its control) expeditiously and in good faith to take all such actions and
do all such things as are necessary or desirable to enable and permit holders of
Exchangeable Shares to participate in such Offer to the same extent and on an
economically equivalent basis as the holders of shares of IBM Common Stock,
without discrimination. IBM may discharge this obligation by ensuring that
holders of Exchangeable Shares may participate in all such Offers by means of
retraction of Exchangeable Shares as against the Corporation (subject to
Holdco's Retraction Call Right) which shall be effective only upon, and shall be
conditional upon, the closing of the Offer and only to the extent necessary to
tender or deposit to the Offer.
2.9 OWNERSHIP OF OUTSTANDING SHARES
Without the prior approval of the Corporation and the prior approval of the
Non-Affiliated Holders given in accordance with Section 9.2 of the Exchangeable
Share Provisions, IBM
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covenants and agrees that, as long as any outstanding Exchangeable Shares are
owned by any person or entity other than IBM, Holdco or any of their
Subsidiaries, IBM will be and remain the direct or indirect beneficial owner of
at least 50.1% of all issued and outstanding securities of the Corporation
carrying or otherwise entitled to voting rights in any circumstances, other than
the Exchangeable Shares.
2.10 IBM NOT TO VOTE EXCHANGEABLE SHARES
IBM and Holdco will appoint and cause to be appointed proxyholders with respect
to all Exchangeable Shares held by IBM or Holdco and their Subsidiaries for the
sole purpose of attending each meeting of holders of Exchangeable Shares in
order to be counted as part of the quorum for each such meeting. IBM and Holdco
further covenant and agree that they will not, and will cause their Subsidiaries
not to, exercise any voting rights that may be exercisable by holders of
Exchangeable Shares from time to time pursuant to the provisions of the CANADA
BUSINESS CORPORATIONS ACT (or any successor or other corporate statute by which
the Corporation may in the future be governed) with respect to any Exchangeable
Shares held by it or by its direct or indirect Subsidiaries in respect of any
matter considered at any meeting of holders of Exchangeable Shares.
2.11 DUE PERFORMANCE
On and after the Effective Date of the Offer, IBM shall duly and timely perform
all of its obligations provided for in the Offer including any obligations that
may arise upon the exercise of rights by any holder of Exchangeable Shares, or
IBM under the Exchangeable Share Provisions. IBM shall be responsible for the
due performance of all of Holdco's obligations hereunder and under the Offer
including the Exchangeable Share Provisions, except that in respect of the
rights of Holdco under the Liquidation Call Right, the Redemption Call Right and
the Retraction Call Right, IBM's obligation shall be limited to acting to ensure
that Holdco will exercise its rights under the Liquidation Call Right, the
Redemption Call Right and the Retraction Call Right only in circumstances where
Holdco is able to duly and timely perform in accordance with applicable law its
obligations with respect to the Liquidation Call Right, the Redemption Call
Right and the Retraction Call Right.
ARTICLE 3
IBM SUCCESSORS
3.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC.
If IBM enters into any transaction (whether by way of reconstruction,
reorganization, consolidation, merger, transfer, sale, lease or otherwise)
whereby all or substantially all of its undertaking, property and assets would
become the property of any other person or, in the case of a merger, of the
continuing corporation resulting therefrom, then IBM will take all necessary
actions to ensure that:
(a) such other person or continuing corporation (the "IBM
Successor"), by operation of law, becomes, without more, bound
by the terms and provisions of this
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agreement or, if not so bound, executes, prior to or
contemporaneously with the consummation of such transaction an
agreement supplemental hereto and such other instruments (if
any) as are satisfactory to the Corporation, acting
reasonably, and in the opinion of legal counsel to the
Corporation, are reasonably necessary or advisable to evidence
the assumption by the IBM Successor of liability for all money
payable and property deliverable hereunder and the covenant of
such IBM Successor to pay and deliver or cause to be delivered
the same and its agreement to observe and perform all the
covenants and obligations of IBM under this agreement; and
(b) such transaction shall be upon such terms as to substantially
preserve and not to impair in any material respect any of the
rights, duties, powers and authorities of the Corporation or
of the Non-Affiliated Holders hereunder.
3.2 VESTING OF POWERS IN SUCCESSOR
Whenever the covenants of Section 3.1 hereof have been duly observed and
performed, if required by Section 3.1 hereof, the IBM Successor, Holdco and the
Corporation shall execute and deliver the amended agreement as set forth in
Article 4 hereof and thereupon the IBM Successor shall possess and from time to
time may exercise each and every right and power of IBM under this agreement in
the name of IBM or otherwise and any act or proceeding by any provision of this
agreement required to be done or performed by the IBM Board of Directors or any
officers of IBM may be done and performed with like force and effect by the
directors or officers of such IBM Successor.
3.3 WHOLLY-OWNED SUBSIDIARIES
Nothing herein shall be construed as preventing the amalgamation or merger of
any Subsidiary of IBM with or into IBM or the winding up, liquidation or
dissolution of any Subsidiary of IBM. In addition, nothing herein shall be
construed as preventing the amalgamation or merger of LGS Group Inc. and/or IBM
Canada Limited with, and or into the Corporation and/or one or more other
corporations, or the winding up, liquidation or dissolution of LGS Group Inc.
ARTICLE 4
GENERAL
4.1 TERM
This Agreement shall come into force and be effective as of the date hereof and
shall terminate and be of no further force and effect at such time as no
Exchangeable Shares (or securities or rights convertible into or exchangeable
for or carrying rights to acquire Exchangeable Shares) are held by any person or
entity other than IBM and any of its Affiliates.
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4.2 CHANGES IN CAPITAL OF IBM AND THE CORPORATION
At all times after the occurrence of any event contemplated pursuant to sections
2.7 and 2.8 hereof or otherwise, as a result of which either IBM Common Stock or
the Exchangeable Shares or both are in any way changed, this Agreement shall
forthwith be amended and modified as necessary in order that it shall apply with
full force and effect, MUTATIS MUTANDIS, to all new securities into which IBM
Common Stock or the Exchangeable Shares or both are so changed and the parties
hereto shall execute and deliver an agreement in writing giving effect to and
evidencing such necessary amendments and modifications.
4.3 SEVERABILITY
If any provision of this Agreement is held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remainder of this
Agreement shall not in any way be affected or impaired thereby and this
Agreement shall be carried out as nearly as possible in accordance with its
original terms and conditions.
4.4 AMENDMENTS, MODIFICATIONS
This Agreement may not be amended or modified except by an agreement in writing
executed by IBM, Holdco and the Corporation and approved by the holders of the
Exchangeable Shares in accordance with section 9.2 of the Share Provisions.
4.5 MINISTERIAL AMENDMENTS
Notwithstanding the provisions of section 4.4, the parties to this Agreement may
in writing at any time and from time to time, without the approval of the
holders of the Exchangeable Shares, amend or modify this Agreement for the
purposes of:
(a) adding to the covenants of any or all parties provided that
each of IBM, Holdco and the Corporation shall be of the good
faith opinion that such additions will not be prejudicial to
the rights or interests of the holders of the Exchangeable
Shares;
(b) making such amendments or modifications not inconsistent with
this Agreement as may be necessary or desirable with respect
to matters or questions which, in the good faith opinion of
each of IBM, Holdco and the Corporation, it may be expedient
to make, provided that each shall be of the good faith opinion
that such amendments or modifications will not be prejudicial
to the rights or interests of the holders of the Exchangeable
Shares; or
(c) making such changes or corrections which are required for the
purpose of curing or correcting any ambiguity or defect or
inconsistent provision or clerical omission or mistake or
manifest error, provided that each of IBM, Holdco and the
Corporation shall be of the good faith opinion that such
changes or corrections will not be prejudicial to the rights
or interests of the holders of the Exchangeable Shares.
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4.6 MEETING TO CONSIDER AMENDMENTS
The Corporation, at the request of IBM, shall call a meeting or meetings of the
holders of the Exchangeable Shares for the purpose of considering any proposed
amendment or modification requiring approval pursuant to section 4.4 hereof. Any
such meeting or meetings shall be called and held in accordance with the by-laws
of the Corporation, the Share Provisions and all applicable laws.
4.8 ENUREMENT
This Agreement shall be binding upon and enure to the benefit of the parties
hereto and their respective successors and permitted assigns and to the benefit
of the Non-Affiliated Holders.
4.9 NOTICES TO PARTIES
All notices and other communications between the parties hereunder shall be in
writing and shall be deemed to have been given if delivered personally or by
confirmed telecopy to the parties at the following addresses (or at such other
address for such party as shall be specified in like notice):
(a) if to IBM at:
Xxx Xxxxxxx Xxxx
Xxxxxx, XX
00000
Attention:
(b) if to Holdco at:
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: President and Secretary
(c) if to the Corporation at:
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: President and Secretary
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Any notice or other communication given personally shall be deemed to have been
given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the next Business Day after the date
of receipt thereof unless such day is not a Business Day in which case it shall
be deemed to have been given and received upon the immediately following
Business Day.
4.10 COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
4.11 JURISDICTION
This Agreement shall be construed and enforced in accordance with the laws of
the Province of Ontario and the laws of Canada applicable therein.
4.12 ATTORNMENT
IBM agrees that any action or proceeding arising out of or relating to this
Agreement may be instituted in the courts of Ontario, waives any objection which
it may have now or hereafter to the venue of any such action or proceeding,
irrevocably submits to the jurisdiction of the said courts in any such action or
proceeding, agrees to be bound by any final and unappealable judgment of the
said courts and hereby appoints the Corporation at its registered office in the
Province of Ontario as its attorney for service of process.
-15-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
INTERNATIONAL BUSINESS IBM ACQUISITION INC.
MACHINES CORPORATION
By: /s/ Xxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxx
-------------------------- --------------------------
Name: Xxx X. Xxxxxx Name: Xxxxxxx X. Xxxx
Title: Vice President of Title: Secretary
Corporate Development
and Real Estate
3040696 NOVA SCOTIA COMPANY
By: /s/ Xxxxxx X. Xxxxx
--------------------------
Name: Xxxxxx X. Xxxxx
Title: President and Secretary
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS AND INTERPRETATION........................................1
1.1 Definitions..................................................1
1.2 Interpretation Not Affected by Headings, etc.................2
1.3 Number, Gender and Persons...................................3
1.4 Date for Any Action..........................................3
ARTICLE 2
COVENANTS, REPRESENTATIONS AND WARRANTIES.............................3
2.1 Covenants of IBM Regarding Exchangeable Shares...............3
2.2 Segregation of Funds.........................................4
2.3 Certain Representations......................................4
2.4 Notification of Certain Events...............................5
2.5 Delivery of Shares of IBM Common Stock.......................5
2.6 Qualification of Shares of IBM Common Stock..................6
2.7 Economic Equivalence.........................................6
2.8 Tender Offers, etc...........................................9
2.9 Ownership of Outstanding Shares..............................9
2.10 IBM Not to Vote Exchangeable Shares.........................10
2.11 Due Performance.............................................10
ARTICLE 3
IBM SUCCESSORS.......................................................10
3.1 Certain Requirements in Respect of Combination, etc.........10
3.2 Vesting of Powers in Successor..............................11
3.3 Wholly-Owned Subsidiaries...................................11
ARTICLE 4
GENERAL..............................................................11
4.1 Term........................................................11
4.2 Changes in Capital of IBM and the Corporation...............11
4.3 Severability................................................12
4.4 Amendments, Modifications...................................12
4.5 Ministerial Amendments......................................12
4.6 Meeting to Consider Amendments..............................12
4.7 Amendments Only in Writing..................................13
4.8 Enurement...................................................13
4.9 Notices to Parties..........................................13
4.10 Counterparts................................................13
4.11 Jurisdiction................................................13
4.12 Attornment..................................................14
-i-
INTERNATIONAL BUSINESS MACHINES CORPORATION, a
corporation existing under the laws of the State of
New York ("IBM")
- and -
3040696 NOVA SCOTIA COMPANY, an unlimited company
existing under the laws of the Province of Nova
Scotia ("Holdco")
- and -
IBM ACQUISITION INC., a corporation existing under
the laws of Canada (the "Corporation")
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SUPPORT AGREEMENT
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