EXHIBIT 2.1
COMBINATION AGREEMENT
QUANTUM FUEL SYSTEMS TECHNOLOGIES WORLDWIDE, INC.
and
GLOBAL THERMOELECTRIC INC.
Dated as of April 8, 2003
TABLE OF CONTENTS
Page
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ARTICLE 1 GENERAL 2
1.1 Plan of Arrangement ........................................ 2
1.2 Exchange Ratio ............................................. 3
1.3 Dissenting Shares .......................................... 3
1.4 Other Effects of the Arrangement ........................... 4
1.5 Joint Proxy Statement ...................................... 4
1.6 Material Adverse Effect; Material Adverse Change ........... 5
1.7 Knowledge .................................................. 6
1.8 Currency ................................................... 6
1.9 Appendix and Exhibits ............ ......................... 6
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF GCo .................. 7
2.1 Organization and Standing .................................. 7
2.2 Capitalization ............................................. 8
2.3 Agreement Authorized and its Effect on Other Obligations ... 8
2.4 Governmental and Third Party Consents ...................... 10
2.5 No Defaults ................................................ 10
2.6 Intellectual Property ...................................... 11
2.7 Securities Reports ......................................... 13
2.8 Financial Statements ....................................... 14
2.9 Absence of Certain Changes and Events ...................... 15
2.10 Material Contracts ......................................... 15
2.11 Customers and Suppliers .................................... 16
2.12 Insurance .................................................. 16
2.13 Books and Records .......................................... 16
2.14 Litigation; Investigations ................................. 17
2.15 Environmental Matters ...................................... 17
2.16 Title to Properties ........................................ 19
2.17 Zoning and Other Matters Relating To Real Property ......... 19
2.18 No Hazardous Substances .................................... 21
2.19 Taxes ...................................................... 21
2.20 Non-Arm's Length Transactions .............................. 23
2.21 Employees .................................................. 24
2.22 Employee Benefit Plans ..................................... 24
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TABLE OF CONTENTS
(continued)
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2.23 Labour Matters ............................................. 25
2.24 Information Supplied ....................................... 25
2.25 Compliance with Laws ....................................... 25
2.26 Restrictions on Business Activities ........................ 26
2.27 Disclosure ................................................. 26
2.28 GCo Assets and Revenues .................................... 26
2.29 Brokers and Finders ........................................ 26
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF QCO .................. 26
3.1 Organization and Standing .................................. 27
3.2 Capitalization ............................................. 27
3.3 Agreement Authorized and its Effect on Other Obligations ... 28
3.4 Governmental and Third Party Consents ...................... 30
3.5 No Defaults ................................................ 30
3.6 Intellectual Property ...................................... 30
3.7 Securities Reports ......................................... 33
3.8 Financial Statements ....................................... 34
3.9 Absence of Certain Changes and Events ...................... 34
3.10 Material Contracts ......................................... 35
3.11 Customers and Suppliers .................................... 35
3.12 Insurance .................................................. 36
3.13 Books and Records .......................................... 36
3.14 Litigation; Investigations ................................. 37
3.15 Environmental Matters ...................................... 37
3.16 Title to Properties ........................................ 38
3.17 Zoning and Other Matters Relating To Real Property ......... 39
3.18 No Hazardous Substances .................................... 40
3.19 Taxes ...................................................... 40
3.20 Non-Arm's Length Transactions .............................. 41
3.21 Employees .................................................. 42
3.22 Employee Benefit Plans ..................................... 42
3.23 Labour Matters ............................................. 44
3.24 Information Supplied ....................................... 44
3.25 Compliance with Laws ....................................... 45
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TABLE OF CONTENTS
(continued)
Page
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3.26 Restrictions on Business Activities ........................ 45
3.27 QCo Common Stock ........................................... 45
3.28 Disclosure ................................................. 45
3.29 QCo Assets and Revenues .................................... 46
3.30 Brokers and Finders ........................................ 46
ARTICLE 4 OBLIGATIONS PENDING EFFECTIVE DATE ..................... 46
4.1 Agreements of QCo and GCo .................................. 46
4.2 Additional Agreements of GCo ............................... 49
4.3 Additional Agreements of QCo ............................... 51
4.4 Public Announcements ....................................... 54
4.5 Comfort Letters ............................................ 54
4.6 Board of Directors ......................................... 54
4.7 Tax Matters ................................................ 54
ARTICLE 5 CONDITIONS PRECEDENT TO OBLIGATIONS .................... 55
5.1 Conditions Precedent to Obligations of Each Party .......... 55
5.2 Conditions Precedent to Obligations of GCo ................. 57
5.3 Conditions Precedent to Obligations of QCo ................. 57
ARTICLE 6 TERMINATION ............................................ 58
6.1 Termination ................................................ 58
6.2 Notice of Termination ...................................... 60
6.3 Effect of Termination ...................................... 60
6.4 Termination Fee ............................................ 60
ARTICLE 7 ADDITIONAL AGREEMENTS .................................. 62
7.1 Meetings ................................................... 62
7.2 The Closing ................................................ 63
7.3 Ancillary Documents/Reservation of Shares .................. 63
7.4 Notice to Holders of GCo Options ........................... 63
7.5 Indemnification and Related Matters ........................ 63
7.6 Affiliate Agreements ....................................... 65
7.7 Consents; Approvals ........................................ 65
7.8 Registration Statements .................................... 65
ARTICLE 8 MISCELLANEOUS ............................................ 66
8.1 No Survival of Representations and Warranties .............. 66
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TABLE OF CONTENTS
(continued)
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8.2 Notices .................................................... 66
8.3 Interpretation ............................................. 67
8.4 Severability ............................................... 67
8.5 Counterparts ............................................... 67
8.6 Miscellaneous .............................................. 67
8.7 Governing Law .............................................. 68
8.8 Amendment and Waivers ...................................... 68
8.9 Expenses ................................................... 68
8.10 Further Assurances ......................................... 68
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COMBINATION AGREEMENT
THIS COMBINATION AGREEMENT (this "Agreement") is entered into
as of April 8, 2003, between QUANTUM FUEL SYSTEMS TECHNOLOGIES WORLDWIDE, INC.,
a Delaware corporation ("QCo"), and GLOBAL THERMOELECTRIC INC., an Alberta
corporation ("GCo") (capitalized terms not otherwise defined herein shall have
the meaning set forth in the Appendix hereto).
RECITALS
WHEREAS, the board of directors of QCo deems it advisable and
in the best interests of its stockholders to combine its business with GCo by
QCo acquiring all of the outstanding GCo Common Shares (as defined herein)
pursuant to the Plan of Arrangement;
WHEREAS, the board of directors of GCo deems it advisable to
submit to its shareholders the transactions contemplated by this Agreement
wherein GCo will combine its business with QCo by QCo acquiring all of the
outstanding GCo Common Shares pursuant to the Plan of Arrangement;
WHEREAS, in furtherance of such combination, the respective
boards of directors of QCo and GCo have approved the transactions contemplated
by this Agreement, the board of directors of GCo has agreed to submit the Plan
of Arrangement and the other transactions contemplated hereby to its holders of
GCo Common Shares (the "GCo Common Shareholders") and the Court of Queen's Bench
of Alberta (the "Court") for approval, and the board of directors of QCo has
agreed to submit the approval of the transactions contemplated hereby and by the
Plan of Arrangement, including the issuance of the shares of QCo Common Stock,
issuable in connection with the transactions contemplated by this Agreement and
the Plan of Arrangement, to its stockholders for approval; and
WHEREAS, the parties intend that the acquisition of GCo
outstanding stock hereunder be structured in a manner that is expected to
maximize present and future financial and tax benefits to QCo and GCo.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE 1
GENERAL
1.1 Plan of Arrangement
As promptly as practicable after the United States Securities
and Exchange Commission (the "SEC") has informed QCo that it has no further
comments with respect to or will not review ("SEC Clearance") the preliminary
Joint Proxy Statement, GCo will apply to the Court pursuant to Section 193 of
the Business Corporations Act (Alberta) (the "ABCA") for an interim order in
form and substance reasonably satisfactory to QCo (the "Interim Order")
providing for, among other things, the calling and holding of the GCo
Shareholders Meeting for
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the purpose of considering and, if deemed advisable, approving the arrangement
(the "Arrangement") under Section 193 of the ABCA and pursuant to this Agreement
and the Plan of Arrangement substantially in the form of Exhibit A (the "Plan of
Arrangement"). If the GCo Common Shareholders approve the Arrangement and all
necessary approvals of QCo stockholders have been obtained, GCo and QCo will
take the necessary steps to submit the Arrangement to the Court and apply for a
final order of the Court approving the Arrangement in such fashion as the Court
may direct (the "Final Order"). At 12:01 a.m. (the "Effective Time") on the date
(the "Effective Date") shown on the articles of arrangement filed with the
Registrar under the ABCA (which articles of arrangement will not be filed with
the Registrar under the ABCA during any 15 business day cure period referred to
in Section 6.1(b) or (c) hereof) giving effect to the Arrangement and other
transactions set out in Section 2.1 of the Plan of Arrangement, the Arrangement
and such other transactions shall occur and shall be deemed to occur in the
order set out therein without any further act or formality.
1.2 Exchange Ratio
(a) As used herein, the term "Exchange Ratio" means, in respect of QCo
Common Stock to be delivered upon the transfer of GCo Common Shares (but
excluding the GCo Series 2 Preferred Shares) to QCo pursuant to Section 2.1 of
the Plan of Arrangement, a ratio of the number of shares of QCo Common Stock per
GCo Common Share. The Exchange Ratio shall be determined as follows:
Exchange Ratio = 2.628378
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QCo Stock Price
Provided, however, that if the foregoing calculation results in an Exchange
Ratio of 1.020 or greater, the Exchange Ratio shall be 1.020 and if the
calculation results in an Exchange Ratio of less than 0.8350, the Exchange Ratio
shall be 0.8350.
(b) The Exchange Ratio as so determined in each case shall be rounded
to four decimal places (rounding up if the fifth decimal is five or more and
otherwise rounding down). The "QCo Stock Price" shall mean the Daily Volume
Weighted Average Price of the QCo Common Stock over the Measurement Period.
"Daily Volume Weighted Average Price" shall mean the daily volume weighted
average price based on trading on the Nasdaq National Market between 9:30 a.m.
and 4:00 p.m. Eastern Time as reported by Bloomberg Financial L.P. QCo Stock
Price as so determined shall be rounded to four decimal places (rounding up if
the fifth decimal is five or more and otherwise rounding down).
(c) The Exchange Ratio shall be adjusted to reflect fully the effect of
any stock split, reverse split, stock dividend (including any dividend or
distribution of securities convertible into QCo Common Stock or GCo Common
Shares), merger, reorganization, recapitalization or other like change with
respect to QCo Common Stock or GCo Common Shares occurring after the date hereof
and prior to the Effective Time.
1.3 Dissenting Shares
Holders of GCo Common Shares may exercise rights of dissent with
respect to such shares in connection with the Arrangement pursuant to and in the
manner set forth in
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Section 191 of the ABCA and Section 3.1 of the Plan of Arrangement (such holders
referred to as "Dissenters" or as "Dissenting Shareholders" when referring
exclusively to GCo Common Shareholders). GCo shall give QCo (a) prompt notice of
any written demands of a right of dissent, withdrawals of such demands, and any
other instruments served pursuant to the ABCA and received by GCo and (b) the
opportunity to participate in all negotiations and proceedings with respect to
such rights. Without the prior written consent of QCo, except as required by
applicable law, GCo shall not make any payment with respect to any such rights
or offer to settle or settle any such rights.
1.4 Other Effects of the Arrangement
At the Effective Time each GCo Common Share outstanding immediately
prior to the Effective Time will be exchanged as provided in the Plan of
Arrangement and the Arrangement will, from and after the Effective Time, have
all of the effects provided by applicable law, including the ABCA.
1.5 Joint Proxy Statement
(a) As promptly as practicable after execution of this Agreement, QCo
and GCo shall prepare and QCo shall file with the SEC a preliminary joint
management information circular and proxy statement, and one or more supplements
for GCo and QCo respectively (the "Joint Proxy Statement"), together with any
other documents required by the United States Securities Act of 1933, as amended
(the "Securities Act"), or the United States Securities Exchange Act of 1934, as
amended (the "Exchange Act"), in connection with the Arrangement and the other
transactions contemplated hereby. The Joint Proxy Statement shall constitute (i)
the management information circular of GCo with respect to the meeting of
securityholders of GCo relating to the Arrangement and the approval of certain
matters in connection therewith (the "GCo Shareholders Meeting") and (ii) the
proxy statement of QCo with respect to the meeting of stockholders of QCo with
respect to the matters set forth in Section 7.1(b) in connection with the
transactions contemplated by this Agreement and the Plan of Arrangement (the
"QCo Stockholders Meeting"). As promptly as practicable after QCo receives SEC
Clearance with respect to the preliminary Joint Proxy Statement, QCo and GCo
shall cause the Joint Proxy Statement to be mailed to each company's respective
securityholders entitled to vote, as the case may be.
(b) Each party shall promptly furnish to the other party all
information concerning such party and its securityholders as may be reasonably
required in connection with any action contemplated by this Section 1.5,
including any information requested by the SEC to be included in the Joint Proxy
Statement. The Joint Proxy Statement shall comply in all material respects with
all applicable requirements of law. Each of QCo and GCo will notify the other
promptly of the receipt of any comments from the SEC and of any request by the
SEC for amendments or supplements to the Joint Proxy Statement or for additional
information, and will supply the other with copies of all correspondence with
the SEC with respect to the Joint Proxy Statement. Whenever any event occurs
which should be set forth in an amendment or supplement to the Joint Proxy
Statement, QCo or GCo, as the case may be, shall promptly inform the other of
such occurrence and cooperate in filing with the SEC, and/or mailing to
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securityholders entitled to vote of QCo and GCo, as may be applicable, such
amendment or supplement.
(c) As promptly as practicable after the Effective Time, QCo shall file
a registration statement on Form S-8 (the "S-8 Registration Statement") with the
SEC to register the QCo Common Stock to be issued from time to time after the
Effective Time upon exercise of GCo Options assumed by QCo pursuant to the terms
of this Agreement. QCo will use its reasonable best efforts to maintain the
effectiveness of the S-8 Registration Statement for so long as any GCo Options
remain outstanding or, in each case, until such earlier time as QCo determines
to be sufficient on the written advice of its outside counsel.
(d) QCo and GCo shall take any action required to be taken under any
applicable provincial or state securities laws (including "blue sky" laws) in
connection with the issuance of the QCo Common Stock and the Arrangement;
provided, however, that with respect to the blue sky and Canadian provincial
qualifications, neither QCo nor GCo shall be required to register or qualify as
a foreign corporation or reporting issuer where any such entity is not now so
registered or qualified except as to matters and transactions arising solely
from the offer and sale of the QCo Common Stock.
1.6 Material Adverse Effect; Material Adverse Change
(a) In this Agreement, the term "Material Adverse Effect" used with
respect to any party means any change, effect, violation, inaccuracy,
circumstance, event or occurrence that is, or would reasonably be expected to
be, material and adverse to the business, assets, liabilities, financial
condition, results of operations or prospects of such party and its subsidiaries
taken as a whole.
(b) In this Agreement, the term "Material Adverse Change", when used in
connection with QCo or GCo, means any change, effect, violation, inaccuracy,
circumstance, event or occurrence that is, or would reasonably be expected to
be, material and adverse to the business, assets, liabilities, financial
condition, results of operations or prospects of such party and its subsidiaries
taken as a whole, other than any change, effect, violation, inaccuracy,
circumstance, event or occurrence (i) relating to the Canadian or United States,
economy or securities markets in general, (ii) relating to any change in the
trading price of the QCo Common Stock or GCo Common Shares, respectively, that
arises from the announcement of execution of this Agreement, or (iii) relating
to any change in the trading price of the QCo Common Stock or GCo Common Shares,
respectively, unrelated to any change, effect, violation, inaccuracy,
circumstance, event or occurrence that is, or would reasonably be expected to
be, material and adverse to the business, assets, liabilities, financial
condition, results of operations or prospects of QCo or GCo, as the case may be,
and its subsidiaries taken as a whole.
(c) For greater certainty, for the purposes of Sections 3.9(a) and
5.2(c) a Material Adverse Change to QCo shall be considered to have occurred at
any time that executive officers of GCo or QCo have actual knowledge that the
United States Internal Revenue Service (the "IRS") has provided a notice of
proposed adjustment, a preliminary notice of deficiency or a statutory notice of
deficiency challenging the status of the Distribution (as such term is defined
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in the Distribution Agreement) as a distribution under Section 355(a) of the
U.S. Internal Revenue Code (the "Code").
1.7 Knowledge
In this Agreement, the phrase "to the knowledge of" means the actual
knowledge of any of the executive officers of GCo or QCo, as the case may be,
after reasonable inquiry, except where otherwise indicated, and such executive
officers shall have made such inquiry as is reasonable in the circumstances.
1.8 Currency
Unless otherwise specified, all references in this Agreement to
"dollars" or "$" shall mean United States dollars.
1.9 Appendix and Exhibits
The following Appendix and Exhibits attached hereto are incorporated
herein by reference:
(a) Appendix - Defined Terms
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(b) Exhibit A - Plan of Arrangement;
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(c) Exhibit B - GCo Affiliates Agreement;
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(d) Exhibit C - GCo Representations for Tax Opinion;
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(e) Exhibit D - QCo Representations for Tax Opinion; and
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(f) Exhibit E - Tax Opinion to be Delivered by Xxxxxxxx & Xxxxxxxx LLP.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF GCo
Except as otherwise fully and fairly disclosed and set forth in a
corresponding paragraph of the GCo Disclosure Letter, GCo hereby represents and
warrants to, and agrees with, QCo that:
2.1 Organization and Standing
(a) Each of GCo and its subsidiaries has been duly organized or formed
under all applicable Laws, is validly existing and in good standing under the
laws of the jurisdiction in which it is organized and has full corporate or
other legal power, authority and capacity to own, lease and operate its
properties and conduct its businesses as currently conducted. All of the
outstanding shares of capital stock and other ownership interests of GCo and its
subsidiaries are duly authorized, validly issued, fully paid and non-assessable,
and all such shares and other ownership interests of GCo's subsidiaries are
owned directly or indirectly by GCo, free and clear of all material liens,
claims or encumbrances and there are no outstanding options, rights,
entitlements, understandings or commitments (pre-emptive, contingent or
otherwise) regarding the right to acquire any such shares of capital stock or
other ownership interests in any of its subsidiaries. GCo and each of its
subsidiaries is duly qualified or licensed to do business in each jurisdiction
where the character of the properties owned, leased or operated by it or the
nature of its activities makes such qualification or licensing necessary, except
where the failure to be so qualified or licensed would not have a Material
Adverse Effect. GCo has disclosed in the GCo Disclosure Letter the names and
jurisdictions of incorporation of each of its subsidiaries.
(b) GCo does not have any subsidiaries which are material in relation
to the business and financial condition of GCo on a consolidated basis; for the
purposes hereof, a subsidiary and its subsidiaries shall be considered material
in relation to GCo if: (i) the investments in and advances to the subsidiary and
its subsidiaries by GCo and its other subsidiaries exceed five percent of the
total assets of GCo and its subsidiaries on a consolidated basis at December 31,
2002; or (ii) the equity of GCo and its other subsidiaries in the income from
continuing operations before income taxes and extraordinary items of the
subsidiary and its subsidiaries exceeds five percent of such income of GCo and
its subsidiaries on a consolidated basis for GCo's fiscal year ended December
31, 2002.
(c) GCo does not have any ownership interest in any other Person, which
interest is material in relation to the consolidated financial position of GCo.
(d) GCo has delivered or made available to QCo a true and correct copy
of its charter documents and similar governing instruments of each of its
subsidiaries, each as amended as of the date hereof, and each such instrument is
in full force and effect. Neither GCo nor any of its subsidiaries is in
violation of any of the provisions of its charter documents or equivalent
governing instruments.
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2.2 Capitalization
(a) The authorized capital of GCo consists of an unlimited number of
preferred shares issuable in series and an unlimited number of Common Shares
(the "GCo Common Shares"). As of April 7, 2003, there were 1,000,000 shares of
Cumulative Redeemable Convertible Preferred Shares, Series 2 (the "GCo Series 2
Preferred Shares" and, together with the GCo Common Shares, being collectively
referred to herein as the "GCo Securities") issued and outstanding and
29,171,683 GCo Common Shares issued and outstanding. As of April 7, 2003,
2,205,667 GCo Common Shares were reserved for issuance upon the exercise of
stock options ("GCo Options") under GCo's Amended Incentive Stock Option Plan
(the "GCo Incentive Plan") and for the future grant of GCo Options under the GCo
Incentive Plan. As of April 7, 2003, 1,502,192 of the GCo Options are
outstanding, of which 355,125 have vested and are exercisable in accordance with
their terms and 1,147,067 remain unvested. Except as described in this Section
2.2, there are no options, warrants, conversion privileges, rights plans or
other rights, agreements, arrangements or commitments (pre-emptive, contingent
or otherwise) obligating GCo or any of its subsidiaries to issue or sell any
securities of GCo or any of its subsidiaries or obligations of any kind
convertible into or exchangeable for any securities of GCo, any of its
subsidiaries or any other Person, nor is 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 GCo
or any of its subsidiaries. All outstanding GCo Securities have been duly
authorized and are validly issued and outstanding as fully paid and
non-assessable shares, free of pre-emptive rights. There are no outstanding
bonds, debentures or other evidences of indebtedness of GCo or any of its
subsidiaries having the right to vote (or that are convertible for or
exercisable into securities having the right to vote) with the holders of GCo
Securities on any matter. There are no outstanding contractual obligations of
GCo or any of its subsidiaries to repurchase, redeem or otherwise acquire any of
GCo's Securities or with respect to the voting or disposition of any outstanding
securities of any of its subsidiaries. No holder of securities issued by GCo or
any of its subsidiaries has any right to compel GCo to register or otherwise
qualify such securities for public sale in Canada or the United States.
(b) GCo's Series 1 10% Cumulative Redeemable Convertible Preferred
Shares (the "GCo Series 1 Preferred Shares") were redeemed or converted by GCo
in July 1999. There are no GCo Series 1 Preferred Shares issued and outstanding.
2.3 Agreement Authorized and its Effect on Other Obligations
(a) GCo has the requisite corporate power and authority to enter into
this Agreement, and to perform its obligations hereunder. The execution and
delivery of this Agreement by GCo and the consummation of the transactions
contemplated by this Agreement, have been duly authorized by its board of
directors and no other corporate proceedings on its part are necessary to
authorize this Agreement or the transactions contemplated hereby other than,
with respect to the completion of the Arrangement, the approval of at least
two-thirds of the votes cast by the holders of GCo Common Shares present, in
person or by proxy, at the GCo Shareholders Meeting.
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(b) This Agreement has been duly executed and delivered by GCo and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency and other similar
Laws affecting creditors' rights generally, and to general principles of equity.
(c) GCo's board of directors has (i) determined that it is in the best
interests of GCo to enter into the Agreement, (ii) received an opinion from
Citigroup Global Markets Inc. (and have been advised that they will receive a
written opinion) that the Exchange Ratio is fair from a financial point of view
to the holders of the GCo Common Shares, (iii) determined to provide the GCo
Common Shareholders with the opportunity to vote in respect of the Agreement,
the Arrangement and the transactions contemplated hereby, (iv) will advise the
GCo Common Shareholders to carefully consider the opportunity presented by the
Arrangement and all of the information set out in the Joint Proxy Statement and,
having regard to their own personal circumstances and investment objectives, to
come to their own decision as to how to vote on the matter and (v) have advised
GCo of those members of GCo's board of directors who have indicated that they
intend to vote the GCo securities held by them in favour of the Agreement, the
Arrangement and the transactions contemplated hereby and GCo will so disclose
such intention in the Joint Proxy Statement, subject to Section 7.1(b).
(d) The approval of this Agreement by GCo, the execution and delivery
by GCo of this Agreement, and the performance by it of its obligations hereunder
and the completion by it of the Arrangement and the transactions contemplated
thereby, will not:
(i) result in a violation or breach of, require any consent to be
obtained under or give rise to any material termination rights or material
payment obligation under any provision of:
(A) its, or any of its subsidiaries' certificate of
incorporation, articles, bylaws or other charter documents;
(B) subject to obtaining the Appropriate Regulatory
Approvals relating to GCo, any Laws, regulation, order, judgment or decree,
applicable to GCo or any of its subsidiaries or by which GCo or any of its
subsidiaries or any of their respective properties is bound;
(C) any Material Contract or material licence, franchise or
permit to which GCo, or any of its subsidiaries, is a party or by which it is
bound; or
(D) the provisions of any of the GCo Property Permitted
Encumbrances;
(ii) give rise to any right of termination or acceleration of
indebtedness, or cause any third party indebtedness to come due before its
stated maturity or cause any available credit to cease to be available;
(iii) result in the imposition of any Encumbrance upon any of
GCo's or any of its subsidiaries' assets, or restrict, hinder, impair or limit
the ability of GCo to carry on the
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business of GCo as and where it is now being carried on, except as would not,
individually or in the aggregate, have a Material Adverse Effect; or
(iv) result in any payment (including severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming due to any director
or employee of GCo or any of its subsidiaries or increase any benefits otherwise
payable under the GCo Incentive Plan or any GCo Employee Plan or result in the
acceleration of time of payment or vesting of any such benefits.
(e) There are no anti-takeover statutes or regulations of any
Governmental Entity that are applicable to GCo in connection with the
transactions contemplated herein.
2.4 Governmental and Third Party Consents
(a) No consent, approval, order or authorization of, or registration,
declaration or filing with or notice to, any Governmental Entity or other Person
is required to be obtained by GCo or any of its subsidiaries in connection with
the execution and delivery of this Agreement or the Plan of Arrangement by GCo
or the consummation by GCo of the transactions contemplated hereby or thereby,
other than: (i) the filing with the Commissions and the Court and the mailing to
the securityholders of GCo of the Joint Proxy Statement relating to the GCo
Shareholders Meeting; (ii) any approvals and notices required by the Interim
Order; (iii) the Final Order; (iv) such filings, authorizations, orders and
approvals as may be required under state "control share acquisition,"
"anti-takeover" or other similar statutes, any other applicable federal,
provincial or state securities laws and the rules of the TSX; (v) such filings
and notifications as may be necessary under the HSR Act; (vi) such notices and
filings as may be necessary under the Investment Canada Act and under the
Competition Act (Canada); and (vii) where the failure to obtain such consents,
approvals, etc., would not prevent or delay the consummation of the Arrangement
or otherwise prevent GCo from performing its obligations under this Agreement
and would not reasonably be expected to have a Material Adverse Effect.
(b) Other than as contemplated by Section 2.4(a), no consents,
assignments, waivers, authorizations or other certificates are necessary in
connection with the transactions contemplated hereby to provide for the
continuation in full force and effect of all of GCo's Material Contracts or
leases or for GCo to consummate the transactions contemplated hereby, except
when the failure to receive such consents or other certificates would not have a
Material Adverse Effect.
(c) GCo and its subsidiaries possesses such consents, licences,
certificates, authorizations, approvals, franchises, permits or other rights as
are currently necessary to conduct the business now operated by it, except where
the failure to posses such consents, licences, certificates, authorizations,
approvals, franchises, permits would not have a Material Adverse Effect.
2.5 No Defaults
Neither GCo nor any of its 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
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a default under any contract, agreement, licence or franchise to which it is a
party which would, if terminated due to such default, cause a Material Adverse
Effect.
2.6 Intellectual Property
(a) The GCo Disclosure Letter lists all Registered Intellectual
Property Rights that are owned by, filed in the name of, or applied for by GCo
or its subsidiaries, specifying as to each the nature or title of such right,
any jurisdiction that has issued a registration with respect thereto or in which
an application for such registration is pending, and any applicable registration
or application number. All such Registered Intellectual Property Rights are
valid and in full force and were prosecuted in good faith. All necessary
registration, maintenance and renewal fees in connection with each item of such
Registered Intellectual Property Rights have been paid and all necessary
documents and certificates in connection with such Registered Intellectual
Property Rights have been filed with the relevant patent, copyright, trademark
or other authorities in the United States, Canada or other jurisdictions, as the
case may be, for the purposes of maintaining such Registered Intellectual
Property Rights.
(b) The GCo Disclosure Letter sets forth an accurate and complete list
of all licences, sublicences and other agreements to which GCo or any of its
subsidiaries is a party or is otherwise bound and pursuant to which any Person
other than GCo or any of its subsidiaries is authorized to use any material GCo
Intellectual Property Rights or GCo Technology and a true and correct copy of
each such agreement has been delivered or made available to QCo.
(c) Section 2.6(c)(i) of the GCo Disclosure Letter sets forth an
accurate and complete list of all material licences, sublicences, and other
agreements to which GCo or any of its subsidiaries is a party or is otherwise
bound and pursuant to which GCo and any of its subsidiaries is authorized to use
any Intellectual Property Right or Technology that is held by any Person other
than GCo or any of its subsidiaries and a true and correct copy of each such
agreement has been delivered or made available to QCo, other than end-user
licences granted to GCo or any of its subsidiaries relating to "off the shelf"
personal computer software that is generally available from Persons that are
unaffiliated with GCo or any of its subsidiaries. Section 2.6(c)(ii) of the GCo
Disclosure Letter sets forth an accurate and complete list of all material
licences granted to GCo or any of its subsidiaries relating to "off the shelf"
personal computer software that is generally available from Persons that are
unaffiliated with GCo or any of its subsidiaries and that is incorporated into
any product marketed, sold, or licensed by, or used in the provision of any
service provided by GCo or any subsidiary of GCo.
(d) GCo and its subsidiaries either exclusively own or have the valid
right to use all GCo Intellectual Property Rights and all Third Party
Intellectual Property Rights used by GCo or any subsidiary of GCo (and no third
party, including any past or present employee or contractor of GCo or any
Governmental Entity, owns or has any ownership interest in any GCo Intellectual
Property Rights that are not Third Party Intellectual Property Rights of GCo).
Upon Closing, all GCo Intellectual Property Rights and all Third Party
Intellectual Property Rights used by GCo or any subsidiary of GCo will be
immediately available for use on terms and conditions substantially identical to
those under which GCo and any subsidiaries of GCo presently uses or reasonably
contemplates using such rights, without any affirmative act by QCo or any other
Person.
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(e) To the knowledge of GCo, there are (and upon Closing, will be) no
royalties, honoraria, fees, or other payments payable by GCo, any subsidiary of
GCo, or QCo to any Person by reason of the ownership, use, licence, sale or
disposition of any GCo Intellectual Property Rights or GCo Technology.
(f) To the knowledge of GCo, neither the GCo Intellectual Property
Rights, nor the conduct of the GCo business as presently conducted or reasonably
currently contemplated to be conducted, uses or discloses in an unauthorized
manner, infringes, or constitutes a misappropriation of any Intellectual
Property Right of any Person. Neither GCo nor any of its subsidiaries: (i) has
any knowledge that any GCo Intellectual Property Right is the subject of any
interference, reexamination, cancellation, or opposition proceeding, or any
currently pending or threatened suit, action, or proceeding arising out of an
alleged right of any Person with respect to any Intellectual Property Right;
(ii) has received any oral, written, or other communication that GCo or any
subsidiary of GCo is using or disclosing in an unauthorized manner, infringing,
or misappropriating the alleged right of any Person with respect to any
Intellectual Property Right; or (iii) has any knowledge that any of the GCo
Intellectual Property Rights is being used or disclosed in an unauthorized
manner, infringed or misappropriated by any Person.
(g) None of the GCo Intellectual Property Rights are subject to any
Proceeding that restricts in any manner the use, transfer or licensing thereof
by GCo or that may affect the validity, use or enforceability of the GCo
Intellectual Property Rights; provided that nothing herein applies to the
prosecution (except for any interference or opposition proceeding) of any GCo
Intellectual Property Rights in the U.S. Patent and Trademark Office or any
other government patent or trademark office.
(h) To the knowledge of GCo, no party to any licence, sublicence, or
agreement listed in the GCo Disclosure Letter is (or upon Closing, will be) in
material breach or default and no event has occurred (or, upon Closing, will
occur) which with notice or lapse of time would constitute a material breach or
default or permit termination, modification or acceleration thereunder.
(i) GCo and its subsidiaries have maintained and continue to maintain a
system to safeguard and maintain the secrecy and confidentiality of and its
proprietary rights in all of the material GCo Intellectual Property Rights not
otherwise protected by patents, patent applications, or copyright or trademark
law. Without limitation on the generality of the foregoing, to the knowledge of
GCo, (i) any disclosures to third parties of trade secrets that are material to
the operation of the GCo business have been pursuant to executed written
confidentiality agreements substantially similar in effect to those included in
the forms set forth in the GCo Disclosure Letter, (ii) GCo has obtained
confidentiality and inventions assignment agreements, in one or more forms, that
have protections and conditions substantially similar in effect to those
included in the forms set forth in the GCo Disclosure Letter, from all of the
past and present employees and independent contractors of GCo and subsidiaries
of GCo involved in the creation or development of GCo Intellectual Property
Rights and GCo Technology that are material to the operation of the GCo
business, (iii) there has been no material breach or violation of any secrecy or
confidentiality commitments of any person in respect of any material
confidential information of GCo or its subsidiaries, and (iv) the measures taken
by GCo and its
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subsidiaries to protect the proprietary and non-public aspects of the
thermo-electric generator and solid oxide fuel cell technology are reasonably
designed to adequately prevent third parties from using any such aspects of such
technology without the approval of GCo. No Person who has performed services
related to the GCo business has (or upon Closing, will have) any right, title or
interest in any GCo Intellectual Property Rights that are material to the
operation of the GCo business.
(j) The execution, delivery, and performance of this Agreement, and the
consummation of the transactions contemplated hereby, will not (i) breach,
violate, or conflict with any agreement governing any GCo Intellectual Property
Rights, (ii) cause the forfeiture or termination or give rise to a right of
forfeiture or termination of any GCo Intellectual Property Rights, or in any way
impair the right of QCo to use or bring any action for the unauthorized use or
disclosure, infringement, or misappropriation of any GCo Intellectual Property
Right, (iii) result in QCo granting to any third party any right to, or with
respect to, any Intellectual Property Right owned by, or licensed to, QCo, (iv)
result in QCo being bound by, or subject to, any non-competition or other
restriction on the operation or scope of its businesses, or (v) result in QCo
being obligated to pay any royalties or other fees of any kind to any third
party. GCo and its Subsidiaries have not entered into any agreements granting
any exclusive right to any material GCo Intellectual Property Right.
(k) For purposes of this Section 2.6, "use" includes, without
limitation, make, have made, reproduce, display or perform, publicly or
otherwise, prepare derivative works based upon, offer for sale, sell,
distribute, import, disclose, licence, sublicence, dispose of and otherwise
exploit.
2.7 Securities Reports
(a) GCo has furnished or made available to QCo true and complete copies
of each statement, form, schedule, report, prospectus, proxy statement, or other
documents filed with, or furnished to, the Commission or on SEDAR since December
31, 1999, and, prior to the Effective Time, GCo will have furnished QCo with
true and complete copies of any additional documents filed with the Commission
by GCo prior to the Effective Time (such forms, reports, schedules,
prospectuses, statements and other documents, including any financial statements
or other documents, including any schedules included therein, are referred to as
the "GCo Documents"). GCo has furnished to QCo true and complete copies of all
written correspondence between GCo and any securities regulatory bodies
including the TSX.
(b) GCo has made available to QCo all exhibits to the GCo Documents
filed prior to the date hereof, and will promptly make available to QCo all
exhibits to any additional GCo Documents filed prior to the Effective Time. All
documents required to be filed as exhibits to the GCo Documents have been so
filed, and all Material Contracts so filed as exhibits are in full force and
effect, except those which have expired in accordance with their terms, and
neither GCo nor any of its subsidiaries is in default thereunder.
(c) The GCo Documents include all forms, reports, schedules,
prospectuses, statements or other documents required to be filed by it with the
Commission since December 31, 1999. GCo has timely filed all GCo Documents
required to be filed by it with the
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Commission since December 31, 1999. The GCo Documents did not, at the time they
were filed, or, if amended or updated, as of the date of such amendment or
update, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, except to the extent corrected by a subsequently filed GCo
Document. None of GCo's subsidiaries is required to file any forms, reports,
schedules, prospectuses, statements or other documents with the Commission. The
GCo Documents, at the time filed complied in all material respects with the
requirements of applicable securities Laws.
(d) GCo has not filed any confidential material change report with the
Commission or any other securities authority or regulator or any stock exchange
or other self-regulatory authority which at the date hereof remains
confidential.
(e) GCo has publicly disclosed in the GCo Documents any information
regarding any event, circumstance or action taken or failed to be taken by GCo
or its subsidiaries which could individually or in the aggregate reasonably be
expected to have a Material Adverse Effect.
2.8 Financial Statements
(a) The GCo Financial Statements complied as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of applicable Governmental Entities and the Commission with
respect thereto as of their respective dates, and have been prepared in
accordance with Canadian generally accepted accounting principles applied on a
basis consistent throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto or, in the case of unaudited
statements included in quarterly reports to shareholders). The GCo Financial
Statements present fairly the consolidated financial position, results of
operations and cash flows of GCo and its subsidiaries at the dates and during
the periods indicated therein (subject, in the case of unaudited statements, to
normal, recurring year-end adjustments and the absence of notes thereto) and
reflect appropriate and adequate reserves in respect of all liabilities,
including contingent liabilities, if any, of GCo and its subsidiaries on a
consolidated basis. There has been no change in GCo's accounting policies,
except as described in the notes to the GCo Financial Statements, since December
31, 2002.
(b) GCo has heretofore made available to QCo the consolidated balance
sheet of GCo and its consolidated subsidiaries at December 31, 2002 (the "GCo
Balance Sheet"), as well as the consolidated statements of operations of GCo and
its consolidated subsidiaries for the period ended December 31, 2002 (the "GCo
Statement of Operations") and the consolidated statements of cash flows of GCo
and its consolidated subsidiaries for the period ended December 31, 2002 (the
"GCo Statement of Cash Flows" and, together with the GCo Balance Sheet and the
GCo Statement of Operations, in each case including the notes thereto, being
collectively referred to herein as the "GCo Financial Statements"). Except as
set forth in the GCo Financial Statements, neither GCo nor any of its
subsidiaries has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), except for liabilities and obligations,
incurred in the ordinary course of business consistent with past practice since
December 31, 2002 and that would not have a Material Adverse Effect.
-14-
2.9 Absence of Certain Changes and Events
Since December 31, 2002, GCo has conducted its business in the ordinary
and regular course consistent with past practice and there has not occurred:
(a) Any Material Adverse Change with respect to GCo;
(b) Any acquisition, sale or transfer of any material asset of GCo or
any of its subsidiaries other than in the ordinary course of business and
consistent with past practice;
(c) Any change in accounting methods or practices (including any change
in depreciation or amortization policies or rates, or capitalized software
policies) by GCo or any revaluation by GCo of any of its or any of its
subsidiaries' assets;
(d) Any declaration, setting aside, or payment of a dividend or other
distribution with respect to GCo Securities, or any direct or indirect
redemption, purchase or other acquisition by GCo of any of its shares of capital
stock;
(e) Any Material Contract entered into by GCo or any of its
subsidiaries, other than in the ordinary course of business, or any material
amendment or termination of, or default under, any Material Contract to which
GCo or any of its subsidiaries is a party or by which it is bound;
(f) Any change in the capital stock or in the number of shares or
classes of GCo's authorized or outstanding capital stock as described in Section
2.2 (other than as a result of exercises of GCo Options);
(g) Any agreement by GCo or any of its subsidiaries to do any of the
things described in the preceding clauses (a) through (f) (other than
negotiations with QCo and its representatives regarding the transactions
contemplated by this Agreement); or
(h) Any agreement or arrangement to take any action which, if taken
prior to the date hereof, would have made any representation or warranty set
forth in this Agreement materially untrue or incorrect as of the date when made.
2.10 Material Contracts
None of GCo, its subsidiaries, nor to the knowledge of GCo any of the
other parties thereto, is in default or breach of, in any material respect, nor
has GCo or its subsidiaries received any notice of material default or
termination under, any Material Contract and, to the knowledge of GCo, there
exists no state of facts which after notice or lapse of time or both would
constitute such a material default or breach. None of GCo or its subsidiaries is
a party to any Material Contract except for those Material Contracts set forth
on the GCo Disclosure Letter. True and complete copies of all of GCo's Material
Contracts, or where such Contracts are oral, true and complete written summaries
of the terms thereof, have been furnished to or made available to QCo.
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2.11 Customers and Suppliers
Since the period ended in the GCo Balance Sheet, there has been no
termination or cancellation of, and no material modification or change in, the
business relationship with any customer or group of customers which singly or in
the aggregate provided more than 10% of the consolidated gross revenues of GCo
and its subsidiaries for the period ended on the GCo Balance Sheet. GCo has no
reason to believe that the benefits of any relationship with any of the
customers or suppliers of GCo or its subsidiaries will not continue on the terms
identified in the agreements establishing such relationships after the Effective
Date in substantially the same manner as prior to the date hereof, assuming the
completion on the Effective Date of the Arrangement. GCo has furnished or made
available to QCo GCo's standard form product warranty provided to customers and
except as set forth in the GCo Disclosure Letter, no GCo product warranty
relating to a Contract for the sale of goods or services worth more than
$500,000 differs from the standard form in any material respect.
2.12 Insurance
GCo and its subsidiaries are insured by insurers, reasonably believed
by GCo to be of recognized financial responsibility and solvency, against such
losses and risks and in such amounts as are customary in the businesses in which
they are engaged. GCo has furnished or made available to QCo accurate
particulars of the policies of insurance maintained by GCo and its subsidiaries
as of the date hereof, including the name of the insurer, the risks insured
against and the amount of coverage, and all such policies will continue in
effect without alteration or loss in coverage in connection with the
consummation of the Arrangement. All such policies are in full force and effect.
None of GCo or its subsidiaries or, to the knowledge of GCo, any of the other
parties thereto, is in default or breach of, whether as to the payment of
premiums or otherwise, nor has GCo or its subsidiaries received any notice of
material default or termination under, any such policy and, to the knowledge of
GCo, there exists no state of facts which after notice or lapse of time or both
would constitute such a material default or breach. There is no reason to
believe that any of the existing insurance policies of GCo and its subsidiaries
will not be renewed by the insurer upon the scheduled termination date of the
policy or will be renewed by the insurer only on the basis that there will be a
material increase in the premiums payable in respect of the policy. True and
complete copies of all the existing insurance policies of GCo and its
subsidiaries have been provided to QCo.
2.13 Books and Records
(a) The books, records and accounts of GCo and its subsidiaries, in all
material respects:
(i) have been maintained in accordance with good business
practices on a basis consistent with prior years;
(ii) are stated in reasonable detail and accurately and fairly
reflect the transactions and dispositions of the assets of GCo and its
subsidiaries; and
(iii) accurately and fairly reflect the basis for the GCo
Financial Statements.
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(b) GCo has devised and maintains 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 generally
accepted accounting principles or any other criteria applicable to such
statements and (B) to maintain accountability for assets.
(c) GCo maintains a system of disclosure controls and procedures that
are designed to ensure that information required to be disclosed by GCo in its
reports or other documents filed with or furnished to the Commission is
recorded, processed, summarized and reported within the time periods required by
the Commission's rules and forms, including, without limitation, controls and
procedures designed to ensure that such information is accumulated and
communicated to GCo's senior management, including its principal executive and
principal financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.
2.14 Litigation; Investigations
There is no claim, action, proceeding or investigation pending or, to
the knowledge of GCo, threatened against or relating to GCo or any of its
subsidiaries or affecting any of their properties, licences or assets before any
court or Governmental Entity or regulatory authority or body that, if adversely
determined, could reasonably be expected to have a Material Adverse Effect, or
prevent or delay consummation of the transactions contemplated by this Agreement
or the Arrangement, nor is GCo aware of any basis for any such claim, action,
proceeding or investigation. Neither GCo nor any of its subsidiaries, nor their
respective assets and properties, is subject to any outstanding judgment, order,
writ, injunction or decree that has had or is reasonably likely to have a
Material Adverse Effect, that involves or may involve, or restricts or may
restrict, or requires or may require, the expenditure of a material amount of
money as a condition to or a necessity for the right or ability of GCo or any of
its material subsidiaries, as the case may be, to conduct its business in any
manner in which it has been carried on prior to the date hereof, or prevent or
delay consummation of the transactions contemplated by this Agreement or the
Arrangement.
2.15 Environmental Matters
(a) There are no environmental conditions or circumstances, such as the
presence or Release of any Hazardous Substance, existing on, at, under, to or
from any property presently or previously owned, operated or leased by GCo or
any of its subsidiaries.
(b) GCo and its subsidiaries have in full force and effect all material
environmental permits, licences, approvals and other authorizations required to
conduct their operations and are operating in material compliance thereunder,
and, to the knowledge of GCo, each of such environmental permits, licences,
approvals and other authorizations shall continue in full force and effect on
and after the Closing.
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(c) GCo's and its subsidiaries' operations and the ownership, operation
or use of their assets are currently, and have at all times been, in compliance
with all applicable United States, Canadian federal, state, provincial or local
law (including common law), statute, ordinance, rule, regulation, code, policy,
licence, permit, consent, approval, judgment, notice, order, administrative
order or decision, decree or injunction requirement pertaining to (i) the
condition or protection of air, groundwater, surface water, soil, or other
environmental media, (ii) the environment, including natural resources or any
activity which affects the environment or (iii) the generation, treatment,
manufacturing, use, storage, handling, recycling, presence, release, disposal,
transportation or shipment of any Hazardous Substance (collectively the
"Applicable Environmental Laws").
(d) Neither GCo nor its subsidiaries have arranged for any other Person
to handle or Release any Hazardous Substance at, on, under, from or to any other
location, except in each case (i) in full compliance with Applicable
Environmental Laws, (ii) in a manner that would not reasonably be expected to
give rise to a claim for damages under any Applicable Environmental Law and
(iii) at a location that is (x) fully permitted for such Handling and Release
and (y) is not subject to any investigation or cleanup under any Applicable
Environmental Laws.
(e) No written notice has been served on GCo or any of its subsidiaries
from any Governmental Entity or individual regarding any existing, pending or
threatened investigation or inquiry related to alleged violations under any
Applicable Environmental Laws, or regarding any claims for remedial obligations
or contribution under any Applicable Environmental Laws.
(f) GCo does not know of any reason that would preclude it from
renewing or obtaining a reissuance of the material permits, licences or other
authorizations required pursuant to any Applicable Environmental Laws to own,
operate or use any of GCo's or any of its subsidiaries' assets for their current
purposes and uses.
(g) GCo has provided QCo with complete and correct copies of all
studies, reports, surveys, assessments (including all Phase I and Phase II
environmental site assessments), audits, correspondence, investigations,
analysis, laboratory data, tests, soil and groundwater sampling results and
other documents (whether in hard copy or electronic form) in GCo's or GCo's
counsel's or GCo's consultant's possession or control (excluding documents which
are subject to solicitor-client privilege, the nature of which documents are
described in the GCo Disclosure Letter) or to which GCo has access relating to
the presence or alleged presence of Hazardous Substances at, on or affecting any
real property currently or formerly owned, leased or operated by GCo or its
subsidiaries, or regarding GCo's compliance with any Applicable Environmental
Law.
(h) No environmental circumstance or condition exists, including the
presence or Release of any Hazardous Substance at, on, under, from or to any
property currently or previously owned, operated or leased by GCo or its
subsidiaries which could reasonably be expected to result in loss or liability
under Applicable Environmental Laws (including losses, liabilities or other
claims for or associated with remedial investigations or cleanup obligations)
greater than $1.5 (Cdn.) million.
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2.16 Title to Properties
Except for goods and other property sold, used or otherwise disposed of
since December 31, 2002 in the ordinary course of business for fair value, GCo
has good and, defensible, and marketable title to all its properties, including
real property owned or leased, interests in properties and assets, real and
personal (the "GCo Property"), reflected in the GCo Financial Statements, free
and clear of any Encumbrance, except: (a) Encumbrances reflected in the GCo
Balance Sheet, all of which Encumbrances are in good standing; (b) liens for
current taxes not yet due and payable; and (c) such imperfections of title,
easements and Encumbrances as would not have a Material Adverse Effect (the "GCo
Property Permitted Encumbrances") and GCo is the sole legal and beneficial owner
of the GCo Property. All leases pursuant to which GCo or any of its subsidiaries
leases (whether as lessee or lessor) any real or personal property are in good
standing, valid, and effective; and there is not, under any such leases, any
existing or prospective default or event of default or event which with notice
or lapse of time, or both, would constitute a default by the tenants under such
leases, or by GCo or any of its subsidiaries which, individually or in the
aggregate, would have a Material Adverse Effect and in respect to which GCo or
any of its subsidiaries has not taken adequate steps to prevent a default from
occurring. The buildings and premises of GCo and each of its subsidiaries that
are used in its business are in good operating condition and repair, subject
only to ordinary wear and tear. All major items of operating equipment of GCo
and its subsidiaries are in good operating condition and in a state of
reasonable maintenance and repair, ordinary wear and tear excepted, and are free
from any known defects except as may be repaired by routine maintenance and such
minor defects as do not substantially interfere with the continued use thereof
in the conduct of normal operations.
2.17 Zoning and Other Matters Relating To Real Property
(a) The buildings and other structures located on the GCo Property and
the operation and maintenance thereof, as now operated and maintained, comply in
all material respects with all applicable Laws, municipal or otherwise; none of
such buildings or other structures encroaches upon any land not owned or leased
by GCo or its subsidiaries; and there are no restrictive covenants, municipal
by-laws or other Laws which in any way restrict or prohibit the use of the GCo
Property or such buildings or structures for the purposes for which they are
presently being used.
(b) GCo is not aware of any plans, studies, notices of intent or
pending bylaws which, if implemented, could change the land use designation of
the GCo Property.
(c) There are no expropriation or similar proceedings, actual or
threatened, of which GCo or its subsidiaries has received notice against any of
the GCo Property or any part thereof.
(d) No buildings or other structures located on the GCo Property
contain any friable asbestos or any other substance containing asbestos and
deemed hazardous by any Environmental Laws applicable to GCo or its
subsidiaries.
-19-
(e) There are no options to purchase, rights of first refusal or
purchase agreements in favour of any third party to purchase the GCo Property or
any part thereof.
(f) Each and every outstanding development agreement or other agreement
with authorities in relation to the GCo Property, if any, has been fully
complied with and satisfied and, subject only to the passing of time, shall be
released or discharged without conditions.
(g) Other than financing against the GCo Property disclosed in the GCo
Balance Sheet, GCo does not have any indebtedness to any person that might by
operation of Law or otherwise constitute an encumbrance against the GCo Property
or any part thereof or which could affect the right of either party, to own,
occupy and obtain the revenue from the GCo Property.
(h) There are no contracts, agreements or employees associated with the
GCo Property in respect of which GCo will incur any liability whatsoever as a
result of the transactions contemplated under this Agreement, other than in
connection with the GCo Property Permitted Encumbrances.
(i) There are no work orders, deficiency notices, notices of violation
or other written notices from any authority, board of fire insurance
underwriters or anyone else advising of any breach of any Law or regulation or
of any permit or stating that any repair, work or change is necessary,
recommended or required to the GCo Property, nor stating that GCo is not
entitled to carry out any of the activities carried out on the GCo Property in
the manner that such are currently carried out.
(j) GCo holds no registered or beneficial interest directly or
indirectly, in any lands adjoining or having a common boundary with any of the
GCo Property.
(k) The GCo Property is not restricted in any manner whatsoever
pursuant to the Historical Resources Act (Alberta) (such restrictions including,
without limitation, designation of the GCo Property as a "Heritage Site"
thereunder).
(l) At the time GCo acquired its interest in the GCo Property it was
not a "foreign controlled corporation" as such phrase is defined by the Foreign
Ownership of Land Regulations and/or regulations from time to time enacted under
the Agricultural and Recreational Land Ownership Act (Alberta).
(m) GCo is not a "non-resident" of Canada within the meaning and intent
of the Tax Act.
(n) There are no security deposits, damage deposits or prepaid rents
outstanding from or owing to any tenants of the GCo Property and none of the
leases contain provisions pursuant to which tenants may be entitled to occupy
the premises demised to them, or any other premises, on a rent-free or rent
reduced basis.
(o) The leases relating to the GCo Properties have not been surrendered
and contain the entire and only agreement between GCo or its subsidiaries, and
the landlords or
-20-
tenants, as the case may be with respect to the premises demised or any other
portions of the GCo Properties.
2.18 No Hazardous Substances
The GCo Property has not been and is not now used as a landfill or
waste disposal site, nor are there any active or out-of-service underground
storage tanks or sites from which such tanks have been removed on the GCo
Property, nor has any Hazardous Substance been deposited in or disposed of at,
on, under, to or from the GCo Property, nor has there been any Release, spill,
emission or discharge of any Hazardous Substance at, on, under, to or from the
GCo Property or any other location which could reasonably be expected to give
rise, directly or indirectly, to any action or claim by a third party or a
Governmental Entity alleging any violation of, or liability under, any
Applicable Environmental Laws.
2.19 Taxes
(a) GCo and each of its subsidiaries have timely filed, or caused to be
filed, all Tax Returns required to be filed by them prior to the date hereof
(all of which returns were correct and complete in all material respects) and
have paid, or caused to be paid, all Taxes, including any installments or
prepayments of Taxes, that are due and payable prior to the date hereof and GCo
has provided adequate accruals in accordance with generally accepted accounting
principles in its most recently published 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. GCo and each of its subsidiaries
have made adequate provision in their respective books and records for any Taxes
accruing in respect of any period subsequent to the period covered by such
financial statements. 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 ordinary course
of business. GCo and its subsidiaries have withheld from all payments made by
them, or otherwise collected, all material amounts in respect of Taxes required
to be withheld therefrom or collected by them prior to the date hereof, and have
remitted same to the applicable Governmental Entity within the required time
periods. Neither GCo nor any of its subsidiaries has any liability for the Taxes
of any other Person.
(b) Neither GCo nor any subsidiary has received any written
notification that any material issues have been raised (and are currently
pending) by Canada Customs and Revenue Agency, the IRS or any other taxing
authority, including, without limitation, any state, provincial, or local tax
authority, in connection with any of the Tax Returns referred to above. No
waivers of statutes of limitations have been given or requested with respect to
GCo or any subsidiary, and the relevant statute of limitations with respect to
any liability for Taxes is closed with respect to the Tax Returns of GCo and its
subsidiaries for all years through 1997. All Tax liability of GCo and its
subsidiaries has been assessed for all fiscal years up to and including the
fiscal year ended December 31, 2001. To the best of the knowledge of GCo, there
are no material proposed (but unassessed) additional Taxes with respect to GCo
or any subsidiary and none has been asserted. No Tax liens have been filed other
than for Taxes not yet due and payable.
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(c) Neither GCo nor any subsidiary (i) is or has been a "controlled
foreign corporation," "passive foreign investment company" or "foreign personal
holding company" for U.S. federal income tax purposes; (ii) currently has or has
had an active trade or business or "permanent establishment" (as defined in an
applicable treaty) in the United States for U.S. federal income tax purposes;
(iii) currently has or has had any employees, officers or directors in the
United States.
(d) Neither GCo nor any of its subsidiaries has participated in any
transactions with an affiliated United States person, as defined in Section
7701(a)(30) of the Code, other than on terms that are consistent with the
principles of Section 482 of the Code and U.S. Treasury Regulations promulgated
thereunder.
(e) GCo and its subsidiaries have filed all reports and have created
and/or retained all records required under Section 6038A of the Code with
respect to ownership by and transactions with related foreign parties. Each
related foreign person required to maintain records under Section 6038A with
respect to transactions between any U.S. subsidiary of GCo and the related
foreign person has maintained such records. All documents that are required to
be created and/or preserved by the related foreign person with respect to
transactions with any U.S. subsidiary of GCo are either maintained in the United
States, or the U.S. subsidiary of GCo is exempt from the record maintenance
requirements of Section 6038A with respect to such transactions under U.S.
Treasury Regulation Section 1.6038A-1. No U.S. subsidiary of GCo is a party to
any record maintenance agreement with the IRS with respect to Section 6038A.
Each related foreign person that has engaged in transactions with a U.S.
subsidiary of GCo has authorized such U.S. subsidiary to act as its limited
agent solely for purposes of Sections 7602, 7603, and 7604 of the Code with
respect to any request by the IRS to examine records or produce testimony
related to any transaction with the U.S. subsidiary, and each such authorization
remains in full force and effect.
(f) There is no Contract to which GCo or any of its subsidiaries is a
party, including but not limited to the provisions of this Agreement, covering
any employee or former employee of GCo that, individually or collectively, could
give rise to the payment of any amount that would not be deductible pursuant to
Section 280G of the Code.
(g) Neither GCo nor any of its subsidiaries is a party to any tax
sharing, tax indemnity or tax allocation agreement or arrangement and neither
GCo nor any of its subsidiaries has any liability or obligation under any such
tax sharing, tax indemnity or tax allocation agreement. No liability (or
reasonable claim of liability) shall arise under any tax sharing, tax indemnity
or tax allocation agreement or arrangement as a result of this transaction.
Neither GCo nor any of its subsidiaries is the subject of an advance income tax
ruling.
(h) For Canadian federal, provincial, state or local Tax purposes, GCo
has not claimed a reserve in respect of an amount that could be included in
income for any period ending after the Effective Date.
(i) GCo will not be required to include any item of income in, or
exclude any item of deduction from, its taxable income for any period ending
after the Effective Date as a
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result of any change in method of accounting for a taxable period beginning
prior to the Effective Date, or prepaid amounts received on or prior to the
Effective Date.
(j) Except pursuant to this Agreement, for purposes of any applicable
Canadian federal, provincial, state or local statute imposing Taxes, no Person
or group of Persons has ever acquired or had the right to acquire control of GCo
after 1997.
(k) None of sections 78, 80, 80.01, 80.02, 80.03 or 80.04 of the Tax
Act, or any equivalent provision of the taxation legislation of any applicable
province of Canada after 1997 and since 1997, GCo has not acquired or disposed
of property in circumstances which could subject it to a liability under section
160 of the Tax Act.
(l) For all transactions between GCo and any non-resident Person, GCo
has made or obtained records or documents that meet the requirements of
paragraphs 247 of the Tax Act.
(m) GCo is duly registered under subdivision (d) of Division V of Part
IX of the Excise Tax Act (Canada) with respect to the goods and services tax and
harmonized sales tax and its registration number is 102120607-RT001.
(n) The GCo Disclosure Letter sets out the estimated tax pools of GCo
for Canadian federal, provincial, state or local Tax purposes.
2.20 Non-Arm's Length Transactions
(a) None of GCo or its subsidiaries has made any payment or loan to, or
has borrowed any monies from or is otherwise indebted to, any officer, director,
employee or shareholder of such company or any Person not dealing with such
officer, director, employee or shareholder at arm's length or any affiliate of
any of the foregoing, except as disclosed in the GCo Financial Statements or in
the GCo Disclosure Letter and except for usual compensation paid in the ordinary
course of business consistent with past practice.
(b) None of GCo or its subsidiaries has outstanding any loan or other
extension of credit, nor any agreement or commitment to make any loan or
extension of credit, in each case in the form of a personal loan, to any
director or senior officer of GCo or its subsidiaries.
(c) Except as disclosed in the GCo Disclosure Letter and except for
Contracts made solely between GCo and its subsidiaries and except for contracts
of employment, options agreements under the GCo Incentive Plan, and agreements
relating to employee benefits generally available to employees of GCo, none of
GCo or its subsidiaries is a party to any Contract with any officer, director,
employee or shareholder of such company or any Person not dealing with such
officer, director, employee or shareholder at arm's length or any affiliate of
any of the foregoing.
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2.21 Employees
The GCo Disclosure Letter lists all employees employed by, and all
individuals engaged on a contractual basis to provide employment or sales
services to GCo or any of its subsidiaries as of the date hereof (the "GCo
Employees"). For each of the GCo Employees, the GCo Disclosure Letter lists such
employee's name, date of hire, title or classification, rate of salary,
commission or bonus entitlements (if any) and any other benefits extended to, or
circumstances unique to each such employee. Except as described in the GCo
Disclosure Letter, neither GCo nor any of its subsidiaries is a party to or
bound by any Contracts relating to employment, severance, retention, bonus or
confidentiality or any consulting Contracts with any GCo Employee or former
employee of GCo or any of its subsidiaries written or otherwise, as to which
unsatisfied obligations of GCo or any of its subsidiaries of greater than
$50,000 remain outstanding.
2.22 Employee Benefit Plans
(a) The GCo Disclosure Letter lists all the employee benefit, health,
welfare, supplemental employment benefit, bonus, pension, profit sharing,
deferred compensation, stock compensation, stock option or purchase, retirement,
hospitalization insurance, medical, dental, legal, disability and similar plans
or arrangements or practices applicable to the GCo Employees or to former
employees of GCo or any of its subsidiaries which are currently maintained or
participated in by GCo or its subsidiaries and each loan to a non-officer GCo
Employee in excess of $40,000, and each loan to an officer or director of GCo
(the "GCo Employee Plans").
(b) All of the GCo Employee Plans are registered where required by,
and are in good standing under, all applicable Laws or other legislative,
administrative or judicial promulgations applicable to the GCo Employee Plans
and there are no actions, claims, proceedings or governmental audits pending
(other than routine claims for benefits) relating to GCo.
(c) All of the GCo Employee Plans have been administered and funded in
material compliance with their terms and all applicable Laws or other
legislative, administrative or judicial promulgations applicable to the GCo
Employee Plans and there are no unfunded liabilities in respect of the GCo
Employee Plans and all required contributions thereunder have been made in
accordance with all applicable Laws or other legislative, administrative or
judicial promulgations applicable to the GCo Employee Plans and the terms of
such GCo Employee Plan.
(d) No amendments to any GCo Employee Plan have been promised and no
amendments to any GCo Employee Plan will be made or promised prior to the
Effective Date which affect or pertain to the GCo Employees.
(e) True and complete copies of all the GCo Employee Plans, as amended
and, if available, current plan summaries and employee booklets in respect
thereof as are applicable to the GCo Employees and all related documents or,
where oral, written summaries of the terms thereof, have been made available to
QCo; for the purpose of the foregoing, related documents means all current plan
documentation and amendments relating thereto, summary
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plan descriptions and summaries of material modifications, if any, all related
trust agreements, funding agreements and similar agreements, the most recent
annual reports filed with any Governmental Entity, and the three most recent
actuarial reports, if any, related thereto.
(f) There are no agreements or undertakings by GCo or any of its
subsidiaries to provide post-retirement profit sharing, medical, health, life
insurance or other benefits to GCo Employees or any former employee of GCo or
any of its subsidiaries.
(g) The assets of each GCo Employee Plan which is a registered pension
plan are at least equal to the liabilities, contingent or otherwise of such plan
on a plan termination basis and each such plan is fully funded on a going
concern and solvency basis in accordance with its terms, applicable actuarial
assumptions and applicable laws.
2.23 Labour Matters
Neither GCo nor any of its subsidiaries is bound by or a party to any
collective bargaining Contracts with any trade union, counsel of trade unions,
employee bargaining agent or affiliated bargaining agent (collectively, "labour
representatives"), and neither GCo nor any of its subsidiaries has conducted any
negotiations with respect to any such future Contracts; no labour
representatives hold bargaining rights with respect to any GCo Employees; no
labour representatives have applied to have GCo or any of its subsidiaries
declared a common employer pursuant to the Alberta Labour Relations Code; to the
knowledge of GCo there are no current or threatened attempts to organize or
establish any trade union or employee association with respect to GCo or any of
its subsidiaries; there is no strike, dispute, slowdown, lockout, shutdown, work
stoppage, unresolved material labour union grievance, labour arbitration, unfair
labour practice, successor rights or common employer proceeding or other
concerted action or formal grievance existing against GCo or any of its
subsidiaries.
2.24 Information Supplied
None of the information supplied or to be supplied by GCo for
inclusion or incorporation by reference in the Joint Proxy Statement will at the
time the Joint Proxy Statement is mailed to the securityholders of GCo and at
the time of the GCo Shareholders Meeting, contain any untrue statement which, at
the time and in light of the circumstances under which it is made, is false or
misleading with respect to any material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of a proxy for the same
meeting or subject matter which has become false or misleading. The Joint Proxy
Statement will comply as to form in all material respects with the provisions of
the ABCA and applicable United States and Canadian securities laws and the rules
and regulations promulgated thereunder.
2.25 Compliance with Laws
Each of GCo and its subsidiaries have complied with and are not in
violation of any applicable Laws, orders, judgments and decrees, except for such
noncompliance that would not cause a Material Adverse Effect. Without limiting
the generality of the foregoing, all securities of GCo (including, without
limitation, all options, rights or other convertible or
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exchangeable securities) have been issued in compliance with all applicable
securities Laws and all securities to be issued upon exercise of any such
options, rights and other convertible or exchangeable securities will be issued
in compliance with all applicable securities Laws.
2.26 Restrictions on Business Activities
There is no agreement, judgment, injunction, order or decree binding
upon GCo or any of its subsidiaries that has or could reasonably be expected to
have the effect of prohibiting, restricting or materially impairing any business
practice of GCo or any of its subsidiaries, any acquisition of property by GCo
or any of its subsidiaries or the conduct of business by GCo or any of its
subsidiaries as currently conducted.
2.27 Disclosure
No representation or warranty made by GCo in this Agreement or the GCo
Disclosure Letter, nor any document, written information, statement, financial
statement, certificate or exhibit prepared and furnished or to be prepared and
furnished by GCo or its representatives pursuant hereto or in connection with
the transactions contemplated hereby, when taken together, contains or contained
(as of the date made) any untrue statement of a material fact when made, or
omits or omitted (as of the date made) to state a material fact necessary to
make the statements or facts contained herein or therein not misleading, in any
material way, in light of the circumstances under which they were made.
2.28 GCo Assets and Revenues
GCo is its own Ultimate Parent Entity. GCo, together with all entities
Controlled by GCo, does not (a) as of the period ended in the GCo Balance Sheet
have total annual sales of $100 million or more, or (b) as of the period ended
in the GCo Balance Sheet, have total assets of $100 million or more, in each
case determined in accordance with 16 C.F.R. (ss) 801.11. This representation
and warranty is made solely for the purpose of determining the applicability of
the HSR Act notification requirements to the transactions contemplated by this
Agreement.
2.29 Brokers and Finders
Other than Citigroup Global Markets Inc. (formerly known as Xxxxxxx
Xxxxx Xxxxxx Inc.) in accordance with the terms of its engagement letter dated
November 19, 2002, a copy of which has been provided to QCo, none of GCo or any
of its subsidiaries nor any of their respective directors, officers or employees
has employed any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions or similar payments in connection
with the transactions contemplated by this Agreement.
Article 3
REPRESENTATIONS AND WARRANTIES OF QCO
Except as otherwise fully and fairly disclosed and set forth in a
corresponding paragraph of the QCo Disclosure Letter, QCo hereby represents and
warrants to, and agrees with, GCo that:
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3.1 Organization and Standing
(a) Each of QCo and its subsidiaries has been duly organized or formed
under all applicable Laws, is validly existing and in good standing under the
laws of the jurisdiction in which it is organized and has full corporate or
other legal power, authority and capacity to own, lease and operate its
properties and conduct its businesses as currently conducted. All of the
outstanding shares of capital stock and other ownership interests of QCo and its
subsidiaries are duly authorized, validly issued, fully paid and non-assessable,
and all such shares and other ownership interests of QCo's subsidiaries are
owned directly or indirectly by QCo, free and clear of all material liens,
claims or encumbrances and there are no outstanding options, rights,
entitlements, understandings or commitments (pre-emptive, contingent or
otherwise) regarding the right to acquire any such shares of capital stock or
other ownership interests in any of its subsidiaries. QCo and each of its
subsidiaries is duly qualified or licensed to do business in each jurisdiction
where the character of the properties owned, leased or operated by it or the
nature of its activities makes such qualification or licensing necessary, except
where the failure to be so qualified or licensed would not have a Material
Adverse Effect. QCo has disclosed in the QCo Disclosure Letter the names and
jurisdictions of incorporation of each of its subsidiaries.
(b) QCo does not have any subsidiaries which are material in relation
to the business and financial condition of QCo on a consolidated basis; for the
purposes hereof, a subsidiary and its subsidiaries shall be considered material
in relation to QCo if: (i) the investments in and advances to the subsidiary and
its subsidiaries by QCo and its other subsidiaries exceed five percent of the
total assets of QCo and its subsidiaries on a consolidated basis at January 31,
2003; or (ii) the equity of QCo and its other subsidiaries in the income from
continuing operations before income taxes and extraordinary items of the
subsidiary and its subsidiaries exceeds five percent of such income of QCo and
its subsidiaries on a consolidated basis for QCo's period ended January 31,
2003.
(c) QCo does not have any ownership interest in any other Person, which
interest is material in relation to the consolidated financial position of QCo.
(d) QCo has delivered or made available to GCo a true and correct copy
of its charter documents and similar governing instruments of each of its
subsidiaries, each as amended as of the date hereof, and each such instrument is
in full force and effect. Neither QCo nor any of its subsidiaries is in
violation of any of the provisions of its charter documents or equivalent
governing instruments.
3.2 Capitalization
The authorized capital of QCo consists of 20,000,000 shares of
Preferred Stock, $.001 par value per share (the "QCo Preferred Stock"),
42,000,000 shares of Common Stock, $.001 par value per share (the "QCo Common
Stock"), 12,000,000 shares of Series A Common Stock, $.001 par value per share
(the "QCo Series A Stock"), and 6,000,000 shares of Series B Common Stock, $.001
par value per share (the "QCo Series B Stock" and, together with the QCo
Preferred Stock, the QCo Common Stock and the QCo Series A Stock, being
collectively referred to herein as the "QCo Securities"). As of April 7, 2003,
there were no shares of QCo Preferred Stock outstanding, 21,680,475 shares of
QCo Common Stock outstanding, no shares of
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QCo Series A Stock outstanding, and 999,969 shares of QCo Series B Stock
outstanding. As of April 7, 2003, 3,500,000 shares of QCo Common Stock were
reserved for issuance upon the exercise of stock options ("QCo Options") under
QCo's 2002 Stock Incentive Plan (the "QCo Incentive Plan") and for the future
grant of QCo Options under the QCo Incentive Plan. As of April 7, 2003, there
were warrants to purchase an aggregate of 100,000 shares of QCo Common Stock
outstanding (the "QCo Warrants"). As of April 7, 2003, 2,428,665 of the QCo
Options are outstanding, of which 839,362 are vested and are exercisable in
accordance with their terms and 1,589,303 remain unvested. Except as described
in this Section 3.2(a), there are no options, warrants, conversion privileges,
rights plans or other rights, agreements, arrangements or commitments
(pre-emptive, contingent or otherwise) obligating QCo or any of its subsidiaries
to issue or sell any securities of QCo or any of its subsidiaries or obligations
of any kind convertible into or exchangeable for any securities of QCo, any of
its subsidiaries or any other Person, nor is 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 QCo
or any of its subsidiaries. All outstanding QCo Securities have been duly
authorized and are validly issued and outstanding as fully paid and
non-assessable shares, free of pre-emptive rights. There are no outstanding
bonds, debentures or other evidences of indebtedness of QCo or any of its
subsidiaries having the right to vote (or that are convertible for or
exercisable into securities having the right to vote) with the QCo
securityholders on any matter. There are no outstanding contractual obligations
of QCo or any of its subsidiaries to repurchase, redeem or otherwise acquire any
of QCo's Securities or with respect to the voting or disposition of any
outstanding securities of any of its subsidiaries. No holder of securities
issued by QCo or any of its subsidiaries has any right to compel QCo to register
or otherwise qualify such securities for public sale in the United States.
3.3 Agreement Authorized and its Effect on Other Obligations
(a) QCo has the requisite corporate power and authority to enter into
this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement by QCo and the consummation of the transactions
contemplated by this Agreement, have been duly authorized by QCo's board of
directors and no other corporate proceedings on its part are necessary to
authorize this Agreement or the transactions contemplated hereby, other than the
requisite approval by the QCo stockholders of (i) this Agreement; (ii) the
amendment of QCo's Certificate of Incorporation to increase its authorized
capital stock; and (iii) the issuance by QCo of the QCo Common Stock issuable
pursuant to the Arrangement.
(b) This Agreement has been duly executed and delivered by QCo and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency and other similar
Laws affecting creditors' rights generally, and to general principles of equity.
(c) QCo's board of directors has (i) determined unanimously that the
Arrangement is fair to the holders of the QCo Common Stock and is in the best
interests of QCo, (ii) received an opinion from Xxxxx, Xxxxxxxx & Xxxx, Inc.
(and have been advised that they will receive a written opinion) that the
Exchange Ratio is fair from a financial point of view to the holders of the QCo
Common Stock, (iii) determined to recommend that the holders of the QCo Common
Stock vote in favour of the Agreement and the transactions contemplated hereby,
and
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(iv) advised QCo that the members of its board of directors will vote the QCo
Common Stock held by them in favour of the Agreement and the transactions
contemplated hereby and will so represent in the Joint Proxy Statement, subject
to Section 7.1(b).
(d) The approval of this Agreement, the execution and delivery by QCo
of this Agreement and the performance by it of its obligations hereunder and the
completion by it of the Arrangement and the transactions contemplated thereby,
will not:
(i) result in a violation or breach of, require any consent to be
obtained under or give rise to any material termination rights or material
payment obligation under any provision of:
(A) its or any of its subsidiaries' certificate of
incorporation, articles, bylaws or other charter documents;
(B) subject to obtaining the Appropriate Regulatory Approvals
relating to QCo, any Laws, regulation, order, judgment or decree, applicable to
QCo or any of its subsidiaries or by which QCo or any of its subsidiaries or any
of their respective properties is bound;
(C) any Material Contract or material licence, franchise or
permit to which QCo, or any of its subsidiaries, is party or by which it is
bound; or
(D) the provisions of any of the QCo Property Permitted
Encumbrances;
(ii) give rise to any right of termination or acceleration of
indebtedness, or cause any third party indebtedness to come due before its
stated maturity or cause any available credit to cease to be available;
(iii) result in the imposition of any Encumbrance upon any of
QCo's or any of its subsidiaries' assets, or restrict, hinder, impair or limit
the ability of QCo or any of its subsidiaries to carry on the business of QCo as
and where it is now being carried on, except as would not, individually or in
the aggregate, have a Material Adverse Effect; or
(iv) result in any payment (including severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming due to any director
or employee of QCo or any of its subsidiaries or increase any benefits otherwise
payable under the QCo Incentive Plan or the QCo Employee Plan or result in the
acceleration of time of payment or vesting of any such benefits, including the
time of exercise of stock options.
(e) There are no "fair price," "moratorium," "control share
acquisition" or other anti-takeover statutes or regulations of any Governmental
Entity that are applicable to QCo in connection with the transactions
contemplated herein.
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3.4 Governmental and Third Party Consents
(a) No consent, approval, order or authorization of, or registration,
declaration or filing with or notice to, any Governmental Entity or other
Person, is required to be obtained by QCo or any of its subsidiaries in
connection with the execution and delivery of this Agreement or the Plan of
Arrangement or the consummation of the transactions contemplated hereby or
thereby, except for: (i) the filing with the Commissions and the mailing to
stockholders of QCo of the Joint Proxy Statement relating to the QCo
Stockholders Meeting, (ii) the furnishing to the SEC of the SEC Filings; (iii)
approval by the Court of the Arrangement and the filings of the articles of
arrangement and other required arrangement or other documents as required by the
ABCA; (iv) such filings, authorizations, orders and approvals as may be required
under applicable federal, provincial or state securities laws and the rules of
The Nasdaq Stock Market Inc. ("Nasdaq"); (v) such filings and notifications as
may be necessary under the HSR Act; (vi) such notices and filings as may be
necessary under the Investment Canada Act and under the Competition Act
(Canada); (vii) the filing by QCo of a certificate of amendment to QCo's
Certificate of Incorporation with the Secretary of State of the State of
Delaware; and (viii) where the failure to obtain such consents, approvals, etc.,
would not prevent or delay the consummation of the Arrangement or otherwise
prevent QCo from performing its obligations under this Agreement and would not
reasonably be expected to have a Material Adverse Effect.
(b) Other than as contemplated by Section 3.4(a), no consents,
assignments, waivers, authorizations or other certificates are necessary in
connection with the transactions contemplated hereby to provide for the
continuation in full force and effect of all of QCo's Material Contracts or
leases or for QCo to consummate the transactions contemplated hereby, except
when the failure to receive such consents or other certificates would not have a
Material Adverse Effect.
(c) QCo and its subsidiaries possesses such consents, licences,
certificates, authorizations, approvals, franchises, permits or other rights as
are currently necessary to conduct the business now operated by it, except where
the failure to posses such consents, licences, certificates, authorizations,
approvals, franchises, permits would not have a Material Adverse Effect.
3.5 No Defaults
Neither QCo nor any of its 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 contract, agreement, licence or
franchise to which it is a party which would, if terminated due to such default,
cause a Material Adverse Effect.
3.6 Intellectual Property
(a) The QCo Disclosure Letter lists all Registered Intellectual
Property Rights that are owned by, filed in the name of, or applied for by QCo
or its subsidiaries, specifying as to each the nature or title of such right,
any jurisdiction that has issued a registration with respect thereto or in which
an application for such registration is pending, and any applicable registration
or application number. All such Registered Intellectual Property Rights are
valid and in full
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force and were prosecuted in good faith. All necessary registration, maintenance
and renewal fees in connection with each item of such Registered Intellectual
Property Rights have been paid and all necessary documents and certificates in
connection with such Registered Intellectual Property Rights have been filed
with the relevant patent, copyright, trademark or other authorities in the
United States, Canada or other jurisdictions, as the case may be, for the
purposes of maintaining such Registered Intellectual Property Rights.
(b) The QCo Disclosure Letter sets forth an accurate and complete list
of all licences, sublicences and other agreements to which QCo or any of its
subsidiaries is a party or is otherwise bound and pursuant to which any Person
other than QCo or any of its subsidiaries is authorized to use any material QCo
Intellectual Property Rights or QCo Technology and a true and correct copy of
each such agreement has been delivered or made available to GCo.
(c) Section 3.6(c)(i) of the QCo Disclosure Letter sets forth an
accurate and complete list of all material licences, sublicences, and other
agreements to which QCo or any of its subsidiaries is a party or is otherwise
bound and pursuant to which QCo and any of its subsidiaries is authorized to use
any Intellectual Property Right or Technology that is held by any Person other
than QCo or any of its subsidiaries and a true and correct copy of each such
agreement has been delivered or made available to GCo, other than end-user
licences granted to QCo or any of its subsidiaries relating to "off the shelf"
personal computer software that is generally available from Persons that are
unaffiliated with QCo or any of its subsidiaries. Section 3.6(c)(ii) of the QCo
Disclosure Letter sets forth an accurate and complete list of all material
licences granted to QCo or any of its subsidiaries relating to "off the shelf"
personal computer software that is generally available from Persons that are
unaffiliated with QCo or any of its subsidiaries and that is incorporated into
any product marketed, sold, or licensed by, or used in the provision of any
service provided by QCo or any subsidiary of QCo.
(d) QCo and its subsidiaries either exclusively own or have the valid
right to use all QCo Intellectual Property Rights and all Third Party
Intellectual Property Rights used by QCo or any subsidiary of QCo (and no third
party, including any past or present employee or contractor of QCo or any
Governmental Entity, owns or has any ownership interest in any QCo Intellectual
Property Rights that are not Third Party Intellectual Property Rights of QCo).
Upon Closing, all QCo Intellectual Property Rights and all Third Party
Intellectual Property Rights used by QCo or any subsidiary of QCo will be
immediately available for use on terms and conditions substantially identical to
those under which QCo and any subsidiaries of QCo presently uses or reasonably
contemplates using such rights, without any affirmative act by GCo or any other
Person.
(e) To the knowledge of QCo, there are (and upon Closing, will be) no
royalties, honoraria, fees, or other payments payable by QCo, any subsidiary of
QCo, or GCo to any Person by reason of the ownership, use, licence, sale or
disposition of any QCo Intellectual Property Rights or QCo Technology.
(f) To the knowledge of QCo, neither the QCo Intellectual Property
Rights, nor the conduct of the QCo business as presently conducted or reasonably
currently contemplated to be conducted, uses or discloses in an unauthorized
manner, infringes, or constitutes a misappropriation of any Intellectual
Property Right of any Person. Neither QCo nor
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any of its subsidiaries: (i) has any knowledge that any QCo Intellectual
Property Right is the subject of any interference, reexamination, cancellation,
or opposition proceeding, or any currently pending or threatened suit, action,
or proceeding arising out of an alleged right of any Person with respect to any
Intellectual Property Right; (ii) has received any oral, written, or other
communication that QCo or any subsidiary of QCo is using or disclosing in an
unauthorized manner, infringing, or misappropriating the alleged right of any
Person with respect to any Intellectual Property Right; or (iii) has any
knowledge that any of the QCo Intellectual Property Rights is being used or
disclosed in an unauthorized manner, infringed or misappropriated by any Person.
(g) None of the QCo Intellectual Property Rights are subject to any
Proceeding that restricts in any manner the use, transfer or licensing thereof
by QCo or that may affect the validity, use or enforceability of the QCo
Intellectual Property Rights; provided that nothing herein applies to the
prosecution (except for any interference or opposition proceeding) of any QCo
Intellectual Property Rights in the U.S. Patent and Trademark Office or any
other government patent or trademark office.
(h) To the knowledge of QCo, no party to any licence, sublicence, or
agreement listed in the QCo Disclosure Letter is (or upon Closing, will be) in
material breach or default and no event has occurred (or, upon Closing, will
occur) which with notice or lapse of time would constitute a material breach or
default or permit termination, modification or acceleration thereunder.
(i) QCo and its subsidiaries have maintained and continue to maintain a
system to safeguard and maintain the secrecy and confidentiality of and its
proprietary rights in all of the material QCo Intellectual Property Rights not
otherwise protected by patents, patent applications, or copyright or trademark
law. Without limitation on the generality of the foregoing, to the knowledge of
QCo, (i) any disclosures to third parties of trade secrets that are material to
the operation of the QCo business have been pursuant to executed written
confidentiality agreements substantially similar in effect to those included in
the forms set forth in the QCo Disclosure Letter, (ii) QCo has obtained
confidentiality and inventions assignment agreements, in one or more forms, that
have protections and conditions substantially similar in effect to those
included in the forms set forth in the QCo Disclosure Letter, from all of the
past and present employees and independent contractors of QCo and subsidiaries
of QCo involved in the creation or development of QCo Intellectual Property
Rights and QCo Technology that are material to the operation of the QCo
business, (iii) there has been no material breach or violation of any secrecy or
confidentiality commitments of any person in respect of any material
confidential information of QCo or its subsidiaries, and (iv) the measures taken
by QCo and its subsidiaries to protect the proprietary and non-public aspects of
the TriShield Tank technology are reasonably designed to adequately prevent
third parties from using any such aspects of such technology without the
approval of QCo. No Person who has performed services related to the QCo
business has (or upon Closing, will have) any right, title or interest in any
QCo Intellectual Property Rights that are material to the operation of the QCo
business.
(j) The execution, delivery, and performance of this Agreement, and the
consummation of the transactions contemplated hereby, will not (i) breach,
violate, or conflict with any agreement governing any QCo Intellectual Property
Rights, (ii) cause the forfeiture or
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termination or give rise to a right of forfeiture or termination of any QCo
Intellectual Property Rights, or in any way impair the right of GCo to use or
bring any action for the unauthorized use or disclosure, infringement, or
misappropriation of any QCo Intellectual Property Right, (iii) result in GCo
granting to any third party any right to, or with respect to, any Intellectual
Property Right owned by, or licensed to, GCo, (iv) result in GCo being bound by,
or subject to, any non-competition or other restriction on the operation or
scope of its businesses, or (v) result in GCo being obligated to pay any
royalties or other fees of any kind to any third party. QCo and its Subsidiaries
have not entered into any agreements granting any exclusive right to any
material QCo Intellectual Property Right.
(k) For purposes of this Section 3.6, "use" includes, without
limitation, make, have made, reproduce, display or perform, publicly or
otherwise, prepare derivative works based upon, offer for sale, sell,
distribute, import, disclose, licence, sublicence, dispose of and otherwise
exploit.
3.7 Securities Reports
(a) QCo has furnished or made available to GCo true and complete copies
of each statement, form, schedule, report, registration statement (including any
prospectus filed pursuant to Rule 424(b) of the 1933 Act), proxy statement and
other filing filed with, or furnished to, the SEC by QCo since June 14, 2002,
and, prior to the Effective Time, QCo will have furnished GCo with true and
complete copies of any additional documents filed with the SEC by QCo prior to
the Effective Time (such statements, reports, registration statements,
prospectuses, proxy statements, other filings, including schedules included
therein, are referred to as the "QCo Documents"). QCo has furnished to GCo true
and complete copies of all written correspondence between QCo and any securities
regulatory bodies including the SEC and Nasdaq.
(b) QCo has made available to GCo all exhibits to the QCo Documents
filed prior to the date hereof, and will promptly make available to GCo all
exhibits to any additional QCo Documents filed prior to the Effective Time. All
documents required to be filed as exhibits to the QCo Documents have been so
filed, and all Material Contracts so filed as exhibits are in full force and
effect, except those which have expired in accordance with their terms, and
neither QCo nor any of its subsidiaries is in default thereunder.
(c) The QCo Documents include all statements, reports, registration
statements, and other documents required to be filed by it with the SEC since
June 14, 2002. QCo has timely filed all QCo Documents required to be filed by it
with the SEC since June 14, 2002. The QCo Documents did not, at the time they
were filed, or, if amended or updated, as of the date of such amendment or
update, 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
made therein, in the light of the circumstances under which they were made, not
misleading, except to the extent corrected by a subsequently filed QCo Document.
None of QCo's subsidiaries is required to file any forms, reports, schedules,
prospectuses, statements or other documents with the SEC. The QCo Documents, at
the time they were filed with the SEC, complied in all material respects with
the requirements of the Exchange Act, the Securities Act, as applicable, and the
rules and regulations promulgated thereunder.
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(d) QCo has publicly disclosed in the QCo Documents any information
regarding any event, circumstance or action taken or failed to be taken by QCo
or its subsidiaries which could individually or in the aggregate reasonably be
expected to have a Material Adverse Effect.
3.8 Financial Statements
(a) The QCo Financial Statements complied as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of applicable Governmental Entities and the SEC with respect
thereto as of their respective dates, and have been prepared in accordance with
United States generally accepted accounting principles applied on a basis
consistent throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto or, in the case of unaudited
statements included in quarterly reports to shareholders). The QCo Financial
Statements present fairly the consolidated financial position, results of
operations and cash flows of QCo and its subsidiaries at the dates and during
the periods indicated therein (subject, in the case of unaudited statements, to
normal, recurring year-end adjustments and the absence of notes thereto) and
reflect appropriate and adequate reserves in respect of all liabilities,
including contingent liabilities, if any, of QCo and its subsidiaries on a
consolidated basis. There has been no change in QCo's accounting policies,
except as described in the notes to the QCo Financial Statements, since January
31, 2003.
(b) QCo has heretofore made available to GCo the consolidated balance
sheet of QCo and its consolidated subsidiaries at January 31, 2003 (the "QCo
Balance Sheet"), as well as the consolidated statements of operations of QCo and
its consolidated subsidiaries for the period ended January 31, 2003 (the "QCo
Statement of Operations") and the consolidated statements of cash flows of QCo
and its consolidated subsidiaries for the period ended January 31, 2003 (the
"QCo Statement of Cash Flows" and, together with the QCo Balance Sheet and the
QCo Statement of Operations, in each case including the notes thereto, being
collectively referred to herein as the "QCo Financial Statements"). Except as
set forth in the QCo Financial Statements, neither QCo nor any of its
subsidiaries has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), except for liabilities and obligations,
incurred in the ordinary course of business consistent with past practice since
January 31, 2003 and that would not have a Material Adverse Effect.
3.9 Absence of Certain Changes and Events
Since January 31, 2003, QCo has conducted its business in the ordinary
and regular course consistent with past practice and there has not occurred:
(a) Any Material Adverse Change with respect to QCo;
(b) Any acquisition, sale or transfer of any material asset of QCo or
any of its subsidiaries other than in the ordinary course of business and
consistent with past practice;
(c) Any change in accounting methods or practices (including any change
in depreciation or amortization policies or rates, or capitalized software
policies) by QCo or any revaluation by QCo of any of its or any of its
subsidiaries' assets;
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(d) Any declaration, setting aside, or payment of a dividend or other
distribution with respect to the QCo Securities, or any direct or indirect
redemption, purchase or other acquisition by QCo of any of its shares of capital
stock;
(e) Any Material Contract entered into by QCo or any of its
subsidiaries, other than in the ordinary course of business, or any material
amendment or termination of, or default under, any Material Contract to which
QCo or any of its subsidiaries is a party or by which it is bound;
(f) Any change in the capital stock or in the number of shares or
classes of QCo's authorized or outstanding capital stock as described in Section
3.2 (other than as a result of exercises of QCo Options and the QCo Warrants);
(g) Any agreement by QCo or any of its subsidiaries to do any of the
things described in the preceding clauses (a) through (f) (other than
negotiations with GCo, and its representatives regarding the transactions
contemplated by this Agreement); or
(h) Any agreement or arrangement to take any action which, if taken
prior to the date hereof, would have made any representation or warranty set
forth in this Agreement materially untrue or incorrect as of the date when made.
3.10 Material Contracts
None of QCo, its subsidiaries, nor to the knowledge of QCo any of the
other parties thereto, is in default or breach of, in any material respect, nor
has QCo or its subsidiaries received any notice of material default or
termination under, any Material Contract and, to the knowledge of QCo, there
exists no state of facts which after notice or lapse of time or both would
constitute such a material default or breach. None of QCo or its subsidiaries is
a party to any Material Contract except for those Material Contracts set forth
on the QCo Disclosure Letter. True and complete copies of all of QCo's Material
Contracts, or where such Contracts are oral, true and complete written summaries
of the terms thereof, have been furnished to or made available to GCo.
3.11 Customers and Suppliers
Since the period ended in the QCo Balance Sheet, there has been no
termination or cancellation of, and no material modification or change in, the
business relationship with any customer or group of customers which singly or in
the aggregate provided more than 10% of the consolidated gross revenues of QCo
and its subsidiaries for the period ended on the QCo Balance Sheet. QCo has no
reason to believe that the benefits of any relationship with any of the
customers or suppliers of QCo or its subsidiaries will not continue on the terms
identified in the agreements establishing such relationships after the Effective
Date in substantially the same manner as prior to the date hereof, assuming the
completion on the Effective Date of the Arrangement. QCo has furnished or made
available to GCo all of QCo's material product warranties provided to customers
through March 31, 2003.
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3.12 Insurance
QCo and its subsidiaries are insured by insurers, reasonably believed
by QCo to be of recognized financial responsibility and solvency, against such
losses and risks and in such amounts as are customary in the businesses in which
they are engaged. QCo has furnished or made available to GCo accurate
particulars of the policies of insurance maintained by QCo and its subsidiaries
as of the date hereof, including the name of the insurer, the risks insured
against and the amount of coverage, and all such policies will continue in
effect without alteration or loss in coverage in connection with the
consummation of the Arrangement. All such policies are in full force and effect.
None of QCo or its subsidiaries or, to the knowledge of QCo, any of the other
parties thereto, is in default or breach of, whether as to the payment of
premiums or otherwise, nor has QCo or its subsidiaries received any notice of
material default or termination under, any such policy and, to the knowledge of
QCo, there exists no state of facts which after notice or lapse of time or both
would constitute such a material default or breach. There is no reason to
believe that any of the existing insurance policies of QCo and its subsidiaries
will not be renewed by the insurer upon the scheduled termination date of the
policy or will be renewed by the insurer only on the basis that there will be a
material increase in the premiums payable in respect of the policy. True and
complete copies of all the existing insurance policies of QCo and its
subsidiaries have been provided to GCo.
3.13 Books and Records
(a) The books, records and accounts of QCo and its subsidiaries, in
all material respects:
(i) have been maintained in accordance with good business
practices on a basis consistent with prior years;
(ii) are stated in reasonable detail and accurately and fairly
reflect the transactions and dispositions of the assets of QCo and its
subsidiaries; and
(iii) accurately and fairly reflect the basis for the QCo
Financial Statements.
(b) QCo has devised and maintains 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 United States generally
accepted accounting principles or any other criteria applicable to such
statements and (B) to maintain accountability for assets.
(c) QCo maintains a system of disclosure controls and procedures that
comply with Rules 13a-14 and 13a-15 of the Exchange Act and that are designed to
ensure that information required to be disclosed by QCo in its reports or other
documents filed with or furnished to the SEC is recorded, processed, summarized
and reported within the time periods
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required by the SEC's rules and forms, including, without limitation, controls
and procedures designed to ensure that such information is accumulated and
communicated to QCo's senior management, including its principal executive and
principal financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.
3.14 Litigation; Investigations
There is no claim, action, proceeding or investigation pending or, to
the knowledge of QCo, threatened against or relating to QCo or any of its
subsidiaries or affecting any of their properties, licences or assets before any
court or Governmental Entity or regulatory authority or body that, if adversely
determined, could reasonably be expected to have a Material Adverse Effect, or
prevent or delay consummation of the transactions contemplated by this Agreement
or the Arrangement, nor is QCo aware of any basis for any such claim, action,
proceeding or investigation. Neither QCo nor any of its subsidiaries, nor their
respective assets and properties, is subject to any outstanding judgment, order,
writ, injunction or decree that has had or is reasonably likely to have a
Material Adverse Effect, that involves or may involve, or restricts or may
restrict, or requires or may require, the expenditure of a material amount of
money as a condition to or a necessity for the right or ability of QCo or any of
its material subsidiaries, as the case may be, to conduct its business in any
manner in which it has been carried on prior to the date hereof, or prevent or
delay consummation of the transactions contemplated by this Agreement or the
Arrangement.
3.15 Environmental Matters
(a) There are no environmental conditions or circumstances, such as
the presence or Release of any Hazardous Substance, existing on, at, under, to
or from any property presently or previously owned, operated or leased by QCo or
any of its subsidiaries.
(b) QCo and its subsidiaries have in full force and effect all
material environmental permits, licences, approvals and other authorizations
required to conduct their operations and are operating in material compliance
thereunder, and, to the knowledge of QCo, each of such environmental permits,
licences, approvals and other authorizations shall continue in full force and
effect on and after the Closing.
(c) QCo's and its subsidiaries' operations and the ownership,
operation or use of their assets are currently, and have at all times been, in
compliance with all Applicable Environmental Laws.
(d) Neither QCo nor its subsidiaries have arranged for any other
Person to handle or Release any Hazardous Substance at, on, under, from or to
any other location, except in each case (i) in full compliance with Applicable
Environmental Laws, (ii) in a manner that would not reasonably be expected to
give rise to a claim for damages under any Applicable Environmental Law and
(iii) at a location that is (x) fully permitted for such Handling and Release
and (y) is not subject to any investigation or cleanup under any Applicable
Environmental Laws.
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(e) No written notice has been served on QCo or any of its
subsidiaries from any Governmental Entity or individual regarding any existing,
pending or threatened investigation or inquiry related to alleged violations
under any Applicable Environmental Laws, or regarding any claims for remedial
obligations or contribution under any Applicable Environmental Laws.
(f) QCo does not know of any reason that would preclude it from
renewing or obtaining a reissuance of the material permits, licences or other
authorizations required pursuant to any Applicable Environmental Laws to own,
operate or use any of QCo's or any of its subsidiaries' assets for their current
purposes and uses.
(g) QCo has provided GCo with complete and correct copies of all
studies, reports, surveys, assessments (including all Phase I and Phase II
environmental site assessments), audits, correspondence, investigations,
analysis, laboratory data, tests, soil and groundwater sampling results and
other documents (whether in hard copy or electronic form) in QCo's or QCo's
counsel's or QCo's consultant's possession or control (excluding documents which
are subject to attorney-client privilege, the nature of which documents are
described in the QCo Disclosure Letter) or to which QCo has access relating to
the presence or alleged presence of Hazardous Substances at, on or affecting any
real property currently or formerly owned, leased or operated by QCo or its
subsidiaries, or regarding QCo's compliance with any Applicable Environmental
Law.
(h) No environmental circumstance or condition exists, including the
presence or Release of any Hazardous Substance at, on, under, from or to any
property currently or previously owned, operated or leased by QCo or its
subsidiaries which could reasonably be expected to result in loss or liability
under Applicable Environmental Laws (including losses, liabilities or other
claims for or associated with remedial investigations or cleanup obligations)
greater than $1 million.
3.16 Title to Properties
Except for goods and other property sold, used or otherwise disposed
of since January 31, 2003 in the ordinary course of business for fair value, QCo
has good and, defensible, and marketable title to all its properties, including
real property owned or leased, interests in properties and assets, real and
personal (the "QCo Property"), reflected in the GCo Financial Statements, free
and clear of any Encumbrance, except: (a) Encumbrances reflected in the QCo
Balance Sheet, all of which Encumbrances are in good standing; (b) liens for
current taxes not yet due and payable; and (c) such imperfections of title,
easements and Encumbrances as would not have a Material Adverse Effect (the "QCo
Property Permitted Encumbrances") and QCo is the sole legal and beneficial owner
of the QCo Property. All leases pursuant to which QCo or any of its subsidiaries
leases (whether as lessee or lessor) any real or personal property are in good
standing, valid, and effective; and there is not, under any such leases, any
existing or prospective default or event of default or event which with notice
or lapse of time, or both, would constitute a default by the tenants under such
leases, or by QCo or any of its subsidiaries which, individually or in the
aggregate, would have a Material Adverse Effect and in respect to which QCo or
any of its subsidiaries has not taken adequate steps to prevent a default from
occurring. The buildings and premises of QCo and each of its subsidiaries that
are used in its
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business are in good operating condition and repair, subject only to ordinary
wear and tear. All major items of operating equipment of QCo and its
subsidiaries are in good operating condition and in a state of reasonable
maintenance and repair, ordinary wear and tear excepted, and are free from any
known defects except as may be repaired by routine maintenance and such minor
defects as do not substantially interfere with the continued use thereof in the
conduct of normal operations.
3.17 Zoning and Other Matters Relating To Real Property
(a) The buildings and other structures located on the QCo Property and
the operation and maintenance thereof, as now operated and maintained, comply in
all material respects with all applicable Laws, municipal or otherwise; none of
such buildings or other structures encroaches upon any land not owned or leased
by QCo or its subsidiaries; and there are no restrictive covenants, municipal
by-laws or other Laws which in any way restrict or prohibit the use of the QCo
Property, buildings or structures for the purposes for which they are presently
being used.
(b) QCo is not aware of any plans, studies, notices of intent or
pending bylaws which, if implemented, could change the land use designation of
the QCo Property.
(c) There are no expropriation or similar proceedings, actual or
threatened, of which QCo or its subsidiaries has received notice against any of
the QCo Property or any part thereof.
(d) No buildings or other structures located on the QCo Property
contain any friable asbestos or any other substance containing asbestos and
deemed hazardous by any Environmental Laws applicable to QCo or its
subsidiaries.
(e) There are no options to purchase, rights of first refusal or
purchase agreements in favour of any third party to purchase the QCo Property or
any part thereof.
(f) Each and every outstanding development agreement or other
agreement with authorities in relation to the QCo Property, if any, has been
fully complied with and satisfied and, subject only to the passing of time,
shall be released or discharged without conditions.
(g) Other than financing against the QCo Property disclosed in the QCo
Balance Sheet, QCo does not have any indebtedness to any person that might by
operation of Law or otherwise constitute an encumbrance against the QCo Property
or any part thereof or which could affect the right of either Party, to own,
occupy and obtain the revenue from the QCo Property.
(h) There are no contracts, agreements or employees associated with
the QCo Property in respect of which QCo will incur any liability whatsoever as
a result of the transactions contemplated under this Agreement, other than in
connection with the QCo Property Permitted Encumbrances.
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(i) There are no work orders, deficiency notices, notices of violation
or other written notices from any authority, board of fire insurance
underwriters or anyone else advising of any breach of any Law or regulation or
of any permit or stating that any repair, work or change is necessary,
recommended or required to the QCo Property, nor stating that QCo is not
entitled to carry out any of the activities carried out on the GCo Property in
the manner that such are currently carried out.
(j) QCo holds no registered or beneficial interest directly or
indirectly, in any lands adjoining or having a common boundary with any of the
QCo Property.
(k) There are no security deposits, damage deposits or prepaid rents
outstanding from or owing to any tenants of the QCo Property and none of the
leases contain provisions pursuant to which tenants may be entitled to occupy
the premises demised to them, or any other premises, on a rent-free or rent
reduced basis.
(l) The leases relating to the QCo Properties have not been
surrendered and contain the entire and only agreement between QCo or its
subsidiaries, and the landlords or tenants, as the case may be with respect to
the premises demised or any other portions of the QCo Properties.
3.18 No Hazardous Substances
The QCo Property has not been and is not now used as a landfill or
waste disposal site, nor are there any active or out-of-service underground
storage tanks or sites from which such tanks have been removed on the QCo
Property, nor has any Hazardous Substance been deposited in or disposed of at,
on, under, to or from the QCo Property, nor has there been any Release, spill,
emission or discharge of any Hazardous Substance at, on, under, to or from the
QCo Property or any other location which could reasonably be expected to give
rise, directly or indirectly, to any action or claim by a third party or a
Governmental Entity alleging any violation of, or liability under, any
Applicable Environmental Laws.
3.19 Taxes
(a) QCo and each of its subsidiaries have timely filed, or caused to
be filed, all Tax Returns required to be filed by them prior to the date hereof
(all of which returns were correct and complete in all material respects) and
have paid, or caused to be paid, all Taxes, including any installments or
prepayments of Taxes, that are due and payable prior to the date hereof and QCo
has provided adequate accruals in accordance with generally accepted accounting
principles in its most recently published 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. QCo and each of its subsidiaries
have made adequate provision in their respective books and records for any Taxes
accruing in respect of any period subsequent to the period covered by such
financial statements. 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 ordinary course
of business. QCo and its subsidiaries have withheld from all payments made by
them, or otherwise collected, all material amounts in respect of Taxes required
to be withheld therefrom or collected by them prior to the
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date hereof and have remitted same to the applicable Governmental Entity within
the required time periods. Neither QCo nor any of its subsidiaries has any
liability for the Taxes of any other Person.
(b) Neither QCo nor any subsidiary has received any written
notification that any material issues have been raised (and are currently
pending) by the IRS, Canada Customs and Revenue Agency or any other taxing
authority, including, without limitation, any state, provincial or local tax
authority, in connection with any of the Tax Returns referred to above. No
waivers of statutes of limitations have been given or requested with respect to
QCo or any subsidiary, and the relevant statute of limitations with respect to
any liability for Taxes has not closed with respect to the Tax Returns of QCo
and its subsidiaries for all taxable years through the date hereof. To the best
of the knowledge of QCo, there are no material proposed (but unassessed)
additional Taxes with respect to QCo or any subsidiary and none has been
asserted. No Tax liens have been filed other than for Taxes not yet due and
payable.
(c) Neither QCo nor any of its subsidiaries that is a United States
person, as defined in Section 7701(a)(30) of the Code, has participated in any
transactions with an affiliated person, other than on terms that are consistent
with the principles of Section 482 of the Code and U.S. Treasury Regulations
promulgated thereunder.
(d) There is no Contract to which QCo or any of its subsidiaries is a
party, including but not limited to the provisions of this Agreement, covering
any employee or former employee of QCo that, individually or collectively, could
give rise to the payment of any amount that would not be deductible pursuant to
Section 280G of the Code.
(e) Neither QCo nor any of its subsidiaries is a party to any tax
sharing, tax indemnity or tax allocation agreement or arrangement and neither
QCo nor any of its subsidiaries has any liability or obligation under any such
tax sharing, tax indemnity or tax allocation agreement. No liability (or
reasonable claim of liability) shall arise under any tax sharing, tax indemnity
or tax allocation agreement or arrangement as a result of this transaction.
Neither QCo nor any of its subsidiaries is the subject of an advance income tax
ruling.
(f) QCo will not be required to include any item of income in, or
exclude any item of deduction from, its taxable income for any period ending
after the Effective Date as a result of any change in method of accounting for a
taxable period beginning prior to the Effective Date, or prepaid amounts
received on or prior to the Effective Date.
3.20 Non-Arm's Length Transactions
(a) None of QCo or its subsidiaries has made any payment or loan to,
or has borrowed any monies from or is otherwise indebted to, any officer,
director, employee or shareholder of such company or any Person not dealing with
such officer, director, employee or shareholder at arm's length or any affiliate
of any of the foregoing, except as disclosed in the QCo Financial Statements or
in the QCo Disclosure Letter and except for usual compensation paid in the
ordinary course of business consistent with past practice.
(b) None of QCo or its subsidiaries has outstanding any loan or other
extension of credit, nor any agreement or commitment to make any loan or
extension of credit, in
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each case in the form of a personal loan, to any director or executive officer
of QCo or its subsidiaries.
(c) Except as disclosed in the QCo Disclosure Letter and except for
Contracts made solely between QCo and its subsidiaries and except for contracts
of employment, options agreements under the QCo Incentive Plan, and agreements
relating to employee benefits generally available to employees of QCo, none of
QCo or its subsidiaries is a party to any Contract with any officer, director,
employee or shareholder of such company or any Person not dealing with such
officer, director, employee or shareholder at arm's length or any affiliate of
any of the foregoing.
3.21 Employees
The QCo Disclosure Letter lists all employees employed by, and all
individuals engaged on a contractual basis to provide employment or sales
services to QCo or any of its subsidiaries as of the date hereof (the "QCo
Employees"). For each of the QCo Employees, the QCo Disclosure Letter lists such
employee's name, date of hire, title or classification, rate of salary,
commission or bonus entitlements (if any) and any other benefits extended to, or
circumstances unique to each such employee. Except as described in the QCo
Disclosure Letter, neither QCo nor any of its subsidiaries is a party to or
bound by any Contracts relating to employment, severance, retention, bonus or
confidentiality or any consulting Contracts with any QCo Employee or former
employee of QCo or any of its subsidiaries written or otherwise, as to which
unsatisfied obligations of QCo or any of its subsidiaries of greater than
$50,000 remain outstanding.
3.22 Employee Benefit Plans
(a) The QCo Disclosure Letter lists, with respect to QCo, any
subsidiary of QCo and any trade or business (whether or not incorporated) which
is treated as a single employer with QCo (an "ERISA Affiliate") within the
meaning of Section 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986
(the "Code"), (i) all material employee benefit plans (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), (ii) each loan to a non-officer employee in excess of $25,000, (iii)
each loan to officers and directors, (iv) any stock option, stock purchase,
phantom stock, stock appreciation right, supplemental retirement, severance,
sabbatical, medical, dental, vision care, disability, employee relocation,
cafeteria benefit (Code section 125) or dependent care (Code section 129), life
insurance or accident insurance plans, programs or arrangements, (v) all bonus,
pension, profit sharing, savings, deferred compensation or incentive plans,
programs or arrangements, and (vi) other fringe or employee benefit plans,
programs or arrangements that apply to senior management of QCo and that do not
generally apply to all employees (together, the "QCo Employee Plans").
(b) QCo has made available or furnished to GCo a copy of all documents
creating or evidencing all of the QCo Employee Plans (including trust documents,
insurance policies or contracts, summary plan descriptions and to the extent
still in its possession, any material employee communications relating thereto)
and has with respect to each QCo Employee Plan that is subject to the reporting
and disclosure requirements of Title I of ERISA, provided or
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made available copies of all Forms 5500 required to be filed with any government
entity for the preceding two plan years, if applicable. Each QCo Employee Plan
intended to qualify under Section 401(a) of the Code has either been determined
by the IRS to so qualify with respect to the Code, as amended by the Tax Reform
Act of 1986 and subsequent legislation, has applied to the IRS for such
determination prior to the expiration of the requisite remedial amendment period
under applicable Treasury Regulations or official guidance published by the IRS,
or is entitled to rely on a notification or opinion letter issued with respect
to an IRS-approved master and prototype or volume submitter plan document
pursuant to IRS Announcement 2001-77. QCo has also furnished to GCo the most
recent IRS determination, notification, or opinion letter issued with respect to
each such QCo Employee Plan. To the best knowledge of QCo, nothing has occurred
since the date of such letter that could reasonably be expected to cause the
loss of the tax-qualified status of any QCo Employee Plan subject to Code
Section 401(a).
(c) (i) None of the QCo Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person, except as required by
the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"); (ii) no
"prohibited transactions" (as defined in Section 406 or 407 of ERISA or Section
4975 of the Code) have occurred for which a statutory exemption is not available
and which could reasonably be expected to have, in the aggregate, a Material
Adverse Effect; (iii) each QCo Employee Plan has been administered in compliance
with its terms and, to the extent applicable, is in compliance with the
requirements prescribed by any and all statutes, rules and regulations
(including ERISA and the Code) except as would not have, in the aggregate, a
Material Adverse Effect, and QCo and each subsidiary or ERISA Affiliate has
performed all obligations required to be performed by it under, are not in any
respect in default under or violation of, and have no knowledge of any default
or violation by any other party to, any of the QCo Employee Plans, which default
or violation could reasonably be expected to have a Material Adverse Effect,
(iv) to the best knowledge of QCo, neither QCo nor any subsidiary or ERISA
Affiliate is subject to any liability or penalty under Sections 4976 through
4980 of the Code or Title I of ERISA with respect to any of the QCo Employee
Plans which have a Material Adverse Effect on any such parties; (v) all material
contributions required to be made by QCo or any subsidiary or ERISA Affiliate to
any QCo Employee Plan have been made on or before their due dates and a
reasonable amount has been accrued for contributions to each QCo Employee Plan
for the current plan years; and (vi) no QCo Employee Plan is covered by, and
neither QCo nor any subsidiary of an ERISA Affiliate has incurred or expects to
incur any liability under Title IV of ERISA or Section 412 of the Code. With
respect to each QCo Employee Plan subject to ERISA as either an employee pension
plan within the meaning of Section 3(2) of ERISA or an employee welfare benefit
plan within the meaning of Section 3(1) of ERISA, QCo has prepared in good faith
and timely filed all requisite governmental reports (which were true and correct
as of the date filed) and has properly and timely filed and distributed or
posted all notices and reports to employees required to be filed, distributed or
posted with respect to each such QCo Employee Plan. No suit, administrative
proceeding, action or other litigation has been brought, or to the best
knowledge of QCo is threatened, against or with respect to any such QCo Employee
Plan, including any audit or inquiry by the IRS or United States Department of
Labor. Neither QCo nor any of its subsidiaries or other ERISA Affiliate is a
party to, or has made any contribution to or otherwise incurred any obligation
under, any "multiemployer plan" as defined in Section 3(37) of ERISA. Except as
otherwise required by applicable Law, each QCo Employee Plan can be amended or
terminated or otherwise discontinued after the Effective Time without liability
to QCo or its subsidiaries.
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(d) With respect to each applicable QCo Employee Plan, QCo and each of
its United States subsidiaries have complied with (i) the applicable health care
continuation and notice provisions of the COBRA and the proposed regulations
thereunder and (ii) the applicable requirements of the Family Leave Act of 1993,
the Health Insurance Portability and Accountability Act of 1996, the Womens'
Health and Cancer Rights Act of 1998, the Newborns' and Mothers' Health
Protection Act of 1996, as they may be amended and the regulations issued
thereunder, except to the extent that such failure to comply would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(e) There has been no amendment to, written interpretation or
announcement (whether or not written) by QCo, any QCo subsidiary or other ERISA
Affiliate relating to, or change in participation or coverage under, any QCo
Employee Plan which would materially increase the expense of maintaining such
Plan above the level of expense incurred with respect to that Plan for the most
recent fiscal year included in the QCo Financial Statements.
(f) There has been no determination by any Governmental Entity that any
individual performing services for QCo or any of its ERISA Affiliates and
classified as an independent contractor constitutes a common law employee of QCo
or any of its ERISA Affiliates. Each current QCo Employee who performs services
in the United States is an "at-will" employee whose employment can be terminated
by QCo or one of its ERISA Affiliates at any time, with or without cause.
(g) Neither QCo nor any of its ERISA Affiliates has violated Sections
306 or 402 of the Xxxxxxxx-Xxxxx Act of 2002, and, to the knowledge of QCo and
assuming the truthfulness of the representation by GCo pursuant to Section
2.20(b), the execution of this Agreement and the consummation of the
transactions contemplated hereby will not cause such a violation.
3.23 Labour Matters
Neither QCo or any of its subsidiaries is bound by or a party to any
collective bargaining Contracts with any trade union, counsel of trade unions,
employee bargaining agent or affiliated bargaining agent (collectively, "labour
representatives"), and neither QCo nor any of its subsidiaries has conducted any
negotiations with respect to any such future Contracts; no labour
representatives hold bargaining rights with respect to any QCo Employees; no
labour representatives have applied to have QCo or any of its subsidiaries
declared a related employer; to the knowledge of QCo, there are no current or
threatened attempts to organize or establish any trade union or employee
association with respect to QCo or any of its subsidiaries; there is no strike,
dispute, slowdown, lockout, shutdown, work stoppage, unresolved material labour
union grievance, labour arbitration, unfair labour practice, successor rights or
common employer proceeding or other concerted action or formal grievance
existing against QCo or any of its subsidiaries.
3.24 Information Supplied
None of the information supplied or to be supplied by QCo for inclusion
or incorporation by reference in the Joint Proxy Statement will, at the time the
Joint Proxy
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Statement is mailed to the securityholders of QCo and at the time of the QCo
Stockholders Meeting, contain any untrue statement which, at the time and in
light of the circumstances under which it is made, is false or misleading with
respect to any material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of a proxy for the same meeting or subject
matter which has become false or misleading. The Joint Proxy Statement will
comply as to form in all material respects with the provisions of the ABCA and
applicable United States and Canadian securities laws and the rules and
regulations promulgated thereunder.
3.25 Compliance with Laws
QCo and its subsidiaries have complied with and are not in violation of
any applicable Laws, orders, judgments and decrees, except for such
noncompliance that would not cause a Material Adverse Effect. Without limiting
the generality of the foregoing, all securities of QCo (including, without
limitation, all options, rights or other convertible or exchangeable securities)
have been issued in compliance with all applicable securities Laws and all
securities to be issued upon exercise of any such options, rights and other
convertible or exchangeable securities will be issued in compliance with all
applicable securities Laws.
3.26 Restrictions on Business Activities
There is no agreement, judgment, injunction, order or decree binding
upon QCo or any of its subsidiaries that has or could reasonably be expected to
have the effect of prohibiting, restricting or materially impairing any business
practice of QCo or any of its subsidiaries, any acquisition of property by QCo
or any of its subsidiaries or the conduct of business by QCo or any of its
subsidiaries as currently conducted.
3.27 QCo Common Stock
The QCo Common Stock to be issued pursuant to this Agreement and the
Arrangement, will, in all cases, be duly authorized and validly issued by QCo,
fully paid and non-assessable and free of pre-emptive rights, encumbrances,
charges and liens on their respective dates of issue.
3.28 Disclosure
No representation or warranty made by QCo in this Agreement or the QCo
Disclosure Letter, nor any document, written information, statement, financial
statement, certificate or exhibit prepared and furnished or to be prepared and
furnished by QCo or its representatives pursuant hereto or in connection with
the transactions contemplated hereby, when taken together, contains or contained
(as of the date made) any untrue statement of a material fact when made, or
omits or omitted (as of the date made) to state a material fact necessary to
make the statements or facts contained herein or therein not misleading, in any
material way, in light of the circumstances under which they were made.
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3.29 QCo Assets and Revenues
QCo is its own Ultimate Parent Entity. QCo, together with all entities
Controlled by QCo, does not (a) as of the period ended in the QCo Balance Sheet
have total annual sales of $100 million or more, or (b) as of the period ended
in the QCo Balance Sheet, have total assets of $100 million or more, in each
case determined in accordance with 16 C.F.R. Section 801.11. This representation
and warranty is made solely for the purpose of determining the applicability of
the HSR Act notification requirements to the transactions contemplated by this
Agreement.
3.30 Brokers and Finders
Other than Xxxxx, Xxxxxxxx & Xxxx, Inc. in accordance with the terms of
its engagement letter dated February 19, 2003, a copy of which has been provided
to GCo, none of QCo or any of its subsidiaries nor any of their respective
directors, officers or employees has employed any broker or finder or incurred
any liability for any financial advisory fees, brokerage fees, commissions or
similar payments in connection with the transactions contemplated by this
Agreement.
ARTICLE 4
OBLIGATIONS PENDING EFFECTIVE DATE
4.1 Agreements of QCo and GCo
QCo and GCo agree to take the following actions after the date hereof:
(a) Each party will promptly execute and file or join in the execution
and filing of any application or other document that may be necessary in order
to obtain the authorization, approval or consent of any Governmental Entity
which may be reasonably required, or which the other party may reasonably
request, in connection with the consummation of the transactions contemplated by
this Agreement. Each party will use its reasonable best efforts to promptly
obtain such authorizations, approvals and consents. Without limiting the
generality of the foregoing, as promptly as practicable after the execution of
this Agreement, each party shall make any required filings under the HSR Act and
shall make such filings as are necessary under the Investment Canada Act and the
Competition Act (Canada);
(b) Each party will allow the other and its agents reasonable access to
the files, books, records, offices and officers of itself and its subsidiaries,
including any and all information relating to such party's tax matters,
contracts, leases, licences and real, personal and intangible property and
financial condition. Each party will cause its accountants to cooperate with the
other in making available to the other party all financial information
reasonably requested, including the right to examine all working papers
pertaining to tax matters and financial statements prepared or audited by such
accountants. Any information provided pursuant to this Agreement shall be
subject to the provisions of the Confidentiality Agreement. Notwithstanding the
foregoing, except as expressly provided for herein, neither party shall be
obligated to make available to the other any of their respective board of
directors' materials relating to the assessment or evaluation of the
transactions contemplated hereby or any alternative transactions nor any
information supplied by any of their respective officers,
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directors, employees, financial advisors, legal advisors, representatives and
agents in connection therewith;
(c) QCo and GCo shall cooperate in the preparation and prompt filing by
QCo of the Joint Proxy Statement and all amendments thereto, with the SEC;
(d) Each of GCo and QCo will promptly notify the other in writing (i)
of any event occurring subsequent to the date of this Agreement which would
render any representation and warranty of such party contained in this Agreement
untrue or inaccurate in any material respect; (ii) of any event occurring
subsequent to the date of this Agreement which would render any representation
and warranty of such party contained in Sections 2.9(f) and 2.15(h) (in the case
of GCo) or Sections 3.9(f) and 3.15(h) (in the case of QCo), untrue or
inaccurate in any respect; (iii) of any Material Adverse Change or any event,
change or effect having a Material Adverse Effect on such party; and (iv) of any
breach by such party of any material covenant or agreement contained in this
Agreement;
(e) During the term of this Agreement, each of QCo and GCo will use its
reasonable best efforts to satisfy or cause to be satisfied as soon as
reasonably practicable all the conditions precedent that are set forth in
Article 5 hereof, and each of QCo and GCo will use its reasonable best efforts
to cause the Arrangement and the other transactions contemplated by this
Agreement to be consummated as soon as reasonably practicable; and
(f) Each of GCo and QCo shall immediately cease and cause to be
terminated any existing solicitation, initiation, encouragement, activity,
discussion or negotiation with any parties conducted heretofore by either such
party, any subsidiary thereof, or their respective officers, directors,
employees, financial advisors, representatives and agents ("Representatives")
with respect to an Acquisition Proposal (as defined herein) whether or not
initiated by such party and in connection therewith, each of GCo and QCo shall
exercise all rights to require the return of information regarding GCo or QCo
(as the case may be) previously provided to such parties and shall exercise all
rights to require the destruction of all materials including or incorporating
any information regarding GCo or QCo. From and after the date hereof, each of
GCo and QCo and their respective subsidiaries will not, and will not authorize
or permit any of their respective Representatives to, directly or indirectly,
solicit, initiate or encourage (including by way of furnishing information) or
participate in or take any other action to facilitate any inquiries or the
making of any proposal which constitutes or may reasonably be expected to lead
to an Acquisition Proposal from any person, or engage in any discussion,
negotiations or inquiries relating thereto or accept any Acquisition Proposal;
provided, however, that notwithstanding any other provision hereof, GCo may, at
any time prior to the time the GCo Common Shareholders shall have voted to
approve the Plan of Arrangement and the other transactions contemplated thereby,
and QCo may, at any time prior to the time QCo's stockholders shall have voted
to approve the transactions contemplated by this Agreement and the Plan of
Arrangement, (i) engage in discussions or negotiations with a third party who
(without any solicitation, initiation or encouragement, directly or indirectly,
by GCo or QCo or any of their subsidiaries or Representatives after the date
hereof) seeks to initiate such discussions or negotiations and may furnish such
third party information concerning GCo or QCo and their respective business,
properties and assets which has previously been provided to QCo or GCo if, and
only to the extent that: (A) the third party has first made an unsolicited bona
fide written Acquisition
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Proposal that is, in the good faith judgment of the board of directors of the
party receiving such Acquisition Proposal, financially superior to the
transactions contemplated by this Agreement and has demonstrated that the funds
or other consideration necessary for the Acquisition Proposal are available (as
determined in good faith in each case by GCo's or QCo's board of directors after
receiving the written advice of its financial advisors) and is subject only to
confirmatory due diligence conditions (a "Superior Proposal") and GCo's or QCo's
board of directors (as the case may be) has concluded in good faith (after
considering applicable law and receiving the advice of outside counsel) that
such action is reasonably necessary for the GCo or QCo board of directors to act
in a manner consistent with fiduciary duties under applicable law; (B) prior to
furnishing such information to or entering into discussions or negotiations with
such person or entity, GCo or QCo provides prompt notice orally and in writing
to the other party specifying the identity of such person or entity and that it
is furnishing information to or entering into discussions or negotiations with
such person or entity in respect to a Superior Proposal and receives from such
person or entity an executed confidentiality agreement having confidentiality
and standstill terms substantially similar to those contained in the
confidentiality agreement executed by GCo and QCo (other than the exclusivity
provisions contained therein), providing full details forthwith, and in any
event within 24 hours, of all material terms and conditions of such Superior
Proposal and any amendments thereto and confirming in writing the determination
of GCo's or QCo's board that the Acquisition Proposal constitutes a Superior
Proposal; (C) GCo or QCo provides notice forthwith and in any event within 24
hours to QCo or GCo (as the case may be) at such time as it is terminating any
such discussions or negotiations with such person or entity; and (D) GCo or QCo
promptly provides to QCo or GCo (as the case may be) any information provided to
any such person or entity whether or not previously made available to QCo or
GCo, (ii) comply with Rules 14d-9 and 14e-2 promulgated under the Exchange Act
with regard to a tender or exchange offer, if applicable, and rules under
applicable Canadian securities laws relating to the provision of directors'
circulars and information circulars, and make appropriate disclosure with
respect thereto to such party's shareholders and (iii) accept, recommend,
approve or implement a Superior Proposal from a third party, but only (in the
case of this clause (iii)) if prior to such acceptance, recommendation, approval
or implementation, GCo's or QCo's board of directors (as the case may be) shall
have concluded in good faith, after considering provisions of applicable law and
after giving effect to all proposals to adjust the terms and conditions of this
Agreement and the Arrangement which may be offered by QCo or GCo (as the case
may be) during the three business day notice period set forth below and after
receiving the advice of outside counsel, that such action is, in the good faith
judgment of the board of directors of the party receiving such Superior
Proposal, reasonably necessary for the GCo or QCo board of directors (as the
case may be) to act in a manner consistent with fiduciary duties under
applicable law and QCo or GCo terminates this Agreement in accordance with
Sections 6.1(i) or (j), respectively, and concurrently therewith has paid the
fees payable under Section 6.4. Each of GCo and QCo shall give the other party
orally and in writing at least three business days notice prior to any decision
by its board of directors to accept, recommend, approve or implement a Superior
Proposal which notice shall identify the party making the Superior Proposal and
shall provide full details of all material terms and conditions thereof and any
amendments thereto. Each of GCo and QCo shall inform the other party of the
status (including all terms and conditions thereof) of any discussions and
negotiations with such party. In addition, each of GCo and QCo shall, and shall
cause their respective financial and legal advisors to, negotiate in good faith
with each other to make such adjustments in the terms and
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conditions of this Agreement and of the Plan of Arrangement as would enable GCo
and QCo to proceed with the transactions contemplated hereby. Prior to executing
any agreement to implement a Superior Proposal, each of GCo and QCo shall
provide the other party hereto with copies of such final documentation executed
by the party making the Superior Proposal. In the event that the party that is
not subject to the Acquisition Proposal proposes to amend this Agreement and the
Arrangement, the board of directors of the party that is subject to the
Acquisition Proposal shall consider such proposed amendments and shall not enter
into any agreement regarding such Acquisition Proposal unless it has provided
the other party with written notice, at least twenty-four (24) hours in advance
of entering into such agreement, which notice shall indicate that the board of
directors has reconfirmed its view that such Acquisition Proposal remains a
Superior Proposal. As used herein, "Acquisition Proposal" shall mean a proposal
or offer (other than by the other party hereto), whether or not subject to a due
diligence condition, whether or not in writing, to acquire in any manner,
directly or indirectly, beneficial ownership (as defined under Rule 13(d) of the
Exchange Act) of more than 20% of the assets of GCo or QCo or any subsidiary
thereof or to acquire in any manner, directly or indirectly, more than 9.9% (and
for the purposes of Sections 6.4(c) and (d), 20%) of the outstanding voting
shares of GCo or QCo whether by an arrangement, amalgamation, a merger,
consolidation or other business combination, by means of a sale of shares of
capital stock, sale of assets, tender offer or exchange offer or similar
transaction involving GCo or QCo or any subsidiary thereof including without
limitation any single or multi-step transaction or series of related
transactions which is structured to permit such third party to acquire
beneficial ownership of more than 20% of the assets of GCo or QCo or any
subsidiary thereof or to acquire in any manner, directly or indirectly, more
than 9.9% (and for the purposes of Sections 6.4(c) and (d), 20%) of the
outstanding voting shares of GCo or QCo (other than the transactions
contemplated by this Agreement).
4.2 Additional Agreements of GCo
GCo agrees that, except as expressly contemplated by this Agreement or
as otherwise agreed to in writing by QCo or as set forth in the GCo Disclosure
Letter, from the date hereof to the Effective Date it will, and will cause each
of its subsidiaries to:
(a) Other than as expressly set forth in this Agreement, operate its
business only in the usual, regular and ordinary manner and, to the extent
consistent with such operation, use all commercially reasonable efforts to
preserve intact its present business organization, keep available the services
of its present officers and employees, and preserve its relationships with
customers, suppliers, distributors and others having business dealings with it;
(b) Maintain all of its property and assets in customary repair, order,
and condition, reasonable wear and use and damage by fire or unavoidable
casualty excepted;
(c) Maintain its books of account and records in the usual, regular and
ordinary manner, in accordance with generally accepted accounting principles
applied on a consistent basis;
(d) Duly comply in all material respects with all laws applicable to it
and to the conduct of its business;
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(e) Not: (i) enter into any indemnification agreements, other than the
indemnification agreements with directors and officers of GCo in substantially
the form provided to QCo; (ii) enter into any contracts of employment which: (A)
cannot be terminated on notice of 30 days or less; or (B) provide for any
severance payments or benefits covering a period beyond the termination date of
such employment contract, except as may be required by law; (iii) amend any
employee benefit plan or stock option plan or agreement, except as may be
required for compliance with this Agreement or applicable law; or (iv)
accelerate, amend or change the period (or permit any acceleration, amendment or
change) of exercisability of options granted under any employee benefit plan
(including the GCo Incentive Plan) or authorize cash payments in exchange for
any options granted under any of such plans;
(f) Except as forth in Section 4.2(f) of the GCo Disclosure Letter or
as required by law, not increase the compensation payable or to become payable
to its officers or employees, except for increases in salary or wages of
employees of GCo or of any subsidiary who are not officers of GCo in the
ordinary course of business and in accordance with past practices, or grant any
bonus, severance or termination pay to, or enter into any employment or
severance agreement with any director, officer (except for officers who are
terminated on an involuntary basis and payments relating thereto made pursuant
to written agreements outstanding on the date hereof as set forth on the GCo
Disclosure Letter) or other employee of GCo or of any subsidiary thereof;
(g) Not incur any borrowings except: (i) the refinancing of
indebtedness now outstanding or additional borrowings under its existing
revolving credit facilities; (ii) the prepayment by customers of amounts due or
to become due for goods sold or services rendered or to be rendered in the
future; or (iii) trade payables incurred in the ordinary course of business;
(h) Not enter into commitments of a capital expenditure nature or incur
any contingent liability which would exceed $1,000,000 individually or on a
project basis and in aggregate in accordance with the fiscal year 2003 capital
budget of GCo, a true copy of which has been provided to QCo (and GCo shall not
amend such budget), except: (i) as may be necessary for the maintenance of
existing facilities, machinery and equipment in good operating condition and
repair in the ordinary course of business; or (ii) as may be required by law;
(i) Not sell, dispose of, or encumber, any property or assets, except
for sales, dispositions or Encumbrances in the ordinary course of business
consistent with prior practice;
(j) Maintain insurance upon all its properties and with respect to the
conduct of its business of such kinds and in such amounts as is customary in the
type of business in which it is engaged, but not less than that presently
carried by it;
(k) Not amend its charter documents or bylaws or other organizational
documents, or acquire (by merger, consolidation, or acquisition of stock or
assets) any company, corporation, partnership or other business organization or
division thereof, or enter into or amend any contract, agreement, commitment or
arrangement to effect any such acquisition, or change in any manner the rights
of its capital stock or the character of its business;
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(l) Not issue or sell (except upon the exercise of outstanding
options), or issue options or rights to subscribe to, or enter into any contract
or commitment to issue or sell, any shares of its capital stock or combine,
subdivide, split or in any way reclassify any shares of its capital stock,
reprice any outstanding options or other securities convertible into or
exchangeable for its capital stock, or acquire, agree to acquire, or redeem any
shares of its capital stock or other securities convertible into or exchangeable
for its capital stock;
(m) Except as permitted under Section 4.1(f), not engage in any action
or enter into any transaction or permit any action to be taken or transaction to
be entered into that could reasonably be expected to delay the consummation of,
or otherwise adversely affect, any of the transactions contemplated by the
Arrangement or this Agreement;
(n) Not pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of liabilities reflected or
reserved against in the financial statements of GCo or incurred since the date
of such financial statements;
(o) Not declare or pay any dividend on shares of its capital stock or
make any other distribution of assets to the holders thereof;
(p) Deliver to QCo, within 30 days after the end of each fiscal quarter
of GCo beginning March 31, 2003, and through the Effective Date, unaudited
consolidated balance sheets and related unaudited statements of income and
changes in financial position as of the end of each fiscal quarter of GCo, and
as of the corresponding fiscal quarter of the previous fiscal year. GCo hereby
represents and warrants that such unaudited consolidated financial statements
shall: (i) be complete in all material respects except for the omission of notes
and schedules contained in audited financial statements; (ii) present fairly in
all material respects the financial condition of GCo at the dates indicated and
the results of operations for the respective periods indicated; (iii) shall have
been prepared in accordance with Canadian generally accepted accounting
principles applied on a consistent basis, except as noted therein; and (iv)
shall contain all adjustments which GCo considers necessary for a fair
presentation of its results for each respective fiscal period; and
(q) Take all steps necessary to commence and diligently prosecute the
recommendations set forth in the "2002 Phase II Environmental Site Assessment
and Remediation Cost Estimate" prepared by Komex International Ltd. and dated
February 2003, including the completion of all necessary or appropriate site
characterization activities (including soil and groundwater sampling and
analysis) and the development of a remedial action plan for the Bassano
manufacturing facility that is satisfactory to the applicable Governmental
Entity.
4.3 Additional Agreements of QCo
QCo agrees that, except as expressly contemplated by this
Agreement or otherwise agreed to in writing by GCo or as set forth in the QCo
Disclosure Letter, from the date hereof to the Effective Date it will, and will
cause each of its subsidiaries to:
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(a) Other than as expressly set forth in this Agreement, operate its
business only in the usual, regular and ordinary manner and, to the extent
consistent with such operation, use all commercially reasonable efforts to
preserve intact its present business organization, keep available the services
of its present officers and employees, and preserve its relationships with
customers, suppliers, distributors and others having business dealings with it;
(b) Maintain all of its property and assets in customary repair, order,
and condition, reasonable wear and use and damage by fire or unavoidable
casualty excepted;
(c) Maintain its books of account and records in the usual, regular and
ordinary manner, in accordance with generally accepted accounting principles
applied on a consistent basis;
(d) Duly comply in all material respects with all laws applicable to it
and to the conduct of its business;
(e) Not: (i) enter into any contracts of employment which: (A) cannot
be terminated on notice of 30 days or less; or (B) provide for any severance
payments or benefits covering a period beyond the termination date of such
employment contract, except as may be required by law; (ii) amend any employee
benefit plan or stock option plan or agreement, except as may be required for
compliance with this Agreement or applicable law; or (iii) accelerate, amend or
change the period (or permit any acceleration, amendment or change) of
exercisability of options granted under any employee benefit plan (including the
QCo Incentive Plan) or authorize cash payments in exchange for any options
granted under any of such plans;
(f) Except as forth in Section 4.3(f) of the QCo Disclosure Letter or
as required by law, not increase the compensation payable or to become payable
to its officers or employees, except for increases in salary or wages of
employees of QCo or of any subsidiary who are not officers of QCo in the
ordinary course of business and in accordance with past practices, or grant any
bonus, severance or termination pay to, or enter into any employment or
severance agreement with any director, officer (except for officers who are
terminated on an involuntary basis and payments relating thereto made pursuant
to written agreements outstanding on the date hereof as set forth on the QCo
Disclosure Letter) or other employee of QCo or of any subsidiary thereof;
(g) Not incur any borrowings except (i) the prepayment by customers of
amounts due or to become due for goods sold or services rendered or to be
rendered in the future; or (ii) trade payables incurred in the ordinary course
of business;
(h) Not enter into commitments of a capital expenditure nature or incur
any contingent liability which would exceed $1,000,000 individually or on a
project basis and in aggregate in accordance with the fiscal year 2003 capital
budget of QCo, a true copy of which has been provided to GCo (and QCo shall not
amend such budget), except: (i) as may be necessary for the maintenance of
existing facilities, machinery and equipment in good operating condition and
repair in the ordinary course of business; or (ii) as may be required by law;
(i) Not sell, dispose of, or encumber, any property or assets, except
for sales, dispositions or Encumbrances in the ordinary course of business
consistent with prior practice;
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(j) Maintain insurance upon all its properties and with respect to the
conduct of its business of such kinds and in such amounts as is customary in the
type of business in which it is engaged, but not less than that presently
carried by it;
(k) Not amend its charter documents or bylaws or other organizational
documents, or acquire (by merger, consolidation, or acquisition of stock or
assets) any company, corporation, partnership or other business organization or
division thereof, or enter into or amend any contract, agreement, commitment or
arrangement to effect any such acquisition, or change in any manner the rights
of its capital stock or the character of its business;
(l) Not issue or sell (except upon the exercise of outstanding
options), or issue options or rights to subscribe to, or enter into any contract
or commitment to issue or sell, any shares of its capital stock or combine,
subdivide, split or in any way reclassify any shares of its capital stock,
reprice any outstanding options or other securities convertible into or
exchangeable for its capital stock, or acquire, agree to acquire, or redeem any
shares of its capital stock or other securities convertible into or exchangeable
for its capital stock;
(m) Except as permitted under Section 4.1(f), not engage in any action
or enter into any transaction or permit any action to be taken or transaction to
be entered into that could reasonably be expected to delay the consummation of,
or otherwise adversely affect, any of the transactions contemplated by the
Arrangement or this Agreement;
(n) Not pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of liabilities reflected or
reserved against in the financial statements of QCo or incurred since the date
of such financial statements;
(o) Not declare or pay any dividend on shares of its capital stock or
make any other distribution of assets to the holders thereof;
(p) Use its reasonable best efforts to cause the shares of QCo Common
Stock to be issued pursuant to the Arrangement to be approved for listing on the
Nasdaq National Market upon the Closing; and
(q) Deliver to GCo, within 30 days after the end of each fiscal quarter
of QCo beginning April 30, 2003, and through the Effective Date, unaudited
consolidated balance sheets and related unaudited statements of income and
changes in financial position as of the end of each fiscal quarter of QCo, and
as of the corresponding fiscal quarter of the previous fiscal year. QCo hereby
represents and warrants that such unaudited consolidated financial statements
shall: (i) be complete in all material respects except for the omission of notes
and schedules contained in audited financial statements; (ii) present fairly in
all material respects the financial condition of QCo at the dates indicated and
the results of operations for the respective periods indicated; (iii) shall have
been prepared in accordance with Canadian generally accepted accounting
principles applied on a consistent basis, except as noted therein; and (iv)
shall contain all adjustments which QCo considers necessary for a fair
presentation of its results for each respective fiscal period.
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4.4 Public Announcements
Neither QCo nor GCo, nor any of their respective affiliates, shall
issue or cause the publication of any press release or other public announcement
with respect to this Agreement, the Arrangement or the other transactions
contemplated hereby without the prior notice to and the opportunity for review
by the other party, except the filing of the Joint Proxy Statement and any
current reports on Form 8-K with the SEC and except as may be required by law or
by any listing agreement with Nasdaq or any national securities exchange or
Canadian stock exchange.
4.5 Comfort Letters
(a) Upon request of QCo, GCo shall use its reasonable best efforts to
cause to be delivered to QCo a letter (the "GCo Comfort Letter") of
PricewaterhouseCoopers LLP, Chartered Accountants, addressed to QCo and dated as
of a date within five days before the date the Joint Proxy Statement is first
mailed to each company's respective securityholders, in form and substance
reasonably satisfactory to QCo and customary in scope and substance for
"comfort" letters delivered by independent public accountants in connection with
proxy statements similar to the Joint Proxy Statement.
(b) Upon request of GCo, QCo shall use its reasonable best efforts to
cause to be delivered to GCo a letter (the "QCo Comfort Letter") of Ernst &
Young LLP, Independent Accountants, addressed to GCo and dated as of a date
within five days before the date the Joint Proxy Statement is first mailed to
each company's respective securityholders, in form and substance reasonably
satisfactory to GCo and customary in scope and substance for "comfort" letters
delivered by independent public accountants in connection with proxy statements
similar to the Joint Proxy Statement.
4.6 Board of Directors
The board of directors of QCo will take action prior to the Effective
Time to cause the number of directors comprising the full board of directors of
QCo to be increased to not more than eight voting members, which shall include
two (2) individuals (the "GCo Nominees") approved by GCo from the list of
individuals included in the GCo Disclosure Letter. The increase in the number of
directors and the election of the CGo Nominees shall be subject to the
consummation of the Closing. If prior to the Effective Time any GCo designee for
director shall decline or be unable to serve as a director of QCo, GCo's board
of directors shall designate another person to serve in such person's stead,
subject to the approval of a majority of QCo's directors at that time. Each of
the directors designated by GCo shall provide QCo with their written consent to
serve as directors of QCo and to be named as directors in the Joint Proxy
Statement. Nothing in this Section 4.6 shall limit QCo's ability to comply with
its contractual obligation to elect a director nominated by General Motors
Corporation.
4.7 Tax Matters
(a) Prior to the Effective Time, the parties shall use their reasonable
best efforts to obtain the tax opinion described in Section 5.1(h), including
the provision of
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representations to Xxxxxxxx & Xxxxxxxx LLP by GCo in the form attached hereto as
Exhibit C and QCo in the form attached as Exhibit D.
(b) It is intended by the parties hereto that the transactions
contemplated under this Agreement and the Plan of Arrangement shall be
implemented in a manner that maximizes the present and future financial and tax
benefits to the QCo and GCo. Accordingly, GCo and QCo agree to consult, confer
and consider all steps reasonably necessary and mutually agreeable through and
including the Effective Date to ensure that the transactions contemplated under
this Agreement and the Plan of Arrangement shall be implemented consistent with
that intention as and to the extent that the same shall not prejudice any party
or its security holders. Except as may be necessary to reflect such change(s) in
the transaction structure, the terms of this Agreement shall continue to govern.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1 Conditions Precedent to Obligations of Each Party
The obligations of each party to consummate and effect the transactions
contemplated hereunder shall be subject to the satisfaction or waiver on or
before the Effective Date of the following conditions:
(a) Securityholder Approval. (i) The Arrangement and the other
transactions contemplated hereby shall have been approved and adopted by the GCo
Common Shareholders in accordance with applicable law and GCo's Articles of
Incorporation and bylaws. (ii) the matters referred to in Section 7.1 shall have
been approved by the holders of shares of the QCo Common Stock in accordance
with the rules of Nasdaq, applicable law and QCo's Certificate of Incorporation
and bylaws;
(b) No Legal Action. No temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation of
the Arrangement shall have been issued by any Governmental Entity and remain in
effect, nor shall any proceeding seeking any of the foregoing be pending. There
shall be no order, decree or ruling by any governmental agency or threat
thereof, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Arrangement, which would prohibit or render illegal the
transactions contemplated by this Agreement;
(c) Court Approval. The Court shall have issued its Final Order
approving the Arrangement in form and substance reasonably satisfactory to QCo
and GCo (such approvals not to be unreasonably withheld or delayed by QCo or
GCo) and reflecting the terms hereof;
(d) Commissions, etc. All required orders shall have been obtained from
the Commissions and other relevant United States and Canadian securities
regulatory authorities in connection with the Arrangement. All waiting periods
required by HSR Act, if applicable, and other similar Laws shall have expired
with respect to the transactions contemplated by this Agreement, or early
termination with respect thereto shall have been obtained, without the
imposition of any governmental request or order requiring the sale or
disposition or holding separate (through a trust or otherwise) of a material
portion of the assets or businesses of GCo or
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QCo. QCo and GCo shall each have filed all notices and information (if any)
required under Part IX of the Competition Act (Canada) and the applicable
waiting periods and any extensions thereof shall have expired or the parties
shall have received an Advance Ruling Certificate pursuant to Section 102 of the
Competition Act (Canada) setting out that the Director under such Act is
satisfied he would not have sufficient grounds on which to apply for an order in
respect of the Arrangement. The Arrangement shall have received the allowance or
approval or deemed allowance or approval by the responsible Minister under the
Investment Canada Act, to the extent such allowance or approval is required, on
terms and conditions satisfactory to the parties and all notice requirements
shall have been complied with;
(e) SEC Matters. On the Closing Date the Joint Proxy Statement shall
not be the subject of any stop-order or proceedings seeking a stop-order, or any
similar proceedings, commenced or threatened by the SEC or the Commissions;
(f) Listings and Exchange Approvals
(i) The QCo Common Stock to be issued pursuant to the
Arrangement shall have been approved for listing on the Nasdaq National Market,
subject only to notice of issuance; and
(ii) Nasdaq shall not have objected to the consummation of the
transactions contemplated by the Plan of Arrangement and this Agreement.
(g) Consents of Certain Parties in Privity. QCo and GCo shall have
received all written consents, assignments, waivers, authorizations or other
certificates necessary to provide for the continuation in full force and effect
of all their Material Contracts and leases and for them to consummate the
transactions contemplated hereby, except when the failure to receive such
consents or other certificates would not have a Material Adverse Effect on QCo
or GCo, as the case may be.
(h) Tax Opinion. QCo shall have received from Xxxxxxxx & Xxxxxxxx LLP,
subject to appropriate representations to that firm by GCo and QCo in the form
attached hereto as Exhibits C and D, respectively, an opinion in the form
attached hereto as Exhibit E to the effect that that the issuance of QCo Common
Stock pursuant to this Agreement and Plan of Arrangement will not result in the
Quantum Common Shares (as defined in the Distribution Agreement) issued pursuant
to the Distribution Agreement failing to qualify as qualified property for
purposes of Section 355(c)(2) or 361(c)(2) of the Code by reason of Section
355(e) of the Code.
(i) Valid Issuance. The issuance by QCo of QCo Common Stock pursuant to
the terms of this Agreement and the Arrangement shall be exempt from the
registration and qualification requirements of the Securities Act and applicable
state securities or "blue sky" laws, and QCo shall be reasonably satisfied that
all necessary approvals under applicable Laws and other authorizations relating
to the issuance by QCo of QCo Common Stock shall have been obtained.
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5.2 Conditions Precedent to Obligations of GCo
The obligations of GCo to consummate and effect the transactions
contemplated hereunder shall be subject to the satisfaction or waiver on or
before the Effective Date of the following conditions:
(a) Representations and Warranties. The representations and warranties
of QCo contained in this Agreement shall be true and correct on the date hereof
and (except to the extent such representations and warranties speak as of a date
earlier than the date hereof, in which case such representations and warranties
shall be true and correct as of such date; and except to give effect to the
issuance of shares of QCo Common Stock on exercise of outstanding options or
warrants) shall also be true and correct on and as of the Effective Date, with
the same force and effect as if made on and as of the Effective Date, except,
other than the representations and warranties contained in Sections 3.9(f) and
3.15(h), where the failure of such representations and warranties to be true and
correct would not have a Material Adverse Effect on QCo;
(b) Covenants. QCo shall have (i) performed and complied in all
respects with the covenants and agreements set forth in Section 1.5(b), and (ii)
performed and complied in all material respects with all other covenants
required by this Agreement to be performed or complied with by QCo on or before
the Effective Date;
(c) Material Adverse Change. Between the date hereof and the Effective
Date, there shall not have occurred, in the reasonable judgment of GCo, a
Material Adverse Change to QCo;
(d) Certificate. QCo shall have delivered to GCo a certificate, dated
the Effective Date and signed by its chief executive officer and its chief
financial officer, to the effect set forth in Sections 5.2(a), (b) and (c).
5.3 Conditions Precedent to Obligations of QCo
The obligations of QCo to consummate and effect the transactions
contemplated hereunder shall be subject to the satisfaction or waiver on or
before the Effective Date of the following conditions:
(a) Representations and Warranties. The representations and warranties
of GCo contained in this Agreement shall be true and correct on the date hereof
and (except to the extent such representations and warranties speak as of a date
earlier than the date hereof, in which case such representations and warranties
shall be true and correct as of such date; and except to give effect to the
issuance of GCo Common Shares on exercise of outstanding options) shall also be
true and correct on and as of the Effective Date, with the same force and effect
as if made on and as of the Effective Date, except, other than the
representations and warranties contained in Sections 2.9(f) and 2.15(h), where
the failure of such representations and warranties to be true and correct would
not have a Material Adverse Effect on GCo;
(b) Covenants. GCo shall have (i) performed and complied in all
respects with the covenants and agreements set forth in Section 1.5(b), and (ii)
performed and complied
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in all material respects with all other covenants required by this Agreement to
be performed or complied with by GCo on or before the Effective Date;
(c) Material Adverse Change. Between the date hereof and the Effective
Date, there shall not have occurred, in the reasonable judgment of QCo, a
Material Adverse Change to GCo; and
(d) Certificate. GCo shall have delivered to QCo a certificate, dated
the Effective Date and signed by its chief executive officer and its chief
financial officer, to the effect set forth in Sections 5.3(a), (b) and (c).
(e) Notice of Dissent. GCo shall not have received on or prior to the
Effective Time notice from the holders of more than 5% of the issued and
outstanding GCo shares entitled to consent to, or vote on, the matters presented
at the GCo Shareholders Meeting, in aggregate, of their intention to exercise
their rights of dissent under Section 191 of the ABCA.
ARTICLE 6
TERMINATION
6.1 Termination
This Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval of the transactions contemplated hereby
by the securityholders of QCo or GCo entitled to vote, as follows:
(a) by mutual agreement of GCo and QCo;
(b) by GCo, if there has been a breach by QCo of any representation,
warranty, covenant or agreement set forth in this Agreement on the part of QCo,
or if any representation or warranty of QCo shall have become untrue, in either
case if the conditions set forth in Sections 5.2(a) and (b) would not be
satisfied as of the time of such breach or as of the time such representation or
warranty shall have become untrue and QCo fails to promptly cure such breach of
a covenant or agreement or inaccuracy of any representation or warranty within
15 business days after written notice thereof from GCo (except that no cure
period shall be provided for a breach by QCo which by its nature cannot be cured
and in no event shall such cure period extend beyond the Termination Date);
(c) by QCo, if there has been a breach by GCo of any representation,
warranty, covenant or agreement set forth in this Agreement on the part of GCo,
or if any representation or warranty of GCo shall have become untrue, in either
case if the conditions set forth in Sections 5.3(a) and (b) would not be
satisfied as of the time of such breach or as of the time such representation or
warranty shall have become untrue and GCo fails to promptly cure such breach of
a covenant or agreement or inaccuracy of any representation or warranty within
15 business days after written notice thereof from QCo (except that no cure
period shall be provided for a breach by GCo which by its nature cannot be cured
and in no event shall such cure period extend beyond the Termination Date);
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(d) by either party, if all the conditions for Closing the Arrangement
for the benefit of such party shall not have been satisfied or waived on or
before 5:00 p.m., Calgary, Alberta time on September 30, 2003 (the "Termination
Date"), other than as a result of a breach of this Agreement by the terminating
party;
(e) by either party, on or before 5:00 p.m. Calgary, Alberta time on
September 29, 2003, if: (i) the securityholders of GCo entitled to vote at the
GCo Shareholders Meeting do not approve the Arrangement (and the other matters
to be approved at such meeting as provided in Section 7.1(a) hereof) or the
Court does not issue a Final Order; or (ii) the stockholders of QCo entitled to
vote at the QCo Stockholders Meeting do not approve the matters set forth in
Section 7.1(b) hereof;
(f) by either party if a final and non-appealable order shall have been
entered in any action or proceeding before any Governmental Entity that prevents
or makes illegal the consummation of the Arrangement;
(g) by QCo if the GCo board of directors or any committee of the GCo
board of directors shall (i) withdraw or modify, in any adverse manner, its
advice to GCo Common Shareholders, or make any recommendation in favour of any
Acquisition Proposal or (ii) fail to reaffirm its advice upon request, from time
to time, by QCo to do so or upon an Acquisition Proposal in respect of GCo being
publicly announced or is proposed, offered or made to the GCo Common
Shareholders or to GCo (such reaffirmation to be made within 10 days of such
request being made or such Acquisition Proposal being publicly announced,
proposed, offered or made or immediately prior to the meeting of GCo Common
Shareholders, whichever occurs first);
(h) by GCo if the QCo board of directors or any committee of the QCo
board of directors shall (i) withdraw or modify in any adverse manner its
approval or recommendation in respect of this Agreement, the Arrangement and the
other transactions contemplated hereby or (ii) fail to reaffirm its approval or
recommendation upon request, from time to time, by GCo to do so or upon an
Acquisition Proposal in respect of QCo being publicly announced or is proposed,
offered or made to the QCo Shareholders or to QCo (such reaffirmation to be made
within 10 days of such request being made or such Acquisition Proposal being
publicly announced, proposed, offered or made or immediately prior to the
meeting of QCo Shareholders, whichever occurs first);
(i) by QCo, prior to the approval of this Agreement, the Arrangement
and the other transactions contemplated hereby by the securityholders of QCo if,
as a result of a Superior Proposal by a party other than GCo or any of its
affiliates, QCo's board of directors determines in accordance with Section
4.1(f) to accept, recommend, approve or implement such Superior Proposal and has
otherwise complied with the provisions of Section 4.1(f) and Section 6.4;
(j) by GCo, prior to the approval of this Agreement, the Arrangement
and the other transactions contemplated hereby by the securityholders of GCo if,
as a result of a Superior Proposal by a party other than QCo or any of its
affiliates, GCo's board of directors determines in accordance with Section
4.1(f) to accept, recommend, approve or implement such Superior Proposal and has
otherwise complied with the provisions of Section 4.1(f) and Section 6.4;
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(k) by GCo if the QCo Stock Price (calculated in accordance with
Section 1.2(b) except using any fifteen consecutive trading days as the
Measurement Period for such calculation and for this purpose shall be calculated
on a rolling basis for each trading day after the date of this Agreement until
the Effective Date) is less than $2.15 (subject to adjustment in the manner as
is set forth in Section 1.2(c)) (the "GCo Walk-Away Price"). Upon the occurrence
of any GCo Walk-Away Price, then GCo may terminate the Agreement within three
days following the end of the relevant Measurement Period, and, if not so
terminated within such three day period, GCo shall have waived its right to
terminate the Agreement pursuant to this Section 6.1(k) for that occurrence of
such GCo Walk-Away Price, but without prejudice to any subsequent GCo Walk-Away
Price that may occur, if such subsequent GCo Walk-Away Price should occur;
(l) by QCo if the Court orders or requires any Persons, other than
the GCo Common Shareholders, the right to consent to, approve, or vote in
connection with, the Arrangement, as a separate class; or
(m) by either party if General Motors Corporation does not deliver to
GCo an executed voting agreement to vote in favour of the transactions
contemplated by this Agreement within 45 days after the date of this Agreement.
6.2 Notice of Termination
Any termination of this Agreement under Section 6.1 above will be
effected by the delivery of written notice by the terminating party to the other
party hereto.
6.3 Effect of Termination
Subject to Section 6.4, in the event of termination of this Agreement
by either GCo or QCo pursuant to Section 6.1, this Agreement shall forthwith
become void and have no effect, and there shall be no liability or obligation on
the part of QCo or GCo or their respective officers or directors, except that:
(i) the provisions of Section 6.4 shall survive such termination; (ii) the
provisions of the Confidentiality Agreement shall survive any such termination;
and (iii) no party shall be released or relieved from any liability arising from
a breach by such party of any of its representations, warranties, covenants or
agreements as set forth in this Agreement resulting from willful misconduct or
bad faith.
6.4 Termination Fee
(a) If this Agreement is terminated:
(i) by GCo pursuant to Section 6.1(b), then QCo shall pay to GCo
a cash termination fee of $900,000 at the time of such termination, it being
agreed between the parties that such amount is an estimate of the reasonable out
of pocket expenses of QCo, incurred in connection with the transactions
contemplated herein; or
(ii) by either party pursuant to Section 6.1(e)(ii), then QCo
shall pay to GCo a cash termination fee of $900,000 at the time of such
termination, it being agreed between
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the parties that such amount is an estimate of the reasonable out of pocket
expenses of GCo, incurred in connection with the transactions contemplated
herein.
(b) If this Agreement is terminated:
(i) by QCo pursuant to Section 6.1(c) then GCo shall pay to QCo
a cash termination fee of $900,000 at the time of such termination, it being
agreed between the parties that such amount is an estimate of the reasonable out
of pocket expenses of QCo, incurred in connection with the transactions
contemplated herein;
(ii) by either party pursuant to Section 6.1(e)(i), then GCo
shall pay to QCo a cash termination fee of $900,000 at the time of such
termination, it being agreed between the parties that such amount is an estimate
of the reasonable out of pocket expenses of QCo, incurred in connection with the
transactions contemplated herein;
(iii) by QCo pursuant to Section 6.1(d), as a result of the
failure of the condition set forth in Section 5.3(e), then GCo shall pay to QCo
a cash termination fee of $900,000 at the time of such termination, it being
agreed between the parties that such amount is an estimate of the reasonable out
of pocket expenses of QCo, incurred in connection with the transactions
contemplated herein; or
(iv) by QCo pursuant to Section 6.1(l), then GCo shall pay to QCo
a cash termination fee of $900,000 at the time of such termination, it being
agreed between the parties that such amount is an estimate of the reasonable out
of pocket expenses of QCo, incurred in connection with the transactions
contemplated herein.
(c) If a bona fide Acquisition Proposal in respect of GCo is publicly
announced or is proposed, offered or made to the securityholders of GCo or to
GCo and (x) such Acquisition Proposal has not expired or been withdrawn at the
time of the GCo Shareholders Meeting, (y) the securityholders of GCo do not
approve the Arrangement (and the other matters to be approved at such meeting as
provided in Section 7.1(a) hereof), and (z) within 12 months following the
termination of this Agreement, GCo enters into, directly or indirectly, an
agreement, commitment or understanding with respect to such Acquisition
Proposal, an amended version thereof, a competing Acquisition Proposal or an
Acquisition Proposal solicited in response to the foregoing, or any such
Acquisition Proposal is consummated, then GCo shall pay to QCo a cash
termination fee of $2 million, payable immediately upon satisfaction of the
requirements contained in paragraphs (x), (y) and (z) of this Section 6.4(c). If
GCo pays a cash termination fee to QCo pursuant to this Section 6.4(c), then GCo
may set-off such amounts previously paid to QCo pursuant to Section 6.4(b).
(d) If a bona fide Acquisition Proposal in respect of QCo is publicly
announced or is proposed, offered or made to the QCo stockholders or to QCo and
(x) such Acquisition Proposal has not expired or been withdrawn at the time of
the QCo Shareholders Meeting, (y) the securityholders of QCo do not approve the
Arrangement (and the other matters to be approved at such meeting as provided in
Section 7.1(b) hereof), and (z) within 12 months following the termination of
this Agreement, QCo enters into, directly or indirectly, an agreement,
commitment or understanding with respect to an Acquisition Proposal, an amended
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version thereof, a competing Acquisition Proposal or an Acquisition Proposal
solicited in response to the foregoing, or any such Acquisition Proposal is
consummated, then QCo shall pay to GCo a cash termination fee of $2 million,
payable immediately upon satisfaction of the requirements contained in
paragraphs (x), (y) and (z) of this Section 6.4(d). If QCo pays a cash
termination fee to GCo pursuant to this Section 6.4(d), then QCo may set-off
such amounts previously paid to GCo pursuant to Section 6.4(a).
(e) If this Agreement is terminated by GCo pursuant to Section 6.1(h)
or by QCo pursuant to Section 6.1(i), then QCo shall pay to GCo upon such
termination a cash termination fee of $2 million at the time of such
termination.
(f) If this Agreement is terminated by QCo pursuant to Section 6.1(g)
or by GCo pursuant to Section 6.1(j), then GCo shall pay to QCo upon such
termination a cash termination fee of $2 million at the time of such
termination.
(g) QCo and GCo each agree that the agreements contained in Sections
6.4(a) through 6.4(f) are an integral part of the transactions contemplated by
this Agreement. If either party fails to promptly pay the other party any fee
due under such Sections 6.4(a) through 6.4(f), it shall pay the other party's
costs and expenses (including legal fees and expenses) in connection with any
action, including the filing of any lawsuit or other legal action, taken to
collect payment, together with interest on the amount of any unpaid fee at the
publicly announced prime rate of Canadian Imperial Bank of Commerce from the
date such fee was first due.
Article 7
ADDITIONAL AGREEMENTS
QCo and GCo, as the case may be, agree to take the following actions
after the execution of this Agreement.
7.1 Meetings
GCo and QCo shall each duly call a meeting of its securityholders
entitled to vote to be held as soon as practicable after the SEC has indicated
that it has no further comments on the Joint Proxy Statement for the purpose of
(a) in the case of GCo, voting upon the Plan of Arrangement and the transactions
contemplated hereby and thereby; and (b) in the case of QCo, voting upon
proposals to approve (i) this Agreement and the transactions contemplated hereby
and by the Plan of Arrangement, (ii) the amendment of QCo's Certificate of
Incorporation to increase the authorized capital stock of QCo, and (iii) such
other matters relating to this Agreement and the Arrangement, if any, as shall
be legally required in the reasonable judgment of QCo. Each party shall take all
reasonable and lawful action to solicit and obtain approval of its
securityholders and take all other action necessary or advisable to secure the
vote or consent of the securityholders required by applicable Law or applicable
stock exchange requirements. The parties shall also coordinate and cooperate
with respect to the timing of such meetings. Each party may only change its
recommendation in the event that the board of directors of such party concludes,
in good faith, after receiving the advice of outside counsel that such action is
reasonably necessary for the board of directors to act in a manner consistent
with its fiduciary duty and, in the event that Section 4.1(f) is applicable, if
such party and its board of directors are
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in compliance with that Section. The meetings of securityholders of GCo and QCo
will be called for the same day at such times as will result in the completion
of the QCo Stockholders Meeting prior to the commencement of the GCo
Shareholders Meeting.
7.2 The Closing
Subject to the termination of this Agreement as provided in Article 6,
the Closing of the transactions contemplated by this Agreement (the "Closing")
will take place at the offices of Burnet, Xxxxxxxxx & Xxxxxx LLP, 1400, 000 -
0xx Xxxxxx X.X., Xxxxxxx, Xxxxxxx, X0X 0X0 on a date (the "Closing Date") and at
a time to be mutually agreed upon by the parties, which date shall be no later
than the first business day after all conditions to Closing set forth herein
shall have been satisfied or waived, unless another place, time and date is
mutually selected by GCo and QCo. Concurrently with the Closing, the Plan of
Arrangement will be filed with the Registrar under the ABCA.
7.3 Ancillary Documents/Reservation of Shares
(a) Provided all other conditions of this Agreement have been
satisfied or waived, GCo shall, on the Closing Date, file Articles of
Arrangement pursuant to Section 193 of the ABCA to give effect to the Plan of
Arrangement.
(b) On the Effective Date QCo shall file with the Delaware Secretary
of State a Certificate of Amendment to its Certificate of Incorporation
increasing the number of its authorized shares to give effect to the
transactions contemplated by this Agreement.
(c) On or before the Effective Date, QCo will reserve for issuance
such number of shares of QCo Common Stock as shall be necessary to give effect
to the transactions contemplated by this Agreement.
7.4 Notice to Holders of GCo Options
As soon as practicable after the Effective Time, QCo shall deliver to
each holder of an outstanding GCo Option an appropriate notice setting forth
such holder's rights pursuant thereto and that such GCo Option shall continue in
effect on the same terms and conditions as set forth therein, subject to the
adjustments and other terms provided for by this Agreement.
7.5 Indemnification and Related Matters
(a) QCo agrees that all rights to indemnification existing in favour of
the present or former directors and officers of GCo (as such) or any of GCo's
subsidiaries or present or former directors and officers (as such) of GCo or any
of its subsidiaries serving or who served at GCo's or any of its subsidiaries'
request as a director, officer, employee, agent or representative of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise (each such present or former director or officer of GCo or any of its
subsidiaries, an "Indemnified Party"), as provided by contract or in GCo's
charter or bylaws or similar documents of any of its subsidiaries in effect as
of the date hereof with respect to matters occurring prior to the Effective
Time, shall survive and shall continue in full force and effect and without
modification, to the extent permitted by applicable Laws, so long as GCo is in
existence
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as a corporation, for a period of not less than the statutes of limitations
applicable to such matters.
(b) From and after the Effective Time, QCo and GCo, jointly and
severally, shall and QCo shall cause GCo to indemnify and hold harmless to the
fullest extent permitted under the ABCA and applicable Laws, each Indemnified
Party against any costs and expenses (including reasonable attorney's fees),
judgments, fines, losses, claims and damages and liabilities, and amounts paid
in settlement thereof with the consent of the indemnifying party, such consent
not to be unreasonably withheld, in connection with any actual or threatened
claim, action, suit, proceeding or investigation that is based on, or arises out
of, the fact that such person is or was a director or officer of GCo or any of
its subsidiaries (including without limitation with respect to any of the
transactions contemplated hereby or the Arrangement) or who is serving or who
served at GCo's or any of its subsidiaries' request as a director, officer,
employee, agent or representative of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise. In the event of any
such claim, action, suit, proceeding or investigation, QCo shall cause GCo to
pay the reasonable fees and expenses of counsel in advance of the final
disposition of any such claim, action, suit, proceeding or investigation to the
fullest extent permitted by law subject to the limitations imposed by the ABCA
and applicable Laws. Without limiting the foregoing, in the event any such
claim, action, suit, proceeding or investigation is brought against any
Indemnified Parties, (i) the Indemnified Parties may retain counsel reasonably
satisfactory to QCo and, subject to limitations imposed by the ABCA and
applicable Laws GCo shall (or QCo shall cause GCo to) pay all reasonable fees
and expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; and (ii) QCo will use all reasonable efforts to assist in
the defense of such matter; provided, however, that neither GCo nor QCo shall be
liable for any settlement effected without its prior written consent which shall
not be unreasonably withheld. Any Indemnified Party wishing to claim
indemnification under this Section 7.5(b), upon learning of any such claim,
action, suit, proceeding or investigation, shall notify QCo (but the failure to
so notify shall not relieve a party from any liability which it may have under
this Section 7.5 (b) unless such failure results in actual prejudice to such
party and then only to the extent of such prejudice). The Indemnified Parties as
a group may retain only one law firm in any jurisdiction to represent them with
respect to each such matter unless such counsel determines that there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties, in which
event additional counsel may be required to be retained by the Indemnified
Parties.
(c) Subject to limitations imposed by the ABCA and applicable Laws,
provided the Arrangement becomes effective, GCo shall (or QCo shall cause GCo
to) pay all expenses, including reasonable attorney's fees, as the same may be
incurred by any Indemnified Parties in any action by any Indemnified Party or
parties seeking to enforce the indemnity or other obligations provided for in
this Section 7.5; provided, however, that GCo will be entitled to reimbursement
for any advances made under this Section 7.5 to any Indemnified Party who
ultimately proves unsuccessful in enforcing the indemnity as finally determined
by a non-appealable judgment in a court of competent jurisdiction, and payment
of such expenses in advance of the final disposition of the action shall be made
only upon receipt of any undertaking by the Indemnified Party to reimburse all
amounts advanced if such action ultimately proves unsuccessful to the extent
permitted by applicable Laws.
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(d) Provided the Arrangement becomes effective, for a period of six
years after the Effective Date, QCo shall continue in effect director and
officer liability insurance for the benefit of the Indemnified Parties in such
amounts, and with such deductibles, retained amounts, coverages and exclusions
as GCo provides for its own directors and officers at the date hereof; provided
that in no event shall the QCo be required to expend pursuant to this Section
7.5 more than an amount per year equal to 150% of the current annual premium
paid by QCo for similar insurance carried by QCo for its own directors and
officers.
(e) This Section 7.5, which shall survive the consummation of this
Agreement and the Arrangement, is intended to benefit each person or entity
indemnified hereunder.
7.6 Affiliate Agreements
GCo will use its reasonable best efforts to have its Affiliates sign
and deliver to QCo the GCo Affiliate Agreements in the form of Exhibit B
concurrently with the execution hereof. For purposes of this Agreement, an
"Affiliate" shall have the meaning referred to in Rule 145 under the Securities
Act. In the event that GCo does not succeed in getting its respective Affiliates
to sign and deliver the GCo Affiliate Agreements, such party shall continue to
use its reasonable best efforts to have its Affiliates sign and deliver the GCo
Affiliate Agreements.
7.7 Consents; Approvals
GCo and QCo shall coordinate and cooperate with one another and shall
each use their reasonable best efforts to obtain (and shall each refrain from
taking any willful action that would impede obtaining) all consents, waivers,
approvals, authorizations or orders (including, without limitation, all rulings,
decisions or approvals by any Governmental Entity), and GCo and QCo shall make
all filings required in connection with the authorization, execution and
delivery of this Agreement and the consummation by them of the transactions
contemplated hereby, excepting only those filings with foreign jurisdictions for
which the failure to file would not have a Material Adverse Effect on GCo or
QCo, as the case may be. The foregoing covenant shall not include any obligation
by GCo or QCo to agree to divest, abandon, licence or take similar action with
respect to any assets (tangible or intangible) of GCo or QCo, as the case may
be.
7.8 Registration Statements
(a) To the extent legally permitted under the Securities Act, other
applicable Laws and SEC policy, and subject Section 7.8(b), QCo shall use
commercially reasonable efforts (i) to file, as soon as reasonably practicable
after the Closing Date, a registration statement on Form S-3 (the "Resale
Registration Statement") in order to register for resale any shares of QCo
Common Stock issued pursuant to the Arrangement to any holder of GCo Common
Shares (excluding officers or directors of GCo in their individual capacity) who
is an Affiliate of GCo immediately prior to the Effective Time (such
determination shall be made (A) by QCo in its reasonable judgment or (B)
pursuant to an opinion of counsel to any such holder reasonably acceptable to
QCo), and QCo shall use commercially reasonable efforts to cause the Resale
Registration Statement to become effective as soon as reasonably practicable
after receiving SEC Clearance of such Resale Registration Statement and to
maintain the effectiveness of the Resale Registration Statement for so long as
any shares of such holders are subject to the resale
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restrictions of Section 145 of the Securities Act; and (ii) to file, as soon as
reasonably practicable after the Effective Date, a registration statement on
Form S-3 (or other available registration form) (the "Primary Registration
Statement") in order to register under the Securities Act the QCo Common Stock
issuable upon conversion of the GCo Series 2 Preferred Shares, and QCo shall use
commercially reasonable efforts to cause the Primary Registration Statement to
become effective as soon as reasonably practicable after receiving SEC Clearance
of such Resale Registration Statement and to maintain effectiveness of such
registration statement for such time as the GCo Series 2 Preferred Shares are
outstanding.
(b) QCo's obligations this Section 7.8 shall be subject to the
condition that each holder of securities to be included in the Primary
Registration Statement and the Resale Registration Statement (each a
"Registration Statement") shall cooperate with QCo in all respects in connection
with the preparation and filing of such Registration Statement, including (i)
timely supplying all information reasonably requested by QCo (which shall
include all information regarding such holder and the proposed manner of sale of
the QCo Common Stock required to be disclosed in any Registration Statement),
(ii) executing and returning all documents reasonably requested by QCo in
connection with the registration and sale of the shares subject to such
Registration Statement, and (iii) promptly furnishing such additional
information as may be requested by the Commission or as required to be disclosed
in order to make the information furnished to QCo by such holder not materially
misleading.
Article 8
MISCELLANEOUS
8.1 No Survival of Representations and Warranties
All representations and warranties of the parties contained in this
Agreement will remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the parties to this Agreement, until the
earlier of the valid termination of this Agreement or the Closing Date,
whereupon such representations and warranties will expire and be of no further
force or effect. All agreements and covenants of the parties shall survive the
Closing Date, except as otherwise set forth in this Agreement.
8.2 Notices
All notices and other communications required or permitted hereunder
shall be in writing and be sent to the parties hereto at the address as set
below, or at such other address as such party shall have furnished to the other
party in writing in accordance with this Section:
(a) if to QCo to: Quantum Fuel Systems Technologies Worldwide, Inc.,
00000 Xxxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx 00000, Attention: Chief Executive
Officer, Facsimile No. (000) 000-0000, with required copies to Burnet, Xxxxxxxxx
& Xxxxxx, 1400, 000 - 0xx Xxxxxx X.X., Xxxxxxx, Xxxxxxx, X0X 0X0, Attention:
Grant Zawalsky, Facsimile No. 000-000-0000.
(b) if to GCo to: Global Thermoelectric Inc., 0000 00xx Xxxxxx X.X.,
Xxxxxxx, Xxxxxxx, X0X0X0 Attention: Chief Executive Officer, Facsimile No. (403)
204-6105, with
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required copies to Xxxxxxx Xxxxx XXX, 0000 Xxxxxxx Xxxx Xxxx, 000 - 0xx Xxxxxx
X.X., Xxxxxxx, Xxxxxxx, X0X 0X0, Attention: Xxxx XxxXxxx, Facsimile No. (403)
265-7219.
All notices and other communications shall be deemed effectively given
as to the party to whom it is addressed as of the earliest of the following
times: (i) when received, (ii) when delivered personally, (iii) one (1) business
day after being delivered by facsimile (with appropriate confirmation of
receipt), (iv) one (1) business day after being timely deposited with an
overnight courier service with instructions (and the capability) to make
delivery on the next day, (v) if sent internationally, five (5) business days
after being deposited in international mail, first class with postage prepaid,
or (vi) if sent domestically, three (3) business days after being deposited in
U.S. mail, first class with postage prepaid.
8.3 Interpretation
When a reference is made in this Agreement to Sections or Exhibits,
such reference shall be to a Section or Exhibit to this Agreement unless
otherwise indicated. The words "include," "includes" and "including" when used
therein shall be deemed in each case to be followed by the words "without
limitation." Any references in this Agreement to "the date hereof" refers to the
date of execution of this Agreement. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. The terms and provisions of this Agreement
shall not be construed against the drafter or drafters hereof. All parties
hereto agree that the language of this Agreement shall be construed as a whole
according to its fair meaning and not strictly for or against any of the parties
hereto.
8.4 Severability
If any provision of this Agreement or the application thereof to any
person or circumstance is held invalid or unenforceable in any jurisdiction, the
remainder hereof, and the application of such provision to such person or
circumstance in any other jurisdiction or to other persons or circumstances in
any jurisdiction, shall not be affected thereby, and to this end the provisions
of this Agreement shall be severable.
8.5 Counterparts
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to each of the other parties, it being understood that all parties
need not sign the same counterpart.
8.6 Miscellaneous
This Agreement, which includes the GCo Disclosure Letter, the QCo
Disclosure Letter and the Exhibits hereto and the Confidentiality Agreement, and
any other documents referred to herein or contemplated hereby (a) constitutes
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof; (b) is not
intended to confer upon any other person any rights or remedies hereunder
(except that Section
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7.5 is for the benefit of GCo's directors and officers and is intended to confer
rights on such persons); and (c) shall not be assigned by operation of law or
otherwise except as otherwise specifically provided.
8.7 Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Alberta (regardless of the laws that might otherwise
govern under applicable principles of conflicts of law) as to all matters,
including without limitation validity, construction, effect, performance and
remedies.
8.8 Amendment and Waivers
Any term or provision of this Agreement may be amended, and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by a writing
signed by the party to be bound thereby which writing expressly refers to this
Agreement and the operation of the provisions of this Section 8.8. The waiver by
a party of any breach hereof or default in the performance hereof will not be
deemed to constitute a waiver of any other default or any succeeding breach or
default. This Agreement may be amended by the parties hereto at any time before
or after approval of the holders of GCo Common Shares, or the QCo stockholders,
but, after such approval, no amendment will be made which by applicable law
requires the further approval of the securityholders of either GCo or QCo
without obtaining such further approval.
8.9 Expenses
Except as otherwise provided herein, each party will bear its
respective expenses and legal fees incurred with respect to this Agreement and
the transactions contemplated hereby. Notwithstanding the foregoing, the parties
shall share equally the costs of (i) printing and filing the Joint Proxy
Statement, and (ii) any filings or applications with any Governmental Entity
relating to the transactions contemplated by the Plan of Arrangement and this
Agreement.
8.10 Further Assurances
Each of the parties hereto will from time to time execute and deliver
all such further documents and instruments and do all such acts and things as
the other parties may reasonably require to effectively carry out or better
evidence or perfect the terms and provisions of this Agreement.
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IN WITNESS WHEREOF, QCo and GCo have caused this Agreement to be signed by
their respective officers thereunder duly authorized, all as of the date first
written above.
Quantum Fuel Systems Technologies
Worldwide, Inc.
By: /s/ Xxxx X. Xxxxxxxxxxx
--------------------------------------
Xxxx X. Xxxxxxxxxxx
President and Chief Executive Officer
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Xxxxxxx X. Xxxxx
Chief Financial Officer and Treasurer
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GLOBAL THERMOELECTRIC INC.
Per: /s/ Xxxxx Xxxxxxx
-------------------------------------
Xxxxx Xxxxxxx
President and Chief Executive Officer
Per: /s/ Xxxxxx Xxxxxx
-------------------------------------
Xxxxxx Xxxxxx
Director
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APPENDIX
DEFINED TERMS
For the purpose of this Agreement:
"ABCA" shall have the meaning set forth in Section 1.1;
"Acquisition Proposal" shall have the meaning set forth in Section 4.1(f);
"Affiliate" shall have the meaning set forth in Section 7.6;
"Applicable Environmental Laws" shall have the meaning set forth in
Sections 2.15(c);
"Appropriate Regulatory Approvals" shall mean those sanctions, rulings,
consents, orders, exemptions, permits and other approvals (including the lapse,
without objection, of a prescribed time under a statute or regulation that
states that a transaction may be implemented if a prescribed time lapses
following the giving of notice without an objection being made) of Governmental
Entities, regulatory agencies or self-regulatory organizations;
"Arrangement" shall have the meaning set forth in Section 1.1;
"CBCA" shall mean the Canada Business Corporations Act as now in effect
and as it may be amended from time to time prior to the Effective Date;
"C.F.R." shall mean the United States Code of Federal Regulations.
"Closing Date" shall have the meaning set forth in Section 7.2;
"Closing" shall have the meaning set forth in Section 7.2;
"COBRA" shall have the meaning set forth in Section 3.22(c);
"Code" shall have the meaning set forth in Section 2.19(d);
"Commission" shall collectively mean applicable Canadian provincial
securities commissions or regulatory authorities;
"Confidentiality Agreement" shall mean that certain confidentiality
agreement dated as of December 5, 2002, as amended, and entered into by and
between GCo and QCo;
"Contract" shall mean in the case of GCo or QCo, any pending and/or
executory contract, agreement, arrangement or understanding to which GCo or QCo,
as the case may be, or any of its subsidiaries, is a party or by which GCo or
QCo, as the case may be, or any of its subsidiaries, or any of their respective
assets is bound or affected;
"Controlled" shall have the meaning set forth in 16 C.F.R.(ss)801.1(b)
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"Copyrights" shall mean all copyrights, and all right, title and interest
in all copyrights, copyright registrations and applications for copyright
registration, certificates of copyright and copyrightable subject matter
throughout the world, all right, title and interest in related applications and
registrations throughout the world, and all Moral Rights;
"Court" shall have the meaning set forth in the recitals hereto;
"Director" shall mean the Director appointed pursuant to section 260 of the
CBCA;
"Dissenters" shall have the meaning set forth in Section 1.3;
"Dissenting Shareholders" shall have the meaning set forth in Section 1.3;
"Distribution Agreement" shall mean the Contribution and Distribution
Agreement, dated as of July 23, 2003, by and among IMPCO Technologies, Inc. and
QCo;
"Effective Date" shall have the meaning set forth in Section 1.1;
"Effective Time" shall have the meaning set forth in Section 1.1;
"Encumbrance" shall mean any lien, charge, mortgage, security interest,
option, preferential purchase right or other right or interest of any other
Person;
"ERISA Affiliate" shall have the meaning set forth in Section 3.22(a);
"ERISA" shall have the meaning set forth in Section 3.22(a);
"Exchange Act" shall have the meaning set forth in Section 1.5(a);
"Exchange Ratio" shall have the meaning set forth in Section 1.2(a);
"Executive Officers" shall have the meaning set forth in Section 1.7;
"Final Order" shall have the meaning set forth in Section 1.1;
"GCo Affiliate Agreement" shall mean the agreement in the form of Exhibit B
attached hereto to be executed and delivered to GCo by the Affiliates of GCo;
"GCo Balance Sheet" shall have the meaning set forth in Section 2.8(b);
"GCo Comfort Letter" shall have the meaning set forth in Section 4.5(a);
"GCo Common Shares" shall have the meaning set forth in Section 2.2;
"GCo Disclosure Letter" shall mean the GCo letter dated the date of this
Agreement and delivered by GCo to QCo concurrently herewith;
"GCo Documents" shall have the meaning set forth in Section 2.7(a);
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"GCo Employee Plan" shall have the meaning set forth in Section 2.22(a);
"GCo Employees" shall have the meaning set forth in Section 2.21;
"GCo Financial Statements" shall have the meaning set forth in Section
2.8(b);
"GCo Incentive Plan" shall have the meaning set forth in Section 2.2;
"GCo Intellectual Property" shall have the meaning set forth in Section
2.6(b)(i);
"GCo Intellectual Property Rights" shall mean all Intellectual Property
Rights used or proposed to be used in, or necessary to, the businesses of GCo
and its Subsidiaries as currently conducted or as currently reasonably
contemplated by GCo and its Subsidiaries, whether owned or controlled, licensed,
or otherwise held by or for the benefit of GCo or its Subsidiaries, including
without limitation the Registered Intellectual Property Rights.
"GCo Nominees" shall have the meaning set forth in Section 4.6;
"GCo Options" shall have the meaning set forth in Section 2.2;
"GCo Property Permitted Encumbrances" shall have the meaning set forth in
Section 2.16;
"GCo Property" shall have the meaning set forth in Section 2.16;
"GCo Securities" shall have the meaning set forth in Section 2.2;
"GCo Series 2 Preferred Shares" shall have the meaning set forth in Section
2.2;
"GCo Shareholders Meeting" shall mean the special meeting of holders of GCo
Common Shares, including any adjournment thereof, to be called to consider the
Arrangement;
"GCo Statement of Cash Flows" shall have the meaning set forth in Section
2.8(b);
"GCo Statement of Operations" shall have the meaning set forth in Section
2.8(b);
"GCo Technology" shall mean all Technology used or proposed to be used in,
or necessary to, the businesses of GCo and its subsidiaries as currently
conducted or as currently contemplated by GCo and its subsidiaries, whether
owned or controlled, licensed or otherwise held by or for the benefit of GCo or
its subsidiaries;
"Governmental Entity" shall mean any (a) multinational, federal,
provincial, state, regional, municipal, local or other government, governmental
or public department, central bank, court, tribunal, arbitral body, commission,
board, bureau or agency, domestic or foreign, (b) any subdivision, agent,
commission, board, or authority of any of the foregoing or (c) any
quasi-governmental or private body exercising any regulatory, expropriation or
taxing authority under or for the account of any of the foregoing;
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"Hazardous Substance" means any material, substance, waste, pollutant or
contaminant listed, defined, designated or classified as hazardous, toxic,
flammable, explosive, reactive, corrosive, infectious, carcinogenic, mutagenic
or radioactive or otherwise regulated by any Governmental Entity or under any
Applicable Environmental Law, including petroleum or petroleum products
(including crude oil) and any derivative or by-products thereof, natural gas,
synthetic gas and any mixtures thereof, or any substance that is or contains
polychlorinated biphenyls (PCBs), radon gas, urea formaldehyde,
asbestos-containing materials (ACMs) or lead;
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended;
"Indemnified Party" shall have the meaning set forth in Section 7.5(a);
"Intellectual Property Rights" shall mean, collectively, Patents, Trade
Secrets, Copyrights, Trademarks, mask work rights, rights in integrated circuit
topographies, industrial design rights, and all other intellectual property
rights and proprietary rights, whether arising under the laws of the United
States, Canada or any other country or jurisdiction, including (i) all rights
received under any licence or other arrangement with respect to the foregoing,
(ii) all rights or causes of action for infringement or misappropriation (past,
present or future) of any of the foregoing and (iii) all rights to apply for or
register any of the foregoing rights;
"Interim Order" shall have the meaning set forth in Section 1.1;
"IRS" shall have the meaning set forth in Section 2.19(b);
"Joint Proxy Statement" shall have the meaning set forth in Section 1.5(a);
"Laws" shall mean all statutes, regulations, statutory rules, principles of
law, orders, published policies and guidelines, and terms and conditions of any
grant of approval, permission, authority or licence of any court, Governmental
Entity, statutory body (including The Toronto Stock Exchange or the Nasdaq
National Market) or self-regulatory authority, and the term "applicable" with
respect to such Laws and in the context that refers to one or more Persons,
means that such Laws apply to such Person or Persons or its or their business,
undertaking, property or securities and emanate from a Person having
jurisdiction over the Person or Persons or its or their business, undertaking,
property or securities;
"Material Adverse Change" shall have the meaning set forth in Section
1.6(b);
"Material Adverse Effect" shall have the meaning set forth in Section
1.6(a);
"Material Contract" shall mean, with respect to QCo or GCo:
(a) any contract not made in the ordinary course of business which is
material to such person or its subsidiaries, including any such contract to
which such person or subsidiary has succeeded by assumption or assignment or in
which such person or subsidiary has a beneficial interest;
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(b) any contract to which such person's directors, officers,
promoters, voting trustees, or security holders are parties;
(c) any contract upon which the business of such person is
substantially dependent, as in the case of continuing contracts to sell the
major part of such person's products or services or to purchase the major part
of such person's requirements of goods, services or raw materials or any
franchise or license or other agreement to use a patent, formula, trade secret,
process or trade name upon which such person's business depends to a material
extent;
(d) any contract calling for the acquisition or sale of any property,
plant or equipment for a consideration exceeding 15 percent of such fixed assets
of the person on a consolidated basis;
(e) any material lease under which a part of the party's property is
held by such person; or
(f) any management contract or any compensatory plan, contract or
arrangement, including but not limited to plans relating to options, warrants or
rights, pension, retirement or deferred compensation or bonus, incentive or
profit sharing in which any director or any of the executive officers of the
person, participates, except for any compensatory plan, contract or arrangement
which pursuant to its terms is available to employees, officers or directors
generally and which in operation provides for the same method of allocation of
benefits between management and nonmanagement participants;
"Measurement Period" shall mean the twenty consecutive trading days ending
on the third trading day next preceding the date of the GCo Shareholders
Meeting;
"Moral Rights" shall mean any right to claim authorship of a work, any
right to object to any distortion or other modification of a work, and any
similar right, existing under the Law of any country or under any treaty;
"Nasdaq" shall have the meaning set forth in Section 3.4(a);
"Patents" shall mean all patent rights and all right, title and interest in
and to all letters patent or equivalent rights and applications, including any
reissue, extension, division, continuation, or continuation in part applications
throughout the world and any patents issuing with respect to any such
applications;
"Person" or "Persons" shall mean any individual, firm, partnership, joint
venture, venture capital fund, association, trust, trustee, executor,
administrator, legal personal representative, estate, group, body corporate,
corporation, unincorporated association or organization, Governmental Entity,
syndicate or other entity, whether or not having legal status;
"Plan of Arrangement" shall have the meaning set forth in Section 1.1;
"QCo Balance Sheet" shall have the meaning set forth in Section 3.8(b);
"QCo Comfort Letter" shall have the meaning set forth in Section 4.5(b);
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"XXx Xxxxxx Xxxxx" shall have the meaning set forth in Section 3.2(a);
"QCo Disclosure Letter" shall mean the QCo letter dated the date of this
Agreement and delivered by QCo to GCo concurrently herewith;
"QCo Documents" shall have the meaning set forth in Section 3.7(a);
"QCo Employee Plans" shall have the meaning set forth in Section 3.22(a);
"QCo Employees" shall have the meaning set forth in Section 3.21;
"QCo Financial Statements" shall have the meaning set forth in Section
3.8(b);
"QCo Incentive Plan" shall have the meaning set forth in Section 3.2(a);
"QCo Intellectual Property Rights" shall mean all Intellectual Property
Rights used or proposed to be used in, or necessary to, the businesses of QCo
and its Subsidiaries as currently conducted or as currently reasonably
contemplated by QCo and its Subsidiaries, whether owned or controlled, licensed,
or otherwise held by or for the benefit of QCo or its Subsidiaries, including
without limitation the Registered Intellectual Property Rights;
"QCo Licensed Intellectual Property" shall have the meaning set forth in
Section 3.6(b)(i);
"QCo Options" shall have the meaning set forth in Section 3.2(a);
"QCo Preferred Stock" shall have the meaning set forth in Section 3.2(a);
"QCo Property" shall have the meaning set forth in Section 3.16;
"QCo Property Permitted Encumbrances" shall have the meaning set forth in
Section 3.16;
"QCo Securities" shall have the meaning set forth in Section 3.2(a);
"QCo Series A Stock" shall have the meaning set forth in Section 3.2(a);
"QCo Series B Stock" shall have the meaning set forth in Section 3.2(a);
"QCo Statement of Cash Flows" shall have the meaning set forth in Section
3.8(b);
"QCo Statement of Operations" shall have the meaning set forth in Section
3.8(b);
"QCo Stock Price" shall have the meaning set forth in Section 1.2(b);
"QCo Stockholders Meeting" shall have the meaning set forth in Section
1.5(a);
"QCo Technology" shall mean all Technology used or proposed to be used in,
or necessary to, the businesses of QCo and its subsidiaries as currently
conducted or as currently
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contemplated by QCo and its subsidiaries, whether owned or controlled, licensed
or otherwise held by or for the benefit of QCo or its subsidiaries;
"Registered Intellectual Property Rights" means all (i) Patents; (ii)
registered Trademarks, applications to register Trademarks, including
intent-to-use applications or proposed use applications, or other registrations
or applications related to Trademarks; (iii) Copyright registrations and
applications to register Copyrights; (iv) mask work or integrated circuit
topography registrations and applications to register mask works or integrated
circuit topographies; and (v) any other Intellectual Property Rights that are
the subject of an application certificate, filing, registration or other
document issued by, filed with, or recorded by, any state, government or other
public legal authority at any time;
"Registrar" shall mean the Registrar appointed pursuant to Section 263 of
the ABCA;
"Release" shall mean any releasing, spilling, leaking, pumping, pouring,
placing, emitting, emptying, discharging, injecting, escaping, leaching,
disposing, or dumping into the environment, whether intentional or
unintentional, negligent or non-negligent, sudden or non-sudden, accidental or
non-accidental.
"Representatives" shall have the meaning set forth in Section 4.1(f);
"SEC Filings" shall mean reports and information furnished or filed with
the SEC under the Exchange Act and the rules and regulations promulgated by the
SEC thereunder, as may be required in connection with this Agreement and the
transactions contemplated hereby;
"SEC" shall have the meaning set forth in Section 1.1;
"Securities Act" shall have the meaning set forth in Section 1.5(a);
"SEDAR" shall mean System for Electronic Document Analysis and Retrieval;
"Special Voting Share" shall mean the share of special voting stock of QCo
having substantially the rights, privileges, restrictions and conditions
described in the Voting and Exchange Trust Agreement;
"Superior Proposal" shall have the meaning set forth in Section 4.1(f);
"Tax" and "Taxes" shall mean, with respect to any entity, (A) 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, withholding taxes, payroll taxes, employment taxes, Canada
or Quebec Pension Plan premiums, excise, severance, social security premiums,
workers' compensation premiums, unemployment insurance or compensation premiums,
stamp taxes, occupation taxes, premium taxes, property taxes, windfall profits
taxes, alternative or add-on minimum taxes, goods and services tax, customs
duties or other taxes, fees, imports, 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,
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penalties, additional taxes and additions to tax imposed with respect to the
foregoing, and (B) any liability for the payment of any amount of the type
described in the immediately preceding clause (A) as a result of being a
"transferee" (within the meaning of section 6901 of the Code or any other
applicable Laws) of another entity or a member of an affiliated or combined
group;
"Tax Act" shall mean the Income Tax Act (Canada);
"Tax Returns" shall mean all returns, declarations, reports, information
returns and statements required to be filed with any taxing authority relating
to Taxes (including any attached schedules), including, without limitation, any
information return, claim for refund, amended return and declaration of
estimated Tax;
"Technology" shall mean any algorithms, computer software (in source code
and object code form), documentation, data and data bases, inventions and
discoveries (whether or not patented or patentable), ideas, concepts,
techniques, know-how, processes, methods, applications, know-how, content,
technical information, engineering, production and other designs, drawings,
schematics, specifications, formulas and all other technology or information
existing anywhere in the world;
"Termination Date" shall have the meaning set forth in Section 6.1(d);
"Third Party Intellectual Property Rights" shall mean, as to any Person,
the Intellectual Property Rights and Technology of other Persons that are used
in or necessary to the business of such Person;
"Trade Secrets" shall mean all right, title and interest in all trade
secrets and trade secret rights arising under any Law, including common law,
state law, federal law or laws of foreign countries;
"Trademarks" shall mean all trademarks, service marks, trade names, trade
designations, trade dress and domain names and associated goodwill and all
right, title and interest in or to the foregoing arising under common law, state
law, federal law or laws of foreign countries, registrations and applications
for registrations thereof, and all right, title and interest in related
applications and registrations throughout the world.
"TSX" shall mean the Toronto Stock Exchange; and
"Ultimate Parent Entity" shall have the meaning set forth in 16
C.F.R. (ss) 801.1(a)(3).
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