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SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT is entered into as of September 29,
1997, between the ForeFront Group, Inc., a Delaware corporation ("ParentCo"),
and LanProfessional Inc., a corporation incorporated under the laws of Canada
(the "Corporation").
RECITALS
WHEREAS, pursuant to an Acquisition Agreement dated as of
September 29, 1997, by and between ParentCo, the Corporation and the Vendors, as
defined therein, (such agreement as it may be amended or restated is hereinafter
referred to as the "Acquisition Agreement") the parties agreed that on the
closing of the transaction contemplated under the Acquisition Agreement,
ParentCo and the Corporation would execute and deliver a Support Agreement
containing the terms and conditions set forth in an Exhibit to the Acquisition
Agreement together with such other terms and conditions as may be agreed to by
the parties to the Acquisition Agreement acting reasonably.
AND WHEREAS, pursuant to the Acquisition Agreement, the
Corporation issued certain exchangeable shares (the "Exchangeable Shares")
having attached thereto certain rights, privileges, restrictions and conditions
(collectively, the "Exchangeable Share Provisions").
AND WHEREAS, the parties hereto desire to make appropriate
provision and to establish a procedure whereby ParentCo will take certain
actions and make certain payments and deliveries necessary to ensure that the
Corporation will be able to make certain payments and to deliver or cause to be
delivered ParentCo Common Shares in satisfaction of the obligations of the
Corporation under the Exchangeable Share Provisions with respect to the payment
and satisfaction of dividends, Liquidation Amounts, Retraction Prices and
Redemption Prices, all in accordance with the Exchangeable Share Provisions.
NOW, THEREFORE, in consideration of the respective covenants
and agreements provided in this agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties agree as follows:
ARTICLE 1.
DEFINITIONS AND INTERPRETATION
1.1 Defined Terms. Each term denoted herein by initial capital letters and not
otherwise defined herein shall have the meaning attributed thereto in the
Exchangeable Share Provisions or in the Exchange Rights Agreement, unless the
context requires otherwise.
1.2 Interpretation Not Affected by Headings, Etc. The division of this agreement
into articles,
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sections and paragraphs and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
agreement.
1.3 Number, Gender, Etc. Words importing the singular number only shall include
the plural and vice versa. Words importing the use of any gender shall include
all genders.
1.4 Date for Any Action. If any date on which any action is required to be taken
under this agreement is not a Business Day, such action shall be required to be
taken on the next succeeding Business Day.
ARTICLE 2.
COVENANTS OF PARENTCO AND THE CORPORATION
2.1 Covenants of ParentCo Regarding Exchangeable Shares. So long as any
Exchangeable Shares are outstanding, and, subject to Section 3.2 of the
Exchangeable Share Provisions, ParentCo will:
(a) not declare or pay any dividend on ParentCo Common Shares
unless (A) the Corporation will have sufficient assets, funds
and other property available to enable the due declaration and
the due and punctual payment in accordance with applicable law
of an equivalent dividend on the Exchangeable Shares and (B)
subsection 2.1(b) shall be complied with in connection with
such dividend;
(b) cause the Corporation to declare simultaneously with the
declaration of any dividend on ParentCo Common Shares an
equivalent dividend on the Exchangeable Shares and, when such
dividend is paid on ParentCo Common Shares, cause the
Corporation to pay simultaneously therewith such equivalent
dividend on the Exchangeable Shares, in each case in
accordance with the Exchangeable Share Provisions;
(c) advise the Corporation sufficiently in advance of the
declaration by ParentCo of any dividend on ParentCo Common
Shares and take all such other actions as are necessary, in
cooperation with the Corporation, to ensure that the
respective declaration date, record date and payment date for
a dividend on the Exchangeable Shares shall be the same as the
record date, declaration date and payment date for the
corresponding dividend on ParentCo Common Shares;
(d) take all such actions and do all such things as are necessary
or desirable to enable and permit the Corporation, in
accordance with applicable law, to pay and otherwise perform
its obligations with respect to the satisfaction of the
Exchangeable Share Consideration representing the Liquidation
Amount in respect of each issued and outstanding Exchangeable
Share upon the liquidation,
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dissolution or winding-up of the Corporation or any other
distribution of the assets of the Corporation for the purpose
of winding up its affairs, including without limitation all
such actions and all such things as are necessary or desirable
to enable and permit the Corporation to cause to be delivered
ParentCo Common Shares to the holders of Exchangeable Shares
in accordance with the provisions of Article 5 of the
Exchangeable Share Provisions;
(e) take all such actions and do all such things as are
necessary or desirable to enable and permit the Corporation,
in accordance with applicable law, to pay and otherwise
perform its obligations with respect to the satisfaction of
the Exchangeable Share Consideration representing the
Retraction Price and the Redemption Price, including without
limitation all such actions and all such things as are
necessary or desirable to enable and permit the Corporation to
cause to be delivered ParentCo Common Shares to the holders of
Exchangeable Shares, upon the retraction or redemption of the
Exchangeable Shares in accordance with the provisions of
Article 6 or Article 7 of the Exchangeable Share Provisions,
as the case may be; and
(f) not prior to the fifth anniversary of the Effective Date
exercise its vote as a shareholder to initiate the voluntary
liquidation, dissolution or winding-up of the Corporation nor
take any action or omit to take any action that is designed to
result in the liquidation, dissolution or winding-up of the
Corporation.
2.2 Reservation of ParentCo Common Shares. ParentCo hereby represents, warrants
and covenants that it has irrevocably reserved for issuance and will at all
times keep available, free from pre-emptive and other rights, out of its
authorized and unissued capital shares such number of ParentCo Common Shares (or
other shares or securities into which ParentCo Common Shares may be reclassified
or changed as contemplated by section 2.6 hereof) (a) as is equal to the sum of
(i) the number of Exchangeable Shares issued and outstanding from time to time
and (ii) the number of Exchangeable Shares issuable upon the exercise of all
rights to acquire Exchangeable Shares outstanding from time to time and (b) as
are now and may hereafter be required to enable and permit the Corporation to
meet its obligations hereunder, under the Exchange Rights Agreement and under
the Exchangeable Share Provisions with respect to which ParentCo may now or
hereafter be required to issue ParentCo Common Shares.
2.3 Notification of Certain Events. In order to assist ParentCo to comply with
its obligations hereunder, the Corporation will give ParentCo notice of each of
the following events at the time set forth below:
(a) in the event of any determination by the Board of Directors of
the Corporation in accordance with the Articles of the
Corporation to institute voluntary liquidation, dissolution or
winding-up proceedings with respect to the Corporation or to
effect any other distribution of the assets of the Corporation
among its shareholders for
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the purpose of winding-up its affairs, at least 20 days prior
to the proposed effective date of such liquidation,
dissolution, winding-up or other distribution;
(b) immediately, upon the earlier of (i) receipt by the
Corporation of notice of, and (ii) the Corporation otherwise
becoming aware of instituted claim, suit, petition or other
proceedings with respect to the involuntary liquidation,
dissolution or winding-up of the Corporation or to effect any
other distribution of the assets of the Corporation among its
shareholders for the purpose of winding-up its affairs;
(c) immediately, upon receipt by the Corporation of a Retraction
Request (as defined in the Exchangeable Share Provisions);
(d) at least 20 days prior to any accelerated Automatic Redemption
Date determined by the Board of Directors of the Corporation
in accordance with the Exchangeable Share Provisions; and
(e) as soon as practicable upon the issuance by the Corporation of
any Exchangeable Shares or rights to acquire Exchangeable
Shares.
2.4 Delivery of ParentCo Common Shares. In furtherance of its obligations
hereunder, upon notice of any event which requires the Corporation to cause to
be delivered ParentCo Common Shares to any holder of Exchangeable Shares,
ParentCo shall forthwith issue and deliver the requisite ParentCo Common Shares
to or to the order of the former holder of the surrendered Exchangeable Shares,
as the Corporation shall direct. All such ParentCo Common Shares shall be duly
issued as fully paid and non-assessable and shall be free and clear of any lien,
claim, encumbrance, security interest or adverse claim or interest.
2.5 Qualification of ParentCo Common Shares. ParentCo shall, at all times
following the issue of the ParentCo Common Shares and expiration of the LockUp
Agreement (as defined in the Acquisition Agreement), use good faith to cooperate
with the Corporation to ensure that the ParentCo Common Shares shall be eligible
for resale under an available exemption from registration under United States
securities laws, including removing any legends which are no longer applicable
upon written request from the Vendors, and providing necessary legal opinions to
the transfer agent on a timely basis. Should the parties determine, either
before or after the issue of the ParentCo Common Shares and the expiration of
the LockUp Agreement, that there are no available exemptions from registration
relating to the resale of the ParentCo Common Shares, then in such instance
ParentCo on ten days written notice from any Vendor shall execute the
Registration Rights Agreement between ParentCo and the Vendors in the form
attached as Exhibit J to the Acquisition Agreement, and subject to execution by
the Vendors, prepare and file a registration statement pursuant to the terms
thereof at least 30 days prior to the expiration or earlier termination of the
LockUp Agreement.
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2.6 Equivalence. ParentCo hereby covenants and agrees to cause the Corporation
to effect the necessary amendments to the Articles of the Corporation to ensure
that the Exchangeable Shares are adjusted to fully reflect the effect of any
stock split, reverse split, stock dividend (including any dividend or
distribution of securities convertible into ParentCo Common Shares),
reorganization, recapitalization or other like change with respect to ParentCo
Common Stock occurring after the Effective Date.
2.7 Tender Offers, Etc. In the event that a tender offer, share exchange offer,
issuer bid, take-over bid or similar transaction with respect to ParentCo Common
Shares (an "Offer") is proposed by ParentCo or is proposed to ParentCo or its
shareholders and is recommended by the Board of Directors of ParentCo, or is
otherwise effected or to be effected with the consent or approval of the Board
of Directors of ParentCo, ParentCo shall, in good faith, take all such actions
and do all such things as are necessary or desirable to enable and permit
holders of Exchangeable Shares to participate in such Offer to the same extent
and on an equivalent basis as the holders of ParentCo Common Shares, without
discrimination, including, without limiting the generality of the foregoing,
ParentCo will use its good faith efforts expeditiously to (and shall, in the
case of a transaction proposed by ParentCo or where ParentCo is a participant in
the negotiation thereof) ensure that holders of Exchangeable Shares may
participate in all such Offers without being required to retract Exchangeable
Shares as against the Corporation (or, if so required, to ensure that any such
retraction shall be effective only upon, and shall be conditional upon, the
closing of the Offer and only to the extent necessary to tender or deposit to
the Offer). If, on the happening of such event, a holder is required to retract
or exchange his or her Exchangeable Shares, such requirement shall be
conditional on ParentCo releasing the holders from the LockUp Agreement, as
defined in the Acquisition Agreement, and on the holders being in the same
position with respect to the sale of ParentCo Common Shares or stock issued in
substitution therefor after the retraction or exchange of Exchangeable Shares as
all other holders of Common Stock of ParentCo or such substituted stock.
2.8 Ownership of Outstanding Shares. Without the prior approval of the
Corporation and the prior approval of the holders of the Exchangeable Shares
given in accordance with Section 10.1 of the Exchangeable Share Provisions,
ParentCo covenants and agrees in favour of the Corporation that, as long as any
outstanding Exchangeable Shares are owned by any person or entity other than
ParentCo or any of its Subsidiaries, ParentCo will be and remain the direct or
indirect beneficial owner of more than 50% of all securities of the Corporation
carrying or entitled to voting rights in any circumstances generally for the
election of directors, in each case other than the Exchangeable Shares.
Notwithstanding the foregoing sentence, ParentCo shall not be in violation of
this section 2.8 if any person or group of persons acquires ParentCo Common
Shares pursuant to any merger of ParentCo in which ParentCo was not the
surviving corporation.
2.9 Due Performance. On and after the Effective Date, ParentCo shall duly and
timely perform all of its obligations under the Acquisition Agreement and
related agreements including any obligations that may arise upon the exercise of
ParentCo's rights under the Exchangeable Share Provisions.
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ARTICLE 3.
EXCHANGE PUT RIGHT
3.1 Exchange Put Right. Upon and subject to the terms and conditions contained
in the Exchangeable Share Provisions and the Exchange Rights Agreement:
(a) a holder of Exchangeable Shares shall have the right (the
"Exchange Put Right") at any time to require ParentCo to
purchase all or any part of the Exchangeable Shares of the
holder; and
(b) upon the exercise by the holder of the Exchange Put Right, the
holder shall be required to sell to ParentCo, and ParentCo
shall be required to purchase from the holder, that number of
Exchangeable Shares in respect of which the Exchange Put Right
is exercised, in consideration of the payment by ParentCo of
the Exchangeable Share Price applicable thereto and delivery
by or on behalf of ParentCo of the Exchangeable Share
Consideration representing the total applicable Exchangeable
Share Price.
ARTICLE 4.
GENERAL
4.1 Term. This agreement shall come into force and be effective as of the date
hereof and shall terminate and be of no further force and effect at such time as
no Exchangeable Shares (or securities or rights convertible into or exchangeable
for or carrying rights to acquire Exchangeable Shares) are held by any party
other than ParentCo and any of its Subsidiaries.
4.2 Changes in Capital of ParentCo and the Corporation. Notwithstanding the
provisions of section 4.4 hereof, at all times after the occurrence of any event
effected pursuant to Section 2.6 or 2.7 hereof, as a result of which either
ParentCo Common Shares or the Exchangeable Shares or both are in any way
changed, this agreement shall forthwith be amended and modified as necessary in
order that it shall apply with full force and effect, mutatis mutandis, to all
new securities into which ParentCo Common Shares or the Exchangeable Shares or
both are so changed, and the parties hereto shall execute and deliver an
agreement in writing giving effect to and evidencing such necessary amendments
and modifications.
4.3 Severability. If any provision of this agreement is held to be invalid,
illegal or unenforceable, the validity, legality or enforceability of the
remainder of this agreement shall not in any way be affected or impaired thereby
and this agreement shall be carried out as nearly as possible in accordance with
its original terms and conditions.
4.4 Amendments, Modifications, Etc. This agreement may not be amended or
modified except by an agreement in writing executed by the Corporation and
ParentCo and approved by the
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holders of the Exchangeable Shares in accordance with Section 10.1 of the
Exchangeable Share Provisions.
4.5 Ministerial Amendments. Notwithstanding the provisions of Section 4.4
hereof, the parties to this agreement may in writing, at any time and from time
to time, without the approval of the holders of the Exchangeable Shares, amend
or modify this agreement for the purposes of:
(a) adding to the covenants of either or both parties for the
protection of the holders of the Exchangeable Shares;
(b) making such amendments or modifications not inconsistent with
this agreement as may be necessary or desirable with respect
to matters or questions which, in the opinion of the board of
directors of each of the Corporation and ParentCo, it may be
expedient to make, provided that each such board of directors
shall be of the opinion that such amendments or modifications
will not be prejudicial to the interests of the holders of the
Exchangeable Shares; or
(c) making such changes or corrections which, on the advice of
counsel to the Corporation and ParentCo, are required for the
purpose of curing or correcting any ambiguity or defect or
inconsistent provision or clerical omission or mistake or
manifest error; provided that the boards of directors of each
of the Corporation and ParentCo shall be of the opinion that
such changes or corrections will not be prejudicial to the
interests of the holders of the Exchangeable Shares.
4.6 Meeting to Consider Amendments. The Corporation, at the request of ParentCo,
shall call a meeting or meetings of the holders of the Exchangeable Shares for
the purpose of considering any proposed amendment or modification requiring
approval of such shareholders. Any such meeting or meetings shall be called and
held in accordance with the by-laws of the Corporation, the Exchangeable Share
Provisions and all applicable laws.
4.7 Amendments Only in Writing. No amendment to or modification or waiver of any
of the provisions of this agreement otherwise permitted hereunder shall be
effective unless made in writing and signed by both of the parties hereto.
4.8 Enurement. This agreement shall be binding upon and enure to the benefit of
the parties hereto and the holders, from time to time, of Exchangeable Shares
and each of their respective heirs, successors and assigns.
4.9 Notices to Parties. All notices and other communications between the parties
shall be in writing and shall be deemed to have been given if delivered
personally or by confirmed telecopy to the parties at the following addresses
(or at such other address for either such party as shall be specified in like
notice):
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(a) if to ParentCo to:
c/o The ForeFront Group, Inc.
0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Secretary
Fax: (000) 000-0000
Tel: (000) 000-0000
(b) if to the Corporation to:
c/o The ForeFront Group, Inc.
0000 Xxxx Xxx Xxxxxxxxx,
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Secretary
Fax: (000) 000-0000
Tel: (000) 000-0000
Except as otherwise specifically provided herein, any notice or other
communication given personally shall be deemed to have been given and received
upon delivery thereof and if given by telecopy shall be deemed to have been
given and received on the date of confirmed receipt thereof, unless such day is
not a Business Day, in which case it shall be deemed to have been given and
received upon the immediately following Business Day.
4.10 Counterparts. This agreement may be executed in counterparts, each of which
shall be deemed an original, and all of which taken together shall constitute
one and the same instrument.
4.11 Jurisdiction. This agreement shall be construed and enforced in accordance
with the laws of the Province of Ontario and the laws of Canada applicable
therein.
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IN WITNESS WHEREOF, ParentCo and the Corporation have caused this
agreement to be signed by their respective officers thereunder duly authorized,
all as of the date first written above.
THE FOREFRONT GROUP, INC.
/S/ Xxxxx Xxxxxx
By: Xxxxx Xxxxxx
LANPROFESSIONAL INC.
/s/ Xxxxx Xxxxxx
By: Xxxxx Xxxxxx
