Execution Copy
COMBINATION AGREEMENT
AMONG
TRANSACTION SYSTEMS ARCHITECTS, INC.,
TRANSACTION SYSTEMS ARCHITECTS NOVA SCOTIA COMPANY,
TSA EXCHANGECO LIMITED
AND
MESSAGINGDIRECT LTD.
Execution Copy
COMBINATION AGREEMENT
COMBINATION AGREEMENT, dated as of October 24, 2000, among Transaction
Systems Architects, Inc., a Delaware corporation ("TSA"), Transaction Systems
Architects Nova Scotia Company, a Nova Scotia unlimited company ("TSA Holdco"),
TSA Exchangeco Limited, a Nova Scotia limited company ("TSA Exchangeco") and
MessagingDirect Ltd., an Alberta corporation ("MDL").
RECITALS
WHEREAS, the respective boards of directors of TSA, TSA Holdco, TSA
Exchangeco and MDL deem it advisable and in the best interests of their
respective shareholders to combine their respective businesses by TSA Exchangeco
acquiring shares of MDL pursuant to this Agreement and the Plan of Arrangement;
WHEREAS, in furtherance of such combination, the respective boards of
directors of TSA and MDL have approved the transactions contemplated by this
Agreement and the board of directors of MDL has agreed to submit the Plan of
Arrangement and the other transactions contemplated hereby to its shareholders
and the Court of Queen's Bench of Alberta for approval;
WHEREAS, concurrently with the execution of this Agreement, the MDL
Principal Securityholders have executed a Principal Securityholders' Agreement,
agreeing, among other things, to vote in favor of the Plan of Arrangement and
the transactions contemplated by this Agreement;
WHEREAS, the transactions contemplated by this Agreement and the Plan
of Arrangement are structured in a manner to meet the requirements of Section 85
of the Income Tax Act (Canada) for the purpose of: (1) permitting the deferral
of tax by the Canadian resident shareholders of MDL; and (2) meeting the
requirements of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Internal Revenue Code,
including the transfer of certain non-voting preferred stock to one or more
third parties for the purpose of permitting TSA Exchangeco to obtain a step-up
in the tax basis of the assets of MDL; and
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and covenants made by each to the other as an
inducement to the consummation of the Plan of Arrangement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
INTERPRETATION
1.1 Definitions
Unless the context otherwise requires, the terms defined below in this
Article I shall have, for the purposes of this Agreement, the respective
meanings set forth below:
"ABCA" means the Business Corporations Act (Alberta), S.A. 1981, c. B-15;
"Additional Consideration" has the meaning ascribed thereto in Subsection
2.2(f);
"Affiliate" has the meaning ascribed to that term in the ABCA;
"Affiliate Letter" means a letter whereby SEC Affiliates of MDL make certain
investment representations and acknowledge certain restrictions under applicable
securities Laws on the resale of the securities issuable pursuant to the Plan of
Arrangement, substantially in the form attached as Exhibit 9.9(a);
"Agreement" means this Combination Agreement together with the MDL Disclosure
Letter and all Exhibits thereto;
"Alternative Proposal Fee" means an amount equal to the lesser of: (a)
$2,400,000.00, or (b) five percent (5%) of the product derived by multiplying
3,357,500 by the Average Trading Price, which amount is in addition to the TSA
Expenses;
"Ancillary Agreements" means the Principal Securityholders' Agreement, the
Support Agreement, the Voting and Exchange Trust Agreement and the Escrow
Agreement;
"Arrangement" means the arrangement contemplated by the Plan of Arrangement;
"Articles of Arrangement" mean the articles of arrangement of MDL to be filed
pursuant to Section 186 of the ABCA;
"Associate" has the meaning ascribed to that term in the ABCA;
"Average Trading Price" means the simple average of the closing sale price of a
TSA Class A Common Share as reported by the National Association of Securities
Dealers on the NASDAQ for the thirty (30) consecutive trading days immediately
preceding two (2) trading days prior to the MDL Securityholders' Meeting;
"Business Combination Transaction" means any of the following involving MDL but
not involving TSA or its Affiliates as the other party to such transaction: (1)
any merger, amalgamation, consolidation, share exchange, business combination or
other similar transaction; (2) except as set forth in the letter from MDL to TSA
dated October 22, 2000, any sale, lease, exchange, transfer or other disposition
(other than a pledge or mortgage) of 90% or more of the assets of MDL or
MessagingDirect (UK) Limited (other than MDL IP Rights) or any MDL IP Rights
having a value in excess of $7,500,000.00 in a single transaction or series of
transactions; or (3) the acquisition by a Person or any "group" (as such term is
defined under Section 13(d) of the Exchange Act) of beneficial ownership of 25%
or more of the then issued and outstanding MDL Class A Shares or other voting or
equity interests of MDL or the shares of MessagingDirect (UK) Limited whether by
tender offer, take-over bid or otherwise;
"Business Day" means any day, other than a Saturday, a Sunday or a day which is
a statutory or civic holiday in the Province of Alberta or the State of
Nebraska;
"Canadian Dollar Equivalent" means in respect of an amount expressed in currency
other than Canadian dollars (the "Foreign Currency Amount") on any date, the
product obtained by multiplying (a) the Foreign Currency Amount by (b) the noon
spot exchange rate on such date for such foreign currency expressed in Canadian
dollars as reported by the Bank of Canada or, in the event such spot exchange
rate is not available, such exchange rate on such date for such foreign currency
expressed in Canadian dollars as may be deemed by the board of directors of TSA
Exchangeco to be appropriate for such purpose;
"Canadian Generally Accepted Accounting Principles" or "Canadian GAAP" means
such recommendations as the Canadian Institute of Chartered Accountants includes
in its handbook concerning accounting treatment or statement of presentation;
"Canadian Prospectus" means a preliminary prospectus or prospectus filed or to
be filed with any securities commission or regulatory authority in any province
or territory of Canada;
"Canadian Resident" means a resident of Canada for the purposes of the ITA;
"Closing" means the closing of the transactions contemplated herein on the
Closing Date;
"Closing Date" means the date determined in accordance with Section 7.1 or such
earlier or later date as may be agreed upon by the parties;
"Code" means the United States Internal Revenue Code of 1986;
"Compensation Warrants" means the warrants issued by MDL to Yorkton Securities
Inc., the particulars of which are listed in Subsection 3.2(a) of the MDL
Disclosure Letter;
"Court" means the Court of Queen's Bench of Alberta;
"Design Documentation" means any documentation, specifications, manuals, user
guides, promotional material, internal notes and memos, technical documentation,
drawings, flow charts, diagrams, source language statements, demo disks,
benchmark test results, and other written materials related to, associated with
or used or produced in the development of any of the software products of the
MDL Companies;
"Distribution Agreement" means the distribution agreement between MDL and TSA or
a TSA Affiliate dated as of October 24, 2000;
"Dollars" or "$" means United States dollars except where Canadian funds are
expressly indicated;
"Effective Date" means the date that the Articles of Arrangement are filed
pursuant to the ABCA;
"Effective Time" means 12:01 a.m. (Edmonton, Alberta time) on the Effective
Date;
"Employees" or "Employee" means any active or inactive person or individual,
including any officer, independent or dependent contractor employed or engaged
by a MDL Company;
"Encumbrance" means any security interest, lien, charge, pledge, encumbrance,
mortgage, hypothec, lease, adverse claim, or title retention agreement of any
nature or kind;
"Escrow Agent" means Xxxxx Fargo Bank Minnesota, N.A. as designated under the
Escrow Agreement;
"Escrow Agreement" means the agreement to be entered into on the Closing Date
among the TSA Companies, the Indemnifying Shareholders, the Shareholder Agent
(as such term is defined therein) and the Escrow Agent, substantially in the
form attached as Exhibit 2.4;
"Escrowed Shares" means 20% of the aggregate number of Exchangeable Shares and
TSA Class A Common Shares delivered by TSA Exchangeco on the Effective Date as
consideration for MDL Class A Shares pursuant to the Arrangement;
"Exchange Act" means the United States Securities Exchange Act of 1934;
"Exchange Ratio" means the number which equals the quotient derived by dividing
3,157,500 by the Fully-Diluted Share Capital, subject to adjustment pursuant to
Section 2.7 (Adjustment for Exchange Ratio Prior to Effective Date);
"Exchangeable Shares" has the meaning ascribed to such term in the Plan of
Arrangement attached hereto;
"Fully-Diluted Share Capital" means the sum of (i) the outstanding MDL Class A
Shares, plus (ii) the MDL Class A Shares issuable upon exercise of the MDL
Options less the quotient derived by dividing (A) the aggregate exercise price
for the MDL Class A Shares purchasable under such MDL Options by (B) the product
derived by multiplying (I) the Exchange Ratio by (II) the Average Trading Price,
plus (iii) the MDL Class A Shares issuable upon conversion and exchange of the
Stonebridge Options and the Compensation Warrants pursuant to Subsection 2.2(b).
For the purposes of this calculation, all dollar amounts shall be calculated
using Canadian dollars or the Canadian Dollar Equivalent.
"Governmental Entity" means any court, tribunal, administrative agency,
regulatory body or commission or other governmental authority or
instrumentality, whether federal, provincial, state, local or other and whether
domestic or foreign and for greater certainty shall include securities
commissions and regulatory authorities in each Canadian province or territory;
"Hazardous Materials" means any pollutant, contaminant, hazardous or toxic
material, regulated biological, chemical or physical agents used, treated,
stored, processed, generated, manufactured, disposed, handled, transported,
released, spilled, produced, discharged or emitted by any Person;
"HSR Act" means the United States Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976;
"Indemnifying Shareholders" means all MDL Securityholders who receive either
Exchangeable Shares or TSA Class A Common Shares under the Plan of Arrangement
at the Effective Time;
"Intellectual Property Rights" means all worldwide industrial and intellectual
property rights, including, without limitation, patents, patent applications,
patent rights, software (including source code and object code form),
nonproductized software technology, trademarks, trademark applications, trade
names, service marks, service xxxx applications, copyright, copyright
applications, mask works, franchises, licenses, know-how, trade secrets,
customer lists, proprietary processes and formulae, all source and object code,
algorithms, architecture, structure, display screens, layouts, inventions,
development tools, designs, processes, works of authorship, computer programs
and technical data and information and all documentation and media constituting,
describing or relating to the above, including, without limitation, manuals,
memoranda and records;
"ITA" means the Income Tax Act of Canada, R.S.C. 1985, c.1 (5th Supp.);
"Law" means any federal, state, provincial, territorial, municipal or other law,
statute, regulation, code, recommendation, notice, judgment, treaty, directive,
ordinance, writ, injunction, decree, by-law, order, restriction, official plan
or stated policy, whether domestic or foreign; and "Laws" means all of the
foregoing;
"Liabilities" means any and all debts, liabilities or obligations of any nature
or kind whatsoever, whether known or unknown, due or to become due, accrued,
absolute, contingent, unliquidated or otherwise;
"Losses" means any and all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, deficiencies, costs and expenses
(including without limitation, all legal and other professional fees and
disbursements), interest, penalties, costs of investigation and defence and
amounts paid in settlement arising directly or indirectly as a consequence of
such matter;
"Material Adverse Effect" means, when used with respect to any entity or group
of entities, any event, change or effect, that is materially adverse to the
financial condition, properties, assets, Liabilities, businesses, operations,
results of operations or long-term prospects of such entity or group, taken as a
whole;
"MDL" means MessagingDirect Ltd., an Alberta corporation;
"MDL Balance Sheet" means the unaudited June 30, 2000 consolidated balance sheet
of MDL, a copy of which is attached hereto as Exhibit 3.4;
"MDL Balance Sheet Date" means June 30, 2000;
"MDL Class A Shares" means one or more of the outstanding Class A common shares
of MDL;
"MDL Companies" means, collectively, MDL and the MDL Subsidiaries;
"MDL Contracts" means all written or oral contracts, agreements and other
instruments which bind any of the MDL Companies;
"MDL Disclosure Letter" means the letter delivered by MDL to TSA
contemporaneously with this Agreement;
"MDL Financial Statements" means (i) the audited consolidated balance sheets of
MDL as of December 31, 1999, March 31, 1999 and February 28, 1998 and the
related consolidated statements of loss and deficit and cash flows for the
periods ended December 31, 1999, reported on by KPMG, Chartered Accountants, and
Xxxxxxxxxx & Company, Chartered Accountants, and (ii) the unaudited consolidated
balance sheet of MDL as of June 30, 2000 and the related consolidated statements
of loss and deficit and cash flows for the six months ended June 30, 2000,
certified to TSA by the V. P. Finance of MDL, in his capacity as a Senior
Officer;
"MDL IP Rights" means all Intellectual Property Rights which any of the MDL
Companies own, or have the right to use, sell or license;
"MDL Options" means the options issued by MDL under MDL's Stock Option Plan, the
particulars of which are listed on Subsection 3.2(a) of the MDL Disclosure
Letter;
"MDL Principal Securityholders" means the parties listed in Subsection 3.2(a)
of the MDL Disclosure Letter;
"MDL Securities" means, collectively, the MDL Class A Shares, the MDL Options,
the Stonebridge Options and the Compensation Warrants;
"MDL Securityholder" means a holder of a MDL Security;
"MDL Securityholders Meeting" means the meeting of all of the MDL
Securityholders (or such MDL Securityholders as directed by the Court) called
for the purpose of considering and approving the Arrangement under Section 186
of the ABCA;
"MDL Subsidiaries" means, collectively, MessagingDirect (UK) Limited, a U.K.
company, Messaging Direct (U.S.) Inc., a Delaware company, MessagingDirect AP
(Pty) Ltd., an Australian company and Messaging Inc., a Delaware company;
"NASDAQ" means the Nasdaq National Market or any successor systems;
"Ordinary Course" means the ordinary course of business consistent with past
custom and practice;
"Permitted Encumbrances" means the Encumbrances listed in Section 3.18
(Ownership of Property) of the MDL Disclosure Letter;
"Person" includes any individual, firm, partnership, limited partnership, joint
venture, syndicate, sole proprietorship, company or corporation with or without
share capital, limited liability corporation, unlimited liability company,
unincorporated association, trust, trustee, executor, administrator or other
legal personal representative, regulatory body or agency, government or
government agency, authority or entity however designated or constituted;
"Plan of Arrangement" means the plan of arrangement, substantially in the form
attached as Exhibit 2.1, as amended, modified or supplemented from time to time
in accordance with its terms;
"Plans" collectively means every Compensation Plan, Benefit Plan and Stock Plan
whether written or unwritten, formal or informal, maintained or contributed to
or required to be contributed to by any Person for the benefit of any Employee
or former Employee or their dependents or beneficiaries. "Compensation Plan"
includes every bonus, deferred compensation, incentive compensation, severance
or termination pay, pay in lieu of notice, plan, program, agreement or
arrangements including compensation practices and policies applicable to such
Employees and former Employees. "Benefit Plan" includes every health, or other
medical, life, disability or other insurance, supplemental unemployment benefit,
pension, retirement, profit sharing, supplemental retirement and other employee
benefit plan, program, agreement or arrangement including practices and policies
regarding vacations, sick leave, leaves of absence and all perquisites of
employment, other than employee benefit programs mandated by Law. "Stock Plan"
includes every stock purchase, stock option, restricted stock award and stock
appreciation rights, plan, program, agreement or arrangement;
"Principal Securityholders' Agreement" means the agreement between the TSA
Companies and the MDL Principal Securityholders, executed contemporaneously with
this Agreement;
"Proxy Materials" means any material to be mailed to the MDL Securityholders in
connection with the approval and adoption by the MDL Securityholders of the
Arrangement (including the Articles of Arrangement giving effect thereto) and
related matters;
"Registration Statement" means the Registration Statement on Form S-3 to be
filed by TSA with the SEC to register the TSA Class A Common Shares to be issued
upon the exchange of the Exchangeable Shares;
"Replacement TSA Options" has the meaning ascribed to such term in Subsection
2.2(g);
"SEC" means the United States Securities and Exchange Commission;
"SEC Affiliate" shall have the meaning attributed to the term "affiliate" as
set forth in the U.S. Securities Act;
"Senior Officer" has the meaning ascribed thereto in the Securities Act, S.A.
1981, c.S-6.1 and in the case of MDL or the MDL Companies refers to the Senior
Officers of MDL and MessagingDirect (U.K.) Limited and in the case of TSA,
refers to the Senior Officers of TSA;
"Shareholders Agreement" means the agreement dated as of December 30, 1999
between MDL, Yorkton Securities Inc., and Xxxxxxx X. Xxxxx, X. Xxxxxxx Hole,
Xxxxxx X. Xxxx, Montage IT Services Inc., and Stonebridge Merchant Capital
Corp.;
"Stonebridge Options" means the options issued by MDL to Stonebridge Merchant
Capital Corp., the particulars of which are listed on Subsection 3.2(a) of the
MDL Disclosure Letter;
"Superior Proposal" means any bona fide written inquiry, offer or proposal for a
Business Combination Transaction that in the good faith determination of the
board of directors of MDL, after consultation with its financial advisors and
with outside legal counsel (a) is reasonably capable of being completed, taking
into account all legal, financial, regulatory and other aspects of such proposal
and the party making such proposal, and (b) would, if consummated in accordance
with its terms, reasonably be expected to result in a transaction more
favourable to the MDL Securityholders from a financial point of view than the
transaction contemplated by this Agreement;
"Support Agreement" means the agreement among the TSA Companies, substantially
in the form attached as Exhibit 7.2(b)(i);
"Tax" or "Taxes" means all income, capital, payroll, sales and use, value added,
goods and services, documentary, stamp, transfer and real property taxes and
customs and excise duties, whether foreign, federal, provincial, state or
municipal (including tax withholdings, employer health taxes, workers'
compensation assessments, penalties and surcharges, Canada and Quebec Pension
Plans and employment insurance premiums, contributions and remittances) and
including any interest, penalties or surcharges attributable thereto;
"Tax Returns" means all returns, declarations, reports, statements, claims for
refund, amended returns and declarations of estimated taxes (including any
attached schedules) or other written information (including elections,
declarations, disclosures, estimates and informational returns) required to be
supplied to a Taxing Authority in connection with or relating to Taxes;
"Taxing Authority" means Canada Customs and Revenue Agency, the United States
Internal Revenue Service or any other taxing authority, including, without
limitation, any value added tax or sales tax authority;
"Trustee" means the trustee as designated under the Voting and Exchange Trust
Agreement;
"TSA" means Transaction Systems Architects, Inc., a Delaware corporation;
"TSA Balance Sheet Date" means June 30, 2000;
"TSA Class A Common Shares" means one or more of the voting shares of TSA, par
value $0.005 per share, having voting rights of one vote per share, and any
other securities into which such shares may be changed;
"TSA Companies" means, collectively, TSA, TSA Holdco and TSA Exchangeco;
"TSA Exchangeco" means TSA Exchangeco Limited, a Nova Scotia limited company;
"TSA Expenses" shall mean all out-of-pocket expenses and fees actually incurred
or accrued by any of the TSA Companies in connection with this Agreement and the
Arrangement prior to the termination of this Agreement, including without
limitation, all fees and expenses of legal counsel, accountants, financial
advisors, in connection with the negotiation, preparation, execution,
performance and termination of this Agreement, the structuring of the
Arrangement, any agreements relating thereto and any filings to be made in
connection therewith;
"TSA Holdco" means Transaction Systems Architects Nova Scotia Company, a Nova
Scotia unlimited company;
"TSA IP Rights" means all Intellectual Property Rights which any of TSA and its
Affiliates own, or have the right to use, sell or license;
"TSA SEC Documents" means each report, schedule, effective registration
statement and definitive proxy statement (other than preliminary material) filed
by TSA as a registrant with the SEC or the NASDAQ after September 30, 1997;
"TSA Subsidiaries" means each corporation, partnership, company, joint venture
and other entity in which TSA beneficially owns or controls, directly or
indirectly, more than 50% of the equity, voting rights, profits interest,
capital or other similar interest thereof;
"US GAAP" means such recommendations as the American Institute of Certified
Public Accountants includes in its handbook concerning accounting treatment or
statement of presentation;
"U.S. Securities Act" means the United States Securities Act of 1933; and
"Voting and Exchange Trust Agreement" means the agreement between the TSA
Companies and the Trustee, substantially in the form attached as Exhibit
7.2(b)(ii).
1.2 Interpretation not affected by headings, etc
The division of this Agreement into Articles, Sections and other
portions and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation hereof. Unless otherwise
indicated, all references to an "Article" or "Section" followed by a number
and/or a letter refer to the specified Article or Section of this Agreement. The
terms "this Agreement", "hereof", "herein" and "hereunder" and similar
expressions refer to this Agreement (including the Schedules and Exhibits
hereto) and not to any particular Article, Section or other portion hereof and
include any agreement or instrument supplementary or ancillary hereto.
1.3 Currency
Unless otherwise specifically indicated, all sums of money referred to
in this Agreement are expressed in lawful money of the United States of America.
1.4 Number, etc
Unless the context otherwise requires, words importing the singular
shall include the plural and vice versa and words importing any gender shall
include all genders.
1.5 Date for any action
In the event that any date on which any action is required to be taken
hereunder by any of the parties hereto is not a Business Day, such action shall
be required to be taken on the next succeeding day which is a Business Day.
1.6 Accounting Matters
Unless otherwise stated, all accounting terms used in this Agreement
with respect to MDL shall have the meanings attributable thereto under Canadian
GAAP and all determinations of an accounting nature with respect to MDL required
to be made shall be made in a manner consistent with Canadian GAAP and
practices, consistently applied. Unless otherwise stated, all accounting terms
used in this Agreement with respect to TSA shall have the meanings attributable
thereto under United States GAAP and all determinations of an accounting nature
with respect to TSA required to be made shall be made in a manner consistent
with United States GAAP and practices, consistently applied.
1.7 Statutory References
Any reference in this Agreement to a statute includes such statute as
amended, consolidated or re-enacted from time to time, all rules and regulations
made thereunder, all amendments to such rules and regulations from time to time,
and any statute, rule or regulation which supersedes such statute, rule or
regulations.
1.8 Knowledge
Each reference herein to the knowledge of a party means, unless
otherwise specified, the knowledge of such party's Senior Officers following due
inquiry.
ARTICLE II
STRUCTURE OF THE TRANSACTION
2.1 Court Approval
As soon as reasonably practicable after execution of this Agreement,
MDL will apply to the Court pursuant to Section 186 of the ABCA for an interim
order in form and substance reasonably satisfactory to TSA providing for, among
other things, the calling and holding of the MDL Securityholders Meeting for the
purpose of considering and if deemed advisable, approving the Arrangement under
Section 186 of the ABCA and pursuant to this Agreement and the Plan of
Arrangement. If the MDL Securityholders approve the Arrangement, MDL 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. Upon receipt of the final order and satisfaction of all conditions set
forth in Articles VIII and IX or waiver of such conditions, the Articles of
Arrangement shall be filed with the Registrar under the ABCA giving effect to
the Arrangement and the transactions specified in Section 2.2 of the Plan of
Arrangement shall occur and shall be deemed to occur in the order specified
without any further act or formality.
2.2 Arrangement
Subject to the provisions of Sections 2.3 (Dissenting Shares) and 2.4
(Escrow of Shares) hereof and all as subject to the Plan of Arrangement, at the
Effective Time, without any action on the part of the holders thereof, and in
the following sequence:
(a) The MDL Stock Option Plan will be amended to permit acceleration of
vesting of the MDL Options and adoption of the MDL Stock Option Plan
by TSA.
(b) Each Stonebridge Option and Compensation Warrant will be converted
into and exchanged for the number of fully-paid and non-assessable MDL
Class A Shares equal to (i) the number of MDL Class A Shares
purchasable on the Effective Date pursuant to such Stonebridge Option
or Compensation Warrant, as applicable, less (ii) the quotient derived
by dividing (A) the aggregate exercise price for the MDL Class A
Shares purchasable under such Stonebridge Option or Compensation
Warrant, by (B) the product derived by multiplying (I) the Exchange
Ratio by (II) the Average Trading Price. For purposes of this
calculation, all dollar amounts will be calculated using Canadian
dollars or the Canadian Dollar Equivalent.
(c) Prior to the Effective Date and in accordance with the Plan of
Arrangement, each holder of a MDL Class A Share will have completed an
election form to elect to receive Exchangeable Shares or TSA Class A
Common Shares from TSA Exchangeco in exchange for their MDL Class A
Shares or will be deemed to have elected to receive TSA Class A Common
Shares.
(d) Each TSA Elected Share (as such term is defined in the Plan of
Arrangement) will, pursuant to the terms hereof, be transferred to TSA
Exchangeco in exchange for a number of fully paid and non-assessable
TSA Class A Common Shares based on the Exchange Ratio. The name of
each such holder will be removed from the register of MDL Class A
Shares and added to the register of TSA Class A Common Shares. TSA
Exchangeco will be recorded as the registered holder of such MDL Class
A Shares so exchanged and will be deemed to be the legal and
beneficial owner thereof. In lieu of fractional TSA Class A Common
Shares, each holder of a MDL Class A Share who otherwise would be
entitled to receive a fraction of a TSA Class A Common Share on the
exchange of all such holder's MDL Class A Shares will be paid by TSA
Exchangeco an amount determined as set forth in the Plan of
Arrangement.
(e) Each Exchangeable Elected Share (as such term is defined in the Plan
of Arrangement) will, pursuant to the terms hereof, be transferred to
TSA Exchangeco in exchange for a number of fully paid and
non-assessable Exchangeable Shares based on the Exchange Ratio. The
name of each such holder will be removed from the register of MDL
Class A Shares and added to the register of Exchangeable Shares. TSA
Exchangeco will be recorded as the registered holder of such MDL Class
A Shares so exchanged and will be deemed to be the legal and
beneficial owner thereof. In lieu of fractional Exchangeable Shares,
each holder of a Class A Share who otherwise would be entitled to
receive a fraction of an Exchangeable Share on the exchange of all
such holder's MDL Class A Shares will be paid by TSA Exchangeco an
amount determined as set forth in the Plan of Arrangement.
(f) Each holder of a TSA Elected Share shall receive additional TSA Class
A Common Shares from TSA Exchangeco ("Additional Consideration"). The
amount of the Additional Consideration payable to each holder of a TSA
Elected Share will equal the product derived by multiplying (i)
200,000, by (ii) the quotient derived by dividing the number of TSA
Elected Shares held by such holder by the aggregate number of TSA
Elected Shares. In lieu of fractional TSA Class A Common Shares, each
holder of a TSA Elected Share who otherwise would be entitled to
receive a fraction of a TSA Class A Common Share will be paid by TSA
Exchangeco an amount determined in accordance with the Plan of
Arrangement.
(g) Each of the MDL Options will be converted into an option to purchase
("Replacement TSA Option") that number of TSA Class A Common Shares
equal to (i) the product of the number of MDL Class A Shares subject
to such MDL Option at the Effective Time multiplied by the Exchange
Ratio, less (ii) the quotient derived by dividing (A) the aggregate
exercise price for the MDL Class A Shares subject to such MDL Option
by (B) the Average Trading Price. The exercise price of each TSA Class
A Common Share subject to such Replacement TSA Option will equal $0.01
per share. If the foregoing calculation results in an exchanged MDL
Option being exercisable for a fraction of a TSA Class A Common Share,
then the number of TSA Class A Common Shares subject to such option
will be rounded down to the nearest whole number of shares. The
obligations of MDL under the MDL Options as so converted shall be
assumed by TSA. For purposes of this calculation, all dollar amounts
will be calculated using Canadian dollars or the Canadian Dollar
Equivalent.
(h) In consideration of the grant of the Liquidation Call Right,
Redemption Call Right and Retraction Call Right (as such terms are
defined in the Plan of Arrangement), TSA will issue to and deposit
with the Trustee the Special Voting Share to be thereafter held of
record by the Trustee as trustee for and on behalf of, and for the use
and benefit of, the holders of the Exchangeable Shares in accordance
with the Voting and Exchange Trust Agreement.
(i) All of the Escrowed Shares will be deposited with the Escrow Agent
under the Escrow Agreement.
2.3 Dissenting Shares
Holders of MDL Class A 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 the Plan of Arrangement as may be modified by the Interim
Order or the Final Order. MDL shall give TSA (i) 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 MDL, and (ii) the
opportunity to participate in all negotiations and proceedings (to the extent
permitted by any judicial authority having jurisdiction) with respect to such
rights. MDL shall not, except with the prior written consent of TSA, voluntarily
make any payment with respect to any such rights or offer to settle or settle
any such rights. All payments to such dissenting shareholders shall be the sole
responsibility of MDL.
2.4 Escrow of Shares
At the Effective Time, MDL shall deliver to the Escrow Agent, a
certificate or certificates representing the Escrowed Shares for the purposes of
securing any indemnity obligations of the Indemnifying Shareholders, all as more
particularly described in the Escrow Agreement.
2.5 Other Effects of the Arrangement
At the Effective Time: (a) the persons recommended by TSA will be
elected as directors of MDL; (b) the persons designated by TSA will be elected
as officers of MDL; and (c) the Arrangement will, from and after the Effective
Time, have all of the effects provided by applicable Law, including the ABCA.
2.6 Exchange of Call Rights for Put Rights
The Liquidation Call Right, Redemption Call Right and Retraction Call
Right (as such terms are defined in the Plan of Arrangement) to be granted to
TSA (which, subject to the terms of the Plan of Arrangement, may be assigned or
delegated by TSA to TSA Holdco) pursuant to the terms of the Plan of Arrangement
will be granted by the holders of Exchangeable Shares (other than TSA and its
Affiliates) to TSA as consideration for the Voting Rights, Exchange Rights and
Automatic Exchange Rights (as such terms are defined in the Voting and Exchange
Trust Agreement) to be granted by TSA to the Trustee for the benefit of the MDL
Securityholders in the Voting and Exchange Trust Agreement.
2.7 Adjustments to Exchange Ratio Prior to Effective Date
If, after the Exchange Ratio has been set but prior to the Effective
Time, TSA recapitalizes its outstanding capital stock through a subdivision of
its outstanding shares into a greater number of shares, or a combination of its
outstanding shares into a lesser number of shares, or reorganizes, reclassifies
or otherwise changes its outstanding shares into the same or a different number
of shares of other classes, or declares a dividend on its outstanding shares
payable in shares of its capital stock or securities convertible into shares of
its capital stock, or completes a rights offering for TSA Class A Common Shares
solely to its existing shareholders at a price less than market price, or grants
a material option solely to existing shareholders to acquire TSA Class A Common
Shares at a price less than market price and the record date for any such action
is prior to the Effective Time, then the Exchange Ratio will be adjusted
proportionately.
2.8 Total Number of Shares
For the avoidance of doubt, subject to Section 2.7, the total of (i)
the TSA Class A Common Shares (including the TSA Class A Common Shares
underlying the Replacement TSA Options) and (ii) the Exchangeable Shares to be
issued or transferred by the TSA Companies hereunder shall equal 3,357,500, less
the number of such shares to which MDL Securityholders exercising rights of
dissent would otherwise be entitled.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MDL
Except as set forth in the MDL Disclosure Letter, MDL hereby represents
and warrants to the TSA Companies that:
3.1 Organization, Good Standing, Qualification and Power
Each of the MDL Companies is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation, or
continuance, as applicable, has all requisite corporate power and authority
necessary to own, lease and operate its properties and to carry on its business
as now being conducted, and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary.
Section 3.1 of the MDL Disclosure Letter sets forth a correct and complete list
of the MDL Companies, together with the jurisdiction of incorporation,
continuance or organization of each MDL Company, a list of the shareholders of
each MDL Company, the number of shares held by each shareholder and a correct
and complete list of each jurisdiction in which each MDL Company is legally
qualified or registered to transact business as a foreign corporation under
applicable Law. MDL has delivered to TSA complete and correct copies of the
articles or certificates of incorporation (or similar documents) and bylaws of
each of the MDL Companies, in each case as amended to the date of this Agreement
and currently in effect. None of the MDL Companies is in violation of any of the
provisions of its articles or certificates of incorporation, as applicable, or
bylaws or equivalent organizational documents.
3.2 Capital Structure
(a) Stock and Options. The authorized share capital of MDL consists of an
unlimited number of MDL Class A Shares, an unlimited number of Class B
Preferred Shares and an unlimited number of Class C Preferred Shares.
The issued and outstanding capital of MDL is listed in Section 3.2(a)
of the MDL Disclosure Letter. All issued and outstanding shares of
each of the MDL Companies have been duly authorized and validly issued
and are fully paid and non-assessable, are not subject to preemptive
rights, are not subject to any right of rescission, and all MDL
Securities have been offered, issued, sold and delivered by each of
the MDL Companies in compliance with all registration, qualification
and prospectus requirements (or applicable exemptions therefrom) of
applicable Laws. Section 3.2(a) of the MDL Disclosure Letter sets
forth a correct and complete list of each holder of MDL Securities,
including, (i) in the case of each MDL Class A Share, the name of the
holder thereof, the last known province or state of residence of such
holder (as listed in the share register) and the number of MDL Class A
Shares held by such holder, (ii) in the case of each MDL Option or
Stonebridge Option, the name of the holder thereof, the last known
province or state of residence of such holder (as listed in the option
register), the grant date of such Option, the number of MDL Class A
Shares issuable upon exercise thereof, the per share exercise price
and the vesting schedule applicable thereto, (iii) in the case of each
Compensation Warrant, the name of the holder thereof, the exercise
price thereof, the issue date and expiration date thereof and the
number of MDL Class A Shares issuable upon exercise thereof, and (iv)
noting the MDL Principal Securityholders.
(b) No Other Subsidiaries. Except for the MDL Subsidiaries, MDL does not
have any equity interest, direct or indirect, in any corporation,
partnership, joint venture or other business entity. All of the equity
interests in the MDL Subsidiaries are held beneficially by MDL free
and clear of any Encumbrance except for security granted to the
Toronto-Dominion Bank.
(c) No Other Commitments. Except for the MDL Options, the Stonebridge
Options and the Compensation Warrants and the obligations of MDL under
this Agreement, there are no Stock Plans, options, warrants, calls,
rights (including, without limitation, stock appreciation rights),
commitments, conversion rights, or agreements of any character to
which any of the MDL Companies is a party or bound obligating any of
the MDL Companies to issue, deliver or sell, or cause to be issued,
delivered or sold, any shares of the MDL Companies or securities
convertible into or exchangeable for shares of any of the MDL
Companies, or obligating any of the MDL Companies to grant, extend or
enter into any such option, warrant, call, right, commitment,
conversion right or agreement. There are no voting trusts or other
agreements or understandings to which any of the MDL Companies is a
party or, to the knowledge of MDL, among any of the MDL
Securityholders, with respect to the voting of the shares of any of
the MDL Companies, other than the Shareholders Agreement which will
terminate on the Closing Date.
(d) Registration Rights.
(i) General. Except as noted in Section 3.2 of the MDL Disclosure
Letter, MDL has not registered, is not in the process of
registering and is not under any obligation to register under any
applicable Laws (including the U.S. Securities Act) or MDL
Contract, any of its presently outstanding securities or any
securities issuable upon conversion or exercise thereof.
(ii) Canada. Except as noted in Section 3.2 of the MDL Disclosure
Letter, MDL has not filed a Canadian Prospectus, is not in the
process of filing a Canadian Prospectus and is not under any
obligation to file a Canadian Prospectus, by any applicable Laws
or MDL Contract, in respect of a distribution of any of its
presently outstanding securities or any securities issuable upon
conversion or exercise thereof.
(e) Shareholders Rights Plan. MDL does not have any shareholders rights
protection plan or similar plan or agreement.
(f) No Reporting Issuer Status. MDL is not a reporting issuer or its
equivalent in any Canadian province or territory other than Alberta,
Manitoba and Ontario.
3.3 Authority
(a) Corporate Action. MDL has all requisite corporate power and authority
to enter into this Agreement and the Ancillary Agreements to which it
is a party, to perform its obligations hereunder and thereunder and to
consummate the Arrangement (subject to Court approval of the Plan of
Arrangement and approval by the MDL Securityholders) and the other
transactions contemplated by this Agreement and such Ancillary
Agreements. The execution and delivery by MDL of this Agreement and
the Ancillary Agreements to which it is a party and the consummation
by MDL of the Arrangement (subject to its approval by the MDL
Securityholders and Court approval of the Plan of Arrangement) and the
other transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of MDL. This
Agreement has been duly executed and delivered by MDL and is, and the
Ancillary Agreements to which it is a party when executed and
delivered in accordance with the terms hereof shall be, valid and
binding obligations of MDL, enforceable in accordance with their
respective terms, except that such enforceability may be subject to
(i) bankruptcy, insolvency, reorganization or other similar Laws
affecting or relating to enforcement of creditors' rights generally
and (ii) general equitable principles.
(b) No Conflict. Neither the execution, delivery and performance by MDL of
this Agreement or of any of the Ancillary Agreements to which it is a
party, nor the consummation by MDL of the transactions contemplated
hereby or thereby nor compliance with the provisions hereof or thereof
by MDL will: (i) conflict with, or result in any violations of, the
articles of incorporation or bylaws or the comparable governing
instruments of any of the MDL Companies, (ii) except as set forth in
Subsection 3.3(b) of the MDL Disclosure Letter, result in any breach
or violation of or cause a default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination,
amendment, cancellation or acceleration of any obligation contained
in, or give rise to any claim or the loss of any benefit under, or
result in the creation of any Encumbrance upon any of the properties
or assets of any of the MDL Companies under, any term, condition or
provision of any loan or credit agreement, note, bond, mortgage,
indenture, lease or other material agreement, judgment, order, decree,
Law, rule, license or permit applicable to any of the MDL Companies or
their respective properties or assets, other than any such breaches,
defaults, losses, or Encumbrances which, individually or in the
aggregate, would not have a Material Adverse Effect on MDL, or (iii)
violate or conflict with any Law.
(c) Governmental Consents. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained by any of the MDL Companies in
connection with the execution and delivery of this Agreement or any of
the Ancillary Agreements to which MDL is a party or the consummation
of the transactions contemplated hereby or thereby, except as listed
in Section 3.3 of the MDL Disclosure Letter or where the failure to
obtain such consents, approvals, etc., would not prevent or delay the
consummation of the Arrangement or otherwise prevent MDL from
performing its obligations under this Agreement and would not
reasonably be expected to have a Material Adverse Effect on MDL.
3.4 Financial Statements
MDL has provided to TSA true and complete copies of the MDL Financial
Statements. The MDL Financial Statements present fairly, in all material
respects, the consolidated financial position and the consolidated results of
operations and changes in financial position of the MDL Companies as of the
dates or for the periods presented therein in conformity with Canadian GAAP
applied on a basis consistent with prior periods, except as otherwise noted
therein and subject in the case of interim financial statements to normal and
recurring year-end audit adjustments.
3.5 Absence of Undisclosed Liabilities
Except for: (a) the Liabilities provided for in the MDL Balance Sheet;
(b) Liabilities of the MDL Companies incurred since the MDL Balance Sheet Date
in the Ordinary Course; and (c) Liabilities for repurchase of MDL Class A Shares
which may arise upon the exercise of rights of dissent in connection with the
Arrangement and which shall not give rise to any right of indemnification in
favour of TSA, there are no material Liabilities of the MDL Companies. All
reserves established by MDL and set forth in the MDL Balance Sheet are
reasonably adequate.
3.6 Receivables
The receivables shown on the MDL Balance Sheet arose in the Ordinary
Course and have been collected or are collectible in the book amounts thereof,
less an amount not in excess of the allowance for doubtful accounts provided for
in such balance sheet. Except as noted in Section 3.6 of the MDL Disclosure
Letter, the receivables of MDL arising after the date of the MDL Balance Sheet
and prior to the Closing Date arose or will arise in the Ordinary Course and
have been collected or are or will be collectible in the book amounts thereof,
consistent with the past practice of MDL, less an appropriate allowance for
doubtful accounts.
3.7 Compliance with Applicable Laws
The MDL Companies are in compliance, in all material respects, and have
conducted their businesses so as to comply, in all material respects, with all
Laws applicable to their operations and with respect to which compliance is a
condition of engaging in the business thereof. There are no judgments or orders,
injunctions, decrees, stipulations or awards (whether rendered by a court or
administrative agency or by arbitration) against any of the MDL Companies or
against any of the property or business of any of the MDL Companies, which are
continuing in effect and could reasonably be expected to have a Material Adverse
Effect on the MDL Companies.
3.8 Litigation
Except as set forth in Section 3.8 of the MDL Disclosure Letter, there
is no suit, action, arbitration, demand, claim or proceeding pending, or to the
knowledge of MDL, threatened, against any of the MDL Companies or any of their
respective officers or investors (in their capacity as such). Except as listed
in Section 3.8 of the MDL Disclosure Letter, there is no judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against any of the MDL Companies or any of their respective properties or
assets, nor is there any governmental inquiry or investigation pending, or to
the knowledge of MDL, threatened against any of the MDL Companies or the
properties, assets or business of any of them before any Governmental Entity
with regard to any of the MDL Companies nor is there a basis for such a
justifiable and valid inquiry, proceeding, governmental inquiry or
investigation. There is no action, suit, proceeding or investigation by any of
the MDL Companies that is currently pending or that any of the MDL Companies
intends to initiate. MDL has made available to TSA correct and complete copies
of all audit response letters prepared by its counsel for its auditors in
connection with the last two completed audits of MDL's Financial Statements and
any such correspondence since the date of the last such audit.
3.9 Employees
(a) List of Employees. Section 3.9(a) of the MDL Disclosure Letter lists
the names and titles of all Employees and directors of the MDL
Companies as of August 31, 2000 together with particulars of their
compensation, (including any bonus or commission arrangement),
position, start date, jurisdiction of residence, their age, and if
absent on workers' compensation or state benefits or insurance, sick
leave, short term disability or long term disability, pregnancy,
maternity, parental, bereavement or adoption leave, or any other
approved or statutory leave of absence or layoff.
(b) Employment Agreements. Section 3.9(b) of the MDL Disclosure Letter
lists all of the Compensation Plans and written employment, services,
agency, consulting, agreements or contracts or arrangements with
Employees and directors of the MDL Companies, all of which are
enforceable in accordance with their terms. MDL has provided TSA with
a true and correct copy of each such agreement, contract or
arrangement. Except to the extent set forth in Section 3.9(b) of the
MDL Disclosure Letter, there are no written or oral employment
agreements or contracts with Employees or directors of the MDL
Companies which are not terminable by the MDL Companies upon providing
that period of notice or, at the applicable MDL Companies' option, pay
in lieu of notice, required by applicable Law or by providing
reasonable notice under common law. Except for the Employees or
directors of the MDL Companies, none of the MDL Companies has any
obligation to make any wage or salary payments to any Person. Except
for changes specifically contemplated in the Plan of Arrangement and
except as listed in Section 3.9(b) of the MDL Disclosure Letter, there
were no changes in compensation since April 1, 1999 out of the
Ordinary Course and there are no increases or modifications (including
acceleration) in compensation or benefits planned or announced to the
Employees.
(c) No Union or Collective Agreement. None of the MDL Companies is or has
been a party to or bound by any collective agreement; no labour or
trade union claims to represent the Employees, or has been certified
or recognized as bargaining agent for such Employees; none of the
Employees is represented or has been represented by any labour or
trade union and none of the MDL Companies has any knowledge of any
current labour union organizing activities among their respective
Employees, nor does any question concerning representation exist
concerning such MDL Employees. There are no outstanding applications
for recognition or certification or any other proceedings in which a
labour or trade union is claiming or seeking exclusive authority to
bargain collectively for any Employees, nor have there been any such
activities within the past 3 years.
(d) except to the extent set forth in Section 3.9(d) of the MDL Disclosure
Letter:
(i) There is no unfair labour practice charge or complaint against
any of the MDL Companies outstanding, pending, or to the
knowledge of MDL, threatened, against or affecting any of the MDL
Companies.
(ii) There is no strike, cessation of work, refusal to work,
industrial or trade dispute or other labour disturbance
outstanding, pending, or to the knowledge of MDL, threatened,
against or affecting any of the MDL Companies, none of the
Employees is currently engaged in a labour disturbance,
industrial dispute or trade dispute and there has not been any
labour disturbance, industrial dispute or trade dispute during
the past 3 years.
(iii)Except as may be jointly initiated by TSA and MDL pursuant to
the terms of this Agreement, consummation of the transaction
contemplated by this Agreement will not cause or result in the
termination of employment of any Employee and will not entitle
any such Employee or director of a MDL Company to pay in lieu of
notice of termination, termination pay, severance pay, retiring
allowance, retirement benefit or any other payment under any
written or oral agreement with any of the MDL Companies and will
not cause or result in any obligation on the part of any of the
MDL Companies to make any payment of any amount greater than
$5,000, or provide any compensation of any nature or kind
whatsoever, to any of their respective Employees or directors.
(iv) The MDL Companies have not failed to pay when due all obligations
of the MDL Companies, whether arising by operation of Law,
contract, past custom or otherwise, for wages, salaries,
remuneration, compensation bonuses, commissions, vacation and
holiday pay, sick pay or leave, termination or severance pay or
pay in lieu of notice of termination, or any other form of
compensation payable to any Employees or directors of MDL, in
respect of the services rendered by any of them.
(v) All unpaid vacation pay, bonuses, commissions and other Employee
benefit payments payable to Employees but not yet due have been
accrued in the MDL Balance Sheet and its books and records and
such amounts are set forth on Section 3.9(b) of the MDL
Disclosure Letter as of August 31, 2000.
(vi) None of the MDL Companies has any liability of any kind to any
Employee, except for compensation or remuneration and benefits
payable to such Employee or to which such Employee may be
entitled, in the Ordinary Course. Except as set forth in Section
3.9 of the MDL Disclosure Letter, there are no outstanding loans
or advances made or granted by any of the MDL Companies to any
Employee or director of any MDL Company.
(vii)The MDL Companies have withheld all amounts required by Law to
be withheld from payments made by them with respect to all of
their respective Employees, including without limitation, those
with respect to Tax withholdings, social security contributions
(including National Insurance contributions), Canada Pension Plan
contributions and unemployment or employment insurance premiums
and remittances, and has not failed to remit such amounts to the
appropriate authorities within the times required by Law.
(viii) Except as listed in Section 3.9(a) of the MDL Disclosure
Letter, no Employee is on long-term disability leave, short-term
disability leave or extended absence, or is receiving, or to the
knowledge of the MDL Companies, has made application for,
workers' compensation or workplace safety and insurance benefits.
(ix) There are no outstanding inspection orders against any of the MDL
Companies under any applicable Laws. There have been no serious
accidents or incidents affecting worker health or safety for
which any of the MDL Companies has responsibility and, to the
knowledge of MDL, no Employee has suffered any illness, disease,
injury or death as a result of his or her employment by any of
the MDL Companies or as a result of having handled or becoming
exposed to or otherwise having been harmed by any Hazardous
Material which may have been present at the workplace during the
course of his or her employment by any of the MDL Companies.
(x) All current employer contributions, assessments and filings,
including but not limited to, experience rating surcharges,
payroll premiums, non-compliance charges, contributions, or any
other amounts required under any applicable workers compensation
or workplace safety and insurance Laws have been paid or filed by
the MDL Companies and any deficiencies in payments have been
properly accrued and are recorded on their respective books. None
of the MDL Companies has been subject to any special or penalty
assessment or surcharge, including but not limited to, experience
rating surcharges under such Laws, and to the knowledge of MDL,
there are no circumstances that would permit or result in a
special or penalty assessment or surcharge under such Laws or any
applicable experience rating plan or program. There are no
existing or potential claims relating to compensation, pensions
or benefits against any of the MDL Companies.
(xi) No complaint or charge with respect to or relating to any of the
MDL Companies is outstanding, pending, or to MDL's knowledge,
threatened, against or affecting any of the MDL Companies before
the applicable human rights commission or board of inquiry or any
other agency responsible for the prevention of discriminatory or
unlawful employment practices.
(xii)There are no complaints, claims, proceedings, questions, issues
or matters outstanding, pending, or to MDL's knowledge,
threatened, against or affecting in any forum by or on behalf of
any Employee or any applicant for employment or classes of the
foregoing, alleging breach of any actual, express or implied
contract of employment, wrongful dismissal or any other
discriminatory, wrongful or tortious conduct in connection with
the employment relationship, or concerning any Employee or
director of any MDL Company.
(xiii) None of the MDL Companies is subject to the provisions of the
Employment Equity Act, S.C. 1995, Chap. 44 and similar applicable
Laws. Nor are any of them a party to any federal, state,
provincial or municipal contractors program which has as its
purpose the achievement of a work environment in which barriers
to equal participation and treatment of employees have been
removed.
3.10 Employee Benefits
(a) The Plans. Section 3.10 of the MDL Disclosure Letter contains a true
and complete list of all of the Benefit Plans. There exists no
undertaking or commitment, to create any additional Benefit Plan or to
change any existing Benefit Plan that would affect any Employee or
former Employee or their dependents or beneficiaries;
(b) Copies of the Plans. There are no actuarial valuation reports, cost
certificates, funding, financial or information returns or statements
in respect of any Benefit Plan and there are no advance income tax
rulings, professional opinions and material correspondence relating to
the Compensation Plans or Benefit Plans including, without limitation,
internal memoranda and determination letters received from the U.S.
Internal Revenue Service. MDL has made available to TSA true and
complete copies of each of the following documents:
(i) each of the written Benefit Plans, and all amendments thereto,
and a written description of each unwritten Benefit Plan;
(ii) most recent description of each of the Benefit Plans that has
been provided to the Employees, and any and all such other
descriptive materials provided to them including employee
booklets;
(iii)any trust agreement, insurance contract or other funding or
related agreement in relation to each Benefit Plan to which any
of the MDL Companies is a party or bound;
(c) No Actions or Violations. There are no outstanding complaints,
actions, suits, investigations, proceedings, grievances, arbitrations,
or claims pending, or, to the knowledge of MDL, threatened, by any
Person relating to any of the Benefit Plans. All past due obligations
regarding the Benefit Plans have been satisfied and there are no
accrued or pending obligations of the Benefit Plans out of the
Ordinary Course. There are no outstanding material defaults or
violations by any Person relating to any Benefit Plan, and no Tax is
owing or exigible and overdue under any of the Benefit Plans;
(d) Operation in Accordance with Law. Each of the Benefit Plans and each
fund established thereunder has been established, operated,
administered, and invested in all material respects in accordance with
its terms and with the requirements of all applicable Laws and each of
the Benefit Plans is in good standing under, has been duly registered
where required by, and is qualified in accordance with, such Laws. No
fact or circumstance exists that could adversely affect the tax-exempt
status of any tax-exempt Benefit Plan;
(e) Full Payment. All contributions, premiums or other amounts required to
be paid or provided by any Person to or under the Benefit Plans have
been duly made in accordance with the terms of each of the Benefit
Plans and applicable Laws. Each of the Benefit Plans is fully funded
or fully insured and no unfunded Liability or other deficit exists
thereunder;
(f) No Improper Withdrawals. There have been no improper withdrawals,
applications or transfers of assets from any Benefit Plan or the
trusts or other funding media relating thereto;
(g) No Multi-Employer Plans. None of the Benefit Plans is a multi-employer
pension plan or a defined benefit pension plan as defined under
applicable pension Law. No Benefit Plan is maintained in connection
with any trust described in Section 501 (e)(9) of the Code, and no
Benefit Plan is subject to Title IV of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or Section 412 of the Code.
Nothing done or omitted to be done and no transaction or holding of
any asset under or in connection with any Benefit Plan has or will
make any of the MDL Companies, or any officer or director thereof,
subject to any liability under Title I of ERISA;
(h) No Notification. No notification is required to be given to any
Governmental Entity having jurisdiction over any of the Benefit Plans
with respect to the consummation of the transactions contemplated by
this Agreement in relation to such Benefit Plans;
(i) No Post-Retirement Benefits. Except as disclosed in Section 3.10 of
the MDL Disclosure Letter, none of the Benefit Plans provides benefits
to Employees beyond their retirement or termination of service, or to
the beneficiaries or dependants of former Employees;
(j) No Limitations on Amendment and Termination of Plans. Other than
provisions of applicable Laws, no condition exists that would prevent
the amendment or termination of any Benefit Plan;
(k) No Material Increase in Costs. There has been no amendment to, written
interpretation or announcement (whether written or oral) by any of the
MDL Companies relating to, or change in employee participation or
coverage under, any Benefit Plan which would materially increase the
expense of maintaining such Benefit Plan above the level of expenses
incurred in respect thereof for the most recent fiscal year; and
(l) Deductibility. There is no contract, agreement, plan or arrangement
covering any Employee or former Employee that could give rise to the
payment by any of the MDL Companies of any amount that would not be
deductible pursuant to the terms of Sections 162 or 280G of the Code.
3.11 Absence of Certain Changes or Events
Except as disclosed in Section 3.11 of the MDL Disclosure Letter and as
expressly contemplated in this Agreement and the Ancillary Agreements, since the
MDL Balance Sheet Date, the MDL Companies have conducted their respective
businesses only in the Ordinary Course and with respect to the MDL Companies
there has not occurred:
(a) any change in the financial condition, properties, assets,
Liabilities, businesses, operations, results of operations or
prospects of the MDL Companies, that could reasonably be expected to
have a Material Adverse Effect on the MDL Companies;
(b) any amendments or changes in the articles of incorporation or bylaws
or the memorandum and articles of association, as applicable;
(c) any damage, destruction or loss, whether covered by insurance or not,
that could reasonably be expected to have a Material Adverse Effect on
the MDL Companies;
(d) any redemption, repurchase or other acquisition by the MDL Companies
of MDL Class A Shares, or any declaration, setting aside or payment of
any dividend or other distribution (whether in cash, stock or
property) with respect to MDL Class A Shares;
(e) any material increase in, or material modification (including
acceleration) of, any Benefit Plan or Stock Plan made to, for, or
with, any of their Employees, except for acceleration of vesting under
the MDL Stock Option Plan;
(f) any material change in their accounting methods, principles or
practices;
(g) any writing down or writing off of the value of any assets other than
in the Ordinary Course;
(h) any acquisition or sale of a material amount of property or assets,
except for sales to customers in the Ordinary Course;
(i) any alteration in any term of any outstanding MDL Security; or any
other securities of the MDL Companies;
(j) (A) any incurrence, assumption or guarantee of any debt for borrowed
money except for borrowed money incurred through MDL's line of credit
with the TD Bank, the balance of which does not exceed
CAN$1,000,000.00; (B) any issuance or sale of any securities
convertible into or exchangeable for debt securities of any of the MDL
Companies; (C) any agreement to act as surety for any obligation of a
third party; or (D) except as set forth in Section 3.2(a) of the MDL
Disclosure Letter, any issuance or sale of options or other rights to
acquire, directly or indirectly, debt securities of any of the MDL
Companies or any securities convertible into or exchangeable for any
such debt securities;
(k) other than in the Ordinary Course or, in respect of non-material
amounts, any creation or assumption of any Encumbrance on any asset;
(l) any making of any loan, advance or capital contribution to or
investment in any Person other than (i) travel loans or advances made
in the Ordinary Course, (ii) other loans and advances in an aggregate
amount which does not exceed $50,000 outstanding at any time, and
(iii) term or demand deposits or money market funds of major financial
institutions;
(m) other than in the Ordinary Course, any entering into, amendment of,
waiver, release, relinquishment, failure in any material respect to
perform under, occurrence of any material default under, or
termination or non-renewal of any material contract (including,
without limitation, any material customer or supplier contract), lease
transaction, commitment or other right or obligation;
(n) any transfer or grant of a material right (including, without
limitation, any of the MDL IP Rights), other than in the Ordinary
Course, or any grant of an exclusive right;
(o) any agreement, arrangement or other transaction with any Associate of
any of the MDL Companies;
(p) any agreement or arrangement made by any MDL Company 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 unless otherwise
disclosed;
(q) any (i) failure to maintain in full force and effect substantially the
same level and type of insurance coverage as in effect on the MDL
Balance Sheet Date or (ii) change in any insurance coverage or the
issuance of any insurance policy, except in the Ordinary Course;
(r) any sale, assignment, transfer, license or encumbrance of any tangible
or intangible asset, including any Intellectual Property Right, except
for sales, assignments, transfers, licenses and Encumbrances in the
Ordinary Course;
(s) the entering into any lease or contract for the purchase or sale or
license of any property, real or personal, except in the Ordinary
Course;
(t) any failure to maintain their equipment and other assets in good
working condition and repair according to the standards they have
maintained to the date of this Agreement, subject only to ordinary
wear and tear;
(u) any issuance or sale of any shares of their capital stock of any class
or any other of their securities, or issuance or creation of any
warrants, obligations, subscriptions, options, convertible securities
or other commitments to issue shares of capital stock, or acceleration
of the vesting of any outstanding option or other security;
(v) any merger, consolidation or reorganization with, or the acquisition
of, any entity, or the entering into of any agreement to do any of the
foregoing; or
(w) any agreement to any audit assessments by any Taxing Authority in
excess of $25,000 in the aggregate.
3.12 Agreements
Section 3.12 of the MDL Disclosure Letter sets forth a complete list of
the following MDL Contracts, complete and correct copies of which have been made
available to TSA for review:
(a) continuing contract for the future purchase, sale, development or
manufacture of products, material, supplies, equipment, software or
services requiring payment to or from any MDL Company (i) in an amount
in excess of $25,000 per annum which is not terminable on 60 days or
less notice without material cost or other liability at, or at any
time after, the Effective Time or in which any of the MDL Companies
has granted or received manufacturing rights or most favored nations
pricing provisions rights relating to any product, group of products
or territory, or (ii)(A) in which any of the MDL Companies has granted
or received any distribution, marketing or other Intellectual Property
Rights, (B) which require consent or are otherwise terminable upon a
change of control of MDL or (C) in which any of the MDL Companies has
granted or received marketing, distribution or exclusive market rights
relating to any product, group of products or territory;
(b) contract providing for the development of software for, or license of
software to, any of the MDL Companies, or other Intellectual Property
Rights used or incorporated in any of the products of any of the MDL
Companies;
(c) indenture, mortgage, promissory note, loan agreement, guarantee or
other agreement or commitment for the borrowing of money, for a line
of credit or for a leasing transaction of a type required to be
capitalized in accordance with Canadian GAAP, involving an amount in
excess of $25,000;
(d) lease or other agreement under which any of the MDL Companies is
lessee of or holds or operates any items of tangible personal property
or real property owned by any third party and under which payments to
such third party exceed $25,000 per annum;
(e) agreement or arrangement for the sale of any assets, properties or
rights having a value in excess of $25,000;
(f) agreement which restricts any MDL Company from engaging in any aspect
of its business or competing in any line of business in any geographic
area or in any functional area or that requires any of the MDL
Companies to distribute or use exclusively a third party technology or
product;
(g) agreement between or among any of the MDL Companies regarding
intercompany loans, revenue or cost sharing, ownership or license of
MDL IP Rights, intercompany royalties or dividends or similar matters;
(h) written dealer, distributor, sales representative, original equipment
manufacturer, value added remarketer, subcontractor or other agreement
for the ongoing distribution of the products and services of any of
the MDL Companies;
(i) any loan or credit agreement, note, bond, mortgage, indenture, lease
or other material agreement that is not otherwise disclosed elsewhere
in the MDL Disclosure Letter, the breach or termination of which would
have a Material Adverse Effect on the MDL Companies;
(j) agreements relating to the acquisition or grant of MDL IP Rights or
other material agreements relating to the products or services of any
MDL Company except for software licenses to end-users and
non-exclusive distribution and sales agency agreements in the Ordinary
Course;
(k) any agreement by any MDL Company regarding directors and officers
indemnification;
(l) any agreement, contract or commitment by any MDL Company relating to
material capital expenditures or involving future obligations in
excess of $25,000;
(m) any voting trust or shareholders agreement between or among any of the
MDL Companies and the MDL Securityholders;
(n) any tax sharing or tax indemnification agreement between or among any
of the MDL Companies; and
(o) any material agreement pursuant to which either the execution of this
Agreement or any of the Ancillary Agreements by MDL or the
consummation of the transactions contemplated hereby or thereby will
or may result in (i) a breach by any of the MDL Companies of any term,
provision or condition of such agreement, or (ii) the ability of the
other party thereto to terminate such agreement or materially change
any of the terms, provisions or conditions thereof.
3.13 No Defaults
Except as disclosed in Section 3.13 of the MDL Disclosure Letter, all
provisions of the MDL Contracts which relate to MDL IP Rights and all material
provisions of other material MDL Contracts are valid and enforceable obligations
of the applicable MDL Companies and, to MDL's knowledge, of the other parties
thereto, enforceable against each such party in accordance with its terms
(subject to bankruptcy, insolvency, reorganization or other similar laws
affecting or relating to enforcement of creditors' rights generally and general
equitable principles). None of the MDL Companies has been notified of any claim
that any material provision of any MDL Contract relating to any MDL IP Right, or
of any other material MDL Contract, is not valid and enforceable in accordance
with its terms (subject to bankruptcy, insolvency, reorganization or other
similar laws affecting or relating to enforcement of creditors' rights generally
and general equitable principles) for the periods stated therein. None of the
MDL Companies is in default under, and to the knowledge of MDL, there exists no
event, condition or occurrence which, after notice or lapse of time, or both,
would constitute such a default by any of the MDL Companies under, any contract
or agreement (other than this Agreement) to which any of the MDL Companies is a
party and which would, if terminated due to such default, have a Material
Adverse Effect on the MDL Companies or any of them. To MDL's knowledge, no other
party to any MDL Contract relating to any MDL IP Right or to any other material
MDL Contract is in material default thereunder, nor, to MDL's knowledge, does
there exist any event, condition or occurrence which, after notice or lapse of
time, or both, would constitute such a default by any such other party which
would, if terminated due to such default, have a Material Adverse Effect on the
MDL Companies.
3.14 Taxes
(a) Tax Returns. Each of the MDL Companies has timely filed, or caused to
be filed, all Tax Returns required to be filed by them (all of which
returns were correct and complete in all material respects). Except
for Taxes incurred since December 31, 1999 in the Ordinary Course,
each of the MDL Companies has paid or withheld, or caused to be paid
or withheld, all Taxes that are due and payable, or MDL has provided
adequate accruals in accordance with Canadian GAAP in its financial
statements for the periods ending December 31, 1999 and Taxes incurred
subsequent thereto in the Ordinary Course, for any Taxes for any
period up to and including those periods covered by such statements
that have not been paid, whether or not shown as being due on any
returns. Since the MDL Balance Sheet Date, no material Tax liability
has been assessed, proposed to be assessed, incurred or accrued other
than in the Ordinary Course. Except for any Taxes for which MDL has
provided adequate accruals in accordance with Canadian GAAP in its
financial statements ending December 31, 1999 and Taxes incurred
subsequent thereto in the Ordinary Course, the MDL Companies have
withheld from all payments made by them, or otherwise collected, and
have remitted all required amounts in respect of Taxes required to be
withheld, collected or remitted when due by them to the applicable
Taxing Authority within the required time periods. Except for any
Taxes for which MDL has provided adequate accruals in accordance with
Canadian GAAP in its financial statements ending December 31, 1999 and
Taxes incurred subsequent thereto in the Ordinary Course, none of the
MDL Companies has any liability for the Taxes of any other Person.
(b) No Audits. Except as set forth in Section 3.14 of the MDL Disclosure
Letter, there are no audits or investigations in progress, pending or,
to the knowledge of MDL, threatened by any Taxing Authority, against
any of the MDL Companies or any of the assets of any of the MDL
Companies, and none of the MDL Companies has received any notification
that any material issues have been raised (and are currently pending)
by any Taxing Authority in connection with any of the Tax Returns
referred to above, and no waivers of statutes of limitations have been
given or requested with respect to any of the MDL Companies. Except
for any Taxes for which MDL has provided adequate accruals in
accordance with Canadian GAAP in its financial statements ending
December 31, 1999 and Taxes incurred subsequent thereto in the
Ordinary Course, there are no material proposed (but unassessed)
additional Taxes, none have been asserted and no Tax liens have been
filed other than for Taxes not yet due and payable. Notices of
Determination have neither been requested nor issued by any of the MDL
Companies.
(c) No material amount in respect of any outlay or expense that is
deductible for the purposes of computing the income of any of the MDL
Companies for the purposes of the ITA has been owing by any of the MDL
Companies, as the case may be, for longer than two years to a person
not dealing at arm's length (for the purposes of the ITA) with any of
the MDL Companies at the time the outlay or expense was incurred.
There are no circumstances which exist and would result in, or which
have existed and resulted in, Section 80 of the ITA applying to any of
the MDL Companies. Except as set forth in Section 3.14 of the MDL
Disclosure Letter, none of the MDL Companies has either directly or
indirectly transferred property to or supplied services to or acquired
property or services from a Person with whom it was not dealing at
arm's length (for the purposes of the ITA) for consideration other
than consideration equal to the fair market value of the property or
services at the time of the transfer, supply or acquisition of the
property or services. None of the MDL Companies has entered into any
advance pricing agreement with any Taxing Authority. None of the MDL
Companies nor any corporation to which MDL is related (for the
purposes of the ITA) is a corporation whose principal business is (i)
the lending of money to persons with whom such corporation is dealing
at arm's length (for the purposes of the ITA); (ii) the purchasing of
debt obligations issued to such persons; or (iii) a combination
thereof. Except as set forth in Section 3.14 of the MDL Disclosure
Letter, none of the MDL Companies (i) has made an election to be
treated as a "consenting corporation" under Section 341(f) of the
Code, or (ii) is a party to any Tax sharing or other similar agreement
or arrangement of any nature with any other person pursuant to which
any of the MDL Companies has or could have any Liabilities in respect
of Taxes.
(d) Except as set forth in Section 3.14 of the MDL Disclosure Letter, any
net operating loss carryforwards and research and development tax
credits reflected in the MDL Financial Statements are valid and
reasonably estimated and will be unaffected by the consummation of the
transactions contemplated hereby.
(e) None of the MDL Securities constitute "Taxable Quebec Property" as
such term is defined in the Taxation Act (Quebec).
3.15 Intellectual Property
(a) The MDL Companies own, or, as applicable, have the right to use, sell,
distribute or license all Intellectual Property Rights necessary or
required for the conduct of the business of the MDL Companies as
currently conducted. Except for software licenses to end-users and
non-exclusive distribution and sales agency agreements in the Ordinary
Course, Section 3.15 of the MDL Disclosure Letter sets forth a
complete and correct list of all MDL IP Rights and specifies whether
each such right is owned by or licensed (including sublicensed) to the
MDL Companies and other agreements pursuant to which any of the MDL
Companies or any other Person is authorized to use, sell, distribute
or license any MDL IP Rights and identifies any licenses (other than
software licenses to end-users and non-exclusive distribution and
sales agency agreements in the Ordinary Course) which will terminate
by its terms within twenty-four (24) months after the date hereof.
(b) Except as set forth in Subsection 3.3(b) of the MDL Disclosure Letter,
the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not
constitute a breach of any agreements relating to MDL IP Rights, will
not cause the forfeiture or termination or give rise to a right of
forfeiture or termination of any MDL IP Right or impair the right of
any of the MDL Companies to use, sell or license any MDL IP Right or
portion thereof;
(c) Except as set forth in Section 3.15 of the MDL Disclosure Letter,
there are no royalties, honoraria, fees or other payments in excess of
$25,000 per annum payable by any of the MDL Companies to any Person in
respect of any MDL IP Rights by reason of the publication, use or
distribution of products or services or in connection with the conduct
of the business of any of the MDL Companies or otherwise;
(d) Neither the manufacture, marketing, license, sale or lawful use of any
product currently licensed or sold by any of the MDL Companies or
currently under development by any of the MDL Companies violates any
license or agreement between any of the MDL Companies and any third
party or infringes any Intellectual Property Right of any other
Person; and there is no pending or, to the knowledge of MDL,
threatened, claim or litigation contesting the validity, ownership or
right to use, sell, license or dispose of any MDL IP Right nor is
there any basis for any such claim, nor has MDL received any notice
asserting that any MDL IP Right or the proposed use, sale, license or
disposition thereof conflicts or will conflict with the rights of any
other party, nor is there any basis for any such assertion;
(e) MDL has taken reasonable and practicable steps designed to safeguard
and maintain the secrecy and confidentiality of, and its proprietary
rights in, all MDL IP Rights provided that TSA hereby covenants that
it will not assert a claim for breach of this warranty based on the
grants by MDL of the rights in respect of the MDL IP Rights as
expressly set forth in the written agreements listed in Section 3.15
of the MDL Disclosure Letter (the "Subject Agreements"). MDL agrees
that the foregoing covenant shall not prevent TSA from asserting a
claim: (i) based on any other matter, information or facts not set
forth in the Subject Agreement; or (ii) for indemnification pursuant
to this Agreement for any claim, including a claim with respect or
relating to a Subject Agreement or the MDL IP Rights referred to in a
Subject Agreement, asserted by a third party. All Employees involved
in the development of products or product documentation have executed
and delivered to the applicable MDL Company an agreement regarding the
protection of proprietary information and the assignment to the
applicable MDL Company of all Intellectual Property Rights arising
from the services performed for the MDL Companies by such Persons; and
copies of the forms of all such agreements have been delivered to TSA.
No Employees claim an ownership interest in any MDL IP Rights as a
result of having been involved in the development of such property
while employed by or consulting to any MDL Company, or otherwise;
(f) Any and all Intellectual Property Rights currently being developed or
developed in the past by any Employee while in the employ of any of
the MDL Companies, is or will be the sole property of such MDL
Company. It is not necessary for the conduct of the business of such
MDL Company to utilize any inventions of any Employee made prior to
his/her employment by the MDL Companies, other than those that have
been assigned to such MDL Company pursuant to an agreement signed by
such Employee;
(g) None of the MDL Companies has received nor has any knowledge regarding
any injunctions or claims from any Governmental Entity or from clients
or consumers in respect of material failures affecting any products
sold by any of the MDL Companies nor in respect of any requirement to
recall said products. In addition, except as disclosed in Section 3.15
of the MDL Disclosure Letter, there are no defects or errors in any
Design Documentation which defects or errors could reasonably be
expected to have a Material Adverse Effect on the MDL Companies. No
portion of the MDL IP Rights contains any unauthorized disabling
mechanism or protection feature designed to prevent its use, computer
virus, worm software lock, drop dead device, Trojan-horse routine,
trap door, time bomb or any other codes or instructions that may be
used to access, modify, delete, damage or disable any of the
intellectual property or any computer system on which any of the
software comprising part thereof is installed or in connection with
which they may operate;
(h) Section 3.15 of the MDL Disclosure Letter sets forth a complete and
correct list of all applications, registrations, filings and other
formal actions made or taken pursuant to applicable Law to perfect or
protect the interest of MDL in MDL IP Rights, including, without
limitation, all patents, patent applications, trademarks and service
marks, trademark and service xxxx applications, copyrights and
copyright applications and there is no cancellation, termination or
expiration of any such registration or patent that is reasonably
foreseeable and is not intended to be renewed or extended by any of
the MDL Companies. None of the MDL Companies is using any confidential
information or trade secrets of any former employer of any Employees;
and
(i) Section 3.15 of the MDL Disclosure Letter sets forth a complete
and correct list of any material software licenses to end-users
and all non-exclusive distribution and sales agency agreements.
3.16 Fees and Expenses
Except for payments to be made by MDL to National Bank Financial Inc.
pursuant to a letter agreement dated June 30, 2000, as amended by a letter
agreement dated October 23, 2000, none of the MDL Companies has paid or become
obligated to pay any fee or commission to any broker, investment banker or other
Person acting in a similar capacity on behalf of or under the authority of MDL,
finder or intermediary, directly or indirectly, in connection with the
transactions contemplated by this Agreement.
3.17 Insurance
(a) Policies. Each of the MDL Companies maintains, and at all times since
the later of August 31, 1998 and the date of its incorporation has
maintained, fire and casualty, general liability, business
interruption, product liability, sprinkler and water damage and any
other insurance that MDL believes or believed to be reasonably prudent
for its business. Section 3.17 of the MDL Disclosure Letter contains a
list of all such insurance policies presently in effect, and correct
and complete copies of all such policies along with a history of
claims made under such policies have been provided to TSA. Each of the
MDL Companies has fully paid all payments presently due under the
terms of each of the foregoing insurance policies and none of the MDL
Companies has received notice of intent to cancel any of the foregoing
insurance policies.
(b) Insurance Claims. MDL does not have any knowledge of any state of
facts or the occurrence of any event, which reasonably might (i) form
the basis for any claim against any of the MDL Companies not
reasonably expected to be fully covered by the insurance policies
referred to in Section 3.17 to the MDL Disclosure Letter, and which
exceeds $25,000 in liability, or (ii) increase the insurance premiums
paid by MDL, in excess of $25,000 per annum in the aggregate, or
affect the availability of the insurance coverage listed in Section
3.17 to the MDL Disclosure Letter on substantially the same terms as
now in effect.
3.18 Ownership of Property
(a) List of Property. None of the MDL Companies owns any real property.
Section 3.18 of the MDL Disclosure Letter sets forth a brief
description of all real property leased to the MDL Companies. Except
for the Permitted Encumbrances disclosed in Section 3.18 of the MDL
Disclosure Letter, each of the MDL Companies holds a valid leasehold
interest in property of which it is a lessee and has good and
marketable title to all of its personal property, free and clear of
all Encumbrances. The tangible personal property owned or leased by
each of the MDL Companies is adequate for the operation of the
business of such MDL Company as currently conducted. None of the MDL
Companies is in violation of any Law applicable to the operation of
leased properties, or has received any notice of violation with which
it has not complied.
(b) No Property Owned by MDL Securityholders. Neither the MDL
Securityholders nor their Associates own, hold or possess, in their
individual or any other capacities, any property, whether tangible or
intangible, used in the business of MDL which is material,
individually or in the aggregate, to the financial condition,
operations, or business of the MDL Companies.
3.19 Environmental Matters
(a) During the period that the MDL Companies have leased or owned their
respective properties or owned or operated any facilities, there have
been no disposals, releases, emissions, spills, discharges or
threatened releases of Hazardous Materials on, from or under such
properties or facilities which could reasonably be expected to result
in a material violation of any applicable Law. MDL has no knowledge of
any presence, disposals, releases, emissions, spills, discharges or
threatened releases of Hazardous Materials on, from or under any of
such properties or facilities, which may have occurred prior to any of
the MDL Companies having taken possession of any of such properties
and facilities which could reasonably be expected to result in a
material violation of any applicable Law.
(b) None of the properties, facilities and operations of the MDL Companies
is in material violation of any Laws relating to protection of the
environment, occupational health and safety, industrial hygiene or
Hazardous Materials. During the time that the MDL Companies have owned
or leased their respective properties and facilities, none of the MDL
Companies nor, to the knowledge of MDL, any third party, has used,
generated, manufactured, processed, treated, disposed of, handled or
stored on, under or about such properties or facilities or transported
to or from such properties or facilities any Hazardous Materials.
(c) During the time that the MDL Companies have owned or leased their
respective properties and facilities, there has been no litigation
brought or, to the knowledge of MDL, threatened, against any of the
MDL Companies, or any settlement reached by any of the MDL Companies
with, any party or parties alleging the presence, disposal, emission,
spill, discharge, release or threatened release of any Hazardous
Materials on, from or under any such properties or facilities.
3.20 Interested Party Transactions
Section 3.20 of the MDL Disclosure Letter sets forth a current list of
all directors, officers and Associates of each of the MDL Companies. Except as
disclosed in Section 3.20 of the MDL Disclosure Letter or expressly contemplated
herein or in connection with the transactions contemplated hereby, no MDL
Securityholder, officer or director of any of the MDL Companies or any Associate
of any such Person or of the MDL Companies has had, either directly or
indirectly, or proposes to have a material interest in: (a) any Person that
purchases from or sells, licenses or furnishes to any of the MDL Companies any
goods, property, technology or intellectual or other property rights or
services; or (b) any current or proposed contract or agreement to which any of
the MDL Companies is or proposes to be a party or by which it may be bound or
affected. Except as disclosed in Section 3.20 of the MDL Disclosure Letter,
there are no defaults or claims under such current or proposed contracts or
agreements referred to above in (b).
3.21 Board Approval
The board of directors of MDL has, on or before the date hereof, (i)
approved this Agreement, the Ancillary Agreements to which MDL is a party and
the Plan of Arrangement, (ii) determined that the Plan of Arrangement is in the
best interests of MDL and is fair to the MDL Securityholders, (iii) resolved to
recommend that the MDL Securityholders approve the Arrangement, and (iv) taken
all other action necessary to authorize the calling of a shareholders meeting
and for the adoption and implementation of the Arrangement other than the
preparation and delivery of the Proxy Materials and the filing of the Articles
of Arrangement giving effect to the Arrangement and the making of certain
applications in accordance with applicable Law.
3.22 Vote Required
Except as may otherwise be ordered by the Court or required by the
Ontario Securities Commission, the affirmative vote of two-thirds of the votes
cast by the MDL Securityholders is the only vote of the holders of any class or
series of MDL's shares or of any securities convertible into or exchangeable for
such capital stock necessary to approve the Plan of Arrangement and there are no
agreements between MDL and any of the MDL Securityholders or among any of such
MDL Securityholders that relate in any manner to the procedure for such voting
which have not been waived.
3.23 Disclosure
(a) No representation or warranty made by the MDL Companies in this
Agreement, nor any document, written information, financial statement,
certificate or Exhibit prepared and furnished or to be prepared and
furnished by MDL or its representatives pursuant hereto or in
connection with the transactions contemplated hereby, when taken
together, contains any untrue statement of a material fact when made,
or omitted to state a material fact necessary to make the statements
or facts contained herein or therein not misleading in light of the
circumstances under which they were made or furnished.
(b) None of the information supplied or to be supplied by MDL for
inclusion in the Registration Statement contains or will contain any
untrue statement of a material fact or omits or will omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they are made, not misleading or will, at the time the Registration
Statement becomes effective under the U.S. Securities Act, contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading.
3.24 Restrictions on Business Activities
There is no agreement, judgment, injunction, order or decree binding
upon any of the MDL Companies that has or could reasonably be expected to have
the effect of prohibiting or materially impairing any business practice of any
of the MDL Companies, any acquisition of property by any of the MDL Companies or
the conduct of business by any of the MDL Companies as currently conducted.
3.25 Books and Records
(a) The books, records and accounts of the MDL Companies (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 the MDL Companies and (iii) accurately and fairly reflect
the basis for the MDL Financial Statements. MDL has devised and
maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (A) transactions are executed in
accordance with management's general or specific authorization; and
(B) transactions are recorded as necessary (1) to permit preparation
of the MDL Financial Statements in conformity with Canadian GAAP, or
any other criteria applicable to such statements and (2) to maintain
accountability for assets.
(b) The minute books of the MDL Companies which have been provided to TSA
contain accurate and complete copies of the minutes of every meeting
of their respective shareholders and their boards of directors and any
committee thereof since their incorporation except for confidential
minutes that record the MDL board of directors' deliberation
specifically on the decision to approve the transaction contemplated
by this Agreement. No resolutions have been passed, enacted, consented
to or adopted by the board of directors of MDL or any committee
thereof or shareholders of the MDL Companies, except for those
contained in such minute books, which accurately reflect all
transactions referred to in such minutes. The corporate records of the
MDL Companies are up to date and have been maintained in accordance
with all applicable Laws and are complete and accurate in all material
respects.
3.26 Customers
Section 3.26 of the MDL Disclosure Letter sets forth a true and
complete list of customers of the MDL Companies within the last twelve (12)
months involving payment in excess of $10,000 per annum. Except as set forth in
Section 3.26 of the MDL Disclosure Letter, since January 1, 2000, none of the
MDL Companies has lost its relationship with any of its material customers. None
of the MDL Companies has been notified that it will lose or might lose, or
suffer any diminution in, its relationship with any such customers. No
representative of any such customer has advised any of the MDL Companies that,
in the event of a sale or change of control of MDL, any of the MDL Companies
would lose, or suffer any diminution in, its relationship with any such customer
nor does MDL expect any such loss or diminution.
3.27 Competition Act
The MDL Companies and its Affiliates do not have assets in Canada that
exceed CDN$35 million in aggregate value and did not have gross revenues from
sales in, from or into Canada, that exceed CDN$35 million in aggregate value,
determined for purposes of and in the manner prescribed by the Competition Act
(Canada) and the Notifiable Transactions Regulations promulgated thereunder.
3.28 Investment Canada Matters
None of the MDL Companies provides any financial or transportation
services, engages in the production of uranium or carries on a "cultural
business" within the meaning of the Investment Canada Act, and the value of the
assets of MDL and of all other entities in Canada the control of which is
acquired, directly or indirectly, for the purposes of the Investment Canada Act
is less than CDN$192 million.
3.29 Fairness Opinions
MDL's board of directors has received a written opinion from National
Bank Financial Inc. that the Exchange Ratio is fair from a financial point of
view to the holders of MDL Class A Shares.
3.30 Sales of MDL Securities
Except as set forth in Section 3.30 of the MDL Disclosure Letter,
neither MDL nor anyone acting on its behalf has offered securities of MDL or any
part thereof or any similar securities for issuance or sale to, or solicited any
offer to acquire any of such securities from, anyone so as to render the
issuance and sale of any such securities not exempt from the registration
requirements of all applicable securities Laws.
3.31 Governmental Authorizations and Licenses
The MDL Companies hold all material licenses, authorizations, consents,
approvals, permits (including all necessary environmental permits, concessions,
certificates and other franchises of any Governmental Entity) required to
operate their businesses, the absence of any of which would have a Material
Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE TSA COMPANIES
Each of the TSA Companies jointly and severally represent and warrant
to MDL that:
4.1 Organization, Good Standing, Qualification and Power
Each of the TSA Companies is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation, has all
requisite corporate power and authority necessary to own, lease and operate its
properties and to carry on its business as now being conducted, and is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification necessary. TSA has delivered to MDL complete and correct copies of
the certificate of incorporation and bylaws of TSA and the memorandum and
articles of association of TSA Holdco and TSA Exchangeco in each case as amended
to the date of this Agreement and currently in effect. None of the TSA Companies
is in violation of any of the provisions of its articles of incorporation or
bylaws or memorandum and articles of association, as applicable.
4.2 Capital Structure
The authorized capital stock of TSA consists of 50,000,000 shares of
Class A Common Stock, par value $0.005 per share, 5,000,000 shares of Class B
Common Stock, par value $0.005 per share and 5,450,000 shares of Preferred
Stock, par value $0.01 per share. As of the close of business on October 20,
2000, there were outstanding:
(a) 33,100,967 shares of Class A Common Stock,
(b) no shares of Class B Common Stock,
(c) no shares of Preferred Stock,
(d) no warrants to purchase any TSA capital stock, and
(e) vested and unvested employee stock options to purchase 4,267,554
shares of TSA Class A Common Stock.
All issued and outstanding shares of TSA capital stock have been duly authorized
and validly issued and are fully paid and non-assessable and are not subject to
preemptive rights.
4.3 Authority
(a) Corporate Action. Each of the TSA Companies has all requisite
corporate power and authority to enter into this Agreement and the
Ancillary Agreements to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the Arrangement
(subject to Court approval of the Plan of Arrangement and approval by
the MDL Securityholders) and the other transactions contemplated by
this Agreement and such Ancillary Agreements. The execution and
delivery by each of the TSA Companies of this Agreement and the
Ancillary Agreements to which it is a party and the consummation by
the TSA Companies of the Arrangement (subject to its approval by the
MDL Securityholders and Court approval of the Plan of Arrangement) and
the other transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of each of
the TSA Companies. This Agreement has been duly executed and delivered
by each of the TSA Companies and is, and the Ancillary Agreements to
which it is a party when executed and delivered in accordance with the
terms hereof shall be, valid and binding obligations of each of the
TSA Companies, enforceable in accordance with their respective terms,
except that such enforceability may be subject to (i) bankruptcy,
insolvency, reorganization or other similar Laws affecting or relating
to enforcement of creditors' rights generally and (ii) general
equitable principles.
(b) No Conflict. Neither the execution, delivery and performance by the
TSA Companies of this Agreement or of any of the Ancillary Agreements
to which it is a party, nor the consummation by either of the TSA
Companies of the transactions contemplated hereby or thereby nor
compliance with the provisions hereof or thereof by either of the TSA
Companies will: (i) conflict with, or result in any violations of, the
articles of incorporation or bylaws or the comparable governing
instruments of any of the TSA Companies, (ii) result in any breach or
violation of or cause a default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination,
amendment, cancellation or acceleration of any obligation contained
in, or give rise to any claim or the loss of any benefit under, or
result in the creation of any Encumbrance upon any of the properties
or assets of any of the TSA Companies under, any term, condition or
provision of any loan or credit agreement, note, bond, mortgage,
indenture, lease or other material agreement, judgment, order, decree,
Law, rule, license or permit applicable to any of the TSA Companies or
their respective properties or assets, other than any such breaches,
defaults, losses, or Encumbrances which, individually or in the
aggregate, would not have a Material Adverse Effect on TSA, or (iii)
violate or conflict with any Law.
(c) Governmental Consents. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained by any of the TSA Companies in
connection with the execution and delivery of this Agreement or any of
the Ancillary Agreements to which any of the TSA Companies is a party
or the consummation of the transactions contemplated hereby or
thereby, except (i) as required under the NASDAQ rules, the Exchange
Act, the U.S. Securities Act or applicable state securities Laws; (ii)
as specified in Sections 9.12 (Governmental Approvals) and 9.13 (HSR
Act) or; (iii) where the failure to obtain such consents, approvals,
etc., would not prevent or delay the consummation of the Arrangement
or otherwise prevent TSA from performing its obligations under this
Agreement and would not reasonably be expected to have a Material
Adverse Effect on TSA.
4.4 SEC Documents and Financial Statements
(a) SEC Documents. TSA has delivered or made available (either directly or
through XXXXX) to MDL true and complete copies of the TSA SEC
Documents.
(b) Financial Statements. The financial statements of TSA included in the
TSA SEC Documents were prepared in accordance with US GAAP applied on
a consistent basis during the periods involved (except as may have
been indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by US GAAP) and fairly present in all
material respects (subject, in the case of the unaudited statements,
to normal, year-end audit adjustments) the consolidated financial
position of TSA and the TSA Subsidiaries as at the respective dates
thereof and the consolidated results of their operations and cash
flows for the respective periods then ended.
(c) Truthfulness. The TSA SEC Documents, on the date filed with the SEC
(and except as modified, replaced, superseded or otherwise rectified
by statements or information contained in a subsequent TSA SEC
Document), complied in all material respects with the requirements of
the Exchange Act (subject to any noncompliance which would not be
reasonably expected to have a Material Adverse Effect on TSA) and
contained no untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
(d) The TSA SEC Documents include all reports required to be filed by TSA
under the Exchange Act during the preceding twelve months and TSA has
not filed a request for confidential treatment with respect to any
such reports during that period.
(e) Except for: (i) the Liabilities provided for in the financial
statements of TSA included in the TSA SEC Documents, and (ii)
Liabilities of TSA and its Affiliates incurred since the date of such
financial statements in the Ordinary Course, there are no known
material Liabilities of TSA and its Affiliates which are material to
TSA and its Affiliates taken as a whole. All reserves established by
TSA and set forth in such financial statements are reasonably
adequate.
4.5 Compliance with Law
TSA and its Affiliates are in compliance and have conducted their
businesses so as to comply with all Laws applicable to their operations and with
respect to which compliance is a condition of engaging in the business thereof
except where such non-compliance could not reasonably be expected to have a
Material Adverse Effect on TSA and its Affiliates. There are no judgments or
orders, injunctions, decrees, stipulations or awards (whether rendered by a
court or administrative agency or by arbitration) against any of TSA or its
Affiliates or against any of their property or business which are continuing in
effect and could reasonably be expected to have a Material Adverse Effect on TSA
and its Affiliates.
4.6 Absence of Certain Changes or Events
Except as disclosed in the TSA SEC Documents, since the TSA Balance
Sheet Date, TSA has conducted its business only in the Ordinary Course and there
has not occurred:
(a) any change in the financial condition, properties, assets (including
TSA IP Rights), Liabilities, businesses, operations, material
contracts, results of operations or prospects of TSA that individually
or collectively could reasonably be expected to have a Material
Adverse Effect on TSA and its Affiliates;
(b) any amendments or changes in the Restated Certificate of Incorporation
or bylaws of TSA;
(c) any damage, destruction or loss, whether covered by insurance or not,
that could reasonably be expected to have a Material Adverse Effect on
TSA and its Affiliates;
(d) any material alteration in any term of any outstanding security of TSA
and its Affiliates; or
(e) any agreement or arrangement made by TSA 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 unless otherwise disclosed.
4.7 Investment Canada Act
As of the date hereof, TSA is a "WTO Investor" within the meaning of
the Investment Canada Act.
4.8 TSA Class A Common Shares
The TSA Class A Common Shares, when issued directly in consideration
for MDL Class A Shares or upon the exchange of the Exchangeable Shares (all as
in accordance with the Plan of Arrangement), will be validly issued, fully paid
and non-assessable and will be free and clear of all Encumbrances attributable
to, or arising due to, any action or omission of TSA.
4.9 Intellectual Property
TSA has disclosed in the TSA SEC Documents any information regarding
any claim or specific event with respect to TSA IP Rights which could reasonably
be expected to have a Material Adverse Effect on TSA and its Affiliates.
4.10 Restrictions on Business Activities
There is no agreement, judgment, injunction, order or decree binding
upon any of TSA or its Affiliates that has, or could reasonably be expected to
have, the effect of prohibiting or materially impairing any material business
practice of any of TSA or its Affiliates, any material acquisition of property
by any of TSA or its Affiliates or the conduct of business by any of TSA or its
Affiliates as currently conducted.
4.11 TSA Holdco and TSA Exchangeco
(a) TSA Holdco has been incorporated pursuant to the Nova Scotia Companies
Act as an unlimited company. TSA is the indirect beneficial holder of
all of the issued and outstanding shares of TSA Holdco.
(b) TSA Exchangeco has been incorporated pursuant to the Nova Scotia
Companies Act as a limited company. TSA Holdco is the direct
beneficial holder of all of the issued and outstanding voting shares
of TSA Exchangeco.
4.12 No Dividends
As of the date of this Agreement, no record dates have been fixed by
TSA for the declaration, setting aside or payment of any dividends or other
distributions in respect of the TSA Class A Common Shares which have not yet
been made; and, since the date of TSA's last 10-Q filing with the SEC, no
dividend or other distribution (whether in cash, stock or property) has been
made with respect to the TSA Class A Common Shares.
4.13 Disclosure
No representation or warranty made by the TSA Companies in this
Agreement, nor any document, written information, certificate or Exhibit
prepared and furnished or to be prepared and furnished by TSA or its
representatives pursuant hereto or in connection with the transactions
contemplated hereby, when taken together, and subject to Subsection 4.4(c)
contains any untrue statement of a material fact when made, or omitted to state
a material fact necessary to make the statements or facts contained herein or
therein not misleading in light of the circumstances under which they were made
or furnished.
ARTICLE V
MDL COVENANTS
5.1 Advice of Changes
During the period from the date of this Agreement until the earlier of
the Closing Date and the termination of this Agreement in accordance with its
terms, MDL will promptly advise TSA in writing (a) of any event or fact
occurring subsequent to the date of this Agreement which becomes known to MDL
that would render any representation or warranty of MDL contained in this
Agreement, if made on or as of the date of such event or the Effective Time,
untrue, inaccurate or incomplete in any material respect, (b) of any Material
Adverse Effect on the MDL Companies which becomes known to MDL, and (c) of any
breach by MDL of any covenant or agreement contained in this Agreement. After
the end of each monthly and quarterly accounting period ending after the date of
this Agreement and before the earlier of the Effective Time and the termination
of this Agreement in accordance with its terms, MDL shall deliver to TSA (i)
within twenty (20) Business Days after the end of each monthly accounting
period, an unaudited consolidated statement of income for the MDL Companies and
an unaudited unconsolidated balance sheet, statement of operations and statement
of changes in financial position for each of the MDL Companies and (ii) within
thirty (30) Business Days after the end of each quarterly accounting period, an
unaudited consolidated balance sheet, statement of operations and statement of
changes in financial position for MDL, all of which financial statements shall
be prepared in the Ordinary Course, in Canadian dollars and in accordance with
MDL's books and records and Canadian GAAP, and shall fairly present the
consolidated financial position of the MDL Companies as of their respective
dates and the results of the MDL Companies' operations for the periods then
ended.
5.2 Maintenance of Business
During the period from the date of this Agreement until the earlier of
the Effective Time and the termination of this Agreement in accordance with its
terms, MDL will use, and will cause each of the MDL Subsidiaries to use, all
commercially reasonable efforts to carry on and preserve its business and its
relationships with customers, suppliers and Employees in substantially the same
manner as it has prior to the date hereof. If any of the MDL Companies becomes
aware of any material deterioration in the relationship with any material
customer, supplier or key Employee, MDL will promptly bring such information to
the attention of TSA in writing and, if requested by TSA, MDL will use
commercially reasonable efforts to restore the relationship.
5.3 Conduct of Business
Subject to the fact that a transaction involving its business is
contemplated by this Agreement, during the period from the date of this
Agreement until the earlier of the Effective Time and the termination of this
Agreement in accordance with its terms, MDL will continue to conduct its
business and use its commercially reasonable efforts to maintain its business
relationships in the Ordinary Course and, except as expressly contemplated
herein, will not, without the prior consent of TSA, such consent not to be
unreasonably withheld or delayed:
(a) borrow any money except through MDL's line of credit with the TD Bank
provided that the balance of such line of credit does not exceed
CAN$1,000,000.00;
(b) enter into any transaction not in the Ordinary Course having a value
calculated by reference to MDL's obligations thereunder in excess of
$25,000;
(c) encumber or permit to be encumbered any of its assets except for
purchase money security interests or similar security interests
granted in a specific asset to secure the purchase price therefor
granted in the Ordinary Course not in excess of $100,000;
(d) dispose of any portion of its assets not in the Ordinary Course;
(e) enter into any material lease or contract for the purchase or sale or
license of any real property or for any personal property except in
the Ordinary Course not in excess of $100,000;
(f) fail to maintain its equipment and other assets in good working
condition and repair according to the standards it has maintained to
the date of this Agreement, subject only to ordinary wear and tear;
(g) pay (or make any oral or written commitments or representations to
pay) any bonus, increased salary or special remuneration to any
Employee (except for normal salary increases and bonuses to Employees
disclosed in the MDL Disclosure Letter) or enter into or vary the
terms of any employment, consulting or severance agreement with any
Employee, pay any severance or termination pay, grant any stock option
or issue any restricted stock or other securities, or enter into or
modify any Plan;
(h) enter into any agreement, arrangement or other transaction with any
Associate of any of the MDL Companies;
(i) revalue any of its assets or properties other than the writing off of
accounts receivable in the Ordinary Course;
(j) declare, set aside or pay any cash or stock dividend or other
distribution in respect of shares of MDL, or redeem or otherwise
acquire any of its shares;
(k) amend or terminate any material contract, agreement or license to
which it is a party except for those amendments or terminations in the
Ordinary Course, which are not material in amount or effect;
(l) lend any amount to any Person other than an amount which is less than
$25,000 in the aggregate and incurred in the Ordinary Course;
(m) guarantee or act as a surety for any obligation of any Person other
than acting as a guarantor or surety in the Ordinary Course for one of
the MDL Companies;
(n) waive or release any material right or claim;
(o) issue or sell any of its shares of any class or issue or create any
warrants, obligations, subscriptions, options, convertible securities
or other commitments to issue shares, or accelerate the vesting of any
outstanding option or other security except as otherwise contemplated
herein or in the Ancillary Agreements or the Plan of Arrangement;
(p) split or combine its outstanding shares of any class or enter into any
recapitalization or agreement affecting the number or rights of
outstanding shares of any class or affecting any other of its
securities;
(q) amalgamate, merge, consolidate or reorganize with, or acquire any
entity or any interest in any entity, or enter into any agreement to
do any of the foregoing;
(r) amend its articles of incorporation or bylaws except as contemplated
by this Agreement;
(s) grant any interest in MDL IP Rights except to license software to
end-users or to grant non-exclusive distribution or sales agency
rights all in the Ordinary Course;
(t) grant any exclusive distribution rights;
(u) agree to any audit assessments by any Taxing Authority in excess of
$25,000 in the aggregate except in respect of the existing SRTC audit;
(v) reduce in amount or scope any insurance coverage or issue any
certificates of insurance;
(w) implement any material change in its accounting principles, practices
or methods, other than as may be required by Canadian GAAP and/or US
GAAP; or
(x) agree to do, or permit any MDL Companies to do, or agree to do, any of
the things described in the preceding clauses in this Section 5.3.
5.4 Shareholder Approval
As soon as reasonably practicable but in no event more than sixty (60)
days from the date of this Agreement, MDL shall take all procedural action
necessary, subject to and in accordance with applicable Law, its articles of
incorporation and bylaws and any outstanding shareholder agreements, to mail to
the MDL Securityholders notice of the MDL Securityholders Meeting, where it
shall seek the approval and adoption of, the Plan of Arrangement (including the
Articles of Arrangement giving effect thereto) and related matters by the MDL
Securityholders. MDL shall provide to TSA reasonable opportunity to review and
comment upon the Proxy Materials (which shall include the recommendation of the
board of directors of MDL referred to in Section 3.21 (Board Approval)) proposed
to be mailed to the MDL Securityholders in connection with the foregoing
approval. If prior to the date of the MDL Securityholders Meeting (i) MDL has
provided written notice to TSA that TSA is in breach of any representation,
warranty, covenant or agreement set forth in this Agreement on the part of TSA
and the board of directors of MDL has determined in good faith and has advised
TSA in such notice that it believes that such breach has or can reasonably be
expected to have a Material Adverse Effect on TSA and is by its nature curable;
and (ii) therefore, pursuant to Subsection 10.1(b) hereof TSA has fifteen (15)
Business Days (the "Cure Period") within which to cure the breach; and (iii) the
MDL Securityholders Meeting is scheduled to be held during the Cure Period, then
the MDL Securityholders Meeting shall be adjourned until three (3) Business Days
following the expiry of the Cure Period.
5.5 Regulatory Approvals
During the term of this Agreement, MDL 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 TSA may
reasonably request, in connection with the consummation of the transactions
contemplated by this Agreement. MDL will use its commercially reasonable efforts
to promptly obtain all such authorizations, approvals and consents. Without
limiting the generality of the foregoing, as promptly as practicable after the
execution of this Agreement, MDL shall file a pre-merger notification report
under the HSR Act and the Investment Canada Act if required by Law. MDL shall
provide TSA with the reasonable opportunity to review and comment upon the Plan
of Arrangement application materials proposed to be filed with the Court.
5.6 Necessary Consents
During the term of this Agreement, MDL will use commercially reasonable
efforts to obtain such written consents and take such other actions as may be
necessary or appropriate in addition to those set forth in Section 5.5
(including, without limitation, those consents and actions required of MDL or to
be delivered by MDL all as set forth in Article IX (Conditions Precedent to
Obligations of the TSA Companies) to allow the consummation of the transactions
contemplated hereby and to allow MDL to carry on its business after the
Effective Time.
5.7 Access to Information
Subject to the terms of the Mutual Non-Disclosure Agreement entered
into between TSA and MDL on May 10, 2000, during the term of this Agreement, MDL
will allow TSA and its agents reasonable access to the files, books, records and
offices of the MDL Companies, including, without limitation, all information
relating to each MDL Companies' Taxes, commitments, contracts, leases, licenses,
products, MDL IP Rights, and real, personal and intangible property and
financial condition as TSA may reasonably request. MDL will use its commercially
reasonable efforts to cause its accountants and personnel to cooperate with TSA
and its agents in making available to TSA all financial and other information
reasonably requested except for confidential minutes that record the MDL board
of directors' deliberation specifically on the decision to approve the
transaction contemplated by this Agreement and excepting that TSA and its agents
shall be restricted in their access to any source code comprising a part of the
MDL IP Rights in a manner consistent with the terms of the Distribution
Agreement.
5.8 Satisfaction of Conditions Precedent
During the term of this Agreement, MDL will use its commercially
reasonable efforts to satisfy or cause to be satisfied all the conditions
precedent that are set forth in Article IX and MDL will use its commercially
reasonable efforts to cause the Plan of Arrangement and the other transactions
contemplated by this Agreement to be consummated and shall take such
commercially reasonable steps as are appropriate so that the representations and
warranties of MDL in this Agreement remain complete and correct on and as of the
Closing Date.
5.9 No Other Negotiations
(a) From and after the date of this Agreement until the later of (i) one
hundred (100) days from the date of this Agreement; and (ii) the
execution of the Distribution Agreement but in no event more than one
hundred and fifty (150) days from the date of this Agreement, the MDL
Companies shall not, and shall not permit their respective Employees,
representatives, investment bankers, agents and Affiliates to,
directly or indirectly, (i) solicit, initiate, continue or engage in
discussions or negotiations with any Person, encourage submission of
any inquiries, proposals or offers by, or take any other action
intended or designed to facilitate the efforts of, any Person relating
to a possible Business Combination Transaction, (ii) provide
information with respect to any of the MDL Companies, or afford any
access to the properties, books or records of the MDL Companies, to
any Person, relating to a possible Business Combination Transaction,
(iii) make or authorize any statement, recommendation or solicitation
in support of any possible Business Combination Transaction by any
Person, or (iv) enter into an agreement with any Person, providing for
a possible Business Combination Transaction.
(b) Notwithstanding the foregoing Subsection 5.9(a), nothing shall prevent
MDL or its board of directors from (i) furnishing information
regarding MDL to any Person in connection with a Business Combination
Transaction or engaging in discussions or negotiations with respect
thereto if and only to the extent that (A) the board of directors of
MDL determines in good faith, after consultation with its financial
and legal advisors that such possible Business Combination Transaction
is reasonably likely to result in a Superior Proposal, (B) the board
of directors of MDL determines in good faith, after consultation with
its outside legal counsel and financial advisers, that such action is
reasonably required in order for the board of directors of MDL to
comply with its fiduciary duties under applicable Law, (C) the Person
who has requested such information has executed and delivered to MDL a
non-disclosure agreement that is not less restrictive than the
non-disclosure agreements in effect between MDL and TSA, (D) prior to
furnishing such information or entering into such discussions or
negotiations, MDL provides written notice to TSA that it is furnishing
information to, or entering into discussions or negotiations with,
another Person which notice identifies such Person and (E) MDL keeps
TSA informed of the status of any such discussions or negotiations. In
addition, nothing in Section 5.9(a) above shall prevent the board of
directors of MDL from recommending a Superior Proposal to the MDL
Securityholders provided however that MDL (i) shall provide TSA with
at least forty-eight (48) hours prior written notice of its intentions
to hold any meeting at which the board of directors of MDL is
reasonably expected to consider a possible Business Combination
Transaction, and (ii) MDL shall not recommend to the MDL
Securityholders the Superior Proposal for at least two (2) Business
Days after MDL has provided TSA with the material terms of such
Superior Proposal.
(c) Nothing in Section 5.9(a) shall prevent the board of directors of MDL
from withdrawing, amending or modifying its recommendation in favor of
the transaction consummating the Arrangement at any time prior to the
approval of the Plan of Arrangement by the MDL Securityholders if (i)
a Superior Proposal is made to MDL and is not withdrawn, and (ii)
neither MDL nor any of its representatives shall have violated any of
the restrictions set forth in Section 5.9. Except as may be limited by
applicable Law, MDL shall call, give notice of, convene and hold the
MDL Securityholders Meeting pursuant to the terms of this Agreement
(regardless of whether the recommendation of the board of directors of
MDL shall have been withdrawn, amended or modified or the board of
directors determines that the Agreement is no longer advisable and
recommends that the MDL Securityholders reject it).
(d) MDL shall immediately cease and cause to be terminated any existing
discussions or negotiations with any Person (other than TSA) conducted
heretofore with respect to any of the foregoing, including, without
limitation, any discussions or negotiations with third parties
regarding the issuance of securities of MDL or other investment(s) in
MDL by such third parties whether or not such investments would result
in a change of control of MDL. MDL agrees not to release any third
party from any confidentiality or standstill agreement with respect to
any of the foregoing to which MDL is a party.
(e) MDL shall use its commercially reasonable efforts to ensure that the
Employees, agents and Associates of the MDL Companies and any bankers,
investment bankers or other agents, advisors or representatives
retained by MDL are aware of the restrictions described in this
Section 5.9, and shall be responsible for any breach of this Section
5.9 by such bankers, investment bankers, Employees, agents, advisors,
representatives or Associates.
5.10 Cooperation
MDL and TSA have discussed a strategy for approaching existing and
prospective customers in an effort to ensure that the business objectives of the
transactions contemplated hereby will be achieved and the business of MDL is not
harmed after execution of this Agreement until the Closing Date. To the extent
permitted by applicable Law and the contractual and other legal obligations of
MDL and TSA to their respective customers, MDL will cooperate with TSA in
developing this strategy and MDL agrees to approach customers on a joint basis
with TSA consistent with the agreed strategy.
5.11 Canadian Clearance Certificates
(a) Persons. MDL will use its commercially reasonable efforts to cause
each Person who holds, or will hold, a MDL Security immediately prior
to the Effective Time to deliver to MDL, at or before such time:
(i) a certificate confirming that such MDL Securityholder is a
Canadian Resident; or
(ii) in the case of a MDL Securityholder who is not a Canadian
Resident, a certificate satisfactory to TSA Exchangeco acting
reasonably, issued pursuant to Subsection 116(2) or 116(4) of the
ITA, with respect to the MDL Security exchanged or disposed of,
and, in the case of a certificate under Subsection 116(2) of the
ITA, having as the "certificate limit", as defined in Subsection
116(2) of the ITA, an amount no less than the cost (which may be
equal to the fair market value of the Exchangeable Shares or TSA
Class A Common Shares and cash (if any) received by such holder)
to TSA Exchangeco of the MDL Security.
(b) Partnerships. In the case of a MDL Securityholder who is a
partnership, MDL will use its commercially reasonable efforts to cause
such MDL Securityholder to also provide a certificate confirming the
name and address of each member thereof and the percentage of
partnership interest held by each member.
(c) Withholding if no certificate. In the event that a holder of a MDL
Security fails to deliver the requisite certificates described above
at or before the exchange or disposition of such MDL Security, TSA
Exchangeco shall be entitled to deduct and withhold from any
consideration otherwise payable to any such holder such amounts as TSA
Exchangeco is required or permitted to deduct and withhold with
respect to such payment under the ITA or any other provision of
applicable Tax Law, in each case, as amended or succeeded; provided
that such withheld amount shall not be remitted prior to two (2)
Business Days prior to the date such amount is required by Law to be
remitted (the "Remittance Date") and where such certificate is
delivered prior to the Remittance Date, such withheld amount shall be
released to the holder except to the extent such amounts were withheld
or deducted pursuant to another provision of applicable Tax Law. To
the extent that amounts are so withheld, such withheld amounts shall
be treated for all purposes hereof as having been paid to the holder
of the MDL Security in respect of which such deduction and withholding
was made, provided that such withheld amounts are actually remitted to
the appropriate Taxing Authority and a receipt evidencing such
remittance is delivered to the holder. To the extent that the amount
so required or permitted to be deducted or withheld from any payment
to a holder exceeds the cash portion of the consideration otherwise
payable to the holder, TSA Exchangeco is hereby authorized to sell or
otherwise dispose of such portion of the consideration as is necessary
to provide sufficient funds to TSA Exchangeco to enable it to comply
with such deduction or withholding requirement and TSA Exchangeco
shall notify the holder thereof and remit to such holder any unapplied
balance of the net proceeds of such sale. If the proceeds of such sale
are insufficient to fund the required withholding, such holder shall
forthwith pay to TSA Exchangeco or remit to the applicable Taxing
Authority the deficiency. The holder shall bear all reasonable costs
and expenses associated with any sale by TSA Exchangeco pursuant to
the two immediately preceding sentences.
(d) Other Exchanges. On any conversion and exchange of Stonebridge Options
or Compensation Warrants, on any exchange of MDL Options for TSA
Replacement Options, on any exchange of MDL Class A Shares for TSA
Class A Common Shares or Exchangeable Shares or on any subsequent
exchange of Exchangeable Shares for TSA Class A Common Shares, the
requirements set forth in this Section 5.11 shall also be applicable
with the necessary changes.
5.12 Insurance Policies
None of the MDL Companies shall take, or omit to take, any action which
would cause any of the insurance policies disclosed in Section 3.17 (Insurance)
above to cease to be in full force and effect immediately following the Closing
Date.
5.13 Employee Incentive Arrangements
MDL agrees that it will implement the employee incentive arrangements
relating to certain key Employees on a basis that is consistent with employee
incentive arrangements implemented for the benefit of key employees of other TSA
business units.
ARTICLE VI
TSA COVENANTS
6.1 Advice of Changes
During the period from the date of this Agreement until the earlier of
the Effective Time and the termination of this Agreement in accordance with its
terms, TSA will promptly advise MDL in writing (a) of any event or fact
occurring subsequent to the date of this Agreement which becomes known to TSA
that would render any representation or warranty of any of the TSA Companies
contained in this Agreement, if made on or as of the date of such event or the
Closing Date, untrue or inaccurate in any material respect, (b) if any Material
Adverse Effect on TSA and its Affiliates which becomes known to TSA and (c) of
any breach by TSA of any covenant or agreement contained in this Agreement. TSA
will provide or otherwise make available to MDL (either directly or through
XXXXX) a copy of all publicly available materials filed by TSA with the SEC
promptly after each such filing is made.
6.2 Regulatory Approvals
TSA 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 that
may be reasonably required, or which MDL may reasonably request, in connection
with the consummation of the transactions contemplated by this Agreement. TSA
will use its commercially reasonable efforts to promptly obtain all such
authorizations, approvals and consents. Without limiting the generality of the
foregoing, as promptly as practicable after the execution of this Agreement, TSA
shall file a pre-merger notification report under the HSR Act and the Investment
Canada Act if required by Law.
6.3 Necessary Consents
During the term of this Agreement, each of the TSA Companies will use
its commercially reasonable efforts to obtain such written consents and take
such other actions as may be necessary or appropriate in addition to those set
forth in Section 6.2 (including without limitation, those consents and action
required of TSA set forth in Article VIII (Conditions Precedent to Obligations
of MDL)) to allow the consummation of the transactions contemplated hereby.
6.4 Satisfaction of Conditions Precedent
During the term of this Agreement, TSA will use its commercially
reasonable efforts to satisfy or cause to be satisfied all the conditions
precedent that are set forth in Article VIII, and TSA will use its commercially
reasonable efforts to cause the Plan of Arrangement and the other transactions
contemplated by this Agreement to be consummated and shall take such
commercially reasonable steps as are appropriate so that the representations and
warranties of the TSA Companies in this Agreement remain complete and correct on
and as of the Closing Date.
6.5 Employee Incentive Arrangements
TSA agrees that it will cause MDL to implement the employee incentive
arrangements relating to certain key Employees on a basis that is consistent
with employee incentive arrangements implemented for the benefit of key
employees of other TSA business units.
6.6 Issuance and Listing of TSA Class A Common Share
For so long as any Exchangeable Shares or Replacement TSA Options are
held by holders other than TSA and its Affiliates, TSA will cause the TSA Class
A Common Shares which are to be issued directly in consideration for MDL Class A
Shares or to be issued from time to time upon exchange of the Exchangeable
Shares or upon exercise of Replacement TSA Options, to be quoted on the NASDAQ
or such other exchange or quotation system to the same extent as TSA stock is
quoted generally, subject only to official notice of issuance.
6.7 Registration Statement
TSA shall prepare and file the Registration Statement with the SEC on a
timely basis. TSA shall use commercially reasonable efforts to ensure that the
Registration Statement shall become effective under the U.S. Securities Act and
shall remain effective so long as any Exchangeable Shares are outstanding. As
soon as reasonably practicable after the Effective Date, TSA shall prepare and
file with the SEC a registration statement on Form S-8 (or other appropriate
form) with respect to the TSA Class A Common Shares subject to Replacement TSA
Options. TSA shall use commercially reasonable efforts to ensure that such
registration statement shall remain effective so long as any Replacement TSA
Options are outstanding.
6.8 Non-Solicitation
Upon execution of this Agreement and for a period of one hundred and
eighty (180) days from the date that this Agreement is terminated pursuant to
Article X, TSA and its Affiliates will not directly or indirectly recruit,
solicit, induce or otherwise promote or encourage any Employee to terminate his
or her employment or otherwise cease his or her relationship with any of the MDL
Companies. In addition, neither TSA nor any Affiliate of TSA will hire or employ
or use under any subcontracting arrangement any present or former MDL Employee
of any of the MDL Companies for a period of one hundred and eighty (180) days
from the date that this Agreement is terminated pursuant to Article X without
the prior written consent of an authorized executive of MDL.
6.9 Cooperation
MDL and TSA have discussed a strategy for approaching existing and
prospective customers in an effort to ensure that the business objectives of the
transactions contemplated hereby will be achieved and the business of MDL is not
harmed after execution of this Agreement until the Closing Date. To the extent
permitted by applicable Law and the contractual and other legal obligations of
MDL and TSA to their respective customers, TSA will cooperate with MDL in
developing this strategy and TSA agrees to approach customers on a joint basis
with MDL consistent with the agreed strategy.
6.10 Access to Information
Subject to the terms of the Mutual Non-Disclosure Agreement entered
into between MDL and TSA on May 10, 2000 and provided that each Person having
access to any TSA information also enters into a non-disclosure agreement with
TSA (in form and substance satisfactory to TSA) agreeing not to sell or trade
TSA Class A Common Shares so long as any information reviewed is in the
non-public domain, during the term of this Agreement, TSA will allow MDL and its
agents reasonable access to the files, books, records and offices of TSA,
including, without limitation, all information relating to the Taxes,
commitments, contracts, leases, licenses, and products of TSA and its
Affiliates, the TSA IP Rights, and real, personal and intangible property and
financial condition of TSA and its Affiliates as MDL may reasonably request. TSA
will use commercially reasonable efforts to cause its accountants and personnel
to cooperate with MDL and its agents in making available to MDL all financial
and other information reasonably requested. MDL acknowledges that certain of
such information may be competitively sensitive and that disclosure thereof
shall be limited to the extent necessary for the purpose of preserving for TSA
the value inherent in its property, including the TSA IP Rights.
6.11 Continuing Ownership
(a) TSA will continue to be the indirect beneficial holder of all of the
issued and outstanding shares of TSA Holdco. A Delaware special
purpose corporation (directly or indirectly wholly-owned by TSA) will
be the direct holder of the issued and outstanding shares of TSA
Holdco.
(b) TSA Holdco will continue to be the direct beneficial holder of all of
the issued and outstanding voting shares of TSA Exchangeco. Non-voting
preferred shares of TSA Exchangeco will be transferred to one or more
third parties in connection with the Closing. The TSA Companies hereby
undertake that the provisions attaching to such non-voting preferred
shares will be appended as Appendix C to the Plan of Arrangement as
soon as reasonably practicable but in no event later than fifteen (15)
Business Days after execution of this Agreement. Such preferred shares
will be entitled to cumulative dividends but the preferred share
provisions will provide that no dividends will be paid on the
preferred shares if TSA Exchangeco is in default of its dividend
obligations on the Exchangeable Shares. The preferred shares may also
be redeemable and retractable. MDL hereby consents to the necessary
amendments to the Plan of Arrangement and other applicable Ancillary
Agreements to reflect the existence and terms of such preferred
shares.
6.12 Preparation of Proxy Materials
TSA will cooperate with MDL in the preparation and drafting of the
Proxy Materials. The information to be supplied by TSA for inclusion in the
Proxy Materials shall be supplied by TSA as soon as reasonably practicable but
in no event later than twenty (20) Business Days following the request for such
information.
6.13 Establishment of Escrow
Simultaneously with the execution and delivery of the Escrow Agreement,
TSA Exchangeco shall deposit with the Escrow Agent certificates representing the
Escrowed Shares.
ARTICLE VII
CLOSING MATTERS
7.1 The Closing
Subject to the termination of this Agreement as provided in Article X
(Termination) below, the Closing will take place on the Closing Date at the
offices of Xxxxx & XxXxxxxx, Suite 2100, 000 Xxx Xxxxxx, Xxxxxxx, Xxxxxxx and at
a time to be mutually agreed upon by the parties. The Closing Date shall be no
later than the fifth (5th) Business Day after all conditions precedent set forth
herein shall have been satisfied or waived, unless another place, time and date
is mutually selected by MDL and TSA. Concurrently with the Closing, the Articles
of Arrangement giving effect to the Plan of Arrangement will be filed with the
Registrar under the ABCA.
7.2 Ancillary Agreements/Reservation of Shares
(a) Provided that the conditions set forth in Articles VIII and IX
(Conditions Precedent) of this Agreement have been satisfied or
waived, MDL shall, on the Closing Date, file the Articles of
Arrangement giving effect to the Plan of Arrangement pursuant to the
ABCA.
(b) Provided that the conditions set forth in Articles VIII and IX
(Condition Precedent) of this Agreement have been satisfied or waived,
on the Closing Date the following Ancillary Agreements shall be
executed and delivered by the parties thereto:
(i) The TSA Companies shall execute and deliver the Support
Agreement;
(ii) The TSA Companies and the Trustee shall execute and deliver the
Voting and Exchange Trust Agreement; and
(iii)The TSA Companies, the Shareholder Agent and the Escrow Agent
shall execute and deliver the Escrow Agreement.
On or before the Closing Date, the board of directors of TSA shall have
adopted a resolution (i) designating and issuing the TSA Special Voting
Share (as defined in the Plan of Arrangement), and such resolution
shall be in full force and effect, (ii) authorizing the issuance of
such number of TSA Class A Common Shares as shall be required to
accommodate any acquisition of MDL Class A Shares or the immediate
exchange of Exchangeable Shares, and (iii) adopting the MDL Stock
Option Plan and authorizing the issuance of the Replacement TSA
Options. On or before the Closing Date, TSA shall have reserved for
issuance such number of TSA Class A Common Shares as shall be necessary
to give effect to the exchanges contemplated hereby and by the Plan of
Arrangement.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF MDL
The obligations of MDL hereunder are subject to the fulfillment or
satisfaction on or before the Closing Date of each of the following conditions
(any one or more of which may be waived by MDL, but only in a writing signed by
MDL):
8.1 Accuracy of Representations and Warranties
The representations and warranties of TSA set forth in Article IV shall
be true and accurate in all material respects on and as of the Closing Date with
the same force and effect as if they had been made on the Closing Date except
for changes contemplated by this Agreement (including, without limitation,
Section 6.1 (Advice of Changes) and MDL shall receive a certificate to such
effect executed by an officer of TSA.
8.2 Covenants
TSA shall have performed and complied in all material respects with all
of its covenants required to be performed by TSA under this Agreement or the
Plan of Arrangement on or before the Closing Date, and MDL shall receive a
certificate to such effect signed by an officer of TSA.
8.3 Absence of Material Adverse Effect
There shall not have occurred any event or change since the date hereof
that has a Material Adverse Effect on TSA and its Affiliates. For the sake of
clarity, a material decrease in the price of TSA Class A Common Shares does not
itself constitute a Material Adverse Effect on TSA and its Affiliates.
8.4 Compliance with Law
There shall be no order, decree or ruling by any Governmental Entity or
threat thereof, or any applicable Law enacted, entered, enforced or deemed
applicable to the Plan of Arrangement, that would prohibit or render illegal the
transactions contemplated by this Agreement.
8.5 Shareholder Approval
The Arrangement shall have been approved and adopted by the MDL
Securityholders in accordance with applicable Law and MDL's articles of
incorporation and bylaws, and, provided that MDL shall have filed the Articles
of Arrangement giving effect to the Arrangement, such Articles of Arrangement
shall have become legally effective to give effect to the Plan of Arrangement as
of the Effective Time.
8.6 No Legal Action
No temporary restraining order, preliminary injunction or permanent
injunction or other order preventing the consummation of the Arrangement or any
other transaction contemplated hereby shall have been issued by any Governmental
Entity and remain in effect, nor shall any proceeding seeking any of the
foregoing be pending.
8.7 Governmental Approvals
All necessary orders, approvals and consents required to consummate the
Arrangement and this Agreement and the Ancillary Agreements shall have been
obtained from applicable Governmental Entities including without limitation the
following:
(a) Orders, decisions or rulings of the applicable securities commissions
and regulatory authorities (including approval of the Proxy Materials,
if required);
(b) Final order of the Court approving the Arrangement; and
(c) Orders, decisions or rulings required under applicable Law (including
"blue sky" Laws) and the rules of the NASDAQ.
8.8 Exemption
An exemption from registration under Section 3(a)(10) of the U.S.
Securities Act shall be available for the issuance of Replacement TSA Options,
Exchangeable Shares and TSA Class A Common Shares issued at Closing in exchange
for MDL Class A Shares or MDL Options.
8.9 HSR Act
The parties shall have complied with the requirements of the HSR Act,
if applicable.
8.10 Tax Status
There shall not have occurred any change in the ITA or the regulations
thereunder enacting into Law a change first proposed from and after the date
hereof, or any proposal made from and after the date hereof by the Minister of
Finance of Canada to amend the ITA or the regulations thereunder which, if
enacted, would result in the exchange of MDL Class A Shares for Exchangeable
Shares not being eligible for election under Subsection 85(1) or Subsection
85(2) of the ITA, to the extent that such exchange would have been eligible for
election under Subsection 85(1) or 85(2) if such change had not been enacted;
and there shall not have been any official or administrative pronouncement or
action announced or adopted after the date hereof or judicial decision rendered
after the date hereof interpreting or applying the ITA or the regulations
thereunder, that would result in or could reasonably be expected to result in
any of the foregoing.
8.11 Delivery of Agreements
Each of the following agreements, in form and substance satisfactory to
MDL, shall have been executed by all parties thereto except for MDL and the
Shareholder Agent and delivered to MDL:
(a) the Voting and Exchange Trust Agreement;
(b) the Support Agreement; and
(c) the Escrow Agreement.
8.12 Effectiveness of the Registration Statement
The Registration Statement shall be effective under the U.S. Securities
Act. No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for that purpose and no
similar proceeding in respect of the Registration Statement shall have been
initiated or threatened by the SEC.
8.13 Opinion of TSA's Counsel
MDL shall have received from Xxxxx & XxXxxxxx, Canadian and U.S.
counsel to TSA, opinions described in Exhibit 8.13 in connection with the
transactions contemplated by this Agreement and subject to the customary
qualifications and reliances.
8.14 Consents, Waivers, Etc
TSA shall have received all written consents, assignments, waivers,
authorizations or other certificates necessary to provide for the continuation
in full force and effect of any and all material contracts and leases of the TSA
Companies and for the TSA Companies 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 TSA and its Affiliates.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF
THE TSA COMPANIES
The obligations of the TSA Companies hereunder are subject to the
fulfillment or satisfaction on or before the Closing Date of each of the
following conditions (any one or more of which may be waived by TSA, but only in
a writing signed by TSA):
9.1 Accuracy of Representations and Warranties
The representations and warranties of MDL set forth in Article III (as
qualified by the MDL Disclosure Letter) shall be true and accurate in all
material respects on and as of the Closing Date with the same force and effect
as if they had been made at the Closing except for changes contemplated by this
Agreement (including, without limitation, Section 5.1), the Ancillary Agreements
and the Plan of Arrangement and TSA shall receive a certificate to such effect
executed by MDL's Chief Executive Officer.
9.2 Covenants
MDL shall have performed and complied in all material respects with all
of its covenants required to be performed by it under this Agreement or the Plan
of Arrangement on or before the Closing Date, and TSA shall receive a
certificate to such effect signed by MDL's Chief Executive Officer.
9.3 Absence of Material Adverse Effect
There shall not have occurred any event or change since the date hereof
that has a Material Adverse Effect on MDL and the MDL Subsidiaries.
9.4 Compliance with Law
There shall be no order, decree or ruling by any Governmental Entity or
threat thereof, or any applicable Law enacted, entered, enforced or deemed
applicable to the Plan of Arrangement, that would prohibit or render illegal the
transactions contemplated by this Agreement.
9.5 Opinion of MDL's Counsel
TSA shall have received from Xxxxxx Xxxxxxx LLP, Canadian counsel to
MDL, opinions described in Exhibit 9.5 in connection with the transactions
contemplated by this Agreement and subject to the customary qualifications and
reliances.
9.6 Consents, Waivers, Etc
MDL shall have received all written consents, assignments, waivers,
authorizations or other certificates necessary to provide for the continuation
in full force and effect of any and all material contracts and leases of the MDL
Companies and for MDL 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 MDL. For the avoidance of doubt and without
limitation of the foregoing, consents under the contracts listed in Subsection
3.3(b) of the MDL Disclosure Letter will be required.
9.7 MDL Approvals
The Arrangement shall have been approved and adopted by the MDL
Securityholders in accordance with applicable Law and MDL's articles of
incorporation and bylaws.
9.8 Plan of Arrangement
Articles of Arrangement giving effect to the Arrangement shall have
been filed with the Registrar under the ABCA and become legally effective to
give effect to the Plan of Arrangement as of the Effective Time.
9.9 Delivery of Agreements
The Principal Securityholders' Agreement and the Estoppel Certificates
(as such term is defined in the Principal Securityholders' Agreement) shall be
unamended and in full force and effect. In addition, each of the following
agreements, in form and substance satisfactory to TSA, shall have been executed
by all parties thereto except for the TSA Companies and delivered to TSA:
(a) an Affiliate Letter executed by each SEC Affiliate of MDL, including
executive officers, directors and holders of 10% or more of the MDL
Class A Shares; and
(b) the Escrow Agreement.
9.10 No Legal Action
No temporary restraining order, preliminary injunction or permanent
injunction or other order preventing the consummation of the Arrangement or any
other transaction contemplated hereby shall have been issued by any Governmental
Entity and remain in effect, nor shall any proceeding seeking any of the
foregoing be pending.
9.11 Termination of Certain Agreements
Each of the following agreements shall have been terminated: (i) the
Shareholders Agreement; and (ii) Special Warrant Indenture dated December 30,
1999 between MDL and CIBC Mellon Trust Company. If the Agency Agreement dated
December 30, 1999 between MDL and Yorkton Securities Inc., has not been
terminated prior to the Closing, as of the Closing Date, MDL shall have
satisfied all of its covenants pursuant thereto and not be in default of any
provision thereto.
9.12 Governmental Approvals
All necessary orders, approvals and consents required to consummate the
Arrangement and this Agreement and the Ancillary Agreements as listed in Section
3.3 (Authority) of the MDL Disclosure Letter shall have been obtained from
applicable Governmental Entities including without limitation the following:
(a) Orders, decisions or rulings of the applicable securities commissions
and regulatory authorities (including approval of the Proxy Materials,
if required);
(b) Final order of the Court approving the Arrangement in form and
substance reasonably satisfactory to TSA; and
(c) Orders, decisions or rulings required under applicable Law (including
"blue sky" Laws) and the rules of the NASDAQ.
9.13 HSR Act
The parties shall have complied with the requirements of the HSR Act,
if applicable.
9.14 Resignation of Directors and Officers
Each member of the board of directors of MDL and each officer of all of
the MDL Companies shall have delivered to TSA an instrument resigning such
person's position as of the Effective Time.
9.15 Dissenting Shareholders
MDL shall not have received on or prior to the Effective Time notice
from the holders of more than 5% of the MDL Securities (who have a right to
dissent) of their intention to exercise rights of dissent under Section 184 of
the ABCA or pursuant to an order of the Court.
9.16 Exemption from Registration for Exchangeable Shares
An exemption from registration under Section 3(a)(10) of the U.S.
Securities Act shall be available for the issuance of Replacement TSA Options,
Exchangeable Shares and TSA Class A Common Shares issued at Closing in exchange
for MDL Class A Shares or MDL Options.
9.17 Effectiveness of the Registration Statement
The Registration Statement shall be effective under the U.S. Securities
Act. No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for that purpose and no
similar proceeding in respect of the Registration Statement shall have been
initiated or threatened by the SEC.
ARTICLE X
TERMINATION OF AGREEMENT
10.1 Termination
This Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval of the Plan of Arrangement by the MDL
Securityholders and by the Court:
(a) by mutual agreement of MDL and TSA;
(b) by MDL, if there has been a breach by TSA of any representation,
warranty, covenant or agreement set forth in this Agreement on the
part of TSA, or if any representation of TSA shall have become untrue,
in either case which has or can reasonably be expected to have a
Material Adverse Effect on TSA and its Affiliates and which TSA fails
to cure within fifteen (15) Business Days after written notice thereof
from MDL (except that no cure period shall be provided for a breach by
TSA which by its nature cannot be cured);
(c) by MDL, if the conditions set forth in Subsections 5.9(b) and 5.9(c)
have been satisfied and (i) the board of directors of MDL fails to
recommend or withdraws its recommendation of this Agreement or the
Plan of Arrangement or shall have resolved to do so pursuant to
Section 5.9 (No Other Negotiations); or (ii) if the board of directors
of MDL shall have recommended to the MDL Securityholders a Superior
Proposal or resolved to do so. Notwithstanding the opening language of
this Section 10.1, MDL's right to terminate in this Subsection only
arises after the MDL Securityholders fail to approve the Plan of
Arrangement at the MDL Securityholders Meeting or any adjournment
thereof and MDL has paid up to $1,000,000.00 of the TSA Expenses as
required by Section 11.3 (Termination Fees and Expenses).
(d) by TSA, if there has been a breach by MDL of any representation,
warranty, covenant or agreement set forth in this Agreement on the
part of MDL, or if any representation of MDL shall have become untrue,
in either case which has or can reasonably be expected to have a
Material Adverse Effect on the MDL Companies or TSA, and which MDL
fails to cure within fifteen (15) Business Days after written notice
thereof from TSA (except that no cure period shall be provided for a
breach by MDL which by its nature cannot be cured);
(e) by TSA, (i) if the board of directors of MDL fails to recommend or
withdraws its recommendation of this Agreement or the Plan of
Arrangement or shall have resolved to do so; or (ii) if the board of
directors of MDL shall have recommended to the MDL Securityholders any
Business Combination Transaction or resolved to do so; or (iii) if an
offer to acquire 50% of more of the outstanding MDL Class A Shares is
commenced, and the board of directors of MDL fails to recommend
against the MDL Securityholders tendering their MDL Class A Shares
into such offer;
(f) by TSA, if the MDL Securityholders fail to approve the Plan of
Arrangement at the MDL Securityholders Meeting;
(g) by TSA or MDL, if the Court fails to issue an interim or final order
approving the Plan of Arrangement;
(h) by MDL or TSA, if all the conditions for Closing the Arrangement shall
not have been satisfied or waived on or before 5:00 p.m., Toronto time
on the date which is one hundred and twenty (120) days following
execution of this Agreement or such later date as may be agreed upon
in writing by MDL and TSA, other than as a result of a breach of this
Agreement by the terminating party; or
(i) by MDL or TSA, if a permanent injunction or other order by any
Governmental Entity shall have been issued and shall have become final
and non-appealable that would (i) make illegal or otherwise restrain
or prohibit the consummation of the Arrangement or any other
transaction contemplated hereby, (ii) prohibit TSA's ownership or
operation of all or any portion of the business or assets of the MDL
Companies or (iii) compel TSA to dispose of or hold separate all or
any portion of the business or assets of the MDL Companies.
10.2 Notice of Termination
Any termination of this Agreement under Section 10.1 above will be
effective by the delivery of written notice by the terminating party to the
other party hereto.
10.3 Effect of Termination
In the case of any termination of this Agreement as provided in this
Article X, this Agreement shall be of no further force and effect (except as
provided in Article XI). Termination or expiration of this Agreement and the
Ancillary Agreements through any means and for any reason shall not relieve the
parties of any obligation occurring prior thereto and shall be without prejudice
to the rights and remedies of either party with respect to any prior breach of
any provision of this Agreement. No termination of this Agreement shall affect
the obligations of the parties contained in the Mutual Non-Disclosure Agreement
entered into between TSA and MDL on May 10, 2000.
10.4 Effect of Termination on Distribution Agreement
In the case of any termination of this Agreement as provided in this
Article X, the Distribution Agreement shall contemporaneously terminate only if
this Agreement is terminated: (a) by MDL, pursuant to (i) Subsection 10.1(b); or
(ii) Subsection 10.1(h) due to a breach by TSA of any representation, warranty,
covenant or agreement set forth in this Agreement on the part of TSA which has,
or can reasonably be expected to have, a Material Adverse Effect on TSA and its
Affiliates; or (b) by TSA, pursuant to Subsection 10.1(h) due to a breach by MDL
of any representation, warranty, covenant or agreement set forth in this
Agreement on the part of MDL which has not, or cannot reasonably be expected to
have, a Material Adverse Effect on the MDL Companies. For the sake of clarity,
unless one of the foregoing conditions is satisfied, the Distribution Agreement
shall be unaffected by termination of this Agreement.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS; INDEMNITY
11.1 Survival of Representations and Warranties
All representations, warranties and covenants of MDL and each of the
TSA Companies, respectively, contained in this Agreement will survive,
regardless of any investigation made by, or on behalf of, the parties to this
Agreement, until the first (1st) anniversary of the Effective Time or as noted
below in Section 11.2. Notwithstanding anything in this Agreement, the aggregate
liability of the TSA Companies whether to MDL or to the MDL Securityholders
shall in no event exceed the aggregate value of 20% of the TSA Class A Common
Shares delivered at Closing and TSA Class A Common Shares underlying the
Exchangeable Shares based on the Average Trading Price.
11.2 Survival of Certain Covenants
Certain covenants of the parties contained herein shall not be extinguished by
the Closing or the termination of this Agreement in accordance with the terms of
Article X hereof in the following manner:
(a) The covenants of the parties contained in Sections 12.7 (Expenses),
12.8 (Legal Fees), 12.10 (No Personal Liability) and 12.12 (Further
Assurances) shall survive both the Closing and the termination of this
Agreement in accordance with the terms of Article X hereof;
(b) The covenants of TSA and its Affiliates, contained in Section 6.8
(Non-Solicitation) and the covenants of the parties contained in
Section 12.13 (Public Announcement) of this Agreement shall survive
the termination of this Agreement in accordance with the terms of
Article X hereof and remain operative and in full force and effect for
the periods stated therein;
(c) The covenants of MDL and TSA contained in, respectively, Section 5.13
and 6.5 (Employee Inventive Arrangements) of this Agreement shall
survive the Closing and shall remain operative and in full force and
effect; and
(d) The covenant of TSA contained in Section 6.7 (Registration Statement)
shall survive the Closing and remain in full force and effect until
there are no Exchangeable Shares held by holders other than TSA and
its Affiliates.
11.3 Termination Fees and Expenses
(a) MDL shall pay TSA the Alternative Proposal Fee and the TSA Expenses
if:
(i) this Agreement is terminated pursuant to Subsections 10.1(c) or
10.1(e) and any Business Combination Transaction is thereafter
consummated within nine (9) months of such termination;
(ii) this Agreement is terminated pursuant to Subsection 10.1(f) as a
result of the failure of the MDL Securityholders to approve the
Arrangement and a Business Combination Transaction proposal shall
have been made prior to such vote, and any Business Combination
Transaction is thereafter consummated within nine (9) months of
such termination; or
(iii)this Agreement is terminated pursuant to Subsection 10.1(g) as a
result of the failure of the Court to issue an interim or final
order approving this Agreement and the Arrangement and a Business
Combination Transaction proposal shall have been made prior to
such termination and any Business Combination Transaction is
thereafter consummated within nine (9) months of such
termination.
(b) MDL shall not be required to pay TSA Expenses in excess of one million
dollars ($1,000,000.00) pursuant to this Section 11.3.
(c) Payment of the TSA Expenses by MDL to TSA arising pursuant to the
terms of Subsection 11.3(a)(i) shall be made prior to termination of
this Agreement. Payment of the Alternative Proposal Fee by MDL to TSA
arising pursuant to the terms of Subsection 11.3(a)(i) shall be made
contemporaneously with the consummation of such Business Combination
Transaction. For the sake of clarity, even if a Business Combination
Transaction is not consummated within nine (9) months of a termination
pursuant to Subsections 10.1(c) or 10.1(e), MDL shall be required to
pay the TSA Expenses prior to such termination but shall not be
required to pay the Alternative Proposal Fee.
(d) Payment of the Alternative Proposal Fee and the TSA Expenses by MDL to
TSA arising pursuant to the terms of Subsection 11.3(a)(ii) or (iii)
shall be made contemporaneously with the consummation of such Business
Combination Transaction.
11.4 Indemnification of the Indemnitees
Without limiting any other rights the Indemnitees (as such term is
defined in the Plan of Arrangement) may have as against Persons other than the
Indemnifying Shareholders in respect of Losses suffered by TSA and its
Affiliates in connection with this Agreement, at the Effective Time, the
Indemnitees shall be entitled to exercise the rights set forth in Section 7.1 of
the Plan of Arrangement and in the Escrow Agreement against the Indemnifying
Shareholders in the event of any Losses suffered or incurred by an Indemnitee
resulting from the inaccuracy or breach of any representation or warranty of
MDL, any breach of or failure to perform any covenant or agreement of MDL in the
Combination Agreement or in any certificate furnished by MDL pursuant to the
Combination Agreement at Closing or any of the Indemnifying Shareholders or any
other matter set forth herein to the extent and on the terms set forth in the
Escrow Agreement. The Indemnitees' sole remedy for such indemnification from the
Indemnifying Shareholders is as set out in Section 7.1 of the Plan of
Arrangement and the Escrow Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 Governing Law
The laws of the Province of Alberta, Canada (irrespective of its choice
of law principles) will govern the validity of this Agreement, the construction
of its terms and the interpretation and enforcement of the rights and duties of
the parties hereto.
12.2 Assignment Binding Upon Successors and Assigns
None of the parties hereto may assign any of its rights or obligations
hereunder or under the Ancillary Agreements without the prior written consent of
the other parties hereto or thereto. This Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. The TSA Companies expressly agree and acknowledge that the
representations, warranties and covenants of the TSA Companies herein are for
the benefit of and shall inure to the benefit of the MDL Securityholders in
addition to MDL.
12.3 Severability
If any provision of this Agreement, or the application thereof, will
for any reason and to any extent be invalid or unenforceable, the remainder of
this Agreement and application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the greatest extent possible, the economic, business, legal and
other purposes of the void or unenforceable provision.
12.4 Facsimile and Counterparts
This Agreement may be executed by facsimile and in any number of
counterparts, each of which will be deemed to be an original as regards any
party whose signature appears thereon and all of which together will constitute
one and the same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, will bear the signatures of
all the parties reflected hereon as signatories.
12.5 Other Remedies
Except as otherwise provided herein, any and all remedies herein
expressly conferred upon a party will be deemed cumulative with, and not
exclusive of, any other remedy conferred hereby or by Law on such party, and the
exercise of any one remedy will not preclude the exercise of any other.
12.6 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. 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. The Agreement
may be amended by the parties hereto at any time before or after approval of the
MDL Securityholders, but, after such approval, no amendment will be made which
by applicable Law requires the further approval of the MDL Securityholders
without obtaining such further approval.
12.7 Expenses
Each party will bear its respective fees and expenses (including the
fees and expenses of legal counsel, accountants and investment bankers) incurred
with respect to this Agreement, and the transactions contemplated hereby;
provided, that, in the event that this transaction is consummated, the total of
all such fees and expenses incurred by MDL and for which it shall be responsible
(including the fees and expenses described in Section 3.16 hereof) shall not
exceed CDN$1,800,000.00. MDL has provided TSA with a budget of all such fees and
expenses required in connection with the completion of the transactions
contemplated by this Agreement and shall use its commercially reasonable efforts
to consummate such transactions without exceeding the budgeted amount and shall
not enter into any agreement or take any action inconsistent with the foregoing.
If MDL's aggregate fees and expenses exceed CDN$1,800,000.00, then such excess
amount shall be paid by the Indemnifying Shareholders pursuant to Section 7.1 of
the Plan of Arrangement and the terms of the Escrow Agreement.
12.8 Legal Fees
Should suit be brought to enforce or interpret any part of this
Agreement, the prevailing party will be entitled to recover, as an element of
the costs of suit and not as damages, reasonable legal fees to be fixed by the
court (including, without limitation, costs, expenses and fees on any appeal).
The prevailing party will be entitled to recover its costs of suit, regardless
of whether such suit proceeds to final judgment.
12.9 Notices
All notices and other communications pursuant to this Agreement shall
be in writing and deemed to be sufficient if contained in a written instrument
and shall be deemed given if delivered personally, by facsimile, sent by
nationally-recognized overnight courier or mailed by registered or certified
mail (return receipt requested), postage prepaid, to the parties at the
following address (or at such other address for a party as shall be specified by
like notice):
If to MDL to:
MessagingDirect Ltd.
#000, 00000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx LLP
0000 Xxxxxxxx Xxxxx
00000-000 Xxxxxx
Xxxxxxxx, XX
X0X 0X0
Attention: Xxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx LLP
00 Xxxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx Xxxxxxx
Facsimile: (000) 000-0000
If to any TSA Company:
Transaction Systems Architects, Inc.
000 Xxxxx 000xx Xxxxxx
Xxxxx 0
Xxxxx, Xxxxxxxx
00000
Attention: General Counsel and Secretary
Facsimile: (000) 000-0000
with a copy to:
Xxxxx & XxXxxxxx
000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxxx X. Orysiuk
Facsimile: (000) 000-0000
All such notices and other communications shall be deemed to have been received
(a) in the case of personal delivery, on the date of such delivery, (b) in the
case of a facsimile, when the party receiving such copy shall have confirmed
receipt of the communication, (c) in the case of delivery by
nationally-recognized overnight courier, on the Business Day following dispatch,
and (d) in the case of mailing, on the tenth Business Day following such
mailing.
12.10 No Personal Liability
(a) No director or officer of any MDL Company shall have, in such
capacity, any personal liability to any Person under this Agreement or
any other document delivered in connection with the Arrangement on
behalf of a MDL Company. For the sake of clarity, if a director or
officer of a MDL Company is also a MDL Securityholder, the foregoing
limitation shall not apply to such Person's liability as a MDL
Securityholder or under the Principal Securityholder Agreement.
(b) No director or officer of TSA or any Affiliate of TSA shall have, in
such capacity, any personal liability to any Person under this
Agreement or any other document delivered in connection with the
Arrangement on behalf of TSA or any Affiliate of TSA.
12.11 No Joint Venture
Nothing contained in this Agreement will be deemed or construed as
creating a joint venture or partnership between any of the parties. No party is
by virtue of this Agreement authorized as an agent, employee or legal
representative of any other party. No party will have the power to control the
activities and operations of any other and their status is, and at all times,
will continue to be, that of independent contractors with respect to each other.
No party will have any power or authority to bind or commit any other. No party
will hold itself out as having any authority or relationship in contravention of
this Section.
12.12 Further Assurances
Each party agrees to cooperate fully with the other parties and to
execute such further instruments, documents and agreements and to give such
further written assurances as may be reasonably requested by any other party to
evidence and reflect the transactions described herein and contemplated hereby
and to carry into effect the intents and purposes of this Agreement.
12.13 Public Announcement
Upon execution of this Agreement, TSA and MDL promptly will issue a
joint press release approved by both parties announcing the Plan of Arrangement.
Thereafter, TSA or MDL may issue such press releases, and make such other
disclosures regarding the Plan of Arrangement, as each determines (after
consultation with legal counsel) are required under applicable Laws or by the
NASDAQ, provided that to the extent reasonably practicable each will provide
advance notice to the other of the form and content of any such disclosure and
opportunity to comment promptly thereon, and shall in any case promptly deliver
to the other a copy of such disclosure in the form released. Notwithstanding the
foregoing, before the earlier of the Effective Time and the termination of this
Agreement in accordance with its terms, MDL shall, prior to the issuance of any
disclosure regarding its financial results for any period, provide to TSA a copy
of such disclosure substantially in the form to be released.
12.14 Entire Agreement
This Agreement and the exhibits hereto and the Ancillary Agreements
constitute the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and supersede all prior agreements or
understandings, inducements or conditions, express or implied, written or oral,
between the parties with respect hereto other than the Mutual Non-Disclosure
Agreement referred to in Section 10.3 (Effect of Termination), which shall
remain in full force and effect. The express terms hereof control and supersede
any course of performance or usage of the trade inconsistent with any of the
terms hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Combination
Agreement as of the date first above written.
TRANSACTION SYSTEMS ARCHITECTS, INC.
By:______________________________________
Name:
Title:
TRANSACTION SYSTEMS ARCHITECTS
NOVA SCOTIA COMPANY
By:______________________________________
Name:
Title:
TSA EXCHANGECO LIMITED
By:______________________________________
Name:
Title:
MESSAGINGDIRECT LTD.
By:______________________________________
Name:
Title:
F:\jnh 2000\Project Mozart\Execution Copies\Combo Execution Copy1.doc
LIST OF EXHIBITS
Exhibit 2.1 - Plan of Arrangement
Exhibit 2.4 - Escrow Agreement
Exhibit 3.4 - MDL Balance Sheet
Exhibit 7.2(b)(i) - Support Agreement
Exhibit 7.2(b)(ii) - Voting and Exchange Trust Agreement
Exhibit 8.13 - Opinion of TSA's counsel
Exhibit 9.5 - Opinion of MDL's counsel
Exhibit 9.9(a) - Affiliate Letter
TABLE OF CONTENTS
ARTICLE I INTERPRETATION.......................................................2
1.1 Definitions...........................................................2
1.2 Interpretation not affected by headings, etc..........................9
1.3 Currency.............................................................10
1.4 Number, etc..........................................................10
1.5 Date for any action..................................................10
1.6 Accounting Matters...................................................10
1.7 Statutory References.................................................10
1.8 Knowledge............................................................10
ARTICLE II STRUCTURE OF THE TRANSACTION.......................................11
2.1 Court Approval.......................................................11
2.2 Arrangement..........................................................11
2.3 Dissenting Shares....................................................13
2.4 Escrow of Shares.....................................................13
2.5 Other Effects of the Arrangement.....................................13
2.6 Exchange of Call Rights for Put Rights...............................13
2.7 Adjustments to Exchange Ratio Prior to Effective Date................14
2.8 Total Number of Shares...............................................14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF MDL.............................14
3.1 Organization, Good Standing, Qualification and Power.................14
3.2 Capital Structure....................................................15
3.3 Authority............................................................16
3.4 Financial Statements.................................................17
3.5 Absence of Undisclosed Liabilities...................................17
3.6 Receivables..........................................................17
3.7 Compliance with Applicable Laws......................................18
3.8 Litigation...........................................................18
3.9 Employees............................................................18
3.10 Employee Benefits.................................................21
3.11 Absence of Certain Changes or Events..............................23
3.12 Agreements........................................................26
3.13 No Defaults.......................................................27
3.14 Taxes.............................................................28
3.15 Intellectual Property.............................................29
3.16 Fees and Expenses.................................................31
3.17 Insurance.........................................................32
3.18 Ownership of Property.............................................32
3.19 Environmental Matters.............................................33
3.20 Interested Party Transactions.....................................33
3.21 Board Approval....................................................33
3.22 Vote Required.....................................................34
3.23 Disclosure........................................................34
3.24 Restrictions on Business Activities...............................34
3.25 Books and Records.................................................35
3.26 Customers.........................................................35
3.27 Competition Act...................................................35
3.28 Investment Canada Matters.........................................36
3.29 Fairness Opinions.................................................36
3.30 Sales of MDL Securities...........................................36
3.31 Governmental Authorizations and Licenses..........................36
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE TSA COMPANIES................36
4.1 Organization, Good Standing, Qualification and Power.................36
4.2 Capital Structure....................................................37
4.3 Authority............................................................37
4.4 SEC Documents and Financial Statements...............................38
4.5 Compliance with Law..................................................39
4.6 Absence of Certain Changes or Events.................................39
4.7 Investment Canada Act................................................40
4.8 TSA Class A Common Shares............................................40
4.9 Intellectual Property................................................40
4.10 Restrictions on Business Activities...............................40
4.11 TSA Holdco and TSA Exchangeco.....................................40
4.12 No Dividends......................................................41
4.13 Disclosure........................................................41
ARTICLE V MDL COVENANTS.......................................................41
5.1 Advice of Changes....................................................41
5.2 Maintenance of Business..............................................42
5.3 Conduct of Business..................................................42
5.4 Shareholder Approval.................................................44
5.5 Regulatory Approvals.................................................44
5.6 Necessary Consents...................................................44
5.7 Access to Information................................................45
5.8 Satisfaction of Conditions Precedent.................................45
5.9 No Other Negotiations................................................45
5.10 Cooperation.......................................................47
5.11 Canadian Clearance Certificates...................................47
5.12 Insurance Policies................................................48
5.13 Employee Incentive Arrangements...................................48
ARTICLE VI TSA COVENANTS......................................................49
6.1 Advice of Changes....................................................49
6.2 Regulatory Approvals.................................................49
6.3 Necessary Consents...................................................49
6.4 Satisfaction of Conditions Precedent.................................49
6.5 Employee Incentive Arrangements......................................50
6.6 Issuance and Listing of TSA Class A Common Share.....................50
6.7 Registration Statement...............................................50
6.8 Non-Solicitation.....................................................50
6.9 Cooperation..........................................................50
6.10 Access to Information.............................................51
6.11 Continuing Ownership..............................................51
6.12 Preparation of Proxy Materials....................................52
6.13 Establishment of Escrow...........................................52
ARTICLE VII CLOSING MATTERS...................................................52
7.1 The Closing..........................................................52
7.2 Ancillary Agreements/Reservation of Shares...........................52
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF MDL.......................53
8.1 Accuracy of Representations and Warranties...........................53
8.2 Covenants............................................................53
8.3 Absence of Material Adverse Effect...................................53
8.4 Compliance with Law..................................................53
8.5 Shareholder Approval.................................................54
8.6 No Legal Action......................................................54
8.7 Governmental Approvals...............................................54
8.8 Exemption............................................................54
8.9 HSR Act..............................................................54
8.10 Tax Status........................................................54
8.11 Delivery of Agreements............................................55
8.12 Effectiveness of the Registration Statement.......................55
8.13 Opinion of TSA's Counsel..........................................55
8.14 Consents, Waivers, Etc............................................55
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TSA COMPANIES...........55
9.1 Accuracy of Representations and Warranties...........................56
9.2 Covenants............................................................56
9.3 Absence of Material Adverse Effect...................................56
9.4 Compliance with Law..................................................56
9.5 Opinion of MDL's Counsel.............................................56
9.6 Consents, Waivers, Etc...............................................56
9.7 MDL Approvals........................................................57
9.8 Plan of Arrangement..................................................57
9.9 Delivery of Agreements...............................................57
9.10 No Legal Action...................................................57
9.11 Termination of Certain Agreements.................................57
9.12 Governmental Approvals............................................57
9.13 HSR Act...........................................................58
9.14 Resignation of Directors and Officers.............................58
9.15 Dissenting Shareholders...........................................58
9.16 Exemption from Registration for Exchangeable Shares...............58
9.17 Effectiveness of the Registration Statement.......................58
ARTICLE X TERMINATION OF AGREEMENT............................................58
10.1 Termination.......................................................58
10.2 Notice of Termination.............................................60
10.3 Effect of Termination.............................................60
10.4 Effect of Termination on Distribution Agreement...................60
ARTICLE XI SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNITY...61
11.1 Survival of Representations and Warranties........................61
11.2 Survival of Certain Covenants.....................................61
11.3 Termination Fees and Expenses.....................................61
11.4 Indemnification of the Indemnitees................................62
ARTICLE XII MISCELLANEOUS.....................................................63
12.1 Governing Law.....................................................63
12.2 Assignment Binding Upon Successors and Assigns....................63
12.3 Severability......................................................63
12.4 Facsimile and Counterparts........................................63
12.5 Other Remedies....................................................63
12.6 Amendment and Waivers.............................................64
12.7 Expenses..........................................................64
12.8 Legal Fees........................................................64
12.9 Notices...........................................................64
12.10 No Personal Liability.............................................66
12.11 No Joint Venture..................................................66
12.12 Further Assurances................................................66
12.13 Public Announcement...............................................67
12.14 Entire Agreement..................................................67
