EXHIBIT 2.1
ARRANGEMENT AGREEMENT
BETWEEN
XXXXXX CORPORATION
AND
XXXXXX TECHNOLOGY CORPORATION
=======================================
AUGUST 31, 2005
=======================================
ARTICLE I DEFINITIONS AND INTERPRETATION.............................................................1
1.1 Definitions....................................................................................1
1.2 Interpretation Not Affected by Headings.......................................................10
1.3 Number and Gender.............................................................................10
1.4 Date for Any Action...........................................................................10
1.5 Currency......................................................................................10
1.6 Accounting Matters............................................................................10
1.7 Knowledge.....................................................................................11
1.8 Disclosure....................................................................................11
1.9 Construction..................................................................................11
1.10 Statutory References..........................................................................11
1.11 Schedules.....................................................................................11
ARTICLE II THE ARRANGEMENT...........................................................................12
2.1 The Arrangement...............................................................................12
2.2 Press Release Announcing the Transaction......................................................12
2.3 Interim Order.................................................................................12
2.4 Articles of Arrangement.......................................................................13
2.5 Shareholders' Meeting and Circular............................................................13
2.6 Preparation of Filings........................................................................14
2.7 Communications................................................................................14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF XXXXXX..................................................15
3.1 Representations and Warranties................................................................15
3.2 Survival of Representation and Warranties.....................................................32
- 2 -
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF XXXXXX..................................................32
4.1 Representations and Warranties................................................................32
4.2 Survival of Representations and Warranties....................................................34
ARTICLE V COVENANTS.................................................................................34
5.1 Covenants of Xxxxxx Regarding the Conduct of Business.........................................34
5.2 Covenants of Xxxxxx Regarding the Performance of Obligations..................................37
5.3 Recommendation of the Board of Directors......................................................39
5.4 Covenant of Xxxxxx Regarding Non-Solicitation.................................................40
5.5 Right to Match................................................................................41
5.6 Covenants of Harris Regarding the Performance of Obligations..................................42
5.7 Mutual Covenants..............................................................................43
5.8 Pre-Acquisition Reorganization................................................................43
ARTICLE VI CONDITIONS................................................................................44
6.1 Mutual Conditions.............................................................................44
6.2 Additional Conditions Precedent to the Obligations of Xxxxxx..................................45
6.3 Additional Conditions Precedent to the Obligations of Harris..................................46
6.4 Merger of Conditions..........................................................................46
6.5 Notice and Cure Provisions....................................................................46
ARTICLE VII AGREEMENT AS TO DAMAGES AND OTHER ARRANGEMENTS............................................47
7.1 Agreement as to Damages.......................................................................47
7.2 Reimbursement of Expenses.....................................................................48
7.3 Liquidated Damages............................................................................48
7.4 Access to Information; Confidentiality........................................................49
7.5 Insurance and Indemnification.................................................................49
7.6 Brokers.......................................................................................50
ARTICLE VIII TERMINATION...............................................................................50
8.1 Termination by the Parties....................................................................50
8.2 Effect of Termination.........................................................................51
8.3 Waiver........................................................................................52
ARTICLE IX GENERAL PROVISIONS........................................................................52
9.1 Notices.......................................................................................52
9.2 Entire Agreement..............................................................................53
- 3 -
9.3 Miscellaneous.................................................................................53
9.4 Investigations................................................................................53
9.5 Governing Law.................................................................................54
9.6 Venue.........................................................................................54
9.7 Injunctive Relief.............................................................................54
9.8 Time of Essence...............................................................................54
9.9 Binding Effect and Assignment.................................................................54
9.10 Severability..................................................................................54
9.11 Counterparts..................................................................................54
9.12 No Personal Liability.........................................................................55
9.13 Amendment.....................................................................................55
ARRANGEMENT AGREEMENT
THIS
ARRANGEMENT AGREEMENT dated AUGUST 31, 2005,
BETWEEN:
XXXXXX CORPORATION, a corporation existing under the laws of the State
of Delaware ("HARRIS")
- and -
XXXXXX TECHNOLOGY CORPORATION, a corporation subsisting under the laws
of the Province of
Ontario ("XXXXXX")
WHEREAS the Xxxxxx Board of Directors has unanimously approved this Agreement
and has unanimously agreed to recommend that Shareholders vote in favour of the
Arrangement Resolution, following the unanimous recommendation from the special
committee of the Xxxxxx Board of Directors regarding the Arrangement and the
Cash Consideration to be paid to the Shareholders hereunder.
AND WHEREAS Harris has required that Xxxxxx execute and deliver the Executive
Agreements as a condition to Harris entering into this Agreement, and Xxxxxx has
executed and delivered the Executive Agreements.
WITNESSETH THAT in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration (the receipt and sufficiency
of which are hereby acknowledged), the Parties hereto covenant and agree as
follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless the context otherwise requires:
"ACQUISITION PROPOSAL" means (i) any merger, amalgamation, take-over bid, tender
offer, arrangement, recapitalization, liquidation, dissolution, reorganization
or other business combination or similar transaction directly or indirectly
involving Xxxxxx or a wholly-owned subsidiary of Xxxxxx; (ii) the acquisition in
any manner, directly or indirectly, of assets of Xxxxxx or any of its
subsidiaries which individually or in the aggregate exceed 20% of the book value
of the consolidated assets of Xxxxxx (or any lease, long term supply agreement
or other arrangement having a similar economic effect to a purchase or sale of
assets); (iii) the acquisition in any manner, directly or indirectly, of
beneficial or registered ownership of any shares or securities convertible,
exercisable or exchangeable for securities which exceed 20% of the outstanding
- 2 -
voting securities of Xxxxxx; or (iv) a bona fide proposal, arrangement for or
announcement of an intention to do any of the foregoing, in each case whether in
a single transaction or series of related transactions and any grant of an
option or right to take any such action, excluding the Arrangement contemplated
by this Agreement and any transaction to which Xxxxxx or an affiliate of Xxxxxx
is a party. Any amendment to an Acquisition Proposal shall be considered a new
Acquisition Proposal.
"AFFILIATE" has the meaning ascribed thereto in the OBCA.
"AGGREGATE CASH CONSIDERATION PAYABLE" means the aggregate of the Common Share
Consideration and the Option Consideration.
"AGREEMENT" means this Agreement, all Schedules and exhibits hereto, and any
amendments hereto made in accordance with SECTION 9.13.
"APPROPRIATE REGULATORY APPROVALS" means those sanctions, rulings, consents,
orders, exemptions, permits and other approvals (including the lapse, without
objection, of a prescribed time under a statute or regulation that states that a
transaction may be implemented if a prescribed time lapses following the giving
of notice without an objection being made) referred to in SCHEDULE A hereto.
"ARRANGEMENT" means the arrangement contemplated herein to be made on the terms
set out in the Plan of Arrangement, subject to any amendments or variations
thereto made in accordance with this Agreement and SECTION 6.1 of the Plan of
Arrangement or made at the direction of the Court in the Final Order (with the
consent of Xxxxxx and Harris, each acting reasonably).
"ARRANGEMENT RESOLUTION" means the special resolution of the Shareholders to be
considered at the Meeting, to be substantially in the form set out in SCHEDULE B
hereto.
"ARTICLES OF ARRANGEMENT" means the articles of arrangement of Xxxxxx in respect
of the Arrangement, to be filed with the Director after the Final Order is made.
"BUSINESS" means the business carried on by Xxxxxx and its subsidiaries as
described in Xxxxxx'x Annual Information Form dated July 29, 2005.
"BUSINESS DAY" means any day, other than a Saturday, a Sunday or a statutory
holiday in Toronto,
Ontario or New York City, New York.
"CANADIAN GAAP" means Canadian generally accepted accounting principles.
"CANADIAN SECURITIES ADMINISTRATORS" means the securities regulatory authorities
in each of the provinces and territories of Canada.
"CASH CONSIDERATION" means $14.00 in cash, subject to increase as provided in
SECTION 2.7 or SECTION 5.5 of this Agreement or as otherwise agreed to by Harris
and Xxxxxx.
"CERTIFICATE OF ARRANGEMENT" means the certificate of arrangement giving effect
to the Arrangement, issued pursuant to subsection 183(2) of the OBCA.
- 3 -
"CIRCULAR" means the Xxxxxx Notice of Meeting and the accompanying management
information circular, including all appendices thereto and all amendments from
time to time made thereto, to be sent to Shareholders in connection with the
Meeting.
"COMMISSIONER" means the Commissioner appointed under the Competition Act.
"COMMON SHARE CONSIDERATION" has the meaning ascribed thereto in the Plan of
Arrangement.
"COMMON SHARES" means the issued and outstanding common shares in the capital of
Xxxxxx (including common shares issued upon the exercise of Xxxxxx Options and
Restricted Share Awards) and shall include any shares into which the Common
Shares may be reclassified, subdivided, consolidated or converted and any rights
and benefits arising therefrom including the right to receive any extraordinary
distributions of securities which may be declared in respect of the Common
Shares after the date hereof (except in accordance with the Plan of
Arrangement).
"COMPETITION ACT" means the Competition Act (Canada).
"CONFIDENTIALITY AGREEMENT" means the agreement dated as of July 8, 2005 between
Harris and Xxxxxx as the same may be amended from time to time in accordance
with its terms.
"CONFIDENTIALITY PROVISIONS" has the meaning ascribed thereto in SUBSECTION
7.4(b).
"CONTAMINATION" means the emission, discharge or release of any Hazardous
Material to, on, onto or into the environment and the effects of such emission,
discharge or release, including, without limitation, the presence, existence, or
threatened presence or existence of any such Hazardous Material.
"CONTRACT" means any contract, agreement, licence, franchise, lease, permit,
arrangement, commitment, understanding or other right or obligation to which
Xxxxxx or any of its subsidiaries is a party or by which Xxxxxx or any of its
subsidiaries is bound or affected.
"COURT" means the Superior Court of Justice (
Ontario).
"DEPOSITARY" means Computershare Investor Services Inc. or such other Person as
is appointed to act as depositary for the purposes of the Arrangement by Xxxxxx,
acting reasonably;
"DIRECTOR" means the Director appointed pursuant to Section 278 of the OBCA.
"DISSENT RIGHTS" means the rights of dissent of a Shareholder in respect of the
Arrangement Resolution described in the Plan of Arrangement.
"DISSENTING SHAREHOLDER" has the meaning ascribed thereto in the Plan of
Arrangement.
"DISSENTING SHARES" has the meaning ascribed thereto in the Plan of Arrangement.
"EFFECTIVE DATE" means the date of the Certificate of Arrangement giving effect
to the Arrangement.
"EFFECTIVE TIME" means 12:01 a.m. (Eastern Time) on the Effective Date.
- 4 -
"ENVIRONMENTAL LAWS" means, collectively, any and all Laws, including common
laws, ordinances, rules, regulations, directives, orders, authorizations,
decrees, notices, permits, binding plans, demand letters or other mandates,
proscriptions or prescriptions of any nature of a Governmental Entity, in each
case to the extent legally binding, relating in any way to Contamination, any
Hazardous Material, protection of the environment (indoor and outdoor),
protection or conservation of natural resources, or protection of health and
safety, including, without limitation, those relating to exposures or threatened
exposures of any Person to, or emissions, discharges, releases, or threatened
emissions, discharges, or releases to, on, onto or into the environment, of any
Hazardous Material.
"ENVIRONMENTAL LIABILITY" shall mean any and all liabilities, losses, claims,
penalties, damages, costs, expenses, investigation, remediation or inspection
costs and any expenses (including, without limitation, attorney, consultant and
engineer fees and expenses) of whatever nature or kind, currently known or
unknown, contingent or otherwise, relating in any way to compliance with or
arising under or from any Environmental Law or arising under any theory of law
or equity and relating to, or arising from, Contamination or the use, treatment,
storage, disposal, transport, generation, management, exposure to or handling of
any Hazardous Material.
"ENVIRONMENTAL PERMITS" means any and all permits, authorizations, certificates,
registrations, approvals and consents necessary under Environmental Laws for
Xxxxxx and its subsidiaries to own, lease, licence and operate their respective
properties and conduct their respective businesses as currently conducted.
"EXCHANGE ACT" means the United States Securities Exchange Act of 1934.
"EXCLUSIVITY AGREEMENT" means the exclusivity agreement dated as of August 12,
2005 between Xxxxxx and Harris.
"EXECUTIVE AGREEMENTS" means the agreements of even date between Xxxxxx and each
of Xxxxxxx Xxxxxxxxxxxx and Xxxxx Xxxxx providing for their respective terms of
employment by Xxxxxx effective upon completion of the Arrangement.
"FINAL ORDER" means the final order of the Court approving the Arrangement, as
such order may be amended by the Court (with the consent of Xxxxxx and Harris,
each acting reasonably) at any time prior to the Effective Date or, if appealed,
then, unless such appeal is withdrawn or denied, as affirmed or amended on
appeal.
"FIRST ACQUISITION PROPOSAL" has the meaning ascribed thereto in SUBSECTION
7.1(b).
"GOVERNMENTAL ENTITY" means (a) any multinational, national, federal,
provincial, state, regional, municipal, local or other government, governmental
or public department, central bank, court, tribunal, arbitral body, commission,
board, bureau or agency, domestic or foreign; (b) any subdivision, agent,
commission, board or authority of any of the foregoing; (c) any
quasi-governmental or private body exercising any regulatory, expropriation or
taxing authority under or for the account of any of the foregoing; or (d) any
self-regulatory agencies or organizations exercising any regulatory,
expropriation or taxing authority.
"XXXXXX ACQUIRECO" means a wholly-owned subsidiary of Xxxxxx.
- 5 -
"HAZARDOUS MATERIAL" shall mean any element, substance, chemical, compound or
mixture (including, without limitation, any constituent or any degradation
product thereof) whether solid, liquid or gaseous, that is (a) subject to
regulation pursuant to Environmental Law; or (b) the exposure, presence,
existence, or threatened exposure, presence or existence to or of which may give
rise to any Environmental Liability.
"HSR ACT" means the United States Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976.
"INTELLECTUAL PROPERTY" means all rights to and interests in:
(a) all business and trade names, trade-marks and service marks
(whether used with wares or services and including the
goodwill attaching to such trade-marks or service marks),
applications for trade-marks and service marks (and all future
income from such trade-marks and service marks), Internet
domains and domain names (including all sub-domains and
related domain names), corporate names, brand names and
slogans (whether registered or unregistered) that are Related
to the Business;
(b) all inventions (whether patentable or unpatentable and whether
or not reduced to practice), patents, patent rights, patent
applications (including all reissues, divisions,
continuations, continuations-in-part and extensions of any
patent or patent application), industrial designs and
applications for registration of industrial designs that are
Related to the Business;
(c) all published and unpublished works of authorship that are
Related to the Business, whether or not entitled to copyright
protection, all copyrights in such works, registrations and
applications for such copyrights, all related renewals,
extensions, restorations, and reversions of such copyrights
and all future income from or related to such copyrights;
(d) all customer and supplier lists, pricing and cost information
and business and marketing plans and proposals that are
Related to the Business;
(e) all rights, however acquired, of privacy or publicity that are
Related to the Business;
(f) all rights and interests in and to Technology;
(g) all of the intellectual property affected by the registrations
and applications for registration listed in the Xxxxxx
Disclosure Letter and the permissions and licenses listed in
the Xxxxxx Disclosure Letter;
(h) all other intellectual and industrial property rights
throughout the world Related to the Business;
(i) all licenses of the intellectual property listed in items (a)
to (h) above;
- 6 -
(j) all future income and proceeds from any of the intellectual
property listed in items (a) to (h) above and the licenses
listed in item (i) above; and
(k) all rights to damages and profits by reason of the
infringement of any of the intellectual property listed in
items (a) to (i) above.
"INTERIM ORDER" means the interim order of the Court, as the same may be amended
by the Court (with the consent of Xxxxxx and Harris, each acting reasonably),
containing a declaration and directions in respect of the notice to be given in
respect of and the conduct of the Meeting with respect to the Arrangement.
"LAWS" means all laws, by-laws, statutes, rules, regulations, ordinances, codes,
decrees principles of law, published policies and guidelines, judicial or
arbitral or administrative or ministerial or departmental or regulatory
judgements, orders, decisions, rulings or awards, including general principles
of common and civil law, and the terms and conditions of any grant of approval,
permission, authority or licence of any Governmental Entity (including the TSX),
and the term "APPLICABLE" with respect to such Laws and in a context that refers
to one or more Parties, means such Laws as are applicable to such Party or its
business, undertaking, property or securities and emanate from a Person having
jurisdiction over the Party or Parties or its or their business, undertaking,
property or securities.
"LEASE" has the meaning ascribed thereto in SUBSECTION 3.1(o).
"XXXXXX DISCLOSURE LETTER" means the letter of even date herewith signed by the
President and Chief Executive Officer and the Chief Financial Officer of Xxxxxx
and delivered by Xxxxxx to Harris, in a form accepted by and initialled on
behalf of Harris, with respect to the disclosure of certain matters in this
Agreement.
"XXXXXX FINANCIAL STATEMENTS" has the meaning ascribed thereto in SUBSECTION
3.1(g).
"XXXXXX INTELLECTUAL PROPERTY" means any and all Intellectual Property that is
wholly owned by Xxxxxx or its subsidiaries.
"LICENSED INTELLECTUAL PROPERTY" means all right and interest of Xxxxxx or its
subsidiaries in and to any and all Intellectual Property that is licensed by
Xxxxxx or its subsidiaries from another Person.
"XXXXXX ITALIA" means Xxxxxx Italia S.R.L.
"XXXXXX OPTION" means an option to purchase a Common Share, including without
limitation any performance or inducement options to acquire Common Shares,
granted under the Xxxxxx Stock Option Plan or under specific Xxxxxx employment
agreements provided to Harris.
"XXXXXX PLANS" has the meaning ascribed thereto in SUBSECTION 3.1(s).
"XXXXXX STOCK OPTION PLAN" means the Xxxxxx stock option plan, as revised, dated
September 11, 2001.
- 7 -
"LIEN" means any mortgage, lien (statutory or other), pledge, assignment, deed
of trust, hypothecation, adverse claim, charge, option, right of first refusal,
pre-emptive right, security interest, or other encumbrance of any kind or
nature, or any interest or title of any vendor, lessor, lender or other secured
party under any conditional sale, capital lease, trust receipt or other title
retention agreement.
"MATERIAL ADVERSE EFFECT" means, when used in connection with a Person, any
change, effect, event, occurrence, circumstance or state of facts, prospective
or otherwise, that separately or taken together with any other change, effect,
event, occurrence, circumstance or state of facts, is or would reasonably be
expected to be material and adverse to the business, operations, results of
operations, affairs, liabilities (including any contingent liabilities that may
arise through outstanding, pending or threatened litigation or otherwise),
capitalization, financial condition, licences, permits, rights, privileges or
prospects of such Person and its subsidiaries, taken as a whole, other than (i)
any change, effect, event, occurrence, circumstance or state of facts relating
to general political, financial or economic conditions or securities markets in
general except to the extent such change, effect, event, occurrence,
circumstance or state of facts has a disproportionate effect on such Person or
its subsidiaries, taken as a whole, as compared to other Persons in the
industries in which such Person and its subsidiaries operate, (ii) any change,
effect, event, occurrence or state of facts arising from the announcement of
this Agreement or the pending consummation of the Arrangement in accordance with
this Agreement or (iii) any change, effect, event, occurrence or state of facts
arising from acts of war, sabotage or terrorism, or any escalation of such acts
of war, sabotage or terrorism threatened or underway as of the date of this
Agreement except to the extent such change, event, effect or occurrence has a
disproportionate effect on such Person and its subsidiaries, taken as a whole,
as compared to other Persons in the industries in which such Person and its
subsidiaries operate.
"MATERIAL FACT" has the meaning ascribed thereto in the Securities Act.
"MATERIAL CONTRACT" has the meaning ascribed thereto in SECTION 3.1(x).
"MEETING" means the special meeting of Xxxxxx Shareholders, and all adjournments
and postponements thereof, called and held to, among other things, consider and
approve the Arrangement Resolution.
"MEETING DATE" has the meaning ascribed thereto in SECTION 5.2(h).
"OBCA" means the Business Corporations Act (
Ontario).
"OPTION CONSIDERATION" has the meaning ascribed thereto in the Plan of
Arrangement.
"OPTIONHOLDER" means a holder of Xxxxxx Options and "OPTIONHOLDERS" means the
holders of Xxxxxx Options.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business of Xxxxxx
and its subsidiaries consistent with past custom and practice (including with
respect to quantity and frequency).
- 8 -
"OUTSIDE DATE" means November 30, 2005 or such later date as may be mutually
agreed by the Parties to this Agreement; provided that the Outside Date shall be
automatically extended if the Effective Date does not occur because Appropriate
Regulatory Approvals have not been obtained, including because the waiting
period under the HSR Act or other similar Laws has not expired, until such
approval is obtained or denied, or such waiting period expires; provided
further, however, in no event shall the Outside Date be extended beyond December
31, 2005.
"PARTIES" means Xxxxxx and Harris; and "PARTY" means either of them.
"PERSON" means and includes any individual, partnership, association, limited or
unlimited liability company, joint venture, body corporate, trustee, executor,
administrator, legal representative, government (including any Governmental
Entity) or any other entity, whether or not having legal status.
"PLAN OF ARRANGEMENT" means the plan of arrangement substantially in the form of
SCHEDULE C hereto as amended or varied pursuant to the terms hereof and thereof.
"PRE-ACQUISITION REORGANIZATION" has the meaning ascribed thereto in SECTION
5.8.
"PROCEEDING" means any judicial, administrative, investigative or arbitral
actions, suits or proceedings by or before any Governmental Entity.
"PUBLICLY DISCLOSED BY XXXXXX" means disclosed by Xxxxxx in a public filing made
by it with the Canadian Securities Administrators during the three year period
prior to the date hereof.
"RELATED TO THE BUSINESS" means, directly or indirectly, used in, arising from
or relating in any manner to the Business.
"RESTRICTED SHARE AWARDS" means the awards of restricted common shares to (a)
Xxxxxxx Xxxxxxxxxxxx pursuant to the terms of the letter agreement dated
November 17, 2003 between Xxxxxxx Xxxxxxxxxxxx and Xxxxxx and (b) Xxxxx Xxxxx
pursuant to the terms of the letter from Xxxxxx to Xxxxx Xxxxx dated July 1,
2005.
"SECURITIES ACT" means the Securities Act (
Ontario).
"SHAREHOLDERS" means the holders of Common Shares and "Shareholder" means a
holder of Common Shares.
"SIMILAR CONFIDENTIALITY AGREEMENT" has the meaning ascribed thereto in SECTION
5.4(d).
"SMT ASSETS" has the meaning ascribed thereto in SECTION 5.1(a)(iv).
"SUBSEQUENT ACQUISITION PROPOSAL" has the meaning ascribed thereto in SECTION
7.1(b).
"SUBSIDIARY" has the meaning ascribed thereto in the Securities Act.
- 9 -
"SUPERIOR PROPOSAL" means an unsolicited bona fide written Acquisition Proposal
involving not less than 90% of the Common Shares or 90% of the consolidated
assets (measured on the basis of book value) of Xxxxxx:
(a) in respect of which the Board of Directors of Xxxxxx, after
consultation with outside counsel, has determined in good
faith that it is required to provide non-public information to
or enter into negotiations or discussions with the proposing
party to comply with its fiduciary duties in accordance with
applicable Laws;
(b) in respect of which the Board of Directors of Xxxxxx, after
consultations with its financial advisers, has determined in
good faith would, if consummated in accordance with its terms
(but not assuming away any risk of non-completion), result in
a transaction (1) more favourable from a financial point of
view to Shareholders than the Arrangement taking into account
all of the terms and conditions thereof (including any
proposal made by Xxxxxx in response to such Acquisition
Proposal or otherwise), (2) having consideration with a value
greater than the value of the consideration provided by the
Arrangement, and (3) reasonably capable of being completed
within a reasonable period of time, taking into account all
legal, financial and regulatory aspects of such Acquisition
Proposal and the Person making such Acquisition Proposal;
(c) in respect of which Xxxxxx has provided written notice to
Xxxxxx to the effect that it intends to furnish non-public
information to, or enter into substantive discussions or
negotiations with, the proposing party and has otherwise
complied with the provisions hereof; and
(d) in respect of which Xxxxxx has provided a copy of all material
terms and conditions to Xxxxxx, including the identity of the
Person making the Acquisition Proposal.
"TAX ACT" means the Income Tax Act (Canada).
"TAX" AND "TAXES" means, with respect to any Person, all income taxes (including
any tax on or based upon net income, gross income, income as specially defined,
earnings, profits or selected items of income, earnings or profits) and all
capital taxes, gross receipts taxes, environmental taxes, sales taxes, use
taxes, ad valorem taxes, value added taxes, transfer taxes, franchise taxes,
licence taxes, withholding taxes, payroll taxes, employment taxes, pension plan
premiums, excise, severance, social security premiums, workers' compensation
premiums, unemployment insurance or compensation premiums, stamp taxes,
occupation taxes, premium taxes, property taxes, windfall profits taxes,
alternative or add-on minimum taxes, excise taxes, goods and services tax,
customs duties or other taxes, fees, imports, assessments or charges of any kind
whatsoever, together with any interest and any penalties or additional amounts
imposed by any taxing authority (domestic or foreign) on such entity, and any
interest, penalties, additional taxes and additions to tax imposed with respect
to the foregoing.
"TAX RETURN" OR "RETURN" means any return, declaration, report, claim for
refund, election, information return or similar statement filed or required to
be filed with respect to any Taxes
- 10 -
(including any electronic copy of any of the foregoing), including any schedule
or attachment thereto, and including any amendment thereof.
"TECHNOLOGY" means all trade secrets, know-how, technologies in development,
computer software (including source code and object code), operating systems,
websites and related code, browsers, website content, user interfaces,
algorithms, architecture, structure, display screens, layouts, developments,
development tools, typographies, instructions, templates, evaluation systems,
servers, hardware, flowcharts, formulae and information, manufacturing,
engineering and other drawings and manuals, processes, designs, lab journals,
notebooks, data, data bases, files, blue prints, research and development
reports, agency agreements, technical information, technical assistance,
engineering data, specifications or other technology or related information,
whether completed or in the course of development, and any similar materials
recording or evidencing expertise or information which are Related to the
Business.
"TERMINATION FEE" has the meaning ascribed thereto in SECTION 7.1 hereof.
"TSX" means the Toronto Stock Exchange.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS
The division of this Agreement into Articles, Sections, subsections and
paragraphs and the insertion of headings are for convenience of reference only
and shall not affect in any way the meaning or interpretation of this Agreement.
Unless the contrary intention appears, references in this Agreement to an
Article, Section, subsection, paragraph or Schedule by number or letter or both
refer to the Article, Section, subsection, paragraph or Schedule, respectively,
bearing that designation in this Agreement. References in this Agreement to
"INCLUDE", "INCLUDES", and "INCLUDING" mean "INCLUDING, WITHOUT LIMITATION".
1.3 NUMBER AND GENDER
In this Agreement, unless the contrary intention appears, words
importing the singular include the plural and vice versa, and words importing
gender include all genders.
1.4 DATE FOR ANY ACTION
If the date on which any action is required to be taken hereunder by a
Party is not a Business Day in the place in which the action is required to be
taken, such action shall be required to be taken on the next succeeding day
which is a Business Day in such place.
1.5 CURRENCY
Unless otherwise stated, all references in this Agreement to sums of
money or currency are expressed in lawful money of Canada.
1.6 ACCOUNTING MATTERS
Unless otherwise stated, all accounting terms used in this Agreement in
respect of Xxxxxx or any of its subsidiaries shall have the meanings
attributable thereto under Canadian GAAP and
- 11 -
all determinations of an accounting nature in respect of Xxxxxx or any of its
subsidiaries required to be made shall be made in accordance with Canadian GAAP
applied on a consistent basis and consistent with Xxxxxx'x past practice.
1.7 KNOWLEDGE
In this Agreement, references to "THE KNOWLEDGE OF" means, with respect
to Xxxxxx, the actual knowledge of Xxxxxxx Xxxxxxxxxxxx, Xxxxx Xxxxx, Xxx
Xxxxxxxx, Xxxx Xxxxx and, only in the case of SECTION 3.1(s), Xxx Xxxxxxxx, and,
only in the case of SECTION 3.1(m), Xxx Xxxxxxxxx, after reasonable inquiry, and
shall include any matter that reasonably would be expected to be known by an
officer holding a similar office as such Persons in a company of similar scope
and size of Xxxxxx.
1.8 DISCLOSURE
Where in this Agreement reference is made to disclosure in writing to
Xxxxxx, such disclosure shall be made in writing in the Xxxxxx Disclosure Letter
and a substantially completed draft of which shall be delivered to Xxxxxx not
later than 10 a.m. (EST) on August 29, 2005. Disclosure of items in such Xxxxxx
Disclosure Letter shall make reference to the applicable Sections and
subsections of this Agreement. Any matter disclosed in a certain section of the
Xxxxxx Disclosure Letter shall be deemed to be disclosed for purposes of all
other applicable sections of the Xxxxxx Disclosure Letter only to the extent the
relevance of such disclosed matter to such other applicable sections of the
Xxxxxx Disclosure Letter is reasonably apparent.
1.9 CONSTRUCTION
The language used in this Agreement is the language chosen by the
Parties to express their intent, and no rule of construction to the effect that
any ambiguity is to be resolved against the drafting Party shall be applied
against any Party.
1.10 STATUTORY REFERENCES
A reference to a statute includes all rules, regulations, policies and
blanket orders made pursuant to such statute and, unless otherwise specified the
provisions of any statute, regulation, rule, policy or blanket order which
amends, supplements and supersedes any such statute, regulation, rule, policy or
blanket order.
1.11 SCHEDULES
The following Schedules are annexed to this Agreement and are
incorporated by reference into this Agreement and form a part hereof:
Schedule A - Appropriate Regulatory Approvals
Schedule B - Arrangement Resolution
Schedule C - Plan of Arrangement
- 12 -
ARTICLE II
THE ARRANGEMENT
2.1 THE ARRANGEMENT
The Arrangement shall be comprised of substantially the following
events or transactions, taken in the sequence indicated, each of which shall be
taken following receipt of necessary Shareholder and Court approvals and
fulfilment or waiver of the other conditions set forth in ARTICLE VI hereof:
(a) all of the Xxxxxx Options granted and outstanding immediately prior
to the Effective Time shall, without any further action on behalf of any Xxxxxx
Option holder, be transferred by the holders thereof to Xxxxxx Acquireco without
any act or formality on its or their part in exchange for a cash amount equal to
the excess, if any, of (i) the product of the number of Common Shares underlying
Xxxxxx Options held by such holder and the Cash Consideration over (ii) the
aggregate exercise price payable under such Xxxxxx Options by the holder to
acquire the Common Shares underlying such Xxxxxx Options. All Xxxxxx Options
issued and outstanding immediately prior to the Effective Time shall thereafter
immediately be cancelled; and
(b) all of the Common Shares issued and outstanding immediately prior to the
Effective Time held by each Shareholder (other than any Dissenting Shares held
by Dissenting Shareholders who are ultimately entitled to be paid the fair value
of the Dissenting Shares held by such Dissenting Shareholder, and any Common
Shares held by Xxxxxx and its affiliates, which shall not be transferred under
the Arrangement) shall, without any further action on behalf of such
Shareholder, be transferred by the holders thereof, and acquired by, Xxxxxx
Acquireco without any act or formality on its or their part in exchange for a
cash amount equal to the product of the number of Common Shares held by such
holder and the Cash Consideration and Xxxxxx Acquireco shall be deemed to be the
legal and beneficial owner thereof, free and clear of all Liens.
2.2 PRESS RELEASES ANNOUNCING THE TRANSACTION
Subject to compliance with the policies of the TSX and the New York
Stock Exchange, each of Xxxxxx and Xxxxxx shall issue their respective form of
press release with the prior consent of the other Party as soon as possible
after execution of this Agreement.
2.3 INTERIM ORDER
The notice of motion for the application for the Interim Order shall
request that the Interim Order provide:
(a) for the class of Persons to whom notice is to be provided in
respect of the Arrangement and the Meeting and for the manner
in which such notice shall be provided;
(b) that the requisite approval for the Arrangement Resolution
shall be 66 2/3% of the votes cast on the Arrangement
Resolution by Shareholders present in person or represented by
proxy at the Meeting;
- 13 -
(c) that in all other respects, the terms, restrictions and
conditions of the by-laws and articles of Xxxxxx, including
quorum requirements and all other matters, shall apply in
respect of the Meeting; and
(d) for the grant of Dissent Rights as contemplated in the Plan of
Arrangement.
2.4 ARTICLES OF ARRANGEMENT
The Articles of Arrangement shall provide for each of the steps set out
in SECTION 2.1 hereof and such other matters as are necessary to effect the
Arrangement.
2.5 SHAREHOLDERS' MEETING AND CIRCULAR
(a) As promptly as practical after the execution and delivery of this
Agreement and in accordance with the Interim Order, Xxxxxx shall call the
Meeting, establish the record date for determining Shareholders entitled to vote
at the Meeting and prepare the Circular together with any other documents
required by applicable corporate and securities Laws in connection with the
Arrangement and Xxxxxx shall use commercially reasonable efforts to cause the
Circular and other documentation required in connection with the Meeting to be
sent in any event before September 30, 2005 to each Shareholder and each
Optionholder of record on the record date for the Meeting and such other Persons
including beneficial Shareholders as may be required by the Interim Order and
applicable corporate and securities Laws and to be filed with securities
regulatory authorities as required by the Interim Order and applicable corporate
and securities Laws.
(b) Xxxxxx shall be entitled to review and comment on the Circular and
all other documentation contemplated by SUBSECTION 2.5(a) (including the form of
proxy) and Xxxxxx will consider (acting reasonably) all Xxxxxx comments,
provided that all information relating to Xxxxxx included in the Circular shall
be in form and content satisfactory to Xxxxxx, acting reasonably.
(c) Xxxxxx shall ensure that the Circular complies in all material
respects with all applicable Laws, and, without limiting the generality of the
foregoing, that the Circular does not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein not misleading in light of the
circumstances in which they are made (other than with respect to any information
relating to and provided by Xxxxxx and Xxxxxx Acquireco) and provides
Shareholders with information in sufficient detail to permit them to form a
reasoned judgement concerning the matters to be placed before them at the
Meeting.
(d) Xxxxxx will furnish to Xxxxxx all such information concerning
Xxxxxx and Xxxxxx Acquireco as may be reasonably required by Xxxxxx in the
preparation of the Circular and Xxxxxx covenants that no such information
furnished by it will contain any untrue statement of a material fact or omit to
state a material fact required to be stated in the Circular in order to make any
information so furnished not misleading in light of the circumstances in which
it is furnished.
(e) Xxxxxx shall diligently do all such acts and things as may be
necessary to comply, in all material respects, with National Instrument 54-101
of the Canadian Securities
- 14 -
Administrators in relation to the Meeting and, without limiting the generality
of the foregoing, shall, in consultation with Xxxxxx, use all commercially
reasonable efforts to benefit from the accelerated meeting timing permitted by
such instrument.
2.6 PREPARATION OF FILINGS
(a) Xxxxxx and Xxxxxx shall co-operate in the preparation of
applications for the Appropriate Regulatory Approvals and the approval of any
other Governmental Entity with jurisdiction over the transactions contemplated
hereby and the preparation of any required documents reasonably deemed by the
Parties to be necessary to discharge their respective obligations under
applicable Laws and in that regard each shall, upon request, furnish to the
other all such information concerning it and, in the case of Xxxxxx, the
Shareholders, as may be reasonably required for such purposes.
(b) Xxxxxx and Xxxxxx shall promptly notify the other Party of any
communication to a Party from any Governmental Entity in respect of the
Arrangement and shall not participate in any meeting with any Governmental
Entity in respect of any filings, investigations or other inquiry related to the
Arrangement unless it consults with the other Party in advance and, to the
extent permitted by such Governmental Entity, gives the other Party the
opportunity to attend and participate thereat.
(c) Xxxxxx and Xxxxxx shall each promptly notify the other if at any
time before the Effective Time it becomes aware that the Circular or an
application for an order described in SECTION 2.3 contains an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements contained therein not misleading in
light of the circumstances in which they are made, or that otherwise requires an
amendment or supplement to the Circular or such application, and the Parties
shall co-operate in the preparation of any amendment or supplement to the
Circular or application, as required, and Xxxxxx shall promptly mail any
amendment or supplement to the Circular to Shareholders and file same with the
Canadian Securities Administrators and as otherwise required by applicable Laws.
2.7 COMMUNICATIONS
(a) Xxxxxx and Xxxxxx agree to co-operate in the preparation of public
statements and presentations to analysts, media and Shareholders regarding the
Arrangement, provided that no Party shall issue any press release with respect
to this Agreement or the Arrangement without the review and consent of the other
Party (such consent not to be unreasonably withheld).
(b) Xxxxxx shall not make any filing with any Governmental Entity with
respect to the Plan of Arrangement without the consent of Xxxxxx (such consent
not to be unreasonably withheld) and Xxxxxx shall not make any filing with any
Governmental Entity with respect to the Plan of Arrangement without advising
Xxxxxx and providing a copy of such filing to Xxxxxx prior thereto.
(c) SUBSECTIONS 2.7 (a) AND (b) shall be subject to each Party's
overriding obligation to make disclosure in accordance with applicable Laws, and
if such disclosure is required and the other Party has not reviewed or commented
on the disclosure, the Party making such disclosure shall use reasonable
commercial efforts to give prior notice to the other Party, and if such prior
- 15 -
notice is not possible, to give such notice immediately following the making of
such disclosure or filing.
(d) Xxxxxx agrees that Xxxxxx may at any time directly or through a
soliciting dealer actively solicit proxies in favour of the Arrangement and that
the Circular shall constitute a proxy circular of Xxxxxx and shall disclose that
Xxxxxx may make such solicitations; provided that in exercising such rights,
Xxxxxx and its agents shall co-operate with Xxxxxx.
(e) Xxxxxx shall be entitled, at any time prior to the Meeting, to
propose modifications to the Arrangement to: (i) increase the consideration it
or Xxxxxx Acquireco is prepared to make available to Shareholders pursuant to
the Arrangement, whether or not the Board of Directors of Xxxxxx has changed its
recommendation, provided that Xxxxxx shall use its commercially reasonable
effects to provide not less than one Business Day's prior written notice of such
proposal to Xxxxxx; or (ii) subject to SECTION 5.8, modify the terms of the
Arrangement to achieve tax planning objectives of Xxxxxx and Xxxxxx Acquireco,
including without limitation to provide for one or more amalgamations of
subsidiaries of Xxxxxx and/or Xxxxxx, which, in the opinion of Xxxxxx, acting
reasonably, (A) would not prejudice it or the Shareholders, or (B) would not
impede or materially delay the completion of the transactions contemplated
hereby provided that Xxxxxx or Xxxxxx Acquireco has provided notice of such
modification to Xxxxxx not less than 15 Business Days prior to the Meeting Date.
Subject to SECTION 5.8, the Parties hereto shall enter into an amended agreement
reflecting Xxxxxx' proposed amendments to the Arrangement (provided that such
agreement shall be on and subject to the same terms and conditions as this
Agreement, mutatis mutandis, except with respect to the modifications proposed
by Xxxxxx), the Plan of Arrangement shall be modified accordingly in accordance
with its terms and Xxxxxx and Xxxxxx shall at the expense of Xxxxxx use their
respective commercially reasonable efforts to communicate any such modifications
to Shareholders and to ensure that any such modifications are presented to
Shareholders at the Meeting.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XXXXXX
3.1 REPRESENTATIONS AND WARRANTIES
Xxxxxx hereby represents and warrants to and in favour of Xxxxxx as
follows and acknowledges that Xxxxxx is relying upon such representations and
warranties in entering into this Agreement and the Arrangement.
(a) Board Approval and Fairness. Acting upon the unanimous
recommendation in favour of the Arrangement by the special committee of the
Board of Directors of Xxxxxx, the Board of Directors of Xxxxxx has determined
unanimously that the Arrangement is fair to the Shareholders and is in the best
interests of Xxxxxx and has resolved unanimously to recommend to the
Shareholders to vote their Common Shares in favour of the Arrangement
Resolution. The Board of Directors of Xxxxxx has received a written opinion from
CIBC World Markets Inc. that, as of the date of this Agreement, the Arrangement
is fair, from a financial point of view, to the Shareholders, and such opinion
has not been withdrawn, amended or modified.
- 16 -
(b) Organization and Qualification. Xxxxxx and each of its subsidiaries
is a corporation duly incorporated or an entity duly created and validly
existing under the laws of its jurisdiction of incorporation, continuance or
creation and has the requisite power and authority to own, lease and operate its
properties as now owned, leased and operated and to carry on its business as it
is now being conducted. Xxxxxx and each of the subsidiaries is duly registered,
qualified or otherwise authorized to do business and each is in good standing in
each jurisdiction in which the character of its properties, owned, leased,
licenced or otherwise held, or the nature of its activities makes such
registration, qualification or authorization necessary, except where the failure
to be so registered, qualified or in good standing or otherwise authorized to do
business would not have a Material Adverse Effect on Xxxxxx. Copies of the
constating or other governing documents and by-laws of Xxxxxx and each of its
subsidiaries furnished to Xxxxxx are accurate and complete and have not been
amended or superseded.
(c) Authority Relative to this Agreement. Subject to Shareholder
approval of the Arrangement Resolution, Xxxxxx has the requisite corporate power
and authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement has been duly authorized
by the Board of Directors of Xxxxxx, and, subject to Shareholder approval of the
Arrangement Resolution, no other corporate proceedings, on the part of Xxxxxx
are necessary to authorize this Agreement or any of the transactions
contemplated herein. This Agreement has been duly executed and delivered by
Xxxxxx and constitutes a legal, valid and binding obligation of Xxxxxx
enforceable against Xxxxxx in accordance with its terms, subject to the
qualification that such enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting
rights of creditors and that equitable remedies, including specific performance,
are discretionary and may not be ordered.
(d) No Violations.
Other than as set forth in the Xxxxxx Disclosure Letter:
(i) Neither the execution and delivery of this Agreement by Xxxxxx
nor the completion of the Arrangement contemplated hereby nor
compliance by Xxxxxx with any of the provisions hereof will:
(1) violate, conflict with, change the rights or obligations
of any party under (including triggering a right of first
refusal, change of control or termination rights under any
Material Contract), or result in a breach of any provision of,
require any consent, approval or notice under, or constitute a
default (or an event which, with notice or lapse of time or
both, would constitute a default) or result in a right of
termination or acceleration, or result in the creation of any
Lien upon any of the properties or assets of Xxxxxx or any of
its subsidiaries or cause any indebtedness of Xxxxxx or any of
its subsidiaries to come due before its stated maturity or
cause any credit currently available to Xxxxxx or any of its
subsidiaries to cease to be available, under any of the terms,
conditions or provisions of (A) their respective charters
(including articles of incorporation) or by-laws or (B) any
material note, bond, mortgage, indenture, loan agreement, deed
of trust, agreement, Lien, Contract or other instrument or
obligation to which Xxxxxx or any of its subsidiaries is a
party or to which any of Xxxxxx, its subsidiaries or any of
the respective properties or assets of Xxxxxx, or any of its
- 17-
subsidiaries is subject or by which Xxxxxx or any of its
subsidiaries is bound; or (2) subject to compliance with the
statutes and regulations referred to in SCHEDULE A -
Appropriate Regulatory Approvals, violate any Law, judgement,
ruling, order, writ, injunction, determination, award, decree,
statute, ordinance, rule or regulation applicable to Xxxxxx or
any of its subsidiaries or any of their respective properties
or assets (except, in the case of each of SUBSECTIONS
3.1(d)(i)(1)(B) and 3.1(d)(i)(2) above, for such violations,
conflicts, changes in the rights or obligations of any party,
breaches, defaults, terminations, accelerations, creations of
Liens or cessations of available credit which, or any
consents, approvals or notices which if not given or received,
would not have a Material Adverse Effect on Xxxxxx or prevent
or materially impair the consummation of the transactions
contemplated by this Agreement); or (3) cause the suspension
or revocation of any authorization, consent, approval or
licence currently in effect which would have a Material
Adverse Effect on Xxxxxx or could prevent or materially impair
the consummation of the transactions contemplated by this
Agreement.
(ii) No consent, approval, licence, permit, order or authorization
of, or declaration, registration or filing with, any
Governmental Entity is required to be obtained or made by
Xxxxxx or any of its subsidiaries in connection with the
execution and delivery of this Agreement, the completion of
the Arrangement or the delivery or filing of the Circular
other than (1) compliance with the provisions of applicable
securities Laws and the OBCA, including filings with the TSX
and the Director under the OBCA; (2) receipt of all
Appropriate Regulatory Approvals in respect of the
Arrangement; (3) any approvals required by the Interim Order;
(4) the Final Order; (5) such registrations and other actions
required under federal, provincial, state and territorial
securities Laws as are contemplated by this Agreement; and (6)
any other consents, approvals, orders, authorizations,
declarations or filings of or with a Governmental Entity
which, if not obtained or made, would not, individually or in
the aggregate, have a Material Adverse Effect on Xxxxxx or
prevent or materially impair the consummation of the
transactions contemplated by this Agreement.
(e) Capitalization. The authorized share capital of Xxxxxx consists of
an unlimited number of Common Shares and an unlimited number of preference
shares. As of the date hereof, there are issued and outstanding 39,350,922
Common Shares and there are no other shares of any class or series of Xxxxxx
outstanding. As of the date hereof, there are 3,339,075 Common Shares issuable
upon the exercise of Xxxxxx Options of which 2,908,837 are in-the-money by
reference to the Cash Consideration and 22,514 Restricted Share Awards. Except
as set out in this SUBSECTION 3.1(e) and the list of Optionholders (which shall
include details of all outstanding Xxxxxx Options, including date of grant,
number outstanding, number vested and exercise price) set out in the Xxxxxx
Disclosure Letter, there are no options, warrants or other rights, shareholder
rights plans, agreements or commitments of any character (whether contingent or
otherwise) whatsoever requiring the issuance, sale or transfer by Xxxxxx of any
securities of Xxxxxx (including Common Shares) or any securities convertible
into, or exchangeable or exercisable for, or otherwise evidencing a right to
acquire, any securities of Xxxxxx (including Common Shares or any securities
with entitlements or rights similar to Common Shares (including phantom stock,
stock appreciation rights and deferred, restricted or performance share units)).
- 18 -
All outstanding Common Shares have been duly authorized and validly issued, are
fully paid and non-assessable and are not subject to, nor were they issued in
violation of, any pre-emptive rights, and all Common Shares issuable upon the
exercise of outstanding Xxxxxx Options in accordance with their respective terms
have been duly authorized and, upon issuance, will be validly issued as fully
paid and non-assessable and will not be subject to any pre-emptive rights. Other
than the Xxxxxx Options and the Restricted Share Awards, there are no securities
of Xxxxxx or of any subsidiary outstanding which have the right to vote
generally (or are exercisable, convertible into or exchangeable for securities
having the right to vote generally) with the Shareholders on any matter. Except
as set out in the Xxxxxx Disclosure Letter, there are no outstanding contractual
or other obligations of Xxxxxx or any subsidiary to repurchase, redeem or
otherwise acquire any of its securities or with respect to the voting or
disposition of any outstanding securities of any of the subsidiaries.
(f) Ownership of Subsidiaries. The Xxxxxx Disclosure Letter includes a
list of (i) all subsidiaries of Xxxxxx and the number and percentage of shares
(equity and voting) of each subsidiary owned, directly or indirectly, by Xxxxxx
and (ii) all other investment interests of Xxxxxx, including any minority (less
than 50% voting control) investment in any Person or any partnership, joint
venture, coventurer or other similar interest or investment. Except as set forth
in the Xxxxxx Disclosure Letter, all of the outstanding shares of capital stock
and other ownership interests in Xxxxxx'x subsidiaries are duly authorized,
validly issued, fully paid and non-assessable, and all such shares and other
ownership interests indicated as owned directly or indirectly by Xxxxxx are
owned free and clear of all Liens, and there are no outstanding options, rights,
entitlements, understandings or commitments (contingent or otherwise) regarding
the right to acquire any such shares of capital stock or other ownership
interests in or material assets or properties of any of Xxxxxx'x subsidiaries.
(g) Financial Statements; Reports. As of their respective dates or,
where no such date is specified, the date of filing with applicable securities
regulatory authorities: (i) Xxxxxx'x consolidated audited financial statements
as at and for the fiscal years ended April 30, 2003, April 30, 2004, April 30,
2005 and the draft unaudited interim financial statements as at and for the
first quarter ended July 31, 2005 as provided to Xxxxxx on August 29, 2005
(collectively, the "XXXXXX FINANCIAL STATEMENTS"); (ii) Xxxxxx'x Annual
Information Form dated July 29, 2005 (including all documents incorporated by
reference therein); (iii) Xxxxxx'x Management Information Circular dated July
26, 2005 in respect of its 2005 Annual Meeting of Shareholders; (iv) all Xxxxxx
material change reports, or similar documents filed with the Canadian Securities
Administrators since April 30, 2005; and (v) all prospectuses or other offering
documents used by Xxxxxx in the offering of its securities or all reports filed
by Xxxxxx with securities regulators pursuant to applicable securities Laws
(including periodic and other reports filed under the Exchange Act) since
September 1, 2003: (1) at their respective effective dates did not (or, in the
case of the interim financial statements referred to above, will not) contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading; and (2)
complied (or, in the case of the interim financial statements referred to above,
will comply) with all applicable securities Laws except where any non-compliance
would not individually or in the aggregate have a Material Adverse Effect on
Xxxxxx. The Xxxxxx Financial Statements, and all financial statements of Xxxxxx
and its subsidiaries included or incorporated by reference in such information
circulars forms, reports, statements, prospectuses
- 19 -
and other documents, were prepared in accordance with Canadian GAAP applied on a
consistent basis (except (A) as otherwise indicated in such financial statements
and the notes thereto or, in the case of audited statements, in the related
report of Xxxxxx'x independent auditors, or (B) in the case of unaudited interim
statements, to the extent they may not include footnotes, are subject to normal
year end adjustments, or may be condensed or summary statements), and fairly
present the consolidated financial position, results of operations and changes
in financial position of Xxxxxx and its subsidiaries, as of the dates thereof
and for the periods indicated therein (subject, in the case of any unaudited
interim financial statements, to normal year-end adjustments and reduced note
disclosure) and reflect reserves required by Canadian GAAP, applied on a
consistent basis, in respect of contingent liabilities of Xxxxxx and its
subsidiaries on a consolidated basis. Xxxxxx is not currently aware of any
year-end adjustments that are expected to be material. There has been no change
in Xxxxxx'x accounting policies, except as described in the notes to the Xxxxxx
Financial Statements, since April 30, 2005. Xxxxxx owns a ten percent interest
in LC Limited, a Hong Kong joint venture. Xxxxxx also has a relationship with
Xxxxxx Italia S.R.L. ("XXXXXX ITALIA"). Xxxxxx has not consolidated the
financial statements of LC Limited or Xxxxxx Italia with Xxxxxx or disclosed
these entities as variable interest entities. If Xxxxxx would have been required
to consolidate or disclose the financial position and results of operations of
LC Limited or Xxxxxx Italia in any of the Xxxxxx Financial Statements, such
consolidation or disclosure would not have materially adversely impacted
Xxxxxx'x financial position, results of operations or cash flows, as of the
dates and for the periods indicated in each of the Xxxxxx Financial Statements.
(h) Books and Records. The financial books, records and accounts of
Xxxxxx and its subsidiaries in all material respects (i) have been maintained in
accordance with good business practices on a basis consistent with prior years,
(ii) are stated in reasonable detail and accurately and fairly reflect the
material transactions and dispositions of the assets of Xxxxxx and its
subsidiaries and (iii) accurately and fairly reflect the basis for the Xxxxxx
Financial Statements. Xxxxxx has devised and maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (x)
transactions are executed in accordance with managements' general or specific
authorization; and (y) transactions are recorded as necessary to permit
preparation of financial statements in conformity with Canadian GAAP. Xxxxxx'x
and its subsidiaries' corporate records and minute books have been maintained
substantially in compliance with applicable Laws and are complete and accurate
in all material respects, and full access thereto has been provided to Xxxxxx,
except with respect to matters relating to the transactions contemplated by this
Agreement.
(i) Litigation. Except as set out in the Xxxxxx Disclosure Letter,
there is no investigation, inquiry, request for information, audit, charge,
claim, action, suit or other Proceeding pending or, to the knowledge of Xxxxxx,
threatened, affecting Xxxxxx or any of its subsidiaries or affecting any of the
property or assets of Xxxxxx (including the Intellectual Property), or any of
its subsidiaries at law or in equity before or by any Governmental Entity which
investigation, inquiry, request for information, audit, charge, claim, action,
suit or other Proceeding (a) involves, or could reasonably involve or lead to a
judgement or claim against or potential liability of Xxxxxx or its subsidiaries
which, individually or in the aggregate, would have a Material Adverse Effect on
Xxxxxx or could prevent or materially impair the consummation of the
transactions contemplated by this Agreement, (b) sought or seeks injunctive
relief against Xxxxxx or its subsidiaries as of the date hereof or which, as at
the Effective Time, has sought or is
- 20 -
seeking injunctive relief against Xxxxxx or its subsidiaries which, individually
or in the aggregate, would have a Material Adverse Effect on Xxxxxx or could
prevent or materially impair the consummation of the transactions contemplated
by this Agreement, or (c) is related to the transactions contemplated by this
Agreement as of the date hereof or which, as at the Effective Time, is related
to the transactions contemplated by this Agreement and which, individually or in
the aggregate, would have a Material Adverse Effect on Xxxxxx or could prevent
or materially impair the consummation of the transactions contemplated by this
Agreement. Except as set out in the Xxxxxx Disclosure Letter or as Publicly
Disclosed by Xxxxxx, neither Xxxxxx nor any of its subsidiaries or the
respective assets or properties of Xxxxxx or any of its subsidiaries is subject
to any outstanding judgement, order, writ, injunction or decree that has had or
would have a Material Adverse Effect on Xxxxxx or could prevent or materially
impair the consummation of the transactions contemplated by this Agreement.
(j) Taxes.
(i) Xxxxxx and each of its subsidiaries have timely filed (taking
into account any extension of time to file granted or
obtained), all material Tax Returns required to be filed by
them (all of which returns were correct and complete in all
material respects), have timely paid, all material Taxes due
(whether or not shown on any Tax Return), and have satisfied
in full in all respects all material Tax withholding, deposit
and remittance requirements imposed on or with respect to any
of Xxxxxx and its subsidiaries, and the most recently
published financial statements of Xxxxxx contain an adequate
provision in accordance with Canadian GAAP for all material
Taxes payable in respect of each period covered by such
financial statements and all prior periods to the extent such
material Taxes have not been paid, whether or not due and
whether or not shown as being due on any Tax Returns. Xxxxxx
and each of its subsidiaries have made adequate provision in
accordance with Canadian GAAP in their books and records for
material Taxes accruing in respect of any accounting period
ending subsequent to the period covered by such financial
statements.
(ii) Neither Xxxxxx nor any subsidiary of Xxxxxx has received any
written notification that any material issue involving
material Taxes has been raised (and is currently pending) by
the Canada Revenue Agency, the United States Internal Revenue
Service or any other taxing authority, including, without
limitation, any sales tax authority, in connection with any of
the material Tax Returns filed or required to be filed, and no
waivers of statutes of limitations or objections to any
assessments or reassessments involving material Taxes have
been given, filed or requested with respect to Xxxxxx or any
subsidiary of Xxxxxx. All material liability of Xxxxxx and its
subsidiaries for Canadian federal and provincial income and
capital taxes has been assessed by the Canada Revenue Agency
and, where applicable, Canadian provincial tax authorities for
all fiscal years up to and including the fiscal year ended
April 30, 2005. Neither Xxxxxx nor any of its subsidiaries has
received any notice from any taxing authority to the effect
that any material Tax Return is being examined or of any Tax
audit or other material Tax issue. No deficiency for
additional material Taxes has been proposed against Xxxxxx or
any of its subsidiaries. To the knowledge of Xxxxxx, no claim
has ever been made in
- 21 -
writing by any Tax authority in a jurisdiction where neither
Xxxxxx nor any of its subsidiaries files material Tax Returns
that Xxxxxx or any of its subsidiaries is or may be subject to
taxation by that jurisdiction. There are no material Tax Liens
on any assets of Xxxxxx or any of its subsidiaries except for
Taxes not yet due and payable and Taxes being contested in
good faith. Neither Xxxxxx nor any of its subsidiaries has
received a refund of any material Taxes to which it was not
entitled. Except for the employment agreements between Xxxxxx
and each of Xxxxxxx Xxxxxxxxxxxx dated November 17, 2003, Xxx
Xxxxxxxxx dated May 25, 2004 and February 21, 2005, Xxxxxx
Xxxxxxxxx dated January 4, 2005 and Xxxxx Xxxx dated April 20,
2004 updated in June 2005, copies of which have been provided
to Xxxxxx, neither Xxxxxx nor any of its subsidiaries is a
party to any Tax sharing, allocation or other similar
agreement or arrangement or any Tax indemnification agreement
of any nature with any other Person (other than among Xxxxxx
and any of its subsidiaries) pursuant to which Xxxxxx or any
of its subsidiaries has or could have, individually or in the
aggregate, any material liability in respect of Taxes.
(iii) The Xxxxxx Disclosure Letter sets forth a list of estimated
Tax loss carry-forwards prepared for financial statement
purposes as of April 30, 2005 of Xxxxxx and its subsidiaries,
organized by entity subject to filing of relevant Tax Returns
and audit adjustments or reassessments by the relevant taxing
authority.
(k) Absence of Undisclosed Liabilities. Except as Publicly Disclosed by
Xxxxxx in the Xxxxxx Financial Statements as at and for the year ended April 30,
2005, neither Xxxxxx nor any of its subsidiaries has any material obligations or
liabilities of any nature, whether or not matured or unmatured, accrued, fixed,
contingent or otherwise, and whether or not required to be disclosed in a
balance sheet or in the notes thereto prepared in accordance with Canadian GAAP
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on Xxxxxx.
(l) Absence of Change; No Material Adverse Effect. Except as Publicly
Disclosed by Xxxxxx, since April 30, 2005, there has not been any Material
Adverse Effect on Xxxxxx. Since April 30, 2005, the Business has been conducted
in the Ordinary Course of Business.
(m) Environmental. Except as set out in the Xxxxxx Disclosure Letter or
as would not reasonably be expected to have a Material Adverse Effect:
(i) Xxxxxx and each of its subsidiaries are, and in the past three
years have been, in compliance with all applicable
Environmental Laws.
(ii) Xxxxxx and each of its subsidiaries currently possess and are
in compliance with the terms of all Environmental Permits and
other approvals required under Environmental Laws to conduct
their respective operations.
(iii) To the knowledge of Xxxxxx, there is no Contamination
migrating onto, emanating from or present at any owned real
property or leased real property or, to the knowledge of
Xxxxxx, any location formerly owned, operated or leased by
Xxxxxx
- 22 -
or any subsidiary except in compliance with Environmental Law.
In addition, neither the owned real property or leased real
property nor, to the knowledge of Xxxxxx, any location
formerly owned, operated or leased by Xxxxxx or any subsidiary
is the subject of any enforcement actions or other
investigations by a Governmental Entity or other third party
that would reasonably be expected to lead to Environmental
Liability for Xxxxxx or any subsidiary. No underground storage
tanks containing Hazardous Materials are, or to the knowledge
of Xxxxxx, have been, located on any property or facility
owned or operated by Xxxxxx or any of its subsidiaries.
(iv) To the knowledge of Xxxxxx, there is no Contamination present
at or migrating from any off-site location to which Xxxxxx or
any subsidiary transported Hazardous Materials or arranged for
the transportation of Hazardous Materials, or at which any
Hazardous Materials for which Xxxxxx or any subsidiary would
reasonably be expected to have Environmental Liability have
been deposited, disposed or otherwise placed. In addition, to
the knowledge of Xxxxxx, no such off-site location is the
subject of any enforcement actions or other investigations by
any Governmental Entity or other third party that would
reasonably be expected to lead to Environmental Liability for
Xxxxxx or any subsidiary.
(v) Neither Xxxxxx nor any subsidiary has within the past three
years received any written request for information, notice,
demand letter, administrative inquiry, or compliance notice,
or notice of claim or other inquiry from a Governmental Entity
or third party with respect to the presence of Contamination
or threatened Contamination, in, on, under, about, migrating
onto or emanating from the owned real property or leased real
property or any real property formerly owned, operated or
leased by Xxxxxx or any subsidiary.
(vi) Neither Xxxxxx nor any subsidiary has received any written
request for information, notice, demand letter or inquiry from
a Governmental Entity or other third party concerning
Contamination or threatened Contamination present at or
migrating from any off-site location or locations to which
Xxxxxx or any subsidiary transported or arranged for
transportation of any Hazardous Material or Hazardous
Material-containing substance generated by Xxxxxx or any
subsidiary.
(vii) During the past three years, neither Xxxxxx nor any subsidiary
has received any written communication from a Governmental
Entity or any Person alleging that Xxxxxx or any subsidiary is
not in compliance with Environmental Law or has or is subject
to an Environmental Liability.
(viii) Neither Xxxxxx nor any subsidiary has entered into or agreed
to any order or is subject to any judgement requiring
compliance with any Environmental Law or the investigation or
cleanup of Contamination or threatened Contamination.
(ix) Neither Xxxxxx nor any subsidiary is aware of any changes or
proposed changes to the terms of any Environmental Permits or
any review by any Governmental Entity of such Environmental
Permits.
- 23 -
(x) Xxxxxx has made available to Xxxxxx copies of all material
environmental audits, evaluations, assessments, studies and
reports dealing with environmental matters for Xxxxxx and any
subsidiary or affiliate, and that are in the possession or
control of Xxxxxx or any subsidiary.
This Section (m) contains all the representations and warranties in this
Agreement with respect to environmental matters, and no other representations
and warranties shall be construed as applicable to the subject matter covered
herein.
(n) Owned Real Property; Assets. The Xxxxxx Disclosure Letter sets out
a list of all owned real property interests of Xxxxxx or any of its subsidiaries
or affiliates. Except as set forth in the Xxxxxx Disclosure Letter, Xxxxxx
and/or each of its subsidiaries has good, marketable, valid and insurable title
in fee simple to its owned real property interests, free and clear of all
material Liens, including mortgages, other than (i) easements and zoning
restrictions which do not materially interfere with the use of such owned real
property interests in the operation of the Business, and (ii) Liens incurred not
in connection with the borrowing of money which do not and would not reasonably
be expected to, individually or in the aggregate, have a Material Adverse Effect
on the occupancy, use or value of the affected assets. Xxxxxx and its
subsidiaries are the beneficial owners of, and have title to, all the material
assets owned by Xxxxxx and its subsidiaries which are used in connection with
their respective businesses.
(o) Leased Real Property. The Xxxxxx Disclosure Letter lists each real
property lease to which Xxxxxx or one of its subsidiaries is a party (a
"LEASE"). Each material Lease has been validly executed and delivered by the
tenant and is unmodified except as set forth in the Xxxxxx Disclosure Letter and
is in full force and effect. Each material Lease represents the entire agreement
between the landlord and the tenant in respect of the leased premises and the
tenant has no charge, Lien or right of set-off in respect of, or credit or right
to a credit in respect of, the rents payable thereunder. With respect to each
material Lease, Xxxxxx or its subsidiary has taken possession of the leased
premises and all material improvements to the leased premises that are the
landlord's responsibility have been completed. Xxxxxx is not in default of any
of its material obligations under any material Lease and there is no outstanding
material dispute between Xxxxxx and the landlord in respect of any material
Lease. There are no material unpaid allowances, incentives, inducements or other
moneys or benefits (including free rent) owing or which may become owing by the
landlord to Xxxxxx at any time under the Lease.
(p) Licences. Xxxxxx and each of its subsidiaries has obtained and is
in compliance with all licences, permits, certificates, consents, orders, grants
and other authorizations of or from any Governmental Entity necessary to conduct
its current businesses as they are now being or are proposed to be conducted,
other than such licences, permits, certificates, consents, orders, grants and
authorizations the absence of which would not individually or in the aggregate
have a Material Adverse Effect on Xxxxxx.
(q) Intellectual Property.
Other than such Intellectual Property, the unavailability of
which would not have a Material Adverse Effect on Xxxxxx, and
except as disclosed in the Xxxxxx Disclosure Letter:
- 24 -
(i) The Xxxxxx Intellectual Property and the Licensed Intellectual
Property are together sufficient to permit the Business to be
carried on immediately after the Effective Date in
substantially the same manner as it was conducted by Xxxxxx
and its subsidiaries as of the Effective Date.
(ii) The Xxxxxx Disclosure Letter contains a complete and accurate
list of all the registrations of, and applications for
registration of, the Xxxxxx Intellectual Property. All of the
registrations and applications for registration of the Xxxxxx
Intellectual Property are valid and subsisting in good
standing and are recorded in the name of Xxxxxx or its
subsidiaries as applicable. No Person has challenged the
validity of any registrations for the Xxxxxx Intellectual
Property or the ownership by Xxxxxx or any of its subsidiaries
of any of the Xxxxxx Intellectual Property. Neither the
current or past use of the Xxxxxx Intellectual Property or the
Licensed Intellectual Property by Xxxxxx or its subsidiaries
nor the conduct of the Business has infringed or currently
infringes or has been alleged to infringe upon the industrial
or intellectual property rights of any other Person, except
for claims or allegations of infringement that have been
settled or are no longer being actively pursued. No
application for registration of any Xxxxxx Intellectual
Property has received a final rejection.
(iii) Xxxxxx and its subsidiaries own all right, title and interest
in and to the Xxxxxx Intellectual Property. Xxxxxx or its
subsidiaries are licensed or possess legally enforceable
rights to use the Licensed Intellectual Property. Neither the
Xxxxxx Intellectual Property nor the Licensed Intellectual
Property is subject to any Lien, option, right of first
refusal or offer or security interest of any kind. None of the
material Xxxxxx Intellectual Property is jointly owned by
Xxxxxx with any third party.
(iv) The Xxxxxx Intellectual Property and the conduct of the
Business have not and do not infringe, misappropriate or
otherwise violate any intellectual or industrial property
rights of any other Person, and, to the knowledge of Xxxxxx,
no other Person or intellectual or industrial property owned
by any other Person has infringed, misappropriated or
otherwise conflicted with or harmed any of the Xxxxxx
Intellectual Property or the right and interest of Xxxxxx or
its subsidiaries in the Licensed Intellectual Property.
(v) Xxxxxx and its subsidiaries have taken all commercially
reasonable steps to protect their respective ownership rights
in the Xxxxxx Intellectual Property. Xxxxxx and its
subsidiaries have maintained the confidentiality of all trade
secrets and confidential information except for such
disclosure to other Persons as may have been made in the
Ordinary Course of Business and in accordance with standard
practices ordinarily followed by manufacturers of broadcasting
equipment.
(vi) Xxxxxx and its subsidiaries have taken all commercially
reasonable steps to obtain the ownership of all Xxxxxx
Intellectual Property created or modified by its employees and
consultants, and all authors of any material Xxxxxx
Intellectual Property and all persons, including all employees
and consultants of Xxxxxx and its
- 25 -
subsidiaries, involved in the development of material Xxxxxx
Intellectual Property have assigned their intellectual
property rights thereto to Xxxxxx and its subsidiaries, as
applicable, and have waived all moral rights that they may
have therein
(vii) Xxxxxx and its subsidiaries have all permissions and licenses
necessary to use the Licensed Intellectual Property and no
additional consent, permission or license from any Person is
required to use the Licensed Intellectual Property, other than
normal course renewals.
(viii) Except in the Ordinary Course of Business, Xxxxxx and its
subsidiaries have not permitted or licensed any Person to use
any of the Xxxxxx Intellectual Property.
(ix) To the knowledge of Xxxxxx, no Material Contract, or any
material part thereof, to which Xxxxxx or one of its
subsidiaries is a party and that relates to the Xxxxxx
Intellectual Property or the Licensed Intellectual Property is
unenforceable, and neither Xxxxxx nor any of its subsidiaries
is in breach of any such Material Contract or has repudiated
such Material Contract. Neither Xxxxxx nor any of its
subsidiaries, has given notice of an intention to terminate,
cancel, fail to renew or change the terms of such Material
Contract.
(r) Technology.
(i) The hardware and software comprising any part of the
Technology is in good operating condition.
(ii) Other than copyright protection and license enforcement
restrictions included in the Ordinary Course of Business, to
the knowledge of Xxxxxx no portion of the Technology contains
any 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 Technology or any
computer system on which any of the Technology is installed or
in connection with which it may operate.
(s) Pension and Employee Benefits.
Other than the Executive Agreements:
(i) The Xxxxxx Disclosure Letter sets out a complete and accurate
list of all written or oral employee benefit, welfare,
supplemental unemployment benefit, bonus, pension, retirement
income, profit sharing, executive compensation, change of
control benefit, current or deferred compensation, incentive
compensation, stock compensation, stock purchase, stock
option, stock appreciation, phantom stock option, savings,
severance or termination pay, retirement, supplementary
retirement, hospitalization insurance, salary continuation,
legal, health or other medical, dental, life, disability or
other insurance (whether insured or self-insured), and every
other written or oral benefit plan, program, agreement or
- 26 -
arrangement sponsored, maintained or contributed to or
required to be contributed to by Xxxxxx or a subsidiary of
Xxxxxx for the benefit of employees or former employees and
their dependants or beneficiaries which are currently
maintained or were maintained by Xxxxxx or a subsidiary at any
time in the last five years or with respect to which Xxxxxx or
a subsidiary participates in or has any actual or potential
liability or obligations (collectively, the "XXXXXX PLANS").
The term "U.S. Plan" shall mean any Xxxxxx Plan that is
maintained in the United States or that is otherwise subject
to the United States Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), the United States Internal
Revenue Code of 1986, as amended ("IRC") or any other Law of
the United States. With respect to any U.S. Plan or any
reference to ERISA or the IRC, under this SECTION 3.1(s),
references to "subsidiaries" shall include any trade or
business (whether or not incorporated) under common control
with the meaning of Section 4001(b)(1) of ERISA with Xxxxxx or
which together with Xxxxxx is treated as a single employer
under Section 414(t) of the IRC. The Xxxxxx Disclosure Letter
sets forth a complete list of the U.S. Plans.
(ii) Xxxxxx has furnished or made available to Xxxxxx true,
correct, up-to-date and complete copies of all the Xxxxxx
Plans, or where oral, written summaries of the most important
terms thereof, as amended together with all current and past
related documentation and all amendments thereto including
trust agreements, funding agreements, funding and financial
information returns and statements, copies of significant
correspondence with all regulatory authorities with respect to
each Xxxxxx Plan and plan summaries, employee booklets and
personnel manuals. None of the Xxxxxx Plans is a
multi-employer pension plan as defined under applicable Laws
including a "multiemployer plan" as defined in Section 3(37)
of ERISA or Section 414(f) of the IRC or a "multiple employer
plan" within the meaning of Section 210(a) of ERISA or Section
413(c) of the IRC. None of the Xxxxxx Plans is a "defined
benefit plan" or contains a "defined benefit provision" or
provides "defined benefits" as defined or used in applicable
Laws including a "defined benefit plan" as defined in Section
3(35) of ERISA, a pension plan subject to the funding
standards of Section 302 of ERISA or Section 412 of the IRC.
None of the Xxxxxx Plans requires the preparation of an
actuarial report in accordance with applicable Laws.
(iii) All of the Xxxxxx Plans are and have been established,
registered, qualified, invested, funded and administered in
accordance in all material respects, with their terms, with
all applicable Laws, with the terms of any applicable
collective agreements and with the terms of agreements,
written or oral, between Xxxxxx, a subsidiary or both, as the
case may be, and any other party. To the knowledge of Xxxxxx,
no fact or circumstance exists that could reasonably be
expected to adversely affect the existing tax status of any of
the Xxxxxx Plans. To the knowledge of Xxxxxx, no event has
occurred respecting any Xxxxxx Plan which would entitle any
Person to cause the wind-up or termination of such Xxxxxx Plan
in whole or in part. No Taxes, penalties or fees are owing or
exigible under any of the Xxxxxx Plans. Each U.S. Plan
intended to be qualified under Section 401(a) of the IRC is so
qualified and has heretofore been determined by the United
States
- 27 -
Internal Revenue Service (the "IRS") to be so qualified, and
each trust created thereunder has heretofore been determined
by the IRS to be exempt from tax under the provisions of
Section 501(a) of the IRC, and nothing has occurred since the
date of any such determination that, to the knowledge of
Xxxxxx, could reasonably be expected to give the IRS grounds
to revoke such determination.
(iv) No insurance policy or any other contract or agreement
affecting any of the Xxxxxx Plans requires or permits a
retroactive increase in premiums or payments due thereunder.
The level of insurance reserves under each insured Xxxxxx Plan
is reasonable and sufficient to provide for all incurred but
unreported claims.
(v) All liabilities of Xxxxxx and each of its subsidiaries
(whether accrued, absolute, contingent or otherwise) related
to the Xxxxxx Plans have been fully and accurately accrued and
disclosed in all material respects and reported in accordance
with Canadian GAAP in the Xxxxxx Financial Statements. No
changes have occurred or are expected to occur to any of the
Xxxxxx Plans which would materially affect the most recent
financial statement prepared in respect of the applicable
Xxxxxx Plan and required to be provided to Xxxxxx pursuant to
this Agreement.
(vi) No Xxxxxx Plan, nor any related trust or funding medium
thereunder, is subject to any pending, or, to the knowledge of
Xxxxxx, threatened or anticipated investigation, examination
or Proceeding, other than routine claims for benefits.
(vii) Except as expressly provided under this Agreement or the
Executive Agreements or as set out in the Xxxxxx Disclosure
Letter, the execution of this Agreement and the completion of
the transactions contemplated herein will not (either alone or
in conjunction with any additional or subsequent events)
constitute an event under any Xxxxxx Plan that will or may
result in any payment (whether of severance pay or otherwise),
acceleration of payment or vesting of benefits, forgiveness of
indebtedness, vesting, distribution, restriction of funds,
increase in benefits or obligation to fund benefits with
respect to any employee of Xxxxxx or a subsidiary.
(viii) No U.S. Plan is or at any time was funded through a "welfare
benefit fund" as defined in Section 419(e) of the IRC, and no
benefits under any U.S. Plan are or at any time have been
provided through a voluntary employees' beneficiary
association (within the meaning of subsection 501(c)(9) of the
IRC) or a supplemental unemployment benefit plan (within the
meaning of Section 501(c)(17) of the IRC).
(ix) Neither Xxxxxx nor its subsidiaries has agreed or committed to
institute any plan, program, arrangement or agreement for the
benefit of employees or former employees of Xxxxxx or its
subsidiaries other than the Xxxxxx Plans, or to make any
amendments to any of the Xxxxxx Plans. Except as set out in
the Xxxxxx Disclosure Letter, no Xxxxxx Plan provides benefits
to retired employees or to the beneficiaries or dependants of
retired employees. No Xxxxxx Plan provides benefits to any
individual who is not an employee, officer or director of
Xxxxxx or
- 28 -
its subsidiaries, or the dependents or other beneficiaries of
any such employee, officer or director.
(x) Xxxxxx or its subsidiaries, as applicable, has reserved all
rights necessary to amend or terminate each of the U.S. Plans
without the consent of any other Person.
(xi) Except as disclosed in the Xxxxxx Disclosure Letter, no amount
that could be received (whether in cash or property or the
vesting of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer or
director of Xxxxxx or any of its affiliates who is a
"disqualified individual" (as such term is defined in United
States Treasury Regulation Section 1.280G-1) under any
employment, severance or termination agreement, other
compensation arrangement or Xxxxxx Plan currently in effect
would be characterized as an "excess parachute payment" (as
such term is defined in SECTION 280G(b)(1) of the IRC).
(t) Employment Agreements and Collective Agreements. Other than the
Executive Agreements and except as set out in the Xxxxxx Disclosure Letter,
neither Xxxxxx nor any of its subsidiaries is a party to:
(i) except as implied by or pursuant to applicable Law, any
employment, retention or change of control agreement with any
employee or any written or oral agreement, arrangement or
understanding providing for retention, severance or
termination payments or payments upon a change of control of
Xxxxxx or its subsidiaries to any director, officer or
employee of Xxxxxx or a subsidiary;
(ii) any collective bargaining agreement, any actual or to the
knowledge of Xxxxxx, threatened, application for certification
or bargaining rights in respect of Xxxxxx or each subsidiary;
(iii) any labour dispute, strike or lock-out relating to or
involving any employee of Xxxxxx or a subsidiary or has, in
the 24 months prior to the date of this Agreement, been a
party to any such labour dispute, strike or lock-out; or
(iv) any actual or, to the knowledge of Xxxxxx, threatened, claim,
charge, complaint or other Proceeding (including without
limitation with respect to an unfair labour practice before
the United States National Labor Relations Board, a union
grievance or a complaint before the United States Equal
Employment Opportunity Commission) arising out of or in
connection with employment by Xxxxxx or any of its
subsidiaries or the termination of such employment, other than
such claims that individually and in the aggregate do not have
a Material Adverse Effect on Xxxxxx.
(u) Compliance with Laws. Xxxxxx and its subsidiaries are in compliance
with and have since April 30, 2002 complied with applicable Laws, other than
non-compliance or violations which would, individually or in the aggregate, not
have a Material Adverse Effect on Xxxxxx. Without limiting the generality of the
foregoing, all outstanding securities of Xxxxxx (including all options, rights
or other convertible or exchangeable securities) have been issued in compliance
with all applicable securities Laws.
- 29 -
(v) Restrictions on Business Activities. There is no agreement,
judgement, injunction, order or decree binding upon Xxxxxx or any of its
subsidiaries that has or would reasonably be expected to have the effect of
prohibiting, restricting or impairing any business practices of Xxxxxx or such
subsidiary except for such agreements, judgements, injunctions, orders or
decrees which individually or in the aggregate do not have a Material Adverse
Effect on Xxxxxx.
(w) Reporting Status and Securities Laws Matters. Xxxxxx is a
"REPORTING ISSUER" under the applicable Canadian provincial securities Laws and
a "foreign private issuer" under United States federal securities Laws. Xxxxxx
is not in material default of any material requirement of any securities Laws.
Xxxxxx properly filed on June 27, 2005 in compliance in all material respects
with all requirements of the Exchange Act a Form 15 with the United States
Securities and Exchange Commission. Except as set forth in the Xxxxxx Disclosure
Letter, no delisting, suspension of trading in or cease trading order with
respect to any securities of Xxxxxx is in effect or ongoing or, to the knowledge
of Xxxxxx, expected to be implemented or undertaken. Xxxxxx is not an investment
company registered or required to be registered under the U.S. Investment
Company Act of 1940, as amended.
(x) Contracts.
(i) The Xxxxxx Disclosure Letter sets out a list of all Contracts
that are material to the business, operations, results of
operations, or financial condition of Xxxxxx and its
subsidiaries considered as a whole (the "MATERIAL CONTRACTS"),
comprising the following types of material Contracts,
agreements or understandings:
(A) any Contract or agreement relating to indebtedness
for borrowed money (including any guarantee of or
obligation to guarantee the indebtedness for borrowed
money of any Person other than a subsidiary) having
an outstanding principal amount in excess of
$500,000, and, for each such Contract or agreement,
the aggregate principal amount outstanding as of the
date of this Agreement;
(B) any Contract or agreement relating to a Lien imposed
on any material asset or property of Xxxxxx or a
subsidiary;
(C) any currency exchange, interest rate exchange,
commodity exchange or similar Contract or agreement;
(D) any Contract or agreement with any supplier,
distributor or customer for the furnishing of
services or purchase or sale of goods, equipment,
inventory or other assets to or by Xxxxxx or any
subsidiary requiring payment of or receipt over the
remaining life of such Contract or agreement of more
than $1,000,000;
(E) any manufacturing Contract or original equipment
manufacturing Contract or agreement requiring payment
of or receipt over the remaining life of such
Contract or agreement of more than $1,000,000;
- 30 -
(F) any Intellectual Property Contract or licence,
excluding standard, off-the-shelf computer software
licences;
(G) any Contract or agreement in connection with
acquisitions, dispositions or the purchase or sale of
shares or assets (other than in the Ordinary Course
of Business) completed within three years of the date
of this Agreement, including any Contract or other
agreement entered into in connection with such
purchase or sale Contract with continuing rights
flowing to, or continuing obligations of, Xxxxxx or
any of its subsidiaries (including ongoing payments
or royalties and ongoing indemnification
obligations);
(H) any partnership, joint venture or similar agreement
or arrangement;
(I) any Contract or agreement that limits or purports to
limit the ability of Xxxxxx or any subsidiary to
compete with any Person or in any line of business or
in any geographic area or during any period of time;
(J) any Contract or agreement (other than dealer,
reseller or distributor agreements) that creates or
imposes any exclusivity right or obligation with
respect to Xxxxxx or any of its subsidiaries or the
other party to such Contract or agreement; and
(K) any other Contract to which Xxxxxx or any subsidiary
is a party which is material to Xxxxxx and its
subsidiaries taken as a whole.
(ii) None of Xxxxxx, its subsidiaries nor, to the knowledge of
Xxxxxx, any of the other parties thereto, is in default or
breach of, in any material respect, nor have Xxxxxx or its
subsidiaries received any notice of default or breach in any
material respect of, or termination under, any Material
Contract, and, to the knowledge of Xxxxxx, there exists no
state of facts which after notice or lapse of time or both
would constitute a material default or breach of such Material
Contract, except as would not, individually or in the
aggregate, have a Material Adverse Effect on Xxxxxx.
(iii) Except as set forth in the Xxxxxx Disclosure Letter, no
Material Contract (a) would be violated, contravened or
breached by, or under which a default would occur; (b)
requires any consent or prior approval be obtained from any
Person (including consents relating to the change of control
of Xxxxxx); or (c) would terminate; in each case, upon the
execution of this Agreement or the completion of the
transactions provided for herein.
(y) Insurance. Xxxxxx and its subsidiaries have policies of insurance
with responsible insurers in full force and effect naming Xxxxxx and its
subsidiaries, as applicable, as insured which provide coverage on a basis that
is customary in the industries in which it and they participate and that, having
regard to the nature of their risk, Xxxxxx believes are reasonable.
(z) Related Parties. To the knowledge of Xxxxxx, no director or senior
officer of Xxxxxx or such director's or senior officer's associated entities
(within the meaning of applicable securities Laws) beneficially owns or
exercises control or direction over, within the meaning of
- 31 -
Ontario Securities Commission Rule 61-501, one per cent or more of the Common
Shares on the date hereof.
(aa) Foreign Corrupt Practices Act. Neither Xxxxxx or any subsidiary
nor any current officer, director or employee nor, to the knowledge of Xxxxxx,
any former officer, director or employee or any current or former representative
or agent of Xxxxxx or any subsidiary acting on behalf of Xxxxxx or any
subsidiary has offered or given, and no Person acting on behalf of Xxxxxx or any
subsidiary has offered or given on its behalf anything of value to: (a) any
member or official of a Governmental Entity, any political party, or official of
any political party, or any candidate for political office; (b) any customer of
any Governmental Entity; or (c) any other Person, in any such case while knowing
or having reason to know that all or a portion of such money or thing of value
may be offered, given, or promised, directly or indirectly, to any customer,
member, or official of any Governmental Entity or candidate for political office
for the purpose of the following: (x) influencing any action or decision of such
Person, in his, her, or its official capacity, including a decision to fail to
perform his, her, or its official function; (y) inducing such Person to use his,
her, or its influence with any Governmental Entity affect or influence any act
or decision of such Governmental Entity to assist Xxxxxx or any subsidiary in
obtaining or retaining business for, or with, or directing business to, any
Person; or (z) where such money or thing of value would constitute a bribe,
kickback, or illegal or improper payment to assist Xxxxxx or any of its
subsidiaries, in obtaining or retaining business for, or with, or directing
business to, any Person; or otherwise taken any other action by or on behalf of
Xxxxxx or its subsidiaries that, in any case, would cause Xxxxxx to be in
violation in any material respect of the Foreign Corrupt Practices Act of the
United States of America or the Corruption of Foreign Public Officials Act
(Canada).
(bb) Disclosure/Internal Controls. Xxxxxx has designed disclosure
controls and procedures to ensure that material information relating to Xxxxxx,
including its subsidiaries, is made known to the management of Xxxxxx by others
within those entities. With respect to Xxxxxx'x most recent annual report on
Form 40-F, Xxxxxx'x principal executive officer and its principal financial
officer have disclosed, based on their most recent evaluation, to Xxxxxx'x
auditors (i) all significant deficiencies in the design or operation of the
internal controls that are reasonably likely to adversely affect Xxxxxx'x
ability to record, process, summarize and report financial data and have
identified for Xxxxxx'x auditors any material weakness in internal controls, and
(ii) any fraud, whether or not material, that involves management or other
employees who have a significant role in Xxxxxx'x internal controls.
(cc) Product Warranties; Product Liabilities. The terms of Xxxxxx'x and
its subsidiaries' standard written product warranties Related to the Business
have been made available to Xxxxxx. Except as set forth therein or in the
related Material Contract, Xxxxxx and its subsidiaries have made no express
warranty with respect to any product of the Business. Except as described in the
Xxxxxx Disclosure Letter, for matters for which a reserve exists on the most
recent Xxxxxx Financial Statements or for such matters that are not likely to
have a Material Adverse Effect on Xxxxxx, (a) no claims have been made or are,
to the knowledge of Xxxxxx, threatened, under the product warranties of the
Business in excess of the reserves on the most recent Xxxxxx Financial Statement
designated for warranty liability or product liability claims, (b) there are no
written notices by any Government Entity or any product testing laboratory
stating that any product of the Business is unsafe or fails to meet any
standards promulgated by such Governmental Entity
- 32 -
or testing laboratory, (c) the products of the Business meet all of their
applicable existing respective specifications for which a written warranty is
provided to customers.
(dd) Competition Law Matters. Xxxxxx and its affiliates do not have
assets in Canada that exceed $110,000,000, or gross revenues from sales in, from
or into Canada, that exceed $110,000,000, all as determined in accordance with
Part IX of the Competition Act (Canada) and the Notifiable Transactions
Regulations thereunder.
3.2 SURVIVAL OF REPRESENTATION AND WARRANTIES
The representations and warranties of Xxxxxx contained in this
Agreement shall survive the execution and delivery of this Agreement and shall
terminate on the earlier of the termination date of this Agreement in accordance
with its terms and the Effective Date. Any investigation by a Party or its
advisors shall not mitigate, diminish or affect the representations and
warranties of the other Party.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXXX
4.1 REPRESENTATIONS AND WARRANTIES
Xxxxxx hereby represents and warrants to and in favour of Xxxxxx as
follows and acknowledges that Xxxxxx is relying upon such representations and
warranties in entering into this Agreement and the Arrangement:
(a) Organization and Qualification. Xxxxxx is a corporation duly
organized and validly existing under the laws of its jurisdiction of
incorporation and has the requisite corporate power and authority to own its
properties and to carry on its business as it is now being conducted. At the
Effective Time, Xxxxxx Acquireco will be a corporation duly organized and
validly existing under the laws of its jurisdiction of incorporation and will
have the requisite corporate power and authority to own its properties and to
give effect to the transaction contemplated in this Agreement.
(b) Authority Relative to this Agreement. Xxxxxx has the requisite
corporate authority to enter into this Agreement and to carry out its
obligations hereunder. At the Effective Time, all of the outstanding shares in
the capital of Xxxxxx Acquireco will be owned directly or indirectly by Xxxxxx,
free and clear from any liens. The execution and delivery of this Agreement and
consummation of the Arrangement as contemplated hereby have been duly authorized
by Xxxxxx by its board of directors, and no other corporate proceedings on the
part of Xxxxxx is necessary to authorize this Agreement or the participation of
Xxxxxx in the Arrangement. This Agreement has been duly executed and delivered
by Xxxxxx and constitutes a legal, valid and binding obligation of Xxxxxx
enforceable against it in accordance with its terms, subject to the
qualification that such enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting
rights of creditors and that equitable remedies, including specific performance,
are discretionary and may not be ordered.
- 33 -
(c) No Violations.
(i) Neither the execution and delivery of this Agreement by Xxxxxx
nor the making or completion of the Arrangement by Xxxxxx and
Xxxxxx Acquireco contemplated hereby nor compliance by Xxxxxx
with any of the provisions hereof will: (1) violate, conflict
with, change the rights or obligations of any parties under
(including triggering a right of first refusal, change of
control, or termination rights under any material note, bond,
mortgage, indenture, loan agreement, deed of trust, agreement,
Lien, contract or other instrument or obligation to which
Xxxxxx or Xxxxxx Acquireco is a party or to which either of
them or any of their respective assets is subject or by which
either of them is bound) or result in a breach of any
provision of, require any consent, approval or notice under,
or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) or result
in a right of termination or acceleration, or cause any
indebtedness of Xxxxxx or Xxxxxx Acquireco to come due before
its stated maturity or result in the creation of any Lien upon
any of the properties or assets of Xxxxxx or Xxxxxx Acquireco
under, any of the terms, conditions or provisions of (A) their
respective charters or by-laws or (B) any material note, bond,
mortgage, indenture, loan agreement, deed of trust, agreement,
Lien, contract or other instrument or obligation to which
Xxxxxx or Xxxxxx Acquireco is a party or to which either of
them or any of their respective assets is subject or by which
either of them is bound; or (2) subject to compliance with the
statutes and regulations referred to in SCHEDULE A,
"APPROPRIATE REGULATORY APPROVALS", violate any Law,
judgement, ruling, order, writ, injunction, determination,
award, decree, statute, ordinance, rule or regulation
applicable to Xxxxxx or Xxxxxx Acquireco or any of their
respective properties or assets (except, in the case of each
of SUBSECTIONS 4.1(d)(i)(1)(B) and 4.1(d)(i)(2), for such
violations, conflicts, breaches, defaults, terminations,
accelerations or creations of Liens which, or any consents,
approvals or notices which if not given or received, would not
impair the ability of Xxxxxx or Xxxxxx Acquireco to complete
the Arrangement); or (3) cause the suspension or revocation of
any authorization, consent, approval or licence issued to or
held by Xxxxxx or Xxxxxx Acquireco currently in effect which
would prevent, make illegal or materially delay or interfere
with the completion of the Arrangement.
(ii) Subject to obtaining the Appropriate Regulatory Approvals and
other than in connection with or in compliance with the
provisions of applicable securities Laws, the OBCA and the
Appropriate Regulatory Approvals, (1) there is no legal
impediment to completion of the Arrangement by Xxxxxx or
Xxxxxx Acquireco, and (2) no filing or registration with, or
authorization, consent or approval of, any domestic or foreign
public body or authority, including any Governmental Entity is
required of Xxxxxx in connection with the execution, delivery
and performance of this Agreement or by Xxxxxx or Xxxxxx
Acquireco in connection with the completion of the
Arrangement, except for such filings or registrations which,
if not made, or for such authorizations, consents or approvals
which, if not received, would not prevent, make illegal or
materially delay or interfere with the completion of the
Arrangement.
- 34 -
(d) Financing. Xxxxxx has sufficient funds or adequate arrangements
(within the meaning of applicable securities Laws) for financing in place to pay
the Aggregate Cash Consideration Payable on the Effective Date.
(e) Common Shares. Neither Xxxxxx nor any of its affiliates owns or
exercises control or direction over any Common Shares on the date hereof.
(f) Competition Law Matters. Xxxxxx and its affiliates do not have
assets in Canada that exceed $225,000,000, or gross revenues from sales in, from
or into Canada, that exceed $180,000,000, all as determined in accordance with
Part IX of the Competition Act (Canada) and the Notifiable Transactions
Regulations thereunder.
4.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of Xxxxxx contained in this
Agreement shall survive the execution and delivery of this Agreement and shall
terminate on the earlier of the termination date of this Agreement in accordance
with its terms and the Effective Date. Any investigation by a Party or its
advisors shall not mitigate, diminish or affect the representations and
warranties of the other Party.
ARTICLE V
COVENANTS
5.1 COVENANTS OF XXXXXX REGARDING THE CONDUCT OF BUSINESS
Xxxxxx covenants and agrees that, during the period from the date of
this Agreement until the earlier of the Effective Date and the time that this
Agreement is terminated in accordance with its terms, or as is otherwise
expressly permitted or specifically contemplated by this Agreement or the
Arrangement or set forth in the Xxxxxx Disclosure Letter:
(a) (i) the Business shall be conducted only in, and Xxxxxx and its
subsidiaries shall not take any action except in, the Ordinary Course of
Business, and Xxxxxx shall use all commercially reasonable efforts to maintain
and preserve its and their business organization, assets, employees, goodwill
and advantageous business relationships;
(ii) Xxxxxx shall not, and shall not permit any of its subsidiaries
to, directly or indirectly: (1) amend its charter or by-laws;
(2) declare, set aside or pay any dividend or other
distribution or payment (whether in cash, shares or property)
in respect of the Common Shares or the securities of any
subsidiary; (3) issue, grant, sell or pledge or agree to
issue, grant, sell or pledge any shares of Xxxxxx or its
subsidiaries, or securities convertible into or exchangeable
or exercisable for, or otherwise evidencing a right to
acquire, shares of Xxxxxx or its subsidiaries, other than (A)
Xxxxxx Options issued consistent with past practice and share
issuances in respect thereof (provided any such issuance is
disclosed to Xxxxxx prior to such grant or issuance); (B)
10,000 Xxxxxx Options and cash payment to be issued to Xx. Xxx
XxXxxxx as Publicly Disclosed by Xxxxxx; (C) the issuance of
Common Shares issuable pursuant to the respective terms of the
outstanding Xxxxxx Options or 22,514 Restricted Share Awards
or in consideration of their termination by the
- 35 -
Optionholders, (D) transactions between two or more Xxxxxx
wholly-owned subsidiaries or between Xxxxxx and a Xxxxxx
wholly-owned subsidiary, and (E) pursuant to pledge
commitments contained in written agreements entered into prior
to the date hereof and which are disclosed in the Xxxxxx
Disclosure Letter; (4) redeem, purchase or otherwise acquire
any of its outstanding securities, unless otherwise required
by the terms of such securities and other than in transactions
between two or more Xxxxxx wholly-owned subsidiaries or
between Xxxxxx and a Xxxxxx wholly-owned subsidiary; (5) amend
the terms of any of its securities other than Xxxxxx Options
in accordance with the terms hereof and the Restricted Share
Awards in accordance with the terms of the Executive
Agreements; (6) adopt a plan of liquidation or resolution
providing for the liquidation, dissolution, merger,
consolidation or a reorganization of Xxxxxx or any of its
subsidiaries; (7) amend the terms of the Executive Agreements;
or (8) enter into, modify or terminate any contract,
agreement, commitment or arrangement with respect to any of
the foregoing;
(iii) Xxxxxx shall conduct itself so as to keep Xxxxxx informed in
all material respects as to the important decisions or actions
required to be made or taken by Xxxxxx'x Board of Directors
with respect to the operation of its Business (for greater
certainty, other than in respect to any Acquisition Proposal,
which shall be governed by SECTIONS 5.3 and 5.4); provided, in
each case, that such disclosure is not otherwise prohibited by
reason of a confidentiality obligation owed to a third party
or otherwise prevented by applicable Law or is in respect of
customer specific or competitively sensitive information;
(iv) Xxxxxx shall not, and shall not permit any of its subsidiaries
to, directly or indirectly: (1) sell, pledge, lease, dispose
of or encumber any assets of Xxxxxx or of any subsidiary,
except in the Ordinary Course of Business, or except as become
redundant as a direct result of outsourcing, the details of
each of which were included in the electronic data room
maintained by the IntraLinks in connection with the
transactions contemplated in this Agreement and has been
discussed with one or more members of the Xxxxxx due diligence
team and excluding any assets comprising part of the SMT line
acquired by Xxxxxx pursuant to a purchase agreement between
Xxxxxx and Mydata (the "SMT ASSETS") (i) prior to October 25,
2005 or (ii) subsequent to October 25, 2005 in the event that
Xxxxxx has provided notice in writing to Xxxxxx prior thereto
that the SMT Assets are not to be sold in which event Xxxxxx
shall indemnify Xxxxxx in respect of any cancellation or other
charges under its purchase order number 9733081 dated July 27,
2005 entered into in respect of certain of the SMT Assets with
Mydata provided that such indemnification obligation shall be
subject to Xxxxxx not being in breach in any material respect
of its obligations hereunder; (2) acquire (by merger,
amalgamation, consolidation or acquisition of shares or
assets) any corporation, partnership or other business
organization or division thereof, or, except for investments
in securities made in the Ordinary Course of Business, make
any investment either by the purchase of securities,
contributions of capital, property transfer, or, purchase of
any property or assets of any other individual or entity
(other than in each case to wholly-owned subsidiaries); (3)
incur any
- 36 -
indebtedness for borrowed money or any other liability or
obligation or issue any debt securities or assume, guarantee,
endorse or otherwise as an accommodation become responsible
for the obligations of any other individual or entity, or make
any loans or advances, except in the Ordinary Course of
Business, except for refinancing of existing debt on
substantially the same or more favourable terms, and except
for daylight employee assistance loans in connection with the
exercise of Xxxxxx Options; (4) pay, discharge or satisfy any
claims, liabilities or obligations other than the payment,
discharge or satisfaction, in the Ordinary Course of Business,
of liabilities reflected or reserved against in the Xxxxxx
Financial Statements or incurred in the Ordinary Course of
Business; (5) authorize, recommend or propose any release or
relinquishment of any contractual right, other than in the
Ordinary Course of Business; (6) waive, release, grant or
transfer any rights of material value or modify or change any
existing Material Contract; (7) except in the Ordinary Course
of Business or as required by applicable Laws, enter into or
modify any Material Contract; (8) enter into any Contract that
can not be terminated by Xxxxxx on or prior to the second
anniversary thereof without penalty; (9) make or amend any Tax
elections or amend any Tax Returns; (10) acquire or commit to
acquire any assets except for purchases of inventory in the
Ordinary Course of Business and except for capital
expenditures contemplated by the capital plan approved by the
Board of Directors and provided to Xxxxxx and identified as
the capital plan referenced by this subsection, or (11)
authorize or propose any of the foregoing, or enter into or
modify any Contract, agreement, commitment or arrangement to
do any of the foregoing; provided, however, that the foregoing
shall not apply to any action, transaction or agreement
(including a series of transactions) with a value of less than
$1 million individually or $3 million in the aggregate (for
greater certainty in the case of any joint venture,
partnership or similar arrangement to which Xxxxxx is a party,
value shall be measured only as the value of Xxxxxx'x
proportionate interest) but excluding any SMT Assets except in
accordance with SUBCLAUSE 5.1(a)(IV)(1) above;
(v) Except as previously agreed to by Xxxxxx or as set forth in
the Xxxxxx Disclosure Letter or as contemplated by this
Agreement or the Executive Agreements, Xxxxxx shall not, and
shall cause its subsidiaries not to, grant to any officer or
director, an increase in compensation in any form, grant any
general salary increase, grant to any other employee any
increase in compensation in any form, make any loan to any
officer or director except for daylight employee assistance
loans in connection with the exercise of Xxxxxx Options, or
take any action with respect to the grant of any retention,
severance or termination pay to, or the entering into of any
employment or change of control agreement with, any officer or
director of Xxxxxx or any of its subsidiaries, or with respect
to any increase of benefits payable under its current
severance or termination pay policies, other than in the
Ordinary Course of Business (including annual salary
increases, bonuses and option grants);
(vi) Xxxxxx shall accelerate the vesting of any unvested Xxxxxx
Options, but shall not otherwise amend, vary or modify the
Xxxxxx Stock Option Plan or the Restricted
- 37 -
Share Awards except as contemplated by this Agreement or the
Executive Agreements;
(vii) Xxxxxx shall not settle or compromise any claim brought by any
present, former or purported holder of its securities in
connection with the transactions contemplated by this
Agreement or the Arrangement prior to the Effective Date
without the prior written consent of Xxxxxx, which consent
shall not be unreasonably withheld or delayed;
(viii) other than in the Ordinary Course of Business or pursuant to
existing employment, collective bargaining, pension,
supplemental pension, termination, severance, or compensation
agreements, plans, arrangements or policies or as is necessary
to comply with applicable Laws or as disclosed in the Xxxxxx
Disclosure Letter, or as contemplated by this Agreement,
neither Xxxxxx nor any of its subsidiaries shall adopt or
amend in any significant manner or make any contribution to
any Xxxxxx Plan or any other bonus, profit sharing, option,
pension, retirement, deferred compensation, insurance,
incentive compensation, other compensation or other similar
plan, agreement, trust, fund or arrangement for the benefit of
employees;
(ix) Xxxxxx shall use its reasonable commercial efforts to cause
its current insurance (or re-insurance) policies maintained by
Xxxxxx or any subsidiary, including directors' and officers'
insurance, not to be cancelled or terminated or any of the
coverage thereunder to lapse, unless simultaneously with such
termination, cancellation or lapse, replacement policies
underwritten by insurance or re-insurance companies of
nationally recognized standing having comparable deductions
and providing coverage equal to or greater than the coverage
under the cancelled, terminated or lapsed policies for
substantially similar premiums are in full force and effect;
and
(x) Xxxxxx shall not adopt, approve or implement a shareholder
rights plan or similar poison pill arrangement.
(b) To the extent that the covenants or agreements contained herein
relate directly or indirectly to a subsidiary of Xxxxxx, each such provision
shall be construed as a covenant or agreement by Xxxxxx to cause (to the fullest
extent to which it is legally capable) such subsidiary to perform the required
action.
5.2 COVENANTS OF XXXXXX REGARDING THE PERFORMANCE OF OBLIGATIONS
Xxxxxx shall and shall cause its subsidiaries to perform all
obligations required to be performed by Xxxxxx or any of its subsidiaries under
this Agreement, co-operate with Xxxxxx in connection therewith, and do all such
other commercially reasonable acts and things as may be necessary or desirable
in order to consummate and make effective, as soon as reasonably practicable,
the transactions contemplated in this Agreement and, without limiting the
generality of the foregoing, Xxxxxx shall and where appropriate shall cause its
subsidiaries to:
- 38 -
(a) as soon as reasonably practicable after the execution of this
Agreement, apply to the Court in a manner acceptable to
Xxxxxx, acting reasonably, under section 182 of the OBCA for
the Interim Order and thereafter proceed with such application
and diligently seek the Interim Order;
(b) provide or cause to be provided to Xxxxxx from time to time
all proxy return information and dissent notices with respect
to the Meeting on a timely basis;
(c) provide lists of Shareholders prepared by its transfer agent
and a list of holders of Xxxxxx Options and any other rights,
warrants or convertible securities currently outstanding (with
full particulars as to the purchase, exercise or conversion
price, vesting and expiry date) as well as a security position
listing from each depositary, including The Canadian
Depositary for Securities Limited, and deliver any such lists
to Xxxxxx promptly following the date hereof and promptly
deliver to Xxxxxx upon demand thereafter supplemental lists
setting out changes thereto;
(d) use commercially reasonable efforts to obtain all necessary
waivers, consents and approvals required to be obtained by it
from other parties to loan agreements, joint venture
agreements, partnerships, leases, licences and other Contracts
to consummate the Arrangement and permit the Business to be
carried on in a manner substantially consistent with its
current operation following the Effective Date, except for
such waivers, consents and approvals which if not obtained
would not have a Material Adverse Effect on Xxxxxx;
(e) apply for and obtain all Appropriate Regulatory Approvals
relating to Xxxxxx or any of its subsidiaries and in doing so,
keep Xxxxxx informed as to the status of the proceedings
related to obtaining such Appropriate Regulatory Approvals,
including but not limited to, providing Xxxxxx with copies of
all related applications and notifications in draft form
(other than commercially sensitive material that may be
required to be filed by Xxxxxx under the HSR Act in connection
with obtaining the Appropriate Regulatory Approvals), in order
for Xxxxxx to provide its reasonable comments;
(f) effect all necessary registrations, filings, applications and
submissions of information required by a Governmental Entity
from Xxxxxx or any of its subsidiaries in connection with the
Arrangement and, if necessary, participate and appear in any
proceedings of either Party before or by any Governmental
Entity;
(g) defend or appeal any Proceeding relating to any injunction or
restraining order or other order or action seeking to stop or
otherwise adversely affecting the ability of the Parties to
consummate the transactions contemplated hereby;
(h) use its commercially reasonable efforts to convene and hold
the Meeting for the purpose of considering the Arrangement
Resolution (and for such other proper purposes as may be set
out in the notice calling the Meeting) on or before October
31, 2005 but in any event convene and hold the Meeting not
later than the fifth
- 39 -
Business Day preceding the Outside Date (the "MEETING DATE")
except as contemplated by this Agreement;
(i) except as required for quorum purposes, not adjourn, postpone,
cancel (or propose the adjournment, postponement or
cancellation of) or fail to call the Meeting without the prior
written consent of Xxxxxx (not to be unreasonably withheld),
except as required by applicable Laws or as contemplated by
this Agreement (including in order to comply with disclosure
obligations);
(j) subject to SECTION 5.3, recommend that the Shareholders vote
in favour of the Arrangement Resolution;
(k) subject to SECTION 5.3, solicit from the Shareholders proxies
in favour of the approval of the Arrangement Resolution and
take all other reasonable action that is necessary or
desirable to secure the approval of the Arrangement
Resolution;
(l) subject to obtaining the approvals (including Shareholder
approval) as required by the Interim Order, proceed with and
diligently pursue the application to the Court for the Final
Order as soon as practicable following the Meeting and
satisfaction or waiver of the other conditions herein
contained in favour of each Party;
(m) as soon as practicable following receipt of the Final Order
and satisfaction or waiver of the other conditions herein
contained in favour of each Party, promptly send to the
Director, for endorsement and filing, the Articles of
Arrangement and such other documents as may be required; and
(n) immediately after the Effective Time, obtain the resignations
of each member of the Xxxxxx Board of Directors and assist in
causing them to be replaced by individuals nominated by Xxxxxx
and Xxxxxx Acquireco.
5.3 RECOMMENDATION OF THE BOARD OF DIRECTORS
The Circular shall include the unanimous recommendation of the Board of
Directors of Xxxxxx that Shareholders vote in favour of the Arrangement
Resolution and shall confirm the prior unanimous recommendation to the Xxxxxx
Board of Directors in respect of the Arrangement from the special committee of
the Xxxxxx Board of Directors. Notwithstanding any other provision of this
Agreement, the Board of Directors of Xxxxxx may change its recommendation to the
Shareholders and refrain from complying with its obligations under SECTION
5.2(k) if and to the extent that the Board of Directors determines, in good
faith (after consultation with outside counsel) that such action is necessary
for the Board of Directors to act in a manner consistent with its fiduciary
duties or applicable Laws. The foregoing shall not relieve Xxxxxx from its
obligation to proceed to call and hold the Meeting and to hold the vote on the
Arrangement Resolution except in circumstances where this Agreement is
terminated in accordance with the terms hereof.
-40-
5.4 COVENANT OF XXXXXX REGARDING NON-SOLICITATION
(a) Xxxxxx shall not, directly or indirectly, through any officer,
director, employee, representative or agent of Xxxxxx or any of its
subsidiaries, solicit, initiate, knowingly facilitate or knowingly encourage
(including by way of furnishing non-public information or entering into any form
of agreement, arrangement or understanding) the initiation of any inquiries or
proposals regarding an Acquisition Proposal; provided that nothing contained in
this Agreement shall prevent the Board of Directors of Xxxxxx, after the date
hereof, considering, negotiating, accepting, approving, recommending to the
Shareholders or entering into a Similar Confidentiality Agreement and providing
information pursuant to this SECTION 5.4 or entering into an agreement,
understanding or arrangement in respect of an Acquisition Proposal that is a
Superior Proposal where: (i) the Person making such Superior Proposal or the
making of the Superior Proposal is not in breach of any agreement between such
Person and Xxxxxx or its subsidiaries; and (ii) such Superior Proposal did not
result from a breach by Xxxxxx of its obligations set forth in this SECTION 5.4
or in SECTION 5.5.
(b) Xxxxxx shall immediately cease and cause to be terminated any
existing discussions or negotiations with any parties (other than Xxxxxx or its
representatives) with respect to any potential Acquisition Proposal. Xxxxxx
agrees not to release any third party from any confidentiality agreement to
which such third party is a party. Xxxxxx further agrees not to release any
third party from any standstill agreement or provision to which such third party
is a party unless such third party has made a Superior Proposal to the extent of
such Superior Proposal. Xxxxxx shall immediately request the return or
destruction of all information previously provided to any third party which has
entered into, at any time in the two year period prior to the date of this
Agreement, a confidentiality agreement with Xxxxxx relating to a potential
Acquisition Proposal and shall use all reasonable commercial efforts to ensure
that such requests are honoured.
(c) Xxxxxx shall promptly notify Xxxxxx of any Acquisition Proposal and
communications related thereto of which any of its directors or officers become
aware after the date hereof (including the renewal of any Acquisition Proposal
made prior to the date hereof), or any amendments to the foregoing, or any
request for non-public information relating to Xxxxxx or any of its
subsidiaries, in connection with an Acquisition Proposal or for access to the
properties, books or records of Xxxxxx or any subsidiary by any Person or entity
that informs Xxxxxx or such subsidiary that it is considering making, or has
made, an Acquisition Proposal. Such notice shall include a copy of any written
Acquisition Proposal and any amendment thereto and a description of all material
terms of any oral or other communications related to an Acquisition Proposal,
including the identity of the Person making such Acquisition Proposal.
(d) If Xxxxxx receives a request for material non-public information
from a Person who proposes a bona fide Acquisition Proposal and the Board of
Directors of Xxxxxx determines that such proposal would be a Superior Proposal
made in compliance with SUBSECTION 5.4(a) and takes all such necessary actions
as to ensure compliance with the terms thereof then, and only in such case, the
Board of Directors of Xxxxxx may, subject to the execution by such Person of a
confidentiality agreement having confidentiality and standstill provisions and
other terms at least as restrictive as the Confidentiality Agreement (a "SIMILAR
CONFIDENTIALITY AGREEMENT"), provide such Person with access to information
regarding Xxxxxx or its subsidiaries; provided,
-41-
however that the Person making the Acquisition Proposal shall not be precluded
thereunder from making such Acquisition Proposal, and provided further that
Xxxxxx sends a copy of any such Similar Confidentiality Agreement to Xxxxxx
promptly upon its execution and Xxxxxx is promptly provided with a list and,
upon request, copies of all information provided to such Person and is promptly
provided with access to information similar to that which was provided to such
Person.
(e) Xxxxxx shall ensure that its senior officers and directors and any
financial or other advisors or representatives retained by it are aware of the
provisions of this SECTION 5.4, and it shall be responsible for any breach of
this SECTION 5.4 by any such Person or its advisors or representatives.
5.5 RIGHT TO MATCH
(a) Xxxxxx shall not accept, approve, recommend or enter into any
agreement, arrangement or understanding to implement a Superior Proposal (other
than a Similar Confidentiality Agreement) without:
(i) complying fully with the provisions of SECTION 5.4;
(ii) providing to Xxxxxx (1) written notice that the Board of
Directors of Xxxxxx has determined that it has received and is
prepared to accept a Superior Proposal, and (2) a copy of any
proposal or commitment to make a Superior Proposal executed by
the Person making the Superior Proposal, in each case, as soon
as possible but in any event not less than five Business Days
prior to acceptance of the Superior Proposal by the Board of
Directors;
(iii) if such five Business Day period would not terminate on or
before the date fixed for the Meeting, Xxxxxx shall adjourn
the Meeting to a date that is not less than two nor more than
five Business Days after the expiration of the five Business
Day period;
(iv) providing Xxxxxx with an opportunity (but not the obligation),
before the expiration of such five Business Day period, to
propose to amend this Agreement to provide for consideration
having a value and financial and other terms equivalent to or
more favourable to the Shareholders than those contained in
such Superior Proposal with the result that the Superior
Proposal would cease to be a Superior Proposal; and
(v) terminating this Agreement pursuant to SECTION 8.1(e) and
paying the Termination Fee to Xxxxxx.
(b) In the event that Xxxxxx agrees to amend this Agreement in the
manner described in SUBSECTION 5.5(a)(iv), but otherwise on terms substantially
the same as the terms of this Agreement, the Board of Directors of Xxxxxx shall
consider the terms of the amendment and if it concludes the Superior Proposal is
no longer a Superior Proposal, Xxxxxx shall not implement the proposed Superior
Proposal and may not terminate this Agreement pursuant to SECTION 8.1(e), and
shall agree to the amendments to this Agreement.
-42-
(c) In the event that Xxxxxx does not agree to amend this Agreement as
contemplated by SUBSECTION 5.5(b) and immediately prior to the termination of
this Agreement such Superior Proposal constitutes a Superior Proposal in
comparison with the terms hereof, Xxxxxx may terminate this Agreement in
accordance with SECTION 8.1(e) and thereafter may enter into an agreement in
order to implement the Superior Proposal.
5.6 COVENANTS OF XXXXXX REGARDING THE PERFORMANCE OF OBLIGATIONS
Xxxxxx shall perform all obligations required to be performed by Xxxxxx
under this Agreement, co-operate with Xxxxxx in connection therewith, and use
its commercially reasonable efforts to do all such other acts and things as may
be necessary or desirable in order to consummate and make effective, as soon as
reasonably practicable, the transactions contemplated by this Agreement and,
without limiting the generality of the foregoing, Xxxxxx shall and where
appropriate Xxxxxx shall cause its other subsidiaries to:
(a) apply for and use commercially reasonable efforts to obtain
all Appropriate Regulatory Approvals relating to Xxxxxx and,
in doing so, keep Xxxxxx informed as to the status of the
proceedings related to obtaining the Appropriate Regulatory
Approvals, including, but not limited to, providing Xxxxxx
with copies of all related applications and notifications, in
draft form (other than commercially sensitive material that
may be required to be filed by Xxxxxx under the HSR Act in
connection with obtaining the Appropriate Regulatory
Approvals), in order for Xxxxxx to provide its reasonable
comments. Notwithstanding the foregoing, in no event shall
Xxxxxx or any of its subsidiaries or affiliates be obligated
to propose or agree to accept any undertaking or condition,
enter into any consent decree, make any divestiture, accept
any operational restriction or take or commit to take any
action that would reasonably be expected to materially limit
Xxxxxx' ability to retain, own or operate any of the Business
or portions thereof, or alter or restrict in any material way
the Business or commercial practices of Xxxxxx or its
subsidiaries or affiliates, and Xxxxxx shall not, without
Xxxxxx' prior written consent, take or commit to take any
action that would reasonably be expected to result in any of
the foregoing;
(b) cooperate with Xxxxxx in the preparation of the Circular;
(c) ensure that its representatives attend the Meeting and the
hearings in respect of the Interim Order and the Final Order;
(d) use commercially reasonable efforts to obtain all necessary
waivers, consents and approvals required to be obtained to
consummate the Arrangement;
(e) vote any Common Shares owned or over which control or
direction is exercised by it in favour of the Arrangement
Resolution and any related matters at the Meeting;
(f) effect all necessary registrations, filing, applications and
submissions of information required by a Governmental Entity
from Xxxxxx in connection with
-43-
the Arrangement and, if necessary, participate and appear in
any proceedings of either Party before or by any Governmental
Entity;
(g) defend or appeal any Proceeding relating to any injunction or
restraining order or other order or action seeking to stop or
otherwise adversely affecting the ability of the Parties to
consummate the transactions contemplated hereby;
(h) after the Effective Date, cause Xxxxxx to maintain the
corporate governance and code of ethics policies of Xxxxxx in
effect at the Effective Date until such time as Xxxxxx ceases
to be a reporting issuer under applicable securities Laws; and
(i) ensure Xxxxxx Acquireco has sufficient funds to pay the
Aggregate Cash Consideration Payable to holders of Common
Shares and Xxxxxx Options on the Effective Date and shall
cause the Common Share Consideration payable to holders of
Common Shares and the Option Consideration payable to holders
of Xxxxxx Options at or after the Effective Time to be
deposited with the Depositary not later than immediately prior
to the Effective Time.
5.7 MUTUAL COVENANTS
Each of the Parties covenants and agrees that, except as otherwise
expressly contemplated in this Agreement, during the period from the date of
this Agreement until the earlier of the Effective Date and the time that this
Agreement is terminated in accordance with its terms:
(a) it shall not take any action which would reasonably be
expected to significantly impede the making or completion of
the Arrangement; and
(b) it shall use its reasonable commercial efforts to conduct its
affairs so that all of its representations and warranties
contained herein shall (i) to the extent qualified by
materiality, be true and correct in all respects, and (ii) to
the extent not qualified by materiality, be true and correct
in all material respects, in each case, on and as of the
Effective Date as if made thereon.
5.8 PRE-ACQUISITION REORGANIZATION
Xxxxxx agrees to effect prior to the Effective Date, at Xxxxxx'
expense, such reorganizations of its business, operations and assets or such
other transactions (each, a "PRE-ACQUISITION REORGANIZATION") as Xxxxxx may
reasonably request prior to the Effective Date, and the Plan of Arrangement, if
required, shall be modified accordingly in accordance with its terms, provided
that Xxxxxx shall provide written notice in reasonable detail to Xxxxxx of any
proposed Pre-Acquisition Reorganization at least fifteen Business Days prior to
the Meeting Date. Notwithstanding the foregoing, Xxxxxx shall not be obligated
to effect any Pre-Acquisition Reorganization which, in the opinion of Xxxxxx,
acting reasonably, (A) would prejudice it or the Shareholders, or (B) would
impede or materially delay the completion of the transactions contemplated
hereby. Xxxxxx agrees to indemnify and hold Xxxxxx harmless from and against any
cost, liability or expense incurred by Xxxxxx as a result of any Pre-Acquisition
Reorganization undertaken if this Agreement is terminated. Xxxxxx acknowledges
and agrees that the
-44-
consummation of any Pre-acquisition Reorganization requested by Xxxxxx shall not
be a condition to completion of the transactions contemplated hereby or
effectiveness of the Arrangement.
ARTICLE VI
CONDITIONS
6.1 MUTUAL CONDITIONS
The obligations of Xxxxxx and Xxxxxx to complete the transactions
contemplated hereby are subject to fulfilment of the following conditions on or
before the Effective Date or such other time prior thereto as is specified
below:
(a) the Interim Order shall have been obtained in form and
substance satisfactory to the Parties, acting reasonably, and
shall not have been set aside or modified in a manner
unacceptable to either of the Parties, acting reasonably, on
appeal or otherwise;
(b) the Shareholders shall have approved the Arrangement
Resolution in accordance with the terms of the Interim Order;
(c) the Final Order shall have been granted before the Outside
Date in form and substance satisfactory to the Parties, acting
reasonably, and shall not have been set aside or modified in a
manner unacceptable to either of the Parties, acting
reasonably, on appeal or otherwise;
(d) there shall be no Proceeding in progress of a judicial or
administrative nature or otherwise brought by or before a
Governmental Entity that would reasonably be expected to
result in an order, ruling, judgement or decree, or any Law
proposed, enacted, promulgated or applied, which:
(i) makes illegal or otherwise directly or indirectly
restrains, enjoins or prohibits the Arrangement, or
(ii) imposes damages, directly or indirectly, relating to
the transactions contemplated hereby which causes a
Material Adverse Effect on the Party to which it
applies; and
(e) all Appropriate Regulatory Approvals and the expiry of any
waiting periods, in connection with, or required to permit,
the completion of the Arrangement, the failure to obtain which
or the non-expiry of which would have a Material Adverse
Effect on either of the Parties or prevent, make illegal or
materially delay the completion of the Arrangement, shall have
been obtained or received on terms which will not have a
Material Adverse Effect on either of the Parties, and
reasonably satisfactory evidence thereof shall have been
delivered to each Party and shall not be subject to any
stop-order or Proceeding seeking a stop-order or revocation.
-45-
The foregoing conditions are for the mutual benefit of each of the
Parties and may be waived, in whole or in part, by either Party at any time,
provided that no Party may waive any mutual condition on behalf of the other
Party. If any of such conditions shall not have been complied with or waived on
or before the date required for their performance, either Party may terminate
this Agreement by written notice to the other and shall have no other right or
remedy against the other Party except as may be provided by ARTICLE VII or
ARTICLE VIII. No Party may rely on the failure to satisfy any of the above
conditions precedent as a basis for non-compliance by the Party of its
obligations under this Agreement if the condition precedent would have been
satisfied but for a material default by the Party in complying with its
obligations hereunder.
6.2 ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF XXXXXX
The obligations of Xxxxxx hereunder to complete the transactions
contemplated hereby are subject to the fulfilment of the following conditions on
or before the Effective Date or such other time prior thereto as is specified
below:
(a) the representations and warranties made by Xxxxxx in this
Agreement shall be true and correct in all material respects
as of the Effective Date as if made on and as of such date
(except to the extent that such representations and warranties
speak as of an earlier date) and Xxxxxx shall have provided a
certificate of two seniors officers certifying, in such
capacity and not personally, such truth and correctness on the
Effective Date;
(b) Xxxxxx shall have complied in all material respects with its
covenants herein and on the Effective Date Xxxxxx shall have
provided to Xxxxxx a certificate of two senior officers
certifying, in such capacity and not personally, that Xxxxxx
has so complied with its covenants herein; and
(c) Xxxxxx shall have deposited the Common Share Consideration
payable to holders of Common Shares and the Option
Consideration payable to holders of Xxxxxx Options at or after
the Effective Time with the Depositary not later than
immediately prior to the Effective Time.
The foregoing conditions are for the benefit of Xxxxxx and may be
waived, in whole or in part, by Xxxxxx in its sole discretion in writing at any
time and, unless otherwise provided in a written waiver, will be limited to the
specific condition waived. If any of such conditions shall not have been
complied with or waived by Xxxxxx on or before the date required for their
performance, Xxxxxx may terminate this Agreement by written notice to Xxxxxx and
shall have no other right or remedy against Xxxxxx or Xxxxxx Acquireco except as
may be provided by ARTICLE VII or ARTICLE VIII. Xxxxxx may not rely on the
failure to satisfy any of the above conditions precedent as a basis for
non-compliance by Xxxxxx of its obligations under this Agreement if the
condition precedent would have been satisfied but for a material default by
Xxxxxx in complying with its obligations hereunder.
-46-
6.3 ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF XXXXXX
The obligation of Xxxxxx to complete the transactions contemplated
hereby is subject to the fulfillment of the following conditions on or before
the Effective Date or such other time prior thereto as is specified below:
(a) the representations and warranties made by Xxxxxx in this
Agreement shall (i) to the extent qualified by materiality be
true and correct in all respects and (ii) to the extent not
qualified by materiality be true and correct in all material
respects, in each case, as of the Effective Date as if made on
and as of such date (except to the extent that such
representations and warranties speak as of an earlier date)
and Xxxxxx shall have provided a certificate of two seniors
officers certifying, in such capacity and not personally, such
truth and correctness on the Effective Date;
(b) Xxxxxx shall have complied in all material respects with its
covenants herein and on the Effective Date Xxxxxx shall have
provided to Xxxxxx a certificate of two senior officers
certifying, in such capacity and not personally, that Xxxxxx
has so complied with its covenants herein;
(c) rights of dissent in relation to the Arrangement shall not
have been duly exercised by the holders of more than 10% of
the Common Shares; and
(d) from the date hereof (or prior to the date hereof to the
extent the relevant change, event, occurrence or development
shall have been disclosed generally or to Xxxxxx only after
the date of this Agreement) up to and including the Effective
Date there shall not have occurred a Material Adverse Effect
on Xxxxxx.
The foregoing conditions are for the benefit of Xxxxxx and may be
waived, in whole or in part, by Xxxxxx in its sole discretion, in writing at any
time and, unless otherwise provided in the written waiver, will be limited to
the specific condition waived. If any of such conditions shall not have been
complied with or waived by Xxxxxx on or before the date required for their
performance, Xxxxxx may terminate this Agreement by written notice to Xxxxxx and
shall have no other right or remedy against Xxxxxx except as may be provided by
ARTICLE VII or ARTICLE VIII. Xxxxxx may not rely on the failure to satisfy any
of the above conditions precedent as a basis for non-compliance by Xxxxxx of its
obligations under this Agreement if the condition precedent would have been
satisfied but for a material default by Xxxxxx in complying with its obligations
hereunder.
6.4 MERGER OF CONDITIONS
The conditions set out in SECTIONS 6.1, 6.2 and 6.3 shall be
conclusively deemed to have been satisfied, waived or released upon the filing
of the Articles of Arrangement as contemplated by this Agreement.
6.5 NOTICE AND CURE PROVISIONS
Each Party will give prompt notice to the other of the occurrence, or
failure to occur, at any time from the date hereof until the earlier to occur of
the termination of this Agreement and
-47-
the Effective Time of any event or state of facts which occurrence or failure
would, or would be likely to:
(a) cause any of the representations or warranties of either Party
contained herein qualified as to materiality to be untrue or
inaccurate or any of those not so qualified to be untrue or
inaccurate in any material respect on the date hereof or at
the Effective Date; or
(b) result in the failure to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by
either Party hereunder prior to the Effective Date.
No Party may elect not to complete the transactions contemplated hereby
pursuant to the conditions set forth herein or exercise any termination right
arising therefrom unless forthwith and in any event prior to the Effective Time,
the Party intending to rely thereon has delivered a written notice to the other
Party specifying in reasonable detail all breaches of covenants, representations
and warranties or other matters which the Party delivering such notice is
asserting as the basis for the non-fulfilment of the applicable condition or
exercise of the termination right, as the case may be. If any such notice is
delivered, provided that a Party is proceeding diligently to cure such matter
and such matter is capable of being cured (except matters arising out of the
failure to make appropriate disclosure in the Xxxxxx Disclosure Letter), no
Party may terminate this Agreement until the later of the Outside Date and the
expiration of a period of 30 days from such notice. If such notice has been
delivered prior to the making of the application for the Final Order or the
filing of the Articles of Arrangement with the Director, such application and
such filing shall be postponed until the expiry of such period. For greater
certainty, in the event that such matter is cured within the time period
referred to herein, this Agreement may not be terminated.
ARTICLE VII
AGREEMENT AS TO DAMAGES AND OTHER ARRANGEMENTS
7.1 AGREEMENT AS TO DAMAGES
Notwithstanding the provisions of SECTION 7.2, if, after the execution
of this Agreement, the Arrangement is not consummated and:
(a) Xxxxxx shall have terminated this Agreement pursuant to
SECTION 8.1(c);
(b) a bona fide Acquisition Proposal is publicly announced,
proposed, offered or made to the Shareholders or to Xxxxxx
prior to the Meeting and after such Acquisition Proposal shall
have been made known, made or announced the Arrangement
Resolution does not receive the required approval of the
Shareholders or the Arrangement Resolution is not submitted
for approval of the Shareholders and, in either event, that
Acquisition Proposal (the "FIRST ACQUISITION PROPOSAL") or any
other Acquisition Proposal publicly announced, proposed,
offered or made to the Shareholders or to Xxxxxx while the
First Acquisition Proposal is outstanding (a "SUBSEQUENT
ACQUISITION PROPOSAL") or while any Subsequent Acquisition
Proposal is outstanding is completed
-48-
substantially in accordance with its terms on or prior to the
first anniversary of the Meeting Date; or
(c) Xxxxxx shall have terminated this Agreement pursuant to
SECTION 8.1(e);
then, Xxxxxx shall pay to Xxxxxx, within two Business Days of the first to occur
of the foregoing, a fee in the amount of $14,800,000 (the "TERMINATION FEE") as
liquidated damages in cash or immediately available funds to an account
designated by Xxxxxx.
7.2 REIMBURSEMENT OF EXPENSES
(a) Subject to SUBSECTION 2.7(e), CLAUSE 5.1(a)(iv), SECTION 5.8 and
SUBSECTIONS 7.2(b) and (c), each Party shall pay all fees, costs and expenses
incurred by such Party in connection with this Agreement, the Arrangement and
the transactions contemplated therein.
(b) If this Agreement is terminated by Xxxxxx pursuant to SUBSECTIONS
8.1(f) or 8.1(h) or if the Arrangement Resolution is not approved by the
Shareholders then, within five Business Days following receipt by Xxxxxx of
notice of such termination or forthwith following the Meeting, as the case may
be, Xxxxxx shall pay to Xxxxxx in cash or immediately available funds to an
account designated by Xxxxxx an amount equal to up to $2,500,000 as payment in
respect of Xxxxxx' actual costs and expenses incurred in connection with the
transactions contemplated by this Agreement (the amount of such costs and
expenses to be certified by Xxxxxx to Xxxxxx in writing in reasonable detail).
(c) No fees shall be payable by Xxxxxx under SUBSECTION 7.2(b) if
Xxxxxx has paid the Termination Fee, and any fees paid by Xxxxxx under
SUBSECTION 7.2(b) shall be credited against the Termination Fee to the extent
that it subsequently becomes payable by Xxxxxx.
(d) If this Agreement is terminated by Xxxxxx pursuant to SUBSECTION
8.1(g) then, within five Business Days following receipt by Xxxxxx of notice of
such termination, Xxxxxx shall pay to Xxxxxx in cash or immediately available
funds to an account designated by Xxxxxx an amount equal to up to $2,500,000 as
payment in respect of Xxxxxx'x actual costs and expenses incurred in connection
with the transactions contemplated by this Agreement (the amount of such costs
and expenses to be certified by Xxxxxx to Xxxxxx in writing in reasonable
detail).
7.3 LIQUIDATED DAMAGES
Each Party acknowledges that all of the payment amounts set out in this
ARTICLE VII are payments of liquidated damages which are a genuine pre-estimate
of the damages which the Party entitled to such damages will suffer or incur as
a result of the event giving rise to such damages and the resultant termination
of this Agreement and are not penalties. Each Party irrevocably waives any right
it may have to raise as a defence that any such liquidated damages are excessive
or punitive. For greater certainty, the Parties agree that, subject to ARTICLE
VIII, payment of an amount determined pursuant to SECTION 7.1 OR 7.2(b) OR
7.2(d) in the manner provided in respect thereof is the sole monetary remedy of
the Party receiving such payment. Nothing contained herein shall preclude a
Party from seeking injunctive relief to restrain any breach or threatened breach
of the covenants or agreements set forth in this Agreement or
-49-
otherwise to obtain specific performance of any of such acts, covenants or
agreements, without the necessity of posting a bond or security in connection
therewith.
7.4 ACCESS TO INFORMATION; CONFIDENTIALITY
(a) Subject to the Confidentiality Agreement and applicable Laws, from
the date hereof until the earlier of the Effective Date and the termination of
this Agreement, upon reasonable notice, Xxxxxx shall, and shall cause its
subsidiaries and its respective officers, directors, employees and agents to,
permit to Xxxxxx and to the officers, employees, agents and representatives of
Xxxxxx such reasonable access as Xxxxxx may reasonably require to Xxxxxx'x
officers, employees, agents, properties, books, records and Contracts, and shall
furnish Xxxxxx with all data and information as Xxxxxx may reasonably request.
(b) Reference is made to the confidentiality provisions set forth in
the Confidentiality Agreement (the "CONFIDENTIALITY PROVISIONS"). The Parties
covenant and agree to observe the Confidentiality Provisions as if they were set
forth in this SECTION 7.4(b) mutatis mutandis.
7.5 INSURANCE AND INDEMNIFICATION
(a) Xxxxxx will, or will cause Xxxxxx to, at Xxxxxx' option, either (i)
maintain in effect without any reduction in scope or coverage for not less than
six years from the Effective Date customary policies of directors' and officers'
liability insurance providing protection comparable to the protection provided
by the policies maintained by Xxxxxx in favour of the directors and officers of
Xxxxxx and each of its subsidiaries which are in effect immediately prior to the
Effective Date and providing protection in respect of claims arising from facts
or events which occurred prior to the Effective Time or (ii) purchase as an
extension of Xxxxxx'x current insurance policies, prepaid non cancellable
run-off directors' and officers' liability insurance providing coverage
comparable to that contained in Xxxxxx'x existing policy for six years from the
Effective Time with respect to claims arising from or related to facts or events
that occurred at or prior to the Effective Time.
(b) Xxxxxx agrees that all rights to indemnification or exculpation
(including rights under Xxxxxx'x corporate by-laws) now existing in favour of
any present or former officer or director of Xxxxxx or any of its subsidiaries
shall survive the completion of the Arrangement and shall continue in full force
and effect for a period of not less than six years from the Effective Date and
Xxxxxx hereby assumes, effective upon completion of the Arrangement, all such
liability with respect to matters arising prior to the Effective Time.
(c) In the event that Xxxxxx or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers all or substantially all of its properties and assets to any
Person, then, and in each such case, proper provision shall be made so that such
successors and assigns of Xxxxxx or, at Xxxxxx' option, Xxxxxx shall assume the
obligations set forth in this SECTION 7.5 without releasing in any respect
Xxxxxx' obligations hereunder.
(d) The provisions of this SECTION 7.5 are (i) for the benefit of, and
shall be enforceable by, each indemnified Party, his or her heirs, executors,
administrators and other legal representatives and (ii) are in addition to, and
not in substitution for, any other rights to
-50-
indemnification or contribution that any such person may have by contract or
otherwise, and the rights granted under this SUBSECTION 7.5(d) shall be held by
Xxxxxx in trust for such persons provided, however, that no approval of any
beneficiary of such trust shall be required in connection with an amendment or
variation of this section prior to the Effective Date.
7.6 BROKERS
Xxxxxx and Xxxxxx represent and warrant to each other that, except for
CIBC World Markets Inc. in the case of Xxxxxx and Xxxxxx Xxxxxxx & Co. Inc. in
the case of Xxxxxx, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission, or to the reimbursement of any
of its expenses, in connection with this Agreement or the Arrangement. Xxxxxx
has provided to Xxxxxx a correct and complete copy of all agreements relating to
the arrangements between it and CIBC World Markets Inc. relating to the payment
of fees and expenses which are in effect at the date hereof and agrees not to
hereafter amend the terms of any such agreements without the prior written
approval of Xxxxxx.
ARTICLE VIII
TERMINATION
8.1 TERMINATION BY THE PARTIES
This Agreement may be terminated at any time prior to the Effective
Date (without further action on the part of the Shareholders if terminated after
the Meeting):
(a) by the written agreement of Xxxxxx and Xxxxxx (notwithstanding
any approval of the Arrangement by the Shareholders);
(b) by either Xxxxxx or Xxxxxx, if any Law makes the Arrangement
or any part of it illegal or otherwise prohibited and such
illegality or prohibition becomes final and non-appealable, or
if any judgement, injunction, order or decree of a
Governmental Entity enjoining Xxxxxx or Xxxxxx from proceeding
with or completing the Arrangement or any part of it is
entered and such judgement, injunction, order or decree has
become final and non-appealable;
(c) by Xxxxxx, if (i) the Board of Directors of Xxxxxx fails to
recommend or confirm its recommendation to Shareholders to
vote in favour of the Arrangement Resolution within three
Business Days of being requested to do so by Xxxxxx, or if the
Board of Directors of Xxxxxx withdraws, modifies, or changes
its approval or recommendation of the Arrangement Resolution
in a manner adverse to Xxxxxx (it being understood that a
neutral position or no recommendation by the Board of
Directors of Xxxxxx shall be considered to be adverse to
Xxxxxx) or if it shall have resolved to do so; (ii) Xxxxxx has
materially breached its obligations under any of SECTIONS 5.4
or 5.5; or (iii) the Board of Directors of Xxxxxx accepts,
approves, recommends or enters into an agreement (other than a
Similar Confidentiality Agreement) with any Person with
respect to a Superior Proposal;
(d) by either Xxxxxx or Xxxxxx if at the Meeting, the Arrangement
Resolution does not receive the required approval of the
Shareholders;
-51-
(e) by Xxxxxx, if the Board of Directors of Xxxxxx shall have
accepted, approved, and concurrently with such termination,
entered into an agreement, arrangement or understanding to
implement a Superior Proposal in accordance with the
provisions of SECTION 5.4 (provided that such Superior
Proposal did not result from a breach of SECTION 5.4 OR 5.5 by
Xxxxxx), provided that Xxxxxx shall have paid to Xxxxxx the
Termination Fee;
(f) by Xxxxxx, if Xxxxxx has breached any of its representations,
warranties, agreements or obligations in this Agreement, the
breach of which would result in the failure to satisfy the
conditions in SECTION 6.3(a) or (b);
(g) by Xxxxxx, if Xxxxxx has breached any of its representations,
warranties, agreements or obligations in this Agreement, the
breach of which would result in the failure to satisfy one or
more of the conditions set forth in SECTION 6.2(a) or (b);
(h) by Xxxxxx, if there shall have occurred after the date hereof
(or prior to the date hereof to the extent the relevant
change, event, occurrence or development shall have been
disclosed generally or to Xxxxxx only after the date of this
Agreement) up to and including the Effective Date, a Material
Adverse Effect on Xxxxxx; or
(i) by either Party if the Effective Date does not occur on or
before the Outside Date provided that the failure of the
Effective Date to so occur is not the result of the breach of
a representation, warranty or covenant by the Party
terminating this Agreement.
8.2 EFFECT OF TERMINATION
In the event of the termination of this Agreement in the circumstances
set out in this ARTICLE VIII, this Agreement shall forthwith become void and of
no force or effect, and no Party shall have any liability or further obligation
to the other Party hereunder except with respect to the obligations set forth in
SECTIONS 7.1, 7.2, 7.3, 7.4(b) and the first sentence of SECTION 7.6, which
shall survive such termination. However, nothing contained in this SECTION 8.2
or in ARTICLE VII including the payment of an amount under ARTICLE VII shall
relieve or have the effect of or result in relieving (i) in the event that the
Termination Fee has been paid by Xxxxxx to Xxxxxx in accordance with SECTION
7.1, (A) Xxxxxx in any way from liability for damages incurred or suffered by
Xxxxxx as a result of a breach of this Agreement by Xxxxxx acting in bad faith
or in a manner intended and designed to result in the conditions precedent to
the completion of this Agreement not being satisfied, or (B) Xxxxxx in any way
from liability for damages incurred or suffered by Xxxxxx as a result of a
breach of this Agreement by Xxxxxx, including without limitation as a result of
any inaccuracy in Xxxxxx' representations and warranties and any non-performance
by Xxxxxx of its covenants made herein; and (ii) in all other events, any Party
in any way from liability for damages incurred or suffered by a Party as a
result of a breach of this Agreement by a Party, including without limitation as
a result of any inaccuracy in its representations and warranties and any
non-performance by it of its covenants made herein.
-52-
8.3 WAIVER
Any Party may (i) extend the time for the performance of any of the
obligations or acts of the other Party, (ii) waive compliance with any of the
other Party's agreements or the fulfilment of any conditions to its own
obligations contained herein, or (iii) waive inaccuracies in the other Party's
representations or warranties contained herein or in any document delivered by
the other Party; provided, however, that any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
Party and, unless otherwise provided in the written waiver, will be limited to
the specific breach or condition waived.
ARTICLE IX
GENERAL PROVISIONS
9.1 NOTICES
All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered or sent if delivered personally or sent by electronic
transmission (including pdf), or as of the following Business Day in the
jurisdiction to which the notice or communication was sent, if sent by prepaid
overnight courier, to the Parties at the following addresses (or at such other
addresses as shall be specified by either Party by notice to the other given in
accordance with these provisions):
(a) to Xxxxxx:
Xxxxxx Technology Corporation
000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxx XxXxxxx, Chairman - Special Committee of the
Board of Directors
E-mail: xxxxxxxxxx@xxxxxx.xxx
with a copy to:
Torys LLP
Xxxxx 0000, Xxx 000, TD Centre
00 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxxxx, XX X0X 0X0
Attention: Xxxxx X. X. Xxxxxx and Xxxx X. Xxxxxxxxxxx
E-mail: xxxxxxx@xxxxx.xxx/xxxxxxxxxxxx@xxxxx.xxx
-53-
(b) to Harris:
Xxxxxx Corporation
0000 Xxxx XXXX Xxxx.
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
E-mail: xxxxx.xxxxxx@xxxxxx.xxx
with a copy to:
Blake, Xxxxxxx & Xxxxxxx LLP
000 Xxx Xxxxxx
P.O. Box 00
Xxxxxxxx Xxxxx Xxxx
Xxxxxxx, XX X0X 0X0
Attention: Xxxxx X. Xxxxxxx
E-mail: xxxxx.xxxxxxx@xxxxxx.xxx
9.2 ENTIRE AGREEMENT
This Agreement and the Confidentiality Agreement and the attached
schedules (including the Xxxxxx Disclosure Letter) constitute the entire
agreement between the Parties pertaining to the subject matter hereof and
supersede all other prior and contemporaneous discussions, agreements and
understandings, both written and oral, among the Parties, including for greater
certainty the Exclusivity Agreement and there are no representations,
warranties, terms, conditions, undertakings or collateral agreements, expressed
or implied, between the Parties in connection with the subject matter of this
Agreement except as expressly set forth in this Agreement, the Confidentiality
Agreement and the Xxxxxx Disclosure Letter.
9.3 MISCELLANEOUS
This Agreement shall be binding upon and enure to the benefit of the
Parties and their respective successors and permitted assigns and, except for
SECTION 7.5 and the Plan of Arrangement as it relates to the rights of
Shareholders and holders of other securities of Xxxxxx, is not intended to
confer upon any other Person any rights or remedies hereunder. The Parties shall
be entitled to rely upon delivery of an executed facsimile copy of this
Agreement, and such facsimile copy shall be legally effective to create a valid
and binding agreement between the Parties.
9.4 INVESTIGATIONS
Any investigation of Xxxxxx and its subsidiaries by Harris and its
representatives and advisors will not mitigate, diminish or affect, in any way,
the representations and warranties of Xxxxxx set out in SECTION 3.1 of this
Agreement.
-54-
9.5 GOVERNING LAW
This Agreement and the Plan of Arrangement shall be governed, including
as to validity, interpretation and effect, by the laws of the Province of
Ontario and the federal laws of Canada applicable therein (without application
of their conflict of law principles), and shall be construed and treated in all
respects as an
Ontario contract.
9.6 VENUE
For the purpose of all legal Proceedings, this Agreement and the Plan
of Arrangement will be deemed to have been performed in the Province of
Ontario
and the courts of the Province of
Ontario will have exclusive jurisdiction to
entertain any action arising under this Agreement and the Plan of Arrangement.
Each Party hereby attorns to the exclusive jurisdiction of the courts of the
Province of Ontario.
9.7 INJUNCTIVE RELIEF
The Parties agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the Parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any Court of the Province of Ontario having jurisdiction, this being
in addition to any other remedy to which they are entitled at law or in equity.
9.8 TIME OF ESSENCE
Time shall be of the essence in this Agreement.
9.9 BINDING EFFECT AND ASSIGNMENT
Neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by any of the Parties without the prior written
consent of the other Parties.
9.10 SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
Party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
9.11 COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
-55-
9.12 NO PERSONAL LIABILITY
(a) No director or officer of Harris or any of its subsidiaries shall
have any personal liability whatsoever to Xxxxxx under this Agreement, or any
other document delivered in connection with the Arrangement on behalf of Harris.
(b) No director or officer of Xxxxxx or any of its subsidiaries shall
have any personal liability whatsoever to Harris under this Agreement, or any
other document delivered in connection with the Arrangement on behalf of Xxxxxx.
9.13 AMENDMENT
This Agreement may, at any time and from time to time before or after
the holding of the Meeting but not later than the Effective Time, be amended by
mutual written agreement of the Parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
-56-
IN WITNESS WHEREOF Harris and Xxxxxx have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
XXXXXX CORPORATION
by: /s/ XXXXXX X. XXXXX
----------------------------------
Chairman, President and
Chief Executive Officer
by: /s/ XXXXX X. XXXX
----------------------------------
Senior Vice President
and Chief Financial Officer
XXXXXX TECHNOLOGY CORPORATION
by: /s/ XXXXX XXXXXXX
----------------------------------
Xxxxx Xxxxxxx, Director
by: /s/ XXXXXX XXXXXX
----------------------------------
Xxxxxx Xxxxxx, Director
SCHEDULE A
APPROPRIATE REGULATORY APPROVALS
PART A - UNITED STATES
o Expiration (without any action by the Federal Trade Commission or
Antitrust Division of the Department of Justice) of all applicable
waiting periods under the HSR Act after a filing of an application with
the Federal Trade Commission and Antitrust Division of the Department
of Justice or earlier termination thereof, including any voluntary
agreed upon extensions.
PART B - OTHER
o Declarations or approvals from the competent competition authorities in
jurisdictions in which declarations or approvals are required under
applicable antitrust and competition laws that the Arrangement is in
compliance with such laws and that it may be consummated, or expiration
of the applicable waiting periods under such laws.
SCHEDULE B
ARRANGEMENT RESOLUTION
SPECIAL RESOLUTION OF THE SHAREHOLDERS OF
XXXXXX TECHNOLOGY CORPORATION
BE IT RESOLVED THAT:
1. The arrangement (the "ARRANGEMENT") under SECTION 182 of the Business
Corporations Act (Ontario) (the "OBCA") involving Xxxxxx Technology
Corporation (the "CORPORATION") and Xxxxxx Corporation, as more
particularly described and set forth in the management information
circular (the "CIRCULAR") of the Corporation accompanying the notice of
this meeting (as the Arrangement may be modified or amended in
accordance with its terms) is hereby authorized, approved and adopted.
2. The plan of arrangement (the "PLAN OF ARRANGEMENT") involving the
Corporation, the full text of which is set out as Schedule C to the
arrangement agreement made as of August 31, 2005 between the
Corporation and Xxxxxx Corporation (the "
ARRANGEMENT AGREEMENT"), (as
the Plan of Arrangement may be modified or amended in accordance with
its terms) is hereby authorized, approved and adopted.
3. Notwithstanding that this resolution has been passed, and the
Arrangement adopted, by the holders of common shares of the Corporation
("COMMON SHARES") or that the Arrangement has been approved by the
Ontario Superior Court of Justice, the directors of the Corporation are
hereby authorized and empowered without further notice to or approval
of the holders of Common Shares (i) to amend the
Arrangement Agreement
or the Plan of Arrangement, to the extent permitted by the
Arrangement
Agreement, and (ii) subject to the terms of the
Arrangement Agreement,
not to proceed with the Arrangement.
4. Any officer or director of the Corporation is hereby authorized and
directed for and on behalf of the Corporation to execute, under the
seal of the Corporation or otherwise, and to deliver articles of
arrangement and such other documents as are necessary or desirable to
the Director under the OBCA in accordance with the
Arrangement
Agreement for filing.
5. Any officer or director of the Corporation is hereby authorized and
directed for and on behalf of the Corporation to execute or cause to be
executed, under the seal of the Corporation or otherwise, and to
deliver or cause to be delivered, all such other documents and
instruments and to perform or cause to be performed all such other acts
and things as in such Person's opinion may be necessary or desirable to
give full effect to the foregoing resolutions and the matters
authorized thereby, such determination to be conclusively evidenced by
the execution and delivery of such document or instrument or the doing
of any such act or thing.
SCHEDULE C
FORM OF
PLAN OF ARRANGEMENT UNDER SECTION 182
OF THE BUSINESS CORPORATIONS ACT (ONTARIO)
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS. In this Plan of Arrangement unless there is something
in the subject matter or context inconsistent therewith, the following words and
phrases shall have the meanings hereinafter set forth:
"AFFILIATE" has the meaning ascribed thereto in the OBCA;
"ARRANGEMENT" means the arrangement contemplated herein to be made on
the terms set out in this Plan of Arrangement subject to any amendments
or variations thereto made in accordance with the
Arrangement Agreement
and the terms hereof or made at the direction of the Court in the Final
Order (with the consent of Xxxxxx and Harris, each acting reasonably);
"ARRANGEMENT AGREEMENT" means the Arrangement Agreement providing for
this Plan of Arrangement by and between Harris and Xxxxxx dated as of
August 31, 2005, as the same may be amended, supplemented and/or
restated from time to time;
"ARRANGEMENT RESOLUTION" means the special resolution in respect of the
Arrangement to be considered and approved by holders of Common Shares
at the Meeting to be substantially in the form of Schedule B annexed to
the Arrangement Agreement;
"ARTICLES OF ARRANGEMENT" means the articles of arrangement of Xxxxxx
in respect of the Arrangement that are required by the OBCA to be filed
with the Director after the Final Order is made;
"BOARD OF DIRECTORS" means the board of directors of Xxxxxx;
"BUSINESS DAY" means any day, other than a Saturday, a Sunday or
statutory holiday in Toronto, Ontario or New York City, New York;
"CASH CONSIDERATION" means $14.00 in cash, subject to increase as
provided in the Arrangement Agreement;
"CERTIFICATE OF ARRANGEMENT" means the certificate of arrangement
giving effect to the Arrangement, endorsed upon the Articles of
Arrangement of Xxxxxx by the Director pursuant to SUBSECTION 183(2) of
the OBCA;
"CIRCULAR" means the notice of the Meeting and accompanying management
information circular, including the schedules attached thereto and all
amendments from time to time made thereto, to be sent to Shareholders
in connection with the Meeting;
"COMMON SHARE CONSIDERATION" means the aggregate cash payable by Harris
Acquireco pursuant to SECTION 2.2(b);
"COMMON SHARES" means the issued and outstanding common shares in the
capital of Xxxxxx (including common shares issued upon the exercise of
Xxxxxx Options and Restricted Share Awards) and shall include any
shares into which the Common Shares may be reclassified, subdivided,
consolidated or converted and any rights or benefits arising therefrom
including any extraordinary distribution of securities which may be
declared in respect of the Common Shares (except in accordance with
this Plan of Arrangement);
"COURT" means the Superior Court of Justice (Ontario);
"CRA" means the Canada Revenue Agency;
"DEPOSITARY" means Computershare Investor Services Inc. at its offices
specified in the Letter of Transmittal;
"DIRECTOR" means the Director appointed pursuant to SECTION 278 of the
OBCA;
"DISSENT RIGHTS" shall have the meaning ascribed thereto in SECTION
3.1;
"DISSENTING SHAREHOLDER" means a Shareholder who dissents in respect of
the Arrangement Resolution in strict compliance with the Dissent
Rights;
"DISSENTING SHARES" means the Common Shares of any Shareholder who has
demanded and perfected Dissent Rights in respect of such Common Shares
in accordance with the Interim Order and who, as of the Effective Time,
has not effectively withdrawn or lost such Dissent Rights;
"EFFECTIVE DATE" means the date of the Certificate of Arrangement;
"EFFECTIVE TIME" means 12:01 a.m. (Eastern time) on the Effective Date;
"FINAL ORDER" means the final order of the Court approving the
Arrangement, as such order may be amended by the Court (with the
consent of Xxxxxx and Harris, each acting reasonably) at any time prior
to the Effective Date or, if appealed, then, unless such appeal is
withdrawn or denied, such order as affirmed or amended on appeal;
"GOVERNMENTAL ENTITY" means (a) any multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or
public department, central bank, court, tribunal, arbitral body,
commission, board, bureau or agency, domestic or foreign; (b) any
subdivision, agent, commission, board or authority of any of the
foregoing; (c) any quasi-governmental or private body exercising any
regulatory, expropriation or taxing authority under or for the account
of any of the foregoing; or (d) any self-regulatory agencies or
organizations;
"HARRIS" means Xxxxxx Corporation, a corporation subsisting under the
laws of the State of Delaware;
"HARRIS ACQUIRECO" means o, a wholly-owned subsidiary of Harris
incorporated under the OBCA;
"INTERIM ORDER" means the interim order of the Court, as the same may
be amended by the Court (with the consent of Xxxxxx and Harris, each
acting reasonably), in respect of the Arrangement;
"LETTER OF TRANSMITTAL" means the letter of transmittal for use by
Shareholders, in the form accompanying the Circular;
"XXXXXX" means Xxxxxx Technology Corporation, a corporation
incorporated under the OBCA;
"XXXXXX OPTIONS" means options to purchase Common Shares, including
without limitation any performance or inducement options to acquire
Common Shares granted under the Xxxxxx Stock Option Plan or under
specific Xxxxxx employment agreements;
"XXXXXX STOCK OPTION PLAN" means Xxxxxx'x stock option plan, as
revised, dated September 11, 2001;
"MEETING" means the special meeting of Shareholders, and all
adjournments and postponements thereof, called and held to, among other
things, consider and approve the Arrangement Resolution;
"OBCA" means the Business Corporations Act (Ontario), including the
regulations made thereunder, as amended;
"OPTION CONSIDERATION" means the aggregate cash payable by Harris
Acquireco pursuant to SECTION 2.2(a);
"PERSON" means and includes any individual, partnership, association,
limited or unlimited liability company, joint venture, body corporate,
trustee, executor, administrator, legal representative, government
(including any Governmental Entity) or any other entity, whether or not
having legal status;
"RESTRICTED SHARE AWARDS" means the awards of restricted common shares
to (a) Xxxxxxx Xxxxxxxxxxxx pursuant to the terms of the letter
agreement dated November 17, 2003 between Xxxxxxx Xxxxxxxxxxxx and
Xxxxxx, and (b) Xxxxx Xxxxx pursuant to the terms of the letter from
Xxxxxx to Xxxxx Xxxxx dated July 1, 2005;
"SHAREHOLDERS" means the holders of Common Shares;
"TRADING DAY" means, with respect to any stock exchange or
over-the-counter market, a day on which shares may be traded through
the facilities of such stock exchange or on
such over-the-counter market, and otherwise means a day on which shares
may be traded through the facilities of the Toronto Stock Exchange;
"TRANSFER AGENT" means Computershare Investor Services Inc. at its
offices located in Toronto, Ontario; and
"THIS PLAN", "PLAN OF ARRANGEMENT", "HEREOF", "HEREIN", "HERETO" and
like references mean and refer to this plan of arrangement.
Words and phrases used herein that are defined in the OBCA or the Arrangement
Agreement and not defined herein shall have the same meaning herein as in the
OBCA or the Arrangement Agreement, as applicable, unless the context otherwise
requires.
SECTION 1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this
Plan of Arrangement 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.
SECTION 1.3 GENDER AND NUMBER. Unless the context requires the contrary, words
importing the singular only shall include the plural and vice versa and words
importing the use of any gender shall include all genders.
SECTION 1.4 DATE FOR ANY ACTION. In the event that the date on which any action
is required to be taken hereunder by any of the parties is not a Business Day,
such action shall be required to be taken on the next succeeding day which is a
Business Day.
SECTION 1.5 GOVERNING LAW. This Plan of Arrangement shall be governed by and
construed in accordance with the laws of the Province of Ontario and the federal
laws of Canada applicable therein.
SECTION 1.6 CURRENCY. All references to currency herein are to lawful money of
Canada unless otherwise specified.
ARTICLE II
ARRANGEMENT
SECTION 2.1 BINDING EFFECT. This Plan of Arrangement will become effective at,
and be binding at and after, the Effective Time on (i) Harris, (ii) Harris
Acquireco, (iii) Xxxxxx, (iv) all holders and all beneficial owners of Common
Shares and (v) all holders and all beneficial owners of Xxxxxx Options.
SECTION 2.2 ARRANGEMENT. Commencing at the Effective Time, subject to the terms
and conditions of the Arrangement Agreement, the following events or
transactions shall occur and shall be deemed to occur in the following sequence
without any further act or formality:
(a) all of the Xxxxxx Options granted and outstanding immediately
prior to the Effective Time shall, without any further action
on behalf of any Xxxxxx Option holder, be transferred by the
holders thereof to Harris Acquireco without any act or
formality on its or their part in exchange for a cash amount
equal to the excess,
if any, of (i) the product of the number of Common Shares
underlying Xxxxxx Options held by such holder and the Cash
Consideration over (ii) the aggregate exercise price payable
under such Xxxxxx Options by the holder to acquire the Common
Shares underlying such Xxxxxx Options. All Xxxxxx Options
issued and outstanding immediately prior to the Effective Time
shall thereafter immediately be cancelled; and
(b) all of the Common Shares issued and outstanding immediately
prior to the Effective Time held by each Shareholder (other
than any Dissenting Shares held by Dissenting Shareholders who
are ultimately entitled to be paid the fair value of the
Dissenting Shares held by such Dissenting Shareholder, and any
Common Shares held by Harris and its affiliates, which shall
not be transferred under the Arrangement) shall, without any
further action on behalf of such Shareholder, be transferred
by the holders thereof, and acquired by, Harris Acquireco
without any act or formality on its or their part in exchange
for a cash amount equal to the product of the number of Common
Shares held by such holder and the Cash Consideration and
Harris Acquireco shall be deemed to be the legal and
beneficial owner thereof, free and clear of all Liens.
ARTICLE III
RIGHTS OF DISSENT
SECTION 3.1 RIGHTS OF DISSENT. Registered holders of Common Shares may exercise
rights of dissent with respect to such shares pursuant to and, except as
expressly indicated to the contrary in this SECTION 3.1, in the manner set forth
in SECTION 185 of the OBCA and this SECTION 3.1 (the "DISSENT RIGHTS") in
connection with the Arrangement Resolution as the same may be modified by the
Interim Order or the Final Order; provided that, notwithstanding SUBSECTION
185(6) of the OBCA, the written objection to the Arrangement Resolution referred
to in SUBSECTION 185(6) of the OBCA must be actually received by Xxxxxx not
later than 5:00 p.m. (Toronto time) on the Business Day preceding the Meeting;
and provided further that, notwithstanding the provisions of SECTION 185 of the
OBCA, holders of Common Shares who duly exercise such rights of dissent and who:
(a) are ultimately determined to be entitled to be paid fair value
for their Common Shares, which fair value, notwithstanding
anything to the contrary contained in SECTION 185 of the OBCA,
shall be determined as of the Effective Time, shall be deemed
to have transferred such Common Shares as of the Effective
Time at the fair value of such shares determined as of the
Effective Time, without any further act or formality and free
and clear of all Liens, to Xxxxxx and such shares so
transferred to Xxxxxx shall be cancelled as of the Effective
Date; or
(b) are ultimately determined not to be entitled, for any reason,
to be paid fair value for their Common Shares shall be deemed
to have participated in the Arrangement on the same basis as
any non-dissenting holder of Common Shares and shall receive
the Cash Consideration per share, as provided in ARTICLE 2,
but in no case shall Xxxxxx, Xxxxxx Acquireco, Xxxxxx, the Transfer Agent or any
other Person be required to recognize such holders as holders of Common Shares
after the Effective Time, and the names of such holders of Common Shares shall
be deleted from the register of holders of Common Shares at the Effective Time.
In addition to any other restrictions under section 185 of the OBCA, none of the
following shall be entitled to exercise Dissent Rights: (i) holders of Xxxxxx
Options and (ii) Shareholders who vote in favour of the Arrangement Resolution.
ARTICLE IV
CONSIDERATION, CERTIFICATES AND FRACTIONAL SHARES
SECTION 4.1 LETTER OF TRANSMITTAL. At the time of mailing the Circular or as
soon as practicable after the Effective Date, Xxxxxx shall forward to each
Shareholder and each holder of Xxxxxx Options at the address of such holder as
it appears on the register maintained by or on behalf of Xxxxxx in respect of
the holders of Common Shares or Xxxxxx Options, as the case may be, the Letter
of Transmittal in the case of the holders of Common Shares and instructions for
obtaining delivery of the Common Share Consideration or the Option Consideration
payable to such holders following the Effective Date pursuant to this Plan of
Arrangement.
SECTION 4.2 DELIVERY OF CASH CONSIDERATION AND OPTION CONSIDERATION.
(a) Not later than immediately before the Effective Time, Harris
shall on behalf of Harris Acquireco deposit in immediately
available funds (at Toronto) with the Depositary, the Common
Share Consideration and the Option Consideration.
(b) On or as soon as practicable after the Effective Date, upon
the holder having validly deposited with the Depositary such
share certificates representing Common Shares held by such
holder accompanied by a duly completed Letter of Transmittal
and such other documents and instruments as the Depositary may
reasonably require, Xxxxxx shall cause the Depositary to
deliver to such holder, or otherwise in accordance with the
Letter of Transmittal, a cheque representing the payment of
the Common Share Consideration to which such holder is
entitled in accordance with this Plan of Arrangement.
(c) On or as soon as practicable after the Effective Date, the
Depositary shall deliver to each holder of Xxxxxx Options as
reflected on the books and records of Xxxxxx a cheque or other
form of payment agreed to by the holder representing the
payment of the Option Consideration to which such holder is
entitled in accordance with this Plan of Arrangement.
(d) The Common Share Consideration and the Option Consideration
deposited with the Depositary shall in each case be held in an
interest bearing account and any interest earned on such funds
shall be for the account of Harris Acquireco.
SECTION 4.3 EXPIRATION OF RIGHTS. Any certificates formerly representing Common
Shares that, following the Effective Date, are not duly presented for payment
with the Depositary, together with a duly executed Letter of Transmittal, and
such other documents as the Depositary deems necessary, or any payment made by
way of cheque by the Depositary on behalf of Harris Acquireco of the Common
Share Consideration or Option Consideration that has not been
deposited or has been returned to the Depositary, or that otherwise remains
unclaimed, in each case on or before the sixth anniversary of the Effective
Date, shall cease to represent a right or claim of any kind or nature and the
right of the holder of such securities to receive the Common Share Consideration
or the Option Consideration, as the case may be, pursuant to this Plan of
Arrangement and shall be deemed to be surrendered and forfeited to Harris
Acquireco for no consideration.
SECTION 4.4 LOST CERTIFICATES. In the event any certificate which immediately
prior to the Effective Time represented outstanding Common Shares that were
exchanged pursuant to ARTICLE 2 hereof shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such certificate to be lost, stolen or destroyed, the Depositary will issue in
exchange for such lost, stolen or destroyed certificate, a cheque for the Cash
Consideration to which such holder is entitled deliverable in respect thereof as
determined in accordance with ARTICLE 2 and such holder's Letter of Transmittal.
When seeking such payment in exchange for any lost, stolen or destroyed
certificate, the Person to whom the Cash Consideration is payable shall, at the
discretion of Harris Acquireco, as a condition precedent to the delivery
thereof, give a bond satisfactory to Xxxxxx, Xxxxxx Acquireco and the
Depositary, in such sum as the parties may reasonably direct or otherwise
indemnify Xxxxxx and Xxxxxx Acquireco against any claim that may be made against
Xxxxxx, Xxxxxx Acquireco or the Depositary with respect to the certificate
alleged to have been lost, stolen or destroyed.
ARTICLE V
WITHHOLDING RIGHTS
SECTION 5.1 WITHHOLDING RIGHTS. Harris Acquireco, Xxxxxx and the Depositary
shall deduct and withhold from the proceeds or amounts distributable or payable
pursuant to this Arrangement to any holder or former holder of Common Shares or
Xxxxxx Options such amount as may be required by law (as advised by outside tax
counsel for Xxxxxx and Xxxxxx Acquireco) to be deducted or withheld therefrom
under any provision of United States or Canadian federal, state, provincial,
regional, local or foreign tax law or under any other applicable legal
requirement. To the extent that amounts are so deducted or withheld, such
amounts shall be treated for all purposes hereof as having been paid to the
holder of the Common Shares or Xxxxxx Options, as the case may be, in respect of
which such deduction and withholding was made, provided that such withheld
amounts are actually remitted to the appropriate taxing authority within the
time required and in accordance with applicable law and that such holder has
been provided forthwith with a receipt evidencing such remittance.
ARTICLE VI
AMENDMENTS
SECTION 6.1 AMENDMENT OF THE ARRANGEMENT.
(a) Xxxxxx, Xxxxxx Acquireco and Xxxxxx reserve the right to
amend, modify and/or supplement this Plan of Arrangement at
any time and from time to time prior to the Effective Date
provided that any such amendment, modification, or supplement
must be contained in a written document which is (i) subject
to SECTION 6.1(b), agreed to by Xxxxxx, Xxxxxx Acquireco and
Xxxxxx, (ii) filed with
the Court and, if made following the Meeting, approved by the
Court subject to such conditions as the Court may impose and
(iii) communicated to holders of Common Shares in the manner
if and as required by the Court.
(b) Subject to the Arrangement Agreement, Xxxxxx shall be
entitled, at any time prior to the Meeting, to modify this
Plan of Arrangement to: (i) increase the consideration it or
Xxxxxx Acquireco is prepared to make available to Shareholders
pursuant to the Arrangement, whether or not the Board of
Directors of Xxxxxx has changed its recommendation, provided
that Xxxxxx shall use its commercially reasonable efforts to
provide not less than one Business Day's prior written notice
of such proposal to Xxxxxx; or (ii) modify the terms of the
Plan of Arrangement to achieve tax planning objectives of
Xxxxxx and Xxxxxx Acquireco, including without limitation to
provide for one or more amalgamations of subsidiaries of
Xxxxxx and/or Xxxxxx, which, in the opinion of Xxxxxx, acting
reasonably, (A) would not prejudice it or the Shareholders, or
(B) would not impede or materially delay the completion of the
transactions contemplated hereby provided that Xxxxxx or
Xxxxxx Acquireco has provided notice of such modification to
Xxxxxx not less than 15 Business Days prior to the Meeting
Date.
(c) Any amendment, modification or supplement to this Plan of
Arrangement referred to in SECTION 6.1(a) OR (b), if so
proposed and, subject to SECTION 6.1(b), accepted by the
Persons voting at the Meeting (other than as may be required
under the Interim Order), shall become part of this Plan of
Arrangement for all purposes.
(d) Any amendment, modification or supplement to this Plan of
Arrangement which is approved by the Court following the
Meeting shall be effective only (i) if, subject to SECTION
6.1(b), it is agreed to by Xxxxxx, Xxxxxx Acquireco and
Xxxxxx, and (iii) if required by the Court, it is consented to
by holders of Common Shares voting in the manner directed by
the Court.
Any amendment, modification or supplement to this Plan of Arrangement may be
made following the Effective Date unilaterally by Xxxxxx Acquireco, provided
that it concerns a matter which, in the reasonable opinion of Xxxxxx Acquireco,
is of an administrative nature required to better give effect to the
implementation of this Plan of Arrangement and is not adverse to the financial
or economic interests of the holders of Common Shares or the Xxxxxx Options.
Notwithstanding the foregoing, no amendment, modification or supplement to this
Plan of Arrangement made following the Effective Date shall be effective prior
to the issuance by the Director of a Certificate of Arrangement endorsing
amended Articles of Arrangement.
ARTICLE VII
GENERAL
SECTION 7.1 FURTHER ASSURANCES. Notwithstanding that the transactions and events
set out herein shall occur and be deemed to occur in the order set out in this
Plan of Arrangement without any further act or formality, each of the parties to
the Arrangement Agreement shall
make, do and execute, or cause to be made, done and executed, all such further
acts, deeds, agreements, transfers, assurances, instruments or documents as may
reasonably be required by any of them in order further to document or evidence
any of the transactions or events set out herein.
SECTION 7.2 PARAMOUNTCY. From and after the Effective Time (i) this Plan of
Arrangement shall take precedence and priority over any and all rights related
to Common Shares and Xxxxxx Options issued prior to the Effective Time, (ii) the
rights and obligations of the holders of Common Shares and Xxxxxx Options and
any trustee and transfer agent therefore, shall be solely as provided for in
this Plan of Arrangement, and (iii) all actions, causes of actions, claims or
proceedings (actual or contingent, and whether or not previously asserted) based
on or in any way relating to Common Shares or Xxxxxx Options shall be deemed to
have been settled, compromised, released and determined without liability except
as set forth herein.
