Exhibit 5
[EXECUTION COPY]
SUPPORT AGREEMENT
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THIS AGREEMENT made the 10th day of October, 2003,
BETWEEN
678669 B.C. LTD., a corporation incorporated under the laws
of British Columbia
(the "Offeror")
AND:
HONEYWELL INTERNATIONAL INC., a corporation incorporated
under the laws of Delaware
("Offeror's Parent")
AND:
SILENT WITNESS ENTERPRISES LTD., a company incorporated
under the laws of British Columbia
("Company")
WHEREAS:
A. Offeror's Parent has taken the initiative of organizing and
incorporating the Offeror for the purposes contemplated in this
Agreement;
B. The Offeror and Offeror's Parent wish to make a takeover bid, through
the Offeror, for all of the outstanding Common Shares at a price per
share of $11.27, assuming that there will be no more than 7,952,952
Common Shares outstanding at the expiry of the bid (which number of
Common Shares shall be reduced by any Options which are surrendered to
the Company for cancellation and payment in cash in lieu of exercise
and cancelled pursuant to such surrender or share appreciation rights
that are settled by a cash payment without issuance of Common Shares),
and based upon the representations and warranties of the Company made
in this Agreement;
C. The Board of Directors has unanimously determined to recommend
acceptance of the Offer to the shareholders of the Company and for the
Company to cooperate with the Offeror and take all reasonable action
not inconsistent with the fiduciary obligations of the directors of
the Company to support the Offer, all on the terms and subject to the
conditions contained herein;
D. The Offeror's Parent has, concurrently with the execution of this
Agreement, entered into deposit agreements with Xxx Xxxxxx, Xxxxx
Xxxxxx and Xxx Xxxx, setting forth the terms and conditions upon which
such shareholders shall irrevocably deposit, or cause to be deposited,
under the Offer all such holders' current and subsequently acquired
Common Shares; and
E. The Board of Directors has unanimously determined that it would be in
the best interests of the Company to enter into this Agreement;
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each party, the parties
agree as follows:
ARTICLE 1
THE OFFER
1.1 THE OFFER
(a) Subject to the terms and conditions of this Agreement, the
Offeror and Offeror's Parent shall promptly publicly announce
and, on a day no later than October 28, 2003, issue and mail the
Offer in accordance with the Applicable Laws. Under the Offer,
the Offeror shall offer to purchase all the outstanding Common
Shares, including Common Shares issuable upon the conversion,
exchange or exercise of any (i) options to acquire Common Shares
(the "Options") and (ii) other rights, warrants or entitlements
to acquire Common Shares, at a price of $11.27 in cash per Common
Share.
(b) The Offer will provide that the obligations of the Offeror to
take-up and pay for Common Shares will be subject only to the
satisfaction or waiver of the Bid Conditions set out on Exhibit
II, including the Minimum Condition.
(c) The Offer will be made in accordance with the Applicable Laws and
applicable securities legislation in other jurisdictions in
Canada and in the United States where registered holders of
Common Shares are located, be in the English and, if necessary
under the laws of the province of Quebec, French language, be
signed by both the Offeror and Offeror's Parent, as offerors, and
the initial expiration date and time will be (i) not earlier than
4:30 p.m. (Vancouver time) on a date 36 days after the date the
Offer is first published or sent or given to holders of Common
Shares and (ii) not later than 4:30 p.m. (Vancouver time) on a
date 40 days after the date the Offer is first published or sent
or given to holders of Common Shares, subject to the right of the
Offeror to extend the period during which Common Shares may be
deposited under the Offer if any of the Bid Conditions are not
satisfied on the initial expiry date of the Offer. The Offeror
and Offeror's Parent shall use their reasonable best efforts to
consummate the Offer and take up and pay for the Common Shares
validly deposited thereunder and not withdrawn, subject only to
the terms and conditions thereof and hereof. In the event that
the condition set forth in paragraphs (a) or (b) of the Bid
Conditions is not satisfied by the initial expiration date, the
Offeror and Offeror's Parent shall extend the Offer, and continue
to extend the Offer, until at least January 31, 2004 (provided
that at least 75% of the outstanding Common Shares on a
fully-diluted basis other than Common Shares already held at the
date of the Offer by, or by a nominee for, the Offeror or its
affiliates have been validly deposited and not withdrawn) or such
earlier date on which such conditions may be satisfied or on
which it is determined by the Offeror that such conditions cannot
be satisfied.
(d) Subject to the terms of the Offer and this Agreement and the
satisfaction or waiver of all the Bid Conditions as of any
expiration date, the Offeror shall within the time periods
required by Applicable Laws take-up, accept for payment and pay
for all Common Shares validly tendered and not properly withdrawn
pursuant to the Offer as soon as practicable after such
expiration date of the Offer.
(e) It is understood and agreed that the Offeror and Offeror's Parent
may, in their sole discretion, modify or waive any term or
condition of the Offer, provided that the Offeror and Offeror's
Parent shall not, without the consent of the Company:
(i) increase the number or percentage of Common Shares
required to satisfy the Minimum Condition or decrease the
number or percentage of Common Shares required to satisfy
the Minimum Condition below 50% of the outstanding Common
Shares, decrease the consideration per Common Share
payable under the Offer, change the form of consideration
payable under the Offer (other than to add additional
consideration) or decrease the number of Common Shares
sought under the Offer;
(ii) impose additional material conditions to the Offer;
(iii) in the event all of the Bid Conditions are satisfied or
waived, extend the period during which Common Shares may
be deposited under the Offer without taking up and paying
for Common Shares validly deposited thereunder and not
withdrawn except as required by Applicable Law; or
(iv) modify or amend the Offer or any terms thereof in any
manner adverse to the holders of Common Shares.
(f) The Offer Documents will comply in all material respects with
Applicable Laws and, on the date filed with applicable securities
regulatory authorities, and on the date first published, sent or
given to the holders of Common Shares, shall not contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make
the statements made therein, in light of the circumstances under
which they were made, not misleading, except that no warranty or
representation is made by the Offeror or Offeror's Parent with
respect to information supplied by the Company for inclusion in
the Offer Documents. The Offeror and Offeror's Parent will give
the Company a reasonable opportunity to review and comment upon a
draft copy of any Offer Document to be filed prior to any such
filing and will provide the Company in writing any comments or
response the Offeror or Offeror's Parent (or their
representatives) may receive from or send to the applicable
securities regulatory authorities with respect to the Offer
Documents promptly after the receipt or before the sending of
such comments or response. Each of the Offeror and Offeror's
Parent, on the one hand, and the Company, on the other hand,
agree promptly to correct any information provided by them for
use in the Offer Documents if and to the extent that it shall
have become false or misleading in any material respect, and the
Offeror and Offeror's Parent further agree to take all steps
necessary to cause the Offer Documents as so corrected to be
filed with the applicable securities regulatory authorities and
to be disseminated to the holders of Common Shares, in each case
as and to the extent required by Applicable Laws.
1.2 CONDITIONS TO THE OFFEROR'S AND OFFEROR'S PARENT'S OBLIGATION TO
MAKE THE OFFER
(a) The obligation of the Offeror and Offeror's Parent to make the
Offer is conditional on the prior satisfaction of the following
conditions:
(i) the obligations of the Offeror hereunder shall not have
been terminated pursuant to section 4.3;
(ii) no circumstance, fact, change, event or occurrence caused
by a person other than the Offeror or Offeror's Parent
shall have occurred that would render it impossible for
one or more of the Bid Conditions to be satisfied;
(iii) the Board of Directors shall have received the advice of
its financial advisors and unanimously:
A. determined that the Offer is fair to the holders of
Common Shares; and
B. resolved to recommend that holders of Common Shares
accept the Offer and not withdraw or change such
recommendation in a manner that has substantially the
same effect as a withdrawal of it;
(iv) the Board of Directors shall have made the determinations
set forth in section 1.3(a) (and such determinations shall
still be in effect) and have resolved to waive the
provisions of the Company's Rights Plan in respect of the
Offer in a manner reasonably satisfactory to Offeror's
Parent;
(v) the Company shall terminate or waive, irrevocably, the
standstill provisions contained in the Confidentiality
Agreement; and
(vi) no cease trade order, injunction or other prohibition at
law shall exist against the Offeror making the Offer or
taking up or paying for Common Shares deposited under the
Offer.
(b) The foregoing conditions are for the sole benefit of the Offeror
and Offeror's Parent and any or all of them may be waived by them
in whole or in part in their sole discretion without prejudice to
any other right they may have under this Agreement, which
conditions shall be deemed to have been satisfied upon the Offer
being made.
1.3 COMPANY ACTIONS
(a) The Company hereby represents that the Board of Directors, upon
consultation with its advisors, has unanimously:
(i) determined that the Offer is fair to the holders of Common
Shares and is in the best interests of the Company and the
holders of Common Shares;
(ii) approved this Agreement and resolved to recommend that
holders of Common Shares accept the Offer and has not
withdrawn or changed such recommendation in a manner that
has substantially the same effect as a withdrawal of it;
and
(iii) resolved to waive the application of the Company's Rights
Plan in respect of the Offer;
provided that the Offer does not differ in any material respect
from the terms and conditions of the Offer as contemplated
herein.
(b) The Company shall prepare and make available for mailing as soon
as practicable after the date the Offer is made a Directors'
Circular, and in any event within the time period required by
Applicable Laws, prepared in accordance with all Applicable Laws,
containing a recommendation to accept the Offer and the Company
shall use its best efforts to mail the Directors' Circular on the
same date that the Offer is mailed.
(c) The Directors' Circular will comply in all material respects with
Applicable Laws and, on the date filed with the applicable
securities regulatory authorities, and on the date first
published, sent or given to the holders of Common Shares, will
not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading,
except that no representation is made by the Company with respect
to information supplied by the Offeror or Offeror's Parent for
inclusion in the Directors' Circular. The Company will give the
Offeror or Offeror's Parent a reasonable opportunity to review
and comment upon a draft copy of the Directors' Circular prior to
its filing (recognizing that the contents of the Directors'
Circular are the sole responsibility of the Board of Directors)
and will provide the Offeror or Offeror's Parent in writing any
comments or response the Company (or their representatives) may
receive from or send to the applicable securities regulatory
authorities with respect to the Directors' Circular promptly
after the receipt or before the sending of such comments or
response. Each of the Company, on the one hand, and the Offeror
and Offeror's Parent, on the other hand, agree promptly to
correct any information provided by them for use in the
Directors' Circular if and to the extent that it shall have
become false or misleading in any material respect, and the
Company further agrees to take all steps necessary to cause the
Directors' Circular as so corrected to be filed with applicable
securities regulatory authorities and to be disseminated to the
holders of Common Shares, in each case as and to the extent
required by Applicable Laws.
1.4 COMPANY TO COOPERATE IN MAKING OF THE OFFER
(a) The Company shall cause its registrar and transfer agent to
provide the Offeror with a list of the holders of Common Shares
and a list of participants in book-based nominee registrants such
as CDS & Co. together with their addresses and respective
holdings of Common Shares, and such other information as the
Offeror may reasonably request in connection with communicating
the Offer to record and beneficial owners of Common Shares.
(b) The Company shall provide the Offeror with the names, addresses
and holdings of all persons having rights to acquire Common
Shares and the details of such rights.
(c) Subject to Applicable Laws, the Company shall from time to time
furnish the Offeror with such additional information in the
possession of or within the control of the Company as the Offeror
may reasonably request in order for the Offeror to be able to
communicate the Offer to the holders of the Common Shares and to
such other persons as are entitled to receive the Offer under the
Applicable Laws, including updated or additional lists of holders
of Common Shares and lists of securities positions.
1.5 COMPANY DIRECTORS
Promptly upon the purchase by the Offeror pursuant to the Offer
of such number of Common Shares which, together with the Common Shares held
by or on behalf of the Offeror and Offeror's Parent, represents at least a
majority of the outstanding Common Shares, and from time to time
thereafter, the Offeror shall be entitled to designate such number of
directors of the Board of Directors and any committees thereof (rounded up
to the next whole number of directors) as is proportionate (determined
after giving effect to the directors to be appointed or elected under this
section) to the percentage of outstanding Common Shares beneficially owned
by or on behalf of the Offeror and Offeror's Parent, and the Company shall
not frustrate the Offeror's attempts to do so and shall cooperate with the
Offeror to enable the Offeror's designees to be elected or appointed to the
Board of Directors, including, without limitation, at the request of the
Offeror, by using its best efforts to increase the number of directors
comprising the Board of Directors and/or securing the resignations of such
number of directors as is necessary to cause the Offeror's designees to be
so elected or appointed.
1.6 SECOND-STEP TRANSACTION
The Offeror and Offeror's Parent covenant and agree that upon
Common Shares being taken up and paid for under the Offer, the Offeror
shall utilize the Compulsory Acquisition provision in respect of Common
Shares not tendered under the Offer if permitted to do so under the Act. If
the Offeror is unable to use such Compulsory Acquisition provision, the
Offeror will propose an alternate arrangement, which may include, without
limitation, a statutory arrangement, amalgamation, merger, or other
combination ("Second-Step Transaction") of the Company with the Offeror or
an affiliate of the Offeror within 180 days after the Offeror takes up and
pays for Common Shares under the Offer on terms and conditions to be
determined by the Offeror, provided that the Offeror agrees that if any
Second-Step Transaction is effected it will provide that the holders of any
Common Shares, other than the Offeror and Offeror's Parent, shall be
entitled to receive consideration per share in cash or the right to receive
cash within 35 days following the approval of the Second-Step Transaction
at least equal to the amount paid per share under the Offer. Nothing herein
shall be construed to prevent the Offeror or Offeror's Parent from
acquiring, directly or indirectly, additional Common Shares in the open
market, in privately negotiated transactions, in another takeover bid or
exchange offer, or otherwise in accordance with Applicable Laws, following
taking up and paying for Common Shares under the Offer. In the case of a
Second-Step Transaction, under the direction of the Offeror, the Company
shall cooperate in the calling of the necessary shareholder meeting and in
making any necessary regulatory and court applications. The Offeror shall
prepare the drafts of the documentation required for any such transaction,
with the Company and its advisors being entitled to participate in their
preparation.
1.7 EMPLOYMENT AND SEVERANCE AGREEMENTS
After the Offeror takes up and pays for Common Shares under the
Offer, the Offeror and Offeror's Parent shall cause the Company and any
successor of the Company to agree to honour and comply with the terms of
all existing employment and severance agreements and policies to which the
Company is subject or by which it is bound, as the same may be amended or
modified as permitted hereunder. The Company Disclosure Schedule contains a
true and complete list of all existing severance agreements and written
employment agreements and policies to which the Company is subject or by
which it is bound, true and complete copies of which severance agreements
and written employment agreements have been provided to Offeror's Parent.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF THE OFFEROR AND OFFEROR'S PARENT
The Offeror and Offeror's Parent hereby jointly and severally
represent and warrant to the Company as to those matters set forth in
Exhibit III and acknowledge that the Company is relying upon those
representations and warranties in entering into this Agreement.
2.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Offeror and
Offeror's Parent as to those matters set forth in Exhibit IV and
acknowledges that the Offeror and Offeror's Parent are relying upon those
representations and warranties in entering into this Agreement.
2.3 INVESTIGATION
No investigation by or on behalf of any party prior to the date
of this Agreement shall mitigate, diminish or affect the representations
and warranties made by any other party.
2.4 KNOWLEDGE
Any reference in this Agreement to the "knowledge" of the Company
shall mean to the best of the actual knowledge, information and belief of
any of the Senior Management of the Company after due inquiry.
ARTICLE 3
CONDUCT OF BUSINESS
3.1 CONDUCT OF BUSINESS OF THE COMPANY PENDING COMPLETION OF THE OFFER
The Company covenants and agrees that from the date hereof and until the
earlier of (i) the time that the Offeror takes up and pays for Common
Shares under the Offer and (ii) the expiry, termination or withdrawal of
the Offer, except as consented to or approved by Offeror's Parent or as
otherwise expressly contemplated or permitted by this Agreement, the
Company shall not, and shall not permit any of its Subsidiaries to:
(a) alter any of the provisions of the constating documents of the
Company or any of the Subsidiaries of the Company;
(b) resolve to consolidate, subdivide, reclassify, alter or reduce
its share capital in any way or repurchase, redeem or otherwise
acquire any of its shares;
(c) except as provided in section 3.3, make an allotment of, or
issue, reissue or sell, any Common Shares or Preference Shares,
or grant (including a grant under any plan existing as of the
date hereof), or amend (other than the amendment of any Options
outstanding at the date of this Agreement to accelerate the
vesting of such Options, to the extent such Options are not
otherwise fully vested or exercisable in full, or to permit the
payment to the holder thereof, in cash representing, for each
share the holder has the right to acquire under the Option, the
excess of the price to be paid for the Common Shares under the
Offer (as the same may be increased or varied from time to time)
over the exercise price thereof, the terms of, any Option, right
or warrant to subscribe for or acquire, any of its shares or
issue securities convertible or exchangeable into or for its
shares;
(d) other than in the ordinary course of business consistent with
past practice, purchase or otherwise acquire or sell, transfer,
lease, exchange or otherwise dispose of any material assets or
material properties;
(e) except pursuant to existing Indebtedness or renewal or
replacement Indebtedness for a principal amount approximately the
same (or less) as the principal amount of the Indebtedness
renewed or replaced, incur or become liable upon any
Indebtedness;
(f) except as disclosed in the Company Disclosure Schedule, pledge,
lien, restrict, mortgage, charge, enter into any title retention
agreement, or otherwise encumber any property or assets of the
Company or any Subsidiary of the Company;
(g) except as disclosed in the Company Disclosure Schedule, enter
into any agreement, whatsoever, to sell, transfer, exchange,
encumber or otherwise dispose of the lands which are the subject
of the Land Exchange Agreement;
(h) except as disclosed in the Company Disclosure Schedule, license
or otherwise alienate or encumber in any manner, any of the Owned
Intellectual Property or other proprietary technology;
(i) declare or pay any dividends, including for the purpose of
effecting a share subdivision, or make any payment or
distribution with respect to its shares;
(j) except as disclosed in the Company Disclosure Schedule or
pursuant to existing employment, pension, termination or
compensation agreements, arrangements, plans or policies, grant
or agree to pay any bonuses, salary increases, severance or
termination pay or enter into or modify any employment,
retention, change of control, collective bargaining, bonus,
incentive compensation or other compensation or benefit plan,
policy, agreement, trust, fund, entitlement or arrangement with,
for or in respect of, any director or officer of the Company or
any of its Subsidiaries other than reasonable compensation
arrangements for members of the special committee formed to
consider the Offer as may be approved by the Board of Directors;
(k) except as disclosed in the Company Disclosure Schedule or
pursuant to existing employment, pension, termination or
compensation agreements, arrangements, plans or policies (in each
case, true and complete copies of which written agreements have
been provided to Offeror's Parent) in the case of employees who
are not officers or directors of the Company or any of its
Subsidiaries, grant or agree to pay any bonuses, salary
increases, severance or termination pay or increase any benefits
or any consideration payable under any benefit plan, policy,
agreement, trust, fund, arrangement or welfare plan for the
benefit of any employee or employees of the Company or any of its
Subsidiaries in effect on the date hereof;
(l) except as disclosed in the Company Disclosure Schedule or as
required by applicable law, enter into or modify in any material
respect any material contract or agreement of which the Company
or any Subsidiary of the Company has the benefit;
(m) except in the ordinary course of business consistent with past
practice or as disclosed in the Company Disclosure Schedule,
enter into, or amend (such that such amendment has the effect set
forth in clause (i) or (ii) below) any instrument or transaction
(i) pursuant to which the aggregate financial obligation of the
Company or a Subsidiary or the value of the services to be
provided could exceed $100,000, or (ii) which is not terminable
upon no more than 90 days' notice by the Company or the
Subsidiary involved without penalty in excess of $100,000,
except, in each case, as required pursuant to the terms of
agreements as in effect on the date hereof (in which case the
Company shall promptly notify Offeror's Parent) (it being
understood that the exceptions set forth in this paragraph (m)
shall not expand the scope of any exception or permit any actions
in any way that is otherwise specifically restricted by this
Section 3.1);
(n) enter into, amend, modify, terminate or waive any material rights
under any material contract or any material agreement or other
material obligation that restricts, in any material respect, the
activities of the Company or a Subsidiary of the Company or
amend, modify, terminate or waive any such right, agreement or
obligation that restricts in any material respect any other
person; or
(o) except as disclosed in the Company Disclosure Schedule,
amalgamate or merge with any other person or resolve that it be
wound up or permit the making of any court order for the winding
up or dissolution of the Company or any of its Subsidiaries,
adopt any plan of liquidation, dissolution, merger,
consolidation, share exchange, restructuring, recapitalization or
other fundamental reorganization, appoint or permit the
appointment of a liquidator, receiver or trustee in bankruptcy
for the Company or any Subsidiary of the Company or in respect of
the assets of the Company or any Subsidiary of the Company;
(p) acquire by amalgamation, merger or consolidation with, purchasing
substantially all of the assets (provided that such assets are in
excess of $100,000) of or otherwise, any business of any
corporation, partnership, association or other business
organization, or division thereof;
(q) except as disclosed in the Company Disclosure Schedule, enter
into any transaction or arrangement with or incur any
indebtedness, liability or obligation to any director or officer,
former director or officer or employee of the Company or any
Subsidiary, or any other person not dealing at arm's length
(within the meaning of the Income Tax Act (Canada)) with, the
Company or any Subsidiary or any affiliate of the foregoing; or
(r) except as disclosed in the Company Disclosure Schedule, commence
or settle any litigation, claims, investigations, grievances or
proceedings, including appeals and applications for review,
involving the Company or any Subsidiary of the Company.
3.2 POSITIVE COVENANTS
The Company agrees with the Offeror and Offeror's Parent that (except as
expressly contemplated by this Agreement or as otherwise consented to or
approved by the Offeror and Offeror's Parent in writing) prior to the
earlier of (i) the time that the Offeror takes up and pays for Common
Shares under the Offer and (ii) the expiry, termination or withdrawal of
the Offer, the Company shall:
(a) carry on its business and cause each of its Subsidiaries to carry
on its business in the ordinary course consistent with past
practice;
(b) promptly and in any case within 24 hours advise Offeror's Parent
of (i) any change in the financial condition, operations,
business or capital of the Company or any of its Subsidiaries
that is Materially Adverse to the Company (ii) any withdrawal or
change that has substantially the same effect as a withdrawal of
the recommendation or approval of any member or members of the
Board of Directors with respect to the determinations set forth
in section 1.3(a);
(c) use its best efforts to maintain the current insurance policies
of it and its Subsidiaries and not allow such policies to be
cancelled or terminated or any other coverage thereunder to
lapse, unless at the same time as such termination, cancellation
or lapse, replacement policies underwritten by one or more
insurance companies of nationally recognized standing providing
coverage comparable to or greater than the coverage under the
cancelled, terminated or lapsed policies, if available, for
reasonably similar premiums are in full force and effect;
(d) use, and cause each of its Subsidiaries to use, its commercially
reasonable efforts to preserve intact their respective business
organizations and goodwill, to keep available the services of
their respective officers and employees as a group and to
maintain satisfactory relationships with suppliers, distributors,
customers and others with whom they have business relationships
and inform Offeror's Parent orally and in writing promptly and in
any case within 24 hours if any member of the Senior Management
of the Company or any other officer submits a resignation;
(e) pay all material accounts payable and other material obligations
(including, for greater certainty, all insurance premiums and
Taxes, including instalments on account of taxes, when they
become due and payable and also including withholding, collecting
and remitting Taxes on a timely basis) in the ordinary course of
business consistent with past practice, except if the same are
contested in good faith, and, in the case of the failure to pay
any material accounts payable or other material obligations which
are contested in good faith, only after consultation with
Offeror's Parent;
(f) duly and timely make or prepare all Tax Returns required to be
made or prepared by it, duly and timely file all Tax Returns
required to be filed by it with the appropriate governmental
authority and duly, completely and correctly report all income
and all other amounts and information required to be reported
thereon;
(g) duly and timely comply with all requirements of applicable
securities laws (including, without limitation, the timely and
complete filing pursuant to applicable Canadian securities laws
of the Company's Annual Information Form for the fiscal year
ended July 31, 2003);
(h) following the making of the Offer (other than during the pendency
of a Competing Proposal being considered by the board of
directors of the Company), permit Offeror's Parent and its
representatives, provided they do not interfere with the ordinary
conduct of the Company's business, upon reasonable notice to and
prior consultation with, Xxx Xxxxxx, Xxx Xxxx or any designee
thereof, to have reasonable access during normal business hours
to (i) the Real Property, (ii) all other locations where books
and records or other material relevant to the business of the
Company and its Subsidiaries are stored, (iii) all the books and
records, and (iv) the properties and assets used by the Company,
and provided that (A) Offeror's Parent and its representatives
will not contact employees of the Company or its Subsidiaries
except after prior consultation with Xxx Xxxxxx, Xxx Xxxx or any
designee thereof; (B) except as disclosed in the Company
Disclosure Schedule, Offeror's Parent and its representatives
will not be entitled to contact suppliers, distributors,
customers and others with whom the Company and its Subsidiaries
have business relationships without the express approval of Xxx
Xxxxxx, Xxx Xxxx or any designee thereof; and (C) notwithstanding
the foregoing, the Company shall not be required to disclose (x)
any information, records, files or other data to Offeror's Parent
where prohibited by any applicable laws (it being understood that
if any consent of any person or governmental authority is
required to permit the Company or any of the Subsidiaries to
release any information to Offeror's Parent, the Company shall
make all reasonable efforts to obtain such consent as soon as
possible); and (y) any of the Company's management or Board of
Directors' materials relating to the assessment or evaluation of
the transactions contemplated hereby or any Competing Proposal
proposed by any other person) nor any information supplied by any
of its officers, directors, employees, financial advisors, legal
advisors, auditors, representatives or agents or other advisors
in connection therewith or any confidentiality agreement made
between the Company and any other person in respect of any
Competing Proposal;
(i) provide the Offeror, Offeror's Parent, and their respective
employees, agents, contractors, and subcontractors with access to
the property owned by Company located at 00000-00xx Xxxxxx,
Xxxxxx, Xxxxxxx Xxxxxxxx, for the purpose of performing an
environmental investigation of such property, at the sole cost
and expense of the Offeror and Offeror's Parent, including
without limitation, such soil, surface water, and groundwater
studies as may be necessary to assess the environmental condition
of such property;
(j) duly and timely furnish Offeror's Parent on a monthly basis with
copies of unaudited monthly financial and operating statements of
the Company and the Subsidiaries as prepared under the direction
of senior management of the Company;
(k) duly and timely, upon request by Offeror's Parent or Offeror's
Parent counsel, execute and deliver to Offeror's Parent all
necessary consents and authorizations to permit Offeror's Parent
to have inspections made or have existing records released to
Offeror's Parent by the municipal building and zoning department,
fire department, public works, environmental agencies, the
elevator inspections branch of the provincial or territorial
department of labour and other appropriate authorities as
Offeror's Parent may consider advisable; and
(l) use its best efforts to perform or comply with, in all respects,
all its obligations and covenants under this Agreement
(including, without limitation, the obligations of the Company
set forth in section 3.6).
3.3 PERMITTED TRANSACTIONS
Nothing in this Agreement will restrict the ability of the
Company or its Subsidiaries to:
(a) subject to the restriction in section 3.1(c) against granting, or
amending the terms of, any Options, issue or transfer Common
Shares upon the exercise of any Option granted prior to the date
of this Agreement;
(b) incur and pay the Transaction Expenses.
3.4 OFFEROR NOT TO MANAGE OR CONTROL THE COMPANY'S BUSINESS
The Offeror and Offeror's Parent acknowledge and agree that
nothing contained in this Agreement shall give or be deemed to give the
Offeror or Offeror's Parent, directly or indirectly, the right to control
or direct the management of the Company's operations prior to the time the
Offeror takes up and pays for the Common Shares and the Company shall
continue to exercise, subject to the terms and conditions of this
Agreement, complete control, direction and supervision over its business
and operations.
3.5 OFFICERS' AND DIRECTORS' INSURANCE AND INDEMNIFICATION
(a) The parties agree that, notwithstanding any other provision of
this Agreement, the Offeror or Offeror's Parent may secure
non-cancellable prepaid officers' and directors' liability
insurance covering the officers and directors of the Company and
its Subsidiaries on a six year "trailing" or "run-off" basis on
terms no less favourable (as determined by the parties acting
reasonably), to the extent available on reasonable commercial
terms and permitted by law, to such persons than such insurance
maintained in effect by the Company on the date hereof in terms
of similar coverage and amounts (such insurance, the "Run-Off
Coverage").
(b) If a policy described in section 3.5(a) is not obtained (or
evidence reasonably satisfactory to the Company that the Offeror
or Offeror's Parent has made arrangements to secure such policy
is not provided to the Company) by Offeror and Offeror's Parent
at a time no later than 48 hours (not counting Saturdays, Sundays
and holidays) prior to the expiry time of the Offer, the Company
may secure Run-Off Coverage prior to the time that the Offeror
first takes up and pays for Common Shares under the Offer.
(c) If neither the policy described in section 3.5(a) nor section
3.5(b) is obtained, then for six years after the Offeror takes up
and pays for Common Shares under the Offer, the Offeror and
Offeror's Parent shall cause the Company and any successor to the
Company (or in the event the Company's existence is terminated,
Offeror's Parent) to maintain the Company's current officers' and
directors' liability insurance, or equivalent insurance covering
the current officers and directors of the Company and its
Subsidiaries with respect to actions and omissions occurring
prior to the date of their resignations in such amounts, and with
such deductibles, retained amounts, coverages and exclusions and
otherwise on terms and conditions no less advantageous or
favourable to such persons than such insurance in effect by the
Company on the date that the Offeror takes up and pays for Common
Shares under the Offer.
(d) The Offeror and Offeror's Parent shall cause the Company and its
Subsidiaries to continue to indemnify to the maximum extent
contemplated law or by the Articles of the Company and constating
documents of the Subsidiaries of the Company or indemnification
agreements to which the Company or its Subsidiaries are a party
such persons who are now or will be entitled on the date the
Offeror takes up and pays for Common Shares under the Offer to
indemnification thereunder and the Articles of the Company and
constating documents of the Subsidiaries of the Company shall not
be amended or restated in any manner to reduce or limit the
rights of indemnity afforded to the directors and officers of the
Company or its Subsidiaries.
(e) Should any threatened or actual claim, action, suit, or
investigation be made against any present or former director,
officer, employee, fiduciary or agent of the Company or
Subsidiary of the Company who is entitled to be indemnified under
the Articles of the Company or constating documents of the
Subsidiaries of the Company or any indemnification agreement to
which the Company or any Subsidiary of the Company is a party,
within six years from the date the Offeror takes up and pays for
Common Shares under the Offer, the provisions of this section 3.5
shall continue in effect until the final disposition of all such
claims, suits, proceedings or investigations.
(f) The Offeror's Parent shall cause the Offeror and the Company (and
any successor to the Company) and the Subsidiaries of the Company
(and any successor to such Subsidiaries) to honour, in accordance
with their terms, any indemnification agreements or arrangements
provided for under the constating documents of the Company or any
of its Subsidiaries, resolutions of their respective boards or
shareholders, or any indemnification agreements in existence on
the date hereof and as disclosed in the Company Disclosure
Schedule between the Company or any Subsidiary of the Company and
any present or former director, officer, employee, fiduciary or
agent of the Company or any of its Subsidiaries and their
respective rights to claim under such agreements or arrangements
shall survive and continue in full force and effect and without
modification, with respect to actions or omissions of such
Indemnified Parties occurring prior to the date the Offeror takes
up and pays for Common Shares under the Offer, for a period of
time of not less than the limitation period applicable under the
statutes of limitation applicable to such matters.
3.6 MUTUAL COVENANTS
(a) Subject to the terms and conditions herein, each party hereto
agrees to use all reasonable commercial efforts to take, or cause
to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make
effective as promptly as is practicable the transactions
contemplated by the Offer and this Agreement, including the
execution and delivery of such documents as the other party
hereto may reasonably require, and using commercially reasonable
efforts to obtain all necessary waivers, consents and approvals,
and to effect all necessary registrations and filings, including,
but not limited to, filings under the Applicable Laws and
submissions of information requested by any Agency.
(b) Each of the parties will use its commercially reasonable efforts
to obtain as soon as practicable all waivers and consents of any
Agency or any other person required in connection with the
consummation of the transactions contemplated by the Offer.
(c) In furtherance and not in limitation of the foregoing, Offeror's
Parent shall use its commercially reasonable efforts to resolve
such objections, if any, as may be asserted with respect to the
transactions contemplated by this Agreement or the Offer under
Antitrust Laws.
(d) Each party hereto shall promptly inform the others of any
material communication from the Competition Bureau or any other
Agency regarding any of the transactions contemplated by this
Agreement or the Offer. If any party or any affiliate thereof
receives a request for additional information or documentary
material from any such Agency with respect to the transactions
contemplated by this Agreement or the Offer, then such party will
endeavour in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other
parties, an appropriate response in compliance with such request.
Offeror's Parent will advise the Company promptly in respect of
any understandings, undertakings or agreements (oral or written)
which Offeror's Parent proposes to make or enter into with such
Agency in connection with the transactions contemplated by this
Agreement.
ARTICLE 4
NO SOLICITATION, TERMINATION AND BREAK FEE
4.1 NO SOLICITATION
(a) The Company shall, and shall cause its officers, directors,
employees, representatives and agents to, immediately cease any
discussions or negotiations with any parties that may be ongoing
with respect to any Competing Proposal. Except as expressly
contemplated by this Agreement, the Company will not, and will
not permit any of the Company's Subsidiaries to, directly or
indirectly, through the officers, directors, employees, financial
advisors, attorneys, accountants, consultants or other agents or
advisors of the Company and the Company's Subsidiaries, directly
or indirectly solicit, initiate or knowingly encourage the
submission of any Competing Proposal; provided that, subject to
section 4.1(b), nothing contained in this Article 4 or other
provisions of this Agreement shall prevent the Company from
engaging in discussions or negotiations with a third party or
providing information in respect of, or otherwise responding to,
or negotiating, approving and recommending to holders of Common
Shares, an unsolicited bona fide Competing Proposal if the Board
of Directors has determined in good faith, after consultation
with and receiving advice from legal counsel and the Company's
financial advisors, that such proposal may constitute or lead to
a Superior Proposal or that such action is otherwise required by
reason of the fiduciary duties of the directors of the Company
under applicable law.
(b) The Company will notify Offeror's Parent promptly (but in no
event later than 24 hours) after receipt by the Company (or any
of its advisors) of any Competing Proposal on or after the date
hereof, or of any request (other than in the ordinary course of
business and whether or not related to a Competing Proposal) for
confidential, non-public information relating to the Company or
any of the Company's Subsidiaries or for access to the
properties, books or records of the Company or any of the
Company's Subsidiaries. The Company shall provide such notice
orally and in writing and shall identify the person making, and
the terms and conditions of, any such Competing Proposal,
indication or request. Information provided under this section
4.1(b) shall constitute information which is subject to the
Confidentiality Agreement.
(c) Nothing in this section 4.1 will preclude the Company or its
officers and Board of Directors from responding, within the time
and manner required by the Applicable Laws, to any take over bid
or tender or exchange offer made for the Common Shares and
nothing in this Agreement shall be interpreted to extend to acts
or omissions of any person acting in his capacity as a director
or officer of the Company or otherwise to xxxxxx the proper
exercise of discretion by such person.
4.2 MODIFICATION OF RECOMMENDATION
Notwithstanding the provisions of section 1.3 of this Agreement,
in the event that, prior to the Offeror taking up and paying for Common
Shares deposited under the Offer,
(a) a Competing Proposal is proposed, offered or made to the holders
of Common Shares or to the Company which is a Superior Proposal,
if the Company complies with its obligations under section 4.1
and the Offeror does not, within 48 hours (excluding Saturdays,
Sundays, holidays, November 27, 2003 and November 28, 2003) of
receipt of notice from the Company that the Board of Directors
has determined that the Competing Proposal is a Superior
Proposal, agree to amend this Agreement and the Offer to increase
the consideration offered under the Offer to an amount having a
value at least equal to the value of the consideration offered
under the Superior Proposal; or
(b) the Offeror or Offeror's Parent is in material breach or default
of any of its agreements, covenants, representations or
warranties contained herein,
the Board of Directors may withdraw, modify or change any recommendation
regarding the Offer.
4.3 TERMINATION
This Agreement may be terminated by written notice by the party
(in case of (a), the parties) desiring and have the right to terminate this
Agreement at any time prior to the Offeror taking up and paying for Common
Shares under the Offer as follows:
(a) by mutual agreement in writing executed by the Offeror, Offeror's
Parent and the Company;
(b) by either of the Offeror or the Company:
(i) after January 31, 2004 if the Offeror has commenced the
Offer in accordance with this Agreement but the Offeror
has not purchased any Common Shares pursuant to the Offer
(provided that, in the event of termination by a party,
such party is not in violation of the terms of this
Agreement or the Offer); or
(ii) if any permanent order, decree, ruling or other action of
a court or other competent authority restraining,
enjoining or otherwise preventing the consummation of the
Offer shall have become final and non-appealable;
(c) by the Offeror:
(i) if the Minimum Condition or any other condition of the
Offer is not satisfied or waived at the expiry time of the
Offer (as the same may be extended) and the Offeror in its
sole discretion shall not elect to waive such condition or
extend the Offer and the Offeror and the Offeror's Parent
are not in material breach of their obligations hereunder
or under the Offer;
(ii) at any time if the Company is in default of any material
obligation under this Agreement or any representation or
warranty of the Company under this Agreement is untrue in
any material respect and which is not curable or, if
curable, is not cured within the later of (x) 2 business
days after notice of such default has been given by the
Offeror to the Company and (y) the satisfaction of all
conditions of the Offer not related to such default; or
(iii) if the Board of Directors (x) withdraws or changes its
recommendation of the Offer as set forth in section
1.2(a)(iii)B in a manner that has substantially the same
effect as a withdrawal or (y) recommends that holders of
Common Shares accept, or vote in favour of, a transaction
that constitutes a Superior Proposal.
(d) by the Company if:
(i) the Offeror does not commence the Offer within the time
contemplated by section 1.1 except if such failure is due
to (A) a breach of this Agreement by the Company or (B) a
material delay in performance of the Company's obligations
under this Agreement;
(ii) prior to the purchase, taking-up or payment of Common
Shares pursuant to the Offer, in accordance with the terms
of this Agreement and the Offer, if the Offeror or
Offeror's Parent is in default of any material obligation
under this Agreement or any representation or warranty of
the Offeror or Offeror's Parent under this Agreement is
untrue in any material respect and which is not curable
or, if curable, is not cured within the later of (x) 2
business days after notice of such breach has been given
by the Company to Offeror's Parent and (y) the
satisfaction of all conditions to the Offer not related to
such breach; or
(iii) the Board of Directors authorizes the Company, subject to
complying with the terms of this Agreement, to enter into
a binding written agreement concerning a transaction that
constitutes a Superior Proposal and the Company so
notifies Offeror's Parent in writing, and the Company,
concurrently with such termination pursuant to this clause
(iii) pays the fees required to be paid to Offeror's
Parent pursuant to section 4.5(b).
4.4 EFFECT OF TERMINATION
In the event this Agreement is terminated as provided in section
4.3, this Agreement shall, except for the payment obligations of the
Company pursuant to section 4.5, become void and of no further force and
effect and no party shall have any liability or obligation (howsoever and
whensoever arising) under or in relation to this Agreement to any other
party hereunder or to their respective shareholders, directors, officers or
employees, except as set forth in section 4.5, provided that nothing herein
will relieve or have the effect of resulting in relieving the Offeror and
Offeror's Parent in any way from liability for damages incurred or suffered
by the Company as a result of a breach by the Offeror or Offeror's Parent
of their obligations in this Agreement or prejudice the rights of the
Company as a result of such breach.
4.5 EXPENSES AND NON-COMPLETION FEE
(a) Subject to section 4.5(b) below, whether or not the Offeror takes
up and pays for Common Shares under the Offer, all costs,
expenses and liabilities incurred in connection with the Offer,
this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs, expenses or liabilities.
(b) Provided that the Offeror and the Offeror's Parent are not in
material default of their obligations under this Agreement to be
performed at or prior to the occurrence of any event referred to
in (i) through (ix) of this section 4.5(b), if at any time after
the execution of this Agreement,
(i) the Board of Directors has withdrawn, redefined or changed
any of its recommendations or determinations as set forth
in section 1.2(a)(iii)B in a manner adverse to the Offeror
or shall have resolved to do so prior to the expiry of the
period during which Common Shares may be deposited under
the Offer;
(ii) the Board of Directors shall have failed to reaffirm its
recommendation of the Offer by press statement within five
full business days after the public announcement or
commencement of any Competing Proposal (or, in the event
that the Offer shall be scheduled to expire within such
five business days, prior to the scheduled expiry of the
Offer);
(iii) the Board of Directors shall have recommended that holders
of Common Shares accept, or vote in favour of, a Competing
Proposal;
(iv) a Competing Proposal has been made and publicly announced
by a Competing Proposal Offeror, prior to the expiry time
of the Offer and not withdrawn at least five days prior to
the expiry time of the Offer, and the Offer is not
completed as a result of the Minimum Condition not being
satisfied and more than 20% of the outstanding Common
Shares (on a non-diluted basis) are acquired under such
Competing Proposal;
(v) the Company consummates a Competing Proposal with the
Competing Proposal Offeror, or a person acting jointly or
in concert with the competing Proposal Offeror (within the
meaning of that expression as used in the Applicable Laws)
prior to the expiration of 270 days following termination
of this Agreement;
(vi) the Competing Proposal Offeror together with persons
acting jointly or in consent with the Competing Proposal
Offeror, acquires sufficient Common Shares of the Company
that, together with their currently held Common Shares,
would constitute control of the Company, prior to the
expiration of 270 days following termination of this
Agreement; or
(vii) the Company enters into a definitive agreement with
respect to a Competing Proposal with any third party
(which, for greater certainty, will not include a
confidentiality and standstill agreement), prior to the
expiration of 180 days following the termination of this
Agreement, and thereafter consummates such Competing
Proposal, provided that the fee specified in this section
4.5(b)(vii) shall not be payable in the event of a
termination of this Agreement following the
non-satisfaction of any of paragraphs (a), (b), (c), (d),
(i) or (k) in the Bid Conditions unless such condition was
not satisfied as a result of any action (or failure to
take any action) by the Company or its Subsidiaries;
(viii) this Agreement is terminated pursuant to section
4.3(d)(iii), or
(ix) the Company fails to comply with or breaches any covenant
made in this Agreement or any representation or warranty
of the Company in this Agreement is untrue, which failure,
breach or misrepresentation, if not cured, would be
reasonably likely to be Materially Adverse to the Company
or reasonably likely to prevent the Offeror from
proceeding with the Offer or impose material limitations
or conditions on the purchase by or sale to the Offeror of
the Common Shares under the Offer or the right of the
Offeror to own or exercise full rights of ownership of the
Common Shares or the Offeror's ability to effect a
Compulsory Acquisition or Second-Step Transaction, and
which is not curable or, if curable, is not cured within
the later of (x) 2 business days after notice of such
failure, breach or misrepresentation has been given by the
Offeror to the Company and (y) the satisfaction of all
conditions of the Offer not related to such failure,
breach or misrepresentation,
then the Company shall pay to Offeror's Parent the sum of $3.52
million by way of wire transfer in immediately available funds as
Offeror's Parent may direct, as liquidated damages. Such payment
will be due (i) in the case of an event specified in section
4.5(b)(i), (ii), (iii), or (ix) within five business days after
such event, (ii) in the case of an event specified in section
4.5(b)(viii), at the time of the termination of this Agreement by
the Company; or (iii) in the case of an event specified in
section 4.5(b)(iv), (v), (vi) or (vii) on the day of consummation
of the transaction referred to therein. The Company shall not be
obligated to make more than one payment pursuant to this section
4.5.
4.6 LIQUIDATED DAMAGES
The parties acknowledge that the payments described in section
4.5 are a payment of liquidated damages which are paid in lieu of actual
damages and represent a genuine pre-estimate of the damages which Offeror's
Parent or the Company, as the case may be, will suffer or incur as a result
of the event giving rise to such damages and resultant termination of this
Agreement and are not penalties. The parties irrevocably waive any right
they may have to raise as a defence that any of such liquidated damages are
excessive or punitive. For greater certainty, the parties agree that the
payment of the payments described in section 4.5 are the sole monetary
remedy of the party receiving such payment. Nothing herein shall preclude a
party from seeking injunctive relief to restrain any breach or threatened
breach of the covenants and agreements set forth in the agreement or
otherwise to obtain specific performance of any such covenant or agreement,
without the necessity of posting bond or security in connection therewith.
ARTICLE 5
GENERAL PROVISIONS
5.1 BROKERS
The parties represent and warrant to each other that, except for Credit
Suisse First Boston, in the case of the Company, no broker, finder or
investment banker is entitled to any brokerage, finder's fee or other fee
or commission, or to the reimbursement of any of its expenses, in
connection with the Offer or any similar transaction based upon
arrangements made by or on behalf of the parties hereto.
5.2 DISCLOSURE
Disclosure of this Agreement, its terms and conditions and the
transactions that it contemplates, or any confidential information provided
by any party in connection therewith shall be made only:
(a) to any legal counsel to or financial advisor engaged by, any of
the parties hereto;
(b) with the approval of each of the parties, which approval shall
not be withheld unreasonably, may be oral, and may be given on
behalf of a party by its counsel;
(c) as required by the Applicable Laws or any Agency; or
(d) as may be necessary to implement and complete the Offer and the
other transactions contemplated herein.
Each party shall agree with the others as to the timing and wording of
press releases and other disclosure of or relating to the Offer and the
other transactions contemplated herein. Notwithstanding the foregoing, the
parties shall be entitled to describe or append this Agreement in the
Company's Directors' Circular, and provide copies thereof to their
respective boards of directors and to those employees, lenders and
professional advisors that need to know details about this Agreement in
order for the parties to perform their covenants or satisfy the conditions
set out in this Agreement.
5.3 NOTICES
Any notice or other communications required or permitted to be
given hereunder shall be in writing and be sufficiently given if delivered
in person or if sent by facsimile transmission (provided such transmission
is confirmed):
(a) in the case of the Offeror or Offeror's Parent, to the following
address:
Honeywell International Inc.
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Senior Vice President and General Counsel
Facsimile: (000) 000-0000
with a copy to:
Honeywell International Inc.
0000 Xxxxx Xxxxxx X
Xxxxx 000
Xx. Xxxxx Xxxx, XX 00000
Attention: Vice President and General Counsel -
Automation and Control Solutions
Facsimile: (000) 000-0000
With a copy to:
Osler, Xxxxxx & Xxxxxxxx XXX
Xxx 00, 0 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX X0X 0X0
Attention: Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
(b) in the case of the Company, to the following address:
Silent Witness Enterprises Ltd.
0000 000 Xx
Xxxxxx, X.X.
X0X 0X0
Attention: Xxx Xxxxxx
Facsimile No.:000 000-0000
With a copy to:
XxXxxxxx Xxxxxxxx LLP
1300 - 000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Attention: Xxx XxXxxxxxxx
Facsimile: (000) 000-0000
or at such other address as the party to which such notice or other
communication is to be given has last notified the party giving the same in
the manner provided in this section, and if so given the same shall be
deemed to have been received on the date of such delivery or sending.
5.4 DEFINITIONS
For the purposes of this Agreement, those terms defined in
Exhibit I shall have the meanings attributed to them in that Exhibit.
5.5 HEADINGS AND REFERENCES
The division of this Agreement into articles, sections and the
insertion of headings are for convenience of reference only and do not
affect the construction or interpretation of this Agreement. Unless
otherwise specified, references to articles or sections are to articles and
sections of this Agreement.
5.6 NUMBER, GENDER AND PERSONS
In this Agreement, unless the contrary intention appears, words
importing the singular include the plural and vice versa; words importing
gender shall include all genders; and words importing persons shall include
a natural person, firm, trust, partnership, association, corporation, joint
venture or Agency.
5.7 DATE FOR ACTION
If the date on which any action is required to be taken hereunder
is not a business day in the place where 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.
5.8 SEVERABILITY
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated and the parties shall
negotiate in good faith to modify the agreement to preserve each party's
anticipated benefits under the Agreement.
5.9 ENTIRE AGREEMENT
This Agreement, together with the Confidentiality Agreement,
supersedes all prior agreements, commitments or understandings between the
parties hereto with respect to the subject matter hereof and constitutes
the entire agreement between the parties with respect to the subject matter
hereof.
5.10 AMENDMENT
This Agreement may not be amended except by an instrument in
writing signed by each of the parties hereto.
5.11 WAIVER
At any time prior to the Offeror taking up and paying for Common
Shares under the Offer, either the Company on the one hand, and the Offeror
and Offeror's Parent, on the other hand may:
(a) extend the time for the performance of any of the obligations or
other acts of the other; or
(b) waive compliance with any of the agreements of the other or with
any conditions to its own obligations,
in each case only to the extent such obligations, agreements and conditions
are intended for its benefit.
5.12 GOVERNING LAW
This Agreement shall be governed by and construed in accordance
with the laws of the Province of Ontario and the laws of Canada applicable
therein (excluding any conflict of laws rule or principle which might refer
such construction to the laws of another jurisdiction). Each party hereto
irrevocably submits to the non-exclusive jurisdiction of the courts of
British Columbia and Ontario with respect to any matter arising hereunder
or related hereto.
5.13 CURRENCY
Except as expressly indicated otherwise, all sums of money
referred to in this Agreement are expressed and shall be payable in
Canadian dollars.
5.14 COUNTERPARTS
This Agreement may be executed in any number of original or
facsimile counterparts, each of which shall be deemed to be an original and
all of which taken together shall be deemed to constitute one and the same
instrument, and it shall not be necessary in making proof of this Agreement
to produce more than one counterpart.
5.15 SEPARATE AGREEMENTS, COVENANTS AND OBLIGATIONS
The agreements and covenants of any party to this Agreement are
the separate agreements and covenants of such party and such party shall
have no liability or obligation in respect of the agreements and covenants
of any other party to this Agreement, except that Offeror's Parent shall be
responsible for causing the Offeror to carry out and perform the
obligations of the Offeror hereunder and be liable in the event of any
breach or default by the Offeror,
5.16 THIRD PARTIES
Nothing in this Agreement shall create any rights in, or be
deemed to have been executed for the benefit of, any person that is not a
party hereto, or a successor or permitted assign of such a party; provided
however, that the parties hereto specifically acknowledge that, the
provisions of section 1.7 and section 3.5 are intended to be for the
benefit of, and shall be enforceable by, the employees, officers and
directors of the Company and its Subsidiaries affected thereby and their
heirs and representatives.
5.17 NO PERSONAL LIABILITY
(a) No director, officer or employee of the Company shall have any
personal liability to the Offeror or Offeror's Parent or persons
named in section 5.16 under this Agreement.
(b) No director, officer or employee of the Offeror or Offeror's
Parent shall have any personal liability to the Company or
persons named in section 5.16 under this Agreement.
5.18 ASSIGNMENT AND APPLICATION
This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto prior to the consummation of the Offer without the prior
written consent of the other party hereto, except that Offeror may assign
to the Offeror's Parent or any other subsidiary of Offeror's Parent any and
all rights, interests and obligations of Offeror under this Agreement
(provided that such entity remains a subsidiary of the Offeror's Parent
until the consummation of the Offer). Offeror's Parent covenants and agrees
to cause the Offeror to carry out its obligations under this Agreement and
agrees that the representations and warranties relating to the Offeror
shall be construed as extending to it.
5.19 EXHIBITS
The following are the Exhibits to this Agreement, which form an
integral part hereof:
Exhibit I - Definitions
Exhibit II - Conditions of the Offer
Exhibit III - Representations and Warranties of the Offeror
and Offeror's Parent
Exhibit IV - Representations and Warranties of the Company
IN WITNESS WHEREOF, the parties have executed this Agreement.
678669 B.C. LTD.
/s/ Xxxx X. Xxxxxx
--------------------
Xxxx X. Xxxxxx
Authorized Signatory
HONEYWELL INTERNATIONAL INC.
/s/ Xxxx X. Xxxxxx
--------------------
Xxxx X. Xxxxxx,
Vice President-Corporate Planning
and Development
SILENT WITNESS ENTERPRISES LTD.
/s/ Xxx Xxxxxx
--------------------
Xxx Xxxxxx,
CEO and Chairman of the Board
EXHIBIT I
TO SUPPORT AGREEMENT
DEFINITIONS
"ACT" means the Company Act (British Columbia), as the same may be amended
or re-enacted or any successor legislation thereto.
"AFFILIATE" shall have the meaning attributed to it under the Act.
"AGENCY" means any:
(a) multinational, federal, provincial, state, regional, municipal,
local or other government, governmental or public department,
central bank, court, tribunal, arbitral body, commission, board,
official, minister, bureau or agency, domestic or foreign;
(b) subdivision, agent, commission, board or authority of any of the
foregoing; or
(c) quasi-governmental or private body exercising any regulatory,
expropriation or taxing authority under or for the account of any
of the foregoing.
"AGREEMENT" means this Agreement including the Exhibits hereto.
"ANTITRUST LAWS" means any antitrust, competition or trade regulatory laws,
rules or regulations of any domestic or foreign government or governmental
authority or any multinational authority.
"APPLICABLE LAWS" means the Act, United States federal securities laws, the
securities legislation of each province and territory of Canada where
holders who are resident in such province or territory hold not less than
2% of the Company's Common Shares, the rules, regulations and forms made or
promulgated under that legislation, and the published policies, bulletins
and notices of the regulatory authorities administering that legislation
and the published rules, regulations, bylaws and policies of The Toronto
Stock Exchange and the National Association of Securities Dealers, Inc., as
any of the foregoing may be amended from time to time.
"APPURTENANCES" means all privileges, rights, easements and appurtenances
both at law and equity belonging to or for the benefit of Real Property,
including any means of access between such Real Property and a public way,
rights in respect of or for any other uses upon which the present use is
dependent (such as pipelines, cables, railway sidings) and all rights
existing in and to any streets, alleys, passages and other rights-of-way.
"BID CONDITIONS" means the conditions set out in Exhibit II.
"BOARD OF DIRECTORS" means the board of directors of the Company.
"BUSINESS DAY" means any day on which commercial banks are generally open
for business in Vancouver, British Columbia, other than a Saturday, a
Sunday or a day observed as a holiday in Vancouver, British Columbia.
"COMMON SHARES" means Common shares without par value in the capital of the
Company as constituted on the date hereof.
"COMPANY" means Silent Witness Enterprises Ltd., a company incorporated
under the Act.
"COMPANY'S DISCLOSURE DOCUMENTS" means the Company's audited financial
statements for the fiscal year-ended July 31, 2003 including the notes
thereto and Management's Discussion and Analysis contained therein, the
Company's Form 20-F/Annual Information Form for each of the fiscal years
ended July 31, 2002 and July 31, 2003 and all other interim financial
statements, reports to shareholders and material change reports filed
pursuant to the Applicable Laws since December 31, 2002.
"COMPANY DISCLOSURE SCHEDULE" means a written disclosure schedule delivered
by the Company to the Offeror's Parent prior to or concurrently with the
execution of this Agreement.
"COMPETING PROPOSAL" does not include the Offer but means:
(a) the possible acquisition of, or business combination with, the
Company or any of its Subsidiaries (whether by way of merger,
amalgamation, arrangement, consolidation, takeover bid, tender
offer, purchase of shares, purchase of assets or otherwise);
(b) the possible acquisition of any material portion of the shares or
assets of the Company or any of its Subsidiaries;
(c) any takeover bid, tender offer, stock exchange takeover bid or
other purchase or acquisition of equity securities of the Company
that, if consummated, would result in any person beneficially
owning 50% or more of any class of equity securities of the
Company; or
(d) any other transaction, the consummation of which would reasonably
be expected to prevent or materially impeded, interfere with or
delay the consummation of the Offer.
"COMPETING PROPOSAL OFFEROR" means any person, other than the Offeror,
Offeror's Parent, or any affiliate of Offeror's Parent that, prior to the
expiry time of the Offer, has made and publicly announced a Competing
Proposal that is not withdrawn at least five days prior to the expiry time
of the Offer.
"COMPULSORY ACQUISITION" means the acquisition of the Common Shares not
deposited under the Offer pursuant to the provisions of Section 255 of the
Act.
"CONFIDENTIALITY AGREEMENT" means the agreement dated May 28, 2003 between
Offeror's Parent and the Company.
"CONTRACT" means any contract, commitment or understanding (including any
lease, license, loan agreement, guarantee, security, indemnity, indenture
or other instrument), whether written or oral.
"ENCUMBRANCE" means any lien, charge, title retention right, security
interest, pledge, hypothecation or encumbrance of any nature or kind
whatsoever.
"EXCESS TREASURY SHARES" has the meaning defined in paragraph (b) of the
Representations and Warranties of the Company set forth in Exhibit IV.
"IMPROVEMENTS" means all plants, buildings, structures, fixtures, erections
and improvements located on, over, under or upon the Real Property
including those under construction and any mechanical, electrical,
plumbing, heating and air-conditioning systems relating to the Real
Property.
"INDEBTEDNESS" of any person, means, without duplication, (a) all
obligations of such person for borrowed money; (b) all obligations of such
person evidenced by bonds, debentures, notes or similar instruments; (c)
all obligations of such person under conditional sale or other title
retention agreements relating to property or assets other than purchase
orders incurred in the ordinary course of business; (d) all obligations of
such person in respect of the deferred purchase price of property, assets
or services (excluding current accounts receivable payable incurred in the
ordinary course of business); (e) all Indebtedness of third parties secured
by (or for which the holder of such Indebtedness has an existing right,
contingent right or otherwise, to be secured by) any lien on property or
assets owned by or acquired by such person, whether or not the Indebtedness
secured thereby has been assumed; (f) all guarantees by such person of
Indebtedness of others; (g) all capital leases of such person; (h) all
obligations, contingent or otherwise, of such person as an account party to
letters of credit and letters of guarantee (other than in connection with
inventory purchased in the ordinary course of business); and (i) all
obligations of such person, contingent or otherwise, of such person in
respect of bankers' acceptances.
"LAND EXCHANGE AGREEMENT" has the meaning defined in subparagraph (k)(ii)
of the Representations and Warranties of the Company set forth in Exhibit
IV.
"LEASED REAL PROPERTY" means lands and/or premises which are used by the
Company or any of the Subsidiaries and which are leased, subleased,
licensed to or otherwise occupied by the Company or any of the Subsidiaries
and the interest of the Company and the Subsidiaries in all Improvements
and Appurtenances.
"LOSSES" means, in respect of any matter, all claims, demands, proceedings,
losses, damages, liabilities, liabilities for Taxes, deficiencies,
reasonable costs and expenses (including, without limitation, all legal and
other professional fees and disbursements, interest, penalties and amounts
paid in settlement) arising directly or indirectly as a consequence of such
matter.
"MATERIALLY ADVERSE" means, with respect to a person, circumstance, term,
asset, agreement, obligation, liability, covenant, sale, disposition,
expenditure, event, change, compliance, breach, violation, default or other
action, occurrence or effect (collectively, a "fact") that is or would
reasonably be expected to be material and adverse to the condition of that
person and its Subsidiaries, taken as a whole, provided that, for all
purposes of this Agreement, a fact shall be deemed not to be Materially
Adverse to a person unless the effect of such fact is or would reasonably
be expected to be, or, in the case of any fact described in Exhibit III or
Exhibit IV, is, or would reasonably be expected to be, when combined with
any other fact described in such Exhibit III or Exhibit IV (without
duplication), material and adverse to the condition of such person and its
Subsidiaries, taken as a whole, and provided for greater certainty that a
fact shall not be deemed to be Materially Adverse if it consists of, or
results from, any change, effect, event, circumstance, action or occurrence
(i) in or relating to the Canadian or United States economy or financial,
credit or securities markets in general including, without limitation, any
reduction in major markets indices, (ii) in or relating to currency
exchange rates, (iii) in or relating to the industries in which the Company
or Offeror's Parent operates or the markets for any of the Company's or
Offeror's Parent products or services in general, (iv) reasonably
attributable to the announcement of the Offer and anticipated closing
thereof, (v) in or relating to the trading price of the Shares, or (vi) in
or relating to Canadian or United States generally accepted accounting
principles or regulatory accounting requirements;
"MINIMUM CONDITION" has the meaning defined in paragraph (a) of the Bid
Conditions;
"OFFER" means the takeover bid to be made by the Offeror offering to
acquire all of the outstanding Common Shares at a price per share of $11.27
payable in cash, including any amendments to, or extensions of, such offer,
including without limitation, increasing the consideration offered,
removing, waiving or altering any condition or extending the date by which
Common Shares may be deposited under such offer.
"OFFER DOCUMENTS" means the take over bid circular setting out the Offer,
together with the Letter of Transmittal, Notice of Guaranteed Delivery and
other related documents, together with any amendments or supplements to
such documents.
"OPTIONS" has the meaning defined in section 1.1(a).
"OWNED REAL PROPERTY" means real property, owned or purported to be owned
in fee simple, by the Company or any of the Subsidiaries, or real property,
other than Leased Real Property, in which the Company or any of the
Subsidiaries has an interest, including all Improvements and Appurtenances.
"PERSON" includes an individual, corporation, incorporated or
unincorporated association, syndicate or organization, partnership, limited
liability company, joint venture, association, joint stock company, trust,
trustee, executor, administrator or other legal representative or other
entity.
"REAL PROPERTY" means the Owned Real Property and the Leased Real Property.
"RIGHTS PLAN" means the Share Rights Plan pursuant to the Share Rights Plan
Agreement dated November 12, 1999 between the Company and Computershare
Trust Company, as trustee.
"SECOND-STEP TRANSACTION" has the meaning defined in section 1.6.
"SENIOR MANAGEMENT OF THE COMPANY" means Messrs. Xxx Xxxxxx, Xxx Xxxx,
Xxxxxx Xxxxxx, Xxxxxx Xxxxx and Xxxxxx Xxxxxx.
"SUBSIDIARY" means, with respect to a specified body corporate, any body
corporate of which more than 50% of the outstanding shares ordinarily
entitled to elect a majority of the board of directors thereof (whether or
not shares of any other class or classes shall or might be entitled to vote
upon the happening of any event or contingency) are at the time owned
directly or indirectly by such specified body corporate or indirectly by
such specified body corporate and shall include any body corporate,
partnership, joint venture or other entity over which it exercises
direction or control or which is in a like relation to a Subsidiary.
"SUPERIOR PROPOSAL" means a bona fide Competing Proposal which is
determined by the board of directors in good faith by majority vote of its
members, after consultation with the Company's financial advisors, to be
one which would, if consummated in accordance with its terms, result in a
transaction more favourable to the holders of the Common Shares than the
Offer with a value of not less than $0.50 per share in excess of the value
of the Offer or, if applicable, any amended Offer by the Offeror. For the
purpose of this Agreement, the value of any non-cash consideration proposed
to be paid, delivered or issued under any Superior Proposal or by the
Offeror (unless the consideration proposed to be paid, delivered or issued
by the Offeror includes an all-cash option in which case the Offer shall be
valued on a per share basis as such cash consideration) shall be determined
by the Board of Directors (having consulted any financial advisor of the
Company or obtained other independent financial advice), acting reasonably.
"TAXES" means all taxes, however denominated, including any interest,
penalties or other additions that may become payable in respect thereof,
imposed by any government or governmental body, which taxes shall include,
without limiting the generality of the foregoing, all income or profits
taxes (including, but not limited to, federal income taxes, provincial and
state income taxes), capital taxes, payroll and employee withholding taxes,
unemployment insurance, social insurance taxes (including Canada Pension
Plan payments), goods and services tax, sales and use taxes, ad valorem
taxes, excise taxes, franchise taxes, gross receipt taxes, business licence
taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, workers compensation, pension
assessment and other governmental charges and other obligations of the same
or of a similar nature to any of the foregoing which the Company or any of
its Subsidiaries is required to pay, withhold or collect.
"TAX RETURNS" includes all returns, reports, declarations, elections,
notices, filings, forms, statements and other documents (whether in
tangible, electronic or other form) and including any amendments,
schedules, attachments, supplements, appendices and exhibits thereto, made,
prepared, filed or required to be made, prepared or filed by law in respect
of Taxes;
"TRANSACTION EXPENSES" means all reasonable costs and expenses incurred in
connection with the transactions contemplated by this Agreement including
all legal, accounting, financial advisory, printing, translation, registrar
and transfer agent, and other administrative or professional fees, costs
and expenses of third parties incurred by the Company in connection with
the solicitation of bids or expressions of interest in relation to the
Company prior to the execution of this Agreement, the preparation,
negotiation and settlement of this Agreement, the preparation and mailing
of a Directors Circular and structuring and the completion of the
transactions contemplated by the Offer and this Agreement and any incentive
fees payable by the Company to its senior officers in connection with
completion of the Offer.
EXHIBIT II
TO SUPPORT AGREEMENT
CONDITIONS OF THE OFFER
The Offeror shall have the right to withdraw the Offer and not
take up and pay for, or extend the period of time during which the Offer is
open and postpone taking up and paying for, any Common Shares deposited
thereunder unless all of the following conditions are satisfied or waived
by the Offeror at or prior to the expiry time of the Offer (the "Expiry
Time"):
(a) there shall have been validly deposited under the Offer and not
withdrawn at the Expiry Time that number of Common Shares that
constitute at least 90% of the outstanding Common Shares on a
fully diluted basis other than Common Shares already held at the
date of the Offer by, or by a nominee for, the Offeror or its
affiliates (the "Minimum Condition");
(b) all necessary consents, authorizations, governmental and
regulatory approvals, orders, rulings and exemptions (including,
without limitation, those of any stock exchange or securities or
other regulatory authorities) shall have been obtained on terms
and conditions satisfactory to the Offeror, including, without
limiting the generality of the foregoing, (i) an advance ruling
certificate ("ARC") pursuant to section 102 of the Competition
Act (Canada) shall have been issued by the Commissioner of
Competition (the "Commissioner") appointed under that Act; or
(ii) the relevant waiting period in section 123 of the
Competition Act (Canada) shall have expired and a "no action"
letter indicating that the Commissioner has determined not to
make an application for an order under section 92 of the
Competition Act (Canada) shall have been received from the
Commissioner, and any terms and conditions attached to any such
letter would not have a Materially Adverse effect on either
Offeror's Parent or Offeror's Parent's global video controls
business or the Company; or (iii) pursuant to section 113(c) of
the Competition Act (Canada) the Commission shall have waived the
obligation to comply with Part IX of the Competition Act (Canada)
and there shall be no threatened or actual application by the
Commissioner for an order under section 92 or 100 of the
Competition Act (Canada) in respect of the transactions
contemplated hereby which would have a Materially Adverse effect
on either Offeror's Parent or Offeror's Parent's global video
controls business or the Company;
(c) no act, action, suit or proceeding shall have been threatened or
taken before or by any domestic or foreign court or tribunal or
governmental agency or other regulatory authority, stock exchange
or administrative agency or commission or by any elected or
appointed public official in Canada or elsewhere, whether or not
having the force of law and no law, regulation or policy shall
have been proposed, enacted, promulgated or applied:
(i) which has the effect or may have the effect to cease
trade, enjoin, prohibit or impose material limitations or
conditions on the purchase by or the sale to the Offeror
of the Common Shares or the right of the Offeror to own or
exercise full rights of ownership of the Common Shares,
(ii) which, if the Offer were consummated, would materially
adversely affect the Company or Offeror's Parent or its
global video controls business; or
(iii) which, if the Offer were consummated, would adversely
affect the Company or the Offeror's ability to effect a
Compulsory Acquisition or a Second-Step Transaction;
(d) there shall not exist any prohibition at law against the Offeror
making the Offer, taking up and paying for any Common Shares
deposited under the Offer or completing a Compulsory Acquisition
or a Second-Step Transaction;
(e) since the announcement of the Offer, the Company and its
Subsidiaries shall not have taken or proposed to take any action
that has not been disclosed in writing to the Offeror prior to
announcement of the Offer, or publicly disclosed that they intend
to take any action that has not been disclosed in writing to the
Offeror prior to the announcement of the Offer, and the Offeror
shall not have otherwise learned of any previous action taken by
the Company or its Subsidiaries which had not been publicly
disclosed prior to the announcement of the Offer, that would have
a material adverse effect on the Company or that would prevent
the Offeror from proceeding with the Offer or that would impose
material limitations or conditions on the purchase by or the sale
to the Offeror of the Common Shares under the Offer or the right
of the Offeror to own or exercise full rights of ownership of the
Common Shares or the Offeror's ability to effect a Compulsory
Acquisition or a Second-Step Transaction, other than actions that
have been consented to by the Offeror;
(f) there shall be no more than 7,952,952 Common Shares outstanding
(which number of Common Shares shall be reduced by any Options
which are surrendered to the Company for cancellation and payment
in cash in lieu of exercise and cancelled pursuant to such
surrender or share appreciation rights that are settled by a cash
payment without issuance of Common Shares) and all of the Options
and any other rights, warrants or entitlements to acquire Common
Shares shall have been either exercised or otherwise cancelled,
terminated, released surrendered or waived by the holders thereof
(and including for this purpose, the cancellation of any Common
Shares held by the Company which are not reserved for transfer on
account of any Options or share appreciation rights);
(g) there shall not have been any breach of a covenant, nor shall any
representation or warranty be untrue at the date it was given or
deemed to have been given, or the date of take-up under the
Offer, by the Company pursuant to the provisions of this
Agreement, except for any breaches or untrue representations
which, individually or in the aggregate, would not be Materially
Adverse to the Company or would not prevent the Offeror from or
significantly impair the Offeror in proceeding with the Offer or
taking up and paying for Common Shares under the Offer or
completing a Compulsory Acquisition or all possible Second-Step
Transactions;
(h) the Company shall have waived the provisions of the Company's
Rights Plan in respect of the Offer;
(i) there shall not have occurred, developed or come into effect or
existence any event, action, state, condition or financial
occurrence of national or international consequence or any law,
regulation, action, government regulation, inquiry or other
occurrence of any nature whatsoever which materially adversely
affects or involves, or may materially adversely affect or
involve, the general economic, financial, currency exchange or
securities in Canada or elsewhere, or the financial condition,
business, operations, assets, affairs or prospects of Company and
its Subsidiaries, taken as a whole (other than those reasonably
attributable to the announcement of the Offer), or which impairs
the Offeror in proceeding with the Offer or taking up and paying
for Common Shares deposited under the Offer or that would impose
material limitations or conditions on the purchase by or sale to
the Offeror of the Common Shares under the Offer or the right of
the Offeror to own or exercise full rights of ownership of the
Common Shares or the Offeror's ability to effect a Compulsory
Acquisition or Second-Step Transaction;
(j) there does not exist and there shall not have occurred (or, if
there does exist or shall have previously occurred, there shall
not have been disclosed, generally or to the Offeror in writing
prior to the commencement of the Offer) any change (or any
condition, event, circumstance or development involving a
prospective change) in the business, assets, operations,
capitalization, condition (financial or otherwise), prospects,
share or debt ownership, results of operations, cash flows,
properties, articles, by-laws, licenses, permits, rights, or
privileges, whether contractual or otherwise, or liabilities
(including without limitation any contingent liabilities that may
arise through outstanding, pending or threatened litigation or
otherwise), whether contractual or otherwise, of the Company and
its Subsidiaries taken as a whole which is or may be Materially
Adverse to Company or the value of the Common Shares to the
Offeror;
(k) there shall not have occurred an actual or announced change in
tax legislation applicable to the Company (including a press
release issued by the Minister of Finance of Canada to amend the
Tax Act or a final rule to further amend the United States
Internal Revenue Code of 1986, or an announcement condition,
event or development involving a change or a prospective change)
that directly or indirectly has or may have a Materially Adverse
effect with respect to the business or operations of Company and
its Subsidiaries taken as a whole with respect to the regulatory
regime applicable to their respective businesses and operations
or with respect to completing a Compulsory Acquisition or
Subsequent Acquisition Transaction or that increases or would
increase the effective tax cost of the Offer to the Offeror; and
(l) the Offeror shall not have become aware of any untrue statement
of material fact, or an omission to state a material fact that is
required to be stated or that is necessary to make a statement
not misleading in the light of the circumstances in which it was
made and at the date it was made (after giving effect to all
subsequent filings prior to the date of the Offer in relation to
all matters covered in earlier filings), in any document filed by
or on behalf of Company or any of its Subsidiaries with any
securities commission or similar securities regulatory authority
in any of the provinces of Canada, including without limitation
any annual information form, financial statement, material change
report or management proxy circular or in any document so filed
or released by Company or its Subsidiaries to the public which is
materially adverse to the Company or significantly impairs the
Offeror in proceeding with the Offer or taking up and paying for
Common Shares deposited under the Offer or that would impose
material limitations or conditions on the purchase by or sale to
the Offeror of the Common Shares under the Offer or the right of
the Offeror to own or exercise full rights of ownership of the
Common Shares or the Offeror's ability to effect a Compulsory
Acquisition or Second-Step Transaction; and
EXHIBIT III
TO SUPPORT AGREEMENT
REPRESENTATIONS AND WARRANTIES OF THE OFFEROR AND
OFFEROR'S PARENT
(a) Organization and Qualification. Each of the Offeror and Offeror's
Parent has been duly incorporated and is validly existing as a
corporation under the jurisdiction of its incorporation, amalgamation
or continuance and has full corporate power and authority to own its
assets and conduct its business as now owned and conducted.
(b) Authority Relative to this Agreement. Each of the Offeror and
Offeror's Parent has the requisite corporate power and authority to
execute and deliver into this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by each of the
Offeror and Offeror's Parent and the consummation by each of the
Offeror and Offeror's Parent of the transactions contemplated by this
Agreement, including without limitation, the making of the Offer and
the taking up of and payment for Common Shares thereunder have been
duly authorized by all requisite corporate action on the part of each
of the Offeror and Offeror's Parent and no other corporate proceedings
on the part of either the Offeror or Offeror's Parent are necessary to
authorize this Agreement and the transactions contemplated hereby,
including without limitation, the making of the Offer and the taking
up of and payment for Common Shares thereunder. This Agreement has
been duly executed and delivered by each of the Offeror and Offeror's
Parent and constitutes a legal, valid and binding obligation of each
of the Offeror and Offeror's Parent, enforceable against each of the
Offeror and Offeror's Parent in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium and other laws relating to or affecting the availability of
equitable remedies and the enforcement of creditors' rights generally
and to general principles of equity and public policy and the fact
that the Currency Act (Canada) precludes a court in Canada from giving
judgment in any currency other than Canadian currency. The execution
and delivery by either the Offeror or Offeror's Parent of this
Agreement and the performance by it of its obligations hereunder,
including without limitation, the making of the Offer and the taking
up of and payment for Common Shares thereunder, will not result in a
material violation or breach of:
(i) any provision of its constating documents;
(ii) any applicable law, or, to its knowledge, any regulation,
order, judgment or decree (subject to obtaining the
authorizations, consents and approvals referred to in paragraph
(e)), or
(iii) any material contract, agreement, arrangement or understanding
to which it is a party or by which its properties are bound or
subject which will have a Material Adverse effect on Offeror's
Parent or significantly impede the completion of the
transactions contemplated by this Agreement.
(c) Approvals. Other than in connection with or in compliance with the
provisions of the Competition Act (Canada), the Xxxx-Xxxxx-Xxxxxx Act,
foreign antitrust laws and the Applicable Laws, no authorization,
consent or approval of, or filing with, any Agency is necessary for
the consummation by either the Offeror or Offeror's Parent of its
obligations under this Agreement, including without limitation, the
making of the Offer and the taking up of and payment for Common Shares
thereunder, except for such authorizations, consents, approvals and
filings the failure to obtain or make which would not, individually or
in the aggregate, prevent, significantly impede or materially delay
the consummation or completion of the transactions contemplated by
this Agreement.
(d) Availability of Financing. The Offeror has available to it financing
sufficient to permit it to fulfil its obligations under this Agreement
and make full payment for securities which the Offeror has agreed to
acquire under the Offer and pay all related fees and expenses. If the
Offeror is borrowing funds, the Offeror has provided to the Company
evidence of the availability of such credit facilities or funding
sources (and any modifications, variations and amendments thereto)
setting out the terms and conditions of such credit facilities or
funding sources.
(e) Actions. There are (i) no claims, actions, proceedings, suits,
investigations or reviews pending or, to the best of the knowledge of
either the Offeror or Offeror's Parent threatened against the Offeror
or Offeror's Parent or any of their properties or assets by or before
any Agency or (ii) existing facts or conditions which may reasonably
be expected, individually or in the aggregate, to be a proper basis
for claims, actions, proceedings, suits, investigations or reviews;
that, in either case, either individually or in the aggregate, could,
or prevent, hinder or materially delay the consummation of the
transactions contemplated hereby, including, without limitation, the
making of the Offer and the taking up of, and payment for Common
Shares thereunder.
EXHIBIT IV
TO SUPPORT AGREEMENT
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
(a) Organization and Qualification. The Company has been duly incorporated
and is validly existing as a corporation under the Act and has all
requisite corporate power and authority to own, lease and operate
properties and conduct its businesses as currently conducted. The
Company is duly qualified to carry on business, and is in
good-standing, in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it
makes such qualification necessary and where the failure to be so
qualified or in good standing has, or would have, a Materially Adverse
effect on the Company.
(b) Capitalization. The authorized capital of the Company consists of
100,000,000 Common Shares and 10,000,000 Preference Shares. As at the
date of this Agreement there are (i) 7,468,541 Common Shares issued
and outstanding (excluding 549,900 Common Shares which are held by the
Company and which have not been cancelled) as fully paid and
non-assessable shares, (ii) 57,411 Common Shares reserved for issue or
transfer pursuant to all oustanding share appreciation rights granted
prior to the date of this Agreement (assuming that the "Market Price"
applicable under the share appreciation rights shall be determined to
be the price per Common Share referred to in Section 1.1(a)), (iii)
427,000 Common Shares reserved for issue or transfer pursuant to all
oustanding Options granted prior to the date of this Agreement and
(iv) no Preference Shares outstanding. Except as set forth on the
Company Disclosure Schedule and the rights of the parties and the
securityholders of the Company under this Agreement and the
transactions contemplated herein, there are no Options, warrants,
conversion privileges, calls or other rights, agreements,
arrangements, commitments or obligations obligating the Company to
issue, transfer or sell any shares of the Company or securities or
obligations of any kind convertible into or exchangeable for any
shares of the Company, nor are there outstanding any share
appreciation rights, phantom equity or similar rights, agreements,
arrangements or commitments based upon the share price, book value,
income or any other attribute of the Company.
(c) Subsidiaries. Other than the Subsidiaries set forth on the Company
Disclosure Schedule, there are no Subsidiaries of the Company the
total assets of which constituted more than ten percent of the
consolidated assets of the Company or the total revenues of which
constituted more than ten percent of the consolidated revenues of the
Company, in each case as set out in the consolidated financial
statements of the Company for the year ended July 31, 2003 and
including each Subsidiary of the Company that directly or indirectly
holds an equity interest in each such Subsidiary. Each of the
Subsidiaries of the Company is validly existing and has all requisite
corporate authority to own, lease and operate its properties and
conduct its businesses as currently conducted. Neither the nature of
its business nor the location or character of the assets owned or
leased by any of the Subsidiaries of the Company requires it to be
registered, licensed or otherwise qualified as an extra-provincial or
foreign corporation in any jurisdiction other than jurisdictions where
the relevant Subsidiary is duly registered, licensed or otherwise
qualified for such purpose as previously disclosed to the Offeror's
Parent. All of the outstanding shares in the capital of or outstanding
shares of capital stock or other ownership interests of such
Subsidiaries are validly issued, fully paid and non assessable and
except:
(i) as previously disclosed to the Offeror's Parent;
(ii) pursuant to the constating documents of any Subsidiary or any
shareholder, partnership or joint venture or other similar
agreements for Subsidiaries that are not wholly-owned; or
(iii) pursuant to existing financing arrangements;
all such shares and other ownership interests owned directly or
indirectly by the Company are owned free and clear of all Encumbrances
other than as previously disclosed to Offeror's Parent. There are no
outstanding Options, rights, entitlements, understandings or
commitments (contingent or otherwise) regarding the right to acquire
any such share or other ownership interests in any such Subsidiaries.
There are no Options, warrants, entitlements, conversion privileges or
other rights, agreements, arrangements or commitments obligating any
such Subsidiaries to issue or sell any shares of such Subsidiary or
securities or obligations of any kind convertible into or exchangeable
for any shares of such Subsidiary.
(d) Authority Relative to this Agreement. The Company has the requisite
corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. The execution and delivery
of this Agreement by the Company and the performance by the Company of
its obligations hereunder have been duly authorized by the Board of
Directors and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement and the transactions
contemplated hereunder, subject to approval of the Directors Circular
by the Board of Directors provided that additional corporate
proceedings on the part of the Company, including approvals by the
Board of Directors and in some cases holders of Common Shares may be
required to authorize (i) a Compulsory Acquisition; (ii) a Second-Step
Transaction; (iii) the transactions described in section 1.5 and (iv)
cancellation of the Excess Treasury Shares. This Agreement has been
duly executed and delivered by the Company and constitutes a legal,
valid and binding obligation of the Company enforceable by the Offeror
and Offeror's Parent against the Company in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium and other laws relating to or affecting the
availability of equitable remedies and the enforcement of creditors'
rights generally and to general principles of equity and public policy
and the fact that the Currency Act (Canada) precludes a court in
Canada from giving judgment in any currency other than Canadian
currency. The execution and delivery by the Company of this Agreement
and performance by it of its obligations hereunder and the
transactions contemplated hereby will not result in:
(i) a material violation or breach of any provision of or
constitute a default (or an event that with notice or lapse of
time or both would become a default) under,
(A) its constating documents or those of any of its
Subsidiaries,
(B) any applicable law or, to its knowledge, any regulation,
order, judgment or decree (subject to obtaining the
authorizations, consents and approvals referred to in
paragraph (e)), or
(C) any material contract, agreement, arrangement,
understanding, license, franchise or permit to which it or
any of its Subsidiaries is a party or by which any of them
or their properties is bound or is subject, or
(ii) the imposition of any Encumbrance upon any of its assets or the
assets of any of its Subsidiaries.
(e) Approvals. Other than in connection with or in compliance with the
provisions of the Competition Act (Canada), the Xxxx-Xxxxx-Xxxxxx Act,
foreign antitrust laws and the Applicable Laws, no authorization,
consent or approval of, or filing with, any Agency is necessary for
the consummation by the Company of its obligations under this
Agreement, except for such authorizations, consents, approvals and
filings the failure to obtain or make would not prevent, significantly
impede or materially delay the consummation or completion of the
transactions contemplated by this Agreement.
(f) Financial Statements and Disclosure Documents. The audited financial
statements of the Company prepared on a consolidated basis, for and as
at the years ended July 31, 2002 and July 31, 2003 have been prepared
in accordance with generally accepted accounting principles in Canada
("GAAP") consistently applied (except as noted in such statements) and
fairly present in all material respects the financial position of the
Company and its Subsidiaries as at the respective dates thereof and
the results of operations and cash flows of the Company and its
Subsidiaries on a consolidated basis for the respective periods
covered thereby. The Company has filed with the appropriate Agency
true and complete copies of all forms, reports, schedules, statements
and other documents required to be filed by it under the Applicable
Laws since July 31, 2001. The Company's Disclosure Documents were, as
of their respective dates, in compliance in all material respects with
the Applicable Laws and did not, when filed, contain any
"misrepresentation" within the meaning of the Applicable Laws and
complied in all material respects with the requirements of Applicable
Laws and make full disclosure of and provision for all material actual
and contingent liabilities.
(g) Absence of Certain Changes or Events. Since July 31, 2003, except as
has been publicly disclosed in one or more documents filed under the
Applicable Laws prior to the date of this Agreement or as contemplated
by this Agreement or disclosed to the Offeror or Offeror's Parent in
writing:
(i) the Company has conducted its business only in the ordinary
course of business;
(ii) no liability or obligation of any nature (whether absolute,
accrued, contingent or otherwise) material to the Company and
its Subsidiaries, taken as a whole, has been incurred other
than in the ordinary course of business;
(iii) none of the Company or any of the Subsidiaries, directly or
indirectly, has declared or paid any dividends or declared or
made any other payments or distributions on or in respect of
any of its shares and has not, directly or indirectly,
purchased or otherwise acquired any of its shares;
(iv) there has not been any change that, individually or in the
aggregate, is or has been Materially Adverse to the Company;
and
(v) as of the date of this Agreement, there are no material change
reports filed on a confidential basis with any Agency or any
other documents with any securities regulatory agency which
remain confidential.
(h) Disclosure. The Company has not failed to disclose in the Company's
Disclosure Documents or to the Offeror or Offeror's Parent in writing,
on or prior to the date of this Agreement, any information regarding
any event, circumstance or action taken or failed to be taken since
July 31, 2003 within the knowledge of the Company and not within the
knowledge of the Offeror or Offeror's Parent as at the date of this
Agreement which could reasonably be expected to be Materially Adverse
to the Company. Without limitation, since July 31, 2003, except as set
forth in the Company's Disclosure Documents that have been filed prior
to the date of this Agreement pursuant to the Applicable Laws or,
prior to the date of this Agreement, disclosed in writing to the
Offeror or Offeror's Parent:
(i) except as disclosed in the Company Disclosure Schedule or as
contemplated in this Agreement, none of the Company nor any of
its Subsidiaries has (A) become a party to any written or oral
agreement providing for severance, retention or termination
payments to, or any employment agreement with, any officer or
director, (B) granted any bonuses, salary increases, severance
or termination payments to any officer or director or (C)
entered into or modified any change of control, collective
bargaining, bonus, incentive compensation or other compensation
or benefit plan, policy, agreement, trust, fund or arrangement
with, for, in respect of, or for the benefit or welfare of any
employees of the Company or any of its Subsidiaries;
(ii) except as contemplated in this Agreement, none of the Company
nor any of its Subsidiaries has incurred any liabilities or
obligations of any nature (whether absolute, accrued,
contingent or otherwise) that, either individually or in the
aggregate, are material to the Company except those incurred in
the ordinary course of business;
(iii) except as specifically contemplated by this Agreement, neither
the Company nor any Subsidiary of the Company is or has become
bound by any voting trust or other agreement or understanding
with respect to the voting of any equity interests of the
Company or any such Subsidiary;
(iv) except as specifically contemplated by this Agreement, neither
the Company nor any Subsidiary of the Company is or has become
bound by any material restrictions on the business or
activities of the Company or any of its Subsidiaries;
(v) there have been no material claims, actions, proceedings,
suits, investigations or reviews and, to the best of the
Company's knowledge, no facts or conditions have arisen which
may reasonably be expected, individually or in the aggregate,
to be a proper basis for material claims, actions, proceedings,
suits, investigations or reviews, commenced or, to the best of
the knowledge of the Company, threatened against the Company or
any of its Subsidiaries or any of their properties by or before
any Agency, nor is the Company aware of any basis for any such
claim, action, proceeding, suit, investigation or review; and
(vi) none of the Company nor any of its Subsidiaries nor any of
their properties has been the subject of a judgement, order,
writ, injunction or decree.
(i) Compliance. None of the Company nor any of its Subsidiaries is in
conflict with, or in default (including cross defaults) under or in
violation of:
(i) its constating documents;
(ii) any law or, to its knowledge, any rule, regulation, order,
judgement or decree applicable to it or by which any of its
properties is bound or affected, or
(iii) any material contract, agreement, license, franchise or permit
to which it is a party or by which any of its properties is
bound or is subject.
(j) Xxxxxxxx-Xxxxx Compliance, etc.
(i) The Company has complied with and maintains the disclosure
controls and procedures required by the U.S. Securities
Exchange Act of 1934 Rule 13a-14 and Rule 15d-14. Such controls
and procedures are effective to ensure that all material
information concerning the Company and its Subsidiaries is made
known on a timely basis to the individuals responsible for the
preparation of Company's filings with the SEC and other public
disclosure documents and the conclusions regarding the
effectiveness of the disclosure controls and procedures set
forth in the SEC Reports are true and correct in all material
respects.
(ii) The chief executive officer and the chief financial officer of
the Company have signed, and the Company has filed with the
SEC, all certifications required by Sections 302 and Section
906 of the Xxxxxxxx-Xxxxx Act with respect to the SEC Reports
filed since such certifications have been required and such
certifications were true and correct when filed, contained no
qualifications or exceptions to the matters certified therein
and have not been modified or withdrawn.
(iii) Neither the Company nor any of its officers has received any
notice from the SEC or any other governmental entity that any
of its accounting policies or practices are the subject of any
review, inquiry, investigation or challenge other than comments
from the SEC on Company filings, which comments have either
been satisfied or withdrawn by the SEC.
(iv) At the time of the signing of the audit report for any audit
period commencing on or after January 1, 2000, as required by
applicable law at the time the financial statements were signed
by the auditor of the Company, the auditor of the Company's
financial statements for each such period was (A) qualified as
an "independent accountant" as required by the U.S. Securities
and Exchange Act of 1934, as amended (and the rules and
regulations promulgated thereunder) and (B) complied with the
auditor independence requirements of applicable Canadian
securities laws.
(v) For purposes of this paragraph (j), (A) "SEC" shall mean the
U.S. Securities and Exchange Commission; (B) "Xxxxxxxx-Xxxxx
Act" shall mean the U.S. Xxxxxxxx-Xxxxx Act of 2002 and the
rule and regulations promulgated thereunder; (C) "principal
executive officer" and "principal financial officer" shall have
the meanings given to such terms in the Xxxxxxxx-Xxxxx Act; and
(D) "SEC Reports" shall mean all forms, reports and documents
required to be filed by the Company with the SEC which were
subject to the requirements of the Xxxxxxxx-Xxxxx Act.
(k) Property.
(i) Except as has been disclosed to Offeror's Parent prior to the
execution of this Agreement, each of the Company and its
Subsidiaries has good and marketable title to, is the legal and
beneficial owner of the Owned Real Property or is entitled to
the benefits of all of its properties and assets (real and
personal, tangible and intangible, including Leased Real
Property) necessary to permit the operation of its businesses
as presently conducted. A full and complete description of all
such property, including a list of all Owned Real Property (by
reference to the owner, municipal address and legal
description) and all Leased Real Property (by reference to the
terms thereof and all relevant documents, including amendments,
extension notices, registered notices, non-disturbance
agreements) has been previously disclosed in writing to
Offeror's Parent. Such properties and assets are not subject to
any Encumbrance of any kind except those Encumbrances which do
not adversely affect the value of such properties and assets,
individually or in the aggregate, or as is reflected in the
balance sheets forming part of the financial statements of the
Company and except where the failure to have such title, or the
existence of such Encumbrance, individually or in the
aggregate, would not be Materially Adverse to the Company.
(ii) The Company is in the process of negotiating a land exchange
agreement with LNF Holdings Inc. with respect to Company lands
legally described as Parcel Identifier: 000-000-000 Xxx 0
Xxxxxxx 0 Xxxxxxxx 0 Xxx Xxxxxxxxxxx Xxxxxxxx Plan BCP5151 and
LNF Holdings Inc. lands legally described as a portion of
Parcel Identifier: 000-000-000 Parcel "A" (Reference Plan 2726)
North East Quarter Section 3, Township 2 and at District Xxx
000 Xxxxx 0, Xxx Xxxxxxxxxxx Xxxxxxxx (xxx "Land Exchange
Agreement"). Except as disclosed in the Company Disclosure
Schedule, the Company has not entered into the Land Exchange
Agreement or any other agreement respecting the sale, transfer
or exchange of the lands which are the subject of the Land
Exchange Agreement.
(iii) Except as previously disclosed to Offeror's Parent, there are
no (A) agreements, undertakings or other documents which affect
or relate to the title to, or ownership, operation or
management of, the Owned Real Property or (B) agreements or
understandings between the landlord and tenant, or sublandlord
and subtenant, or other relevant parties, other than as
contained in the Real Property Leases, relating to the rights
and obligations of the parties thereto or relating to the use
and occupation of the Leased Real Property.
(l) Tax Matters.
(i) Each of the Company and its Subsidiaries has filed all Tax
Returns required to be filed by it (and such returns are true,
complete and correct in all material respects), has paid in
full on a timely basis all Taxes that are imposed under any
laws or by any relevant taxing authority that are due and
payable and has made adequate provision in the financial
statements referred to above for the payment of all Taxes not
then due and payable including all Taxes shown to be payable on
the returns or on subsequent assessments with respect thereto
and no other Taxes are payable by the Company or any of its
Subsidiaries with respect to the items or time periods covered
by the returns. Each of the Company and its Subsidiaries has
made and will have made adequate and timely payment of
instalments on account of Taxes for each of the taxation
periods ending on or before the date on which the Offeror takes
up and pays for the Common Shares under the Offer. With respect
to any taxation period up to and including the date on which
the Offeror takes up and pays for Common Shares under the Offer
for which Tax Returns have not yet been filed or for which
Taxes are not yet due and payable, each of the Company and its
Subsidiaries has only incurred liabilities for Taxes in the
ordinary course of its business consistent with past practice.
Except as disclosed in writing to the Offeror or Offeror's
Parent prior to the date of this Agreement, there are no
outstanding waivers of any limitation periods or agreements
providing for an extension of time for the filing of any tax
return or the payment of any Taxes. No deficiencies exist or
have been asserted with respect to Taxes of the Company or any
of its Subsidiaries, neither the Company nor any Subsidiary of
the Company is a party to any action or proceeding or
assessment or collection of Taxes, nor has any such event been
asserted or threatened against the Company or any of its
Subsidiaries or any of their respective assets and to the best
of the Company's knowledge, as of the date of this Agreement
none of the Company nor any of its Subsidiaries is subject to
any assessments, penalties or levies with respect to Taxes that
will result in any liability on its part in respect of any
period ending on or before the date of this Agreement in excess
of the amount provided for in the financial statements referred
to above. Except as disclosed in writing to the Offeror or
Offeror's Parent prior to the date of this Agreement, to the
knowledge of the Company and its Subsidiaries, no audit,
investigation, assessment or reassessment of Taxes is
reasonably anticipated or imminent.
(ii) Each of the Company and the Subsidiaries has duly and timely
withheld all Taxes and other amounts required by law to be
withheld by it (including Taxes and other amounts required to
be withheld by it in respect of any amount paid or credited or
deemed to be paid or credited by it to or for the account or
benefit of any person, including any employees, officers or
directors and any non-resident person), and has duly and timely
remitted to the appropriate governmental authority such Taxes
and other amounts required by law to be remitted by it.
(iii) Each of the Company and the Subsidiaries has duly and timely
collected all amounts on account of any sales or transfer
taxes, including goods and services, harmonized sales and
local, state, provincial or territorial sales taxes, required
by law to be collected by it and has duly and timely remitted
to the appropriate governmental authority any such amounts
required by law to be remitted by it.
(m) Environmental Laws. Except as disclosed in writing to the Offeror or
Offeror's Parent prior to the date of this Agreement:
(i) the operations of the Company and its Subsidiaries are in
compliance with all applicable environmental laws and
environmental permits in Canada and in other applicable foreign
jurisdictions with environmental regulatory jurisdiction over
the Company or any of its Subsidiaries except where the failure
to be in compliance would not have a Material Adverse effect on
the Company; and
(ii) none of the Company nor any of its Subsidiaries is, with
respect to its businesses and operations, aware of or subject
to any written notice, written notice of default, order,
summons, or notice of judgment or commencement of proceedings
of any nature related to any material breach, liability or
remedial action (or alleged material breach, liability or
remedial action) arising under environmental laws and
environmental permits that could reasonably be expected to be,
individually nor in the aggregate, Materially Adverse to the
Company, and none of the Company or its Subsidiaries have (with
respect to such businesses and operations) at any time given
any written undertakings with respect to remedying any breach
of, or liability under, environmental laws that have not been
duly performed, which breach or liability could reasonably be
expected to be, individually or in the aggregate, Materially
Adverse to the Company.
(n) Books and Records. The corporate records and minute books of the
Company and its Subsidiaries have been maintained substantially in
accordance with all applicable laws and are complete and accurate in
all material respects.
(o) Insurance. Policies of insurance in force as of the date hereof,
naming the Company and its Subsidiaries as insureds adequately cover
all risk reasonably and prudently foreseeable in the operation and
conduct of the businesses of the Company and its Subsidiaries in such
amounts and against such risks as are customarily carried and insured
against by owners of comparable businesses, properties and assets. All
such policies of insurance are in full force and effect and none of
the Company or any of the Subsidiaries is in default, as to the
payment of premiums or otherwise, under the terms of any such policy.
The Company has previously disclosed to Offeror's Parent in writing a
complete list of all policies of insurance which the Company or any of
the Subsidiaries maintain and the particulars of such policies,
including the name of the insurer, the risk insured against, the
amount of coverage and the amount of any deductible and a summary of
all claims under each such policy for the past three years.
(p) Employment Agreements. Except as set forth in the Company Disclosure
Schedule, the Company is not a party to any written or oral
employment, service or consulting agreement specifically providing for
severance or termination payments to any officer of the Company.
(q) Non-Arm's Length Transactions. Except as set forth in the Company
Disclosure Schedule, no director or officer, former director or
officer, shareholder or employee of, or any other person not dealing
at arm's length (within the meaning of the Income Tax Act (Canada))
with, the Company or any Subsidiary or any affiliate of the foregoing
is engaged in any transaction or arrangement with or is a party to a
contract with, or has any indebtedness, liability or obligation to,
the Company or any of the Subsidiaries except for employment
arrangements with employees, the terms of which have been disclosed to
Offeror's Parent.
(r) Pension and Employee Benefits. Except as disclosed to the Offeror or
Offeror's Parent in writing prior to the date of this Agreement,
neither the Company nor any Subsidiary of the Company has, or is
subject to, any present or future obligation or liability under, any
pension plan, deferred compensation plan, retirement income plan,
Option or stock purchase plan, profit sharing plan, bonus plan or
policy, employee group insurance plan, program policy or practice,
formal or informal, with respect to its employees.
(s) Material Agreements. Other than:
(i) as referred to in the Company's Disclosure Documents;
(ii) agreements, copies of which were in the data or information
rooms maintained by the Company made available to Offeror's
Parent; or
(iii) as set forth in a list provided to Offeror's Parent;
there are no agreements material to the conduct of the Company's
business. Except as disclosed in writing to Offeror's Parent or the
Offeror, such agreements are all in full force and effect unamended
and there are no outstanding material defaults or violations under any
such agreements on the part of the Company or any of the Subsidiaries
or, to the Company's knowledge, on the part of any other party to such
agreements and no approval or consent of any person is needed in order
that such agreements continue in full force and effect following
consummation of the transactions contemplated hereby.
(t) Indebtedness. The Company, together with its Subsidiaries on a
consolidated basis, does not have any Indebtedness (excluding
liabilities incurred in the ordinary course of business).
(u) Liens, etc. Except as disclosed in writing to Offeror's Parent prior
to the date hereof, there are no pledges, liens, charges, security
interests, leases, title retention agreements, mortgages, restrictions
or encumbrances of any kind or character whatsoever on any material
asset of the Company or its Subsidiaries.
(v) Intellectual Property.
(i) The Company has previously disclosed to Offeror's Parent a
true, correct and complete list (including, to the extent
applicable, registration, application or file numbers) of all
patents, registered copyrights, registered trademarks, trade
names, and registered service marks owned by the Company or any
Subsidiary of the Company, including all domain names that are
registered in the name of the Company or any Subsidiary of the
Company and that are currently used in connection with the
Company's business as it is now conducted, and all
registrations of or applications for registration of any of the
foregoing, including any additions thereto or extensions,
continuations, renewals or divisions thereof (setting forth the
registration, issue or serial number and a description of the
same) (collectively, together with all trade dress, trade
secrets, processes, formulae, designs, know-how and other
intellectual property rights that are so owned, the "Owned
Intellectual Property"). The Company has previously disclosed
to Offeror's Parent true, correct and complete copies of each
registration or application for registration covering any of
the Owned Intellectual Property which is registered with, or in
respect of which any application for registration has been
filed with, any governmental entity.
(ii) All patents, copyrights, trademarks, trade names, service
marks, domain names, trade dress, trade secrets, processes,
formulae, designs, know-how and other intellectual property
rights held by the Company or any Subsidiary of the Company
under a license or similar arrangement (collectively, the
"Licensed Intellectual Property" and, together with the Owned
Intellectual Property, the "Intellectual Property"), together
with the Owned Intellectual Property, includes all of the
intellectual property rights owned or licensed by the Company
and its Subsidiaries that are reasonably necessary to conduct
the Company's business as it is now conducted. The Company,
directly or through its Subsidiaries, has good, marketable and
exclusive title to, and the valid and enforceable power and
unqualified right to use, the Owned Intellectual Property free
and clear of all liens and encumbrances and no person or entity
other than the Company and its Subsidiaries has any material
right or interest of any kind or nature in or with respect to
the Owned Intellectual Property or any portion thereof or any
material rights to use, market or exploit the Owned
Intellectual Property or any portion thereof, except for rights
that have been granted by the Company or any of its
Subsidiaries to its customers as part of sales in the ordinary
course of business or as disclosed in the Company Disclosure
Schedule.
(iii) Except as set forth the Company Disclosure Schedule, neither
the existence nor the sale, license, lease, transfer, use,
reproduction, distribution, modification or other exploitation
by the Company or any Subsidiary of the Company of any
Intellectual Property, as is reasonably necessary to conduct
the Company's business as it is currently conducted does or did
(i) infringe on any patent, trademark, copyright or other right
of any other person or (ii) constitute a misuse or
misappropriation of any trade secret, know-how process,
proprietary information or other right of any other person
(each an "Infringement"). Since January 1, 2000, except (i) as
set forth on the Company Disclosure Schedule, (ii) for
agreements previously delivered to Purchaser with a claiming
party pursuant to which such party has released or otherwise
agreed to settle such claim of Infringement or (iii)
settlements of claims of Infringements which were not
individually or in the aggregate material, neither the Company
nor any of its Subsidiaries has received in writing any
complaint, assertion, threat or allegation or otherwise has
notice of any lawsuit, claim, demand, proceeding or
investigation involving matters of Infringement or is aware of
any facts or circumstances that could reasonably be expected to
give rise to any such lawsuit, claim, demand, proceeding or
investigation. Except as required under any license agreements
or similar agreements to which the Company or any Subsidiary of
the Company is bound which (i) were placed in the Data Room on
or prior to Thursday, August 21, 2003 or (ii) have previously
been delivered by the Company to the Offeror's Parent, there
are no restrictions on the ability of the Company or any
Subsidiary of the Company to commercially exploit any Owned
Intellectual Property or any Licensed Intellectual Property.
(iv) Except for agreements which (i) were placed in the Data Room on
or prior to Thursday, August 21, 2003 or (ii) previously
delivered to Offeror's Parent, neither the Company nor any
Subsidiary of the Company has any obligation to indemnify any
third party for any claims of any infringement,
misappropriation or violation relating to any Intellectual
Property.
(v) Except for agreements which (i) were placed in the Data Room on
or prior to Thursday, August 21, 2003 or (ii) have previously
been delivered by the Company to the Offeror's Parent, there
are no settlement agreements, consents, judgments, orders,
forbearance to xxx or similar obligations limiting or
restricting any rights of the Company or any Subsidiary of the
Company in and to any Intellectual Property.
(vi) Each of the Company and the Subsidiaries of the Company is
using or holding Intellectual Property to which it is not the
sole beneficial and registered owner with the consent of or a
licence from the owner of such Intellectual Property, all of
which such consents or licences are in full force and effect
and no material default exists on the part of the Company or
any of the Subsidiaries of the Company or, to the knowledge of
the Company or any of the Subsidiaries of the Company, on the
part of any of the parties thereto.
(v) Inventory. All inventories of the Company and its Subsidiaries are
valued on the books of the Company and its Subsidiaries at the lower
of cost, using the first in, first out method, or net realizable value
in accordance with GAAP consistently applied. Inventories of finished
goods are saleable and all other inventories are merchantable or
usable and all inventories are in quantities usable or saleable in the
ordinary course of business. The inventory levels have been maintained
at the amounts required for the operations of the Company and its
Subsidiaries as previously conducted and such inventory levels are
adequate for such operations.
(w) Major Suppliers and Customers. Other than as a result of the
announcement of the Offer or the anticipated completion of the Offer,
to the Company's knowledge, no material supplier or customer has any
intention to change its relationship or the terms upon which it
conducts business with the Company or any of its Subsidiaries.
