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TARGETCO ACQUISITION AGREEMENT ENTERED INTO THIS 3RD DAY OF AUGUST, 1998.
BETWEEN:
FUTURELINK DISTRIBUTION CORP. (A COLORADO CORPORATION)
(hereinafter called "FutureLink USA")
- and -
FUTURELINK DISTRIBUTION CORP. (AN ALBERTA CORPORATION)
(hereinafter called "FutureLink Alberta")
RECITALS
WHEREAS:
1. The Board of directors of FutureLink Alberta wishes to encourage
FutureLink USA to make a take-over bid to the shareholders of
FutureLink Alberta by offering to purchase all of the outstanding
Class "A" Common Voting Shares.
2. The board of directors of FutureLink Alberta has determined that it
would be in the best interest of FutureLink Alberta and its
shareholders to recommend acceptance of the FutureLink USA offer to
the shareholders of FutureLink Alberta to cooperate with FutureLink
USA and take all reasonable action to support the FutureLink USA
offer.
3. The board of directors of FutureLink Alberta has determined that it
would be in the best interest of FutureLink Alberta and its
shareholders to enter into this Agreement; and
4. FutureLink USA is willing to make an offer subject to the terms and
conditions of this Agreement.
NOW THEREFORE IN CONSIDERATION of the mutual covenants hereinafter set out, the
parties hereby agree as follows:
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ARTICLE I
THE OFFER
1.1 THE OFFER
(a) Subject to the terms and conditions of this Agreement, FutureLink
USA agrees to mail on or about August 3, 1998 or so soon as the
documentation is available to the holders of Class "A" Common Voting
Shares of FutureLink Alberta an offer to purchase all of the
outstanding Class "A" Common Voting Shares of FutureLink Alberta, by
the exchange of one (1) FutureLink USA Common Share for each issued
and outstanding FutureLink Alberta Class A Common Voting Share
subject to the terms and conditions set out in the Offer marked as
Schedule "A" to this Agreement (as such Offer may be amended from
time to time as permitted under this Agreement. FutureLink USA
expressly reserves the right to modify the terms of the Offer except
that, without the prior written consent of FutureLink Alberta,
FutureLink USA shall not reduce the Offer price; change the form of
consideration payable under the Offer; or add to, amend or change
any of the Offer terms in any manner adverse to the holders of
Shares.
(b) The Offering shall expire approximately 21 calendar days after it is
commenced (or, if such date is not a business day, on the next
following business day), provided that the Offer may be extended, at
the sole discretion of FutureLink USA, if the conditions thereto set
forth in Schedule "A" hereto are not satisfied on the expiry day of
the Offer. Subject to the satisfaction or waiver of the conditions
set forth in Schedule "A" hereto, FutureLink USA shall within the
time periods required by law take up and pay for all Class "A"
Common Voting Shares validly tendered (and not properly withdraw)
pursuant to the Offer. FutureLink USA shall use its reasonable
commercial efforts to consummate the Offer, subject only to the
terms and conditions hereof.
1.2 FUTURELINK ALBERTA APPROVAL OF THE OFFER
(a) FutureLink Alberta represents that its board of directors, upon
consultation with its advisors, has determined unanimously that:
(i) the Offer is fair to and is in the best interest of FutureLink
Alberta and its Shareholders
(ii) The board of directors will recommend that FutureLink Alberta
Shareholders accept the Offer; and
(iii) this Agreement is in the best interests of FutureLink Alberta and
the Shareholders;
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(b) FutureLink Alberta represents that its board of directors has received an
opinion from CST Financial Services Inc., that the Offer is fair from a
financial point of view to the Shareholders.
1.3 POST OFFER COVENANTS
If FutureLink USA takes up and pays for Class "A" Common Voting Shares
pursuant to the Offer, FutureLink USA and FutureLink Alberta agree to use
all reasonable commercial efforts to enable FutureLink USA to acquire the
balance of the Class "A" Common Voting Shares as soon as practicable after
completion of the Offer by way of compulsory acquisition, arrangement,
amalgamation or other type of acquisition transaction carried out for a
consideration at least of equal value of the consideration paid in the
Offer.
1.4 OUTSTANDING STOCK OPTIONS
FutureLink Alberta agrees and represents that its board of directors has
determined unanimously to use its and their respective best efforts to
encourage and facilitate all persons holding options to purchase Class "A"
Common Voting Shares pursuant to FutureLink Alberta's employee stock
option plan and other compensation arrangements or otherwise, to exercise
their option prior to the expiry of the Offer and to tender all Class "A"
Common Voting Shares issued in connection therewith to the Offer.
FutureLink Alberta further agrees and represents that its board of
directors shall authorize and direct FutureLink Alberta to cause the
accelerated vesting of all stock option entitlements prior to the Expiry
Date.
ARTICLE II
COVENANTS OF FUTURELINK ALBERTA
2.1 ORDINARY COURSE OF BUSINESS
FutureLink Alberta covenants and agrees that;
(a) FutureLink Alberta shall conduct its business only, and not
take any action except in, the usual, ordinary and regular
course of business and consistent with past practice;
(b) FutureLink Alberta shall not directly or indirectly do or
permit to occur any of the following:
(i) issue, sell pledge, lease, dispose of, encumber or agree
to issue, sell, pledge, lease dispose of or encumber:
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(a) Any additional shares of, or any options,
warrants, calls, conversion privileges or rights
of any kind to acquire any shares of, any capital
stock of FutureLink Alberta (other than pursuant
to the exercise, or
(b) except with the usual, ordinary and regular course
of business and consistent with past practice, any
assets of FutureLink Alberta.
(ii) amend or propose to amend its articles or by-laws;
(iii) split, combine or reclassify any outstanding Class "A"
Common Voting Shares, or declare, set aside or pay any
dividend or other distribution payable in cash, stock,
property or otherwise with respect to the Class "A"
Common Voting Shares;
(iv) redeem, purchase or offer to purchase any Class "A"
Common Voting Shares or other securities of FutureLink
Alberta;
(v) reorganize, amalgamate or merge FutureLink Alberta
with any other person, corporation, partnership or
other business organization whatsoever;
(vi) acquire or agree to acquire (by merger, amalgamation,
acquisition of stock or assets or otherwise) any
persona, corporation, partnership, joint venture or
other business organization or division or acquire or
agree to acquire any material assets;
(vii) except in the usual, ordinary and regular course of
business and consistent with past practice, satisfy
any material claims or liabilities except such as have
been reserved against in FutureLink Alberta's
financial statements delivered to FutureLink USA,
relinquish any material contractual rights or enter
into any interest rate, currency or commodity swaps,
xxxxxx or other similar financial instruments; or
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(viii) incur or commit to incur any indebtedness for borrowed
money or issue any debt securities except for the
borrowing of working capital in the ordinary course of
business and consistent with past practice not in
excess of $500,000 other than renewals of existing
credit facilities;
(c) FutureLink Alberta shall cooperate with FutureLink USA in
structuring the acquisition by FutureLink USA of FutureLink Alberta
in a tax efficient manner provided that no such cooperation shall be
required where such structuring shall have any adverse effect on
FutureLink Alberta.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FUTURELINK ALBERTA
3.1 REPRESENTATIONS
FutureLink Alberta hereby represents to FutureLink USA that the
information as it relates to FutureLink Alberta as set forth in Schedule
"B" to this Agreement are accurate and FutureLink Alberta hereby warrants
the accuracy of the representations contained therein (and acknowledge
that FutureLink USA is relying upon those representations and warranties
in connection with entering into this Agreement).
3.1 INVESTIGATION
Any investigation by FutureLink USA and its advisors shall not mitigate,
diminish or affect the representations and warranties of FutureLink
Alberta provided pursuant to this Agreement. Where the provisions of
Schedule "B" or elsewhere in this Agreement refer to disclosure in
writing, such disclosure shall be made expressly in response to the
applicable provision and shall be signed by a senior officer of FutureLink
Alberta.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FUTURELINK USA
4.1 REPRESENTATIONS
FutureLink USA hereby represents and warrants to FutureLink Alberta that
the information as it relates to FutureLink USA as set forth in The
Circular attached as Schedule B to this Agreement are accurate and
FutureLink USA hereby warrants the accuracy of the representations
contained
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therein (and acknowledges that FutureLink Alberta is relying upon such
representations and warranties in connection with the entering into of
this Agreement).
ARTICLE V
MUTUAL COVENANTS
5.1 FURTHER ASSURANCES
Subject to the terms and conditions herein, FutureLink USA and FutureLink
Alberta agree to use their respective commercially reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and
regulations, to consummate the transactions contemplated by this Agreement
and the Offer. FutureLink Alberta and FutureLink USA will use their
commercially reasonable efforts (i) to obtain all necessary waivers,
consents and approvals from other parties to material loan agreements,
leases, and other contracts or agreements (including in particular but
without limitation, the agreement of any persons as may be required
pursuant to any agreement, arrangement or understanding relating to
FutureLink Alberta's operations), (ii) to obtain all necessary consents,
approvals and authorizations as are required to be obtained under any
federal, provincial or foreign law or regulations with respect to this
Agreement or the Offer, (iii) to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the
parties to consummate the transactions contemplated hereby or by the
Offer, and (iv) to fulfil all conditions and satisfy all provisions of
this Agreement and the Offer.
ARTICLE VI
TERMINATION
6.1 TERMINATION
This Agreement may be terminated at any time prior to the Effective Time:
(a) by mutual written consent of FutureLink USA and FutureLink Alberta;
(b) by either FutureLink USA or FutureLink Alberta after September 30,
1998 if FutureLink USA has not purchased Class "A" Common Voting
Shares pursuant to the Offer;
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(c) by either FutureLink USA or FutureLink Alberta, if the conditions of
the Offer has not been satisfied or waived on the Expiry Date.
In the event of the termination of this Agreement as provided in this
Section 6.1, (i) this Agreement shall forthwith become void and there
shall be no liability on the part of FutureLink USA or FutureLink Alberta
ARTICLE VII
MISCELLANEOUS
7.1 ENTIRE AGREEMENT
This Agreement and the documents referred to herein constitute the entire
agreement between the parties with respect to the subject matter hereof
and supersede all prior agreements, arrangements or understandings with
respect thereto.
7.2 COUNTERPARTS
This Agreement may be executed in any number of counterparts and each such
counterpart shall be deemed to be an original instrument but all such
counterparts together shall constitute but one Agreement.
7.3 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
effect, 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.
7.4 CHOICE OF LAW
This Agreement shall be governed by, construed and in accordance with the
laws of the Province of Alberta.
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7.5 REMEDIES
The parties hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to remedy or prevent non-compliance or breaches with the terms
of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the Province of Alberta having jurisdiction;
provided that such remedies shall be in addition to, and not in
substitution for, any other remedy to which the parties may be entitled at
law or in equity.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to
be executed on their behalf by their officers thereunto duly authorized as
of the date first written above.
FUTURELINK DISTRIBUTION CORP.
(a Colorado Corporation)
PER:
-----------------------------------
Xxxxxxx Xxxxx, President
FUTURELINK DISTRIBUTION CORP.
(an Alberta Corporation)
PER:
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Xxxxxxx Xxxxx, President
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