EXHIBIT 2.1
SHARE PURCHASE AGREEMENT
by and among
CALAMP CORP.,
4308093 CANADA, INC.,
DATARADIO INC.
and
THE SHAREHOLDERS THEREOF
Dated as of May 9, 2006
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1
1.1. Defined Terms 1
1.2. Terms Defined Elsewhere 5
ARTICLE II AGREEMENT TO PURCHASE AND SELL SHARES 6
2.1. Agreement to Purchase and Sell Shares 6
2.2. Distribution of the Consideration 7
2.3. Purchase Price Adjustments 7
2.4. Tax Withholding 9
2.5. Payment of Closing Debt Outstanding at Closing 9
ARTICLE III CLOSING; DELIVERIES 9
3.1. The Closing 9
3.2. Deliveries by Dataradio and the Shareholders at the Closing 9
3.3. Deliveries by Acquisition Sub and CalAmp at the Closing 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF DATARADIO AND THE SHAREHOLDERS11
4.1. Organization, Good Standing and Qualification 11
4.2. Capitalization 11
4.3. Subsidiaries 12
4.4. Due Authorization 12
4.5. Consents and Approvals 13
4.6. Compliance with Other Instruments 13
4.7. Financial Statements 14
4.8. No Undisclosed Liabilities 14
4.9. Certain Actions 15
4.10. Activities Since Interim Date 15
4.11. Title to Properties and Assets 16
4.12. Material Contracts and Obligations 16
4.13. Litigation 17
4.14. Compliance with Law 17
4.15. Taxes 18
4.16. Intellectual Property 22
4.17. Environmental Matters 24
4.18. Employee Benefits 26
4.19. Employment and Labor Matters 28
4.20. Permits 30
4.21. Interested Party Transactions 30
4.22. Insurance 30
4.23. Certain Business Practices 30
4.24. Books and Records 31
4.25. Accounts Receivable; Inventory 31
4.26. Customers; Suppliers 31
4.27. No Brokers 32
4.28. Bank Accounts 32
4.29. HSR Act; Competition Act 32
4.30. Investment Canada Act (Canada) 32
4.31. Title to Shares 32
4.32. Residence of Shareholders 33
4.33. Material Misstatements or Omissions 33
4.34. Warranties 33
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ACQUISITION SUB 33
5.1. Organization 33
5.2. Due Authorization 34
5.3. No Conflicts 34
5.4. Consents and Approvals 34
5.5. Litigation 34
5.6. No Brokers 35
ARTICLE VI CERTAIN COVENANTS 35
6.1. Conduct of the Business 35
6.2. Investigation by CalAmp 36
6.3. Further Assurances 37
6.4. Notification of Certain Matters 37
6.5. Employee Matters 37
6.6. Public Announcements; Confidentiality 38
6.7. Shareholder Release 38
6.8. Tax Audits and Reassessments 39
6.9. Other Proposals 39
6.10. Post Closing Net Worth 39
6.11.Dataradio Employee Bonus Payments 40
ARTICLE VII CONDITIONS TO CLOSING 40
7.1. Conditions to Each Party's Obligations 40
7.2. Conditions to the Obligation of Dataradio and the Shareholders 40
7.3. Conditions to the Obligation of Acquisition Sub 41
ARTICLE VIII. TERMINATION 42
8.1. Termination 42
8.2. Effect of Termination 43
ARTICLE IX. INDEMNIFICATION 44
9.1. Survival of Representations 44
9.2. Indemnification 45
9.3. Notice of Claims 46
9.4. Third Person Claims 47
9.5. Limitation on Indemnity 48
9.6. Payment out of Escrow Account 48
9.7. Remedies 48
9.8. Contract Revenues 49
ARTICLE X. MISCELLANEOUS 49
10.1. Binding Effect; Assignment 49
10.2. Notices 49
10.3. Choice of Law 50
10.4. Entire Agreement; Amendments and Waivers 51
10.5. Counterparts 51
10.6. Severability 51
10.7. Headings 51
10.8. Schedules 51
10.9. No Third Party Beneficiaries 51
10.10.Specific Performance 51
10.11. No Strict Construction 51
10.12. Expenses 52
10.13. Shareholders' Representative 52
EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Form of Non-Competition Agreement
Exhibit C Form of Opinion of Counsel to Dataradio
SCHEDULES
Schedule I Schedule of Shareholders
Schedule 2.3 Closing Balance Sheet Accounting Principles
Schedule 2.5 Closing Debt
Schedule 4.2 Capitalization
Schedule 4.3 Subsidiaries
Schedule 4.5 Consents and Approvals
Schedule 4.8 No Undisclosed Liabilities
Schedule 4.9 Certain Actions Since the Interim Date
Schedule 4.10 Severance or Change of Control Agreements
Schedule 4.11 Title to Properties and Assets
Schedule 4.12 Material Contracts
Schedule 4.13 Litigation
Schedule 4.15 Taxes
Schedule 4.16 Intellectual Property
Schedule 4.17 Environmental Matters
Schedule 4.18 Employee Benefits
Schedule 4.19 Labor Matters
Schedule 4.20 Permits
Schedule 4.21 Interested Party Transactions
Schedule 4.22 Insurance
Schedule 4.26 Customers; Suppliers
Schedule 4.27 No Brokers
Schedule 4.28 Bank Accounts
Schedule 4.32 Residence of Shareholders
Schedule 4.34 Warranties
Schedule 7.3(i)Liens
SHARE PURCHASE AGREEMENT
This Share Purchase Agreement (the "Agreement") is entered into as of
May 9, 2006 by and among CalAmp Corp., a Delaware corporation ("CalAmp"),
4308093 Canada, Inc., a corporation incorporated under the laws of Canada and
a wholly-owned subsidiary of CalAmp ("Acquisition Sub"), Dataradio Inc., a
corporation incorporated under the laws of Canada ("Dataradio") and the
shareholders of Dataradio (each a "Shareholder" and collectively, the
"Shareholders").
R E C I T A L S
WHEREAS, CalAmp desires to acquire Dataradio and to effect the
acquisition through Acquisition Sub;
WHEREAS, Acquisition Sub desires to purchase from the Shareholders, and
the Shareholders desire to sell to Acquisition Sub, all of Dataradio's
outstanding common shares (the "Shares"), in exchange for cash consideration
as provided below; and
WHEREAS, the Shares to be sold to Acquisition Sub by the Shareholders
are listed on Schedule I attached hereto and represent 100% of Dataradio's
fully diluted equity securities.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. As used herein, the terms below shall have the
following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
"Act" means the Securities Act of 1933, as amended, of the United
States.
"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by or is under common control
with such Person.
"Ancillary Agreements" means the Escrow Agreement and the Non-
Competition Agreements substantially in the forms attached hereto as Exhibits
A and B, respectively.
"Business" means Dataradio's business of designing, manufacturing,
marketing and selling wireless data products for fixed and mobile
applications.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in Los Angeles, California or Montreal, Quebec are
authorized or required by law to close.
"Canadian GAAP" means generally accepted accounting principles as stated
in the Handbook of the Canadian Institute of Chartered Accountants.
"Closing Debt" means (a) the outstanding long-term Debt and the
outstanding short-term Debt of Dataradio as set forth on Schedule 2.5 and (b)
all Transaction Fees of Dataradio and the Shareholders.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Competition Act (Canada)" means the Canadian Competition Act, R.S.C.
1985, c. C34, as amended.
"Consents" means any and all consents, approvals, authorizations or
waivers of any public, governmental or regulatory body or authority or from
parties to Material Contracts (as defined below) that are (a)required for the
consummation of the transactions contemplated by this Agreement or (b)
necessary in order that Dataradio can conduct the Business after the Closing
Date substantially in the same manner as the Business was conducted by
Dataradio before the Closing Date.
"Court Order" means any judgment, decision, consent decree, injunction,
ruling or order of any national, federal, state, provincial or local court or
governmental agency, department or authority that is binding on any Person or
its property under applicable Regulations.
"Dataradio Accountants" means Ernst & Young LLP.
"Debt" means (a) any indebtedness of Dataradio or any of its
Subsidiaries, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or other similar instruments or letters
of credit (or reimbursement agreements in respect thereof) or banker's
acceptances, (b) any balance deferred and unpaid of the purchase price of any
property, except any such balance that constitutes an accrued expense or
account payable, in each case referred to in this clause (b) incurred in the
Ordinary Course of Business, (c) all indebtedness of others secured by a lien
on any asset of Dataradio or any of its Subsidiaries (whether or not such
indebtedness is assumed by Dataradio) and (d) to the extent not otherwise
included by clauses (a), (b) and (c), any guaranty by Dataradio or any of its
Subsidiaries of any indebtedness of any other Person.
"Default" means (a) any actual breach or default, (b) the occurrence of
an event that with the passage of time or the giving of notice or both would
constitute a breach or default or (c) the occurrence of an event that with or
without the passage of time or the giving of notice or both would give rise to
a right of termination, renegotiation or acceleration.
"Encumbrance" means any prior claim, claim, lien, pledge, hypothec,
option, charge, easement, security interest, deed of trust, mortgage,
conditional sales agreement, encumbrance or other right of third parties,
whether voluntarily incurred or arising by operation of law, and includes,
without limitation, any agreement to give any of the foregoing in the future,
and any contingent sale or other title retention agreement or lease in the
nature thereof.
"Escrow Agreement" means that certain escrow agreement to be entered
into at the Closing by and between the Escrow Agent, the Shareholders'
Representative, Acquisition Sub and CalAmp substantially in the form attached
hereto as Exhibit B, with such changes as reasonably requested by the Escrow
Agent.
"Executives" means Xxxxxx Xxxxx and Xxxxxx Xxxxxxx.
"Financial Statements" means (a) Dataradio's audited balance sheets
dated as of July 31, 2004 and July 31, 2005, (b) the related statements of
operations, changes in shareholders' equity and cash flow for each of the
years ended July 31, 2004 and July 31, 2005 and (c) the Interim Financial
Statements (as defined below).
"Fiscal Year" means a twelve month period commencing on August 1 of each
calendar year.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Interim Date" means January 31, 2006.
"Interim Financial Statements" means Dataradio's balance sheet and the
related statement of operations, each dated as of the Interim Date.
"Inventory" means all inventory, wherever located, used or useable by
Dataradio and its Subsidiaries, including inventory, merchandise, goods and
other personal property that are held by or on behalf of Dataradio or any of
its Subsidiaries for sale or lease or are furnished or are to be furnished
under a service contract, or that constitute raw materials, work in process,
finished goods, returned goods, spare parts or materials or supplies of any
kind, nature or description used or consumed or to be used or consumed by
Dataradio or its Subsidiaries or in the processing, production, packaging,
promotion, delivery or shipping of the same.
"Investment Canada Act (Canada)" means the Canadian Investment Canada
Act, R.S., 1985, c. 28 (1st Supp.), as amended.
"ITA" means the Income Tax Act (Canada) and the regulations thereunder.
"Knowledge" of Dataradio means the knowledge of Xxxxxx Xxxxx, Xxxxxx
Xxxxxxx, Xxxx Xxxx, Xxxxxx Xxxxxxxxx and Xxxxxxx Xxxxxxx, after a reasonable
investigation of the surrounding circumstances.
"Liabilities" means any direct or indirect cost, damage, liability,
indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or
endorsement or other responsibility of or by any Person of any type, known or
unknown, and whether accrued, absolute, contingent, matured, unmatured or
other.
"Material Adverse Effect" or "Material Adverse Change" will be deemed to
occur if any event, violation, inaccuracy, circumstance or other matter has,
or could reasonably be expected to have or give rise to, a material adverse
effect or material adverse change on (a) the condition (financial or
otherwise), Business, results of operations, assets, prospects, Liabilities,
capitalization, operations or financial performance of Dataradio or (b) the
ability of Dataradio to consummate the transactions contemplated by this
Agreement or to perform any of its obligations under this Agreement.
"Non-Competition Agreements" means those certain Non-Competition
Agreements to be entered into at the Closing, by and among CalAmp, Dataradio
and each of the Executives, substantially in the form attached hereto as
Exhibit C.
"Ordinary Course of Business" or "Ordinary Course" or any similar phrase
means the ordinary course of the Business, consistent with the past practice
of Dataradio.
"Permits" with respect to any Person means all licenses, permits,
franchises, approvals, authorizations, certificates, registrations, decrees,
consents or orders of, or filings with, or other similar authorizations from,
any governmental authority, whether national, federal, provincial, state or
local in the United States or Canada, or any other Person, necessary for the
past, present or anticipated conduct or occupation of, or relating to the
operation of the business of such Person or ownership of its assets.
"Permitted Encumbrances" means (a) non-consensual liens for taxes,
assessments and other governmental charges not yet due and payable and
(b) statutory, mechanics', laborers' and materialmen liens arising in the
Ordinary Course of Business for sums not yet due.
"Person" means any person or entity, whether an individual, trustee,
corporation, partnership, limited partnership, limited liability company,
trust, unincorporated organization, business association, firm, joint venture,
governmental agency or authority.
"Regulations" means any laws, statutes, codes, ordinances, regulations,
municipal by-laws, principle of common law, rules, notice requirements, court
decisions, agency guidelines, principles of law and orders, judgments, writs,
injunctions, rulings, decrees, directions, instructions, penalties, sanctions
and awards of any federal, national, provincial, state or local government in
the United States or Canada, and including, without limitation, environmental
laws, energy, public utility, health codes, occupational safety and health
regulations and laws respecting employment practices, employee documentation,
terms and conditions of employment and wages and hours, and all policies,
practices and guidelines of any governmental authority which, although not
actually having the force of law, are considered by such governmental
authority as requiring compliance as if having the force of law.
"Representative" means, with respect to any Person, any officer,
director, principal, attorney, agent, employee or other representative of such
Person.
"SEC" means the United States Securities and Exchange Commission.
"Shareholder Indemnitors" means Famizav Holdings, Inc., Famiroul
Holdings Inc. and Gestion Pernor Inc.
"Subsidiary" means (a) any corporation in an unbroken chain of
corporations if each of the corporations other than the last corporation in
the unbroken chain then owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain, (b) any partnership in which a Person is a general partner or
(c) any limited liability company, partnership or other entity in which a
Person possesses a 50% or greater interest in the total capital or total
income of such limited liability company, partnership or other entity.
"Target Closing Date" means May 16, 2006.
"Week Day" means a day other than a Saturday or Sunday, regardless of
whether or not commercial banks in Los Angeles, California or Montreal, Quebec
are authorized or required by law to close.
"Workers' Compensation Liability" means any and all Damages incurred or
payable by Dataradio or its Subsidiaries in connection with (a) any and all
workers' compensation claims made against Dataradio or its Subsidiaries with
respect to facts or circumstances arising prior to the Closing Date and (b)
any failure by Dataradio or its Subsidiaries to maintain workers' compensation
insurance prior to the Closing Date.
1.2 Terms Defined Elsewhere. The following is a list of additional
terms used in this Agreement and a reference to the Section hereof in which
such term is defined:
Defined Term Section Page
AAA Section 9.3(b) 46
Acquisition Sub Indemnified Parties Section 9.2(a) 45
Acquisition Sub Preamble 1
Agreement Preamble 1
Alternative Transaction Section 6.8 39
Arbitrator Section 9.3(b) 46
Auditor Section 2.3(c) 8
CalAmp Termination Fee Section 8.2(b) 44
CalAmp Preamble 1
CERCLA Section 4.17(a) 24
Claim Notice Section 9.3(a) 46
Closing Balance Sheet Section 2.3(a) 7
Closing Cash Section 2.3(a) 7
Closing Date Section 3.1 9
Closing Statement Section 2.3(a) 7
Closing Section 3.1 9
Confidentiality Agreement Section 6.6 38
Consideration Section 2.1 6
Damages Section 9.2(a) 45
Dataradio Group Section 6.8 39
Dataradio Intellectual Property Section 4.16(b) 22
Dataradio Preamble 1
Disposal Section 4.17(a) 24
Dispute Notice Section 9.3(b) 46
Dispute Period Section 2.3(c) 8
Employee Plans Section 4.18(a) 26
Environment Section 4.17(a) 24
Environmental Laws Section 4.17(a) 24
Environmental Liabilities Section 4.17(a) 25
ERISA Affiliate Section 4.18(a) 26
Escrow Agent Section 2.2 7
Escrow Amount Section 2.2 7
Final Closing Cash Section 2.3(e) 9
Final Net Book Value Section 2.3(d) 8
Hazardous Substance Section 4.17(a) 25
Indemnified Party Section 9.3(a) 46
Indemnitor Section 9.3(a) 46
Intellectual Property Section 4.16(a) 22
ITCs Section 4.15(y) 21
Licenses Section 4.16(f) 24
Material Contracts Section 4.12(a) 17
Minimum Liquid Net Worth Section 6.10 39
Net Book Value Section 2.3(a) 7
Outside Date Section 8.1(b) 43
Proceeding Section 4.13 17
Purchase Price Adjustments Section 2.3(e) 9
Real Property Section 4.11(c) 16
Release Section 4.17(a) 24
Review Period Section 2.3(b) 8
Shareholder Indemnified Parties Section 9.2(b) 45
Shareholders Preamble 1
Shareholders' Representative Section 10.13(a) 52
Shares Recitals 1
Target Net Book Value Section 2.3(d) 8
Tax Return Section 4.15(a) 18
Tax Section 4.15(a) 18
Third Party Section 6.8 39
Threatened Release Section 4.17(a) 24
Threshold Amount Section 9.5(a) 48
Transaction Fees Section 10.12 52
Uncollected Contract Revenues Section 9.8 49
ARTICLE II
AGREEMENT TO PURCHASE AND SELL SHARES
2.1 Agreement to Purchase and Sell Shares. Subject to the terms and
conditions hereof, the Shareholders agree to sell to Acquisition Sub, and
Acquisition Sub agrees to purchase from the Shareholders, the Shares, which
represent 100% of the fully-diluted equity of Dataradio, for an aggregate
purchase price equal to Sixty Million One Hundred Thousand Canadian Dollars
(CAN$60,100,000) in cash (the "Consideration") The Consideration shall be
allocated to the Shareholders as provided on Schedule I attached hereto, as
amended immediately prior to the Closing, and shall be subject to adjustment
as provided in Section 2.3.
2.2 Distribution of the Consideration.
(a) On the Closing Date, Acquisition Sub shall, subject to the
provisions of Sections 2.2(b) and Section 2.5, pay to each Shareholder, by
certified check or wire transfer, that portion of the Consideration that such
Shareholder has the right to receive with respect to the Shares held by such
Shareholder, as reflected on Schedule I attached hereto, as amended
immediately prior to the Closing.
(b) On the Closing Date, CalAmp shall deposit Seven Million
Canadian Dollars (CAN$7,000,000), representing a portion of the Consideration
otherwise allocable to the Shareholders as provided on Schedule I attached
hereto, as amended immediately prior to the Closing (the "Escrow Amount"), in
an account with an escrow agent selected by CalAmp, subject to the consent of
the Shareholders' Representative (as defined below), such consent not to be
unreasonably withheld (the "Escrow Agent"), in accordance with the provisions
of the Escrow Agreement. The portion of the Escrow Amount that shall be
deposited with respect to each Shareholder shall be reflected on Schedule I.
Three Million Canadian Dollars (CAN$3,000,000) of the Escrow Amount shall be
available as a source for the payment of any indemnification claims to which
the Acquisition Sub Indemnified Parties (as defined below) may be entitled
under Article IX, and Four Million Canadian Dollars (CAN$4,000,000) of the
Escrow Amount shall be available for the payment of any obligation arising out
of the Purchase Price Adjustments pursuant to Section 2.3 hereof, and shall be
maintained and used strictly in accordance with the terms of this Agreement
and the Escrow Agreement. Absent any claims, all amounts remaining in the
Escrow Amount on the second anniversary of the Closing Date shall be
distributed in accordance with the terms and conditions of the Escrow
Agreement.
2.3 Purchase Price Adjustments.
(a) As promptly as practicable after the Closing but in no event
later than forty-five (45) Business Days following the Closing Date, CalAmp
shall prepare and deliver to the Shareholders' Representative (i) a
consolidated statement of assets and liabilities of Dataradio and its
Subsidiaries as at the Closing Date (the "Closing Balance Sheet"), and (ii) a
statement setting forth (A) the amount, if any, by which the consolidated
assets of Dataradio and its Subsidiaries as shown on the Closing Balance Sheet
exceeds the consolidated liabilities of Dataradio and its Subsidiaries as
shown on the Closing Balance Sheet (such amount shall be referred to herein as
the "Net Book Value"), and (B) the consolidated cash of Dataradio and its
Subsidiaries as of the Closing Date (the "Closing Cash") as shown on the
Closing Balance Sheet (and such statement shall be referred to herein as the
"Closing Statement"). The Closing Balance Sheet shall be prepared in
conformity with Canadian GAAP applied on a consistent basis as reflected in
the Financial Statements and the books and records of Dataradio and its
Subsidiaries, subject to the specific accounting principles set forth on
Schedule 2.3, and shall present fairly the assets, liabilities and
shareholders' equity of Dataradio and its Subsidiaries at the Closing Date
immediately prior to the Closing.
(b) After the delivery to the Shareholders' Representative of
the Closing Balance Sheet and the Closing Statement in accordance herewith,
CalAmp shall provide reasonable access to the Shareholders' Representative and
its advisors (including, without limitation, accountants) during normal
business hours to the work papers, schedules, memoranda and other documents
and information and data necessary to prepare the Closing Balance Sheet and
Closing Statement for a period of fifteen (15) Business Days after receipt by
the Shareholders' Representative of the Closing Statement and Closing Balance
Sheet (the "Review Period").
(c) Prior to the expiration of the Review Period, the
Shareholders' Representative shall notify CalAmp of any objections or proposed
changes to the Closing Statement or the Closing Balance Sheet. If the
Shareholders' Representative fails to so notify CalAmp of any objections or
proposed changes within the Review Period, if the Shareholders' Representative
notifies CalAmp that he has no objections or proposed changes to any of such
items, or if the Shareholders' Representative and CalAmp agree in writing on
the resolution of all such objections or changes within ten (10) Business Days
following delivery to CalAmp of such objections or proposed changes, the
Closing Balance Sheet and the Closing Statement, with any changes as may be
agreed upon in writing, shall be final and binding. If the Shareholders'
Representative and CalAmp shall fail to reach an agreement with respect to any
objection or proposed change within ten (10) Business Days of delivery to
CalAmp of any such objections or proposed changes (the "Dispute Period"), then
all such disputed objections or changes shall, not later than five (5)
Business Days after the end of the Dispute Period, be submitted for resolution
to an independent accounting firm of recognized standing that is licensed as a
Chartered Accountant in Canada and is mutually acceptable to CalAmp and the
Shareholder Representative (the "Auditor"). The Auditor shall, twenty (20)
Business Days after its appointment, notify the parties of its selection of
one of the two original determinations of the Closing Cash and Net Book Value
as of the Closing Date based on its determination that it more closely
reflects the Closing Cash and Net Book Value as of the Closing Date than the
other original determination. The Auditor's determination as to the Closing
Cash and Net Book Value as of the Closing Date will be final and binding.
CalAmp, on the one hand, and the Shareholders, on the other, shall bear the
costs and expenses of the Auditor equally.
(d) If the Net Book Value as finally determined pursuant to
Section 2.3(c) hereof (the "Final Net Book Value") is less than Twelve Million
One Hundred Thousand Canadian Dollars (CAN$12,100,000) (the "Target Net Book
Value") (provided, that (i) if the Closing Date occurs on a date subsequent to
the Target Closing Date, such Target Net Book Value shall be increased by
Twenty-Nine Thousand Canadian Dollars (CAN$29,000) for each Week Day included
in the period beginning on the first Week Day following the Target Closing
Date through and including the earlier of (A) Closing Date and (B) June 30,
2006; or (ii) if the Closing Date occurs on a date prior to the Target Closing
Date, such Target Net Book Value shall be decreased by Twenty-Nine Thousand
Canadian Dollars (CAN$29,000) for each Week Day included in the period
beginning on the first Week Day following the Closing Date through and
including the last Week Day prior to the Target Closing Date), CalAmp shall be
entitled to instruct the Escrow Agent to return to CalAmp from the Escrow
Amount an amount in cash equal to the product of five times the Canadian
dollar amount of such deficiency up to a maximum of Six Million Canadian
Dollars (CAN$6,000,000).
(e) If the Closing Cash as finally determined pursuant to
Section 2.3(c) hereof (the "Final Closing Cash") is less than Six Million
Canadian Dollars (CAN$6,000,000), CalAmp shall be entitled to instruct the
Escrow Agent to return to CalAmp from the Escrow Amount an amount in cash
equal to the Canadian dollar amount of such deficiency. Any adjustment or
adjustments made pursuant to Section 2.3(d) and/or Section 2.3(e) shall be
referred to herein as the "Purchase Price Adjustments."
2.4 Tax Withholding. CalAmp shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
Shareholder such amounts as CalAmp is required to deduct and withhold with
respect to the making of such payment under the Code or under any applicable
provision of United States or Canadian state, provincial or local Tax law or
any foreign Tax law. To the extent that amounts are so withheld by CalAmp and
duly paid to the applicable taxing authority, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the
Shareholder in respect of which such deduction and withholding was made by
CalAmp.
2.5 Payment of Closing Debt Outstanding at Closing. The Shareholders
shall cause Dataradio to pay all Closing Debt of Dataradio and its
Subsidiaries prior to the Closing. Subject to the adjustment of the
Consideration in Section 2.3, the Shareholders may use all cash of Dataradio
and its Subsidiaries as of the Closing Date to make all or any portion of such
payments. Amounts to be paid upon the Closing are reflected on Schedule 2.5,
as amended immediately prior to the Closing Date.
ARTICLE III
CLOSING; DELIVERIES
3.1 The Closing. The closing (the "Closing") of the transactions
contemplated by this Agreement shall be held at the offices of Stikeman
Elliott LLP at 1155 Xxxx Xxxxxxxx Blvd. West, Suite 4000, Montreal, Quebec,
H3B 3V2 Canada, on the second Business Day after satisfaction of the latest to
occur of the conditions set forth in Article VII, or at such other time and
place as to which Dataradio, the Shareholders, CalAmp and Acquisition Sub may
agree (the "Closing Date")
3.2 Deliveries by Dataradio and the Shareholders at the Closing. At
the Closing, Dataradio and the Shareholders, as the case may be, shall
deliver, or cause to be delivered:
(a) the Ancillary Agreements;
(b) certificates representing all of the Shares;
(c) certificates of existence and compliance issued by Industry
Canada and a certificate of attestation issued by the Registraire des
enterprises of the Province of Quebec for Dataradio, and equivalent
certificates of good standing issued by the Secretary of State for the State
of Delaware for each of the Subsidiaries of Dataradio, dated not more than
five days prior to the Closing Date, with bring-down good standing
certificates dated as of the Closing Date;
(d) a certificate, dated as of the Closing Date and signed by
Dataradio's President, as to the fulfillment of the conditions set forth in
Section 7.3;
(e) a certificate executed by the Secretary of Dataradio, dated as
of the Closing Date, certifying resolutions adopted by Dataradio's board of
directors relating to the transactions contemplated by this Agreement and the
Ancillary Agreements;
(f) a certificate executed by the Secretary of each Shareholder,
dated as of the Closing Date, certifying resolutions adopted by such
Shareholder's board of directors relating to the transactions contemplated by
this Agreement and the Ancillary Agreements;
(g) copies of all third party and governmental Consents, approvals
and filings required in connection with the consummation of the transactions
hereunder;
(h) the written opinion of counsel described in Section 7.3(i);
and
(i) such other documents and items as Acquisition Sub or CalAmp
may reasonably request, including, without limitation, all documents required
by Section 7.3.
3.3 Deliveries by Acquisition Sub and CalAmp at the Closing. At the
Closing, Acquisition Sub and CalAmp shall deliver, or cause to be delivered:
(a) the Ancillary Agreements;
(b) the Consideration;
(c) a certificate, dated as of the Closing Date and signed by
Acquisition Sub's authorized representative, as to the fulfillment of the
conditions set forth in Section 7.2;
(d) such other documents and items as Dataradio or the
Shareholders may reasonably request, including, without limitation, all
documents required Section 7.2;
(e) a certificate of good standing issued by the Secretary of
State for the State of Delaware for CalAmp, and issued by Industry Canada for
Acquisition Sub, each dated not more than five days prior to the Closing Date,
with a bring-down good standing certificate dated as of the Closing Date; and
(f) a certificate executed by the Secretary of each of CalAmp and
Acquisition Sub, dated as of the Closing Date, certifying resolutions adopted
by the board of directors of each of CalAmp and Acquisition Sub relating to
the transactions contemplated by this Agreement and the Ancillary Agreements.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF DATARADIO AND THE SHAREHOLDERS
As a material inducement to Acquisition Sub and CalAmp to enter into
this Agreement, each of Dataradio and the Shareholders, jointly and
solidarily, hereby represent and warrant to Acquisition Sub and CalAmp, which
representations and warranties are, as of the date hereof, and will be, as of
the Closing Date, true, correct and complete:
4.1 Organization, Good Standing and Qualification.
(a) Dataradio is a corporation duly incorporated and organized,
and is validly existing and up-to-date in the filing of all corporate and
similar returns under the laws of Canada, its jurisdiction of incorporation,
and has all requisite corporate power and authority to own its properties and
assets, to perform all its obligations under its Material Contracts and to
carry on its business as now conducted and as presently proposed to be
conducted. Dataradio is duly qualified to do business as an extra-provincial
or foreign corporation and is in good standing in each jurisdiction where the
character of its properties owned or leased or the nature of its activities
make such qualification necessary, except where the failure to be so qualified
or in good standing would not have a Material Adverse Effect on Dataradio.
Copies of the Articles of Incorporation and Bylaws of Dataradio, and all
amendments thereto, heretofore delivered to CalAmp, are accurate and complete
as of the date hereof.
(b) Each of the Shareholders is a corporation duly incorporated
and organized, and is validly existing and up-to-date in the filing of all
corporate and similar returns under the laws of its jurisdiction of
incorporation, and has all requisite corporate power and authority to own its
properties and assets and to carry on its business as now conducted and as
presently proposed to be conducted.
4.2 Capitalization.
(a) The Schedule of Shareholders attached hereto as Schedule I,
as amended immediately prior to the Closing, sets forth the name of each
Person holding any equity securities of Dataradio or securities convertible
into or exchangeable for equity securities of Dataradio. The authorized
capital stock of Dataradio consists of an unlimited number of common shares,
of which 20,000,000 shares are issued and outstanding and an unlimited number
of preferred shares, none of which are issued and outstanding. All shares of
capital stock of Dataradio are duly authorized, validly issued, fully paid and
non-assessable. No claim has been made or threatened to Dataradio or any of
the Shareholders asserting that any Person other than a Person listed on
Schedule I is the holder or beneficial owner of, or has the right to acquire
beneficial ownership of, any stock of, or any other voting, equity or
ownership interest in Dataradio.
(b) Except as set forth on Schedule 4.2, there are no (i)
options, warrants, agreements, convertible or exchangeable securities or other
agreements or commitments pursuant to which Dataradio is or may become
obligated to issue, sell, transfer, purchase, return, redeem or otherwise
acquire capital stock or any other securities of Dataradio, (ii) securities of
Dataradio reserved for issuance for any purpose, (iii) agreements pursuant to
which registration rights in the capital stock of Dataradio have been granted,
(iv) shareholders agreements, whether written or verbal, among any current and
former shareholders of Dataradio or (v) statutory or contractual preemptive
rights or rights of first refusal with respect to the Shares.
(c) Dataradio has issued all of its securities (including,
without limitation, share purchase options and warrants) pursuant to valid
exemptions from registration and prospectus requirements under applicable
federal, national, provincial and state securities laws. There are no
agreements between Dataradio's shareholders with respect to the voting or
transfer of Dataradio's securities or with respect to any other aspect of
Dataradio's affairs.
4.3 Subsidiaries.
(a) Except as set forth on Schedule 4.3, Dataradio does not
presently own or control, directly or indirectly, any interest in any other
corporation, partnership, trust, joint venture, association, or other entity.
(b) Each of the Subsidiaries of Dataradio is a corporation duly
incorporated and organized, and is validly existing and up-to-date in the
filing of all corporate and similar returns under the laws of the State of
Delaware, and has all requisite corporate power and capacity to own its
properties and assets and to carry on its business as now conducted and as
presently proposed to be conducted. Each of the Subsidiaries of Dataradio is
duly qualified to do business as a foreign corporation in each jurisdiction
where failure to be so qualified would have a Material Adverse Effect on
Dataradio.
(c) The authorized shares of each of the Subsidiaries of Dataradio
consists of the shares set forth on Schedule 4.3, all of which are owned by
Dataradio or one of its Subsidiaries and are issued and outstanding and free
of any Encumbrance. All of the outstanding shares of each of the Subsidiaries
of Dataradio have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights.
(d) None of the Subsidiaries of Dataradio has granted any
outstanding option, warrants, rights or other securities convertible into or
exchangeable or exercisable for shares of such Subsidiary or any other
commitments or agreements providing for the issuance of additional shares, the
sale of treasury shares, or for the repurchase or redemption of shares of such
Subsidiary's shares. There are no agreements of any kind which obligate any
of the Subsidiaries of Dataradio to issue, purchase, redeem or otherwise
acquire any of its shares.
4.4 Due Authorization.
(a) Dataradio has all requisite power and authority, and has taken
all action necessary, to execute, deliver and perform this Agreement and the
Ancillary Agreements to which it is a party, to consummate the transactions
contemplated hereby and thereby and to perform its obligations hereunder and
thereunder. The execution and delivery of this Agreement and the Ancillary
Agreements by Dataradio and the consummation by Dataradio of the transactions
contemplated hereby and thereby have been duly approved by the board of
directors of Dataradio. No other corporate proceedings on the part of
Dataradio are necessary to authorize this Agreement and the Ancillary
Agreements and the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by Dataradio and is, and, upon
execution and delivery of the Ancillary Agreements, the Ancillary Agreements
to which Dataradio is party will be, the legal, valid and binding obligations
of Dataradio, enforceable against it in accordance with their respective terms
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors' rights
generally and except insofar as the availability of equitable remedies may be
limited by applicable law.
(b) Each of the Shareholders has all requisite power and
authority, and has taken all action necessary, to execute, deliver and perform
this Agreement and the Ancillary Agreements to which it is a party, to
consummate the transactions contemplated hereby and thereby and to perform its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Ancillary Agreements by each Shareholder and the
consummation by each Shareholder of the transactions contemplated hereby and
thereby have been duly approved by the board of directors of such Shareholder.
This Agreement has been duly executed and delivered by each of the
Shareholders and is, and, upon execution and delivery of the Ancillary
Agreements, the Ancillary Agreements to which each Shareholder is party will
be, the legal, valid and binding obligations of each of the Shareholders,
enforceable against it in accordance with their respective terms except as
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors' rights
generally and except insofar as the availability of equitable remedies may be
limited by applicable law.
4.5 Consents and Approvals. Except as set forth on Schedule 4.5, no
consent, approval or authorization of, declaration to, or filing or
registration with, any governmental or regulatory authority, or any other
Person, is required to be made or obtained by the Shareholders, Dataradio or
any of its Subsidiaries or Affiliates in connection with the execution,
delivery and performance by Dataradio of this Agreement and the consummation
of the transactions contemplated hereby.
4.6 Compliance with Other Instruments.
(a) Neither Dataradio nor any of its Subsidiaries is in any
violation, breach or Default of any term of its articles of incorporation,
certificate of incorporation, bylaws or other constituting or organizational
documents, or in any material respect of any term or provision of any
mortgage, indenture, contract, agreement or instrument to which Dataradio or
one of its Subsidiaries is a party or by which it may be bound, or of any
provision of any United States or Canadian national, federal, provincial,
state or local Court Order or Regulation, applicable to or binding upon
Dataradio or one of its Subsidiaries. The execution, delivery and performance
of and compliance with this Agreement and the consummation of the transactions
contemplated hereby will not result in any such violation or Default, or be in
conflict with or constitute, with or without the passage of time or the giving
of notice or both, either a Default under the articles of incorporation,
certificate of incorporation, bylaws or other organizational documents of
Dataradio or any of its Subsidiaries, or any agreement or contract of
Dataradio or one of its Subsidiaries, or a violation of any Court Order or
Regulation, or an event which results in the creation of any lien, charge or
Encumbrance upon any of the assets of Dataradio or one of its Subsidiaries.
(b) The execution, delivery and performance of and compliance with
this Agreement and the consummation of the transactions contemplated hereby
will not result in any such violation or Default, or be in conflict with or
constitute, with or without the passage of time or the giving of notice or
both, either a Default under the organizational documents of such Shareholder,
or any agreement or contract of such Shareholder or a violation of any Court
Order or Regulation.
4.7 Financial Statements.
(a) Dataradio heretofore has delivered to CalAmp true and correct
copies of the Financial Statements. The Financial Statements (a) are complete
in all material respects, (b) are in accordance with the books and records of
Dataradio and its Subsidiaries, (c) have been prepared in accordance with
Canadian GAAP consistently applied throughout the periods covered thereby and
(d) fairly and accurately present the financial position of Dataradio and its
Subsidiaries as of the respective dates thereof and the results of operations
and changes in cash flows for the periods then ended. Except for the Interim
Financial Statements, the Financial Statements have been audited by the
Dataradio Accountants, whose report thereon is included with such financial
statements. Specifically, but not by way of limitation, the balance sheet of
the Financial Statements discloses all of the material Debts, Liabilities and
obligations of any nature of Dataradio and its Subsidiaries, whether due or to
become due, as of the date thereof to the extent such Debts, Liabilities and
obligations are required to be disclosed in accordance with Canadian GAAP.
Dataradio or one of its Subsidiaries has good and marketable title to all
assets set forth on the balance sheet of the Financial Statements, except for
such assets as have been spent, sold or transferred in the Ordinary Course of
Business since the date thereof.
(b) Dataradio keeps books, records and accounts that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of assets of Dataradio and its Subsidiaries. To Dataradio's
Knowledge, neither Dataradio nor any of its Subsidiaries has, and no employee,
agent or stockholder of Dataradio or any of its Subsidiaries (in their
capacity as such as purporting to act in such capacity or on behalf of or in
connection with the business or affairs of Dataradio and its Subsidiaries),
directly or indirectly has misappropriated any funds of any such entity or
received or retained any misappropriated funds.
(c) Any contract revenues of Dataradio and its Subsidiaries
recognized prior to the Closing that remain unbilled as of the Closing Date
will be billable and collectible by Dataradio and its Subsidiaries within the
twelve (12) months immediately following the Closing Date.
4.8 No Undisclosed Liabilities. Except as set forth on Schedule 4.8,
Dataradio and its Subsidiaries are not subject to any Liability (including
unasserted claims), whether known or unknown, absolute, contingent, accrued or
otherwise, which is not shown or which is in excess of amounts shown or
reserved for on the balance sheet of the Financial Statements, other than
Liabilities reasonably incurred in the Ordinary Course of Business after the
Interim Date, which are not, individually or in the aggregate, material.
4.9 Certain Actions. Since the Interim Date, neither Dataradio nor
any of its Subsidiaries has:
(a) declared or paid any dividends, or authorized or made any
distribution upon or with respect to any class or series of its capital stock;
(b) made a change in the capital stock of Dataradio and no
dividend or distribution of any kind has been declared, paid or made in
respect of any class of stock of Dataradio or any of its Subsidiaries or any
repurchase, redemption or other acquisition by Dataradio or any of its
Subsidiaries of any outstanding shares of capital stock or other securities
of, or other ownership interests in, Dataradio or any of its Subsidiaries;
(c) except as set forth on Schedule 4.9, incurred any indebtedness
for money borrowed or incurred any other Liabilities individually in excess of
CAN$50,000 or in excess of CAN$500,000 in the aggregate;
(d) made any loans or advances to any Person, other than ordinary
advances for travel expenses;
(e) sold, exchanged or otherwise disposed of any material assets
or rights other than the sale of inventory in the Ordinary Course of Business;
or
(f) entered into any transactions with any of its officers,
directors or employees or any entity controlled by any of such individuals
(other than employment, stock option, confidentiality, non-competition and
intellectual property rights agreements entered into in the Ordinary Course of
Business and disclosed on Schedule 4.12 hereto).
4.10 Activities Since Interim Date. Since the Interim Date, there has
not been:
(a) any Material Adverse Effect on Dataradio or any damage,
destruction or loss, whether or not covered by insurance, materially and
adversely affecting the assets, properties, financial condition, operating
results, prospects or business of Dataradio and its Subsidiaries, taken as a
whole (as presently conducted and as presently proposed to be conducted);
(b) any waiver by Dataradio or any of its Subsidiaries of a
valuable right or of a material debt owed to it;
(c) any satisfaction or discharge of any lien, claim or
Encumbrance or payment of any obligation by Dataradio or one of its
Subsidiaries, except such a satisfaction, discharge or payment made in the
Ordinary Course of Business that is not material to the assets, properties,
financial condition, operating results or business of Dataradio and its
Subsidiaries, taken as a whole;
(d) any material change or amendment to a Material Contract or
arrangement by which Dataradio, its Subsidiaries or any of their respective
assets or properties is bound or subject, except for changes or amendments
which are expressly provided for or disclosed in this Agreement;
(e) (i) any change in any Employee Plan (as hereinafter defined)
affecting any former, present or prospective employee, contractor, shareholder
or director, including a change affecting the form or timing of any benefit
payable or to become payable under an Employee Plan or (ii) any increase in
the compensation or benefits payable or to become payable to any directors,
officers or employees, in each case other than in the Ordinary Course of
Business and consistent with past practice;
(f) any termination of employment of any director, manager or
officer or any severance or termination pay granted to any director, manager,
officer or any other employee;
(g) any bonus payment, profit sharing distribution or similar
amount of any kind paid by Dataradio or any of its Subsidiaries;
(h) except as set forth on Schedule 4.10, any termination, notice,
severance or change of control agreement entered into with any present or
prospective employee, director, manager, officer, contractor or agent; or
(i) any other event or condition of any character which would
materially and adversely affect the assets, properties, financial condition,
operating results, prospects or business of Dataradio and its Subsidiaries,
taken as a whole.
4.11 Title to Properties and Assets.
(a) Except as set forth on Schedule 4.11(a), (i) each of Dataradio
and its Subsidiaries has, or will have, as of the Closing, a good and valid
title to or, in the case of leased properties or properties held under
license, a good and valid leasehold or license interest in, all of its
properties and assets and (ii) each of Dataradio and its Subsidiaries holds
title to each such property and asset which it purports to own, free and clear
of all liens, adverse claims, mortgages, pledges, Encumbrances, security
interest or charge of any kind, except Permitted Encumbrances. The
representations in this Section 4.11 do not apply to the Intellectual Property
Rights as to which only the representations in Section 4.16 shall apply.
(b) All of the tangible assets of each of Dataradio and its
Subsidiaries, are, or will be as of the Closing, in all material respects, in
reasonably serviceable operating condition and repair and are adequate for the
conduct of the business of Dataradio and its Subsidiaries in substantially the
same manner as has heretofore been conducted.
(c) Schedule 4.11(c) sets forth a true and complete list of all
real property owned or leased by each of Dataradio and its Subsidiaries
(collectively, the "Real Property"), including the location of, and a brief
description of the nature of the activities conducted on, such Real Property.
4.12 Material Contracts and Obligations.
(a) All agreements, contracts, leases, licenses, instruments,
commitments (oral or written), indebtedness, Liabilities and other obligations
to which Dataradio or one of its Subsidiaries is a party or by which it is
bound that (a) are material to the conduct and operations of its business and
properties, (b) involve any of the officers, consultants, directors or
employees of Dataradio or one of its Subsidiaries or the Shareholders or any
of their Affiliates or (c) obligate Dataradio or one of its Subsidiaries to
share, license or develop any product or technology or restrict any of them to
carry on any business (the "Material Contracts") are listed in Schedule
4.12(a) and have been made available for inspection by CalAmp and its counsel.
For purposes of this Section 4.12, "material" shall mean any agreement,
contract, indebtedness, Liability or other obligation either (i) having an
aggregate value, cost or amount in excess of CAN$100,000 or (ii) not
terminable upon thirty days' notice.
(b) Each Material Contract is in full force and effect, paid
currently and has not been materially impaired by any acts or omissions of
Dataradio or one of its Subsidiaries. Except for those Material Contracts
denoted with an asterisk (*) as set forth on Schedule 4.12(a), no Material
Contract requires the consent of any other contracting party to the
transactions contemplated by this Agreement to prevent a breach of, a Default
under, or a termination, change in the terms or conditions or modification of,
any Material Contract. All of the Material Contracts are valid, binding and
enforceable in accordance with their terms except as enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting enforcement of creditors' rights generally and except
insofar as the availability of equitable remedies may be limited by applicable
law. Each of Dataradio and its Subsidiaries has fulfilled, or taken all
action reasonably necessary to enable them to fulfill when due, all of its
material obligations under each of such Material Contracts. To Dataradio's
Knowledge, no party is in material Default under such Material Contracts, no
event has occurred and no condition or state of facts exists which, with the
passage of time or the giving of notice or both, would constitute such a
Default and no notice of any claim of Default has been given to Dataradio or
one of its Subsidiaries. Dataradio is not aware of any intent by any party to
any Material Contract to terminate or amend the terms thereof or to refuse to
renew any such Material Contract upon expiration of its term. Dataradio is
not currently paying liquidated damages in lieu of performance under any
Material Contract.
4.13 Litigation. Except as set forth on Schedule 4.13, there is no
action, suit, proceeding, claim, arbitration or investigation ("Proceeding")
pending or, to Dataradio's Knowledge, currently threatened against Dataradio
or one of its Subsidiaries, its activities, properties or assets or, to
Dataradio's Knowledge, against any officer, director or employee of Dataradio
or one of its Subsidiaries in connection with such officer's, director's or
employee's relationship with, or actions taken on behalf of, Dataradio or one
of its Subsidiaries. To Dataradio's Knowledge, there is no factual or legal
basis for any such Proceeding that might result, individually or in the
aggregate, in any Material Adverse Effect on Dataradio. Neither Dataradio nor
any of its Subsidiaries is a party to or subject to the provisions of any
Court Order, writ, injunction, judgment or decree of any court or government
agency or instrumentality and there is no Proceeding by Dataradio or one of
its Subsidiaries currently pending or which Dataradio or one of its
Subsidiaries intends to initiate. There is no Proceeding pending against, or
to each Shareholder's Knowledge, currently threatened against or affecting,
any Shareholder before any court or arbitrator or any governmental body,
agency or official that challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by this Agreement.
4.14 Compliance with Law. Dataradio, its Subsidiaries and the conduct
of the Business have not violated and are in compliance with all Regulations
and Court Orders relating to the Business or operations of Dataradio and its
Subsidiaries. Dataradio and its Subsidiaries have not received any notice to
the effect that, or otherwise been advised that, Dataradio or one of its
Subsidiaries is not in compliance with any such Regulations or Court Orders,
and Dataradio does not know of any existing circumstances that are likely to
result in violations of any of the foregoing.
4.15 Taxes.
(a) Definitions. For purposes of this Agreement:
(i) the term "Tax" (including with correlative meaning, the
terms "Taxes" and "Taxable") means (A) all federal, national, provincial,
state, local, foreign and other net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, lease, service,
service use, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs, duties or other
taxes, fees, assessments or charges of any kind whatsoever, including Canada
Pension Plan and Provincial Pension Plan contributions, unemployment insurance
contributions, worker's compensation and deduction at source, together with
any interest and any penalties, additions to tax or additional amounts with
respect thereto, (B) any Liability for payment of amounts described in clause
(A) whether as a result of transferee liability, of being a member of an
affiliated, consolidated, combined or unitary group for any period, or
otherwise through operation of law, and (C) any Liability for the payment of
amounts described in clauses (A) or (B) as a result of any tax sharing, tax
indemnity or tax allocation agreement or any other express or implied
agreement to indemnify any other Person; and
(ii) the term "Tax Return" means any return, declaration,
report, statement, information statement, estimates, elections, designations,
reports and other document required to be filed with respect to Taxes.
(b) Each of Dataradio and its Subsidiaries has accurately prepared
and timely filed all Tax Returns it is required to have filed. Such Tax
Returns are accurate, complete and correct in all material respects and do not
contain a disclosure statement under Section 6662 of the Code (or any
predecessor provision or comparable provision of state, provincial, local or
foreign law).
(c) Dataradio and its Subsidiaries have timely paid or will cause
to be timely paid all Taxes that have become due or payable or that will
become due payable prior to the Closing Date and have adequately reserved in
the Interim Financial Statements for all Taxes (whether or not shown on any
Tax Return) that have accrued but are not yet due or payable as of the Interim
Date as well as for any professional fees for the preparation of any such Tax
Returns. Dataradio and its Subsidiaries have made adequate and timely
installments of Taxes as required to be made.
(d) Except as set forth on Schedule 4.15(d):
(i) no claim has been made by any taxing authority in any
jurisdiction where Dataradio or any of its Subsidiaries does not file Tax
Returns that it is or may be subject to Tax by that jurisdiction; and
(ii) no extensions or waivers of statutes or periods of
limitations with respect to the Tax Returns have been given by or requested
from Dataradio or its Subsidiaries.
(iii) no power of attorney has been granted by Dataradio or
any of its Subsidiaries with respect to any matter relating to Taxes; and
(iv) no written claim for assessment or collection of Taxes
is presently being asserted against Dataradio or any of its Subsidiaries, and
there is no presently pending audit examination, refund claim, litigation,
proceeding, proposed adjustment or matter in controversy with respect to any
Taxes of or with respect to Dataradio or any of its Subsidiaries, and neither
Dataradio nor any of its Subsidiaries has Knowledge that any such action or
proceeding is being contemplated.
(e) Except to the extent indicated in Schedule 4.15(e), all
deficiencies asserted or assessments made against Dataradio or its
Subsidiaries as a result of any examinations by any taxing authority have been
fully paid.
(f) There are no liens for Taxes (other than for current Taxes not
yet due and payable) upon the assets of Dataradio or its Subsidiaries.
(g) Neither Dataradio nor any of its Subsidiaries is a party to or
bound by any tax indemnity, tax sharing or tax allocation agreement.
(h) Neither Dataradio nor any of its Subsidiaries is a party to or
bound by any closing agreement or offer in compromise, or other agreement,
with any taxing authority.
(i) Except to the extent indicated in Schedule 4.15(i):
(i) neither Dataradio nor any of its Subsidiaries has ever
been a member of an affiliated group of corporations, within the meaning of
Section 1504 of the Code (or any predecessor provision or comparable provision
of state, provincial, local or foreign law), or a member of combined,
consolidated or unitary group for state, provincial, local or foreign Tax
purposes;
(ii) neither Dataradio nor any of its Subsidiaries has
Liability for Taxes of any Person (other than Dataradio and its Subsidiaries)
under Treasury Regulations Section 1.1502-6 (or any corresponding provision of
state, provincial, local or foreign income Tax law), as transferee or
successor, by contract, or otherwise;
(iii) neither Dataradio nor any of its Subsidiaries has
participated in an international boycott within the meaning of Section 999 of
the Code (or any corresponding provision of state, provincial, local or
foreign income Tax law);
(iv) neither Dataradio nor any of its Subsidiaries has
engaged in a transaction that constitutes a "reportable transaction," as such
term is defined in Treasury Regulation Section 1.6011-4(b)(1), or a
transaction that constitutes a "listed transaction", as such term is defined
in Treasury Regulation Section 1.6011-4(b)(2) (or any corresponding provision
of state, provincial, local or foreign income Tax law); and
(v) neither Dataradio nor any of its Subsidiaries has been a
personal holding company under Section 542 of the Code (or any corresponding
provision of state, provincial, local or foreign income Tax law).
(j) Neither Dataradio nor any of its Subsidiaries has agreed to
make, nor is it required to make, any adjustment under Sections 481(a) of the
Code or any comparable provision of state, provincial or foreign tax laws by
reason of a change in accounting method or otherwise. Neither Dataradio nor
any of its Subsidiaries has taken action that is not in accordance with past
practice that could defer a Liability for Taxes of Dataradio or any of its
Subsidiaries from any taxable period ending on or before the Closing Date to
any taxable period ending after such date.
(k) Neither Dataradio nor any of its Subsidiaries is a party to
any agreement, contract, arrangement or plan that has resulted or would
result, separately or in the aggregate, in connection with this Agreement or
any change of control of Dataradio, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code.
(l) Schedule 4.15(l) sets forth all foreign jurisdictions in which
Dataradio or any of its Subsidiaries is subject to Tax, is engaged in business
or has a permanent establishment.
(m) Neither Dataradio nor any of its Subsidiaries is a party to
any joint venture, partnership, or other arrangement or contract which could
be treated as a partnership for federal income tax purposes.
(n) No material election with respect to Taxes of Dataradio or any
of its Subsidiaries will be made by Dataradio or any of its Subsidiaries after
the date of this Agreement without the prior written consent of CalAmp.
(o) None of Dataradio's Subsidiaries is, or at any time has been,
a passive foreign investment company within the meaning of Section 1297 of the
Code, and neither Dataradio nor any Subsidiary is a shareholder, directly or
indirectly, in a passive foreign investment company. No Subsidiary that is
not a United States person (i) is, or at any time has been, engaged in the
conduct of a trade or business within the United States or treated as or
considered to be so engaged and (ii) has, or at any time has had, an
investment in "United States property" within the meaning of Section 956(c) of
the Code.
(p) The provisions for Taxes currently payable on the Interim
Financial Statements are at least equal, as of the date thereof, to all unpaid
Taxes of Dataradio and its Subsidiaries, whether or not disputed. Dataradio
and its Subsidiaries have and will have no accrued liability for Taxes in
respect of taxable periods or portions thereof following the date of the
Interim Financial Statements and ending on or before the Closing Date other
than Taxes incurred in the Ordinary Course of Business.
(q) No United States subsidiary of Dataradio has ever been a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Code.
(r) Neither Dataradio nor any of its Subsidiaries has been a
"distributing corporation" or a "controlled corporation" in connection with a
distribution described in Section 355 of the Code.
(s) There is currently no limitation on the utilization of Tax
attributes of Dataradio or any subsidiary under Sections 269, 382, 383, 384 or
1502 of the Code (and comparable provisions of state, local or foreign law).
Neither Dataradio nor any of its Subsidiaries has undergone an ownership
change within the meaning of Section 382(g) of the Code.
(t) Dataradio and each of its Subsidiaries have withheld all Taxes
required to be withheld from any payments made by each of them and have
remitted such withheld Taxes on a timely basis to the appropriate governmental
authorities. The amount of Tax withheld but not remitted by Dataradio will be
retained in the appropriate accounts and will be remitted by Dataradio to the
appropriate authorities when due.
(u) There are no contingent Tax liabilities or any grounds that
could prompt an assessment or reassessment of Dataradio and its subsidiaries,
including aggressive treatment of income, expenses, deductions, credits or
other amounts in the filing of earlier or current Tax Returns, nor has
Dataradio and its subsidiaries received any indication from any taxation
authorities that an assessment or reassessment of Tax is proposed.
(v) Dataradio and its subsidiaries have collected from each
receipt from any of the past and present customers (or other Persons paying
amounts to Dataradio and its subsidiaries) the amount of all taxes (including
goods and services tax and provincial sales taxes) required to be collected
and has paid and remitted such Taxes when due, in the form required under
appropriate laws or made adequate provision for the payment of such amounts to
the proper receiving authorities. The amount of Tax collected but not
remitted by Dataradio and it subsidiaries will be retained in the appropriate
accounts and remitted by Dataradio and its subsidiaries to the appropriate
authorities when due.
(w) Dataradio and its subsidiaries have not, and have never been
deemed to have for purposes of the ITA, acquired or had the use of property
for proceeds greater than the fair market value thereof from, or disposed of
property for proceeds less than the fair market value thereof to, or received
or performed services or had the use of property for other than fair market
value from or to, or paid or received interests or any other amount other than
at a fair market value rate to or from, any Person with whom they do not deal
at arm's length within the meaning of the ITA.
(x) The aggregate amount of expenditures qualifying as research
and development expenditures under the ITA and the relevant provincial
legislation incurred by Dataradio and its subsidiaries in Tax years, including
short period Tax years, ending on or prior to the Closing Date for federal
income tax purposes and for provincial income tax purposes are as indicated in
Schedule 4.15(x).
(y) All research and development investment tax credits ("ITCs")
were recorded net of appropriate provisions by Dataradio and its subsidiaries.
Dataradio and its subsidiaries satisfied at all times the relevant criteria
and conditions under the ITA and the relevant provincial legislation entitling
it to such ITCs. All refunds of ITCs received or receivable, net of
appropriate provisions, by Dataradio and its subsidiaries in any financial
year were recorded by Dataradio and its subsidiaries and satisfied at all
times the relevant criteria and conditions under the ITA and the relevant
provincial legislation entitling it to claim a refund of such ITCs.
(z) Except as described in Schedule 4.15(z), Dataradio and its
subsidiaries have not filed or been party to any election pursuant to Section
83 or 85 of the ITA or the corresponding provisions of any provincial statute.
(aa) Dataradio and its subsidiaries have not at any time benefited
from a forgiveness of debt or entered into any transaction or arrangement
(including conversion of debt into shares of its share capital) which could
have resulted in the application of Section 80 and following of the ITA.
(bb) As of Closing, there will not be any contract, plan or
arrangement, covering any employee or former employee of Dataradio and its
subsidiaries that, individually or collectively, could give rise to the
payment of any amount that would not be deductible by Dataradio and its
subsidiaries as an expense under applicable law other than reimbursements of a
reasonable amount of entertainment expenses and other nondeductible expenses
that are commonly paid by similarly situated businesses in reasonable amounts.
(cc) Dataradio's and its subsidiaries' cost amount, as defined in
the ITA, in respect of its assets is accurately reflected on Dataradio's and
its subsidiaries' Tax Returns and records.
(dd) The paid-up capital for Tax purposes of each of the Purchased
Shares is no less than its stated capital for corporate purposes.
4.16 Intellectual Property.
(a) For all purposes of this Agreement, "Intellectual Property"
means intellectual property rights arising from or in respect of the
following, whether protected, created or arising under the laws of the United
States, Canada or any other jurisdiction: (A) fictional business names, trade
names, service names, registered and unregistered trademarks and service marks
and logos (including any Internet domain names), and applications therefor,
(B) patents, patent rights, industrial designs and all applications therefor,
including any and all continuation, divisional, continuation-in-part, or
reissue patent applications or patents issuing thereon, (C) copyrights and all
registrations and applications therefor and (D) know-how, trade secrets,
inventions, discoveries, concepts, ideas, methods, processes, designs,
formulae, technical data, drawings, specifications, data bases and other
proprietary and confidential information, including customer lists, in each
case to the extent not included in the foregoing clauses (B) or (C).
(b) All Intellectual Property that Dataradio or any of its
Subsidiaries is using in the conduct of its respective business as currently
conducted (the "Dataradio Intellectual Property") is owned by, or validly
licensed to Dataradio or such Subsidiary, free and clear of all Encumbrances,
except for Permitted Encumbrances.
(c) Except as set forth on Schedule 4.16(c), to the Knowledge of
Dataradio, none of Dataradio or any of its Subsidiaries (i) has infringed
upon, misappropriated or violated any Intellectual Property of third parties
or (ii) has received during the past thirty-six months any written charge,
complaint, claim, demand or notice alleging any such infringement,
misappropriation or violation (including any claim that a Person must license
or refrain from using any Intellectual Property of any third party in
connection with the conduct of the business of Dataradio or any of its
Subsidiaries or the use of Dataradio Intellectual Property) and (iii) no third
party has infringed upon, misappropriated or violated any Dataradio
Intellectual Property.
(d) Schedule 4.16(d) identifies (i) all registered Intellectual
Property that has been issued to Dataradio or any Dataradio Subsidiary, (ii)
each pending application for registration that Dataradio or a Dataradio
Subsidiary has made with respect to any Dataradio Intellectual Property and
(iii) each contract or agreement that Dataradio or one of its Subsidiaries has
granted to any third party with respect to any of (i) or (ii) above and that
authorizes such third party to use (A) know-how that constitutes a trade
secret of Dataradio or one of its Subsidiaries or (B) any trademarks of
Dataradio or one of its Subsidiaries other than agreements entered into in the
Ordinary Course of Business relating to advertising and promotional activities
of Dataradio or one of its Subsidiaries. True, accurate and complete copies
of all such registrations, applications and contracts or agreements, in each
case, as amended, or otherwise modified and in effect, have been made
available to CalAmp as well as true, accurate and complete copies of all other
written documentation evidencing ownership and prosecution (if applicable) of
each such item. Schedule 4.16(d) identifies all actions that would be
required within six months of Closing to maintain or preserve the registration
or validity of such registered Intellectual Property. Each such registration
is valid and subsisting. Schedule 4.16(d) also identifies each material trade
name, trade dress and unregistered trademark or service xxxx used by Dataradio
or one of its Subsidiaries or in connection with the business thereof or with
Dataradio Intellectual Property.
(e) With respect to each item of Dataradio Intellectual Property
owned or purported to be owned by Dataradio or one of its Subsidiaries,
including, but not limited to, the Intellectual Property identified on
Schedule 4.16(d):
(i) Dataradio or one of its Subsidiaries possesses all right, title, and
interest in and to such item, free and clear of any Encumbrance other than a
Permitted Encumbrance;
(ii) such item is not subject to any outstanding Court Order, and no
suit, claim, action or proceeding is pending or, to the Knowledge of
Dataradio, threatened, that challenges the legality, validity, enforceability,
use or ownership of such item, except as disclosed on Schedule 4.16(e); and
(iii) except as disclosed on Schedule 4.16(e), neither Dataradio nor one
of its Subsidiaries has agreed nor is obligated to indemnify any person for or
against any interference, infringement, misappropriation or other conflict
with respect to such item.
(f) Schedule 4.16(f) identifies each material item of Dataradio
Intellectual Property that any person besides Dataradio or one of its
Subsidiaries owns and that is used by Dataradio or one of its Subsidiaries in
connection with the business thereof pursuant to any license, sublicense or
other contract or agreement, other than any non-exclusive end user license of
commercially available desktop application software used generally in support
Dataradio's operations (the "Licenses"). Except as disclosed on Schedule
4.16(f), there are no royalties for the use of any such Dataradio Intellectual
Property. This Agreement, the Ancillary Agreements and transactions
contemplated hereby and thereby will not violate or beach the terms of any of
the Licenses nor will they entitle any other party to terminate or modify such
Licenses. Dataradio has made available to CalAmp true, accurate and complete
copies of all of the Licenses, in each case, as amended or otherwise modified
and in effect. With respect to each such item identified on Schedule 4.16(f):
(i) to the Knowledge of Dataradio, such item is not subject to any outstanding
Court Order, and no suit, claim, action or proceeding is pending or threatened
that challenges the legality, validity or enforceability of such item and (ii)
neither Dataradio nor any of its Subsidiaries has granted any material
sublicense or similar right with respect to any License covering such item.
(g) All current and former employees and contractors of Dataradio
and its Subsidiaries who contributed to the Intellectual Property owned or
purported to be owned by Dataradio or one of its Subsidiaries have executed
enforceable contracts that assign to Dataradio or one of its Subsidiaries all
the respective rights, including Intellectual Property, and waive all non-
assignable rights, such as moral rights, to any inventions, improvements,
discoveries or information relating to the business of Dataradio or one of its
Subsidiaries made by such employees or contractors in the course of their
employment by Dataradio or one of its Subsidiaries.
4.17 Environmental Matters.
(a) For the purposes of this Section 4.17:
(i) "CERCLA" means the U.S. Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et
seq., as amended.
(ii) "Disposal," "Release" and "Threatened Release" shall
have the definitions assigned thereto in any Environmental Law and includes
any sudden, intermittent or gradual release, spill, leak, pumping, addition,
pouring, emission, emptying, discharge, migration, injection, escape,
leaching, disposal, dumping, deposit, spraying, burial, abandonment,
incineration, seepage, placement or introduction whether accidental or
intentional.
(iii) "Environment" means the natural environment, including
any ambient, workplace or indoor air (including all layers of the atmosphere),
surface water, drinking water, groundwater, land surface, subsurface strata,
river sediment, plant or animal life, natural resources, workplace, and real
property and the physical buildings, structures, improvements and fixtures
thereon, and all sewer systems.
(iv) "Environmental Laws" means all applicable Regulations
relating to Hazardous Substances, toxic torts, occupational health and safety,
or the Environment, including without limitation, civil responsibility for
acts or omissions with respect to the Environment, the Environmental Quality
Act (Quebec), the Resource Conservation and Recovery Act, CERCLA, the Clean
Air Act, the Water Pollution Control Act, the Safe Drinking Water Act, and the
Toxic Substances Control Act, and any requirements promulgated pursuant to
these applicable Regulations or any analogous applicable Regulations.
(v) "Environmental Liabilities" means all Liabilities of a
Person (whether such Liabilities are owed by such Person to governmental
authorities, third parties or otherwise) whether currently in existence or
arising hereafter which arise under or relate to any Environmental Law.
(iv) "Hazardous Substance" means any substance or material
(including any mixture or solution thereof): (A) the presence of which
requires investigation or remediation under any Environmental Law; or (B) that
is defined, listed, designated, classified as or otherwise determined to be a
"pollutant" or "contaminant," "solid waste," "hazardous waste" or "hazardous
substance" under any Environmental Law; or (C) that is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic or mutagenic or
otherwise hazardous and is regulated by any governmental authority having or
asserting jurisdiction over Dataradio; or (D) the presence of which causes a
nuisance, trespass or other tortious condition; or (E) the presence of which
poses a hazard to the health or safety of Persons; or (F) without limitation,
that contains gasoline, diesel fuel or other petroleum hydrocarbons,
polychlorinated biphenols (PCBs) or asbestos.
(b) Except as disclosed in Schedule 4.17(b), each of Dataradio and
its Subsidiaries, each of the real properties presently or formerly owned by
Dataradio and its Subsidiaries, and to the Knowledge of Dataradio each of the
real properties presently or formerly leased or operated by Dataradio and its
Subsidiaries, are, and at all times have been, in material compliance with all
Environmental Laws.
(c) Except as disclosed in Schedule 4.17(c), each of Dataradio and
its Subsidiaries has obtained all Permits that are required under any
Environmental Law. Schedule 4.17(c) sets forth all Permits issued under any
Environmental Law relating to Dataradio, any of its Subsidiaries or the
Business.
(d) Except as set forth in Schedule 4.17(d), each of Dataradio and
its Subsidiaries is in material compliance with all terms and conditions of
all Permits required under all Environmental Laws that are used in the
Business or that relate to Dataradio or any of its Subsidiaries. Each of
Dataradio and its Subsidiaries is also in material compliance with all other
limitations, restrictions, conditions, standards, requirements, schedules and
timetables required or imposed under all Environmental Laws.
(e) Except as set forth in Schedule 4.17(e), there are no past or
present events, conditions, circumstances, incidents, actions or omissions
relating to or in any way affecting Dataradio, any of the Subsidiaries or the
Business that violate or may violate any Environmental Law after the Closing
Date or that may give rise to any Environmental Liability, or otherwise form
the basis of any demand, complaint, grievance, Proceeding, causes of action,
prosecution, hearing, study or investigation (i) under any Environmental Law,
(ii) based on or related to the generation, manufacture, processing,
distribution, use, treatment, storage (including without limitation
underground storage tanks), Disposal, transport or handling, or the emission,
discharge, Release or Threatened Release of any Hazardous Substance or (iii)
resulting from exposure to workplace hazards.
(f) During the period that Dataradio or any of its Subsidiaries
has owned or leased its properties and facilities, (i) there have been no
Disposals, Releases or Threatened Releases of Hazardous Substances on, at, in,
to, from or under such properties or facilities or presence of any above
ground or underground storage systems, active or abandoned and (ii) neither
Dataradio nor any of its Subsidiaries, nor, to Dataradio's Knowledge, any
third party, has used, generated, manufactured or stored on, at, in, under or
about such properties or facilities or transported to or from such properties
or facilities any Hazardous Substances. Dataradio has no Knowledge of any
presence, Disposals, Releases or Threatened Releases of Hazardous Substances
on, at, in, to, from or under any of such properties or facilities or presence
of any above ground or underground storage systems, active or abandoned, which
may have occurred prior to Dataradio having taken possession of any of such
properties or facilities.
(g) Dataradio has delivered to CalAmp all material environmental
documents, studies and reports in its possession or control or otherwise
available to it relating to: (i) any facilities or real property ever owned,
operated or leased by Dataradio or any of its Subsidiaries or (ii) any
Environmental Liability of the Business, Dataradio or any of its Subsidiaries.
4.18 Employee Benefits.
(a) Schedule 4.18 sets forth a complete and accurate list of all
"employee benefit plans" (as defined in Section 3(3) of ERISA), whether or not
subject to ERISA, and all other employment, bonus, stock option, stock
purchase or other equity-based, benefit, incentive compensation, profit
sharing, savings, retirement (including early retirement and supplemental
retirement), disability, insurance, vacation, incentive, deferred
compensation, supplemental retirement (including termination indemnities and
seniority payments), severance, termination, retention, change of control and
other similar fringe, welfare or other employee benefit plans, programs,
agreement, contracts, policies or arrangements (whether or not in writing)
maintained or contributed to for the benefit of or relating to any current or
former employee or director (and their dependents) of Dataradio, any of its
Subsidiaries or any other trade or business (whether or not incorporated)
which would be treated as a single employer with Dataradio or any of its
Subsidiaries under the Regulations, Section 414 of the Code (an "ERISA
Affiliate"), or with respect to which Dataradio or any of its Subsidiaries has
any Liability (together the "Employee Plans"). With respect to each Employee
Plan (as applicable), Dataradio has made available to CalAmp complete and
accurate copies of (i) the most recent two years' annual reports on Form 5500,
including all schedules thereto; (ii) the most recent determination letter
from the Internal Revenue Service for any Employee Plan that is intended to
qualify under Section 401(a) of the Code; (iii) the plan documents and summary
plan descriptions, or a written description of the terms of any Employee Plan
that is not in writing; (iv) any related trust agreements, insurance
contracts, insurance policies or other documents of any funding arrangements;
and (v) any notices to or from the Internal Revenue Service or any office or
representative of the Department of Labor or any similar governmental entity
relating to any compliance issues in respect of any such Employee Plan. No
Employee Plan is (1) a "defined benefit plan" (as defined in Section 414 of
the Code or applicable Regulations), (2) a "multiemployer plan" (as defined in
Section 3(37) of ERISA or applicable Regulations), (3) a "multiple employer
plan" (as defined in Section 4063 or 4064 of ERISA or applicable Regulations)
(in each case under clause (1), (2) or (3) whether or not subject to ERISA or
applicable Regulations), (4) subject to Section 302 of ERISA, Section 412 of
the Code or Title IV of ERISA or (5) a registered pension plan under
applicable Regulations.
(b) Each Employee Plan has been maintained, operated and
administered in compliance with its terms and with all applicable Regulations.
All contributions, premiums and other payments required to be made with
respect to any Employee Plan have been timely made or accrued for under
applicable Regulations and the terms of such Employee Plan.
(c) No Employee Plan that is a non-qualified deferred compensation
plan or arrangement subject to Section 409A of the Code has been materially
modified (as defined under Section 409A of the Code) since October 3, 2004 and
all such non-qualified deferred compensation plans or arrangements have been
operated and administered in good faith in compliance with Section 409A of the
Code from the period beginning January 1, 2005 through the date hereof.
(d) There are no Legal Proceedings pending or, to the Knowledge of
Dataradio, threatened on behalf of or against any Employee Plan, the assets of
any trust under any Employee Plan, or the plan sponsor, plan administrator or
any fiduciary of any Employee Plan. No event has occurred and there currently
exists no condition or set of circumstances in connection with which Dataradio
or any of its Subsidiaries could be subject to any liability (other than
routine claims for benefits) under the terms of any Employee Plan, ERISA, the
Code or any other applicable Regulations.
(e) No fiduciary or party in interest of any Employee Plan has
participated in, engaged in or been a party to any transaction that is
prohibited under Section 4975 of the Code or Section 406 of ERISA and not
exempt under Section 4975 of the Code or Section 408 of ERISA, respectively.
With respect to any Employee Plan, (i)neither Dataradio nor any of its ERISA
Affiliates has had asserted against it any claim for Taxes under Chapter 43 of
Subtitle D of the Code and Section 5000 of the Code, or for penalties under
ERISA Section 502(c), 502(i) or 502 (l), nor, to the Knowledge of Dataradio,
is there a basis for any such claim, and (ii)no officer, director or employee
of Dataradio or any Subsidiary has committed a breach of any fiduciary
responsibility or obligation imposed by Title I of ERISA.
(f) No Employee Plan that is a "welfare benefit plan" within the
meaning of Section 3(1) of ERISA (whether or not subject to ERISA) provides
benefits to former employees (or their dependents) of Dataradio or its ERISA
Affiliates, other than pursuant to Section 4980B of the Code or any similar
state Law. Dataradio and its ERISA Affiliates have complied in all material
respects with the provisions of Part 6 of Title I of ERISA and Sections 4980B,
9801, 9802, 9811 and 9812 of the Code.
(g) Each Employee Plan intended to be qualified under Section
401(a) of the Code, and each trust intended to be exempt under Section 501(a)
of the Code, has been determined to be so qualified or exempt by the IRS, and
since the date of each most recent determination, there has been no event,
condition or circumstance that has adversely affected or is reasonably likely
to adversely affect such qualified status.
(h) Neither the execution or delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement will, either
alone or in conjunction with any other event, (i)result in any payment or
benefit becoming due or payable, or required to be provided, to any director,
employee or independent contractor of Dataradio or any of its Subsidiaries,
(ii)increase the amount or value of any benefit or compensation otherwise
payable or required to be provided to any such director, employee or
independent contractor or (iii)result in the acceleration of the time of
payment, vesting or funding of any such benefit or compensation.
(i) In accordance with applicable Regulations, each Employee Plan
can be amended or terminated at any time, without consent from any other party
and without liability other than for benefits accrued as of the date of such
amendment or termination (other than charges incurred as a result of such
termination).
4.19 Employment and Labor Matters.
(a) Dataradio and its Subsidiaries have complied, and are in
compliance, with all applicable laws relating to employment and labor matters,
including any provision thereof relating to wages, hours of work, vacation
pay, pay equity, overtime pay, occupational health and safety and conditions
of employment.
(b)Except as set forth in Schedule 4.19(b):
(i) there is no collective agreement in force with respect
to the employees of Dataradio or any of its Subsidiaries, no collective
agreement is currently being negotiated by Dataradio or any of its
Subsidiaries, no union or employee bargaining agent holds bargaining rights
with respect to any employees of Dataradio or any of its Subsidiaries, and
there are no current or, to Dataradio's Knowledge, threatened attempts to
organize or establish any trade union or employee association with respect to
Dataradio or any of its Subsidiaries, nor have there been any such attempts
within the past five years;
(ii) Dataradio and its Subsidiaries have not engaged in any
unfair labor practice. There is no unfair labor practice complaint pending
or, to Dataradio's Knowledge, threatened against Dataradio or any of its
Subsidiaries and there is no labor strike, slow down, work stoppage or lockout
in effect, or to Dataradio's Knowledge, threatened against Dataradio or any of
its Subsidiaries, nor has there been any such event within the past five
years;
(iii) all amounts due and owing or accrued but not yet owing
for all salary, wages, bonuses, commissions, vacation pay, pension benefits or
other employee benefits have been paid or, if accrued, are reflected in the
books and records of Dataradio and its Subsidiaries;
(iv) Dataradio and its Subsidiaries are not subject to any
claim for wrongful dismissal, constructive dismissal or any other claim,
grievance, complaint or litigation relating to employment, discrimination or
termination of employment of any of their employees or former employees, or
relating to any failure to hire a candidate for employment;
(v) there is no order pursuant to any law requiring the
taking of any action or the refraining from taking any action in respect of
any employee or former employee of Dataradio or any of its Subsidiaries;
(vi) there are no outstanding loans made by Dataradio or any
of its Subsidiaries to any employee or former employee of Dataradio or any of
its Subsidiaries (for greater certainty, the travel advances or advances
against commission of less than CAN$2,000 are not considered as loans for the
purposes of this paragraph); and
(vii) to Dataradio's Knowledge, no managerial employee and
no groups of employees of Dataradio or of any of its Subsidiaries have any
plans to terminate his, her or their employment with Dataradio or any of its
Subsidiaries.
(c) Schedule 4.19(c) contains for:
(i) all employees, directors, managers and officers of
Dataradio and its Subsidiaries, the following correct and complete lists on a
no-name basis:
(1) a list of all salaries, wage rates, hourly pay
rates and commissions, incentive compensation, bonus arrangements, deferred
compensation and benefits in effect during the current Fiscal Year;
(2) a list of their job titles;
(3) a list indicating how many individuals work full-
time and part-time;
(4) a list of their number of years of service; and
(5) a list indicating how many individuals are laid-
off or on a leave of absence with the reasons for any such leave of absence;
and
(ii) all contractors and agents of Dataradio and its
Subsidiaries, the following correct and complete lists:
(1) a list of the names and status of each individual,
including a description of the services performed for Dataradio or its
Subsidiaries; and
(2) a list of all consulting fees or compensation paid
during the current Fiscal Year.
(d) Schedule 4.19(d) contains a list of all employment and service
agreements (whether written and oral) of Dataradio and any of its Subsidiaries
with their employees or consultants, as the case may be. Dataradio has
furnished CalAmp with true and complete copies of all such agreements. Except
as set forth in Schedule 4.19(d) and except as may be required or stipulated
by any applicable law, no employee, director, manager or officer of Dataradio
or of any of its Subsidiaries has any agreement as to length of notice,
severance or termination payment required to terminate his employment or is
bound by any non-disclosure, confidentiality, non-competition, proprietary
rights, employment, consulting or similar agreement with any Person which, to
Dataradio's Knowledge, may adversely affect the performance of his or her
duties as an employee, director, manager or officer of Dataradio or any of its
Subsidiaries.
4.20 Permits. Schedule 4.20 sets forth a complete list of all Permits
used in the operation of the Business or otherwise held by Dataradio or any of
its Subsidiaries in connection with the Business, all of which are as of the
date hereof, and all of which will be as of the Closing Date, in full force
and effect. Dataradio and its Subsidiaries have, and at all times have had,
all Permits required under any Regulation in the operation of the Business and
own or possess such Permits free and clear of all Encumbrances except
Permitted Encumbrances. Dataradio and its Subsidiaries are not in material
Default and have not received any notice of any claim of Default, with respect
to any such Permit. Except as otherwise governed by law, all such Permits are
renewable by their terms or in the Ordinary Course of Business without the
need to comply with any special qualification procedures or to pay any amounts
other than routine filing fees and will not be adversely affected by the
completion of the transactions contemplated by this Agreement. No present or
former shareholder, director, officer or employee of Dataradio or its
Subsidiaries, or any Affiliate thereof, or any other Person, owns or has any
proprietary, financial or other interest (direct or indirect) in any Permit
which Dataradio or one of its Subsidiaries owns, possesses or uses.
4.21 Interested Party Transactions. Except as set forth Schedule 4.21,
no officer or director of any of Dataradio or any of its Subsidiaries or any
Affiliate of any such person has had, either directly or indirectly, a
material interest in: (a) any person or entity which purchases from or sells,
licenses or furnishes to Dataradio or any of its Subsidiaries any goods,
property, technology, intellectual or other property rights or (b) any
contract or agreement to which Dataradio or any of its Subsidiaries is a party
or by which it may be bound or affected.
4.22 Insurance. Schedule 4.22 sets forth a complete and correct list
of all insurance policies of Dataradio and its Subsidiaries of any kind
currently in force and also sets forth for each insurance policy the type of
coverage, the name of the insureds, the insurer, the premium, the expiration
date, the deductibles and loss retention amounts and the amounts of coverage.
All insurance coverage applicable to Dataradio, its Subsidiaries and the
Business is in full force and effect, insures Dataradio and its Subsidiaries
in reasonably sufficient amounts against all risks usually insured against by
persons operating similar businesses or properties of similar size in the
localities where such businesses or properties are located. Except as set
forth on Schedule 4.22, Dataradio and its Subsidiaries have no self-insurance
or co-insurance programs, and the reserves set forth on the Interim Financial
Statements are adequate to cover all anticipated liabilities with respect to
any such self-insurance or co-insurance programs.
4.23 Certain Business Practices. None of the directors, officers,
agents or employees of Dataradio or any of its Subsidiaries or Affiliates has
(a) used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses, including without limitation, expenses related to political
activity, (b) made any unlawful payment to foreign or United States or
Canadian domestic government officials or employees or to foreign or United
States or Canadian domestic political parties or campaigns, made any bribes or
kickback payments or violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended, or the Corruption of Foreign Public Officials Act
(Canada), as amended, or (c) made any other unlawful payment.
4.24 Books and Records. Dataradio has made and kept (and given CalAmp
access to) its and its Subsidiaries true, correct and complete books and
records and accounts, which, in reasonable detail, accurately and fairly
reflect the activities of Dataradio and its Subsidiaries. The minute books of
Dataradio and its Subsidiaries previously made available to CalAmp accurately
and adequately reflect in all material respects all action previously taken by
the shareholders, board of directors and committees of the board of directors
of Dataradio and its Subsidiaries. The copies of the stock book records of
Dataradio and its Subsidiaries previously made available to CalAmp are true,
correct and complete, and accurately reflect all transactions effected in the
stock of Dataradio and its Subsidiaries through and including the date hereof.
4.25 Accounts Receivable; Inventory.
(a) The accounts receivable set forth on the Interim Financial
Statements represent bona fide claims of Dataradio or one of its Subsidiaries
against debtors for products sold or services performed or other charges
arising on or before the date hereof. Such accounts receivable are subject to
no defenses, counterclaims or rights of setoff and are fully collectible in
the Ordinary Course of Business without cost in collection efforts therefor,
except to the extent of the appropriate reserves for bad debts on accounts
receivable as set forth on the Interim Financial Statements and, in the case
of accounts receivable arising since the Interim Date, to the extent of a
reasonable reserve rate for bad debts on accounts receivable which is not
greater than the rate reflected by the reserve for bad debts on the Interim
Financial Statements.
(b) The Inventory reflected in the Financial Statements or
thereafter acquired (through the Closing Date) has been determined and valued
in accordance with Canadian GAAP applied on a consistent basis as reflected in
the Financial Statements and the books and records Dataradio and its
Subsidiaries at the lower of cost or market on a first-in, first-out basis.
The Inventory (whether raw materials, work-in-process or other inventory) is
of first quality usable or salable in the ordinary course of business, except
for obsolete or damaged Inventory for which adequate reserves have been made
on the Financial Statements or, with respect to the period after the date of
the Financial Statements, for which reserves have been established on the
books and records of Dataradio and in Subsidiaries in accordance with Canadian
GAAP in the ordinary course of business consistent with past practices. No
previously sold Inventory is subject to refunds materially in excess of that
historically experienced by Dataradio and its Subsidiaries. All Inventory
conforms to all applicable design specifications or industry standards of any
governmental entity or otherwise. All commitments or orders for work-in-
process were entered into in the ordinary course of business.
4.26 Customers; Suppliers.
(a) Schedule 4.26(a) sets forth a true and correct list of the ten
largest customers of Dataradio and its Subsidiaries in terms of revenues
during the Fiscal Year ended July 31, 2005, showing the approximate total
products sold or services performed by Dataradio or one of its Subsidiaries to
or for each such customer during each such period. No customer of Dataradio
or its Subsidiaries listed on Schedule 4.26(a) has notified Dataradio or its
Subsidiaries in writing or otherwise of any intention to stop, or materially
decrease the rate of, buying goods or services from Dataradio or its
Subsidiaries or to change its current business relationship with Dataradio and
its Subsidiaries and no significant customer has otherwise expressed such
intention.
(b) Schedule 4.26(b) sets forth a true and correct list of the ten
largest suppliers of Dataradio and its Subsidiaries in terms of costs during
the Fiscal Year ended July 31, 2005, showing the approximate total paid by
Dataradio or one of its Subsidiaries to each such supplier during each such
period. No supplier of Dataradio or its Subsidiaries listed on Schedule
4.26(b) has notified Dataradio or its Subsidiaries in writing or otherwise of
any intention to stop, or materially decrease, the amount of business it does
with Dataradio or its Subsidiaries or to change its current business
relationship with Dataradio and its Subsidiaries and no significant supplier
has otherwise expressed such intention.
4.27 No Brokers. Except as set forth on Schedule 4.27, none of
Dataradio or its Subsidiaries or any of the officers, directors, employees or
shareholders of Dataradio and its Subsidiaries has entered into nor will enter
into any contract, agreement, arrangement or understanding with any broker,
finder or similar agent or any Person which will result in the obligation of
Acquisition Sub, CalAmp, Dataradio or any of their respective Affiliates to
pay any finder's fee, brokerage fees or commission or similar payment in
connection with the transactions contemplated hereby.
4.28 Bank Accounts. Schedule 4.28 contains a true, correct and
complete list of all bank accounts maintained by Dataradio and its
Subsidiaries, including each account number and the name and address of each
bank and the name of each Person who has signature power with respect to each
such account.
4.29 HSR Act; Competition Act.
(a) The assets of Dataradio and its Subsidiaries located in the
United States have a book value of less than US$56.7 million. Dataradio and
its Subsidiaries did not make sales in or into the United States of more than
US$56.7 million in the Fiscal Year ended July 31, 2005.
(b) For the purposes of determining the application of the pre-
merger filing requirements of the Competition Act (Canada), the aggregate
value of each of (i) the assets in Canada and (ii) the gross revenues from
sales in or from Canada generated from such assets, for Dataradio together
with its Subsidiaries, determined as prescribed for the purposes of section
110 of the Competition Act (Canada), does not exceed Canadian $50 million.
4.30 Investment Canada Act (Canada). Neither Dataradio nor its
Subsidiaries provides any of the services or engages in any of the activities
of a business described in subsection 14.1(5) of the Investment Canada Act
(Canada).
4.31 Title to Shares. As of the date hereof, each Shareholder is the
registered and sole beneficial owner of the Shares held by such Shareholder,
with good and marketable title thereto, free and clear of any and all liens,
security interests, pledges, mortgages, charges, limitation, claims,
restrictions, rights of first refusal, rights of first offer, rights of first
negotiation or other Encumbrance of any kind or nature whatsoever. Effective
upon the Closing, each Shareholder will be the registered and sole beneficial
owner of the Shares held by such Shareholder, with good and marketable title
thereto, free and clear of any and all liens, security interests, pledges,
mortgages, charges, limitation, claims, restrictions, rights of first refusal,
rights of first offer, rights of first negotiation or other Encumbrance of any
kind or nature whatsoever. Upon consummation of the purchase of the Shares
from each Shareholder, Acquisition Sub will acquire from such Shareholder good
and marketable title to the Shares held by such Shareholder, free and clear of
any and all liens, security interests, pledges, mortgages, charges,
limitation, claims, restrictions, rights of first refusal, rights of first
offer, rights of first negotiation or other Encumbrance of any kind or nature
whatsoever.
4.32 Residence of Shareholders. Except as set forth on Schedule 4.32,
each Shareholder is not a non-resident of Canada within the meaning of the
ITA.
4.33 Material Misstatements or Omissions. No representations or
warranties by Dataradio or the Shareholders in this Agreement, including,
without limitation, the Schedules hereto, contains any untrue statement of a
material fact, or omits or will omit to state any material fact necessary to
make the statements or facts contained therein not misleading. Dataradio has
disclosed to CalAmp all events, conditions and facts materially affecting the
Business and financial condition of Dataradio and its Subsidiaries on the date
hereof.
4.34 Warranties. Schedule 4.34 sets forth complete and accurate
summaries of the written warranties and guaranties by Dataradio or any of its
Subsidiaries utilized with respect to its products or services. There have
not been any material deviations from such warranties and guaranties, and none
of Dataradio's Subsidiaries nor any of Dataradio's or its Subsidiaries'
salespeople, employees, distributors and agents is authorized by Dataradio to
undertake material warranty obligations to any customer or to other third
parties in excess of the warranties or guaranties set forth on Schedule 4.34.
To Dataradio's knowledge, neither Dataradio nor any of its Subsidiaries has
made any material oral warranty or guaranty with respect to its products or
services.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUISITION SUB
Each of CalAmp and Acquisition Sub hereby represents and warrants to
each of Dataradio and the Shareholders as follows, which representations and
warranties are, as of the date hereof, and will be, as of the Closing Date,
true and correct:
5.1 Organization. Acquisition Sub is a corporation duly incorporated
and organized, and is validly existing and up-to-date in the filing of all
corporate and similar returns under all applicable Regulations, its
jurisdiction of incorporation, and has all requisite corporate power and
capacity to own its properties and assets and to carry on its business as now
conducted and as presently proposed to be conducted. CalAmp is a corporation
duly incorporated and organized, and is validly existing and up-to-date in the
filing of all corporate and similar returns under the laws of the State of
Delaware, its jurisdiction of incorporation, and has all requisite corporate
power and capacity to own its properties and assets and to carry on its
business as now conducted and as presently proposed to be conducted.
5.2 Due Authorization. Each of CalAmp and Acquisition Sub has all
requisite power and authority, and has taken all action necessary, to execute
and deliver this Agreement and the Ancillary Agreements to which it is a
party, to consummate the transactions contemplated hereby and thereby and to
perform its obligations hereunder and thereunder. The execution and delivery
of this Agreement and the Ancillary Agreements to which it is a party by each
of CalAmp and Acquisition Sub and the consummation by each of CalAmp and
Acquisition Sub of the transactions contemplated hereby and thereby have been
duly approved by the boards of directors of each of CalAmp and Acquisition
Sub. No other proceeding on the part of each of CalAmp and Acquisition Sub
are necessary to authorize this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby. This Agreement has been duly
executed and delivered by each of CalAmp and Acquisition Sub and is, and upon
execution and delivery the Ancillary Agreements will be, a legal, valid and
binding obligation of each of CalAmp and Acquisition Sub, enforceable against
each of CalAmp and Acquisition Sub in accordance with their respective terms
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors' rights
generally and except insofar as the availability of equitable remedies may be
limited by applicable law.
5.3 No Conflicts. Each of CalAmp and Acquisition Sub is not in any
violation, breach or default of any term of its charter or bylaws or in any
material respect of any term or provision of any mortgage, indenture,
contract, agreement or instrument to which CalAmp of Acquisition Sub is a
party or by which it may be bound, or of any provision of any United States or
Canadian national, federal, provincial, state or local Court Order or
Regulation, applicable to or binding upon CalAmp or Acquisition Sub. The
execution, delivery and performance of and compliance with this Agreement and
the consummation of the transactions contemplated hereby will not result in
any such violation or default, or be in conflict with or constitute, with or
without the passage of time or the giving of notice or both, either a default
under CalAmp's or Acquisition Sub's charter or bylaws, or any agreement or
contract to which CalAmp or Acquisition Sub is party, or, to the best of
CalAmp's knowledge, a violation of any Regulations or Court Orders, or an
event which results in the creation of any lien, charge or Encumbrance upon
any of the assets of CalAmp or Acquisition Sub.
5.4 Consents and Approvals. No consent, approval or authorization of,
declaration to, or filing or registration with, any governmental or regulatory
authority, or any other Person, is required to be made or obtained by
Acquisition Sub or CalAmp in connection with the execution, delivery and
performance by Acquisition Sub or CalAmp of this Agreement and the
consummation of the transactions contemplated hereby.
5.5 Litigation. There is no Proceeding pending, or to the knowledge
of Acquisition Sub or CalAmp, threatened or anticipated against or affecting
Acquisition Sub or CalAmp which has or might be reasonably expected to have a
Material Adverse Effect on Acquisition Sub or CalAmp or on the ability of
Acquisition Sub or CalAmp to perform any of its obligations hereunder or on
the consummation of the transactions contemplated by this Agreement.
5.6 No Brokers. Neither Acquisition Sub nor CalAmp nor any of their
respective partners, Representatives or Affiliates has entered into nor will
enter into any contract, agreement, arrangement or understanding with any
broker, finder or similar agent or any Person which will result in the
obligation of Dataradio or the Shareholders to pay any finder's fee, brokerage
fees or commission or similar payment in connection with the transactions
contemplated hereby.
ARTICLE VI
CERTAIN COVENANTS
Each of Dataradio, the Shareholders, CalAmp and Acquisition Sub
covenants and agrees as follows:
6.1 Conduct of the Business. From the date hereof through the
Closing, Dataradio shall, and shall cause its Subsidiaries to, and the
Shareholders shall cause Dataradio and its Subsidiaries to, carry on the
operation of the Business in the Ordinary Course and substantially in
accordance with past practice and will use its reasonable best efforts not to
take any action inconsistent with this Agreement. Except as contemplated
hereby or as may be incidental to or in furtherance of the transactions
contemplated hereby or as may have been set forth herein or in the Schedules
hereto, Dataradio shall, and shall cause its Subsidiaries to, and the
Shareholders shall cause Dataradio and its Subsidiaries to, use its best
efforts to maintain the present character and quality of the Business,
including its present operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers and employees.
Without limiting the generality of the foregoing, unless consented to by
CalAmp in writing within at least three (3) Business Days following the
receipt of written notice from Dataradio (which consent shall not be
unreasonably withheld), each of Dataradio and its Subsidiaries, except as
specifically contemplated by this Agreement, shall not, and the Shareholders
shall cause each of Dataradio and its Subsidiaries not to:
(a) except in the Ordinary Course of Business, incur any
indebtedness for borrowed or purchase money or letters of credit, or assume,
guarantee, endorse (other than endorsements for deposit or collection in the
Ordinary Course of Business), or otherwise become responsible for obligations
of any other Person;
(b) incur any Liability, except Liabilities (i) incurred in the
Ordinary Course of Business where the aggregate dollar amount of all such
Liabilities incurred does not exceed CAN$500,000, (ii) incurred pursuant to
existing obligations of Dataradio that are disclosed in the Schedules hereto,
(iii) incurred for payroll purposes in the Ordinary Course of Business or
(iv) expressly contemplated by the terms of this Agreement;
(c) issue or redeem any securities;
(d) make or incur any obligation to make any distribution to the
Shareholders;
(e) make any change to its articles of incorporation, certificate
of incorporation, bylaws or other organizational documents;
(f) mortgage, pledge or otherwise encumber any of its assets or
sell, transfer or otherwise dispose of any of its assets except in the
Ordinary Course of Business;
(g) make any investment of a capital nature either by purchase of
stock or securities, contributions to capital, property transfer or otherwise,
or by the purchase of any property or assets of any other Person, except in
the Ordinary Course of Business;
(h) terminate or renew any Material Contract or modify, amend or
make any material change to any Material Contract or enter into or renew any
other contract entered into by Dataradio after the date hereof which, if in
existence on the date hereof, would be considered a Material Contract, unless
the same shall be terminable on no more than 90 days' written notice without
penalty or payment and is entered into in the Ordinary Course of Business;
(i) make any change in any method of accounting or accounting
practice;
(j) (i)pay or agree to pay any compensation to or for any
employee, shareholder, officer or director of Dataradio or its Subsidiaries
other than in the Ordinary Course of Business and in the amounts and manner as
such compensation has been paid by Dataradio or its Subsidiaries in the past,
or make any other change in the compensation of the employees of Dataradio or
any of its Subsidiaries, (ii)pay or agree to pay any bonus, incentive
compensation, service award or other like benefit or (iii)enter into or renew
any Employee Plan;
(k) enter into any agreement or make any commitment or offer with
respect to the Business other than in the Ordinary Course of Business for the
transfer of cash at rates and other terms consistent with past practice;
(l) purchase or otherwise acquire assets from any other Person, or
sell or transfer any assets, other than in the Ordinary Course of Business;
(m) allow any liens for Taxes to be placed on any of its assets,
except for liens arising from Taxes which are due but not yet payable;
(n) make or change any election in respect of Taxes, enter into
any closing agreement, settle any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of material Taxes;
(o) fail to comply with all material applicable laws; and
(p) take or agree in writing or otherwise to take any of the
actions described in Sections 6.1(a) through 6.1(p) or do any other act which
would cause any representation or warranty of Dataradio in this Agreement to
be or become untrue in any material respect or that is not in the Ordinary
Course of Business consistent with past practice.
6.2 Investigation by CalAmp. Dataradio shall allow CalAmp and
Acquisition Sub during regular business hours to make such investigation of
the business, properties, books and records of Dataradio and its Subsidiaries,
and to conduct such examination of the condition of the assets of Dataradio
and its Subsidiaries and the Business as CalAmp and Acquisition Sub deem
necessary or advisable to familiarize itself with the assets, properties,
books, records and other matters and to verify the representations and
warranties of Dataradio hereunder, including, without limitation, discussions
with Dataradio's and its Subsidiaries' officers, employees, independent
accountants, actuaries, customers, distributors and suppliers and other
agents; provided that CalAmp and Acquisition Sub shall conduct such
investigation in a manner so as to minimize the disruption of the business and
operations of Dataradio and its Subsidiaries.
6.3 Further Assurances. Upon the terms and subject to the conditions
contained herein, the parties agree (i) to use all reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement and the Ancillary Agreements,
(ii) to execute any documents, instruments or conveyances of any kind which
may be reasonably necessary or advisable to carry out any of the transactions
contemplated hereunder and thereunder and (iii) to cooperate with each other
in connection with the foregoing.
6.4 Notification of Certain Matters.
(a) Dataradio and the Shareholders shall give prompt notice to
CalAmp and Acquisition Sub of (i)the occurrence, or failure to occur, of any
event which occurrence or failure would be likely to cause any representation
or warranty of Dataradio of the Shareholders contained in this Agreement or in
any Ancillary Agreement, exhibit or schedule to be untrue or inaccurate in any
material respect and (ii)any material failure of Dataradio or any of its
Subsidiaries, or any of the Shareholders, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement or any Ancillary Agreement, exhibit or schedule; provided,
however, that such disclosure shall not be deemed to cure any breach of a
representation, warranty, covenant or agreement or to satisfy any condition.
Dataradio and the Shareholders shall promptly notify CalAmp and Acquisition
Sub of the threat or commencement of any Action, or any development that
occurs before the Closing that could in any way result in a Material Adverse
Effect.
(b) CalAmp and Acquisition Sub shall give prompt notice to
Dataradio of (i)the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or warranty
of CalAmp or Acquisition Sub contained in this Agreement or in any Ancillary
Agreement, exhibit or schedule to be untrue or inaccurate in any material
respect and (ii)any material failure of CalAmp or Acquisition Sub to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement or any Ancillary Agreement, exhibit or
schedule; provided, however, that such disclosure shall not be deemed to cure
any breach of a representation, warranty, covenant or agreement or to satisfy
any condition.
6.5 Employee Matters. Acquisition Sub and CalAmp intend to continue
the employment with Dataradio of all employees of Dataradio on an at-will
basis at the Closing at the same compensation levels such employees received
as of the Closing Date. Dataradio and the Shareholders shall each use their
commercially reasonable efforts to assist Acquisition Sub in continuing the
employment of such employees of Dataradio.
6.6 Public Announcements; Confidentiality. On and after the date
hereof and through the Closing Date, Dataradio and CalAmp shall consult with
each other before issuing any press releases or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby, and none of the parties shall issue any press release or make any
public statement prior to obtaining the other parties' written approval, which
approval shall not be unreasonably withheld, except that no such approval
shall be necessary to the extent disclosure may be required by applicable
Regulations or any listing agreement of any party hereto. The confidentiality
agreement, dated as of November 14, 2005, by and between Dataradio and CalAmp
(the "Confidentiality Agreement") shall continue in full force and effect
after the date hereof.
6.7 Shareholder Release.
(a) Each of the Shareholders will, as of the Closing Date, agree
to finally and forever release Dataradio, and its successors, assigns,
officers, directors, agents and employees, CalAmp and its successors, assigns
and directors, each of the employees and officers of CalAmp listed on Annex 1
attached hereto, and all Affiliates and Subsidiaries, past and present, of
CalAmp and Dataradio, from all agreements, commitments, indebtedness,
obligations and claims existing as of the date hereof or which, to the extent
arising from or in connection with any act, omission or state of facts taken
or existing on or prior to the date hereof, may exist after the date hereof,
except to the extent such agreements, commitments, indebtedness, obligations
and claims are contemplated by this Agreement. In addition, each of the
Shareholders hereby acknowledges and agrees that this release extends to all
claims of every nature and kind whatsoever, known or unknown, suspected or
unsuspected, except to the extent such claims are contemplated by the
Agreement. Each of the Shareholders acknowledges its understanding that the
facts in respect of which this release is given may hereafter be determined to
be other than or different from the facts now known or believed by such
Shareholder, and each of the Shareholders hereby accepts and assumes the risks
of the facts being different and agrees that this release shall be and remain,
in all respects, effective and not subject to termination or rescission by
reason of any such difference in facts. The parties hereto intend that the
provisions regarding the claims released herein be construed as broadly as
possible, and incorporate herein similar federal, state, provincial or other
Regulations, all of which are similarly waived by each Shareholder.
(b) Each of the Shareholders covenants and agrees to waive and
release the right to receive any and all amounts due to such Shareholder
pursuant to Liabilities of Dataradio by reason of any agreement between
Dataradio and such Shareholder on or before the Closing Date or otherwise.
Each of the Shareholders shall have caused all indebtedness owed to Dataradio
by such Shareholder or any Affiliate of such Shareholder to be paid in full
prior to the Closing. In addition, each of the Shareholders covenants and
agrees to take any and all actions as may be necessary to effect the release
of indebtedness contemplated hereby, in form reasonably satisfactory to
CalAmp.
(c) Each of the Shareholders hereby acknowledges that, as of the
Closing Date, such Shareholder will have no ongoing interest in Dataradio,
financial or otherwise, by reason of ownership of the capital stock of
Dataradio or otherwise.
6.8 Tax Audits and Reassessments. From and after the Closing Date,
CalAmp and Acquisition Sub covenant and agree that neither shall request that
any taxing authority of a federal, national, provincial, state or local
government in the United States or Canada initiate an audit of, or a tax
reassessment pertaining to, any of the Tax Returns filed by Dataradio or its
Subsidiaries prior to the Closing Date. For the sake of clarity, Cal Amp and
Acquisition Sub shall not be treated as making such request as a result of the
filing of any Tax Return or amended Tax Return for such period or as a result
of communications with the taxing authorities during the course of an audit or
examination initiated by the taxing authorities. Until the third anniversary
following the Closing Date, ,CalAmp and Acquisition Sub shall notify the
Shareholders' Representative of the intent to file any amended Tax Return
prior to the filing of such Tax Return.
6.9 Other Proposals. Immediately after the execution of this
Agreement, the Shareholders and Dataradio shall terminate and cease, and shall
direct their Subsidiaries, Affiliates, officers, directors, representatives
and agents (such Persons collectively shall be referred to as the "Dataradio
Group") to terminate and cease, all discussions and negotiations that may then
be ongoing by any of them with respect to an Alternative Transaction (as
defined below). From the date hereof through the earlier of (a) the Closing
or (b) the termination of this Agreement in accordance with its terms, none of
the Shareholders, Dataradio or any member of Dataradio shall, directly or
indirectly, (i) solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any Person or group of
Persons (other than CalAmp, Acquisition Sub or any of their respective
Affiliates) concerning any Alternative Transaction, or (ii) enter into any
agreement, arrangement or understanding (including any letter of intent or
similar document) involving an Alternative Transaction or which could
reasonably be expected to result in the abandonment, termination or failure to
consummate the transactions contemplated by this Agreement. Dataradio shall
notify CalAmp within two Business Days if any member of Dataradio Group
receives a bona fide, written offer in respect of an Alternative Transaction.
"Alternative Transaction" means any transaction or series of related
transactions involving (A) the acquisition of Dataradio or any of its
Subsidiaries by merger, consolidation or otherwise by any Person other than
CalAmp, Acquisition Sub or any Affiliate thereof (a "Third Party"); (B) the
acquisition by a Third Party of any material portion of the assets of
Dataradio and its Subsidiaries; (C) the acquisition by a Third Party of
fifteen percent (15%) or more of the outstanding Shares; (D) the adoption by
Dataradio of a plan of total or partial liquidation or the declaration or
payment of an extraordinary dividend; (E) the repurchase by Dataradio or any
of its Subsidiaries of more than ten percent (10%) of the outstanding Shares;
or (F) the acquisition by Dataradio or any of its Subsidiaries by merger,
purchase of stock or assets, joint venture or otherwise of a direct or
indirect ownership interest or investment in any business whose annual
revenues, net income or assets is equal or greater than twenty percent (20%)
of the annual revenues, net income or assets of Dataradio and its
Subsidiaries.
6.10 Post Closing Net Worth. For a period of five (5) years following
the Closing, the Shareholder Indemnitors shall preserve, renew and keep in
full force and effect the legal existence of at least one of the Shareholder
Indemnitors, and such Shareholder Indemnitor or Shareholder Indemnitors, as
the case may be, shall maintain in the aggregate a liquid net worth of at
least Five Million Canadian Dollars (CAN$5,000,000) (the "Minimum Liquid Net
Worth") . On each six (6) month anniversary following the Closing Date during
this five (5) year period, the Shareholders' Representative shall deliver to
CalAmp a statement prepared and certified by the chief financial officer(s) of
each Shareholder Indemnitor (or in such officer's absence, a responsible
senior officer of such Shareholder) included in the determination of the
maintenance of the Minimum Liquid Net Worth attesting to the accuracy of the
reported Minimum Liquid Net Worth for such Shareholder(s).
6.11 Dataradio Employee Bonus Payments. Within ten Business Days of
the Closing Date, Acquisition Sub agrees to cause Dataradio to pay all
employee bonuses that were accrued as of the Closing Date. The Shareholders'
Representative shall direct Acquisition Sub, subject to the consent of
Acquisition Sub, which consent shall not be unreasonably withheld, as to the
Dataradio employees that will receive bonus payments and the amount of such
payments. The maximum aggregate payment that Dataradio shall be obligated to
make pursuant to this Section 6.11 shall be Five Million Nine Hundred Thousand
Canadian Dollars (CAN$5,900,000), which amount shall be inclusive of any
employer-related taxes or other amounts owed in connection with such employee
bonus payments.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to Each Party's Obligations. The respective
obligations of each party hereto to consummate the transactions provided
for hereby are subject to the satisfaction, on or prior to the Closing Date,
of each of the following conditions:
(a) No Proceeding by any governmental authority or other Person
shall have been instituted or threatened which seeks to prevent, enjoin, alter
or materially delay the transactions contemplated by this Agreement or
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected to damage the assets of Dataradio or its
Subsidiaries materially if the transactions contemplated hereby are
consummated. There shall not be any Regulation, Court Order or other
applicable law or regulation of any foreign jurisdiction that makes the
transactions contemplated hereby and by the Ancillary Agreements illegal or
otherwise prohibited.
(b) Any governmental or regulatory notices or approvals required
under any Regulations or other applicable law or regulation of any foreign
jurisdiction to carry out the transactions contemplated by this Agreement
shall have been obtained and the parties shall have complied with all
Regulations and other applicable laws and regulations of any foreign
jurisdiction applicable to the transactions contemplated by this Agreement.
7.2 Conditions to the Obligation of Dataradio and the Shareholders.
The obligations of Dataradio and the Shareholders to consummate the
transactions provided for hereby are subject to the satisfaction, on or prior
to the Closing Date, of each of the following conditions, any of which may be
waived by Dataradio or the Shareholders:
(a) All representations and warranties of each of CalAmp and
Acquisition Sub contained in this Agreement or in any other document delivered
pursuant hereto that are qualified as to materiality shall be true and correct
and those not so qualified shall be true and correct in all material respects,
at and as of the date of this Agreement and at and as of the Closing Date as
though made on the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties qualified as to materiality shall be true and
correct, and those not so qualified shall be true and correct in all material
respects, on and as of such earlier date)
(b) Each of Acquisition Sub and CalAmp shall have performed and
satisfied in all material respects all agreements and covenants required
hereby to be performed by it prior to or on the Closing Date.
(c) Acquisition Sub shall have tendered for delivery the documents
and other items to be delivered by such parties pursuant to Article III of
this Agreement.
7.3 Conditions to the Obligation of Acquisition Sub. The obligation
of Acquisition Sub to consummate the transactions provided for hereby are
subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, any of which may be waived by Acquisition Sub:
(a) All representations and warranties of each of Dataradio and
the Shareholders contained in this Agreement or in any other document
delivered pursuant hereto that are qualified as to materiality shall be true
and correct and those not so qualified shall be true and correct in all
material respects, at and as of the date of this Agreement and at and as of
the Closing Date as though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties qualified as to materiality shall be
true and correct, and those not so qualified shall be true and correct in all
material respects, on and as of such earlier date)
(b) Each of Dataradio and the Shareholders shall have performed
and satisfied in all material respects all agreements and covenants required
hereby to be performed by it prior to or on the Closing Date.
(c) Each of Dataradio and the Shareholders shall have tendered for
delivery the documents and other items to be delivered by such parties
pursuant to Article III of this Agreement.
(d) All Permits and Consents by governmental agencies that are
required for the consummation of the transactions contemplated hereby, or by
third parties that are required in order to prevent a breach of, a Default
under, or a termination, change in the terms or conditions or modification of,
any instrument, contract, lease, license or other agreement to which Dataradio
is a party and which is denoted with an asterisk (*) on either Schedule 4.12
or Schedule 4.20 shall have been obtained on terms and conditions satisfactory
to Acquisition Sub. In the event Dataradio cannot obtain certain Consents
prior to the Closing and Acquisition Sub elects to waive this condition to
Closing, Dataradio and the Shareholders shall have the continuing obligation
after the Closing to use its commercially reasonable efforts to endeavor to
obtain all necessary Consents.
(e) Dataradio shall have obtained on terms and conditions
satisfactory to Acquisition Sub the Consent of the Ministry of Industry
through Communications Research Centre Canada with respect to the License
Agreement dated as of July 12, 1999 between Her Majesty The Queen In Right of
Canada, as represented by the Ministry of Industry, through the Communications
Research Centre Canada, and Dataradio, and as amended by Amendment Number 1
dated as of July 23, 2003. In the event Dataradio shall not have obtained
such Consent prior to the Closing and Acquisition Sub, in its sole discretion
elects to waive this condition to Closing, Dataradio and the Shareholders
shall have the continuing obligation after the Closing to use their best
efforts to obtain such Consent.
(f) Dataradio shall have filed all Tax Returns required to be
filed in connection with the Fiscal Years ended July 31, 2005.
(g) The Executives and Dataradio shall have executed and delivered
the Ancillary Agreements.
(h) All liens against Dataradio or any of its assets or properties
shall have been released, including, without limitation, those liens listed on
Schedule 7.3(h) hereto, except as otherwise provided for herein.
(i) Dataradio shall have delivered to Acquisition Sub the written
opinions of counsel to Dataradio, dated as of the Closing Date, substantially
in the form attached hereto as Exhibit D.
(j) The offer and sale of the Shares to Acquisition Sub pursuant
to this Agreement shall be exempt from the registration, prospectus and
qualification requirements of all applicable securities Regulations.
(k) Since the date of this Agreement, there shall have been no
Material Adverse Effect on Dataradio.
(l) Acquisition Sub shall have received the letters of resignation
of each of the directors of Dataradio and its Subsidiaries, effective as of
the Closing Date.
(m) The Dataradio Accountants shall have delivered a written
consent to CalAmp for the use of the reports of the Dataradio Accountants
dated November 4, 2005, and the reference to it, in a current report on Form
8-K filed with the SEC by CalAmp with respect to the filing of the Financial
Statements for the Fiscal Years ending July 31, 2005 and 2004 and the
transactions contemplated hereby.
ARTICLE VIII.
TERMINATION
8.1 Termination. This Agreement may be terminated at any time prior
to the Closing Date:
(a) by mutual written consent of Acquisition Sub, Dataradio and
the Shareholders;
(b) by Acquisition Sub or Dataradio and the Shareholders if (i)any
governmental authority shall have issued a final order, decree or ruling or
taken any other final action restraining, enjoining or otherwise prohibiting
the transactions contemplated hereby and such order, decree, ruling or other
action is or shall have become nonappealable or (ii) the transactions
contemplated hereby have not been consummated by June 30, 2006 (the "Outside
Date"); provided, however, that no party may terminate this Agreement pursuant
to this clause (ii) if such party's failure to fulfill any of its obligations
under this Agreement shall have been the reason that the Closing Date shall
not have occurred on or before said date;
(c) by Dataradio and the Shareholders if (i) there shall have been
a breach of any representation or warranty on the part of Acquisition Sub or
CalAmp set forth in this Agreement or if any representation or warranty of
Acquisition Sub or CalAmp shall have become untrue, in either case such that
the conditions set forth in Section 7.2(a) would be incapable of being
satisfied by the Outside Date or (ii) there shall have been a breach by
Acquisition Sub or CalAmp of any of their respective covenants or agreements
hereunder materially adversely affecting (or materially delaying) the
consummation of the transactions contemplated hereby, and Acquisition Sub or
CalAmp has not cured such breach or event within twenty (20) Business Days
after notice by Dataradio thereof; provided that Dataradio and the
Shareholders have not breached any of their respective obligations hereunder;
or
(d) by Acquisition Sub if (i) there shall have been a breach of
any representation or warranty on the part of Dataradio or the Shareholders
set forth in this Agreement or if any representation or warranty of Dataradio
or the Shareholders shall have become untrue in either case such that the
conditions set forth in Section 7.3(a) would be incapable of being satisfied
by the Outside Date or (ii) there shall have been a breach by Dataradio or the
Shareholders of any of their respective covenants or agreements hereunder
having a Material Adverse Effect on Dataradio or materially adversely
affecting (or materially delaying) the consummation of the transactions
contemplated hereby, and Dataradio or the Shareholders, as the case may be,
have not cured such breach or event within twenty (20) Business Days after
notice by Acquisition Sub thereof; provided that Acquisition Sub or CalAmp has
not breached any of its respective obligations hereunder.
8.2 Effect of Termination.
(a) In the event of the termination and abandonment of this
Agreement pursuant to Section 8.1, this Agreement shall forthwith become void
and have no effect without any liability on the part of any party hereto or
its Affiliates, directors, officers or stockholders other than the provisions
of Section 6.6, this Section 8.2, the arbitration provisions of Section 9.3(b)
and Section 10.12 hereof. Nothing contained in this Section 8.2 shall relieve
any party from liability for any breach of this Agreement that occurred prior
to such termination.
(b) In the event of the termination and abandonment of this
Agreement for any reason, CalAmp agrees that, for a period of eighteen months
after the date of such termination, it will not solicit for employment any
officer or employee of Dataradio; provided, however, the foregoing provision
will not prevent CalAmp from employing any such person who contacts CalAmp
solely on his or her own initiative or in response to general advertisements
in periodicals including newspapers and trade publications.
(c) In the event that this Agreement is terminated for any reason
pursuant to clause (ii) of Section 8.1(b) and, prior to the expiration of six
months after such termination, an agreement is entered into by Dataradio
and/or the Shareholders with respect to any transaction or series of related
transactions involving (A) the acquisition of Dataradio or any of its
Subsidiaries by merger, consolidation or otherwise by any Third Party, (B) the
acquisition by a Third Party of any material portion of the assets of
Dataradio and its Subsidiaries or (C) the acquisition, directly or indirectly,
by a Third Party of fifty percent (50%) or more of the outstanding Shares, in
each case where the aggregate consideration to be paid to Dataradio and/or the
Shareholders and/or their Affiliates, regardless of form, is Sixty Million
Canadian Dollars (CAN$60,000,000) or more, after subtracting any amounts of
cash required to be left in Dataradio or its Subsidiaries as of the
consummation of any such transaction, CalAmp and Acquisition Sub would suffer
direct and substantial damages, which damages cannot be determined with
reasonable certainty. To compensate CalAmp and Acquisition Sub for such
damages, Dataradio shall pay to CalAmp the amount of Four Million Canadian
Dollars (CAN$4,000,000) (the "CalAmp Termination Fee") as liquidated damages
immediately upon the occurrence of the event described in this Section 8.2(c)
giving rise to such damages. Except for claims or causes of action based on
fraud, in the event that the CalAmp Termination Fee is paid as required
herein, such CalAmp Termination Fee payment shall be the sole and exclusive
remedy with respect to such termination and all matters arising out of or in
connection with or in any way related to such termination or matters and
neither CalAmp nor Acquisition Sub shall be entitled to any further or other
rights, claims or remedies. It is specifically agreed that the amount to be
paid pursuant to this Section 8.2(c) represents liquidated damages and not a
penalty. Dataradio hereby waives any right to set-off or counterclaim against
such amount.
ARTICLE IX.
INDEMNIFICATION
9.1 Survival of Representations. The representations and warranties
of Dataradio, the Shareholders and Acquisition Sub and CalAmp contained herein
shall survive the Closing Date until the second anniversary of the Closing
Date; provided, however, that: (i) the representations and warranties set
forth in Sections 4.1 ("Organization"), 4.2 ("Capitalization"), 4.4 ("Due
Authorization"), 4.27 ("No Brokers") and 4.30 ("Title to Shares") shall
survive shall survive the Closing Date until the fifth anniversary of the
Closing Date, (ii) the representations and warranties set forth in Sections
4.14 ("Compliance with Law"), 4.16 ("Intellectual Property"), 4.17
("Environmental Matters") and 4.18 ("Employee Benefits") shall survive until
the third anniversary of the Closing Date and (iii) the representations and
warranties in Section 4.15 ("Taxes") shall survive the Closing Date until
sixty days following the expiration of all periods allowed for objecting to or
appealing from the final determination of any proceedings relating to any
assessment, reassessment or additional assessment of Dataradio and its
Subsidiaries by and taxing authority in respect of any Tax period ending on or
prior to the Closing Date. For these purposes, a final determination shall
mean (A) the expiry of the delay to appeal from or object to the relevant
assessment, reassessment or additional assessment by Canada Revenue Agency,
Revenue Quebec or other taxing authority if no appeal is taken or no objection
is made, (B) the entering into of any agreement by Dataradio and its
Subsidiaries and such a taxing authority in settlement of a dispute regarding
such assessment, reassessment, additional assessment or proposed assessment,
reassessment or additional assessment of (C) the decision by a court or
tribunal of competent jurisdiction regarding the relevant assessment,
reassessment or additional assessment from which no appeal may be taken or the
period during which an appeal may be taken has expired and no appeal has been
taken. Any claims under this Agreement with respect to a breach of a
representation and warranty must be asserted by written notice within the
applicable survival period contemplated by this Section 9.1 or within the 30
days immediately thereafter, and if such a notice is given, the survival
period for such representation and warranty shall continue until the claim is
fully resolved. The right to indemnification or other remedy based on the
representations, warranties, covenants and agreements herein will not be
affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired) at any time, whether before or after
the execution and delivery of this Agreement or the Closing, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or agreement. All representations and warranties of each
party set forth in this Agreement shall be deemed to have been made again by
such party at and as of the Closing Date. The waiver of any condition based
on the accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or agreement, will not affect the right to
indemnification or other remedy based on such representations, warranties,
covenants and agreements, unless such right is also expressly waived.
9.2 Indemnification.
(a) Subsequent to the Closing and subject to the provisions and
limitations on indemnity contained in Sections 9.5 and 9.6 hereof, the
Shareholders shall, jointly and solidarily, indemnify CalAmp, Acquisition Sub
and their respective Affiliates (including, after the Closing, Dataradio), and
each of their respective directors, and each of the employees and officers of
CalAmp listed on Annex 1 attached hereto ("Acquisition Sub Indemnified
Parties") against, and hold each of the Acquisition Sub Indemnified Parties
harmless from, any damage, claim, loss, cost, Liability or expense, including
without limitation, interest, penalties, reasonable attorneys' fees and
expenses of investigation, consequential damages, response action, removal
action or remedial action (collectively "Damages") incurred by such
Acquisition Sub Indemnified Party that arise out of or relate to, whether
directly or indirectly: (i) any misrepresentation or breach of any warranty
on the part of Dataradio or the Shareholders contained in this Agreement or in
any agreement, certificate or other instrument delivered by Dataradio or the
Shareholders pursuant to this Agreement (without giving effect to any
limitations or qualifications thereto, including materiality, Material Adverse
Effect or Knowledge), (ii) any breach or non-performance by Dataradio or the
Shareholders of any of their respective covenants or agreements contained in
this Agreement or in any agreement, certificate or other instrument delivered
by Dataradio or the Shareholders pursuant to this Agreement, (iii) any claim
made by any Person with respect to any oral or written option, warrant or
other agreement or right to acquire any equity securities of Dataradio or any
of its Subsidiaries and (iv) any Workers' Compensation Liability exceeding
CAN$79,275.
(b) Subsequent to the Closing and subject to the provisions and
limitations on indemnity contained in Sections 9.5 and 9.6 hereof, each of
Acquisition Sub and CalAmp shall jointly and solidarily indemnify each of the
Shareholders ("Shareholder Indemnified Parties"), against, and hold each of
the Shareholder Indemnified Parties harmless from, any Damages incurred by
such Shareholder Indemnified Party that arise out of or relate to, whether
directly or indirectly: (i)any breach of any representation or warranty of
Acquisition Sub or CalAmp contained in this Agreement or in any agreement,
certificate or other instrument delivered by Acquisition Sub or CalAmp
pursuant to this Agreement (without giving effect to any limitations or
qualifications thereto, including materiality, Material Adverse Effect or
knowledge) or (ii)any breach or non-performance by Acquisition Sub or CalAmp
of its covenants or agreements contained in this Agreement or in any
agreement, certificate or other instrument delivered by Acquisition Sub or
CalAmp pursuant to this Agreement.
9.3 Notice of Claims.
(a) Any Acquisition Sub Indemnified Party or Shareholder
Indemnified Party (the "Indemnified Party") seeking indemnification hereunder
shall, within the relevant limitation period provided for in Section 9.1
above, give to the party obligated to provide indemnification (the
"Indemnitor") to such Indemnified Party a notice (a "Claim Notice") describing
in reasonable detail the facts giving rise to any claims for indemnification
hereunder and shall include in such Claim Notice (if then known) the amount or
the method of computation of the amount of such claim, and a reference to the
provision of this Agreement or any agreement, certificate or instrument
executed pursuant hereto or in connection herewith upon which such claim is
based; provided, that a Claim Notice in respect of any action at law or suit
in equity by or against a third Person as to which indemnification will be
sought shall be given promptly after the action or suit is commenced; and
provided further, that failure to give such notice shall not relieve the
Indemnitor of its obligations hereunder except to the extent it shall have
been prejudiced by such failure.
(b) Indemnitor shall have thirty days after the giving of any
Claim Notice pursuant hereto to (i) agree to the amount or method of
determination set forth in the Claim Notice and to pay such amount to such
Indemnified Party in immediately available funds or (ii) to provide such
Indemnified Party with notice that it disagrees with the amount or method of
determination set forth in the Claim Notice (the "Dispute Notice"). Within
fifteen days after the giving of the Dispute Notice, a representative of
Indemnitor and such Indemnified Party shall negotiate in a bona fide attempt
to resolve the matter. In the event that the controversy is not resolved
within thirty days of the giving of the Dispute Notice, the parties shall
proceed to binding arbitration pursuant to the following procedures:
(1) Any party may send another party written notice
identifying the matter in dispute and invoking the procedures of this Section
9.3. Within 14 days, each party involved in the dispute shall meet at a
mutually agreed location in Montreal, Quebec, for the purpose of determining
whether they can resolve the dispute themselves by written agreement, and, if
not, whether they can agree upon a third-party arbitrator to whom to submit
the matter in dispute for final and binding arbitration.
(2) If such parties fail to resolve the dispute by written
agreement or agree on the arbitrator within said 14-day period, any such party
may make written application to the American Arbitration Association ("AAA")
for the appointment of a panel of three arbitrators (collectively, the
"Arbitrator") to resolve the dispute by arbitration. At the request of AAA
the parties involved in the dispute shall meet with AAA at its offices within
ten calendar days of such request to discuss the dispute and the
qualifications and experience which each party respectively believes the
Arbitrator should have; provided, however, that the selection of the
Arbitrator shall be the exclusive decision of AAA and shall be made within 30
days of the written application to AAA.
(3) Within 120 days of the selection of the Arbitrator, the
parties involved in the dispute shall meet in Montreal, Quebec with such
Arbitrator at a place and time designated by such Arbitrator after
consultation with such parties and present their respective positions on the
dispute. The arbitration proceeding shall be held in accordance with the
rules for commercial arbitration of the AAA in effect on the date of the
initial request for appointment of the Arbitrator, that gave rise to the
dispute to be arbitrated (as such rules are modified by the terms of this
Agreement or may be further modified by mutual agreement of the parties).
Each party shall have no longer than five days to present its position, the
entire proceedings before the Arbitrator shall be no more than ten consecutive
days, and the decision of the Arbitrator shall be made in writing no more than
30 days following the end of the proceeding. Such an award shall be a final
and binding determination of the dispute and shall be fully enforceable as an
arbitration decision in any court having jurisdiction and venue over such
parties. The prevailing party (as determined by the Arbitrator) shall in
addition be awarded by the Arbitrator such party's own attorneys' fees and
expenses in connection with such proceeding. The non-prevailing party (as
determined by the Arbitrator) shall pay the Arbitrator's fees and expenses.
9.4 Third Person Claims.
(a) If a claim by a third Person is made against an Indemnified
Party, and if such party intends to seek indemnity with respect thereto under
this Article IX, such Indemnified Party shall promptly notify the Indemnitor
in writing of such claims, setting forth such claims in reasonable detail.
The Indemnitor shall have 20 days after receipt of such notice to undertake,
conduct and control, through counsel of its own choosing and at its own
expense, the settlement or defense thereof, and the Indemnified Party shall
cooperate with it in connection therewith; provided that the Indemnified Party
may participate in such settlement or defense through counsel chosen by such
Indemnified Party and paid at its own expense; and provided further that, if
in the opinion of counsel for such Indemnified Party, there is a reasonable
likelihood of a conflict of interest between the Indemnitor and the
Indemnified Party, the Indemnitor shall be responsible for reasonable fees and
expenses of one counsel to such Indemnified Party in connection with such
defense. So long as the Indemnitor is reasonably contesting any such claim in
good faith, the Indemnified Party shall not pay or settle any such claim
without the consent of the Indemnitor. If the Indemnitor does not notify the
Indemnified Party within ten days after receipt of the Indemnified Party's
notice of a claim of indemnity hereunder that it elects to undertake the
defense thereof, the Indemnified Party shall have the right to undertake, at
Indemnitor's cost, risk and expense, the defense, compromise or settlement of
the claim but shall not thereby waive any right to indemnity therefore
pursuant to this Agreement. The Indemnitor shall not, except with the consent
of the Indemnified Party, enter into any settlement that does not include as
an unconditional term thereof the giving by the person or persons asserting
such claim to all Indemnified Parties (i.e., the Shareholder Indemnified Party
or the CalAmp Indemnified Party, as the case may be) of an unconditional
release from all liability with respect to such claim or consent to entry of
any judgment.
(b) Notwithstanding Section 9.4(a), the Indemnitor shall not be
permitted to compromise and settle or to cause a compromise and settlement of
any Third Person Claim relating to Taxes without the prior written consent of
the Indemnified Party if such compromise and settlement may have an impact
upon Taxes for any period ending after the Closing Date. The Indemnitor's
right to defend any Third Person Claim in respect of any Tax or other
liability enforceable by Lien against the property of or any amount receivable
by the Indemnified Party shall only apply after payment to the applicable
taxing authority or other Person of the amount due in respect thereof.
9.5 Limitation on Indemnity.
(a) Notwithstanding the foregoing, an Indemnitor shall not be
obligated to indemnify an Indemnified Party under Sections 9.2(a)(i) or
(b)(i) unless and until the aggregate of all Damages suffered by such
Indemnified Parties hereunder exceeds CAN$75,000 (the "Threshold Amount"),
whereupon, provided the other requirements of this Article IX have been
complied with, the Indemnitor shall only be responsible for the amount of
Damages in excess of such Threshold Amount, and all subsequent Damages.
Notwithstanding the foregoing, no Threshold Amount shall apply to the
obligations of any party hereto to the extent a breach results from actual
fraud, intentional misrepresentation or active concealment.
(b) Subject to the provisions and limitations on indemnity
contained in Section 9.6 hereof, the total aggregate indemnity obligations of
the Shareholders under Section 9.2(a)(i) shall not exceed CAN$5,000,000 (the
"Cap"). The total aggregate indemnity obligations of the CalAmp and
Acquisition Sub under Section 9.2(b)(i) shall not exceed the Cap.
Notwithstanding the foregoing, the Cap shall not apply to (a) Dataradio's and
Shareholders' representations and warranties set forth in Sections 4.1, 4.2,
4.4, 4.15, 4.27 and 4.30 hereof and (b) the obligations of any party hereto to
the extent a breach results from actual fraud, intentional misrepresentation
or active concealment.
(c) Notwithstanding anything to the contrary contained herein, all
amounts due to CalAmp pursuant to the Purchase Price Adjustments set forth in
Section 2.3 hereof shall not be subject to the provisions of this Article IX.
9.6 Payment out of Escrow Account. Any indemnification or
reimbursement payments to be made by the Shareholders pursuant to this Article
IX shall be paid first from the Escrow Amount pursuant to the terms of the
Escrow Agreement; provided that the Acquisition Sub Indemnified Parties'
recourse with respect to amounts owing to any such Acquisition Sub Indemnified
Party pursuant to this Article IX shall not be limited to the Escrow Amount,
but shall be limited by the provisions of Section 9.5(b). Without limiting
any of the foregoing indemnification rights of the Acquisition Sub Indemnified
Parties, (a) CalAmp and Acquisition Sub agree that, with respect to any
Damages recoverable by the Acquisition Sub Indemnified Parties in excess of
the Escrow Amount, the Acquisition Sub Indemnified Parties shall only seek to
recover such Damages from the Shareholder Indemnitors and (b) the Shareholder
Indemnitors agree that they shall be jointly and solidarily liable for the
full amount of any Damages recoverable by the Acquisition Sub Indemnified
Parties in excess of the Escrow Amount, subject to the provisions of Section
9.5(b).
9.7 Remedies. The remedies in this Article IX shall be the exclusive
remedies of the parties with respect to any breach of the respective
representations, warranties, covenants and agreements pursuant to this
Agreement or otherwise arising out of this Agreement, regardless of the theory
or cause of action plead, except for the remedies of specific performance,
injunction and other equitable relief; provided, however, that no party hereto
shall be deemed to have waived any rights, claims, causes of action or
remedies if and to the extent such rights, claims, causes of action or
remedies may not be waived under applicable law or actual fraud, intentional
misrepresentation or active concealment is proven on the part of a party by
another party hereto.
9.8 Contract Revenues. To the extent of any indemnification payment
made to CalAmp or Acquisition Sub pursuant to this Article IX in connection
with a breach of Section 4.7(c) (the "Uncollected Contract Revenues"), CalAmp
and Acquisition Sub agree to cause Dataradio to execute and deliver to the
Shareholders' Representative all instruments as shall be reasonably necessary
to effectively vest in the Shareholders all of the right, title, and interest
of Dataradio with respect to any Uncollected Contract Revenues. If following
any indemnification payment on account of such Uncollected Contract Revenues,
Dataradio shall have received a payment from a third party for such
Uncollected Contract Revenues, CalAmp and Acquisition Sub agree to cause
Dataradio to forward any such payment to the Shareholders' Representative to
the extent of any indemnification payment actually received by CalAmp or
Acquisition Sub and such amount shall be added back to the amount available
under the Cap.
ARTICLE X.
MISCELLANEOUS
10.1 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, their successors and permitted
assigns, in accordance with the terms hereof. Neither this Agreement nor any
of the rights or obligations hereunder may be assigned by Dataradio or the
Shareholders without the prior written consent of CalAmp, or by Acquisition
Sub or CalAmp without the prior written consent of the Shareholders, except
that Acquisition Sub or CalAmp may, without such consent, assign the rights
and obligations hereunder (both before and after the Closing Date), to an
Affiliate of Acquisition Sub; provided, however, that no such assignment shall
release Acquisition Sub or CalAmp of any of its obligations under this
Agreement. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, and no other Person shall have any right, benefit or obligation
hereunder.
10.2 Notices. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by any party to the other
shall be in writing and delivered in person or by courier, telegraphed,
telexed or by facsimile transmission or mailed by registered or certified
mail, postage prepaid, return receipt requested (such mailed notice to be
effective on the date of such receipt is acknowledged), as follows:
If to Acquisition Sub or CalAmp:
CalAmp Corp.
0000 X. Xxxx Xxx.
Xxxxxx, XX, 00000
Attn: Chief Executive Officer
Facsimile No.: 000-000-0000
With copies to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 X. Xxxxx Xxx.
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Facsimile No.: 213-229-6595
Stikeman Elliott LLP
0000 Xxxx Xxxxxxxx Xxxx. Xxxx
Xxx 000, TD Centre
Xxxxx 0000, Xxxxxxxx, Xxxxxx, X0X 0X0 Xxxxxx
Attn: Xxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
If to Dataradio or the Shareholders:
Dataradio Inc.
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
XXX, Xxxxxxxx, Xxxxxx, Xxxxxx X0X 0X0
With copies to:
GROSS, PINSKY
Avocats / Attorneys
Attn: Xxxx Xxxxxx
0 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
0000 xx Xxxxxxxxxxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxx, X0X 0X0
Xxxxxxxxxx Securities Inc.
1 Complexe Xxxxxxxxxx
X.X. 394, Succ. Desjardins
29th floor, South Tower
Attn: Corporate Finance
Xxxxxxxx, XX X0X 0X0
Any party may, from time to time, designate any other address to which
any such notice to such party shall be sent. Any such notice shall be deemed
to have been delivered upon receipt.
10.3 Choice of Law. This Agreement shall be governed by and construed
in accordance with the laws of the Province of Quebec. The parties hereto
acknowledge that they have requested and are satisfied that this Agreement and
all related documents be drawn up in English. Les parties aux presentes
reconnaissent avoir requis que la presente entente et les documents qui y sont
relatifs soient rediges en anglais.
10.4 Entire Agreement; Amendments and Waivers. This Agreement, the
Confidentiality Agreement, the Ancillary Agreements and all exhibits and
schedules hereto and thereto, to be read together as a single transaction,
constitute the entire agreement among the parties pertaining to the subject
matter hereof and supersede all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the parties. No supplement,
modification or other amendment or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.
10.5 Counterparts. This Agreement may be executed by facsimile and in
one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
10.6 Severability. If any provision of this Agreement is deemed or
held to be illegal, invalid or unenforceable, this Agreement shall be
considered divisible and inoperative as to such provision to the extent it is
deemed to be illegal, invalid or unenforceable, and in all other respects this
Agreement shall remain in full force and effect; provided, however, that if
any provision of this Agreement is deemed or held to be illegal, invalid or
unenforceable there shall be added hereto automatically a provision as similar
as possible to such illegal, invalid or unenforceable provision that is legal,
valid and enforceable. Further, should any provision contained in this
Agreement ever be reformed or rewritten by any judicial body of competent
jurisdiction, such provision as so reformed or rewritten shall be binding upon
all parties hereto.
10.7 Headings. The headings of the Articles and Sections herein are
inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
10.8 Schedules. The Schedules and the Exhibits referenced in this
Agreement are a material part hereof and shall be treated as if fully
incorporated into the body of the Agreement.
10.9 No Third Party Beneficiaries. Nothing expressed or referred to
in this Agreement will be construed to give any Person other than the parties
to this Agreement (and their successors and assigns) any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any
provision of this Agreement.
10.10 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity without the necessity of demonstrating the inadequacy
of monetary damages.
10.11 No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and no presumption
or burden of proof shall arise favoring or disfavoring any party by virtue of
the authorship of any of the provisions of this Agreement.
10.12 Expenses. Except as otherwise specifically provided in this
Agreement, including without limitation Section 8.2(c), (a) CalAmp will pay
its and Acquisition Sub's fees and expenses incident to this Agreement and the
transactions contemplated hereby, including legal and accounting fees,
investment banking fees, fees and points to any lender, consulting fees and
related disbursements in connection with any of the foregoing ("Transaction
Fees"), (b) the aggregate Transaction Fees of Dataradio and the Shareholders
shall be paid by the Shareholders.
10.13 Shareholders' Representative. By executing this Agreement, each
Shareholder irrevocably constitutes and appoints Xxxxxx Xxxxxxx as its true
and lawful agent and attorney-in-fact (the "Shareholders' Representative"),
with full powers of substitution, to act in the name, place and stead of each
Shareholder with respect to the transactions contemplated hereby in accordance
with the provisions of this Agreement and the Escrow Agreement, including,
without limitation, to grant waivers on behalf of each Shareholder or to enter
into amendments to this Agreement and to do or refrain from doing all such
further acts and things, to execute all such certificates, instruments and
other documents, as such Shareholders' Representative may deem necessary or
appropriate in connection with any of the transactions contemplated by this
Agreement or the Escrow Agreement, to give and receive notices and
communications, to authorize delivery to Acquisition Sub and CalAmp of the
Escrow Amount or other property from the Escrow Account in satisfaction of
claims by Acquisition Sub Indemnified Parties, to object to such deliveries,
to agree to, negotiate, enter into settlements and compromises of, and demand
arbitration and comply with orders of courts and awards of arbitrators with
respect to such claims and to take all actions necessary or appropriate in the
judgment of the Shareholders' Representative for the accomplishment of the
foregoing. Such agency may be changed by the Shareholder from time to time
upon not less than 30 days prior written notice to Acquisition Sub and CalAmp;
provided, however, that the Shareholders' Representative may not be removed
unless holders of a two-thirds interest in the Escrow Amount agree to such
removal and to the identity of the substituted shareholders' representative.
Any vacancy in the position of Shareholders' Representative may be filled by
approval of the holders of a majority in interest of the Escrow Account. The
Shareholders agree that any such action, if material to the rights and
obligations of the Shareholders in the reasonable judgment of the
Shareholders' Representative, shall be taken in the same manner with respect
to all Shareholders, unless otherwise agreed by each Shareholder. The
appointment of the Shareholders' Representative shall be deemed coupled with
an interest and shall be irrevocable, and Acquisition Sub, CalAmp, the Escrow
Agent and any other Person may conclusively and absolutely rely, without
inquiry, upon any actions of the Shareholders' Representative as the act of
the Shareholders in all matters referred to in this Agreement. The
Shareholders' Representative shall not be liable for any act done or omitted
hereunder as Shareholders' Representative while acting in good faith and in
the exercise of reasonable judgment.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year herein above first written.
CALAMP CORP., a Delaware corporation
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: CEO
4308093 CANADA, INC., a corporation incorporated under the laws of Canada
By: /s/ Xxxx Xxxxxxxxxx
Name: Xxxx Xxxxxxxxxx
Title: President
DATARADIO, INC., a corporation incorporated under the laws of Canada
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title:
SHAREHOLDERS:
3778576 Canada Inc.
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Famizav Holdings Inc.
By: /s/ Xxxxxx Zavackoff
Name: Xxxxxx Zavackoff
Famiroul Holdings Inc.
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Xxxxxxxx Holdings Ltd.
By: /s/ Xxxxxx Zavackoff
Name: Xxxxxx Zavackoff
Amenagements Helrob Inc.
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Chrismat Centro Inc.
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Gestion Pernor Inc.
By: /s/ Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx
Xxxxx Interests Inc.
By: /s/ X. Xxxxxxx
Name: X. Xxxxxxx
