EXHIBIT 10.1
COMBINATION AGREEMENT
This Agreement is made as of the 15th day of May, 2002
AMONG:
XXXXXXX COMPUTER ASSOCIATES, INC.,
a corporation existing under the laws of the Commonwealth of Pennsylvania
("XXXXXXX"),
1518356 ONTARIO LIMITED,
a corporation existing under the Business Corporations Act (Ontario)
("SUBCO"),
XXXXXXX SOFTWARE, LTD.,
a corporation existing under the laws of the State of Delaware
("XXXXXXX DELAWARE"),
SPECTRA SECURITIES SOFTWARE INC.,
a corporation existing under the Business Corporations Act (Ontario)
("SPECTRA"),
XXXX X. XXXXXX, an individual who is a resident of Ontario, Canada
("XXXX XXXXXX"),
THE 1998 XXXXXX FAMILY TRUST,
a trust created under the laws of Ontario, Canada, by its trustees Xxxx
XxXxxx and Xxxxxxx XxXxxx
(the "XXXXXX TRUST")
RECITALS:
WHEREAS, Xxxx XxXxxx and the XxXxxx Trust are the sole owners of all of the
shares of outstanding capital stock of Eclipse VII Holdings Inc. ("ECLIPSE");
and
WHEREAS, the parties intend that Xxxxxxx acquire all of the shares of
outstanding capital stock of Spectra Securities Software Inc., a corporation
existing under the laws of the State of Delaware ("SPECTRA US"), and that
Xxxxxxx Delaware acquire all of the shares of capital stock of Spectra
Securities Software Pty Ltd. ("SPECTRA AUSTRALIA") and Spectra Securities
Software Limited ("SPECTRA UK") (each individually a "STOCK PURCHASE" and,
collectively, the "STOCK PURCHASES"); and
WHEREAS, on the Business Day immediately after the consummation of the
Stock Purchases, the parties intend that Subco acquire all of the outstanding
capital stock of Eclipse and the Spectra Shares (other than those Spectra Shares
owned by Eclipse) and immediately thereafter on the same Business Day amalgamate
with Spectra and Eclipse (the "AMALGAMATION"), all of which will be effected by
way of a Plan of Arrangement pursuant to Section 182 of the OBCA (the
"ARRANGEMENT" and collectively with the Stock Purchases, the "TRANSACTIONS");
and
WHEREAS, concurrently with the execution of this Agreement, certain holders
of Spectra Shares have entered into a Support Agreement with Xxxxxxx pursuant to
which such holders have agreed, among other things, to vote in favour of the
Transactions contemplated by this Agreement at the Special Meeting.
NOW THEREFORE IN CONSIDERATION of the mutual covenants in this Agreement,
and of other good and valuable consideration, the receipt and sufficiency of
which are acknowledged by each party, the parties hereto, intending to be
legally bound, agree as follows:
ARTICLE 1 - INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless there is something in the context or subject matter
inconsistent therewith:
"1933 ACT" means the United States Securities Act of 1933, as amended;
"1934 ACT" means the United States Securities Exchange Act of 1934, as amended;
"2001 EMPLOYEE BONUS" has the meaning set forth in Section 2.8(c) hereof;
"2001 EMPLOYEE BONUS HOLDBACK AMOUNT" means the product of (i) the quotient of
(A) the aggregate Bonus Consideration, divided by (B) the Purchase Price less
the Spectra Transaction Fees, multiplied by (ii) the Holdback Amount, all as set
forth in the sample calculation on Schedule 2.9;
"ACCEPTABLE SETTLEMENT" means either of the following: (i) a final,
non-appealable written order of a court of competent jurisdiction fully and
finally resolving any Disclosed Claim or (ii) any irrevocable settlement and
release agreement entered into fully and finally resolving a Disclosed Claim;
"ADJUSTED CLOSING DATE CASH" means the Cash as of the Closing Date (prior to
giving effect to the repayment of the VenGrowth Debentures), less the Aggregate
Spectra Subsidiary Purchase Price, one-half of the Spectra Insurance Premium,
the Disclosed Claim Settlement Amount and
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the amount of any loan from any of the Companies to the XxXxxx Parties or
Eclipse that is repaid prior to Closing;
"AFFILIATE" has the meaning given to such term in Section 13(d) of the 1934 Act;
"AGGREGATE ADDITIONAL PAYMENTS" has the meaning set forth in Section 2.5(b)
hereof:
"AGGREGATE SUBSIDIARY PURCHASE PRICE" has the meaning set forth in Section 2.2
of this Agreement;
"AGREEMENT" means this Combination Agreement among the parties hereto, together
with all Schedules hereto, as amended or supplemented from time to time in
accordance herewith;
"AMALGAMATION" means the amalgamation of Spectra, Eclipse and Subco on the terms
and subject to the conditions set out in this Agreement and the Plan of
Arrangement;
"APPLICABLE LAWS" means with respect to Laws and in the context that refers to
one or more Persons, means those Laws that apply to that Person or Persons or
its or their business, undertaking, property or securities;
"ARRANGEMENT" means the arrangement to be effected under the provisions of
Section 182 of the OBCA and pursuant to the Plan of Arrangement, substantially
as included in the Articles of Arrangement, which includes the Amalgamation, as
set forth in the recitals to this Agreement;
"ARTICLES OF ARRANGEMENT" means the Articles of Arrangement to be filed in
connection with the Arrangement, the form of which is attached hereto as
Exhibit A.
"BALANCE SHEET DATE" has the meaning set forth in Section 3.1(o) hereof;
"BASE PURCHASE PRICE" has the meaning set forth in Section 2.5(a) hereof;
"BONUS CONSIDERATION" has the meaning set forth in Section 2.8(c) hereof;
"BONUS SURRENDER AGREEMENT" has the meaning set forth in Section 2.8(c)(i)
hereof;
"BOOKS AND RECORDS" means all files, documents, instruments, papers, books and
records of Spectra or its Subsidiaries, as the case may be, including without
limitation, financial statements, Tax Returns and related work papers and
letters from accountants, budgets, pricing guidelines, ledgers, journals, deeds,
title policies, customer lists, computer files and programs, retrieval programs,
operating data and plans and environmental studies and plans;
"BUSINESS" means the software development implementation, outsourcing and
related business currently conducted by Spectra and its Subsidiaries;
"BUSINESS CUSTOMER BASE" has the meaning set forth in Section 3.1(zzz) hereof;
"BUSINESS DAY" means any day other than (a) a Saturday or Sunday or (b) a
statutory or civic holiday in Toronto, Ontario or Philadelphia, Pennsylvania;
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"BUSINESS INTELLECTUAL PROPERTY" has the meaning set forth in Section 3.1(cc)
hereof;
"CANADIAN JURISDICTIONS" has the meaning set forth in Section 3.1(ffff) hereof;
"CAP" has the meaning set forth in Section 3.5(c) hereof;
"CASH" means all of Spectra's and its Subsidiaries' cash and cash equivalents,
including cash which is subject to restrictions on use pursuant to financing
agreements or otherwise, in any currency, as reflected on the Books and Records;
"CASH OPTION" has the meaning set forth in Section 2.4(a) hereof;
"CERTIFICATE OF ARRANGEMENT" means the certificate of arrangement of Spectra to
be endorsed by the Director upon the filing of the Articles of Arrangement;
"CLAIM" means any written or oral demand, claim, suit, action, cause of action,
investigation, proceeding or notice by any Person, alleging actual or potential
Liability for any Loss;
"CLAIM NOTICE" has the meaning set forth in Section 3.5(b) hereof;
"CLOSING" means the consummation of the Arrangement on the Closing Date pursuant
to the provisions hereof;
"CLOSING CASH AMOUNT" has the meaning set forth in Section 2.5(a) hereof;
"CLOSING CERTIFICATE" has the meaning set forth in Section 2.10 hereof;
"CLOSING CONSIDERATION" has the meaning set forth in Section 2.5(b) hereof;
"CLOSING DATE" has the meaning set forth in Section 2.12 hereof;
"CLOSING NET DEBT ADJUSTMENT" has the meaning set forth in Section 2.5(a)
hereof;
"CLOSING PAYMENT FUND" has the meaning set forth in Section 2.7(c) hereof;
"CODE" means the INTERNAL REVENUE CODE OF 1986, as amended, of the United States
of America;
"COLLATERAL DOCUMENTS" has the meaning set forth in Section 3.1(k) hereof;
"COMPANIES" means Spectra and its Subsidiaries and "COMPANY" means any one of
them;
"COMPANY BENEFIT PLANS" means all employee benefit plans maintained or
contributed to by Spectra or any ERISA Affiliate, including employee benefit
plans within the meaning of Section 3(3) of ERISA, and any related or separate
contracts, plans, trusts, programs, policies, and arrangements, in each case
whether written or oral, and whether maintained by or binding upon Spectra or
any ERISA Affiliate, that provide rights or benefits of economic value to any
current or former employee of Spectra or any ERISA Affiliate or current or
former beneficiary, dependent or assignee of any such employee or former
employee;
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"CONFIDENTIALITY AGREEMENT" means the confidentiality agreement between Spectra
and Xxxxxxx dated as of November 21, 2001;
"XXXXXX" means R. Xxxxxx Xxxxxx, acting in his individual capacity, and The 1998
Xxxxxx Family Trust;
"CONTRACT" means any written or oral contract, agreement, arrangement,
commitment, note, bond, pledge, lease, mortgage, guaranty, indenture, license,
consulting agreement, supply contract, repair contract, distribution agreement,
purchase order, work order, job order, joint venture agreement, franchise,
technology and know-how agreement, employment agreement, instrument or any other
contractual commitment that is binding on any Person or its property;
"CONTROL PERIOD" has the meaning set forth in Section 4.12 hereof;
"CONVERTIBLE SECURITIES" means any options, warrants, rights, agreements or
securities enabling the holder thereof upon exchange, conversion or exercise to
acquire Spectra Shares, as the case may be;
"COPYRIGHTS" means registered copyrights, copyright applications and
unregistered copyrights;
"COURT" means the Ontario Superior Court of Justice;
"COURT ORDER" means any judgment, decree, edict, writ, injunction, award, order
or ruling of any Governmental Entity or of any arbitration or similar panel;
"CROESUS" has the meaning set forth in Section 3.1(b) hereof;
"CURRENT POLICIES" has the meaning set forth in Section 3.1(vvv) hereof;
"DEBENTURE PAYOFF AMOUNT" means a dollar amount equal to the aggregate of
principal, interest, fees and other amounts owing to VenGrowth under the
VenGrowth Debentures for payment in full of all obligations owing from Spectra
to VenGrowth on the Closing Date, including any prepayment penalties that may be
imposed in connection with the repayment of the VenGrowth Debentures at or
immediately after Closing;
"DEFAULT" means (a) a violation, breach or default, (b) the occurrence of an
event which, with the passage of time, the giving of notice or both, would
constitute a violation, breach or default, or (c) the occurrence of an event
which, with or without the passage of time, the giving of notice or both, would
give rise to a right of damages, specific performance, termination,
cancellation, renegotiation or acceleration (including, without limitation, the
acceleration of payment);
"DEPOSITARY" means CIBC Mellon Trust Company or such other institution as
Xxxxxxx may select;
"DEVELOPERS" has the meaning set forth in Section 3.1(jj) hereof;
"DIRECTOR" means the Director appointed under Section 278 of the OBCA;
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"DISCLOSED CLAIM" means any claims and assertions listed in Schedule 3.1(sss)
hereto;
"DISCLOSED CLAIM SETTLEMENT AMOUNT" means the amount payable to any Third
Parties pursuant to an Acceptable Settlement that is obtained prior to the
Closing Date;
"DISSENTING SHARES" has the meaning set forth in Section 2.6(a) hereof;
"ECLIPSE" has the meaning set forth in the recitals to this Agreement;
"ECLIPSE CASH OPTION" has the meaning set forth in Section 2.4(b) hereof;
"ECLIPSE COLLATERAL DOCUMENTS" has the meaning set forth in Section 3.1A(d)
hereof;
"ECLIPSE PURCHASE PRICE" has the meaning set forth in Section 2.5(a.1) hereof;
"ECLIPSE SHARE OPTION" has the meaning set forth in Section 2.4(b) hereof;
"ECLIPSE SHAREHOLDERS" means Xxxx XxXxxx and the XxXxxx Trust, the holders of
all of the Eclipse Shares;
"ECLIPSE SHARES" means the outstanding capital stock of Eclipse, including, but
not limited to, the common shares, Class A special shares, the Class B special
shares and Class C special shares;
"EDS" means EDS Canada Inc.;
"EFFECTIVE DATE" means the date shown on the Certificate of Arrangement issued
by the Director, giving effect to the Arrangement;
"EFFECTIVE TIME" means 12:01 a.m. (Toronto time) on the Effective Date;
"ELECTION DEADLINE" means the time specified in the Letter of Transmittal and
Election Form as the deadline for a Spectra Shareholder to elect the Share
Option or the Cash Option, but in no event less than four Business Days prior to
the Effective Date;
"EMPLOYEE SHAREHOLDERS AGREEMENT" means the Shareholders Agreement dated as of
May 5, 2000, among the parties set forth in Exhibit B;
"EMPLOYMENT AGREEMENTS" means the employment agreements among Spectra and the
parties stipulated in Sections 5.3(f) and 5.5(f) hereof;
"ENCUMBRANCE" means any mortgage, lien (including federal, state and local tax
liens), security interest, pledge, negative pledge, encumbrance, assessment,
title retention agreement, restriction or restraint on transfer, defect of
title, charge in the nature of a lien or security interest, or option (whether
consensual, statutory or otherwise) or any conditional sale contract, title
retention contract or other contract to give any of the foregoing;
"ENVIRONMENTAL LAWS" means all Applicable Laws, including applicable common
laws, relating to the protection of the environment and employee and public
health and safety;
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"ERISA" means the United States Employee Retirement Income Security Act of 1974,
as amended;
"ERISA AFFILIATE" shall mean (i) any corporation included with Spectra in a
controlled group of corporations within the meaning of Section 414(b) of the
Code; (ii) any trade or business (whether or not incorporated) which is under
common control with Spectra within the meaning of Section 414(c) of the Code;
(iii) any member of an affiliated service group of which Spectra is a member
within the meaning of Section 414(m) of the Code; or (iv) any other person or
entity treated as an affiliate of Spectra under Section 414(o) of the Code;
"ESCROW ACCOUNT" has the meaning set forth in Section 2.9(a) hereof;
"ESCROW AGENT" means CIBC Mellon Trust Company;
"ESCROW AGREEMENT" means the agreement among Spectra, the Escrow Agent, Xxxxxxx,
Xxxx XxXxxx, the XxXxxx Trust, Xxxxxxx Delaware, the Shareholders'
Representative and Subco stipulated under Section 2.9(a) hereof in regard to the
Escrow Account;
"EXPORT/IMPORT CLAIM" has the meaning set forth in Section 3.1(bbbb) hereof;
"EXPORT/IMPORT LAWS" means all U.S. or foreign federal, state and local laws and
regulations relating to the export or import of any items (commodities, software
or technology), and all laws and regulations relating to customs, export
controls, embargoes, quotas, anti-boycott and economic sanctions, including,
without limitation, the International Traffic in Arms Regulations ("ITAR"), Arms
Export Control Act ("AECA"), and Defense Trade Security Initiatives ("DTSI")
administered by the U.S. Department of Defense and the U.S. Department of State,
Office of Defense Trade Controls ("ODTC"); the Export Administration Regulations
("EAR") (including the anti-boycott laws) administered by the U.S. Department of
Commerce, Bureau of Export Administration ("BXA") and the sanctions and assets
control regulations administered by the U.S. Department of Treasury, Office of
Foreign Assets Control ("OFAC");
"FINAL ORDER" means an order of the Court approving the Arrangement;
"FINANCIAL STATEMENTS" has the meaning set forth in Section 3.1(o) hereof;
"FULLY DILUTED AMOUNT" means 25,505,458 (which is the sum of (i) 17,840,891 (the
number of shares of Spectra common shares), (ii) 6,881,984 (the number of shares
of Spectra common shares into which the Spectra preferred shares are
convertible), and (iii) 782,583 (the number of shares of Spectra common shares
represented by the anti-dilutive clauses in the UpTick Subscription Rights
Agreement dated December 13, 1999)), and in each case that are issued and
outstanding immediately prior to the Effective Time;
"GAAP" means, with respect to any Person, generally accepted accounting
principles consistently applied, as applied by the jurisdiction of organization
of such Person;
"GOVERNMENTAL ENTITY" means any: (i) federal, provincial, state, regional,
municipal, local or other government, governmental or public department, central
bank, court, tribunal, arbitrage body, commission, board, bureau, agency,
domestic or foreign; (ii) any subdivision, agent,
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commission, board or authority of any of the foregoing; or (iii) any
quasi-governmental or private body exercising any regulatory, expropriation or
taxing authority under or for the account of any of the foregoing;
"GST" has the meaning set forth in Section 3.1(ppp) hereof;
"HOLDBACK AMOUNT" has the meaning set forth in Section 2.9(a);
"INDEBTEDNESS" of any Person means all obligations of such Person (i) for
borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases or (v) in the nature of guarantees of the obligations
described in clauses (i) through (iv) above of any other Person;
"INDEMNIFIED PARTY", "INDEMNITY NOTICE" and "INDEMNIFYING PARTY" each have the
meaning set forth in Section 3.5(a);
"INFORMATION CIRCULAR" means the management information circular(s) to be
prepared by Spectra in connection with the Agreement, the Transactions and the
Special Meeting, together with any amendments or supplements thereto;
"INSTITUTIONAL SHAREHOLDERS AGREEMENT" means the Shareholders Agreement dated as
of May 5, 2000 among the parties listed in Exhibit C;
"INTELLECTUAL PROPERTY" means collectively, (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all Patents; (b) all Trademarks, trade dress, logos,
trade names, fictitious names, brand names, brand marks, domain names and
corporate names, together with all translations, adaptations, derivations and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations and renewals in connection therewith; (c) all
copyrightable works, all Copyrights and all applications, registrations and
renewals in connection therewith; (d) all mask works and all applications,
registrations, and renewals in connection therewith; (e) all trade secrets and
confidential business information (including, without limitation, ideas,
research and development, know-how, formulae, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals); (f) all computer software
(including, without limitation, data, source codes, object codes, objects,
specifications and related documentation), including the Software; (g) all other
proprietary rights; and (h) all copies and tangible embodiments thereof (in
whatever form or medium);
"INTERIM ORDER" means an order of the Court providing for, among other things,
the calling and holding of the Special Meeting, as such order may be amended,
supplemented or varied by the Court;
"ITA" means the Income Tax Act (Canada), R.S.C. 1985, c. 1 (5th Supplement), as
amended;
"XXXX XXXXXX" means Xxxx X. XxXxxx, acting either in his individual capacity or
on behalf of Eclipse;
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"KNOWLEDGE" means the actual knowledge and the knowledge which a reasonable
person acting in such capacity should have under the circumstances after having
made due and diligent inquiry as to the matters which are the subject of the
statements which are "known" or made to the "knowledge" or "best knowledge", of:
(i) with respect to Xxxxxxx and Subco, each such entity's respective corporate
executive officers, (ii) with respect to Spectra, such entity's corporate
executive officers and directors, (iii) with respect to the Spectra
Subsidiaries, each such entity's respective corporate executive officers and
directors, and (iv) with respect to the Spectra or Eclipse Shareholders, such
Shareholder, to the extent a natural Person, and otherwise such Shareholder's
executive officers, directors, executive managers, general partners, or such
similar Persons;
"LAW" means all published laws, statutes, codes, ordinances, decrees, rules,
regulations, by-laws, judicial or arbitral or administrative or ministerial or
departmental or regulatory judgments, orders, decisions, rulings or awards,
including general principles of common and civil law, and conditions of any
grant of approval, permission, authority or license of any court, Governmental
Entity, statutory body or self-regulatory authority;
"LETTER OF TRANSMITTAL AND ELECTION FORM" means the letter of transmittal and
election form to be forwarded by Spectra to the Spectra Shareholders;
"LIABILITIES" means all Indebtedness, obligations and other liabilities, whether
direct or indirect, and any loss, damage, cost, contingent liability, loss
contingency, unpaid expense, Claim, deficiency, guaranty or endorsement of or by
any Person whether or not ascertainable;
"LICENSES" means all licenses, permits, authorizations, approvals, franchises,
rights, orders, variances, easements, rights of way, and similar consents or
certificates granted or issued by any Person, other than a Governmental Entity,
and relating to the Companies, their assets and properties or the Business;
"LITIGATION" means (i) any action, lawsuit, arbitration, mediation, criminal
prosecution, Tax audit, administrative or other proceeding by, before or on
behalf of any Person, including any Governmental Entity, or (ii) any
investigation or inquiry asserting a violation of any Law by, before or on
behalf of any Governmental Entity;
"LOSS" means any and all damages (including direct, incidental, consequential
and special damages), losses, obligations, deficiencies, Liabilities,
Encumbrances, penalties, fines, interest, costs and expenses (including, without
limitation, court costs, fees and disbursements of attorneys, accountants,
consultants and other experts, or other expenses of investigating, prosecuting
or defending any Litigation, Claim or Default);
"MATERIAL ADVERSE CHANGE" means, when used in connection with a party, any
change, effect, event or occurrence that is, or could reasonably be expected to
be, material and adverse to the business, results of operation, financial
condition or prospects of such party and its Subsidiaries taken as a whole;
"MATERIAL ADVERSE EFFECT" means the effect of a Material Adverse Change;
"MAXIMUM XXXXXXX SHARE PERCENTAGE" means 75%;
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"MAXIMUM XXXXXXX SHARES" means 1.1 million Xxxxxxx Shares;
"XXXXXX CLAIM NOTICE" has the meaning set forth in Section 3.5A(g) hereof;
"XXXXXX INDEMNIFIED PARTY" and "XXXXXX INDEMNITY NOTICE" each have the meaning
set forth in Section 3.5A(f) hereof;
"XXXXXX PARTIES" means Xxxx XxXxxx and the XxXxxx Trust;
"XXXXXX TRUST" means the 1998 XxXxxx Family Trust, of which Xxxx XxXxxx and
Xxxxxxx XxXxxx are the trustees;
"NON-COMPETITION AGREEMENT" means the non-competition and non-solicitation
agreement among Spectra and Messrs. XxXxxx and Xxxxxx to be entered into on or
prior to the Effective Date;
"NOTICE OF DISSENT" means a notice given in respect of the dissent right of
Holders as contemplated in the Interim Order and as described in Section 2.6;
"OBCA" means the BUSINESS CORPORATIONS ACT (Ontario), as amended;
"OPTION CONSIDERATION" has the meaning set forth in Section 2.8(a)(ii) hereof;
"OPTION HOLDBACK AMOUNT" means the product of (i) the quotient of (A) the
aggregate Option Consideration, divided by (B) the Purchase Price less the
Spectra Transaction Fees, multiplied by (ii) the Holdback Amount, all as set
forth in the sample calculation on Schedule 2.9;
"OPTION SURRENDER AGREEMENT" has the meaning set forth in Section 2.8(a)(i)
hereof;
"ORGANIZATIONAL DOCUMENTS" means the articles or certificate of incorporation,
by-laws, operating agreement, certificate of partnership or other governing or
constituent documents of a Person;
"OSA" means the SECURITIES ACT (Ontario), as amended;
"PATENTS" means all patents and pending applications for patents of Canada and
all countries foreign thereto, including regional patents, certificates of
invention and utility models, rights of license or otherwise to or under letters
patent, certificates of intention and utility models which have been opened for
public inspection and all reissues, divisions, continuations and extensions
thereof;
"PBGC" means the Pension Benefit Guaranty Corporation;
"PER SHARE CASH ARRANGEMENT CONSIDERATION" means an amount equal to the Per
Share Closing Consideration paid in cash;
"PER SHARE CLOSING CONSIDERATION" has the meaning set forth in Section 2.5(b);
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"PER SHARE STOCK ARRANGEMENT CONSIDERATION" means the number of Xxxxxxx Shares
equal to the quotient of the Per Share Closing Consideration divided by the
Weighted Average Sales Price of a Xxxxxxx Share as of the Closing Date;
"PERMITS" means any and all licenses, franchises, permits, registrations,
certificates of authority, easements and rights of way, variances (including
zoning variances), rights, consents, orders, approvals, certificates and other
authorizations of or issued by any Governmental Entity and relating to the
Companies, their assets and properties or the Business;
"PERMITTED LIENS" means Encumbrances listed on Schedule 1.1(a), none of which,
individually or in the aggregate, has a Material Adverse Effect or will detract
from, interferes with or will interfere with any of the Companies' or Xxxxxxx'
right to dispose of any property or the use of such property;
"PERSON" includes an individual, corporation, partnership, joint venture, trust,
limited liability company, unincorporated organization, Governmental Entity, the
Crown or any agency or instrumentality thereof or any other entity recognized by
Law;
"PLAN OF ARRANGEMENT" means the Plan of Arrangement of Spectra in respect of the
Arrangement required by the OBCA to be filed with the Articles of Arrangement
and substantially in the form included in Exhibit A;
"POTENTIAL BUYER" has the meaning set forth in Section 4.4(a) hereof;
"PREVAILING PARTY" has the meaning set forth in Section 8.4;
"PURCHASE PRICE" has the meaning set forth in Section 2.5(a) hereof;
"REAL PROPERTY" has the meaning set forth in Section 3.1(aaa) hereof;
"REAL PROPERTY LEASE" and "REAL PROPERTY LEASES" has the meaning set forth in
Section 3.1(zz) hereof;
"REGISTRAR" has the meaning attributed to that term under the OBCA;
"REPRESENTATION AND WARRANTY INSURANCE POLICY" means the insurance policy from a
Best's "A+" rated insurance company for coverage of Spectra's indemnification
obligations under Section 3.4 hereof and the Spectra Shareholders'
indemnification obligations under the Support Agreement on terms and conditions
and in the form of Exhibit D hereto;
"REQUIRED CONSENTS" means any consent, waiver, approval, authorization,
certification or exemption required from any person or under any Contract or
Law, as applicable, including all consents of a Governmental Entity or
Third-Party Consents required in connection with, as a result of or prior to the
execution of this Agreement or the consummation of the transactions contemplated
hereby including, without limitation, the Arrangement and the Stock Purchases,
all listed on Schedule 1.1(b);
"SALES TAXES" has the meaning set forth in Section 3.1(ppp) hereof;
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"XXXXXXX" means Xxxxxxx Computer Associates, Inc., a corporation existing under
the laws of the Commonwealth of Pennsylvania;
"XXXXXXX DELAWARE" means Xxxxxxx Delaware, Ltd., a corporation formed under the
laws of the State of Delaware;
"XXXXXXX PARTIES" means Xxxxxxx, Xxxxxxx Delaware and Subco;
"XXXXXXX SHARES" means the shares of the common stock of Xxxxxxx, no par value
per share;
"XXXXXXX TERMINATION FEE" has the meaning set forth in Section 7.4(a) hereof;
"SECURITIES LEGISLATION" means the OSA, the COMMODITY FUTURES ACT (Ontario), the
1933 Act, the 1934 Act, and the equivalent Laws in the other provinces of Canada
and the United States, and the published rules, regulations and policies of any
Governmental Entity administering those Laws;
"SHARE ELECTING HOLDERS" has the meaning set forth in Section 2.4(c) hereof;
"SHARE HOLDBACK AMOUNT" means the product of (i) the quotient of (A) the Closing
Consideration, divided by (B) the Purchase Price less the Spectra Transaction
Fees, multiplied by (ii) the Holdback Amount, all as set forth in the sample
calculation on Schedule 2.9;
"SHARE OPTION" has the meaning set forth in Section 2.4(a) hereof;
"SHARE PLANS" means (i) the Stock Option Plan of Spectra dated December 9, 1999
and (ii) the 2001 Stock Option Plan of Spectra dated February 16, 2001;
"SHAREHOLDER AGREEMENTS" means the Employee Shareholders Agreement and the
Institutional Shareholders Agreement;
"SHAREHOLDERS' REPRESENTATIVE" has the meaning set forth in Section 2.11 hereof;
"SHARES OUTSTANDING" means the number of Spectra common shares outstanding as of
the Closing Date, but not including any common shares which may be issuable
pursuant to the Spectra Options or Spectra Warrants;
"SOFTWARE" means all computer software programs and related objects, object
codes and source codes owned, marketed, licensed or under development by the
Companies, as the case may be, or for which the Companies have the right and
license to copy, distribute, prepare derivative works of, display and perform
publicly, modify, use or market, and any enhancements, improvements or
modifications thereto owned or under development by the Companies, other than
shrink-wrapped "off-the-shelf" software products. All documentation and
specifications used in connection with and related to the Software shall be
included in the definition of Software;
"SPECIAL MEETING" means the special meeting of the Spectra Shareholders to be
held on or about June 24, 2002 (or such later date or dates to which such
meeting is postponed or adjourned) to, among other things, consider and if
deemed advisable, to approve the Transactions by way of the
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Special Resolution passed by (i) two-thirds of the votes cast by holders of
Spectra Shares represented in person or by proxy at such meeting, (ii) a
majority of the votes cast by holders of the Spectra Shares (other than Xxxx
XxXxxx, Eclipse and Xxxxxx) represented in person or by proxy at such meeting,
if applicable, and (iii) in such other manner as may be required by the Court in
the Interim Order;
"SPECIAL RESOLUTION" means the resolution of the Spectra Shareholders approving
the Transactions;
"SPECTRA" means Spectra Securities Software Inc., a corporation existing under
the OBCA;
"SPECTRA ACQUISITION PROPOSAL" means any proposal or any transaction (other than
a proposal or transaction made with respect to the Arrangement, including,
without limitation, any proposal or offer to the Spectra Shareholders) regarding
(i) amalgamation, merger, consolidation, share exchange, business combination or
other similar transaction or series of related transactions involving Spectra or
its Subsidiaries; (ii) any sale, lease, exchange, transfer or other disposition
of a material portion of the assets or of the intellectual property (including
software) of Spectra or its Subsidiaries; (iii) any tender offer, take-over bid,
exchange offer or similar transaction or series of related transactions made by
any Person or entity involving the acquisition or lock up of 10% or more of any
class of securities of Spectra or its Subsidiaries, coupled with or followed by
an offer for the balance of the outstanding securities of such class; (iv) the
acquisition by any Person or any group of persons (as defined in Section 13(d)
of the 1934 Act) (other than Xxxxxxx and its Affiliates), directly or
indirectly, of beneficial ownership of, or the formation of a group of Persons
to acquire beneficial ownership of, 10% or more of the then outstanding shares
of any class of securities of Spectra or its Subsidiaries, coupled with or
followed by an offer for the balance of such outstanding shares; or (v) any
other substantially similar transaction or series of related transactions that
would hinder the consummation of the transactions contemplated herein or would
otherwise defeat the purposes of this Agreement;
"SPECTRA BOARD" means the board of directors of Spectra;
"SPECTRA EQUITY HOLDERS" means holders of Spectra Shares, Spectra Options,
Spectra Warrants and a 2001 Employee Bonus;
"SPECTRA INSURANCE PREMIUM" means the insurance premium payable by Spectra
relating to the Representation and Warranty Insurance Policy, one-half of which
will be included in the Spectra Transaction Fees pursuant to Section
2.7(c)(i)(B) hereto;
"SPECTRA OPTIONS" means the outstanding options to purchase common shares of
Spectra pursuant to the Share Plans, whether or not vested;
"SPECTRA SHAREHOLDER" means a registered holder of Spectra Shares;
"SPECTRA SHAREHOLDER APPROVAL" means the approval of the Transactions by the
Spectra Shareholders pursuant to the Special Resolution;
"SPECTRA SHARES" means all of the issued and outstanding common and preferred
shares, if any, of Spectra;
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"SPECTRA US," "SPECTRA UK," "SPECTRA AUSTRALIA" shall each have the meanings set
forth in the recitals to this Agreement;
"SPECTRA WARRANTS" means the warrants to purchase or acquire Spectra Shares,
whether or not exercisable;
"STOCK PURCHASE" and "STOCK PURCHASES" each have the meaning set forth in the
preambles to this Agreement;
"STOCK PURCHASE CLOSING DATE" means the Business Day immediately preceding the
Effective Date;
"STOCK PURCHASE CLOSINGS" means the consummation of the Stock Purchases on the
Stock Purchase Closing Date pursuant to the provisions hereof and "STOCK
PURCHASE CLOSING" means the consummation of any one of the Stock Purchases on
the Stock Purchase Closing Date pursuant to the provisions hereof;
"SUB SHARES" means all of the shares of capital stock of the Subsidiaries of
Spectra;
"SUBCO" means 1518356 Ontario Limited;
"SUBSIDIARY" means, with respect to a specified body corporate, a body corporate
of which more than 50% of the outstanding shares ordinarily entitled to elect a
majority of the board of directors thereof (whether or not shares of any other
class or classes shall or might be entitled to vote upon the happening of any
event or contingency) are at the time owned, directly or indirectly, by such
specified body corporate, and includes a body corporate in like relation to a
Subsidiary;
"SUBSIDIARY PURCHASE PRICE" has the meaning set forth in Section 2.2 hereof;
"SUBSIDIARY PURCHASE SHARES" has the meaning set forth in Section 2.2 hereof;
"SUPERIOR PROPOSAL" has the meaning set forth in Section 4.4(b) hereof;
"SUPPORT AGREEMENT" means the lock-up agreement among Xxxx XxXxxx, Xxxxxx, EDS
and VenGrowth in favour of Xxxxxxx dated as of the date hereof;
"SURVIVAL DATE" has the meaning set forth in Section 3.3(a) hereof;
"SURVIVING CORPORATION" means the entity formed or continuing in existence as a
result of the Arrangement and the Amalgamation contained therein;
"TAX" and "TAXES" means, with respect to any entity (i) all federal, provincial,
state, local or foreign income taxes (including any tax on or based upon net
income, gross income, income as specially defined, earnings, profits or selected
items of income, earnings or profits), capital taxes, gross receipts taxes,
environmental taxes, sales taxes, use taxes, ad valorem taxes, value added
taxes, transfer taxes, franchise taxes, license taxes, withholding taxes,
payroll taxes, employment taxes, Canada or Quebec Pension Plan premiums, excise,
severance, social security premiums, workers' compensation premiums, employment
insurance or compensation premiums, stamp
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taxes, occupation taxes, premium taxes, property taxes, windfall profits taxes,
alternative or add-on minimum taxes, goods and services tax, customs duties or
other taxes, fees, imports, assessments or charges of any kind whatsoever,
together with any interest and any penalties or additional amounts imposed by
any taxing authority (domestic or foreign) on such entity, and any interest,
penalties, additional taxes and additions to tax imposed with respect to the
foregoing, and (ii) any liability for the payment of any amount of the type
described in the immediately preceding clause (i) as a result of being a
"transferee" (within the meaning of Section 6901 of the Code or any other
Applicable Laws) of another entity or a member of an affiliated or combined
group;
"TAX RETURNS" means all returns, declarations, reports, claims for refund,
elections, designations, information returns and statements relating to Taxes,
including any schedules or attachments thereto, and including any amendment
thereof;
"THIRD PARTY" means any Person other than the Xxxxxxx Parties, the Companies,
the Shareholders, or an Affiliate of the Xxxxxxx Parties, the Companies or the
Shareholders;
"THIRD-PARTY CONSENTS" means any and all Licenses, franchises, Permits,
easements, rights, consents, approvals, variances, waivers, filings and other
authorizations with, of or from Persons (other than Governmental Entities) which
are parties to any Contract, License and other instrument to which a Person is a
party (or by which any of their respective properties or assets is bound or
affected) and which are necessary for the consummation of the transactions
contemplated herein in the manner contemplated hereby, including the transfer of
any such Contract, License or other instrument in accordance with the terms
hereof;
"THRESHOLD AMOUNT" has the meaning set forth in Section 3.5(c) hereof;
"THRESHOLD SETTLEMENT AMOUNT" has the meaning set forth in Section 4.12 hereof;
"TRADEMARKS" means registered trademarks, registered service marks, trademark
and service xxxx applications and unregistered trademarks and service marks;
"TRANSACTION FEES" of a Person means all fees and expenses of legal, audit and
financial advisors and any other fees and expenses of such Person relating to
the negotiation and completion of this Agreement and transactions contemplated
herein;
"TRANSACTIONS" has the meaning set forth in the recitals to this Agreement;
"TRIGGER EVENT" has the meaning set forth in the Share Plans;
"U.S. JURISDICTIONS" has the meaning set forth in Section 3.2(d) hereof;
"UNAUDITED MONTHLY STATEMENTS" has the meaning set forth in Section 4.10 hereof;
"UPTICK SHARES" means 782,583 Spectra common shares issuable under Subscription
Rights Agreements dated December 13, 1999;
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"VENGROWTH" means The VenGrowth Investment Fund Inc. and The VenGrowth II
Investment Fund Inc.;
"VENGROWTH DEBENTURES" means debentures of Spectra dated April 11, 1997 and
December 23, 1998 in favour of VenGrowth, and any amendments thereto;
"WARRANT CONSIDERATION" has the meaning set forth in Section 2.8(b) hereof;
"WARRANT HOLDBACK AMOUNT" means the product of (i) the quotient of (A) the
aggregate Warrant Consideration, divided by (B) the Purchase Price less the
Spectra Transaction Fees, multiplied by (ii) the Holdback Amount all as set
forth in the sample calculation on Schedule 2.9;
"WARRANT SURRENDER AGREEMENT" has the meaning set forth in Section 2.8(b)
hereof;
"WEIGHTED AVERAGE SALES PRICE" means (i) the volume-weighted average sales price
per Xxxxxxx Share (i.e., the sum of the daily volume multiplied by the average
of the high and low sales prices for such trading day) as reported by Bloomberg
Information Systems, Inc. during a period consisting of the Nasdaq trading day
two trading days immediately prior to the date as of which the Weighted Average
Sales Price of a Xxxxxxx Share is being determined and the ten (10) consecutive
trading days prior to such day divided by (ii) the total daily volume of such
ten-day period; and
"WITHHOLDING TAXES" means any Taxes which are required to be withheld by a
Governmental Entity in connection with the payment of the Purchase Price to a
Spectra Shareholder or the holder of a Spectra Option, a Spectra Warrant or a
2001 Employee Bonus; and
"Y2K WARRANTY" has the meaning set forth in Section 3.1(ii).
1.2 CALCULATION OF TIME
In this Agreement, a period of days shall be deemed to begin on the first day
after the event which began the period and to end at 6:00 p.m. (Toronto time) on
the last day of the period. If, however, the last day of the period does not
fall on a Business Day, the period shall terminate at 6:00 p.m. (Toronto time)
on the next Business Day. References to time in this Agreement shall be to local
time in Xxxxxxx, Xxxxxxx, Xxxxxx unless otherwise stated.
1.3 SUBSIDIARIES
Notwithstanding any other provision hereof, to the extent any covenants
contained herein relate, directly or indirectly, to a Subsidiary of either
Spectra or Xxxxxxx, each such provision will be construed as a covenant by
Spectra or Xxxxxxx, as the case may be, to cause (to the fullest extent to which
it is legally capable) that Subsidiary to perform the required action.
1.4 CURRENCY
Unless specified otherwise, all statements of or references to dollar amounts in
this Agreement are to lawful money of Canada.
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1.5 SECTIONS AND HEADINGS
The division of this Agreement into sections and the insertion of headings are
for reference purposes only and shall not affect the interpretation of this
Agreement. Unless otherwise indicated, any reference in this Agreement to a
section or schedule refers to the specified section of or schedule to this
Agreement. References to "hereof", "herein", "hereto" and similar expressions
refer to this Agreement as a whole and not to any particular part of or any
particular schedule to this Agreement.
1.6 NUMBER AND GENDER
In this Agreement, unless the context otherwise requires, words importing the
singular number include the plural and vice versa, and words importing any
gender include all genders.
1.7 SCHEDULES
The Schedules referenced in this Agreement are incorporated into and form part
of this Agreement.
ARTICLE 2 - STOCK PURCHASE; ARRANGEMENT; CLOSING
2.1 TRANSACTIONS
As promptly as practicable after the execution of this Agreement, Spectra shall
seek the approval of the Transactions by the holders of the outstanding Spectra
Shares in accordance with the Interim Order and with the covenants of Spectra
and the Xxxxxxx Parties set forth in Article 4 hereof.
2.2 STOCK PURCHASES
On the date of the Stock Purchase Closing Date, subject to the conditions of
this Agreement, Spectra hereby agrees to sell, assign, transfer and set over
unto Xxxxxxx Delaware all of the issued and outstanding shares of capital stock
of each of Spectra UK and Spectra Australia and to Xxxxxxx all of the issued and
outstanding capital stock of Spectra US (collectively, the "SUBSIDIARY PURCHASE
SHARES") in exchange for $1, $500,000 and $3,499,999, respectively (each
individually a "SUBSIDIARY PURCHASE PRICE," and collectively, the "AGGREGATE
SUBSIDIARY PURCHASE PRICE"). Such Aggregate Subsidiary Purchase Price shall be
paid by Xxxxxxx and Xxxxxxx Delaware, as applicable, to Spectra on the Stock
Purchase Closing Date at the Stock Purchase Closing by wire transfer of
immediately available funds as set forth in Section 2.12 and in accordance with
the terms and conditions of this Agreement.
2.3 ARRANGEMENT
At the Effective Time, without any further act or formality, by virtue of the
Plan of Arrangement and without any further action on the part of Spectra,
Xxxxxxx, Subco or any Spectra Shareholder, the following shall occur and shall
be deemed to occur:
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(a) Spectra shall issue the UpTick Shares;
(b) Subco, on behalf of the Companies, will pay to each holder of a
Spectra Option, a Spectra Warrant and a 2001 Employee Bonus, the
Option Consideration, the Warrant Consideration and the Bonus
Consideration, respectively, which shall be paid in the amounts and
in the manner provided for in Section 2.8 hereof;
(c) each of the Spectra Shares, other than Spectra Shares in respect of
which a Notice of Dissent has been given and other than Spectra
Shares owned by Eclipse, shall be and shall be deemed to be
transferred to Subco in exchange for the Purchase Price provided in
Section 2.5 hereof, as adjusted and less the payments set forth in
Sections 2.5 and 2.7 hereof and subject to the Holdback Amount set
forth herein, all of which shall be paid in the manner provided for
in Section 2.7 hereof and, as to the Holdback Amount, Section 2.9(a)
hereof;
(d) each of the Eclipse Shares shall be and shall be deemed to be
transferred to Subco in exchange for the Eclipse Purchase Price
provided in Section 2.5 hereof, as adjusted and less the payments
set forth in Sections 2.5 and 2.7 hereof and subject to the Holdback
Amount set forth herein, all of which shall be paid to the Eclipse
Shareholders in the manner provided for in Section 2.7 hereof and,
as to the Holdback Amount, Section 2.9(a) hereof;
(e) each of the Spectra Shares in respect of which a Notice of Dissent
has been given shall be and shall be deemed to be cancelled pursuant
to Section 2.6 hereof with Spectra being obligated to pay therefor
the amount determined in accordance with Section 2.6 hereof;
(f) each of the Spectra Shares owned by Eclipse shall be deemed to be
cancelled for no consideration;
(g) with respect to each Spectra Share transferred or cancelled in
accordance with Sections 2.3(c) and (e) above and with respect to
each Eclipse Share transferred in accordance with Sections 2.3(d)
and (f) above:
(i) the registered holder thereof shall cease to be the
registered holder of such share and the name of the holder
thereof shall be removed from the register of Spectra
Shareholders or the Eclipse Shareholders, as applicable, as
of the Effective Time;
(ii) the certificate representing such share shall be deemed to
have been cancelled as of the Effective Time;
(iii) the holder thereof shall be deemed to have executed and
delivered all consents, releases, assignments and waivers,
statutory or otherwise, required to transfer such share in
accordance with Section 2.3(c), (d), (e) or (f) above; and
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(iv) Subco shall be and shall be deemed to be the transferee of
such shares and Subco shall be entered in the register of
Spectra Shareholders and the Eclipse Shareholders, as
applicable, as the registered holder of such share; and
(h) Subco, Eclipse and Spectra shall amalgamate pursuant to the
Amalgamation.
2.4 SHARE OPTION AND CASH OPTION
(a) With respect to the transfer of the Spectra Shares set forth in
Section 2.3(c), above, a Spectra Shareholder may elect to receive
either the Per Share Stock Arrangement Consideration (the "SHARE
OPTION") or the Per Share Cash Arrangement Consideration (the "CASH
OPTION") with respect to all Spectra Shares held by him or may
divide the number of Spectra Shares held by him between the two
options, such election to be made in the manner set forth in Section
2.7 hereof; provided, however, that each Spectra Shareholder must
select the Cash Option so that the portion of the Purchase Price
payable to such Spectra Shareholder on account of the Share Option
does not exceed the Maximum Xxxxxxx Share Percentage. A Spectra
Shareholder who does not indicate his election in respect of the
Share Option or the Cash Option in the Letter of Transmittal and
Election Form delivered within the time limits set out therein, or
who does not deliver such a Letter of Transmittal and Election Form,
subject to Section 2.6 below, shall be deemed to have elected the
Cash Option in respect of all Spectra Shares held by him.
(b) With respect to the transfer of the Eclipse Shares set forth in
Section 2.3(d) above, the Eclipse Shareholders may elect to receive
the Eclipse Purchase Price either in cash (the "ECLIPSE CASH
OPTION") or in Xxxxxxx Shares valued on the same basis as the Share
Option (the "ECLIPSE SHARE OPTION") with respect to all or a portion
of the Eclipse Purchase Price, such election to be made in the
manner set forth in Section 2.7 hereof; provided, however, that the
Eclipse Shareholders must select the Eclipse Cash Option so that the
portion of the Eclipse Purchase Price payable to such Eclipse
Shareholders on account of the Eclipse Share Option does not exceed
the Maximum Xxxxxxx Share Percentage. If the Eclipse Shareholders do
not indicate their election in respect of the Eclipse Share Option
or the Eclipse Cash Option in the Letter of Transmittal and Election
Form delivered within the time limits set out therein, or do not
deliver such a Letter of Transmittal and Election Form, subject to
Section 2.6 below, the shall be deemed to have elected the Eclipse
Cash Option in respect of the entire Eclipse Purchase Price.
(c) The number of Spectra Shares and Purchase Price to be transferred to
Subco in respect of the Share Option and the portion of the Eclipse
Purchase Price to be paid pursuant to the Eclipse Share Option shall
be limited such that, if the number of Xxxxxxx Shares to be issued
in respect of the aggregate of the Purchase Price that would
otherwise be payable by Subco to the Spectra Shareholders and the
Eclipse Shareholders who elect the Share Option in respect of their
Spectra Shares and the Eclipse Share Option (the "SHARE ELECTING
HOLDERS") exceeds the
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Maximum Xxxxxxx Shares, then the number of Spectra Shares to be
acquired by Subco from each Share Electing Holder and the amount of
Eclipse Purchase Price to be paid to each Eclipse Shareholder on
account of the Eclipse Share Option may, at the sole discretion of
Subco, be reduced pro-rata so that, in the aggregate, the number of
Xxxxxxx Shares to be issued in respect of the portion of the
Purchase Price payable to the Share Electing Holders and the amount
of Eclipse Purchase Price to be paid to each Eclipse Shareholder on
account of the Eclipse Share Option equals the Maximum Xxxxxxx
Shares. In addition, the number of Spectra Shares to be transferred
to Subco in respect of the Share Option and the amount of Eclipse
Purchase Price to be paid to each Eclipse Shareholder on account of
the Eclipse Share Option shall be limited such that, if the number
of Xxxxxxx Shares to be issued in respect of the Purchase Price that
would otherwise be payable by Subco to a specific Share Electing
Holder exceeds the Maximum Xxxxxxx Share Percentage, then the number
of Spectra Shares and Eclipse Shares to be acquired by Subco from
such Share Electing Holder in connection with the Share Option and
the amount of Eclipse Purchase Price to be paid to each Eclipse
Shareholder on account of the Eclipse Share Option may, at the sole
discretion of Subco, be reduced so that, in the aggregate, the
number of Xxxxxxx Shares to be issued in respect of the portion of
the Purchase Price payable to the Share Electing Holder on account
of the Share Option and the amount of Eclipse Purchase Price to be
paid to each Eclipse Shareholder on account of the Eclipse Share
Option does not exceed the Maximum Xxxxxxx Share Percentage. Each
Share Electing Holder may, at the sole discretion of Subco, be
deemed, for all purposes, to have elected the Cash Option in respect
of any Spectra Shares or portion of Eclipse Purchase Price to which
the Stock Option or the Eclipse Stock Option, as the case may be, as
a result of either of the foregoing pro-rations, does not apply and
shall transfer such shares to Subco and shall receive from Subco the
consideration payable in respect of such Spectra Shares and Eclipse
Shares on the same basis as the Spectra Shareholders and any Eclipse
Shareholder who elect the Cash Option for the Spectra Shares and the
Eclipse Cash Option.
2.5 ARRANGEMENT CONSIDERATION
(a) As full consideration for the Spectra Shares and Eclipse Shares
acquired in the Arrangement, Subco shall pay and deliver or cause to
be paid and delivered to the Spectra Shareholders and the Eclipse
Shareholders, in the manner, including the combination of Xxxxxxx
Shares and cash, set forth in this Article 2, the Base Purchase
Price (as defined below), decreased as further set forth in this
Section 2.5 (collectively, the "PURCHASE PRICE").
(i) BASE PURCHASE PRICE. The base Purchase Price is Forty-One
Million Three Hundred Ninety-Six Thousand Two Hundred Fifty
($41,396,250) (the "BASE PURCHASE PRICE").
(ii) CLOSING NET DEBT ADJUSTMENT. If (i) the Debenture Payoff
Amount less the Adjusted Closing Date Cash is greater than
(ii) $3,500,000, then the Base Purchase Price shall be
decreased at Closing by $1.00 for each $1.00
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of such excess (the "CLOSING NET DEBT ADJUSTMENT"). Attached
as Schedule 2.5(a) is a sample Closing Net Debt Adjustment
using figures from Spectra's balance sheet at March 31,
2002. The Cash as of the Closing Date (the "CLOSING CASH
AMOUNT") and the Closing Net Debt Adjustment shall be
determined as set forth herein and in Section 2.10 hereof.
(a.1) ALLOCATION OF CLOSING CONSIDERATION. The Eclipse Shareholders shall
receive 4.704875% of the Closing Consideration reflecting Eclipse's
percentage ownership of the Spectra Shares on Closing Date (the
"ECLIPSE PURCHASE PRICE"), as to be determined by the Eclipse
Shareholders prior to Closing.
(b) The Purchase Price shall be reduced by the Aggregate Additional
Payments (as defined below) in order to determine the aggregate
amount to be paid to the Spectra Shareholders in respect of each
Spectra Share in connection with the transfer of the Spectra Shares
pursuant to Section 2.3(c) and 2.3(e) hereof and to the Eclipse
Shareholders in connection with the transfer of the Eclipse Shares
pursuant to Section 2.3(d) and 2.3(f) hereof (collectively, the
"CLOSING CONSIDERATION"). The per share Closing Consideration shall
be determined by dividing the Closing Consideration by the Shares
Outstanding (the "PER SHARE CLOSING CONSIDERATION"). For purposes
hereof, the "AGGREGATE ADDITIONAL PAYMENTS" shall mean Spectra's
Transaction Fees, the aggregate Option Consideration, the aggregate
Warrant Consideration and the Bonus Consideration.
2.6 DISSENTING SHAREHOLDERS
(a) A Spectra Shareholder may exercise rights of dissent conferred by
the Interim Order in connection with the Arrangement in the manner
set out in Section 185 of the OBCA, as modified by the Interim
Order, provided the Notice of Dissent is given to Spectra in the
manner and within the time periods contemplated by such section as
modified by the Interim Order. The Spectra Shares subject to the
exercise of such rights of dissent shall be referred to herein as
"DISSENTING SHARES." Without limiting the generality of the
foregoing, Spectra Shareholders who duly exercise such rights of
dissent and who are ultimately entitled to be paid fair value for
their Spectra Shares by Spectra shall have their Spectra Shares in
respect of which the Notice of Dissent was given cancelled as of the
Effective Date. In no case shall Spectra or Xxxxxxx be required to
recognize such Spectra Shareholders as Spectra shareholders at and
after the Effective Date, and the names of such Spectra Shareholders
shall be deleted from Spectra's register of shareholders on the
Effective Date.
(b) In the event a Spectra Shareholder gives a Notice of Dissent but is
not entitled, for any reason, to be paid the fair value of the
Spectra Shares in respect of which the Notice of Dissent was given
as contemplated in Section 185 of the OBCA and the Interim Order,
such Spectra Shareholder shall be deemed to have participated in the
Arrangement on the same basis as each non-dissenting Spectra
Shareholder who has elected the Cash Option.
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2.7 PAYMENT ELECTION; CLOSING PAYMENT FUND; CASH AND CERTIFICATES
(a) MANNER OF MAKING ELECTIONS.
(i) Spectra shall cause the Letter of Transmittal and Election
Form to be sent to each Spectra Shareholder no later than
the date on which the Information Circular is mailed to the
Spectra Shareholders by Spectra, at the earliest possible
date after the execution of this Agreement and on a date
which will enable the Election Deadline to occur as soon as
practicable so as not to unduly delay the Effective Date.
(ii) Each Spectra Shareholder entitled to make an election under
Section 2.4 may elect either the Share Option or the Cash
Option by depositing, or by causing their agent or other
representative to deposit, with the Depositary prior to the
Election Deadline a duly completed Letter of Transmittal and
Election Form indicating such Spectra Shareholder's election
together with the certificates representing such Spectra
Shareholder's Spectra Shares or as otherwise provided in the
Letter of Transmittal and Election Form.
(iii) Any Spectra Shareholder entitled to make an election under
Section 2.4 who, in respect of a Spectra Share held by such
Spectra Shareholder: (i) does not deposit with the
Depositary a duly completed Letter of Transmittal and
Election Form prior to the Election Deadline or (ii)
otherwise fails to comply fully with the requirements of
this Section 2.7 and the Letter of Transmittal and Election
Form in respect of such Spectra Shareholder's election of
the Share Option, shall, subject to Section 2.6(b) above, be
deemed to have elected the Cash Option in respect of such
Spectra Share.
(iv) Any deposit of a Letter of Transmittal and Election Form and
accompanying certificates, or other documentation as
provided in the Letter of Transmittal and Election Form, may
be made at any of the offices of the Depositary specified in
the Letter of Transmittal and Election Form.
(a.1) ECLIPSE ELECTION.
The XxXxxx Trust and Xxxx XxXxxx shall elect either the Eclipse Share Option or
the Eclipse Cash Option by depositing, or by causing their agent or other
representative to deposit, with the Depositary prior to the Election Deadline, a
duly completed Letter of Transmittal and Election Form.
(b) VENGROWTH REPAYMENT.
(i) On the Closing Date but prior to the Closing, Spectra will
promptly deliver a certified cheque in the amount of the
Debenture Payoff Amount to VenGrowth.
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(c) DEPOSITARY AND CLOSING PAYMENT FUND.
(i) At the Closing, Subco shall deliver to the Depositary the
Purchase Price, as adjusted pursuant to Section 2.5(a)
hereof, in the applicable portions of cash and Xxxxxxx
Shares set forth in the Letters of Transmittal and Election
Forms pursuant to this Section 2.7 and to account for
payment of the Spectra Transaction Fees set forth below, for
deposit in a separate, interest-bearing account (as to the
cash portion) designated for such purpose (the "CLOSING
PAYMENT FUND"), established for the benefit of the former
holders of Spectra Shares, Eclipse Shares and holders of
Spectra Options, Spectra Warrants and 2001 Employee Bonus,
for payment in accordance with this Section 2.7. The cash
portion of the Purchase Price shall be delivered to the
Depositary by bank transfer or other means satisfactory to
the Depositary. Promptly thereafter, the Depositary will,
pursuant to irrevocable instructions from Xxxxxxx, in form
and substance acceptable to the Shareholders'
Representative, promptly deliver from the Closing Payment
Fund:
A. cash in an amount equal to the Holdback Amount to two
separate, interest-bearing accounts at the Escrow Agent
designated for such purpose as further set forth in
Section 2.9 and the Escrow Agreement, then
B. cash in the respective amount of Spectra's Transaction
Fees (which, for purposes of this Agreement, includes,
without limitation, (i) any fees or expenses of the
Depositary and the Shareholders' Representative, and
(ii) any fees and expenses related to the preparation
of the Information Circular, the printing and
distribution thereof and the Special Meeting, and (iii)
any fees and expenses of the Representation and
Warranty Insurance Policy and 50% of Spectra Insurance
Premium) owing to each Person set forth on the
certificate delivered by Spectra to the Xxxxxxx Parties
pursuant to Sections 5.3(l) and 5.5(l) shall be paid to
Spectra for the immediate payment on the Closing Date
of such amounts to such Persons and to the extent any
such specific Transaction Fees arise or become known
after the Closing Date, such Transaction Fees shall be
paid from the Holdback Amount in the Escrow Account;
then
C. the applicable Closing Consideration for the Spectra
Shares and Eclipse Shares described in Section 2.3 and
2.5, less the applicable Share Holdback Amount pursuant
to Section 2.9 for each such Spectra Share and Eclipse
Shares represented by such certificate the holder of
which has selected the Share Option and applicable
Withholding Taxes; then
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D. in exchange for an Option Surrender Agreement pursuant
to Section 2.8, the cash payment described in Section
2.8 for the corresponding Spectra Options, less the
applicable Option Holdback Amount pursuant to Section
2.9 for each Spectra Share purchasable pursuant to such
Spectra Options and applicable Withholding Taxes; then
E. in exchange for a Warrant Surrender Agreement pursuant
to Section 2.8, the cash payment described in Section
2.8 for the corresponding Spectra Warrants, less the
Warrant Holdback Amount pursuant to Section 2.9 for
each Spectra Share purchasable pursuant to such Spectra
Warrants and applicable Withholding Taxes; then
F. in exchange for a Bonus Surrender Agreement pursuant to
Section 2.8, the cash payment described in Section 2.8
for the corresponding Bonus Consideration, less the
2001 Employee Bonus Holdback Amount pursuant to
Section 2.9 for each Spectra Share purchasable pursuant
to such Bonus Consideration and applicable Withholding
Taxes; then
G. cash in the amount of the aggregate applicable
Withholding Taxes to the appropriate Governmental
Entity.
(ii) In no event, however, shall the Depositary disburse amounts
from the Closing Payment Fund with respect to any holders of
Dissenting Shares until the receipt of an order to such
effect from the applicable Governmental Entity or as agreed
by Spectra upon settlement of such dispute and in no event
shall the Depositary disburse amounts from the Closing
Payment Fund to any holders of Dissenting Shares in excess
of the Per Share Closing Consideration. Schedule 2.7(c)(ii)
sets forth a detailed list of all recipients and estimated
amounts to be paid from the Closing Payment Fund. The
deposit of cash by Subco to the Closing Payment Fund and
payment thereof by the Depositary of the amounts necessary
to make the payments pursuant to this Section 2.7 shall be
by wire transfer. Such payments shall be made out of the
Closing Payment Fund. If, after delivery by the Subco of the
Purchase Price to the Closing Payment Fund, sufficient funds
are not present in the Closing Payment Fund to enable the
Depositary to pay the recipients the amounts set forth in
this Section 2.7, appropriate adjustments shall be made to
the amounts to be paid to the Spectra Shareholders, Eclipse
Shareholders and the holders of Spectra Options, Spectra
Warrants and 2001 Employee Bonus pursuant to Section 2.9. In
no event shall Xxxxxxx or Subco be required to pay or
deposit an amount greater than the Purchase Price to the
Depositary or any intended recipient set forth in this
Section 2.7. The Closing Payment Fund shall not be used for
any purpose except as expressly provided in this
Section 2.7.
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(d) RIGHT TO PAYMENT/XXXXXXX SHARES.
(i) Where a Spectra Shareholder or Eclipse Shareholder has
properly elected or is deemed to have elected in accordance
with Section 2.7(a), Section Section 2.7(a.1) or Section 2.6
the Cash Option for such Spectra Shareholder's Spectra
Shares or the Eclipse Cash Option, as applicable, Subco
shall, as soon as practicable following the later of the
Effective Date and the date of deposit with the Depositary
of a duly completed Letter of Transmittal and Election Form,
cause the Depositary either:
A. to forward or cause to be forwarded by first class mail
(postage prepaid) to the Spectra Shareholder or Eclipse
Shareholder at the address specified in the Letter of
Transmittal and Election Form; or
B. if requested by the Spectra Shareholder or Eclipse
Shareholder in the Letter of Transmittal and Election
Form, to make available at the Depositary for pick-up
by the Spectra Shareholder or Eclipse Shareholder; or
C. if the Letter of Transmittal and Election Form neither
specifies an address nor contains a request as
described in (ii), to forward or cause to be forwarded
to the Spectra Shareholder or Eclipse Shareholder at
the address of such holder as shown on the share
register maintained by Spectra, a cheque in Canadian
currency representing the payment required to be made
to such Spectra Shareholder or Eclipse Shareholder
pursuant to the provisions hereof. Subco shall have
provided the Depositary with sufficient funds for this
purpose on or prior to the Effective Date by wire
transfer or other means satisfactory to the Depositary.
Under no circumstances will interest be paid to any
Spectra Shareholder or Eclipse Shareholder on any
payment to be made hereunder, regardless of any delay
in making such payment.
(ii) Where a Spectra Shareholder or Eclipse Shareholder has
elected in accordance with Section 2.7(a) or 2.7(a.1) to
receive Xxxxxxx Shares for such Spectra Shareholder's
Spectra Shares or for such Eclipse Shareholder's Eclipse
Shares, Subco shall, as soon as practicable following the
later of the Effective Date and the date of deposit with the
Depositary of a duly completed Letter of Transmittal and
Election Form, cause the Depositary either:
A. to forward or cause to be forwarded by first class mail
(postage prepaid) to the Spectra Shareholder or Eclipse
Shareholder at the address specified in the Letter of
Transmittal and Election Form; or
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B. if requested by the Spectra Shareholder or Eclipse
Shareholder in the Letter of Transmittal and Election
Form, to make available at the Depositary for pick-up
by the holder; or
C. if the Letter of Transmittal and Election Form neither
specifies an address nor contains a request as
described in (B), to forward or cause to be forwarded
to the Spectra Shareholder or Eclipse Shareholder at
the address of such holder as shown on the share
register maintained by Spectra or Eclipse, as
applicable, certificates representing the number of
Xxxxxxx Shares issuable to such Spectra Shareholder or
Eclipse Shareholder as determined in accordance with
the provisions hereof, together with a cheque in the
amount, if any, payable to such Spectra Shareholder or
Eclipse Shareholder pursuant to this Section 2.7(d).
Subco shall have provided the Depositary with
sufficient certificates representing Xxxxxxx Shares for
this purpose.
(iii) Spectra Shareholders or Eclipse Shareholders who have
elected to receive Xxxxxxx Shares shall be deemed to be the
registered holder for all purposes as of the Effective Time
of the number of Xxxxxxx Shares to which they are entitled.
All dividends paid or other distributions made on or after
the Effective Date on or in respect of any Xxxxxxx Shares
which a Spectra Shareholder or Eclipse Shareholder is
entitled to receive pursuant to the Plan of Arrangement, but
for which a certificate has not yet been delivered to such
Spectra Shareholder or Eclipse Shareholder in accordance
with this Section 2.7(d), shall be paid or made to such
Spectra Shareholder or Eclipse Shareholder when such
certificate is delivered to such Spectra Shareholder or
Eclipse Shareholder in accordance with this Section 2.7(d).
(iv) Subject to Section 2.6, and after the Effective Date, any
certificate formerly representing Spectra Shares shall
represent only the right to receive Xxxxxxx Shares or cash
in accordance with the Arrangement. Any portion of the
Closing Payment Fund (including any undistributed Option
Consideration, Warrant Consideration or Bonus Consideration)
which remains undistributed to the beneficial holders of
Spectra Shares, Spectra Options, Spectra Warrants or 2001
Employee Bonus on the first anniversary of the Effective
Time shall be delivered to the Surviving Corporation, upon
demand, and any such holders who have not theretofore
complied with this Section 2.7 and the instructions set
forth in the Letter of Transmittal and Election Form mailed
to such holder shall thereafter look only to Xxxxxxx and the
Surviving Corporation for payment of the consideration to
which they are entitled under this Section 2.7. All interest
accrued in respect of the Closing Payment Fund shall inure
to the benefit of and be paid to the Surviving Corporation.
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(v) Any dividends or other distributions to which the Spectra
Shareholder or Eclipse Shareholder is entitled under this
Section 2.7(d), and any such certificate formerly
representing Spectra Shares not duly surrendered on or prior
to the second anniversary of the Effective Date shall cease
to represent a claim on interest of any kind or nature,
including a claim for dividends or other distributions under
this Section 2.7(d), against Xxxxxxx, Subco or Spectra by a
former Spectra Shareholder or Eclipse Shareholder. On such
date, all cash and Xxxxxxx Shares to which the former
Spectra Shareholder or Eclipse Shareholder of such
certificates was entitled shall be deemed to have been
surrendered to Subco.
(e) FRACTIONAL SHARES. No fractional Xxxxxxx Shares will be issued
pursuant to this Agreement. In lieu of a fractional Xxxxxxx Share, a
Spectra Shareholder or Eclipse Shareholder who would otherwise
receive a fraction of a Xxxxxxx Share will receive a cash payment
from Xxxxxxx determined on the basis of the Weighted Average Sales
Price of a Xxxxxxx Share as of the Closing Date multiplied by such
fractioned Xxxxxxx Share.
(f) ILLEGALITY OF DELIVERY OF XXXXXXX SHARES. Notwithstanding the
foregoing, if it appears to Xxxxxxx or Subco that it would be
contrary to Applicable Law to issue or transfer, as the case may be,
Xxxxxxx Shares pursuant to the Arrangement to a person that is not a
resident of Canada, the Xxxxxxx Shares that otherwise would be
issued or transferred, as the case may be, to that person will be
issued or transferred, as the case may be, and delivered to the
Depositary for sale of the Xxxxxxx Shares by the Depositary on
behalf of that person. The Xxxxxxx Shares delivered to the
Depositary will be pooled and sold as soon as practicable after the
Effective Date, on such dates and at such prices as the Depositary
determines in its sole discretion. The Depositary shall not be
obligated to seek or obtain a minimum price for any of the Xxxxxxx
Shares sold by it. Each such person will receive a pro rata share of
the cash proceeds from the sale of the Xxxxxxx Shares sold by the
Depositary (less commissions, other reasonable expenses incurred in
connection with the sale of the Xxxxxxx Shares and any amount
withheld in respect of Canadian taxes) in lieu of the Xxxxxxx
Shares. The net proceeds will be remitted in the same manner as set
forth in this Section 2.7. None of Spectra, the XxXxxx Parties,
Xxxxxxx, Subco or the Depositary will be liable for any loss arising
out of any such sales.
(g) SECTION 116 OF THE ITA
(i) Each Spectra Equity Holder that is a non-resident of Canada
(each a "NON-RESIDENT SHAREHOLDER") for the purposes of
section 116 of the ITA shall on or before the Effective
Date, deliver to Subco a certificate issued by the Minister
of National Revenue of Canada pursuant to subsection 116(2)
of the ITA (a "SECTION 116 CERTIFICATE") in respect of the
proposed disposition by such Spectra Equity Holder of the
Spectra Shares, Spectra Options, Spectra Warrants or 2001
Bonus Award, as applicable. The Section 116 Certificate
delivered by the Spectra Equity Holder shall
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specify a "certificate limit" in an amount no less than the
aggregate consideration to be received hereunder by such
Spectra Equity Holder (for each such Non-resident
Shareholder the "LIMIT AMOUNT").
(ii) In the event that the Section 116 Certificate required under
Section 2.7(g)(i) has not been delivered by a Non-resident
Shareholder on or before the Effective Time, or in the event
that a Section 116 Certificate does not specify a
"certificate limit" that is no less than the Limit Amount
for such Non-resident Shareholder, the Depositary shall
withhold from payment an amount equal to 25% of the Limit
Amount, or, if a Section 116 Certificate has been delivered
by the Non-resident Shareholder, an amount equal to 25% of
the Limit Amount less the certificate limit specified in the
Section 116 Certificate (the "WITHHELD AMOUNT"). The
Withheld Amount shall be in addition to amounts held in
respect of the Holdback Amount, as applicable. The Withheld
Amount shall be immediately converted to Canadian dollars
and deposited by the Depositary in an interest bearing
Canadian dollar trust account at a bank located in Ontario
to be held for the benefit of the Non-resident Shareholder
to be disposed of as set out herein. The Withheld Amount
shall be remitted by the Depositary to Subco five Business
Days prior to the day that the Withheld Amount is required
to be so remitted pursuant to subsection 116(5) of the ITA
(the "Remittance Date") who shall in turn remit such amount
to the Receiver General of Canada on, or up to five Business
Days prior to, the Remittance Date. All interest earned on
the Withheld Amount shall be for the account of Non-resident
Shareholder and the full amount of such interest less any
applicable Taxes of any nature whatsoever applicable to such
interest shall be paid by the Depositary to the Non-resident
Shareholder on the Remittance Date.
(iii) Notwithstanding the foregoing, if the Non-resident
Shareholder delivers a Section 116 Certificate to the
Depositary at any time after the Closing Date and prior to
the day that is five Business Days before the Remittance
Date that exonerates Subco from liability under Section 116
of the ITA in respect of any payment pursuant to this
Agreement in the amount of the "certificate limit" specified
in the Section 116 Certificate, the Depositary shall pay to
such Spectra Equity Holder on account of such payment an
amount equal to the amount, if any, by which
A. the aggregate of
(1) the Withheld Amount; and
(2) the amount, if any, by which
a) the amount of interest received by the
Depositary on the Withheld Amount
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exceeds
b) the amount of any tax payable by the
Depositary in respect of any interest on the
Withheld Amount or which the Depositary is
required or entitled to withhold or deduct in
respect of such interest
exceeds
B. 25% of the amount, if any, by which
(1) such payment
exceeds
(2) the "certificate limit" specified in the Section
116 Certificate.
The balance of the Withheld Amount shall be remitted by the
Depositary to Subco five days prior to the Remittance Date
and in turn by Subco to the Receiver General of Canada on,
or up to five Business Days prior to, the Remittance Date.
2.8 SPECTRA OPTIONS AND WARRANTS
(a) SURRENDER OF SPECTRA OPTIONS.
(i) Spectra will use commercially reasonable efforts to obtain
from each holder of a Spectra Option, promptly after the
date of this Agreement, an option surrender agreement
substantially in the form of Schedule 2.8(a) attached hereto
(an "OPTION SURRENDER AGREEMENT"), duly executed and
delivered by such holder (which agreement may be conditioned
upon the Spectra Shareholder Approval and the consummation
of the Arrangement). At the Effective Time, each then
outstanding Spectra Option shall be cancelled and shall
represent the right to receive the Option Consideration, net
to the holder, payable to the holder thereof in cash,
without any interest thereon, less any required withholding
taxes. No outstanding Spectra Option, the holder of which
has not duly executed and delivered to Spectra an Option
Surrender Agreement in accordance with this Section 2.8
hereof, will be entitled to receive any portion of the
Option Consideration until such holder duly executes and
delivers to the Surviving Corporation an Option Surrender
Agreement; at which time each then outstanding Spectra
Option held by such holder shall be cancelled, net to the
holder of any deductions set forth herein, payable to the
holder thereof in cash, without any interest thereon, less
any required withholding taxes.
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(ii) The Term "OPTION CONSIDERATION" means, with respect to each
Spectra Option, an amount equal to the product of (i) the
result of (A) the quotient of (1) the Closing Consideration,
divided by (2) the Fully Diluted Amount, minus (B) the per
share exercise price of such Spectra Option, to the extent
such amount is a positive number, multiplied by (ii) the
number of Spectra Shares pursuant to which such Spectra
Option is exercisable. The calculation is based on the steps
set forth in Section 2.7(c)(i)(A) through (G) being
performed mechanically in an iterative fashion in each case
adjusting the Option, Warrant and Bonus Consideration paid
under Section 2.3(b) for the per share amount received on
the prior calculation. Such calculation will be performed
100 times to ensure that the amount per share is calculated
with sufficient efficiency, all as set forth on Schedule
2.7(c)(ii), which shall be updated at Closing to include the
amounts set forth on the Closing Certificate and the Spectra
Transaction Fees.
(b) SURRENDER OF SPECTRA WARRANTS.
(i) Spectra will obtain from each holder of a Spectra Warrant,
promptly after the date of this Agreement, a surrender
agreement in the form of Schedule 2.8 (b) attached hereto
(the "WARRANT SURRENDER AGREEMENT") duly executed and
delivered by such warrant holder (which agreement may be
conditioned upon Spectra Shareholder Approval and the
consummation of the Arrangement). At the Effective Time,
each then outstanding Spectra Warrant shall be cancelled and
shall represent the right to receive the following
consideration. With respect to each Spectra Share subject to
such Spectra Warrant, the Spectra Warrant shall be converted
into the right to receive cash in the amount of the Warrant
Consideration, net to the holder, payable to the holder
thereof in cash, without any interest thereon, less any
required withholding taxes. No outstanding Spectra Warrant,
the holder of which has not duly executed and delivered to
Spectra a Warrant Surrender Agreement in accordance with
this Section 2.8 hereof, will be entitled to receive any
portion of the Warrant Consideration until such holder duly
executes and delivers to the Surviving Corporation a Warrant
Surrender Agreement; at which time each then outstanding
Spectra Warrant held by such holder shall be cancelled, net
to the holder of any deductions set forth herein, payable to
the holder thereof in cash, without any interest thereon,
less any required withholding taxes.
(ii) The term "WARRANT CONSIDERATION" means an amount equal to
the product of (i) the result of (A) the quotient of (1) the
Closing Consideration, divided by (2) the Fully Diluted
Amount, minus (B) the per share exercise price of such
Spectra Warrant, to the extent such amount is a positive
number, multiplied by (ii) the number of Spectra Shares
pursuant to which such Spectra Warrant is exercisable. The
calculation is based on the steps set forth in Section
2.7(c)(i)(A) through (G) being performed mechanically in an
iterative fashion in each case adjusting the
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Option, Warrant and Bonus Consideration paid under Section
2.3(b) for the per share amount received on the prior
calculation. Such calculation will be performed 100 times to
ensure that the amount per share is calculated with
sufficient efficiency; all as set forth on Schedule
2.7(c)(ii), which shall be updated at Closing to include the
amounts set forth on the Closing Certificate and the Spectra
Transaction Fees.
(c) SURRENDER OF 2001 EMPLOYEE BONUS.
(i) Spectra will use commercially reasonable efforts to obtain
from each holder of a bonus pursuant to Spectra's 2001 bonus
plan (the "2001 EMPLOYEE BONUS"), promptly after the date of
this agreement, a bonus surrender agreement substantially in
the form of Schedule 2.8(c) attached hereto (a "BONUS
SURRENDER AGREEMENT"), duly executed and delivered by such
holder (which agreement may be conditioned upon the Spectra
Shareholder Approval and consummation of the Arrangements).
At the Effective Time, each then outstanding 2001 Employee
Bonus shall be cancelled and shall represent the right to
receive the Bonus Consideration, net to the holder, payable
to the holder thereof in cash, without any interest thereon,
less any required withholding taxes. No outstanding 2001
Employee Bonus, the holder of which has not duly executed
and delivered to Spectra a Bonus Surrender Agreement in
accordance with this Section 2.8 hereof, will be entitled to
receive any portion of the Bonus Consideration until such
holder duly executes and delivers to the Surviving
Corporation a Bonus Surrender Agreement; at which time each
then outstanding 2001 Employee Bonus held by such holder
shall be cancelled, net to the holder of any deductions set
forth herein, payable to the holder in cash, without any
interest thereon, less any required withholding taxes.
(ii) The term "BONUS CONSIDERATION" means an amount equal to the
product of (i) the result of (A) the quotient of (1) the
Closing Consideration, divided by (2) the Fully Diluted
Amount, minus (B) the per share exercise price of such 2001
Employee Bonus, to the extent such amount is a positive
number, multiplied by (ii) the number of Spectra Shares
pursuant to which such 2001 Employee Bonus is exercisable.
The calculation is based on the steps set forth in Section
2.7(c)(i)(A) through (G) being performed mechanically in an
iterative fashion in each case adjusting the Option, Warrant
and Bonus Consideration paid under Section 2.3(b) for the
per share amount received on the prior calculation. Such
calculation will be performed 100 times to ensure that the
amount per share is calculated with sufficient efficiency;
all as set forth on Schedule 2.7(c)(ii), which shall be
updated at Closing to include the amounts set forth on the
Closing Certificate and the Spectra Transaction Fees.
(d) TERMINATION OF RIGHTS. The surrender of a Spectra Option to Spectra
and/or the Surviving Corporation in exchange for the Option
Consideration shall be deemed
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a release of any and all rights the holder thereof had or may have
had in respect of such Spectra Option and each applicable surrender
agreement shall include such a release in its terms. The surrender
of a Spectra Warrant to Spectra and/or the Surviving Corporation in
exchange for the Warrant Consideration shall be deemed a release of
any and all rights the holder thereof had or may have had in respect
of such Spectra Warrant and each applicable surrender agreement
shall include such a release in its terms. The surrender of a 2001
Employee Bonus to Spectra and/or the Surviving Corporation in
exchange for the Bonus Consideration shall be deemed a release of
any and all rights the holder thereof had or may have had in respect
of such 2001 Employee Bonus and each applicable surrender agreement
shall include a release in its terms. Prior to the Special Meeting,
Spectra shall take all action necessary (including such actions by
the Spectra Board (or any committees thereof)), to make certain
that, following the Effective Time, no warrant holder, participant
in such stock option plan, participant in any employee bonus plan or
any other plans, programs or arrangements, or other party shall have
any right thereunder to acquire equity securities of Spectra, the
Surviving Corporation, Xxxxxxx or any Subsidiary thereof.
(e) PAYMENT PROCEDURES.
(i) Upon the delivery of a duly executed Option Surrender
Agreement by a holder of a Spectra Option, the Depositary
shall pay to each such holder the Option Consideration, in
respect thereof (less, in each case, the applicable Option
Holdback Amount pursuant to Section 2.9 for each such option
and less any required withholding taxes pursuant to the
terms of Section 2.7 hereof).
(ii) Upon the delivery of a duly executed Warrant Surrender
Agreement by a holder of a Spectra Warrant, the Depositary
shall pay to each such holder the Warrant Consideration, in
respect thereof (less, in each case, the applicable portion
of the Warrant Holdback Amount pursuant to Section 2.9 for
each such warrant and less any required withholding taxes)
pursuant to the terms of Section 2.7 hereof.
(iii) Upon the delivery of a duly executed Bonus Surrender
Agreement by a holder of a 2001 Employee Bonus, the
Depositary shall pay to each such holder the Bonus
Consideration, in respect thereof (less, in each case, the
applicable portion of the 2001 Employee Bonus Holdback
Amount pursuant to Section 2.9 for each such 2001 Employee
Bonus and less any required withholding taxes) pursuant to
the terms of Section 2.7 hereof.
(iv) No interest shall be paid or accrued on any Option
Consideration, Warrant Consideration or Bonus Consideration.
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2.9 HOLDBACK AMOUNT
(a) HOLDBACK AMOUNT. Subco shall pay from the Closing Payment Fund in
accordance with Section 2.7 hereof, and not as additional
consideration, an amount (the "HOLDBACK AMOUNT") equal to $7,365,500
at Closing to the Depositary pursuant to the Escrow Agreement (the
"ESCROW ACCOUNT"), such amount which shall be deemed to be paid by
each Spectra Shareholder and Eclipse Shareholder from the Cash
Option, and the holders of Spectra Options, Spectra Warrants and
2001 Employee Bonus based on his or its proportionate ownership
interest of Spectra (and as to an Eclipse Share the ownership of
Spectra Shares held by Eclipse), as set forth on Schedule 2.9
attached hereto, as updated at Closing to reflect the Closing Net
Debt Adjustment and the Spectra Transaction Fees. The Escrow Account
shall be available to fund any obligations of (i) Spectra and the
Spectra Equity Holders under this Agreement, the Support Agreement
and the Plan of Arrangement, and (ii) the Eclipse Shareholders under
Section 3.4 of this Agreement, the Support Agreement and the Plan of
Arrangement, and shall be subject to adjustment, deduction and
set-off for, amongst other things, the indemnification obligations
in favour of the Xxxxxxx Parties and other Persons set forth in
Sections 3.4 and in the Support Agreement.
(b) RELEASE OF HOLDBACK AMOUNT. The Depositary will retain the Holdback
Amount in escrow pursuant to the terms of this Agreement and the
Escrow Agreement and will, when required to pursuant the Escrow
Agreement, release and deliver such funds to the former Holders of
Spectra Shares and Eclipse Shares, and the holders of the Spectra
Warrants, Spectra Options and 2001 Employee Bonus in the pro-rated
amount calculated as set forth in Section 2.9(a) above with the
applicable Withholding Taxes deducted and such applicable
Withholding Taxes to be paid to the applicable Governmental Entity.
2.10 ADJUSTMENT OF BASE PURCHASE PRICE
The Base Purchase Price shall be adjusted at Closing as set forth in Section 2.5
hereof. The Closing Cash Amount shall be determined for purposes of Closing
based on a closing certificate executed by, and the truth and accuracy of which
is certified by, the Chief Financial Officer and the Chief Executive Officer of
Spectra (the "CLOSING CERTIFICATE") that shall be delivered to the Xxxxxxx
Parties Three Business Days prior to the Closing, such Closing Certificate which
shall set forth the Closing Cash Amount and the Debenture Payoff Amount at
Closing and shall be accompanied by a revised Schedule 2.7(c)(ii) and Schedule
2.9 to reflect the amounts set forth on the Closing Certificate. Such Closing
Certificate shall be accompanied by (i) a certificate of an officer of VenGrowth
certifying that the Debenture Payoff Amount shown therein is accurate and that
no further amounts are owed to VenGrowth in connection with the VenGrowth
Debentures and (ii) a certificate of an officer of each bank or other
institution at which Spectra has an account that contains Cash certifying to the
amount of Cash in such account.
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2.11 SHAREHOLDERS' REPRESENTATIVE
As of the date of the Plan of Arrangement, each Spectra Shareholder and the
Eclipse Shareholders (pursuant to their approval of this Agreement and the
Transactions) and each holder of Spectra Options, Spectra Warrants and 2001
Employee Bonus as set forth in their Option Surrender Agreement, Warrant
Surrender Agreement or Bonus Surrender Agreement, appoints XxXxxxxx Xxxxxxxx LLP
as the shareholders' representative (the "SHAREHOLDERS' REPRESENTATIVE")
pursuant to the Escrow Agreement and authorizes the Shareholders' Representative
to act on such Person's behalf in effecting the performance of the Escrow
Agreement and Section 3.5 of this Agreement and any other document, instrument
or agreement executed and delivered in connection with the Escrow Agreement or
Section 3.5 of this Agreement or the transactions contemplated thereby, with
full power and authority to bind such Person as though such Person was present
and acting on his, her or its behalf. Each such Person further authorizes
Xxxxxxx and Subco to discuss all matters relating to the Escrow Agreement and
Section 3.5 of this Agreement and any other matters associated with the
transactions contemplated therein with the Shareholders' Representative acting
on behalf of all such Persons.
2.12 CLOSING
The Stock Purchase Closings shall occur on the Stock Purchase Closing Date,
assuming the satisfaction or waiver of the applicable conditions set forth in
Sections 5.1, 5.2 and 5.3 hereof (other than those involving the delivery of
documents, agreements and instruments at the Closing). The Closing of the
Arrangement and all of other transactions contemplated in the Arrangement shall
(subject to satisfaction or waiver of the conditions set forth in Sections 5.1,
5.4 and 5.5 hereof) begin at 10:00 a.m., local time, on the fourth Business Day
following the satisfaction or waiver of the conditions set forth in Sections
5.1, 5.4 and 5.5 hereof (other than those involving the delivery of documents,
agreements and instruments at the Closing) (the "CLOSING DATE"), at the offices
of XxXxxxxx Xxxxxxxx LLP or such other place as is mutually agreed to in writing
by the parties hereto. At or prior to the Closing, the parties shall take all
administrative actions necessary to prepare to effect the Transactions. On the
Stock Purchase Closing Date, the capital stock of the applicable Subsidiaries of
Spectra shall be delivered to Xxxxxxx or Xxxxxxx Delaware, as applicable, so as
to transfer good, valid and marketable title to such shares and the Aggregate
Spectra Subsidiary Purchase Price shall be paid to Spectra pursuant to the terms
and conditions hereof. On the Closing Date, (i), the Articles of Arrangement
shall be filed with the appropriate Governmental Entity so that they shall
become effective and the Arrangement shall thereby be effected on the Closing
Date and (ii) all transactions contemplated by this Agreement, including the
conversion of the Spectra Shares and the Eclipse Shares shall be consummated.
All actions taken at the Closing shall be deemed to have occurred
simultaneously, and shall be effective as of the close of business on the
Closing Date.
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ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF SPECTRA
Spectra and its Subsidiaries hereby, jointly and severally, represent and
warrant to and in favour of the Xxxxxxx Parties as follows, and acknowledge that
the Xxxxxxx Parties are relying upon such representation and warranties in
connection with the matters contemplated by this Agreement:
INCORPORATION
(a) Spectra is a corporation duly incorporated, organized and is validly
subsisting under the laws of the Province of Ontario with the
corporate power and authority to own, lease and operate its assets
and to carry on its business and has made all necessary filings
under all Applicable Laws. Spectra is not qualified to transact
business as a foreign corporation and has never been required to be
so qualified, or in good standing, in any jurisdiction other than
Canada.
SUBSIDIARIES
(b) Spectra has no Subsidiaries other than Spectra US, Spectra Australia
and Spectra UK. Except for a 20% ownership interest in Croesus
Finansoft, Inc. ("CROESUS"), neither Spectra nor any of its
Subsidiaries (i) owns any shares of capital stock, units or any
other interest of any other Person or any rights, options, warrants
or other securities of any other Person, (ii) does not have any
agreement for the purchase, subscription or issuance of any of the
unissued shares of capital rights, options, warrants, securities or
any other interest of any other Person and (iii) does not have any
interest, directly or indirectly, in any other Person.
(c) Each of the Subsidiaries of Spectra is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation with the corporate power and authority
to own, lease and operates its assets and to carry on its business
and has made all necessary filings under all Applicable Laws.
Spectra US is qualified to transact business as a foreign
corporation in the State of New York. No other Spectra Subsidiary
is, or has at any time been, required to be duly qualified to
transact business as a foreign corporation in any jurisdiction.
(d) No bankruptcy, insolvency or receivership proceedings have been
instituted or are pending against Spectra or any of its Subsidiaries
and Spectra and its Subsidiaries are able to satisfy their
liabilities as they become due.
CAPITALIZATION
(e) The authorized capital stock of Spectra consists of an unlimited
number of common shares and preferred shares, of which 17,840,891
common shares and 6,881,984 preferred shares have been validly
issued and are outstanding as fully paid and non-assessable and of
which 25,505,458 common shares (which includes
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the 17,840,891 common shares outstanding as of the date hereof,
6,881,984 common shares into which the outstanding preferred shares
on the date hereof will be converted and the UpTick Shares to be
issued prior to Closing) and no preferred shares will be validly
issued and outstanding as fully paid and non-assessable on the
Closing Date, all of which are, or will be at Closing, as the case
may be, beneficially owned by and registered in the name of those
Persons set forth on Schedule 3.1(e). The rights, privileges,
restrictions and conditions attached to the Spectra Shares are set
out in the Articles of Amalgamation of Spectra, a copy of which are
attached as Exhibit E. Other than as set forth on Schedule 3.1(e),
there are no outstanding options, warrants, convertible or
exchangeable securities or other rights to (i) purchase Spectra
Shares, or (ii) require Spectra to allot or issue any of its capital
stock.
(f) The ordinary shares of Spectra Australia consists of 12 shares of
which all have been validly issued and are fully paid and which are
beneficially owned by and registered in the name of Spectra. The
rights, privileges, restrictions and conditions of such shares are
set forth in the Constitution of Spectra Australia attached hereto
as Schedule 3.1(f). There are no outstanding options, warrants,
convertible or exchangeable securities or other rights to (i)
purchase shares of Spectra Australia, or (ii) require Spectra
Australia to allot or issue any shares.
(g) The authorized capital stock of Spectra UK consists of 1,000 common
shares par value of L 1.00 per share, of which 2 shares have
been validly issued and are outstanding as fully paid and
non-assessable, all of which are beneficially owned by and
registered in the name of Spectra. The rights, privileges,
restrictions and conditions of such common stock are set forth in
the Articles of Association or other similar documents of Spectra UK
attached hereto as Schedule 3.1(g). There are no outstanding
options, warrants, convertible or exchangeable securities or other
rights to (i) purchase shares of capital stock of Spectra UK, or
(ii) require Spectra UK to allot or issue any of its capital stock.
(h) The authorized capital stock of Spectra US consists of 3,000 shares
of common stock, $1.00 par value per share of which 600 shares have
been validly issued and are outstanding as fully paid and
non-assessable, all of which are beneficially owned by and
registered in the name of Spectra. The rights, privileges,
restrictions and conditions of such common stock are set forth in
the Certificate of Incorporation or other similar documents of
Spectra US attached hereto as Schedule 3.1(h). There are no
outstanding options, warrants, convertible or exchangeable
securities or other rights to (i) purchase shares of capital stock
of Spectra US, or (ii) require Spectra US to allot or issue any of
its capital stock.
(i) There is no Contract, option, or any other right of another binding
upon or which at any time in the future may become binding upon
Spectra to sell, transfer, assign, pledge, charge, mortgage or any
other way to dispose of or encumber any of the Sub Shares other than
pursuant to the provisions of this Agreement.
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(j) Spectra has good and valid title to the Sub Shares owned by it, free
and clear of all Encumbrances.
AUTHORITY AND ENFORCEABILITY
(k) Spectra has the requisite power and authority to execute, deliver
and enter into this Agreement and each of the documents, agreements
and instruments to be executed, delivered and performed by it in
connection with this Agreement (collectively the "COLLATERAL
DOCUMENTS") and perform the actions and complete the transactions to
be completed by it hereunder and thereunder. The execution, delivery
and performance of this Agreement and each of the Collateral
Documents to which Spectra is a party, and the consummation of the
transactions contemplated hereby and thereby, has been authorized by
all necessary action (corporate or otherwise) on the part of
Spectra, including the approval of the Transactions and this
Agreement by the Spectra Board, other than (i) the approval of the
Spectra Board solely with respect to the Information Circular and
(ii) shareholder approval with respect to the completion of the
Transactions as contemplated herein. Other than as contemplated
herein, no further authorization or consent will be required by
Spectra or any of its Subsidiaries in order to consummate the
Transactions. This Agreement and the Collateral Documents to be
executed and delivered by Spectra have been duly and validly
executed and delivered by Spectra and constitute the legal, valid
and binding obligation of Spectra, enforceable against it in
accordance with their respective terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, moratorium or
similar Laws affecting the enforcement of creditors' rights
generally.
SPECTRA BOARD REPRESENTATION
(l) The board of directors of Spectra has determined to recommend that
the Spectra Shareholders vote in favour of the Transactions.
CONTRAVENTION
(m) The execution, delivery and performance of this Agreement and each
of the Collateral Documents, and the consummation of the
Transactions, by Spectra or any of its Subsidiaries, do not and will
not (i) result in a Default, of or under (A) any of the terms of the
Organizational Documents of Spectra or any of its Subsidiaries, (B)
assuming the receipt of all Required Consents of a Governmental
Entity, any Law or Court Order applicable to or binding upon any of
the Companies, or (C) assuming the receipt of all Required Consents,
any Contracts, Licenses or Permits to which any of the Companies is
a party or by which they are bound, (ii) result in the creation or
imposition of any Encumbrances, other than Permitted Liens, upon any
of the equity interests of any of the Companies or upon any of the
assets or properties of any of the Companies, or (iii) assuming the
receipt of all Required Consents, (A) result in the termination,
amendment or modification of, or give any party the right to
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terminate, amend, modify, abandon, or refuse to perform any
Contract, License or Permit to which any of the Companies is a party
or by which they, or any of their properties or assets, are bound,
or (B) result in the acceleration or modification, or give any party
the right to accelerate or modify, the time within which, or the
terms under which, any duties or obligations are to be performed, or
any rights or benefits are to be received under any Contract,
License or Permit to which any of the Companies is a party or by
which they, or any of their properties or assets, are bound.
FINANCIAL STATEMENTS
(n) The corporate records and minute books of Spectra and its
Subsidiaries are maintained in all material respects in accordance
with Applicable Law. The books, records and accounts of Spectra and
its Subsidiaries, in all material respects: (i) have been maintained
in accordance with good business practices on a basis consistent
with prior years; and (ii) are stated in reasonable detail and
accurately and fairly reflect the transactions and dispositions of
the assets of Spectra and its Subsidiaries. Except as set forth on
Schedule 3.1(n), there have been no material changes in accounting
policies of Spectra and its Subsidiaries since September 1, 1998.
Spectra and its Subsidiaries have devised and maintain a system of
internal accounting controls sufficient to provide reasonable
assurances that: (i) transactions are executed in accordance with
management's general or specific authorization and (ii) transactions
are recorded as necessary (A) to permit preparation of financial
statements in conformity with applicable GAAP and (B) to maintain
accountability for assets.
(o) The consolidated financial statements of Spectra and its
Subsidiaries, consisting of the audited consolidated balance sheet
and consolidated statements of operations and cash flows for the
period ended on August 31, 2001 (the "BALANCE SHEET DATE"), the
notes thereto and the accompanying report of the auditors of
Spectra, and the unaudited consolidated balance sheet and
consolidated statements of operations and cash flow for the period
ended March 31, 2002 (collectively, the "FINANCIAL STATEMENTS"):
(i) are in accordance with the Books and Records of Spectra and
its Subsidiaries;
(ii) are true and correct and present fairly the financial
position of Spectra on a consolidated basis as of the date
presented and the changes in Spectra's financial position
for the periods then ended;
(iii) have been prepared in accordance with applicable GAAP;
(iv) contain and reflect adequate provision or allowance for all
reasonably anticipated liabilities, expenses and losses of
Spectra and its Subsidiaries; and
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(v) present fairly and in accordance with applicable GAAP and on
a consolidated basis all of the assets and liabilities of
Spectra as at the dates presented including all contingent
liabilities of Spectra required to be disclosed by
applicable GAAP as at the dates presented.
(p) Since the Balance Sheet Date, the Business has been carried on in
its usual and ordinary course and neither Spectra nor any of its
Subsidiaries has entered into any transaction out of the usual and
ordinary course of the Business. The accruals set forth on
Schedule 3.1(p) shall be recorded on Spectra's Books and Records as
of the Closing Date.
(q) On the Effective Date, neither Spectra nor any of its Subsidiaries
will have any Liabilities (except for (i) those Liabilities set
forth in the Financial Statements and (ii) those Liabilities which
arose after the Balance Sheet Date and were incurred in the ordinary
course of business, consistent with past practices and in compliance
with the covenants and agreements of Spectra and its Subsidiaries
herein contained, as the case may be).
ABSENCE OF CHANGES
(r) Except as set forth on Schedule 3.1(sss), since the Balance Sheet
Date, neither Spectra nor any of its Subsidiaries has had:
(i) any Material Adverse Change;
(ii) any damage, destruction or Loss (whether or not covered by
insurance) or any condemnation by any Governmental Entity,
whether or not arising as a result of any legislative or
regulatory change, revocation of any licence or right to do
business, fire, explosion, accident, casualty, labour
dispute, flood, drought, riot, storm, condemnation, act of
God, public force or otherwise, which has had or may have a
Material Adverse Effect;
(iii) any strike, lockout, labour trouble or any event or
condition of any character having a Material Adverse Effect;
(iv) any declaration, setting aside or payment of any dividend or
other distribution in respect of any of the Sub Shares, or
any direct or indirect redemption, purchase or other
acquisition of any of the Sub Shares;
(v) any increase in the compensation payable or to become
payable by Spectra or any of its Subsidiaries to any of
their officers, employees or agents, or any known payment or
arrangement made to or with any thereof, other than normal
increases in compensation to employees consistent with past
practices; or
(vi) any amendments to their charter, bylaws or other
organizational documents.
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(s) Neither Spectra nor any of its Subsidiaries has taken or agreed to
take, whether in writing or otherwise, either (i) any action
described in Section 3.1(r) above or in Sections 3.1(y), 3.1(z) or
3.1(aa) below (Contracts and Commitments) or (ii) any action which
would result in the occurrence of any of the events described
Section 3.1(r) above or in Sections 3.1(y), 3.1(z) or 3.1(aa) below.
Neither Spectra nor any of its Subsidiaries has omitted to take any
action where the omission could reasonably be expected to result in
or lead to the occurrence of any of the events described in Section
3.1(r) above or in Sections 3.1(y), 3.1(z) or 3.1(aa) below.
(t) No dividends have been declared or paid on or in respect of the
Spectra Shares and no distribution on any of its securities or
shares has been made or authorized by Spectra or any of its
Subsidiaries (other than in the case of a Subsidiary, a distribution
to Spectra or another Subsidiary) since the Balance Sheet Date.
CONDITION OF ASSETS
(u) Spectra and each of its Subsidiaries have good and marketable title
to, or have valid leasehold interests in or valid rights under a
Contract to use, all of the their properties and assets (real and
personal, immovable and moveable, tangible and intangible, including
leasehold interests), including all the properties and assets shown
or reflected on the balance sheets forming part of the Financial
Statements and of all assets acquired by Spectra or one of its
Subsidiaries since the Balance Sheet Date, free and clear of all
Encumbrances, except such of the assets as have been disposed of in
the usual and ordinary course of business since the Balance Sheet
Date. The tangible personal property included in such property and
assets (including equipment) is in good working order and fit for
its intended use, reasonable wear and tear excepted. The properties
and assets of Spectra and its Subsidiaries, taken as a whole,
together with all leasehold interests and Contracts relating
thereto, are adequate to conduct the Business.
(v) Except as set forth on Schedule 3.1(v), no properties or assets used
by Spectra or its Subsidiaries in connection with the Business
(other than the real property subject to the Real Property Leases)
is held under any lease, security agreement, pledge agreement or
security arrangement or is located other than in the possession of
Spectra or its Subsidiaries. All of the leases of personal property
to which Spectra or its Subsidiaries are a party, are valid and in
effect and afford Spectra and its Subsidiaries peaceful and
undisturbed possession of the subject matter of the lease.
ACCOUNTS RECEIVABLE AND PAYABLE
(w) The accounts receivable and notes receivable of Spectra and its
Subsidiaries have been accurately reflected in the Books and Records
or the Financial Statements of Spectra and its Subsidiaries and are
valid accounts receivable that arose from bona fide transaction in
the ordinary course of business, consistent with past practices.
Schedule 3.1(w) sets forth, as of March 31, 2002, an aged trial
balance of all accounts receivable and any reserves relating
thereto. Each such accounts
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and note receivable (including any loans to current or former
employees, directors, consultants or Spectra Affiliates) is fully
collectible in its stated amount within ninety (90) days following
the date such account receivable was created or on the date of
maturity with respect to a note receivable and is not subject to any
defence, counterclaim or set-off, nor is one threatened, and there
is an adequate allowance in the Books and Records of Spectra and its
Subsidiaries for bad and doubtful accounts. No part of any such
accounts or note receivable is contingent upon performance by
Spectra (other than those accounted for as unearned revenue on the
Financial Statements) or any other party of any obligation, and no
agreements for deductions or discounts have been made with respect
to any par of such accounts or note receivable. Spectra has
collected its accounts receivable and notes receivable and paid its
accounts payable in a consistent manner and has not taken any
actions (e.g. acceleration of receivables or delayed payment of
payables) that are not in the ordinary course of business and
consistent with past practices.
CONTRACTS AND COMMITMENTS
(x) Schedule 3.1(x) sets forth a true and complete list of all Contracts
to which Spectra or its Subsidiaries is a party, or by which any of
their respective assets or properties is bound, that fall into one
or more of the following categories:
(i) agreement or commitment with any current or former
shareholder, director, or officer, or any of their
Affiliates;
(ii) agreement, commitment or arrangement with any labour union
or other representative of any of their employees;
(iii) written employment agreement or severance agreement with any
of their employees or independent contractors or agents;
(iv) agreement or commitment for the performance of services or
the supply of products by a third party which involves in
any one case (or in the aggregate for similar type
arrangements) in any calendar year Fifty Thousand Dollars
($50,000) and is not cancellable on thirty (30) days notice
or less without penalty. Schedule 3.1(x) also contains a
list of the five (5) largest (in terms of dollar amount)
active customer Contracts as of March 31, 2002;
(v) agreement or commitment to sell or supply products or to
perform services which obligates Spectra or its Subsidiaries
to sell products or perform services which involves in any
one case (or in the aggregate for similar type arrangements
with the same or Affiliated Persons) in any calendar year
One Hundred Thousand Dollars ($100,000) which is not
cancellable on thirty (30) days notice or less without
penalty;
(vi) outstanding proposal to sell or supply products or to
perform services which, upon acceptance of such proposal,
would obligate Spectra or its
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Subsidiaries to sell products or perform services which
involves in any one case (or in the aggregate for similar
type arrangements with the same or Affiliated Persons) in
any calendar year One Hundred Thousand Dollars ($100,000)
which is not cancellable by Spectra or its Subsidiaries on
thirty (30) days notice or less without penalty;
(vii) distribution agreement where Spectra or its Subsidiaries is
acting as supplier or distributor or any agency agreement
where Spectra or its Subsidiaries is acting as principal or
agent;
(viii) lease under which Spectra or its Subsidiaries is either
lessor or lessee of personal property requiring annual lease
payments (including rent and any other charges) in excess of
One Hundred Thousand Dollars ($100,000), in any calendar
year (or in the aggregate for similar type arrangements with
the same or Affiliated Persons), and any lease under which
Spectra or its Subsidiaries is the lessor of real property;
(ix) evidence of Indebtedness, including capital leases or
providing for any Encumbrance on any of the assets or
properties of Spectra or its Subsidiaries, any agreement,
commitment or Contract relating to a guarantee,
indemnification, surety or similar obligation;
(x) agreement, Contract or commitment for any charitable or
political contribution;
(xi) agreement, Contract or commitment for any capital
expenditure in excess of Fifty Thousand Dollars ($50,000)
(or in the aggregate for similar type arrangements with the
same or Affiliated Persons);
(xii) agreement, Contract or commitment limiting or restraining it
from engaging or competing in any lines of business with any
Persons;
(xiii) license, franchise, distributorship, joint venture, royalty
or other similar agreement, including, without limitation,
those which relate in whole or in part to any asset, and
property, any patent, trademark, trade name, service xxxx or
copyright or to any ideas, technical assistance or other
know-how of or used by Spectra or its Subsidiaries;
(xiv) agreement with any Governmental Entity;
(xv) power of attorney granted by Spectra or its Subsidiaries
with respect to Spectra or its Subsidiaries in favour of any
Person;
(xvi) other agreement requiring committed payments or other
consideration by or from Spectra or any of its Subsidiaries
in excess of Fifty Thousand Dollars ($50,000) during the
remainder of its term (or in the aggregate for similar type
arrangements with the same or Affiliated Persons);
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(xvii) agreement or Contract which involves an obligation to
indemnify, defend or hold harmless any other Person;
(xviii) agreement or Contract which involves the payment of any
commission, royalty, finders fee, agency fee or similar fee,
whether payable in cash or other consideration;
(xix) other material agreement, Contract or commitment not made in
the ordinary course of business; or
(xx) agreement, option, understanding or commitment, or any right
or privilege capable of becoming an agreement, for the
purchase from Spectra or any of its Subsidiaries of any of
its Business or any of its assets or properties, other than
in the ordinary course of business consistent with past
practice.
(y) Except as set forth on Schedule 3.1(sss), neither Spectra nor any of
its Subsidiaries has received notice of any Default or breach of any
such Contracts and there exists no condition, event or act that,
with the giving of notice or lapse of time or both, would constitute
such a Default or breach, and such Contracts are in good standing
and in full force and effect without unwritten amendment thereto.
(z) None of such Contracts will be materially adversely affected, or
contains any provisions which would cause Spectra or its
Subsidiaries to be liable to the other party thereto for any amount
(or any increased price for goods or services being provided by the
other party thereto), as a result of the consummation of the
transactions contemplated hereby. None of such Contracts contains
any provisions which would cause Spectra or its Subsidiaries to be
liable to the other party thereto for any amount in the event that
following the Closing, Spectra or its Subsidiaries terminates such
Contract, so long as such termination does not constitute a breach
of such Contract by Spectra or its Subsidiaries.
(aa) There are no outstanding orders, notices or similar requirements
relating to Spectra or the Business issued by any Governmental
Entity and there are no matters under discussion with any
Governmental Entity relating to orders, notices or similar
requirements.
(bb) Spectra and its Subsidiaries have made available a true and correct
copy of each written contract (excluding purchase orders) included
in the Contracts to Xxxxxxx prior to the date hereof.
INTELLECTUAL PROPERTY
(cc) The Companies own or license and lawfully use all Intellectual
Property necessary or appropriate for the operation of the Business
or ownership or use of the assets and properties of the Companies,
free and clear of all Encumbrances, all of which Intellectual
Property is set forth on Schedule 3.1(cc) (the "BUSINESS
INTELLECTUAL PROPERTY"). All of the Business Intellectual Property,
including the
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Software, functions in all material respects in accordance with the
currently published documentation and specifications therefore. Each
of the Companies has taken all commercially reasonable steps to
adequately protect the status of the Business Intellectual Property
as the Intellectual Property of Spectra or its Subsidiaries, as the
case may be. All of such Software is available in "general release"
form (as opposed to only "alpha," "beta" or "early release" forms).
With respect to any applications to register or registrations of the
Business Intellectual Property owned by each of the Companies,
Schedule 3.1(cc) also sets forth, as to each such item of the
Business Intellectual Property, the (i) relevant application of
registration number, (ii) relevant filing, registration, issue or
application date, (iii) record owner, (iv) jurisdiction, (v) title
or description and (vi) remaining life thereof. In addition,
Schedule 3.1(cc) identifies whether each item of the Business
Intellectual Property is owned by each of the Companies or is
possessed and used by each of the Companies under any license,
Contract, agreement or other commitment, and if under any such
commitment, the identity of the parties thereto, the term thereof
and all amounts payable thereunder (whether royalties, license fees
or otherwise) together with the payment terms therefore. All such
licenses, Contracts, agreements or other commitments, if any, are
valid and enforceable and are renewable by their terms in the
ordinary course of business.
(dd) Each item of the Business Intellectual Property owned by one of the
Companies constitutes a valid and enforceable right of Spectra or
its Subsidiaries, as the case may be, and other than rights with
respect to Patents, does not infringe or conflict with the rights of
any Person and with respect to rights with respect to Patents, to
the Knowledge of Spectra, does not infringe or conflict with the
rights of any Person. Except as otherwise provided in Schedule
3.1(dd), none of the Companies has or will have an obligation to
compensate, or to obtain the consent of, any third party for the use
of any item of the Business Intellectual Property. There is neither
pending nor, to the Knowledge of any of Spectra or its Subsidiaries,
threatened, any Claim, grievance or Litigation against any of the
Companies or their respective licensors contesting the validity of,
or any of the Companies' right to use, any of the Business
Intellectual Property. Except as otherwise provided on Schedule
3.1(dd), none of the Companies has granted a license or other right
to use, in any manner, any item of the Business Intellectual
Property (including, but not limited to, source code for any of the
Software), whether or not requiring the payment of royalties, and no
third party has any right to use any of the Business Intellectual
Property.
(ee) None of the Companies has received any written notice that any Third
Party is (i) infringing all or any portion of the Business
Intellectual Property, or (ii) using all or any portion of the
Business Intellectual Property in derogation of any rights of the
Companies or rights to be granted to Xxxxxxx or Subco under this
Agreement.
(ff) There is no interference action or other Litigation pending or, to
the Knowledge of Spectra or its Subsidiaries, threatened before any
Governmental Entity (including, without limitation, the United
States Patent and Trademark Office or
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corresponding Governmental Entities in any jurisdiction) in regard
to any of the Business Intellectual Property.
(gg) The modification, use, promotion, distribution and/or sale of the
Business Intellectual Property (for the purposes of this clause
(gg), Business Intellectual Property shall not include Software not
owned by Spectra or its Subsidiaries), other than Patents and rights
in Patents, has not infringed and does not infringe any Intellectual
Property right of any Person and, as to Patents and rights in
Patents, to the Knowledge of any of the Companies, has not infringed
and does not infringe on any Intellectual Property right of any
Person. None of the Companies has received notice of infringement
upon, misappropriation of or conflict with any asserted right of any
Person, and to the Knowledge of Spectra and its Subsidiaries, there
is no basis for any such notice.
(hh) The inception, development and reduction to practice of the Business
Intellectual Property by Spectra or its Subsidiaries have not
constituted or involved, and do not constitute or involve, the
misappropriation of trade secrets, other Intellectual Property or
other rights of any other Person (including, without limitation, any
Governmental Entity).
(ii) The Software is capable of (i) recording, storing, processing,
calculating, comparing, sequencing and presenting date data, and
(ii) calculating information dependent on dates between January 1,
1999 and January 1, 2000 (the "Y2K WARRANTY"). However, for greater
clarity, such representation does not apply to output, results,
errors, or abnormal terminations or delays caused in whole or in
part by (1) any functionality of software or products, including
databases, not created or approved by Spectra, whether or not such
products or software are embedded in or form part of the Software;
(2) use of the Software and updates thereto in combination with any
other product not provided or approved by Spectra; (3) errors not
attributable to date-specific data; (4) any modification of the
Software or updates thereto made by a party other than Spectra; (5)
any data provided to the Software by non-Spectra products (unless
approved by Spectra) which does not adequately specify date data;
(6) any failures to process date data that result from any Third
Party hardware or operating system; or (7) a customer's failure to
use the Software in accordance with the documentation related
thereto provided by Spectra.
(jj) All Software developed by Spectra or any of its Subsidiaries was
developed by employees of and consultants to Spectra and its
Subsidiaries (the "DEVELOPERS") and all such work is done under
employment contracts and employee non-disclosure agreements that
explicitly confer all Intellectual Property Rights to Spectra and is
the exclusive property of Spectra or its Subsidiaries. By way of the
employee non-disclosure agreements, all Developers were advised of
Spectra's requirement that all work was to be the sole property of
Spectra and that all related Intellectual Property rights were to be
the sole property of Spectra. All Developers were also advised and
agreed by way of the employee non-disclosure agreement that all work
product arising out of or in the course of the work
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relationship with Spectra was to be assigned to and become the
property of Spectra.
(kk) Each past or current employee, officer and consultant of Spectra or
any of its Subsidiaries has executed a Non-Disclosure Agreement
which includes Intellectual Property Rights provisions in the form
of Exhibit F attached hereto, and each such agreement is assignable,
and shall be assigned, to the Surviving Corporation as of the
Closing Date. No past or current employee, officer or consultant of
the Companies has excluded works or inventions made prior to his or
her employment with the Companies from his or her assignment of
inventions pursuant to such employee, officer or consultant's
Non-Disclosure Agreement.
EMPLOYMENT RELATED MATTERS
(ll) Spectra and its Subsidiaries have written employment contracts or
consulting contracts with each of their respective employees and
consultants. The form of employment agreement for all of the
Companies employees (other than Messrs. Nissan, Xxxx and Xxxxxx,
Spectra's five Canadian residents employed by Spectra Australia and
Spectra US in Australia and the United States, and Xxxx XxXxxx) is
attached hereto as Schedule 3.1(ll).
(mm) Neither Spectra nor any of its Subsidiaries is bound by or a party
to or is in the process of negotiating or renegotiating, any
collective bargaining agreement, side letter or other agreement with
any trade union, council of trade unions, employee bargaining agency
or other affiliated bargaining agency.
(nn) All accrued vacation days and accrued vacation pay for employees
(including all senior management) of Spectra and its Subsidiaries is
properly reflected and accrued in the Books and Records and accounts
of Spectra and its Subsidiaries.
(oo) Since the Balance Sheet Date, except in the ordinary course of
business and consistent with the schedule of salary increases
provided to Xxxxxxx as referenced in Section 4.1(p) hereof, there
have been no material changes in the terms and conditions of
employment of any employees of Spectra or its Subsidiaries,
including their salaries, remuneration and any other payments to
them, there have been no material changes in any remuneration
payable or benefits provided to any officer, director, consultant,
independent or dependent contractor or agent of Spectra or any of
its Subsidiaries, neither Spectra nor any of its Subsidiaries has
paid or declared any bonuses, and neither Spectra nor any of its
Subsidiaries has agreed or otherwise become committed to change any
of the foregoing since that date.
(pp) Neither Spectra nor any of its Subsidiaries is a party to any
collective bargaining agreement or other contract or agreement with
any labour organization or other representative of any of the
employees of Spectra or any of its Subsidiaries, nor are any of such
contracts or agreements pending or contemplated. There is no labour
strike, dispute, slowdown, work stoppage or lockout that is pending
or, to
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the Knowledge of Spectra or any of its Subsidiaries, threatened
against or otherwise affecting Spectra or any of its Subsidiaries,
and neither Spectra nor any of its Subsidiaries has experienced the
same. Neither Spectra nor any of its Subsidiaries has closed any
office, plant or facility, effectuated any layoffs of employees or
implemented any early retirement or separation program at any time
nor has Spectra or any of its Subsidiaries planned (where a decision
has been made) or announced any such action or program for the
future with respect to which Spectra or any of its Subsidiaries may
have any liability. All salaries, wages, vacation pay, bonuses,
commissions and other compensation payable by Spectra or any of its
Subsidiaries to the employees of Spectra or any of its Subsidiaries
before the date hereof have been paid in all material respects as of
the date hereof. Except as set forth in Schedule 3.1(sss), no Person
has asserted any Claim, or, to the Knowledge of Spectra or any of
its Subsidiaries, has any reasonable basis to assert any valid
Claim, against Spectra or any of its Subsidiaries that either the
continued employment by, or association with, Spectra or any of its
Subsidiaries of any of the present officers or employees of, or
consultants to, Spectra or any of its Subsidiaries contravenes any
agreements or Laws applicable to unfair competition, trade secrets
or proprietary information.
EMPLOYEE BENEFIT PLANS.
(qq) Except for the Company Benefit Plans listed on Schedule 3.1(qq),
there are no employee benefit plans, or any contracts, plans,
trusts, programs, policies or arrangements, in each case whether
written or oral, that provide rights or benefits of economic value
to any current or former employee of Spectra, any of its
Subsidiaries or any ERISA Affiliate or current or former
beneficiary, dependent or assignee of any such employee or former
employee, maintained or contributed to by Spectra, its Subsidiaries
or any ERISA Affiliate. Except as disclosed on Schedule 3.1(qq), no
promise or commitment to increase benefits under the Company Benefit
Plans has been made by Spectra or its Subsidiaries except as
required by Applicable Law.
(rr) LIST OF PLANS. Schedule 3.1(rr) sets forth a complete list of all
Company Benefit Plans. Spectra has made available to Xxxxxxx (i)
accurate and complete copies of all Company Benefit Plan documents
and all other material documents relating thereto, including (if
applicable) the most recent summary plan description for each plan,
and all summary annual reports and insurance contracts, (ii)
accurate and complete detailed summaries of all unwritten Company
Benefit Plans, (iii) accurate and complete copies of the most recent
financial statements and actuarial reports with respect to all
Company Benefit Plans for which financial statements or actuarial
reports are required or have been prepared, and (iv) accurate and
complete copies of all information returns and annual reports for
all Company Benefit Plans (for which information returns or annual
reports are required) prepared within the last three years, (v) all
material professional opinions relating to Company Benefit Plans and
(vi) accurate and complete copies of material correspondence with
all Governmental Entities. No material changes have occurred or are
expected to occur which would affect the actuarial reports or
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financial statements delivered to Xxxxxxx pursuant to this Section
3.1(rr). Neither Spectra nor any ERISA Affiliate sponsors a benefit
plan subject to Part 3, Subtitle B of Title I of ERISA or Title IV
of ERISA, nor has Spectra or any ERISA Affiliate ever contributed to
or been required to contribute to any multiemployer plan (as defined
in Section 3(37) of ERISA), nor does Spectra nor any ERISA Affiliate
have a current or contingent obligation to or liability with respect
to such a multiemployer plan. Neither Spectra nor any ERISA
Affiliate has any liability with respect to any employee benefit
plan (as defined in Section 3(3) of ERISA) other than with respect
to Company Benefit Plans.
(ss) LEGAL COMPLIANCE; FUNDING. All Company Benefit Plans conform (and at
all times have conformed) in all material respects to, and are being
administered and operated (and have at all time been administered
and operated) in material compliance with, the terms of the
applicable plan and the requirements of all Applicable Laws. All
returns, reports and disclosure statements required to be made under
Applicable Laws have been timely filed or delivered. To the extent
required by Applicable Laws, the Company Benefit Plans are
registered, and no event has occurred, or could reasonably be
expected to occur, which could entitle any Person to terminate any
Company Benefit Plan or adversely affect the Tax status of any
Company Benefit Plan. There have not been any "prohibited
transactions," as such term is defined in Section 4975 of the Code
or Section 406 of ERISA, involving any Company Benefit Plans that
could subject Spectra or any ERISA Affiliate to any penalty or Tax
imposed under ERISA or the Code. No Company Benefit Plan is
underfunded on either a going concern or a solvency basis, and, to
the Knowledge of Spectra and its Subsidiaries, there have been no
withdrawals of surplus or contribution holidays except as permitted
by Applicable Law and the terms of the applicable plan.
(tt) PLAN DETERMINATIONS. Any Company Benefit Plan that was or is
intended to be qualified under Section 401(a) of the Code and exempt
from tax under Section 501(a) of the Code has been determined by the
Internal Revenue Service (U.S.) to be so qualified or an application
for such determination is pending. Any such determination that has
been obtained remains in effect and has not been revoked.
(uu) CLAIMS. There are no pending or, to the Knowledge of Spectra or its
Subsidiaries, threatened Claims by or on behalf of any Company
Benefit Plans, or by or on behalf of any individual participants or
beneficiaries of any Company Benefit Plans, involving or relating to
the Company Benefit Plans (other than Claims made in the ordinary
operation of such plans), nor is there, to the Knowledge of Spectra
or its Subsidiaries, any reasonable basis to assert any such Claim.
None of the Company Benefit Plans are the subject of any pending,
or, to the Knowledge of any Spectra and its Subsidiaries, threatened
investigation or audit by the Internal Revenue Service, the
Department of Labor or the PBGC or other Governmental Entity.
(vv) WELFARE PLANS. No Company Benefit Plan provides any health, life or
other welfare coverage to employees of Spectra or any of its
Subsidiaries beyond
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termination of their employment with Spectra or any of its
Subsidiaries by reason or retirement or otherwise, other than
coverage as may be required under Section 4980B of the Code or Part
6 of ERISA, or under the continuation of coverage provisions of the
Laws of any state, province, territory or locality.
(ww) NO ACCELERATED BENEFITS. Spectra's execution and performance of the
transactions contemplated by this Agreement will not constitute an
event under any Company Benefit Plan that will result in any payment
(whether as severance pay or otherwise), acceleration, vesting or
increase in benefits with respect to any employee or any dependent
or independent contractor of Spectra or any ERISA Affiliate.
(xx) [INTENTIONALLY OMITTED].
REALTY
(yy) Neither Spectra nor any of its Subsidiaries owns any real property.
(zz) Schedule 3.1(zz) is a true, complete, correct and current list, by
address, owner and usage, of all real property agreements (including
all amendments and supplements thereto) pursuant to which any of the
Companies (as the case may be) leases, subleases or otherwise
occupies any real property (each a "REAL PROPERTY LEASE" and
collectively the "REAL PROPERTY LEASES"), copies of which have been
made available to Xxxxxxx. Pursuant to the Real Property Leases,
Spectra or its Subsidiaries (as the case may be) has validly
existing and enforceable leasehold, sublease hold or occupancy
interests in the real property leased thereunder, in each case free
and clear of all Encumbrances and free from Defaults (i) by the
Companies and (ii) by the other party or parties to such Real
Property Leases. Except for the Real Property Leases, if any,
described in Schedule 3.1(zz), the consummation of the transactions
contemplated by this Agreement will not require any consent or
approval of any landlord or sublandlord under any such Real Property
Lease, result in any increase in rent or penalty to the party which
is a tenant or subtenant thereunder or result in the early
termination of any Real Property Lease. None of the Companies has
transferred, assigned, hypothecated, pledged or encumbered any of
its rights or interest under any Real Property Lease. None of the
Companies has received any notice from any landlord or sublandlord
or any other party of any Default under, or the termination of, any
Real Property Lease.
(aaa) The real property leased to Spectra or its Subsidiaries, as the case
may be, pursuant to the Real Property Leases, if any, constitutes
all real property used or occupied by Spectra or its Subsidiaries
(the "REAL PROPERTY") and (i) no portion thereof is subject to any
pending condemnation proceeding or proceeding by any Governmental
Entity and there is no threatened condemnation or proceeding with
respect thereto; (ii) the physical condition of such Real Property
is sufficient to permit the continued conduct of the Business,
subject to the provision of usual and customary maintenance and
repair performed in the ordinary course; (iii)
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there are no Contracts, written or oral, to which any of the
Companies is a party, granting to any party or parties the right of
use or occupancy of any portion of the Real Property; (iv) there are
no parties (other than the Spectra or its Subsidiaries, as the case
may be) in possession of any such Real Property and (v) no notice of
any increase in the assessed valuation of any such Real Property and
no notice of any contemplated special assessment has been received
by the Companies, and to Spectra's Knowledge, there is no threatened
increase in assessed valuation or threatened special assessment
pertaining to any of the Real Property.
(bbb) As may be required by Law, each of the Companies has all permits and
certificates of occupancy necessary to the use and possession of the
Real Property as such is currently being used and possessed, and no
such permits or certificates will be required, as a result of the
consummation of the transactions contemplated by this Agreement, to
be issued, modified or supplemented after the Closing Date in order
to permit Xxxxxxx or Surviving Corporation (as the case may be)
following the consummation of the transactions contemplated by this
Agreement to lease or operate the Real Property as such is currently
being leased and used.
(ccc) There is nothing that restricts or limits the normal operation of
the Business from the Real Property and such normal operation is not
in contravention of any Applicable Law or of any decree or order of
any court or other Governmental Entity having jurisdiction.
ENVIRONMENTAL
(ddd) The Business, as carried on by Spectra and its Subsidiaries, from
the Real Property is in compliance in all material respects with all
Environmental Laws and, to the Knowledge of Spectra, there are no
facts that could give rise to a notice of non-compliance with any
Environmental Law.
(eee) There are no environmental permits used in or required to carry on
the Business.
TAXES
(fff) Spectra and each of its Subsidiaries has duly and timely filed all
Tax Returns, required to be filed by it with any taxation authority;
no Tax Return, filed by Spectra or any of its Subsidiaries contains
any material misstatement or omits any material statements or
elections that should have been included and each Tax Return,
including accompanying schedules and statements, is true, correct
and complete in all material respects.
(ggg) All Taxes due and payable by Spectra and each of its Subsidiaries
(whether or not shown on any Tax Return) have been paid.
(hhh) There are no agreements, waivers or other arrangements with any
taxation authority providing for an extension of time with respect
to the filing of any Tax Return, or any payment of any amount by or
governmental charge with respect to Spectra or any of its
Subsidiaries nor with respect to the issuance of any
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assessment or reassessment. Neither Spectra nor any of its
Subsidiaries has waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(iii) There are no actions, suits, proceedings, reassessments, audits,
investigations or claims by any Governmental Entity or to the
Knowledge of Spectra, after reasonable enquiry, threatened against
Spectra or any of its Subsidiaries relating to Taxes; there are no
current objections or appeals by Spectra or any of its Subsidiaries
relating to Taxes other than normally required annual reviews under
the Scientific, Research and Expenditure Development program
administered by the Canada Customs and Revenue Agency.
(jjj) Spectra and each of its Subsidiaries has withheld and remitted all
Taxes required to have been withheld and paid by it in connection
with any amounts paid or owing to any employee, independent
contractor, creditor, Shareholder or other Third Party (including
without limitation, income tax, workers' compensation payments,
Canadian Plan contributions, employment insurance premiums, Benefit
Plan premiums and contributions) and has paid those amounts
including any penalties or interest due to the appropriate authority
on a timely basis and in the form required under the Applicable
Laws.
(kkk) The Books and Records of Spectra and each of its Subsidiaries
accurately depict payroll Taxes withheld and remitted by each such
Company.
(lll) Neither Spectra nor any of its Subsidiaries has been required to
file any Tax Returns, with any taxation authority located in any
jurisdiction other than Canada, Ontario, United States (federal),
New York (state and city), United Kingdom and Australia. Neither
Spectra nor any of its Subsidiaries is currently required to file
any Tax Returns with any taxation authority located in any
jurisdiction outside Canada, Ontario, United States (federal), New
York (state and city), United Kingdom or Australia. No Claim has
ever been made by an authority in a jurisdiction where Spectra and
its Subsidiaries does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction.
(mmm) Except as set forth on Schedule 3.1(mmm), the taxation year end of
Spectra and each of its Subsidiaries is August 31 and the taxation
year end of Spectra has not been changed in the last five years.
(nnn) Neither Spectra nor any of its Subsidiaries has made any election or
designation for purposes of the ITA or any relevant provincial
taxing statute, or for purposes of any administrative rulings or
notices or administrative practices pursuant to the ITA or any
relevant provincial taxing statute.
(ooo) To Spectra's Knowledge, neither Spectra nor any of its Subsidiaries
has any contingent tax liability.
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(ppp) With respect to the goods and services tax ("GST") under the EXCISE
TAX ACT (Canada) and any other sales, ad valorem, excise or any
other similar tax (collectively, "SALES TAXES"):
(i) Spectra and each of its Subsidiaries are registered in each
applicable jurisdiction for Sales Tax purposes;
(ii) None of the Companies has deferred obligations or
liabilities under any section of the EXCISE TAX ACT
(Canada), or any other similar Applicable Law;
(iii) none of the Companies has made a supply of property or
service for which it paid or that has a fair market value in
excess of $10,000 to a person with whom either Spectra or a
Subsidiary was not dealing at arm's length for proceeds less
than the fair market value thereof;
(iv) all Sales Taxes required to be collected by any of the
Companies has been collected and all Sales Tax amounts
required to be remitted to the applicable Government Entity
have been remitted; and
(qqq) the reporting period of each of the Companies for purposes of Sales
Taxes is monthly (except with respect to value added tax in the
United Kingdom, for which the reporting period is quarterly) and all
Sales Tax returns and reports of each of the Companies required by
law to be filed have been filed and are true, complete and correct
in all respects.
(rrr) Schedule 3.1(rrr) lists all federal, provincial, state, local and
foreign income Tax Returns filed with respect to Spectra and its
Subsidiaries for taxable periods ended on or after August 31, 1997,
indicates those Tax Returns that have been audited, and indicates
those Tax Returns which are currently the subject of audit. Spectra
has made available to Xxxxxxx correct and complete copies of all
income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by any of Spectra and its
Subsidiaries filed or received since August 31, 1997. Neither
Spectra nor any of its Subsidiaries has filed a consent under Code
Section 341(f) concerning collapsible corporations. Neither Spectra
nor any of its Subsidiaries is a party to any agreement, contract,
arrangement or plant that has resulted or would result, separately
or in the aggregate, in the payments of (i) any "excess parachute
payment" within the meaning of Code Section 280G (or any
corresponding provision of state, local or foreign Tax law) and (ii)
any amount that will not be fully deductible as a result of Code
162(m) (or any corresponding provision of state, local or foreign
Tax law). Neither Spectra nor any of its Subsidiaries has been a
United States real property holding corporation within the meaning
of Code Section 897(c)(2) during the applicable period specified in
Code Section 897(c)(1)(A)(ii). Neither Spectra nor any of its
Subsidiaries is a party to or bound by any Tax allocation or sharing
agreement. Neither Spectra nor any of its Subsidiaries (A) has been
a member of an affiliated group filing a consolidated federal income
Tax Return, or (B) has any liability for the Taxes of any Person
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(other than any of Spectra and its Subsidiaries) under
Reg. Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or
otherwise
LITIGATION AND LIABILITIES
(sss) Except as set forth on Schedule 3.1(sss), no Litigation is pending
or, to the Knowledge of Spectra or any of its Subsidiaries,
threatened against any of the Companies in respect of the assets and
properties of the Companies, the employees of the Companies, the
Business or the transactions contemplated by this Agreement, and
none of the Companies has any Knowledge of any basis for any such
Litigation. None of the Companies is a party to or subject to the
provisions of any Court Order which provides limitations or
instructions upon the ability to operate the Business.
(ttt) No Claims under product or service warranties or guarantees made to
customers have been received by any of the Companies. Other than the
warranties set forth in the Contracts and applicable
license/maintenance schedules with customers, a form of which is
attached as Schedule 3.1(ttt), and any warranties provided by Law,
none of the Companies has given or made any warranties to Third
Parties with respect to any products sold or services performed by
it. Any warranties provided in a license or maintenance schedule to
a customer Contract conforms in all material respects to the form
attached as Schedule 3.1(ttt). Except as set forth on Schedule
3.1(sss), there are no actual or, to the Knowledge of Spectra or the
Spectra Subsidiaries, any threatened or anticipated Claims,
discounts or credits arising out of or resulting from a client
request or performance concern relating to Croesus (or any
Affiliated Persons or predecessor entity related thereto) or in any
way arising out of any of the Companies' relationships with Croesus
(or any Affiliated Persons or predecessor entity related thereto).
Except as set forth on Schedule 3.1(sss), there are no actual or, to
the Knowledge of Spectra or the Spectra Subsidiaries, any threatened
or anticipated Claims, discounts or credits relating to or in any
way arising out of any Croesus products sold or services performed
by any of the Companies.
PERMITS AND LICENSES
(uuu) The Companies have obtained all Permits and Licenses for the
operation of the Business, or as needed in connection with the
assets and properties of the Companies or the employees of the
Companies. There are no Licenses or Permits issued, other than
licenses for shrink-wrapped "off-the-shelf" software products, in
favour of each of the Companies, and each of the Companies currently
operates in compliance with the terms of each of the foregoing.
Xxxxxxx will not be required, prior to or following the Closing, to
file, apply for or obtain any Permit or License in order to
consummate the Transactions, employ the current employees of the
Companies or operate the Business pursuant to this Agreement.
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INSURANCE
(vvv) All of the assets and properties owned or leased by any of the
Companies are insured against fire and casualty under the policies
and in the amounts and types of coverage set forth in Schedule
3.1(vvv) attached hereto, and each of the Companies are insured
under liability insurance policies in the amounts set forth in
Schedule 3.1(vvv) attached hereto (the "CURRENT POLICIES"). The
Current Policies are maintained with reputable insurers, are in full
force and effect, the premiums thereon are paid, and are in amounts
and with such coverages as would be maintained by a prudent
corporation in the carrying on of a business comparable to the
Business. All such insurance policies are valid, binding and
enforceable in accordance with their terms against the respective
insurers, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar Laws
affecting creditor's rights generally. To the Knowledge of Spectra
or any of its Subsidiaries, no insurer of any of the Companies is
the subject of pending or threatened insolvency proceedings. Each of
the Companies has notified each of their respective insurance
carriers of all known Litigation, known Claims, and known facts and
circumstances which could reasonably give rise to a Claim. None of
the Companies has received any notice from its respective insurance
carrier disclaiming coverage or defending a reservation of rights
clause as to any of such notifications.
COMPLIANCE WITH LAWS
(www) Each of the Companies has complied with each, and is not in
violation of any Law or Court Order to which such Company is subject
and has not failed to obtain, or to adhere to the requirements of,
any License, Permit or authorization necessary to the ownership of
their assets and properties, the employment of their employees and
the engagement of their consultants and independent contractors or
the operation of the Business. Without limiting the generality of
the foregoing, none of the Companies has made any offer, payment,
promise to pay or authorization for the payment of money or an
offer, gift, promise to give, or authorization for the giving of
anything of value to any Person in violation of the United States
Foreign Corrupt Practices Act of 1977. In addition, without limiting
the generality of the foregoing, none of the Companies has violated
or is currently in violation of any Laws of any Governmental Entity
relating to the privacy of personal information.
(xxx) Each of the Companies is conducting and has conducted the Business
in compliance with all Applicable Laws, is not in material breach of
any such Applicable Laws.
(yyy) All Software owned by Spectra or any of the other Companies is
operating in compliance with all Applicable Laws in the
jurisdictions in which such Software is currently being used,
excluding Laws relating to privacy of personal information;
provided, however, that Spectra makes no representations or
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warranties that Spectra's customers use such Software in accordance
with Applicable Laws.
CUSTOMERS
(zzz) Each of the Companies have used their commercially reasonable
efforts to maintain good working relationships with all of their
customers. The Companies' Contracts with their customers and
customer relationships which have been terminated or cancelled, or
threatened to be terminated or cancelled, or which have resulted in
credits, discounts or refunds arising out of or resulting from a
client request or performance concern or have given rise to
allegations of breach of contract, during the past two years are set
forth and described on Schedule 3.1(zzz). Schedule 3.1(zzz) also
contains a list of the names of each of the current customers of the
Companies (the "BUSINESS CUSTOMER BASE"), indicating the dollar
amount of sales to each such customer for the period beginning
September 1, 2000 and ending as of the date hereof. Except as set
forth on Schedule 3.1(zzz), none of the customers listed on Schedule
3.1(zzz) has terminated or, to the Knowledge of Spectra or any of
its Subsidiaries, given written notice to any of the Companies prior
to the date of this Agreement or any notice (whether written or
otherwise) to any of the Companies from the date of this Agreement
to the Closing Date of an intention or plan to terminate any
Contract of the Companies, and to the Knowledge of Spectra or any of
its Subsidiaries, none of such customers may terminate any Contract
with any of the Companies or all or a material part of such
purchases, whether by reason of the Transactions, the execution of
this Agreement or for any other reason other than by mutual consent.
To the Knowledge of Spectra or any of its Subsidiaries, no employees
or independent contractors primarily responsible for servicing
customers listed on Schedule 3.1 (zzz) thereon has indicated in
writing an intention or plan to terminate his or her employment or
relationship, as the case may be, with any of the Companies. Except
as listed on Schedule 3.1(sss), none of the Companies has received
notice of, and to the Knowledge of Spectra or any of its
Subsidiaries, there is no basis for, any material complaint or
dispute by any of their customers.
EXPORT/IMPORT COMPLIANCE
(aaaa) Each of the Companies is in compliance with all Export/Import Laws
and neither Spectra nor any of its Subsidiaries has any Knowledge of
any facts or circumstances, and none of the Companies has received
any Claim from any Governmental Entity, employee or other Person,
indicating that it is not in compliance with any Export/Import Laws
or the terms or conditions of any Permits relating to the export or
import of any items (commodities, Software, technology or
otherwise).
(bbbb) There has not been to the Knowledge of Spectra or any of its
Subsidiaries, and none of the Companies has received, any Claim from
any Governmental Entity, Employee or other Person that there has
been any past or present actions, activities, circumstances,
conditions, events or incidents involving any unlawful
-55-
export or import of any items (commodities, software or technology)
that form or could form the basis of any Claim against any of the
Companies, their properties or assets or any Person, the liability
for which has or may have been retained or assumed either
contractually or by operation of law (an "EXPORT/IMPORT CLAIM").
SALES COMMISSIONS
(cccc) Except as set forth on Schedule 3.1(sss), no Claims have been made
or threatened against any of the Companies relating to sales
commissions, royalties and other similar payments in connection with
the sale of the Companies' products, and none of the Companies has
any Knowledge of any basis for any such Claim. Such commissions,
royalties and similar payments which have accrued but are not yet
payable are accurately reflected in the Books and Records of the
Companies. Other than as set forth on Schedule 3.1(p), there are no
obligations of the Companies to make any payments on account of
bonuses or similar payments under any bonus plan, arrangement,
Contract or otherwise.
BROKERS AND OTHER FEES
(dddd) No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the
Transactions or the other transactions contemplated by this
Agreement (other than CIBC World Markets Inc. and Xxxxxx Xxxxxxx &
Co. Incorporated, the fees for whom shall be solely borne by the
Spectra Shareholders and shall be paid as set forth in Section
2.7(c)).
GENERAL
(eeee) No representation or warranty made herein, and no statement
contained in any certificate, Schedule or the Collateral Documents,
as to Spectra or its Subsidiaries contains or will contain 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 herein not misleading in light of the circumstances under
which they were made. Except with respect to matters referenced
herein, Spectra does not have Knowledge of any material facts
relating to Spectra, any of its Subsidiaries or the Business that
could reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect on the Business or any of the
Companies.
(ffff) Spectra is, and has been for not less than the past 12 months, a
reporting issuer (or its equivalent) public company not in default
under the securities laws of the Province of Ontario, Canada, and in
any applicable jurisdiction in Canada (the "CANADIAN
JURISDICTIONS"), since December 13, 2000, has filed with the
securities regulatory authorities of such Canadian Jurisdictions all
documents required to be filed by it pursuant to the securities laws
of such Canadian Jurisdictions and the published policies of such
regulatory authorities and all such documents when filed complied in
all material respects with the then applicable requirements of such
laws and policies. As of their respective dates, none of such
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documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(gggg) There are no prepayment penalties that may be imposed in connection
with the anticipated repayment of the VenGrowth Debentures at
Closing.
3.1A REPRESENTATION AND WARRANTIES OF THE XXXXXX PARTIES
The XxXxxx Parties, jointly and severally, hereby represent and warrant to and
in favour of the Xxxxxxx Parties and Spectra and its Subsidiaries as follows,
and acknowledges that each of the Xxxxxxx Parties and Spectra and its
Subsidiaries is relying upon such representations and warranties in connection
with the matters contemplated by this Agreement:
(a) Eclipse is a corporation duly incorporated, organized and is validly
subsisting under the laws of the Province of Ontario and the XxXxxx
Trust is an entity duly organized and is validly subsisting under
the laws of the Province of Ontario, each with the power and
authority (corporate or otherwise) to own, lease and operate its
assets and to carry on its business and has made all necessary
filings under all Applicable Laws. Neither Eclipse nor the XxXxxx
Trust is qualified to transact business as a foreign corporation or
entity and has never been required to be so qualified or in good
standing, in any jurisdiction other than Canada.
(b) Eclipse has no Subsidiaries and, other than its ownership of Spectra
Shares, does not (i) own any shares of capital stock, units or any
other interest of any other Person or any rights, options, warrants
or other securities of any other Person, (ii) does not have any
agreement for the purchase, subscription or issuance of any of the
unissued shares of capital rights, options, warrants, securities or
any other interest of any other Person and (iii) does not have any
interest, directly or indirectly, in any other Person.
(c) The authorized capital stock of Eclipse consists of an unlimited
number of common shares, an unlimited number of Class A special
shares, an unlimited number of Class B special shares and an
unlimited number of Class C special shares, of which 100 common
shares, 200,000 Class A special shares, 1,333,000 Class B special
shares and 2,352,600 Class C special shares have been validly issued
and are outstanding as fully paid and non-assessable and will be
validly issued and outstanding as fully paid and non-assessable on
the Closing Date. On the Closing Date:
(i) 200,000 Class A special shares and 100 common shares will be
beneficially owned by and registered in the name of Xxxx X.
XxXxxx;
(ii) 1,333,000 Class B special shares and 2,352,600 Class C
special shares will be beneficially owned by and registered
in the name of the XxXxxx Trust.
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There are no outstanding options, warrants, convertible or
exchangeable securities or other rights to (i) purchase capital
stock of Eclipse, or (ii) require Eclipse to allot or issue any of
its capital stock.
(d) Eclipse has the requisite power and authority to execute, deliver
and enter into this Agreement and each of the documents, agreements
and instruments to be executed, delivered and performed by it in
connection with this Agreement (collectively the "ECLIPSE COLLATERAL
DOCUMENTS") and perform the actions and complete the transactions to
be completed by it hereunder and thereunder. The execution, delivery
and performance of this Agreement and each of the Eclipse Collateral
Documents, and the consummation of the transactions contemplated
hereby and thereby, has been authorized by all necessary action
(corporate or otherwise) on the part of Eclipse. This Agreement and
the Eclipse Collateral Documents have been duly and validly executed
and delivered by Eclipse and constitute the legal, valid and binding
obligation of Eclipse, enforceable against it in accordance with
their respective terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium or similar Laws
affecting the enforcement of creditors' rights generally.
(e) The execution, delivery and performance of this Agreement and each
of the Eclipse Collateral Documents, and the consummation of the
Amalgamation, by Eclipse, does not and will not (i) result in a
Default, of or under (A) any of the terms of the Organizational
Documents of Eclipse or the XxXxxx Trust, (B) assuming the receipt
of all Required Consents of a Governmental Entity, any Law or Court
Order applicable to or binding upon Eclipse or the XxXxxx Trust, or
(C) any Contracts, Licenses or Permits to which Eclipse or the
XxXxxx Trust is a party or by which it is bound, (ii) result in the
creation or imposition of any Encumbrances, upon any of the equity
interests of Eclipse or the XxXxxx Trust or upon any of their assets
or properties, (iii) result in the termination, amendment or
modification of, or give any party the right to terminate, amend,
modify, abandon, or refuse to perform any Contract, License or
Permit to which Eclipse or the XxXxxx Trust is a party or by which
they, or any of their properties or assets, are bound, or (iv)
result in the acceleration or modification, or give any party the
right to accelerate or modify, the time within which, or the terms
under which, any duties or obligations are to be performed, or any
rights or benefits are to be received under any Contract, License or
Permit to which Eclipse or the XxXxxx Trust is a party or by which
they, or any of their properties or assets, is bound.
(f) The corporate records and minute books of Eclipse are maintained in
all material respects in accordance with Applicable Laws. The books,
records and accounts of Eclipse, in all material respects: (i) have
been maintained in accordance with good business practices on a
basis consistent with prior years; and (ii) are stated in reasonable
detail and accurately and fairly reflect the transactions and
dispositions of the assets of Eclipse.
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(g) Eclipse was formed for the sole purposes of holding Spectra Shares
and, except as incident thereto, Eclipse has not (i) engaged in any
business activities, (ii) entered into any Contracts or agreements,
or (iii) conducted any other operations.
(h) Eclipse has good and marketable title to all of its properties and
assets, which only consist of 1,200,000 common shares of Spectra,
free and clear of all Encumbrances.
(i) Eclipse does not now nor has it ever owned, licensed or used any
Intellectual Property.
(j) On the Effective Date, Eclipse will not have any Liabilities.
(k) Eclipse does not now nor has it ever (i) had any employees, nor has
it ever (ii) maintained, or contributed to or had any obligation or
liability to any employee benefit plans, programs, agreements or
arrangements (whether written or unwritten). Eclipse is not (i) in a
controlled group of corporations within the meaning of Section
414(b) of the Code; (ii) under common control, within the meaning of
Section 414(c) of the Code, with any trade or business (whether or
not incorporated); (iii) a member of an affiliated service group
within the meaning of Section 414(m) of the Code; or (iv) or treated
as an affiliate of any entity under Section 414(o) of the Code.
(l) Eclipse does not now nor has it ever owned any real property, nor
has it ever leased, subleased or otherwise occupied any real
property.
(m) No Tax Return filed by Eclipse contains any material misstatement or
omits any material statements or elections that should have been
included and each Tax Return filed by Eclipse, including
accompanying schedules and statements, is true, correct and complete
in all material respects.
(n) All Taxes due and payable by Eclipse (whether or not shown on any
Tax Return) have been paid.
(o) There are no actions, suits, proceedings, reassessments, audits,
investigations or claims by any Governmental Entity or threatened
against Eclipse relating to Taxes.
(p) There is no Litigation pending or threatened against Eclipse or any
of its assets or properties or the transactions contemplated by this
Agreement, and none of the XxXxxx Parties are aware of any basis for
any such Litigation.
(q) Eclipse has complied with each, and is not in violation of any Law
or Court Order to which it is subject and has not failed to obtain,
or to adhere to the requirements of, any License, Permit or
authorization necessary to the ownership of its assets and
properties.
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(r) No representation or warranty made herein, and no statement
contained in any certificate, Schedule or the Eclipse Collateral
Documents, as to Eclipse, the XxXxxx Trust or Xxxx XxXxxx, contains
or will contain 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 herein not misleading in light of the
circumstances under which they were made.
3.2 XXXXXXX'X REPRESENTATIONS AND WARRANTIES
Xxxxxxx hereby represents and warrants to and in favour of Spectra as follows,
and acknowledges that Spectra is relying upon such representations and
warranties in connection with the matters contemplated by this Agreement:
(a) Xxxxxxx is a corporation duly incorporated, organized and is validly
subsisting under the laws of the Commonwealth of Pennsylvania and is
a non-resident corporation for the purposes of the ITA.
(b) Xxxxxxx has the requisite power and authority to execute, deliver
and enter into this Agreement and the Collateral Documents and to
perform the actions and complete the transactions to be completed by
Xxxxxxx hereunder.
(c) This Agreement and the Collateral Documents to be executed and
delivered by Xxxxxxx have been duly and validly executed and
delivered by Xxxxxxx and constitute the legal, valid and binding
obligation of Xxxxxxx, enforceable against it in accordance with
their respective terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium or similar Laws
affecting the enforcement of creditors' rights generally.
(d) Xxxxxxx is, and has been for not less than the past 12 months, a
public company not in default under the securities laws of the
United States and in any applicable jurisdiction in the United
States (the "U.S. JURISDICTIONS") since November 13, 1996, has filed
with the securities regulatory authorities of such U.S.
Jurisdictions all documents required to be filed by it pursuant to
the securities laws of such U.S. Jurisdictions and the published
policies of such regulatory authorities and all such documents when
filed complied in all material respects with the then applicable
requirements of such laws and policies. As of their respective
dates, none of such documents contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
(e) Neither the entering into and the delivery of the Agreement nor the
completion of the transactions contemplated by the Agreement by
Xxxxxxx will result in the violation of:
A. any of the provisions of the constituting documents or
by-laws of Xxxxxxx;
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B. any Applicable Law; or
C. any material agreement or other material instrument to
which Xxxxxxx is a party or by which Xxxxxxx is bound.
(f) No notices, consents, authorizations, licenses, permits, approvals
or orders of any person or government are required to permit Xxxxxxx
to complete the transactions contemplated by the Agreement.
3.3 SURVIVAL.
(a) REPRESENTATIONS AND WARRANTIES. Notwithstanding any investigation
made by or on behalf of the Xxxxxxx Parties, Spectra or its
Subsidiaries, or any of the Spectra Shareholders prior to or after
the Closing Date: (i) representations or warranties made by any
party which were made by such party with intent to defraud or
mislead shall survive in accordance with the applicable statute of
limitations, (ii) the representations and warranties of Spectra set
forth in Sections 3.1(fff) to (rrr) relating to Taxes shall survive
until the expiration of the applicable tax statute of limitations,
(iii) representations and warranties set forth in Sections 3.1(cc)
to (kk) and Section 3.1(yyy), Section 3.1(u) and (v) and Section
3.1(e) to (j) relating to Intellectual Property, Title to Assets and
Title to Subsidiaries shall survive the Closing until the date which
is three years from the Closing Date, (iv) all representations and
warranties made by the XxXxxx Parties in Section 3.1A shall survive
the Closing without any limitation, and (v) all other
representations and warranties made by any party in this Agreement
or in any Collateral Document shall survive the Closing until the
date which is one year following the Closing Date (each a "SURVIVAL
DATE"), and thereafter as to any Claims or Losses set forth with
reasonable specificity in a notice given prior to the applicable
Survival Date.
(b) COVENANTS, AGREEMENTS. All covenants set forth herein shall survive
the Closing in accordance with the applicable statute of
limitations.
3.4 SPECTRA'S INDEMNIFICATION.
Subject to the limitations set forth in Sections 3.5(c) and 3.5(e), regardless
of any investigation undertaken or made by the Xxxxxxx Parties, or any of their
shareholders, employees, agents or representatives prior to the Closing Date,
Spectra, prior to Closing, and the Spectra Equity Holders and the Eclipse
Shareholders, jointly and severally, agree to indemnify, defend and hold
harmless the Xxxxxxx Parties (and the amalgamated company in the event the
Closing occurs) and each of their directors, officers, employees, Affiliates,
agents, shareholders, successors and assigns and legal representatives, and each
Person who controls (within the meaning of the 0000 Xxx) any of them, from and
against any and all Claims (including, without limitation, Claims arising out of
facts or circumstances that have occurred on or prior to the Closing Date, even
though such Claim may not be filed or come to light until after the Closing
Date) or Losses that may be imposed upon, incurred by or asserted against any of
them arising out of, based upon or resulting from: (a) any misrepresentation,
breach of any warranty or non-fulfillment of any covenant to be performed by the
Companies under this Agreement or any Collateral Document,
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or the Shareholders under any Collateral Document; (b) a Disclosed Claim; (c)
any non-compliance by the Companies at or before the Closing Date with
Applicable Laws relating to fraudulent conveyances, fraudulent transfers,
preferential transfers and the like; or (d) any breach by any officer or
director of any of the Companies of any fiduciary duty owed by such officer or
director to any shareholder of the Companies, which breach occurred prior to, in
connection with or as a result of the Closing and the transactions contemplated
to take place at Closing.
3.4A INDEMNIFICATION BY THE XXXXXX PARTIES
Regardless of any investigation undertaken or made by the Company or the Xxxxxxx
Parties, or any of their shareholders, employees, agents or representatives
prior to the Closing Date, the XxXxxx Parties, jointly and severally, agree to
indemnify, defend and hold harmless the Company and the Xxxxxxx Parties (and the
amalgamated company in the event the Closing occurs) and each of their
directors, officers, employees, Affiliates, agents, shareholders, successors and
assigns and legal representatives, and each Person who controls (within the
meaning of the 0000 Xxx) any of them, from and against any and all Claims
(including, without limitation, Claims arising out of facts or circumstances
that have occurred on or prior to the Closing Date, even though such Claim may
not be filed or come to light until after the Closing Date) or Losses that may
be imposed upon, incurred by or asserted against any of them arising out of,
based upon or resulting from: (a) any misrepresentation, breach of any warranty
or non-fulfillment of any covenant to be performed by Eclipse or the XxXxxx
Parties under this Agreement; (b) any non-compliance by Eclipse or the XxXxxx
Parties at or before the Closing Date with Applicable Laws relating to
fraudulent conveyances, fraudulent transfers, preferential transfers and the
like; or (c) any breach by any officer or director of Eclipse of any fiduciary
duty owed by such officer or director to any shareholder of Eclipse, which
breach occurred prior to, in connection with or as a result of the Closing and
the transactions contemplated to take place at Closing.
3.5 PAYMENT; PROCEDURE FOR INDEMNIFICATION.
(a) CLAIM OR LOSS. In the event that the Person seeking indemnification
under Section 3.4 (the "INDEMNIFIED PARTY") shall suffer an
indemnifiable Claim or Loss, he, she or it shall promptly, after
obtaining knowledge of the incurrence of any such indemnifiable
Claim or Loss, give a notice of intent to seek indemnity, describing
the Claim or Loss in reasonable detail (an "INDEMNITY NOTICE") to
the Shareholders' Representative and, to the extent such Claim or
Loss could give rise to a payment from the Escrow Account, the
Instructing Shareholders (as defined in the Escrow Agreement)(in
which case such notice shall be accompanied by a list of the last
known address of each of the Spectra Equity Holders on the Books and
Records). The failure of any Indemnified Party to give such Persons
the Indemnity Notice pursuant to such notification provisions shall
not release the party from whom indemnification under Section 3.4 is
sought (the "INDEMNIFYING PARTY") of liability under Section 3.4,
except to the extent that the Indemnifying Party's ability to defend
such Claim or Loss is materially prejudiced by the failure to give
such notice. Within thirty (30) days after the receipt by the
Shareholders' Representative and the Instructing Shareholders (as
defined in the Escrow Agreement) of the Indemnity Notice, the
Shareholders'
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Representative, in accordance with the Escrow Agreement and upon
receipt of instructions thereunder, shall either (i) direct to the
Escrow Agent to pay to the Indemnified Party an amount equal to the
indemnifiable Claim or Loss or (ii) direct to the Shareholders'
Representative to object to such Claim, in which case the
Shareholders' Representative shall give written notice to the
Indemnified Party of such objection together with the reasons
therefor, it being understood that the failure of the Instructing
Shareholders to so instruct the Shareholders' Representative to so
object shall preclude the Indemnifying Party from asserting any
Claim, defense or counterclaim relating to the Indemnifying Party's
failure to pay any indemnifiable Claim or Loss and the Indemnified
Party shall be entitled to have such Claim or Loss resolved pursuant
to the dispute resolution provisions of Section 8.4 of this
Agreement. The Shareholders' Representative's objection shall not,
in and of itself, relieve the Indemnifying Party from its
obligations under Section 3.4 which shall remain subject to Section
3.5(e) hereof. In the event that the parties are unable to resolve
the subject of the Indemnity Notice, the issue shall be submitted to
the dispute resolution provisions of Section 8.4 of this Agreement.
(b) Third Party Claim or Loss.
(i) Notwithstanding anything set forth in subparagraph (a)
above, in the event the facts giving rise to the Claim for
indemnification under Section 3.4 shall involve any action,
or threatened Claim or demand by any Third Party, the
Indemnified Party shall, promptly after obtaining knowledge
of such Third Party Claim or demand giving rise to the Claim
for indemnification, send written notice of intent to seek
indemnity, describing such action, Claim or demand in
reasonable detail (a "CLAIM NOTICE") to the Shareholders'
Representative and, to the extent such Claim or Loss could
give rise to a payment from the Escrow Account, the
Instructing Shareholders (in which case such notice shall be
accompanied by a list of the last known address of each of
the Spectra Equity Holders on the Books and Records). The
failure of the Indemnified Party to give such Persons the
Claim Notice pursuant to such notification provisions, other
than by accidental omission, shall not release the
Indemnifying Party of Liability under Section 3.4, except to
the extent that the Indemnifying Party's ability to defend
such Claim or Loss is materially prejudiced by the failure
to give such notice. The Shareholders' Representative on
behalf of the Indemnifying Party and on the instruction of
the Instructing Shareholders, in accordance with the Escrow
Agreement, shall be entitled to defend such action, Claim or
demand in the name of the Indemnified Party at the expense
of the Indemnifying Party and through counsel selected by
the Instructing Shareholders; provided, that if the
applicable action, Claim or demand is against, or if the
defendants in any such Litigation shall include, both the
Indemnified Party and the Indemnifying Party and the
Indemnified Party reasonably concludes that a legal conflict
exists with respect to the defense of such matter, then the
Indemnified Party shall have the right to select separate
counsel with the reasonable
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fees, expenses and disbursements of a single such counsel to
be reimbursed by the Indemnifying Party as incurred. In such
event, each party will agree not to settle any Claim or Loss
without the express written consent of the other party,
which consent will not be unreasonably withheld. The
Shareholders' Representative shall give the Indemnified
Party notice in writing within fourteen (14) days after
receiving the Claim Notice from the Indemnified Party of its
intent to exercise its right to assume the defense of such
action, Claim or demand. If the Indemnified Party has
received no such notice within such time period, the
Indemnified Party may take control of the defense of such
action, Claim or demand but the Indemnifying Party shall pay
the reasonable costs of such defense incurred by the
Indemnified Party (and all such costs shall be deemed to be
Losses for purposes of Section 3.4).
(ii) Whenever the Indemnifying Party is entitled to defend any
Claim hereunder, the Indemnified Party may elect, by notice
in writing to the Shareholders' Representative, to continue
to participate through its own counsel, at its expense, but
the Shareholders' Representative shall have the right to
control the defense of the Claim or the Litigation;
provided, that the Shareholders' Representative retains
counsel reasonably satisfactory to the Indemnified Party.
(iii) Notwithstanding any other provision contained in this
Agreement, the party controlling the defense of the Claim or
the Litigation shall not settle any such Claim or litigation
without the written consent of the other party; which
consent shall not be unreasonably withheld or delayed. In
the event the Indemnified Party and Shareholders'
Representative are unable to agree as to whether the
proposed settlement terms are reasonable, the Indemnifying
Party and the Shareholders' Representative will submit the
disagreement to dispute resolution pursuant to the
provisions in Section 8.4 of this Agreement. In the event
the proposed settlement shall require that the Indemnified
Party make an admission of liability, a confession of
judgment, or shall contain any other non-financial
obligation which, in the reasonable judgment of the
Indemnified Party, renders such settlement unacceptable,
then the Indemnifying Party shall continue to be liable to
the full extent of such Litigation or Claim. Notwithstanding
any provision to the contrary, no indemnifiable Claims or
Losses with respect to Taxes shall be settled without the
prior written consent of the Surviving Corporation.
(c) LIMITATIONS OF INDEMNITY. Notwithstanding any provisions herein to
the contrary, (i) no Indemnifying Party shall be required to
indemnify, defend or hold harmless Indemnified Parties pursuant to
Section 3.4, until such time as the aggregate amount of Losses
sustained, suffered or incurred, or which may be sustained, suffered
or incurred exceeds in the aggregate the sum of $50,000 (the
"THRESHOLD AMOUNT"), and then such recovery shall include the full
amount of any such Losses, including the Threshold Amount, provided
that for the sole purpose of
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calculating whether the Threshold Amount has been reached, any
materiality provisions contained in the representations and
warranties shall be disregarded, and (ii) the aggregate liability of
Spectra for Losses as to which indemnification may be sought
pursuant to Section 3.4 shall not exceed $7,365,500 (the "CAP");
provided, however, (1) that the Cap shall not be applicable to a
Claim for indemnification which may be sought pursuant to Section
3.4(a) relating to or arising out of any alleged misstatement of or
omission from the representations and warranties contained in
Sections 3.1(cc) to (kk) and Section 3.1(yyy) relating to Spectra's
Intellectual Property, (2) that the Threshold Amount shall not be
applicable to a Claim for indemnification which may be sought
pursuant to Section 3.4(b) and (3) that neither the Threshold Amount
nor the Cap shall be applicable to (A) a Claim for indemnification
which may be sought pursuant to Section 3.4(a) relating to or
arising out of non-compliance with the covenants set forth in
Sections 4.1 (hh), (B) a Claim for indemnification which may be
sought pursuant to Section 3.4(a) relating to or arising out of any
alleged misstatement of or omission from the representations and
warranties contained in Section 3.1(w) relating to loans to current
or former employees, directors or consultants of Spectra or (C) a
Claim that is based on fraud on the part of Spectra or the Spectra
Shareholders.
(d) NO THIRD PARTY BENEFICIARIES. There are no intended third party
beneficiaries under Section 3.4 with respect to the rights of any
party hereunder.
(e) HOLDBACK. No party entitled to indemnification under Section 3.4
shall be entitled to make any Claim whatsoever against property or
assets of any Spectra Equity Holder or Eclipse Shareholder other
than against the Escrow Accounts as set forth below and in
accordance with the Escrow Agreement. After Closing and prior to the
escrow release dates set forth in the Escrow Agreement, any amounts
which must be paid by an Indemnifying Party on account of the
indemnification obligations set forth in Section 3.4 hereof or in
the Support Agreement, respectively (other than on account of an
indemnification obligation set forth in Section 3.4(a) relating to
or arising out of any alleged misstatement of or omission from the
representations and warranties contained in Sections 3.1(cc) through
(kk) and Section 3.1(yyy) relating to Spectra's Intellectual
Property which shall be satisfied from the coverages provided to the
Xxxxxxx Parties under the Representation and Warranty Insurance
Policy), shall be paid first from the Escrow Account pursuant to the
provisions hereof and the Escrow Agreement. After the applicable
escrow release dates set forth in the Escrow Agreement, any amounts
owing on account of the indemnification provisions in Section 3.4
hereof or under the Support Agreement may only be sought against the
Representation and Warranty Insurance Policy, provided, however,
that the Xxxxxxx Parties shall be entitled to payment of the
Retention Amount (as such term is defined in the Escrow Agreement)
pursuant to the terms of the Escrow Agreement.
3.5A PAYMENT; PROCEDURE FOR XXXX XXXXXX'X INDEMNIFICATION
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(a) CLAIM OR LOSS. In the event that the Person seeking indemnification
under Section 3.4A (the "XXXXXX INDEMNIFIED PARTY") shall suffer an
indemnifiable Claim or Loss, he, she or it shall promptly, after
obtaining knowledge of the incurrence of any such indemnifiable
Claim or Loss, give a notice of intent to seek indemnity, describing
the Claim or Loss in reasonable detail (a "XXXXXX INDEMNITY NOTICE")
to the XxXxxx Parties. The failure of any XxXxxx Indemnified Party
to give the XxXxxx Parties the XxXxxx Indemnity Notice shall not
release the XxXxxx Parties of liability under Section 3.4A, except
to the extent that the XxXxxx Parties' ability to defend such Claim
or Loss is materially prejudiced by the failure to give such notice.
Within thirty (30) days after the receipt by the XxXxxx Parties of
the XxXxxx Indemnity Notice, the XxXxxx Parties shall either (i) pay
to the XxXxxx Indemnified Party an amount equal to the indemnifiable
Claim or Loss or (ii) object to such Claim, in which case Xxxx
XxXxxx, on behalf of the XxXxxx Parties shall give written notice to
the XxXxxx Indemnified Party of such objection together with the
reasons therefor, it being understood that the failure of Xxxx
XxXxxx to so object shall preclude the XxXxxx Parties from asserting
any Claim, defense or counterclaim relating to his failure to pay
any indemnifiable Claim or Loss. Xxxx XxXxxx'x objection shall not,
in and of itself, relieve the XxXxxx Parties from their obligations
under Section 3.4A. In the event that the parties are unable to
resolve the subject of the XxXxxx Indemnity Notice, the issue shall
be submitted to the dispute resolution provisions of Section 8.4 of
this Agreement.
(b) Third Party Claim or Loss.
(i) Notwithstanding anything set forth in subparagraph (a)
above, in the event the facts giving rise to the Claim for
indemnification under Section 3.4A shall involve any action,
or threatened Claim or demand by any Third Party, the XxXxxx
Indemnified Party shall, promptly after obtaining knowledge
of such Third Party Claim or demand giving rise to the Claim
for indemnification, send written notice of intent to seek
indemnity, describing such action, Claim or demand in
reasonable detail (a "XXXXXX CLAIM NOTICE") to Xxxx XxXxxx.
The failure of the XxXxxx Indemnified Party to give Xxxx
XxXxxx the XxXxxx Claim Notice shall not release the XxXxxx
Parties of Liability under Section 3.4A, except to the
extent that his ability to defend such Claim or Loss is
materially prejudiced by the failure to give such notice.
The XxXxxx Parties shall be entitled to defend such action,
Claim or demand in the name of the XxXxxx Indemnified Party
at his own expense and through counsel of its own choosing;
provided, that if the applicable action, Claim or demand is
against, or if the defendants in any such Litigation shall
include, both the XxXxxx Indemnified Party and the XxXxxx
Parties and the XxXxxx Indemnified Party reasonably
concludes that a legal conflict exists with respect to the
defense of such matter, then the XxXxxx Indemnified Party
shall have the right to select separate counsel with the
reasonable fees, expenses and disbursements of a single such
counsel to be reimbursed by the XxXxxx Parties as incurred.
In such event, each party will agree not to settle any
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Claim or Loss without the express written consent of the
other party, which consent will not be unreasonably
withheld. Xxxx XxXxxx shall give the XxXxxx Indemnified
Party notice in writing within fourteen (14) days after
receiving the XxXxxx Claim Notice from the XxXxxx
Indemnified Party of the XxXxxx Parties' intent to exercise
their right to assume the defense of such action, Claim or
demand. If the XxXxxx Indemnified Party has received no such
notice within such time period, the XxXxxx Indemnified Party
may take control of the defense of such action, Claim or
demand but the XxXxxx Parties shall pay the reasonable costs
of such defense incurred by the XxXxxx Indemnified Party
(and all such costs shall be deemed to be Losses for
purposes of Section 3.4A).
(ii) Whenever the XxXxxx Parties are entitled to defend any Claim
hereunder, the XxXxxx Indemnified Party may elect, by notice
in writing to Xxxx XxXxxx, to continue to participate
through its own counsel, at its expense, but the XxXxxx
Parties shall have the right to control the defense of the
Claim or the Litigation; provided, that he retains counsel
reasonably satisfactory to the XxXxxx Indemnified Party.
(iii) Notwithstanding any other provision contained in this
Agreement, the party controlling the defense of the Claim or
the Litigation shall not settle any such Claim or litigation
without the written consent of the other party; which
consent shall not be unreasonably withheld or delayed. In
the event the XxXxxx Indemnified Party and Xxxx XxXxxx, on
behalf of the XxXxxx Parties, are unable to agree as to
whether the proposed settlement terms are reasonable, Xxxx
XxXxxx and the XxXxxx Indemnified Party will submit the
disagreement to dispute resolution pursuant to the
provisions in Section 8.4 of this Agreement. In the event
the proposed settlement shall require that the XxXxxx
Indemnified Party make an admission of liability, a
confession of judgment, or shall contain any other
non-financial obligation which, in the reasonable judgment
of the XxXxxx Indemnified Party, renders such settlement
unacceptable, then the XxXxxx Parties shall continue to be
liable to the full extent of such Litigation or Claim.
Notwithstanding any provision to the contrary, no
indemnifiable Claims or Losses with respect to Taxes shall
be settled without the prior written consent of the
Surviving Corporation.
(c) NO THIRD PARTY BENEFICIARIES. There are no intended third party
beneficiaries under Section 3.4A with respect to the rights of any
party hereunder.
ARTICLE 4 - COVENANTS
4.1 COVENANTS OF SPECTRA
Spectra covenants and agrees with the Xxxxxxx Parties that during the period
commencing on the date hereof and continuing until the earlier of the Effective
Date or the termination of this
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Agreement pursuant to Article 7, as the case may be, it will not (and will not
cause or permit any of its Subsidiaries to), without the consent in writing of
Xxxxxxx otherwise, take any action or enter into any transaction other than in
the ordinary course of business consistent with past practices. Without limiting
the generality of the foregoing, Spectra shall (unless otherwise consented to in
writing by Xxxxxxx):
(a) use reasonable commercial efforts to take all actions and to do all
things necessary in order to consummate and make effective the
transactions contemplated by this Agreement (including satisfaction,
but not waiver, of the closing conditions set forth in Article 5
below);
(b) carry on its business and the business of its Subsidiaries in and
only in the ordinary and regular course in substantially the same
manner as heretofore conducted (including, without limitation,
maintaining all necessary Licenses and Permits) and, to the extent
consistent with such business and use all reasonable efforts to
preserve intact its present business organization;
(c) not commence to undertake a substantial or unusual expansion of its
or its Subsidiaries' business or an expansion that is out of the
ordinary and regular course of business consistent with prior
practice in light of current market and economic conditions;
(d) not, and will not permit any of its Subsidiaries to, except as
expressly contemplated by Sections 4.4 and 4.5 and otherwise in this
Agreement, take any action or enter into any transaction or
negotiation which would interfere or be inconsistent with the
consummation of the transactions contemplated by this Agreement;
(e) except as contemplated herein in connection with the Transactions,
not, and will not permit any of its Subsidiaries to, declare, set
aside or pay any dividend or make any distribution of its properties
or assets to its shareholders or purchase or retire any Spectra
Shares or Sub Shares;
(f) except for (i) 6,881,984 common shares to be issued prior to Closing
on the conversion of Series A Preferred Shares, (ii) common shares
to be issued prior to Closing pursuant to the anti-dilution
provisions of UpTick Subscription Rights Agreements dated October
13, 1999, (iii) in respect of the Option Consideration, Warrant
Consideration and 2001 Employee Bonus to be paid pursuant hereto or
(iv) as otherwise described in Schedule 4.1(f), Spectra shall not,
and will not permit any of its Subsidiaries to, allot, reserve, set
aside or issue, or enter into any agreement for the allotment or
issuance of, or purchase or redeem or propose the purchase or
redemption of, or grant any other rights to acquire, shares of its
capital stock or any of its Subsidiaries thereof or securities
convertible into, exchangeable for, or which carry the right to
acquire, directly or indirectly, any shares of its capital stock or
any such Subsidiary;
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(g) not, whether through the action of the Spectra Board or otherwise,
accelerate the vesting of any unvested stock options or accelerate
the release of, or the expiry date of any hold period relating to,
any Convertible Securities;
(h) except as contemplated herein in connection with the Transactions,
not, and will not permit any of its Subsidiaries to, alter or amend
its articles, by-laws or other organizational documents, or those of
its Subsidiaries, as the same exist at the date of this Agreement;
(i) use reasonable commercial efforts to obtain all approvals and
waivers (including, without limitation, the Required Consents) and
provide all notices necessary or desirable in connection with the
Transactions and the transactions contemplated hereby and take such
other reasonable measures as may be appropriate to fulfil its
obligations hereunder and to carry out the transactions contemplated
by this Agreement;
(j) not, and will not permit any of its Subsidiaries to, acquire or
agree to acquire by amalgamating, merging or consolidating with,
purchasing substantially all of the assets of or otherwise, any
business of any corporation, partnership, association or other
business organization or division thereof;
(k) not, and will not permit any of its Subsidiaries to, sell, lease or
otherwise dispose of any of its assets;
(l) not, and will not permit any of its Subsidiaries to, assume,
guarantee, endorse or otherwise become liable for the payment of
Indebtedness or incur Indebtedness or issue or sell any debt
securities (or any securities convertible or exchangeable thereto),
it being understood that any prohibition will not prevent or hinder
the drawing of funds pursuant to credit facilities established and
available as of the date hereof;
(m) promptly advise Xxxxxxx in writing of any Material Adverse Change;
(n) for the purposes of carrying out the Transactions, afford to Xxxxxxx
and its financial, legal and other advisers full access during
normal business hours during the period prior to the Effective Date
to the management, properties, Books and Records and Contracts of
Spectra and its Subsidiaries and to allow Xxxxxxx and such advisers
to perform a diligent and complete examination of the financial
condition, business, affairs, properties and assets of Spectra and
its Subsidiaries and, during such period, make available to Xxxxxxx
a copy of each material change report or similar document filed by
it during such period pursuant to the requirements of any Securities
Legislation, and all other information concerning its business,
properties and personnel as Xxxxxxx may reasonably request, which
information shall be true, correct and complete in all material
respects and shall not contain an untrue statement of any material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading in the light of the circumstances in which they are made;
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(o) comply promptly with all requirements which Applicable Laws may
impose on Spectra or its Subsidiaries with respect to the
transactions contemplated hereby and by the Arrangement;
(p) except June 1, 2002 increases in the amounts previously disclosed to
Xxxxxxx, not permit Spectra or its Subsidiaries to grant any of
their employees any increase in compensation or to pay any severance
or termination amounts whether or not such compensation, payment or
amount is payable in cash, or enter into any employment agreement
with any executive officer;
(q) not, and shall not permit its Subsidiaries to, make any changes in
management and use its commercially reasonable efforts to retain all
of its employees and the current employees of its Subsidiaries;
(r) not, and shall not permit any of its Subsidiaries to, grant any
stock options, stock appreciation or other Convertible Securities;
(s) not create or assume any Lien or other Encumbrance on any asset or
property of the Companies;
(t) not, and will not permit any of its Subsidiaries to, make any loan,
advance or capital contribution to or investment in any Person;
(u) not, and will not permit any of its Subsidiaries to, enter into,
amend, relinquish, terminate or fail to renew any Contract;
(v) not incur, or allow any of the Companies incur, any capital
expenditures in excess of those provided for in the annual budget of
the Companies as previously presented to Xxxxxxx;
(w) not pass any resolution to approve a split, combination or
reclassification of any of its outstanding Spectra Shares or
Convertible Securities;
(x) not change accounting methods, principles or practices unless
required by applicable GAAP and after consultation with Xxxxxxx;
(y) do all things necessary to establish the date, which shall be as
soon as practicable and in any event not later than June 24, 2002,
for the Special Meeting, or such later date as Spectra and Xxxxxxx
may agree, solicit proxies to be voted at such meeting in favour of
the Transactions, and prepare and mail Information Circular in
connection with such meeting which shall be satisfactory in form and
substance to Xxxxxxx, acting reasonably, and convene the Special
Meeting, all as contemplated herein and in accordance with
Applicable Laws, the Interim Order and the requirements of
securities regulatory authorities;
(z) use commercially reasonable efforts to cause each of the conditions
precedent set forth in Article 5 hereof to be complied with and the
Required Consents to be obtained on or before the Effective Date and
take such measures as may be
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reasonably necessary or desirable to fulfil its obligations
hereunder and to implement the Transactions and the transactions
contemplated under this Agreement;
(aa) promptly provide notice of and defend all lawsuits or other legal,
regulatory or other proceedings challenging or affecting this
Agreement or the consummation of the transactions contemplated
hereby;
(bb) use reasonable commercial efforts to have lifted or rescinded any
injunction or restraining order or other order which may adversely
affect the ability of the parties to consummate the transactions
contemplated hereby;
(cc) effect all necessary registrations, filings and submissions of
information required by Governmental Entities from Spectra or any of
its Subsidiaries;
(dd) file, or cause to be filed, in a timely manner, all Tax Returns to
be filed by Spectra and its Subsidiaries and pay, or cause to be
paid, all Taxes that are due and payable by them;
(ee) use reasonable commercial efforts to preserve intact its business
organizations and goodwill and to maintain satisfactory
relationships with suppliers, distributors, customers and others
having business relationship with it;
(ff) use reasonable commercial efforts to prevent the cancellation or
termination of its Current Policies or any of the coverage
thereunder to lapse;
(gg) prior to the Special Meeting, automatically convert all outstanding
preferred shares into common shares pursuant to and in accordance
with the "Drag-Along" provision in the articles of amalgamation of
Spectra dated September 1, 2001 with respect to its Series A
Preferred Shares;
(hh) Except as set forth on the certificate provided by Spectra pursuant
to Sections 5.3(l) and 5.5(l), all Transaction Fees of Spectra will
have been paid on Closing and there will be no other outstanding
Spectra Transaction Fees at Closing; and
(ii) The Closing Cash Amount and the Debenture Payoff Amount set forth on
the Closing Certificate will be true and accurate in all respects as
of the Closing Date.
4.2 COVENANTS OF XXXXXXX
Xxxxxxx covenants and agrees with Spectra that during the period commencing on
the date hereof and continuing until the earlier of the Effective Date and the
termination of this Agreement pursuant to Article 7, as the case may be, it will
(subject to Spectra consenting in writing otherwise):
(a) not, and will not permit any of its Subsidiaries to, except as
expressly contemplated in this Agreement, take any action or enter
into any transaction or
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negotiation which would interfere or be inconsistent with the
consummation of the transactions contemplated by this Agreement;
(b) use reasonable commercial efforts to obtain all consents, approvals
and waivers which it is required to obtain and provide all notices
that are necessary for it to provide in connection with the
Transactions and the transactions contemplated hereby as may be
appropriate to fulfil its obligations hereunder and to carry out the
transactions contemplated by this Agreement;
(c) use reasonable commercial efforts to cause each of the conditions
precedent to its obligations as set forth in Article 5 hereof to be
complied with on or before the Effective Date and take such measures
as may be necessary or desirable to fulfil its obligations hereunder
and implement the Transactions;
(d) use reasonable commercial efforts to defend all lawsuits or other
legal, regulatory or other proceedings to which it is a party
challenging or affecting this Agreement or the consummation of the
transactions contemplated hereby;
(e) use reasonable commercial efforts to effect all necessary
registrations, filings and submissions of information required by
Governmental Entities from Xxxxxxx or its Subsidiaries;
(f) use its reasonable commercial efforts to comply promptly with all
requirements which Applicable Laws may impose on Xxxxxxx or its
Subsidiaries with respect to the transactions contemplated hereby
and by the Arrangement; and
(g) use its reasonable commercial efforts to assist Spectra in informing
its clients of this Agreement and the transactions contemplated
hereby.
4.3 ACTIONS TO COMPLETE ARRANGEMENT
(a) CO-OPERATION. Xxxxxxx and Spectra agree that they shall co-operate
and proceed in good faith with respect to the Arrangement and shall
use all commercially reasonable efforts to complete the Arrangement
on or prior to June 30, 2002 including, without limitation:
(i) the preparation and filing as promptly as practicable of the
Information Circular, any exemption applications or orders
and any other documents deemed reasonably necessary by
either of Xxxxxxx and Spectra to discharge their respective
obligations under applicable Securities Legislation in
connection with the Arrangement;
(ii) fixing a record date for the determination of those holders
of Spectra Shares entitled to receive notice of the Special
Meeting and causing such meeting to be held; and
(iii) the taking of all such action as may be required under the
OBCA in connection with the transactions contemplated by
this Agreement,
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subject in each case to the provisions of this Agreement.
(b) THE ARRANGEMENT.
(i) Spectra shall: (i) forthwith following the execution and
delivery of this Agreement, prepare jointly with Xxxxxxx an
application to the Court for an Interim Order on terms
acceptable to both Spectra and Xxxxxxx, each acting
reasonably, providing for, among other things, the calling
and holding of the Special Meeting on or about
June 24, 2002; and (ii) apply for the Interim Order such
that the application for such order may be heard by the
Court on or about May 31, 2002.
(ii) If the approval of the Special Resolution at the Special
Meeting in accordance with the Interim Order (or any
variation thereof) is obtained, as soon as reasonably
practicable thereafter, the parties will forthwith, but in
any event no later than five Business Days after the Special
Meeting, bring the application to the Court for the Final
Order in respect of the Arrangement on any terms as the
Court may direct and Spectra and Xxxxxxx may agree.
(iii) If a Final Order is obtained, subject to the fulfilment or
waiver of each of the conditions set forth in Article 5
hereof and, subject to the last sentence of this subsection,
on the Stock Purchase Closing Date Spectra and Xxxxxxx will
cause the Stock Purchases to be consummated. Subject to the
fulfilment or waiver of each of the conditions set forth in
Article 5 hereof and, subject to the last sentence of this
subsection, on the Effective Date Spectra will file a
certified copy of the Final Order for acceptance by the
Registrar, together with any other documentation as may be
required in connection therewith, to give effect to the
Arrangement pursuant to Section 183 of the OBCA.
Notwithstanding the foregoing, Xxxxxxx shall be entitled, if
it reasonably considers it appropriate to do so having
regard, among other things, to the percentage of the total
issued and outstanding Spectra Shares that were voted in
favour of the Arrangement at the Special Meeting and whether
and to what extent Spectra Shareholders appear or are
represented at the Court hearing in respect of the Interim
Order or the Final Order expressing opposition to the
Transactions, to require that the consummation of the Stock
Purchases and the filing by Spectra of the Plan of
Arrangement be delayed until the earlier of the Termination
Date and three Business Days after all appeal periods
applicable to the Interim Order and the Final Order have
expired, and any such appeals, if any, made during such
periods have been denied or withdrawn.
(c) INTERIM ORDER. The notice of motion for the application referred to
in Section 2.1 above will request that the Interim Order provide,
among other things mutually agreed upon by Spectra and the Xxxxxxx
Parties: (i) the calling and holding of the Special Meeting, (ii)
for the class of Persons to whom notice is to be provided in respect
of the Arrangement and the Special Meeting and for the manner in
which
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such notice is to be provided; (iii) that the requisite approval for
the Special Resolution shall be (1) two-thirds of the votes cast by
holders of Spectra Shares represented in person or by proxy at such
meeting, (2) a majority of the votes cast by holders of the Spectra
Shares (other than Xxxx XxXxxx, Eclipse and Xxxxxx) represented in
person or by proxy at such meeting, if applicable; and (3) in such
other manner as may be required by the Court in the Interim Order;
and (iv) the provision of dissent rights.
(d) INFORMATION CIRCULAR. As promptly as practicable after the execution
and delivery of this Agreement, Spectra and the Xxxxxxx Parties will
jointly prepare the Information Circular, Letter of Transmittal and
Election Form, Warrant Surrender Agreement, Bonus Surrender
Agreement and Option Surrender Agreement, together with any other
documents required by the OBCA or other Applicable Law in connection
with the Transactions and the Special Meeting. Spectra will cause
the Information Circular, Letter of Transmittal and Election Form,
Warrant Surrender Agreement, Bonus Surrender Agreement and Option
Surrender Agreement and any other documentation required in
connection with the Special Meeting to be sent to each Spectra
Shareholder and holder of Spectra Options, 2001 Bonus Awards and
Spectra Warrants, as applicable, as soon as reasonably practicable
following receipt of the Interim Order and filed as required by the
Interim Order and Applicable Law. The Warrant Surrender Agreement,
Bonus Surrender Agreement and Option Surrender Agreement shall be in
the forms set forth in Section 2.8 hereof.
(e) SECURITIES COMPLIANCE.
(i) Each of Spectra and the Xxxxxxx Parties will use all
reasonable commercial efforts to obtain all orders required
(to the extent necessary) from the applicable Canadian and
United States securities regulatory authorities to permit
the issuance and resale of the Xxxxxxx Shares issued
pursuant to the Arrangement, in each case, without
qualification, without the approval of, or the filing of,
any document, including any prospectus or similar document,
or the taking of any proceeding with, or the obtaining of
any further order, ruling or consent from, any Governmental
Entity or regulatory authority under any Canadian or United
States (as applicable) federal, provincial, state or
territorial securities or other Law or pursuant to the rules
and regulations of any regulatory authority administering
those Laws, or the fulfilment of any other legal requirement
in any jurisdiction (other than, with respect to resales,
any restrictions on transfer by reason of, among other
things, a holder being: (i) a "control person" of Xxxxxxx
for purposes of Canadian Securities Legislation; or (ii) an
"affiliate" of Spectra or Xxxxxxx for purposes of United
States Securities Legislation); provided, however, that
nothing in this Agreement shall create the obligation that
any of the Xxxxxxx Parties be required to file a
registration statement or prospectus in the United States in
respect of the Xxxxxxx Shares.
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(ii) Spectra and Xxxxxxx will prepare and file all documents
(including exemption applications) required under applicable
Securities Legislation in respect of exemptions to
registration and other requirements of the relevant
Securities Legislation, provided that Xxxxxxx shall not in
any event be required to file a registration statement or
prospectus in the United States in respect of the Xxxxxxx
Shares, including pursuant to Regulation A of the 1933 Act.
(f) PREPARATION OF FILINGS.
(i) Each of Spectra and Xxxxxxx will proceed diligently, in a
co-ordinated fashion and use its reasonable commercial
efforts in:
A. the preparation of the Information Circular, any
exemption applications or orders and any other
documents deemed reasonably necessary by either of them
to discharge their respective obligations under
applicable Securities Legislation in connection with
the Arrangement and the other transactions contemplated
hereby; and
B. the taking of such action as may be required under any
applicable Securities Legislation (including "blue sky
laws ") in connection with the issuance of Xxxxxxx
Shares, provided however, that with respect to the
United States "blue sky" requirements and Canadian
provincial qualifications neither Spectra nor Xxxxxxx
will be required to register or qualify as a foreign
corporation or to take any action that would subject it
to service of process in any jurisdiction where that
entity is not now so subject except with respect to
service of process as to matters and transactions
arising solely from the offer and sale of the Xxxxxxx
Shares.
(ii) Each of Spectra and Xxxxxxx will furnish to the other of
them, on a timely basis, all information as may be required
to effectuate the foregoing actions, and each covenants that
no information so furnished by it in writing in connection
with those actions or otherwise in connection with the
consummation of the Arrangement will contain any
misrepresentation or omission or will fail to comply with
any Securities Legislation or Applicable Law. Each of
Spectra and Xxxxxxx will ensure that the information
relating to it which is provided in the Information Circular
will not contain any misrepresentation or omission and will
otherwise comply with all Securities Legislation and
Applicable Law.
(iii) Each of Spectra and Xxxxxxx will promptly notify the other
of them if, at any time before the Stock Purchase Closing
Date or Effective Date, it becomes aware that the
Information Circular contains a misrepresentation (within
the meaning of the OSA) or omission of a material fact. In
any event, each of Spectra and Xxxxxxx will co-operate in
the preparation of a
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supplement or amendment to the Information Circular, as
the case may be, that corrects that misrepresentation, and
will cause the same to be distributed to the Spectra
Shareholders and filed with each applicable Governmental
Entity under Securities Legislation.
(iv) Each of Spectra and Xxxxxxx will ensure that the Information
Circular complies with all applicable Law (including
Securities Legislation). Without limiting the generality of
the foregoing, each of Spectra and Xxxxxxx will ensure that
the Information Circular provides the Spectra Shareholders
with information in sufficient detail to permit them to form
a reasoned judgment concerning the matters to be placed
before them at the Special Meeting.
(g) SPECIAL MEETING. Spectra will, subject to the terms of the Interim
Order, convene the Special Meeting for the Spectra Shareholders to
consider and, if deemed advisable, approve the Transactions by way
of Special Resolution, passed, subject to the terms of the Interim
Order, by (i) two-thirds of the votes cast by holders of Spectra
Shares represented in person or by proxy at such meeting, (ii) a
majority of the votes cast by holders of the Spectra Shares (other
than Xxxx XxXxxx, Eclipse and Xxxxxx) represented in person or by
proxy at such meeting, if applicable and (iii) in such other manner
as may be required by the Court in the Interim Order.
4.4 EXCLUSIVE NEGOTIATION AND NON-SOLICITATION
(a) Spectra shall not, directly or indirectly, through any officer,
director, employee, representative or agent (including, but not
limited to, any investment banker, attorney or accountant) of
Spectra or any of its Subsidiaries (i) solicit, initiate or
encourage (including by way of furnishing information or entering
into any form of agreement, arrangement or understanding) the
initiation of any inquiries or proposals regarding a Spectra
Acquisition Proposal or (ii) participate in any discussions or
negotiations regarding, or provide any confidential information or
data to any Person relating to, or otherwise assist or facilitate
any effort or attempt by any Person to make or implement any Spectra
Acquisition Proposal. Spectra will notify Xxxxxxx promptly if any
such inquiries or proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought
to be instituted or continued with, Spectra, and will provide to
Xxxxxxx a copy of such Spectra Acquisition Proposal, including a
description of the material terms and conditions of any such Spectra
Acquisition Proposal and the names of the Persons or groups of
Persons making such proposal. Spectra and its officers and directors
will, and Spectra will cause its employees, agents and
representatives (including, without limitation, any investment
banker, attorney or accountant retained by Spectra) to, immediately
cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing; provided, however, that
Spectra shall not terminate any agreement pursuant to which a Third
Party has agreed not to acquire or agree, offer, seek or propose to
acquire ownership (beneficial or
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otherwise) of outstanding capital stock of Spectra. Spectra will
promptly request that each Person to whom any confidential documents
or information concerning Spectra was disclosed by Spectra since
February 28, 2002 for the purpose of discussing a possible change in
control transaction involving Spectra (a "POTENTIAL BUYER"), either
return all of such confidential documents and information, and all
copies thereof, to Spectra or deliver a written certification of
such destruction to Spectra.
(b) Nothing contained in Section 4.4(a) shall prohibit the Spectra Board
from furnishing information to, or entering into discussions or
negotiations with, any Person in connection with an unsolicited
proposal involving a fully-financed Spectra Acquisition Proposal
which is made in writing by such Person and which, if consummated,
would provide aggregate consideration to the Spectra Shareholders
and the holders of Spectra Options and Spectra Warrants in excess of
the Purchase Price if, and only to the extent that, the Spectra
Board determines in good faith, based upon the written advice of
XxXxxxxx Xxxxxxxx LLP, that such action is required for the Spectra
Board to comply with its fiduciary duties to shareholders under
Applicable Law (a "SUPERIOR PROPOSAL").
(c) If Spectra or its Subsidiaries receives a request for material
non-public information from a Person who proposes a bona fide
Spectra Acquisition Proposal and the Spectra Board determines that
such proposal would constitute a Superior Proposal pursuant to
Section 4.4(b), then, and only in such case, the Spectra Board may,
subject to the execution by such Person of a confidentiality
agreement in form and substance no less beneficial to Spectra as the
Confidentiality Agreement, provide such Person with access to
information regarding Spectra.
(d) Spectra shall ensure that its officers, directors and employees and
its Subsidiaries and their officers, directors and employees and any
financial advisors or other advisors or representatives retained by
it are aware of the provisions of this Section 4.4, and it shall be
responsible for any breach of this Section 4.4 by its financial
advisors or other advisors or representatives.
4.5 COMPETING TRANSACTION
Subject to clauses (a) and (b) below, nothing in this Agreement shall prevent
the Spectra Board from withdrawing, modifying or changing any recommendation
regarding the Transactions, in response to a bona fide Superior Proposal
received in sufficient time to enable Spectra to comply with this Section 4.5.
Spectra shall inform Xxxxxxx forthwith upon becoming aware of a Superior
Proposal and shall not withdraw or otherwise change its recommendation to
approve the Transactions unless:
(a) it has provided Xxxxxxx with notice in writing delivered to Xxxxxxx
that there is a Superior Proposal at least eight Business Days prior
to the date on which the Spectra Board proposes to withdraw or
otherwise change its recommendation to approve the Transactions,
which notice may only be given if the Superior
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Proposal has been made or proposed on or before the eight Business
Day prior to the Special Meeting;
(b) Xxxxxxx, within five Business Days after receipt of the notice
contemplated above, does not increase the consideration to at least
equal the consideration under the Superior Proposal within three
Business Days thereafter and, in any event, before the Special
Meeting, provided that, if more than one Superior Proposal exists,
the provisions of this Section 4.5(b) shall only apply to and in
respect of the Superior Proposal that the Spectra Board concludes is
the superior transaction and has so notified Xxxxxxx; and
(c) it deposits the Xxxxxxx Termination Fee in an interest bearing
escrow account with a Third Party mutually agreeable to Xxxxxxx and
Spectra, such amounts to be used exclusively to pay the Xxxxxxx
Termination Fee pursuant to Section 7.4 hereof.
4.6 POSTPONEMENT OF SPECIAL MEETINGS
Notwithstanding anything to the contrary herein, if a Superior Proposal is
proposed at any time prior to the date of the Special Meeting, Xxxxxxx may, if
Xxxxxxx increases the consideration per Spectra Share, by notice in writing to
Spectra, require that the Special Meeting be postponed to a date reasonably
necessary (up to maximum of 30 days) to enable Spectra and Xxxxxxx to jointly
prepare an amendment to the Information Circular, together with any other
documents required by the OBCA or other Applicable Law, which Information
Circular and any other documentation required in connection with the Special
Meeting Spectra will cause to be sent to each Spectra shareholder as soon as
reasonably practicable after such notice has been given by Xxxxxxx to Spectra to
enable the Spectra Shareholders to vote on the Transactions, as amended.
4.7 INDEMNIFICATION
(a) Xxxxxxx agrees that all rights to indemnification or exculpation now
existing in favour of the directors or officers of Spectra shall
survive the Arrangement and shall continue in full force and effect
for a period of four years, and effective upon consummation of the
Arrangement, Xxxxxxx shall assume, to the extent permitted under the
Applicable Law, all such indemnification obligations with respect to
any matters arising prior to the Effective Time. The foregoing
covenant shall be held by Spectra in trust for the directors and
officers of Spectra and all benefits existing thereunder shall be
for the benefit of such directors and officers.
(b) There shall be maintained in effect, for not less than four years
from the Effective Date, coverage equivalent to that in effect under
the current policies of the directors' and officers' liability
insurance maintained by Spectra which is no less advantageous, and
with no gaps or lapses in coverages with respect to matters
occurring prior to the Effective Date; provided, however, if the
existing liability insurance expires, or is terminated or canceled
by the insurance carrier during such four-year period, the Surviving
Corporation will use reasonable commercial efforts to obtain as much
liability insurance as can be obtained for the remainder
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of such period for a premium not in excess (on an annualized basis)
of 150% of the last annual premium paid prior to the date hereof. In
fulfillment of its obligations under this clause (b), Xxxxxxx may
arrange insurance providing coverage that in the aggregate is no
less favorable to Spectra's officers and directors than that which
is currently in effect for Xxxxxxx' officers and directors.
4.8 LITIGATION PROCEEDINGS
In the event that any Person including, without limitation, any securities
regulatory authority, seeks to prevent, delay or hinder implementation of all or
any portion of the Arrangement or seeks to invalidate all or any portion of this
Agreement or the Plan of Arrangement, each of the parties hereto shall use all
commercially reasonable efforts to vigorously and diligently resist such
proceedings and will not settle or compromise any Claim or Claims which, if
successful, would exceed $50,000 alone or in the aggregate, brought by any such
Person, including, without limitation, any securities regulatory authority or
Spectra's or Xxxxxxx'x respective present, former or purported holders of any of
their securities, in connection with the transactions contemplated by this
Agreement, prior to the Effective Date without first consulting and discussing
the proposed settlement or compromise fully with the other parties and obtaining
such other parties' prior written consent, which shall not be unreasonably
withheld or delayed.
4.9 NOTICE
Each of Xxxxxxx and Spectra will give prompt notice to each other of the
existence, occurrence, or failure to occur, at any time from the date hereof to
the Effective Date, of any change, event, condition, occurrence or state of
facts which would, or would be likely to: (i) cause any of the representations
or warranties of such party contained herein to be untrue or inaccurate in any
material respect on the date hereof or at the Effective Date; or (ii) result in
the failure to comply with or satisfy any covenant, condition or agreement
relating to this Agreement to be complied with or satisfied by such party prior
to the Effective Date; provided, however, that no notification will affect the
representations and warranties of either of them or the conditions to the
obligations of either of them or otherwise affect the remedies available
hereunder to the party receiving the notice.
4.10 MONTHLY REPORTS AND QUARTERLY FINANCIAL STATEMENTS.
Spectra shall deliver to Xxxxxxx monthly consolidated financial statements of
the Companies consisting of a balance sheet, income statement and statement of
cash flows (the "UNAUDITED MONTHLY STATEMENTS") for each calendar month
hereafter within 15 Business Days after the end of each such month. Delivery of
each set of Unaudited Monthly Statements shall automatically constitute a
representation and warranty by Spectra that such Unaudited Monthly Statements
were prepared in accordance with applicable GAAP and fairly present the
financial condition, the results of operations and, where applicable, the cash
flows of the Companies as of their respective dates and for the respective
periods reported therein (subject to normal year-end adjustments and the lack of
any footnote disclosures) and such Unaudited Monthly Statements shall be deemed
"Financial Statements" for purposes of this Agreement.
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4.11 [INTENTIONALLY OMITTED]
4.12 DISCLOSED CLAIMS
Prior to and for the 90 day period immediately following Closing (the "CONTROL
PERIOD"), counsel reasonably acceptable to the Xxxxxxx Parties and Spectra or
the Shareholders' Representative shall continue, under the direction and at the
discretion of Spectra (or the Shareholders' Representative after Closing), to
represent Spectra and any person who served as an officer or director of Spectra
in respect of Disclosed Claims. Prior to the Closing, Spectra shall pay all
costs and expenses in connection with such Disclosed Claims. Prior to the
Closing, Spectra may obtain an Acceptable Settlement without the consent of the
Xxxxxxx Parties if the Losses related thereto do not exceed that amount which is
set forth on Schedule 4.12 (the "THRESHOLD SETTLEMENT AMOUNT"), otherwise any
other settlement of Disclosed Claims involving a settlement amount in excess of
the Threshold Settlement Amount, shall require the prior written approval of the
Xxxxxxx Parties. After the Control Period, counsel reasonably acceptable to the
Xxxxxxx Parties and Spectra or the Shareholders' Representative, under the
direction and at the discretion of Xxxxxxx, shall represent Spectra and any
person who served as an officer or director of Spectra prior to Closing in
respect of the Disclosed Claims and Xxxxxxx shall control all aspects of the
defence and settlement of such Disclosed Claims. Any and all costs incurred by
the Xxxxxxx Parties and paid in connection with Disclosed Claims in excess of US
$30,000 shall be reimbursed from the Escrow Account in accordance with the terms
and conditions of Section 3.5 hereof and the Escrow Agreement.
4.13 EMPLOYEES
Within five (5) days after the date hereof, the Companies shall demand payment
in full of all outstanding loans to current or former employees, directors or
consultants of the Companies.
ARTICLE 5 - CONDITIONS OF CLOSING
5.1 MUTUAL CONDITIONS PRECEDENT
The respective obligations of the parties hereto to consummate the Stock
Purchases and Arrangement shall be subject to fulfilment of each of the
following conditions on or before the Stock Purchase Closing Date and the
Effective Date, as the case may be, any of which may be waived by the parties
hereto, without prejudice to their right to rely on any other or others of them:
(a) the Agreement shall have been accepted by the holders of Spectra
Shares by such margin as is in compliance with the terms of the
"Drag-Along Right" contained in the Series A Preferred Share terms;
(b) the Plan of Arrangement shall have been approved by the holders of
Spectra Shares at the Special Meeting by such margin as is in
compliance with the terms and provisions of the OBCA and the Interim
Order;
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(c) all consents, approvals, authorizations, waivers and orders required
or necessary for the completion of the transactions contemplated
herein shall have been obtained or received from the Persons,
authorities or bodies having jurisdiction in the circumstances
(including consents to change of control of Spectra under
contractual obligations of Spectra and the issuance of the Final
Order);
(d) no legal impediment will exist, whether arising under Law or
regulation, or by actions of a court, nor will any proceedings or
Litigation, judicial, administrative or otherwise, be pending before
a court or threatened, in Canada or elsewhere, that will have the
consequence (or would, if successful, have the consequence) of
preventing the Stock Purchases or the Arrangement, imposing material
limitations or conditions on the Stock Purchases, Arrangement or the
transactions contemplated hereby or on the rights of the Xxxxxxx
Parties to own and exercise full rights to ownership of the Spectra
Shares and the Subsidiary Purchase Shares, or which has resulted in,
or if the Arrangement or Stock Purchases were completed, would
result in a Material Adverse Change with respect to Spectra or its
Subsidiaries; and
(e) this Agreement shall not have been terminated pursuant to Article 7.
5.2 CONDITIONS TO OBLIGATION OF SPECTRA TO CONSUMMATE THE STOCK
PURCHASES
The obligation of Spectra to consummate the Stock Purchases is subject to the
satisfaction on or before the Effective Date of each of the following
conditions, any of which may be waived by it in writing without prejudice to its
right to rely on any other or others of them except as affected by the
transactions permitted or contemplated by this Agreement:
(a) the representations and warranties of Xxxxxxx contained herein which
are not subject to a Material Adverse Effect, materiality or similar
qualifier shall be true and correct in all material respects on the
Effective Date with the same effect as though made again at and as
of such date (except representations and warranties which address
matters only as of a certain date which shall be true and correct as
of such date) and all representations and warranties which are
subject to a Material Adverse Effect, materiality or other similar
qualifier shall be true and correct on the Effective Date (except
representations and warranties which address matters only as of a
certain date which shall be true and correct as of such date) and
all covenants and obligations of Xxxxxxx required to be observed,
performed or complied with shall have been so observed, performed or
complied with in all material respects by the Stock Purchase Closing
Date and Spectra shall have received certificates dated the Stock
Purchase Closing Date signed by two senior officers of Xxxxxxx, as
applicable, to that effect; and
(b) The Xxxxxxx Parties shall have caused the Stock Purchase Price to be
deposited to a bank account at a Canadian financial institution at
least one Business Day prior to the Stock Purchase Closings.
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5.3 CONDITIONS TO OBLIGATION OF XXXXXXX PARTIES TO CONSUMMATE THE STOCK
PURCHASES
The obligation of each of the Xxxxxxx Parties to consummate the Stock Purchases
is subject to the satisfaction on or before the Stock Purchase Closing Dates of
each of the following conditions, any of which may be waived by Xxxxxxx on
behalf of itself in writing without prejudice to Xxxxxxx'x right to rely on any
other or others of them:
(a) except as affected by the transactions permitted or contemplated by
this Agreement, the representations and warranties of Spectra
contained herein which are not subject to a Material Adverse Effect,
materiality or similar qualifier shall be true and correct in all
material respects on the Effective Date with the same effect as
though made again at and as of such date (except representations and
warranties which address matters only as of a certain date which
shall be true and correct as of such date) and all representations
and warranties which are subject to a Material Adverse Effect,
materiality or other similar qualifier shall be true and correct on
the Effective Date (except representations and warranties which
address matters only as of a certain date which shall be true and
correct as of such date) and all covenants and obligations of
Spectra required to be observed, performed or complied with shall
have been so observed, performed or complied with in all material
respects by the Stock Purchase Closing Date, and Xxxxxxx shall have
received certificates dated the Stock Purchase Closing Date signed
by two senior officers of Spectra as applicable, to that effect,
such certificate which shall be deemed a Collateral Document
hereunder;
(b) except with respect to any Material Adverse Changes disclosed to
Xxxxxxx herein as of the date this Agreement is first executed by
the parties hereto, from the Balance Sheet Date up to and including
the Stock Closing Purchase Date, there shall have been no Material
Adverse Change with respect to Spectra and its Subsidiaries nor will
any change of Law have occurred which, in the reasonable judgement
of Xxxxxxx, has or will have a Material Adverse Effect with respect
to Spectra and its Subsidiaries;
(c) all Convertible Securities, other than those set forth on Schedule
3.1(e), shall have been cancelled and shall no longer be
outstanding;
(d) Spectra and the Spectra Shareholders shall have complied with all
notice requirements and other provisions of the Institutional
Shareholders Agreement, the Employee Shareholders Agreement, the
Spectra Warrants and the Spectra Options and the Company Benefit
Plans in connection with or as a result of the Transactions;
(e) the Support Agreement shall be and remain in full force and effect,
unamended, and each of the parties thereto shall have performed
their respective obligations thereunder;
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(f) the Employment Agreements in the form attached as Exhibit G shall
have been duly executed and delivered by Xxxx X. XxXxxx and
R. Xxxxxx Xxxxxx;
(g) the Non-Competition Agreements in the form attached as Exhibit H
shall have been duly executed and delivered by Xxxx X. XxXxxx and
R. Xxxxxx Xxxxxx;
(h) all Required Consents (including, without limitation, the Third
Party Consents) which, in the determination of Xxxxxxx, acting
reasonably, are necessary or desirable to proceed with and
consummate the Stock Purchases and the Arrangement shall have been
obtained;
(i) XxXxxxxx Xxxxxxxx LLP, counsel for the Companies, shall have
delivered to Xxxxxxx their favorable opinion, dated the Stock
Purchase Closing Date, in the form attached as Exhibit I hereto;
(j) Spectra and the Escrow Agent shall have entered into the Escrow
Agreement making provision for the deposit of the Holdback Amount
with CIBC Mellon Trust Company pursuant to the terms of the Escrow
Agreement to be available to Xxxxxxx to satisfy any Claims (as
hereinafter defined) arising under this Agreement or the Support
Agreement;
(k) Spectra shall have delivered to the Xxxxxxx Parties the agreement
and consent of VenGrowth to be paid the Debenture Payoff Amount, as
set forth in Section 2.7;
(l) Spectra shall have delivered to the Xxxxxxx Parties (i) the Closing
Certificate and (ii) a detailed accounting of all of Spectra's
Transaction Fees, the nature of the fee, the amount of the fee and
payment instructions of such fee, together with a statement from any
Third Party to which such amounts are owed stating that such amounts
shown are final and that such Third Party shall have no other claims
for fees or amounts in connection with the Transactions or the
transactions contemplated by this Agreement;
(m) Spectra shall have delivered to the Xxxxxxx Parties a Warrant
Surrender Agreement from the holder of each outstanding Spectra
Warrant;
(n) the Shareholder Agreements shall have been terminated;
(o) Spectra shall have no preferred shares outstanding, and all rights
to participate in the Transactions as a purchaser of the Spectra
Shares or to otherwise acquire Spectra Shares as a result of the
Transactions shall have expired or been waived in writing by the
holder of such rights;
(p) Spectra shall have obtained the Representation and Warranty
Insurance Policy, 50% of the cost of the premiums of which shall be
Spectra Transaction Fees payable in accordance with Section
2.7(c)(i)(B);
(q) the existing loans to Xxxx XxXxxx and R. Xxxxxx Xxxxxx shall be
repaid in full;
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(r) Spectra shall have delivered to the Xxxxxxx Parties a certificate
duly executed by the Secretary or any Assistant Secretary of Spectra
dated the Stock Purchase Closing Date that (i)(A) the certified copy
of the Articles of Incorporation for Spectra, certified by the
Province of Ontario, attached to such certificate, is true, correct
and complete, and is in effect on and as of the Stock Purchase
Closing Date, (B) the Bylaws of Spectra, attached to such
certificate, are true, correct and complete, and are in effect on
and as of the Stock Purchase Closing Date and (C) the resolutions of
the Board of Directors of Spectra, attached to such certificate
approving this Agreement and the Transactions are true, correct and
complete and are in full force and effect as of the Stock Purchase
Closing Date; (ii) the officers of Spectra executing this Agreement
are incumbent officers of Spectra and that the specimen signatures
on such certificate are their genuine signatures; and (iii) Spectra
is presently existing and in good standing under the laws of the
Province of Ontario;
(s) Spectra shall have delivered to the Xxxxxxx Parties letters executed
by each of the members of the Spectra Board and each Spectra
Subsidiary effecting each such member's resignation from the Spectra
Board and the board of directors of each Spectra Subsidiary as of
the Closing Date;
(t) Spectra shall have entered into a settlement and release agreement
with Croesus which memorializes and contains the terms of the
settlement outline attached hereto as Exhibit J and which includes a
release from any liability concerning intellectual property
infringement or potential intellectual property infringement;
(u) except as affected by the transactions permitted or contemplated by
this Agreement, the representations and warranties of the XxXxxx
Parties contained herein which are not subject to a materiality or
similar qualifier shall be true and correct in all material respects
on the Effective Date with the same effect as though made again at
and as of such date (except representations and warranties which
address matters only as of a certain date which shall be true and
correct as of such date) and all representations and warranties
which are subject to a materiality or other similar qualifier shall
be true and correct on the Effective Date (except representations
and warranties which address matters only as of a certain date which
shall be true and correct as of such date) and all covenants and
obligations of the XxXxxx Parties required to be observed, performed
or complied with shall have been so observed, performed or complied
with in all material respects by the Stock Purchase Closing Date,
and Xxxxxxx shall have received a certificate dated the Stock
Purchase Closing Date signed by the XxXxxx Parties that effect; and
(v) from the Balance Sheet Date up to and including the Stock Closing
Purchase Date, there shall have been no Material Adverse Change with
respect to Eclipse nor will any change of Law have occurred which,
in the reasonable judgement of Xxxxxxx, has or will have a Material
Adverse Effect with respect to Eclipse;
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(w) all outstanding indebtedness of the Subsidiaries of Spectra owed to
Spectra shall have been converted to equity or forgiven;
(x) Eclipse shall have duly filed, and paid all amounts owed in
connection with, all Tax Returns required to be filed by it with any
taxation authority;
(y) the Director shall have granted the rectification set forth in the
Application for Rectification of Articles of Incorporation under the
OBCA filed by Spectra in March 20, 2002; and
(z) the Encumbrances on the properties and assets of Spectra and its
Subsidiaries in favour of VenGrowth shall have been removed.
5.4 CONDITIONS TO OBLIGATION OF SPECTRA TO CONSUMMATE THE ARRANGEMENT
The obligation of Spectra to consummate the Arrangement is subject to the
satisfaction on or before the Effective Date of each of the following
conditions, any of which may be waived by it in writing without prejudice to its
right to rely on any other or others of them except as affected by the
transactions permitted or contemplated by this Agreement:
(a) the representations and warranties of Xxxxxxx contained herein which
are not subject to a Material Adverse Effect, materiality or similar
qualifier shall be true and correct in all material respects on the
Effective Date with the same effect as though made again at and as
of such date (except representations and warranties which address
matters only as of a certain date which shall be true and correct as
of such date) and all representations and warranties which are
subject to a Material Adverse Effect, materiality or other similar
qualifier shall be true and correct on the Effective Date (except
representations and warranties which address matters only as of a
certain date which shall be true and correct as of such date) and
all covenants and obligations of Xxxxxxx required to be observed,
performed or complied with shall have been so observed, performed or
complied with in all material respects by the Effective Date and
Spectra shall have received certificates dated the Effective Date
signed by two senior officers of Xxxxxxx, as applicable, to that
effect;
(b) Xxxxxxx and the Escrow Agent shall have entered into the Escrow
Agreement making provision for the deposit of the Holdback Amount
with CIBC Mellon Trust Company pursuant to the terms of the Escrow
Agreement to be available to Xxxxxxx to satisfy any Claims (as
hereinafter defined) arising under this Agreement or the Support
Agreement and the funds required to be delivered by Xxxxxxx by
Section 2.5 shall have been deposited free and clear of all charges;
and
(c) Xxxxxxx shall have caused the Purchase Price to be deposited to a
bank account at a Canadian financial institution at least one
Business Day prior to the Closing.
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5.5 CONDITIONS TO OBLIGATION OF XXXXXXX PARTIES TO CONSUMMATE THE
ARRANGEMENT
The obligation of each of the Xxxxxxx Parties to consummate the Arrangement is
subject to the satisfaction on or before the Effective Date of each of the
following conditions, any of which may be waived by Xxxxxxx on behalf of itself
in writing without prejudice to Xxxxxxx'x right to rely on any other or others
of them:
(a) except as affected by the transactions permitted or contemplated by
this Agreement, the representations and warranties of Spectra
contained herein which are not subject to a Material Adverse Effect,
materiality or similar qualifier shall be true and correct in all
material respects on the Effective Date with the same effect as
though made again at and as of such date (except representations and
warranties which address matters only as of a certain date which
shall be true and correct as of such date) and all representations
and warranties which are subject to a Material Adverse Effect,
materiality or other similar qualifier shall be true and correct on
the Effective Date (except representations and warranties which
address matters only as of a certain date which shall be true and
correct as of such date) and, subject to Section 4.1, all covenants
and obligations of Spectra required to be observed, performed or
complied with shall have been so observed, performed or complied
with in all material respects by the Effective Date, and Xxxxxxx
shall have received certificates dated the Effective Date signed by
two senior officers of Spectra as applicable, to that effect, such
certificate which shall be deemed a Collateral Document hereunder;
(b) from the Balance Sheet Date up to and including the Effective Date,
there shall have been no Material Adverse Change with respect to
Spectra and its Subsidiaries nor will any change of Law have
occurred which, in the reasonable judgement of Xxxxxxx, has or will
have a Material Adverse Effect with respect to Spectra and its
Subsidiaries;
(c) all Convertible Securities shall have been cancelled and shall no
longer be outstanding;
(d) Spectra and the Spectra Shareholders shall have complied with all
notice requirements and other provisions of the Institutional
Shareholders Agreement, the Employee Shareholders Agreement, the
Spectra Warrants and the Spectra Options and the Company Benefit
Plans in connection with or as a result of the Transactions;
(e) the Support Agreement shall be and remain in full force and effect,
unamended, and each of the parties thereto shall have performed
their respective obligations thereunder;
(f) the Employment Agreements in the form attached as Exhibit G shall
have been duly executed and delivered by Xxxx X. XxXxxx and
R. Xxxxxx Xxxxxx;
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(g) the Non-Competition Agreements in the form attached as Exhibit H
shall have been duly executed and delivered by Xxxx X. XxXxxx and
R. Xxxxxx Xxxxxx;
(h) all Required Consents (including, without limitation, the Third
Party Consents) which, in the determination of Xxxxxxx, acting
reasonably, are necessary or desirable to proceed with and
consummate the Arrangement shall have been obtained;
(i) XxXxxxxx Xxxxxxxx LLP, counsel for the Companies, shall have
delivered to Xxxxxxx their favorable opinion, dated the Closing
Date, in the form attached as Exhibit I hereto;
(j) Spectra and the Escrow Agent shall have entered into the Escrow
Agreement making provision for the deposit of the Holdback Amount
with CIBC Mellon Trust Company pursuant to the terms of the Escrow
Agreement to be available to Xxxxxxx to satisfy any Claims (as
hereinafter defined) arising under this Agreement or the Support
Agreement;
(k) Spectra shall have delivered to the Xxxxxxx Parties the agreement
and consent of VenGrowth to be paid the Debenture Payoff Amount, as
set forth in Section 2.7;
(l) Spectra shall have delivered to the Xxxxxxx Parties (i) the Closing
Certificate and (ii) a detailed accounting of all of Spectra's
Transaction Fees, the nature of the fee, the amount of the fee and
payment instructions of such fee, together with a statement from any
Third Party to which such amounts are owed stating that such amounts
shown are final and that such Third Party shall have no other claims
for fees or amounts in connection with the Transactions or the
transactions contemplated by this Agreement;
(m) Spectra shall have delivered to the Xxxxxxx Parties a Warrant
Surrender Agreement from the holder of each outstanding Spectra
Warrant;
(n) the Shareholder Agreements shall have been terminated;
(o) the Stock Purchases shall have been consummated in accordance with
this Agreement;
(p) Spectra shall have no preferred shares outstanding, and all rights
to participate in the Transactions as a purchaser of the Spectra
Shares or to otherwise acquire Spectra Shares as a result of the
Transactions shall have expired or been waived in writing by the
holder of such rights;
(q) Spectra shall have obtained the Representation and Warranty
Insurance Policy, 50% of the cost of the premiums of which shall be
Spectra Transaction Fees payable in accordance with Section
2.7(c)(i)(B);
(r) the existing loans to Xxxx XxXxxx and R. Xxxxxx Xxxxxx shall be
repaid in full;
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(s) Spectra shall have delivered to the Xxxxxxx Parties a certificate
duly executed by the Secretary or any Assistant Secretary of Spectra
dated the Closing Date that (i)(A) the certified copy of the
Articles of Incorporation for Spectra, certified by the Province of
Ontario, attached to such certificate, is true, correct and
complete, and is in effect on and as of the Closing Date, (B) the
Bylaws of Spectra, attached to such certificate, are true, correct
and complete, and are in effect on and as of the Closing Date and
(C) the resolutions of the Board of Directors of Spectra, attached
to such certificate approving this Agreement and the Transactions
are true, correct and complete and are in full force and effect as
of the Closing Date; (ii) the officers of Spectra executing this
Agreement are incumbent officers of Spectra and that the specimen
signatures on such certificate are their genuine signatures; and
(iii) Spectra is presently existing and in good standing under the
laws of the Province of Ontario;
(t) Spectra shall have delivered to the Xxxxxxx Parties letters executed
by each of the members of the Spectra Board and each Spectra
Subsidiary effecting each such member's resignation from the Spectra
Board and the board of directors of each Spectra Subsidiary as of
the Closing Date;
(u) Spectra shall have entered into a settlement and release agreement
with Croesus which memorializes and contains the terms of the
settlement outline attached hereto as Exhibit J and which includes a
release from any liability concerning intellectual property
infringement or potential intellectual property infringement;
(v) except as affected by the transactions permitted or contemplated by
this Agreement, the representations and warranties of the XxXxxx
Parties contained herein which are not subject to a materiality or
similar qualifier shall be true and correct in all material respects
on the Effective Date with the same effect as though made again at
and as of such date (except representations and warranties which
address matters only as of a certain date which shall be true and
correct as of such date) and all representations and warranties
which are subject to a materiality or other similar qualifier shall
be true and correct on the Effective Date (except representations
and warranties which address matters only as of a certain date which
shall be true and correct as of such date) and, subject to
Section 5.1, all covenants and obligations of the XxXxxx Parties
required to be observed, performed or complied with shall have been
so observed, performed or complied with in all material respects by
the Effective Date, and Xxxxxxx shall have received a certificate
dated the Effective Date signed by the XxXxxx Parties to that
effect;
(w) from the Balance Sheet Date up to and including the Effective Date,
there shall have been no Material Adverse Change with respect to
Eclipse nor will any change of Law have occurred which, in the
reasonable judgement of Xxxxxxx, has or will have a Material Adverse
Effect with respect to Eclipse;
(x) all outstanding indebtedness of the Subsidiaries of Spectra owed to
Spectra shall have been converted to equity or forgiven;
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(y) Eclipse shall have duly filed, and paid all amounts owed in
connection with, all Tax Returns required to be filed by it with any
taxation authority; and
(z) the Director shall have granted the rectification set forth in the
Application for Rectification of Articles of Incorporation under the
OBCA filed by Spectra in March, 2002.
ARTICLE 6 - PAYMENT OF FEES
6.1 PAYMENT OF FEES
Except as provided in Section 7.4 hereto and Section 2.7(c) hereto, each party
hereto shall pay its own costs and expenses incurred in connection with this
Agreement and the Arrangement including, without limitation, expenses incurred
in connection with the preparation and mailing of the Information Circulars and
fees payable to their respective investment advisors, legal counsel and
auditors. In addition to any other remedies set forth herein, any Spectra
Transaction Fees that arise or become known after the Closing, to the extent
there is sufficient funds after payment of all indemnification Claims pursuant
to Section 3.4 hereof, shall be paid from the Holdback Amount in the Escrow
Account prior to its release.
ARTICLE 7 - TERMINATION
7.1 TERMINATION
This Agreement may be terminated and the transactions contemplated hereby may be
abandoned, whether before or after the approval of this Agreement and the
Transactions by the Spectra Shareholders:
(a) by written mutual consent of Spectra and Xxxxxxx;
(b) by either Xxxxxxx or Spectra if either of the Transactions shall not
have been consummated on or before July 26, 2002, unless otherwise
agreed to in writing by Xxxxxxx and Spectra;
(c) by either Xxxxxxx or Spectra if the requisite approval of the
Spectra Shareholders shall not have been obtained at the Special
Meeting;
(d) by either Xxxxxxx or Spectra if any of the conditions precedent to
be performed by the other party set forth in Article 5 shall not
have been fulfilled or performed by such other party in accordance
with the provisions hereof or thereof; or
(e) by either Xxxxxxx or Spectra if a federal, state, provincial or
other court of competent jurisdiction (whether U.S., Canadian or
otherwise) or Governmental Entity shall have issued an order, decree
or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by
this Agreement and such injunction, order, decree, ruling or
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other action shall have become final; provided that the party
seeking to terminate this Agreement pursuant to this clause (e)
shall have used all commercially reasonable efforts to remove such
injunction, order, decree or ruling;
(f) by Xxxxxxx, if the Spectra Board (i) enters into or publicly
announces its intention to enter into an agreement or agreement in
principle with respect to a Spectra Acquisition Proposal, (ii)
withdraws or modifies its recommendation to the Spectra Shareholders
of this Agreement or the Transactions or (iii) after the receipt of
a Spectra Acquisition Proposal, fails to confirm publicly, upon
request by Xxxxxxx, its recommendation to the Spectra Shareholders
that the Spectra Shareholders approve this Agreement and the
Transactions;
(g) by Xxxxxxx, if Spectra or its Subsidiaries shall have breached any
of their representations, warranties or covenants under this
Agreement; or
(h) by Spectra, if any of the Xxxxxxx Parties shall have breached any of
their representations, warranties or covenants under this Agreement.
7.2 EFFECT OF TERMINATION
Except as provided in Section 7.4 below, if any party hereto terminates this
Agreement pursuant to Section 7.1 above, all rights and obligations of the
parties hereto hereunder shall terminate without any liability of any party to
any other party (except for any liability of any party then in breach);
provided, however, that the provisions of the Confidentiality Agreement, this
Section 7.2, Section 7.4 and Section 6.1 shall survive any such termination.
7.3 WITHDRAWAL OF SUPPORT FOR THE TRANSACTIONS
Subject to the provisions of Sections 4.4, 4.5 and 7.4, nothing in this
Agreement shall prevent the Spectra Board from withdrawing, modifying or
changing any recommendation regarding the Agreement or the Transactions (but not
terminating this Agreement), if a Superior Proposal has been made.
7.4 XXXXXXX TERMINATION FEE
(a) If this Agreement is terminated by Xxxxxxx pursuant to Section
7.1(g), but only with respect to a breach by Spectra or its
Subsidiaries of Section 4.4, or Section 7.1(f), then Spectra will
immediately pay Xxxxxxx the sum of $2,000,000 in immediately
available funds (such amount which shall have been deposited into an
escrow account pursuant to Section 4.5), which the parties hereto
agree is a reasonable sum to reimburse Xxxxxxx for costs and
expenses incurred in connection with this Agreement (the "XXXXXXX
TERMINATION FEE").
(b) Xxxxxxx agrees that the payment provided for in Section 7.4(a) shall
be the sole and exclusive remedy upon a termination of this
Agreement provided that nothing herein shall relieve any party from
liability for any breach of any representation, warranty, covenant
or other agreement in this Agreement occurring prior to termination.
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(c) The provisions of this Section 7.4 shall survive the termination of
this Agreement.
(d) If Spectra fails to pay Xxxxxxx any amounts due under this Section
7.4, it shall also pay Xxxxxxx' costs and expense (including fees
and disbursements of counsel) in connection with any action,
including the filing of a law suit or other legal action, taken to
collect payment, together with interest on the unpaid amount as the
U.S. prime rate of interest announced from time to time in the Wall
Street Journal (New York Edition) from the dates such amounts were
first due.
ARTICLE 8 - GENERAL
8.1 DISCLOSURE
The parties hereto shall co-ordinate the making, dissemination and content of
the initial public announcement of this Agreement. Thereafter, the parties shall
use their best efforts to notify each other of the contents of all press
releases solely relating to the Transactions or the transactions contemplated
thereby issued by such party.
8.2 ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors but shall not
be assignable by any party hereto, unless otherwise agreed in writing by the
other parties hereto; provided, however, Xxxxxxx or any of the Xxxxxxx Parties
may assign its obligations and rights hereunder to any of its Affiliates without
the consent of any party hereto.
8.3 TIME
Time shall be of the essence of this Agreement.
8.4 GOVERNING LAW; DISPUTE RESOLUTION
(a) This Agreement and the rights and obligations of the parties hereto
shall be governed by and construed and interpreted in accordance
with the Laws of the Province of Ontario and the federal Laws of
Canada applicable therein.
(b) EACH OF THE XXXXXXX PARTIES, SPECTRA, XXXX XXXXXX AND THE SPECTRA
SUBSIDIARIES HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY.
(c) Except as otherwise set forth in this Agreement, if any dispute
arises under this Agreement or the Escrow Agreement that is not
settled promptly in the ordinary course of business, the parties
shall seek to resolve such dispute between them,
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first, by negotiating promptly with each other in good faith
negotiations. If the parties are unable to resolve such dispute
between them within 10 Business Days after such dispute arises (or
such period as the parties shall otherwise agree) through these
negotiations, then any such dispute shall be submitted to
arbitration as set forth in subsection (d) below.
(d) Except as otherwise set forth in this Agreement, any dispute herein
shall take place on a confidential basis under the auspices of the
American Arbitration Association ("AAA"), which proceeding shall be
conducted under the Commercial Arbitration Rules. The arbitration
shall take place in New York, New York, in accordance with the
following procedures:
(i) The parties shall attempt to agree on a single arbitrator
within thirty (30) days of the demand for arbitration. If
the parties fail to agree on a single arbitrator within the
thirty (30) day period, then within ten (10) further days
each party shall select a single arbitrator, who shall
together within ten (10) further days select a third
arbitrator (and if no such third arbitrator can be selected,
the AAA shall select such third arbitrator). The single
arbitrator, or the three arbitrators, as the case may be,
shall preside over the arbitration.
(ii) Unless otherwise agreed to by the parties, the arbitration
shall take place within sixty (60) days after the
arbitrator(s) are appointed. The arbitration hearing shall
be held on consecutive Business Days.
(iii) The parties shall be entitled to conduct discovery in
accordance with the Federal Rules of Civil Procedure as in
effect where arbitration occurs, limited to document
production and depositions and subject to further limitation
by the arbitrator(s) to secure just and efficient resolution
of the controversy, dispute or Claim. The arbitrator(s) are
empowered to issue subpoenas to compel compliance with
requirements for pre-hearing exchange of witness lists and
documents or deposition discovery, and to enforce the
discovery rights and obligations of the parties.
(iv) The arbitration shall include the presentation of evidence
and examination of witnesses at an oral hearing. The hearing
shall be conducted to preserve its privacy and to allow
reasonable procedural due process. Rules of evidence need
not be strictly followed, and the hearing shall be
streamlined. Documents shall be self-authenticating, subject
to valid objection by the opposing party. Expert reports,
witness biographies, depositions, and affidavits may be
utilized, subject to the opposing party's right to a live
cross-examination of the witness in person. The
arbitrator(s) shall control the scheduling and conduct of
the proceedings.
(v) If the amount in controversy exceeds $10,000, the decision
of the arbitrator(s) shall include a statement specifying in
reasonable detail the basis for and computation of the
award, if any. The award rendered by the
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arbitrator(s) shall be final, shall not constitute a basis
for collateral estoppel as to any issue in any other legal
or arbitration proceeding, and shall not be subject to
vacation or modification. Judgment upon the award may be
entered in any court having jurisdiction.
(vi) No party shall be precluded hereby from securing equitable
remedies in courts of any jurisdiction, including temporary
restraining orders and preliminary injunctions, to protect
its rights and interests, but no party shall seek any such
equitable remedies as a means to avoid or stay arbitration.
(vii) The parties other than the party that substantially prevails
(the "PREVAILING PARTY") in the arbitration shall share
equally the arbitrator(s) fees for the arbitration. The
Prevailing Party shall be entitled, as a component of the
arbitration award, to reimbursement of its costs and
expenses including, without limitation, reasonable
attorney's fees. In the event that the arbitration award
fails to clarify which (if any) party has substantially
prevailed, then the parties agree that the arbitrator(s)
shall be deemed to have retained jurisdiction for purposes
of clarifying, upon request of any party, such determination
and any resulting allocation of costs, fees or expenses.
8.5 ENTIRE AGREEMENT
This Agreement, together with the Collateral Documents, sets forth the entire
agreement and understanding of the parties hereto in respect of the transactions
contemplated hereby. There are no warranties, representations, terms, conditions
or collateral agreements, expressed, implied or statutory, among the parties
hereto other than as expressly set forth herein or therein.
8.6 WAIVER
No modification of, or amendment to this Agreement shall be valid or binding
unless set forth in writing and duly executed by the parties hereto and no
waiver of any breach of any term or provision of this Agreement shall be
effective or binding unless made in writing and signed by the party purporting
to give the same and, unless otherwise provided, shall be limited to the
specific breach waived and any waiver by Xxxxxxx or Spectra of a breach by the
other shall not in itself be deemed to be or constitute a waiver of a similar or
other breach by the other.
8.7 NOTICES
All notices and other communications hereunder shall be in writing and shall be
given and shall be deemed to have been duly given at the time of receipt, if
delivered in person or sent by facsimile transmission on a Business Day at the
place of receipt (or, if given on a non-Business Day at the place of receipt,
shall be deemed to have been duly given on the next succeeding Business Day at
such place) to the parties as follows:
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If to Xxxxxxx at:
Xxxxxxx Computer Associates, Inc.
00 Xxxxxx Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxxxx, XXX
00000
Fax: 000-000-0000
Attention: Xxxxxx X. Xxxxxxxx
with a copy to:
XXXXXX XXXXXXXX LLP
3000 Two Xxxxx Square
00xx xxx Xxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Fax: 000-000-0000
Attention: Xxxxx X. Xxxxxxx, Esquire
If to Spectra at:
Spectra Securities Software Inc.:
000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx. Xxxxxx
X0X 0X0
Fax: (000) 000-0000
Attention: Xxxx XxXxxx
with a copy to XxXxxxxx Xxxxxxxx LLP:
Xxxxx 0000
Xxxxxxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxx, Xxxxxx
X0X 0X0
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
If to the XxXxxx Parties, at:
c/o Xxxx X. XxXxxx
00 Xxxx Xxxxxx'x Xxxx
Xxxxxxxxx, Xxxxxxx X0X0X0
or to such other address as a party may have furnished to the others in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
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8.8 INVALIDITY
If any provision of this Agreement is determined to be invalid or unenforceable
by a court of competent jurisdiction that provision shall be deemed to be
severed herefrom, and the remaining provisions of this Agreement shall not be
affected thereby and shall remain valid and enforceable.
8.9 COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be deemed to
be an original, but all of which together shall constitute one and the same
document.
8.10 FURTHER ASSURANCES
Each of the parties hereto shall, from time to time, execute and deliver all
such further documents and instruments and do all acts and things as any other
party may, either before or after the Effective Date, which may reasonably be
required to effectively carry out the meaning and intent of this Agreement.
8.11 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS
No party shall issue any press release or make any public announcement relating
to the subject matter of this Agreement without the prior written approval of
the other parties; PROVIDED, HOWEVER, that any party may make any public
disclosure it believes in good faith is required by Applicable Law or any
listing or trading agreement concerning its publicly-traded securities (in which
case the disclosing party will use all reasonable efforts to advise the other
parties prior to making the disclosure).
8.12 SUBSIDIARY PERFORMANCE
Xxxxxxx hereby guarantees the performance of all covenants of Subco and Xxxxxxx
Delaware set forth herein. Spectra hereby guarantees the performance of all
covenants of its Subsidiaries set forth herein.
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IN WITNESS WHEREOF this Agreement has been executed by the parties hereto
on the date first written above.
XXXXXXX COMPUTER ASSOCIATES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Title: President
---------------------------
XXXXXXX SOFTWARE, LTD.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Title: President
--------------------------
1518356 ONTARIO LIMITED
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Title: President
---------------------------
SPECTRA SECURITIES SOFTWARE INC.
By: /s/ Xxxx X. XxXxxx
------------------------------
Title: President
---------------------------
/s/ Xxxx X. Xxxxxxx /s/ Xxxx X. XxXxxx
----------------------- --------------------------
Witness XXXX X. XXXXXX
THE 1998 XXXXXX FAMILY TRUST, BY A
TRUSTEE XXXX X. XXXXXX
By: /s/ Xxxx X. XxXxxx
------------------------------
Xxxx X. XxXxxx, Trustee
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