APOLLO GOLD CORPORATION and 1526735 ALBERTA ULC and LINEAR GOLD CORP.
APOLLO GOLD CORPORATION
and
1526735
ALBERTA ULC
and
LINEAR
GOLD CORP.
TABLE
OF CONTENTS
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ARTICLE 1
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DEFINITIONS,
INTERPRETATION AND SCHEDULES
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Section 1.1
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Definitions
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2
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Section 1.2
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Interpretation
Not Affected by Headings
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9
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Section 1.3
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Number,
Gender and Persons
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9
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Section 1.4
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Date
for any Action.
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9
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Section 1.5
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Statutory
References
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9
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Section 1.6
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Currency
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9
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Section 1.7
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Invalidity
of Provisions
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9
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Section 1.8
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Accounting
Matters
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10
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Section 1.9
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Knowledge
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10
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Section 1.10
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Meaning
of Certain Phrase
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10
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Section 1.11
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Schedules
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10
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ARTICLE 2
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THE
ARRANGEMENT
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Section 2.1
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Arrangement
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11
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Section 2.2
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Effective
Date
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11
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Section 2.3
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Board
of Directors
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11
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Section 2.4
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Name
Change
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11
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Section 2.5
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Management
Changes
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11
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Section 2.6
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Consultation
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12
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Section 2.7
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Court
Proceedings
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12
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Section 2.8
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U.S.
Securities Law Matters
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13
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Section 2.9
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Articles
of Arrangement
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14
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Section 2.10
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Cancellation
of Apollo Shares
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14
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Section 2.11
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Closing
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14
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Section 2.12
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U.S.
Tax Matters
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14
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ARTICLE 3
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REPRESENTATIONS
AND WARRANTIES
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Section 3.1
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Representations
and Warranties of Linear.
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15
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Section 3.2
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Representations
and Warranties of Apollo and Apollo Subco.
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26
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Section 3.3
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Survival
of Representations and Warranties
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38
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ARTICLE 4
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COVENANTS
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Section 4.1
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Covenants
of Linear
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38
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Section 4.2
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Covenants
of Apollo and Apollo Subco
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46
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Section 4.3
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Linear
Options
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54
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Section 4.4
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Linear
Warrants
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54
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Section 4.5
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Apollo
Options
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55
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Section 4.6
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Indemnification
and Insurance
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55
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ARTICLE 5
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CONDITIONS
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Section 5.1
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Mutual
Conditions
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56
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Section 5.2
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Linear
Conditions
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57
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Section 5.3
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Apollo
and Apollo Subco Conditions
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59
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Section 5.4
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Notice
and Cure Provisions
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61
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Section 5.5
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Merger
of Conditions
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62
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ARTICLE 6
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NON-SOLICITATION
AND BREAK FEE
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Section 6.1
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Mutual
Covenants Regarding Non-Solicitation
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62
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Section 6.2
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Break
Fee Event
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66
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ARTICLE 7
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AMENDMENT
AND TERMINATION
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Section 7.1
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Amendment
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67
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Section 7.2
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Mutual
Understanding Regarding Amendments
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68
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Section 7.3
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Termination
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68
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ARTICLE 8
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GENERAL
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Section 8.1
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Notice
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70
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Section 8.2
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Remedies
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71
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Section 8.3
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Indemnification
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71
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Section 8.4
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Privacy
Matters
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72
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Section 8.5
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Expenses
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72
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Section 8.6
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Time
of the Essence
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72
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Section 8.7
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Entire
Agreement
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72
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Section 8.8
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Further
Assurances
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72
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Section 8.9
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Governing
Law
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72
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Section 8.10
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Execution
in Counterparts
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73
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Section 8.11
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Waiver
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73
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Section 8.12
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No
Personal Liability
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73
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Section 8.13
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Enurement
and Assignment
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73
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SCHEDULES
SCHEDULE
“A” PLAN OF ARRANGEMENT UNDER SECTION 193 OF THE
BUSINESS CORPORATIONS ACT
(ALBERTA)
SCHEDULE
“B” LINEAR COVERTIBLE SECURITIES
THIS AGREEMENT made as the
31st day
of March, 2010
AMONG
:
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APOLLO
GOLD CORPORATION,
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a
corporation existing under the
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Business Corporations Act
(Yukon),
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(hereinafter
referred to as “Apollo”)
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OF
THE FIRST PART
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-
and -
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1526735
ALBERTA ULC,
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an
unlimited liability company existing under the
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the
Business Corporations
Act (Alberta),
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(hereinafter
referred to as “Apollo
Subco”)
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OF
THE SECOND PART
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-
and -
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LINEAR
GOLD CORP.,
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a
corporation existing under the
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Canada Business Corporations
Act,
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(hereinafter
referred to as “Linear”)
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OF
THE THIRD PART
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WITNESSES
THAT:
WHEREAS Apollo Subco is
wholly-owned by Apollo;
AND WHEREAS Apollo,
Apollo Subco and Linear propose to effect a business combination to combine the
business and assets of Linear with those of Apollo;
AND WHEREAS the parties hereto
intend to carry out the proposed business combination by way of a plan of
arrangement under the provisions of the Business Corporations Act
(Alberta);
NOW THEREFORE in consideration
of the mutual covenants and agreements herein contained and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each of the parties hereto, the parties hereto hereby covenant
and agree as follows:
ARTICLE 1
DEFINITIONS,
INTERPRETATION AND SCHEDULES
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Section
1.1
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Definitions
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In this
Agreement, unless the context otherwise requires, the following words and terms
with the initial letter or letters thereof capitalized shall have the meanings
ascribed to them below:
“ABCA” means the Business Corporations Act
(Alberta), including the regulations promulgated thereunder, as now enacted or
as the same may from time to time be amended, re-enacted or
replaced;
“Acquisition Proposal” means,
with respect to Apollo or Linear, any inquiry or the making of any proposal to
such party or its shareholders, from any person which constitutes, or may
reasonably be expected to lead to (in either case whether in one transaction or
a series of transactions): (i) an acquisition from such party or its
shareholders, of any securities of such party or its subsidiaries; (ii) any
acquisition of a substantial amount of assets of such party or its subsidiaries;
(iii) an amalgamation, arrangement, merger, or consolidation involving such
party or its subsidiaries; or (iv) any take-over bid, issuer bid, exchange
offer, recapitalization, liquidation, dissolution, reorganization into a royalty
trust or income fund or similar transaction involving such party or its
subsidiaries or any other transaction, the consummation of which would or could
reasonably be expected to impede, interfere with, prevent or delay the
transactions contemplated by this Agreement or the Arrangement or which would or
could reasonably be expected to materially reduce the benefits to the other
party under this Agreement or the Arrangement;
“Agreement” means this
arrangement agreement, together with the schedules attached hereto, as amended
or supplemented from time to time;
“Amalgamation” means the
amalgamation of the Amalgamating Corporations as contemplated by the Plan of
Arrangement;
“Amalgamating Corporations”
means, collectively, Apollo Subco and Linear;
“AMEX” means the NYSE Amex
Equities Exchange;
“Apollo” means Apollo Gold
Corporation, a corporation existing under the YBCA;
“Apollo Disclosure Documents”
means all publicly available press releases, material change reports, annual
information forms, information circulars, financial statements and other
documents that have been disclosed by Apollo to the public and filed pursuant to
applicable Securities Laws or otherwise posted on SEDAR or XXXXX after January
1, 2009;
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“Apollo Employee Plans” has the
meaning ascribed thereto in subsection 3.2(ii);
“Apollo Leased Premises” has
the meaning ascribed thereto in subsection 3.2(dd);
“Apollo Meeting” means the annual and
special meeting, including any adjournments or postponements thereof, of the
Apollo Shareholders to be held, among other things, to consider and, if deemed
advisable, to approve the Arrangement;
“Apollo Options” means the
outstanding options to purchase an aggregate of 11,561,871 Apollo Shares issued
pursuant to the Apollo Stock Option Plan;
“Apollo Material Properties”
means, collectively, those properties commonly referred to as Black Fox,
Grey Fox and Pike River, in which
Apollo has an interest as described in the Apollo Disclosure
Documents;
“Apollo Proxy Circular” means
the management information circular, including all schedules and exhibits
thereto, to be prepared by Apollo with the assistance of Linear in respect of
the Apollo Meeting;
“Apollo Replacement Options”
means the stock options of Apollo to be granted to the holders of Linear Options
on the terms and conditions set out in the Plan of Arrangement;
“Apollo Replacement Warrants”
means the common share purchase warrants of Apollo to be issued to the holders
of Linear Warrants on the terms and conditions set out in the Plan of
Arrangement;
“Apollo Shareholders” means, at any
time, the holders of Apollo Shares;
“Apollo Shares” means the
common shares in the capital of Apollo;
“Apollo Stock Option Plan” means the stock
option plan of Apollo adopted in December 2003 and amended and restated as of
May 7, 2009;
“Apollo Subco” means 1526735
Alberta ULC, a wholly-owned subsidiary of Apollo existing under the
ABCA;
“Apollo Subsidiaries” has
the meaning ascribed thereto in subsection 4.1(b);
“Apollo Support Agreements” means,
collectively, the support agreements between Linear and each of the Apollo
Support Parties;
“Apollo Support Parties” means the
persons who shall execute and deliver to Linear an Apollo Support Agreement
being R. Xxxxx Xxxxxxx, Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxx, Xxxxx Xxxx, Xxxxxxx
Xxxxx, Xxxxxx Xxxxxxxx, X.X. Xxxxxxx, Xxxxx Xxxxxxx, Xxxxxxx Xxxxx, Xxxxx Xxxx,
Xxxxxxx Xxxxxx and Xxxxxxx Xxxxx;
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“Arrangement” means the
arrangement under the provisions of Section 193 of the ABCA on the terms and
conditions set forth in the Plan of Arrangement, subject to any amendment or
supplement thereto made in accordance therewith or made at the direction of the
Court in the Final Order;
“Articles of Arrangement” means
articles of arrangement in respect of the Arrangement required by the ABCA to be
filed with the Registrar after the Final Order is made;
“Business Day” means any day,
other than a Saturday, a Sunday or a statutory holiday in Toronto, Ontario or
Calgary, Alberta;
“Canadian GAAP” means
accounting principles generally accepted in Canada;
“CBCA” means the Canada Business Corporations
Act, including
the regulations promulgated thereunder, as now enacted or as the same may from
time to time be amended, re-enacted or replaced;
“Certificate” means the
certificate giving effect to the Amalgamation issued by the Registrar on the
Articles of Amalgamation pursuant to subsection 193(11) of the
ABCA;
“Completion Deadline” means the
date by which the transactions contemplated by this Agreement are to be
completed, which date shall be no later than July 2, 2010;
“Confidentiality Agreement”
means the confidentiality agreement dated January 6, 2010 between Apollo and
Linear;
“Continuance” means the
continuance of Linear to be completed under the ABCA pursuant to the Plan of
Arrangement;
“Court” means the Court of Queen’s
Bench of Alberta;
“Dissent Rights” means the
rights of dissent in respect of the Arrangement described in the Plan of
Arrangement;
“XXXXX” means the SEC’s
Electronic Data Gathering Analysis and Retrieval System;
“Effective Date” means the date
set out in the Certificate as being the effective date in respect of the
Arrangement;
“Effective Time” means 5:00
p.m. (Toronto time) on the Effective Date;
“Environmental Laws” has
the meaning ascribed thereto in subsection 3.1(kk);
“Final Order” means the order
of the Court pursuant to subsection 193(9) of the ABCA approving the
Arrangement, as such order may be amended at any time prior to the Effective
Date or, if appealed, then unless such appeal is withdrawn or denied, as
affirmed;
- 4
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“Governmental Authority” means
and includes, without limitation, any national, federal, provincial, state,
county or municipal government, governmental or public department, court,
tribunal, commission, board, bureau or agency or any political subdivision of
any of the foregoing, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government and any
corporation or other entity owned or controlled (through stock or capital
ownership or otherwise) by any of the foregoing;
“Interim Order” means the
interim order of the Court, as such order may be amended, pursuant to subsection
193(4) of the ABCA made in connection with the Arrangement;
“Laws” means all laws, by-laws,
rules, regulations, orders, ordinances, protocols, codes, guidelines,
directives, instruments, policies, notices, directions and judgments or other
requirements of any Governmental Authority;
“Lender Consent Letter” means
the consent letter, dated as of March 9, 2010, among the Lenders, Linear and
Apollo, pursuant to which, among other things, the Lenders consented to the
Arrangement upon the terms and conditions set out therein;
“Lender Lock-Up Agreements”
means, collectively, the lock-up agreements entered into by each of the Lenders
dated March 18, 2010 pursuant to which each Lender agrees, among other things,
not to, directly or indirectly, exercise or offer, sell, contract to sell, lend,
swap, or enter into any other agreement to transfer the economic consequences of
any of the Apollo Shares or common share purchase warrants of Apollo held by
them until December 31, 2010, or such earlier date specified
therein;
“Lenders” means, collectively,
Macquarie Bank Limited and RMB Australia Holdings Limited, being the lenders to
Apollo under the Project Facility Agreement;
“Lender Support Agreements”
means, collectively, the support agreements entered into by each of the Lenders
dated March 18, 2010 pursuant to which each Lender agrees, among other things,
to support and vote in favour of the Arrangement;
“Letter of Intent” means the
binding letter of intent dated March 9, 2010 between Apollo and Linear, as
amended March 18, 2010, setting out, among other things, the terms and
conditions of the Arrangement;
“Linear” means Linear Gold
Corp., a corporation existing under the CBCA;
“Linear Audited Financial
Statements” has the meaning ascribed thereto in subsection
3.1(n);
“Linear Convertible Securities”
means, collectively, the Linear Options and the Linear Warrants as set out in
Schedule B;
“Linear Disclosure Documents”
means all publicly available press releases, material change reports, annual
information forms, information circulars, financial statements and other
documents that have been disclosed by Linear to the public and filed pursuant to
applicable Securities Laws or otherwise posted on SEDAR after January 1,
2009;
- 5
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“Linear Employee Plans” has the
meaning ascribed thereto in subsection 3.1(gg);
“Linear Leased Premises” has
the meaning ascribed thereto in subsection 3.1(bb);
“Linear Listed Warrants” means,
collectively, an aggregate of up to 5,203,750 Linear Warrants outstanding on the
date hereof which were issued pursuant to the Linear Warrant
Indenture;
“Linear Meeting” means the
special meeting, including any adjournments or postponements thereof, of the
Linear Shareholders to be held, among other things, to consider and, if deemed
advisable, to approve the Continuance and the Arrangement;
“Linear Options” means,
collectively, an aggregate of up to 2,770,000 options as set out in Schedule
B;
“Linear Material Properties”
means, collectively, those properties commonly referred to as the Box mine and
the Athona deposit, in which Linear has an interest as described in the Linear
Disclosure Documents;
“Linear Proxy Circular” means the
management information circular, including all schedules and exhibits thereto,
to be prepared by Linear with the assistance of Apollo in respect of the Linear
Meeting;
“Linear Securityholders” means,
collectively, the Linear Shareholders, the holders of Linear Options and the
holders of Linear Warrants;
“Linear Shareholders” means, at
any time, the holders of Linear Shares;
“Linear Stock Option Plan” means the stock
option plan of Linear adopted on September 29,
2006;
“Linear Shares” means the
common shares in the capital of Linear;
“Linear Subsidiaries” has
the meaning ascribed thereto in subsection 3.1(b);
“Linear Support Agreements”
means, collectively, the support agreements between Apollo and each of the
Linear Support Parties;
“Linear Support Parties” means the persons
who shall execute and deliver to Apollo a Linear Support Agreement being Xxxx
Xxxx, Xxxxx XxxXxxxxx, Xxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxxx Xxxxxxxxx, Xxxx Xxx,
Xxxxx Xxxxxxx, Xxxxxxx Xxxx, Xxxxx Xxxxxxxx and Xxxxxxx
Xxxxx;
“Linear Warrant Indenture”
means the common share purchase warrant indenture between Linear and
Computershare Trust Company of Canada dated November 19, 2009 providing for,
among other things, the issue of up to 5,203,750 Linear Listed
Warrants;
- 6
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“Linear Warrants” means,
collectively, an aggregate of up to 8,177,764 warrants as set out in
Schedule B;
“Material Adverse Change” when used in connection
with an entity means any change (or any condition, event or development
involving a prospective change) in the business, affairs, operations, results of
operations, assets, capitalization, financial condition, licenses, permits,
concessions, rights, liabilities, prospects or privileges, whether contractual
or otherwise, of such entity which has or is reasonably likely to have a
Material Adverse Effect on such entity and its parent (if applicable) or
subsidiaries, taken as a whole;
“Material Adverse Effect” when
used in connection with an entity means any change (including a decision to
implement such a change made by the board of directors or by senior management
who believe that confirmation of the decision by the board of directors is
probable), event, violation, inaccuracy, circumstance or effect that is
materially adverse to the business, assets (including intangible assets),
liabilities, capitalization, ownership, financial condition or results of
operations of such entity and its parent (if applicable) or subsidiaries, taken
as a whole;
“Mining Rights” has the meaning
ascribed thereto in subsection 3.1(f);
“Plan of Arrangement” means a
plan of arrangement substantially in the form and content of Schedule A attached
hereto and any amendment or variation thereto made in accordance with Section
7.01 of the Plan of Arrangement or Section 7.1 hereof;
“Project Facility Agreement”
means the agreement among Apollo, the Lenders and RMB Resources Inc. dated
February 20, 2009, as amended, relating to Apollo’s credit facility in respect
of Apollo’s Black Fox project;
“Receiving Party” has the
meaning ascribed thereto in subsection 6.1(b)(v)(A);
“Registrar” means the Registrar
of Corporations of Deputy Registrar of Corporations appointed pursuant to
Section 263 of the ABCA;
“Reporting Provinces” means,
collectively, the provinces of British Columbia, Alberta, Saskatchewan,
Manitoba, Ontario, New Brunswick, Nova Scotia, Xxxxxx Xxxxxx Island and
Newfoundland and Labrador;
“Resigning Directors” means,
collectively, those directors of Apollo who shall resign as directors effective
as of the Effective Date and who shall cease to be directors of Apollo upon
completion of the Arrangement;
“Responding Party” has the
meaning ascribed thereto in subsection 6.1(c);
“SEC” means the Securities and
Exchange Commission of the United States of America;
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“Section 3(a)(10) Exemption”
means the exemption from the registration requirements of the 1933 Act provided
under Section 3(a)(10) thereof;
“Securities Authorities” means,
collectively, the securities regulatory authorities in the provinces and
territories of Canada and the United States and the states thereof, including
the SEC;
“Securities Laws” means, unless
the context otherwise requires, all applicable securities laws in the provinces
and territories of Canada and the federal laws and
regulations of United States of America and the laws
and regulations of the states thereof and the respective regulations made
thereunder, together with applicable published fee schedules, prescribed forms,
policy statements, national or multilateral instruments, orders, blanket rulings
and other regulatory instruments of the Securities Authorities in such
jurisdictions;
“SEDAR” means the System for
Electronic Document Analysis and Retrieval;
“subsidiary” means, with
respect to a specified body corporate, any body corporate of which the specified
body corporate is entitled to elect a majority of the directors thereof and
shall include any body corporate, partnership, joint venture or other entity
over which such specified body corporate exercises direction or control or which
is in a like relation to such a body corporate, excluding any body corporate in
respect of which such direction or control is not exercised by the specified
body corporate as a result of any existing contract, agreement or
commitment;
“Superior Proposal” has the
meaning ascribed thereto in subsection 6.1(b)(v)(A);
“Tax” and “Taxes” have the meanings
ascribed thereto in subsection 3.1(o);
“Tax Act” means the Income Tax Act
(Canada);
“TSX” means the Toronto Stock
Exchange;
“U.S. GAAP” means accounting
principles generally accepted in the United States of America;
“YBCA” means the Business Corporations Act
(Yukon), including the regulations promulgated thereunder, as now enacted or as
the same may from time to time be amended, re-enacted or replaced;
“1933 Act” means the Securities
Act of 1933, as amended, of the United States of America;
“1934 Act” means the Securities
Exchange Act of 1934, as amended, of the United States of America;
and
“1940 Act” means the Investment
Company Act of 1940, as amended, of the United States of America.
- 8
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In addition, words and phrases used
herein and defined in the ABCA shall have the same meaning herein as in the
ABCA unless the
context otherwise requires.
|
Section
1.2
|
Interpretation
Not Affected by Headings
|
The
division of this Agreement into articles, sections, subsections, paragraphs and
subparagraphs and the insertion of headings herein are for convenience of
reference only and shall not affect in any way the meaning or interpretation of
this Agreement. The terms “this Agreement”, “hereof”, “herein”, “hereto”,
“hereunder” and similar expressions refer to this Agreement and the schedules
attached hereto and not to any particular article, section or other portion
hereof and include any agreement, schedule or instrument supplementary or
ancillary hereto or thereto.
|
Section
1.3
|
Number,
Gender and Persons
|
In this
Agreement, unless the context otherwise requires, words importing the singular
only shall include the plural and vice versa, words importing the use of either
gender shall include both genders and neuter, and the word person and all words
importing persons shall include a natural person, firm, trust, partnership,
association, corporation, joint venture or government (including any
Governmental Authority, political subdivision or instrumentality thereof) and
any other entity of any kind or nature whatsoever.
|
Section
1.4
|
Date
for any Action.
|
If the
date on which any action is required to be taken hereunder by any party hereto
is not a Business Day, such action shall be required to be taken on the next
succeeding day which is a Business Day.
|
Section
1.5
|
Statutory
References
|
Any
reference in this Agreement to a statute includes all regulations and rules made
thereunder, all amendments to such statute or regulation in force from time to
time and any statute or regulation that supplements or supersedes such statute
or regulation.
|
Section
1.6
|
Currency
|
Unless
otherwise stated, all references in this Agreement to amounts of money are
expressed in lawful money of Canada.
|
Section
1.7
|
Invalidity
of Provisions
|
Each of
the provisions contained in this Agreement is distinct and severable and a
declaration of invalidity or unenforceability of any such provision or part
thereof by a court of competent jurisdiction shall not affect the validity or
enforceability of any other provision hereof. To the extent permitted by
applicable Law, the parties hereto waive any provision of Law which renders any
provision of this Agreement or any part thereof invalid or unenforceable in any
respect. The parties hereto will engage in good faith negotiations to replace
any provision hereof or any part thereof which is declared invalid or
unenforceable with a valid and enforceable provision or part thereof, the
economic effect of which approximates as much as possible the invalid or
unenforceable provision or part thereof which it replaces.
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Section
1.8
|
Accounting
Matters
|
Unless
otherwise stated, all accounting terms used in this Agreement shall have the
meanings attributable thereto under Canadian GAAP in regard to Linear and under
U.S. GAAP in regard to Apollo and all determinations of an accounting nature
required to be made hereunder shall be made in a manner consistent with Canadian
GAAP in regard to Linear and in a manner consistent with U.S. GAAP in regard to
Apollo.
|
Section
1.9
|
Knowledge
|
Where the
phrases “to the knowledge of Apollo” is used in respect of Apollo or the Apollo
Subsidiaries or “to the knowledge of Linear” is used in respect of Linear or the
Linear Subsidiaries, such phrase shall mean, in respect of each representation
and warranty or other statement which is qualified by such phrase, that such
representation and warranty or other statement is being made based upon: (i) in
the case of Apollo and the Apollo Subsidiaries, the collective actual knowledge
of Xxxxx Xxxxxxx and Xxx Xxxxxxxx after due enquiry and (ii) in the case of
Linear and the Linear Subsidiaries, the collective actual knowledge of Xxxx
Xxxx, Xxxxx Xxxxxx and Xxxxx XxxXxxxxx after due enquiry.
|
Section
1.10
|
Meaning
of Certain Phrase
|
In this
Agreement the phrase “in the ordinary course of business” shall mean and refer
to those activities that are normally conducted by corporations engaged in the
exploration for and development of precious and base metals and in the
construction and operation of precious and base metal mines, and “including”
means “including, without limitation”.
|
Section
1.11
|
Schedules
|
The
following schedules are attached to, and are deemed to be incorporated into and
form part of, this Agreement:
|
Schedule
|
Matter
|
|
|
A
|
Plan
of Arrangement
|
|
|
B
|
Linear
Convertible
Securities
|
- 10
-
ARTICLE 2
THE
ARRANGEMENT
|
Section 2.1
|
Arrangement
|
The
Amalgamating Corporations shall amalgamate by way of arrangement pursuant to
Section 193 of the ABCA on the terms and subject to the conditions contained in
this Agreement and the Plan of Arrangement, and the Arrangement shall be
comprised of substantially the events or transactions, taken in the sequence
indicated, in Schedule A to this Agreement.
|
Section 2.2
|
Effective
Date
|
The
Arrangement shall become effective at the Effective Time and at such time the
Amalgamating Corporations shall amalgamate and continue as one unlimited
liability corporation (the “Surviving Corporation”) on the
terms and subject to the conditions contained in this Agreement and the Plan of
Arrangement.
|
Section 2.3
|
Board
of Directors
|
As of the
Effective Time, the board of directors of Apollo (the “New Board”) shall consist of
seven (7) directors appointed as follows: three (3) current Apollo
board members or Apollo nominees; three (3) Linear nominees (including Xxxx Xxxx
who shall be appointed Chairman of the Board of Directors); and one (1) nominee
who shall be a technical person mutually agreed upon by Apollo and
Linear. For greater certainty, subject to delivery of customary
mutual releases (in a form acceptable to Linear, acting reasonably), each
of the Resigning Directors shall resign as a director of Apollo effective as of
the Effective Time.
|
Section 2.4
|
Name
Change
|
Immediately
following the Effective Time, Apollo shall file articles of amendment with the
Registrar under the YBCA to change the name of Apollo to a name to be agreed to
by Apollo and Linear.
|
Section 2.5
|
Management
Changes
|
Apollo
hereby agrees that immediately prior to the completion of the Arrangement Linear
shall effect all management terminations, buyouts, severance payments and
retention bonuses in respect of Linear management and staff in accordance with
management contracts and common law and, subject to the approval of the board of
directors of Linear, in amounts not to exceed an aggregate of
$1,700,000. Apollo agrees that upon completion of the Arrangement,
Apollo will enter into employment agreements with any Linear management and
staff whose employment shall continue with the Surviving Corporation following
completion of the Arrangement in form and substance satisfactory to each of
Linear and Apollo, each acting reasonably. Upon completion of the
Arrangement, R. Xxxxx Xxxxxxx shall resign as President and Chief Executive
Officer of Apollo and, subject to delivery of customary releases, shall be paid
all termination and other amounts owing pursuant to his employment agreement
(which the parties hereby agree shall not exceed approximately US$1,700,000 in
the aggregate) and an aggregate of 2,231,000 Apollo Options previously granted
to R. Xxxxx Xxxxxxx and outstanding on the date hereof will remain in effect for
a period of one year following the Effective Date. Upon completion of
the Arrangement, R. Xxxxx Xxxxxxx shall enter into a consulting agreement with
the Surviving Corporation in form and substance satisfactory to Linear and
Apollo, each acting reasonably.
- 11
-
|
Section 2.6
|
Consultation
|
Apollo
and Linear will consult with the other in issuing any press release or otherwise
making any public statement with respect to this Agreement, the Arrangement or
their respective businesses and in making any filing with any Governmental
Authority, Securities Authority or stock exchange with respect thereto. Each of
Apollo and Linear shall use its commercially reasonable best efforts to enable
the other to review and comment on all such press releases and filings prior to
the release or filing, respectively, thereof.
|
Section 2.7
|
Court
Proceedings
|
As soon
as is reasonably practicable after the date of execution of this Agreement,
Linear and Apollo Subco shall apply to the Court pursuant to Section 193 of the
ABCA for an order approving the Arrangement and, in connection with such
application, Linear and Apollo Subco shall:
|
(a)
|
file,
proceed with and diligently prosecute an application to the Court for the
Interim Order providing for, among other things, the calling and holding
of the Linear Meeting; and
|
|
(b)
|
subject
to obtaining the approvals as contemplated by the Interim Order and as may
be directed by the Court in the Interim Order, take all steps necessary or
desirable to submit the Arrangement to the Court and to apply for the
Final Order.
|
The
notices of motion and related materials for the applications referred to in this
section shall be in a form satisfactory to Linear and Apollo Subco, each acting
reasonably, and, in the case of the application to the Court for the Interim
Order, shall request that the Interim Order provide, among other
things:
|
(i)
|
for
the persons to whom notice is to be provided in respect of the Arrangement
for the Linear Meeting and for the manner in which such notice is to be
provided;
|
|
(ii)
|
that
the requisite approval of the Linear Shareholders for the Arrangement
shall be two-thirds of the votes cast thereon by Linear Shareholders
present in person or represented by proxy at the Linear
Meeting;
|
|
(iii)
|
that
in all other respects, the terms, conditions and restrictions of the
Linear constating documents, including quorum requirements and other
matters, shall apply in respect of the Linear
Meeting;
|
- 12
-
|
(iv)
|
for
the grant of the Dissent Rights;
|
|
(v)
|
for
notice requirements with respect to the presentation of the application to
the Court for the Final Order;
|
|
(vi)
|
that
the Linear Meeting may be adjourned from time to time by management of
Linear without the need for additional approval of the Court;
and
|
|
(vii)
|
that
the record date for Linear Shareholders entitled to notice of and to vote
at the Linear Meeting will not change in respect of any adjournment(s) of
the Linear Meeting.
|
|
Section 2.8
|
U.S.
Securities Law Matters
|
The parties agree that the Arrangement
will be carried out with the intention that all Apollo Shares and other
securities of Apollo issued on completion of the Arrangement to the Linear
Securityholders will be issued by Apollo in reliance on the exemption from the
registration requirements of the 1933 Act, provided by the Section 3(a)(10)
Exemption. In order to ensure the availability of the
Section 3(a)(10) Exemption, the parties agree that the Arrangement will be
carried out on the following basis:
|
(a)
|
the
Arrangement will be subject to the approval of the
Court;
|
|
(b)
|
the
Court will be advised as to the intention of the parties to rely on the
Section 3(a)(10) Exemption prior to the hearing required to approve the
Arrangement;
|
|
(c)
|
the
Court will be required to satisfy itself as to the fairness of the
Arrangement to the Linear Securityholders subject to the
Arrangement;
|
|
(d)
|
the
Final Order approving the Arrangement that is obtained from the Court will
expressly state that the Arrangement is approved by the Court as being
fair to the Linear Securityholders;
|
|
(e)
|
Linear
will ensure that each Linear Securityholder entitled to receive securities
of Apollo on completion of the Arrangement will be given adequate notice
advising them of their right to attend the hearing of the Court to give
approval of the Arrangement and providing them with sufficient information
necessary for them to exercise that
right;
|
|
(f)
|
the
Linear Securityholders will be advised
that the securities of Apollo issued in the Arrangement have not been
registered under the 1933 Act and will be issued by Apollo in
reliance on the exemption from the registration requirements of the U.S.
Securities Act provided by the Section 3(a)(10) Exemption and may be
subject to restrictions on resale under the securities laws of the United
States, including, as applicable, Rule 144 under the 1933 Act with respect
to affiliates of Apollo;
|
- 13
-
|
(g)
|
the
Interim Order will specify that each Linear Securityholder will have the
right to appear before the Court at the hearing of the Court to give
approval of the Arrangement so long as they enter an appearance within a
reasonable time; and
|
|
(h)
|
the
Final Order shall include a statement to the following
effect:
|
“This
Order will serve as a basis of a claim to an exemption, pursuant to section
3(a)(10) of the United States
Securities Act of 1933, as amended, from the registration requirements
otherwise imposed by that act, regarding the distribution of securities of
Apollo, pursuant to the Plan of Arrangement.”
|
Section 2.9
|
Articles
of Arrangement
|
Subject
to the rights of termination contained in Section 7.3 hereof, upon the
Linear Shareholders approving the Continuance in accordance with the CBCA and
the Arrangement in accordance with the Interim Order, the Amalgamating
Corporations obtaining the Final Order, the Apollo Shareholders approving the
Arrangement at the Apollo Meeting as required by this Agreement and applicable
Laws, including the rules and policies of the TSX and AMEX, and the other
conditions contained in Article 5 hereof being complied with or waived, Linear
shall proceed with the Continuance and thereafter the Amalgamating Corporations
shall jointly file Articles of Arrangement, in duplicate, with the Registrar
together with such other documents as may be required in order to effect the
Arrangement.
|
Section 2.10
|
Cancellation
of Apollo Shares
|
Effective
as of the Effective Time, an aggregate of 62,500,000 Apollo Shares owned by
Linear shall be cancelled without any payment.
|
Section 2.11
|
Closing
|
The
closing of the Arrangement will take place at the offices of Fogler, Xxxxxxxx
LLP, 95 Wellington Street West, Suite 0000, Xxxxxxx-Xxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxx at 9:00 a.m. on the Effective Date.
|
Section 2.12
|
U.S.
Tax Matters
|
The Arrangement is intended to qualify
as a reorganization within the meaning of Section 368(a) of the U.S. Internal
Revenue Code and this Agreement is intended to be a “plan of reorganization”
within the meaning of the Treasury Regulations promulgated under Section 368 of
the U.S. Internal Revenue Code. Each party, to the extent it is
required to make any filings in the United States, agrees to treat the
Arrangement as a reorganization within the meaning of Section 368(a) of the U.S.
Internal Revenue Code for all U.S. federal income tax purposes, and agrees to
treat this Agreement as a “plan of reorganization” within the meaning of the
Treasury Regulations promulgated under Section 368 of the U.S. Internal Revenue
Code, and to not take any position on any Tax return or otherwise take any Tax
reporting position inconsistent with such treatment, unless otherwise required
by a "determination" within the meaning of Section 1313 of the U.S. Internal
Revenue Code that such treatment is not correct or in connection with the
settlement of a tax controversy. Each party hereto agrees to act in a
manner that is consistent with the parties’ intention that the Arrangement be
treated as a reorganization within the meaning of Section 368(a) of the U.S.
Internal Revenue Code for all U.S. federal income tax
purposes. However, neither Apollo nor Apollo Subco makes any
representation or warranty to Linear, any Linear Shareholder, any holder of
Linear Options or any holder of Linear Warrants regarding (a) the qualification
of the amalgamation of Amalgamating Corporations as a “reorganization” within
the meaning of section 368(a)(1) of the U.S. Internal Revenue Code or (b) the
U.S. federal income tax consequences of the amalgamation of the Amalgamating
Corporations.
- 14
-
ARTICLE 3
REPRESENTATIONS
AND WARRANTIES
|
Section 3.1
|
Representations
and Warranties of Linear.
|
Linear
hereby represents and warrants to and in favour of Apollo and Apollo Subco and
acknowledges that each of Apollo and Apollo Subco is relying upon such
representations and warranties in connection with entering into this Agreement
and agreeing to complete the Arrangement, as follows:
|
|
(a)
|
each
of Linear and each of the Linear Subsidiaries is a corporation duly
incorporated, continued or amalgamated and validly existing under the laws
of the jurisdiction in which it was incorporated, continued or
amalgamated, as the case may be, has all requisite corporate power and
authority and is duly qualified and holds all necessary material permits,
licences and authorizations necessary or required to carry on its business
as now conducted and to own, lease or operate its properties and assets
and no steps or proceedings have been taken by any person, voluntary or
otherwise, requiring or authorizing its dissolution or winding up, and
Linear has all requisite power and authority to enter into this Agreement
and to carry out its obligations
hereunder;
|
|
|
(b)
|
Linear
has no subsidiaries other than the following (the “Linear Subsidiaries” and
each an “Linear
Subsidiary”) and, other than the acquisition by Linear of an
aggregate of 62,500,000 Apollo Shares effective March 19, 2010, no
investment in any person which, for the financial year ended March 31,
2009 accounted for or which, for the financial year ending March 31, 2010
is expected to account for, more than five percent of the consolidated
assets or consolidated revenues of Linear or would otherwise be material
to the business and affairs of Linear on a consolidated
basis:
|
|
Linear Subsidiaries
|
Corporate
Jurisdiction
|
Percentage
Ownership |
||||
|
Linear
Gold Caribe, S.A.
|
Panama
|
100 | % | |||
|
Linear
Gold Holdings Corp.
|
Canada
|
100 | % | |||
|
Linear
Gold Mexico, S.A. de C.V.
|
Mexico
|
100 | % | |||
|
Linear
Gold Mineracao Ltda.
|
Brazil
|
100 | % | |||
|
Servicios
Ixhuatán, S.A. de C.V.
|
Mexico
|
100 | % | |||
|
7153945
Canada Inc.
|
Canada
|
100 | % | |||
- 15
-
|
|
(c)
|
Linear
owns, directly or indirectly, the percentage of issued and outstanding
shares of each of the Linear Subsidiaries set out above, all of the issued
and outstanding shares of the Linear Subsidiaries are issued as fully paid
and non-assessable shares, in each case, other than as disclosed in the
Linear Disclosure Documents, free and clear of all mortgages, liens,
charges, pledges, security interests, encumbrances,
claims or demands whatsoever
and no person, firm or corporation has any agreement, option, right or
privilege (whether pre-emptive or contractual) capable of becoming an
agreement, for the purchase from Linear or any of the Linear Subsidiaries
of any interest in any of the shares in the capital of any of the Linear
Subsidiaries;
|
|
|
(d)
|
other
than as disclosed in the Linear Disclosure Documents, Linear and each of
the Linear Subsidiaries holds all requisite licences, registrations,
qualifications, permits and consents necessary or appropriate for carrying
on its business as currently carried on and all such licences,
registrations, qualifications, permits and consents are valid and
subsisting and in good standing in all material respects except where the
failure to hold such licences, registrations, qualifications, permits and
consents would not have a Material Adverse Effect on Linear or any Linear
Subsidiary. In particular, without limiting the generality of
the foregoing, neither Linear nor any of the Linear Subsidiaries has
received any notice of proceedings relating to the revocation or adverse
modification of any material mining or exploration permit or licence, nor
have any of them received notice of the revocation or cancellation of, or
any intention to revoke or cancel, any mining claims, groups of claims,
exploration rights, concessions or leases with respect to any of the
resource properties described in the Linear Disclosure Documents where
such revocation or cancellation would have a Material Adverse Effect on
Linear or any Linear Subsidiary;
|
|
|
(e)
|
except
as disclosed in the Linear Disclosure Documents, (A) Linear and the Linear
Subsidiaries are the absolute legal and beneficial owners of, and have
good and marketable title to, all of their respective material property or
assets as described in the Linear Disclosure Documents, and no other
Mining Rights are necessary for the conduct of the business of Linear or
any Linear Subsidiary as currently conducted, (B) none of Linear or any
Linear Subsidiary knows of any claim or the basis for any claim that might
or could materially and adversely affect the right thereof to use,
transfer or otherwise exploit such Mining Rights and (C) none of Linear or
any Linear Subsidiary has any responsibility or obligation to pay any
material commission, royalty, licence fee or similar payment to any person
with respect to such Mining
Rights;
|
- 16
-
|
|
(f)
|
except
as disclosed in the Linear Disclosure Documents, Linear and the Linear
Subsidiaries hold either freehold title, mining leases, mining
concessions, mining claims or participating interests or other
conventional property or proprietary interests or rights, recognized in
the jurisdiction in which a particular property is located (collectively,
“Mining Rights”),
in respect of the ore bodies and minerals located in properties in which
Linear and the Linear Subsidiaries have an interest as described in the
Linear Disclosure Documents under valid, subsisting and enforceable title
documents or other recognized and enforceable agreements or instruments,
sufficient to permit Linear or the applicable Linear Subsidiary to explore
the minerals relating thereto; all property, leases or claims in which
Linear or any Linear Subsidiary has an interest or right have been validly
located and recorded in accordance in all material respects with all
applicable laws and are valid and subsisting except where the failure to
be so would not have a Material Adverse Effect on Linear or any Linear
Subsidiary; Linear and the Linear Subsidiaries have all necessary surface
rights, access rights and other necessary rights and interests relating to
the properties in which Linear and the Linear Subsidiaries have an
interest as described in the Linear Disclosure Documents granting Linear
or the applicable Linear Subsidiary the right and ability to explore for
minerals, ore and metals for development purposes as are appropriate in
view of the rights and interest therein of Linear or the applicable Linear
Subsidiary, with only such exceptions as do not interfere with the use
made by Linear or the applicable Linear Subsidiary of the rights or
interest so held; and each of the proprietary interests or rights and each
of the documents, agreements and instruments and obligations relating
thereto referred to above is currently in good standing in the name of
Linear or a Linear Subsidiary except where the failure to be so would not
have a Material Adverse Effect on Linear or any Linear Subsidiary. The
Mining Rights in respect of Linear’s properties, as disclosed in the
Linear Disclosure Documents, constitute a description of all material
Mining Rights held by Linear and the Linear
Subsidiaries;
|
|
|
(g)
|
Linear
has made available to the respective authors thereof, prior to the
issuance of the technical reports in respect of each of the Linear
Material Properties or the purpose of preparing such technical reports,
all information requested, and to the knowledge and belief of Linear, no
such information contains any material misrepresentation. Except as
disclosed in the Linear Disclosure Documents, Linear does not have any
knowledge of a Material Adverse Change in any production, cost, price,
reserves or other relevant information provided since the dates that such
information was so provided;
|
|
|
(h)
|
to
the best of the knowledge of Linear, except as disclosed in the Linear
Disclosure Documents, the technical reports in respect of each of the
Linear Material Properties, as supplemented by the disclosure in respect
of such properties in the Linear Disclosure Documents, accurately and
completely set forth all material facts relating to the properties that
are subject thereto. Since the date of preparation of each of the
technical reports in respect of each of the Linear Material Properties,
respectively, except as disclosed in the Linear Disclosure Documents,
there has been no change of which Linear is aware that would disaffirm any
aspect of such reports in any material respect, other than a contemplated
increase in capital
expenditures;
|
- 17
-
|
|
(i)
|
Linear
is a reporting issuer under the Securities Laws of each of the
provinces of British Columbia, Alberta, Manitoba, Ontario, Quebec, Nova
Scotia, is not in
default of any requirement of such Securities Laws and Linear is not
included on a list of defaulting reporting issuers maintained by the
Securities Authorities of such
provinces;
|
|
|
(j)
|
Linear
is not subject to any cease trade order or other order of any applicable
stock exchange or Securities Authority and, to the knowledge of Linear, no
investigation or other proceedings involving Linear which may operate to
prevent or restrict trading of any securities of Linear are currently in
progress or pending before any applicable stock exchange or Securities
Authority;
|
|
|
(k)
|
the
execution and delivery of this Agreement, the performance by Linear of its
obligations hereunder and the consummation of the transactions
contemplated in this Agreement, do not and will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, (whether after notice or lapse of time or
both), (A) any statute, rule or regulation applicable to Linear including,
without limitation, applicable Securities Laws and the policies, rules and
regulations of the TSX; (B) the constating documents, by-laws or
resolutions of Linear which are in effect at the date hereof; (C) any
mortgage, note, indenture, contract, agreement, joint venture,
partnership, instrument, lease or other document to which Linear is a
party or by which it is bound; or (D) any judgment, decree or order
binding Linear, any Linear Subsidiary or the property or assets
thereof;
|
|
|
(l)
|
Linear
is in compliance in all material respects with its timely and continuous
disclosure obligations under the Securities Laws and the rules and
regulations of the TSX and, without limiting the generality of the
foregoing, there has not occurred any Material Adverse Change in respect
of Linear and the Linear Subsidiaries (taken as a whole) since December
31, 2009, which has not been publicly disclosed on a non-confidential
basis and all the statements set forth in the Linear Disclosure Documents
were true, correct and complete in all material respects and did not
contain any misrepresentation as of the date of such statements and Linear
has not filed any confidential material change reports since the date of
such statements which remain confidential as at the date
hereof;
|
- 18
-
|
|
(m)
|
except
as disclosed in the Linear Disclosure Documents, neither Linear nor any
Linear Subsidiary has approved, or has entered into any agreement in
respect of, or has any knowledge
of:
|
|
|
(A)
|
the
purchase of any material property or assets or any interest therein, other
than the purchase of the residual 16.875% participating interest in the
Crackingstone Joint Venture for $50,000, or the sale, transfer or other
disposition of any material property or assets or any interest therein
currently owned, directly or indirectly, by Linear or any Linear
Subsidiary whether by asset sale, transfer of shares or
otherwise;
|
|
|
(B)
|
the
change in control (by sale, transfer or other disposition of shares or
sale, transfer, lease or other disposition of all or substantially all of
the property and assets of Linear) of Linear or any Linear Subsidiary;
or
|
|
|
(C)
|
a
proposed or planned disposition of shares by any Linear Shareholder who
owns, directly or indirectly, 10% or more of the outstanding shares of
Linear or any Linear Subsidiary;
|
|
|
(n)
|
the
audited consolidated financial statements of Linear as at and for the year
ended March 31, 2009 (the “Linear Audited Financial
Statements”) and consolidated comparative financial statements for
the nine months ended December 31, 2009 have been prepared in accordance
with Canadian GAAP and present fully, fairly and correctly in all material
respects, the consolidated financial condition of Linear as at the date
thereof and the results of the operations and the changes in the financial
position of Linear for the periods then ended and contain and reflect
adequate provisions or allowance for all reasonably anticipated
liabilities, expenses and losses of Linear and except as disclosed in the
Linear Disclosure Documents, there has been no change in accounting
policies or practices of Linear since December 31,
2009;
|
|
|
(o)
|
all
taxes (including income tax, capital tax, payroll taxes, employer health
tax, workers’ compensation payments, property taxes, custom and land
transfer taxes), duties, royalties, levies, imposts, assessments,
deductions, charges or withholdings and all liabilities with respect
thereto including any penalty and interest payable with respect thereto
(individually, a “Tax” and, collectively,
“Taxes”) due and
payable by Linear and the Linear Subsidiaries have been paid, except where
the failure to pay such Taxes would not constitute an adverse material
fact in respect of Linear or any Linear Subsidiary or have a Material
Adverse Effect on Linear or any Linear Subsidiary. All Tax
returns, declarations, remittances and filings required to be filed by
Linear and the Linear Subsidiaries have been filed with all appropriate
governmental authorities and all such returns, declarations, remittances
and filings are complete and accurate and no material fact or facts have
been omitted therefrom which would make any of them misleading, except
where the failure to file such documents would not constitute an adverse
material fact in respect of Linear or have a Material Adverse Effect on
Linear or any Linear Subsidiary. To the best of the knowledge
of Linear, no examination of any Tax return of Linear or any Linear
Subsidiary is currently in progress and there are no issues or disputes
outstanding with any governmental authority respecting any taxes that have
been paid, or may be payable, by Linear or any Linear Subsidiary, in any
case, except where such examinations, issues or disputes would not
constitute an adverse material fact in respect of Linear or have a
Material Adverse Effect on Linear or any Linear
Subsidiary;
|
- 19
-
|
|
(p)
|
Linear’s
auditors who audited the Linear Audited Financial Statements and who
provided their audit report thereon are independent public accountants as
required under applicable Securities Laws and there has never been a
reportable event (within the meaning of National Instrument 51-102 Continuous Disclosure
Obligations) between Linear and Linear’s auditors or, to the
knowledge of Linear, any former auditors of
Linear;
|
|
|
(q)
|
other
than: (i) 2,770,000 Linear Shares issuable pursuant to outstanding stock
options of Linear; and (ii) 8,177,764 Linear Shares issuable pursuant to
the Linear Warrants, no person, firm or corporation has or will have at
the Effective Date any agreement or option, or right or privilege (whether
pre-emptive or contractual) capable of becoming an agreement or option,
for the purchase of any unissued shares or securities of Linear or of any
of the Linear Subsidiaries;
|
|
|
(r)
|
to
Linear’s knowledge, other than the Linear Support Agreements, there is no
agreement in force or effect which in any manner affects or will affect
the voting or control of any of the securities of Linear or of the Linear
Subsidiaries;
|
|
|
(s)
|
except
as disclosed in the Linear Disclosure Documents, none of the officers or
employees of Linear or of any Linear Subsidiary, any person who owns,
directly or indirectly, more than 10% of any class of securities of Linear
or securities of any person exchangeable for more than 10% of any class of
securities of Linear, or any associate or affiliate of any of the
foregoing, had or has any material interest, direct or indirect, in any
transaction or any proposed transaction (including, without limitation,
any loan made to or by any such person) with Linear or any of the Linear
Subsidiaries which, as the case may be, materially affects, is material to
or will materially affect Linear on a consolidated
basis;
|
|
|
(t)
|
except
as disclosed in the Linear Disclosure Documents, no legal or governmental
proceedings or inquiries are pending to which Linear or any Linear
Subsidiary is a party or to which its property is subject that would
result in the revocation or modification of any material certificate,
authority, permit or license necessary to conduct the business now owned
or operated by Linear and the Linear Subsidiaries which, if the subject of
an unfavourable decision, ruling or finding would have a Material Adverse
Effect on Linear or any Linear Subsidiary and, to the knowledge of Linear,
no such legal or governmental proceedings or inquiries have been
threatened against or are contemplated with respect to Linear or with
respect to its properties;
|
- 20
-
|
|
(u)
|
except
as disclosed in the Linear Disclosure Documents, there are no actions,
suits, judgments, investigations or proceedings of any kind whatsoever
outstanding, pending or, to the best of Linear’s knowledge, threatened
against or affecting Linear, the Linear Subsidiaries, or their respective
directors, officers or employees, at law or in equity or before or by any
commission, board, bureau or agency of any kind whatsoever and, to the
best of Linear’s knowledge, there is no basis therefor and neither Linear
nor any Linear Subsidiary is subject to any judgment, order, writ,
injunction, decree, award, rule, policy or regulation of any governmental
authority, which, either separately or in the aggregate, may have a
Material Adverse Effect on Linear or any Linear Subsidiary or that would
adversely affect the ability of Linear to perform its obligations under
this Agreement;
|
|
|
(v)
|
none
of Linear nor any of the Linear Subsidiaries is in violation of its
constating documents or, except as disclosed in the Linear Disclosure
Documents, in default of the performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, trust deed, mortgage, loan agreement, note, lease or other
agreement or instrument to which it is a party or by which it or its
property may be bound;
|
|
|
(w)
|
Linear
and each of the Linear Subsidiaries owns or has the right to use under
licence, sub-licence or otherwise all material intellectual property used
by Linear and the Linear Subsidiaries in its business, including
copyrights, industrial designs, trade marks, trade secrets, know how and
proprietary rights, free and clear of any and all
encumbrances;
|
|
|
(x)
|
except
as disclosed in the Linear Disclosure Documents, any and all of the
agreements and other documents and instruments pursuant to which Linear
and the Linear Subsidiaries hold the property and assets thereof
(including any interest in, or right to earn an interest in, any property)
are valid and subsisting agreements, documents or instruments in full
force and effect, enforceable in accordance with the terms thereof,
neither Linear nor any Linear Subsidiary is in default of any of the
material provisions of any such agreements, documents or instruments nor
has any such default been alleged and such properties and assets are in
good standing under the applicable statutes and regulations of the
jurisdictions in which they are situated. All material leases,
licences and other agreements pursuant to which Linear or any Linear
Subsidiary derives the interests thereof in such property and assets are
in good standing and there has been no material default under any such
lease, licence or agreement. None of the properties (or any
interest in, or right to earn an interest in, any property) of Linear or
any Linear Subsidiary is subject to any right of first refusal or purchase
or acquisition right which is not disclosed in the Linear Disclosure
Documents;
|
- 21
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|
|
(y)
|
this
Agreement has been duly authorized and executed and delivered by Linear
and constitutes a valid and binding obligation of Linear and is
enforceable against Linear in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting the
rights of creditors generally and except as limited by the application of
equitable principles when equitable remedies are sought, and by the fact
that rights to indemnity, contribution and waiver, and the ability to
sever unenforceable terms, may be limited by applicable
law;
|
|
|
(z)
|
the
authorized capital of Linear consists of an unlimited number of Linear
Shares, of which, as at the close of business on March 29, 2010,
44,222,573 Linear Shares were issued and outstanding as fully paid and
non-assessable shares of Linear;
|
|
|
(aa)
|
other
than as set out in the Linear Disclosure Documents, neither Linear nor any
of the Linear Subsidiaries has made any loans to or guaranteed the
obligations of any person;
|
|
|
(bb)
|
with
respect to those leased premises of Linear or the Linear Subsidiaries
which are material to Linear and the Linear Subsidiaries on a consolidated
basis and which Linear or any of the Linear Subsidiaries occupies as
tenant (the “Linear
Leased Premises”), Linear or such Linear Subsidiary occupies the
Linear Leased Premises and has the exclusive right to occupy and use the
Linear Leased Premises and each of the leases pursuant to which Linear
and/or the Linear Subsidiaries occupies the Linear Leased Premises is in
good standing and in full force and
effect;
|
|
|
(cc)
|
the
assets of Linear and the Linear Subsidiaries and their business and
operations are insured against loss or damage with responsible insurers on
a basis consistent with insurance obtained by reasonably prudent
participants in comparable businesses, and such coverage is in full force
and effect, and Linear has not failed to promptly give any notice of any
material claim thereunder;
|
|
|
(dd)
|
each
of Linear and each of the Linear Subsidiaries is in compliance with all
Laws respecting employment and employment practices, terms and conditions
of employment, pay equity and wages, except where non-compliance with such
Laws could not reasonably be expected to have a Material Adverse Effect on
Linear or any Linear Subsidiary, and has not and is not engaged in any
unfair labour practice;
|
- 22
-
|
|
(ee)
|
there
has not been in the last two years and there is not currently any labour
disruption, grievance, arbitration proceeding or other conflict which
could reasonably be expected to have a Material Adverse Effect on Linear’s
or any of the Linear Subsidiaries’ business, taken as a whole, and each of
Linear and each of the Linear Subsidiaries is in compliance with all
provisions of all federal, provincial, local and foreign Laws and
regulations respecting employment and employment practices, terms and
conditions of employment and wages and hours, except where non-compliance
with any such provisions would not have a Material Adverse Effect on
Linear or any of the Linear
Subsidiaries;
|
|
|
(ff)
|
no
union has been accredited or otherwise designated to represent any
employees of Linear or any of the Linear Subsidiaries and, to the
knowledge of Linear, no accreditation request or other representation
question is pending with respect to the employees of Linear or any of the
Linear Subsidiaries and no collective agreement or collective bargaining
agreement or modification thereof has expired or is in effect in any of
Linear’s facilities and none is currently being negotiated by Linear or
any Linear Subsidiary;
|
|
|
(gg)
|
the
Linear Disclosure Documents disclose, to the extent required by applicable
Securities Laws, each material plan for retirement, bonus, stock purchase,
profit sharing, stock option, deferred compensation, severance or
termination pay, insurance, medical, hospital, dental, vision care, drug,
sick leave, disability, salary continuation, legal benefits, unemployment
benefits, vacation, incentive or otherwise contributed to, or required to
be contributed to, by Linear for the benefit of any current or former
director, officer, employee or consultant of Linear (the “Linear Employee Plans”),
each of which has been maintained in all material respects with its terms
and with the requirements prescribed by any and all statutes, orders,
rules and regulations that are applicable to such Linear Employee
Plans;
|
|
|
(hh)
|
Linear
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance
with management’s general or specific authorization, and (B) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with Canadian GAAP and to maintain accountability for
assets. Linear has disclosed, based on the most recent
evaluation of its chief executive officer and its chief financial officer
prior to the date hereof, to Linear’s auditors and the audit committee of
Linear’s board of directors (i) any significant deficiencies in the design
or operation of its internal controls over financial reporting that are
reasonably likely to adversely affect Linear’s ability to record, process,
summarize and report financial information and has identified for Linear’s
auditors and Linear’s board of directors any material weaknesses in
internal control over financial reporting and (ii) any fraud, whether or
not material, that involves management or other employees who have a
significant role in Linear’s internal control over financial
reporting;
|
- 23
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|
|
(ii)
|
management
of Linear has established and maintained a system of disclosure controls
and procedures designed to provide reasonable assurance that information
required to be disclosed by Linear in its annual filings, interim filings
or other reports filed, furnished or submitted by it under applicable
Securities Law is recorded, processed, summarized and reported within the
time periods specified in such legislation, laws and rules. Such
disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be
disclosed by Linear in its annual filings, interim filings or other
reports filed, furnished or submitted under applicable Securities Law is
accumulated and communicated to Linear’s management, including its chief
executive officer and chief financial officer (or persons performing
similar functions), as appropriate to allow timely decisions regarding
required disclosure;
|
|
|
(jj)
|
except
as disclosed in the Linear Disclosure Documents, none of the directors,
officers or employees of Linear or any associate or affiliate of any of
the foregoing had or has any material interest, direct or indirect, in any
material transaction or any proposed material transaction with Linear or
its Linear Subsidiaries which materially affects, is material to or will
materially affect Linear or any Linear
Subsidiary;
|
|
|
(kk)
|
the
minute books and records of Linear and the Linear Subsidiaries made
available to Apollo and its counsel in
connection with their due diligence investigation of Linear for the
periods from January 1, 2007 to the date hereof are all of the minute
books and records of Linear and the Linear Subsidiaries and contain copies
of all material proceedings (or certified copies thereof or drafts thereof
pending approval) of the shareholders, the directors and all committees of
directors of Linear and the Linear Subsidiaries to the date of review of
such corporate records and minute books and there have been no other
meetings, resolutions or proceedings of the shareholders, directors or any
committees of the directors of Linear or any of its Linear Subsidiaries to
the date hereof not reflected in such minute books and other
records;
|
|
|
(ll)
|
neither
Linear nor any of its Linear Subsidiaries has been in violation
of, in connection with the ownership, use, maintenance or operation of its
property and assets, including the Linear Leased Premises, any applicable
federal, provincial, state, municipal or local laws, by-laws, regulations,
orders, policies, permits, licences, certificates or approvals having the
force of law, domestic or foreign, relating to environmental, health or
safety matters (collectively the “Environmental Laws”)
which would have a Material Adverse Effect on Linear or any of its Linear
Subsidiaries;
|
- 24
-
|
(mm)
|
without
limiting the generality of the immediately preceding paragraph, neither
Linear nor any of the Linear Subsidiaries have any knowledge of, and
have not received any notice of, any currently outstanding material claim,
judicial or administrative proceeding, pending or threatened against, or
which may affect, either Linear or any Linear Subsidiary or any of the
property, assets or operations thereof, relating to, or alleging any
violation of any Environmental Laws, Linear is not aware of any facts
which could give rise to any such claim or judicial or administrative
proceeding and to the knowledge of Linear neither Linear, nor any Linear
Subsidiary nor any of the property, assets or operations thereof is the
subject of any investigation, evaluation, audit or review by any
governmental authority to determine whether any violation of any
Environmental Laws has occurred or is occurring or whether any remedial
action is needed in connection with a release of any contaminant into the
environment, except for compliance investigations conducted in the normal
course by any governmental authority, in each case which could reasonably
be expected to have a Material Adverse Effect on Linear or any of its
Linear Subsidiaries;
|
|
|
(nn)
|
there
are no orders, rulings or directives issued, pending or, to the best of
Linear’s knowledge reasonably held, being based on due direction and
enquiry of its personnel and advisors, threatened against Linear or any of
the Linear Subsidiaries under or pursuant to any Environmental Laws
requiring any work, repairs, construction or capital expenditures with
respect to the property or assets of Linear or any of the Linear
Subsidiaries (including the Linear Leased Premises) which would have a
Material Adverse Effect on Linear or any of its Linear
Subsidiaries;
|
|
|
(oo)
|
Linear
and the Linear Subsidiaries are not subject to any contingent or other
liability relating to the restoration or rehabilitation of land, water or
any other part of the environment (except for those derived from normal
exploration activities and those arising under permits, licenses or
approvals from applicable Governmental Authorities) or non-compliance with
Environmental Laws which could reasonably be expected to have a Material
Adverse Effect on Linear or any of the Linear
Subsidiaries;
|
|
|
(pp)
|
all
information which has been prepared by Linear and the Linear Subsidiaries
relating to Linear and the Linear Subsidiaries and the business, property
and liabilities thereof and either publicly disclosed, provided or made
available to Apollo, including all financial, marketing, sales and
operational information provided to Apollo is, as of the date of such
information, true and correct in all material respects, taken as a whole,
and no fact or facts have been omitted therefrom which would make such
information materially
misleading;
|
- 25
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|
|
(qq)
|
Linear
is not aware of any circumstances presently existing under which liability
is or could reasonably be expected to be incurred under Part XXIII – Civil
Liability for Secondary Market Disclosure of the Securities Act
(Ontario);
|
|
|
(rr)
|
Linear
has not entered into any arrangement whereby Linear will have any
liability for financial advisor’s, broker’s or finder’s fees (including,
without limitation, any disbursements, expenses or fairness opinion) in
respect of the Arrangement, except for Linear’s fees and disbursements to
its financial advisors. Linear has provided to Apollo true and
correct copies of its agreements with each of its financial
advisors;
|
|
|
(ss)
|
Linear
is not in material breach of, and has complied in all material respects
with all of its covenants and other obligations set out in, the
Letter of Intent as of the date of this Agreement;
and
|
|
|
(tt)
|
other
than any Tax payable by Linear resulting from the anticipated deemed
disposition of the outstanding shares of Linear Gold Mexico, S.A. de C.V.
occurring as a result of the completion of the Arrangement, which, to the
knowledge of Linear and based on currently available information, Linear
believes will not result in a material Tax liability or material
withholding Tax obligation in respect of Linear or any Linear Subsidiary,
the transactions contemplated by this Agreement will not cause Apollo
Subco, Linear, any Linear Subsidiary or the Surviving Corporation to incur
any Tax liability or be subject to any withholding Tax obligation with
respect to any Linear Subsidiary in any jurisdiction in which such Linear
Subsidiary is organized, conducts business or owns real
property.
|
|
Section
3.2
|
Representations
and Warranties of Apollo and Apollo
Subco.
|
Apollo
and Apollo Subco hereby jointly and severally represent and warrant to and in
favour of Linear and acknowledge that Linear is relying upon such
representations and warranties in connection with entering into this Agreement
and agreeing to complete the Arrangement, as follows:
|
|
(a)
|
each
of Apollo and each of the Apollo Subsidiaries is a corporation duly
incorporated, continued or amalgamated and validly existing under the Laws
of the jurisdiction in which it was incorporated, continued or
amalgamated, as the case may be, has all requisite corporate power and
authority and is duly qualified and holds all necessary material permits,
licences and authorizations necessary or required to carry on its business
as now conducted and to own, lease or operate its properties and assets
and no steps or proceedings have been taken by any person, voluntary or
otherwise, requiring or authorizing its dissolution or winding up, and
each of Apollo and Apollo Subco has all requisite power and authority to
enter into this Agreement and to carry out their respective obligations
hereunder;
|
- 26
-
|
|
(b)
|
Apollo
has no subsidiaries other than the following (the “Apollo Subsidiaries” and
each an “Apollo
Subsidiary”) and, other than the transactions contemplated by this
Agreement, no investment in any person which, for the financial year ended
December 31, 2009 accounted for or which, for the financial year ending
December 31, 2010 is expected to account for, more than five percent of
the consolidated assets or consolidated revenues of Apollo or would
otherwise be material to the business and affairs of Apollo on a
consolidated basis:
|
|
Apollo Subsidiaries
|
Corporate
Jurisdiction
|
Percentage
Ownership
|
||||
|
Apollo
Gold, Inc.
|
Delaware
|
100 | % | |||
|
Mine
Development Finance, Inc.
|
Delaware
|
100 | % | |||
|
Minera
Sol de ORO S.A. de C.V.
|
Mexico
|
100 | % | |||
|
Minas
de Argonautas S de X.X. de C.V.
|
Mexico
|
100 | % | |||
|
1526735
Alberta ULC
|
Alberta
|
100 | % | |||
|
|
(c)
|
Apollo
owns, directly or indirectly, the percentage of issued and outstanding
shares of each of the Apollo Subsidiaries set out above, all of the issued
and outstanding shares of the Apollo Subsidiaries are issued as fully paid
and non-assessable shares, in each case, other than as disclosed in the
Apollo Disclosure Documents, free and clear of all mortgages, liens,
charges, pledges, security interests, encumbrances,
claims or demands whatsoever
and no person, firm or corporation has any agreement, option, right or
privilege (whether pre-emptive or contractual) capable of becoming an
agreement, for the purchase from Apollo or any of the Apollo Subsidiaries
of any interest in any of the shares in the capital of any of the Apollo
Subsidiaries.
|
|
|
(d)
|
other
than as disclosed in the Apollo Disclosure Documents, each of Apollo and
each of the Apollo Subsidiaries holds all requisite licences,
registrations, qualifications, permits and consents necessary or
appropriate for carrying on its business as currently carried on and all
such licences, registrations, qualifications, permits and consents are
valid and subsisting and in good standing in all material respects except
where the failure to hold such licences, registrations, qualifications,
permits and consents would not have a Material Adverse Effect on Apollo or
any Apollo Subsidiary. In particular, without limiting the
generality of the foregoing, neither Apollo nor any of the Apollo
Subsidiaries has received any notice of proceedings relating to the
revocation or adverse modification of any material mining or exploration
permit or licence, nor have any of them received notice of the revocation
or cancellation of, or any intention to revoke or cancel, any mining
claims, groups of claims, exploration rights, concessions or leases with
respect to any of the resource properties described in the Apollo
Disclosure Documents where such revocation or cancellation would have a
Material Adverse Effect on Apollo or any Apollo
Subsidiary;
|
- 27
-
|
|
(e)
|
except
as disclosed in the Apollo Disclosure Documents, (A) Apollo and the Apollo
Subsidiaries are the absolute legal and beneficial owners of, and have
good and marketable title to, all of their respective material property or
assets as described in the Apollo Disclosure Documents, and no other
Mining Rights are necessary for the conduct of the business of Apollo or
any Apollo Subsidiary as currently conducted, (B) none of Apollo or any
Apollo Subsidiary knows of any claim or the basis for any claim that might
or could materially and adversely affect the right thereof to use,
transfer or otherwise exploit such Mining Rights, and (C) none of Apollo
or any Apollo Subsidiary has any responsibility or obligation to pay any
material commission, royalty, licence fee or similar payment to any person
with respect to such Mining Rights;
|
|
|
(f)
|
except
as disclosed in the Apollo Disclosure Documents, Apollo and the Apollo
Subsidiaries hold Mining Rights in respect of the ore bodies and minerals
located in properties in which Apollo and the Apollo Subsidiaries have an
interest as described in the Apollo Disclosure Documents under valid,
subsisting and enforceable title documents or other recognized and
enforceable agreements or instruments, sufficient to permit Apollo or the
applicable Apollo Subsidiary to explore the minerals relating thereto; all
property, leases or claims in which Apollo or any Apollo Subsidiary has an
interest or right have been validly located and recorded in accordance in
all material respects with all applicable Laws and are valid and
subsisting except where the failure to be so would not have a Material
Adverse Effect on Apollo or any Apollo Subsidiary; Apollo and the Apollo
Subsidiaries have all necessary surface rights, access rights and other
necessary rights and interests relating to the properties in which Apollo
and the Apollo Subsidiaries have an interest as described in the Apollo
Disclosure Documents granting Apollo or the applicable Apollo Subsidiary
the right and ability to explore for minerals, ore and metals for
development purposes as are appropriate in view of the rights and interest
therein of Apollo or the applicable Apollo Subsidiary, with only such
exceptions as do not interfere with the use made by Apollo or the
applicable Apollo Subsidiary of the rights or interest so held; and each
of the proprietary interests or rights and each of the documents,
agreements and instruments and obligations relating thereto referred to
above is currently in good standing in the name of Apollo or an Apollo
Subsidiary except where the failure to be so would not have a Material
Adverse Effect on Apollo or any Apollo Subsidiary. The Mining Rights in
respect of Apollo’s properties, as disclosed in the Apollo Disclosure
Documents, constitute a description of all material Mining Rights held by
Apollo and the Apollo
Subsidiaries;
|
- 28
-
|
|
(g)
|
Apollo
has made available to the respective authors thereof, prior to the
issuance of the technical reports in respect of each of the Apollo
Material Properties for the purpose of preparing such technical reports,
all information requested, and to the knowledge and belief of Apollo, no
such information contains any material misrepresentation. Except as
disclosed in the Apollo Disclosure Documents, Apollo does not have any
knowledge of a Material Adverse Change in any production, cost, price,
reserves or other relevant information provided since the dates that such
information was so provided;
|
|
|
(h)
|
to
the best of the knowledge of Apollo, except as disclosed in the Apollo
Disclosure Documents, the technical reports in respect of each of the
Apollo Material Properties, as supplemented by the disclosure in respect
of such properties in the Apollo Disclosure Documents, accurately and
completely set forth all material facts relating to the properties that
are subject thereto. Since the date of preparation of each of the
technical reports in respect of each of the Apollo Material Properties,
respectively, except as disclosed in the Apollo Disclosure Documents,
there has been no change of which Apollo is aware that would disaffirm any
aspect of such reports in any material
respect;
|
|
|
(i)
|
Apollo
is a reporting issuer under the Securities Laws of each of the
Reporting Provinces, is not in default of any requirement of such
Securities Laws and Apollo is not
included on a list of defaulting reporting issuers maintained by the
Securities Authorities of such
provinces;
|
|
|
(j)
|
Apollo
is not subject to any cease trade order or other order of any applicable
stock exchange or Securities Authority and, to the knowledge of Apollo, no
investigation or other proceedings involving Apollo which may operate to
prevent or restrict trading of any securities of Apollo are currently in
progress or pending before any applicable stock exchange or Securities
Authority;
|
|
|
(k)
|
the
execution and delivery of this Agreement, the performance by each of
Apollo and Apollo Subco of their respective obligations hereunder and the
consummation of the transactions contemplated in this Agreement, do not
and will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, (whether after
notice or lapse of time or both), (A) any statute, rule or regulation
applicable to Apollo or Apollo Subco including, without limitation,
applicable Securities Laws and the policies, rules and regulations of the
TSX and the AMEX; (B) the constating documents, by-laws or resolutions of
Apollo or Apollo Subco which are in effect at the date hereof; (C) any
mortgage, note, indenture, contract, agreement, joint venture,
partnership, instrument, lease or other document to which either Apollo or
Apollo Subco is a party or by which they are bound; or (D) any judgment,
decree or order binding Apollo, any Apollo Subsidiary, or the property or
assets thereof;
|
- 29
-
|
|
(l)
|
Apollo
is in compliance in all material respects with its timely and continuous
disclosure obligations under the Securities Laws and the rules and
regulations of the TSX and AMEX and, without limiting the generality of
the foregoing, there has not occurred any Material Adverse Change in
respect of Apollo and the Apollo Subsidiaries (taken as a whole) since
December 31, 2009, which has not been publicly disclosed on a
non-confidential basis and all the statements set forth in the Apollo
Disclosure Documents were true, correct and complete in all material
respects and did not contain any misrepresentation as of the date of such
statements and Apollo has not filed any confidential material change
reports since the date of such statements which remain confidential as at
the date hereof;
|
|
|
(m)
|
except
as disclosed in the Apollo Disclosure Documents, neither Apollo nor any
Apollo Subsidiary has approved, or has entered into any agreement in
respect of, or has any knowledge
of:
|
|
|
(A)
|
the
purchase of any material property or assets or any interest therein or the
sale, transfer or other disposition of any material property or assets or
any interest therein currently owned, directly or indirectly, by Apollo or
any Apollo Subsidiary whether by asset sale, transfer of shares or
otherwise;
|
|
|
(B)
|
the
change in control (by sale, transfer or other disposition of shares or
sale, transfer, lease or other disposition of all or substantially all of
the property and assets of Apollo) of Apollo or any Apollo Subsidiary;
or
|
|
|
(C)
|
a
proposed or planned disposition of shares by any Apollo Shareholder who
owns, directly or indirectly, 10% or more of the outstanding shares of
Apollo or any Apollo Subsidiary;
|
|
|
(n)
|
the
audited consolidated financial statements of Apollo as at and for the year
ended December 31, 2009 (the “Apollo Audited Financial
Statements”) have been prepared in accordance with U.S. GAAP and
present fully, fairly and correctly in all material respects, the
consolidated financial condition of Apollo as at the date thereof and the
results of the operations and the changes in the financial position of
Apollo for the periods then ended and contain and reflect adequate
provisions or allowance for all reasonably anticipated liabilities,
expenses and losses of Apollo and, except as disclosed in the Apollo
Disclosure Documents, there has been no change in accounting policies or
practices of Apollo since December 31,
2009;
|
- 30
-
|
|
(o)
|
all
Taxes due and payable by Apollo and the Apollo Subsidiaries have been
paid, except where the failure to pay such Taxes would not constitute an
adverse material fact in respect of Apollo or any Apollo Subsidiary or
have a Material Adverse Effect on Apollo or any Apollo
Subsidiary. All Tax returns, declarations, remittances and
filings required to be filed by Apollo and the Apollo Subsidiaries have
been filed with all appropriate governmental authorities and all such
returns, declarations, remittances and filings are complete and accurate
and no material fact or facts have been omitted therefrom which would make
any of them misleading, except where the failure to file such documents
would not constitute an adverse material fact in respect of Apollo or have
a Material Adverse Effect on Apollo or any Apollo
Subsidiary. To the best of the knowledge of Apollo, no
examination of any Tax return of Apollo or any Apollo Subsidiary is
currently in progress and there are no issues or disputes outstanding with
any governmental authority respecting any taxes that have been paid, or
may be payable, by Apollo or any Apollo Subsidiary, in any case, except
where such examinations, issues or disputes would not constitute an
adverse material fact in respect of Apollo or have a Material Adverse
Effect on Apollo or any Apollo
Subsidiary;
|
|
|
(p)
|
Apollo’s
auditors who audited the Apollo Audited Financial Statements and who
provided their audit report thereon are independent public accountants as
required under applicable Securities Laws and there has never been a
reportable event (within the meaning of National Instrument 51-102 Continuous Disclosure
Obligations) between Apollo and Apollo’s auditors or, to the
knowledge of Apollo, any former auditors of
Apollo;
|
|
|
(q)
|
other
than: (i) 11,594,371 Apollo Shares issuable pursuant to outstanding stock
options of Apollo and an additional 85,000 Apollo Shares issuable pursuant
to stock options of Apollo to be granted after public announcement of the
Arrangement; (ii) 104,138,178 Apollo Shares issuable pursuant to
outstanding common share purchase warrants of Apollo; (iii) 1,592,733
Apollo Shares issuable to Xxxxx Xxxxx, Xxxxx Xxxxx, Xxxx Xxxxxx and Xxxxx
Xxxx pursuant to a letter of intent dated February 22, 2010 among Apollo,
Calais Resources, Inc.; (iv) 8,580,000 Apollo Shares issuable pursuant to
convertible debentures; and (v) 2,448,390 Apollo Shares issuable pursuant
to agents’ compensation units, and the foregoing persons, no person, firm
or corporation has or will have at the Effective Date any agreement or
option, or right or privilege (whether pre-emptive or contractual) capable
of becoming an agreement or option, for the purchase of any unissued
shares or securities of Apollo or of any of the Apollo
Subsidiaries;
|
|
|
(r)
|
to
Apollo's knowledge, other than the Apollo Support Agreements, the Lender
Support Agreements and the Lender Lock-Up Agreements, there is no
agreement in force or effect which in any manner affects or will affect
the voting or control of any of the securities of Apollo or of the Apollo
Subsidiaries;
|
- 31
-
|
|
(s)
|
except
than as set forth in the Apollo Disclosure Documents, none of the officers
or employees of Apollo or of any Apollo Subsidiary, any person who owns,
directly or indirectly, more than 10% of any class of securities of Apollo
or securities of any person exchangeable for more than 10% of any class of
securities of Apollo, or any associate or affiliate of any of the
foregoing, had or has any material interest, direct or indirect, in any
transaction or any proposed transaction (including, without limitation,
any loan made to or by any such person) with Apollo or any of the Apollo
Subsidiaries which, as the case may be, materially affects, is material to
or will materially affect Apollo on a consolidated
basis;
|
|
|
(t)
|
except
as disclosed in the Apollo Disclosure Documents, no legal or governmental
proceedings or inquiries are pending to which Apollo or any Apollo
Subsidiary is a party or to which its property is subject that would
result in the revocation or modification of any material certificate,
authority, permit or license necessary to conduct the business now owned
or operated by Apollo and the Apollo Subsidiaries which, if the subject of
an unfavourable decision, ruling or finding would have a Material Adverse
Effect on Apollo or any Apollo Subsidiary and, to the knowledge of Apollo,
no such legal or governmental proceedings or inquiries have been
threatened against or are contemplated with respect to Apollo or with
respect to its properties;
|
|
|
(u)
|
except
as disclosed in the Apollo Disclosure Documents, there are no actions,
suits, judgments, investigations or proceedings of any kind whatsoever
outstanding, pending or, to the best of Apollo’s knowledge, threatened
against or affecting Apollo, the Apollo Subsidiaries, or their respective
directors, officers or employees, at law or in equity or before or by any
commission, board, bureau or agency of any kind whatsoever and, to the
best of Apollo’s knowledge, there is no basis therefor and neither Apollo
nor any Apollo Subsidiary is subject to any judgment, order, writ,
injunction, decree, award, rule, policy or regulation of any governmental
authority, which, either separately or in the aggregate, may have a
Material Adverse Effect on Apollo or any Apollo Subsidiary or that would
adversely affect the ability of Apollo or Apollo Subco to perform their
respective obligations under this
Agreement;
|
|
|
(v)
|
none
of Apollo nor any of the Apollo Subsidiaries is in violation of its
constating documents or, except as disclosed in the Apollo Disclosure
Documents, in default of the performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, trust deed, mortgage, loan agreement, note, lease or other
agreement or instrument to which it is a party or by which it or its
property may be bound;
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|
|
(w)
|
Apollo
or one of the Apollo Subsidiaries owns or has the right to use under
licence, sub-licence or otherwise all material intellectual property used
by Apollo and the Apollo Subsidiaries in its business, including
copyrights, industrial designs, trade marks, trade secrets, know how and
proprietary rights, free and clear of any and all
encumbrances;
|
|
|
(x)
|
except
as disclosed in the Apollo Disclosure Documents, any and all of the
agreements and other documents and instruments pursuant to which Apollo
and the Apollo Subsidiaries hold the property and assets thereof
(including any interest in, or right to earn an interest in, any property)
are valid and subsisting agreements, documents or instruments in full
force and effect, enforceable in accordance with the terms thereof,
neither Apollo nor any Apollo Subsidiary is in default of any of the
material provisions of any such agreements, documents or instruments nor
has any such default been alleged and such properties and assets are in
good standing under the applicable statutes and regulations of the
jurisdictions in which they are situated. All material leases,
licences and other agreements pursuant to which Apollo or any Apollo
Subsidiary derives the interests thereof in such property and assets are
in good standing and there has been no material default under any such
lease, licence or agreement. None of the properties (or any
interest in, or right to earn an interest in, any property) of Apollo or
any Apollo Subsidiary is subject to any right of first refusal or purchase
or acquisition right which is not disclosed in the Apollo Disclosure
Documents;
|
|
|
(y)
|
this
Agreement has been duly authorized and executed and delivered by each of
Apollo and Apollo Subco and constitutes a valid and binding obligation of
each of Apollo and Apollo Subco and is enforceable against each of Apollo
and Apollo Subco in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium and other Laws relating to or affecting the rights of creditors
generally and except as limited by the application of equitable principles
when equitable remedies are sought, and by the fact that rights to
indemnity, contribution and waiver, and the ability to sever unenforceable
terms, may be limited by applicable
Law;
|
|
|
(z)
|
the
authorized capital of Apollo consists of an unlimited number of Apollo
Shares, of which, as at the close of business on March 29, 2010,
337,973,660 Apollo Shares were issued and outstanding as fully paid and
non-assessable shares of Apollo;
|
|
|
(aa)
|
the
authorized capital of Apollo Subco consists of an unlimited number of
common shares (“Subco
Common
Shares”)
and an unlimited number of preferred shares issuable in series, of which,
as at the close of business on March 29, 2010, one Subco Common
Share and no preferred shares were issued and outstanding as fully
paid and non-assessable shares of Apollo
Subco;
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|
|
(bb)
|
the
Apollo Shares to be issued in exchange for Linear Shares pursuant to the
Arrangement will, upon issue, be issued as fully paid and non-assessable
shares in the capital of Apollo and the Apollo Shares issuable upon
exercise of the Apollo Replacement Options and the Apollo Replacement
Warrants will be issued as fully paid and non-assessable shares in the
capital of Apollo on payment of the purchase price
therefor;
|
|
|
(cc)
|
other
than as set out in the Apollo Disclosure Documents, neither Apollo nor any
of the Apollo Subsidiaries has made any loans to or guaranteed the
obligations of any person;
|
|
|
(dd)
|
with
respect to those leased premises of Apollo or the Apollo Subsidiaries
which are material to Apollo and the Apollo Subsidiaries on a consolidated
basis and which Apollo or any of the Apollo Subsidiaries occupies as
tenant (the “Apollo
Leased Premises”), Apollo or such Apollo Subsidiary occupies the
Apollo Leased Premises and has the exclusive right to occupy and use the
Apollo Leased Premises and each of the leases pursuant to which Apollo
and/or the Apollo Subsidiaries occupies the Apollo Leased Premises is in
good standing and in full force and
effect;
|
|
|
(ee)
|
the
assets of Apollo and the Apollo Subsidiaries and their business and
operations are insured against loss or damage with responsible insurers on
a basis consistent with insurance obtained by reasonably prudent
participants in comparable businesses, and such coverage is in full force
and effect, and Apollo has not failed to promptly give any notice of any
material claim thereunder;
|
|
|
(ff)
|
each
of Apollo and each of the Apollo Subsidiaries is in compliance with all
Laws respecting employment and employment practices, terms and conditions
of employment, pay equity and wages, except where non-compliance with such
Laws could not reasonably be expected to have a Material Adverse Effect on
Apollo or any Apollo Subsidiary, and has not and is not engaged in any
unfair labour practice;
|
|
|
(gg)
|
there
has not been in the last two years and there is not currently any labour
disruption, grievance, arbitration proceeding or other conflict which
could reasonably be expected to have a Material Adverse Effect on Apollo’s
or any of the Apollo Subsidiaries’ business, taken as a whole, and Apollo
and each of the Apollo Subsidiaries is in compliance with all provisions
of all federal, provincial, local and foreign Laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours, except where non-compliance with any such
provisions would not have a Material Adverse Effect on Apollo or any of
the Apollo Subsidiaries;
|
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|
|
(hh)
|
no
union has been accredited or otherwise designated to represent any
employees of Apollo or any of the Apollo Subsidiaries and, to the
knowledge of Apollo, no accreditation request or other representation
question is pending with respect to the employees of Apollo or any of the
Apollo Subsidiaries and no collective agreement or collective bargaining
agreement or modification thereof has expired or is in effect in any of
Apollo’s facilities and none is currently being negotiated by Apollo or
any Apollo Subsidiary;
|
|
|
(ii)
|
the
Apollo Disclosure Documents disclose, to the extent required by applicable
Securities Laws, each material plan for retirement, bonus, stock purchase,
profit sharing, stock option, deferred compensation, severance or
termination pay, insurance, medical, hospital, dental, vision care, drug,
sick leave, disability, salary continuation, legal benefits, unemployment
benefits, vacation, incentive or otherwise contributed to, or required to
be contributed to, by Apollo for the benefit of any current or former
director, officer, employee or consultant of Apollo (the “Apollo Employee Plans”),
each of which has been maintained in all material respects with its terms
and with the requirements prescribed by any and all statutes, orders,
rules and regulations that are applicable to such Apollo Employee
Plans;
|
|
|
(jj)
|
Apollo
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance
with management’s general or specific authorization, and (B) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with U.S. GAAP and to maintain accountability for
assets. Apollo has disclosed, based on the most recent
evaluation of its chief executive officer and its chief financial officer
prior to the date hereof, to Apollo’s auditors and the audit committee of
Apollo’s board of directors (i) any significant deficiencies in the design
or operation of its internal controls over financial reporting that are
reasonably likely to adversely affect Apollo’s ability to record, process,
summarize and report financial information and has identified for Apollo’s
auditors and Apollo’s board of directors any material weaknesses in
internal control over financial reporting and (ii) any fraud, whether or
not material, that involves management or other employees who have a
significant role in Apollo’s internal control over financial
reporting;
|
|
|
(kk)
|
management
of Apollo has established and maintained a system of disclosure controls
and procedures designed to provide reasonable assurance that information
required to be disclosed by Apollo in its annual filings, interim filings
or other reports filed, furnished or submitted by it under applicable
Securities Law is recorded, processed, summarized and reported within the
time periods specified in such legislation, laws and rules. Such
disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be
disclosed by Apollo in its annual filings, interim filings or other
reports filed, furnished or submitted under applicable Securities Law is
accumulated and communicated to Apollo’s management, including its chief
executive officer and chief financial officer (or persons performing
similar functions), as appropriate to allow timely decisions regarding
required disclosure;
|
- 35
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|
|
(ll)
|
following
completion of the Arrangement pursuant to the terms and conditions of this
Agreement and the Plan of Arrangement, Apollo will not be required to
register as an “investment company” pursuant to the 1940
Act;
|
|
(mm)
|
except
as disclosed in the Apollo Disclosure Documents, none of the directors,
officers or employees of Apollo or any associate or affiliate of any of
the foregoing had or has any material interest, direct or indirect, in any
material transaction or any proposed material transaction with Apollo or
its Apollo Subsidiaries which materially affects, is material to or will
materially affect Apollo or any Apollo
Subsidiary;
|
|
|
(nn)
|
the
minute books and records of Apollo and the Apollo Subsidiaries made
available to Linear and its counsel in connection with their due diligence
investigation of Apollo for the periods from January 1, 2007 to the date
hereof are all of the minute books and records of Apollo and the Apollo
Subsidiaries and contain copies of all material proceedings (or certified
copies thereof or drafts thereof pending approval) of the shareholders,
the directors and all committees of directors of Apollo and the Apollo
Subsidiaries to the date of review of such corporate records and minute
books and there have been no other meetings, resolutions or proceedings of
the shareholders, directors or any committees of the directors of Apollo
or any of its Apollo Subsidiaries to the date hereof not reflected in such
minute books and other records;
|
|
|
(oo)
|
neither
Apollo nor any of its Apollo Subsidiaries has been in violation
of, in connection with the ownership, use, maintenance or operation of its
property and assets, including the Apollo Leased Premises, any
Environmental Laws which would have a Material Adverse Effect on Apollo or
any of its Apollo Subsidiaries;
|
|
|
(pp)
|
without
limiting the generality of the immediately preceding paragraph, Apollo and
each of the Apollo Subsidiaries do not have any knowledge of, and have not
received any notice of, any currently outstanding material claim, judicial
or administrative proceeding, pending or threatened against, or which may
affect, either Apollo or any Apollo Subsidiary or any of the property,
assets or operations thereof, relating to, or alleging any violation of
any Environmental Laws, Apollo is not aware of any facts which could give
rise to any such claim or judicial or administrative proceeding and to the
knowledge of Apollo neither Apollo, nor any Apollo Subsidiary nor any of
the property, assets or operations thereof is the subject of any
investigation, evaluation, audit or review by any governmental authority
to determine whether any violation of any Environmental Laws has occurred
or is occurring or whether any remedial action is needed in connection
with a release of any contaminant into the environment, except for
compliance investigations conducted in the normal course by any
governmental authority, in each case which could reasonably be expected to
have a Material Adverse Effect on Apollo or any of its Apollo
Subsidiaries;
|
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|
|
(qq)
|
there
are no orders, rulings or directives issued, pending or, to the best of
Apollo’s knowledge reasonably held, being based on due direction and
enquiry of its personnel and advisors, threatened against Apollo or any of
the Apollo Subsidiaries under or pursuant to any Environmental Laws
requiring any work, repairs, construction or capital expenditures with
respect to the property or assets of Apollo or any of the Apollo
Subsidiaries (including the Apollo Leased Premises) which would have a
Material Adverse Effect on Apollo or any of the Apollo
Subsidiaries;
|
|
|
(rr)
|
Apollo
and the Apollo Subsidiaries are not subject to any contingent or other
liability relating to the restoration or rehabilitation of land, water or
any other part of the environment (except for those derived from normal
exploration, development and mining activities and those arising under
permits, licenses or approvals from applicable Governmental Authorities)
or non-compliance with Environmental Laws which could reasonably be
expected to have a Material Adverse Effect on Apollo or any of the Apollo
Subsidiaries;
|
|
|
(ss)
|
all
information which has been prepared by Apollo and the Apollo Subsidiaries
relating to Apollo and the Apollo Subsidiaries and the business, property
and liabilities thereof and either publicly disclosed, provided or made
available to Linear, including all financial, marketing, sales and
operational information provided to Linear is, as of the date of such
information, true and correct in all material respects, taken as a whole,
and no fact or facts have been omitted therefrom which would make such
information materially misleading;
|
|
|
(tt)
|
Apollo
is not aware of any circumstances presently existing under which liability
is or could reasonably be expected to be incurred under Part XXIII – Civil
Liability for Secondary Market Disclosure of the Securities Act
(Ontario);
|
|
|
(uu)
|
Apollo
has not entered into any arrangement whereby Apollo will have any
liability for financial advisor’s, broker’s or finder’s fees (including,
without limitation, any disbursements, expenses or fairness opinion) in
respect of the Arrangement, except for Apollo’s fees and disbursements to
its financial advisors. Apollo has provided to Linear true and
correct copies of its agreements with each of its financial
advisors;
|
- 37
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|
|
(vv)
|
Apollo
is not in material breach of, and has complied in all material respects
with all its covenants and other obligations set out in, the Letter of
Intent as of the date of this Agreement;
and
|
|
(ww)
|
the
transactions contemplated by this Agreement will not cause Apollo, any
Apollo Subsidiary or the Surviving Corporation to incur any Tax liability
or be subject to any withholding Tax obligation with respect to Apollo or
any Apollo Subsidiary in any jurisdiction in which Apollo or such Apollo
Subsidiary is organized, conducts business or owns real
property.
|
|
Section
3.3
|
Survival
of Representations and
Warranties
|
The representations and warranties
contained in this Agreement shall survive the execution and delivery of this
Agreement and shall expire and be terminated and extinguished on the Effective
Date. Any investigation by Apollo or Linear and their respective advisors shall
not mitigate, diminish or affect the representations and warranties contained in
this Agreement.
ARTICLE 4
COVENANTS
|
Section
4.1
|
Covenants
of Linear
|
Subject
to Section 6.1 and Section 6.2, Linear hereby covenants and agrees with Apollo
and Apollo Subco as follows:
|
(a)
|
as
soon as practicable following the execution of this Agreement, Linear
shall, jointly with Apollo Subco, file, proceed with and diligently
prosecute an application to the Court for the Interim Order on terms and
conditions acceptable to Apollo and Apollo Subco, acting
reasonably;
|
|
(b)
|
in
a timely and expeditious manner, Linear
shall:
|
|
|
(i)
|
forthwith
carry out such terms of the Interim Order as are required under the terms
thereof to be carried out by
Linear;
|
|
|
(ii)
|
prepare
with the assistance of Apollo, and file as promptly as reasonably
practicable, the Linear Proxy Circular (which shall be in a form
satisfactory to Apollo, acting reasonably), together with any other
documents required by applicable Laws, in all jurisdictions where the
Linear Proxy Circular is required to be filed and mail the Linear Proxy
Circular, as ordered by the Interim Order and in accordance with all
applicable Laws, including the rules and policies of the TSX, in and to
all jurisdictions where the Linear Proxy Circular is required to be
mailed, complying in all material respects with all applicable Laws,
including the rules and policies of the TSX, on the date of the mailing
thereof and in the form and containing the information required by all
applicable Laws, including all applicable corporate and securities
legislation and requirements and the rules and policies of the TSX, and
not containing any misrepresentation (as defined under applicable
Securities Laws) with respect thereto, other than with respect to any
information relating to and provided by Apollo for which neither Linear
nor its directors or officers assume any responsibility for the accuracy
or completeness of;
|
- 38
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|
|
(iii)
|
subject
to the terms of this Agreement: (a) take all commercially reasonable
lawful action to solicit Linear Shareholders to vote in favour of the
Continuance and the Arrangement including, without
limitation, if deemed advisable, retaining a proxy solicitation agent to
solicit Linear Shareholders to vote in favour of the Arrangement (on
condition such agent can be engaged at reasonable expense); (b) recommend
to all holders of Linear Shares that they vote in favour of the
Continuance and the Arrangement and the other transactions contemplated
hereby or thereby; and (c) not withdraw, modify or qualify, or publicly
propose to or publicly state that it intends to withdraw, modify or
qualify in any manner adverse to Apollo such recommendation except as
expressly permitted by Sections 6.1 and 6.2
hereof;
|
|
|
(iv)
|
use
reasonable efforts to deliver or cause to be delivered to Apollo or its
legal counsel all certificates and legal, tax and other opinions necessary
to support the disclosure contained or to be contained in the Linear Proxy
Circular;
|
|
|
(v)
|
convene
the Linear Meeting on such date as provided in the Interim Order or such
later date that may be mutually agreed upon with
Apollo;
|
|
|
(vi)
|
provide
notice to Apollo of the Linear Meeting and allow representatives of Apollo
to attend the Linear Meeting;
|
|
|
(vii)
|
conduct
the Linear Meeting in accordance with the Interim Order, the CBCA, the
by-laws of Linear and as otherwise required by applicable Laws;
and
|
|
|
(viii)
|
take
all such actions as may be required under the CBCA and the ABCA in
connection with the transactions contemplated by this Agreement and the
Plan of Arrangement;
|
|
(c)
|
Linear
shall not adjourn, postpone or cancel the Linear Meeting (or propose to do
so), except: (i) if a quorum is not present at the Linear Meeting; (ii) if
required by applicable Laws; or (iii) if required by the Linear
Shareholders;
|
- 39
-
|
(d)
|
in
a timely and expeditious manner, Linear shall prepare (in consultation
with Apollo), and file any mutually agreed (or as otherwise required by
applicable Laws) amendments or supplements to the Linear Proxy Circular
(which amendments or supplements shall be in a form satisfactory to
Apollo, acting reasonably) with respect to the Linear Meeting and mail
such amendments or supplements, as required by the Interim Order and in
accordance with all applicable Laws, in and to all jurisdictions where
such amendments or supplements are required to be mailed, complying in all
material respects with all applicable Laws on the date of the mailing
thereof;
|
|
(e)
|
subject
to the approval at the Linear Meeting of the Continuance in accordance
with the CBCA and the Arrangement in accordance with the provisions of the
Interim Order and the approval of the Arrangement at the Apollo Meeting in
accordance with applicable Laws, including the rules and policies of the
TSX and AMEX, Linear shall complete the Continuance and shall, jointly
with Apollo Subco, forthwith file, proceed with and diligently prosecute
an application for the Final Order, which application shall be in a form
and substance satisfactory to the parties hereto, acting
reasonably;
|
|
(f)
|
Linear
shall forthwith carry out the terms of the Final Order and, following the
issue of the Final Order and the satisfaction, fulfillment or waiver of
the conditions in favour of Linear, Apollo and Apollo Subco set forth
herein, at a time and on a date to be agreed by Apollo and Linear, file
the Articles of Arrangement with the Registrar in order for the
Arrangement to become
effective;
|
|
(g)
|
except
for proxies and other non-substantive communications, Linear shall furnish
promptly to Apollo a copy of each notice, report, schedule or other
document or communication delivered, filed or received by Linear in
connection with this Agreement, the Arrangement, the Interim Order or the
Linear Meeting or any other meeting at which all Linear Shareholders are
entitled to attend relating to special business, any filings made under
any applicable Law and any dealings or communications with any
Governmental Authority, Securities Authority or stock exchange in
connection with, or in any way affecting, the transactions contemplated by
this Agreement;
|
|
(h)
|
other
than in contemplation of or as required to give effect to the transactions
contemplated by this Agreement, Linear shall, and shall cause the Linear
Subsidiaries to, conduct business only in the usual and ordinary course of
business and consistent with past practice, and Linear shall use all
reasonable commercial efforts to maintain and preserve Linear’s and the
Linear Subsidiaries’ business, assets and advantageous business
relationships, provided that it shall be entitled and authorized to comply
with all pre-emptive rights, first purchase rights or rights of first
refusal that are applicable to its assets and become operative by virtue
of this Agreement or any of the transactions contemplated by this
Agreement;
|
|
(i)
|
other
than in contemplation of or as required to give effect to the transactions
contemplated by this Agreement, Linear shall
not:
|
- 40
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|
|
(i)
|
except
in connection with an internal reorganization implemented in conjunction
with the Arrangement: (A) amend Linear’s or any Linear Subsidiary’s
constating documents; (B) declare, set aside or pay any dividend or make
any other distribution or payment (whether in cash, shares, or property)
in respect of its outstanding securities; (C) issue or agree to issue any
shares or securities convertible into or exchangeable or exercisable for,
or otherwise evidencing a right to acquire, shares, other than the
issuance of shares pursuant to the exercise of currently outstanding
rights to acquire shares or to employees hired after the date hereof in a
manner consistent with past practice; (D) redeem, purchase or otherwise
acquire any of its outstanding shares or other securities (other than
redemptions required pursuant to its constating documents); (E) split,
combine or reclassify any of its securities; (F) adopt a plan of
liquidation or resolutions providing for its liquidation, dissolution,
merger, consolidation or reorganization; or (G) enter into or modify any
contract, agreement, commitment or arrangement with respect to any of the
foregoing;
|
|
|
(ii)
|
except
as previously disclosed in writing to Apollo or expressly publicly
disclosed by Linear in documents filed on SEDAR prior to the date hereof,
without prior consultation with and the consent of Apollo, such consent
not to be unreasonably withheld, directly or indirectly: (A) sell, pledge,
dispose of or encumber any assets other than in the ordinary course of
business for consideration in excess of US$500,000 individually or
US$1,000,000 in the aggregate; (B) expend or commit to expend more than
US$1,000,000 individually or US$2,000,000 in the aggregate with respect to
any capital expenditures prior to the date hereof; (C) expend or commit to
expend any amounts with respect to any operating expenses other than in
the ordinary course of business or pursuant to the Arrangement; (D)
acquire (by merger, amalgamation, consolidation or acquisition of shares
or assets) any corporation, partnership or other business organization or
division thereof which is not a subsidiary or affiliate of such party, or
make any investment therein either by purchase of shares or securities,
contributions of capital or property transfer with an acquisition cost in
excess of US$1,000,000 in the aggregate; (E) acquire any assets with an
acquisition cost in excess of US$1,000,000 in the aggregate; (F) incur any
indebtedness for borrowed money in excess of existing credit facilities,
or any other material liability or obligation or issue any debt securities
or assume, guarantee, endorse or otherwise become responsible for, the
obligations of any other individual or entity, or make any loans or
advances, other than in respect of fees payable to legal, financial and
other advisors in the ordinary course of business or in respect of the
Arrangement; (G) authorize, recommend or propose any release or
relinquishment of any material contract right; (H) waive, abandon,
release, grant or transfer any material assets or rights of value or
modify or change in any material respect any existing material license,
lease, contract or other material document; (I) enter into or terminate
any xxxxxx, swaps or other financial instruments or like transactions; or
(J) authorize or propose any of the foregoing, or enter into or modify any
contract, agreement, commitment or arrangement to do any of the
foregoing;
|
- 41
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|
|
(iii)
|
other
than the payments contemplated by Section 2.5, make any payment to any
employee, officer or director outside of its ordinary and usual
compensation for services provided, except to the extent that any such
entitlement to payment to a former employee or officer has accrued prior
to the date hereof and has been disclosed to, and consented to by,
Apollo;
|
|
|
(iv)
|
(A)
grant any officer, director or employee an increase in compensation in any
form; (B) grant any general salary increase; (C) take any action with
respect to the amendment or grant of any severance or termination pay
policies or arrangement for any directors, officers or employees; (D)
amend any stock option plan or trust unit incentive plan or the terms of
any outstanding options or rights thereunder; nor (E) advance any loan to
any officer, director or any other party not at arm's length, other than
as may be agreed to by Linear and
Apollo;
|
|
|
(v)
|
adopt
or amend or make any contribution to any bonus, employee benefit plan,
profit sharing, share or deferred compensation, insurance, incentive
compensation, other compensation or other similar plan, agreement, share
or incentive or purchase plan, fund or arrangement for the benefit of
employees, except as is necessary to comply with the law or with respect
to existing provisions of any such plans, programs, arrangement or
agreements;
|
|
|
(vi)
|
take
any action, refrain from taking any action, permit any action to be taken
or not taken, inconsistent with this Agreement, which might directly or
indirectly interfere or affect the consummation of the Arrangement or that
could reasonably be expected to render, any representation or warranty
made by Linear in this Agreement untrue or inaccurate in any material
respect at any time prior to the Effective Time if then made, or which
would or could have a Material Adverse Effect on
Linear;
|
|
|
(vii)
|
other
than pursuant to obligations or rights under existing contracts,
agreements and commitments (to the extent such rights have been exercised
or initiated by other persons), sell, lease or otherwise dispose of any
property or assets or enter into any agreement or commitment in respect of
any of the foregoing;
|
- 42
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|
|
(viii)
|
except
as required by Canadian GAAP, any other generally accepted accounting
principle to which any Linear Subsidiary may be subject or any applicable
Law, make any changes to the existing accounting practices of Linear or
make any material tax election inconsistent with past practice;
or
|
|
|
(ix)
|
permit
or cause any of the Linear Subsidiaries to effect any of the
foregoing;
|
|
(j)
|
other
than the payments set out in Section 2.5, without the prior written
consent of Apollo, Linear shall not, and shall cause the Linear
Subsidiaries not to, enter into or modify any employment, consulting,
severance, collective bargaining or similar agreement, policy or
arrangement with, or grant any bonus, salary increase, option to purchase
shares, pension or supplemental pension benefit, profit sharing,
retirement allowance, deferred compensation, incentive compensation,
severance, change of control or termination pay to, or make any loan to,
any officer, director, employee or consultant of Linear or any of the
Linear Subsidiaries;
|
|
(k)
|
Linear
shall use its commercially reasonable best efforts, and shall cause the
Linear Subsidiaries to use their commercially reasonable best efforts, to
cause their respective current insurance (or reinsurance) policies not to
be cancelled or terminated or any of the coverage thereunder to lapse,
unless simultaneously with such termination, cancellation or lapse,
replacement policies underwritten by insurance and re-insurance companies
of internationally recognized standing providing coverage equal to or
greater than the coverage under the cancelled, terminated or lapsed
policies for substantially similar premiums are in full force and
effect;
|
|
(l)
|
Linear
shall promptly notify Apollo in writing of (i) any significant development
or material change relating to Linear’s business, operations, assets or
prospects promptly after becoming aware of any such development or change;
or (ii) any event or state of facts of which the occurrence or failure
would, or would reasonably be likely to: (A) cause any of the
representations or warranties of Linear contained in this Agreement to be
untrue or inaccurate in any material respect on the date of this Agreement
or at the Effective Date (provided that this subsection 4.1(l) shall not
apply in the case of an event or state of facts resulting from actions or
omissions of Linear which are permitted or required by this Agreement); or
(B) result in the failure to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by Linear prior to
the Effective Date. Linear shall use commercially reasonable
best efforts to confer with and obtain Apollo’s approval (not to be
unreasonably withheld or delayed), prior to taking action (other than in
emergency situations) with respect to any operational matters involved in
Linear’s business which may constitute a material change for
Linear;
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(m)
|
Linear
shall not, and shall cause the Linear Subsidiaries not to, settle or
compromise any claim brought by any present, former or purported holder of
any securities of Linear in connection with the transactions contemplated
by this Agreement prior to the Effective Time without the prior written
consent of Apollo;
|
|
(n)
|
Linear
shall not, and shall cause the Linear Subsidiaries not to, enter into,
renew or modify in any respect any material contract, agreement, lease,
commitment or arrangement to which Linear or any of the Linear
Subsidiaries is a party or by which any of them is bound, except insofar
as may be necessary to permit or provide for the completion of the
Arrangement;
|
|
(o)
|
Linear
shall use all commercially reasonable best efforts to satisfy, or cause to
be satisfied, all conditions precedent to its obligations to the extent
that the same is within its control and to take, or cause to be taken, all
other action and to do, or cause to be done, all other things necessary,
proper or advisable under all applicable Laws to complete the transactions
contemplated by this Agreement, including using its commercially
reasonable best efforts to:
|
|
|
(i)
|
obtain
the approval of Linear Shareholders for the Continuance and the
Arrangement in accordance with the provisions of the CBCA, the Interim
Order, and the requirements of any applicable regulatory
authority;
|
|
|
(ii)
|
obtain
all other consents, approvals and authorizations as are required to be
obtained by Linear or any of the Linear Subsidiaries under any applicable
Law or from any Governmental Authority which would, if not obtained,
materially impede the completion of the transactions contemplated by this
Agreement or have a Material Adverse Effect on
Linear;
|
|
|
(iii)
|
effect
all necessary registrations, filings and submissions of information
requested by Governmental Authorities required to be effected by it in
connection with the transactions contemplated by this Agreement and
participate and appear in any proceedings of any party hereto before any
Governmental Authority;
|
|
|
(iv)
|
oppose,
lift or rescind any injunction or restraining order or other order or
action challenging or affecting this Agreement, the transactions
contemplated hereby or seeking to stop, or otherwise adversely affecting
the ability of the parties hereto to consummate, the transactions
contemplated hereby;
|
|
|
(v)
|
fulfill
all conditions and satisfy all provisions of this Agreement and the Plan
of Arrangement required to be fulfilled or satisfied by Linear;
and
|
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|
|
(vi)
|
cooperate
with Apollo and Apollo Subco in connection with the performance by each of
them of their respective obligations hereunder, provided however that the
foregoing shall not be construed to obligate Linear to pay or cause to be
paid any monies to cause such performance to
occur;
|
|
(p)
|
Linear
shall make, or cooperate as necessary in the making of, all necessary
filings and applications under all applicable Laws required in connection
with the transactions contemplated hereby and take all reasonable action
necessary to be in compliance with such
Laws;
|
|
(q)
|
Linear
shall use its commercially reasonable best efforts to conduct its affairs
and to cause the Linear Subsidiaries to conduct their affairs so that all
of the representations and warranties of Linear contained herein shall be
true and correct on and as of the Effective Date as if made on and as of
such date;
|
|
(r)
|
Linear
shall continue to make available and cause to be made available to Apollo,
the Lenders and the agents and advisors thereto all documents, agreements,
corporate records and minute books as may be necessary to enable Apollo to
effect a thorough examination of Linear and the Linear Subsidiaries and
the business, properties and financial status thereof and shall cooperate
with Apollo in securing access for Apollo to any documents, agreements,
corporate records or minute books not in the possession or under the
control of Linear. Subject to applicable Laws, upon reasonable notice,
Linear shall, and shall cause the Linear Subsidiaries to, afford officers,
employees, counsel, accountants and other authorized representatives and
advisors of Apollo and the Lenders reasonable access, during normal
business hours from the date hereof until the earlier of the Effective
Time or the termination of this Agreement, to the properties, books,
contracts and records as well as to the management personnel of Linear and
the Linear Subsidiaries, and, during such period, Linear shall, and shall
cause the Linear Subsidiaries to, furnish promptly to Apollo all
information concerning the business, properties and personnel of Linear
and the Linear Subsidiaries as Apollo may reasonably
request;
|
|
(s)
|
Linear
shall deliver title opinions with respect to each of the Linear Material
Properties; and
|
|
(t)
|
Linear
shall execute and deliver, or cause to be executed and delivered, at the
closing of the transactions contemplated hereby such customary agreements,
certificates, resolutions, opinions and other closing documents as may be
required by the other parties hereto, all in form satisfactory to the
other parties hereto, acting
reasonably.
|
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|
Section
4.2
|
Covenants
of Apollo and Apollo Subco
|
Subject
to Section 6.1 and Section 6.2, each of Apollo and Apollo Subco hereby covenants
and agrees with Linear as follows:
|
(a)
|
as
soon as practicable following the execution of this Agreement, Apollo
Subco shall, jointly with Linear, file, proceed with and diligently
prosecute an application to the Court for the Interim Order on terms and
conditions acceptable to Linear, acting
reasonably;
|
|
(b)
|
in
a timely and expeditious manner, Apollo and Apollo Subco shall take all
such actions and do all such acts and things as are specified in the
Interim Order, the Plan of Arrangement (including issuing the Apollo
Shares, the Apollo Replacement Options and the Apollo Replacement Warrants
as contemplated in the Plan of Arrangement) and the Final Order to be
taken or done by Apollo and Apollo Subco, as
applicable;
|
|
(c)
|
in
a timely and expeditious manner, Apollo and Apollo Subco
shall:
|
|
|
(i)
|
forthwith
carry out such terms of the Interim Order as are required under the terms
thereof to be carried out by Apollo and Apollo
Subco;
|
|
|
(ii)
|
subject
to the terms of this Agreement: (a) take all commercially reasonable
lawful action to solicit Apollo Shareholders to vote in favour of the
Arrangement including, without
limitation, if deemed advisable, retaining a proxy solicitation agent to
solicit Apollo Shareholders to vote in favour of the Arrangement (on
condition such agent can be engaged at reasonable expense); (b) recommend
to all holders of Apollo Shares that they vote in favour of the
Arrangement and the other transactions contemplated hereby or thereby; and
(c) not withdraw, modify or qualify, or publicly propose to or publicly
state that it intends to withdraw, modify or qualify in any manner adverse
to Linear such recommendation except as expressly permitted by Sections
6.1 and 6.2 hereof;
|
|
|
(iii)
|
use
reasonable efforts to deliver or cause to be delivered to Linear or its
legal counsel all certificates and legal, tax and other opinions necessary
to support the disclosure contained or to be contained in the Apollo Proxy
Circular;
|
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|
|
(iv)
|
prepare
with the assistance of Linear, and file, as promptly as reasonably
practicable (after resolution of any SEC comments thereon), the Apollo
Proxy Circular (which shall be in a form satisfactory to Linear, acting
reasonably), together with any other documents required by applicable
Laws, in all jurisdictions where the Apollo Proxy Circular is required to
be filed and mail the Apollo Proxy Circular, in accordance with all
applicable Laws, including the rules and policies of the TSX and AMEX, in
and to all jurisdictions where the Apollo Proxy Circular is required to be
mailed, complying in all material respects with all applicable Laws,
including the rules and policies of the TSX and AMEX, on the date of the
mailing thereof and in the form and containing the information required by
all applicable Laws, including all applicable corporate and securities
legislation and requirements and the rules and policies of the TSX and
AMEX, and not containing any misrepresentation (as defined under
applicable Securities Laws) with respect thereto, other than with respect
to any information relating to and provided by Linear for which none of
Apollo, Apollo Subco nor their respective directors or officers assume any
responsibility for the accuracy or completeness
of;
|
|
|
(v)
|
use
reasonable efforts to file a registration statement with the United States
Securities and Exchange Commission prior to the Linear Meeting,
registering under the 1933 Act the Apollo Shares issuable upon exercise of
the Apollo Replacement Warrants and Apollo Replacement Options (but only
with respect to those Apollo Replacement Options that are not eligible for
registration on Apollo’s registration statement on Form S-8 filed with the
SEC on October 16, 2009) to be issued pursuant to this Agreement and the
Arrangement and to use reasonable efforts to bring such registration
statement effective prior to the Effective Date of the Arrangement (it
being understood that Apollo may satisfy this requirement by maintaining
the effectiveness of its currently effective shelf registration statement
on Form S-3 filed with the SEC on April 24, 2008 (the “Shelf Registration
Statement”) and using reasonable efforts to file a supplement
thereto pursuant to Rule 424 of the 1933 Act registering the issuance of
common shares of Apollo upon exercise of the Apollo Replacement Warrants
and Apollo Replacement Options (but only with respect to those Apollo
Replacement Options that are not eligible for registration on Apollo’s
registration statement on Form S-8 filed with the SEC on October 16, 2009)
prior to the Effective Date of the Arrangement (the “Shelf Registration Statement
Supplement”);
|
|
|
(vi)
|
convene
the Apollo Meeting on the date specified for the Linear Meeting as
provided in the Interim Order or such later date that may be mutually
agreed upon with Linear;
|
|
|
(vii)
|
provide
notice to Linear of the Apollo Meeting and allow representatives of Linear
to attend the Apollo Meeting;
|
|
|
(viii)
|
conduct
the Apollo Meeting in accordance with the YBCA, the by-laws of Apollo and
as otherwise required by applicable Laws, including the rules and policies
of the TSX and AMEX; and
|
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|
|
(ix)
|
take
all such actions as may be required under the YBCA and pursuant to the
rules and policies of the TSX and AMEX in connection with the transactions
contemplated by this Agreement and the Plan of
Arrangement;
|
|
(d)
|
in
its capacity as sole shareholder of Apollo Subco, Apollo shall take all
necessary action to approve the amalgamation of Apollo Subco and Linear
and to otherwise approve the
Arrangement.
|
|
(e)
|
Apollo
shall not adjourn, postpone or cancel the Apollo Meeting (or propose to do
so), except: (i) if a quorum is not present at the Apollo Meeting; (ii) if
required by applicable Laws; or (iii) if required by the Apollo
Shareholders;
|
|
(f)
|
in
a timely and expeditious manner, Apollo and Apollo Subco shall prepare (in
consultation with Linear), and file any mutually agreed (or as otherwise
required by applicable Laws) amendments or supplements to the Apollo Proxy
Circular (which amendments or supplements shall be in a form satisfactory
to Linear, acting reasonably) with respect to the Apollo Meeting and mail
such amendments or supplements, and in accordance with all applicable
Laws, including the rules and policies of the TSX and AMEX, in and to all
jurisdictions where such amendments or supplements are required to be
mailed, complying in all material respects with all applicable Laws on the
date of the mailing thereof;
|
|
(g)
|
subject
to the approval of the Continuance and, in accordance with the provisions
of the Interim Order, the Arrangement at the Linear Meeting and the
approval of the Arrangement at the Apollo Meeting in accordance with
applicable Laws, including the rules and policies of the TSX and AMEX,
Apollo Subco shall, jointly with Linear, forthwith file, proceed with and
diligently prosecute an application for the Final Order, which application
shall be in a form and substance satisfactory to the parties hereto,
acting reasonably;
|
|
(h)
|
except
for proxies and other non-substantive communications, Apollo and Apollo
Subco shall furnish promptly to Linear a copy of each notice, report,
schedule or other document or communication delivered, filed or received
by Apollo or Apollo Subco in connection with the Arrangement or the
Interim Order, any filing under any applicable Law and any dealings or
communications with any Governmental Authority, Securities Authority or
stock exchange in connection with, or in any way affecting, the
transactions contemplated by this
Agreement;
|
|
(i)
|
other
than in contemplation of or as required to give effect to the transactions
contemplated by this Agreement, Apollo shall, and shall cause the Apollo
Subsidiaries to, conduct business only in the usual and ordinary course of
business and consistent with past practice, and Apollo shall use all
reasonable commercial efforts to maintain and preserve Apollo’s and the
Apollo Subsidiaries’ business, assets and advantageous business
relationships, provided that it shall be entitled and authorized to comply
with all pre-emptive rights, first purchase rights or rights of first
refusal that are applicable to its assets and become operative by virtue
of this Agreement or any of the transactions contemplated by this
Agreement;
|
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|
(j)
|
other
than in contemplation of or as required to give effect to the transactions
contemplated by this Agreement, Apollo shall
not:
|
|
|
(i)
|
except
in connection with an internal reorganization implemented in conjunction
with the Arrangement: (A) amend Apollo’s or any Apollo Subsidiary’s
constating documents; (B) declare, set aside or pay any dividend or make
any other distribution or payment (whether in cash, shares, or property)
in respect of its outstanding securities; (C) issue or agree to issue any
shares or securities convertible into or exchangeable or exercisable for,
or otherwise evidencing a right to acquire, shares, other than the
issuance of shares pursuant to the exercise of currently outstanding
rights to acquire shares or to employees hired after the date hereof in a
manner consistent with past practice and other than in connection with the
Xxxxx Issuance; (D) redeem, purchase or otherwise acquire any of its
outstanding shares or other securities (other than redemptions required
pursuant to its constating documents); (E) split, combine or reclassify
any of its securities; (F) adopt a plan of liquidation or resolutions
providing for its liquidation, dissolution, merger, consolidation or
reorganization; or (G) enter into or modify any contract, agreement,
commitment or arrangement with respect to any of the
foregoing;
|
|
|
(ii)
|
except
as previously disclosed in writing to Linear or expressly publicly
disclosed by Apollo in documents filed on SEDAR or XXXXX prior to the date
hereof, without prior consultation with and the consent of Linear, such
consent not to be unreasonably withheld, directly or indirectly: (A) sell,
pledge, dispose of or encumber any assets other than in the ordinary
course of business for consideration in excess of US$500,000 individually
or US$1,000,000 in the aggregate; (B) expend or commit to expend more than
US$1,000,000 individually or US$2,000,000 in the aggregate with respect to
any capital expenditures prior to the date hereof; (C) expend or commit to
expend any amounts with respect to any operating expenses other than in
the ordinary course of business or pursuant to the Arrangement; (D)
acquire (by merger, amalgamation, consolidation or acquisition of shares
or assets) any corporation, partnership or other business organization or
division thereof which is not a subsidiary or affiliate of such party, or
make any investment therein either by purchase of shares or securities,
contributions of capital or property transfer with an acquisition cost in
excess of US$1,000,000 in the aggregate; (E) acquire any assets with an
acquisition cost in excess of US$1,000,000 in the aggregate; (F) incur any
indebtedness for borrowed money in excess of existing credit facilities,
or any other material liability or obligation or issue any debt securities
or assume, guarantee, endorse or otherwise become responsible for, the
obligations of any other individual or entity, or make any loans or
advances, other than in respect of fees payable to legal, financial and
other advisors in the ordinary course of business or in respect of the
Arrangement; (G) authorize, recommend or propose any release or
relinquishment of any material contract right; (H) waive, abandon,
release, grant or transfer any material assets or rights of value or
modify or change in any material respect any existing material license,
lease, contract or other material document; (I) enter into or terminate
any xxxxxx, swaps or other financial instruments or like transactions,
other than the termination of certain existing xxxxxx as contemplated in
the Lender Consent Letter or a restructuring of such xxxxxx with the
consent of Linear; or (J) authorize or propose any of the foregoing, or
enter into or modify any contract, agreement, commitment or arrangement to
do any of the foregoing;
|
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|
|
(iii)
|
make
any payment to any employee, officer or director outside of its ordinary
and usual compensation for services provided, except to the extent that
any such entitlement to payment to a former employee or officer has
accrued prior to the date hereof and has been disclosed in writing to, and
consented to by, Linear;
|
|
|
(iv)
|
(A)
grant any officer, director or employee an increase in compensation in any
form; (B) grant any general salary increase; (C) take any action with
respect to the amendment or grant of any severance or termination pay
policies or arrangement for any directors, officers or employees; (D)
amend any stock option plan or trust unit incentive plan or the terms of
any outstanding options or rights thereunder; nor (E) advance any loan to
any officer, director or any other party not at arm's length, other than
as may be agreed to by Linear and
Apollo;
|
|
|
(v)
|
adopt
or amend or make any contribution to any bonus, employee benefit plan,
profit sharing, share or deferred compensation, insurance, incentive
compensation, other compensation or other similar plan, agreement, share
or incentive or purchase plan, fund or arrangement for the benefit of
employees, except as is necessary to comply with the law or with respect
to existing provisions of any such plans, programs, arrangement or
agreements;
|
|
|
(vi)
|
take
any action, refrain from taking any action, permit any action to be taken
or not taken, inconsistent with this Agreement, which might directly or
indirectly interfere or affect the consummation of the Arrangement or that
could reasonably be expected to render, any representation or warranty
made by Apollo in this Agreement untrue or inaccurate in any material
respect at any time prior to the Effective Time if then made, or which
would or could have a Material Adverse Effect on
Apollo;
|
- 50
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|
|
(vii)
|
other
than pursuant to obligations or rights under existing contracts,
agreements and commitments (to the extent such rights have been exercised
or initiated by other persons), sell, lease or otherwise dispose of any
property or assets or enter into any agreement or commitment in respect of
any of the foregoing;
|
|
|
(viii)
|
except
as required by U.S. GAAP, any other generally accepted accounting
principle to which any Apollo Subsidiary may be subject or any applicable
Law, make any changes to the existing accounting practices of Apollo or
make any material tax election inconsistent with past practice;
and
|
|
|
(ix)
|
permit
or cause any of the Apollo Subsidiaries to effect any of the
foregoing;
|
|
(k)
|
without
the prior written consent of Linear and other than as contemplated in
Section 2.5, Apollo shall not, and shall cause the Apollo Subsidiaries not
to, enter into or modify any employment, consulting, severance, collective
bargaining or similar agreement, policy or arrangement with, or grant any
bonus, salary increase, option to purchase shares, pension or supplemental
pension benefit, profit sharing, retirement allowance, deferred
compensation, incentive compensation, severance, change of control or
termination pay to, or make any loan to, any officer, director, employee
or consultant of Apollo or any of the Apollo
Subsidiaries;
|
|
(l)
|
Apollo
shall promptly notify Linear in writing of (A) any significant development
or material change relating to Apollo’s business, operations, assets or
prospects promptly after becoming aware of any such development or change;
or (B) any event or state of facts of which the occurrence or failure
would, or would reasonably be likely to: (i) cause any of the
representations or warranties of Apollo or Apollo Subco contained in this
Agreement to be untrue or inaccurate in any material respect on the date
of this Agreement or at the Effective Date (provided that this subsection
4.2(k) shall not apply in the case of an event or state of facts resulting
from actions or omissions of Apollo or Apollo Subco which are permitted or
required by this Agreement); or (ii) result in the failure to comply with
or satisfy any covenant, condition or agreement to be complied with or
satisfied by Apollo or Apollo Subco prior to the Effective
Date. Each of Apollo and Apollo Subco shall use commercially
reasonable best efforts to confer with and obtain Linear’s approval (not
to be unreasonably withheld or delayed), prior to taking action (other
than in emergency situations) with respect to any operational matters
involved in Apollo’s or Apollo Subco’s business which may constitute a
material change for Apollo;
|
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|
(m)
|
Apollo
shall not, and shall cause the Apollo Subsidiaries not to, settle or
compromise any claim brought by any present, former or purported holder of
any securities of Apollo in connection with the transactions contemplated
by this Agreement prior to the Effective Time without the prior written
consent of Linear;
|
|
(n)
|
Apollo
shall not, and shall cause the Apollo Subsidiaries not to, enter into,
renew or modify in any respect any material contract, agreement, lease,
commitment or arrangement to which Apollo or any of the Apollo
Subsidiaries is a party or by which any of them is bound, except insofar
as may be necessary to permit or provide for the completion of the
Arrangement;
|
|
(o)
|
Apollo
and Apollo Subco shall use all commercially reasonable best efforts to
satisfy, or cause to be satisfied, all of the conditions precedent to
their obligations to the extent the same is within their control and to
take, or cause to be taken, all other actions and to do, or cause to be
done, all other things necessary, proper or advisable under all applicable
Laws to complete the transactions contemplated by this Agreement,
including using their commercially reasonable best efforts
to:
|
|
|
(i)
|
obtain
the approval of the Apollo Shareholders for the Arrangement in accordance
with the provisions of the YBCA, the rules and policies of the TSX and
AMEX and any other applicable regulatory
authority;
|
|
|
(ii)
|
obtain
all consents, approvals and authorizations as are required to be obtained
by Apollo or any of the Apollo Subsidiaries under any applicable Law or
from any Governmental Authority which would, if not obtained, materially
impede the completion of the transactions contemplated hereby or have a
Material Adverse Effect on Apollo;
|
|
|
(iii)
|
effect
all necessary registrations, filings and submissions of information
requested by Governmental Authorities required to be effected by them in
connection with the transactions contemplated by this Agreement and
participate, and appear in any proceedings of, any party hereto before any
Governmental Authority;
|
|
|
(iv)
|
oppose,
lift or rescind any injunction or restraining order or other order or
action challenging or affecting this Agreement, the transactions
contemplated hereby or seeking to stop, or otherwise adversely affecting
the ability of the parties hereto to consummate, the transactions
contemplated hereby;
|
|
|
(v)
|
fulfill
all conditions and satisfy all provisions of this Agreement and the Plan
of Arrangement required to be fulfilled or satisfied by them;
and
|
|
|
(vi)
|
cooperate
with Linear in connection with the performance by Linear of its
obligations hereunder, provided however that the foregoing shall not be
construed to obligate Apollo to pay or cause to be paid any monies to
cause such performance to occur;
|
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|
(p)
|
Apollo
and Apollo Subco shall make, or cooperate as necessary in the making of,
all necessary filings and applications under all applicable Laws required
in connection with the transactions contemplated hereby and take all
reasonable action necessary to be in compliance with such
Laws;
|
|
(q)
|
Apollo
and Apollo Subco shall use commercially reasonable best efforts to conduct
their affairs and to cause the Apollo Subsidiaries to conduct their
affairs so that all of the representations and warranties of Apollo and
Apollo Subco contained herein shall be true and correct on and as of the
Effective Date as if made on and as of such
date;
|
|
(r)
|
Apollo
shall continue to make available and cause to be made available to Linear
and the agents and advisors thereto all documents, agreements, corporate
records and minute books as may be necessary to enable Linear to effect a
thorough examination of Apollo and the Apollo Subsidiaries and the
business, properties and financial status thereof and shall cooperate with
Linear in securing access for Linear to any documents, agreements,
corporate records or minute books not in the possession or under the
control of Apollo. Subject to applicable Laws, upon reasonable notice,
Apollo shall, and shall cause the Apollo Subsidiaries to, afford officers,
employees, counsel, accountants and other authorized representatives and
advisors of Linear reasonable access, during normal business hours from
the date hereof until the earlier of the Effective Time or the termination
of this Agreement, to the properties, books, contracts and records as well
as to the management personnel of Apollo and the Apollo Subsidiaries, and,
during such period, Apollo shall, and shall cause the Apollo Subsidiaries
to, furnish promptly to Linear all information concerning the business,
properties and personnel of Apollo and the Apollo Subsidiaries as Linear
may reasonably request;
|
|
(s)
|
Apollo
shall deliver title opinions with respect to each of the Apollo Material
Properties;
|
|
(t)
|
immediately
following the Effective Time, Apollo shall file articles of amendment with
the Registrar under the YBCA to change the name of Apollo to a name to be
mutually agreed to by Apollo and Linear;
and
|
|
(u)
|
Apollo
and Apollo Subco shall execute and deliver, or cause to be executed and
delivered at the closing of the transactions contemplated hereby such
customary agreements, certificates, opinions, resolutions and other
closing documents as may be required by Linear, all in form satisfactory
to Linear, acting reasonably.
|
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|
Section 4.3
|
Linear
Options
|
|
(a)
|
In
accordance with the terms of the Plan of Arrangement, each Linear Option
outstanding immediately prior to the Effective Time shall be exchanged for
an Apollo Replacement Option issued under the Apollo Stock Option Plan
which shall be exercisable to acquire, on the terms and conditions set
forth in the Apollo Stock Option Plan, provided that the rights of the
holders under the Apollo Replacement Options shall not (as mutually agreed
to by Apollo and Linear, each acting reasonably) materially adversely
differ from the rights of the holders of such Linear Options outstanding
immediately prior to the Effective Time (and provided further that the
current employees of Linear holding Linear Options whose employment is
terminated in connection with the Arrangement shall have their Linear
Options exchanged for Apollo Replacement Options which shall expire on the
earlier of: (i) the current expiry date of the corresponding Linear
Options; and (ii) the first anniversary of the date of completion of the
Arrangement), the number of Apollo Shares (rounded to the nearest whole
number) equal to the product of: (A) the number of Linear Shares subject
to such Linear Option immediately prior to the Effective Time and (B)
5.4742. The exercise price per Apollo Share subject to any such Apollo
Replacement Option shall be an amount (rounded to the nearest cent) equal
to the quotient of: (A) the exercise price per Linear Share subject to
such Linear Option immediately prior to the Effective Time divided by (B)
5.4742. The obligations of Linear under the Linear Options as
so exchanged shall be assumed by
Apollo.
|
|
(b)
|
Apollo
shall take all corporate action necessary to reserve for issuance a
sufficient number of Apollo Shares for delivery upon the exercise of the
Apollo Replacement Options including, without limitation, seeking and
obtaining the approval of the Apollo Shareholders at the Apollo Meeting in
respect of any amendments to the Apollo Stock Option Plan necessary in
order for Apollo to comply with its obligations under the Apollo
Replacement Options.
|
|
Section 4.4
|
Linear
Warrants
|
In accordance with the terms of the
Plan of Arrangement, each Linear Warrant outstanding immediately prior to the
Effective Time shall be exchanged for an Apollo Replacement Warrant which shall
be exercisable to acquire, on the same terms and conditions as were applicable
to such Linear Warrant immediately prior to the Effective Time, the number of
Apollo Shares (rounded to the nearest whole number) equal to the product of: (A)
the number of Linear Shares subject to such Linear Warrant immediately prior to
the Effective Time; and (B) 5.4742. The exercise price per Apollo
Share subject to any such Apollo Replacement Warrants shall be an amount
(rounded to the nearest cent) equal to the quotient of: (A) the exercise price
per Linear Share subject to the such Linear Warrant immediately prior to the
Effective Time divided by (B) 5.4742. The obligations of Linear under
the Linear Warrants as so exchanged shall be assumed by Apollo and Apollo agrees
to use commercially reasonable best efforts to arrange for the Apollo
Replacement Warrants issued upon exchange of the Linear Listed Warrants to be
listed on the TSX and to maintain such listing until 5:00 p.m. (Halifax time) on
November 19, 2014.
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Section
4.5
|
Apollo
Options
|
Subject
to the approval of the TSX and, if applicable, AMEX, immediately prior to the
Effective Date:
|
(a)
|
the
terms of the Apollo Options held by the Resigning Directors shall be
amended to provide that such Apollo Options shall expire on the earlier
of: (i) the current expiry date of such Apollo Options; and (ii) the first
anniversary of the Effective Date regardless of whether such Resigning
Directors are “eligible persons” under the terms of the Apollo Stock
Option Plan or applicable TSX rules;
and
|
|
(b)
|
an
aggregate of 2,231,000 Apollo Options previously granted to R. Xxxxx
Xxxxxxx and outstanding on the date hereof will remain in effect for a
period of one year following the Effective
Date.
|
|
Section
4.6
|
Indemnification
and Insurance
|
|
(a)
|
Apollo
hereby covenants and agrees that all rights to indemnification or
exculpation in favour of the current and former directors and officers of
Linear and the Linear Subsidiaries provided in the articles or by-laws of
Linear or any Linear Subsidiary, or in any indemnity agreements entered
into between Linear and such directors and officers shall survive the
completion of the Arrangement and shall be binding upon Apollo and
continue in full force and effect and Apollo undertakes to ensure that
this covenant shall remain binding upon its successors and
assigns.
|
|
(b)
|
Apollo
hereby covenants that prior to the Effective Date, Apollo shall purchase
and maintain director and officer liability “run-off” insurance for the
benefit of the former directors and officers of Linear and Apollo for a
period of not less than six (6) years following the Effective Date with
coverage of not less than $10,000,000 with respect to claims arising from
facts or events that occurred on or before the Effective Date, including
with respect to the Arrangement. Such insurance shall be at all
times no less favourable than any insurance coverage Apollo purchases and
maintains for the benefit of its then current directors and officers from
time to time and Apollo covenants and agrees to maintain such insurance in
full force and effect and not to take any action to diminish the scope and
extent of such insurance coverage for and throughout such
period. Apollo undertakes to ensure that this covenant shall
remain binding upon its successors and
assigns.
|
|
(c)
|
Linear
shall act as agent and trustee of the benefits of the foregoing
subsections 4.6(a) and 4.6(b) for its directors and officers and those of
the Linear Subsidiaries for the purpose of this Section
4.6.
|
|
(d)
|
This
Section 4.6 shall survive the execution and delivery of this Agreement and
the completion of the Arrangement and shall be enforceable against Apollo
by the persons described in subsections 4.6(a) and 4.6(b)
hereof.
|
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ARTICLE 5
CONDITIONS
|
Section 5.1
|
Mutual
Conditions
|
The
respective obligations of Linear, Apollo and Apollo Subco to complete the
transactions contemplated herein are subject to the fulfillment of the following
conditions at or before the Effective Time or such other time as is specified
below:
|
(a)
|
the
Interim Order shall have been granted in form and substance satisfactory
to each of the parties hereto, acting reasonably, and shall not have been
set aside or modified in a manner unacceptable to the parties hereto,
acting reasonably, on appeal or
otherwise;
|
|
(b)
|
the
Arrangement and, if required, all other material transactions contemplated
herein or necessary to complete the Arrangement, including the
Continuance, with or without amendment, shall have been approved at the
Linear Meeting by the Linear Shareholders in accordance with the
provisions of the CBCA, the Interim Order and the requirements of any
applicable regulatory
authority;
|
|
(c)
|
the
Arrangement and, if required, all other material transactions contemplated
herein or necessary to complete the Arrangement, with or without
amendment, shall have been approved at the Apollo Meeting by the Apollo
Shareholders in accordance with the provisions of the YBCA and the
requirements of any applicable regulatory authority, including the rules
and policies of the TSX and
AMEX;
|
|
(d)
|
the
Final Order shall have been granted in form and substance satisfactory to
the parties hereto, acting reasonably, and shall not have been set aside
or modified in a manner unacceptable to such parties, acting reasonably,
on appeal or otherwise;
|
|
(e)
|
the
Articles of Arrangement shall be in form and substance satisfactory to the
parties hereto, acting
reasonably;
|
|
(f)
|
there
shall not be in force any Law, ruling, order or decree, and there shall
not have been any action taken under any Law or by any Governmental
Authority or other regulatory authority, that makes it illegal or
otherwise directly or indirectly restrains, enjoins or prohibits the
consummation of the Arrangement in accordance with the terms hereof or
results or could reasonably be expected to result in a judgment, order,
decree or assessment of damages, directly or indirectly, relating to the
Arrangement which has, or could reasonably be expected to have, a Material
Adverse Effect on Linear or
Apollo;
|
|
(g)
|
(i)
the TSX shall have conditionally approved the listing thereon, and the
AMEX shall have authorized for listing, subject to official notice of
issuance, of the Apollo Shares to be issued in exchange for Linear Shares
pursuant to the Arrangement and the Apollo Shares which, as a result of
the Arrangement, are issuable upon the exercise of the Apollo Replacement
Options and the Apollo Replacement Warrants, as of the Effective Date, or
as soon as possible thereafter, and (ii) the TSX shall have, if required,
accepted notice for filing of all transactions of Linear contemplated
herein or necessary to complete the Arrangement, subject only to
compliance with the usual requirements of the TSX and AMEX as
applicable;
|
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(h)
|
the
Apollo Shares, Apollo Replacement Options and Apollo Replacement Warrants
to be issued in the United States pursuant to the Arrangement are exempt
from registration requirements under Section 3(a)(10) of the 1933 Act and
the Apollo Shares, Apollo Replacement Options and Apollo Replacement
Warrants to be distributed in the United States pursuant to the
Arrangement are not subject to resale restrictions in the United States
under the 1933 Act, (other than as may be prescribed by Rule 144 and Rule
145 under the 1933 Act);
|
|
(i)
|
the
registration statement of Apollo as filed with the United States
Securities and Exchange Commission regarding the issuance of Apollo Shares
upon exercise of the Apollo Replacement Warrants and Apollo Replacement
Options shall have been declared effective by the SEC or the Shelf
Registration Statement shall be effective and the Shelf Registration
Statement Supplement shall have been filed with the SEC pursuant to Rule
424 of the 1933 Act; and
|
|
(j)
|
this
Agreement shall not have been terminated pursuant to Section 7.3
hereof.
|
The
foregoing conditions are for the mutual benefit of the parties hereto and may be
waived by mutual consent of Apollo and Linear in writing at any time. If any of
such conditions shall not be complied with or waived as aforesaid on or before
the Completion Deadline or, if earlier, the date required for the performance
thereof, then, subject to Section 5.4 hereof, any party hereto may terminate
this Agreement in accordance with Section 7.3 in circumstances where the failure
to satisfy any such condition is not the result, directly or indirectly, of a
breach of this Agreement by such rescinding party hereto.
|
Section 5.2
|
Linear
Conditions
|
The
obligation of Linear to complete the transactions contemplated herein is subject
to the fulfillment of the following additional conditions at or before the
Effective Date or such other time as is specified below:
|
(a)
|
the
representations and warranties made by Apollo and Apollo Subco in this
Agreement shall be true and correct in all material respects as of the
Effective Date as if made on and as of such date (except (i) to the extent
such representations and warranties speak as of an earlier date; (ii)
except as affected by transactions contemplated or permitted by this
Agreement; or (iii) as affected by the occurrence of one or more Apollo
Exclusions (as hereinafter defined)), and each of Apollo and Apollo Subco
shall have provided to Linear a certificate of two senior officers
certifying such accuracy on the Effective
Date;
|
|
(b)
|
Apollo
and Apollo Subco shall have complied in all material respects with its
covenants and other obligations herein and each of Apollo and Apollo Subco
shall have provided to Linear a certificate of two senior officers
certifying compliance with such covenants on the Effective
Date;
|
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(c)
|
no
Material Adverse Change shall have occurred in respect of Apollo and the
Apollo Subsidiaries, taken as a whole, from and after the date hereof and
prior to the Effective Date, and no Material Adverse Change in respect of
Apollo and the Apollo Subsidiaries, taken as a whole, shall have occurred
prior to the date hereof or shall occur from and after the date hereof and
prior to the Effective Date from that reflected in the audited
consolidated financial statements of Apollo as at and for the fiscal year
ending December 31, 2009 (other than a Material Adverse Change resulting
from: (i) conditions affecting the gold industry generally in
jurisdictions in which they carry on business, including changes in prices
or taxes; (ii) general or economic, financial, currency, exchange,
securities or commodities market conditions; or (iii) any matter permitted
by this Agreement, or consented to by Linear including, without
limitation, the public announcement of the Arrangement (collectively, the
“Apollo
Exclusions”));
|
|
(d)
|
no
act, action, suit, proceeding, objection or opposition shall have been
threatened or taken before or by any Governmental Authority by any elected
or appointed public official or private person in Canada or elsewhere,
whether or not having the force of law and no Law shall have been
proposed, enacted, promulgated, amended or applied, in either case has had
or, if the Arrangement was consummated, would result in a Material Adverse
Change in respect of Apollo or would have a material adverse effect on the
ability of the parties to complete the
Arrangement;
|
|
(e)
|
(i)
all consents, waivers, permits, exemptions, orders and approvals of, and
any registrations and filings with, any Governmental Authority (including,
without limitation, under the Competition Act
(Canada) and those of the TSX, the AMEX or other Securities Authorities),
and all applicable statutory or regulatory waiting periods shall have
expired or been terminated and the expiry of any waiting periods, in
connection with, or required to permit, the completion of the Arrangement,
and (ii) all third person and other consents, waivers, permits,
exemptions, orders, approvals, agreements and amendments and modifications
to agreements, indentures or arrangements, the failure of which to obtain
or the non-expiry of which would, or could reasonably be expected to have,
a Material Adverse Effect on Apollo or Apollo Subco or materially impede
the completion of the Arrangement, shall have been obtained or received on
terms that are reasonably satisfactory to
Linear;
|
|
(f)
|
all
directors and officers of Apollo shall have entered into an Apollo Support
Agreement (in form and substance satisfactory to Linear) with Linear and
none of such persons shall have breached, in any material respect, any of
the representations, warranties and covenants
thereof;
|
|
(g)
|
the
Lender Consent Letter, the Lender Support Agreements and the Lender
Lock-Up Agreements shall be in full force and effect and, other than as
otherwise may be agreed to by Linear, unamended as of the Effective
Date;
|
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(h)
|
the
directors of each of Apollo and Apollo Subco shall have adopted all
necessary resolutions and all other necessary corporate action shall have
been taken by each of Apollo and Apollo Subco to permit the consummation
of the Arrangement;
|
|
(i)
|
the
New Board shall be constituted as set out in Section
2.3;
|
|
(j)
|
the
directors of Apollo shall not have withdrawn or modified in a manner
adverse to Linear their approval or recommendation to Apollo Shareholders
of the transaction contemplated
hereby;
|
|
(k)
|
R.
Xxxxx Xxxxxxx shall have tendered his resignation as President and Chief
Executive Officer of Apollo (or, alternatively, R. Xxxxx Xxxxxxx
shall have been terminated as President and Chief Executive
Officer of Apollo) and all amounts owing to R. Xxxxx Xxxxxxx pursuant to
his employment agreement, to a maximum of US$1,700,000, shall have been
paid (or arrangements satisfactory to Linear shall have been made to pay
such amounts following the Effective Date) to him, and all steps, actions
and proceedings necessary to appoint Xxxx Xxxx as President and Chief
Executive Officer of Apollo shall have been taken;
and
|
|
(l)
|
Apollo
shall have provided to Linear evidence of the director and liability
insurance required pursuant to subsection
4.6(b).
|
The
foregoing conditions are for the benefit of Linear and may be waived, in whole
or in part, by Linear in writing at any time. If any of such conditions shall
not be complied with or waived by Linear on or before the Completion Deadline
or, if earlier, the date required for the performance thereof, then, subject to
section 5.4 hereof, Linear may terminate this Agreement in accordance with
Section 7.3 in circumstances where the failure to satisfy any such condition is
not the result, directly or indirectly, of a breach of this Agreement by
Linear.
|
Section 5.3
|
Apollo
and Apollo Subco Conditions
|
The
obligation of Apollo and Apollo Subco to complete the transactions contemplated
herein is subject to the fulfillment of the following additional conditions at
or before the Effective Date or such other time as is specified
below:
|
(a)
|
the
representations and warranties made by Linear in this Agreement shall be
true and correct in all material respects as of the Effective Date as if
made on and as of such date (except (i) to the extent such representations
and warranties speak as of an earlier date; (ii) except as affected by
transactions contemplated or permitted by this Agreement; or (iii) as
affected by the occurrence of one or more Linear Exclusions (as
hereinafter defined)), and Linear shall have provided to Apollo a
certificate of two senior officers certifying such accuracy on the
Effective Date;
|
|
(b)
|
Linear
shall have complied in all material respects with its covenants and other
obligations herein and Linear shall have provided to Apollo a certificate
of two senior officers certifying compliance with such covenants on the
Effective Date;
|
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(c)
|
no
Material Adverse Change shall have occurred in respect of Linear and the
Linear Subsidiaries, taken as a whole, from and after the date hereof and
prior to the Effective Date, and no Material Adverse Change in respect of
Linear and the Linear Subsidiaries, taken as a whole, shall have occurred
prior to the date hereof or shall occur from and after the date hereof and
prior to the Effective Date from that reflected in the audited
consolidated financial statements of Linear as at and for the fiscal year
ending March 31, 2009 or in the unaudited financial statements of Linear
as at and for the nine months ending December 31, 2009 (other than a
Material Adverse Change resulting from: (i) conditions affecting the gold
industry generally in jurisdictions in which they carry on business,
including changes in prices or taxes; (ii) general or economic, financial,
currency, exchange, securities or commodities market conditions; (iii) any
matter permitted by this Agreement, or consented to by Apollo including,
without limitation, the public announcement of the Arrangement; or (iv)
Linear’s obligations under an agreement between Linear and Yantai Jinyan
Mining Machinery Co. Ltd. (collectively, the “Linear
Exclusions”);
|
|
(d)
|
no
act, action, suit, proceeding, objection or opposition shall have been
threatened or taken before or by any Governmental Authority by any elected
or appointed public official or private person in Canada or elsewhere,
whether or not having the force of law and no Law shall have been
proposed, enacted, promulgated, amended or applied, in either case has had
or, if the Arrangement was consummated, would result in a Material Adverse
Change in respect of Linear or would have a material adverse effect on the
ability of the parties to complete the
Arrangement;
|
|
(e)
|
(i)
all consents, waivers, permits, exemptions, orders and approvals of, and
any registrations and filings with, any Governmental Authority (including,
without limitation, under the Competition Act
(Canada) and those of the TSX, the AMEX or other Securities Authorities),
and all applicable statutory or regulatory waiting periods shall have
expired or been terminated and the expiry of any waiting periods, in
connection with, or required to permit, the completion of the Arrangement,
and (ii) all third person and other consents, waivers, permits,
exemptions, orders, approvals, agreements and amendments and modifications
to agreements, indentures or arrangements, the failure of which to obtain
or the non-expiry of which would, or could reasonably be expected to have,
a Material Adverse Effect on Linear or materially impede the completion of
the Arrangement, shall have been obtained or received on terms that are
reasonably satisfactory to Apollo and Apollo
Subco;
|
|
(f)
|
if
Dissent Rights are granted to Linear Shareholders by the Court in
connection with the Arrangement, holders of not more than 5% of the issued
and outstanding Linear Shares shall have exercised rights of dissent in
relation to the Arrangement;
|
|
(g)
|
the
Lender Consent Letter, the Lender Support Agreements and the Lender
Lock-Up Agreements shall be in full force and effect and, other than as
otherwise may be agreed to by Apollo, unamended as of the Effective
Date;
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|
(h)
|
all
directors and officers of Linear shall have entered into a Linear Support
Agreement (in form and substance satisfactory to Apollo) with Apollo and
none of such persons shall have breached, in any material respect, any of
the representations, warranties and covenants
thereof;
|
|
(i)
|
the
directors of Linear shall have adopted all necessary resolutions and all
other necessary corporate action shall have been taken by Linear and the
Linear Subsidiaries to permit the consummation of the Arrangement;
and
|
|
(j)
|
the
directors of Linear shall not have withdrawn or modified in a manner
adverse to Apollo their approval or recommendation to Linear Shareholders
of the transaction contemplated
hereby.
|
The
foregoing conditions are for the benefit of Apollo and Apollo Subco and may be
waived, in whole or in part, by Apollo and Apollo Subco in writing at any time.
If any of such conditions shall not be complied with or waived by Apollo and
Apollo Subco on or before the Completion Deadline or, if earlier, the date
required for the performance thereof, then, subject to Section 5.4 hereof,
Apollo and Apollo Subco may terminate this Agreement in accordance with Section
7.3 in circumstances where the failure to satisfy any such condition is not the
result, directly or indirectly, of a breach of this Agreement by Apollo or
Apollo Subco.
|
Section 5.4
|
Notice
and Cure Provisions
|
Each
party hereto shall give prompt notice to the others of them of the occurrence,
or failure to occur, at any time from the date hereof until the Effective Date,
of any event or state of facts which occurrence or failure would, would be
likely to or could:
|
(a)
|
cause
any of the representations or warranties of such party hereto contained
herein to be untrue or inaccurate in any respect on the date hereof or on
the Effective Date;
|
|
(b)
|
result
in the failure to comply with or satisfy any covenant or agreement to be
complied with or satisfied by such party hereto prior to the Effective
Date; or
|
|
(c)
|
result
in the failure to satisfy any of the conditions precedent in favour of the
other parties hereto contained in Sections 5.1, 5.2 or 5.3 hereof, as the
case may be.
|
Subject
as herein provided, a party hereto may (a) elect not to complete the
transactions contemplated hereby by virtue of the conditions contained in
Sections 5.1, 5.2 or 5.3 hereof not being satisfied or waived or (b) exercise
any termination right arising therefrom; provided, however, that (i) promptly
and in any event prior to the filing of the Articles of Arrangement with the
Registrar, the party hereto intending to rely thereon has delivered a written
notice to the other parties hereto specifying in reasonable detail the breaches
of covenants or untruthfulness or inaccuracy of representations and warranties
or other matters which the party hereto delivering such notice is asserting as
the basis for the exercise of the termination right, as the case may be, and
(ii) if any such notice is delivered, and a party hereto is proceeding
diligently, at its own expense, to cure such matter, if such matter is
susceptible to being cured, the party hereto which has delivered such notice may
not terminate this Agreement until the earlier of the Completion Deadline and
the expiration of a period of 15 days from date of delivery of such
notice. If such notice has been delivered prior to the date of the
Linear Meeting or the Apollo Meeting, the Linear Meeting or Apollo Meeting, as
applicable, shall be adjourned or postponed until the expiry of such
period.
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|
Section 5.5
|
Merger
of Conditions
|
The
conditions set out in sections 5.1, 5.2 or 5.3 hereof shall be conclusively
deemed to have been satisfied, fulfilled or waived upon the issue of the
Certificate. Linear and Apollo each acknowledge and agree that it shall have no
right to file the Articles of Arrangement with the Registrar unless such
conditions have been satisfied, fulfilled or waived.
ARTICLE 6
NON-SOLICITATION AND BREAK
FEE
|
Section 6.1
|
Mutual
Covenants Regarding
Non-Solicitation
|
|
(a)
|
Each
of Apollo and Linear shall continue to comply with the terms and
conditions set out in the Letter of Intent with respect to
non-solicitation and shall continue to refrain from entering into
discussions and negotiations (including, without limitation, through any
advisors or other parties on its behalf) with any parties conducted before
the date of the Letter of Intent with respect to any Acquisition Proposal
and shall continue to use all reasonable commercial efforts to ensure that
their respective requests for the return or destruction of all information
provided to any third parties who have entered into a confidentiality
agreement with such party relating to an Acquisition Proposal are
honoured.
|
|
(b)
|
Neither
Apollo nor Linear shall, directly or indirectly, do or authorize or permit
any of its officers, directors or employees or any financial advisor,
expert or other representative retained by it to do, any of the
following:
|
|
|
(i)
|
solicit,
facilitate, initiate or encourage any Acquisition
Proposal;
|
|
|
(ii)
|
enter
into or participate in any discussions or negotiations regarding an
Acquisition Proposal, or furnish to any other person any information with
respect to its businesses, properties, operations, prospects or conditions
(financial or otherwise) in connection with an Acquisition Proposal or
otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage any effort or attempt of any other person to do or
seek to do any of the foregoing;
|
|
|
(iii)
|
waive,
or otherwise forbear in the enforcement of, or enter into or participate
in any discussions, negotiations or agreements to waive or otherwise
forbear in respect of, any rights or other benefits under confidential
information agreements, including, without limitation, any “standstill
provisions” thereunder; or
|
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|
|
(iv)
|
accept,
recommend, approve or enter into an agreement to implement an Acquisition
Proposal;
|
provided,
however, that notwithstanding any other provision hereof, each of Apollo and
Linear and its officers, directors and advisers may:
|
|
(v)
|
enter
into or participate in any discussions or negotiations with a third party
who (without any solicitation, initiation or encouragement, directly or
indirectly, after the date of this Agreement, by such party or any of its
officers, directors or employees or any financial advisor, expert or other
representative retained by it) seeks to initiate such discussions or
negotiations and, subject to execution of a confidentiality and standstill
(provided that such confidentiality agreement shall provide for disclosure
thereof (along with all information provided thereunder) to the other
parties hereto as set out below) may furnish to such third party
information concerning such party and its business, properties and assets,
in each case if, and only to the extent
that:
|
|
|
(A)
|
the
third party has first made a written bona fide Acquisition Proposal which
the board of directors of the party to which such Acquisition Proposal is
made (the “Receiving
Party”) determines in good faith: (1) that funds or other
consideration necessary for the Acquisition Proposal are available; (2)
(after consultation with its financial advisor) would, if consummated in
accordance with its terms, result in a transaction financially superior
for securityholders of the Receiving Party than the transaction
contemplated by this Agreement; (3) after receiving the advice of outside
counsel as reflected in minutes of the board of directors of the Receiving
Party, that the taking of such action is necessary for the board of
directors in discharge of its fiduciary duties under applicable Laws; (4)
that is reasonably capable of being completed without undue delay, taking
into account all legal, financial, regulatory and other aspects of such
proposal and the party making such proposal; (5) which is not subject to a
due diligence and/or access condition which would allow access to the
books, records, personnel or properties of the Receiving Party or
its respective officers and employees beyond 5:00 p.m. (Toronto
time) on the fifth Business Day after which access is afforded to the
third party making the Acquisition Proposal (provided, however, that the
foregoing shall not restrict the ability of such person to continue to
review information provided to it by such party during such five Business
Day period); (6) that the board of directors of the Receiving Party has
determined to recommend to the shareholders of such party, and (7)
that was not solicited in contravention of the Letter of Intent or this
Agreement (a “Superior Proposal”);
and
|
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|
|
(B)
|
prior
to furnishing such information to or entering into or participating in any
such discussions or negotiations with such third party, the Receiving
Party provides prompt notice to the other party to the effect that it is
furnishing information to or entering into or participating in discussions
or negotiations with such person or entity together with a copy of the
confidentiality agreement referenced above and if not previously provided
to the other party, copies of all information provided to such third party
concurrently with the provision of such information to such third party,
and provided further that the Receiving Party shall notify the other
parties orally and in writing of any inquiries, offers or proposals with
respect to a Superior Proposal from such third party (which written notice
shall include, without limitation, a copy of any such proposal (and any
amendments or supplements thereto), the identity of the person making it,
if not previously provided to the other parties, copies of all information
provided to such party and all other information reasonably requested by
the other parties), within 24 hours of the receipt thereof, shall keep the
other party informed of the status and details of any such inquiry, offer
or proposal and answer the other party's questions with respect thereto;
or
|
|
|
(vi)
|
comply
with Canadian Securities Administrators' Multilateral Instrument 62-104
and OSC Rule 62-504 (as applicable) relating to the provision of
directors' circulars and make appropriate disclosure with respect thereto
to its securityholders; and
|
|
|
(vii)
|
accept,
recommend, approve or enter into an agreement to implement a Superior
Proposal from a third party, but only if: (1) prior to such acceptance,
recommendation, approval or implementation, the board of directors shall
have concluded in good faith, after considering all proposals to adjust
the terms and conditions of this Agreement in accordance with subsection
6.1(c) and after receiving the advice of outside counsel as reflected in
minutes of the board of directors of such party, that the taking of such
action is necessary for the board of directors in discharge of its
fiduciary duties under applicable Laws; (2) such party has complied with
its obligations set forth in paragraph Section 6.1(c); and (3) such
party terminates this Agreement in accordance with Section
7.3.
|
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(c)
|
the
Receiving Party shall give the other party (the “Responding Party”),
orally and in writing, at least 72 hours advance notice of any decision by
its board of directors to accept, recommend, approve or enter into an
agreement to implement such Superior Proposal, which notice shall confirm
that the board of directors of the Receiving Party has determined that
such Acquisition Proposal constitutes a Superior Proposal, shall identify
the third party making the Superior Proposal and shall provide a true and
complete copy thereof and any amendments thereto. During such 72 hour
period, the Receiving Party agrees not to accept, recommend, approve or
enter into any agreement to implement such Superior Proposal and not to
release the party making the Superior Proposal from any confidentiality or
standstill provisions and shall not withdraw, redefine, modify or change
its recommendation in respect of the Arrangement. In addition, during such
72 hour period the Receiving Party shall, and shall cause its financial
and legal advisors to, negotiate in good faith with the Responding Party
and their financial and legal advisors to make such adjustments in the
terms and conditions of this Agreement and the Arrangement as would cause
such Acquisition Proposal to no longer constitute a Superior Proposal
hereunder. In the event the Responding Party offers in writing to amend
this Agreement and the Arrangement prior to the expiry of such 72 hour
period, the board of directors of the Receiving Party shall review such
offer and determine in good faith if the Acquisition Proposal would no
longer constitute a Superior Proposal, in which event (i) the parties
hereto will enter into an amendment to this Agreement to reflect such
offer, and (ii) the board of directors of the Receiving Party shall not
accept, recommend, approve or enter into any agreement to implement such
Superior Proposal and shall not release the party making the Superior
Proposal from any confidentiality or standstill provisions and shall not
withdraw, redefine, modify or change its recommendation in respect of the
Arrangement;
|
|
(d)
|
each
party agrees that all information that may be provided to it by the other
party with respect to any Superior Proposal pursuant to this Section 6.1
shall be treated as if it were “Confidential Information” as that term is
defined in the Confidentiality
Agreement;
|
|
(e)
|
each
party hereby represents and warrants to the other party that, as of the
date hereof, it is not in active discussions or negotiations with any
person (other than the other party to this Agreement) with respect to any
actual or potential Acquisition Proposal. Except to the extent
otherwise permitted pursuant to subsection 6.1(b), each party shall deny
access to non-public information under any confidentiality agreement, and
shall not consent in favour of, or release from or fail to enforce
against, any person under any confidentiality agreement or standstill
agreement or similar obligation in favour of such party;
and
|
|
(f)
|
each
party shall ensure that its officers, directors and employees and any
investment bankers or other advisers or representatives retained by it are
aware of the provisions of this Section 6.1. Each party shall be
responsible for any breach of this Section 6.1 by its officers, directors,
employees, investment bankers, advisers or
representatives.
|
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|
Section
6.2
|
Break
Fee Event
|
|
|
(a)
|
In
the event that:
|
|
|
(i)
|
this
Agreement is terminated pursuant to subsection 7.3(a)(ii) as a result of
the Apollo Shareholders failing to approve the Arrangement at the Apollo
Meeting as contemplated in Section
5.1(c);
|
|
|
(ii)
|
this
Agreement is terminated by Linear pursuant to subsection 7.3(a)(v) and
such Acquisition Proposal or Superior Proposal (as applicable) is
consummated; or
|
|
|
(iii)
|
this
Agreement is terminated by Apollo pursuant to subsection
7.3(a)(vi),
|
then
Apollo shall pay to Linear an amount equal to $4,000,000 (the “Apollo Break Fee”) in
immediately available funds (A) in the circumstances set forth in subsection
6.2(a)(i), within five (5) Business Days following the date of the Apollo
Meeting; (B) in the circumstances set forth in subsection 6.2(a)(ii), within
five (5) Business Days following the completion of such Acquisition Proposal or
Superior Proposal (as applicable); and (C) in the circumstances set forth in
subsection 6.2(a)(iii), concurrently with the delivery of Apollo’s notice of
termination of this Agreement contemplated by subsection 7.3(b).
|
|
(b)
|
In
the event that:
|
|
|
(i)
|
this
Agreement is terminated pursuant to subsection 7.3(a)(ii) as a result of
the Linear Shareholders failing to approve the Continuance or the
Arrangement at the Linear Meeting as contemplated in Section
5.1(b);
|
|
|
(ii)
|
this
Agreement is terminated by Apollo pursuant to subsection 7.3(a)(iii) and
such Acquisition Proposal or Superior Proposal (as applicable) is
consummated; or
|
|
|
(iii)
|
this
Agreement is terminated by Linear pursuant to subsection
7.3(a)(iv),
|
then
Linear shall pay to Apollo an amount equal to $4,000,000 (the “Linear Break Fee”) in
immediately available funds (A) in the circumstances set forth in subsection
6.2(b)(i), within five (5) Business Days following the date of the Apollo
Meeting; (B) in the circumstances set forth in subsection 6.2(b)(ii), within
five (5) Business Days following the completion of such Acquisition Proposal or
Superior Proposal (as applicable); and (C) in the circumstances set forth in
subsection 6.2(b)(iii), concurrently with the delivery of Linear’s notice of
termination of this Agreement contemplated by subsection
7.3(b).
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|
|
(c)
|
Each
of Linear and Apollo hereby acknowledges that the amount of the Linear
Break Fee and Apollo Break Fee set out in this Section 6.2 shall be a
payment of liquidated damages which are a genuine pre-estimate of the
damages which Linear or Apollo, as applicable, will suffer or incur as a
result of the event giving rise to such damages and the resultant
non-completion of the Arrangement and are not penalties. Each of Linear
and Apollo hereby irrevocably waives any right it may have to raise as a
defence that any such liquidated damages are excessive or punitive. Upon
receipt of payment of the amount set out in this subsection, the receiving
party shall have no further claim against the payor party in respect of
the failure to complete the Arrangement and the payor party shall have no
further liabilities arising hereunder other than for a breach of any
section of this Agreement.
|
ARTICLE 7
AMENDMENT
AND TERMINATION
|
Section
7.1
|
Amendment
|
This
Agreement may, at any time and from time to time before or after the holding of
the Linear Meeting or the Apollo Meeting be amended by mutual written agreement
of the parties hereto without, subject to applicable Law, further notice to or
authorization on the part of the Linear Shareholders or the Apollo Shareholders
and any such amendment may, without limitation:
|
|
(a)
|
change
the time for the performance of any of the obligations or acts of any of
the parties hereto;
|
|
|
(b)
|
waive
any inaccuracies in or modify any representation or warranty contained
herein or in any document delivered pursuant
hereto;
|
|
|
(c)
|
waive
compliance with or modify any of the covenants herein contained and waive
or modify the performance of any of the obligations of any of the parties
hereto; and
|
|
|
(d)
|
waive
compliance with or modify any condition herein
contained,
|
provided,
however, that notwithstanding the foregoing, the terms of subsection 3.01(d) of
the Plan of Arrangement shall not be amended without the approval of the Linear
Shareholders given in the same manner as required for the approval of the
Arrangement or as may be ordered by the Court. This Agreement and the Plan of
Arrangement may be amended in accordance with the Final Order, but in the event
that the terms of the Final Order require any such amendment, the rights of the
parties hereto under Sections 5.1, 5.2, 5.3, 6.2 and Article Seven hereof shall
remain unaffected.
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|
Section
7.2
|
Mutual
Understanding Regarding
Amendments
|
|
|
(a)
|
In
addition to the transactions contemplated hereby or at the request of a
party hereto, the parties hereto will continue from and after the date
hereof and through and including the Effective Date to use their
respective commercially reasonable best efforts to maximize present and
future planning opportunities for Linear, the Linear Shareholders, the
Linear Subsidiaries, Apollo, the Apollo Shareholders and the Apollo
Subsidiaries as and to the extent that the same shall not prejudice any
party hereto or the shareholders thereof. The parties hereto will ensure
that such planning activities do not impede the progress of the
Arrangement in any material way.
|
|
|
(b)
|
The
parties hereto mutually agree that if a party hereto proposes any other
amendment or amendments to this Agreement or to the Plan of Arrangement,
Linear on the one hand, and Apollo and Apollo Subco on the other hand,
will act reasonably in considering such amendment and if the other of them
and the shareholders thereof are not prejudiced by reason of any such
amendment they will co-operate in a reasonable fashion with the party
hereto proposing the amendment so that such amendment can be effected
subject to applicable Laws and the rights of the Linear Shareholders and
the Apollo Shareholders.
|
|
Section
7.3
|
Termination
|
|
|
(a)
|
This
Agreement may be terminated at any time prior to the Effective
Date:
|
|
|
(i)
|
by
the mutual written consent of the parties
hereto;
|
|
|
(ii)
|
(A)
by Apollo if any of the conditions set forth in Sections 5.1 and 5.3 are
not satisfied, and such condition is incapable of being satisfied, by the
Completion Deadline; or (B) by Linear if any of the conditions set forth
in Sections 5.1 or 5.2 are not satisfied, and such condition is incapable
of being satisfied, by the Completion
Deadline;
|
|
|
(iii)
|
by
Apollo and Apollo Subco if there is an Acquisition Proposal in respect of
Linear and (A) the directors of Linear shall have withdrawn or modified in
a manner adverse to Apollo and Apollo Subco their approval or
recommendation of the Arrangement or shall have failed, after being
requested by Apollo in writing, to reaffirm their approval or
recommendation of the Arrangement and the transactions contemplated herein
as promptly as possible (but in any event within two (2) Business Days)
after receipt of such written request from Apollo; or (B) such Acquisition
Proposal constitutes a Superior Proposal and Linear shall have accepted,
recommended, approved or entered into an agreement to implement such
Superior Proposal in accordance with Section
6.1;
|
|
|
(iv)
|
by
Linear in the event that, prior to the Linear Meeting, Linear’s board of
directors authorizes Linear, subject to complying with the terms of this
Agreement, to enter into a legally binding agreement, undertaking or
arrangement with respect to a Superior Proposal received at any time
following the date of this Agreement and prior to the Linear Meeting;
provided that prior to such termination, Linear pays the Linear Break Fee
payable pursuant to subsection
6.2(b);
|
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|
|
(v)
|
by
Linear if there is an Acquisition Proposal in respect of Apollo and (A)
the directors of Apollo shall have withdrawn or modified in a manner
adverse to Linear their approval or recommendation of the Arrangement or
shall have failed, after being requested by Linear in writing, to reaffirm
their approval or recommendation of the Arrangement and the transactions
contemplated herein as promptly as possible (but in any event within two
(2) Business Days) after receipt of such written request from Linear; or
(B) such Acquisition Proposal constitutes a Superior Proposal and Apollo
shall have accepted, recommended, approved or entered into an agreement to
implement such Superior Proposal in accordance with Section
6.1;
|
|
|
(vi)
|
by
Apollo in the event that, prior to the Apollo Meeting, Apollo’s board of
directors authorizes Apollo, subject to complying with the terms of this
Agreement, to enter into a legally binding agreement, undertaking or
arrangement with respect to a Superior Proposal received at any time
following the date of this Agreement and prior to the Apollo Meeting;
provided that Apollo pays the Apollo Break Fee payable pursuant to
subsection 6.2(a);
|
|
|
(vii)
|
if
any of the parties is in breach or default of any of its obligations or
covenants set forth in Section 6.1;
or
|
|
|
(viii)
|
by
either Apollo or Linear if the Arrangement shall not have been completed
by the Completion Deadline.
|
|
|
(b)
|
Any
termination by a party hereto shall be made by such party delivering
written notice thereof to the other party or parties hereto prior to the
Effective Date and specifying therein in reasonable detail the matter or
matters giving rise to such termination
right.
|
|
|
(c)
|
In
the event of any termination in accordance with this Section 7.3, subject
to the obligations of Apollo and Linear contained in Article 6 hereof,
including the payment of the Apollo Break Fee or the Linear Break Fee
required by Section 6.2 hereof, as applicable, each party hereto shall be
deemed to have released, remised and forever discharged the other parties
hereto in respect of any and all claims arising in respect of this
Agreement, except as otherwise provided
herein.
|
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ARTICLE 8
GENERAL
|
Section
8.1
|
Notice
|
Any
notice, consent, waiver, direction or other communication required or permitted
to be given under this Agreement by a party hereto shall be in writing and shall
be delivered by hand to the party hereto to which the notice is to be given at
the following address or sent by facsimile to the following numbers or to such
other address or facsimile number as shall be specified by a party hereto by
like notice. Any notice, consent, waiver, direction or other communication
aforesaid shall, if delivered, be deemed to have been given and received on the
date on which it was delivered to the address provided herein (if a Business Day
or, if not, then the next succeeding Business Day) and if sent by facsimile be
deemed to have been given and received at the time of receipt (if a Business Day
or, if not, then the next succeeding Business Day) unless actually received
after 4:00 p.m. (Toronto time) at the point of delivery in which case it shall
be deemed to have been given and received on the next Business Day.
The
address for service of each of the parties hereto shall be as
follows:
|
(a)
|
if
to Linear:
|
Linear Gold Corp.
Xxxxx 000, 0000 Xxxxxxxxxx
Xxxxxx
Xxxxxxx, Xxxx Xxxxxx
X0X 0X0
Attention: Xxxx X. Xxxx
Facsimile: (000) 000-0000
with a
copy (which shall not constitute notice) to:
Xxxxxxxxx
Dellelce LLP
Xxxxx
000, 000 Xxx Xxxxxx
Xxxxxxx,
Xxxxxxx
X0X
0X0
Attention:
Xxxx Pocaluyko
Facsimile:
(000) 000-0000
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|
(b)
|
if
to Apollo or Apollo Subco:
|
Apollo Gold Corporation
0000 X. Xxxxxxxx Xxxxxx, Xxxxx
000
Xxxxxxxxx Xxxxxxx,
Xxxxxxxx
000000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
with a
copy (which shall not constitute notice) to:
Fogler,
Rubinoff, LLP
00
Xxxxxxxxxx Xxxxxx West, Suite 0000
Xxxxxxx-Xxxxxxxx
Xxxxxx
Xxxxxxx,
Xxxxxxx
X0X
0X0
Attention:
Xxxxxxx Xxxxxx
Facsimile:
(000) 000-0000
|
Section
8.2
|
Remedies
|
The
parties hereto acknowledge and agree that an award of money damages may be
inadequate for any breach of this Agreement by any party hereto or its
representatives and advisors and that such breach may cause the non-breaching
party hereto irreparable harm. Accordingly, the parties hereto agree that, in
the event of any such breach or threatened breach of this Agreement by one of
the parties hereto, Linear (if either Apollo or Apollo Subco is the breaching
party) or Apollo and Apollo Subco (if Linear is the breaching party) will be
entitled, without the requirement of posting a bond or other security, to seek
equitable relief, including injunctive relief and specific performance. Subject
to any other provision hereof including, without limitation, Section 6.3 hereof,
such remedies will not be the exclusive remedies for any breach of this
Agreement but will be in addition to all other remedies available hereunder or
at law or in equity to each of the parties hereto.
|
Section
8.3
|
Indemnification
|
Each of
Apollo and Linear hereby agree to indemnify and hold harmless the other (and its
respective directors, officers and advisers) (collectively, the “Indemnified Persons”) from and
against all claims, damages, liabilities, actions or demands to which the
Indemnified Persons may be subject insofar as such claims, damages, liabilities,
actions or demands arise out of or are based upon the information supplied by
Apollo or Linear, as applicable, and contained in the Linear Proxy Circular or
the Apollo Proxy Circular, as applicable, having contained a
misrepresentation.
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|
Section 8.4
|
Privacy
Matters
|
The
parties acknowledge that they are responsible for compliance at all times with
applicable privacy laws which govern the collection, use and disclosure of
personal information acquired by or disclosed to the parties pursuant to or in
connection with this Agreement (the “Disclosed Personal
Information”). None of the parties shall use the Disclosed Personal
Information for any purposes other than those relating to the performance of
this Agreement and the completion of the Arrangement.
|
Section
8.5
|
Expenses
|
The
parties hereto agree that all out-of-pocket expenses incurred in connection with
this Agreement and the transactions contemplated hereby, the Linear Meeting, the
Apollo Meeting and the preparation and mailing of the Linear Proxy Circular and
the Apollo Proxy Circular, including legal and
accounting fees, printing costs, financial advisor fees and all disbursements by
advisors, shall be paid by the party hereto incurring such expense and that
nothing in this Agreement shall be construed so as to prevent the payment of
such expenses. The provisions of this section 8.5 shall survive the termination
of this Agreement.
|
Section8.6
|
Time
of the Essence
|
Time
shall be of the essence in this Agreement.
|
Section
8.7
|
Entire
Agreement
|
This
Agreement, together with the agreements and other documents herein or therein
referred to, constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, between
the parties hereto with respect to the subject matter hereof. There are no
representations, warranties, covenants or conditions with respect to the subject
matter hereof except as contained herein.
|
Section
8.8
|
Further
Assurances
|
Each
party hereto shall, from time to time, and at all times hereafter, at the
request of the other of them, but without further consideration, do, or cause to
be done, all such other acts and execute and deliver, or cause to be executed
and delivered, all such further agreements, transfers, assurances, instruments
or documents as shall be reasonably required in order to fully perform and carry
out the terms and intent hereof including, without limitation, the Plan of
Arrangement.
|
Section
8.9
|
Governing
Law
|
This
Agreement shall be governed by, and be construed in accordance with, the Laws of
the Province of Ontario and the Laws of Canada applicable therein but the
reference to such Laws shall not, by conflict of laws rules or otherwise,
require the application of the Law of any jurisdiction other than the Province
of Ontario.
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|
Section
8.10
|
Execution
in Counterparts
|
This
Agreement may be executed in one or more counterparts, each of which shall
conclusively be deemed to be an original and all such counterparts collectively
shall be conclusively deemed to be one and the same. Delivery of an executed
counterpart of the signature page to this Agreement by a facsimile or electronic
(PDF) copy shall be effective as delivery of a manually executed counterpart of
this Agreement, and any party delivering an executed counterpart of the
signature page to this Agreement by facsimile or electronically to any other
party shall thereafter also promptly deliver a manually executed original
counterpart of this Agreement to such other party, but the failure to deliver
such manually executed original counterpart shall not affect the validity,
enforceability or binding effect of this Agreement.
|
Section
8.11
|
Waiver
|
No waiver
or release by any party hereto shall be effective unless in writing and executed
by the party granting such waiver or release and any waiver or release shall
affect only the matter, and the occurrence thereof, specifically identified and
shall not extend to any other matter or occurrence. Waivers may only be granted
upon compliance with the provisions governing amendments set forth in Section
7.1 hereof.
|
Section
8.12
|
No
Personal Liability
|
|
|
(a)
|
No
director or officer of Linear shall have any personal liability whatsoever
(other than in the case of fraud, negligence or willful misconduct) to
Apollo or Apollo Subco under this Agreement or any other document
delivered in connection with this Agreement or the Arrangement by or on
behalf of Linear.
|
|
|
(b)
|
No
director or officer of Apollo or Apollo Subco shall have any personal
liability whatsoever (other than in the case of fraud, negligence or
willful misconduct) to Linear under this Agreement or any other document
delivered in connection with this Agreement or the Arrangement by or on
behalf of Apollo or Apollo Subco.
|
|
Section
8.13
|
Enurement
and Assignment
|
This
Agreement shall enure to the benefit of the parties hereto and their respective
successors and permitted assigns and shall be binding upon the parties hereto
and their respective successors. This Agreement may not be assigned by any party
hereto without the prior written consent of each of the other parties
hereto.
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IN
WITNESS WHEREOF the parties hereto have executed this Agreement as of the date
first above written.
|
APOLLO
GOLD CORPORATION
|
|||
|
Per:
|
/s/ R. Xxxxx Xxxxxxx | ||
|
Name:
R. Xxxxx Xxxxxxx
|
|||
|
Title:
President and Chief Executive Officer
|
|||
|
1526735
ALBERTA ULC
|
|||
|
Per:
|
/s/ R. Xxxxx Xxxxxxx | ||
|
Name:
R. Xxxxx Xxxxxxx
|
|||
|
Title:
President
|
|||
|
LINEAR
GOLD CORP.
|
|||
|
Per:
|
/s/ Xxxx Xxxx | ||
|
Name:
Xxxx Xxxx
|
|||
|
Title: President
and Chief Executive
Officer
|
|||
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SCHEDULE
“A”
PLAN
OF ARRANGEMENT UNDER SECTION 193 OF THE
BUSINESS CORPORATIONS ACT
(ALBERTA)
ARTICLE
1
DEFINITIONS
AND INTERPRETATION
Section
1.01 Definitions
In this
Plan of Arrangement, unless the context otherwise requires, the following words
and terms with the initial letter or letters thereof capitalized shall have the
meanings ascribed to them below:
“ABCA” means the Business Corporations Act
(Alberta), including the regulations promulgated thereunder, as now enacted or
as the same may from time to time be amended, re-enacted or
replaced;
“Amalgamating Corporations”
means, collectively, Apollo Subco and Linear and “Amalgamating Corporation”
means either one of them;
“Amalgamation” has the meaning
ascribed thereto in section 3.01(b) hereof;
“Apollo” means Apollo Gold
Corporation, a corporation existing under the YBCA;
“Apollo Replacement Option” has
the meaning ascribed thereto in section 3.01(f) hereof;
“Apollo Replacement Warrant”
has the meaning ascribed thereto in section 3.01(g) hereof;
“Apollo Shares” means the
common shares in the capital of Apollo;
“Apollo Stock Option Plan” means the stock
option plan of Apollo adopted in December 2003 and amended and restated as of
May 7, 2009;
“Apollo Subco” means 1526735
Alberta ULC, a wholly-owned subsidiary of Apollo existing under the
ABCA;
“Arrangement” means the
arrangement under the provisions of Section 193 of the ABCA on the terms and
subject to the conditions set forth in this Plan of Arrangement, subject to any
amendment or supplement hereto made in accordance with the provisions hereof or
at the direction of the Court in the Final Order;
“Arrangement Agreement” means
the arrangement agreement dated as of March 31, 2010 among Apollo, Apollo Subco
and Linear, as amended or supplemented prior to the Effective Date, entered into
in connection with the Arrangement;
“Articles of Amalgamation”
means articles of amalgamation in respect of the Amalgamation by way of
Arrangement required by the ABCA to be filed with the Registrar after the Final
Order is made in order for the Amalgamation to become effective;
“Business Day” means any day,
other than a Saturday, a Sunday or a statutory holiday in Toronto, Ontario or
Calgary, Alberta;
“CBCA” means the Canada Business Corporations
Act;
“Certificate” means the
certificate giving effect to the Amalgamation issued by the Registrar on the
Articles of Amalgamation pursuant to subsection 193(11) of the
ABCA;
“Common Shares” means the
common shares which the Corporation is authorized to issue and having the
rights, privileges, restrictions and conditions set forth in Section 4.04
hereof;
“Corporation” means the
corporation continuing from the Amalgamation;
“Court” means the Court of
Queen’s Bench of Alberta;
“Depositary” means CIBC Mellon
Trust Company, being the depositary appointed by Apollo for the purpose of,
among other things, exchanging certificates representing Linear Shares for
Apollo Shares in connection with the Arrangement;
“Dissent Procedures” means the
procedures set forth in Section 191 of the ABCA required to be taken by a
registered holder of Linear Shares to exercise the right of dissent in respect
of such Linear Shares in connection with the Arrangement;
“Dissenting Shareholders” means
the registered holders of Linear Shares who dissent in respect of the
Arrangement in strict compliance with the Dissent Procedures;
“Effective Date” means the date
set out in the Certificate as being the effective date in respect of the
Arrangement;
“Effective Time” means 5:00
p.m. (Toronto time) on the Effective Date;
“Final Order” means the order
of the Court pursuant to subsection 193(9) of the ABCA approving the
Arrangement, as such order may be amended at any time prior to the Effective
Date or, if appealed, then unless such appeal is withdrawn or denied, as
affirmed;
“Former Linear Shareholders”
means the holders of Linear Shares immediately prior to the Effective
Time;
“Interim Order” means the
interim order of the Court, as such order may be amended, pursuant to subsection
193(4) of the ABCA made in connection with the Arrangement;
“Letter of Transmittal” means
the letter of transmittal to be sent by Linear to the Former Linear Shareholders
to be used by the Former Linear Shareholders to surrender the certificates
representing their Linear Shares to receive certificates for the Apollo Shares
issued to them pursuant to the Arrangement;
- 2
-
“Linear” means Linear Gold
Corp., a corporation existing under the CBCA;
“Linear Meeting” means the
special meeting, including any adjournments or postponements thereof, of the
holders of Linear Shares held, among other things, to consider and, if deemed
advisable, approve the Arrangement;
“Linear Options” means the
outstanding options to purchase an aggregate of 2,770,000 Linear Shares issued
pursuant to the Linear Stock Option Plan;
“Linear Shares” means the
common shares in the capital of Linear;
“Linear Stock Option Plan”
means the amended share option plan of Linear adopted on September 29,
2006;
“Linear Warrants” means the
outstanding warrants to purchase an aggregate of 8,177,764 Linear
Shares;
“Plan of Arrangement” means
this plan of arrangement, as amended, modified or supplemented from time to time
in accordance herewith and with any order of the Court;
“Proxy Circular” means the
management information circular, including all schedules and exhibits thereto,
prepared by Linear with the assistance of Apollo in respect of the Linear
Meeting;
“Registrar” means the Registrar
of Corporations or Deputy Registrar of Corporations appointed pursuant to
Section 263 of the ABCA; and
“YBCA” means the Business Corporations Act
(Yukon).
In
addition, words and phrases used herein and defined in the ABCA shall have the
same meaning herein as in the ABCA unless the context otherwise
requires.
Section
1.02 Interpretation Not Affected by Headings
The division of this Plan of
Arrangement into articles, sections, paragraphs and subparagraphs and the
insertion of headings herein are for convenience of reference only and shall not
affect the construction or interpretation of this Plan of Arrangement. The terms
“this Plan of Arrangement”, “hereof”, “herein”, “hereto”, “hereunder” and
similar expressions refer to this Plan of Arrangement and not to any particular
article, section or other portion hereof and include any instrument
supplementary or ancillary hereto.
- 3
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Section
1.03 Number, Gender and Persons
In this Plan of Arrangement, unless the
context otherwise requires, words importing the singular shall include the
plural and vice versa, words importing the use of either gender shall include
both genders and neuter and the word person and words importing persons shall
include a natural person, firm, trust, partnership, association, corporation,
joint venture or government (including any governmental agency, political
subdivision or instrumentality thereof) and any other entity of any kind or
nature whatsoever.
Section
1.04 Date for any Action
If the date on which any action is
required to be taken hereunder is not a Business Day, such action shall be
required to be taken on the next succeeding day which is a Business
Day.
Section
1.05 Statutory References
Any reference in this Plan of
Arrangement to a statute includes all regulations made thereunder, all
amendments to such statute or regulation in force from time to time and any
statute or regulation that supplements or supersedes such statute or
regulation.
Section
1.06 Time
Time shall be of the essence in every
matter or action contemplated hereunder.
Section
1.07 Currency
Unless otherwise stated, all references
herein to amounts of money are expressed in lawful money of Canada.
ARTICLE
2
Section
2.01 Arrangement Agreement
This Plan of Arrangement is made
pursuant to, and is subject to the provisions of, the Arrangement
Agreement.
Section
2.02 Effect of Arrangement
This Plan of Arrangement will become
effective at, and be binding at and after the Effective Time on the Former
Linear Shareholders, the holders of Linear Options and the holders of Linear
Warrants.
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ARTICLE
3
ARRANGEMENT
Section
3.01 Arrangement
On the Effective Date, the following
shall occur and shall be deemed to occur in the following order without any
further act or formality:
(a)
immediately prior to the
Effective Time, each Linear Share in respect of which Dissent Procedures have
been exercised shall be deemed to be transferred by the holder thereof, without
any further act or formality on its part, free and clear of all liens, claims
and encumbrances, to Apollo, with Apollo being obliged to pay therefor the
amount determined and payable in accordance with Article 5 hereof, and the name
of such holder will be removed from the register of holders of Linear Shares and
Apollo will be recorded as the registered holder of the Linear Shares so
transferred and will be deemed to be the legal and beneficial owner of such
Linear Shares;
(b) at
the Effective Time, the Amalgamating Corporations shall be amalgamated and
continue as one unlimited liability corporation under the ABCA on the terms
prescribed in this Plan of Arrangement (the “Amalgamation”)
and:
|
|
(i)
|
the
property of each Amalgamating Corporation continues to be the property of
the Corporation;
|
|
|
(ii)
|
the
Corporation continues to be liable for the obligations of each
Amalgamating Corporation;
|
|
|
(iii)
|
an
existing cause of action, claim or liability to prosecution is
unaffected;
|
|
|
(iv)
|
a
civil, criminal or administrative action or proceeding pending by or
against an Amalgamating Corporation may be continued to be prosecuted by
or against the Corporation;
|
|
|
(v)
|
a
conviction against, or ruling, order or judgment in favour of or against,
an Amalgamating Corporation may be enforced by or against the Corporation;
and
|
|
|
(vi)
|
the
Articles of Amalgamation are deemed to be the articles of incorporation of
the Corporation and the Certificate is deemed to be the certificate of
incorporation of the Corporation.
|
(c) immediately
upon the Amalgamation as set forth in subsection (b), all Linear Shares held by
Apollo Subco (if any) shall be cancelled without any repayment of capital in
respect thereof;
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-
(d) immediately
upon the Amalgamation as set forth in subsection (b), all Linear Shares (other
than Linear Shares acquired by Apollo in accordance with subsection (a)) held by
Former Linear Shareholders (other than Dissenting Shareholders) shall be
exchanged with Apollo for Apollo Shares on the basis of 5.4742 Apollo Shares for
each Linear Share, subject to sections 3.03 and 5.01 hereof, and shall
thereafter be cancelled without any repayment of capital in respect
thereof. Each Former Linear Shareholder shall cease to be a holder of
Linear Shares and the name of such holder shall be removed from the securities
register of holders of Linear Shares and each Former Linear Shareholder shall be
added to the securities register of holders of Apollo Shares showing such holder
as the registered holder of the Apollo Shares so issued;
(e) immediately
upon the Amalgamation as set forth in subsection (b), each Linear Share acquired
by Apollo in accordance with subsection (a) shall be cancelled;
(f) immediately
upon the Amalgamation as set forth in subsection (b), each Linear Option
outstanding immediately prior to the Effective Time shall be exchanged for an
option (an “Apollo Replacement
Option”) to acquire, on the terms and conditions set forth in the Apollo
Stock Option Plan, provided that the rights
of the holders under the Apollo Replacement Options shall not (as mutually
agreed to by Apollo and Linear, each acting reasonably) materially adversely
differ from the rights of the holders of such Linear Options outstanding
immediately prior to the Effective Time (and provided further that the
current employees of Linear holding Linear Options whose employment is
terminated in connection with the Arrangement shall have their Linear Options
exchanged for Apollo Replacement Options which shall expire on the earlier of:
(i) the current expiry date of the corresponding Linear Options; and (ii) the
first anniversary of the date of completion of the Arrangement), the number of
Apollo Shares (rounded to the nearest whole number) equal to the product of: (A)
the number of Linear Shares subject to such Linear Option immediately prior to
the Effective Time and (B) 5.4742. The exercise price per Apollo
Share subject to any such Apollo Replacement Option shall be an amount (rounded
to the nearest cent) equal to the quotient of: (A) the exercise price per Linear
Share subject to such Linear Option immediately prior to the Effective Time
divided by (B) 5.4742. The obligations of Linear under the Linear
Options as so exchanged shall be assumed by Apollo;
(g) immediately
upon the Amalgamation as set forth in subsection (b), each Linear Warrant
outstanding immediately prior to the Effective Time shall be exchanged for a
common share purchase warrant of Apollo (an “Apollo Replacement Warrant”)
exercisable to acquire, on the same terms and conditions as were applicable to
such Linear Warrant immediately prior to the Effective Time, the number of
Apollo Shares (rounded down to the nearest whole number) equal to the product
of: (A) the number of Linear Shares subject to such Linear Warrant immediately
prior to the Effective Time; and (B) 5.4742. The exercise price per
Apollo Share subject to any such Apollo Replacement Warrants shall be an amount
(rounded up to the nearest cent) equal to the quotient of: (A) the exercise
price per Linear Share subject to the such Linear Warrant immediately prior to
the Effective Time divided by (B) 5.4742. The obligations of Linear
under the Linear Warrants as so exchanged shall be assumed by Apollo and Apollo
agrees to use commercially reasonable best efforts to arrange for the Apollo
Replacement Warrants issued upon exchange of the Linear Listed Warrants to be
listed on the Toronto Stock Exchange and to maintain such listing until 5:00
p.m. (Halifax time) on November 19, 2014;
- 6
-
(h) immediately
upon the Amalgamation as set forth in subsection (b), each Apollo Share held by
Linear shall be cancelled without the payment of any consideration;
(i) immediately
upon the Amalgamation as set forth in subsection (b), each common share of
Apollo Subco shall be exchanged for one Common Share; and
(j) immediately
upon the Amalgamation as set forth in subsection (b), the Corporation shall be a
wholly-owned subsidiary of Apollo and there shall not be any issued or
outstanding options, warrants or other rights or privileges to acquire
securities of the Corporation.
Section
3.02 Post-Effective Time Procedures
(a) On
or promptly after the Effective Date, Apollo shall issue from treasury and
deliver or arrange to be delivered to the Depositary certificates representing
the Apollo Shares required to be issued to Former Linear Shareholders in
accordance with the provisions of section 3.01 hereof, which certificates shall
be held by the Depositary as agent and nominee for such Former Linear
Shareholders for distribution to such Former Linear Shareholders in accordance
with the provisions of Article 6 hereof.
(b) Subject
to the provisions of Article 6 hereof, Former Linear Shareholders shall be
entitled to receive delivery of the certificates representing the Apollo Shares
to which they are entitled pursuant to subsection 3.01(d)
hereof. Certificates representing former Linear Shares, other than
those to which Article 5 applies, shall represent only the right to receive the
Apollo Shares to which the Former Linear Shareholder is entitled to receive
pursuant to the Arrangement.
(c) Apollo
shall, as soon as practicable following the later of the Effective Date and date
of deposit by a Former Linear Shareholder of a duly completed Letter of
Transmittal and the certificates representing such Linear shares,
either:
|
|
(i)
|
forward
or cause to be forwarded by first class mail (postage prepaid) to such
Former Linear Shareholder at the address specified in the Letter of
Transmittal; or
|
|
|
(ii)
|
if
requested by such Former Linear Shareholder in the Letter of Transmittal,
make available or cause to be made available at the Depository for pick-up
by such Former Linear Shareholder,
|
certificates
representing the number of Apollo Shares issued to such Former Linear
Shareholder under the Arrangement.
- 7
-
|
(d)
|
After
the Effective Time, the certificates representing the former Linear Shares
to which Article 5 herein applies shall represent only the right to
receive payment which the Dissenting Shareholders are entitled to receive
pursuant to Article 5.
|
Section
3.03 No Fractional Apollo Shares
No fractional Apollo Shares shall be
issued to Former Linear Shareholders. Any fractional number of Apollo Shares
shall be rounded up or down to the nearest whole number.
ARTICLE
4
THE
CORPORATION
Section
4.01 Name
The name of the Corporation shall be
Linear Gold ULC or such number company name as may be assigned to the
Corporation.
Section
4.02 Registered Office
The registered office of the
Corporation shall be located in the City of Calgary in the Province of Alberta
and the address of the registered office of the Corporation shall be 0000,
000-0xx Xxxxxx
X.X., Xxxxxxx Xxxxxxx, X0X 0X0.
Section
4.03 Authorized Capital
The Corporation shall be authorized to
issue an unlimited number of common shares (being the Common
Shares).
Section
4.04 Share Provisions
The rights, privileges, restrictions
and conditions attaching to the Common Shares shall be as follows:
(a) Voting. The holders of Common
Shares shall be entitled to receive notice of, and to vote at every meeting of
the shareholders of the Corporation and shall have one (1) vote thereat for each
such Common Share so held.
(b) Dividends. The holders of
Common Shares shall be entitled to receive such dividend as the directors may
from time to time, by resolution, declare.
(c) Liquidation. In the event of
liquidation, dissolution or winding up of the Corporation or upon any
distribution of the assets of the Corporation among shareholders being made
(other than by way of dividend out of monies properly applicable to the payment
of dividends) the holders of Common Shares shall be entitled to share pro
rata.
- 8
-
Section
4.05 Restrictions on Transfer
No transfer of shares of the
Corporation shall occur or be registered unless and until the directors have, by
a resolution, approved the transfer and the directors shall be under no
obligation to give such approval or to give any reason for withholding the
same.
Section
4.06 Stated Capital
At the Effective Time, the Corporation
shall add to the stated capital account maintained by the Corporation for the
Common Shares an amount equal to the aggregate of the amount of the stated
capital account maintained by Apollo Subco in respect of the common shares of
Apollo Subco immediately prior to the Effective Time and the amount of the
stated capital account maintained by Linear in respect of the Linear Shares
immediately prior to the Effective Time.
Section
4.07 Directors
(a)
The directors of the Corporation shall, until otherwise changed in
accordance with the ABCA, consist of a minimum number of one and a maximum
number of fifteen directors.
(b)
The number of directors on the board of directors shall initially be set
at one. The initial director of the Corporation immediately following
the Amalgamation shall be the person whose name and residential address appears
below:
|
Name
|
Municipality of
Residence
|
|
|
Xxxx
X. Xxxx
|
|
Halifax,
Nova Scotia
|
The
initial director shall hold office until the next annual meeting of the
shareholders of the Corporation or until his successors are elected or
appointed.
Section
4.08 Business and Powers
There shall be no restriction on the
business which the Corporation is authorized to carry on or on the powers which
the Corporation may exercise.
Section
4.09 By-Laws
The by-laws of the Corporation, until
repealed, amended or altered, shall be the by-laws of Apollo
Subco.
- 9
-
ARTICLE
5
DISSENT
PROCEDURES
Section
5.01 Dissent Procedures
Holders of Linear Shares may exercise
Dissent Procedures with respect to Linear Shares in connection with the
Arrangement, provided that, notwithstanding the Dissent Procedures, the written
objection to the special resolution to approve the Arrangement contemplated by
Section 191 of the ABCA must be received by Linear no later than 5:00 p.m.
(Toronto time) on the Business Day immediately prior to the date of the Linear
Meeting or any date to which the Linear Meeting may be postponed or adjourned
and provided further that holders who exercise such rights of dissent and
who:
(a)
are ultimately entitled to be paid fair value for their Linear Shares,
which fair value shall be determined as of the close of business on the day
before the Final Order becomes effective, shall be paid an amount equal to such
fair value by Apollo; and
(b)
are ultimately not entitled, for any reason, to be paid fair value
for their Linear Shares shall be deemed to have participated in the Arrangement,
as of the Effective Time, on the same basis as a non-dissenting holder of Linear
Shares and shall be entitled to receive only the consideration contemplated in
subsection 3.01(d) hereof which such holder would have received pursuant to the
Arrangement if such holder had not exercised Dissent Procedures,
but
further provided that in no case shall Apollo, Apollo Subco, Linear or any other
person be required to recognize Dissenting Shareholders as holders of Linear
Shares after the Effective Time, and the names of such Dissenting Shareholders
shall be deleted from the register of holders of Linear Shares at the Effective
Time.
ARTICLE
6
DELIVERY
OF APOLLO SHARES
Section
6.01 Delivery of Apollo Shares
(a)
Upon surrender to the Depositary, as specified in the Letter
of Transmittal, for cancellation of a certificate which immediately prior to the
Effective Time represented one or more outstanding Linear Shares which were
exchanged for Apollo Shares in accordance with section 3.01 hereof, together
with a completed Letter of Transmittal and such other documents and instruments
as would have been required to effect the transfer of the Linear Shares formerly
represented by such certificate and such additional documents and instruments as
the Depositary may reasonably require, the holder of such surrendered
certificate shall be entitled to receive in exchange therefor, and the
Depositary shall deliver to such holder following the Effective Time, a
certificate representing the Apollo Shares which such holder is entitled to
receive in accordance with section 3.02 hereof.
- 10
-
(b) After
the Effective Time and until surrendered for cancellation as contemplated by
subsection 6.01(a) hereof, each certificate which immediately prior to the
Effective Time represented one or more Linear Shares shall be deemed at all
times to represent only the right to receive in exchange therefor a certificate
representing the Apollo Shares which the holder of such certificate is entitled
to receive in accordance with section 6.01(a) hereof.
Section
6.02 Lost Certificates
In the event that any certificate which
immediately prior to the Effective Time represented one or more outstanding
Linear Shares which were exchanged for Apollo Shares in accordance with section
3.01 hereof shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the holder claiming such certificate to be lost,
stolen or destroyed, the Depositary shall deliver in exchange for such lost,
stolen or destroyed certificate, a certificate representing the Apollo Shares
which such holder is entitled to receive in accordance with section 3.02 hereof.
When authorizing such delivery of a certificate representing the Apollo Shares
which such holder is entitled to receive in exchange for such lost, stolen or
destroyed certificate, the holder to whom a certificate representing such Apollo
Shares is to be delivered shall, as a condition precedent to the delivery of
such Apollo Shares, give a bond satisfactory to Apollo and the Depositary in
such amount as Apollo and the Depositary may direct, or otherwise indemnify
Apollo, Apollo Subco and the Depositary in a manner satisfactory to Apollo and
the Depositary, against any claim that may be made against Apollo, Apollo Subco
or the Depositary with respect to the certificate alleged to have been lost,
stolen or destroyed and shall otherwise take such actions as may be required by
the by-laws of the Corporation.
Section
6.03 Distributions with Respect to Unsurrendered
Certificates
No dividend or other distribution
declared or made after the Effective Time with respect to Apollo Shares with a
record date after the Effective Time shall be delivered to the holder of any
unsurrendered certificate which, immediately prior to the Effective Time,
represented outstanding Linear Shares unless and until the holder of such
certificate shall have complied with the provisions of section 6.01 or section
6.02 hereof. Subject to applicable law and to section 6.04 hereof, at the time
of such compliance, there shall, in addition to the delivery of a certificate
representing the Apollo Shares to which such holder is thereby entitled, be
delivered to such holder, without interest, the amount of the dividend or other
distribution with a record date after the Effective Time theretofore paid with
respect such Apollo Shares.
Section
6.04 Withholding Rights
Apollo and the Depositary shall be
entitled to deduct and withhold from all dividends or other distributions
otherwise payable to any Former Linear Shareholder such amounts as Apollo,
Apollo Subco or the Depositary is required or permitted to deduct and withhold
with respect to such payment under the Income Tax Act (Canada), the
United States Internal Revenue
Code of 1986, as amended, or any provision of any applicable federal,
provincial, state, local or foreign tax law, in each case, as amended. To the
extent that amounts are so withheld, such withheld amounts shall be treated for
all purposes hereof as having been paid to the Former Linear Shareholder in
respect of which such deduction and withholding was made, provided that such
withheld amounts are actually remitted to the appropriate taxing
authority.
- 11
-
Section
6.05 Limitation and Proscription.
To the extent that a Former Linear
Shareholder shall not have complied with the provisions of section 6.01 or
section 6.02 hereof on or before the date which is six years after the Effective
Date (the “final proscription date”), then the Apollo Shares which such Former
Linear Shareholder was entitled to receive shall be automatically cancelled
without any repayment of capital in respect thereof and the certificates
representing such Apollo Shares shall be delivered to Apollo by the Depositary
for cancellation and shall be cancelled by Apollo, and the interest of the
Former Linear Shareholder in such Apollo Shares shall be terminated as of such
final proscription date.
ARTICLE
7
AMENDMENTS
Section
7.01 Amendments to Plan of Arrangement
(a) Apollo
and Linear reserve the right to amend, modify or supplement this Plan of
Arrangement at any time and from time to time, provided that each such
amendment, modification or supplement must be (i) set out in writing, (ii)
agreed to in writing by Apollo and Linear, (iii) filed with the Court and, if
made following the Linear Meeting, approved by the Court, and (iv) communicated
to Former Linear Shareholders if and as required by the Court.
(b) Any
amendment, modification or supplement to this Plan of Arrangement may be
proposed by Linear at any time prior to the Linear Meeting provided that Apollo
shall have consented thereto in writing, with or without any other prior notice
or communication, and, if so proposed and accepted by the persons voting at the
Linear Meeting (other than as may be required under the Interim Order), shall
become part of this Plan of Arrangement for all purposes.
(c) Any
amendment, modification or supplement to this Plan of Arrangement that is
approved by the Court following the Linear Meeting shall be effective only if
(i) it is consented to in writing by each of Apollo and Linear, and (ii) if
required by the Court, it is consented to by holders of the Linear Shares voting
in the manner directed by the Court.
- 12
-
SCHEDULE
“B”
LINEAR
COVERTIBLE SECURITIES
|
Linear Convertible
Securities
|
Number
Outstanding
|
Expiry Date
|
Exercise Price
|
||||||
|
Linear
Warrants
|
2,322,728 |
March
19, 2011
|
$ | 1.50 | |||||
| 5,203,750 |
November
19, 2014
|
$ | 3.00 | ||||||
| 651,286 |
November
19, 2011
|
$ | 2.15 | ||||||
|
Total
|
8,177,764 | ||||||||
|
Linear
Options
|
705,000 |
January
9, 2013
|
$ | 3.00 | |||||
| 10,000 |
February
28, 2013
|
$ | 3.00 | ||||||
| 50,000 |
July
20, 2013
|
$ | 3.00 | ||||||
| 885,000 |
February
6, 2014
|
$ | 1.05 | ||||||
| 25,000 |
February
19, 2014
|
$ | 1.05 | ||||||
| 5,000 |
March
4, 2014
|
$ | 1.05 | ||||||
| 405,000 |
July
29, 2014
|
$ | 1.37 | ||||||
| 250,000 |
August
4, 2012
|
$ | 1.50 | ||||||
| 75,000 |
August
24, 2014
|
$ | 2.18 | ||||||
| 250,000 |
August
26, 2014
|
$ | 2.00 | ||||||
| 30,000 |
September
9, 2014
|
$ | 2.10 | ||||||
| 80,000 |
October
5, 2014
|
$ | 2.40 | ||||||
|
Total
|
2,770,000 | ||||||||
- 13
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