Exhibit 99.1
November 28, 1999
CONFIDENTIAL
TigerTel Inc.
00 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX X0X 0X0
Attention: Xxxxxx X. Xxxxx,
Chairman of the Board and
Chief Executive Officer
Dear Sirs:
This letter agreement (the "Agreement") sets out the terms and conditions upon
which AT&T Canada Corp. (the "Purchaser") will make an offer (the "Offer"), on
substantially the terms and conditions summarized in Schedule "A" forming part
of this Agreement, to purchase all of the issued and outstanding common shares
(including any common shares which may become outstanding pursuant to the
exercise of outstanding options to acquire common shares) (the "Common Shares")
of TigerTel Inc. (the "Company"). The term "Offer" shall include any amendments
to, or extensions of, the Offer made in accordance with the terms of this
Agreement, including, without limitation, removing or waiving any condition or
extending the date by which Common Shares may be deposited.
The Purchaser has, concurrently with the execution of this Agreement, entered
into a lock-up agreement with Applied Digital Solutions, Inc. ("Applied"), the
Company's controlling shareholder (the "Applied Lock-up Agreement").
This Agreement also sets out the agreement by the Company, among other things,
(i) to recommend that the holders of the Common Shares accept the Offer, (ii)
not to solicit expressions of interest for, or assist or encourage competing
Offers for, the Common Shares, (iii) to complete the Exchangeable Share
Redemption and (iv) to complete the Consolidated Technologies Disposition.
All references to dollar amounts in this Agreement are to Canadian dollars,
unless otherwise stated. The definitions for capitalized terms used and not
otherwise defined in the body of this Agreement are set out in Schedule "B"
hereto.
1. Covenants of the Purchaser. Upon execution of this Agreement, the Purchaser
will:
(a) not later than December 2, 1999 (the "Proposed Offer Date"), make a
take-over bid to purchase 100% of the Common Shares issued and
outstanding as of such date, on substantially the terms and conditions
summarized in Schedule "A" forming part of this Agreement;
(b) subject to the satisfaction of the terms and conditions of the Offer,
take-up and pay for Common Shares tendered under the Offer in
accordance with Canadian securities laws;
(c) prior to or concurrently with the Purchaser taking up and paying for
the Common Shares tendered under the Offer, the Purchaser will provide
funds to the Company or at the direction of the Company, provide funds
to IBM Canada on behalf of the Company in an amount equal to the IBM
Indebtedness; and
(d) upon the last take-up and payment of Common Shares under the Offer,
proceed expeditiously with a compulsory acquisition or subsequent
acquisition transaction whereby holders of Common Shares will receive
cash consideration per Common Share in a transaction which is at least
as favourable to holders of Common Shares as the Offer.
The Purchaser shall mail the Offer and accompanying take-over bid circular
(such circular, together with the Offer, being referred to herein as the
"Bid Circular") in accordance with applicable laws to each holder of Common
Shares (a "Shareholder") not later than 11:59 p.m. (Toronto time) on the
Proposed Offer Date (such time on such date being referred to herein as the
"Latest Mailing Time"); provided, however, that if the mailing of the Offer
is delayed by (i) an injunction or order made by a court or regulatory
authority of competent jurisdiction or (ii) the Purchaser not having
obtained any regulatory waiver, consent or approval which is necessary to
permit it to mail the Offer or take up and pay for the Common Shares
tendered under the Offer, then, provided that such injunction or order is
being contested or appealed or such regulatory waiver, consent or approval
is being actively sought, as applicable, the Latest Mailing Time shall be
extended for a period ending on the fifth Business Day following the date
on which such injunction or order ceases to be in effect or such waiver,
consent or approval is obtained, as applicable, provided however that if
such event has not occurred by December 2, 1999, this Agreement will
terminate.
The Offer will be made in accordance with applicable Laws and shall be open
for acceptance for a minimum period of 20 business days and shall have an
initial expiry date not later than December 30, 1999; provided, however,
that the Offer shall not expire or be withdrawn and shall be extended for
successive 10 day periods until the earlier of (i) 75 days after the date
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of the Offer, and (ii) the date which is 10 days after the Purchaser has
publicly announced that the conditions set out in sections 4(b) and (c) of
Schedule "A" have been satisfied or waived, and may be extended from time
to time at the option of the Purchaser or as permitted in Schedule "A". The
final date of expiry of the Offer in accordance with the foregoing is
herein referred to as the "Expiry Time". The Bid Circular shall set forth a
date of expiry of the Offer of not later than December 30, 1999. The
Purchaser shall use all reasonable efforts to consummate the Offer, subject
to the terms and conditions hereof and thereof. Any and all fees required
to be paid in connection with filings under the Competition Act (Canada)
shall be borne and paid equally by the Company and the Purchaser.
2. Conditions Precedent to the Obligations of the Purchaser. Notwithstanding
the foregoing, the obligations of the Purchaser to make the Offer shall be
subject to the satisfaction, on the Proposed Offer Date (or any earlier
date on which the Purchaser proposes to make the Offer or on any later date
on which the Offer is required to be made pursuant to section 1 hereof), of
each of the following conditions precedent:
(a) each of the conditions set forth in paragraphs (d) through (f) of
section 4 of Schedule "A" hereto shall have been satisfied;
(b) the Purchaser shall have entered into an Additional Lock-up Agreement
with Cote 100 Inc., in form and substance satisfactory to the
Purchaser, pursuant to which it has agreed to deposit 651,375 Common
Shares under the Offer beneficially owned by accounts fully managed by
it in accordance with the provisions of the Additional Lock-up
Agreement;
(c) TigerTel Services Limited ("TigerTel Services") shall have mailed to
the holders of Exchangeable Shares a notice of special meeting and
management information circular to consider, and, if deemed advisable,
to pass, without variation, the Exchangeable Share Resolution within 2
Business Days of the acceptance of this Agreement by the Company; and
(d) each of the Specified Representations and Warranties shall be true and
correct in all respects, each of the other representations and
warranties set forth in this Agreement shall be true and correct in
all material respects, and the Company shall have performed in all
respects any covenant or complied in all respects with any agreement
to be performed by it under this Agreement prior to such date.
The Company shall deliver to the Purchaser, prior to the making of the
Offer by the Purchaser on the Proposed Offer Date (or any earlier date on
which the Purchaser proposes to make the Offer or on any later date on
which the Offer is required to be made pursuant to section 1 hereof), a
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certificate of two senior executive officers of the Company confirming, in
such capacity, the matters set forth in paragraphs (a) through (d) above.
The foregoing conditions precedent are for the sole benefit of the
Purchaser and may be waived by the Purchaser in whole or in part at any
time or from time to time.
3. Circulars.
(a) The Company hereby approves of and consents to the Offer and to the
inclusion in the Bid Circular of reference to the determinations,
approvals and recommendations of the Company's board of directors (the
"Board") and of Yorkton Securities Inc. referred to in section 6(dd)
hereof. The Company agrees to prepare and file in accordance with all
applicable laws and make available for mailing, concurrently and
together with the Bid Circular, sufficient copies of a directors'
circular meeting the requirements of Canadian securities laws, in both
the English and French languages as circumstances may require
(collectively, the "Directors' Circular"). Prior to the final approval
of the Directors' Circular by the Board, the Company shall provide the
Purchaser with a reasonable opportunity to review and comment on the
form of the Directors' Circular, the Purchaser recognizing that
whether any such comments are appropriate will be determined by the
Board, acting reasonably. The Company agrees to provide the Purchaser
and its counsel in writing with any comments that the Company receives
from the applicable securities regulatory authorities in Canada or the
United States on the Directors' Circular or in connection with the
Offer. The Directors' Circular and all information supplied by the
Company for inclusion in the Bid Circular and any amendments or
supplements thereto, at the time filed with applicable securities
regulatory authorities or first published, sent or given to
Shareholders, as the case may be, shall not contain any
misrepresentation (as defined in the Securities Act) or contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) The Company hereby agrees to cause TigerTel Services to prepare,
approve, file and mail to each of the holders of Exchangeable Shares,
in accordance with all applicable laws, the Meeting Circular. The
Company agrees to cause the Meeting Circular to be mailed within 2
Business Days of the acceptance of this Offer by the Company. Prior to
the final approval of the Meeting Circular by the Board of Directors
of TigerTel Services, the Company shall cause TigerTel Services to
provide the Purchaser with a reasonable opportunity to review and
comment on the form of the Meeting Circular, the Purchaser recognizing
that whether any such comments are appropriate will be determined by
the Board of Directors of TigerTel Services, acting reasonably. The
Company agrees to provide the Purchaser and its counsel in writing
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with any comments that TigerTel Services receives from the applicable
regulatory authorities in Canada or the United States on the Meeting
Circular or in connection with the Exchangeable Share Redemption.
4. Mutual Covenants. Each of the parties covenants and agrees that, except as
contemplated in this Agreement, between the date hereof and Expiry Time or
the day on which this Agreement is terminated, whichever is earlier:
(a) it shall use its reasonable efforts to comply promptly with all
requirements which applicable Laws may impose on it or, in the case of
the Company, its subsidiaries, with respect to the transactions
contemplated by this Agreement;
(b) it shall use its reasonable best efforts, and, in the case of the
Company, shall cause its subsidiaries to use their reasonable best
efforts, to perform all obligations required or desirable to be
performed by it or, in the case of the Company, any of its
subsidiaries, under this Agreement, it shall not take any action or
shall refrain from taking any action that would be inconsistent with
this Agreement or which would reasonably be expected to significantly
impede the consummation of the transactions contemplated in this
Agreement, and it shall do all such other acts and things as may be
necessary or desirable in order to consummate and make effective, as
soon as reasonably practicable, the transactions contemplated in this
Agreement; without limiting the generality of the foregoing, it shall
and where appropriate, in the case of the Company, cause the
subsidiaries to:
(i) apply for and use reasonable efforts to obtain all Appropriate
Regulatory Approvals relating to it or, in the case of the
Company, any of its subsidiaries;
(ii) defend all lawsuits or other legal, regulatory or other
proceedings challenging or affecting this Agreement or the
consummation of the transactions contemplated hereby;
(iii) use reasonable best efforts to have lifted or rescinded any
injunction or restraining order or other order which may
adversely affect the ability of the parties to consummate the
transactions contemplated hereby;
(iv) effect all necessary registrations, filings and submissions of
information required by Governmental Entities from the parties
or any of their subsidiaries;
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(v) cooperate with the other party to this Agreement in connection
with the performance by them of their obligations hereunder;
(vi) subject to applicable Laws, make and cooperate in the making
of all filings and applications and submissions of information
under all Laws which are applicable in connection with the
transactions contemplated herein and take all reasonable
actions in connection therewith, including without limitation,
in connection with the appropriate regulatory approvals and by
participating and appearing in any proceedings of either party
before governmental entities, and use reasonable best efforts
to coordinate the parties' discussions with and responses to
all governmental entities where both parties are seeking to
obtain material approvals or make material filings; and
(c) it shall have performed and satisfied, in all material respects, all
covenants and agreements required by this Agreement to be performed or
satisfied by it prior to the Expiry Time.
5. Covenants of the Company. The Company hereby covenants that from the date
hereof until the earlier of: (i) the Purchaser having caused the boards of
directors of the Company and each of its subsidiaries to consist of persons
designated or selected by the Purchaser or having abandoned the Offer; or
(ii) this Agreement having been terminated pursuant to section 11 hereof:
(a) The Company shall and shall cause each of its subsidiaries to conduct
its and their respective businesses only in, and not take action
except in, the ordinary and usual course of business consistent with
past practice and in compliance with applicable Laws, except (i) with
the prior written consent of the Purchaser; and (ii) with respect to
any matters which are disclosed in section 5(a) of the Disclosure
Letter, and in furtherance of the foregoing:
(i) neither the Company nor any of its subsidiaries shall declare,
set aside or pay any dividends on or make any other
distributions or payments (whether in cash, stock, securities
or other property or any combination thereof) in respect of
any shares in the capital of the Company or any of its
subsidiaries, take or authorize any action to implement any of
the foregoing or split, combine or reclassify any shares in
the capital of the Company or any of its subsidiaries;
(ii) the Company will not amend or propose to amend its articles or
by-laws or the articles or by-laws of any of its subsidiaries
provided, however, that TigerTel Services may amend its
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articles in the manner contemplated by the Exchangeable Share
Resolution;
(iii) neither the Company nor any of its subsidiaries shall fail to
pay any fee to maintain the registrations of the Intellectual
Property of the Company and its subsidiaries;
(iv) neither the Company nor any of its subsidiaries shall enter
into any Agreement, arrangement or understanding with any
Shareholder for the sale or purchase of any asset, the making
of any loan, the assumption of any liability or the issuance
of any security, other than as may be required in connection
with the Exchangeable Share Redemption and the Consolidated
Technologies Disposition;
(v) neither the Company nor any of its subsidiaries will enter
into or amend any employment agreement, consulting services
agreement, non-competition agreement, severance agreement or
arrangement with respect to the termination of employment, or
any arrangement with respect to the increase of compensation
or fringe benefits, with any of its directors, officers,
consultants or key employees except for the Employment
Agreements;
(vi) neither the Company nor any of its subsidiaries will dismiss
any senior employee of the Company or any subsidiary of the
Company, save and except for cause, other than in consultation
and cooperation with the Purchaser and with the prior written
consent of the Purchaser;
(vii) neither the Company nor any of its subsidiaries will authorize
or commit to the use of cash not in the ordinary course of
business and consistent with past practice;
(viii) neither the Company nor any of its subsidiaries will adopt,
enter into, amend or terminate any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred
compensation, health care, employment or other employee
benefit plan, agreement, trust, fund or arrangement for the
benefit or welfare of any employee or retiree, except as
required to comply with changes in applicable Law;
(ix) each of the Company and its subsidiaries will use its
reasonable best efforts to maintain with financially
responsible insurance companies insurance on its tangible
assets and its businesses in such amounts and against such
risks and losses as are consistent with past practice;
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(x) the Company will not sell, deliver, reserve, set aside,
pledge, dispose of, issue, authorize or propose or commit to
the issuance of (whether through the allotment, reservation,
issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) or otherwise
encumber any securities of the Company or any of its
subsidiaries, or amend the terms of any outstanding securities
of the Company or any of its subsidiaries, including any
Common Shares or any securities convertible into or
exchangeable for, or rights, warrants or options to acquire,
or any equity equivalents (including stock appreciation
rights) of, any Common Shares or other securities of the
Company or any of its subsidiaries or accelerate any vesting
or other rights or waive any rights under any outstanding
rights, warrants or options to acquire any such shares, voting
securities or convertible securities, provided that,
notwithstanding the foregoing, the Company may accelerate the
vesting of Company Options pursuant to section 5(d) hereof,
may issue Common Shares pursuant to the exercise of fully
vested options or other rights to purchase Common Shares which
are outstanding as of the date hereof or which become
outstanding pursuant to section 5(d) hereof and may amend the
terms of the Exchangeable Shares in the manner contemplated by
the Exchangeable Share Resolution;
(xi) the Company will not, and will not permit any of its
subsidiaries to, acquire or agree to acquire any material
amount of assets or securities, or enter into any partnership,
joint venture, association or similar arrangement, or acquire
or agree to acquire (whether by amalgamating, merging,
consolidating or entering into a business combination with or
purchasing or leasing or otherwise) any business or
undertaking or any corporation, partnership, association or
other business organization or division thereof;
(xii) except as required in connection with the Consolidated
Technologies Disposition, the Company will not, and will not
permit any of its subsidiaries to, sell, lease, transfer,
license, mortgage or otherwise dispose of or encumber any of
its property or assets, real or personal, that, individually
or in the aggregate, are material to the Company and its
subsidiaries taken as a whole;
(xiii) the Company will not, and will not permit any of its
subsidiaries to, license or otherwise alienate or encumber in
any manner, any of the Owned Software (as hereinafter
defined), Owned Intellectual Property (as hereinafter defined)
or other proprietary technology, other than to its customers
in the ordinary course of business consistent with past
practice;
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(xiv) the Company will not redeem, purchase, acquire or offer to
purchase any of its outstanding Common Shares or any of the
shares of any of its subsidiaries, or any options, warrants or
rights to acquire any Common Shares or any of the shares of
any of its subsidiaries, or any security convertible into or
exchangeable for Common Shares or any of the shares of any of
its subsidiaries;
(xv) the Company will not, and will not allow any of its
subsidiaries to, enter into, amend, assign or terminate any
agreements, or waive, assign, transfer or release any rights
under any covenants or agreements that, individually or in the
aggregate, are material to the Company and its subsidiaries
taken as a whole and will not modify, amend, assign, waive or
terminate any confidentiality agreement the Company has
entered into with third parties (except as contemplated by
section 8(a));
(xvi) neither the Company nor any of its subsidiaries will effect or
enter into any agreement to change its debt capitalization
(including but not limited to any increase in the amount of
its borrowings or any conversion of short-term borrowings into
long-term borrowings), will not incur any liability or
indebtedness for borrowed money, and will not make any loans,
advances or capital contributions to, or investments in, any
other person, other than loans made, in circumstances
satisfactory to the Purchaser, to fund the exercise price of
Company Options;
(xvii) the Company will not guarantee or permit its subsidiaries to
guarantee the payment of any indebtedness;
(xviii) neither the Company nor any of its subsidiaries shall expend
funds for capital expenditures other than in accordance with
its current capital expenditure plans (which shall have been
disclosed in writing to the Purchaser on or before the date of
this Agreement);
(xix) neither the Company nor any of its subsidiaries shall take any
steps to terminate its corporate existence or to adopt a plan
of complete or partial liquidation or to adopt resolutions
providing for or authorizing such a liquidation or a
dissolution, merger, amalgamation, plan of arrangement,
consolidation, restructuring, recapitalization, reorganization
or similar transaction;
(xx) neither the Company nor any of its subsidiaries shall
recognize any labour union (unless legally required to do so)
or enter into or amend any collective bargaining agreement;
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(xxi) neither the Company nor any of its subsidiaries shall change
any accounting principle used by it, unless required by one of
the relevant Canadian securities regulatory authorities or a
change in Canadian generally accepted accounting principles
except in order to conform the accounting practices of the
subsidiaries of the Company (other than TigerTel Services)
and/or the Company with the accounting practices of TigerTel
Services;
(xxii) the Company and it subsidiaries shall use their reasonable
best efforts to prepare and file on or before the due date
therefor all Tax Returns required to be filed by the Company
and its subsidiaries, and shall pay all Taxes (including
estimated Taxes) due on any such Tax Returns or which are
otherwise required to be paid. Such Tax Returns shall be
prepared in accordance with the most recent Tax practices as
to elections and accounting methods except for new elections
that may be made therein that were not previously available;
(xxiii) to the extent the Company or any of its subsidiaries has
knowledge of the commencement or scheduling of any Tax audit,
the assessment of any Tax, the issuance of any notice of Tax
due or any xxxx for collection of any Tax due, or the
commencement or scheduling of any other administrative or
judicial proceeding with respect to the determination,
assessment or collection of any Tax of the Company or any of
its subsidiaries, the Company shall provide prompt notice to
the Purchaser of such matter, setting forth information
describing any asserted Tax liability in reasonable detail and
including copies of any notice or other documentation received
from the applicable Tax authority with respect to such matter;
(xxiv) neither the Company nor any of its subsidiaries shall take any
of the following actions:
(A) make, revoke or amend any Tax election;
(B) execute any waiver of restrictions on assessment or
collection of any Tax; or
(C) enter into or amend any agreement or settlement with any
Tax authority;
(xxv) neither the Company nor any of its subsidiaries shall settle
or compromise any litigation (whether or not commenced prior
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to the date of this Agreement) or settle, pay, discharge or
compromise any claims not required to be paid, individually in
an amount in excess of $10,000 and in the aggregate in an
amount in excess of $50,000, other than in consultation and
cooperation with the Purchaser, and, with respect to any such
settlement, with the prior written consent of the Purchaser;
(xxvi) the Company will advise the Purchaser as soon as practicable
of any matter coming to its attention which could reasonably
be expected to cause any of the representations or warranties
of the Company contained herein to be, or with the passage of
time to become, incorrect or untrue in any way that could
reasonably be expected to constitute or give rise to a
Material Adverse Effect; and
(xxvii) neither the Company nor any of its subsidiaries shall
authorize, commit or propose or agree to take any action which
could reasonably be expected to make any of the
representations or warranties of the Company contained in this
Agreement untrue or incorrect, or which could reasonably be
expected to result in any of the conditions of the Offer (as
set forth in section 4 of Schedule "A" hereto) not being
satisfied.
(b) The Company shall provide lists of shareholders of all classes and
series of securities of the Company and of TigerTel Services and a
list of holders of stock options and any other rights, warrants or
convertible or exchangeable securities currently outstanding (with
full particulars as to the number held and exercise or conversion
price) prepared by the Company or the transfer agent of the Company
and/or TigerTel Services and deliver such lists to the Purchaser
within 2 Business Days after execution of this Agreement and obtain
and deliver to the Purchaser thereafter on demand supplemental lists
setting out any changes thereto, all such deliveries to be both in
printed form and if available in computer-readable format. The Company
shall, if requested by the Purchaser, in connection with the Offer,
permit its registrar and transfer agent to act as the Purchaser's
depositary under the Offer. The Company shall otherwise co-operate in
good faith with the Purchaser to facilitate the mailing of the Offer.
(c) The Company and its subsidiaries shall participate and co-operate in
all reasonable respects with the Purchaser and shall use their
respective reasonable best efforts to take all appropriate action or
to do or cause to be done all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including to
diligently make all required regulatory filings and applications
(including, without limitation, filings and applications under the
Competition Act (Canada) and to obtain all licences, permits,
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consents, approvals, authorizations, qualifications and orders of
Governmental Entities and parties to contracts with the Company and
its subsidiaries as are necessary for the consummation of the
transactions contemplated by this Agreement and to fulfil the
conditions to the Offer. The Company will participate and cooperate in
all reasonable respects with the Purchaser in the preparation and
filing of the Bid Circular.
(d) The Company will (i) accelerate the vesting of any outstanding
unvested Company Options issued by the Company or any predecessor,
subject to obtaining the consent of the holder where required under
the terms of the option so that such unvested options may be exercised
prior to the Expiry Time; (ii) use all reasonable efforts to cause
each holder of Company Options to exercise such options prior to the
Expiry Time and to cancel, without consideration, any options not so
exercised; and (iii) upon the written direction of the Purchaser, take
any reasonable action in respect of such options that is permitted
under applicable Laws.
(e) Upon the take-up and payment for Common Shares by the Purchaser
pursuant to the Offer, and provided the Purchaser thereby acquires at
least a majority of the outstanding Common Shares, the Company shall
use its reasonable best efforts to (i) ensure that the Purchaser will
have the ability to immediately replace the members of the Board with
individuals designated by the Purchaser, and (ii) assist the Purchaser
in acquiring pursuant to a subsequent acquisition transaction, or
other transaction proposed by the Purchaser, all of the Common Shares
not tendered to the Offer.
(f) The Company agrees to use its reasonable best efforts to preserve
intact the goodwill and present relationships of the Company and its
subsidiaries with the Employees (as hereinafter defined) and with
customers, suppliers and other persons with whom the Company and its
subsidiaries have business relationships, and to ensure that such
relationships are maintained following the completion of the Offer,
and the Company shall advise the Purchaser forthwith if it has reason
to believe that any such relationship will not continue after the
completion of the Offer in substantially the same manner as prior to
the date of this Agreement.
(g) The Company and its subsidiaries will consult on an ongoing basis with
representatives of the Purchaser to report on operational matters and
as to the general status of the business, and in order that the
representatives of the Purchaser will become more familiar with the
philosophy and techniques of the Company and its subsidiaries, as well
as with their business and financial affairs, and in order to provide
experience as a basis for ongoing relationships in connection with the
acquisition of the Company by the Purchaser.
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(h) In furtherance of the transactions contemplated by this Agreement, the
Applied Lock-up Agreement and the Additional Lock-up Agreements, the
Company hereby covenants and agrees to direct its transfer agent to
place a stop transfer order on the Common Shares held by the parties
to such Agreements and not to amend, terminate or waive any of the
terms of such stop transfer order (other than to permit the transfer
of such Common Shares to the Purchaser) during the term of this
Agreement.
(i) The Company shall use its reasonable best efforts, and shall cause its
subsidiaries to use their reasonable best efforts, to satisfy the
conditions precedent to the obligations of the Purchaser and the
Purchaser hereunder set forth in section 2 hereof and paragraphs (a)
through (k) of section 4 of Schedule "A" and to perform all
obligations required or desirable to be performed by the Company or
any of its subsidiaries in furtherance of the consummation of the
transactions contemplated by the Exchangeable Share Redemption and the
Consolidated Technologies Disposition. The Company and its
subsidiaries shall not take any action or refrain from taking any
action that would be inconsistent with, or which would reasonably be
expected to significantly impede, the consummation of the transactions
contemplated by the Exchangeable Share Redemption and the Consolidated
Technologies Disposition, and the Company and its subsidiaries shall
do all such other acts and things as may be necessary or desirable in
order to consummate and make effective immediately prior to the Expiry
Time the transactions contemplated under the Exchangeable Share
Redemption and the Consolidated Technologies Disposition; without
limiting the generality of the foregoing, the Company shall, and where
appropriate, shall cause its subsidiaries to:
(i) apply for and use reasonable efforts to obtain any necessary
regulatory approvals relating to the Company or any of its
subsidiaries;
(ii) defend all lawsuits or other legal, regulatory or other
proceedings challenging or affecting the Consolidated
Disposition Agreements or the consummation of the transactions
contemplated thereby or under the Exchangeable Share
Redemption;
(iii) use reasonable commercial efforts to have lifted or rescinded
any injunction or restraining order or other order which may
adversely affect the ability of the Company, or any of its
subsidiaries, to consummate the transactions contemplated
under the Exchangeable Share Redemption and the Consolidated
Technologies Disposition;
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(iv) effect all necessary registrations, filings and submissions of
information required by Governmental Entities from the Company
or any of its subsidiaries;
(v) cooperate with the other parties to the Consolidated
Disposition Agreements and any agreements entered in
connection with the Exchangeable Share Redemption in
connection with the performance by them of their obligations
thereunder; and
(vi) make all filings and applications and submissions of
information under all Laws which are applicable in connection
with the transactions contemplated under the Exchangeable
Share Redemption and the Consolidated Technologies Disposition
and take all reasonable actions in connection therewith.
(j) The Meeting Circular and any amendments or supplements thereto, at the
time filed with applicable securities regulatory authorities or first
published, sent or given to the holders of Exchangeable Shares, as the
case may be, shall not contain any misrepresentation (as defined in
the Securities Act) or contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(k) The Company shall, and shall cause TigerTel Services to,
(i) convene the special meeting of the holders of Exchangeable
Shares on December 29, 1999;
(ii) provide notice to the Purchaser of such meeting and allow the
Purchaser's Representatives to attend such meeting;
(iii) use its reasonable best efforts to solicit Irrevocable Proxies
in favour of the Exchangeable Share Resolution from holders of
Exchangeable Shares which hold not less than two-thirds of the
issued and outstanding Exchangeable Shares;
(iv) conduct such special meeting in accordance with the by-laws of
TigerTel Services and any instrument governing such meeting,
as applicable, and as otherwise required by applicable Laws;
and
(v) subject to the approval of the Exchangeable Share Resolution
at the special meeting of holders of Exchangeable Shares,
forthwith proceed with and diligently prosecute the
Exchangeable Share Redemption such that articles of amendment
14
in respect of TigerTel Services giving effect to the
Exchangeable Share Resolution are filed and effective on or
before December 30, 1999 and that such transaction may be
consummated on the Automatic Redemption Date approved by the
Purchaser and set by the board of directors of TigerTel
Services.
(l) the Company will, and will cause Applied to, use its reasonable best
efforts to obtain a letter from IBM Credit Corporation and IBM Canada
addressed to Applied, the Company and the Purchaser, in form and
substance satisfactory to the Purchaser, acting reasonably, which
provides for the following: (i) that upon the repayment of the IBM
Indebtedness by the Company, the Company shall be able to effect the
IBM Termination without payment of any penalty or premium, (ii) that
upon the IBM Termination, IBM Credit Corporation will discharge and
release any liens, security interests or other encumbrances now or
hereafter existing on the Common Shares of the Company owned by
Applied such that upon such discharge, the Common Shares of the
Company owned by Applied will be free and clear of any and all
mortgages, liens, charges, restrictions, security interests, adverse
claims, pledges, encumbrances and demands or rights of others of any
nature or kind whatsoever arising under the IBM Loan Documents, and
(iii) that upon the IBM Termination, IBM Canada will discharge and
release any liens, security interests or other encumbrances now or
hereafter existing over the property of the Company or any of its
subsidiaries, including without limitation, any liens, security
interests or other encumbrances now or hereafter existing over any
goods, equipment, property, monetary obligations, undertaking or
assets of the Company or any of its subsidiaries such that upon such
discharge, the property, undertaking, goods, equipment, monetary
obligations and assets of the Company and each of its subsidiaries
will be free and clear and clear of any and all mortgages, liens,
charges, restrictions, security interests, adverse claims, pledges,
encumbrances and demands or rights of others of any nature or kind
whatsoever arising under the IBM Loan Documents.
(m) The Company shall repay to IBM Canada the amount of the IBM
Indebtedness upon receipt by the Company from the Purchaser of cash in
the amount of the IBM Indebtedness, or, the Company shall direct the
Purchaser to pay to IBM Canada on behalf of the Company the amount of
the IBM Indebtedness, and, concurrently with such repayment or
direction and payment, as the case may be, the Company shall terminate
the IBM Credit Agreement and the other IBM Loan Documents such that
the Company and its subsidiaries will no longer be a party thereto or
be bound by any obligations arising thereunder (the "IBM
Termination").
15
(n) Concurrently with the IBM Termination, the Company will use its
reasonable best efforts to cause IBM Credit Corporation to discharge
and release (and complete, at the Company's expense, any registrations
or filings relating thereto) any and all liens or other encumbrances
granted by Applied to IBM Credit Corporation pursuant to the IBM Loan
Documents over the Common Shares of the Company owned by Applied such
that upon such discharge and release, the Common Shares of the Company
owned by Applied will be free and clear of any and all mortgages,
liens, charges, restrictions, security interests, adverse claims,
pledges, encumbrances and demands or rights of others of any nature or
kind whatsoever arising from the IBM Loan Documents.
(o) Concurrently with the IBM Termination, the Company will use its
reasonable best efforts to cause IBM Canada to discharge and release
(and complete, at the Company's expense, any registrations or filings
relating thereto) any and all liens, security interests or other
encumbrances now or hereafter existing over the property of the
Company or any of its subsidiaries, including without limitation, any
liens, security interests or other encumbrances now or hereafter
existing over any goods, equipment, property, monetary obligations,
undertaking or assets of the Company or any of its subsidiaries such
that upon such discharge, the property, undertaking, goods, equipment,
monetary obligations and assets of the Company and each of its
subsidiaries will be free and clear and clear of any and all
mortgages, liens, charges, restrictions, security interests, adverse
claims, pledges, encumbrances and demands or rights of others of any
nature or kind whatsoever arising under the IBM Loan Documents.
(p) The Company shall and shall cause its subsidiaries to use their
reasonable best efforts to enter into the Consolidated Disposition
Agreements and to consummate the Consolidated Technologies Disposition
on or before the Expiry Time.
Nothing contained in this Agreement shall give to the Purchaser, directly
or indirectly, rights to control or direct the Company's operations prior
to the completion of the Offer. Prior to the completion of the Offer, the
Company shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision of its operations.
16
6. Representations and Warranties of the Company. The Company represents and
warrants to the Purchaser as follows:
Except as otherwise disclosed in the Disclosure Letter,
(a) Organization
(i) The Company is a corporation duly organized and validly
existing under the laws of Canada and has all requisite
corporate power and authority to own, lease and operate its
properties and to carry on its business as now being
conducted.
(ii) Each subsidiary of the Company is a corporation duly organized
and validly existing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to
carry on its business as now being conducted.
(iii) All of the outstanding shares of the subsidiaries of the
Company are validly issued, fully paid and non-assessable and
all such shares are owned directly or indirectly by the
Company, free and clear of all liens, claims or encumbrances
and there are no outstanding options, rights, entitlements,
understandings, subscriptions, warrants rights, contracts,
voting trusts, proxies or other commitments or understandings,
restrictions or arrangements relating to the issuance, sale,
voting, transfer or ownership thereof, or commitments
(pre-emptive, contingent or otherwise) regarding the right to
acquire any such shares or other right with respect to any
shares of or in any of its subsidiaries. The Company has
disclosed the names and jurisdictions of incorporation of each
of its subsidiaries in the Disclosure Letter. Other than such
subsidiaries, the Company does not have any ownership interest
in any other person or entity.
(iv) The Company and each of its subsidiaries is duly registered,
licensed or otherwise qualified as a foreign or
extra-provincial corporation to carry on business and is in
good standing in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of
its activities makes such registration, licence or
qualification necessary (except where the failure to be so
registered, licensed or otherwise qualified could not
reasonably be expected to have, in the aggregate, a Material
Adverse Effect).
(b) Authority. The Company has all requisite corporate power and authority
to enter into this Agreement and to carry out the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby has been duly
and validly authorized by all necessary corporate action on the part
of the Company and no other corporate proceedings on the part of the
Company is necessary to authorize such agreement. This Agreement has
been duly executed and delivered by the Company and constitutes a
legal, valid and binding agreement enforceable by the Purchaser
against the Company in accordance with its terms, subject, however, to
the usual limitations with respect to enforcement imposed by law in
17
connection with bankruptcy or similar proceedings and the availability
of equitable remedies. No approval, authorization, registration,
consent or order or other action of or filing with any person,
including any court, administrative agency or other governmental
authority is required for the execution and delivery of this Agreement
and the documents to be delivered hereunder or the consummation by the
Company of the transactions contemplated hereby.
(c) Articles of Incorporation and By-laws. The Company has furnished to
the Purchaser a complete and correct copy of the articles and the
by-laws of the Company and the equivalent charter or organizational
documents of each of the Company's subsidiaries. Such documents are in
full force and effect and no other organizational documents are
applicable to or binding upon the Company or any of its subsidiaries.
Neither the Company nor any of its subsidiaries is in violation of any
of the provisions of its charter or organizational documents.
(d) No Conflict. Neither the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby or compliance
with any of the provisions hereof will (i) conflict with or result in
any breach of any provision of the Company's articles or by-laws, (ii)
result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right
of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
license, lease, contract, agreement or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which
any of them or any of their properties or assets may be bound, or
(iii) violate any law, order, writ, injunction, decree, statute, rule
or regulation applicable to the Company or any of its subsidiaries or
any of their properties or assets (except in the case of (ii) and
(iii) for such violations, breaches or defaults that could not
reasonably be expected to, in the aggregate, constitute a Material
Adverse Effect).
(e) Capitalization. As at the date hereof, the authorized capital of the
Company consists of an unlimited number of Common Shares and 1,000,000
Preference Shares. As at November 24, 1999, (i) 6,732,780 Common
Shares were issued and outstanding, and (ii) options to acquire up to
a maximum of 773,517 Common Shares had been granted to directors,
officers and employees of the Company and are outstanding. As of the
date hereof, there are no Preference Shares issued and outstanding. As
at the date hereof, the authorized capital of TigerTel Services
consists of an unlimited number of common shares, an unlimited number
of Exchangeable Shares and an unlimited number of Preference Shares.
As at November 24, 1999, (i) 30,000 common shares were issued and
outstanding in the capital of TigerTel Services, and (ii) 598,825
18
Exchangeable Shares were issued and outstanding (excluding
Exchangeable Shares held by Applied). As of the date hereof, there are
no Preference Shares issued and outstanding in the capital of TigerTel
Services. The Disclosure Letter sets forth a list of all options to
acquire Common Shares granted by the Company, including the name of
each option holder, the number of options granted and the exercise
price. No securities have been issued or granted by the Company or any
of its subsidiaries since November 24, 1999. Except as described
above, there are no securities outstanding and there are no options,
warrants, conversion or exchange privileges or subscriptions, calls,
contracts, commitments, understandings, restrictions, arrangements, or
other rights, agreements, arrangements or commitments (pre-emptive,
contingent or otherwise) obligating the Company or any subsidiary to
issue, deliver or sell or cause to be issued, delivered or sold any
shares of the Company or any of its subsidiaries or securities or
obligations of any kind convertible into or exchangeable for any
shares of the Company, any subsidiary or any other person, nor are
there outstanding any stock appreciation rights, phantom equity or
similar rights, agreements, arrangements or commitments based upon the
book value, income or any other attribute of the Company or any
subsidiary. All of the outstanding Common Shares and shares in the
capital of TigerTel Services have been duly authorized and are validly
issued and outstanding as fully paid and non-assessable shares, free
of pre-emptive rights. There are no outstanding bonds, debentures or
other evidences of indebtedness of the Company or any subsidiary
having the right to vote (or that are convertible for or exercisable
into securities having the right to vote) with the holders of the
Common Shares on any matter. There are no outstanding contractual
obligations of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any of its outstanding securities or with
respect to the voting or disposition of any outstanding securities of
any of its subsidiaries. No holder of securities issued by the Company
has any right to compel the Company to register or otherwise qualify
such securities for public sale in Canada or the United States. The
Disclosure Letter describes the capitalization of each of the
subsidiaries of the Company including, among other things, the
authorized and issued capital of such subsidiaries and the names of
each of the registered and beneficial holders of securities of such
subsidiaries and the number of securities held by such Persons. The
consolidated indebtedness of the Company in respect of borrowing money
is less than $10 million and such consolidated indebtedness of the
Company will not exceed $10 million at any time on or before December
31, 1999. Upon repayment of the IBM Indebtedness, Applied will be
entitled to demand the discharge of any and all liens granted by
Applied in favour of IBM Credit Corporation over the Common Shares of
the Company owned by Applied, such that upon such discharge, the
Common Shares of the Company owned by Applied will be free and clear
of any and all mortgages, liens, charges, restrictions, security
interests, adverse claims, pledges, encumbrances and demands or rights
19
of others of any nature or kind whatsoever arising from the IBM Loan
Documents.
(f) U.S. Holders. As of June 30, 1999 and September 30, 1999, less than
40% of the outstanding Common Shares were held by "U.S. holders" (as
such term is defined for the purposes of Schedule 14D-1F under the
U.S. Securities Exchange Act of 1934, as amended (the "Exchange
Act")). The most recent annual report and annual information form
filed by the Company with applicable Canadian securities regulatory
authorities or with the United States Securities Exchange Commission
do not indicate that U.S. holders hold 40% or more of the outstanding
Common Shares. For the purposes of the calculations in the preceding
sentences of this section 6(f), securities held by Applied have been
excluded. The Company is a "foreign private issuer" within the meaning
of Rule 3b-4 promulgated under the Exchange Act and Rule 405 of the
Securities Act of 1933 and is not an "Investment Company" as defined
under the United States Investment Company Act of 1940, as amended.
(g) Reports. The Company has complied with its obligation to file all
forms, reports, statements, schedules and documents required to be
filed by it with securities regulators under applicable Canadian
securities laws. Each of such reports and the notice of and management
information circular for the annual and special meeting of
shareholders of the Company dated June 21, 1999 (together with all
financial statements, schedules, documents or exhibits included or
incorporated by reference therein) (collectively, the "Reports")
complied with all applicable requirements of law as in effect on the
date so filed. To the knowledge of the Company, none of the Reports,
at the time filed, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company
has not filed any confidential material change report with any
securities authority or regulator or any stock exchange or other
self-regulatory authority which at the date hereof remains
confidential. The Company has publicly disclosed in the Reports any
information regarding any event, circumstance or action taken or
failed to be taken by the Company or its subsidiaries which could
individually or in the aggregate reasonably be expected to have a
Material Adverse Effect. The Disclosure Letter sets forth a complete
list of all Reports filed since June 25, 1999.
(h) Financial Statements. The consolidated financial statements of the
Company as of and for the year ended December 31, 1998, and for the
three quarters ended September 30, 1999, and the combined consolidated
financial statements of TigerTel Services for the year ended December
31, 1998, all as contained in the Reports (collectively, the "Company
20
Financial Statements"), were prepared in accordance with Canadian
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise stated in such
financial statements) and present fairly the consolidated financial
position and results of operations of the Company and its subsidiaries
for the periods and as of the dates thereof (subject, in the case of
unaudited statements, to normal, recurring year-end adjustments) and
reflect appropriate and adequate reserves in respect of contingent
liabilities, if any, of the Company and its subsidiaries on a
consolidated basis. There has been no change in the Company's
accounting policies, except as described in the notes to the Company
Financial Statements, since December 31, 1998 except in order to
conform the accounting practices of the subsidiaries of the Company
(other than TigerTel Services) and/or the Company with the accounting
practices of TigerTel Services. The Disclosure Letter accurately
describes all disagreements, disputes and other matters under
discussion with the Company's auditors in respect of the Company's
financial statements and financial statement presentation since
December 31, 1998.
(i) Absence of Certain Changes. Except for changes resulting from the
transactions contemplated hereby, or as disclosed in the Reports or
the Disclosure Letter, since December 31, 1998, and in the case of
1084028 Ontario Inc. (o/a Telnet Communications), Economux Telecom
Inc., Argos Alliance Inc., 3046168 Canada Inc., Opticom Communications
Inc. and Gestion Xxxxxxx et Xxxxxx Inc., since the date of acquisition
thereof, the Company has conducted its business in the ordinary and
regular course consistent with past practice and there has not
occurred:
(i) any material change (as defined in the Securities Act) in its
affairs or in its business, assets, liabilities, financial
condition, results of operations or prospects;
(ii) any acquisition, sale or transfer of any material asset of the
Company or any of its subsidiaries, or any entry by the
Company or any of its subsidiaries into any commitment or
transaction material to the Company and its subsidiaries taken
as a whole;
(iii) any change in accounting methods or practices (including any
change in depreciation or amortization policies or rates) by
the Company or any of its subsidiaries or any revaluation by
the Company of any of its assets or any of its subsidiaries'
assets except in order to conform the accounting practices of
the subsidiaries of the Company (other than TigerTel Services)
and/or the Company with the accounting practices of TigerTel
Services;
21
(iv) any declaration, setting aside, or payment of a dividend or
other distribution with respect to the shares of the Company,
or any direct or indirect redemption, purchase or other
acquisition by the Company of any of its shares of capital
stock;
(v) any issuance or sale of any securities of the Company (other
than Common Shares pursuant to the exercise of employee stock
options and pursuant to the Company's employee share ownership
plan);
(vi) any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit
sharing, stock option (including the granting of stock
options, stock appreciation rights, performance awards, or
restricted stock awards), stock purchase or other employee
benefit plan or agreement or arrangement, or any other
increase in the compensation payable or to become payable to
any officers or key employees of the Company or any of its
subsidiaries, and neither the Company nor any of its
subsidiaries has authorized or otherwise committed itself to
do any of the foregoing other than in the ordinary and regular
course of business consistent with past practice;
(vii) any Material Contract entered into by the Company or any of
its subsidiaries, other than in the ordinary course of
business, or any amendment or default under, any Material
Contract to which the Company or any of its subsidiaries is a
party or by which it is bound; or
(viii) any agreement by the Company or any of its subsidiaries to do
any of the things described in the preceding clauses (i)
through (vii) (other than negotiations with the Purchaser and
its representatives regarding the transactions contemplated by
this Agreement and as contemplated with the Exchangeable Share
Redemption and the Consolidated Technologies Disposition).
(j) Absence of Undisclosed Liabilities. The Company has no obligations or
liabilities of any nature (matured or unmatured, fixed or contingent),
other than:
(i) those set forth or adequately provided for in the balance
sheet included in the Company Financial Statements;
(ii) those incurred in the ordinary course of business and not
required to be set forth in the Company Financial Statements
under Canadian generally accepted accounting principles; and
22
(iii) those incurred in the ordinary course of business since
December 31, 1998 and consistent with past practice.
(k) Material Contracts. The Disclosure Letter lists all of the
Material Contracts. None of the Company, its subsidiaries, nor
to the knowledge of the Company, any of the other parties
thereto, is in default or breach of, nor has the Company or
any of its subsidiaries received any notice of default or
termination under, any Material Contract and, to the knowledge
of the Company, there exists no state of facts which after
notice or lapse of time or both would constitute such a
default or breach.
(l) Customers and Suppliers. Since December 31, 1998, there has
been no termination or cancellation of, and no modification or
change in, the business relationship with any customer or
group of customers which singly or in the aggregate provided
more than 5% of the consolidated gross revenues of the Company
and its subsidiaries for the fiscal year ended December 31,
1998 (based on the pro forma combined consolidated financial
statements of TigerTel Services for the year ended December
31, 1998). The Disclosure Letter lists all independent
contractors and consultants which are currently retained to
engage in any other activities which could reasonably be
expected to produce or give rise to Owned Intellectual
Property (as hereinafter defined) and the Disclosure Letter
accurately sets out the periods during which each such
independent contractor or consultant was so retained and a
general description of the services provided by each such
independent contractor and consultant.
(m) Insurance. The Disclosure Letter lists all of the existing
insurance policies of the Company and its subsidiaries. The
Company has made available to the Purchaser accurate
particulars of the policies of insurance maintained by the
Company and its subsidiaries at the date hereof, including the
name of the insurer, the risks insured against and the amount
of coverage. All such policies are in full force and effect.
None of the Company or its subsidiaries or, to the knowledge
of the Company, any of the other parties thereto, is in
default or breach of, whether as to the payment of premiums or
otherwise, nor has the Company or any of its subsidiaries
received any notice of default or termination under, any such
policy and there exists no state of facts which after notice
or lapse of time or both could reasonably be expected to
constitute such a default or breach.
(n) Books and Records. The books, records and accounts and the
documents and other information provided to the Purchaser by
the Company and the representatives of the Company and its
subsidiaries, (i) have been maintained in accordance with good
business practices on a basis consistent with prior years,
(ii) are stated in reasonable detail and accurately and fairly
23
reflect the transactions and dispositions of the assets of the
Company and its subsidiaries and (iii) accurately and fairly
reflect the basis for the Company Financial Statements. The
Company has devised and maintains a system of internal
accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance
with management's general or specific authorization; and (ii)
transactions are recorded as necessary (A) to permit
preparation of financial statements in conformity with
Canadian generally accepted accounting principles or any other
criteria applicable to such statements and (B) to maintain
accountability for assets.
(o) Litigation. The Disclosure Letter describes all suits, claims,
actions, proceedings or investigations pending or, to the
knowledge of the Company, threatened against or relating to
the Company or any of its subsidiaries or affecting any of
their properties, licenses or assets before any court or
Governmental Entity or regulatory authority or body and the
Company is not otherwise aware of any basis for any such
claim, action, proceeding or investigation. Neither the
Company nor any of its subsidiaries, nor their respective
assets and properties, is subject to any outstanding judgment,
order, writ, injunction or decree that involves or may
involve, or restricts or may restrict, or requires or may
require, the expenditure of any amount of money as a condition
to or a necessity for the right or ability of the Company or
any of its subsidiaries, as the case may be, to conduct its
business in any manner in which it has been carried on prior
to the date hereof, or prevent or delay consummation of the
transactions contemplated by this Agreement.
(p) Environmental Matters.
(i) Except as disclosed in the Reports, (i) the Company and
its subsidiaries have conducted their respective
businesses in compliance with all applicable
Environmental Laws (as defined below) including,
without limitation, having all permits, licenses and
other approvals and authorizations necessary for the
operation of their respective businesses, (ii) none of
the properties owned by the Company or any of its
subsidiaries contains any Hazardous Substance (as
defined below) as a result of any activity of the
Company or any of its subsidiaries in amounts exceeding
the levels permitted by applicable Environmental Laws,
(iii) neither the Company nor any of its subsidiaries
has received any notices, demand letters or requests
for information from any Governmental Entity or third
party indicating that the Company or any of its
subsidiaries may be in violation of, or liable under,
any Environmental Law in connection with the ownership
or operation of its businesses, (iv) there are no
civil, criminal or administrative actions, suits,
demands, claims, hearings, investigations or
proceedings pending or threatened, against the Company
or any of its subsidiaries relating to any violation,
24
or alleged violation, of any Environmental Law, (v) no
reports have been filed, or are required to be filed,
by the Company or any of its subsidiaries concerning
the release of any Hazardous Substance or the
threatened or actual violation of any Environmental
Law, (vi) no Hazardous Substance has been disposed of,
released or transported in violation of any applicable
Environmental Law from any properties owned, leased or
operated by the Company or any of its subsidiaries as a
result of any activity of the Company or any of its
subsidiaries during the time such properties were
owned, leased or operated by the Company or any of its
subsidiaries, (vii) no underground storage tanks have
been installed, closed or removed from any properties
owned, leased or operated by the Company or any of its
subsidiaries during, in the case of the Company, the
time such properties were owned, leased or operated by
the Company and during, in the case of each subsidiary,
the time such subsidiary has been owned by the Company,
(viii) there is no asbestos or asbestos containing
material present in any of the properties owned, leased
or operated by the Company and its subsidiaries, and no
asbestos has been removed from any of such properties
during the time such properties were owned, leased or
operated by the Company or any of its subsidiaries, and
(ix) neither the Company, its subsidiaries nor any of
their respective properties are subject to any
liabilities or expenditures (fixed or contingent)
relating to any suit, settlement, court order,
administrative order, regulatory requirement, judgment
or claim asserted or arising under any Environmental
Law.
(ii) As used herein, "Environmental Law" means applicable
federal, provincial, local or non-Canadian laws or
treaties or any statute, ordinance, by-law, regulation,
binding agreement with a Governmental Entity, company
permit, or order, as the foregoing may be enacted,
amended, issued, interpreted or entered into, relating
to pollution or protection of the environment, natural
resources or human health, including laws relating to
the release of Hazardous Substances.
(iii) As used herein, "Hazardous Substance" means any
substance presently or hereafter listed, defined,
designated or classified as hazardous, toxic,
radioactive, or dangerous, or otherwise regulated,
under any Environmental Law. Hazardous Substance
includes any substance to which exposure is regulated
by any Governmental Entity or any Environmental Law
including, without limitation, any toxic waste,
pollutant, contaminant, hazardous substance, toxic
substance, hazardous waste, special waste, industrial
substance or petroleum or any derivative or by-product
thereof, radon, radioactive material, asbestos, or
25
asbestos containing material, urea formaldehyde foam
insulation, lead or polychlorinated biphenyls.
(q) No Contaminants. Neither the Company or any of its
subsidiaries has ever owned any real property. The Disclosure
Letter lists all real property or premises leased by the
Company or any of its subsidiaries. The real property on which
the buildings or other structures currently or previously
leased by the Company or its subsidiaries (the "Company
Property") has not been and is not now used as a landfill or
waste disposal site, nor has any hazardous substance or
contaminant been deposited in or disposed of on, in, under, or
at, the Company Property, nor has there been any release,
spill, emission or discharge of any contaminant at the Company
Property which would give rise to any action or claim by a
third party or a Governmental Entity relating to any violation
of or any liability under any such Environmental Laws or other
requirements.
(r) Tax Matters.
(i) The Company and each of its subsidiaries have timely
filed, or caused to be filed, all Tax Returns required
to be filed by them (all of which returns were correct
and complete) and have paid, or caused to be paid, all
Taxes that are due and payable and the Company has
provided adequate accruals in accordance with Canadian
generally accepted accounting principles in its most
recently published financial statements for any Taxes
for the period covered by such financial statements
that have not been paid, whether or not shown as being
due on any Tax Returns. The Company and each of its
subsidiaries have made adequate provision in their
respective books and records for any Taxes accruing in
respect of any period subsequent to the period covered
by such financial statements. Since such publication
date, no Tax liability not reflected in such statements
or otherwise provided for has been assessed, proposed
to be assessed, incurred or accrued other than in the
ordinary course of business. The Company and its
subsidiaries have withheld from all payments made by
them, or otherwise collected, all amounts in respect of
Taxes required to be withheld therefrom or collected by
them, and have remitted same to the applicable
Governmental Entity within the required time periods.
Neither the Company nor any of its subsidiaries has any
liability for the Taxes of any other Person.
(ii) Neither the Company nor any of its subsidiaries has
received any notification that any issues have been
raised (and are currently pending) by Revenue Canada or
any other taxing authority, including, without
limitation, any sales Tax authority, in connection with
any of the Tax Returns referred to above, and, no
26
waivers of statutes of limitations or extensions of
time have been given or requested with respect to the
Company or any of its subsidiaries. Neither the Company
nor any of its subsidiaries is a party to any agreement
providing for the allocation or sharing of Taxes with
any entity that is not a direct, wholly-owned
subsidiary of the Company. All Tax liability of the
Company and its subsidiaries has been assessed for all
fiscal years up to and including the fiscal year ended
December 31, 1998. There are no proposed (but
unassessed) additional Taxes and none has been
asserted. No Tax liens have been filed other than for
Taxes not yet due and payable.
(iii) No claim has ever been made by an authority in any
jurisdiction where the Company or any of its
subsidiaries does not file Tax Returns that the Company
or any of its subsidiaries is or may be subject to
taxation by that jurisdiction. There are no liens or
encumbrances on any of the assets of the Company or any
of its subsidiaries that arose in connection with any
failure (or alleged failure) to pay any Tax.
(iv) There are no outstanding rulings of, or requests for
rulings with, any Tax authority expressly addressed to
either the Company or any of its subsidiaries that are,
or if issued would be, binding upon the Company or any
of its subsidiaries.
(v) The Disclosure Letter lists those federal, provincial,
local and foreign income Tax Returns filed with respect
to any of the Company and its subsidiaries for any Tax
year which have been audited, which currently are the
subject of an audit or in respect of which the Company
or any of its subsidiaries have received a notice of
reassessment or audit from any Tax authority. The
Company has delivered to the Purchaser correct and
complete copies of all income Tax Returns, examination
reports, and statements of deficiencies assessed
against or agreed to by any of the Company and its
subsidiaries for any Tax year which may be subject to
reassessment by any Tax authority.
(s) Non-Arms Length Transactions.
(i) None of the Company or its subsidiaries has made any
payment or loan to, or has borrowed any monies from
or is otherwise indebted to, any officer, director,
employee or shareholder of such company or any Person
not dealing with it at arm's length (within the
meaning of the Income Tax Act (Canada)) or any
affiliate of any of the foregoing, except as
disclosed in the Company Financial Statements and
except for usual compensation, reimbursement of
27
expenses and advances paid in the ordinary course of
business consistent with past practice.
(ii) Except as disclosed in the Reports and except for
Contracts made solely between the Company and its
subsidiaries and except for contracts of employment,
none of the Company or its subsidiaries is a party to
any Contract with any officer, director, employee or
shareholder of such company or any Person not dealing
with it at arm's length (within the meaning of the
Income Tax Act (Canada)) or any affiliate of any of
the foregoing.
(t) Employees.
(i) The Disclosure Letter lists all individuals employed
by, and all individuals engaged on a contractual
basis to provide employment or sales services to, the
Company or any of its subsidiaries as at the date
hereof (the "Employees"). For each salaried Employee,
the Disclosure Letter lists such Employee's employer,
place of employment, date of hire (if known), title
or job classification, salary and commission (if
any). Neither the Company nor any of its subsidiaries
is a party to or bound by any Contracts relating to
employment, severance, retention, bonus or
confidentiality or any consulting Contracts with any
Employee or former employee of the Company or any of
its subsidiaries.
(ii) There exist no employment, consulting, severance or
indemnification agreements or arrangements between
the Company or any of its subsidiaries and any
current or former director or officer of the Company
or any of its subsidiaries pursuant to which the
Company or any such subsidiary has, or may have,
obligations, and there are no employment policies or
plans, including policies regarding incentive
compensation, stock options, severance pay or other
terms and conditions upon which any such director or
officer can be terminated which are binding on the
Company or any of its subsidiaries, and no such
director or officer is entitled to any severance
benefits from the Company or any of its subsidiaries.
(iii) Each of the Company and each of its subsidiaries has
been and is being operated in full compliance with
all laws relating to employees, including employment
standards, occupational health and safety, pay equity
and employment equity. There have been no complaints
under such laws against the Company or any of its
subsidiaries.
28
(iv) There are no complaints nor, to the knowledge of the
Company, are there any threatened complaints, against
the Company or any of its subsidiaries, before any
employment standards branch or tribunal or human
rights tribunal. Nothing has occurred which might
lead to a complaint against the Company or any of its
subsidiaries, under any human rights legislation or
employment standards legislation. There are no
outstanding decisions or settlements or pending
settlements under employment standards legislation
which place any obligation upon the Company or any of
its subsidiaries to do or refrain from doing any act.
(v) All workers compensation assessments under
legislation in Canada or any country or economic
region in which either the Company or any of its
subsidiaries, directly or indirectly, has assets or
operations in relation to the Company and each of its
subsidiaries have been paid or accrued, and neither
the Company nor any of its subsidiaries has been
subject to any special or penalty assessment under
such legislation which has not been paid.
(u) Employee Benefit Plans
(i) The Disclosure Letter lists all of the employee
benefit, health, welfare, supplemental employment
benefit, bonus, pension, supplementary executive
retirement, profit sharing, deferred compensation,
stock compensation, stock option or purchase,
retirement, hospitalization insurance, medical,
dental, legal, disability and similar plans or
arrangements or practices applicable to the Employees
or to former employees of the Company or any of its
subsidiaries which are currently maintained or
participated in by the Company or its subsidiaries
and each loan to a non-officer Employee in excess of
$10,000, and each loan to an officer or director of
the Company or any subsidiary (the "Employee Plans").
(ii) All of the Employee Plans are registered where
required by, and are in good standing under, all
applicable Laws or other legislative, administrative
or judicial promulgations applicable to the Employee
Plans and there are no actions, claims, proceedings
or governmental audits pending (other than routine
claims for benefits) relating to the Company or any
of its subsidiaries.
(iii) All of the Employee Plans have been administered and
funded in compliance with their terms and all
applicable Laws or other legislative, administrative
or judicial promulgations applicable to the Employee
Plans, and there are no unfunded liabilities in
29
respect of the Employee Plans and all required
contributions thereunder have been made in accordance
with all applicable Laws or other legislative,
administrative or judicial promulgations applicable
to the Employee Plans and the terms of such Employee
Plans.
(iv) No amendments to any Employee Plan have been promised
and no amendments to any Employee Plan will be made
or promised prior to the completion of the Offer.
(v) True and complete copies of all the Employee Plans as
amended as of the date hereof have been made
available to the Purchaser and are listed in the
Disclosure Letter.
(vi) There are no agreements or undertakings by the
Company or any of its subsidiaries to provide
post-retirement profit sharing, medical, health, life
insurance or other benefits to Employees or any
former employee of the Company or any of its
subsidiaries.
(vii) None of the Employee Plans are registered pension
plans.
(v) Labour Matters.
(i) The Disclosure Letter sets forth a complete list of
all collective bargaining agreements or other
agreements or commitments with any trade union or
other employee bargaining representatives (together,
"collective agreements") and neither the Company nor
any of its subsidiaries is in default of any of its
material obligations under such collective
agreements.
(ii) There are no outstanding tribunal proceedings of any
kind, including any proceedings which could result in
certification of a trade union as bargaining agent
for any Employees not already covered by a collective
agreement.
(iii) There are no union organizing or decertification
activities pending, or to the knowledge of the
Company, threatened involving Employees not already
covered by a collective agreement. No labour
representatives hold bargaining rights with respect
to any Employees and no labour representatives have
applied to have the Company or any of its
subsidiaries declared a related employer pursuant to
the Labour Relations Act (Ontario).
30
(iv) Neither the Company nor any of its subsidiaries has
any material unresolved grievances or material
pending arbitration cases outstanding. Neither the
Company nor any of its subsidiaries has any serious
labour problems that might materially affect the
value of the Company or its subsidiaries, taken as a
whole, or lead to an interruption of its operations
at any location. There is no strike, dispute,
slowdown, lockout, shutdown, work stoppage,
unresolved material labour union grievance, unfair
labour practice or successor rights or other
concerted action or formal grievance existing,
pending or, to the knowledge of the Company,
threatened against the Company or any of its
subsidiaries.
(w) Intellectual Property.
(i) The Disclosure Letter contains a complete and
accurate listing of all (A) registrations and
applications relating to Intellectual Property that
are owned by the Company or its subsidiaries (the
"Owned Intellectual Property"), and (B) licensed
Intellectual Property material to the Company's
business (the "Licensed Intellectual Property") and
for each the governing license agreements and (C) all
licenses or similar agreements or its arrangement
covering Intellectual Property rights to which the
Company or any of its subsidiaries is a party, either
as a licensee or licensor, or a third party
beneficiary;
(ii) The Company or one of its subsidiaries owns and
possesses all right, title and interest in and to the
Owned Intellectual Property or has a valid and
enforceable right or license to use the Licensed
Intellectual Property used in the Company's business
as currently conducted;
(iii) The Company or one of its subsidiaries is the owner
of all of the Owned Intellectual Property, with good
and marketable title thereto, free and clear of any
and all liens. To the knowledge of the Company, all
of the Owned Intellectual Property is duly and
validly registered, where applicable;
(iv) To the knowledge of the Company, the Owned and
Licensed Intellectual Property and the conduct of the
business of the Company and its subsidiaries do not
infringe upon, violate or breach the Intellectual
Property rights of any other Person;
(v) There has been no unauthorized or improper use by the
Company or its subsidiaries of the Owned or Licensed
Intellectual Property that has affected or could
reasonably be expected to affect the validity or
distinctiveness thereof or rights therein;
31
(vi) To the knowledge of the Company, no Person is
infringing or misappropriating any of the Licensed or
Owned Intellectual Property;
(vii) Neither the Company nor any of its subsidiaries has
received any written notice or claim challenging the
Company or any of its subsidiaries respecting the
validity, use or ownership of the Owned or Licensed
Intellectual Property and, to the knowledge of the
Company, there are no facts upon which such a
challenge could be made;
(viii) The consummation of the transactions contemplated by
this Agreement will not affect the availability or
terms and conditions of any material software license
to which the Company or any of its subsidiaries is a
party;
(ix) The Company has obtained any third-party consents
required relating to Owned Intellectual Property,
Licensed Intellectual Property and Material
Contracts; and
(x) The Owned Intellectual Property and Licensed
Intellectual Property will be available for use
immediately after the consummation of the
transactions contemplated by this Agreement in the
same manner as they were available for use by the
Company and its subsidiaries immediately prior to the
consummation of the transactions contemplated by this
Agreement.
(x) Compliance with Laws. The Company and its subsidiaries have
complied with and are not in violation of any applicable Laws,
orders, judgments and decrees. Without limiting the generality
of the foregoing, all securities of the Company (including,
without limitation, all options, rights or other convertible
or exchangeable securities) have been issued in compliance
with all applicable securities Laws and all securities to be
issued upon exercise of any such options, rights and other
convertible or exchangeable securities will be issued in
compliance with all applicable securities Laws.
(y) Restrictions on Business Activities. There is no agreement,
judgment, injunction, order or decree binding upon the Company
or any of its subsidiaries that has or could reasonably be
expected to have the effect of prohibiting, restricting or
impairing any business practice of the Company or any of its
subsidiaries, any acquisition of property by the Company or
any of its subsidiaries or the conduct of business by the
Company or any of its subsidiaries as currently conducted.
(z) Representations Complete. None of the representations or
warranties made by the Company herein or in the Disclosure
Letter, when such documents are read together in their
32
entirety, contains any untrue statement of a fact, or omits to
state any fact necessary in order to make the statements
contained herein or therein, in the light of the circumstances
under which made, not misleading.
(aa) No Defaults. Neither the Company nor any of its subsidiaries
is in default under, and there exists no event, condition or
occurrence which, after notice or lapse of time or both, would
constitute such a default under any contract, agreement,
license or franchise to which it is a party.
(bb) Year 2000 Compliance. The Company and its subsidiaries have
endeavoured and are currently proceeding diligently, with
reasonable care and resources, to assess the nature and scope
of the impact of the new century and related problems and
situations, including the so-called "Millennium Bug"
(collectively the "Year 2000 Problem"), on the access to, and
operations of, the management information systems of the
Company and its subsidiaries and all other computer and
digital networks owned or used by the Company and its
subsidiaries, and their respective components (including
hardware and software), and the possible solutions to any
significant problems that may arise therefrom. To the
knowledge of the Company, the Year 2000 Problem will not
affect the Company or any of its subsidiaries in such a way as
to have a Material Adverse Effect. None of the material
suppliers to the Company or any of its subsidiaries have given
any reason to believe that the Year 2000 Problem will affect
them in such a way as to have a Material Adverse Effect. The
Purchaser has been provided with access to a true and correct
copy of the most recent management report prepared by the
Company in respect of the Year 2000 Problem.
(cc) Recommendation of the Offer. The Board, after consultation
with its advisers and after receiving the report of the
independent committee of the Board, by a resolution of Board,
has unanimously (i) determined that the Offer is fair to the
Shareholders from a financial point of view and that this
Agreement and the transactions contemplated hereby are in the
best interests of the Company and the Shareholders, (ii)
approved this Agreement and the transactions contemplated
hereby, and (iii) resolved to recommend that the Shareholders
accept and tender their Common Shares to the Offer, subject to
section 8 of this Agreement and compliance with section 15 of
this Agreement, if applicable.
(dd) Fairness Opinion. The Company has received an opinion of its
financial advisor, Yorkton Securities Inc., to the effect
that, in the context of the transactions contemplated by this
Agreement, the Offer is fair to the Shareholders from a
financial point of view. Yorkton Securities Inc. has
authorized the Company to permit references to such fairness
opinion to be included in the Bid Circular.
33
(ee) Support of Directors. Each of the directors of the Company has
advised the Company that he or she intends to tender his or
her Common Shares to the Offer.
(ff) Consents and Approval. No consent, approval or authorization
of any Person (other than any Governmental Entity) is required
on the part of the Company in connection with the Offer and
the completion of the transactions contemplated hereby.
(gg) Title to Assets. The Company and each of its subsidiaries has
good title to all of its assets, leasehold interests and other
properties as reflected in the most recent balance sheet
included in the Company Financial Statements and has good
title to all of its leasehold interests and other properties
and assets acquired since the date of the most recent balance
sheet included in the Company Financial Statements, except for
such properties and assets that have been disposed of in the
ordinary course of business since the date of such balance
sheet, free and clear of all mortgages, liens, pledges,
charges or encumbrances of any nature whatsoever, except (i)
the lien for current Taxes, payments of which are not yet
delinquent, or (ii) such imperfections in title and easements
and encumbrances, if any, as are not substantial in character,
amount or extent and do not detract from the value or
interfere with the present use of the property subject thereto
or affected thereby, or otherwise impair the Company's
business operations (in the manner presently carried on by the
Company). All leases under which the Company leases any real
or personal property are in good standing, valid and effective
in accordance with their respective terms, and there is not,
under any such leases, any existing default or event which
with notice or lapse of time or both could become a default.
(hh) The Company, and each of its subsidiaries, is in possession of
all licences, permits, certificates, waivers, consents,
franchises, approvals and authorizations issued under the
Telecommunications Act (Canada), the Canadian Radio-television
and Telecommunications (Canada), the Radiocommunication Act
(Canada), and all other statutes of Canada specifically
relating to the regulation of the Canadian telecommunications
industry, (including for this purpose and to the extent not
set forth above, the orders, rules, regulations, directives,
decisions, notices and policies promulgated pursuant to such
statutes and applicable statutes or regulations, if any, of
the provinces and territories of Canada specifically relating
to the regulation of the Canadian telecommunications industry
and the orders, rules, regulations, directives, decisions,
notices and policies promulgated thereunder)
("Telecommunications Licences") required by it in order to
provide telecommunication services in the manner presently
provided. The Company, and each of its subsidiaries, is in
compliance in all material respects with the terms of each of
the Telecommunications Licences and has timely filed all
material renewal applications with respect to the
Telecommunications Licences, no protests or competing
34
applications have been filed with respect to such renewal
applications and nothing has come to the attention of the
Company that would lead it to conclude that such renewal
applications would not be granted in the ordinary course.
(ii) The Company, and its subsidiaries, have all requisite
corporate power and authority to enter into the Consolidated
Disposition Agreements and to carry out the transactions
contemplated thereby and under the Exchangeable Share
Redemption subject to any required approval of the holders of
Exchangeable Shares. The execution and delivery of the
Consolidated Disposition Agreements and the agreements entered
into in connection with the Exchangeable Share Redemption and
the consummation of the transactions contemplated thereby have
been duly and validly authorized by all necessary corporate
action on the part of the Company and its subsidiaries and no
other corporate proceedings on the part of the Company and its
subsidiaries are necessary to authorize such agreements. Each
of the Consolidated Disposition Agreements and the agreements
entered into in connection with the Exchangeable Share
Redemption has been duly executed and delivered by the
Company, and/or its subsidiaries, and constitutes a legal,
valid and binding agreement enforceable against the Company,
and/or its subsidiaries, in accordance with its terms,
subject, however, to the usual limitations with respect to
enforcement imposed by law in connection with bankruptcy or
similar proceedings and the availability of equitable
remedies. No approval, authorization, registration, consent or
order or other action of or filing with any person, including
any court, administrative agency or other governmental
authority is required for the execution and delivery of the
Consolidated Disposition Agreements and the agreements entered
into in connection with the Exchangeable Share Redemption and
the documents to be delivered thereunder or the consummation
by the Company, and its subsidiaries, of the transactions
contemplated thereby.
(jj) Neither the execution and delivery of the Consolidated
Disposition Agreements or the agreements entered into in
connection with the Exchangeable Share Redemption or the
consummation of the transactions contemplated thereby or in
compliance with any of the provisions thereof will (i)
conflict with or result in any breach of any provision of the
Company's or any of its subsidiaries' articles or by-laws,
(ii) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or
provisions of any material note, bond, mortgage, indenture,
licence, lease, contract, agreement or other instrument or
obligation to which the Company or any of its subsidiaries is
a party or by which any of them or any of their properties or
assets may be bound, or (iii) violate any law, order, writ,
35
injunction, decree, statute, rule or regulation applicable to
the Company or any of its subsidiaries or any of their
properties or assets (except, in the case of (iii), for such
violations that could not reasonably be expected to, in the
aggregate, constitute a Material Adverse Effect).
(kk) Consolidated Technologies Indebtedness.
(i) as of the date hereof, the amount of the outstanding
principal owing to TigerTel Services under the
Consolidated Technologies Notes is $949,802.94;
(ii) as of the date hereof, the amount of the accrued but
unpaid interest owing to TigerTel Services under the
Consolidated Technologies Notes is $11,618.65;
(iii) the Consolidated Technologies Notes have been duly
made and TigerTel Services is the sole legal and
beneficial holder of the Consolidated Technologies
Notes free and clear of any liens, claims or
encumbrances;
(iv) each of the Consolidated Technologies Notes, the
Consolidated Technologies GSA, the Consolidated
Holdings GSA and the Consolidated Holdings Guarantee
are in full force and effect unamended as of the date
hereof;
(v) the Purchaser has been provided true and complete
copies of the Consolidated Technologies Notes, the
Consolidated Technologies GSA, the Consolidated
Holdings GSA and the Consolidated Holdings Guarantee;
(vi) the security interest granted in favour of TigerTel
Services pursuant to the Consolidated Technologies
GSA and the Consolidated Holdings GSA has been
properly perfected and creates a first priority
security interest in the collateral described
therein;
(vii) each of Consolidated Technologies Holdings Inc. and
Consolidated Technologies Inc. have not granted or
permitted to exist any security interest or other
encumbrance in favour of any party other than
TigerTel Services covering the collateral described
in each of the Consolidated Technologies GSA and the
Consolidated Holdings GSA;
(viii) the Consolidated Holdings Guarantee guarantees all
obligations of Consolidated Technologies Inc. owing
to TigerTel Services including those obligations
contained in the Consolidated Technologies Notes;
36
(ix) the Consolidated Holdings GSA properly secures all of
the obligations of Consolidated Technologies Holdings
Inc. to TigerTel Services including the obligations
of Consolidated Technologies Holdings Inc. under the
Consolidated Holdings Guarantee; and
(x) the Consolidated Technologies GSA properly secures
all obligations of Consolidated Technologies Inc. to
TigerTel Services including the obligations of
Consolidated Technologies Inc. under the Consolidated
Technologies Notes.
7. Representations and Warranties of the Purchaser. The Purchaser represents
and warrants to the Company as follows:
(a) Organization. The Purchaser is a corporation duly organized and
validly existing under the laws of its jurisdiction of incorporation.
(b) Authority. The Purchaser has all requisite corporate power and
authority to enter into this Agreement, to make the Offer and to carry
out the transactions contemplated hereby and by the Offer. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized
by all necessary corporate action on the part of the Purchaser, and no
other corporate proceedings on the part of the Purchaser are necessary
to authorize this Agreement. The Agreement has been duly executed and
delivered by the Purchaser and constitutes a legal, valid and binding
agreement enforceable by the Company against the Purchaser in
accordance with its terms, subject, however, to the usual limitations
with respect to enforcement imposed by law in connection with
bankruptcy or similar proceedings and the availability of equitable
remedies.
(c) No Conflict. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby nor
compliance with any of the provisions hereof will (i) conflict with or
result in any breach of any provision of the constating documents of
the Purchaser or the Purchaser, as the case may be, (ii) result in a
violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of
termination cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
license, lease, contract, agreement or other instrument or obligation
to which the Purchaser or any of its subsidiaries is a party or by
which any of them or any of their properties or assets may be bound,
other than such violations, breaches or defaults that shall have been
waived, cured or otherwise consented to in accordance with the terms
of such agreements or instruments or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the
37
Purchaser or any of its subsidiaries or any of their properties or
assets, except in the case of (ii) and (iii) for violations, breaches
or defaults that could not reasonably be expected to, in the
aggregate, materially and adversely affect the Purchaser and its
subsidiaries taken as a whole.
(d) Financing. The Purchaser has entered into adequate arrangements
sufficient to ensure, upon satisfaction of the conditions of the
Offer, that the required funds are available to effect the full
payment by the Purchaser of the cash consideration payable pursuant to
the Offer.
8. Exclusivity.
(a) The Company shall not, directly or indirectly, through any officer,
director, employee, Representative, financial advisor or agent, or any
of its subsidiaries, (i) solicit, initiate or knowingly encourage
(including by way of furnishing information or entering into any form
of agreement, arrangement or understanding) the initiation of any
Acquisition Proposal or inquiries or proposals in connection
therewith, (ii) participate in any discussions or negotiations
regarding any Acquisition Proposal, (iii) withdraw or modify the
approval of the Board of the transactions contemplated hereby in a
manner adverse to the Purchaser, (iv) approve or recommend any
Acquisition Proposal, or (v) enter into any agreement related to any
Acquisition Proposal; provided, however, that, subject to compliance
with section 9, but notwithstanding the preceding part of this section
8(a) or any other provision of this Agreement, nothing shall prevent
the Board from considering, negotiating, approving, recommending to
its shareholders or entering into an agreement in respect of an
unsolicited bona fide written Acquisition Proposal (x) that the Board
determines in good faith, after receiving (i) a written opinion from
its financial advisors (a copy of which shall be provided to the
Purchaser) that the Acquisition Proposal would reasonably be expected
to, if consummated in accordance with its terms, result in a
transaction more favourable to Shareholders from a financial point of
view than the transaction contemplated by this Agreement, and (ii) a
written opinion of outside counsel (a copy of which shall be provided
to the Purchaser) to the effect that it is appropriate that the Board
take such action in order to discharge properly its fiduciary duties,
would reasonably be expected to, if consummated in accordance with its
terms, result in a transaction more favourable to its Shareholders
than the transaction contemplated by this Agreement, and (y) that is
received prior to the Expiry Time (any such Acquisition Proposal being
referred to herein as a "Superior Proposal").
(b) The Company shall forthwith notify the Purchaser, at first orally and
then in writing, of all current and future Acquisition Proposals of
which its directors or senior officers are or become aware, or any
38
amendments to the foregoing, or any request for non-public information
relating to the Company or any of its subsidiaries in connection with
an Acquisition Proposal or for access to the properties, books or
records of the Company or any of its subsidiaries by any Person. Such
notice shall include a description of the material terms and
conditions of any proposal and provide such details of the proposal,
inquiry or contact as the Purchaser may reasonably request including
the identity of the Person making such proposal, inquiry or contact.
(c) If the Company receives a request for material non-public information
from a Person who proposes a bona fide Acquisition Proposal in respect
of the Company (the existence and content of which have been disclosed
to the Purchaser), and the Board determines that such proposal would
be likely to be a Superior Proposal pursuant to section 8(a) having
received the advice referred to therein, then, and only in such case,
the Board may, subject to the execution by such Person of a
non-disclosure agreement, provide such Person with access to
information regarding the Company and its subsidiaries; provided,
however, that the Person making the Acquisition Proposal shall not be
precluded under such non-disclosure agreement from making the
Acquisition Proposal, and provided further that the Company sends a
copy of any such non-disclosure agreement to the Purchaser immediately
upon its execution and the Purchaser is provided with a list or copies
of the information provided to such Person and immediately provided
with access to similar information to which such Person was provided.
(d) The Company shall ensure that its officers, directors and employees
and its subsidiaries and their officers, directors and employees and
any financial advisors or other advisors or Representatives retained
by it are aware of the provisions of this section 8 and, for greater
certainty, the Company shall be responsible for any breach of this
section 8 by its financial advisors or other advisors or
Representatives.
9. Notice of Superior Proposal Determination.
(a) The Company shall not accept, approve, recommend or enter into any
agreement, arrangement or understanding in respect of an Acquisition
Proposal (other than a non-disclosure agreement as contemplated by
section 8(c)) unless (i) it has provided the Purchaser with a copy of
the Acquisition Proposal document which the Board has determined would
be a Superior Proposal, and (ii) five Business Days shall have elapsed
from the later of the date the Purchaser received notice of the
Company's proposed determination to accept, approve, recommend or
enter into an agreement in respect of such Acquisition Proposal, and
the date the Purchaser received a copy of the Acquisition Proposal.
39
Information provided under this section 9(a) shall constitute
Information for the purposes of section 10(b).
(b) During such five Business Day period, the Company acknowledges that
the Purchaser shall have the opportunity, but not the obligation, to
offer to amend the terms of this Agreement and the Offer. The Board
will review any offer by the Purchaser to amend the terms of this
Agreement and the Offer in good faith in order to determine, in its
discretion in the exercise of its fiduciary duties, whether the Offer,
as amended, upon acceptance by the Company would result in the
Acquisition Proposal not being a Superior Proposal. If the Board so
determines, it will enter into an amended agreement with the Purchaser
reflecting the amended proposal. If the Board continues to believe, in
good faith and after consultation with its financial advisors and
outside counsel, that the Acquisition Proposal is nonetheless a
Superior Proposal and therefore rejects the amended proposal, the
Company shall terminate the Agreement under section 14(b)(iii)
forthwith and pay to the Purchaser the compensation payable to the
Purchaser under section 15.
(c) The Company also acknowledges and agrees that each successive
modification of any Acquisition Proposal shall constitute a new
Acquisition Proposal for purposes of the requirement under clause (ii)
of section 9(a) to initiate an additional five Business Day notice
period.
10. Access to Information.
(a) Subject to sections 10(b) to and including 10(h) and applicable Laws,
upon reasonable notice, the Company shall (and shall cause each of its
subsidiaries to) continue to afford the Representatives of the
Purchaser access, during normal business hours from the date hereof
and until the earlier of the Expiry Time or the termination of this
Agreement, to its properties, books, contracts and records as well as
to its management personnel, and, during such period, each party shall
(and shall cause each of its subsidiaries to) furnish promptly to the
other party all information concerning its business, properties and
personnel as such party may reasonably request, including monthly
financial information.
(b) The Information will be kept strictly confidential and shall not,
without the prior written consent of the Company, be disclosed by the
Purchaser, or by its Representatives, in any manner whatsoever, in
whole or in part, and shall not be used by the Purchaser or its
Representatives other than in connection with the Offer. Moreover, the
Purchaser agrees to reveal the Information only to its Representatives
who have a reasonable need to know the Information for the purposes of
evaluating the Offer, who are informed by it of the confidential
nature of the Information and who have agreed to act in accordance
with the terms and conditions of this Agreement. Notwithstanding such
40
agreement, the Purchaser shall continue to be responsible for any
breach of this Agreement by its Representatives and shall indemnify
and save the Company harmless from any breach by any of its
Representatives.
(c) All copies of the Information, except for that portion of the
Information which consists of analyses, compilations, forecasts,
studies or other documents prepared by the Purchaser or its
Representatives, will be returned to the Company immediately upon the
termination of this Agreement. That portion of the Information which
consists of analyses, compilations, forecasts, studies or other
documents prepared by the Purchaser or its Representatives, will be
destroyed upon the Company's request and any oral Information will
continue to be subject to the terms of this Agreement. Upon the
request of the Company, the Purchaser shall provide a certificate
certifying as to the complete return and destruction of all
Information in accordance with the terms of this paragraph.
(d) The Purchaser acknowledges that the Information is confidential and a
valuable asset of the Company and all right, title and interest in and
to the Information is and at all times shall remain the exclusive
property of the Company.
(e) If the Purchaser or anyone to whom the Purchaser transmits the
Information pursuant to this Agreement becomes legally compelled to
disclose any of the Information, the Purchaser shall provide the
Company with prompt notice so that the Company may seek a protective
order or other appropriate remedy and/or waive compliance with the
provisions of this Agreement. If such protective order or other remedy
is not obtained or the Company waives compliance with the provisions
of this Agreement, the Purchaser shall furnish only that portion of
the Information which it is advised, by written opinion of counsel
addressed to the Purchaser and to the Company, is legally required and
shall exercise commercially reasonable efforts to obtain reliable
assurance that confidential treatment will be accorded the
Information.
(f) Without the prior written consent of the Company, until the earlier of
the acquisition by the Purchaser of 100% of the Common Shares pursuant
to the transactions contemplated by this Agreement and December 31,
2000, neither the Purchaser nor any of its affiliates shall, directly
or indirectly, solicit for employment any person who is then employed
or who, within the 90 day period prior to the date of such
solicitation, was employed (either as an employee or a consultant) by
the Company or any of its subsidiaries.
(g) The Purchaser acknowledges that disclosure of any Information may
cause significant damage and harm to the Company, its affiliates,
subsidiaries and shareholders and that remedies at law may be
41
inadequate to protect against breach of this Agreement, and the
Purchaser hereby in advance agrees to the granting of injunctive
relief in favour of the Company without proof of actual damages, in
addition to any other remedy the Company may be entitled to.
(h) The provisions of sections 10(b) to and including 10(h) of this
section 10 shall survive for a period of two years after the
termination of this Agreement.
(i) Each of the Purchaser and the Company shall deliver, at the closing of
the transactions contemplated hereby, such customary certificates,
resolutions and other closing documents as may be required by the
other parties hereto, acting reasonably.
11. Fees and Expenses. The Company and the Purchaser will each pay their
respective fees and expenses (including fees and expenses of legal counsel,
investment bankers, brokers or other representatives or consultants) in
connection with the transactions contemplated hereby.
12. Commissions. The Company represents and warrants to the Purchaser that it
has not dealt with any broker or finder in connection with this letter or
the transactions contemplated herein and that no person or entity is
entitled to any brokerage or finder's fee, commission or other compensation
on account of any such dealings on behalf of the Company, other than
Yorkton Securities Inc., which the Company has agreed to pay an advisory
fee pursuant to an agreement dated November 19, 1999, a copy of which was
provided to the Purchaser. The Company shall indemnify, save and hold the
Purchaser harmless from and against any and all losses, costs or expenses
(including, without limitation, any and all attorneys' fees related to
suits, actions or judgements incident hereto), whether direct, contingent
or consequential, and no matter how arising, in any way related to or
arising from any breach of the representations and warranties contained in
this paragraph.
13. Binding Nature. The parties acknowledge that this Agreement represents the
binding and legally enforceable obligations of the parties hereto with
respect of the matters covered hereby. The parties each agree to proceed in
good faith to cause their respective counsel, accountants and personnel to
obtain any and all necessary authorizations, regulatory approvals and
consents as may be required or desirable to consummate the Offer.
14. Termination.
(a) If any condition contained in section 2 is not satisfied at or before
the Proposed Offer Date to the satisfaction of the Purchaser, or if
any of the conditions set forth in Section 4(a), (f), (h), (i) and (j)
42
of Schedule "A" are not satisfied at the Expiry Time to the
satisfaction of the Purchaser, then the Purchaser may by notice to the
Company terminate this Agreement and the obligations of the parties
hereunder except as otherwise herein provided.
(b) This Agreement may, until the Expiry Time:
(i) be terminated by mutual agreement of the Company and the
Purchaser;
(ii) be terminated by the Company if the Purchaser breaches this
Agreement in any material respect;
(iii) be terminated by the Company, provided that the Company is not
then in breach or default in any material respect of any of its
obligations hereunder, upon any determination by the Board at the
conclusion of the process set out in sections 8 and 9 that an
Acquisition Proposal constitutes a Superior Proposal, and further
provided the Company has paid the compensation payable to the
Purchaser under section 15;
(iv) be terminated by the Purchaser if the Company breaches this
Agreement in any material respect;
(v) be terminated by the Purchaser if at any time after the date
hereof;
(A) the Board shall have approved or recommended any Superior
Proposal, or determined at the conclusion of the process set
out in sections 8 and 9 that any Acquisition Proposal is a
Superior Proposal, or resolved to take any of the foregoing
actions,
(B) the Board shall have withdrawn or modified in a manner
adverse to the Purchaser or shall have failed upon request
by the Purchaser to confirm its approval or recommendation
of the Offer (other than as a direct result of and in direct
response to a material breach by the Purchaser of its
obligations hereunder), or resolved to take any of the
foregoing actions, or
(C) an Acquisition Proposal is publicly announced, proposed,
offered or made by a third party to the Shareholders and at
the Expiry Time such Acquisition Proposal has not expired or
been withdrawn and the minimum share tender condition (as
defined in section 4(a) of Schedule "A") has not been
satisfied or waived by the Purchaser.
43
(c) If the Purchaser has not taken up and paid for the Common Shares
deposited under the Offer on or before the date that is the earliest
of (i) the date by which the Purchaser is required to take up and pay
for Common Shares tendered to the Offer pursuant to the provisions of
the Securities Act; (ii) 10 days after the Expiry Time; and (iii) the
75th day after the date of the Offer if no Acquisition Proposal has
been made or publicly announced by a third party prior to such 75th
day and when the Offer is outstanding, then this Agreement shall
automatically terminate, provided that the Company and the Purchaser
may mutually agree to extend the date for termination of the
Agreement.
(d) If this Agreement is terminated in accordance with the foregoing
provisions of this section 14, no party shall have any further
liability to perform its obligations hereunder except as otherwise
expressly contemplated hereby, and provided that neither the
termination of this Agreement nor anything contained in this section
14(d) shall relieve any party from any liability for any breach by it
of this Agreement, including from any inaccuracy in its
representations and warranties and any non-performance by it of its
covenants made herein.
15. Purchaser's Compensation.
(a) If the Agreement is terminated pursuant to section 14(b)(iii), section
14(b)(v)(A) or section 14(b)(v)(B), provided the Purchaser is not in
material breach of its obligations to make the Offer in accordance
with this Agreement, then the Company shall pay to the Purchaser an
amount equal to the Cash Compensation Amount in immediately available
funds to an account designated by the Purchaser. Such cash payment
shall be paid, in case of termination by the Company, prior to any
such termination and in case of termination by the Purchaser,
forthwith following any such termination.
(b) If the Agreement is terminated pursuant to section 14(a), provided the
Purchaser is not in material breach of its obligations under this
Agreement, then the Company shall pay to the Purchaser the aggregate
out of pocket costs and expenses of the Purchaser, including without
limitation, the amount of the fees and expenses (including
disbursements) of counsel to the Purchaser and its affiliates in
connection with the transactions contemplated by this Agreement
incurred in the period from and including the date hereof to and
including the date of termination by the Purchaser pursuant to Section
14(a) to a maximum of $250,000 in immediately available funds to an
account designated by the Purchaser. Such payment shall be due on the
first Business Day following the receipt by the Company of
documentation satisfactory to it, acting reasonably, substantiating
the incurrence of such costs and expenses.
44
(c) For greater certainty, the parties hereto agree that the compensation
to be received pursuant to section 15(a) or 15(b) is the sole remedy
of the party receiving such payment provided that nothing shall
preclude a party from seeking injunctive relief to restrain any breach
or threatened breach of the covenants or agreements set forth in this
Agreement (including pursuant to section 10 or otherwise to obtain
specific performance of any of such act, covenants or agreements,
without the necessity or posting bond or security in connection
therewith.
16. Notice and Cure Provisions.
(a) The Purchaser and the Company shall give prompt notice to the other,
after obtaining knowledge of the occurrence, or failure to occur, at
any time until the Expiry Time, of any event or state of facts which
occurrence or failure would, or would be likely to:
(i) cause any of the representations or warranties of the other
contained herein to be untrue or inaccurate in any material
respect on the date made; or
(ii) result in the failure to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by the
other hereunder prior to the Expiry Time which is susceptible to
being cured.
(b) Neither the Purchaser nor the Company may elect not to complete the
transactions contemplated hereby pursuant to the conditions contained
herein, or exercise any termination right arising therefrom, unless
forthwith and in any event prior to the Expiry Time, the Purchaser or
the Company has, as the case may be, delivered a written notice to the
other specifying in reasonable detail all breaches of covenants,
representations and warranties or other matters which the Purchaser of
the Company is, as the case may be, asserting as the basis for the
non-fulfilment of the applicable condition precedent or the exercise
of the termination right, as the case may be. If any such notice is
delivered, provided that the Purchaser or the Company is, as the case
may be, proceeding diligently to cure such matter, if such matter is
susceptible to being cured, the other may not terminate this Agreement
until the earlier of the Expiry Time and the expiration of a period of
10 days from such notice.
17. Publication/Disclosure. Except as may otherwise be required by law or by
regulatory authorities having discretion over such matters, each party
hereto agrees that it will not publish, file with any securities commission
or other regulatory authority, or otherwise make public or make any public
disclosure with respect to this Agreement or the negotiations related to
this Agreement, in each case without the prior approval of the other party.
If any party deems that it is required by law or such regulatory authority
45
to make any public announcement or release concerning this Agreement, such
party agrees to provide a written copy thereof to the other party in
advance of any such announcement or release and to reasonably consider any
suggested modifications, which will be provided by the other party in a
timely matter. The parties acknowledge that the terms of this Agreement
will be summarized in the Bid Circular and in the Directors' Circular.
18. Notices. Any notice required or permitted to be given hereunder shall be
written, and shall be either (i) personally delivered, (ii) sent by a
reputable common carrier guaranteeing next Business Day delivery, or (iii)
sent by facsimile, to the respective addresses of the parties set forth
below, or to such other place as any party hereto may by notice given as
provided herein designate for receipt of notices hereunder. Any such notice
shall be deemed given and effective upon receipt or refusal of receipt
thereof by the primary party to whom it is to be sent.
46
If to the Company:
TigerTel Inc.
00 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX X0X 0X0
Attention: Xxxxxx Xxxxx
Facsimile: (000) 000-0000
with a required copy to: Xxxxxxx Xxxxxx
Xxx 00
Xxxxxxx Xxxxx Xxxxxx Tower
0000-000 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx Xxxxx
Facsimile: (000) 000-0000
If to the Purchaser or the Purchaser: AT&T Canada Corp.
000 Xxxxxxx Xxxxxx Xxxx
Xxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
with a required copy to: AT&T Canada Inc.
000 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
with a required copy to: Osler, Xxxxxx & Xxxxxxxx XXX
X.X. Xxx 00
1 First Canadian Place
Toronto, Ontario
M5X 1B8
Attention: Xxxxxxx Xxxxx
Facsimile: (000) 000-0000
47
19. Non-Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements contained in this Agreement
shall terminate on the Expiry Time or upon the termination of this
Agreement pursuant to section 14, as the case may be, except that the
agreements set forth in section 4 (further action, reasonable best efforts)
and section 17 shall survive the Expiry Time indefinitely and those set
forth in section 10, section 11, section 15, and section 22 shall survive
termination indefinitely (in accordance with the terms of such provisions).
20. Knowledge. In this Agreement, references to "to the knowledge of" means the
actual knowledge of any of the Executive Officers of the Company or the
Purchaser, as the case may be, after reasonable inquiry, and such Executive
Officers shall make such inquiry as is reasonable in the circumstances.
21. Principles of Interpretation. The division of this Agreement into sections
and other portions and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation
hereof. Unless otherwise indicated, all references to a "section" or
"Schedule" followed by a number and/or a letter refer to the specified
section or Schedule of this Agreement. The terms "this Agreement",
"hereof", "herein" and "hereunder" and similar expressions refer to this
Agreement (including the Schedules hereto) and not to any particular
section or other portion hereof and include any agreement or instrument
supplementary or ancillary hereto. Unless the context otherwise requires,
words importing the singular shall include the plural and vice versa and
words importing any gender shall include all genders. In the event that any
date on which any action is required to be taken hereunder by any of the
parties hereto is not a Business Day, such action shall be required to be
taken on the next succeeding day which is a Business Day.
22. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein. The parties hereto irrevocably submit to the
non-exclusive jurisdiction of the courts of the Province of Ontario in
respect of the interpretation and enforcement of this Agreement.
23. Counterparts. This Agreement may be executed by facsimile signature, or
otherwise, in two or more counterparts, all of which taken together will
constitute one binding agreement.
24. Entire Agreement. This Agreement constitutes and comprises the entire
agreement and understanding between the Company and the Purchaser with
regard to the subject matter hereof and supersedes all prior agreements and
undertakings, both written and oral, among the parties, or any of them,
with respect to the subject matter hereof
48
25. Beneficiaries. Except as expressly provided herein, no third party shall be
entitled to enforce any provision hereof, and no third party is intended to
benefit from this Agreement.
26. Authorship. The parties hereto agree that the terms and language of this
Agreement and all agreements contemplated hereby were the results of
negotiations between the parties and, as a result, there shall be no
presumption that any ambiguity in this Agreement shall be resolved against
either party.
27. Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy,
all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance
of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.
28. Assignment. This Agreement shall not be assigned by operation of law or
otherwise, except that the Purchaser may assign all or any of its rights
and obligations hereunder to any direct or indirect wholly-owned subsidiary
of the Purchaser, provided that no such assignment shall relieve the
Purchaser of its obligations hereunder if such assignee does not perform
such obligations.
29. Amendment; Waiver. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by each of the parties hereto. Any party hereto may (a) extend the
time for the performance of any of the obligations or other acts of the
other party hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto
and (c) waive compliance with any of the agreements or conditions contained
herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
49
If the foregoing accurately expresses the Company's understanding and agreement
with respect to the matters described herein, please execute this letter below
and return it to us.
AT&T CANADA CORP.
By: /S/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxx
Senior Vice President and
General Counsel
Accepted and Agreed as of November 28, 1999.
TIGERTEL INC.
By: /S/ Xxxxxx X. Xxxxx
------------------------------
Xxxxxx X. Xxxxx
Chairman and CEO
50
SCHEDULE "A"
TERMS OF THE OFFER
1. General Terms. The Offer shall be made to purchase all of the Common Shares
by way of a take-over bid circular prepared in compliance with the
Securities Act and other applicable provincial securities laws and, if
necessary, in accordance with the applicable laws of the United States. The
Offer shall be made on the terms herein set forth and upon such other terms
and conditions as are required by law and shall be open for acceptance for
a period of not less than 20 business days and shall have an initial expiry
date not later than December 30, 1999 and may be extended as permitted in
the circumstances prescribed in section 2 below.
The Purchaser shall have the right to vary the terms of the Offer to
effect one or more of the following:
(a) increase the consideration offered for the Common Shares;
(b) extend the period during which Common Shares may be deposited to the
Offer;
(c) waive any condition of the Offer or reduce the minimum deposit
condition contained in paragraph 4(a) hereof; and
(d) comply with applicable securities laws.
2. Maximum Offer Period. Except as described in the following paragraph, the
Purchaser shall no later than 75 calendar days from the date of the Offer
either:
(a) withdraw the Offer and return all Common Shares deposited thereunder;
or
(b) waive any conditions that have not been satisfied, if any, and take up
and pay for all Common Shares deposited under the Offer.
The Offer may be extended by the Purchaser beyond the date which is 75
calendar days from the date of the Offer, from time-to-time, in the event
that the Purchaser first takes up and pays for all deposited Common Shares.
3. Price of the Offer. The Purchaser shall pay, for each whole Common Share
validly deposited under the Offer and not withdrawn, $9.25 in cash.
4. Conditions of the Offer. The Offer shall not be subject to any conditions
other than the following:
(a) there shall have been validly deposited and not withdrawn pursuant to
the Offer a number of Common Shares which constitutes at least 90% of
the Common Shares outstanding (calculated on a fully diluted basis)
(the "minimum share tender condition");
(b) Competition Act Approval shall have been obtained in connection with
the Offer and no other governmental authority or other person shall
have opposed or threatened to oppose the purchase of the Common Shares
(including any application for interim relief);
(c) the Purchaser shall have obtained such orders or exemptive relief from
the appropriate governmental or regulatory authorities in each
applicable jurisdiction as are necessary in connection with completing
the Offer and the transactions contemplated thereby;
(d) there shall not exist any prohibition at law against the Purchaser
making the Offer or taking up and paying for Common Shares deposited
under the Offer, or completing any subsequent compulsory acquisition
or going private transaction;
(e) (i) no act, action, suit or proceeding shall have been threatened or
taken before or by any domestic or foreign court, tribunal or
governmental agency or other regulatory authority or
administrative agency or commission or before or by any elected
or appointed public official or private person, or by any other
person, in Canada or elsewhere, whether or not having the force
of law; and
(ii) no law, regulation, policy, directive or order, whether or not
having the force of law, shall have been proposed, enacted,
promulgated or applied,
to cease trade, enjoin, prohibit or impose material limitations or
conditions on the purchase by or the sale to the Purchaser of the
Common Shares or the rights of the Purchaser to own or exercise full
rights of ownership of Common Shares or which, if the Offer were
consummated, could materially and adversely affect the Purchaser's
ability subsequently to effect a going private transaction;
(f) the covenants and agreements contained in each of the Lock-up
Agreements, to be performed or complied with by a party other than the
Purchaser, shall have been performed or complied with;
(g) each of the Specified Representations and Warranties shall be true and
correct in all respects, each of the other representations and
warranties of the Company set forth in this Agreement shall be true
and correct in all material respects, and the Company shall have
performed in all respects any covenant or complied in all respects
with any agreement to be performed by it under this Agreement;
2
(h) the Exchangeable Share Resolution shall have been approved by not less
than two-thirds of the votes cast on such resolution at the
Exchangeable Shareholder Meeting duly held in accordance with the
relevant provisions of the OBCA and the Articles of TigerTel Services;
Articles of Amendment amending the Articles of TigerTel Services in
accordance with the Exchangeable Share Resolution shall have been duly
filed with the Director under the OBCA and shall be effective on or
before the Expiry Time; the board of directors of TigerTel Services
shall have set an Automatic Redemption Date approved by the Purchaser;
and Applied shall have duly given notice of the exercise of its
Redemption Call Right and shall have taken all other actions requested
by the Purchaser, acting reasonably, to ensure that the Exchangeable
Share Redemption shall occur on the Automatic Redemption Date;
(i) the Consolidated Technologies Agreements shall have been entered into
and the Consolidated Technologies Disposition shall have been
consummated;
(j) the Purchaser shall have been provided executed copies of a letter
from IBM Credit Corporation and IBM Canada addressed to Applied, the
Company and the Purchaser, in form and substance satisfactory to the
Purchaser, acting reasonably, which provides for the following: (i)
that upon the repayment of the IBM Indebtedness by the Company, the
Company shall be able to effect the IBM Termination without payment of
any penalty or premium, (ii) that upon the IBM Termination, IBM Credit
Corporation will discharge and release any liens, security interests
or other encumbrances now or hereafter existing on the Common Shares
of the Company owned by Applied such that upon such discharge, the
Common Shares of the Company owned by Applied will be free and clear
of any and all mortgages, liens, charges, restrictions, security
interests, adverse claims, pledges, encumbrances and demands or rights
of others of any nature or kind whatsoever arising under the IBM Loan
Documents, and (iii) that upon the IBM Termination, IBM Canada will
discharge and release any liens, security interests or other
encumbrances now or hereafter existing over the property of the
Company or any of its subsidiaries, including without limitation, any
liens, security interests or other encumbrances now or hereafter
existing over any goods, equipment, property, monetary obligations,
undertaking or assets of the Company or any of its subsidiaries such
that upon such discharge, the property, undertaking, goods, equipment,
monetary obligations and assets of the Company and each of its
subsidiaries will be free and clear and clear of any and all
mortgages, liens, charges, restrictions, security interests, adverse
claims, pledges, encumbrances and demands or rights of others of any
nature or kind whatsoever arising under the IBM Loan Documents; and
(k) the Purchaser shall have entered into the Employment Agreements.
3
The foregoing conditions are for the exclusive benefit of the Purchaser and may
be asserted by the Purchaser regardless of the circumstances (including any
action or inaction by the Purchaser) giving rise to such assertion or may be
waived by the Purchaser in whole or in part at any time and from time to time,
in its sole discretion and shall be exclusive of any other right which the
Purchaser may have under the Offer. The failure by the Purchaser at any time to
exercise or assert any of the foregoing rights shall not be deemed to constitute
a waiver of any such right, the waiver of any such right with respect to
particular facts or other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances and each such right shall be deemed
an on-going right which may be asserted at any time and from time to time by the
Purchaser. Any determination by the Purchaser concerning the foregoing
conditions shall be final and binding upon all parties.
4
SCHEDULE "B"
DEFINITIONS
"Acquisition Proposal" means (i) any sale of material assets of the Company or
any of its subsidiaries, other than sales of inventory or accounts receivable or
sales in the ordinary course, of any lease, long-term supply agreement or any
other agreement having the same economic effect as such a sale, (ii) any
amalgamation, merger, consolidation, take-over bid, reorganization, dissolution,
recapitalization, business combination or similar transaction involving the
Company or any of the Common Shares (or rights to acquire such shares), or (iii)
a sale or transfer, directly or indirectly, of any of the Common Shares held by
Applied other than as provided for or permitted by the Applied Lock-Up
Agreement;
"Additional Lock-up Agreement" means agreement entered into with Cote 100 Inc.
substantially in the form of the Applied Lock-up Agreement;
"Applied Lock-Up Agreement" has the meaning ascribed to it in the Agreement;
"Appropriate Regulatory Approvals" means those sanctions, rulings, consents,
orders, exemptions, permits and other approvals (including the lapse, without
objection, of a prescribed time under a statute or regulation that states that a
transaction may be implemented if a prescribed time lapses following the giving
of notice without an objection being made) of any Government Entity, regulatory
agency or self-regulatory organization, as set out on Schedule "C" hereto;
"Articles" means the Articles of Amalgamation of TigerTel Services dated January
1, 1999, as amended by Articles of Amendment dated February 9, 1999;
"Business Day" means any day on which commercial banks are open for business in
Xxx Xxxx, Xxx Xxxx xxx Xxxxxxx, Xxxxxxx other than a Saturday, a Sunday or a day
observed as a holiday in Toronto, Ontario under the laws of the Province of
Ontario or the federal laws of Canada applicable therein or in New York, New
York under the laws of the State of New York or the federal laws of the United
States of America applicable therein;
"Cash Compensation Amount" means $3,471,306;
"CBCA" means the Canada Business Corporations Act (Canada) as now in effect and
as it may be amended from time to time prior to the Expiry Time;
"Commissioner" means the Commission of Competition appointed under the
Competition Act;
"Company Financial Statements" has the meaning ascribed thereto in section 6(h);
"Company Options" means the outstanding stock options providing for the issuance
of 773,517 Common Shares upon the exercise thereof as set forth in the
Disclosure Letter, disclosing the names of the holders, the number of Common
Shares underlying each such option and the exercise price thereof;
"Company Property" has the meaning ascribed thereto in section 6(q);
"Competition Act" means the Competition Act (Canada);
"Competition Act Approval" means the relevant waiting period under Section 123
of the Competition Act shall have expired and (a) an advance ruling certificate
("ARC") pursuant to Section 102 of the Competition Act shall have been issued by
the Commissioner or (b) a "no action letter" satisfactory to the Purchaser,
indicating that the Commissioner has determined not to make an application for
an order under Section 92 of the Competition Act, shall have been received from
the Commissioner, and any terms and conditions attached to any such letter shall
be acceptable to the Purchaser and, in each case, there shall be no threatened
or actual application by the Commissioner for an order under sections 92 or 100
of the Competition Act.
"Consolidated Disposition Agreements" means the definitive agreements, in form
and substance satisfactory to the Purchaser, acting reasonably, providing for
(i) the consummation of the Consolidated Technologies Disposition, (ii) the
delivery, in escrow, of all agreements, instruments, releases, payments,
opinions and other documents necessary to consummate the Consolidated
Technologies Disposition and (iii) the release of escrow and the immediate
consummation of the Consolidated Technologies Disposition concurrently with the
take up by the Purchaser of any Common Shares deposited, and not withdrawn,
under the Offer;
"Consolidated Technologies Disposition" means the following transactions:
(a) the purchase by Applied of all securities of all classes of
Consolidated Technologies Holdings Inc., a corporation incorporated
under the laws of British Columbia, beneficially owned by each of:
(i) TigerTel Acquisition Ltd., a corporation incorporated under the
laws of British Columbia and a wholly owned subsidiary of
TigerTel Services, and
(ii) TigerTel Services,
with each purchase of each separate class of securities being made by
way of a take-over bid exempt from the applicable take-over bid
provisions of the Securities Act (British Columbia) and conducted in
accordance with Section 98(1)(c) of such Act such that each separate
bid meets all of the following conditions, namely,
(iii) purchases are made from not more than 5 persons in the
aggregate, including persons outside British Columbia;
2
(iv) the bid is not made generally to security holders of the class of
securities that is the subject of the particular bid; and
(v) the value of the consideration paid for any of the securities,
including brokerage fees and commissions, is not greater than 115% of
the market price of securities of that class at the date of the bid,
with the market price of such securities being an amount equal to the
simple average of the closing price of securities of that class for
each of the business days on which there was a closing price falling
not more than 20 business days before that date, or if the market for
such securities does not provide a closing price, but provides only
the highest and lowest prices of securities traded on a particular
day, the market price of the securities, at any date, is an amount
equal to the average of the simple averages of the highest and lowest
prices for each of the business days on which there were highest and
lowest prices falling not more than 20 business days before that date.
(b) the purchase by Applied of all of the common shares of Payless
Communications Inc. ("Payless"), a corporation incorporated under the
laws of British Columbia, beneficially owned by TigerTel Services for
a purchase price equal to TigerTel Services' aggregate book value in
respect of the common shares of Payless beneficially owned by TigerTel
Services;
(c) the execution and delivery by Consolidated Technologies Holdings Inc.,
and each of its subsidiaries of agreements providing TigerTel Services
with general security over all of the assets, properties and equipment
of Consolidated Holdings Technologies Inc., and each of its
subsidiaries, to secure the obligations of Consolidated Technologies
Inc. pursuant to the Consolidated Technologies Notes; and
(d) the payment to TigerTel Services by way of certified cheque, bank
draft or wire transfer of immediately available funds in the amount of
all the then outstanding principal and accrued interest payable by
Payless pursuant to that certain promissory note dated September 8,
1999 issued in favour of TigerTel Services.
"Consolidated Holdings GSA" means that certain General Security Agreement
between Consolidated Technologies Holdings Inc. and AT&T Long Distance Services
Company ("AT&T") dated as of March 1, 1997 as assigned by AT&T to TigerTel
Services pursuant to the Assignment of Debt and Security Agreement dated as of
May 31, 1999 between AT&T and TigerTel Services;
"Consolidated Holdings Guarantee" means that certain guarantee of Consolidated
Technologies Holdings Inc. dated as of March 1, 1997 providing AT&T a guarantee
of all obligations of Consolidated Technologies Inc., all as assigned by AT&T to
3
TigerTel Services pursuant to the Assignment of Guarantee Agreement dated as of
November 28, 1999 between AT&T and TigerTel Services;
"Consolidated Technologies GSA" means that certain General Security Agreement
between Consolidated Technologies Inc. and AT&T dated as of March 1, 1997 as
assigned by AT&T to TigerTel Services pursuant to the Assignment of Debt and
Security Agreement dated as of May 31, 1999 between AT&T and TigerTel Services;
"Consolidated Technologies Notes" means (i) that certain promissory note dated
September 8, 1999 in the principal amount of $827,474.24 issued by Consolidated
Technologies Inc. in favour of TigerTel Services, (ii) that certain promissory
note dated as of November 26, 1999 in the principal amount of $122,328.70 issued
by Consolidated Technologies Inc. in favour of TigerTel Services and (iii) such
other promissory notes issued by Consolidated Technologies Inc. in favour of the
Company or any of its subsidiaries evidencing advances made by the Company or
any of its subsidiaries to Consolidated Technologies Inc.;
"Contract" means any pending and/or executory contract, agreement, arrangement
or understanding to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries or any of their respective
assets is bound or affected;
"Disclosure Letter" means that certain letter dated November 28, 1999 and
delivered by the Purchaser to the Company concurrently with the execution of
this Agreement;
"Employee" has the meaning ascribed thereto in section 6(t)(i);
"Employee Plans" has the meaning ascribed thereto in section 6(u)(ii);
"Employment Agreements" means employment and non-competition agreements with
each of Xxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxx Xxxxxxx, Xxxxxx Xxxxx, Xxxxxxxx
Xxxxxxxxxxx, Xxxxx Xxxxxx, Xxxxxxx Xxx, Xxxxx XxxXxxxxx, Xxxxx Xxxxx, Xxxxxxxxx
Xxxx, Xxxxxx Xxxxx, Xxxxx Xxxx, Xxx Xxxxxxx, Xxx Xxxxxxxx, Xxxxxx Xxxxxxx,
Xxxxxx Xxxxxx, Xxxxx Xxxx and each branch manager of each of the call centres
operated by the Company and each of its subsidiaries which agreements shall
provide for employment terms no less favourable than those currently provided to
each such employee and shall take effect only upon the consummation of the
Offer;
"Exchangeable Share Redemption" means the cancellation of Exchangeable Shares to
be completed in accordance with the following:
(a) the directors of TigerTel Services shall call the Exchangeable
Shareholder Meeting and the Exchangeable Shareholder Meeting Date
shall be set in accordance with the provisions of the OBCA;
4
(b) the Meeting Circular shall be mailed to all registered and beneficial
holders of Exchangeable Shares not later than 25 days prior to the
date of the Exchangeable Shareholder Meeting in accordance with
National Policy Statement No. 41;
(c) the record date for the Exchangeable Shareholder Meeting shall be at
the close of business on the date immediately preceding the
Exchangeable Shareholder Mailing Date;
(d) the Exchangeable Shareholder Meeting shall be held in accordance with
the relevant provisions of the OBCA and the articles and by-laws of
TigerTel Services:
(i) the Exchangeable Share Resolution shall be approved by not less
than two-thirds of the votes cast on such resolution, and
(ii) holders of Exchangeable Shares holding at least 50% of the
Exchangeable Shares outstanding at that time shall be present or
represented by proxy (excluding Exchangeable Shares beneficially
owned by Applied or its Affiliates).
(e) assuming approval of the Exchangeable Share Resolution at the
Exchangeable Shareholder Meeting, Articles of Amendment amending the
Articles of TigerTel Services in accordance with the Exchangeable
Share Resolution, shall be filed with the Director under the OBCA and
shall be effective on or before December 30, 1999;
(f) on or before December 30, 1999, Applied shall notify TigerTel Services
and Montreal Trust Company of Canada, or such other person as may from
time to time be the registrar and transfer agent of the Exchangeable
Shares, of its intention to exercise its Redemption Call Right (as
that term is defined in the provisions relating to Exchangeable Shares
contained in the Articles of TigerTel Services);
(g) on or before December 30, 1999, Applied shall deposit with Montreal
Trust Company of Canada, or such other person as may from time to time
be the registrar and transfer agent of the Exchangeable Shares,
certificates representing the aggregate number of shares of Applied
Common Stock deliverable by Applied (which shares shall be duly issued
as fully paid and non-assessable and shall be free and clear of any
liens) in payment of the total Redemption Call Purchase Price (as that
term is defined in the provisions relating to Exchangeable Shares
contained in the Articles of TigerTel Services) for all outstanding
Exchangeable Shares and a cash amount, if any, equal to all declared
5
and unpaid dividends comprising part of the total Redemption Call
Purchase Price for all outstanding Exchangeable Shares;
(h) on the Automatic Redemption Date, Applied shall exercise its
Redemption Call Right and shall purchase and the Exchangeable
Shareholders shall sell all of the Exchangeable Shares then
outstanding (other than shares held by Applied) for the Redemption
Call Purchase Price (as that term is defined in the provisions
relating to Exchangeable Shares contained in the Articles of TigerTel
Services);
(i) on the day after the Automatic Redemption Date, Applied shall sell and
the Company shall purchase for no additional consideration, all right,
title, and interest in all Exchangeable Shares held by Applied and its
Affiliates;
(j) upon the sale by Applied to the Company of all Exchangeable Shares
held by Applied and its Affiliates, the Company will transfer to
TigerTel Services each such Exchangeable Share acquired from Applied
and, in consideration for such transfer, TigerTel Services will issue
to the Company one common share from its capital stock for each
Exchangeable Share so transferred; and
(k) upon receipt of all the Exchangeable Shares transferred from the
Company to TigerTel Services, TigerTel Services will cancel all such
Exchangeable Shares and will file articles of amendment amending the
Articles of TigerTel Services removing the Exchangeable Shares as a
class of shares in the capital stock of TigerTel Services.
"Exchangeable Shareholder Mailing Date" means the date on which the Meeting
Circular is mailed to all registered and beneficial holders of Exchangeable
Shares, which date shall be not later than 25 days prior to the Exchangeable
Shareholder Meeting Date;
"Exchangeable Shareholder Meeting" means the special meeting of Exchangeable
Shareholders to be held to consider the Exchangeable Share Resolution;
"Exchangeable Shareholder Meeting Date" means December 29, 1999, the date of the
Exchangeable Shareholder Meeting;
"Exchangeable Share Resolution" means the resolution approving the:
(a) amendment of the definition of "Automatic Redemption Date"
contained in the provisions relating to the Exchangeable Shares
and found in the Articles of TigerTel Services to mean the
following:
"Automatic Redemption Date" means the date for the automatic
redemption by the Corporation of Exchangeable Shares
pursuant to Article 6 of these share provisions, which date
shall be a date selected by the Board of Directors provided
6
such date will be after January 1, 2000 but in any event not
later than June 30, 2001.
(b) amendments of the first sentence of Section 6.3(b) of the share
provisions relating to the Exchangeable Shares found in the
Articles of TigerTel Services to be the following:
(i) To exercise the Redemption Call Right, Applied must notify
the Transfer Agent in writing, as agent for the holders of
Exchangeable Shares, and the Corporation of Applied's
intention to exercise such right at any time on or before
the Automatic Redemption Date.
"Exchangeable Shares" means the class of exchangeable shares that form part of
the authorized and issued capital of TigerTel Services and which carry with them
certain rights and privileges with respect to common shares of Applied;
"Executive Officers" in the case of the Company means the individuals named for
such purpose in the Disclosure Letter;
"Expiry Time" has the meaning ascribed thereto in section 1;
"Governmental Entity" means any (a) multinational, federal, provincial, state,
regional, municipal, local or other government, governmental or public
department, central bank, court, tribunal, arbitral body, commission, board,
bureau or agency, domestic or foreign, (b) any subdivision, agent, commission,
board, or authority of any of the foregoing or (c) any quasi-governmental or
private body exercising any regulatory, expropriation or taxing authority under
or for the account of any of the foregoing;
"IBM Credit Agreement" means the Amended and Restated Term and Revolving Credit
Agreement dated as of July 30, 1999 by and among IBM Credit Corporation, IBM
Financing, a division of IBM Canada Limited ("IBM Canada") and IBM United
Kingdom Financial Services Limited, Applied, Ground Effects Ltd. ("Ground
Effects"), the Company, Signal Processors Limited and Signature Industries
Limited as amended by Amendment No. 1 to the Amended and Restated Term and
Revolving Credit Agreement dated as of September 29, 1999 by and among IBM
Credit Corporation, IBM Canada, Applied, Ground Effects and the Company;
"IBM Indebtedness" means the amount of any outstanding indebtedness owed by the
Company under the IBM Credit Agreement;
"IBM Loan Documents" means the IBM Credit Agreement, any guarantees delivered by
any subsidiary of the Company in connection with the IBM Credit Agreement, and
any security or other document delivered by Applied (relating to any security
given by Applied in any interest in the Company or any of its subsidiaries), the
Company or any of the Company's subsidiaries in connection with the IBM Credit
Agreement or any such guarantee;
7
"IBM Termination" has the meaning ascribed thereto in Section 5(l);
"Information" means all information furnished under section 10(a) by the Company
relating to the business, assets, corporate structure, financial position and
operations of the Company, including, without limitation, all documentation,
business plans, Intellectual Property, studies, records, knowledge, systems,
ideas, know-how, source codes, object codes, manuals and other tangible or
intangible information relating to the Company's business, products or services
together with all financial information, plans, corporate records, product
information, analyses, compilations, forecasts, studies or other documents
prepared by the Company or its Representatives which contain or otherwise
reflect such information. The term "Information" shall not include such portions
of the Information which: (i) are or become generally available to the public
other than as a result of a disclosure by the Purchaser, one of its affiliates
or their Representatives; or (ii) are received from an independent third party
who had obtained such information lawfully and was under no obligation of
secrecy or confidentiality; (iii) were independently developed by the Purchaser
or on the Purchaser's behalf, or (iv) the Purchaser Shows was lawfully in the
possession of the Purchaser or one of its affiliates before the Purchaser
received such information from the Company;
"Intellectual Property" means industrial and intellectual property including:
(a) all registered or unregistered trade-marks, trade names,
business names, domain names, brand names, brands, designs,
logos, identifying indicia and service marks, including any
goodwill attached thereto and all registrations and
applications relating thereto;
(b) all inventions, patents, patent rights, patent applications
(including all reissues, divisions, continuations,
continuations-in-part and extensions of any patent or patent
application), industrial designs and applications for
registration of industrial designs;
(c) all copyrights, registrations and applications for
registration of copyrights and works of authorship including
all computer programs (including source codes), databases and
related works; and
(d) all processes, data, trade secrets, designs, know-how, product
information, manuals, technology, research and development
reports, technical information, technical assistance, design
specifications and similar materials recording or evidencing
expertise or proprietary information;
"Irrevocable Proxy" means a duly executed proxy and voting agreement in the form
attached hereto as Schedule "D";
8
"Laws" means all statutes, regulations, statutory rules, principles of law,
orders, published policies and guidelines, and terms and conditions of any grant
of approval, permission, authority or license of any court, Governmental Entity,
statutory body (including The Toronto Stock Exchange or the Montreal Exchange)
or self-regulatory authority, and the term "applicable" with respect to such
Laws and in the context that refers to one or more Persons, means that such Laws
apply to such Person or Persons or its or their business, undertaking, property
or securities and emanate from a Person having jurisdiction over the Person or
Persons or its or their business, undertaking, property or securities;
"Leased Real Property" means all land, building, fixtures or other real property
in which the Company or any of its subsidiaries hold a leasehold or subleasehold
estate, or is granted a licence, concession or other right of use or occupancy;
"Leasehold Improvements" means all buildings, fixtures and other improvements
located on each Leased Real Property which are owned by the Company or any of
its subsidiaries, regardless of whether such buildings, fixtures or improvements
are subject to reversion to the landlord or other third party upon the
expiration or termination of the Lease for such Leased Real Property;
"Leases" means all leases, subleases, licences, concessions and other agreements
(written or oral), together with all amendments, extensions, renewals,
guarantees and other agreements with respect thereto, for any Leased Real
Property;
"Lock-up Agreements" means the Applied Lock-up Agreement and the Additional
Lock-up Agreement;
"Licensed Intellectual Property" has the meaning inscribed thereto in section
6(w)(i);
"Material Adverse Effect" means any matter or action that has an effect that is,
or would reasonably be expected to be, material and adverse to the business,
assets, liabilities, financial condition, results of operations or prospects of
the Company and its subsidiaries taken as a whole, other than any change,
effect, event or occurrence relating to (i) the Canadian or United States
economy in general, or (ii) as disclosed in the Disclosure Letter; and for
greater certainty, shall not include any change, effect, event or occurrence
resulting from the announcement of the transactions contemplated in this
Agreement;
"Material Contract" means any Contract which:
(a) imposes a purchase right or right of first refusal or
security interest in any asset of the Company or its
subsidiaries having a value in excess of $100,000;
(b) is a warranty or guaranty creating an obligation, contingent
or otherwise, in an amount in excess of $100,000 in the
aggregate given to any customer or other party by the Company
9
or any of the Company's subsidiaries with respect to any of
the Company's products or to Company's or any of the Company's
subsidiaries' performance or the performance of any employees
of the Company or any subsidiary of the Company (or series of
related warranties or guaranties creating such an obligation);
(c) is a contract under which the Company or any of the Company's
subsidiaries has acquired or licensed any real or personal
property or assets of a third party or under which the Company
or any of its subsidiaries otherwise uses any properties or
assets of another party or which are jointly owned by the
Company or any of its subsidiaries with any other party or
parties, in each case involving property or assets having a
value of more than $100,000, or aggregate payments of more
than $100,000;
(d) is an agreement with an original equipment manufacturer
which is a material supplier to the Company or its
subsidiaries;
(e) is a distribution, agency or sales representation agreement
having a value or aggregate payments in excess of $100,000;
(f) any other contract which provides for aggregate annual
payments to or from the Company or its subsidiaries having an
aggregate value of $3,000,000 or more;
(g) requires aggregate annual future payments or expenditures in
excess of $100,000 or having a term of more than one year that
relates to cleanup, abatement or other actions in connection
with environmental liabilities;
(h) a contract containing a covenant limiting the freedom of the
Company or any of its subsidiaries to engage in any line of
business similar to the business currently conducted by it or
to compete with any person or entity in a similar business;
(i) an employment, severance or consulting contract with an
employee or former employee of the Company or any of its
subsidiaries that is not terminable at will by the Company or
its subsidiaries;
(j) a collective bargaining agreement relating to the Employees;
(k) a contract for capital expenditures or the acquisition or
construction of fixed assets which requires payments in
excess of $100,000;
(l) a licence to use computer software (other than off-the-shelf
software marketed to the public generally) used or held for
use by the Company or its subsidiaries and involving aggregate
payments of more than $100,000;
10
(m) a contract to which the Company or any of its subsidiaries is
a party, a breach or default under which could reasonably be
expected to have a Material Adverse Effect; or
(n) that is otherwise material to the business and operations of
the Company and its subsidiaries.
"Meeting Circular" means the management information circular and accompanying
notice of a special meeting mailed to the holders of Exchangeable Shares to
consider, and if deemed advisable, to pass, without variation, the Exchangeable
Share Resolution necessary in order to complete the Exchangeable Share
Redemption;
"OSC" means the Ontario Securities Commission;
"Owned Intellectual Property" has the meaning ascribed thereto in section
6(w)(i);
"Person" includes any individual, firm, partnership, joint venture, venture
capital fund, association, trust, trustee, executor, administrator, legal
personal representative, estate, group, body corporate, corporation,
unincorporated association or organization, Governmental Entity, syndicate or
other entity, whether or not having legal status;
"Reports" has the meaning ascribed thereto in section 6(g);
"Securities Act" means the Securities Act (Ontario) as now in effect and as it
may be amended from time to time prior to the Expiry Time;
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge or
other security interest, other than (i) mechanics', materialmen's and similar
liens, (ii) liens for Taxes not yet due and payable, (ii) money purchase liens
and liens securing rental payments under capital lease arrangements, and (iv)
other liens arising out of the ordinary course of business and not incurred in
connection with the borrowing of money;
"Shareholders" means the holders of the Common Shares;
"Specified Representations and Warranties" means the representations and
warranties of the Company set forth in sections 6(a), (b), (c), (d), (e), (f)
and (h) and sections 6(cc)-(ee) of this Agreement;
"subsidiary" has the meaning ascribed thereto in the Securities Act;
"Superior Proposal" has the meaning ascribed thereto in section 8(a);
"Tax" and "Taxes" means, with respect to any entity, (A) all income taxes
(including any tax on or based upon net income, gross income, income as
specially defined, earnings, profits or selected items of income, earnings or
profits) and all capital taxes, gross receipts taxes, environmental taxes, sales
11
taxes, use taxes, ad valorem taxes, value added taxes, transfer taxes, franchise
taxes, license taxes, withholding taxes, payroll taxes, employment taxes, Canada
or Quebec Pension Plan premiums, excise, severance, social security premiums,
workers' compensation premiums, employment insurance or compensation premiums,
stamp taxes, occupation taxes, premium taxes, property taxes, windfall profits
taxes, alternative or add-on minimum taxes, goods and services tax, customs
duties or other taxes, fees, imports, assessments or charges of any kind
whatsoever, together with any interest and any penalties or additional amounts
imposed by any taxing authority (domestic or foreign) on such entity, and any
interest, penalties, additional taxes and additions to tax imposed with respect
to the foregoing, and (B) any liability for the payment of any amount of the
type described in the immediately preceding clause (A) by contract, as a result
of being a "transferee" (within the meaning of section 6901 of the United States
Internal Revenue Code or any other applicable Laws) of another entity or a
member of an affiliated or combined group, or otherwise;
"Tax Returns" means all returns, declarations, elections, reports, information
returns and statements required to be filed with any taxing authority relating
to Taxes (including any attached schedules), including, without limitation, any
information return, claim for refund, amended return and declaration of
estimated Tax; and
"Year 2000 Problem" shall have the meaning ascribed thereto in section 6(bb).
12
SCHEDULE "C"
APPROPRIATE REGULATORY APPROVALS
(i) Advanced Ruling Certificate under the Competition Act (Canada).
SCHEDULE "D"
FORM OF TIGERTEL SERVICES IRREVOCABLE PROXY
[omitted]
