EXHIBIT 4.3
COMBINATION AGREEMENT
THIS COMBINATION AGREEMENT is made as of June 20, 2003,
AMONG
ACETEX CORPORATION, a body corporate existing under the laws of
Alberta with its head office in the City of Vancouver, in the Province
of British Columbia (hereinafter called "ACETEX")
AND
2028569 ONTARIO LIMITED, a body corporate existing under the laws of
Ontario with its registered office in the City of Toronto, in the
Province of Ontario (hereinafter called "ACETEX SUB")
AND
AT PLASTICS INC., a body corporate existing under the laws of the
Province of Ontario with its head office in the City of Brampton, in
the Province of Ontario (hereinafter called "AT PLASTICS")
WHEREAS Acetex and AT Plastics wish to propose a combination of their
businesses;
AND WHEREAS the parties hereto intend to carry out the transactions
contemplated herein by way of an amalgamation of AT Plastics and Acetex Sub
pursuant to which the shareholders of AT Plastics will dispose of their shares
and receive shares of Acetex.
AND WHEREAS the parties hereto have entered into this Agreement to
provide for the matters referred to in the foregoing recitals and for other
matters relating to such amalgamation;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
covenants and agreements herein contained and other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties hereto do hereby covenant and agree as follows.
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless the context otherwise requires:
"ACETEX OPTION PLAN" means the Acetex Employee Stock Option Plan, as amended and
restated effective August 17, 2000;
"ACETEX SHARES" means common shares in the capital of Acetex;
"ACETEX SHAREHOLDERS" means the holders of Acetex Shares;
"ACETEX SUB" means 2028569 Ontario Limited;
"ACETEX SUBSTITUTE WARRANTS #1" and "ACETEX SUBSTITUTE WARRANTS #2" means those
warrants to acquire Acetex Shares as set out in Schedule E hereto;
"ACQUISITION PROPOSAL" means any merger, amalgamation, consolidation,
arrangement, business combination, recapitalization, take-over bid, sale of
material assets, material sale of treasury shares or rights or interests therein
or thereto (other than a public offering of treasury shares) or similar
transactions involving Acetex or AT Plastics or any Material Subsidiary of
Acetex or AT Plastics, or a proposal to do so, excluding the Amalgamation;
"AMALGAMATION" means the amalgamation involving AT Plastics and Acetex Sub
pursuant to the provisions of Section 175 of the OBCA, on the terms and
conditions set forth in herein;
"AMALGAMATED CORPORATION" means the corporation continuing on the amalgamation
of Acetex Sub and AT Plastics;
"ARTICLES OF AMALGAMATION" means the articles of amalgamation in form attached
as Schedule A hereto;
"AT PLASTICS AMALGAMATION RESOLUTION" means the special resolution of AT
Plastics Shareholders approving the Amalgamation;
"AT PLASTICS CIRCULAR" means the management information circular to be prepared
and sent to the AT Plastics Shareholders in connection with the AT Plastics
Meeting;
"AT PLASTICS MEETING" means the special meeting of AT Plastics Shareholders to
approve the Amalgamation;
"AT PLASTICS OPTION PLAN" means the AT Plastics Employee Stock Option Plan, as
amended and restated May 1, 2002;
"AT PLASTICS OPTIONHOLDERS" means the holders of AT Plastics Options;
"AT PLASTICS OPTIONS" means AT Plastics Employee Stock Options;
"AT PLASTICS SHAREHOLDERS" means the holders of AT Plastics Shares;
"AT PLASTICS SHARES" means the common shares in the capital of AT Plastics;
"AT PLASTICS SUPPORT OBLIGATIONS" means those obligations described in Schedule
F hereto
"AT PLASTICS WARRANTS" means warrants outstanding pursuant to Warrant
Certificates dated June 2, 2003 entitling Peninsula Funds III, L.P to acquire
4,240,568 AT Plastics Shares at a price of $1.57 per share and Connecticut
General Life Insurance Company; to acquire 843,113 AT Plastics Shares at a price
of $.72 per share;
"AT PLASTICS WARRANTHOLDERS" means Peninsula Fund III, L.P. and Connecticut
General Life Insurance Company;
"BUSINESS DAY" means any day, other than Saturday, Sunday and a statutory
holiday in the Province of Ontario;
"COMPETITION ACT" means the Competition Act, R.S.C. 1985, c. C-34, as amended;
"CONFIDENTIALITY AGREEMENT" means the Confidentiality Agreement dated April 5,
2003 between Acetex and AT Plastics;
"DEPOSITORY" means Computershare Trust Company, or any successor thereto;
"DIRECTOR" means the Director of Corporations appointed pursuant to Section 278
of the OBCA;
"EFFECTIVE DATE" means the date upon which the Amalgamation becomes effective
under the OBCA;
"ENCUMBRANCE" includes, without limitation, any mortgage, pledge, assignment,
charge, lien, security interest, adverse interest in property, other third party
interest or encumbrance of any kind, whether contingent or absolute, and any
agreement, option, right or privilege (whether by law, contract or otherwise)
capable of becoming any of the foregoing;
"ENVIRONMENTAL APPROVALS" means all permits, certificates, licenses,
authorizations, consents, instructions, registrations, directions or approvals
issued or required by Governmental Entities pursuant to Environmental Laws;
"ENVIRONMENTAL LAWS" means all applicable Laws, including applicable common
laws, relating to the protection of the environment and employee and public
health and safety;
"GOVERNANCE ARRANGEMENTS" means the arrangements set forth in Schedule D hereto;
"GOVERNMENTAL ENTITY" means any (a) multi-national, 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) subdivision, agent, commission, board
or authority of any of the foregoing or (c) quasi-governmental or private body
exercising any regulatory, expropriation or taxing authority under or for the
account of any of the foregoing;
"HAZARDOUS SUBSTANCE" means any pollutant, contaminant, waste of any nature,
hazardous substance, hazardous material, toxic substance, dangerous substance or
dangerous good as defined, judicially interpreted or identified in any
applicable Environmental Law;
"LAWS" means all laws, by-laws, rules, regulations, orders, ordinances,
protocols, codes, guidelines, policies, notices, directions and judgments or
other requirements of any Governmental Entity;
"LENDER CONSENTS" means the consents of the lenders to AT Plastics to the
Amalgamation;
"LETTER OF TRANSMITTAL" means the letter of transmittal sent by AT Plastics to
the AT Plastics Shareholders concurrently with the sending of the AT Plastics
Circular for the AT Plastics Meeting;
"MATERIAL ADVERSE CHANGE" or "material adverse effect" means, when used in
connection with Acetex or AT Plastics, any change, effect, event, occurrence or
change in a state of facts that is, or would reasonably be expected to be,
material and adverse to the business, operations or financial condition of such
Party and its Subsidiaries, taken as a whole, other than any change, effect,
event, occurrence or change in a state of facts principally caused by a change,
effect, event, occurrence or change in a state of facts in (i) the Canadian or
United States economies or financial, currency exchange, securities or
commodities markets in general, (ii) the trading price of the Acetex Shares or
AT Plastics Shares, respectively, or other securities of Acetex or AT Plastics
immediately following and reasonably attributable to the announcement of this
Agreement and the transactions contemplated hereby, (iii) the chemical
manufacturing industry in general, and (iv) specific matters disclosed in the
disclosure memoranda delivered pursuant to Section 1.10;
"MATERIAL SUBSIDIARY" in respect of a Party means a Subsidiary of that Party the
total assets of which constitute more than 10% of the consolidated assets of the
Party or the total revenues of which constitute more than 10% of the
consolidated revenues of that Party, in each case based on the unaudited interim
financial statements for the three months ended March 31, 2003; [NOTE - SHOULD
REVENUE THRESHOLD BE BASED ON 12 MONTH PERIOD?]
"MEETING DATE" means August 1, 2003 or such other date as the parties may agree
upon;
"OBCA" means the Business Corporations Act, R.S.O. 1990, c. B-16, as may be
amended;
"PARTIES" means Acetex, Acetex Sub and AT Plastics and "Party" means any one of
them;
"RETURNS" means all material reports, information statements and returns
relating to or as required to be filed in connection with any Taxes;
"SUBSIDIARY" means, with respect to a specified body corporate, any body
corporate of which more than 50% of the outstanding shares ordinarily entitled
to elect a majority of the board of directors thereof (whether or not shares of
any other class or classes shall or might be entitled to vote upon the happening
of any event or contingency) are at the time owned directly or indirectly by
such specified body corporate and shall include any body corporate, partnership,
joint venture or other entity over which it exercises direction or control or
which is in a like relation to a Subsidiary;
"SUPERIOR PROPOSAL" shall have the meaning as set forth in Section 5.5(a);
"TAX ACT" means the Income Tax Act, R.S.C. 1985, c. 1 (5th supp.), as amended;
and
"TAXES" means all taxes, however denominated, including any interest, penalties
or other additions that may become payable in respect thereof, imposed by any
Governmental Entity; which taxes shall include, without limiting the generality
of the foregoing, all income or profits taxes (including, but not limited to,
federal, state and provincial income taxes), capital taxes, payroll and employee
withholding taxes, unemployment insurance, social insurance taxes (including
Canada Pension Plan payments), sales and use taxes, ad valorem taxes, excise
taxes, franchise taxes, gross receipts taxes, business license taxes, occupation
taxes, real and personal property taxes, stamp taxes, environmental taxes,
transfer taxes, workers' compensation, pension assessment and other governmental
charges, and other obligations of the same or of a similar nature to any of the
foregoing, which one of the Parties or any of its Subsidiaries is required to
pay, withhold or collect.
1.2 INTERPRETATION
The division of this Agreement into Articles, Sections, subsections and
paragraphs and the insertion of headings are for convenience of reference only
and shall not affect in any way the meaning or interpretation of this Agreement.
The Parties hereto acknowledge that their respective legal counsel have reviewed
and participated in settling the terms of this Agreement, and the Parties hereby
agree that any rule of construction to the effect that any ambiguity is to be
resolved against the drafting Party will not be applicable in the interpretation
of this Agreement.
1.3 ARTICLE REFERENCES
Unless the contrary intention appears, references in this Agreement to
an Article, Section, subsection, paragraph or Schedule by number or letter or
both refer to the Article, Section, subsection, paragraph or Schedule,
respectively, bearing that designation in this Agreement.
1.4 NUMBER AND GENDER
In this Agreement, unless the contrary intention appears, words
importing the singular include the plural and vice versa; words importing gender
shall include all genders; and words importing persons shall include a natural
person, firm, trust, partnership, association, corporation, joint venture or
government (including any Governmental Entity).
1.5 DATE FOR ANY ACTION
If the date on which any action is required to be taken hereunder by
any of the Parties is not a day of business in the place where the action is
required to be taken, such action shall be required to be taken on the next
succeeding day which is a day of business in such place.
1.6 CURRENCY
Unless otherwise stated, all references in this Agreement to sums of
money are expressed in lawful money of Canada.
1.7 SCHEDULES
Schedules A, B, C, D, E and F annexed to this Agreement; being the
Articles of Amalgamation, the representations and warranties of Acetex and AT
Plastics, Governance Arrangements, Acetex Substitute Warrants #1 and #2 and AT
Plastics Support Obligations respectively, are incorporated by reference into
this Agreement and form a part hereof.
1.8 ACCOUNTING MATTERS
Unless otherwise stated, all accounting terms used in this Agreement
shall have the meanings attributable thereto under Canadian generally accepted
accounting principles and all determinations of an accounting nature required to
be made shall be made in a manner consistent with, Canadian generally accepted
accounting principles.
1.9 MATERIAL
The terms "material" and "materially" shall, when used in this
Agreement, be construed, measured or assessed on the basis of whether the matter
would materially affect a Party and its Subsidiaries, taken as a whole, or would
significantly impede the ability to complete the Amalgamation in accordance with
this Agreement.
1.10 DISCLOSURE
Where in this Agreement reference is made to disclosure in writing, or
disclosed in writing on or prior to the date hereof, such disclosure shall be
made in writing in separate memorandum, dated the date hereof and signed by an
officer of each of Acetex or AT Plastics, as the case may be, and delivered to
the other immediately prior to the execution of this Agreement. Such disclosure
memoranda shall make specific reference to the applicable Sections and
paragraphs of this Agreement in respect of which such disclosure is made.
ARTICLE 2
THE COMBINATION
2.1 AMALGAMATION
(a) Subject to the terms and conditions hereof:
(i) AT Plastics and Acetex Sub shall amalgamate pursuant to the
provisions of section 175 of the OBCA and the Articles of
Amalgamation shall be filed;
(ii) Shareholders of AT Plastics shall receive 1/6 of an Acetex Share
for each AT Plastics Share held;
(iii) Acetex shall receive one share of the Amalgamated Corporation for
each share of Acetex Sub held.
(b) On the Effective Date each AT Plastics Option will, without any further
action on the part of any AT Plastics Optionholder, become an option
(remaining under the AT Plastics Option Plan) to purchase the number of
Acetex Shares determined by dividing the number of AT Plastics Shares
subject to the particular AT Plastics Option at the Effective Date by
6, at an exercise price per Acetex Shares equal to the exercise price
per share in the particular AT Plastics Option at the Effective Time
multiplied by 6. If the foregoing calculation results in an option
being exercisable for a fraction of an Acetex Share then the number of
Acetex Shares subject to such option will be rounded down to the
nearest whole number of shares, and the exercise price per whole Acetex
Share will be as determined above. The obligations of AT Plastics under
the AT Plastics Options so converted shall be assumed by Acetex and
Acetex shall be substituted for AT Plastics under the AT Plastics
Option Plan, the address for exercise of such converted options shall
be the registered office of Acetex in Calgary, Alberta, Attention:
Corporate Secretary, and the AT Plastics Options will be further
modified as necessary to effect such conversion. Except as provided in
this subsection, the term, exerciseability and all other terms and
conditions of the AT Plastics Options in effect at the Effective Date
shall govern the AT Plastics Options as so converted.
(c) On the Effective Date the AT Plastics Warrants shall be cancelled and
extinguished and in consideration therefore Peninsula Fund III, L.P.
shall be entitled to receive Acetex Substitute Warrant #1 entitling it
to acquire 706,760 Acetex Shares at an exercise price equal to the
closing price of the Acetex Shares on the Toronto Stock Exchange on the
Effective Date or if there is no closing price on the Effective Date
the next day on which there is a trade on the Toronto Stock Exchange
and Connecticut General Life Insurance shall be entitled to receive
Acetex Substitute Warrant #2 entitling it to acquire 141,352 Acetex
Shares at an exercise price of $4.32.
(d) As of the Effective Date:
(i) An AT Plastics Shareholder who is entitled to dissent with
respect to the Amalgamation in accordance with the OBCA and who
duly exercises such right; and
(A) is ultimately entitled to be paid fair value for such
shareholder's AT Plastics Shares shall be deemed to have
transferred such shares to the Amalgamated Corporation for
cancellation on the Effective Date; or
(B) is ultimately not entitled to be paid fair value for such
shareholder's AT Plastics Shares, for any reason, shall be
deemed to have participated in the Amalgamation on the same
basis as at and from the Effective Date as any other
non-dissenting AT Plastics Shareholder;
(ii) Acetex shall not be required to recognize AT Plastics
Shareholders described in paragraph 2.1(c)(i)(A) above as holding
AT Plastics Shares on or after the Effective Date and the names
of such holders shall be deleted from the registers of AT
Plastics;
(iii) The Amalgamated Corporation will possess all of the property,
rights and assets of each of Acetex Sub and AT Plastics and will
assume all of their respective obligations;
(iv) The first director of the Amalgamated Corporation shall be ▇▇▇▇▇▇
▇. ▇▇▇▇ Vancouver, British Columbia;
(v) The by-laws of the Amalgamated Corporation shall be the by-laws
of Acetex Sub;
(vi) The registered office of the Amalgamated Corporation shall be
Suite 1800 BCE Place, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇.
2.2 ISSUANCE OF CERTIFICATES REPRESENTING ACETEX SHARES
At or promptly after the Effective Date, Acetex shall deposit with the
Depository, for the benefit of the former AT Plastics Shareholders who exchanged
AT Plastics Shares pursuant to the Amalgamation, certificates representing the
Acetex Shares issued pursuant to the Amalgamation. Upon surrender to the
Depository, at any of its offices specified in the Letter of Transmittal, of a
certificate which prior to the Effective Date represented outstanding AT
Plastics Shares, and such additional documents and instruments as the Depository
may reasonably require, the holder of such surrendered certificate shall be
entitled to receive in exchange therefor, and the Depository shall forthwith
deliver to such holder, a certificate representing that number (rounded down to
the nearest whole number) of Acetex Shares which such holder received pursuant
to the Amalgamation (together with any dividends or distributions with respect
thereto pursuant to Section 2.3 and any cash in lieu of fractional Acetex Shares
pursuant to Section 2.4), and any certificate so surrendered shall forthwith be
cancelled. In the event of a transfer of ownership of AT Plastics Shares which
is not registered in the transfer records of AT Plastics, a certificate
representing the proper number of Acetex Shares (together with any dividends or
distributions with respect thereto pursuant to Section 2.3 and any cash in lieu
of fractional Acetex Shares pursuant to Section 2.4) shall be delivered to a
transferee if the certificate formerly representing such AT Plastics Shares is
presented to the Depository at its offices as aforesaid, accompanied by the
foregoing documents together with all other documents required to evidence and
effect such transfer. Until surrendered as contemplated by this Section 2.2,
each certificate which prior to the Effective Date represented outstanding AT
Plastics Shares shall be deemed at any time after the Effective Date, to
represent only the right to receive upon such surrender (a) the certificate
representing Acetex Shares as contemplated by this Section 2.2, (b) a cash
payment in lieu of any fractional Acetex Shares as contemplated by Section 2.4,
and (c) any dividends or distributions with a record date on or after the
Effective Date theretofore paid or payable with respect to Acetex Shares as
contemplated by Section 2.3.
2.3 DIVIDENDS AND OTHER DISTRIBUTIONS
No dividends or other distributions declared or made on or after the
Effective Date with respect to the Acetex Shares with a record date on or after
the Effective Date shall be paid to the holder of any certificates formerly
representing outstanding AT Plastics Shares which are not surrendered pursuant
to Section 2.2 and no cash payment in lieu of fractional shares shall be paid to
any such holder pursuant to Section 2.4 (and no interest will be earned and
payable thereon), unless and until the certificate representing such AT Plastics
Shares shall be surrendered in accordance with Section 2.2. Subject to
applicable law, at the time of such surrender of any such certificate (or, in
the case of clause (c) below, at the appropriate payment date), there shall be
paid to the holder of the Acetex Shares issued pursuant to the Amalgamation, in
all cases without interest, (a) the amount of any cash payable in lieu of a
fractional Acetex Shares to which such holder is entitled pursuant to Section
2.4, (b) the amount of dividends or other distributions with a record date on or
after the Effective Date theretofore paid with respect to such Acetex Shares,
and (c) the amount of dividends or other distributions with a record date on or
after the Effective Date but prior to surrender and a payment date subsequent to
surrender payable with respect to such Acetex Shares.
2.4 NO FRACTIONAL SHARES
No certificates or scrip representing fractional Acetex Shares shall be
issued upon the surrender for exchange of certificates pursuant to Section 2.2,
and such fractional interests shall not entitle the owner thereof to vote or to
possess or exercise any rights as a security holder of Acetex. In lieu of any
such fractional interests, each person entitled thereto, will receive an amount
of cash (rounded to the nearest whole cent), without interest, equal to the
product of (a) such fractional interest, multiplied by (b) the average of the
closing trading price for Acetex Shares on the Toronto Stock Exchange for the
first three trading days on which Acetex Shares are traded following the
Effective Date, such amount to be provided to the Depository by Acetex upon
request.
2.5 LOST CERTIFICATES
If any certificate which prior to the Effective Date represented
outstanding AT Plastics Shares has been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such certificate to
be lost, stolen or destroyed, the Depository will issue in exchange for such
lost, stolen or destroyed certificate, certificates representing Acetex Shares
(together with any dividends or distributions with respect thereto pursuant to
Section 2.3 and any cash in lieu of fractional Acetex Shares pursuant to Section
2.4) deliverable in respect thereof as determined in accordance with Section
2.2. When seeking such certificate and payment in exchange for any lost, stolen
or destroyed certificate, the person to whom certificates representing Acetex
Shares are to be issued shall, as a condition precedent to the issuance thereof,
give a bond satisfactory to Acetex and its transfer agent, in such sum as Acetex
may direct or otherwise indemnify Acetex and its transfer agent in a manner
satisfactory to Acetex and its transfer agent against any claim that may be made
against Acetex or its transfer agent with respect to the certificate alleged to
have been lost, stolen or destroyed.
2.6 EXTINGUISHMENT OF RIGHTS
Any certificate which prior to the Effective Date represented
outstanding AT Plastics Shares and has not been deposited on or prior to the
tenth anniversary of the Effective Date shall cease to represent a claim or
interest of any kind or nature as a shareholder or a holder of Acetex Shares or
AT Plastics Shares. On such date, the Acetex Shares (and any dividends or
distributions with respect thereto pursuant to Section 2.3 and any cash in lieu
of fractional Acetex Shares pursuant to Section 2.4) to which the former holder
of the certificate referred to in the preceding sentence was ultimately entitled
shall be deemed to have been surrendered to Acetex, together with all
entitlements to dividends, distributions, cash and interest thereon held for
such former holder, for no consideration, and such shares and rights shall
thereupon be cancelled and the name of the former registered holder shall be
removed from the register of holders of such shares.
2.7 CONVERTED AT PLASTICS OPTION
As soon as practical after the Effective Date, Acetex shall confirm in
writing to each of the former holders of AT Plastics Options the terms of their
options for Acetex Shares into which their AT Plastics Options have been
converted pursuant to subsection 2.1(b).
2.8 AT PLASTICS MEETING
Subject to compliance with the terms and conditions contained herein,
AT Plastics shall call the AT Plastics Meeting on August 1, 2003, or such other
date as the Parties may agree to for the purpose of considering and, if deemed
advisable:
(a) approving by a special resolution at the AT Plastics Meeting the AT
Plastics Amalgamation Resolution in accordance with the terms and
conditions hereof; and
(b) passing such other resolutions as Acetex and AT Plastics may agree are
necessary or desirable for the purposes hereof.
2.9 AT PLASTICS DIRECTORS' APPROVAL
(a) AT Plastics represents as of the date hereof that its Board of Directors,
after considering the Amalgamation, has determined unanimously that:
(i) the Amalgamation is fair to AT Plastics Shareholders and AT Plastics
Optionholders and is in the best interests of AT Plastics; and
(ii) it will recommend in the AT Plastics Circular that AT Plastics
Shareholders vote in favour of the AT Plastics Amalgamation Resolution;
(b) AT Plastics represents as of the date hereof that its Board of Directors
has received an opinion from W. Y. ▇▇▇▇▇▇▇▇ & Company, financial advisors
to AT Plastics, to the effect that the consideration to be received by the
AT Plastics Shareholders and AT Plastics Optionholders under the
Amalgamation is fair to AT Plastics Shareholders and AT Plastics
Optionholders from a financial point of view, subject, in each case, to the
assumptions and limitations described in such opinion; and
(c) AT Plastics represents as of the date hereof that its directors, Chief
Executive Officer and Chief Financial Officer have advised it that they
intend to vote all AT Plastics Shares held by them in favour of the AT
Plastics Amalgamation Resolution and will, accordingly, so represent in the
AT Plastics Circular.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ACETEX
3.1 REPRESENTATIONS AND WARRANTIES
Acetex hereby makes to AT Plastics the representations and warranties
as set forth in Schedule B to this Agreement and acknowledges that AT Plastics
is relying upon those representations and warranties in connection with entering
into this Agreement.
3.2 INVESTIGATION
Any investigation by AT Plastics and its advisors shall not mitigate,
diminish or affect the representations and warranties of Acetex pursuant to this
Agreement.
3.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of Acetex contained in this
Agreement shall not survive the completion of the Amalgamation and shall expire
and be terminated and extinguished upon the Amalgamation becoming effective.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF AT PLASTICS
4.1 REPRESENTATIONS AND WARRANTIES
AT Plastics hereby makes to Acetex the representations and warranties
as set forth in Schedule C to this Agreement and acknowledges that Acetex is
relying upon those representations and warranties in connection with entering
into this Agreement.
4.2 INVESTIGATION
Any investigation by Acetex and its advisors shall not mitigate,
diminish or affect the representations and warranties of AT Plastics pursuant to
this Agreement.
4.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of AT Plastics contained in this
Agreement shall not survive the completion of the Amalgamation and shall expire
and be terminated and extinguished upon the Amalgamation becoming effective.
ARTICLE 5
COVENANTS
5.1 CORPORATE GOVERNANCE
The Parties agree to use their best efforts to cause the Governance
Arrangements set out in Schedule D, including without limitation, the matters
contained in Section 1 of Schedule D, to become effective upon the Amalgamation
becoming effective or immediately thereafter.
5.2 CONSULTATION
Acetex and AT Plastics agree to consult with each other in issuing any
press releases or otherwise making public statements with respect to this
Agreement or the Amalgamation and in making any filing with any Governmental
Entity or with any stock exchange with respect thereto. Each Party shall use all
reasonable commercial efforts to enable the other Party to review and comment on
all such press releases prior to the release thereof and to enable the other
Party to review and comment on such filings prior to the filing thereof. The
Parties agree to issue jointly a press release with respect to this Agreement as
soon as practicable, in a form acceptable to both Parties.
5.3 MUTUAL COVENANTS
Each of the Parties covenants and agrees that, except as contemplated
in this Agreement or the Amalgamation, until the Effective Date or the day upon
which this Agreement is terminated, whichever is earlier:
(a) except as previously disclosed in writing to, or with the prior written
consent of, the other Party hereto, it shall, and shall cause each of its
Subsidiaries to, conduct its and their respective businesses only in, and
not take any action except in, the usual, ordinary and regular course of
business and consistent with past practices;
(b) except as previously disclosed in writing to the other Party, including in
paragraph 2 of Schedule C hereto or except in respect of internal
transactions involving a Party and its wholly-owned Subsidiaries or among
such Subsidiaries, it shall not, without the prior written consent of the
other Party hereto, which shall not be unreasonably withheld or delayed,
directly or indirectly, including through a Subsidiary, do or permit to
occur any of the following:
(i) issue, sell, pledge, lease, dispose of, encumber or agree to issue,
sell, pledge, lease, dispose of or encumber (or permit any of its
Subsidiaries to issue, sell, pledge, lease, dispose of, encumber or
agree to issue, sell, pledge, lease, dispose of or encumber):
(A) any shares of, or any options, warrants, calls, conversion
privileges or rights of any kind to acquire any shares of it
or any of its Subsidiaries, except pursuant to the exercise
of stock options currently outstanding or under existing
share issuance plans which have been disclosed to the other
Party to this Agreement and except for stock options issued
to new hires in accordance with past practices and shares
issued in respect thereof; and as Acetex may deem
appropriate or necessary for purposes of refinancing the
debt of the Amalgamated Corporation; or
(B) except in the usual, ordinary and regular course of business
and consistent with past practice, any material assets of it
or any of its Material Subsidiaries;
(ii) amend or propose to amend its articles or by-laws or those of any
of its Material Subsidiaries;
(iii) split, combine or reclassify any of its outstanding shares, or
declare, set aside or pay any dividend or other distribution
payable in cash, stock, property or otherwise with respect to its
shares;
(iv) redeem, purchase or offer to purchase (or permit any of its
Material Subsidiaries to redeem, purchase or offer to purchase) any
shares or other securities of it or any of its Material
Subsidiaries, unless otherwise required by the terms of such
securities;
(v) reorganize, amalgamate or merge it or any of its Material
Subsidiaries with any other person, corporation, partnership or
other business organization whatsoever;
(vi) except in the usual, ordinary and regular course of business and
consistent with past practice, acquire, agree to acquire, dispose
of or agree to dispose of any person, corporation, partnership,
joint venture or other business organization or division or
acquire, agree to acquire, dispose of or agree to dispose of any
assets, which, in each case, are individually or in the aggregate
material;
(vii) except in the usual, ordinary and regular course of business and
consistent with past practice: (A) satisfy or settle any claims or
liabilities which are individually or in the aggregate material;
(B) relinquish any contractual rights which are individually or in
the aggregate material; or (C) enter into any interest rate,
currency or commodity swaps, ▇▇▇▇▇▇ or other similar financial
instruments; or
(viii) except in the usual, ordinary and regular course of business and
consistent with past practice, and except for the purpose of the
renewal of or the replacement of existing credit facilities where
such renewal or replacement facilities are for a principal amount
approximately the same as or less than the principal amount of the
facilities renewed or replaced, incur or commit to provide
guarantees, incur any indebtedness for borrowed money or issue any
amount of debt securities which are individually or in the
aggregate material;
(c) except as may be required under the Lender Consents, without the prior
written consent of the other Party hereto, which shall not be unreasonably
withheld or delayed, it shall not, and shall cause each of its Subsidiaries
not to:
(i) other than as previously disclosed in writing to the other Party
hereto or in the usual, ordinary and regular course of business and
consistent with past practice or pursuant to existing employment,
pension, supplemental pension, termination, compensation
arrangements or policies, enter into or modify any employment,
severance, collective bargaining or similar agreements, policies or
arrangements with, or grant any bonuses, salary increases, stock
options, pension or supplemental pension benefits, profit sharing,
retirement allowances, deferred compensation, incentive
compensation, severance or termination pay to, or make any loan to,
any officers or directors of it or any Subsidiary;
(ii) other than as previously disclosed in writing to the other Party
hereto or in the usual, ordinary and regular course of business and
consistent with past practice or pursuant to existing employment,
pension, supplemental pension, termination, compensation
arrangements or policies, in the case of employees of it or any of
its Subsidiaries who are not officers or directors, take any action
with respect to the entering into or modifying of any employment,
severance, collective bargaining or similar agreements, policies or
arrangements or with respect to the grant of any bonuses, salary
increases, stock options, pension or supplemental pension benefits,
profit sharing, retirement allowances, deferred compensation,
incentive compensation, severance or termination pay or any other
form of compensation or profit sharing or with respect to any
increase of benefits payable (provided that Acetex consents to the
acceleration of vesting of all options under the AT Plastics Option
Plan upon the Amalgamation becoming effective); or
(iii) except as set forth in the Parties' previously approved respective
capital budgets (copies of which have been previously provided to
the other Party), incur or commit to capital expenditures prior to
the Effective Date individually or in the aggregate exceeding
$250,000;
(d) it shall use its reasonable commercial efforts (taking into account
insurance market conditions and offerings and industry practices) to cause
its current insurance (or re-insurance) policies not to be cancelled or
terminated or any of the coverage thereunder to lapse, except where such
cancellation, termination or lapse would not individually or in the
aggregate have a material adverse effect, unless simultaneously with such
termination, cancellation or lapse, replacement policies underwritten by
insurance and re-insurance companies of nationally recognized standing
providing coverage equal to or greater than the coverage under the
cancelled, terminated or lapsed policies for substantially similar premiums
are in full force and effect;
(e) it shall:
(i) use its reasonable commercial efforts, and cause each of its
Subsidiaries to use its reasonable commercial efforts, to preserve
intact their respective business organizations and goodwill, to
keep available the services of its officers and employees as a
group and to maintain satisfactory relationships with suppliers,
agents, distributors, customers and others having business
relationships with it or its Subsidiaries;
(ii) not take any action, or permit any of its Subsidiaries to take any
action that would interfere with or be inconsistent with the
completion of the transactions contemplated hereunder or would
render, or that reasonably may be expected to render, any
representation or warranty made by it in this Agreement untrue in
any material respect at any time prior to the Effective Date if
then made (other than a change of recommendation in accordance with
Section 5.4 and the communication of such change); and
(iii) promptly notify the other Party to this Agreement of any material
adverse change, or any change which could reasonably be expected to
become a material adverse change, in respect of its or any of its
Subsidiaries' businesses or in the operation of its or any of its
Subsidiaries' businesses or in the operation of its or any of its
Subsidiaries' properties, and of any material Governmental Entity
or third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated);
(f) except in connection with the Lender Consents, it shall not settle or
compromise any claim brought by any present, former or purported holder of
any of its securities in connection with the transactions contemplated by
this Agreement or the Amalgamation prior to the Effective Date without the
prior written consent, not to be unreasonably withheld or delayed, of the
other Party to this Agreement;
(g) except in the usual, ordinary and regular course of business and consistent
with past practice, or except as previously disclosed in writing to the
other Party hereto or as required by applicable Laws, it and its
Subsidiaries shall not enter into or modify in any material respect any
contract, agreement, commitment or arrangement which new contract or series
of related new contracts or modification to an existing contract or series
of related existing contracts would be material to a Party hereto or which
would have a material adverse effect on a Party hereto;
(h) it shall use all reasonable commercial efforts to satisfy (or cause the
satisfaction of) the conditions precedent to its obligations hereunder set
forth in Article 6 to the extent the same is within its control and take,
or cause to be taken, all other action and to do, or cause to be done, all
other things necessary, proper or advisable under all applicable Laws to
complete the Amalgamation, including using its reasonable commercial
efforts to:
(i) obtain all necessary waivers, consents and approvals required to be
obtained by it from other parties to loan agreements, leases and
other contracts;
(ii) obtain all necessary consents, approvals and authorizations as are
required to be obtained by it under any applicable Laws;
(iii) effect all necessary registrations and filings and submissions of
information requested by Governmental Entities required to be
effected by it in connection with the Amalgamation and participate
and appear in any proceedings of either Party before Governmental
Entities in connection with the Amalgamation;
(iv) oppose, lift or rescind any injunction or restraining order or
other order or action seeking to stop, or otherwise adversely
affecting the ability of the Parties to consummate, the
transactions contemplated hereby or by the Amalgamation;
(v) fulfill all conditions and satisfy all provisions of this Agreement
and the Amalgamation, including delivery of the certificates of
their respective officers contemplated by Section 6.2 and Section
6.3; and
(vi) cooperate with the other Party to this Agreement in connection with
the performance by it of its obligations hereunder;
(vii) it shall not take any action, refrain from taking any action, or
permit any action to be taken or not taken, inconsistent with this
Agreement or which would reasonably be expected to significantly
impede the consummation of the Amalgamation (other than a change of
recommendation in accordance with Section 5.4 and the communication
of such change);
(i) subject to the Confidentiality Agreement and Section 5.7, it will, in all
material respects, conduct itself so as to keep the other Parties to this
Agreement fully informed as to the material decisions required to be made
or actions required to be taken with respect to the operation of its
business, provided that such disclosure is not otherwise prohibited by
reason of a confidentiality obligation owed to a third party for which a
waiver could not be obtained or is with respect to customer specific or
competitively sensitive information relating to areas or projects where
Acetex and AT Plastics are competitors;
(j) it shall discuss and consider such Pre-Amalgamation Steps as may be
proposed by the other Party hereto and implement such Pre-Amalgamation
Steps that it considers to be in the best interests of its shareholders,
provided such steps are agreed to in writing by the other Party hereto;
(k) it shall make or cooperate as necessary in the making of all necessary
filings and applications under all applicable Laws required in connection
with the transactions contemplated herein and take all reasonable action
necessary to be in compliance with such Laws; and
(l) it shall use its reasonable commercial efforts to conduct its affairs so
that all of its representations and warranties contained herein shall be
true and correct in all material respects on and as of the Effective Date
as if made thereon.
5.4 RECOMMENDATION OF BOARDS OF DIRECTORS
The AT Plastics Circular shall include the recommendation and
representation of the AT Plastics Board of Directors to its security holders in
respect of the Amalgamation as set out in Section 2.9. Notwithstanding any other
provision of this Agreement, the Board of Directors of AT Plastics may change
its recommendation to its securityholders in respect of the Amalgamation from
that set forth in
Sections 2.9, if such Board concludes, in good faith, after receiving the advice
of outside counsel and financial advisors that is reflected in the minutes of a
meeting of the Board, that such action is necessary for such Board to act in a
manner consistent with its fiduciary duty or applicable Laws and, in the event
that Sections 5.5, 5.6 or 8.2 are applicable, if such Party and its Board are in
compliance with those sections and such Party has paid any fee applicable under
Article 8. The foregoing shall not relieve the Board of Directors of AT Plastics
from its obligation to proceed to call and hold the AT Plastics Meeting, solicit
proxies for such meeting and to hold the vote of AT Plastics Shareholders.
5.5 MUTUAL COVENANT REGARDING NON-SOLICITATION
(a) Neither Acetex nor AT Plastics, nor their respective Subsidiaries shall,
directly or indirectly, through any officer, director, employee,
representative or agent of Acetex or AT Plastics, as the case may be,
solicit, initiate, invite or knowingly encourage (including by way of
furnishing confidential information or entering into any form of agreement,
arrangement or understanding) the initiation of or participate in, any
inquiries or proposals regarding an Acquisition Proposal, provided that
nothing contained in this Section 5.5 or other provisions of this Agreement
shall prevent the Board of Directors of Acetex or AT Plastics from
considering, negotiating, approving or recommending to its shareholders an
agreement in respect of an unsolicited bona fide written Acquisition
Proposal (i) in respect of which any required financing has been
demonstrated to the satisfaction of the Board of Directors of the Party
subject to the Acquisition Proposal, acting in good faith, to be reasonably
likely to be obtained, (ii) which is not subject to a due diligence access
condition which allows access to the books, records and personnel of a
Party hereto or any of its Subsidiaries or their representatives beyond
5:00 p.m. (Eastern Daylight Time) on the third business day after which
access is afforded to the person making the Acquisition Proposal (provided,
however, the foregoing shall not restrict the ability of such person to
continue to review the information provided); (iii) in respect of which the
Board of Directors of the Party subject to the Acquisition Proposal
determines (having consulted outside counsel) that in the exercise of its
fiduciary duty it would be necessary for such Board of Directors to take
such action in order to avoid breaching its fiduciary duties; and (iv) in
respect of which the Board of Directors of the Party subject to the
Acquisition Proposal determines in good faith, after consultation with
financial advisors, if consummated in accordance with its terms, would
result in a transaction more favourable to its shareholders than the
Amalgamation (any such Acquisition Proposal that satisfies clauses (i)
through (iv) above being referred to herein as a "Superior Proposal").
(b) Subject to the ability of the Parties to carry on business in accordance
with Section 5.3, Acetex and AT Plastics shall continue to refrain from
participating in any discussions or negotiations with any parties (other
than the other Party hereto) with respect to any potential Acquisition
Proposal. Acetex and AT Plastics agree not to release any third party from
any confidentiality agreement in respect of an Acquisition Proposal to
which such third party is a party. Acetex and AT Plastics further agree not
to release any third party from any standstill agreement to which such
third party is a party, unless such third party has made a Superior
Proposal. Acetex and AT Plastics shall immediately request the return or
destruction of all confidential information provided to any third parties
who have previously entered into a confidentiality agreement in respect of
an Acquisition Proposal with Acetex or AT Plastics, as the case may be, and
shall use all reasonable efforts to ensure that such requests are honoured.
(c) Each of Acetex and AT Plastics shall immediately notify the other Party
(orally and in writing) of any future Acquisition Proposal of which such
Party's directors or senior officers become aware, or any amendments to the
foregoing, or any request for non-public information relating to Acetex or
AT Plastics, as the case may be, or any of such Party's Material
Subsidiaries in connection with
an Acquisition Proposal or for access to the properties, books or records
or for a list of the shareholders of such Party or any Material Subsidiary
by any person or entity that informs such Party or such Material Subsidiary
that it is considering making an Acquisition Proposal. Such notice shall
include a copy, of all written communications and a description of the
material terms and conditions of any proposal and provide such details of
the proposal, inquiry or contact as the other Party hereto may reasonably
request, including without limitation the identity of the person and
controlling person, if any, making such proposal, inquiry or contact.
(d) If Acetex or AT Plastics receives a request for material non-public
information from a person who proposes a bona fide Acquisition Proposal in
respect of Acetex or AT Plastics, and the Board of Directors of such Party
determines that such proposal would be a Superior Proposal pursuant to
Section 5.5(a), assuming the satisfactory outcome of a due diligence
condition which conforms to Section 5.5(a), then, and only in such case,
the Board of Directors may, subject to the execution of a confidentiality
agreement containing a standstill provision substantially similar to that
contained in Article 7 of the Confidentiality Agreement (provided, however,
the person making the Acquisition Proposal shall not be precluded
thereunder from making the Acquisition Proposal as proposed) and provided
such Party sends a copy of any such confidentiality agreement to the other
Party immediately upon its execution, only provide such person with access,
in accordance with Section 5.5(a) to the same information previously
provided to the other Party. The Party providing access shall provide the
other Party with a list of the information provided to the person making
the Superior Proposal.
(e) Each Party hereto shall ensure that its directors and officers and its
Subsidiaries and any financial advisors or other advisors or
representatives retained by it are aware of the provisions of this Section,
and it shall be responsible for any breach of this Section 5.5 by its
financial advisors or other advisors or representatives.
5.6 NOTICE OF SUPERIOR PROPOSAL DETERMINATION
Neither Acetex nor AT Plastics shall accept, approve or recommend or
enter into any agreement (except for a confidentiality agreement pursuant to
Section 5.5(d)) in respect of an Acquisition Proposal on the basis that it
constitutes a Superior Proposal unless (i) it has provided the other Party
hereto with a copy of the Acquisition Proposal document which has been
determined to be a Superior Proposal, with such deletions as are necessary to
protect confidential portions of such Acquisition Proposal document, provided
that the material terms, conditions and the identity of the person, and
controlling person, if any, making the Acquisition Proposal may not be deleted;
(ii) five (5) business days (the "Notice Period") shall have elapsed from the
later of the date the other Party received notice of the determination to
accept, approve or recommend an agreement in respect of such Acquisition
Proposal, and the date such Party received a copy of the Acquisition Proposal
document; (iii) it has paid to the other Party the fee payable under Sections
8.1 or 8.2, as the case may be; and (iv) it concurrently terminates this
Agreement pursuant to Sections 9.1(e) or (f), as the case may be. During the
Notice Period, the Party receiving or subject to the Superior Proposal shall
provide a reasonable opportunity to the other Party to consider, discuss and
offer such adjustments in the terms and conditions of this Agreement as would
enable the Party receiving the Superior Proposal to proceed with its
recommendation to securityholders with respect to the Amalgamation; provided
however that any such adjustment shall be at the discretion of the Parties at
the time. The Board of Directors of the Party receiving or subject to the
Superior Proposal will review in good faith any offer made by the other Party to
amend the terms of this Agreement in order to determine, in its discretion, as
part of its exercising its fiduciary duties, whether the proposed amendments
would, upon acceptance, result in such Superior Proposal ceasing to be a
Superior Proposal. If the Board of Directors of the Party determines that the
Superior Proposal would cease to be a Superior Proposal, it will so advise the
other Party and will accept the offer by the other Party to amend the terms
of this Agreement and the Parties agree to take such actions and execute such
documents as are necessary to give effect to the foregoing. If the Board of
Directors of the Party subject to or receiving the Superior Proposal continues
to believe, in good faith and after consultation with financial advisors and
outside counsel, that such Superior Proposal remains a Superior Proposal and
therefore rejects the amendments offered by the other Party hereto, that Party
may, subject to the terms of this Agreement including the payment of applicable
fees under Article 8, accept, approve, recommend or enter into an agreement,
understanding or arrangement in respect of such Superior Proposal. Each
successive material modification of any Acquisition Proposal or a Superior
Proposal shall constitute a new Acquisition Proposal for the purposes of this
Section 5.6 and shall require a five (5) business day Notice Period from the
date such amendment is communicated to the other Party hereto (other than an
amendment to improve upon a Superior Proposal in respect of which the other
Party has been provided with an opportunity to amend the terms of this Agreement
and such Superior Proposal has not ceased to be a Superior Proposal prior to the
proposed amendment). Information provided hereunder shall constitute
confidential information under the Confidentiality Agreement.
5.7 ACCESS TO INFORMATION
Subject to the Confidentiality Agreement and applicable Laws, upon
reasonable notice, AT Plastics shall (and shall cause each of its Subsidiaries
to) afford the officers, employees, counsel, accountants and other authorized
representatives and advisors ("Representatives") of Acetex access, during normal
business hours from the date hereof and until the earlier of the Effective Date
or the termination of this Agreement, to its properties, books, contracts and
records as well as to its management personnel, and, during such period, AT
Plastics shall (and shall cause each of its Subsidiaries to) furnish promptly to
Acetex all information concerning its business, properties and personnel as
Acetex may reasonably request. Subject to the Confidentiality Agreement and
applicable Laws, upon reasonable notice, Acetex shall (and shall cause each of
its Subsidiaries to) provide the same access to AT Plastics and its
Representatives on the same terms and conditions. Nothing in the foregoing shall
require Acetex or AT Plastics to disclose information subject to a written
confidentiality agreement with third parties or competitively sensitive
information relating to areas or projects where Acetex and AT Plastics are
competitors. For greater certainty, until the earlier of the Effective Date and
the termination of this Agreement, access to and exchange of competitively
sensitive confidential information ("Confidential Data") as between the Parties
shall be limited to that which is reasonably necessary for the purposes of
securing all necessary regulatory approvals, the preparation and settlement of
definitive documents and the advancement of the Amalgamation as contemplated
herein and shall be further limited such that the dissemination of such
Confidential Data shall be confined to those representatives of the Parties and
their advisors who have a need to know such information for these purposes and
who agree to respect such confidentiality in their dealings with such
Confidential Data. In particular, with reference to access to and the sharing of
Confidential Data of one Party with representatives of the other Party for the
purposes of preparing any filings or submissions under the Competition Act in
respect of the Amalgamation, the general principle which shall be applied is
that such information shall be made available to, exchanged or shared with
counsel to the Parties rather than the Parties or their representatives.
5.8 COVENANTS OF AT PLASTICS
AT Plastics covenants and agrees that, except as contemplated in this
Agreement or pursuant to the Amalgamation, until the Effective Date or the day
upon which this Agreement is terminated, whichever is earlier, it will:
(a) in a timely and expeditious manner:
(i) prepare, in consultation with Acetex, and file the AT Plastics
Circular in all jurisdictions where the same is required to be
filed and mail the same in accordance with all applicable Laws, in
all jurisdictions where the same is required, complying in all
material respects with all applicable Laws on the date of mailing
thereof and containing full, true and plain disclosure of all
material facts relating to the Amalgamation and AT Plastics and not
containing any misrepresentation, as defined under such applicable
Laws, with respect thereto;
(ii) solicit proxies for the approval of the AT Plastics Amalgamation
Resolution in accordance with the AT Plastics Circular;
(iii) convene the AT Plastics Meeting and distribute copies of this
Agreement (or a written summary thereof prepared by AT Plastics in
form and substance satisfactory to Acetex acting reasonably); and
(iv) provide notice to Acetex of the AT Plastics Meeting and allow
Acetex's representatives to attend the AT Plastics Meeting; and
(v) conduct the AT Plastics Meeting in accordance with the by-laws of
AT Plastics and any instrument governing such meeting, as
applicable, and as otherwise required by applicable Laws;
(b) in a timely and expeditious manner, prepare (in consultation with Acetex)
and file any mutually agreed (or otherwise required by applicable Laws)
amendments or supplements to the AT Plastics Circular with respect to the
AT Plastics Meeting and mail the same in accordance with all applicable
Laws, in all jurisdictions where the same is required, complying in all
material respects with all applicable legal requirements on the date of
mailing thereof;
(c) subject to the satisfaction of the conditions precedent in favour of AT
Plastics and the receipt of the written confirmation of Acetex that the
conditions precedent in favour of Acetex have been satisfied, file the
Articles of Amalgamation with the Director in order for the Amalgamation to
become effective;
(d) except for individual proxies and other non-substantive communications,
furnish promptly to Acetex a copy of each notice, report, report of proxies
submitted, schedule or other document or communication delivered, filed or
received by AT Plastics in connection with the Amalgamation the AT Plastics
Meeting or any other meeting of AT Plastics security holders or class of
security holders which all such holders, as the case may be, are entitled
to attend, any filings under applicable Laws and any dealings with
regulatory agencies in connection with, or in any way affecting, the
transactions contemplated herein;
(e) subject to Section 5.7, in a timely and expeditious manner, provide to
Acetex all information as may be reasonably requested by Acetex with
respect to AT Plastics and its Subsidiaries and their respective businesses
and properties; and
(f) assist and cooperate in the preparation and filing with all applicable
securities commissions or similar securities regulatory authorities of
Canada of all necessary applications to seek exemptions, if required, from
the prospectus, registration and other requirements of the applicable
securities laws of Canada for the issue by Acetex of Acetex Shares pursuant
to the terms of the Amalgamation and the resale of such Acetex Shares.
5.9 COVENANTS OF ACETEX
Acetex covenants and agrees that, except as contemplated in this
Agreement or pursuant to the Amalgamation, until the Effective Date or the day
upon which this Agreement is terminated, whichever is earlier, it will:
(a) in a timely and expeditious manner prepare, in consultation with AT
Plastics, the AT Plastics Circular in so far as information contained
therein relates to Acetex and provide to AT Plastics for inclusion in the
circular all such information and financial statements required under
applicable Laws which information shall constitute full, true and plain
disclosure of all material facts relating to the Amalgamation and Acetex
and shall not contain any misrepresentation, as defined under such
applicable Laws, with respect thereto and shall provide a certificate to
that effect in the Circular.
(b) in a timely and expeditious manner, prepare (in consultation with AT
Plastics) and file any mutually agreed (or otherwise required by applicable
Laws) amendments or supplements to the AT Plastics Circular with respect to
the Acetex Meeting and mail the same in accordance with all applicable
Laws, in all jurisdictions where the same is required, complying in all
material respects with all applicable legal requirements on the date of
mailing thereof;
(c) except for non-substantive communications, furnish promptly to AT Plastics
a copy of each notice, report, schedule or other document or communication
delivered, filed or received by Acetex in connection with the Amalgamation,
any meeting of Acetex Security holders or class of security holders which
all such holders, as the case may be, are entitled to attend, any filings
under applicable Laws and any dealings with regulatory agencies in
connection with, or in any way affecting, the transactions contemplated
herein;
(d) subject to Section 5.7, in a timely and expeditious manner, provide to AT
Plastics all information as may be reasonably requested by AT Plastics with
respect to Acetex and its Subsidiaries and their respective businesses and
properties;
(e) prepare and file with all applicable securities commissions or similar
securities regulatory authorities of Canada all necessary applications to
seek exemptions if required by applicable securities Laws or this
Agreement, from the prospectus, registration and other requirements of the
applicable securities Laws of Canada for the issue by Acetex of Acetex
Shares pursuant to the terms of the Amalgamation and the resale of such
Acetex Shares;
(f) apply for and use all reasonable efforts to obtain the listing on The
Toronto Stock Exchange, as of the Effective Date, of the Acetex Shares
which are to be issued pursuant to the Amalgamation and issuable upon the
exercise of the AT Plastics Options;
(g) subject to the satisfaction of the conditions precedent in favour of Acetex
and the receipt of the written confirmation of AT Plastics that the
conditions precedent in favour of AT Plastics have been satisfied, cause
Acetex Sub to file the Articles of Amalgamation with the Director in order
for the Amalgamation to become effective;
(h) issue the Acetex Shares, in accordance with the terms of the terms hereof
to those AT Plastics Shareholders who are entitled to receive Acetex Shares
pursuant to the Amalgamation, which Acetex Shares shall be validly issued
as fully paid and non-assessable shares;
(i) assume, in accordance with the terms hereof, the obligations of AT Plastics
under the AT Plastics Options in accordance with the terms hereof; and
(j) issue the Acetex Substitute Warrants #1 and Acetex Substitute Warrants #2
in accordance with the terms hereof.
5.10 INDEMNIFICATION OF DIRECTORS AND OFFICERS, CORPORATE INDEMNITIES AND
INSURANCE
(a) For a period of six years after the Effective Date, AT Plastics shall and
Acetex shall cause AT Plastics to (i) maintain in effect the current or
substantially similar (subject to any changes required by applicable Laws
in the jurisdiction in which AT Plastics may exist from time to time)
provisions regarding indemnification of officers and directors contained in
the constating documents of AT Plastics and its Subsidiaries and any
directors', officers' or employees' indemnification agreements of AT
Plastics and its Subsidiaries; (ii) maintain in effect the current policies
of directors' and officers' liability insurance and fiduciary liability
insurance maintained by AT Plastics and its Subsidiaries (provided that
Acetex may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are, in the aggregate, not
materially less advantageous to the insured) with respect to claims arising
from facts or events which occurred on or before the Effective Date; and
(iii) indemnify the directors and officers of AT Plastics and its
Subsidiaries to the fullest extent to which AT Plastics and its
Subsidiaries are permitted to indemnify such officers and directors under
its articles and bylaws and applicable Laws in the jurisdiction in which AT
Plastics may continue to exist from time to time. Acetex shall
unconditionally and irrevocably guarantee for the benefit of such
directors, officers and employees, the obligations of AT Plastics and its
Subsidiaries under the foregoing indemnification arrangements.
(b) The provisions of this Section 5.10 are (i) for the benefit of, and shall
be enforceable by, each indemnified party, his or her heirs, executors,
administrators and other legal representatives; and (ii) are in addition
to, and not in substitution for, any other rights to indemnification or
contribution that any such person may have by contract or otherwise, and
such rights shall be held by AT Plastics or Acetex, as the case may be, in
trust for such person provided however that no approval of any beneficiary
of such trust shall be required in connection with an amendment or
variation of this Section 5.10 prior to the Effective Date.
(c) Notwithstanding the foregoing, this Section 5.10 shall not restrict or
prohibit Acetex or AT Plastics from entering into any transaction
subsequent to the Effective Date, including a merger, amalgamation,
arrangement, dissolution, liquidation, reorganization of capital or sale of
all or substantially all of the assets of Acetex or AT Plastics or a
Subsidiary of either of them to another entity, causing Acetex, AT Plastics
or a Subsidiary of either of them to assume the liabilities of another
entity or otherwise reorganizing or restructuring Acetex, AT Plastics or a
Subsidiary of either of them or their respective businesses.
5.11 MERGER OF COVENANTS
The covenants set out in this Agreement, except for Section 5.10 and
Article 10 (other than Section 10.5), shall not survive the completion of the
Amalgamation, and shall expire and be terminated without recourse between the
Parties upon such completion.
ARTICLE 6
CONDITIONS
6.1 MUTUAL CONDITIONS
The obligations of AT Plastics and Acetex to complete the transactions
contemplated hereby are subject to fulfillment of the following conditions on or
before the Effective Date or such other time as is specified below:
(a) the AT Plastics Amalgamation Resolutions set forth in the AT Plastics
Circular shall have been passed at the AT Plastics Meeting, in accordance
with the by-laws of AT Plastics;
(b) the Effective Date shall be on or before September 30, 2003, subject to any
extension of up to thirty (30) days from September 30, 2003, available to a
Party pursuant to Section 6.4;
(c) there shall be no action taken under any Laws or by any Governmental
Entity, that:
(i) makes illegal or otherwise directly or indirectly restrains,
enjoins or prohibits the Amalgamation or any other transactions or
agreements contemplated herein; or
(ii) results in a judgment or assessment of damages, directly or
indirectly, which is materially adverse to the transactions or
agreements contemplated herein;
(d) if applicable, the relevant waiting period in section 123 of the
Competition Act shall have expired and (i) an advance ruling certificate
("ARC") pursuant to section 102 of the Competition Act shall have been
issued by the Commissioner of the Competition Bureau ("Commissioner")
appointed under the Competition Act; or (ii) a "no action letter"
satisfactory to Acetex and AT Plastics, acting reasonably, 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 Acetex and AT Plastics, acting reasonably; and, in
addition, in the event that the ARC or "no action" letter described in (i)
or (ii) in the foregoing is issued, there shall be no threatened or actual
application by the Commissioner for an order under section 92 or 100 of the
Competition Act;
(e) all other consents, waivers, permits, orders and approvals of any
Governmental Entity (other than as contemplated in Sections 6.1(g) or
6.1(i)) or other person, and the expiry or termination of any waiting
periods, in connection with, or required to permit, the consummation of the
Amalgamation, the failure of which to obtain or the non-expiry of which
would be materially adverse to Acetex or AT Plastics, as the case may be,
or materially impede the completion of the Amalgamation, shall have been
obtained, received or occurred on terms that will not have a material
adverse effect on either Acetex or AT Plastics and reasonably satisfactory
evidence thereof shall have been delivered to each Party;
(f) The Toronto Stock Exchange shall have conditionally approved for listing,
subject to compliance with the usual requirements of such exchanges, the
Acetex Shares issuable pursuant to the terms of the Amalgamation and
issuable upon the exercise of the AT Plastics Options;
(g) Acetex and AT Plastics shall have each received a legal opinion from United
States counsel to Acetex and United States counsel to AT Plastics in
connection with the Amalgamation, each in form and substance satisfactory
to Acetex and to AT Plastics, acting reasonably, to the effect that,
assuming compliance with the procedures specified in such legal opinions,
the issuance of Acetex Shares pursuant to the terms of the Amalgamation are
exempt from the registration requirements of the United States Securities
Act of 1933, as amended;
(h) any required prospectus exemptions under Canadian federal, provincial or
territorial securities Laws and any required registration exemptions under
state securities Laws shall have been obtained or perfected or be otherwise
available so that the Acetex Shares issuable pursuant to the terms of the
Amalgamation shall not be subject to any prospectus or registration
requirements or resale restrictions under any of such securities Laws,
other than such requirements or restrictions in respect of control persons
or affiliates and subject to requirements of general application; and
(i) rights of dissent shall not have been exercised, nor shall proceedings have
been initiated to exercise such rights by AT Plastics Shareholders which
exceed 10% of the AT Plastics Shares issued and outstanding or such other
amount which in the opinion of the board of directors of Acetex and AT
Plastics, acting reasonably, may have a material adverse effect upon the
business, property or financial condition of Acetex or AT Plastics.
The foregoing conditions are for the mutual benefit of AT Plastics and Acetex
and may be waived, in whole or in part, in writing by both AT Plastics and
Acetex at any time. If any of the said conditions precedent shall not be
complied with or waived in writing as aforesaid on or before the date required
for the performance thereof, either AT Plastics or Acetex may rescind and
terminate this Agreement by written notice to the other Party (provided such
non-compliance did not arise from the acts or omissions of the Party purporting
to rescind and terminate this Agreement) and shall have no other right or
remedy, except as set forth in Article 8 or 9.
6.2 AT PLASTICS CONDITIONS
The obligation of AT Plastics to complete the transactions contemplated
herein is subject to the fulfillment of the following conditions on or before
the Effective Date or such other time as specified below:
(a) the representations and warranties made by Acetex in this Agreement shall,
in the reasonable judgment of AT Plastics, be true and correct as of the
Effective Date as if made on and as of such date (except to the extent such
representations and warranties speak as of an earlier date or except as
affected by transactions contemplated or permitted by this Agreement or
except for any failures or breaches of representations and warranties which
individually or in the aggregate would not have, or would not reasonably be
expected to have, a material adverse effect on Acetex or materially impede
the completion of the Amalgamation or the transactions contemplated by this
Agreement), and Acetex shall have provided to AT Plastics the certificate
of a senior officer of Acetex certifying such accuracy on the Effective
Date;
(b) Acetex shall have complied with its covenants herein, except to the extent
the failure, in the reasonable judgment of AT Plastics, to comply with such
covenants has not had, or would not reasonably be expected to have,
individually or in the aggregate a material adverse effect on Acetex or
materially impede the completion of the Amalgamation or the transactions
contemplated by this Agreement, and Acetex shall have provided to AT
Plastics the certificate of a senior officer of Acetex certifying that
Acetex has so complied with its covenants herein; and
(c) from the date hereof and up to and including the Effective Date, there
shall have been no change, effect, event, occurrence or change in state of
facts which has had or, in the reasonable judgment of AT Plastics has or
would reasonably be expected to have, a material adverse effect on Acetex.
The foregoing conditions precedent are for the benefit of AT Plastics
and may be waived, in whole or in part, by AT Plastics in writing at any time.
If any of the said conditions shall not be complied, with or waived in writing
by AT Plastics on or before the date required for their performance and provided
such non-compliance did not arise from the acts or omissions of AT Plastics,
then AT Plastics may rescind and terminate this Agreement by written notice to
Acetex and shall have no other right or remedy against Acetex, except as set
forth in Article 8 or 9.
6.3 ACETEX CONDITIONS
The obligation of Acetex to complete the transactions contemplated
herein is subject to the fulfillment of the following conditions on or before
the Effective Date or such other time as specified below:
(a) the representations and warranties made by AT Plastics in this Agreement
shall be, in the reasonable judgment of Acetex, true and correct as of the
Effective Date as if made on and as of such date (except to the extent such
representations and warranties speak as of an earlier date or except as
affected by transactions contemplated or permitted by this Agreement or
except for any failures or breaches of representations and warranties which
individually or in the aggregate would not have, or would not reasonably be
expected to have, a material adverse effect on AT Plastics or materially
impede the completion of the Amalgamation or the transactions contemplated
by this Agreement), and AT Plastics shall have provided to Acetex the
certificate of a senior officer of AT Plastics certifying such accuracy on
the Effective Date;
(b) AT Plastics shall have complied with its covenants herein, except to the
extent the failure, in the reasonable judgment of Acetex, to comply with
such covenants has not had, or would not reasonably be expected to have,
individually or in the aggregate a material adverse effect on AT Plastics
or materially impede the completion of the Amalgamation or the transactions
contemplated by this Agreement, and AT Plastics shall have provided to
Acetex the certificate of a senior officer of AT Plastics certifying that
AT Plastics has so complied with its covenants herein;
(c) from the date hereof and up to and including the Effective Date, there
shall have been no change, effect, event, occurrence or change in state of
facts which has had or in the reasonable judgment of Acetex has or would
reasonably be expected to have, a material adverse effect on AT Plastics;
(d) Acetex, acting reasonably shall have determined that it is able to arrange
financing which in its opinion is adequate to refinance the debt of the
Amalgamated Corporation such that Acetex will be in compliance with the
terms and conditions of its 10 7/8% Senior Notes due 2009 on the Effective
Date;
(e) AT Plastics has entered into agreements in form and substance satisfactory
to Acetex providing that after the Effective Date the Amalgamated
Corporation may refinance its debts owing to AT Plastics Warrantholders for
the principal amount thereof and an additional amount not to exceed
US$850,000 and which provide for the cancellation and extinguishment of the
AT Plastics Warrants in consideration for the Acetex Substitute Warrants #1
and Acetex Substitute Warrants #2; and
(f) Acetex is satisfied that AT Plastics has not issued any options or issued
warrants to acquire its stock save as disclosed in writing since March 31,
2003.
The foregoing conditions precedent are for the benefit of Acetex and
may be waived, in whole or in part, by Acetex in writing at any time. If any of
the said conditions shall not be complied with or waived in writing by Acetex on
or before the date required for their performance and provided such
non-compliance did not arise from the acts or omissions of Acetex, then Acetex
may rescind and terminate this Agreement by written notice to AT Plastics and
shall have no other right or remedy against AT Plastics, except as set forth in
Article 8 or 9.
6.4 NOTICE AND CURE PROVISIONS
Each of AT Plastics and Acetex will give prompt notice to the other of
the occurrence, or failure to occur, at any time from the date hereof until the
Effective Date, of any event or state of facts which occurrence of failure
would, or would be likely to:
(a) cause any of the representations or warranties of any Party contained
herein to be untrue or inaccurate in any material respect on the date
hereof; or
(b) result in the failure to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by any Party hereunder.
No Party may elect not to complete the transactions contemplated hereby
pursuant to the non-fulfillment of the conditions precedent contained in
Sections 6.1, 6.2 and 6.3 or, any termination right arising therefrom and no
payments are payable pursuant to Sections 8.1 or 8.2 as a result of such
election unless forthwith and in any event prior to the filing of the Articles
of Amalgamation for acceptance by the Director, the Party intending to rely
thereon has delivered a written notice to the other Party specifying in
reasonable detail all breaches of covenants, representations and warranties or
other matters which the Party delivering such notice is asserting as the basis
for the non-fulfillment of the applicable condition precedent or termination
right, as the case may be. If any such notice is delivered, provided that a
Party is proceeding diligently to cure such matter and such matter is capable of
being cured (except matters arising out of the failure to make appropriate
disclosure in the disclosure memoranda delivered on the date of execution of
this Agreement pursuant to Section 1.10 hereof) no Party may terminate this
Agreement until the later of September 30, 2003 and (except with respect to the
condition set out in 6.3(d)) the expiration of a period of thirty (30) days from
such notice and then only if such matter is not cured in all material respects.
If such notice has been delivered prior to the date of the AT Plastics Meeting,
such meeting shall be postponed until the expiry of such period. If such notice
has been delivered prior to the filing of the Articles of Amalgamation with the
Director, such application and such filing shall be postponed until the expiry
of such period.
6.5 MERGER OF CONDITIONS
The conditions set out in Sections 6.1, 6.2 and 6.3 shall be
conclusively deemed to have been satisfied, waived or released upon the filing
of Articles of Amalgamation as contemplated by this Agreement. Notwithstanding
the foregoing, the covenants set forth in Section 5.10 and Article 10 (other
than Section 10.5) shall survive the filing of Articles of Amalgamation, as
contemplated by this Agreement.
ARTICLE 7
AMENDMENT
7.1 AMENDMENT
This Agreement may, at any time and from time to time before or after
the holding of the AT Plastics Meeting, be amended by mutual written agreement
of the Parties hereto without further notice to or authorization on the part of
their respective shareholders, and any such amendment may, without limitation:
(a) change the time for performance of any of the obligations or acts of the
Parties;
(b) waive any inaccuracies or modify any representation contained herein or in
any document delivered pursuant hereto;
(c) waive compliance with or modify any of the covenants herein contained and
waive or modify, performance of any of the obligations of the Parties; and
(d) waive compliance with or modify any conditions precedent herein contained;
provided that: (i) notwithstanding the foregoing, following the approval of the
AT Plastics Amalgamation Resolution, the number of Acetex Shares which the AT
Plastics Shareholders shall have the right to receive in the Amalgamation may
not be decreased without the further approval of the AT Plastics Shareholders
given in the same manner as required for the approval of the Amalgamation; and
(ii) any such change, waiver or modification does not invalidate any required
securityholder approval of the Amalgamation.
ARTICLE 8
AGREEMENT AS TO COMPENSATION AND OTHER ARRANGEMENTS
8.1 ACETEX COMPENSATION
(a) If at any time after the execution of this Agreement:
(i) the Board of Directors of AT Plastics has withdrawn, qualified or
changed any of its recommendations or determinations referred to in
Section 2.9(a) in a manner adverse to Acetex or shall have resolved
to do so prior to the Effective Date;
(ii) a bona fide Acquisition Proposal is publicly announced, proposed,
offered or made to the AT Plastics Shareholders or to AT Plastics,
and (A) such Acquisition Proposal has not expired or been withdrawn
at the time of the AT Plastics Meeting, (B) the AT Plastics
Shareholders do not approve the Amalgamation and (C) such
Acquisition Proposal, an amended version thereof, a competing
Acquisition Proposal or an Acquisition Proposal solicited in
response to the foregoing, is consummated within 12 months of the
termination of this Agreement; or
(each of the above being an "Acetex Payment Event"), then AT Plastics shall
pay to Acetex in immediately available funds the amount of US$5,000,000 to
an account designated by Acetex , within three business days after any one
of Sections 8.1(a)(i) or (ii) being satisfied or if requested by Acetex
issue and deliver to Acetex (subject to all necessary regulatory approvals
including the approval of the Toronto Stock Exchange) that number of AT
Plastics Shares of its capital, as fully
paid and non-assessable as is equal to US$5,000,000 divided by the closing
price of the AT Plastics Shares on the business day immediately preceding
the date of the Acetex Payment Event, within three business days thereof.
(b) If this Agreement is terminated by Acetex in accordance with Section 9.1(b)
in reliance on the condition contained in Section 6.3(a), then AT Plastics
shall pay to Acetex in immediately available funds the amount of
US$1,000,000 to an account designated by Acetex , within three business
days or if requested by Acetex issue and deliver to Acetex (subject to all
necessary regulatory approvals including the approval of the Toronto Stock
Exchange) that number of AT Plastics Shares of its capital, as fully paid
and non-assessable as is equal to US$1,000,000 divided by the closing price
of the AT Plastics Shares on the business day immediately preceding the
date of such termination, within three business days thereof.
(c) Notwithstanding anything to the contrary contained herein, if a payment has
been made under any of Sections 8.1(a)(i) or (ii) or 8.1(b) above, no
further payment shall be required under Sections 8.1 (a)(i) or (ii) or
8.1(b).
8.2 AT PLASTICS COMPENSATION
(a) If at any time after the execution of this Agreement: Acetex does not waive
the condition set out in Section 6.3(d) by September 30, 2003 and its
failure to do so is not principally attributable to the failure of AT
Plastics to co-operate and assist Acetex with respect to the matters
provided therein and/or the failure of AT Plastics to perform the AT
Plastics Support Obligations (an "AT Plastics Payment Event"), then Acetex
shall pay to AT Plastics US$5,000,000 as liquidated damages in immediately
available funds to an account designated by AT Plastics within three
business days thereof or if requested by AT Plastics issue and deliver to
AT Plastics (subject to all necessary regulatory approvals including the
approval of the Toronto Stock Exchange) that number of Acetex Shares, as
fully paid and non-assessable as is equal to US$5,000,000 divided by the
closing price of the Acetex Shares on the business day immediately
preceding the Acetex Payment Event, within three business days thereof
(b) If this Agreement is terminated by AT Plastics in accordance with Section
9.1(b) in reliance on the condition contained in Section 6.2(a), then
Acetex shall pay to AT Plastics in immediately available funds the amount
of US$1,000,000 to an account designated by AT Plastics, within three
business days thereof issue or if requested by AT Plastics issue and
deliver to AT Plastics (subject to all necessary regulatory approvals
including the approval of the Toronto Stock Exchange) that number of Acetex
Common Shares of its capital, as fully paid and non-assessable as is equal
to US$1,000,000 divided by the closing price of the Acetex Shares on the
business day immediately preceding the date of such termination, within
three business days thereof.
(c) Notwithstanding anything to the contrary contained herein, if a payment has
been made under any of Sections 8.2(a)or 8.2(b) above, no further payment
shall be required under Sections 8.2(a) or 8.2(b).
8.3 LIQUIDATED DAMAGES
Each Party acknowledges that the amounts set out in this Article 8
represent liquidated damages which are a genuine pre-estimate of the damages,
including opportunity costs, which the Party entitled to such damages will
suffer or incur as a result of the event (subject to Section 6.4) giving rise to
such damages and resultant termination of this Agreement, and are not penalties.
Each Party irrevocably
waives any right it may have to raise as a defence that any such liquidated
damages are excessive or punitive.
8.4 LIMITED REMEDY
For greater certainty, the Parties agree that the compensation or
damages to be received pursuant to this Article 8 is the sole remedy in
compensation or damages of the party receiving such payment; provided however
that nothing contained in this Article 8 or Section 9.1, including the payment
of an amount under this Article 8 shall relieve or have the effect of relieving
any Party in any way from liability for damages incurred or suffered by a Party
as a result of a breach of this Agreement by a Party acting in bad faith with a
clear intent and design to prevent the conditions precedent to this Agreement's
completion from being satisfied. Nothing herein 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 or the Confidentiality
Agreement or otherwise to obtain specific performance of any of such act,
covenants or agreements, without the necessity of posting bond or security in
connection therewith.
ARTICLE 9
TERMINATION
9.1 TERMINATION
This Agreement may be terminated at any time prior to the Effective
Date:
(a) by mutual written consent of Acetex and AT Plastics;
(b) as provided in Sections 6.1, 6.2 and 6.3, subject to the right to cure
pursuant to Section 6.4;
(c) by Acetex upon the occurrence of an Acetex Payment Event as provided in
Section 8.1;
(d) by AT Plastics upon the occurrence of an AT Plastics Payment Event as
provided in Section 8.2;
(e) by Acetex upon the acceptance of an Acquisition Proposal pursuant to, and
in accordance with, Sections 5.5 and 5.6 (and provided payment of the
applicable amounts under Section 8.2(a) to, AT Plastics have been made);
(f) by AT Plastics upon the acceptance of an Acquisition Proposal pursuant to,
and in accordance with, Sections 5.5 and 5.6 (and provided payment of the
applicable amounts under Section 8.1(a) to Acetex have been made); and
(g) by either Acetex or AT Plastics if: at the AT Plastics Meeting the
requisite vote of AT Plastics Shareholders is not obtained;
(h) In the event of the termination of this Agreement in the circumstances set
out in any of paragraphs (a) through (g) of this Section 9.1, this
Agreement shall forthwith be terminated and neither Party shall have any
liability or further obligation to the other Party hereunder, except with
respect to the obligations set forth in Article 8 and Article 10 (other
than Section 10.5) which shall survive such termination.
ARTICLE 10
GENERAL
10.1 EXPENSES
(a) The Parties agree that, except in the event of the termination of this
Agreement, all out-of-pocket third party transaction expenses of the
Amalgamation, including legal fees, regulatory filing fees, all
disbursements by advisors and printing and mailing costs, shall be paid by
the Party incurring such expenses. If this Agreement is terminated, Acetex
and AT Plastics agree to share equally the fees and filing fees in respect
of the Competition Act.
(b) Acetex and AT Plastics represent and warrant to each other that, except for
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Partners and UBS Securities, LLC in the case of Acetex,
and W.Y. ▇▇▇▇▇▇▇▇ & Company in the case of AT Plastics, no broker, finder
or investment banker is entitled to any brokerage, finder's or other fee or
commission, or to the reimbursement of any of its expenses, in connection
with the Amalgamation. Each Party to this Agreement has provided to the
other Party a correct and complete copy of all agreements relating to the
arrangement between it and its financial advisors as are in existence at
the date hereof and agrees not to amend the terms of any such agreements
relating to the payment of fees and expenses or enter into an engagement
letter with any strategic advisor without the prior written approval of the
other Party of the fees and expenses to be incurred.
10.2 NOTICES
Any notice, consent, waiver, direction or other communication required
or permitted to be given under this Agreement by a Party to any other Party
shall be in writing and may be given by delivering same or sending same by
facsimile transmission or by delivery addressed to the Party to which the notice
is to be given at its address for service herein. Any notice, consent, waiver,
direction or other communication aforesaid shall, if delivered, be deemed to
have been given and received on the date on which it was delivered to the
address provided herein (if a business day, if not, the next succeeding business
day) and if sent by facsimile transmission be deemed to have been given and
received at the time of receipt unless actually received after 4:00 p.m. at the
point of delivery in which case it shall be deemed to have been given and
received on the next business day.
The address for service of each of the parties hereto shall be as follows:
(a) if to Acetex or 2028569 Ontario Limited:
Acetex Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Burnet, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to AT Plastics:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention : ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇ & Berlis LLP
#1800, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
10.3 TIME OF ESSENCE
Time shall be of the essence in this Agreement.
10.4 ENTIRE AGREEMENT
This Agreement and the Confidentiality Agreement constitute the entire
agreement between the Parties and cancel and supersede all prior agreements and
understandings between the Parties with respect to the subject matter hereof. To
the extent that provisions of the Confidentiality Agreement conflict with
provisions of this Agreement, the provisions of this Agreement shall govern. The
Board of Directors of each of the Parties hereby consents under Section 11.1 of
the Confidentiality Agreement (for so long as this Agreement remains in effect
and has not been terminated) to the actions of the other taken to consummate the
Amalgamation and the transactions contemplated thereby or action taken to
propose amendments thereto under Section 5.6 of this Agreement. The Parties
hereby amend the Confidentiality Agreement such that the Confidentiality
Agreement shall terminate upon the Amalgamation becoming effective or at the end
of the 12th calendar month following the termination of this Agreement,
whichever is first to occur and the exclusivity provisions of the
Confidentiality Agreement contained in Article 3 thereof are hereby terminated.
10.5 FURTHER ASSURANCES
Each Party hereto shall, from time to time, and at all times hereafter,
at the request of the other Party hereto, but without further consideration, do
all such further acts and execute and deliver all such further documents and
instruments as shall be reasonably required in order to fully perform and carry
out the terms and intent hereof.
10.6 GOVERNING LAW
This Agreement shall be governed by, and be construed in accordance
with, the laws of the Province of Ontario and the laws of Canada applicable
therein. Each Party hereto hereby irrevocably attorns to the exclusive
jurisdiction of the Courts of the Province of Ontario in respect of all matters
arising under or in relation to this Agreement.
10.7 EXECUTION IN COUNTERPARTS
This Agreement may be executed in identical counterparts, each of which
is and is hereby conclusively deemed to be an original and the counterparts
collectively are to be conclusively deemed to be one instrument.
10.8 WAIVER
No waiver by any Party hereto shall be effective unless in writing and
any waiver shall affect only the matter, and the occurrence thereof,
specifically identified and shall not extend to any other matter or occurrence.
10.9 ENUREMENT AND ASSIGNMENT
This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns. This
Agreement may not be assigned by any Party hereto without the prior written
consent of the other Party hereto.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first above written.
ACETEX CORPORATION AT PLASTICS INC.
Per: (signed) "▇▇▇▇▇▇ ▇. ▇▇▇▇" Per: (signed) "▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇"
-------------------------------- -----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chairman & Chief Title: President & Chief
Executive Officer Executive Officer
Per: (signed) "▇▇▇ ▇. ▇▇▇▇▇▇▇"
--------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President & Chief
Operating Officer
2028569 ONTARIO LIMITED
Per: (signed) "▇▇▇▇▇▇ ▇. ▇▇▇▇"
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman & Chief
Executive Officer
Per: (signed) "▇▇▇ ▇. ▇▇▇▇▇▇▇"
--------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President & Chief
Operating Officer
SCHEDULE "A"
ARTICLES OF AMALGAMATION
[OBCA FORM]
1. NAME OF CORPORATION.
Acetex (Ontario) Inc.
2. CORPORATE ACCESS NO.
3.
4. THE CLASSES AND ANY MAXIMUM NUMBER OF SHARES THAT THE CORPORATION IS
AUTHORIZED TO ISSUE.
An unlimited number of common shares
5. RESTRICTIONS IF ANY ON SHARE TRANSFERS.
No restrictions.
6. NUMBER (OR MINIMUM AND MAXIMUM NUMBER) OF DIRECTORS.
Minimum of three (3), maximum of twelve (12).
7. RESTRICTIONS IF ANY ON BUSINESS THE CORPORATION MAY CARRY ON.
No restrictions.
8. OTHER RULES OR PROVISIONS IF ANY.
The directors of the Corporation are authorized to appoint from time to
time between annual meetings one or more additional directors of the Corporation
to serve until the next annual general meeting, but the number of additional
directors shall not at any time exceed one-third of the number of directors who
held office at the end of the most recently completed annual general meeting of
the Corporation.
9. NAME OF AMALGAMATING CORPORATIONS.
AT Plastics Inc
Acetex (Ontario) Inc.
10. CORPORATE ACCESS NO.
DATE SIGNATURE TITLE
SCHEDULE B
REPRESENTATIONS AND WARRANTIES OF ACETEX
1. ORGANIZATION.
Each of Acetex and its Material Subsidiaries has been duly incorporated
or formed under the Laws of its jurisdiction of incorporation or other
organization, is validly subsisting and has full corporate or legal power and
authority to own its properties and conduct its businesses as presently owned
and conducted. All of the outstanding shares in the capital of and other
ownership interests of its Subsidiaries are validly issued, fully paid and
non-assessable and all such shares and other ownership interests owned directly
or indirectly by Acetex are (except as disclosed in writing to AT Plastics or
pursuant to restrictions on transfer contained in constating documents, rights
of first refusal and similar rights restricting transfer contained in
shareholder, partnership or joint venture agreements for or pursuant to existing
financing arrangements involving Subsidiaries which are not wholly owned): (i)
owned free and clear of all material liens, claims or encumbrances and (ii)
there are no outstanding options, rights, entitlements, understandings or
commitments (contingent or otherwise) regarding the right to acquire any such
shares of capital stock or other ownership interests in any of its Subsidiaries.
2. CAPITALIZATION.
The authorized capital of Acetex consists of an unlimited number of
Acetex Shares. As of the date hereof there are 25,491,864 Acetex Shares
outstanding and 2,869,188 Acetex Shares issuable under the Acetex Option Plan.
Except as described in the immediately preceding sentence or otherwise disclosed
in writing, there are no options, warrants, conversion privileges or other
rights, agreements, arrangements or commitments obligating Acetex or any
Subsidiary to issue or sell (other than to a wholly-owned Subsidiary of Acetex
or any of its Subsidiaries) any shares of Acetex or any of its Subsidiaries or
securities or obligations of any kind convertible into or exchangeable for any
shares of Acetex, any Subsidiary or any other person, nor (except for rights
under the Acetex Option Plans), is 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 Acetex
or any Subsidiary. There have been no Acetex Shares issued since 2000, other
than pursuant to the exercise of stock option entitlements. Since 2000, Acetex
has granted Acetex Options only in the ordinary course of business.
3. AUTHORITY.
Acetex has the requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement by Acetex and the consummation by Acetex of the transactions
contemplated by this Agreement have been duly authorized by the Board of
Directors of Acetex and, subject to approval by the Acetex Shareholders, no
other corporate proceedings on the part of Acetex are necessary to authorize
this Agreement or the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Acetex and constitutes a valid and binding
obligation of Acetex, enforceable against Acetex in accordance with its terms
subject to bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium and other applicable Laws relating to or affecting creditors' rights
generally, to general principles of equity and public policy. Except as
disclosed in writing to AT Plastics on or prior to the date hereof and subject
to obtaining all consents and approvals contemplated by this Agreement, the
execution and delivery by Acetex of this Agreement and performance by it of its
obligations hereunder and the completion of the Amalgamation and the
transactions contemplated thereby, will not:
(a) result in a violation or breach of, require any consent to be obtained
under or give rise to any termination rights under any provision of:
(i) its or any Material Subsidiary's certificate of incorporation,
articles, by-laws or other charter documents, including any
unanimous shareholder agreement or any other agreement or
understanding with any person holding an ownership interest in any
Material Subsidiary;
(ii) any law, regulation, order, judgment or decree; or
(iii) any contract, agreement, license, franchise or permit to which
Acetex or any Material Subsidiary is bound or is subject or is the
beneficiary;
(b) give rise to any right of termination or acceleration of indebtedness, or
cause any third party indebtedness to come due before its stated maturity
or cause any available credit to cease to be available; or
(c) result in the imposition of any Encumbrance, charge or lien upon any of its
assets or the assets of any Material Subsidiary, or restrict, hinder,
impair or limit the ability of Acetex or any Material Subsidiary to carry
on the business of Acetex or any Material Subsidiary as and where it is now
being carried on or as and where it may be carried on in the future;
which would individually or in the aggregate have a material adverse effect on
Acetex or materially impair the ability of Acetex to perform its obligations
hereunder or prevent or materially delay the consummation of any of the
transactions contemplated hereby.
4. ABSENCE OF CHANGES.
Since December 31, 2002, and except as has been previously disclosed in
writing to AT Plastics or has been publicly disclosed prior to the date hereof
in any document filed with the Alberta Securities Commission (the "Securities
Authorities") (i) Acetex has conducted its business only in the ordinary and
regular course of business consistent with past practice, (ii) other than in the
ordinary and regular course of business consistent with past practice, no
liabilities or obligations of any nature (whether absolute, accrued, contingent
or otherwise) which would individually or in the aggregate be material to Acetex
or which materially and adversely affects the ability of Acetex to consummate
the transactions contemplated hereby have been incurred, (iii) there has not
been any material change, as defined under the Securities Act (Alberta), in the
affairs of Acetex or in the financial condition, results of operations or
business of Acetex and (iv) as of the execution hereof, there are no material
change reports filed with the Securities Authorities which remain confidential.
5. EMPLOYMENT AGREEMENTS.
(a) Other than as disclosed in writing to AT Plastics on or prior to the date
hereof, or except as set forth in the proxy circular prepared in connection
with the Annual General Meeting of Acetex held on May 24, 2003, neither
Acetex nor any Material Subsidiary is a party to any written or oral
policy, agreement, obligation or understanding providing for severance or
termination payments to, or any employment agreement with, any senior
executive.
(b) Other than as disclosed in writing to AT Plastics on or prior to the date
hereof, neither Acetex nor any Material Subsidiary is a party to any
collective bargaining agreement nor
subject to any application for certification or threatened or apparent
union-organizing campaigns for employees not covered under a collective
bargaining agreement nor are there any current, pending or threatened
strikes or lockouts at either Acetex or any Material Subsidiary that would
individually or in the aggregate have a material adverse effect on Acetex.
(c) Other than as disclosed in writing to AT Plastics on or prior to the date
hereof, neither Acetex nor any Material Subsidiary is subject to any claim
for wrongful dismissal, constructive dismissal or any other tort claim,
actual or threatened, or any litigation, actual or threatened, relating to
its employees or independent contractors (including any termination of such
persons) other than those claims or such litigation as would individually
or in the aggregate not have a material adverse effect on Acetex.
(d) Other than as disclosed in writing to AT Plastics on or prior to the date
hereof or as are not material, Acetex and all Material Subsidiaries have
operated in accordance with all applicable Laws with respect to employment
and labour, including, but not limited to, employment and labour standards,
occupational health and safety, employment equity, pay equity, workers'
compensation, human rights and labour relations and there are no current,
pending or threatened proceedings before any board or tribunal with respect
to any of the areas listed herein other than where the failure to so
operate or such proceedings which, individually or in the aggregate would
not have a material adverse effect on Acetex.
6. DISCLOSURE.
Acetex has publicly disclosed in documents filed with the Securities
Authorities or disclosed to AT Plastics in writing, on or prior to the date
hereof, any information regarding any event, circumstance or action taken or
failed to be taken which could, individually or in the aggregate, reasonably be
expected to have a material adverse effect on Acetex or materially and adversely
affects the ability of Acetex to consummate the transactions contemplated
hereby.
7. FINANCIAL STATEMENTS.
Except as disclosed in writing to AT Plastics on or prior to the date
hereto, the audited consolidated balance sheet and related consolidated
statements of income, retained income and cash flows of Acetex, for the fiscal
years ended December 31, 2002 and 2001 and the unaudited interim consolidated
financial statements of Acetex for the periods ended March 31, 2003, were
prepared in accordance with generally accepted accounting principles in Canada
consistently applied (except (i) as otherwise indicated in such financial
statements and the notes thereto or, in the case of audited statements, in the
related report of Acetex's independent accountants or (ii) in the case of
unaudited interim financial statements, to the extent they may not include
footnotes or may be condensed or summary statements), and fairly present the
consolidated financial condition of Acetex at the respective dates indicated and
the results of operations of Acetex (on a consolidated basis) for the periods
indicated therein (subject, in the case of any unaudited interim financial
statements, to normal year-end audit adjustments).
8. BOOKS AND RECORDS.
The corporate records and minute books of Acetex and the Material
Subsidiaries have been maintained substantially in accordance with all
applicable Laws and are complete and accurate in all material respects.
9. LITIGATION, ETC.
Except as set forth or specifically reflected in any document filed
with the Securities Authorities, or as disclosed in writing to AT Plastics on or
prior to the date hereof, there is no claim, action, proceeding or investigation
pending or, to the knowledge of Acetex, threatened against or relating to Acetex
or any Material Subsidiary or affecting any of their properties or assets before
any court or governmental or regulatory authority or body that, if adversely
determined, is likely to have a material adverse effect on Acetex or prevent or
materially delay consummation of the transactions contemplated by this Agreement
or the Amalgamation, nor is Acetex aware of any basis for any such claim,
action, proceeding or investigation. Neither Acetex nor any Material Subsidiary
is subject to any outstanding order, writ, injunction or decree that has had or
is reasonably likely to have a material adverse effect on Acetex or prevent or
materially delay consummation of the transactions contemplated by this Agreement
or the Amalgamation.
10. ENVIRONMENTAL.
All operations of Acetex and its Material Subsidiaries, have been and
are now, in compliance with all Environmental Laws, except where the failure to
be in compliance would not, individually or in the aggregate, have a material
adverse effect on Acetex. Except as has been disclosed in writing to AT Plastics
on or prior to the date hereof, neither Acetex nor any Material Subsidiary is
aware of, or is subject to:
(a) any proceeding, application, order or directive which relates to
environmental health or safety matters, and which may require any material
work, repairs, construction, or expenditures; or
(b) any demand or notice with respect to the breach of any Environmental Laws
applicable to Acetex or any Subsidiary, including, without limitation, any
regulations respecting the use, storage, treatment, transportation, or
disposition of Hazardous Substances;
which individually or in the aggregate would have a material adverse effect on
Acetex.
11. INSURANCE.
Policies of insurance in force as of the date hereof naming Acetex as
an insured adequately cover all risks reasonably and prudently foreseeable in
the operation and conduct of the business of Acetex and the Material
Subsidiaries for which, having regard to the nature of such risk and the
relative cost of obtaining insurance, it is in the opinion of Acetex reasonable
to seek such insurance rather than provide for self insurance. All such policies
of insurance shall remain in force and effect (subject to taking into account
insurance market conditions and offerings and industry practices) and shall not
be cancelled or otherwise terminated as a result of the transactions
contemplated hereby or by the Amalgamation other than such cancellations as
would not individually or in the aggregate have a material adverse effect on
Acetex.
12. TAX MATTERS.
(a) RETURNS FILED AND TAXES PAID. All Returns required to be filed by or on
behalf of Acetex or any Material Subsidiaries have been duly filed on a
timely basis and such Returns are true, complete and correct in all
material respects. Except as disclosed in writing by Acetex to AT Plastics
on or prior to the date hereof, all Taxes shown to be payable on the
Returns or on subsequent assessments with respect thereto have been paid
in full on a timely basis, and no other material amount of Taxes are
payable by Acetex or any Material Subsidiaries with respect to items or
periods covered by such Returns.
(b) TAX RESERVES. Acetex has paid or provided adequate accruals in its
consolidated financial statements for the year ended December 31, 2002 for
Taxes assessed, including income taxes and related deferred taxes, in
conformity with generally accepted accounting principles applicable in
Canada.
(c) TAX DEFICIENCIES; AUDITS. Except as has been disclosed in writing to AT
Plastics, no deficiencies exist or have been asserted with respect to Taxes
of Acetex or any Material Subsidiary, neither Acetex nor any Material
Subsidiary is a Party to any action or proceeding for assessment or
collection of Taxes, nor has such event been asserted or threatened against
Acetex or any Material Subsidiary or any of their respective assets, except
where such deficiencies, actions or proceedings are not material to Acetex
or the Amalgamation.
13. PENSION AND EMPLOYEE BENEFITS.
(a) Other than as disclosed in writing to AT Plastics on or prior to the date
hereof, Acetex has complied, in all material respects, with all the terms
of and all applicable Laws in respect of the pension and other employee
compensation and benefit obligations of Acetex and its Material
Subsidiaries, including the terms of any collective agreements, funding and
investment contracts or obligations applicable thereto, arising under or
relating to each of the pension or retirement income plans or other
employee compensation or benefit plans, agreements, policies, programs,
arrangements or practices, whether written or oral, which are maintained by
or binding upon Acetex or any of its Material Subsidiaries (collectively
referred to as the "Acetex Plans") and all Acetex Plans are fully funded
and in good standing with such regulatory authorities as may be applicable.
(b) No step has been taken, no event has occurred and no condition or
circumstance exists that has resulted in or could reasonably be expected to
result in any Acetex Plan being ordered or required to be terminated or
wound up in whole or in part or having its registration under applicable
legislation refused or revoked, or being placed under the administration of
any trustee or receiver or regulatory authority or being required to pay
any material taxes, fees, penalties or levies under applicable Laws. There
are no actions, suits, claims (other than routine claims for payment of
benefits in the ordinary course), trials, demands, investigations,
arbitrations or other proceedings which are pending or threatened in
respect of any of the Acetex Plans or their assets which individually or in
the aggregate would have a material adverse effect on Acetex:
(c) Other than as disclosed in writing to AT Plastics on or prior to the date
hereof, no event has occurred or condition exists with respect to any of
the Acetex Plans or relating to any employee of Acetex or a Material
Subsidiary which, individually or in the aggregate, is reasonably likely to
result in a material liability to Acetex.
14. PROPERTY.
Acetex and its Material Subsidiaries have good and sufficient title to
the real property interests including, without limitation, fee simple estate of
and in real property, leases, easements, rights of way, permits or licences from
landowners or authorities permitting the use of land by Acetex and its
Material Subsidiaries, necessary to permit the operation of its businesses as
presently owned and conducted except as disclosed in writing to the other Party
hereto on or prior to the date hereof and except for such failures of title that
would, individually or in the aggregate, not have a material adverse effect on
Acetex. All trade marks, trade names, patents and copyrights, both domestic and
foreign, used in or required for the proper carrying on of the business of
Acetex and its Material Subsidiaries are validly and beneficially owned by
Acetex or the relevant Material Subsidiary with the sole and exclusive right to
use the same and are in good standing and duly registered in all appropriate
offices to preserve the right thereof and thereto and the conduct of the Acetex
and its Material Subsidiaries does not infringe upon the trade marks, trade
names, patents or copyrights, domestic or foreign, of any other person;
15. REPORTS.
Acetex has filed with the Securities Authorities, true and complete
copies of all forms, reports, schedules, statements and other documents required
to be filed by it since January 1, 1997 except for such forms, reports,
schedules, statements or other documents which were not material (such forms,
reports, schedules, statements and other documents, including any financial
statements or other documents, including any financial statements or schedules
included therein, are referred to as the "Acetex Documents"). The Acetex
Documents, at the time filed, (a) did not contain any misrepresentation and (b)
complied in all material respects with the requirements of applicable securities
legislation.
16. COMPLIANCE WITH LAWS.
Since December 31, 2002, and except as has been publicly disclosed
prior to the date hereof in any document filed with the Securities Authorities,
Acetex and its Material Subsidiaries and its Material Subsidiaries have complied
with and are not in violation of any applicable Laws other than non-compliance
or violations which would not, individually or in the aggregate, have a material
adverse effect on Acetex or which would not materially impair the ability of
Acetex to perform its obligations hereunder or prevent or materially delay the
consummation of any of the transactions contemplated hereby.
17. LICENSES, ETC.
Except as disclosed in writing to AT Plastics on or prior to the date
hereof, Acetex and each of its Material Subsidiaries owns, possesses, or has
obtained and is in compliance with, all licenses, permits (including permits
required under Environmental Laws), certificates, orders, grants and other
authorizations of or from any Governmental Entity necessary to conduct its
businesses as now conducted or as proposed to be conducted, the failure to own,
possess, obtain or be in compliance with which would not, individually or in the
aggregate, have a material adverse effect on Acetex or would not materially
impair the ability of Acetex to perform its obligations hereunder or prevent or
materially delay the consummation of any of the transactions contemplated
hereby.
18. CERTAIN CONTRACTS.
Except as disclosed in writing to AT Plastics on or prior to the date
hereof, neither Acetex nor any of its Material Subsidiaries is a party to or
bound by any non-competition agreement or any other agreement or obligation
which purports to limit the manner or the localities in which all or any
material portion of the business of Acetex or its Material Subsidiaries is or
would be conducted other than such contracts which individually or in the
aggregate would not have material portion of the business of Acetex or its
Material Subsidiaries is or would be conducted other than such contracts which
individually or in the aggregate would not have a material adverse effect, on
Acetex or would not materially impair the ability of Acetex to perform its
obligations hereunder or prevent or materially delay the consummation of any of
the transactions contemplated hereby.
19. REGULATORY MATTERS
The aggregate value of the assets of Acetex and its Subsidiaries in
Canada does not exceed (Cdn.) $9 million in the aggregate, determined as of
December 31, 2002 and in such manner as is prescribed for purposes of the
Competition Act (Canada); and the gross revenues from sales in, from or into
Canada of Acetex and its Subsidiaries, determined for the year ended December
31, 2002 and in such manner as is prescribed for purposes of the Competition Act
(Canada), do not exceed (Cdn.) $150 million in the aggregate Acetex is a
"Canadian" as that term is defined pursuant to the provisions of the Investment
Canada Act.
20. ACETEX SUB
Acetex Sub has no liabilities or obligations other than those arising
pursuant to the Agreement and has no assets save for cash of $10.
SCHEDULE C
REPRESENTATIONS AND WARRANTIES OF AT PLASTICS
21. ORGANIZATION.
Each of AT Plastics and its Material Subsidiaries has been duly
incorporated or formed under the Laws of its jurisdiction of incorporation or
other organization, is validly subsisting and has full corporate or legal power
and authority to own its properties and conduct its businesses as presently
owned and conducted. All of the outstanding shares in the capital of and other
ownership interests of its Subsidiaries are validly issued, fully paid and
non-assessable and all such shares and other ownership interests owned directly
or indirectly by AT Plastics are (except as disclosed in writing to Acetex or
pursuant to restrictions on transfer contained in constating documents, rights
of first refusal and similar rights restricting transfer contained in
shareholder, partnership or joint venture agreements for or pursuant to existing
financing arrangements involving Subsidiaries which are not wholly owned): (i)
owned free and clear of all material liens, claims or encumbrances and (ii)
there are no outstanding options, rights, entitlements, understandings or
commitments (contingent or otherwise) regarding the right to acquire any such
shares of capital stock or other ownership interests in any of its Subsidiaries.
22. CAPITALIZATION.
The authorized capital of AT Plastics consists of: (a) an unlimited
number of AT Plastics Shares and two classes of preferred shares. As of the date
hereof there are 49,935,934 AT Plastics Shares outstanding and no preferred
shares outstanding and 4,013,497 AT Plastics Shares were issuable pursuant to
outstanding AT Plastics Options. Except as described in the immediately
preceding sentence or as disclosed in writing to Acetex and except for: (a)the
AT Plastics Warrants; the compensation arrangement with ▇▇▇▇▇▇ ▇▇▇▇▇; and (c)
the compensation arrangement with certain directors of AT Plastics, there are no
options, warrants, conversion privileges or other rights; agreements,
arrangements or commitments obligating AT Plastics or any Subsidiary to issue or
sell (other than to a wholly-owned Subsidiary of AT Plastics or any of its
Subsidiaries) any shares of AT Plastics or any of its Subsidiaries or securities
or obligations of any kind convertible into or exchangeable for any shares of AT
Plastics, any Subsidiary or any other person, nor is 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 AT
Plastics or the Subsidiary. Except as disclosed in writing to Acetex, there have
been no AT Plastics Shares issued since December 31, 2002 other than pursuant to
the exercise of stock option entitlements.
23. AUTHORITY.
AT Plastics has the requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement by AT Plastics and the consummation by AT Plastics of
the transactions contemplated by this Agreement have been duly authorized by the
Board of Directors of AT Plastics and, subject to approval by the AT Plastics
Shareholders, no other corporate proceedings on the part of AT Plastics are
necessary to authorize this Agreement or the transactions contemplated hereby.
This Agreement has been duly executed and delivered by AT Plastics and
constitutes a valid and binding obligation of AT Plastics, enforceable against
AT Plastics in accordance with its terms subject to bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and other applicable Laws
relating to or affecting creditors' rights generally, to general principles of
equity and public policy. Except as disclosed in writing to Acetex on or prior
to the date hereof and subject to obtaining all consents and approvals
contemplated by this Agreement, the
execution and delivery by AT Plastics of this Agreement and performance by it of
its obligations hereunder and the completion of the Amalgamation and the
transactions contemplated thereby, will not:
(a) result in a violation or breach of, require any consent to be obtained
under or give rise to any termination rights under any provision of:
(i) its or any Material Subsidiary's certificate of incorporation,
articles, by-laws or other charter documents, including any
unanimous shareholder agreement or any other agreement or
understanding with any Person holding an ownership interest in any
Material Subsidiary;
(ii) any law, regulation, order, judgment or decree; or
(iii) any contract, agreement, license, franchise or permit to which AT
Plastics or any Material Subsidiary is bound or is subject or is
the beneficiary;
(b) give rise to any right of termination or acceleration of indebtedness, or
cause any third party indebtedness to come due before its stated maturity
or cause any available credit to cease to be available; or
(c) result in the imposition of any Encumbrance, charge or lien upon any of its
assets or the assets of any Material Subsidiary, or restrict, hinder,
impair or limit the ability of AT Plastics or any Material Subsidiary to
carry on the business of AT Plastics or any Material Subsidiary as and
where it is now being carried on or as and where it may be carried on in
the future;
which would individually or in the aggregate have a material adverse effect on
AT Plastics or materially impair the ability of AT Plastics to perform its
obligations hereunder or materially delay the consummation of the transactions
contemplated hereby.
24. ABSENCE OF CHANGES.
Since December 31, 2002, and except as has been previously disclosed in
writing to Acetex or has been publicly disclosed prior to the date hereof in any
document filed with the Alberta Securities Commission (the "Securities
Authorities") (i) AT Plastics has conducted its business only in the ordinary
and regular course of business consistent with past practice, (ii) other than in
the ordinary and regular course of business consistent with past practice, no
liabilities or obligations of any nature (whether absolute, accrued, contingent
or otherwise) which would individually or in the aggregate be material to AT
Plastics or which materially and adversely affects the ability of AT Plastics to
consummate the transactions contemplated hereby have been incurred, (iii) there
has not been any material change, as defined under the Securities Act (Alberta),
in the affairs of AT Plastics or in the financial condition, results of
operations or business of AT Plastics and (iv) as of the execution hereof, there
are no material change reports filed with the Securities Authorities which
remain confidential.
25. EMPLOYMENT AGREEMENTS.
(a) Except as disclosed in writing to Acetex on or prior to the date hereof, or
except as set forth in the proxy circular prepared in connection with the
Annual General Meeting of AT Plastics held on May 22, 2003o , neither AT
Plastics nor any Material Subsidiary is a party to any written or oral
policy, agreement, obligation or understanding providing for severance or
termination payments to, or any employment agreement with, any senior
executive.
(b) Other than as disclosed in writing to Acetex on or prior to the date
hereof, neither AT Plastics nor any Material Subsidiary is a party to any
collective bargaining agreement nor subject to any application for
certification or threatened or apparent union-organizing campaigns for
employees not covered under a collective bargaining agreement nor are there
any current, pending or threatened strikes or lockouts at either AT
Plastics or any Material Subsidiary that would individually or in the
aggregate have a material adverse effect on AT Plastics.
(c) Other than as disclosed in writing to Acetex on or prior to the date
hereof, neither AT Plastics nor any Material Subsidiary is subject to any
claim for wrongful dismissal, constructive dismissal or any other tort
claim, actual or threatened, or any litigation, actual or threatened,
relating to its employees or independent contractors (including any
termination of such persons) other than those claims or such litigation as
would individually or in the aggregate not have a material adverse effect
on AT Plastics.
(d) Other than as disclosed in writing to Acetex on or prior to the date hereof
or as are not material, AT Plastics and all Material Subsidiaries have
operated in accordance with all applicable Laws with respect to employment
and labour, including, but not limited to, employment and labour standards,
occupational health and safety, employment equity, pay equity, workers'
compensation, human rights and labour relations and there are no current,
pending or threatened proceedings before any board or tribunal with respect
to any of the areas listed herein other than where the failure to so
operate or such proceedings which, individually or in the aggregate would
not have a material adverse effect on AT Plastics.
26. DISCLOSURE.
AT Plastics has publicly disclosed in documents filed with the
Securities Authorities or disclosed to Acetex in writing, on or prior to the
date hereof, any information regarding any event, circumstance or action taken
or failed to be taken which could, individually or in the aggregate, reasonably
be expected to have a material adverse effect on AT Plastics or materially and
adversely affects the ability of AT Plastics to consummate the transactions
contemplated hereby.
27. FINANCIAL STATEMENTS.
The audited consolidated financial statements of AT Plastics for the
fiscal year ended December 31, 2002 and the unaudited interim consolidated
financial statements of AT Plastics for the period ended March 31, 2003 were
prepared in accordance with generally accepted accounting principles in Canada
consistently applied (except (i) as otherwise indicated in such financial
statements and the notes thereto or, in the case of audited statements, in the
related report of AT Plastics's independent accountants or (ii) in the case of
unaudited interim financial statements, to the extent they may not include
footnotes or may be condensed or summary statements), and fairly present the
consolidated financial condition of AT Plastics at the respective dates
indicated and the results of operations of AT Plastics (on a consolidated basis)
for the periods indicated therein (subject, in the case of any unaudited interim
financial statements, to normal year-end audit adjustments).
28. BOOKS AND RECORDS.
The corporate records and minute books of AT Plastics and the Material
Subsidiaries have been maintained substantially in accordance with all
applicable Laws and are complete and accurate in all material respects.
29. LITIGATION, ETC.
Except as set forth or specifically reflected in any document filed
with the Securities Authorities, or as disclosed in writing to Acetex on or
prior to the date hereof, there is no claim, action, proceeding or investigation
pending or, to the knowledge of AT Plastics, threatened against or relating to
AT Plastics or any Material Subsidiary or affecting any of their properties or
assets before any court or governmental or regulatory authority or body that, if
adversely determined, is likely to have a material adverse effect on AT
Plastics, or prevent or materially delay consummation of the transactions
contemplated by this Agreement or the Amalgamation, nor is AT Plastics aware of
any basis for any such claim, action, proceeding or investigation. Neither AT
Plastics nor any Material Subsidiary is subject to any outstanding order, writ,
injunction or decree that has had or is reasonably likely to have a material
adverse effect on AT Plastics or prevent or materially delay consummation of the
transactions contemplated by this Agreement or the Amalgamation.
30. ENVIRONMENTAL.
All operations of AT Plastics and its Material Subsidiaries, have been
and are now, in compliance with all Environmental Laws, except where the failure
to be in compliance would, not, individually or in the aggregate, have a
material adverse effect on AT Plastics. Except as has been disclosed in, writing
to Acetex on or prior to the date hereof, neither AT Plastics nor any Material
Subsidiary is aware of, or is subject to:
(a) any proceeding, application, order or directive which relates to
environmental health or safety matters, and which may require any material
work, repairs, construction, or expenditures; or
(b) any demand or notice with respect to the breach of any Environmental Laws
applicable to AT Plastics or any Subsidiary, including, without limitation,
any regulations respecting the use, storage, treatment, transportation, or
disposition of Hazardous Substances;
which individually or in the aggregate would have a material adverse effect on
AT Plastics.
31. INSURANCE.
Policies of insurance in force as of the date hereof naming AT Plastics
as an insured adequately cover all risks reasonably and prudently foreseeable in
the operation and conduct of the business of AT Plastics and the Material
Subsidiaries for which, having regard to the nature of such risk and the
relative costs of obtaining insurance, it is in the opinion of AT Plastics
reasonable to seek such insurance rather than provide for self insurance. All
such policies of insurance shall remain in force and effect (subject to taking
into account insurance market conditions and offerings and industry practices)
and shall not be cancelled or otherwise terminated as a result of the
transactions contemplated hereby or by the Amalgamation other than such
cancellations as would not individually or in the aggregate have a material
adverse effect on AT Plastics.
32. TAX MATTERS.
(a) RETURNS FILED AND TAXES PAID. All Returns required to be filed by or on
behalf of AT Plastics or any Material Subsidiaries have been duly filed on
a timely basis and such Returns are true, complete and correct in all
material respects. Except as disclosed in writing by AT Plastics to Acetex
on or prior to the date hereof, all Taxes shown to be payable on the
Returns or on subsequent assessments with respect thereto have been paid
in full on a timely basis, and no other material amount of Taxes are
payable by AT Plastics or any Material Subsidiaries with respect to items
or periods covered by such Returns.
(b) TAX RESERVES. AT Plastics has paid or provided adequate accruals in its
consolidated financial statements for the year ended December 31, 2002 for
Taxes assessed, including income taxes and related deferred taxes, in
conformity with generally accepted accounting principles applicable in
Canada.
(c) TAX DEFICIENCIES; AUDITS. Except as has been disclosed in writing to
Acetex, no deficiencies exist or have been asserted with respect to Taxes
of AT Plastics or any Material Subsidiary, neither AT Plastics nor any
Material Subsidiary is a Party to any action or proceeding for assessment
or collection of Taxes, nor has such event been asserted or threatened
against AT Plastics or any Material Subsidiary or any of their respective
assets, except where such deficiencies, actions or proceedings are not
material to AT Plastics or the Amalgamation.
33. PENSION AND EMPLOYEE BENEFITS.
(a) Other than as disclosed in writing to Acetex on or prior to the date
hereof, AT Plastics has complied, in all material respects, with all the
terms of and all applicable Laws in respect of the pension and other
employee compensation and benefit obligations of AT Plastics and its
Material Subsidiaries, including the terms of any collective agreements,
funding and investment contracts or obligations applicable thereto, arising
under or relating to each of the pension or retirement income plans or
other employee compensation or benefit plans, agreements, policies,
programs, arrangements or practices, whether written or oral, which are
maintained by or binding upon AT Plastics or any of its Material
Subsidiaries
(collectively referred to as the "AT Plastics Plans") and all AT Plastics
Plans are fully funded and in good standing with such regulatory
authorities as may be applicable.
(b) No step has been taken, no event has occurred and no condition or
circumstance exists that has resulted in or could reasonably be expected to
result in any AT Plastics Plan being ordered or required to be terminated
or wound up in whole or in part or having its registration under applicable
legislation refused or revoked, or being placed under the administration of
any trustee or receiver or regulatory authority or being required to pay
any material taxes, fees, penalties or levies under applicable Laws. There
are no actions, suits, claims (other than routine claims for payment of
benefits in the ordinary course), trials, demands, investigations,
arbitrations or other proceedings which are pending or threatened in
respect of any of the AT Plastics Plans or their assets which individually
or in the aggregate would have a material adverse effect on AT Plastics.
(c) Other than as disclosed in writing to Acetex on or prior to the date
hereof, no event has occurred or condition exists with respect to the AT
Plastics Plans or relating to any employee of AT Plastics or a Material
Subsidiary which, individually or in the aggregate, is reasonably likely to
result in a material liability to AT Plastics.
34. PROPERTY.
AT Plastics and its Material Subsidiaries have good and sufficient
title to the real property interests including, without limitation, fee simple
estate of and in real property, leases, easements, rights of way, permits or
licences from landowners or authorities permitting the use of land by AT
Plastics and its Material Subsidiaries, necessary to permit the operation of its
businesses as presently owned and conducted except as disclosed in writing to
the other Party hereto on or prior to the date hereof and except for such
failures of title that would, individually or in the aggregate, not have a
material adverse effect on AT Plastics. All trade marks, trade names, patents
and copyrights, both domestic and foreign, used in or required for the proper
carrying on of the business of AT Plastics and its Material Subsidiaries are
validly and beneficially owned by AT Plastics or the relevant Material
Subsidiary with the sole and exclusive right to use the same and are in good
standing and duly registered in all appropriate offices to preserve the right
thereof and thereto and the conduct of the AT Plastics and its Material
Subsidiaries does not infringe upon the trade marks, trade names, patents or
copyrights, domestic or foreign, of any other person.
35. REPORTS.
AT Plastics has filed with the Securities Authorities, true and
complete copies of all forms, reports, schedules, statements and other documents
required to be filed by it since January 1, 1999 except for such forms, reports,
schedules, statements or other documents which were not material (such forms,
reports, schedules, statements and other documents, including any financial
statements or other documents, including any financial statements or schedules
included therein, are referred to as the "AT Plastics Documents"). The AT
Plastics Documents, at the time filed, (a) did not contain any misrepresentation
not subsequently corrected and (b) complied in all material respects with the
requirements of applicable securities legislation.
36. COMPLIANCE WITH LAWS.
Since December 31, 2002, and except as has been publicly disclosed
prior to the date hereof in any document filed with the Securities Authorities,
AT Plastics and its Material Subsidiaries have complied with and are not in
violation of any applicable Laws other than non-compliance or violations which
would not individually or in the aggregate have a material adverse effect on AT
Plastics or which would not materially impair the ability of AT Plastics to
perform its obligations hereunder or prevent or materially delay the
consummation of any of the transactions contemplated hereby.
37. LICENSES, ETC.
Except as disclosed in writing to Acetex on or prior to the date
hereof, AT Plastics and each of its Material Subsidiaries owns, possesses, or
has obtained and is in compliance with, all licenses, permits (including permits
required under Environmental Laws), certificates, orders, grants and other
authorizations of or from any Governmental Entity necessary to conduct its
businesses as now conducted or as proposed to be conducted, the failure to own,
possess, obtain or be in compliance with which would not individually or in the
aggregate have a material adverse effect on AT Plastics or would not materially
impair the ability of AT Plastics to perform its obligations hereunder or
prevent or materially delay the consummation of any of the transactions
contemplated hereby.
38. CERTAIN CONTRACTS.
Except as disclosed in writing to Acetex on or prior to the date
hereof, neither AT Plastics nor any of its Material Subsidiaries is a party to
or bound by any non-competition agreement or
any other agreement or obligation which purports to limit the manner or the
localities in which all or any material portion of the business of AT Plastics
or its Material Subsidiaries is or would be conducted other than such contracts
which individually or in the aggregate would not have a material adverse effect
on AT Plastics or would not materially impair the ability of AT Plastics to
perform its obligations hereunder or prevent or materially delay the
consummation of any of the transactions contemplated hereby.
SCHEDULE D
GOVERNANCE ARRANGEMENTS
39. TRANSITIONAL
Between the date hereof and the Effective Date, the Chief Executive
Officers of each of Acetex and AT Plastics shall agree on an organizational
structure to be implemented as soon as practicable after the Effective Date and
shall agree on the placement of individuals in respect of significant management
positions.
It is the intention of Acetex and AT Plastics that there be a
reasonable sharing of employment positions for the combined business operations
after the Effective Date; it being understood that determinations in respect of
such positions shall be made in a manner consistent with the efficient operation
of the combined business operations.
40. OPTIONS
AT Plastics and Acetex anticipate that, following the completion of the
Amalgamation; the Board of Directors of Acetex will conduct an assessment of
Acetex's outstanding options. This may result in additional options being
granted or in the surrender of options in conjunction with the grant of new
options, all in accordance with the terms of the Acetex Option Plan and subject
to any required stock exchange and shareholder approvals. All determinations
with respect of the foregoing matters described in this paragraph shall be at
the discretion of the Board of Directors of Acetex.
SCHEDULE E
ACETEX SUBSTITUTE WARRANTS
(attached)
SCHEDULE F
AT PLASTICS SUPPORT OBLIGATIONS
AT Plastics shall on or before July 10, 2003 prepare and deliver financial
statements in U.S. dollars (prepared as a translation of convenience):
(b) Audited consolidated balance sheets at December 31, 2001 and December 31,
2002
(c) Audited consolidated statements of income, retained earnings and cash flows
for the twelve month periods ending December 31, 2000, December 31, 2001
and December 31, 2002,
(d) Unaudited consolidated balance sheets at June 30, 2003 subject to auditors
review sufficient for a comfort letter;
(e) Unaudited consolidated statements of income, retained earnings and cash
flows for the six month periods ending June 30, 2002 and June 30, 2003
subject to auditor's review sufficient for a comfort letter;
(f) All the above statements reconciled to U.S. generally accepted accounting
principles as required for Form 20F, item 17 status.
(g) Actuarial reports with respect to AT Plastics pension plans for funding
purposes as at June 30, 2003.
AT Plastics shall provide access to its facilities, employees, executives and
consultants as may be reasonably requested by Acetex to allow Acetex to complete
its financing arrangements as contemplated by section 6.3(d).
