EXHIBIT 2.1
SECOND AMENDED AND RESTATED
AGREEMENT AND PLAN OF ACQUISITION AND AMALGAMATION
BY AND AMONG
AUTODESK, INC.,
AUTODESK DEVELOPMENT B.V.,
9066-9771 QUEBEC INC.,
AUTODESK CANADA INC.,
0000-0000 XXXXXX INC.
and
DISCREET LOGIC INC.
Dated as of November 18, 1998
TABLE OF CONTENTS
Page
----
ARTICLE I The Transactions................................................. A-2
1.1 The Transactions.................................................... A-2
1.2 Effective Time...................................................... A-2
1.3 Share Conversions, Etc.............................................. A-2
1.4 Accounting Consequences............................................. A-2
1.5 Material Adverse Effect............................................. A-2
1.6 Adjustments to Exchange Ratio....................................... A-3
1.7 Cancellation........................................................ A-3
1.8 Share Certificates of Amalgamation Sub and Giants Quebec............ A-3
1.9 Execution of Amalgamation Agreement................................. A-3
1.10 Tax Treatment....................................................... A-3
1.11 Existing Agreement Terminated....................................... A-3
ARTICLE II Representations And Warranties Of The Company................... A-4
2.1 Organization and Qualification; Subsidiaries........................ A-4
2.2 Articles of Incorporation and By-Laws............................... A-4
2.3 Capitalization...................................................... A-4
2.4 Authority........................................................... A-5
2.5 No Conflict; Required Filings and Consents.......................... A-5
2.6 Compliance; Permits................................................. A-6
2.7 SEC Filings; Financial Statements................................... A-6
2.8 Absence of Certain Changes or Events................................ A-7
2.9 Absence of Litigation............................................... A-7
2.10 Employee Benefit Plans; Employment Agreements....................... A-8
2.11 Labor Matters....................................................... A-9
2.12 Registration Statement; Joint Proxy Statement....................... A-9
2.13 Restrictions on Business Activities................................. A-10
2.14 Title to Property................................................... A-10
2.15 Taxes............................................................... A-10
2.16 Environmental Matters............................................... A-12
2.17 Brokers............................................................. A-12
2.18 Intellectual Property............................................... A-12
2.19 Interested Party Transactions....................................... A-14
2.20 Insurance........................................................... A-14
2.21 Vote Required....................................................... A-14
2.22 Pooling Matters..................................................... A-14
2.23 Opinion of Financial Advisor........................................ A-14
ARTICLE III Representations And Warranties Of The Parent Group............. A-14
3.1 Organization and Qualification...................................... A-14
3.2 Authority .......................................................... A-15
3.3 No Conflict; Required Filings and Consents.......................... A-15
3.4 Certificate of Incorporation and By-Laws............................ A-16
3.5 Capitalization...................................................... A-16
3.6 Compliance; Permits................................................. A-16
3.7 SEC Filings; Financial Statements................................... A-16
3.8 Absence of Certain Changes or Events................................ A-17
3.9 Board Approval...................................................... A-17
3.10 Registration Statement; Joint Proxy Statement/Prospectus............ A-17
3.11 Brokers............................................................. A-18
i
Page
----
3.12 Opinion of Financial Advisor........................................ A-18
3.13 Pooling Matters..................................................... A-18
3.14 Absence of Litigation............................................... A-18
3.15 Restrictions on Business Activities................................. A-18
3.16 Taxes............................................................... A-18
3.17 Intellectual Property............................................... A-19
3.18 Insurance........................................................... A-20
3.19 Vote Required....................................................... A-20
ARTICLE IV Conduct Of Business Pending The Amalgamation.................... A-20
4.1 Conduct of Business by the Company Pending the Amalgamation......... A-20
4.2 No Solicitation..................................................... A-22
4.3 Covenants of Parent................................................. A-23
ARTICLE V Additional Agreements............................................ A-23
5.1 Joint Proxy Statement/Prospectus; Registration Statement............ A-23
5.2 Shareholders' Meetings.............................................. A-24
5.3 Access to Information; Confidentiality.............................. A-24
5.4 Consents; Approvals................................................. A-24
5.5 Stock Options; Employee Benefits; Retention of Employees............ A-24
5.6 Company Employee Stock Purchase Plan................................ A-26
5.7 Agreements of Affiliates............................................ A-26
5.8 Voting Agreements................................................... A-26
5.9 Indemnification and Insurance....................................... A-26
5.10 Notification of Certain Matters..................................... A-27
5.11 Further Action...................................................... A-27
5.12 Public Announcements................................................ A-28
5.13 Listing of Parent Common Shares..................................... A-28
5.14 Conveyance Taxes.................................................... A-28
5.15 Pooling Letters..................................................... A-28
5.16 Pooling Accounting Treatment........................................ A-28
5.17 Ancillary Documents/Reservation of Shares........................... A-28
5.18 Listing of Class B Shares, Class E Shares and Class F Shares........ A-29
5.19 Tax Elections....................................................... A-29
5.20 Board Candidate..................................................... A-29
5.21 Issuance of Class D Shares.......................................... A-29
ARTICLE VI Conditions To The Transactions.................................. A-30
6.1 Conditions to Obligation of Each Party to Effect the Transactions... A-30
6.2 Additional Conditions to Obligations of Parent Group Members........ A-31
6.3 Additional Conditions to Obligation of the Company.................. A-31
ARTICLE VII Termination.................................................... A-32
7.1 Termination......................................................... A-32
7.2 Effect of Termination............................................... A-33
7.3 Fees and Expenses................................................... A-33
ARTICLE VIII General Provisions............................................ A-34
8.1 Effectiveness of Representations, Warranties and Agreements......... A-34
8.2 Notices............................................................. A-35
8.3 Certain Definitions................................................. A-36
8.4 Amendment........................................................... A-36
ii
Page
----
8.5 Waiver.............................................................. A-36
8.6 Headings............................................................ A-36
8.7 Severability........................................................ A-36
8.8 Entire Agreement.................................................... A-36
8.9 Assignment; Amalgamation Sub/Dutchco................................ A-36
8.10 Parties in Interest................................................. A-37
8.11 Failure or Indulgence Not Waiver; Remedies Cumulative............... A-37
8.12 Governing Law....................................................... A-37
8.13 Choice of Language.................................................. A-37
8.14 Counterparts........................................................ A-37
8.15 Guarantee........................................................... A-37
Exhibits:
Exhibit A:Form of Amalgamation Agreement
Exhibit B-1:Form of Parent Affiliate Agreement
Exhibit B-2:Form of Company Affiliate Agreement
Exhibit C-1:Form of Parent Voting Agreement
Exhibit C-2:Form of Company Voting Agreement
Exhibit D:Form of Support Agreement
Exhibit E:Form of Voting and Exchange Trust Agreement
Exhibit F:Form of Certificate of Designation
iii
SECOND AMENDED AND RESTATED AGREEMENT AND PLAN OF ACQUISITION AND AMALGAMATION
This Second Amended and Restated Agreement and Plan of Acquisition and
Amalgamation, dated as of November 18, 1998 (the "Agreement"), is entered into
by and among Autodesk, Inc., a Delaware corporation ("Parent"), Autodesk
Development B.V., a Netherlands corporation and indirect wholly owned
subsidiary of Parent ("Dutchco"), 0000-0000 Xxxxxx Inc., a Quebec company and
a wholly owned subsidiary of Dutchco ("Amalgamation Sub"), Autodesk Canada
Inc., an Ontario company and wholly owned subsidiary of Parent ("ACI"), 9066-
9854 Quebec Inc., a Quebec company and indirect wholly owned subsidiary of
Parent ("Giants Quebec"), and Discreet Logic Inc., a Quebec company (the
"Company").
Witnesseth:
Whereas, the Boards of Directors of Parent, Dutchco and the Company have
each determined that it is advisable and in the best interests of their
respective stockholders for Dutchco to acquire shares in the share capital of
the Company upon the terms and subject to the conditions set forth herein;
Whereas, in furtherance of such acquisition, Parent, Dutchco, Amalgamation
Sub, Giants Quebec, ACI and the Company entered into an Agreement and Plan of
Acquisition and Arrangement dated as of August 20, 1998 (the "Original
Agreement"), which was subsequently amended and restated in its entirety by
the parties in the Amended and Restated Agreement and Plan of Acquisition and
Amalgamation dated as of September 23, 1998 (the "Exisiting Agreement");
Whereas, the Boards of Directors of Parent, Dutchco, Amalgamation Sub,
Giants Quebec, ACI and the Company now desire to amend and restate the
Existing Agreement and have each approved the execution and delivery of this
Agreement in order to provide for a business combination involving the
amalgamation (the "Amalgamation") of Amalgamation Sub, Giants Quebec (to which
ACI will assign, prior to the Amalgamation, substantially all its assets) and
the Company whereupon each outstanding common share in the Company's share
capital (the "Company Common Shares") shall be converted into one Class B
Share of the continuing corporation resulting from the Amalgamation (the
"Continuing Corporation");
Whereas, Articles of Amalgamation (the "Articles") will be filed pursuant to
Section 123.118 of the Companies Act (Quebec) (the "Quebec Act"), pursuant to
the terms hereof and the Amended and Restated Amalgamation Agreement (the
"Amalgamation Agreement") in the form annexed hereto as Exhibit A;
Whereas, immediately following the Amalgamation, the Class B Shares of the
Continuing Corporation automatically will be, based on the prior election of
the holder, either (i) redeemed by the Continuing Corporation for 0.48 (the
"Exchange Ratio") exchangeable shares in the share capital of the Continuing
Corporation (the "Exchangeable Shares"), subject to proration in certain
instances, or (ii) converted into units comprised of one Class E Share and one
Class F Share of the Continuing Corporation ("Units"), which units will be
acquired by Dutchco in exchange for 0.48 shares of common stock, par value
$0.01 per share, of Parent ("Parent Common Shares"), in either case without
further action on the part of the holder;
Whereas, the Exchangeable Shares are exchangeable by the holders for Parent
Common Shares on a one-for-one basis at any time on or before a date eleven
(11) years after the Effective Time (as defined herein), and
Whereas, for accounting purposes, it is intended that the Transactions (as
defined in Section 1.1 hereof) shall be accounted for as a taxable pooling of
interests under United States generally accepted accounting principles ("US
GAAP");
Now, Therefore, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Dutchco, ACI, Giants Quebec, Amalgamation Sub (collectively, the
"Parent Group") and the Company hereby agree as follows:
1
ARTICLE I
The Transactions
1.1 The Transactions.
(a) Effective Time. Subject to and upon the terms and conditions of the
Ancillary Documents (as defined in Section 5.17), this Agreement, the Articles
and the Quebec Act, (i) at the Effective Time (as defined in Section 1.2
hereof), Amalgamation Sub and Giants Quebec shall be amalgamated with the
Company (provided, however, that the Company shall not be required to
amalgamate with Amalgamation Sub unless Giants Quebec simultaneously
amalgamates with Amalgamation Sub, and Giants Quebec shall not be required to
amalgamate with Amalgamation Sub unless the Company simultaneously amalgamates
with Amalgamation Sub) and (ii) immediately following the Effective Time, the
Class B Shares of the Continuing Corporation automatically shall, based on the
prior election of the holder, either (x) be redeemed by the Continuing
Corporation for Exchangeable Shares of the Continuing Corporation or (y) be
converted into Units which Units shall be acquired by Dutchco in exchange for
shares of Parent Common Stock, in either case without further action on the
part of the holder (such redemptions, conversions and share acquisitions set
forth in clause (ii), together with the Amalgamation, are collectively
referred to herein as the "Transactions"). Prior to the Effective Time, ACI
will assign and transfer all of its assets and liabilities to Giants Quebec.
(b) Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1 hereof, and subject to the satisfaction or waiver of the conditions set
forth in Article VI hereof, the consummation of the Transactions will take
place as promptly as practicable after satisfaction or waiver of the
conditions set forth in Article VI hereof, at the offices of Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx, unless another
date, time or place is agreed to in writing by the parties hereto. At the
closing, the parties hereto shall deliver the documents contemplated hereby
together with such other customary documents as may be reasonably requested by
the parties.
1.2 Effective Time. As promptly as practicable after the satisfaction or
waiver of the conditions set forth in Article VI, the parties hereto shall
cause the Amalgamation to be consummated by filing the Articles together with
the documents contemplated by Section 123.14 of the Quebec Act, with the
Inspector General of Financial Institutions of the Province of Quebec (the
"Inspector General"), in such form as required by, and executed in accordance
with the relevant provisions of, the Quebec Act. The Amalgamation will become
effective at such time and on such date shown on the Certificate of
Amalgamation issued by the Inspector General (the "Effective Time").
1.3 Share Conversions, Etc. Immediately following the Class B Conversion
Time (as defined in Appendix A to the Amalgamation Agreement), Dutchco and
Parent shall cause the Continuing Corporation to provide notice of its
intention to exercise its right to redeem the Class E Shares and Class F
Shares of the Continuing Corporation (as specified in Appendix A to the
Amalgamation Agreement). At or prior to the Class E Redemption Time and the
Class F Redemption Time, Dutchco shall, and Parent shall cause Dutchco to,
exercise the Class E Redemption Call Right and the Class F Redemption Call
Right (as each is defined in Appendix A to the Amalgamation Agreement).
1.4 Accounting Consequences. It is intended by the parties hereto that the
Transactions shall qualify for accounting treatment as a pooling of interests
under US GAAP.
1.5 Material Adverse Effect. When used in connection with the Company, or
Parent, as the case may be, the term "Material Adverse Effect" means any
change or effect that, individually or when taken together with all other such
changes or effects that have occurred prior to the date of determination of
the occurrence of the Material Adverse Effect, is or is reasonably likely to
be materially adverse to the business, assets (including intangible assets),
financial condition or results of operations of the Company and its
subsidiaries or Parent and its subsidiaries, as the case may be, in each case
taken as a whole; provided, however, that none of the following
2
shall be deemed to constitute a Material Adverse Effect with respect to either
party: (a) any change in the market price or trading volume of the Company
Common Shares or Parent Common Shares, as appropriate; (b) any adverse effect
on the bookings, revenues or earnings of such party, or any delay in or
reduction or cancellation of such party's product orders, following the
execution of the Original Agreement, the Existing Agreement or this Agreement
which is reasonably attributable to the announcement of the execution of the
Original Agreement, the Existing Agreement or this Agreement and the
transactions contemplated hereby; (c) any change arising out of conditions
affecting the economy or industry of such party in general; (d) the failure,
in and of itself, to meet analysts' expectations (it being understood that the
underlying causes of such failure shall not be excluded from the definition of
Material Adverse Effect except as otherwise provided in this definition); or
(e) employee attrition which is (i) reasonably attributable to the
announcement of the execution of the Original Agreement, the Existing
Agreement or this Agreement and the transactions contemplated hereby, or (ii)
directly attributable to any action directly required of the Company by Parent
under Section 4.1, or any omission of the Company directly resulting from
Parent's failure to consent to actions requested to be taken by the Company
under Section 4.1.
1.6 Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted to
reflect fully the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into Parent
Common Shares or Company Common Shares), reorganization, recapitalization or
other like change with respect to Parent Common Shares or Company Common
Shares occurring after the date hereof and prior to the Effective Time.
1.7 Cancellation. Immediately prior to the Effective Time, each Company
Common Share owned by Parent, Dutchco, Amalgamation Sub or any direct or
indirect wholly owned subsidiary of the Company or Parent shall be purchased
for cancellation by the Company for nominal consideration.
1.8 Share Certificates of Amalgamation Sub and Giants Quebec. Each share
certificate of Amalgamation Sub evidencing ownership of any common shares of
Amalgamation Sub shall continue to evidence ownership of Class A Shares in the
share capital of the Continuing Corporation, and each share certificate of
Giants Quebec evidencing ownership of any common shares of Giants Quebec shall
continue to evidence ownership of Class C Shares in the share capital of the
Continuing Corporation. Any reference herein to classes of shares in the share
capital of the Continuing Corporation shall mean the classes of shares set out
in Appendix A to the Amalgamation Agreement.
1.9 Execution of Amalgamation Agreement. Concurrently herewith, Amalgamation
Sub, Autodesk Quebec and the Company shall execute and deliver the
Amalgamation Agreement.
1.10 Tax Treatment. It is intended that the Transactions shall generally
constitute (i) a taxable exchange for United States federal income tax
purposes (not qualifying under Sections 368 or 351 of the United States
Internal Revenue Code of 1986, as amended (the "Code")) to holders of Company
Common Shares who are otherwise subject to taxation in the United States on
the sale or exchange of Company Common Shares, and (ii) a non-taxable exchange
for Canadian federal income tax purposes for owners of Company Common Shares
who are residents of Canada for Canadian federal income tax purposes who elect
to receive Exchangeable Shares (but only to the extent they actually receive
Exchangeable Shares and only to the extent that they file appropriate
elections with the relevant tax authorities), which election the parties
hereto intend shall be permitted only to the extent that the aggregate
percentage of Company Common Shares exchanged for Exchangeable Shares pursuant
to all such elections shall not exceed 19.99 percent of the Company Common
Shares outstanding immediately prior to the Effective Time.
1.11 Existing Agreement and Original Agreement Terminated. This Agreement
amends and restates in its entirety the Existing Agreement and the Original
Agreement. Accordingly, upon the execution and delivery hereof by the parties,
the Existing Agreement and the Original Agreement shall be terminated in all
respects and be of no further force or effect.
3
ARTICLE II
Representations And Warranties Of The Company
The term "knowledge" as used in connection with the Company shall mean the
Company's actual knowledge after reasonable inquiry of officers, directors and
other employees of the Company charged with senior administrative or
operational responsibility of such matters. The Company hereby represents and
warrants to each member of the Parent Group as of the date of the Original
Agreement (except for the representations and warranties contained in Sections
2.4, 2.5(b), 2.5(c), 2.7(a), 2.7(b) and 2.23, which are made as of the date of
this Agreement), subject to the written disclosure schedule supplied by the
Company to Parent dated as of the date of the Original Agreement and certified
by a duly authorized officer of the Company (the "Company Disclosure
Schedule"), that:
2.1 Organization and Qualification; Subsidiaries. The Company and, except as
set forth on Schedule 2.1 of the Company Disclosure Schedule, each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization and has the requisite corporate power and authority and is in
possession of all material franchises, grants, authorizations, licenses,
permits, easements, consents, certificates, approvals and orders
(collectively, "Approvals") necessary to own, lease and operate the properties
it purports to own, operate or lease and to carry on its business as it is now
being conducted, except where the failure to be so organized, existing and in
good standing or to have such power, authority and Approvals would not have a
Material Adverse Effect. The Company and each of its subsidiaries is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not have a Material
Adverse Effect. A true and complete list of all of the Company's subsidiaries,
together with the jurisdiction of incorporation or organization of each
subsidiary and the percentage of each subsidiary's outstanding capital stock
owned by the Company or another subsidiary, is set forth in Schedule 2.1 of
the Company Disclosure Schedule. Except as set forth in Schedule 2.1 of the
Company Disclosure Schedule, the Company does not directly or indirectly own
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or
entity.
2.2 Articles of Incorporation and By-Laws. The Company has heretofore
furnished to Parent a complete and correct copy of its Articles of
Incorporation and By-Laws, as amended through August 20, 1998, and has made
available to Parent the equivalent organizational documents of each of its
subsidiaries. Such Articles of Incorporation, By-Laws and equivalent
organizational documents of each of its subsidiaries are in full force and
effect. Except as set forth on Schedule 2.2 of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is in violation of
any of the provisions of its Articles of Incorporation or By-Laws or
equivalent organizational documents.
2.3 Capitalization. The authorized share capital of the Company consists of
an unlimited number of Company Common Shares and an unlimited number of
preferred shares, no par value (the "Company Preferred Shares"). As of August
10, 1998, (i) 29,653,313 Company Common Shares were issued and outstanding,
all of which are validly issued, fully paid and nonassessable, (ii) no Company
Common Shares were held by subsidiaries of the Company, (iii) 5,012,924
Company Common Shares were reserved for future issuance pursuant to option
grants under the Company's Amended and Restated 1994 Restricted Stock and
Stock Option Plan, of which options to purchase 3,505,716 Company Common
Shares are outstanding, (iv) 111,779 Company Common Shares were reserved for
future issuance under the Company's 1995 Employee Stock Purchase Plan, (v)
200,000 Company Common Shares were reserved for future issuance pursuant to
option grants under the Company's 1995 Non-Employee Director Stock Option
Plan, of which options to purchase 140,000 Company Common Shares are
outstanding, (vi) 20,000 Company Common Shares were reserved for future
issuance pursuant to option grants under the Company's 1997 Special Limited
Non-Employee Director Stock Plan, of
4
which options to purchase 20,000 Company Common Shares are outstanding, and
(vii) no Company Preferred Shares were issued or outstanding. Except as set
forth in Schedule 2.3 of the Company Disclosure Schedule, no material change
in such capitalization has occurred between August 10, 1998 and August 20,
1998, except for the issuance of shares under the exercise of options,
warrants or other rights outstanding prior to August 10, 1998. Except as set
forth in this Section 2.3 or Section 2.10 hereof or in Schedule 2.3 or
Schedule 2.10 of the Company Disclosure Schedule, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of the Company or
any of its subsidiaries obligating the Company or any of its subsidiaries to
issue or sell any shares of share capital of, or other equity interests in,
the Company or any of its subsidiaries. All Company Common Shares subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, shall be duly authorized,
validly issued, fully paid and nonassessable. Except as set forth in
Schedule 2.3 of the Company Disclosure Schedule, there are no obligations,
contingent or otherwise, of the Company or any of its subsidiaries (A) to
repurchase, redeem or otherwise acquire any shares of the share capital of the
Company or the capital stock of any subsidiary or (B) except for the provision
of operational expenses to subsidiaries in the ordinary course of business
consistent with past practice, to provide funds or to make any investment (in
the form of a loan, capital contribution or otherwise) in any such subsidiary
or any other entity other than guarantees of bank and capital or other lease
obligations of subsidiaries entered into in the ordinary course of business.
All of the outstanding shares of capital stock of each of the Company's
subsidiaries are duly authorized, validly issued, fully paid and
nonassessable, and all such shares are owned by the Company or another
subsidiary free and clear of all security interests, liens, claims, pledges,
agreements, limitations in the Company's voting rights, charges or other
encumbrances of any nature whatsoever which would have a Material Adverse
Effect.
2.4 Authority. The Company has all necessary corporate power and authority
to execute and deliver this Agreement and the Amalgamation Agreement and to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Amalgamation Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate
action and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or the Amalgamation Agreement or to
consummate the Transactions, other than the approval and adoption of this
Agreement and confirmation of by-law No. 1998-1 approving the Amalgamation by
the holders of at least sixty-six and two-thirds percent (66 2/3%) of the
outstanding Company Common Shares who are permitted to, and who, vote at the
Company Shareholders' Meeting (as defined in Section 2.12 hereof) in
accordance with the Quebec Act. The Board of Directors of the Company has
determined that it is advisable and in the best interests of the Company's
shareholders for the Company to enter into a business combination with Parent
upon the terms and subject to the conditions of this Agreement and to
recommend that the shareholders of the Company approve same. This Agreement
and the Amalgamation Agreement have each been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery of each such agreement by each member of the Parent Group, as
applicable, each such agreement constitutes a legal, valid and binding
obligation of the Company.
2.5 No Conflict; Required Filings and Consents.
(a) Schedule 2.5(a) of the Company Disclosure Schedule sets forth all
agreements necessary to the current operation of the business of the Company,
excluding (i) employment agreements, standard end user license agreements and
standard distribution agreements; (ii) purchase orders, procurement contracts
and other similar agreements entered into in the ordinary course of business;
(iii) agreements which call for the payment or receipt of less than $200,000
over a three-year period; (iv) agreements disclosed in Schedule 2.18 of the
Company Disclosure Schedule; or (v) agreements filed with the United States
Securities and Exchange Commission ("SEC") pursuant to the requirements under
Item 601(b) of Regulation S-K.
(b) The execution and delivery of this Agreement and the Amalgamation
Agreement by the Company do not, and the performance of this Agreement and the
Amalgamation Agreement by the Company will not, (i) conflict with or violate
the Articles of Incorporation or By-Laws or equivalent organizational
documents of the Company or any of its subsidiaries, (ii) conflict with or
violate any law, rule, regulation, order, judgment or
5
decree applicable to the Company or any of its subsidiaries or by which its or
any of their respective properties is bound or affected, or (iii) result in
any breach of or constitute a default (or an event that with notice or lapse
of time or both would become a default), or impair the Company's or any of its
subsidiaries' rights or, to the Company's knowledge, alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of any agreement (each, a
"Covered Agreement") disclosed in Schedule 2.5(a) and Schedule 2.18 of the
Company Disclosure Schedule or filed as a "material contract" with the SEC
pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, and the SEC's rules thereunder (collectively, the "Exchange Act"), or
result in the creation of a lien or encumbrance on any of the properties or
assets of the Company or any of its subsidiaries pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or its or any of
their respective properties is bound or affected, except in the case of (ii)
and (iii) for any such conflicts, violations, breaches, defaults,
terminations, cancellations or accelerations which would not have a Material
Adverse Effect.
(c) The execution and delivery of this Agreement and the Amalgamation
Agreement by the Company do not, and the performance of the transactions
contemplated hereby and thereby will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign, to be made or
obtained by the Company, except (i) for applicable requirements, if any, of
the Securities Act of 1933, as amended, and the SEC's rules thereunder (the
"Securities Act"), the Exchange Act, state securities laws ("Blue Sky Laws"),
the pre-merger notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the Securities Act
(Quebec) (the "QSA") and other relevant Canadian securities statutes, filing
with Industry Canada under the Investment Canada Act (Canada), filing under
the Competition Act (Canada) and the filing and recordation of appropriate
documents as required by the Quebec Act in connection with the Transactions
and (ii) where the failure to obtain such consents, approvals, authorizations
or permits, or to make such filings or notifications, would not prevent or
materially delay consummation of the Transactions, or otherwise prevent or
materially delay the Company from performing its obligations under this
Agreement and the Amalgamation Agreement, or would not otherwise have a
Material Adverse Effect.
2.6 Compliance; Permits.
(a) Neither the Company nor any of its subsidiaries is in conflict with, or in
default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its subsidiaries or by which its or
any of their respective properties is bound or affected or (ii) any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
its or any of their respective properties is bound or affected, except for any
such conflicts, defaults or violations which would not have a Material Adverse
Effect.
(b) Except as disclosed in Schedule 2.6(b) of the Company Disclosure Schedule,
the Company and its subsidiaries, but only to the extent material to the
operation of the business of the Company and the subsidiaries, as a whole,
hold all permits, licenses, easements, variances, exemptions, consents,
certificates, orders and approvals from governmental authorities that are
material to the operation of the business of the Company as operated on August
20, 1998 (collectively, the "Company Permits"). The Company and its
subsidiaries, but only to the extent material to the operation of the business
of the Company and the subsidiaries, as a whole, are in compliance with the
terms of the Company Permits, except where the failure to so comply would not
have a Material Adverse Effect.
2.7 SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports and documents required to be
filed by the Company with the SEC since July 6, 1995 and has made available to
Parent (i) its Transition Report on Form 10-K for the eleven-month period
ended June 30, 1997, (ii) its Quarterly Reports on Form 10-Q for the three-
month periods ended September 30, 1997, December 31, 1997, March 31, 1998 and
September 30, 1998, respectively, (iii) all proxy
6
statements relating to the Company's meetings of stockholders (whether annual
or special) held since July 6, 1995, (iv) all other reports or Registration
Statements (other than Reports on Form 10-Q not referred to in clause (ii)
above and Reports on Form 3, 4 or 5 or registration statements on Form S-8)
filed by the Company with the SEC since July 6, 1995, and (v) all amendments
and supplements to all such reports and registration statements filed by the
Company with the SEC (collectively, the "Company SEC Reports"). The Company
SEC Reports (i) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, in all material
respects, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date
of such amending or superseding filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. As of the date
hereof, none of the Company's subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports was prepared
in accordance with US GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated therein or in the notes thereto
or, in the case of unaudited financial statements, as permitted by Form 10-Q
of the SEC) and each fairly presented in all material respects the
consolidated financial position of the Company and its subsidiaries as at the
respective dates thereof and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount.
(c) The unaudited financial statements of the Company for its fiscal year
ended June 30, 1998 included in Schedule 2.7(b) of the Company Disclosure
Schedule (the "Company Financial Statements") reflect in all material respects
the financial position of the Company as of June 30, 1998 and were prepared in
accordance with US GAAP, except for the absence of a statement of
shareholders' equity, a statement of cash flow, and in each case, the absence
of notes thereto and of any subsequent events or similar such notations that
may require a change in the financial statements.
(d) The Company has hereto furnished to Parent a complete and correct copy of
any amendments or modifications which have not yet been filed with the SEC but
which are required to be filed, to agreements, documents or other instruments
which previously had been filed by the Company with the SEC pursuant to the
Securities Act or the Exchange Act.
(e) The Company is not a "reporting issuer" or its equivalent for the purposes
of the QSA or any other Canadian provincial securities legislation.
2.8 Absence of Certain Changes or Events. Except as set forth in Schedule
2.8 of the Company Disclosure Schedule and in the Company SEC Reports, since
June 30, 1998, the Company has conducted its business in the ordinary course
and since such date and through August 20, 1998, there has not occurred any
Material Adverse Effect. In addition, since such date there has not been (i)
any amendment or change in the Articles of Incorporation or By-Laws of the
Company, (ii) any damage to, destruction or loss of any assets of the Company
(whether or not covered by insurance) that could have a Material Adverse
Effect, (iii) any revaluation by the Company of any of its assets resulting in
or reasonably likely to have a Material Adverse Effect, including, without
limitation, writing down the value of capitalized software or inventory or
writing off notes or accounts receivable other than in the ordinary course of
business, (iii) except as disclosed in Schedule 2.8 of the Company Disclosure
Schedule, any other action or event that would have required the consent of
Parent pursuant to Section 4.1 hereof had such action or event occurred after
the date of this Agreement and that would be reasonably likely to have a
Material Adverse Effect.
2.9 Absence of Litigation. Except as set forth in Schedule 2.9 of the
Company Disclosure Schedule or the Company SEC Reports, there are no claims,
actions, suits, proceedings or investigations pending or, to the knowledge of
the Company, threatened against the Company or any of its subsidiaries, or any
properties of the Company or any of its subsidiaries or the Company
Intellectual Property Rights (as defined in Section 2.18), before any court,
tribunal, arbitrator or administrative, governmental or regulatory authority
or body, domestic or foreign, that is reasonably likely to have a Material
Adverse Effect.
7
2.10 Employee Benefit Plans; Employment Agreements.
(a) The Company has made available to Parent all employee benefit plans (as
defined in Section 3(3) of the United States Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), regardless of whether ERISA is
applicable thereto, all other bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance or termination pay,
or medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plans, agreements or arrangements and
other similar material fringe or employee benefit plans, programs or
arrangements (including those sponsored by the federal or any provincial
government of Canada, collectively "Government Sponsored or Mandated Plans")
and any current or former employment or executive compensation or severance
agreements, written or otherwise, for the benefit of, or relating to, any
employee of the Company, any trade or business (whether or not incorporated)
which is a member of a controlled group including the Company or which is
under common control with the Company (an "ERISA Affiliate") within the
meaning of Section 414 of the Code, or any subsidiary of the Company, as well
as each plan with respect to which the Company or an ERISA Affiliate could
incur liability if such plan has been or were terminated (together, the
"Employee Plans"), and a copy of each such written Employee Plan has been made
available to Parent.
(b) (i) Except as set forth in Schedule 2.10(b) of the Company Disclosure
Schedule, none of the Employee Plans promises or provides retiree medical or
other retiree welfare benefits to any person and none of the Employee Plans is
a "multiemployer plan" as such term is defined in Section 3(37) of ERISA; (ii)
there has been no transaction or failure to act with respect to any Employee
Plan, which could result in any material liability of the Company or any of
its subsidiaries; (iii) all Employee Plans are in compliance in all material
respects with the requirements prescribed by any and all statutes, orders, or
governmental rules and regulations currently in effect with respect thereto,
and the Company and each of its subsidiaries have performed all material
obligations required to be performed by them under, are not in any material
respect in default under or in violation of, and have no knowledge of any
material default or violation by any other party to, any of the Employee
Plans; (iv) each Employee Plan intended to qualify under Section 401(a) of the
Code and each trust intended to qualify under Section 501(a) of the Code is
the subject of a favorable determination letter from the United States
Internal Revenue Service (the "IRS"), and so far as the Company is aware
nothing has occurred which may reasonably be expected to impair such
determination; (v) all contributions required to be made to any Employee Plan,
under the terms of the Employee Plan or any collective bargaining agreement,
have been made on or before their due dates and a reasonable amount has been
accrued for contributions to each Employee Plan for the current plan years;
(vi) with respect to each Employee Plan subject to Title IV of ERISA, no
"reportable event" within the meaning of Section 4043 of ERISA (excluding any
such event for which the thirty (30) day notice requirement has been waived
under the regulations to Section 4043 of ERISA) nor any event described in
Section 4062, 4063 or 4041 of ERISA has occurred; and (vii) neither the
Company nor any ERISA Affiliate has incurred, nor reasonably expects to incur,
any liability under Title IV of ERISA (other than liability for premium
payments to the United States Pension Benefit Guaranty Corporation arising in
the ordinary course).
(c) Each Employee Plan that is required or intended to be qualified under
applicable law or registered or approved by a governmental agency or authority
has been so qualified, registered or approved by the appropriate governmental
agency or authority if required to obtain such qualification, registration or
approval, and, to the Company's knowledge, nothing has occurred since the date
of the last qualification, registration or approval to adversely affect, or
cause, the appropriate governmental agency or authority to revoke such
qualification, registration or approval.
(d) All contributions (including premiums) required by law or contract to have
been made or approved by the Company under or with respect to the Employee
Plans have been paid or accrued by the Company, except as would not have a
Material Adverse Effect. Without limiting the foregoing, there are no material
unfunded liabilities under any Employee Plan.
(e) There are no pending or, to the Company's knowledge, threatened
investigations, litigation or other enforcement actions against the Company
with respect to any of the Employee Plans.
(f) There are no actions, suits or claims pending or, to the knowledge of the
Company, threatened by former or present employees of the Company (or their
beneficiaries) with respect to the Employee Plans or the assets or fiduciaries
thereof (other than routine claims for benefits).
8
(g) Except as set forth in Schedule 2.10(g) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries maintains any 401(k)
or other type of pension plan subject to Section 401(a) of the Code in the
United States.
(h) No condition or event has occurred with respect to the Employee Plans
which has or could reasonably be expected to result in a material liability to
the Company.
(i) Schedule 2.10(i) of the Company Disclosure Schedule sets forth, as of
August 10, 1998, a true and complete list of each current or former employee,
officer or director of the Company or any of its subsidiaries who holds any
option to purchase Company Common Shares as of August 20, 1998, together with
the number of Company Common Shares subject to such option, the date of grant
of such option, the extent to which such option is vested, the option price of
such option (to the extent determined as of the date hereof), whether such
option is intended to qualify as an incentive stock option within the meaning
of Section 422(b) of the Code (an "ISO"), and the expiration date of such
option. Schedule 2.10(i) of the Company Disclosure Schedule also sets forth
the total number of such ISOs and such nonqualified options.
(j) The Company has made available to Parent and Dutchco (i) copies of all
employment agreements with executive officers of the Company; (ii) copies of
all agreements with consultants who are individuals obligating the Company to
make annual cash payments in an amount exceeding US $100,000; (iii) a schedule
listing all officers of the Company who have executed a non-competition
agreement with the Company; (iv) copies of all severance agreements, programs
and policies of the Company, if any, with or relating to its employees; (v)
copies of all plans, programs, agreements and other arrangements of the
Company with or relating to its employees which contain change in control
provisions; and (vi) the form of standard employment agreement of the Company
for its non-executive employees.
2.11 Labor Matters. (i) There are no actions or proceedings pending or, to
the knowledge of the Company, threatened between the Company or any of its
subsidiaries and any of their respective employees, which have or may have a
Material Adverse Effect; (ii) neither the Company nor any of its subsidiaries
is a party to any collective bargaining agreement or other labor union
contract applicable to persons employed by the Company or any of its
subsidiaries nor does the Company or any of its subsidiaries know of any
activities or proceedings of any labor union to organize any such employees;
and (iii) neither the Company nor any of its subsidiaries has any knowledge of
any strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or
with respect to any employees of the Company or any of its subsidiaries.
2.12 Registration Statement; Joint Proxy Statement. None of the information
to be supplied by the Company in writing for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 (the "Form S-4") to be
filed with the SEC by Parent in connection with the (A) sale of Parent Common
Shares by Dutchco to holders of Units in exchange for such Units, and (B)
issuance of Exchangeable Shares by the Continuing Corporation, (ii) the proxy
statement relating to the general special meeting of the Company's
shareholders (the "Company Shareholders' Meeting") and the proxy statement
relating to the special meeting of Parent's stockholders (the "Parent
Stockholders' Meeting") to be held in connection with the Transactions
(collectively, the "Joint Proxy Statement" and, together with the Form S-4,
the "Joint Proxy Statement/Prospectus"), and (iii) any other document to be
filed with the SEC or any regulatory agency by any member of the Parent Group
or the Company in connection with the transactions contemplated by this
Agreement (the "Other Filings") will, (A) at the respective times such
documents are filed with the SEC or other regulatory agency, (B) in the case
of the Joint Proxy Statement/Prospectus, at the date it or any amendments or
supplements thereto are mailed to stockholders, at the time of the Company
Shareholders' Meeting and at the Effective Time and (C) in the case of the
Form S-4, when it becomes effective under the Securities Act, at the Effective
Time and on the date of any post-effective amendment thereto, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Joint Proxy Statement (as it relates to the Company
Shareholders' Meeting) will comply as to form in all material respects with
the applicable provisions of the Quebec Act and the Exchange Act. If at any
time prior to the Effective Time any event relating to the Company or any of
its respective affiliates, officers or directors should be discovered by the
Company which should be set forth in an amendment to the Form S-4 or a
supplement to the
9
Joint Proxy Statement, the Company shall promptly inform Parent.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information supplied by any member of the Parent Group
which is contained in any of the foregoing documents. No requirements of any
Canadian provincial securities legislation govern the contents or mailing of
the Joint Proxy Statement nor the holding of the Company Shareholders'
Meeting.
2.13 Restrictions on Business Activities. Except for this Agreement, there
is no material agreement, judgment, injunction, order or decree binding upon
the Company or any of its subsidiaries which has or could reasonably be
expected to have the effect of prohibiting or impairing any material business
practice of the Company or any of its subsidiaries, the acquisition of
property by the Company or any of its subsidiaries or the conduct of business
by the Company or any of its subsidiaries as currently conducted.
2.14 Title to Property. Schedule 2.14 of the Company Disclosure Schedule
sets forth a true and complete list of all real property (i) owned by the
Company or any of its subsidiaries or (ii) leased by the Company or any of its
subsidiaries requiring annual lease payments of more than US $100,000
("Material Leases"), and the aggregate monthly rental or other fee payable
under such Material Lease. The Company and each of its subsidiaries have good
and valid title to all of their properties and assets free and clear of all
liens, charges and encumbrances except (i) liens for Taxes not yet due and
payable, (ii) such liens or other imperfections of title, if any, as do not
materially detract from the value of or interfere with the present use of the
property affected thereby, (iii) liens securing debt which is reflected on the
balance sheet of the Company at June 30, 1998 included in the Company
Financial Statements, or (iv) liens which would not have a Material Adverse
Effect; and all Material Leases are in good standing, valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing material default or event of default as to the Company or
its subsidiaries (or event which with notice or lapse of time, or both, would
constitute a material default and in respect of which the Company or such
subsidiary has not taken adequate steps to prevent such a default from
occurring) except where the lack of such good standing, validity and
effectiveness or the existence of such default or event of default would not
have a Material Adverse Effect. All the facilities of the Company and its
subsidiaries used in the operation of their businesses, except such as may be
under construction, are in good operating condition and repair, except where
the failure of such plants, structures and equipment to be in such good
operating condition and repair would not, individually or in the aggregate,
have a Material Adverse Effect.
2.15 Taxes.
(a) For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes, fees,
levies, duties, tariffs, imposts, premiums and governmental impositions or
charges of any kind in the nature of (or similar to) taxes, payable to any
federal, state, provincial, local or foreign taxing authority, including
(without limitation) (i) income, capital, business, franchise, profits, gross
receipts, ad valorem, goods and services, customs, net worth, value added,
sales, use, service, real or personal property, special assessments, capital
stock, license, payroll, withholding, employment, social security, workers'
compensation, unemployment insurance or compensation, utility, severance,
production, excise, stamp, occupation, premiums, environmental, recapture,
windfall profits, transfer and gains taxes, fees, levies, duties, tariffs,
imposts, premiums and governmental impositions and (ii) interest, penalties,
additional taxes and additions to tax imposed with respect thereto; and "Tax
Returns" shall mean returns, reports, declarations, and information statements
with respect to Taxes required to be filed with Revenue Canada, Ministere du
Revenu du Quebec ("Revenue Quebec"), the Internal Revenue Service ("IRS") or
any other taxing authority, domestic or foreign, including, without
limitation, consolidated, combined and unitary tax returns.
(b) Except as disclosed in Schedule 2.15(b) of the Company Disclosure
Schedule, the Company and its subsidiaries have filed or caused to be filed
all Tax Returns required to be filed by them, except to the extent the failure
to file such Tax Returns would not have a Material Adverse Effect, and the
Company and its subsidiaries have paid and discharged or caused to be paid and
discharged all Taxes due in connection with or with respect to the filing of
all Tax Returns and have paid all other Taxes as are due, and there are no
other Taxes that would be due if asserted by a taxing authority, except such
Taxes as are being contested in good faith by appropriate proceedings (to the
extent that any such proceedings are required) and with respect to which the
10
Company is maintaining reserves to the extent currently required in all
material respects adequate for their payment except to the extent the failure
to maintain such reserves or pay such Taxes would not have a Material Adverse
Effect. Except as disclosed in Schedule 2.15(b) of the Company Disclosure
Schedule, none of Revenue Canada, Revenue Quebec, the IRS or any other taxing
authority or agency is now asserting or, to the Company's knowledge,
threatening to assert against the Company or any of its subsidiaries any
deficiency or claim for additional Taxes other than additional Taxes with
respect to which the Company is maintaining reserves in all material respects
adequate for their payment, and, to the Company's knowledge, there are no
requests for information currently outstanding that could affect the Taxes of
the Company or any of its subsidiaries. Except as disclosed in Schedule
2.15(b) of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries is currently being audited or examined by any taxing authority,
nor has the Company received any written notice that any Tax Return will
undergo any audit or examination or that such an audit or examination is
threatened. Except as disclosed in Schedule 2.15(b) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has, except as would
not have a Material Adverse Effect, granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment
of, any Tax. The accruals and reserves for Taxes reflected in the Company
Financial Statements are in all material respects adequate to cover all Taxes
accruable through the date thereof (including interest and penalties, if any,
thereon and Taxes being contested) in accordance with generally accepted
accounting principles. No liability for Taxes has been incurred (or prior to
the Effective Time will be incurred) since such date other than in the
ordinary course of business except (i) as would not have a Material Adverse
Effect or (ii) attributable to the transactions contemplated hereby. Except as
disclosed in Schedule 2.15(b) of the Company Disclosure Schedule, neither the
Company nor any of its subsidiaries is required to include in income (i) items
in respect of any change in accounting principles or (ii) any installment sale
gain, where the inclusion in income would result in a tax liability materially
in excess of the reserves therefor.
(c) The Company on behalf of itself and all its subsidiaries hereby represents
that, other than as disclosed on Schedule 2.15(c) of the Company Disclosure
Schedule, and other than with respect to items the inaccuracy of which would
not have a Material Adverse Effect: (i) neither the Company nor any of its
subsidiaries is a party to any agreement, contract or arrangement that may
result, separately or in the aggregate, in the payment of any "excess
parachute payment" within the meaning of Section 280G of the Code, determined
without regard to Section 280G(b)(4) of the Code and (ii) neither the Company
nor any of its subsidiaries has participated in or cooperated with a boycott
under Section 999 of the Code.
(d) Except as disclosed in Schedule 2.15(d) of the Company Disclosure
Schedule, no power of attorney has been granted by the Company or any of its
subsidiaries with respect to any matter relating to Taxes which is currently
in force.
(e) Except as disclosed in Schedule 2.15(e) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to any
agreement or arrangement (written or oral) providing for the allocation or
sharing of Taxes.
(f) Except as disclosed in Schedule 2.15(f) of the Company Disclosure
Schedule, the Company and each of its subsidiaries have reported and withheld
from each payment made to any of their respective past or present employees,
officers, directors or non-residents of Canada the amount of all Taxes and
other material deductions required to be withheld therefrom and have paid the
same to the proper tax or other receiving officers within the time required
under any applicable legislation except where failure to do so would not have
a Material Adverse Effect.
(g) Except as disclosed in Schedule 2.15(g) of the Company Disclosure
Schedule, the Company has remitted to the appropriate tax authority when
required by law to do so all amounts collected by it on account of all Taxes
under Part IX of the Excise Tax Act and retail sales tax except where failure
to do so would not have a Material Adverse Effect.
(h) Except as would not have a Material Adverse Effect on the Company, the
Company has not deducted any material amounts in computing its income in a
taxation year which may be included in a subsequent taxation year under
Section 78 of the Income Tax Act (Canada).
11
(i) Except as disclosed in Schedule 2.15(i) of the Company Disclosure
Schedule, the Company has not requested or received a ruling from any taxing
authority or signed a closing or other agreement with any taxable authority
which could have a Material Adverse Effect.
(j) Except as would not have a Material Adverse Effect on the Company, to the
Company's knowledge, no circumstances exist which would make the Company or
any subsidiary subject to the application of any of sections 79 to 80.04 of
the Income Tax Act (Canada). Neither the Company nor any of its subsidiaries
have acquired property or services from, or disposed of property or provided
services to, a person with whom it does not deal at arm's length (within the
meaning of the Income Tax Act (Canada)) for an amount that is other than the
fair market value of such property or services, or has been deemed to have
done so for purposes of the Income Tax Act (Canada).
2.16 Environmental Matters. Except in all cases as have not had and could
not reasonably be expected to have a Material Adverse Effect, to the knowledge
of the Company, the Company and each of its subsidiaries: (i) have obtained
all applicable permits, licenses and other authorization which are required
under federal, state, provincial or local laws relating to pollution or
protection of the environment, including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants or
hazardous or toxic materials or wastes into ambient air, surface water, ground
water or land or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants or hazardous or toxic materials or wastes by the
Company or its subsidiaries (or their respective agents); (ii) are in
compliance with all terms and conditions of such required permits, licenses
and authorization, and also are in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in such laws or contained in any
regulation, code, plan, order, decree, judgment, notice or demand letter
issued, entered, promulgated or approved thereunder; and (iii) are not aware
of nor have received notice of any event, condition, circumstance, activity,
practice, incident, action or plan which is reasonably likely to interfere
with or prevent continued compliance with or which would give rise to any
common law or statutory liability, or otherwise form the basis of any claim,
action, suit or proceeding, based on or resulting from the Company's or any of
its subsidiary's (or any of their respective agent's) manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous or toxic material or waste.
2.17 Brokers. No broker, finder or investment banker (other than Xxxxx Xxxxx
Xxxxxx & Company, LLC) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. The Company has
heretofore furnished to Parent a complete and correct copy of all agreements
between the Company and Xxxxx Xxxxx Xxxxxx & Company, LLC pursuant to which
such firm would be entitled to any payment relating to the transactions
contemplated hereunder.
2.18 Intellectual Property.
(a) Except as set forth in Schedule 2.18 of the Company Disclosure Schedule,
the Company owns, or is licensed or otherwise possesses legally enforceable
rights to use sell (except as to Third Party Intellectual Property Rights, as
defined below) and license all trademarks, trade names, service marks,
copyrights and any applications therefor, technology, trade secrets, know-how,
computer software programs or applications (in both source code and object
code form), tangible or intangible proprietary information or material, and,
to the knowledge of the Company, all patents, that are necessary to, required
for or used in the business of the Company as currently conducted (the
"Company Intellectual Property Rights") the absence of which would be
reasonably likely to have a Material Adverse Effect. Schedule 2.18 of the
Company Disclosure Schedule lists all current patents, registered and material
unregistered trademarks and service marks, registered copyrights, material
trade names and any applications therefor owned by the Company, and specifies
the jurisdictions in which each such Company Intellectual Property Right has
been issued or registered or in which an application for such issuance and
registration has been filed, including the respective registration or
application numbers and the names of all registered owners, together with a
list of all of the Company's currently marketed software products and an
indication as to which, if any, of such software products have been registered
for copyright
12
protection with the United States or Canadian Copyright Office and any other
foreign offices and by whom such items have been registered. Schedule 2.18 of
the Company Disclosure Schedule also includes and specifically identifies all
third-party patents, trademarks or copyrights (including software) (the "Third
Party Intellectual Property Rights"), that are incorporated in, are, or form a
part of, any Company product and which are material to the Company's business.
The listing of Third Party Intellectual Property Rights shall include the
following information: the type of the agreement by which such Third Party
Intellectual Property Rights have been
procured by the Company, the names of the parties and the material terms of
such agreement(s). Schedule 2.18 of the Company Disclosure Schedule lists (i)
any requests the Company has received to make any registration of a copyright,
patent or trademark, including the identity of the requester and the item
requested to be so registered, and the jurisdiction for which such request has
been made; and (ii) except for object code license agreements for the
Company's products executed in the ordinary course of business that are not
material to the Company's business, all material licenses, sublicenses and
other agreements as to which the Company is a party and pursuant to which any
person is authorized to use, or which otherwise relate to, any Company
Intellectual Property Right.
(b) The Company is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations hereunder, in
violation in any material respect of any license, sublicense or agreement
described in Schedule 2.18 of the Company Disclosure Schedule. Neither the
execution and delivery of this Agreement by the Company, nor the performance
by the Company of its obligations hereunder will cause the forfeiture or
termination or give rise to a right of forfeiture or termination of any
Company Intellectual Property Right or Third Party Intellectual Property Right
set forth in Schedule 2.18 of the Company Disclosure Schedule, nor impair the
ability of the Company, its subsidiaries, the Continuing Corporation or Parent
to use, sell or license any Company Intellectual Property Right or Third Party
Intellectual Property Right set forth in Schedule 2.18 of the Company
Disclosure Schedule. Except as set forth in Schedule 2.18 of the Company
Disclosure Schedule, no claims with respect to the Company Intellectual
Property Rights (or Third Party Intellectual Property Rights to the extent
arising out of any use, reproduction or distribution of such Third Party
Intellectual Property Rights by or through the Company) are currently pending,
or, to the knowledge of the Company, are threatened by any person, nor, to the
knowledge of the Company, are there any valid grounds for any such claims (i)
to the effect that the manufacture, sale, licensing or use of any product as
now used, sold or licensed or proposed for use, sale or license by the Company
infringes on any copyright, patent, trademark, service xxxx or trade secret;
(ii) against the use by the Company of any trademarks, trade names, trade
secrets, copyrights used in the Company's business as currently conducted by
the Company; (iii) challenging the ownership, validity or effectiveness of any
of the Company Intellectual Property Rights or (iv) challenging the Company's
license or legally enforceable right to use of the Third Party Intellectual
Property Rights. All registered trademarks, maskworks, and copyrights held by
the Company, are valid and subsisting. Except as set forth in Schedule 2.18 of
the Company Disclosure Schedule, to the knowledge of the Company, all patents
held by the Company are valid and subsisting. Except as set forth in Schedule
2.18 of the Company Disclosure Schedule, to the Company's knowledge, there is
no material unauthorized use, infringement or misappropriation of any of the
Company Intellectual Property by any third party, including any employee or
former employee of the Company or any of its subsidiaries. Except as set forth
in Schedule 2.18 of the Company Disclosure Schedule, neither the Company nor
any of its subsidiaries (i) has been sued or charged in writing as a defendant
in any claim, suit, action or proceeding which involves a claim or
infringement of trade secrets, any patents, trademarks, service marks,
maskworks or copyrights and which has not been finally terminated prior to
August 20, 1998, or been informed or notified by any third party that the
Company may be engaged in such infringement, or (ii) has knowledge of any
infringement liability with respect to, or infringement by, the Company or any
of its subsidiaries of any trade secret, patent, trademark, service xxxx,
maskwork or copyright of another.
(c) The Company has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, all Company Intellectual Property Rights (other than those which,
by operation of law, have been disclosed or made public). Except as set forth
in Schedule 2.18 of the Company Disclosure Schedule, each employee and
consultant of the Company has executed a confidentiality and invention
agreement substantially in the respective forms previously delivered to
Parent.
13
2.19 Interested Party Transactions. Except as set forth in the Company SEC
Reports or as set forth in Schedule 2.19 of the Company Disclosure Schedule,
since the date of the Company's proxy statement dated October 24, 1997, no
event has occurred that would be required to be reported as a Certain
Relationship or Related Transaction pursuant to Item 404 of Regulation S-K
promulgated by the SEC or that is a related party transaction for the purposes
of Quebec Securities Commission Policy Statement Q-27. The Transactions will
not constitute a "going private transaction" for the purposes of such Policy.
2.20 Insurance. To the Company's knowledge, except as set forth in Schedule
2.20 of the Company Disclosure Schedule, there is no material claim by the
Company or any of its subsidiaries pending under any of such policies or bonds
as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums payable on or prior to
August 20, 1998 under all such policies and bonds have been paid and the
Company and its subsidiaries are otherwise in compliance in all material
respects with the terms of such policies and bonds (or other policies and
bonds providing substantially similar insurance coverage). The Company has no
knowledge of any threatened termination of, or material premium increase with
respect to, any of such policies.
2.21 Vote Required. The affirmative vote of the holders of at least sixty-
six and two-thirds percent (66 2/3%) of the Company Common Shares voting on
such matter is the only vote of the holders of any class or series of the
Company's share capital necessary to approve the Amalgamation and confirm By-
law No. 1998-1 in accordance with the Quebec Act.
2.22 Pooling Matters. Neither the Company nor, to the Company's knowledge,
any of its affiliates has, based upon consultation with its independent
auditors, taken or agreed to take any action that (without giving effect to
any action taken or agreed to be taken by Parent or any of its affiliates)
would affect the ability of Parent to account for the business combination to
be effected by the Transactions as a pooling-of-interests.
2.23 Opinion of Financial Advisor. The Company has received an oral opinion
from its financial advisor, Xxxxx Xxxxx Xxxxxx & Company, LLC (subsequently
confirmed in writing), to the effect that, as of November 18, 1998, the
consideration to be received by the shareholders of the Company pursuant to
the Transactions is fair to such shareholders from a financial point of view.
ARTICLE III
Representations And Warranties Of The Parent Group
The term "knowledge" as used in connection with Parent, shall mean Parent's
actual knowledge after reasonable inquiry of officers, directors and other
employees of Parent charged with senior administrative or operational
responsibility of such matters. Each member of the Parent Group hereby
represents and warrants to the Company as of the date of the Original
Agreement (except for the representations and warranties made in Sections 3.2,
3.3, 3.7(a), 3.7(b) and 3.9, which are made as of the date of this Agreement),
subject to the written disclosure schedule supplied by the Parent Group to the
Company dated as of the date of the Original Agreement and certified by a duly
authorized officer of Parent (the "Parent Disclosure Schedule"), that:
3.1 Organization and Qualification. Parent and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has the
requisite corporate power and authority and is in possession of all Approvals
necessary to own, lease and operate the properties it purports to own, operate
or lease and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing and in good standing or to have
such power, authority and Approvals would not have a Material Adverse Effect.
Parent and each of its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction
where the character of its properties owned, leased or operated by it or the
nature of its activities makes such qualification or licensing necessary,
except for such failures to be so duly qualified or licensed and in good
standing that would not have a Material Adverse Effect.
14
3.2 Authority. Each member of the Parent Group has all necessary corporate
power and authority to execute and deliver this Agreement and the Ancillary
Documents (as defined in Section 5.17) (to the extent they are parties
thereto) and to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the Ancillary Documents by each member of the Parent Group
(to the extent they are parties thereto) and the consummation by each member
of the Parent Group of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action on the part
of each member of the Parent Group, and no other corporate proceedings on the
part of any such member are necessary to authorize this Agreement or the
Ancillary Documents or to consummate the transactions so contemplated (other
than the approval of the Parent Stock Issuance (as defined in Section 3.9
hereof) by the requisite vote of the stockholders of Parent, to the extent
necessary). The Boards of Directors of Parent and Dutchco have determined that
it is advisable and in the best interest of Parent's stockholders and
Dutchco's stockholder for Parent and Dutchco to enter into a business
combination with the Company upon the terms and subject to the conditions of
this Agreement and the Amalgamation Agreement and to recommend that the
stockholders of Parent approve the Parent Stock Issuance. This Agreement and
the Amalgamation Agreement have each been duly and validly executed and
delivered by each member of the Parent Group (to the extent they are parties
thereto) and, assuming the due authorization, execution and delivery by the
Company, each such agreement constitutes a legal, valid and binding obligation
of each member of the Parent Group. Each of the Ancillary Documents not yet
executed and delivered as of the date hereof shall constitute a legal, valid
and binding obligation of each member of the Parent Group (to the extent they
are parties thereto) upon execution and delivery of each such document.
3.3 No Conflict; Required Filings and Consents.
(a) Except as set forth in Schedule 3.3(a) of the Parent Disclosure Schedule,
the execution and delivery of this Agreement and the Ancillary Documents by
each member of the Parent Group (to the extent they are parties thereto) do
not (or in the case of Ancillary Documents not yet executed and delivered,
will not), and the performance of this Agreement and the Ancillary Documents
by each member of the Parent Group will not, (i) conflict with or violate the
Certificate of Incorporation or By-Laws (or similar charter documents, as the
case may be) of any member of the Parent Group, (ii) conflict with or violate
any law, rule, regulation, order, judgment or decree applicable to Parent or
any of its subsidiaries or by which its or their respective properties are
bound or affected, or (iii) result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a
default) under, or impair Parent's or any of its subsidiaries' rights or alter
the rights or obligations of any third party under, or to the knowledge of
Parent, give to others any rights of termination, amendment, acceleration or
cancellation of, any material contract or result in the creation of a lien or
encumbrance on any of the properties or assets of Parent or any of its
subsidiaries pursuant to any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent or any of its subsidiaries is a party or by which
Parent or any of its subsidiaries or its or any of their respective properties
are bound or affected, except in the case of (ii) and (iii) any such case for
any such breaches, defaults or other occurrences that would not have a
Material Adverse Effect.
(b) The execution and delivery of this Agreement and the Ancillary Documents
by each member of the Parent Group (to the extent they are parties thereto)
does not (or in the case of Ancillary Documents not yet executed and
delivered, will not), and the performance of the transactions contemplated
hereby and thereby will not, require any material consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign, except (i) for
applicable requirements, if any, of the Securities Act, the Exchange Act, the
Blue Sky Laws, the pre-merger notification requirements of the HSR Act,
relevant Canadian securities statutes, filing with Industry Canada under the
Investment Canada Act (Canada), filing under the Competition Act (Canada) and
the filing and recordation of appropriate merger or other documents as
required by the Quebec Act and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or materially delay consummation of the
Transactions, or otherwise prevent or materially delay any member of the
Parent Group from performing its respective obligations under this Agreement
and the Ancillary Documents, and would not otherwise have a Material Adverse
Effect.
15
3.4 Certificate of Incorporation and By-Laws. Parent has heretofore
furnished to the Company a complete and correct copy of its Certificate of
Incorporation and the By-Laws, as amended through August 20, 1998. Such
Certificate of Incorporation and By-Laws are in full force and effect. Neither
Parent, Dutchco nor Amalgamation Sub is in violation of any of the provisions
of its respective Certificate of Incorporation or By-Laws (or similar charter
documents, as the case may be).
3.5 Capitalization. As of July 31, 1998, the authorized capital stock of
Parent consisted of (i) 250,000,000 shares of Parent Common Stock of which:
46,347,747 shares were issued and outstanding, no shares were held in
treasury, 12,832,135 shares were reserved for issuance pursuant to outstanding
options under Parent's stock option plans, 2,000,000 shares were reserved for
future issuance under Parent's employee purchase plan; and 2,000,000 shares of
Preferred Stock, US $0.01 par value ("Parent Preferred Stock"), none of which
were issued and outstanding. No material change in such capitalization has
occurred between July 31, 1998 and August 20, 1998. The authorized capital
stock of Amalgamation Sub consists of an unlimited number of common shares, no
par value, one share of which, as of August 20, 1998, is issued and
outstanding. All of the outstanding shares of Parent's, Dutchco's, Giants
Quebec's and Amalgamation Sub's respective capital stock have been duly
authorized and validly issued and are fully paid and nonassessable. All of the
Parent Common Shares, Exchangeable Shares, Class B Shares (as each is defined
in the Amalgamation Agreement) and Units to be issued in connection with the
transactions contemplated hereby have been authorized by all necessary
corporate action and, when issued in accordance with the terms of this
Agreement and the provisions of such shares (as set out in Appendix A to the
Amalgamation Agreement), will be validly issued, fully paid and nonassessable.
3.6 Compliance; Permits.
(a) Neither Parent nor any of its subsidiaries is in conflict with, or in
default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to Parent or any of its subsidiaries or by which its or any
of their respective properties is bound or affected or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or any of its subsidiaries is a
party or by which Parent or any of its subsidiaries or is or any of their
respective properties is bound or affected, except for any such conflicts,
defaults or violations which would not have a Material Adverse Effect.
(b) Parent and its subsidiaries hold all permits, licenses, easements,
variances, exemptions, consents, certificates, orders and approvals from
governmental or other regulatory authorities which are material to the
operation of the business of the Company and its subsidiaries taken as a whole
as operated on August 20, 1998 (collectively, the "Parent Permits"). Parent
and its subsidiaries are in compliance with the terms of the Parent Permits,
except where the failure to so comply would not have a Material Adverse
Effect.
3.7 SEC Filings; Financial Statements.
(a) Parent has filed all forms, reports and documents required to be filed
with the SEC since February 1, 1995, and has heretofore delivered to the
Company, in the form filed with the SEC, (i) its Annual Reports on Form 10-K
for the fiscal years ended January 31, 1998, 1997 and 1996, and its quarterly
report on Form 10-Q for the fiscal quarters ended April 30, 1998 and July 31,
1998, (ii) all proxy statements relating to Parent's meetings of stockholders
(whether annual or special) held since January 31, 1996, (iii) all other
reports or registration statements (other than Reports on Form 10-Q not
referred to in clause (ii) above, Reports on Form 3, 4 or 5 filed on behalf of
affiliates of the Parent and Registration Statements on Form S-8) filed by
Parent with the SEC since January 31, 1996 and (iv) all amendments and
supplements to all such reports and registration statements filed by Parent
with the SEC (collectively, the "Parent SEC Reports"). The Parent SEC Reports
(i) were prepared in accordance with the requirements of the Securities Act or
the Exchange Act, as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of Parent's
subsidiaries is required to file any forms, reports or other documents with
the SEC.
16
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Parent SEC Reports has been
prepared in accordance with US GAAP applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto) and
each fairly presents the consolidated financial position of Parent and its
subsidiaries as at the respective dates thereof and the consolidated results
of its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be
material in amount.
(c) Parent has heretofore furnished to the Company a complete and correct copy
of any amendments or modifications, which have not yet been filed with the SEC
but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by Parent with the SEC pursuant to
the Securities Act or the Exchange Act.
3.8 Absence of Certain Changes or Events. Except as set forth in Schedule
3.8 of the Parent Disclosure Schedule and in the Parent SEC Reports, since
January 31, 1998, Parent has conducted its business in the ordinary course and
since such date and through August 20, 1998, there has not occurred any
Material Adverse Effect with respect to Parent. In addition, since such date
there has not been (i) any damage to, destruction or loss of any assets of
Parent (whether or not covered by insurance) that could have a Material
Adverse Effect with respect to Parent, (ii) any revaluation by Parent of any
of its assets reasonably likely to have a Material Adverse Effect with respect
to Parent, including, without limitation, writing down the value of
capitalized software or inventory or writing off notes or accounts receivable
other than in the ordinary course of business or (iii) other events outside of
the ordinary course of business and inconsistent with past practices that
would be reasonably likely to have a Material Adverse Effect with respect to
Parent.
3.9 Board Approval. The Board of Directors of Parent has, as of November 18,
1998, determined to recommend that the stockholders of Parent approve the
issuance of Parent Common Stock in connection with the Transactions (including
any subsequent issuance of Parent Common Stock in connection with the exchange
of Exchangeable Shares) (the "Parent Stock Issuance").
3.10 Registration Statement; Joint Proxy Statement/Prospectus.
(a) Subject to the accuracy of the representations of the Company in Section
2.12 hereof, (i) the Form S-4 pursuant to which the Parent Common Shares,
Exchangeable Shares, Units and Class B Shares to be issued in connection with
the Transactions will be registered with the SEC, (ii) the Joint Proxy
Statement, and (iii) the Other Filings will (A) at the respective times such
documents are filed with the SEC or other regulatory agency, (B) in the case
of the Joint Proxy Statement, at the date it or any amendments or supplements
thereto are mailed to stockholders, at the time of the Parent Stockholders'
Meeting and at the Effective Time and (C) in the case of the Form S-4, if any,
when it becomes effective under the Securities Act, at the Effective Time and
on the date of any post-effective amendment thereto, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Joint Proxy Statement will comply as
to form in all material respects with the applicable provisions of the
Delaware General Corporation Law and the Exchange Act as it relates to the
Parent Stockholders' Meeting, and the Form S-4, as it relates the issuance of
the Parent Common Shares, Exchangeable Shares, Units and Class B Shares to be
issued in connection with the Transactions, will comply as to form in all
material respects with the requirements of the Securities Act. If at any time
prior to the Effective Date any event relating to Parent, Dutchco,
Amalgamation Sub or any of their respective affiliates, officers or directors
should be discovered by Parent, Dutchco or Amalgamation Sub which should be
set forth in an amendment to the Form S-4 or a supplement to the Joint Proxy
Statement, Parent, Dutchco or Amalgamation Sub will promptly inform the
Company. Notwithstanding the foregoing, Parent makes no representation or
warranty with respect to any information supplied by the Company which is
contained in, or furnished in connection with the preparation of, any of the
foregoing.
(b) As of August 20, 1998 and at the Effective Time, except for obligations or
liabilities incurred in connection with its incorporation or organization and
the transactions contemplated by this Agreement and the
17
Amalgamation Agreement and except for this Agreement and the Amalgamation
Agreement and any other agreements or arrangements contemplated by this
Agreement, Amalgamation Sub has not and will not have incurred, directly or
indirectly, through any subsidiary or affiliate, any obligations or
liabilities or engaged in any business activities of any type or kind
whatsoever or entered into any agreements or arrangements with any person.
3.11 Brokers. No broker, finder or investment banker (other than Xxxxx
Xxxxxxx, Inc. and Xxxxxxx, Xxxxx & Co.) is entitled to any brokerage, finder's
or other fee or commission in connection with the transactions contemplated by
this Agreement and the Amalgamation Agreement based upon arrangements made by
or on behalf of Parent, Dutchco or Amalgamation Sub. Parent has heretofore
furnished to Company a complete and correct copy of all agreements between any
member of the Parent Group and Xxxxx Xxxxxxx, Inc. and Xxxxxxx, Xxxxx & Co.
pursuant to which such firms would be entitled to any payment relating to the
transactions contemplated hereunder.
3.12 Opinion of Financial Advisor. Parent has received an oral opinion from
its financial advisor, Xxxxx Xxxxxxx, Inc. (subsequently confirmed in
writing), to the effect that, as of November 18, 1998, the Exchange Ratio is
fair from a financial point of view to Parent.
3.13 Pooling Matters. Neither Parent nor any of its affiliates has, to its
knowledge and based upon consultation with its independent auditors, taken or
agreed to take any action that (without giving effect to any action taken or
agreed to be taken by the Company or any of its affiliates) would affect the
ability of Parent to account for the business combination to be effected by
the Transactions as a pooling-of-interests.
3.14 Absence of Litigation. Except as set forth in Schedule 3.14 of the
Parent Disclosure Schedule or the Parent SEC Reports, there are no claims,
actions, suits, proceedings or investigations pending or, to the knowledge of
the Parent, threatened against the Parent or any of its subsidiaries, or any
properties or rights of the Parent or any of its subsidiaries, before any
court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, that could have a Material Adverse Effect.
3.15 Restrictions on Business Activities. Except for this Agreement and the
Ancillary Documents or as otherwise set forth in the Parent Disclosure
Schedule or the Parent SEC Reports, there is no material agreement, judgment,
injunction, order or decree binding upon the Company or any of its
subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or impairing any material business practice of Parent or any of
its subsidiaries, the acquisition of property by Parent or any of its
subsidiaries or the conduct of business by Parent or any of its subsidiaries
as currently conducted by Parent.
3.16 Taxes.
(a) Except as disclosed in Schedule 3.16 of the Parent Disclosure Schedule,
Parent and its subsidiaries have filed or caused to be filed all Tax Returns
required to be filed by them, except to the extent that the failure to file
such Tax Returns would not have a Material Adverse Effect, and Parent and its
subsidiaries have paid and discharged or caused or to be paid and discharged
all Taxes due in connection with or with respect to the filing of all Tax
Returns and have paid all other Taxes as are due, and there are no other Taxes
that would be due if asserted by a taxing authority, except such as are being
contested in good faith by appropriate proceedings (to the extent that any
such proceedings are required) and with respect to which Parent is maintaining
reserves to the extent currently required in all material respects adequate
for their payment except to the extent the failure to do so would not have a
Material Adverse Effect. Except as disclosed in Schedule 3.16 of the Parent
Disclosure Schedule, none of Revenue Canada, Revenue Quebec, the IRS or any
other taxation authority or agency is now asserting or, to the best of
Parent's knowledge, threatening to assert against Parent or any of its
subsidiaries any deficiency or claim for additional Taxes other than
additional Taxes with respect to which Parent is maintaining reserves in all
material respects adequate for their payment, and there are no requests for
information currently outstanding that could affect the Taxes of Parent or any
of its subsidiaries. Except as disclosed in Schedule 3.16 of the Parent
Disclosure Schedule, neither Parent nor any of its subsidiaries is currently
being audited or examined by any taxation authority, nor has Parent received
any written notice that
18
any Tax Return will undergo any audit or examination or that such an audit or
examination is threatened. Except as disclosed in Schedule 3.16 of the Parent
Disclosure Schedule, neither Parent nor any of its subsidiaries has, except as
would not have a Material Adverse Effect, granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment
of, any Tax. The accruals and reserves for Taxes reflected in the consolidated
financial statements (including, in each case, any related notes thereto)
contained in the Parent SEC Reports are in all material respects adequate to
cover all Taxes accruable through the date thereof (including interest and
penalties, if any, thereon and Taxes being contested) in accordance with
generally accepted accounting principles. No liability for taxes has been
incurred (or prior to the Effective Time will be incurred) since such date
other than in the ordinary course of business except as (i) would not have a
Material Adverse Effect, or (ii) is attributable to the transactions
contemplated herein.
(b) Except as disclosed in Schedule 3.16 of the Parent Disclosure Schedule,
Parent and each of its subsidiaries have reported and withheld from each
payment made to any of their respective past or present employees, officers,
directors or non-residents of the United States the amount of all Taxes and
other material deductions required to be withheld therefrom and have paid the
same to the proper tax or other receiving officers within the time required
under any applicable legislation except where failure to do so would not have
a Material Adverse Effect.
(c) Except as disclosed in Schedule 3.16 of the Parent Disclosure Schedule,
Parent has not requested or received a ruling from any taxation authority or
signed a closing or other agreement with any taxation authority which could
have a Material Adverse Effect.
3.17 Intellectual Property.
(a) Parent and its subsidiaries own, or are licensed or otherwise possess
legally enforceable rights to use, sell and license all trademarks,
tradenames, service marks, copyrights and any applications therefor necessary
to, used in or required for their respective businesses as currently conducted
(the "Parent Intellectual Property Rights"), the absence of which would be
reasonably likely to have a Material Adverse Effect on Parent.
(b) Parent is not, nor will it be as a result of the execution and delivery of
this Agreement or the Ancillary Documents or the performance of its
obligations hereunder or thereunder, in violation in any material respect of
any license, sublicense or agreement of which Parent or any of Parent's
subsidiaries is a party. The execution and delivery of this Agreement and the
Ancillary Documents or the performance of its obligations hereunder or
thereunder will not cause the forfeiture or termination or give rise to a
right of forfeiture or termination of any material Parent Intellectual
Property Right, or impair the ability of Parent or its subsidiaries to use,
sell or license any Parent Intellectual Property Right or portion thereof.
Except as set forth in Schedule 3.17 of the Parent Disclosure Schedule, no
claims with respect to Parent Intellectual Property Rights are currently
pending, or, to the knowledge of Parent, are threatened by any person, nor, to
the knowledge of the Parent, are there any valid grounds for any such claims
(i) to the effect that the manufacture, sale, licensing or use of any product
as now used, sold or licensed or proposed for use, sale or license by Parent
infringes on any copyright, patent, trademark, service xxxx or trade secret;
(ii) against the use by Parent of any trademarks, trade names, trade secrets,
copyrights used in Parent's business as currently conducted by Parent; (iii)
challenging the ownership, validity or effectiveness of any of Parent
Intellectual Property Rights or (iv) to the knowledge of Parent, against the
use by Parent of any patents. All registered trademarks, maskworks and
copyrights are valid and subsisting. Except as set forth in Schedule 3.17 of
the Parent Disclosure Schedule, to the knowledge of Parent, all patents held
by Parent are valid and subsisting. Except as set forth in Schedule 3.17 of
the Parent Disclosure Schedule, to Parent's knowledge, there is no material
unauthorized use, infringement or misappropriation of any of Parent
Intellectual Property Right by any third party, including any employee or
former employee of Parent or any of its subsidiaries. Except as set forth in
Schedule 3.17 of the Parent Disclosure Schedule, neither Parent nor any of its
subsidiaries (i) has been sued or charged in writing as a defendant in any
claim, suit, action or proceeding which involves a claim or infringement of
trade secrets, any patents, trademarks, service marks, maskworks or copyrights
and which has not been finally terminated prior to August 20, 1998, or been
informed or notified by any third party that Parent may be engaged in such
infringement, or (ii) has knowledge of any infringement liability with respect
to, or infringement by, Parent or any of its subsidiaries of any trade secret,
patent, trademark, service xxxx, maskwork or copyright of another.
19
(c) Each employee and consultant of Parent has executed a confidentiality and
invention agreement substantially in the respective forms previously delivered
to the Company.
(d) Parent has taken reasonable and practicable steps designed to safeguard
and maintain the secrecy and confidentiality of, and its proprietary rights
in, all Parent Intellectual Property Rights (other than those which, by
operation of law, have been disclosed or made public).
3.18 Insurance. To Parent's knowledge, except as is set forth in Schedule
3.18 of the Parent Disclosure Schedule, there is no material claim by Parent
or any of its subsidiaries pending under any of such policies or bonds as to
which coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds. All premiums payable on or prior to the date hereof
under all such policies and bonds have been paid and Parent and its
subsidiaries are otherwise in compliance in all material respects with the
terms of such policies and bonds (or other policies and bonds providing
substantially similar insurance coverage). Parent has no knowledge of any
threatened termination of, or material premium increase with respect to, any
of such policies.
3.19 Vote Required. The affirmative vote of the holders of a majority of the
shares present and entitled to vote at a stockholder meeting duly convened for
the purpose of considering the Parent Stock Issuance is the only vote of the
holders of any class or series of Parent's capital stock necessary to approve
the Transactions in accordance with the Delaware General Corporation Law, the
Certificate of Incorporation of Parent and the By-Laws of Parent.
ARTICLE IV
Conduct of Business Pending the Amalgamation
4.1 Conduct of Business by the Company Pending the Amalgamation. During the
period from the date of the Original Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, and except
as set forth in Schedule 4.1 of the Company Disclosure Schedule, the Company
covenants and agrees, unless Dutchco shall otherwise agree in writing, to
conduct its business and cause the businesses of its subsidiaries to be
conducted only in, and the Company and its subsidiaries shall not take any
action except in, the ordinary course of business or in accordance with the
provisions of this Agreement and in a manner consistent with past practice;
and the Company shall use commercially reasonable efforts to preserve
substantially intact the business organization of the Company and its
subsidiaries, to keep available the services of the present officers,
employees and consultants of the Company and its subsidiaries, to take all
commercially reasonable action necessary to prevent the loss, cancellation,
abandonment, forfeiture or expiration of any Company Intellectual Property and
to preserve the present relationships of the Company and its subsidiaries with
customers, suppliers and other persons with which the Company or any of its
subsidiaries has significant business relations, except in each case where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect; provided, however, that the provisions of this Section 4.1 shall not
prevent the Company from taking action to cause the Exchangeable Shares, the
Class B Shares, Class E Shares and Class F Shares to be listed, posted or
quoted for trading on the Nasdaq National Market and/or a prescribed Canadian
stock exchange. By way of amplification and not limitation, except as
contemplated by this Agreement, neither the Company nor any of its
subsidiaries shall, during the period from the date of the Original Agreement
and continuing until the earlier of the termination of this Agreement or the
Effective Time, directly or indirectly do, or agree to do, any of the
following without the prior written consent of Dutchco, which shall not be
unreasonably withheld:
(a) amend or otherwise change the Company's Articles of Incorporation or By-
Laws;
(b) except as disclosed in Schedule 4.1(b) of the Company Disclosure Schedule,
issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale,
pledge, disposition or encumbrance of, any shares of any class of the
Company's share capital, or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of the Company's share capital,
or any other ownership interest (including, without limitation, any phantom
interest) of the Company, any of its subsidiaries or affiliates (except for
the issuance of Company Common Shares issuable pursuant to employee stock
options under the Company Stock Option Plans
20
(as defined in Section 5.5), pursuant to rights to purchase such shares under
the Company Stock Purchase Plan (as defined in Section 5.6), which options or
rights, as the case may be, are outstanding on the date hereof) or as
permitted under Section 4.2;
(c) except as set forth in Schedule 4.1(c) of the Company Disclosure Schedule,
sell, pledge, dispose of or encumber any material assets of the Company or any
of its subsidiaries (except for (i) sales of assets in the ordinary course of
business and in a manner consistent with past practice and (ii) dispositions
of obsolete or worthless assets);
(d) amend or change the period (or permit any acceleration, amendment or
change) of exercisability of options or restricted stock granted under the
Employee Plans (including the Company Stock Option Plans) or authorize cash
payments in exchange for any options granted under any of such plans except
with regard to options set forth in Schedule 4.1(d) of the Company Disclosure
Schedule;
(e) (i) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any of its capital stock, except that a wholly owned subsidiary of the Company
may declare and pay a dividend to its parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (iii) amend the terms of, repurchase,
redeem or otherwise acquire, or permit any subsidiary to repurchase, redeem or
otherwise acquire, any of its securities or any securities of its
subsidiaries, or propose to do any of the foregoing;
(f) except as set forth in Schedule 4.1(f) of the Company Disclosure Schedule,
sell, transfer, license, sublicense or otherwise dispose of any Company
Intellectual Property, or amend or modify any existing agreements with respect
to any Company Intellectual Property or Third Party Intellectual Property
Rights, other than nonexclusive object and source code licenses in the
ordinary course of business consistent with past practice or industry
standards for such licensing or distribution;
(g) (i) acquire (by merger, consolidation, or acquisition of stock or assets)
any corporation, partnership or other business organization or division
thereof or otherwise acquire any material amount of assets; (ii) incur any
material indebtedness for borrowed money or issue any debt securities or
assume, guarantee (other than guarantees of bank debt of the Company's
subsidiaries entered into in the ordinary course of business), endorse or
otherwise as an accommodation become responsible for, the obligations of any
person, or make any loans or advances, except in the ordinary course of
business consistent with past practice; (iii) authorize any capital
expenditures or purchase of fixed assets which are, in the aggregate, in
excess of US $6,000,000 for the Company and its subsidiaries taken as a whole;
or (iv) enter into or amend any contract, agreement, commitment or arrangement
to effect any of the matters prohibited by this Section 4.1(g);
(h) except as set forth in Schedule 4.1(h) of the Company Disclosure Schedule,
increase the compensation payable or to become payable to its officers or
employees, except for increases in salary or wages of officers or employees of
the Company or its subsidiaries in accordance with past practices, or grant
any severance or termination pay to, or enter into any employment or severance
agreement with, any director, officer or other employee of the Company or any
of its subsidiaries, or establish, adopt, enter into or amend any Employee
Plan, except as may be required by applicable law;
(i) take any action to change material Tax or accounting policies or
procedures (including, without limitation, procedures with respect to revenue
recognition, capitalization of software development costs, payments of
accounts payable and collection of accounts receivable) other than as may be
required by law or US GAAP;
(j) make any material Tax election inconsistent with past practices or settle
or compromise any material federal, state, local or foreign Tax liability or
agree to an extension of a statute of limitations except to the extent the
amount of any such settlement has been reserved for on the Company Balance
Sheet;
(k) pay, discharge or satisfy any material claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction of liabilities reflected or
reserved against in the Company Financial Statements or incurred in the
ordinary course of business and consistent with past practice;
21
(l) except as may be required by law and except as disclosed on Schedule
4.1(l) of the Company Disclosure Schedule, take any action to terminate or
amend any of its Employee Plans;
(m) modify, amend or terminate any Covered Agreement (as defined in Section
2.5(b)), other than in the ordinary course of business consistent with past
practice;
(n) take or allow to be taken or fail to take any act or omission which would
jeopardize the treatment of the Transactions as a pooling-of-interests for
accounting purposes under US GAAP; or
(o) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1(a) through (n) above, or any action which would make
any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect in any material respect or prevent the Company
from performing or cause the Company not to perform its covenants hereunder or
result in any of the conditions to the Transactions set forth herein not being
satisfied.
4.2 No Solicitation.
(a) From and after the date of the Original Agreement until the earlier of the
Effective Time or the termination of this Agreement in accordance with Article
VII hereof, the Company shall not, directly or indirectly, through any
officer, director, employee, representative or agent of the Company or any of
its subsidiaries, take any action to initiate, solicit or encourage (including
by way of furnishing any person any non-public information, except as
permitted in Section 4.2(e)) or, subject to the terms of the immediately
following sentence, participate in any discussions or negotiations with any
persons who are considering or who have made any inquiries or proposals
regarding any merger, amalgamation, take-over bid, sale of substantial assets,
sale of shares of capital stock (including without limitation by way of a
tender offer) or similar transactions involving the Company or any
subsidiaries of the Company (any of the foregoing inquiries or proposals being
referred to herein as an "Acquisition Proposal"). Notwithstanding anything to
the contrary contained in this Section 4.2(a) or in any other provision of
this Agreement, the Company may, to the extent the Board of Directors of the
Company determines, in good faith, after consultation with outside legal
counsel, that the Board's fiduciary duties under applicable law require it to
do so, participate in discussions or negotiations with, and, subject to the
requirements of paragraph (d), below, furnish information to any person,
entity or group after such person, entity or group has delivered to the
Company, an unsolicited bona fide Acquisition Proposal which the Board of
Directors of the Company in its good faith reasonable judgment determines,
after consultation with its independent financial advisors, would result in a
transaction more favorable to the shareholders of the Company than the
transactions contemplated by this Agreement (a "Superior Proposal"). In
addition, notwithstanding any other provision of this Agreement, in connection
with a possible Acquisition Proposal, the Company may refer any third party to
this Section 4.2 or make a copy of this Section 4.2 available to a third
party. In the event the Company receives a Superior Proposal, nothing
contained in this Agreement (but subject to the terms of this Section 4.2)
will prevent the Board of Directors of the Company from accepting, approving
or recommending such Superior Proposal to its shareholders, if the Board
determines, in good faith, after consultation with outside legal counsel, that
such action is required by its fiduciary duties under applicable law; in such
case, the Board of Directors of the Company may withdraw, modify or refrain
from making its recommendation set forth in Section 5.1(a), and, to the extent
it does so, the Company may refrain from soliciting proxies and taking such
other action necessary to secure the vote of its shareholders as may be
required by Section 5.2; provided, however, that the Company shall not accept,
approve or recommend to its shareholders, or enter into any agreement
concerning, a Superior Proposal for a period of not less than three business
days after Parent's receipt of a copy of the Superior Proposal (or a
reasonably detailed written description of the significant terms and
conditions thereof, if such proposal is not in writing).
(b) Notwithstanding Section 4.2(a) above, nothing contained in this Agreement
shall prohibit the Company from complying with Rules 14d-9 and 14e-2 under the
Exchange Act; provided, however, that, in complying with Rules 14d-9 and 14e-
2, the Company will not make or authorize any recommendation of any
Acquisition Proposal unless such proposal constitutes a Superior Proposal.
(c) The Company shall immediately (and no later than 24 hours) notify Parent
and Dutchco after receipt of any written Acquisition Proposal or any request
for non-public information relating to the Company or
22
any of its subsidiaries in connection with an Acquisition Proposal or for
access to the properties, books or records of the Company or any subsidiary by
any person or entity that informs the Board of Directors of the Company or
such subsidiary that it is considering making, or has made, an Acquisition
Proposal. Such notice to Parent and Dutchco shall be made orally and in
writing and shall indicate in reasonable detail the terms and conditions of
such proposal, inquiry or contact.
(d) If the Board of Directors of the Company receives a request for material
nonpublic information by a party who makes a bona fide Acquisition Proposal
and the Board of Directors of the Company determines that such proposal is a
Superior Proposal, then, and only in such case, the Company may, subject to
the execution of a confidentiality agreement substantially similar to that
then in effect between the Company and Parent, provide such party with access
to information regarding the Company, which access shall be no more extensive
than that provided to Parent.
(e) The Company shall immediately cease and cause to be terminated any
existing discussions or negotiations with any parties (other than Parent,
Dutchco and Amalgamation Sub) conducted heretofore with respect to any of the
foregoing. The Company agrees not to release any third party from any
confidentiality or standstill agreement with respect to any of the foregoing
to which the Company is a party.
(f) The Company shall ensure that the officers, directors, employees and
agents of the Company and its subsidiaries and any investment bankers or other
agents, advisors or representatives retained by the Company are aware of the
restrictions described in this Section, and shall be responsible for any
breach of this Section 4.2 by such bankers, officers, directors, employees,
agents, advisors or representatives.
4.3 Covenants of Parent. During the period from the date of the Original
Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, Parent agrees as to itself and its material
subsidiaries (except to the extent that the Company shall otherwise consent in
writing, which consent shall not unreasonably be withheld), to carry on its
and such subsidiaries' business in the ordinary course, to pay its debts and
Taxes when due subject to good faith disputes over such debts or Taxes and to
pay or perform other obligations when due, except to the extent failure to do
any of the foregoing would not have a Material Adverse Effect.
ARTICLE V
Additional Agreements
5.1 Joint Proxy Statement/Prospectus; Registration Statement. As promptly as
practicable after the execution of this Agreement, Parent and Company shall
prepare and file with the SEC a preliminary proxy statement which shall
constitute the Joint Proxy Statement/Prospectus, together with any other
documents required by the Securities Act or the Exchange Act, in connection
with the Transactions. The Joint Proxy Statement/Prospectus shall constitute
(i) the proxy statement of the Company with respect to the Company
Shareholders' Meeting, (ii) the proxy statement of Parent with respect to the
Parent Stockholders' Meeting and, (iii) the prospectus to be contained in the
Form S-4 with respect to the issuance by (A) Dutchco of the Parent Common
Shares and (B) the Continuing Corporation of the Exchangeable Shares, Units
and Class B Shares in connection with the Transactions. As promptly as
practicable after comments (if any) are received from the SEC thereon and
after the furnishing by Parent and the Company of all information required to
be contained therein, Parent and Company shall cause the Joint Proxy
Statement/Prospectus to be mailed to each of the Company's Shareholders and
each of Parent's Stockholders. The Joint Proxy Statement/Prospectus shall (i)
include the unanimous recommendation of the non-interested Board of Directors
of the Company in favor of the Transactions, except that the Board of
Directors of the Company may withdraw, modify or refrain from making such
recommendation to the extent that the Board determines, in good faith, after
consultation with outside legal counsel, that compliance with the Board's
fiduciary duties under applicable law would require it to do so, and (ii) the
unanimous recommendation of the Board of Directors of Parent in favor of the
Parent Stock Issuance, except that the Board of Directors of Parent may
withdraw, modify or refrain from making such recommendation to the extent that
the Board determines, in good faith, after consultation with outside legal
counsel, that compliance with the Board's fiduciary duties under applicable
law would require it to do so. Parent shall file a
23
registration statement on Form S-3 (the "Form S-3") in order to register the
Parent Common Shares to be issued from time to time after the Effective Time
upon exchange of the Exchangeable Shares and shall use its reasonable best
efforts to maintain the effectiveness of such registration for such period as
such Exchangeable Shares remain outstanding, and Parent and the Company shall
use all reasonable efforts to cause the Form S-3 to become effective prior to
the Effective Time. Notwithstanding anything herein to the contrary, Parent
shall be under no obligation to file the Form S-3 if it shall have determined
on the advice of its counsel that the shares of Parent Common Stock to be
issued upon exchange of the Exchangeable Shares after the Effective Time will
be exempt from the registration requirements of Section 5 of the Securities
Act by virtue of Section 3(a)(9) thereof.
5.2 Shareholders' Meetings. The Company shall take all commercially
reasonable action necessary in accordance with applicable law, its Articles of
Incorporation and By-Laws to hold the Company Shareholders' Meeting as soon as
practicable (but in no event more than 40 days) after the date on which the
Form S-4 becomes effective. Parent will take all commercially reasonable
action necessary in accordance with the Delaware General Corporation Law and
its Certificate of Incorporation and By-Laws to convene the Parent
Stockholders' Meeting to be held as soon as practicable (but in no event more
than 40 days) after the date on which the Form S-4 becomes effective. Parent
will consult with Company and will use its commercially reasonable efforts to
hold the Parent Shareholders' Meeting on the same day as the Company
Stockholders' Meeting. Subject to the terms of this Agreement, each of Parent
and the Company will use its commercially reasonable efforts to solicit from
its stockholders proxies in favor of the approval of this Agreement and the
transactions contemplated hereby and the approval of the Parent Stock
Issuance, as the case may be, and will take all other action necessary or
advisable to secure the vote or consent of their respective stockholders
required by the rules of the National Association of Securities Dealers, Inc.
and applicable law to obtain such approvals.
5.3 Access to Information; Confidentiality. Upon reasonable notice and
subject to restrictions contained in confidentiality agreements to which such
party is subject, the Company, Parent and Dutchco shall each (and shall cause
each of their subsidiaries to) afford to the officers, employees, accountants,
counsel and other representatives of the other, reasonable access during
normal business hours, during the period prior to the Effective Time, to all
its properties, books, contracts, commitments and records and, during such
period, the Company and Parent each shall (and shall cause each of their
subsidiaries to) furnish promptly to the other all information concerning its
business, properties and personnel as such other party may reasonably request,
and each shall make available to the other the appropriate individuals
(including attorneys, accountants and other professionals) for discussion of
the other's business, properties and personnel as either party may reasonably
request. Each party shall keep such information confidential in accordance
with the terms of the existing confidentiality agreement dated July 10, 1998
(the "Confidentiality Agreement") between Parent and the Company.
5.4 Consents; Approvals. The Company, Parent and Dutchco shall each use best
efforts to obtain all consents, waivers, approvals, authorizations or orders
(including, without limitation, all United States, Canadian federal and
provincial and foreign governmental and regulatory rulings and approvals), and
the Company and Parent shall promptly make all filings (including, without
limitation, all filings with United States, Canadian federal and provincial
and foreign governmental or regulatory agencies) required in connection with
the authorization, execution and delivery of this Agreement and the Ancillary
Documents by the Company and each member of the Parent Group (to the extent
they are parties thereto) and the consummation by them of the transactions
contemplated hereby and thereby. The Company and Parent (with respect to
themselves and their respective subsidiaries) shall furnish all information
required to be included in the Joint Proxy Statement and the Form S-4, or for
any application or other filing to be made pursuant to the rules and
regulations of any United States, Canadian federal or provincial or foreign
governmental body in connection with the Transactions.
5.5 Stock Options; Employee Benefits; Retention of Employees.
(a) At the Effective Time, the Company's obligations with respect to each
outstanding option to purchase Company Common Shares (each a "Company Option")
under the Company's Amended and Restated 1994 Restricted Stock and Stock
Option Plan, 1995 Non-Employee Director Stock Option Plan, 1995 Employee Stock
Purchase Plan and 1997 Special Limited Non-Employee Director Stock Plan and
outside of any such
24
formal plan (individually, a "Company Stock Option Plan," and, collectively,
the "Company Stock Option Plans"), whether vested or unvested, will be assumed
by Parent and, on such assumption, the rights to acquire Company Common Shares
under the Company Stock Option Plans shall be exchanged for rights to acquire
Parent Common Shares under such plans. Each Company Option so assumed by
Parent under this Agreement shall continue to have, and be subject to, the
same terms and conditions set forth in the applicable Company Stock Option
Plan and agreement pursuant to which such Company Option was issued as in
effect immediately prior to the Effective Time, except that (i) such Company
Option will be deemed to constitute an option to purchase that number of
Parent Common Shares equal to the product of the number of Company Common
Shares that the holder of such option would have been entitled to receive had
such holder exercised such options immediately prior to the Effective Time
(not taking into account whether such option was in fact exercisable)
multiplied by the Exchange Ratio, rounded down to the nearest whole number of
Parent Common Shares, and (ii) the per share exercise price for the Parent
Common Shares issuable upon exercise of such assumed Company Option will be
equal to the quotient determined by dividing the exercise price per Company
Common Shares at which such Company Option was exercisable immediately prior
to the Effective Time by the Exchange Ratio, and rounding the resulting
exercise price up to the nearest whole cent.
(b) It is the intention of the parties that the Company Options assumed by
Parent qualify following the Effective Time as incentive stock options as
defined in the Code ("ISOs"), to the extent the Company Options qualified as
ISOs prior to the Effective Time.
(c) The Company shall ensure that any required consents of holders of such
options or rights to such assumptions are obtained prior to the Effective
Time.
(d) As soon as practicable after the Effective Time, Parent shall deliver to
each holder of an outstanding Company Option, an appropriate notice setting
forth such holder's rights pursuant thereto and such Company Option shall
continue in effect on the same terms and conditions (including further anti-
dilution provisions, and subject to the adjustments required by this Section
5.5 after giving effect to the Transactions). Parent shall comply with the
terms of all such Company Options. Parent shall take all corporate action
necessary to reserve for issuance a sufficient number of Parent Common Shares
for delivery pursuant to the terms set forth in this Section 5.5.
(e) As of the Effective Time, the employees of the Company (the "Company
Employees") shall be entitled (to the extent permitted by applicable law and
subject to the provisions of this Agreement) to participate in each of
Parent's employee benefit and incentive compensation and perquisite plans and
arrangements (the "Parent Employee Plans") in which similarly situated
employees of Parent participate, to the same extent as similarly situated
employees of Parent. For purposes of determining eligibility to participate in
the Parent Employee Plans, eligibility to participate in the Parent Employee
Plans, eligibility for benefit forms and subsidies and the vesting of benefits
under such plans (including, but not limited to, any severance, 401(k),
vacation and sick pay plan) and for purposes of accrual of benefits under any
severance, sick leave, vacation and other similar Parent Employee Benefit
Plans (except with respect to Parent's sabbatical program), Parent shall give
effect to years of service (and for purposes of qualified and nonqualified
pension plans, prior earnings) with the Company or its subsidiaries, as the
case may be, as if they were employees of the Parent. Such service shall also
be given effect for purposes of satisfying any waiting period, evidence of
insurability requirements, or the application of any preexisting condition
limitation. The Company Employees shall be given credit for amounts paid under
a corresponding Company Employee Plan during the same period for purposes of
applying deductibles, copayments and out-of-pocket maximums as though such
amounts had been paid in accordance with the terms and conditions of the
Parent Employee Plan. With regard to any employees who are redeployed as a
result of the transactions contemplated hereby, such redeployment shall be
made in accordance with the Redeployment Schedule attached at Schedule 5.6(f)
of the Parent Disclosure Schedule, subject to any general changes in the
policies of Parent.
(f) Parent shall assume and honor the obligations of the Company and its
subsidiaries under all employment, severance, consulting and other
compensation contracts, commitments or agreements disclosed in the Company
Disclosure Schedule, each as amended to the date hereof or as contemplated
hereby. Parent hereby acknowledges that the Transactions will constitute a
"Change in Control" for purposes of all of the Company Employee Plans.
25
(g) The Company will use its best efforts to assist Parent in identifying and
ensuring the retention by Parent and/or the Continuing Corporation of those
technical and non-technical employees who are necessary to carrying out the
operations of the Company as presently conducted and proposed to be conducted.
The parties acknowledge and agree, consistent with the provisions of this
Agreement, that the failure of Parent and/or the Continuing Corporation to
retain such employees despite the Company's best efforts shall not entitle
Parent to terminate this Agreement.
5.6 Company Employee Stock Purchase Plan.
(a) At the Effective Time, each outstanding purchase right (each an "Assumed
Purchase Right" and, collectively, the "Assumed Purchase Rights") under the
Company's 1995 Employee Stock Purchase Plan (the
"Company Stock Purchase Plan") shall be deemed to constitute a purchase right
to acquire, on the same terms and conditions as were applicable under the
Company Stock Purchase Plan immediately prior to the Effective Time, a number
of Parent Common Shares determined as provided in the Company Stock Purchase
Plan, except that the per share purchase price of such Parent Common Shares
under each such Assumed Purchase Right will be the lower of (i) the quotient
determined by dividing (x) 85% of the closing price of a Discreet Common Share
as reported on the Nasdaq National Market on the first day of the offering
period in effect as of the Effective Time (the "Current Offering Period") by
(y) the Exchange Ratio and (ii) 85% of the closing price of a share of
Autodesk Common Stock as reported on the Nasdaq National Market on the last
day of the Current Offering Period. As soon as practicable after consummation
of the Transactions, Autodesk shall deliver to the participants in the Company
Stock Purchase Plan appropriate notice setting forth such participants' rights
pursuant thereto and that the Assumed Purchase Rights shall continue in effect
on the terms and conditions provided in this Section 5.6.
(b) Parent shall file and cause to become effective not later than the
Effective Time a registration statement under the Securities Act with respect
to the assumption by Parent of the Company Options referred to in Section 5.5
and the Assumed Purchase Rights referred to in this Section 5.6 and with
respect to the issuance of Parent Common Shares upon exercise of those Company
Options and Assumed Purchase Rights and to keep such registration statement
effective throughout the term of such Company Options and Assumed Purchase
Rights.
(c) Employees of the Company as of the Effective Time shall be permitted to
participate in Parent's Employee Stock Purchase Plan commencing on the first
enrollment date following the Effective Time, subject to compliance with the
eligibility provisions of such plan (with employees receiving credit, for
purposes of such eligibility provisions, for service with the Company).
5.7 Agreements of Affiliates. The Company shall promptly deliver to Parent a
letter (the "Affiliate Letter") identifying all persons who are, or may be
deemed to be, at the time of the Company Stockholders' Meeting, "affiliates"
of the Company for purposes of Rule 145 under the Securities Act. The Company
shall use its best efforts to cause each person who is identified as an
"affiliate" in the Affiliate Letter to deliver to Parent, and Parent shall use
its best efforts to receive from its own affiliates, as promptly as
practicable, but in no event later than the date on which the Joint Proxy
Statement/Prospectus is mailed to stockholders, a written agreement (an
"Affiliate Agreement") in substantially the form of Exhibit B-1 hereto (in the
case of affiliates of Parent) and Exhibit B-2 hereto (in the case of
affiliates of the Company).
5.8 Voting Agreements. Concurrently with the date upon which the Joint Proxy
Statement/Prospectus is mailed to the holders of Company Common Shares and
Parent Common Shares, all executive officers and certain directors of both the
Company and Parent shall each execute and deliver a Voting Agreement in
substantially the form of Exhibit C-1 hereto (in the case of officers and
directors of Parent) and Exhibit C-2 hereto (in the case of officers and
directors of the Company), and all such agreements shall be in full force and
effect.
5.9 Indemnification and Insurance.
(a) From and after the Effective Time, (i) the Continuing Corporation and
Parent will fulfill and honor in all respects the obligations of the Company
and its subsidiaries pursuant to the indemnification provisions in the
Company's Articles of Incorporation and By-Laws existing as in effect on the
date hereof with respect to the
26
Company's directors and officers (including without limitation advancement of
legal and other expenses to the extent provided for in such Articles of
Incorporation and By-Laws), and (ii) in the event any of the Company's
directors or officers is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter relating to this
Agreement or the Amalgamation Agreement or the transactions contemplated
hereby or thereby occurring on or prior to the Effective Time, Parent shall,
or shall cause the Continuing Corporation to, pay as incurred such reasonable
legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith, subject to an undertaking to
repay such amounts as required by applicable law.
(b) From and after the Effective Time, the Continuing Corporation and Parent
shall, to the fullest extent permitted under applicable law or under the
Continuing Corporation's and Parent's, as the case may be, By-Laws, indemnify
and hold harmless, each present director, officer, employee, fiduciary and
agent of the Company or any of its subsidiaries (collectively, the
"Indemnified Parties") against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and amounts paid
in settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of or pertaining to any action or omission occurring at or prior
to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement and the Amalgamation Agreement), and to pay as
incurred such legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith, subject to an
undertaking to repay such amounts as required by applicable law. The
Indemnified Parties as a group may retain only one law firm to represent them
with respect to any single action unless there is, under applicable standards
of professional conduct, a conflict of interest between the positions of any
two or more Indemnified Parties. Any counsel retained by the Indemnified
Parties shall be reasonably satisfactory to Parent and Parent shall not be
liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld).
(c) The provisions of this Section 5.9 are intended to be for the benefit of,
and shall be enforceable by, each Indemnified Party, his or her heirs and
representatives and may not be amended, altered or repealed without the prior
written consent of the affected Indemnified Party.
(d) For a period of five years after the Effective Time, Parent and Dutchco
will, or will cause the Continuing Corporation to, provide officers' and
directors' liability insurance in respect of acts or omissions occurring on or
prior to the Effective Time covering each such person currently covered by the
Company's officers' and directors' liability insurance policy on terms
substantially similar to those of such policy in effect on the date hereof.
5.10 Notification of Certain Matters. The Company shall give prompt notice
to Parent and Dutchco, and Parent and Dutchco shall give prompt notice to the
Company, of (i) the occurrence, or non-occurrence, of any event the
occurrence, or non-occurrence, of which would be likely to cause, or does
cause, any representation or warranty contained in this Agreement to be untrue
or inaccurate or (ii) any failure of the Company, or any member of the Parent
Group as the case may be, materially to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement; provided further that failure
to provide such notice shall not be treated as a breach for purposes of
Section 7.1(g) unless failure to give such notice results in material
prejudice to Parent.
5.11 Further Action. Upon the terms and subject to the conditions hereof,
each of the parties hereto shall use all reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement and the
Amalgamation Agreement, to obtain in a timely manner all necessary waivers,
consents and approvals and to effect all necessary registrations and filings,
and to otherwise satisfy or cause to be satisfied all conditions precedent to
its obligations under this Agreement. Each member of the Parent Group and the
Company shall use its best efforts to cause the Transactions to fail to
qualify, will take any actions (that do not materially adversely affect such
party) to cause the Transactions to fail to qualify, and will not (both before
and after consummation of the Transactions) take any actions which cause such
Transactions to qualify,
27
as a reorganization under the provisions of Section 368 of the Code or a
transaction described in Section 351 of the Code.
5.12 Public Announcements. Parent (on behalf of each member of the Parent
Group) and the Company shall consult with each other before issuing any press
release or otherwise making any public statements with respect to the
Transactions or this Agreement and shall not issue any such press release or
make any such public statement without the prior consent of the other party,
which shall not be unreasonably withheld; provided, however, that a party may,
without the prior consent of the other party, issue such press release or make
such public statement as may upon the advice of counsel be required by law,
the National Association of Securities Dealers, Inc. or the Nasdaq National
Market or any other regulatory body to which such party is subject if it has
used all reasonable efforts to consult with the other party as to the timing
and content of such release or statement.
5.13 Listing of Parent Common Shares. Parent shall cause the shares of
Parent Common Stock to be issued in connection with the Transactions
(including shares of Parent Common Stock delivered by Dutchco as a result of
rights attaching to the Exchangeable Shares) to be approved for listing on the
Nasdaq National Market, subject to official notice of issuance, prior to the
Effective Time.
5.14 Conveyance Taxes. Parent, Dutchco and the Company shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp Taxes, any
transfer, recording, registration and other fees, and any similar Taxes which
become payable in connection with the transactions contemplated hereby that
are required or permitted to be filed on or before the Effective Time.
5.15 Pooling Letters.
(a) The Company shall use its best efforts to cause to be delivered to Parent
a letter of Xxxxxx Xxxxxxxx & Cie, addressed to the Company, dated as of a
date within two business days prior to the Effective Time, setting forth that
the Company will qualify as a combining company in a pooling-of-interests
transaction under Opinion 16 of the Accounting Principles Board and applicable
SEC rules and regulations (the "Xxxxxx Xxxxxxxx Pooling Letter").
(b) Parent shall use its best efforts to cause to be delivered to the Company
a letter of Ernst & Young LLP, addressed to Parent, dated as of a date within
two business days prior to the Effective Time, setting forth the concurrence
of Ernst & Young LLP with the conclusion of Parent's management that the
Transactions will qualify as a pooling-of-interests transaction under Opinion
16 of the Accounting Principles Board and applicable SEC rules and regulations
if consummated in accordance with the terms of this Agreement and the
Ancillary Documents (the "Ernst & Young Pooling Letter").
5.16 Pooling Accounting Treatment. Each of Parent and the Company agrees not
to take any action that would adversely affect the ability of Parent to treat
the Transactions as a pooling of interests under US GAAP.
5.17 Ancillary Documents/Reservation of Shares.
(a) Provided all other conditions of this Agreement have been satisfied or
waived, the Company, Giants Quebec and Amalgamation Sub shall, as promptly as
practicable thereafter, jointly file Articles to give effect to the
Amalgamation, such Articles to contain share conditions for the Continuing
Corporation substantially in the form of those contained in Appendix A to the
Amalgamation Agreement.
(b) Immediately after the Effective Time:
(i) Parent, Dutchco and the Continuing Corporation shall execute and
deliver a Support Agreement between Parent, Dutchco and the Continuing
Corporation containing the terms and conditions set forth in Exhibit D
hereto (the "Support Agreement"), together with such other terms and
conditions as may be agreed to by the parties hereto acting reasonably;
(ii) Parent, Dutchco, the Continuing Corporation and a Canadian trust
company to be selected by Parent shall execute and deliver a Voting and
Exchange Trust Agreement containing the terms and
28
conditions set forth in Exhibit E hereto (the "Voting and Exchange
Trust Agreement"), together with such other terms and conditions as may
be agreed to by the parties hereto acting reasonably; and
(iii) Parent shall file with the Secretary of State of the State of
Delaware a Certificate of Designation which shall be in substantially
the form set forth in Exhibit F hereto.
On and after the Effective Time, Parent and Dutchco shall duly and timely
perform all of their respective obligations expressed in this Agreement, the
Support Agreement and the Voting and Exchange Trust Agreement and the
Amalgamation Agreement, subject to the respective terms thereof. The
Amalgamation Agreement and the other documents referred to in this Section
5.17(b) are referred to herein as the "Ancillary Documents."
(c) On or prior to the Effective Time, Parent will reserve for issuance such
number of Parent Common Shares as shall be necessary to give effect to the
exchanges, conversions and assumptions of options contemplated hereby. On or
prior to the Effective Time, Parent and Dutchco shall enter into a stock
purchase agreement pursuant to which Dutchco will purchase from Parent the
Parent Common Shares to be delivered pursuant hereto and in connection with
the Transactions to holders of Company Common Shares at the Effective Time or
immediately thereafter and from time to time thereafter upon exercise of the
Exchangeable Shares.
5.18 Listing of Class B Shares, Class E Shares and Class F Shares. Unless
otherwise agreed to by the parties, the Company, Dutchco and Parent shall
cause the Class B Shares, Class E Shares and Class F Shares to be approved for
listing on The Winnipeg Stock Exchange or any other prescribed stock exchange
for the purposes of Section 115 of the Income Tax Act (Canada), effective as
of the time such Class B Shares, Class E Shares, Class F Shares are issued
pursuant to the Transactions.
5.19 Tax Elections.
(a) The Company understands that there may be elections under Sections 338(a)
and (g) of the Code for the Company and/or the Continuing Corporation.
(b) Eligible holders of Class B Shares who receive Exchangeable Shares on the
redemption of their Class B Shares shall be entitled to make an income tax
election pursuant to section 85 of the Income Tax Act (Canada) (and the
analogous provision of provincial income tax law) with respect to the transfer
of their Class B Shares to the Continuing Corporation by providing two signed
copies of the necessary election forms to the Continuing Corporation within
ninety (90) days following the Effective Time, duly completed with the details
of the number of shares transferred and the applicable agreed amounts for the
purposes of such elections. Thereafter, subject to the election forms
complying with the provisions of the Income Tax Act (Canada) (or applicable
provincial income tax law), the Parent and/or Dutchco will cause the forms to
be signed by the Continuing Corporation and returned to such holders of Class
B Shares (within 60 days after the receipt thereof) for filing with Revenue
Canada, Customs, Excise and Taxation (or the applicable provincial taxing
authority). With the exception of execution or causing execution of the
election by the Continuing Corporation, compliance with the requirements for a
valid election shall be the sole responsibility of the holder making the
election. For purposes of this provision an eligible holder is a holder who is
a Canadian resident for purposes of the Income Tax Act (Canada) other than a
person who is exempt from tax under the Income Tax Act (Canada) or which is a
partnership that owns such shares if one or more of its members would be
entitled to make such election if such member held such shares directly.
5.20 Board Candidate. Provided that a qualified person having relevant
expertise in the area of the Company's core business groups is identified by
Parent, Parent shall recommend such person to the Nominating Committee of
Parent's Board of Directors.
5.21 Issuance of Class D Shares. Immediately following the Transactions,
Parent and Dutchco shall cause the Continuing Corporation to issue the Class D
Shares (as defined in the Amalgamation Agreement) solely in exchange for
services.
29
ARTICLE VI
Conditions To The Transactions
6.1 Conditions to Obligation of Each Party to Effect the Transactions. The
respective obligations of each party to effect the Transactions shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Effectiveness of the Registration Statements. The Form S-4 shall have been
declared effective by the SEC under the Securities Act and shall cover the
Parent Common Shares, Exchangeable Shares, Units and Class B Shares issued at
or immediately after the Effective Time. The Form S-3 shall have been declared
effective by the SEC under the Securities Act and shall cover the Parent
Common Shares to be issued upon the exchange of Exchangeable Shares, if no
exemption from registration under the Securities Act is available for such
shares. No stop order suspending the effectiveness of the Form S-4 or Form S-
3, if any, shall have been issued by the SEC and no proceedings for that
purpose and no similar proceeding in respect of the Joint Proxy
Statement/Prospectus shall have been initiated or threatened by the SEC or any
provincial securities regulatory authority in Canada;
(b) Shareholder Approval. This Agreement and the Amalgamation shall have been
approved and adopted by the affirmative requisite vote of the shareholders of
the Company, and the Parent Stock Issuance shall have been approved and
adopted by the affirmative requisite vote of the stockholders of Parent;
(c) HSR Act. The waiting period applicable to the consummation of the
Transactions under the HSR Act shall have expired or been terminated;
(d) QSC, Etc. The Company, Parent and Dutchco each shall have filed all
notices and information (if any) required under (i) the Investment Canada Act
(Canada) and shall have received a notice (if required) from the responsible
Minister under the Investment Canada Act (Canada) that he is satisfied or
deemed to be satisfied that the transactions contemplated by this Agreement
and the Ancillary Documents are likely to be of net benefit to Canada, and
(ii) Part IX of the Competition Act (Canada) and the applicable waiting period
shall have expired. Parent and Company shall have obtained from the Quebec
Securities Commission and other relevant securities commissions and
authorities such orders or exemptions as may be required in order to permit
the resale at any time by holders of Parent Common Shares received from time
to time pursuant hereto on the Nasdaq National Market;
(e) No Injunctions or Restraints; Illegality. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Transactions shall be in
effect, nor shall any proceeding brought by any administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending; and there shall not be any
action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Transactions, which makes the
consummation of the Transactions illegal. If an injunction shall have been
issued, each party agrees to use its reasonable diligent efforts to have such
Injunction lifted;
(f) Nasdaq Listing. The Parent Common Shares issued or issuable in the
Transactions and any additional Parent Common Shares issued as a result of the
exercise of rights attaching to the Exchangeable Shares, Class B Shares and
Units shall have been approved for listing, subject to notice of issuance, on
the Nasdaq National Market;
(g) Tax Opinions. Parent and Dutchco and the Company shall each have received
substantially identical written opinions from their counsel, Xxxx & Berlis and
Stikeman, Elliott, respectively, in form and substance reasonably satisfactory
to them, to the effect that, provided that (i) the adjusted cost base to a
holder of Class B Shares that are redeemed by the Continuing Corporation for
Exchangeable Shares in connection with the Transactions exceeds the aggregate
of (A) the fair market value of the rights to be received by such holder under
the Voting and Exchange Trust Agreement in respect of such holder's
Exchangeable Shares and (B) any cash received by such holder in lieu of a
fraction of an Exchangeable Share, and (ii) the holder files the appropriate
elections with the relevant tax authorities within the required time such that
the holder's proceeds of disposition do not exceed the adjusted cost base to
the holder of such Class B Shares, such holder will not realize
30
a capital gain or a capital loss for purposes of the Income Tax Act (Canada)
on the Amalgamation or the redemption of the Class B Shares;
(h) Public Corporation. Upon the Amalgamation, the Continuing Corporation will
be a "public corporation" under the Income Tax Act (Canada);
(i) Affiliate Agreements. Parent and Dutchco shall have received from each
person who is identified in the Affiliate Letter as an "affiliate" of the
Company an Affiliate Agreement as set forth in Section 5.7, and each such
Affiliate Agreement shall be in full force and effect. The Company shall have
received from each person who Parent in good faith determines is an affiliate
of Parent, an Affiliate Agreement as set forth in Section 5.7, and each such
Affiliate Agreement shall be in full force and effect; and
(j) Pooling Letters. Each of the Company and Parent shall have received the
Xxxxxx Xxxxxxxx Pooling Letter and the Ernst & Young Pooling Letter,
respectively.
6.2 Additional Conditions to Obligations of Parent Group Members. The
obligations of each member of the Parent Group to effect the Transactions are
also subject to the following conditions:
(a) Representations and Warranties. The representations and warranties of the
Company contained in this Agreement shall be true and correct in all respects
on and as of the Effective Time, except (i) for changes contemplated by this
Agreement, (ii) for those representations and warranties which address matters
only as of a particular date (which shall remain true and correct as of such
date) or (iii) where the failure to be true and correct would not have and
could not reasonably be expected to have a Material Adverse Effect on the
Company, with the same force and effect as if made on and as of the Effective
Time, and Parent and Dutchco shall have received a certificate to such effect
signed on behalf of the Company by the President and Chief Financial Officer
of the Company;
(b) Agreements and Covenants. The Company shall have performed or complied in
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Effective
Time, and Parent and Dutchco shall have received a certificate to such effect
signed on behalf of the Company by the President and Chief Financial Officer
of the Company;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all material filings
required to be made, by the Company for the authorization, execution and
delivery of this Agreement and the Amalgamation Agreement and the consummation
by it of the transactions contemplated hereby and thereby shall have been
obtained and made by the Company; and
(d) Governmental Actions. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint provision, materially
limiting or restricting Parent's conduct or operation of the business of the
Company and its subsidiaries following the consummation of the Transactions
shall be in effect, nor shall any investigation or other inquiry that is
reasonably likely to result in any of the foregoing, nor shall any proceeding
brought by an administrative agency or commission or other governmental
entity, domestic or foreign, seeking the foregoing be pending or threatened.
6.3 Additional Conditions to Obligation of the Company. The obligation of
the Company to effect the Transactions is also subject to the following
conditions:
(a) Representations and Warranties. The representations and warranties of the
Parent Group contained in this Agreement shall be true and correct in all
respects on and as of the Effective Time, except (i) for changes contemplated
by this Agreement, (ii) for those representations and warranties which address
matters only as of a particular date (which shall remain true and correct as
of such date) or (iii) where the failure to be true and correct would not have
and could not reasonably be expected to have a Material Adverse Effect on the
Company, with the same force and effect as if made on and as of the Effective
Time, and the Company shall have received a certificate to such effect signed
by the President and Chief Executive Officer of Parent and of Dutchco;
(b) Agreements and Covenants. Each member of the Parent Group shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement and the Ancillary
31
Documents (to the extent they are parties thereto) to be performed or complied
with by it on or prior to the Effective Time, and the Company shall have
received a certificate to such effect signed by the President and Chief
Financial Officer of Parent and of Dutchco; and
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to
be made, by any member of the Parent Group for the authorization, execution
and delivery of this Agreement and the Ancillary Documents and the
consummation by them of the transactions contemplated hereby and thereby shall
have been obtained and made by such Parent Group member.
ARTICLE VII
Termination
7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, notwithstanding approval thereof by the shareholders of the
Company:
(a) by mutual written consent duly authorized by the Boards of Directors of
Parent, Dutchco and the Company; or
(b) by either Parent, Dutchco or the Company if the Transactions shall not
have been consummated by December 31, 1998 or such later date as may be agreed
upon in writing by the parties hereto (the "Final Date"); provided, however,
that the Final Date shall be extended on a day-for-day basis (i) for each day
that the SEC fails to indicate that it has no further comments with regard to
the Joint Proxy Statement beginning 40 days after the filing of such document
with the SEC, and (ii) for each day that any necessary waiting period under or
compliance with the HSR Act is not completed beginning 45 days after the
original filing of the required notice under the HSR Act by the last party to
make such filing; and provided, further, that, the right to terminate this
Agreement and the Amalgamation Agreement under this Section 7.1(b) shall not
be available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of or resulted in the failure of the Transactions
to be consummated on or before such date); or
(c) by either Parent, Dutchco or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a non-appealable final order, decree or ruling or
taken any other action, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Transactions (provided,
however, that no party which has not complied with its obligations under
Section 5.4 may terminate this Agreement pursuant to this Section 7.1(c)); or
(d) by either Parent, Dutchco or the Company, if, at either the Company
Shareholders' Meeting or the Parent Stockholders' Meeting (including any
adjournment or postponement thereof), the requisite affirmative vote of
stockholders shall not have been obtained (provided, however, that no party
which has not complied with its obligations under Section 5.1 or 5.2 may
terminate this Agreement pursuant to this Section 7.1(d)); or
(e) by Parent or Dutchco, if (i) the Board of Directors of the Company shall
withdraw, modify or change its recommendation of the Transactions referred to
in Section 5.1 in a manner adverse to Parent or Dutchco or shall have resolved
to do so; or (ii) the Board of Directors of the Company shall have recommended
to its stockholders, or publicly announced a "neutral" position with respect
to, an Acquisition Proposal (as defined in Section 4.2(a)), or shall have
failed to reject as inadequate, or shall have failed to reaffirm its
recommendation of this Agreement and the Transactions within ten business days
after the public announcement or commencement of such Acquisition Proposal; or
(f) by the Company, if the Board of Directors of the Parent or Dutchco shall
withdraw, modify or change its recommendation in favor of the Parent Stock
Issuance, or shall have resolved to do so; or
(g) by (i) the Company, upon a breach of any representation, warranty,
covenant or agreement on the part of any member of the Parent Group set forth
in this Agreement or the Amalgamation Agreement or if any representation or
warranty of the Parent Group shall have become untrue, such that the
conditions set forth in Section 6.3(a) or 6.3(b) would not be satisfied, or
(ii) Parent or Dutchco, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this Agreement
or if any representation
32
or warranty of the Company shall have become untrue, such that the conditions
set forth in Section 6.2(a) or 6.2(b) would not be satisfied (in either case,
a "Terminating Breach"), provided, however, that if such Terminating Breach is
curable prior to the expiration of 30 days from its occurrence (but in no
event later than December 31, 1998) by a Parent Group member or the Company,
as the case may be, through the exercise of its reasonable best efforts and
for so long as Parent, Dutchco and/or Amalgamation Sub or the Company, as the
case may be, continues to exercise such reasonable best efforts, neither the
Company nor Parent and/or Amalgamation Sub, respectively, may terminate this
Agreement under this Section 7.1(g) until the earlier of December 31, 1998 or
the expiration of such 30-day period without such Terminating Breach having
been cured; or
(h) by either Parent, Dutchco or the Company, if the Board of Directors of the
Company shall have recommended, resolved to accept, or accepted, a Superior
Proposal.
7.2 Effect of Termination. In the event of the termination of this Agreement
pursuant to Section 7.1, this Agreement shall forthwith become void and there
shall be no liability on the part of any party hereto or any of its
affiliates, directors, officers or stockholders except (i) as set forth in
Section 7.3 and the last sentence of Section 8.1 hereof, and (ii) nothing
herein shall relieve any party from liability for any willful breach hereof.
7.3 Fees and Expenses.
(a) Except as set forth in this Section 7.3, all fees and expenses incurred in
connection with this Agreement and the Transactions shall be paid by the party
incurring such expenses, whether or not the Transactions are consummated.
(b) Payments by Company to Dutchco.
(i) If there shall have occurred any of the following events:
(A) The Board of Directors of the Company shall have withheld,
withdrawn or modified in a manner adverse to Parent its
recommendation in favor of adoption and approval of this Agreement
and approval of the Transactions as permitted by Section 5.1, and at
or prior to the time of such action by the Company there shall not
have occurred a Material Adverse Effect on Parent, and there shall
have occurred a Superior Proposal which shall have been publicly
disclosed and not withdrawn;
(B) The Board of Directors of the Company shall have recommended a
Superior Proposal (other than Dutchco's) to the shareholders of the
Company;
(C) The Company shall have failed to convene the Company
Shareholder's Meeting by December 24, 1998 and there is an
Acquisition Proposal outstanding at such time; or
(D) The vote of the shareholders of Company approving and adopting
this Agreement and approving the consummation of the Amalgamation
shall not have been obtained by reason of the failure to obtain the
required vote upon a vote taken at a meeting of shareholders duly
convened therefor or any adjournment thereof (a "Company Negative
Vote"), and prior to such Company Negative Vote there shall have
occurred an Acquisition Proposal with respect to the Company which
shall have been publicly disclosed and not withdrawn;
then the Company shall pay to Dutchco (1) an amount equal to US $5,000,000
within one business day following the earlier to occur of (x) termination of
this Agreement pursuant to Section 7.1(b), Section 7.1(e) or Section 7.1(h),
and (y) a Company Negative Vote, plus (2) if any Acquisition Proposal is
consummated within 9 months after the time for such payment under clause (1),
an amount equal to US $15,000,000 less any amounts paid under the preceding
clause (1) within one business day following demand therefor after such
consummation.
(ii) If no payment shall have been required pursuant to Section
7.3(b)(i) and the Board of Directors of the Company shall have
withheld, withdrawn or modified in a manner adverse to Parent its
recommendation in favor of adoption and approval of this Agreement and
approval of the
33
Transactions as permitted by Section 5.1, and at or prior to the time
of such action by the Company there shall not have occurred a Material
Adverse Effect on Parent and there shall not be a Superior Proposal at
that time outstanding, then the Company shall pay to Dutchco US
$15,000,000 following the earlier to occur of (x) termination of this
Agreement pursuant to Section 7.1(e) or (y) a Company Negative Vote.
(iii) If no payment shall have been required pursuant to clauses
7.3(b)(i) or 7.3(b)(ii) and (A) there shall be a Company Negative Vote
and at or prior to the time of such Company Negative Vote, there shall
not have occurred a Material Adverse Effect with respect to Parent, or
(B) this Agreement is terminated by Dutchco pursuant to Section 7.1(g),
then Company shall pay to Dutchco an amount equal to US $5,000,000
within one business day following the earlier to occur of (A)
termination of this Agreement pursuant to Section 7.1(g), or (B) a
Company Negative Vote.
(c) Payments by Dutchco to the Company.
(i) If the Board of Directors of Parent shall have withheld,
withdrawn or adversely modified its recommendation in favor of the
Parent Stock Issuance as permitted by Section 5.1, and at or prior to
the time of such action by Parent there shall not have occurred a
Material Adverse Effect on the Company, then Dutchco shall pay US
$15,000,000 within one business day following the earlier of (A)
termination of this Agreement pursuant to Section 7.1(f) or (B) a
Parent Negative Vote (as defined below).
(ii) If (A) the vote of the stockholders of Parent approving the
Parent Stock Issuance shall not have been obtained by reason of the
failure to obtain the required vote upon a vote taken at a meeting of
stockholders duly convened therefor or any adjournment thereof (a
"Parent Negative Vote") and at or prior to the time of such Parent
Negative Vote, there shall not have occurred a Material Adverse Effect
with respect to the Company, (B) this Agreement is terminated by the
Company pursuant to Section 7.1(g), or (C) Parent shall have failed to
convene the Parent Stockholder's Meeting by December 24, 1998, then
Dutchco shall pay to the Company an amount equal to US $5,000,000
within one business day following the earlier to occur of (A)
termination of this Agreement pursuant to Section 7.1(d) or Section
7.1(g), or (B) a Parent Negative Vote.
(d) Payment of the amounts described in Section 7.3(b) and (c) above shall not
be in lieu of damages incurred by a party for breach of this Agreement.
(e) Any fees or expenses incurred by Parent shall be borne by Dutchco to the
extent agreed by Parent and Dutchco.
ARTICLE VIII
General Provisions
8.1 Effectiveness of Representations, Warranties and Agreements. Except as
otherwise provided in this Section 8.1, the representations, warranties and
agreements of each party hereto shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any other party
hereto, any person controlling any such party or any of their officers or
directors, whether prior to or after the execution of this Agreement. The
representations, warranties and agreements in this Agreement shall terminate
upon consummation of the Transactions or upon the termination of this
Agreement pursuant to Section 7.1, as the case may be, except that any
agreement contemplated by this Agreement which, by its terms, does not
terminate until a later date and the agreements set forth in Sections 5.5,
5.6, 5.9, the ultimate paragraph of Section 5.17(b) and Sections 5.17(c), 5.18
and 5.19 shall survive the consummation of the Transactions indefinitely and
those set forth in Section 7.3 and the final sentence of Section 5.3 shall
survive termination indefinitely. The Confidentiality Agreement(s) shall
survive termination of this Agreement as provided therein.
34
8.2 Notices. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered, if delivered personally, three days after being sent
by registered or certified mail (postage prepaid, return receipt requested),
one day after dispatch by recognized overnight courier (provided delivery is
confirmed by the courier), and upon transmission by telecopy, confirmed
received, to the parties at the following addresses (or at such other address
for a party as shall be specified by like changes of address shall be
effective upon receipt) or sent by electronic transmission, with confirmation
received, to the telecopy number specified below:
(a) If to Parent, Dutchco, Giants Quebec, ACI or Amalgamation Sub:
Autodesk, Inc.
00000 Xxxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000-0000
Fax No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
Vice President Business Development, General Counsel and
Secretary
With a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx
and
Xxxx & Berlis
BCE Place
Suite 1800, Box 754
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Fax No.: (000) 000-0000
Attention: Xxx X. Xxxxxx
(b) If to the Company:
Discreet Logic Inc.
00 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxx Xxxxxx X0X 0X0
Fax No.: (000) 000-0000
Attention: Xxxxxxxx Xxxxxxxxx
Executive Vice President, Chief Financial Officer, Treasurer
and Secretary
With a copy to:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
High Street Tower
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxx
and to:
Stikeman, Xxxxxxx
1155 Xxxx Xxxxxxxx Boulevard West
Suite 4000
Xxxxxxxx, Xxxxxx X0X 0X0
Fax No.: (000) 000-0000
Attention: Xxxxxxxxx Xxxxxxxxxxx
35
8.3 Certain Definitions. For purposes of this Agreement, the term:
(a) "affiliates" means a person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common
control with, the first-mentioned person; including, without limitation,
any partnership or joint venture in which the Company (either alone, or
through or together with any other subsidiary) has, directly or indirectly,
an interest of 10 percent or more;
(b) "business day" means any day other than a Saturday, Sunday or a day
when banks are not open for business in either of Xxx Xxxxxxxxx, Xxxxxxxxxx
xxx Xxxxxxxx, Xxxxxx;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of stock,
as trustee or executor, by contract or credit arrangement or otherwise;
(d) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in
Section 13(d)(3) of the Exchange Act); and
(e) "subsidiary" or "subsidiaries" of the Company, the Continuing
Corporation, Parent or any other person means any corporation, partnership,
joint venture or other legal entity of which the Company, the Continuing
Corporation, Parent or such other person, as the case may be (either alone
or through or together with any other subsidiary), owns, directly or
indirectly, more than 50% of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other
legal entity.
8.4 Amendment. This Agreement may be amended by the parties hereto by action
taken by or on behalf of their respective Boards of Directors at any time
prior to the Effective Time; provided, however, that, after approval of the
Transactions by the shareholders of the Company, no amendment may be made
which by law requires further approval by such shareholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
8.5 Waiver. At any time prior to the Effective Time, any party hereto may
with respect to any other party hereto (a) extend the time for the performance
of any of the obligations or other acts, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if
set forth in an instrument in writing signed by the party or parties to be
bound thereby.
8.6 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
8.7 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
8.8 Entire Agreement. This Agreement, together with the Amalgamation
Agreement and the Confidentiality Agreement, constitutes the entire agreement
and supersedes all prior agreements and undertakings (other than the
Amalgamation Agreement and the Confidentiality Agreement), both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof and, except as otherwise expressly provided herein, are not intended to
confer upon any other person any rights or remedies hereunder.
8.9 Assignment; Amalgamation Sub/Dutchco.
(a) This Agreement shall not be assigned by operation of law or otherwise,
except that any member of the Parent Group may assign all or any of its
respective rights hereunder to any subsidiary of Parent provided
36
that no such assignment shall relieve the assigning party of its obligations
hereunder. The Company agrees that prior to the Effective Time, it may amend
the Amalgamation Agreement to provide for the amalgamation of one or more of
Parent's Canadian subsidiaries with the Company; provided, however, that, such
amalgamation does not, in any respect adversely affect the ability of the
parties to complete the transaction contemplated hereby or, affect the
economic terms of the transactions contemplated hereby to the holders of the
Company Common Shares, including, without limitation, the tax treatment to
holders who elect to receive Exchangeable Shares.
(b) Parent undertakes to the Company that Parent shall cause Dutchco to
perform in a due and timely manner all of its obligations hereunder and to be
performed by it under the Ancillary Documents and in connection with the
implementation of the Transactions and that Parent shall cause Dutchco to
refrain from taking or omitting to take any action which would have an adverse
economic effect on the implementation of the Transactions as contemplated
herein.
8.10 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, other than Section 5.8 (which is intended to be for the benefit of
the Indemnified Parties and may be enforced by such Indemnified Parties).
8.11 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of any party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude other or further
exercise thereof or of any other right. All rights and remedies existing under
this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
8.12 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO
CONTRACTS EXECUTED AND FULLY PERFORMED WITHIN THE STATE OF CALIFORNIA, EXCEPT
TO THE EXTENT MANDATORILY GOVERNED BY QUEBEC LAW.
8.13 Choice of Language. The parties hereto confirm that it is their wish
that this Agreement, as well as all other documents related hereto, including
legal notices, have been and shall be drawn up in the English language only.
Les parties si-dessous confirment leur xxxxx que cet accord ainsi que tous les
documents, y compris tous avis qui s'y rattachent, soient rediges en langue
Anglaise.
8.14 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
8.15 Guarantee. Parent and Dutchco hereby unconditionally and irrevocably
guarantee the full and punctual performance of the Continuing Corporation's
obligations hereunder and pursuant to the Amalgamation Agreement.
[Remainder of Page Intentionally Left Blank]
37
In Witness Whereof, Parent, Dutchco, Amalgamation Sub, Giants Quebec, ACI and
the Company have caused this Agreement to be executed as of the date first
written above by their respective officers thereunto duly authorized.
"Parent"
Autodesk, Inc.
/s/ Xxxxx X. Xxxxx
By:__________________________________
Xxxxx X. Xxxxx
Chief Executive Officer
"Dutchco"
Autodesk Development B.V.
/s/ Xxxxxxx X. Xxxxxx
By:__________________________________
Xxxxxxx X. Xxxxxx
Directeur
"Amalgamation Sub"
0000-0000 Xxxxxx Inc.
/s/ Xxxxxx X. Xxxxxxxx
By:__________________________________
Xxxxxx X. Xxxxxxxx
Secretary
"ACI"
Autodesk Canada Inc.
/s/ Xxxxx X. Xxxxx
By:__________________________________
Xxxxx X. Xxxxx
President
38
"Giants Quebec"
9066-9854 Quebec Inc.
/s/ Xxxxxx X. Xxxxxxxx
By:__________________________________
Xxxxxx X. Xxxxxxxx
Secretary
"Company"
Discreet Logic Inc.
/s/ Xxxxxxxx Xxxxxxxxx
By:__________________________________
Xxxxxxxx Xxxxxxxxx
Executive Vice President and
Chief Financial Officer
39
AMENDMENT TO SECOND AMENDED AND RESTATED AGREEMENT AND PLAN OF ACQUISITION AND
AMALGAMATION
This Amendment (the "Amendment") to the Second Amended and Restated
Agreement and Plan of Acquisition and Amalgamation by and among Autodesk, Inc.
("Parent"), Autodesk Development B.V. ("Dutchco"), 0000-0000 Xxxxxx Inc.
("Amalgamation Sub"), Autodesk Canada Inc. ("ACI"), 0000-0000 Xxxxxx Inc.
("Giants Quebec") and Discreet Logic Inc. (the "Company") dated as of November
18, 1998 (the "Second Amended and Restated Agreement"), is entered into by and
among each of the parties to the Second Amended and Restated Agreement
effective as of December 18, 1998.
RECITALS
Whereas, Parent, Dutchco, Amalgamation Sub, ACI, Giants Quebec and the
Company entered into an Agreement and Plan of Acquisition and Arrangement
dated as of August 20, 1998, which was subsequently amended and restated in
its entirety by the parties in the Amended and Restated Agreement and Plan of
Acquisition and Amalgamation dated as of September 23, 1998, and again amended
and restated in its entirety in the Second Amended and Restated Agreement;
Whereas, the Second Amended and Restated Agreement provides, among other
things, that upon the terms and subject to the conditions thereof, immediately
following the amalgamation (the "Amalgamation") of Amalgamation Sub, Giants
Quebec (to which ACI will assign, prior to the Amalgamation, substantially all
its assets) and the Company, whereupon each outstanding Company Common Share
shall be converted into one Class B Share of the Continuing Corporation
resulting from the Amalgamation, the Class B Shares of the Continuing
Corporation automatically will be, based on the prior election of their
holder, either (i) redeemed by the Continuing Corporation for 0.48
exchangeable shares in the share capital of the Continuing Corporation,
subject to proration in certain instances, or (ii) converted into units
comprised of one Class E Share and one Class F Share of the Continuing
Corporation, which units will be acquired by Dutchco in exchange for 0.48
shares of Parent Common Stock; and
Whereas, the parties now desire to amend Article VII of the Second Amended
and Restated Agreement to effect certain changes to the termination provisions
thereof;
AGREEMENT
Now, therefore, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. Termination. Article VII of the Second Amended and Restated Agreement is
hereby amended as follows:
(a) Section 7.1(g) shall be amended such that each reference to "December 31,
1998" shall be replaced with a reference to "the Final Date".
(b) Section 7.3(b)(i)(C) shall be amended such that the reference to "December
24, 1998" shall be replaced with a reference to "February 23, 1999".
(c) Section 7.3(c)(ii) shall be amended such that the reference to "December
24, 1998" shall be replaced with a reference to "February 23, 1999".
40
2. General.
(a) All other terms and conditions of the Second Amended and Restated
Agreement, including without limitation the representations, warranties,
covenants and agreements of the respective parties, shall remain in full force
and effect without other or further amendment or modification, fully applying
to the Second Amended and Restated Agreement as amended by this Amendment.
(b) Each capitalized term used in this Amendment but not defined herein shall
have the meaning ascribed to it in the Second Amended and Restated Agreement.
All section references in this Agreement are to the Second Amended and
Restated Agreement.
(c)This Amendment may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which, when taken together, shall
constitute one and the same instrument.
[Remainder of Page Intentionally Left Blank]
41
In witness whereof, the parties hereto have caused this Amendment to be
executed by their respective duly authorized officers as of the date first
above written.
"Parent"
Autodesk, Inc.
/s/ Xxxxx X. Xxxxx
By:__________________________________
Xxxxx X. Xxxxx
Chief Executive Officer
"Dutchco"
Autodesk Development B.V.
/s/ Xxxxxxx X. Xxxxxx
By:__________________________________
Xxxxxxx X. Xxxxxx
Directeur
"Amalgamation Sub"
0000-0000 Xxxxxx Inc.
/s/ Xxxxxx X. Xxxxxxxx
By:__________________________________
Xxxxxx X. Xxxxxxxx
Secretary
"ACI"
Autodesk Canada Inc.
/s/ Xxxxx X. Xxxxx
By:__________________________________
Xxxxx X. Xxxxx
President
42
"Giants Quebec"
9066-9854 Quebec Inc.
/s/ Xxxxxx X. Xxxxxxxx
By:__________________________________
Xxxxxx X. Xxxxxxxx
Secretary
"Company"
Discreet Logic Inc.
/s/ Xxxxxxxx Xxxxxxxxx
By:__________________________________
Xxxxxxxx Xxxxxxxxx
Executive Vice President and
Chief Financial Officer
43
AMENDMENT NO. 2 TO SECOND AMENDED AND RESTATED AGREEMENT AND PLAN OF
ACQUISITION AND AMALGAMATION
This Amendment No. 2 (the "Second Amendment") to the Second Amended and
Restated Agreement and Plan of Acquisition and Amalgamation by and among
Autodesk, Inc. ("Parent"), Autodesk Development B.V. ("Dutchco"), 0000-0000
Xxxxxx Inc. ("Amalgamation Sub"), Autodesk Canada Inc. ("ACI"), 0000-0000
Xxxxxx Inc ("Giants Quebec") and Discreet Logic Inc (the "Company") dated as
of November 18, 1998 (the "Second Amended and Restated Agreement"), as amended
by the Amendment dated December 18, 1998 (the "First Amendment"), is entered
into by and among each of the parties to the Second Amended and Restated
Agreement effective as of January 18, 1999.
RECITALS
Whereas, Parent, Dutchco, Amalgamation Sub, ACI, Giants Quebec and the
Company entered into an Agreement and Plan of Acquisition and Arrangement
dated as of August 20, 1998, which was subsequently amended and restated in
its entirety by the parties in the Amended and Restated Agreement and Plan of
Acquisition and Amalgamation dated as of September 23, 1998, and again amended
and restated in its entirety in the Second Amended and Restated Agreement;
Whereas, the Second Amended and Restated Agreement provides, among other
things, that upon the terms and subject to the conditions thereof, immediately
following the amalgamation (the "Amalgamation") of Amalgamation Sub, Giants
Quebec (to which ACI will assign, prior to the Amalgamation, substantially all
its assets) and the Company, whereupon each outstanding Company Common Share
shall be converted into one Class B Share of the Continuing Corporation
resulting from the Amalgamation, the Class B Shares of the Continuing
Corporation automatically will be, based on the prior election of their
holder, either (i) redeemed by the Continuing Corporation for 0.48
exchangeable shares in the share capital of the Continuing Corporation,
subject to proration in certain instances, or (ii) converted into units
comprised of one Class E Share and one Class F Share of the Continuing
Corporation, which units will be acquired by Dutchco in exchange for 0.48
shares of Parent Common Stock; and
Whereas, the parties now desire to amend the Exchange Ratio set forth in the
Second Amended and Restated Agreement, and to make certain representations and
warranties to each other as of the date hereof;
AGREEMENT
Now, Therefore, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. Exchange Ratio. The recitals to the Second Amended and Restated Agreement
are hereby amended such that all occurrences in the recitals of the term
"0.48" shall be replaced in each case with "0.33" and the term "Exchange
Ratio" shall be defined as 0.33.
2. Representations and Warranties of the Company. The Company hereby
represents to each member of the Parent Group as of the date hereof, subject
to the Company Disclosure Schedule dated as of the date of the Original
Agreement:
(a) Authority. The Company has all necessary corporate power and authority
to execute and deliver this Second Amendment and to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution and delivery of this Second Amendment by the Company and the
consummation by the Company of the transactions contemplated thereby have been
duly and validly authorized
44
by all necessary corporate action and no other corporate proceedings on the
part of the Company are necessary to authorize this Second Amendment or to
consummate the Transactions, other than the approval and adoption of the
Second Amended and Restated Agreement, as amended, and confirmation of by-law
No. 1998-1 approving the Amalgamation by the holders of at least sixty-six and
two-thirds percent (66 2/3%) of the outstanding Company Shares who are
permitted to, and who, vote at the Company Shareholders' Meeting in accordance
with the Quebec Act. The Board of Directors of the Company has determined that
it is advisable and in the best interests of the Company's shareholders for
the Company to enter into a business combination with Parent upon the terms
and subject to the conditions of the Second Amended and Restated Agreement, as
amended, and to recommend that the shareholders of the Company approve same.
This Second Amendment has been duly and validly executed and delivered by the
Company, and assuming the due authorization, execution and delivery hereof by
each member of the Parent Group, constitutes a legal, valid and binding
obligation of the Company.
(b) No Conflict. The execution and delivery of this Second Amendment by
the Company does not, and the performance of the Company's obligations under
this Second Amendment will not, (i) conflict with or violate the Articles of
Incorporation or By-Laws or equivalent organizational documents of the Company
or any of its subsidiaries, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the Company or any of its
subsidiaries or by which its or any of their respective properties is bound or
affected, or (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default), or
impair the Company's or any of its subsidiaries' rights or, to the Company's
knowledge, alter the rights or obligations of any third party under, or give
to others any rights of termination, amendment, acceleration or cancellation
of any Covered Agreement, or result in the creation of a lien or encumbrance
on any of the properties or assets of the Company or any of its subsidiaries
pursuant to any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any
of its subsidiaries or its or any of their respective properties is bound or
affected, except in the case of (ii) and (iii) for any such conflicts,
violations, breaches, defaults, terminations, cancellations or accelerations
which would not have a Material Adverse Effect.
(c) Required Filings. The execution and delivery of this Second Amendment
by the Company does not, and the performance of the transactions contemplated
hereby and by the Second Amended and Restated Agreement, as amended, will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or
foreign, to be made or obtained by the Company, except (i) for applicable
requirements, if any, of the Securities Act, the Exchange Act, Blue Sky Laws,
the pre-merger notification requirements of the HSR Act, the QSA and other
relevant Canadian securities statutes, filing with Industry Canada under the
Investment Canada Act (Canada), filing under the Competition Act (Canada) and
the filing and recordation of appropriate documents as required by the Quebec
Act in connection with the Amalgamation and (ii) where the failure to obtain
such consents, approvals, authorizations or permits, or to make such filings
or notifications, would not prevent or materially delay consummation of the
Amalgamation, or otherwise prevent or materially delay the Company from
performing its obligations under this Second Amendment or the Second Amended
and Restated Agreement, as amended, or would not otherwise have a Material
Adverse Effect.
(d) Opinion of Financial Advisor. The Company has received an oral opinion
from its financial advisor, Xxxxx Xxxxx Xxxxxx & Company (to be subsequently
confirmed in writing), to the effect that, as of the date hereof, the
consideration to be received by the shareholders of the Company pursuant to
the Second Amendment and the Second Amended and Restated Agreement, as
amended, is fair to such shareholders from a financial point of view.
3. Representations and Warranties of the Parent Group. Each member of the
Parent Group hereby represents to the Company as of the date hereof, subject
to the Parent Disclosure Schedule dated as of the date of the Original
Agreement:
(a) Authority. Each member of the Parent Group has all necessary corporate
power and authority to execute and deliver this Second Amendment and to
perform its obligations hereunder and to consummate
45
the transactions contemplated hereby. The execution and delivery of this
Second Amendment by each member of the Parent Group and the consummation by
each member of the Parent Group of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the part
of each member of the Parent Group, and no other corporate proceedings on the
part of any such member are necessary to authorize this Agreement or to
consummate the Transactions (other than the approval of the Parent Stock
Issuance and/or the adoption of the Second Amendment and Restated Agreement,
as amended, and the transactions contemplated thereby by the requisite vote of
the stockholders of Parent, to the extent necessary). The Boards of Directors
of Parent and Dutchco have determined that it is advisable and in the best
interest of Parent's stockholders and Dutchco's stockholder for Parent and
Dutchco to enter into a business combination with the Company upon the terms
and subject to the conditions of the Second Amended and Restated Agreement, as
amended (including by this Second Amendment) and to recommend that the
stockholders of Parent approve same. This Second Amendment has been duly and
validly executed and delivered by each member of the Parent Group and,
assuming the due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of each member of the Parent
Group.
(b) No Conflict. The execution and delivery of this Second Amendment by
each member of the Parent Group do not, and the performance of the Company's
obligations under this Second Amendment by each member of the Parent Group
will not, (i) conflict with or violate the Certificate of Incorporation or By-
Laws (or similar charter documents, as the case may be) of any member of the
Parent Group, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or any of its subsidiaries or by which
its or their respective properties are bound or affected, or (iii) result in
any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or impair Parent's or any of
its subsidiaries' rights or alter the rights or obligations of any third party
under, or to the knowledge of Parent, give to others any rights of
termination, amendment, acceleration or cancellation of, any material contract
or result in the creation of a lien or encumbrance on any of the properties or
assets of Parent or any of its subsidiaries pursuant to any material note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent or any of its
subsidiaries is a party or by which Parent or any of its subsidiaries or its
or any of their respective properties are bound or affected, except in the
case of (ii) and (iii) for any such breaches, defaults or other occurrences
that would not have a Material Adverse Effect.
(c) Required Filings. The execution and delivery of this Second Amendment
by each member of the Parent Group does not, and the performance of the
transactions contemplated hereby and by the Second Amended and Restated
Agreement, as amended will not, require any material consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign, except (i) for
applicable requirements, if any, of the Securities Act, the Exchange Act, the
Blue Sky Laws, the pre-merger notification requirements of the HSR Act,
relevant Canadian securities statutes, filing with Industry Canada under the
Investment Canada Act (Canada), filing under the Competition Act (Canada) and
the filing and recordation of appropriate merger or other documents as
required by the Quebec Act and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or materially delay consummation of the
Amalgamation, or otherwise prevent any member of the Parent Group from
performing its respective obligations under this Second Amendment, or the
Second Amended and Restated Agreement, as amended, and would not have a
Material Adverse Effect.
(d) Board Approval. The Board of Directors of Parent has, as of the date
of this Second Amendment, determined to recommend that the stockholders of
Parent approve the Parent Stock Issuance.
4. Termination. Article VII of the Second Amended and Restated Agreement is
hereby amended as follows:
(a) Section 7.3(b)(i)(C) shall be amended such that the reference to
"February 23, 1999" shall be replaced with a reference to "March 23, 1999".
(b) Section 7.3(c)(ii) shall be amended such that the reference to
"February 23, 1999" shall be replaced with a reference to "March 23, 1999".
46
5. General.
(a) All other terms and conditions of the Second Amended and Restated
Agreement, as amended by the First Amendment, including without limitation the
representations, warranties, covenants and agreements of the respective
parties, shall remain in full force and effect without other or further
amendment or modification, fully applying to the Second Amended and Restated
Agreement as amended by the First Amendment and this Second Amendment.
(b) Each capitalized term used in this Second Amendment but not defined
herein shall have the meaning ascribed to it in the Second Amended and
Restated Agreement. All section references in this Agreement are to the Second
Amended and Restated Agreement.
(c) This Second Amendment may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which, when taken together,
shall constitute one and the same instrument.
[Remainder of Page Intentionally Left Blank]
47
In witness whereof, the parties hereto have caused this Amendment to be
executed by their respective duly authorized officers as of the date first
above written.
"Parent"
Autodesk, Inc.
/s/ Xxxxx X. Xxxxx
By:__________________________________
Xxxxx X. Xxxxx
Chief Executive Officer
"Dutchco"
Autodesk Development B.V.
/s/ Xxxxxxx X. Xxxxxx
By:__________________________________
Xxxxxxx X. Xxxxxx
Directeur
"Amalgamation Sub"
0000-0000 Xxxxxx Inc.
/s/ Xxxxxx X. Xxxxxxxx
By:__________________________________
Xxxxxx X. Xxxxxxxx
Secretary
"ACI"
Autodesk Canada Inc.
/s/ Xxxxx X. Xxxxx
By:__________________________________
Xxxxx X. Xxxxx
President
48
"Giants Quebec"
9066-9854 Quebec Inc.
/s/ Xxxxxx X. Xxxxxxxx
By:__________________________________
Xxxxxx X. Xxxxxxxx
Secretary
"Company"
Discreet Logic Inc.
/s/ Xxxxxxxx Xxxxxxxxx
By:__________________________________
Xxxxxxxx Xxxxxxxxx
Executive Vice President and
Chief Financial Officer
49
