Arrangement Agreement dated January 23, 2009

 

(e)

No certificates or scrip evidencing fractional shares of Parent Common Stock shall be issued upon the surrender for exchange of Certificates (after taking into account all Certificates delivered by such holder) and such fractional share interests will not entitle the owner thereof to vote or to any rights of a stockholder of Parent. Company Shareholders who would otherwise have been entitled to receive decimal five (0.5) or more of a share of Parent Common Stock pursuant to the Arrangement shall receive a number of shares of Parent Common Stock rounded up to the next whole number of shares of Parent Common Stock.  Company Shareholders who would otherwise have been entitled to receive less than decimal five (0.5) of a share of Parent Common Stock pursuant to the Arrangement shall receive a number of shares of Parent Common Stock rounded down to the next whole number of shares of Parent Common Stock.  For greater certainty, Company Shareholders shall not be entitled to receive a cash payment in lieu of a fractional share of Parent Common Stock.

 

(a)

Before the Effective Date, the Company Board (or, if appropriate, any committee of the Company Board administering the Company Stock Option Plans) shall adopt such resolutions or take such other actions as may be required to effect the following:

 

(i)

in accordance with the provisions of the Company Stock Option Plans, declare that all of the unvested Company Stock Options shall vest and specify a date prior to the Effective Date before which all Company Stock Options must be exercised, failing which any unexercised Company Stock Options shall terminate at the Effective Time; and

 

(ii)

make such other changes to the Company Stock Option Plans as Parent and the Company may agree are appropriate to give effect to the Arrangement.

 

(b)

Before the Effective Date, the Company Board (or, if appropriate, any committee of the Company Board administering the Company RSU Plan) shall adopt such resolutions or take such other actions as may be required to effect the following:

 

(i)

amend the terms of all outstanding unvested Company RSUs, as necessary and as permitted by the Company RSU Plan, to provide that, at the Effective Time, the Company RSUs outstanding immediately prior to the Effective Time (the “Adjusted RSUs”) shall from and after the Effective Time be redeemable in accordance with the terms of the Company RSU Plan for such number of shares of Parent Common Stock as equals (i) the number of shares of Company Common Stock for which the Company RSUs, if vested, would have been redeemable immediately prior to the Effective Time, multiplied by (ii) the Exchange Ratio; and

 

(ii)

make such other changes to the Company RSU Plan as Parent and the Company may agree are appropriate to give effect to the Arrangement.

 

(c)

At the Effective Time, by virtue of the Arrangement and without the need of any further corporate action, Parent shall assume the Company RSU Plan, with the result that all obligations of the Company under the Company RSU Plan, including with respect to unvested Company RSUs outstanding at the Effective Time (adjusted pursuant to Section 2.10(b)), shall be obligations of Parent following the Effective Time.

 

(d)

As soon as practicable after the Effective Time, Parent shall prepare and file with the SEC a registration statement on Form S-8 (or another appropriate form) registering a number of shares of Parent Common Stock equal to the number of shares of Parent Common Stock issuable in connection with the redemption of the Adjusted RSUs.  Such registration statement shall be kept effective (and the current status of the prospectus or prospectuses required thereby shall be maintained) at least for so long as any Adjusted RSUs or any unsettled awards granted under the Company RSU Plan after the Effective Time may remain outstanding.

 

(a)

The execution and delivery of the Transaction Documents by the Company do not, and the performance by the Company of its obligations thereunder, will not, (i) result in a breach of or conflict with or violate the certificate of incorporation or other constating documents or by-laws or any equivalent organizational documents, each as amended to date, of the Company or any Company Subsidiary, (ii) result in a breach of, constitute a default under, violate or conflict with any material term or provision of any order of any court, Governmental Authority or any Law applicable to the Company or any Company Subsidiary or by which any property or asset of the Company or any Company Subsidiary is bound or affected, (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 give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien or other encumbrance on any property or asset of the Company or any Company Subsidiary pursuant to, or result in any payment under, any Material Contract (as defined in Section 3.11) or Company Permit or, except as set forth in Schedule 3.04(a), require the Company or any Company Subsidiary, under the terms of any agreement, contract, arrangement or understanding to which it is a party or by which it or any property or asset of the Company or Company Subsidiary is bound, to obtain the consent or approval of, or provide notice to, any other party to such agreement, contract, arrangement or understanding; or (iv) give rise to any Liability not disclosed in Schedule 3.04(a).

 

(b)

The execution and delivery of the Transaction Documents by the Company do not, and the performance by the Company of its obligations hereunder and thereunder, will not, require any consent, approval, authorization or permit of, or filing with or notification to any Governmental Authority, except (A) for applicable requirements, if any, of Canadian Securities Laws, the Investment Canada Act and filing of appropriate documents as required by the OBCA, and (B) as contemplated by Section 2.01, Section 2.02 and the Plan of Arrangement.

 

(a)

The Company is a “reporting issuer” or has equivalent status in each of the provinces of Canada.  The Company Common Stock is listed on the TSX.  Other than as disclosed in Schedule 3.06(a), the Company has not been notified of any default or alleged default by the Company of any material requirement of the TSX or applicable Canadian Securities Laws.  No Canadian Securities Regulators have issued any order preventing or suspending trading of any securities of the Company and the Company is not in material default of any requirement of applicable Canadian Securities Laws.

 

(b)

At the time that they were filed or, if amended, as of the date of such amendment, the Company Reports complied in all material respects, and each report subsequently filed by the Company with the Canadian Securities Regulators will, on the date filed, comply in all material respects, with all applicable requirements of Canadian Securities Legislation as in effect on the date so filed.  The Company Reports did not or will not, at the time they were or will be filed, or, if amended, as of the date of such amendment, contain any Misrepresentation.

 

(c)

Neither the Company nor any of the Company Subsidiaries has filed with the SEC any registration statement under the Securities Act or is currently registered, or has prior to the date hereof been registered, under the Exchange Act.  The Company is not currently required, and, with the exception of notices filed with the SEC on Form D pursuant to Rule 503 of Regulation D under the Securities Act and similar notices filed with certain state securities regulatory authorities as permitted by section 18 of the Securities Act or in connection with offerings of securities effected pursuant to exemptions from applicable state registration requirements, has not prior to the date hereof been required, to file any form, report or other document with the U.S. Securities Regulators.  No Company Subsidiary is required to file any form, report or other document with the Canadian Securities Regulators or the U.S. Securities Regulators.  Except as set out in Schedule 3.06(c), the Company has not received any non-routine inquires or interrogatories, whether in writing or otherwise, from any Canadian Securities Regulators, the TSX or any other Governmental Authority, or, to the knowledge of the Company, been the subject of any investigation, audit, review or hearing by or in front of such Persons, in each case with respect to any of the Company Reports or any of the information contained therein.

 

(d)

Each of the consolidated financial statements contained in the Company Reports, including, for greater certainty, the Financial Statements, and including, in each case, any notes thereto, have been and, as regards such financial statements prepared after the date hereof, will be, prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated and each fairly presents or will fairly present, in all material respects, the consolidated financial position, results of operations and cash flows of the Company and its consolidated Company Subsidiaries as at the respective dates thereof and for the respective periods indicated therein (subject, in the case of unaudited statements, to normal and recurring year-end adjustments) and reflects appropriate and adequate reserves for contingent Liabilities in accordance with GAAP.

 

(e)

Except as and to the extent set forth in the Company Reports, neither the Company nor any Company Subsidiary has any Liability, except for (i) Liabilities incurred in the ordinary course of Business consistent with past practice since September 30, 2008, or (ii) Liabilities for fees, costs and expenses incurred in connection with the Transactions.

 

(f)

The Company and the Company Subsidiaries have devised and maintain a system of internal accounting controls and information systems sufficient to provide reasonable assurances that (x) transactions are executed in accordance with management’s general or specific authorization, and (y) transactions are recorded as necessary (A) to permit preparation of financial statements in conformity with GAAP, and (B) to maintain accountability for assets, in all material respects.

 

(a)

The Circular and the other documents required to be filed by the Company with the Canadian Securities Regulators in connection with the Transactions will comply as to form in all material respects with the requirements of the Canadian Securities Laws and the OBCA, as the case may be.  Each of the Circular and the other documents required to be filed by the Company with the Canadian Securities Regulators in connection with the Transactions and any of the information supplied or to be supplied by the Company or the Company Subsidiaries or their representatives for inclusion or incorporation by reference in the Circular will not, on the date of its filing or mailing, on the date of the Company Meeting or at the Effective Date, 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.

 

(b)

Notwithstanding the foregoing provisions of this Section 3.07, no representation or warranty is made by the Company with respect to statements made in the Circular based on information supplied by or on behalf of the Purchaser Parties for inclusion therein, unless such information shall have been modified in any way, or reproduced in any manner other than that provided by a Purchaser Party, without its prior written consent.

 

(a)

The operations of the Company and the Company Subsidiaries have been conducted in compliance with all Laws in each jurisdiction in which it or they carry on business or hold a Company Permit, except where the failure to so comply has not resulted in a Company Material Adverse Effect.  The Company holds all necessary Company Permits and all such Company Permits are in full force and effect.

 

(b)

Except as set out on Schedule 3.08(b), neither the Company nor any of the Company Subsidiaries is in default, in any material respect, with respect to any Law or Company Permit or has received written notice of any possible violation (or of any investigation, inspection, audit, or other proceeding by any Governmental Authority involving allegations of any violation) of any Law or Company Permit, and, to the knowledge of the Company, no investigation, inspection, audit or other proceeding by any Governmental Authority involving allegations of any violation of any Law or Company Permit is threatened or contemplated.

 

(c)

Each of the Company and the Company Subsidiaries has, and to the knowledge of the Company all employees or agents of each of the Company and the Company Subsidiaries have, all material licenses, franchises, permits, authorizations, certifications, easements, variances, exceptions, consents and orders, including approvals from all Governmental Authorities (“Approvals”) required for the conduct of the business of each of the Company and the Company Subsidiaries and the occupancy and operation, for its present uses, of the real and personal property which each of the Company and the Company Subsidiaries owns or leases and neither the Company nor any of the Company Subsidiaries is in material violation of any such Approval or any terms or conditions thereof.

 

(d)

All Approvals for the Company and each of the Company Subsidiaries are, in all material respects, in full force and effect, have been issued to and fully paid for by the holder thereof and, to the knowledge of the Company, no suspension or cancellation thereof has been threatened.

 

(e)

No Approvals for the Company and each of the Company Subsidiaries, nor any Company Permits, will terminate or cease to be valid and in effect by reason of the Transactions.

 

(a)

Schedule 3.11(a)(A) contains a complete list of all oral contracts or agreements to which the Company or any Company Subsidiary is a party involving a commitment in excess of CAD$15,000. Schedule 3.11(a)(B) contains a complete list of all written contracts and agreements to which the Company or any Company Subsidiary is a party:  (i) each contract, agreement or account involving aggregate annual payments to the Company or any Company Subsidiary of more than CAD$10.0 million, or aggregate annual payments by the Company or any Company Subsidiary of more than CAD$5.0 million, (ii) all material contracts and agreements with any Governmental Authority, (iii) all contracts and agreements that (A) limit or purport to limit the ability of the Company or any Company Subsidiary or, to the Company’s knowledge, any key executives of the Company or any Company Subsidiary, to compete in any line of business or with any Person or in any geographic area or during any period of time or otherwise restricts the development, manufacture, marketing, distribution or sale of any products or services by the Company or any Company Subsidiary, (B) require the Company or any Company Subsidiary to use any supplier or third party for all or substantially all of the requirements or needs of the Company or a Company Subsidiary and that provide for services of more than CAD$5.0 million, or aggregate annual payments by the Company or any Company Subsidiary of more than CAD$5.0 million, (C) limit or purport to limit in any material respect the ability of the Company or any Company Subsidiary to solicit any customers or clients of the other parties thereto, (D) contain “non-solicitation” or “no-hire” provisions that restrict the Company or any Company Subsidiary in any manner, or (E) require the Company or any Company Subsidiary to market or co-market any services or products of a third party (each of (A) through (E), a “Restrictive Agreement”); (iv) all contracts, agreements and arrangements between the Company or any of the Company Subsidiaries, on the one hand, and any Affiliate, stockholder or officers, directors or principals of the Company or any Company Subsidiary on the other hand (each such contract, a “Related Party Agreement”); (v) all joint venture contracts, partnership arrangements or other agreements outside the ordinary course of business involving a sharing of profits, losses, costs or Liabilities by the Company or any Company Subsidiary with any third party; (vi) all licenses issued by any other Governmental Authority including, without limitation, the identity of the respective licensees thereunder; (vii) each material employment, services or consulting contract with any employee, service provider or consultant of the Company or any of the Company Subsidiaries; (viii) any standstill or similar contract currently restricting the ability of the Company or any Company Subsidiary to offer to purchase or purchase the assets or equity securities of another Person; (ix) each material contract providing that the Company, any Company Subsidiary or any of their respective employees maintain the confidentiality of any information, or providing for any Person to maintain the confidentiality of any information material to the Company, any Company Subsidiary or their respective businesses; (x) any contract under which the Company or any Company Subsidiary has directly or indirectly guaranteed Indebtedness of any Person; (xi) any contract under which the Company or any Company Subsidiary has borrowed any money from, or issued any note, bond, debenture or other evidence of Indebtedness to, any Person; (xii) any contract granting a third party any license to any Intellectual Property Rights involving aggregate annual payments to the Company or any Company Subsidiary of more than CAD$10.0 million, or pursuant to which the Company or any Company Subsidiary has been granted by a third party any license to any software or Intellectual Property Rights, or any other license, option or other contract relating in whole or in part to Intellectual Property Rights or the intellectual property of any other Person; (xiii) all collective bargaining agreements, letters of understanding, and all other agreements between the Company or a Company Subsidiary and any trade union, employee association or similar organization; and (xiv) all other material contracts and agreements, including any sole source contracts with suppliers and licensors, whether or not made in the ordinary course of business, which are material to the Company or any Company Subsidiary or the conduct of their respective businesses. The contracts in Schedule 3.11(a)(A) and Schedule 3.11(a)(B), collectively, the “Material Contracts”.

 

(b)

Each Material Contract is valid and binding on the Company or the Company Subsidiary that is a party thereto or bound thereby, as the case may be, is, in all material respects, in full force and effect against the Company or the relevant Company Subsidiary, except to the extent it has expired in accordance with its terms, and represents the entire agreement between or among the parties thereto with respect to the subject matter thereof; and, upon consummation of the Transactions, each Material Contract shall continue in full force and effect without penalty.  None of the Company or any Company Subsidiary or, to the knowledge of the Company, as of the date of this Agreement, any other party thereto, is in breach of, or default under, in any material respect, any Material Contract.

 

(c)

The Company has made available to Parent a true, complete and correct copy of each Material Contract, together with all material amendments, waivers or other changes thereto.

 

(a)

Schedule 3.12(a) sets forth a true and complete list of the names, titles, annual salaries or wage rates and other compensation, benefits and office location of all employees of the Company or any Subsidiary whose general (or annualized in the case of recent hires) compensation exceeds CAD$100,000 (or CAD$ equivalent if paid in another currency) (“Key Employees”), indicating all changes in salaries and wage rates per employee since September 30, 2008.  Schedule 3.12(a) also sets forth a true and complete list of all written agreements with Key Employees.

 

(b)

The Company and all Company Subsidiaries have complied with all applicable Laws and Orders relating to employment or labor other than those Laws and Orders with which it could fail to comply, either individually or in the aggregate, without causing a Company Material Adverse Effect.  Except as set forth on Schedule 3.12(b), no present or former employee, officer or director of the Company or any Company Subsidiary has commenced or threatened, or will have commenced at the Effective Date, any Action against the Company or any Company Subsidiary for any matter including, but not limited to, for (i) wages, salary, bonus, vacation, severance, benefit plans, or sick pay except for the same incurred in the ordinary course of business for the last payroll period prior to the Effective Time, or (ii) Actions respecting employment conditions, standards or practices, including discrimination, harassment including sexual harassment, pay equity, or health and safety conditions, which in each case if successful would result in a Company Material Adverse Effect.

 

(c)

There is no: (i) unfair labor practice complaint against the Company or any Company Subsidiary pending or ongoing before the National Labor Relations Board, relevant employment standards or labour relations board, tribunal or commission in Canada or any equivalent provincial, state or local agency, board or commission in any jurisdiction where the Company or any Company Subsidiary carries on business and has employees; (ii) pending or ongoing labor strike, lock-out, slow down or other material labor trouble affecting the Company or any Company Subsidiary; (iii) material labor grievance pending or ongoing against the Company or any Company Subsidiary; (iv) pending or ongoing representation question or certification application respecting the employees of the Company or any Company Subsidiary; or (v) pending or ongoing arbitration proceeding arising out of or under any collective bargaining agreement to which the Company or any Company Subsidiary is a party.  In addition, to the Company’s knowledge: (a) none of the matters specified in clauses (i) through (v) above is threatened against the Company or any Company Subsidiary; (b) no union organizing activities are in progress or have taken place within the last five (5) years with respect to the Company or any Company Subsidiary; and (c) no basis exists for which a claim may be made or Action may be commenced under any collective bargaining agreement to which the Company or any Company Subsidiary is a party.

 

(d)

Neither the Company nor any of the Company Subsidiaries has entered into, made any commitments to conduct or conducted negotiations for, nor is the Company or any of the Company Subsidiaries a party to, either directly or by operation of Law, any collective agreement, letter of understanding, or other agreement with any trade union, employee association or other similar organization, which would cover any employee or dependant contractor of the Company or any of the Company Subsidiaries, currently or in the future, except as disclosed in Schedule 3.12(a).  In the past five (5) years, there have not been any strikes, labour disturbances, work refusals, lock-outs, or slow downs by any of the employees of the Company or Company Subsidiaries.

 

(e)

Schedule 3.12(e) sets forth a true and complete list of every written pension, retirement, profit sharing, bonus, incentive compensation, savings, deferred compensation, stock option, stock purchase or stock appreciation, employee stock ownership, fringe benefit, vacation, health, welfare, medical, dental, vision, supplemental unemployment benefit, life insurance, disability, sick pay, severance pay, group insurance or other written or oral employee benefit plans, programs or arrangements currently or within the last one (1) year sponsored, maintained or contributed to by the Company or any of the Company Subsidiaries or with respect to which the Company or any of the Company Subsidiaries participates in or has any potential liability or obligations (collectively, the “Plans”).  Each Plan has been maintained and administered in all material respects in compliance with its terms and all applicable Laws and in accordance with all understandings, written or oral, between the Company and employees of the Company or any of the Company Subsidiaries and between any of the Company Subsidiaries and employees of the Company or any of the Company Subsidiaries.  All contributions to the Plans (including both employee and Company and/or Company Subsidiary contributions), including premium payments, that are required to have been made, whether by virtue of the terms of the particular Plan or arrangement or by operation of Law, have, in all material respects, been made by the due date thereof (including all applicable extensions).

 

(f)

(i) No promise to make any improvements to any Plan or to adopt any additional plan has been made except as required by Law and no improvements to any Plan will be made or promised by the Company, and no promise to adopt any additional plan will be made, before the Effective Date; (ii) no event has occurred which could subject the Company or any of the Company Subsidiaries to any material tax, penalty or fiduciary liability in connection with any Plan which has not been accrued on the Annual Financial Statements; (iii) there have been no withdrawals of surplus or contribution holidays, except as permitted by Law and the terms of the Plans; and (iv) no Plan provides post-employment or post-retirement benefits to former or retired employees or to the beneficiaries or dependants of former or retired employees, other than as required by Law.

 

(g)

No insurance policy or any other contract or agreement affecting any Plan requires or permits a retroactive increase in premiums or payments due thereunder.

 

(h)

The Company has furnished or made available to the Parent true, correct, up-to-date and complete copies of all the Plans, as amended as of the date hereof together with all current and past related documentation and all amendments thereto.

 

(i)

Neither the Company nor any of the Company Subsidiaries have received notice of the intent of any Governmental Authority responsible for the enforcement or administration of labour or employment laws, to conduct an audit, inquiry or investigation of the Company or the Company Subsidiaries.

 

(j)

There are no outstanding Actions, orders, charges or fines against the Company or any of the Company Subsidiaries under any occupational health and safety legislation or other Laws. All levies, assessments and penalties made against or premiums owed by the Company or the Company Subsidiaries pursuant to applicable workers’ compensation or workplace safety and insurance legislation have, in all material respects, been paid in full, and there has been no reassessment under such legislation during the past three years and, to the knowledge of the Company, there are no circumstances that would permit a reassessment

 

(k)

All obligations of the Company and the Company Subsidiaries as of the Effective Date for wages, salary, bonuses, commissions or incentives, vacation pay, holiday pay, sick pay, premiums for employment or unemployment insurance, employer health tax or premiums, workers’ compensation and workplace safety and insurance payments or premiums, and all other accrued payroll obligations in respect of the employees of the Company and the Company Subsidiaries will have, in all material respects, been paid, or if unpaid, will be accrued and properly reflected in the Books and Records of the Company and the Company Subsidiaries on the Effective Date.

 

(l)

The execution of this Agreement and the completion of the Transactions will not constitute an event under any Plan that will result in any payment (whether of severance pay or otherwise), acceleration of payment or vesting of benefits or compensation, forgiveness of indebtedness, vesting, distribution, restriction on funds, increase in benefits or obligation to fund benefits or compensation, except as will be accrued and properly reflected in the Books and Records of the Company and the Company Subsidiaries on the Effective Date.

 

(a)

The Company and the Company Subsidiaries have good, valid and marketable title to or, in the case of leased properties and assets, valid leasehold interest in, all of the properties and assets owned or used by them to conduct their respective businesses as currently conducted or as currently contemplated by the Company and the Company Subsidiaries to be conducted, free and clear of all Liens, subject only to Permitted Liens.

 

(b)

Neither the Company nor any Company Subsidiary owns any real property.

 

(c)

To the knowledge of the Company, all Leases (as defined below) are in full force and effect and have not been modified or amended, and there exists no material default under any such lease by the Company or any Company Subsidiary, nor any event which, with notice or lapse of time or both, would constitute a material default thereunder by the Company or any Company Subsidiary. To the knowledge of the Company, none of the landlords or other parties to the Leases are in default of any of their material obligations under the Leases.

 

(d)

Schedule 3.14(d) discloses a full and complete list of all leases of real property by or for the benefit of the Company and the Company Subsidiaries and all amendments and modifications thereto (the “Leases”) and the lessors thereof.  The Company has made available to Parent prior to the date of this Agreement complete and accurate copies of each of the Leases, and none of the Leases has been modified in any material respect.

 

(e)

Neither the Company nor any Company Subsidiary has breached or violated and is not in default under any of the Leases or any building, zoning or other statute, by-law, ordinance, regulation, covenant, restriction or official plan, the breach or violation of which could individually or in the aggregate have a Company Material Adverse Effect, and no written notice from any Person has been received by the Company or any Company Subsidiary or served upon the Company or any Company Subsidiary claiming any such breach or violation.  There are no condemnation or appropriation or similar proceedings pending or, to the knowledge of the Company, threatened against any such real property or improvements thereon.  No material capital expenditures by the Company (or the Company Subsidiaries) or by the landlord are required for the maintenance and repair of the leased real property.  The Company’s (or the Company Subsidiaries’) leased real property is adequately served by gas, electricity, water, sewage and waste removal utilities.  To the knowledge of the Company, there are no challenges or appeals pending, or threatened regarding the amount of the Taxes on, or the assessed valuation of the leased real property, and neither the Company nor any of the Company Subsidiaries have entered into any special arrangements or agreements with any Governmental Authority with respect thereto.  No part of the premises subject to the Leases has been taken or expropriated by any Governmental Authority nor has any notice or proceeding in respect thereof been given or commenced to or against the Company or any Company Subsidiary.

 

(a)

Schedule 3.15(a) sets forth a true and complete list of all registered or filed Intellectual Property Rights, specifying as to each, as applicable: (i) the nature of such Intellectual Property Right; (ii) the owner of such Intellectual Property Right; (iii) the jurisdictions by or in which such Intellectual Property Right has been issued or registered or in which an application for such issuance or registration has been filed and the name of the owner of each such registration or application; (iv) the filing and registration numbers and filing or registration dates of such Intellectual Property Rights; and (v) all licenses, sublicenses and other agreements pursuant to which any Person is authorized to use such Intellectual Property Right. The Intellectual Property Rights listed in Schedule 3.15(a) are valid, enforceable and subsisting. The Intellectual Property Rights owned or licensed to the Company or the Company Subsidiaries include all of the Intellectual Property Rights used by the Company or any of the Company Subsidiaries to conduct its business in the manner in which such business is currently being conducted.

 

(b)

Except as set forth on Schedule 3.15(b), neither the Company nor any Company Subsidiary is currently being sued or charged in writing with or is a defendant in any claim, suit, action or proceeding that involves a claim of infringement of any Intellectual Property Right, and the Company has no knowledge of any other claim of infringement by the Company or any Company Subsidiary, and no knowledge of any continuing infringement by any other Person of any Intellectual Property Right.

 

(c)

To the knowledge of the Company, the current use by the Company and the Company Subsidiaries of the Intellectual Property Rights does not infringe the rights of any other Person, which if the Company was required cease such use, would have a Company Material Adverse Effect.

 

(d)

The Company warrants that the Company or the Company Subsidiaries have good and valid title to all Intellectual Property Rights they own and that any licenses by which Intellectual Property Rights are licensed to or from the Company or the Company Subsidiaries are in full force and effect, are unamended and there are no outstanding defaults or breaches under any of them. With respect to any copyrights owned by or licensed to the Company or the Company Subsidiaries, written, unrestricted waivers of moral rights have been obtained, the failure of which to obtain would have a Company Material Adverse Effect and which waivers may be invoked by the Company or the Company Subsidiaries to use the work.

 

(a)

Except as set out in Schedule 3.16(a), the Company and each of the Company Subsidiaries have duly and on a timely basis filed (or have had filed on their behalf) with all appropriate Governmental Authorities all Tax Returns and other documents required to be filed by each of them in respect of all Taxes in accordance with all applicable Laws except where the failure to file such Tax Returns or other documents is not likely to result in a Company Material Adverse Effect, and such Tax Returns and other documents are, in all material respects, complete and correct.  The Company and each of the Company Subsidiaries has made available to Purchaser complete and correct copies of all Tax Returns for the three (3) fiscal years ending before the date hereof.

 

(b)

The Company and each of the Company Subsidiaries has, within the time and in the manner prescribed by Law, paid, collected, remitted and discharged all Taxes that have become due and payable, collectible and remittable and will timely pay all Taxes which will become due and payable on or prior to the Effective Date other than such payments as are being diligently contested in good faith by appropriate proceedings and for which adequate reserves have been taken on the Annual Financial Statements in accordance with GAAP.

 

(c)

Neither the Company nor any Company Subsidiary has granted any waiver of any statute of limitations with respect to, or any extension of a period for the assessment, reassessment or payment of, any Tax.

 

(d)

Neither the Company nor any Company Subsidiary is party to any Tax-sharing agreement, Tax-indemnification agreement or other agreement or arrangement relating to Taxes with any Person; neither the Company nor any of the Company Subsidiaries has been a member of an affiliated, combined or unitary group filing a consolidated, combined, unitary or other Tax Return for Tax purposes reflecting the income, assets or activities of affiliated companies, or has any Liability for the Taxes of any other Person under any provision of Canadian federal, provincial, local or non-Canadian Law, or as a transferee or successor, or by contract, or otherwise.

 

(e)

The Company and each of the Company Subsidiaries has, in all material respects, withheld from each amount paid or credited to any Person the amount of Taxes required to be withheld therefrom and has remitted such Taxes to the proper Governmental Authority within the time required by applicable Law.

 

(f)

Except as set out in Schedule 3.16(f), neither the Company nor any of the Company Subsidiaries has any material Liability for any Taxes.

 

(g)

Neither the Company nor any of the Company Subsidiaries has any material Liability, obligation or commitment for the payment of Taxes not yet due other than those that have arisen since September 30, 2008 in the usual and ordinary course of business and for which adequate provisions have been made in the Financial Statements in accordance with GAAP.

 

(h)

Except as set out in Schedule 3.16(h), all Tax Returns of the Company and the Company Subsidiaries have been assessed through December 31, 2007, there are no proposed or issued assessments or reassessments respecting the Company or any of the Company Subsidiaries pursuant to which there are amounts owing or discussions in respect thereof with any taxing authority and there are no outstanding objections to any assessment or reassessment of Taxes.  Neither Canada Revenue Agency, the Internal Revenue Service nor any other taxing authority or agency has asserted in writing or, to the knowledge of the Company, has threatened to assert against the Company or any Company Subsidiary any deficiency or claim for any Taxes and there are no outstanding actions, suits, proceedings, investigations, audits or claims existing or, to the knowledge of the Company, threatened against the Company or any Company Subsidiary.

 

(i)

The Company and the Company Subsidiaries have collected from each past and present customer (or other Person paying amounts to the Company and the Company Subsidiaries) the amount of all Taxes (including goods and services Tax and provincial, state and local sales Taxes) required to be collected, except where the failure to so collect has not and is not reasonably likely to result in a Company Material Adverse Effect.

 

(j)

Except as set out on Schedule 3.16(j), neither the Company nor any of the Company Subsidiaries (i) is a party to any waiver or agreement extending the time within which to file any Tax Return or other document relating to Taxes, (ii) has executed or entered into any written agreement with, or obtained or applied for any written consents or written clearances or any other Tax rulings from, nor has there been any written agreement executed or entered into on behalf of any of them with, any taxing authority relating to any material amount of Taxes, (iii) has any Liability for the Taxes of another Person under U.S. Treasury Regulation Section 1.1502-6 (or any comparable provision of state, local or foreign Law), (iv) has, or has ever had, a permanent establishment in any country other than the country of its organization or been subject to Tax in a jurisdiction outside the country of its organization, or (v) has engaged in any “reportable transaction” as defined in U.S. Treasury Regulation Section 1.6011-4(b).

 

(k)

The value of consideration paid or received by the Company and each of the Company Subsidiaries in respect of the acquisition, sale or transfer of any property or the provision of any services to or from any person with whom they do not deal at “arm’s length” (as defined for purposes of the ITA) has been equal to the fair market value of such property acquired, sold or transferred or services provided.

 

(l)

Except as described in Schedule 3.16(l), the Company and each of the Company Subsidiaries is in compliance in all material respects with all applicable Tax laws and guidelines relating to transfer pricing.  For greater certainty, and without limiting the foregoing, for all transactions between the Company and the Company Subsidiaries and any non-resident person with whom any of the Company and the Company Subsidiaries was not dealing at “arm’s length” for the purposes of the ITA, each of the Company and the Company Subsidiaries has made or obtained records or documents that satisfy, in all material respects, the applicable transfer pricing requirements.

 

(m)

Neither the Company nor any of the Company Subsidiaries has, within the last seven (7) years, benefited from a forgiveness of debt or entered into any transaction or arrangement (including conversion of debt into shares of its share capital) which could have resulted in the application of Section 80 through and including Section 80.04 of the ITA or any corresponding provision of any provincial Tax law.

 

(n)

To the knowledge of the Company, there are no circumstances existing which could result in the application of Section 78 of the ITA or any corresponding provision of any provincial Tax law to the Company or any of the Company Subsidiaries.

 

(o)

Neither the Company nor any of the Company Subsidiaries has (i) agreed to or is required to make any adjustments pursuant to a change in Tax accounting method, (ii) any knowledge that any taxing authority has proposed any such adjustment, or (iii) any application pending with any taxing authority requesting permission for any changes in Tax accounting methods.

 

(p)

Neither the Company nor any of the Company Subsidiaries has any plan, arrangement or agreement providing for deferred compensation that is subject to Section 409A(a) or 457A of the Code or any asset, plan, arrangement or agreement that is subject to Section 409A(b) of the Code.

 

(q)

Each U.S. Subsidiary of the Company has complied with all record keeping and reporting obligations under Section 6038A of the Code.

 

(r)

Neither the Company nor any of the Company Subsidiaries is a party to any agreement or arrangement that would result individually or in the aggregate in the payment of any amount that would not be deductible by the Company or such Company Subsidiary by reason of Sections 162, 280G or 404 of the Code.

 

(a)

Neither the Company nor any of the Company Subsidiaries is in violation of or has violated, during the three previous years, or has any Liability under, any Environmental Law and there are no facts, circumstances or conditions existing, initiated or occurring prior to the Effective Date which could result in Liability under Environmental Laws.  Without limiting the generality of the foregoing: (i)  there has been no Release of Hazardous Substances at, on, under or from any of the properties currently owned, leased or operated by the Company or any Company Subsidiary (including, without limitation, soils and surface and ground waters) during the period of the Company’s or any Company Subsidiary’s ownership, tenancy or operation of such property; (ii)  there has been no Release of Hazardous Substances at, on, under or from any of the properties formerly owned, leased or operated by the Company or any Company Subsidiary (including, without limitation, soils and surface and ground waters) during the period of the Company’s or any Company Subsidiary’s ownership, tenancy or operation of such property; (iii) none of the real property currently leased or operated by the Company or the Company Subsidiaries contains underground improvements, including but not limited to treatment or storage tanks, or underground piping associated with such tanks, used currently or in the past for the management of Hazardous Substances, and no portion of such real property is or has been used as a dump or landfill or consists of or contains filled-in land or wetlands; and (iv) neither PCB’s, “toxic mold,” asbestos-containing materials, nor any contamination are present on or in the real property currently or previously owned, operated or leased by the Company or the Company Subsidiaries or the improvements thereon.

 

(b)

Neither the Company nor any Company Subsidiary has received any notice, demand, claim or request for information or other written communication alleging that the Company or any Company Subsidiary (i) is actually, potentially or allegedly liable under any Environmental Law for Remediation of Hazardous Substances, or (ii) may be in violation of or have any Liability under any Environmental Law.

 

(c)

The Company and each Company Subsidiary has applied for and maintains all material permits, licenses, consents, approvals and other authorizations required under any Environmental Law (“Environmental Permits”) and the Company and such Company Subsidiaries are in compliance in all material respects with the Environmental Permits.

 

(d)

Neither the Company nor any of the Company Subsidiaries has arranged, by contract, agreement or otherwise, for the transportation, disposal or treatment of Hazardous Substances at any location such that it is or could be liable for Remediation of such location pursuant to Environmental Laws, and no such location, nor any of the real property currently owned, operated, or leased by the Company or any of the Company Subsidiaries is listed on any governmental list or database of properties that may require Remediation.

 

(e)

No authorization, notification, recording, filing, consent, waiting period, Remediation or approval is required under any Environmental Law in order to consummate the Transactions.

 

(a)

True and complete copies of all insurance policies of the Company and the Company Subsidiaries relating to fire and casualty, general liability, business interruption, directors’ and officers’ liability, workers’ compensation and workplace safety and insurance and other forms of insurance of any kind relating to the business and operations of the Company or any Company Subsidiary, or summaries thereof have been made available to Parent, and such policies are in full force and effect as of the date of this Agreement.

 

(b)

The insurance maintained by the Company and the Company Subsidiaries adequately covers all material risks reasonably and prudently foreseeable in the operation and conduct of the business of the Company and the Company Subsidiaries which would be customary in the business carried on by the Company and the Company Subsidiaries and the Company and the Company Subsidiaries are not in material default under the terms of any such policy.

 

(c)

There is no claim outstanding under any insurance policy of the Company or a Company Subsidiary as to which coverage has been questioned, denied or disputed by the underwriter of such policy, and there has been no notice of cancellation or termination of, or premium increase with respect to, any such policy.

 

(d)

The Company and the Company Subsidiaries have paid all premiums due under their insurance policies and none of the Company or any Company Subsidiary is in default in any material respect under the terms of any of their insurance policies.

 

(a)

No executive officer, director or Affiliate of the Company or any Company Subsidiary, nor any immediate family member or Affiliate of such executive officer or director is entitled to receive directly or indirectly any benefit  that would constitute a “collateral benefit” within the meaning of Canadian Securities Legislation, as a consequence of the Transactions.

 

(b)

Save for or pursuant to (i) the employment, management or consulting arrangements listed in Schedule 3.11 or Schedule 3.12 and the payments to be made thereunder, as disclosed therein, and (ii) compensation payable to the directors of the Company in accordance with the “Compensation of Directors” contained in the Company’s Management Information Circular of March 14, 2008, no executive officer, director or Affiliate of the Company or any Company Subsidiary, nor any immediate family member or Affiliate of such executive officer or director:

 

(i)

is a party to any agreement, contract, commitment, arrangement or transaction with the Company or any Company Subsidiary;

 

(ii)

is entitled to any payment or transfer of any assets from the Company or any Company Subsidiary;

 

(iii)

has any material interest in any material property used by the Company or any Company Subsidiary; or

 

(iv)

has an interest in any customer or supplier of the Company or any Company Subsidiary or provider of any services to the Company or any Company Subsidiary, other than the ownership of less than 5% of the outstanding stock of any publicly-traded company.

 

(a)

True and complete copies of all documents listed in the Schedules attached hereto relating to the Company (the “Company Schedules”) have been made available or provided to Parent.

 

(b)

The Company has made available to Parent all Books and Records. All such Books and Records are, in all material respects, complete and correct and have been maintained, in all material respects, in accordance with good business practices, including the maintenance of an adequate system of internal accounting controls, and the information in the Books and Records is accurately reflected in the Financial Statements.

 

(c)

The minute books of the Company and each Company Subsidiary contain, in all material respects, accurate and complete records of all meetings held of, and corporate action by, the stockholders and the board of directors (and committees thereof) of the Company and each Company Subsidiary, and no meeting of any such stockholders or board of directors (or committees thereof) has been held for which minutes have not been prepared and are not contained in such minute books (except for meetings of the Company Board held since December 1, 2008).

 

(d)

None of the representations or warranties made by the Company herein or in the Company Schedules, or in any certificate or document furnished by the Company pursuant to this Agreement, when all such documents are read together in their entirety, contains or will contain any untrue statement of a material fact, or omits to state any material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which it was made, not misleading.

 

(a)

The Company and each of the Company Subsidiaries are conducting and have conducted their respective businesses in compliance, in all material respects, with all applicable Privacy Laws.

 

(b)

The Company has a written privacy policy which governs the processing of Personal Information, and the Company is in compliance and has been in compliance, in all material respects, with such policy.

 

(c)

Personal Information in the custody or control of the Company has been collected, used and disclosed with the consent of the individual to whom it relates and has been used only for the purposes for which it was initially collected.

 

(d)

There has been no loss, theft or unauthorized processing of or access to Personal Information in the custody or control of the Company or of any of the Company Subsidiaries; and neither the Company nor any Company Subsidiary has received any written notice or other communication from any Person regarding or in connection with any actual, alleged, possible or potential violation of, or failure to comply with, any Privacy Laws or the Company’s privacy policy or with respect to the loss, theft or unauthorized processing of or access to Personal Information in the custody or control of the Company or the Company Subsidiaries.

 

(a)

Schedule 4.10 sets forth, with respect to the Parent, (i) Parent’s authorized capital, (ii) the number of Parent’s securities that are outstanding, and (iii) the number of securities convertible into or exercisable or exchangeable for the Parent’s securities.  All outstanding shares of Parent’s capital stock are, and all such shares that may be issued prior to the Effective Time and all shares of Parent Common Stock issuable pursuant to Article II hereof will be when issued, duly authorized, validly issued, fully paid and non-assessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL, the Parent’s Charter Documents or any contract to which Parent is a party or otherwise bound.  Except as set forth in the Parent SEC Documents (as defined herein), there is no contract, agreement, commitment, arrangement or understanding (whether written or oral, formal or informal) that requires or under any circumstance would require Parent to issue, or grant any right to acquire, any securities of the Parent, or any security or instrument exercisable or exchangeable for or convertible into, the capital stock or membership interest of the Parent, “phantom” stock rights, stock appreciation rights, stock-based performance units or to merge, consolidate, dissolve, liquidate, restructure, or recapitalize the Parent.

 

(b)

As of the date hereof and at the Effective Time, Parent has and will have no less than U.S.$70.0 million (after giving effect to potential redemptions of the IPO Shares (as defined in the Parent’s Certificate of Incorporation) (the “Trust Fund”) invested in United States Government securities or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act in a trust account (the “Trust Account”) administered by The American Stock Transfer and Trust Company (the “Trustee”) pursuant to the Investment Management Trust Agreement, dated as of April 17, 2007, between Parent and the Trustee.

 

(a)

Schedule 4.12 contains a complete list of all written contracts and agreements to which Parent or any of its Subsidiaries is a party. Each such contract and agreement is valid and binding on Parent or the Subsidiary that is a party thereto or bound thereby, as the case may be, is, in all material respects, in full force and effect against Parent or the relevant Subsidiary and represents the entire agreement between or among the parties thereto with respect to the subject matter thereof.  None of Parent or any Subsidiary or, to the knowledge of the Company, as of the date of this Agreement, any other party thereto, is in breach of, or default under any such contract or agreement. Parent has made available to the Company a true, complete and correct copy of each such contract or agreement, together with all material amendments, waivers or other changes thereto.

 

(b)

There are no plans, contracts or agreements of Parent or the Purchaser pursuant to which any amount may become payable (whether currently or in the future) to any officer, director, employee or stockholder of Parent or the Purchaser as a result of or in connection with the Arrangement or any of the other Transactions contemplated by this Agreement.

 

(a)

Parent has filed and furnished all required reports, schedules, forms, prospectuses, and registration, proxy and other statements with the SEC since July 14, 2006 (collectively, and in each case including all exhibits and schedules thereto and documents incorporated by reference therein, the “Parent SEC Documents”).  As of their respective effective dates (in the case of Parent SEC Documents that are registration statements filed pursuant to the requirements of the Securities Act) and as of their respective SEC filing dates (in the case of all other Parent SEC Documents), the Parent SEC Documents complied in all material respects with the requirements of the Exchange Act or the Securities Act, as the case may be, applicable to such Parent SEC Documents, and none of the Parent SEC Documents as of such respective dates contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  The consolidated financial statements of Parent included in the Parent SEC Documents comply in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with U.S. GAAP (except, in the case of unaudited statements, as indicated in the notes thereto applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the financial position of Parent and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

 

(b)

Parent has established and maintains internal control over financial reporting and disclosure controls and procedures (as such terms are defined in Rule 13a-15 and Rule 15d-15 under the Exchange Act); such disclosure controls and procedures are designed to ensure that material information relating to Parent, including its consolidated Subsidiaries, required to be disclosed by Parent in the reports that it files or furnishes under the Exchange Act is accumulated and communicated to Parent’s principal executive officer and its principal financial officer to allow timely decisions regarding required disclosure; and such disclosure controls and procedures are effective to ensure that information required to be disclosed by Parent in the reports that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.  The principal executive officer and the principal financial officer of Parent have made all certifications required by the Sarbanes-Oxley Act of 2002, the Exchange Act and any related rules and regulations promulgated by the SEC with respect to the Parent SEC Documents, and the statements contained in such certifications are complete and correct.

 

(c)

 

(d)

 

(e)

Each of the consolidated financial statements contained in the reports filed by Parent under U.S. Securities Laws since January 1, 2007, has been and, as regards such financial statements prepared after the date hereof, will be, prepared in accordance with U.S. GAAP, applied on a consistent basis throughout the periods indicated, except as disclosed therein, and each fairly presents or will fairly present, in all material respects, the consolidated financial position, results of operations and cash flows of Parent and its consolidated Subsidiaries as at the respective dates thereof and for the respective periods indicated therein (subject, in the case of unaudited statements, to normal and recurring year-end adjustments) and reflects appropriate and adequate reserves for contingent Liabilities in accordance with such generally accepted accounting principles.

 

(a)

make any capital expenditures other than in the ordinary course of business consistent with past practice, which is not provided for in the most recently approved capital expenditure plan of the Company;

 

(b)

except as contemplated by this Agreement, declare or promise to pay any dividends or other distributions with respect to its capital stock or equity securities other than distributions by wholly-owned Company Subsidiaries or tax distributions in the ordinary course consistent with past practice, or pay, declare or promise to pay any other payments to any Company Shareholder or any Affiliate of the Company;

 

(c)

except for indebtedness for borrowed money currently outstanding, and indebtedness for borrowed money that may arise among the Company and the Company Subsidiaries, obtain or suffer to exist any further indebtedness for borrowed money in excess of U.S.$15 million, in the aggregate;

 

(d)

merge or consolidate with or acquire any other Person or be acquired by any other Person other than as provided by this Agreement;

 

(e)

extend any loans in excess of CAD$50,000 to any Person, other than travel, relocation or other expense advances to employees in the ordinary course of business;

 

(f)

except in connection with the Company Financing, issue, redeem or repurchase any shares of its capital stock, other than pursuant to options, warrants or other rights existing on the date hereof or granted between the date hereof and the Effective Time to employees and other service providers in the ordinary course of business and pursuant to the terms of the arrangements with such employees and service providers; or

 

(g)

agree to do any of the foregoing.

 

(a)

any notice or other communication from any Person alleging or raising the possibility that the consent of such Person is or may be required in connection with the Transactions or that the Transactions might give rise to any claims or causes of action or other rights by or on behalf of such Person or result in the loss of any rights or privileges of the Company or any Company Subsidiary to any such Person;

 

(b)

any notice or other communication from any regulatory or Governmental Authority in connection with the Transactions;

 

(c)

any Actions commenced or threatened against, relating to or involving or otherwise affecting the Company, any Company Subsidiary or the Business or that relate to the consummation of the Transactions; and

 

(d)

the occurrence of any fact or circumstance which make any representation made hereunder by the Company false in any material respect.

 

(a)

Each of the Company and Parent, for themselves and each of their Affiliates, agrees to the respective provisions of this Section 6.01 from the date hereof to the date of termination of this Agreement (the “Exclusivity Period”).

 

(b)

 

(c)

Subject to Section 6.02(a), beginning on March 15, 2009 and during the balance of the Exclusivity Period or, in the event that the Proxy Statement has not been mailed to the Stockholders of the Parent prior to April 7, 2009, until April 7, 2009, the Company and the Company Representatives shall deal, directly or indirectly, exclusively with Parent regarding a Potential Transaction and, without the prior written consent of Parent, the Company and the Company Representatives, directly or indirectly, will not (i) encourage, solicit, initiate discussions or engage in negotiations with any person (whether such negotiations are initiated by the Company, a Company Representative or otherwise), other than Parent, relating to a Potential Transaction, (ii) provide information or documentation with respect to the Company to any Person, other than Parent, or a person designated by Parent relating to a Potential Transaction, or (iii) enter into an agreement with any person, other than Parent or a person designated by Parent, providing for a Potential Transaction.

 

(d)

Notwithstanding the provisions of Section 6.01(a)-(c), the Company will have the right to pursue, negotiate and enter into and complete a joint venture, partnership, teaming arrangement or other strategic alliance with any Person with respect to the Company’s Electronic Systems business (the “ES Business Transaction”) at any time, whether before or after the required approval of the Arrangement by the  Company Shareholders is obtained.

 

(e)

During the Exclusivity Period, Parent and its respective officers, directors, employees, agents, affiliates and advisors, as applicable (collectively, the “Parent Group Representatives”) shall deal, directly or indirectly, exclusively with the Company regarding an acquisition or investment by Parent (whether by way of merger, purchase of capital stock, purchase of assets or otherwise) and, without the prior written consent of the Company, will not (i) encourage, solicit, initiate discussions or engage in negotiations with any person (whether such negotiations are initiated by Parent, the Parent Group Representatives or otherwise, other than the Company, relating to the possible acquisition of or investment in any other company by Parent (whether by way of merger, purchase of capital stock, purchase of assets or otherwise) or any material portion of the capital stock or assets of any other company by the Purchaser (a “Potential Alternative Transaction”), (ii) receive or review any information or documentation with respect to any other company from any Person, other than the Company, relating to a Potential Alternative Transaction or (iii) enter into an agreement with any Person, other than the Company or a Person designated by the Company, providing for a Potential Alternative Transaction.

 

(f)

 

(g)

In consideration of the substantial time, cost and financial risk for Parent and in the process of moving toward a successful Transaction and in light of the non-exclusive nature of the arrangements between the Company and Parent, the Company agrees to pay to Parent or its designate a break fee of U.S.$5.0 million (the “Break Fee”) in the event that: (a) this Agreement has not been terminated during the Exclusivity Period pursuant to (i) Section 8.01, (ii) Section 8.02(a), due to a breach or failure by Parent to fulfill its obligations under this Agreement,  or (iii) Section 8.02(c); (b) Parent has not announced another Potential Alternative Transaction on or prior to the completion of a Potential Transaction, and (c) the Company is successful in completing a Potential Transaction with (i) one or more of the entities listed on Schedule 6.01(b) by April 30, 2010, (ii) a Person not listed on Schedule 6.01(b) that makes an unsolicited bid for a majority of the Company’s capital stock on or prior to April 17, 2009 with the purpose of taking control of the Company, or (iii) an entity that makes a Superior Proposal. If and when the Break Fee becomes due, the Company shall within five (5) Business Days thereof and following the termination of this Agreement and the Transactions, pay the entire Break Fee by wire transfer of immediately available funds to Parent or its designee to an account designated by Parent. For greater certainty, no Break Fee will be payable in the event that the Parent Stockholders vote against the Parent Stockholder Proposals relating to the Arrangement at the Parent Stockholders Meeting, provided that the Company proceeds expeditiously and in good faith towards approval of the Arrangement Resolution by the Company Shareholders.

 

(h)

 

(a)

At any time during the Exclusivity Period, the Company Board may furnish information to, and enter into discussions with, a Person who has made an unsolicited written proposal or offer regarding an Acquisition Proposal (as defined below), and with respect to which (i) the Company Board has determined, in its good faith judgment (after consultation with its financial advisor), that such proposal or offer constitutes or could reasonably be expected to result in a Superior Proposal (as defined below), (ii) the Company Board has determined, in its good faith judgment after consultation with outside legal counsel, that, in light of such Superior Proposal, the failure to furnish such information or to enter into such discussions would result in a breach of its fiduciary obligations under applicable Law, (iii) the Company Board has provided written notice to Parent of its intent to furnish information or enter into discussions with such Person at least three Business Days prior to taking any such action, and (iv) the Company Board has obtained from such Person an executed confidentiality agreement containing confidentiality provisions no less favourable to the Company than those contained in the Confidentiality Agreement, provided that such confidentiality agreement shall not preclude such Person from making the Acquisition Proposal. Upon the receipt of a Superior Proposal, the Company shall be entitled to withdraw the Recommendation, and terminate this Agreement and the Transactions immediately prior to entering into a binding agreement relating to the Superior Proposal.

 

(b)

The Company agrees that in addition to the obligations of the Company set forth in paragraph (a) of this Section 6.02, immediately upon receipt thereof, the Company shall advise Parent in writing of any request for information or any Acquisition Proposal, or any inquiry, discussions or negotiations with respect to any Acquisition Proposal and the terms and conditions of such request for information, Acquisition Proposal, inquiry, discussions or negotiations and the Company shall promptly provide to Parent copies of any written materials received by the Company in connection with any of the foregoing, and the identity of the Person or group making any such request for information, Acquisition Proposal or inquiry or with whom any discussions or negotiations may be taking place.  The Company agrees that it shall keep Parent informed of the status, terms and material details (including amendments or proposed amendments) of any such request for information, Acquisition Proposal or inquiry and keep Parent informed as to the details of any information requested of or provided by the Company and as to the status and material terms of all substantive discussions or negotiations with respect to any such request, Acquisition Proposal or inquiry.  The Company agrees that it shall simultaneously provide to Parent any non-public information concerning the Company that may be provided to any other Person or group in connection with any Acquisition Proposal which was not previously provided to Parent.

 

(c)

The Company shall as promptly as practicable reaffirm the Recommendation of the Transaction by press release after any written Acquisition Proposal (which is determined not to be a Superior Proposal) is publicly announced or made.

 

(d)

“Acquisition Proposal” means any proposal or offer for a transaction, consolidation, business combination, sale or other transfer or disposition of substantial assets, sale, exchange, transfer of, or take-over bid for, shares of capital stock or other similar transaction (other than the Transactions) involving the Company or any Company Subsidiary.

 

(e)

“Superior Proposal” means a  unsolicited  bona fide written offer made by a third party to consummate an Acquisition Proposal during the Exclusivity Period on terms (including conditions to consummation of the contemplated transaction) that the Company Board determines, in its good faith judgment (after consultation with its financial advisor), to be more favourable to the Company Shareholders, from a financial point of view, than the Transactions contemplated in this Agreement, is reasonably capable of being consummated, and in respect of which, if the consideration is to be paid in cash or partly in cash, the third party has made at that time, in the good faith judgment of the Company Board, adequate arrangements to ensure that the required funds are available to effect payment in full for all securities of the Company that the third party has offered to acquire.

 

(a)

From and after the Effective Time, Parent will, and will cause the Company to, fulfill and honor in all respects the obligations of the Company pursuant to any indemnification agreements between the Company and its directors and officers immediately prior to the Effective Time (the “Indemnified Parties”), subject to applicable Law.  The constitutional documents and bylaws of Parent and the Company will contain provisions with respect to exculpation and indemnification that are at least as favorable to the Indemnified Parties as those constitutional document and bylaws of the Company as in effect on the date hereof, which provisions will not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would adversely affect the rights thereunder of individuals who, immediately prior to the Effective Time, were directors, officers, employees or agents of the Company, unless such modification is required by Law.

 

(b)

For a period of three years after the Effective Time, Parent will, and will cause the Company to, use all reasonable efforts to cause to be maintained directors’ and officers’ liability insurance maintained by the Company covering those persons who are covered by the Company’s directors’ and officers’ liability insurance policy as of the date hereof on terms comparable to those applicable to the current directors and officers of the Company for a period of three years; provided, however, that in no event will Parent or the Company be required to expend in excess of one hundred percent (100%) of the annual premium currently paid by the Company for such coverage (and to the extent the annual premium would exceed one hundred percent (100%) of the annual premium currently paid by the Company for such coverage, Parent and the Company shall use all reasonable efforts to cause to be maintained the maximum amount of coverage as is available for such one hundred percent (100%) of such annual premium).

 

(c)

 

(a)

Interim Order.  The Interim Order shall have been obtained in form and substance satisfactory to each of the Company and Parent, acting reasonably.

 

(b)

Final Order.  The Court will have determined that the issuance of the Parent Common Stock to the Company Shareholders pursuant to the terms of the Arrangement is fair to the Company Shareholders, prior to issuing the Final Order and will have granted the Final Order, which Final Order shall be in form and substance satisfactory to each of the Company and Parent, acting reasonably, and shall not have been set aside or modified in a manner unacceptable to such parties on appeal or otherwise.

 

(c)

Stockholder Approvals. This Agreement and the Transactions contemplated hereby shall have been approved by the requisite vote of the stockholders of the Company and Parent, and the issuance of Parent Common Stock in connection with the Arrangement and the other Parent Stockholder Proposals shall have been approved by the requisite vote of the Parent Stockholders.

 

(d)

Approvals.  All other authorizations, consents, orders, declarations or approvals of, or filings with, or terminations or expirations of waiting periods imposed by, any Governmental Authority which the failure to obtain, make or occur would have the effect of making the Arrangement or any of the Transactions illegal shall have been given or shall be in effect.

 

(e)

Laws. No provision of any applicable Law shall prohibit or impose any condition on the consummation of the Transactions or limit in any material way Parent’s right to control or operate the Purchaser, the Company or any of the Company Subsidiaries or any material portion of the Business.

 

(f)

Third-Party Proceedings. There shall not be pending or threatened any proceeding by a third-party to enjoin or otherwise restrict the consummation of the Transactions.

 

(g)

Exchange Listing. As of the Effective Time, the shares of Parent Common Stock issued in connection with the Arrangement shall be quoted and approved for listing on the NYSE Alternext US.

 

(h)

Conversion Rights.  At or prior to the Parent Stockholders’ Meeting, holders of less than thirty percent (30%) of the IPO Shares (as such term is defined in Parent’s Certificate of Incorporation) shall have demanded that Parent convert their IPO Shares into cash pursuant to the terms of the Parent’s Charter Documents.

 

(a)

Representations and Warranties. The representations and warranties of the Company contained in this Agreement shall be true and correct as of the Effective Time, with the same effect as though such representations and warranties were made on and as of the Effective Time (provided that any representation and warranty that addresses matters only as of a certain date shall be true and correct as of that certain date), except as otherwise specifically permitted by this Agreement and except where the failure of any such representation and warranty to be true and correct in all material respects would not result in or would not be reasonably likely to result in a Company Material Adverse Effect.

 

(b)

Performance of Obligations. The Company shall have performed and complied with all covenants, undertakings, obligations, agreements and conditions to be performed or complied with by it at or before the Effective Time pursuant to the terms of the Transaction Documents, except where the failure to so perform or comply would not result in or would not be reasonably likely to result in a Company Material Adverse Effect.

 

(c)

Company Material Adverse Effect.  Between the date hereof and the Effective Date, there shall not have occurred a Company Material Adverse Effect.

 

(d)

Dissent Rights.  Company Shareholders representing in the aggregate 10% or more of the issued and outstanding Company Common Stock immediately prior to the Effective Date shall not have validly exercised Dissent Rights.

 

(e)

Consents.  Each of the consents referred to in Section 3.04 shall have been obtained, except where the failure to obtain any such consent would not result in or would not be reasonably likely to result in a Company Material Adverse Effect.

 

(f)

Regulatory Filings. All necessary regulatory or governmental approvals and consents required to consummate the transactions contemplated hereby (other than immaterial government permits) shall have been obtained without any term or condition which would materially impair the value of the Company. All conditions required to be satisfied prior to the Effective Time by the terms of such approvals and consents shall have been satisfied, and any and all statutory waiting periods in respect thereof shall have expired.

 

(g)

Updated Schedules. Parent shall have received updated Schedules to this Agreement as of a date within three (3) Business Days of the Effective Date.  Such updated Schedules shall include the Financial Statements and financial statements for any subsequent annual or interim period that would be required under GAAP.

 

(h)

Transaction Documents. The Transaction Documents to be executed and delivered by the Company shall have been duly executed by the Company and delivered to Parent.

 

(i)

Certificate of Officer.  Parent shall have received a certificate dated the Effective Date and signed by the Chief Executive Officer of the Company, certifying that the conditions specified in this Section 7.02 have been satisfied.

 

(j)

Lender Arrangements.  The Company shall have entered into a revised arrangement with its senior secured lenders with respect to the outstanding credit facilities provided to the Company and the Company Subsidiaries by such lenders, including with respect to the warrants issued and issuable to such lenders in connection with such facilities, that is satisfactory to Parent, acting reasonably.

 

(k)

Lock-up Agreements.  Each of the persons listed on Schedule 7.02(k)(A) shall have entered into a lock-up agreement in the form attached as Schedule 7.02(k)(B).

 

(a)

Representations and Warranties. The representations and warranties of Parent contained in this Agreement shall be true and correct as of the Effective Time, with the same effect as though such representations and warranties were made on and as of the Effective Time (provided that any representation and warranty that addresses matters only as of a certain date shall be true and correct as of that certain date), except as otherwise specifically permitted by this Agreement and except where the failure of any such representation and warranty to be true and correct in all material respects would not result in or would not be reasonably likely to result in a Parent Material Adverse Effect.

 

(b)

Performance of Obligations. Each of Parent and the Purchaser shall have performed and complied with all covenants, undertakings, obligations, agreements and conditions to be performed or complied with by it at or before the Effective Time pursuant to the terms of the Transaction Documents, except where the failure to so perform or comply would not result in or would not be reasonably likely to result in a Parent Material Adverse Effect.

 

(c)

Parent Material Adverse Effect.  Between the date hereof and the Effective Date, there shall not have occurred a Parent Material Adverse Effect.

 

(d)

Dissent Rights.  Company Shareholders representing in the aggregate 10% or more of the issued and outstanding Company Common Stock immediately prior to the Effective Date shall not have validly exercised Dissent Rights.

 

(e)

Regulatory Filings. All necessary regulatory or governmental approvals and consents required to consummate the transactions contemplated hereby (other than immaterial government permits) shall have been obtained without any term or condition which would materially impair the value of Parent. All conditions required to be satisfied prior to the Effective Time by the terms of such approvals and consents shall have been satisfied, and any and all statutory waiting periods in respect thereof shall have expired.

 

(f)

Transaction Documents. The Transaction Documents to be executed and delivered by Parent and/or the Purchaser shall have been duly executed by Parent and/or the Purchaser and delivered to the Company.

 

(g)

Updated Schedules. The Company shall have received updated schedules to this Agreement relating to Parent as of a date within three (3) Business Days of the Effective Date.

 

(h)

Company RSU Plan and Company Warrants. Parent will have adopted the Company RSU Plan and the Company Warrants and will have approved and reserved for issuance the aggregate  number of shares of Parent Common Stock that may be issued after the Effective Time pursuant to the exercise of the Company RSUs and Company Warrants, as adopted by Parent.

 

(i)

Board of Directors and Officers. The board of directors of Parent and officers of Parent shall be constituted as determined pursuant to Section 6.11.

 

(j)

Trust Account. At the Effective Time, Parent shall have in the Trust Account no less than an amount equal to U.S.$70.0 million.

 

(k)

Release of Trust Funds. Parent will have delivered to the Trustee pursuant to the Investment Trust Management Agreement a notice triggering the release of funds from the Trust Account to Parent forthwith after completion of the Arrangement.

 

(l)

Certificate of Officer. The Company shall have received a certificate dated the Effective Date and signed by the Chief Financial Officer of Parent, certifying that, the conditions specified in this Section 7.03 have been satisfied.

 

(m)

 

(a)

The Transactions shall not have been completed by the Drop Dead Date, whether such date is before or after the date of the stockholder approvals referred to in Section 7.01(c) (the “Termination Date”);

 

(b)

The approval of the Company Shareholders required by Section 7.01(c) shall not have been obtained at the Company Meeting duly convened therefor or at any adjournment or postponement thereof;

 

(c)

The approval of the Parent Stockholders referred to in Section 7.01(c) shall not have been obtained at the Parent Stockholder Meeting duly convened therefor or at any adjournment or postponement thereof; or

 

(d)

Any Governmental Authority of competent jurisdiction shall have issued a non-appealable final Order permanently restraining, enjoining or otherwise prohibiting the consummation of the Transactions;

 

(a)

By the Company, subject to its having complied and being in compliance with all of its obligations under this Agreement, in the event of a material breach by a Purchaser Party of any representation, warranty, covenant or agreement made by it contained in this Agreement or if any representation or warranty made by a Purchaser Party shall have become untrue, in either case such that the conditions set forth in Section 7.03(a) or (b) would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue, and if such breach or inaccuracy shall not be cured within twenty (20) Business Days after delivery of written notice thereof by the Company to Parent;

 

(b)

By a Purchaser Party, subject to its having complied and being in compliance with all of its obligations under this Agreement, in the event of a material breach by the Company of any representation, warranty, covenant or agreement made by it contained in this Agreement or if any representation or warranty made by the Company shall have become untrue, in either case such that the conditions set forth in Section 7.02(a) or (b) would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue, and if such breach or inaccuracy shall not be cured within twenty (20) Business Days after delivery of written notice thereof by the Purchaser Party to the Company;

 

(c)

By the Company, if any condition specified to be for the benefit of the Company under Section 7.01 or 7.03, other than a condition set out in Section 7.03(a) or (b), shall not have been satisfied on or prior to the date on which it is required to be satisfied and the provisions of Section 8.03(a) do not otherwise apply thereto; or

 

(d)

By Parent, if any condition specified to be for the benefit of Parent under Section 7.01 or 7.02, other than a condition set out in Section 7.02(a) or (b), shall not have been satisfied on or prior to the date on which it is required to be satisfied and the provisions of Section 8.03(b) do not otherwise apply thereto.

 

(a)

Except as may otherwise be provided herein, any provision of this Agreement may be amended, modified or waived by the parties hereto, by action taken by or authorized by their respective Boards of Directors, prior to the Effective Date if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Company and Parent or, in the case of a waiver, by the party against whom the waiver is to be effective; provided further, however, that, after the approval of this Agreement by the Company Shareholders, no such amendment shall be made except as allowed under applicable Law.

 

(b)

No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.