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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DATE OF REPORT: (DATE OF EARLIEST EVENT REPORTED): MAY 10, 1996
DIGICON INC.
(Exact name of registrant as specified in its charter)
Delaware 1-7427 76-0343152
(State of Incorporation) (Commission File Number) (IRS Employer Identification
No.)
3701 Kirby Drive
Houston, Texas 77098
(Address of Principal Executive Offices)
713/526-5611
(Registrant's telephone number, including area code)
(Not Applicable)
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On May 10, 1996, Digicon Inc. (the "Company") and Veritas Energy Services
Inc. ("Veritas") announced the signing of a definitive Combination Agreement
related to the previously announced proposed merger of the two companies to
form Veritas DGC Inc. The terms of the agreement substantively provide for the
exchange by the Company of 0.80 Digicon shares for each Veritas share in a
pooling of interest transaction on a tax deferred basis. The transaction has
been approved by the board of directors of each company. Fairness opinions
regarding the transactions have been rendered by PaineWebber Incorporated on
behalf of the Digicon shareholders and Rauscher Pierce Refsnes, Inc. on behalf
of Veritas shareholders.
The transaction is subject to approval by the shareholders of each company
in meetings expected to be held in July. The proposed merger also remains
subject to applicable Canadian and United States regulatory approval, and it is
expected that all required regulatory filings will be made shortly. The
companies presently expect the transaction to close prior July 31, 1996. The
May 10, 1996 news release of the Company concerning this transaction and a copy
of the Combination Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to this Form 8-K. This summary description of the
transaction does not purport to be complete and is qualified by reference to
the press release and the Combination Agreement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Exhibit
----------- -------
<S> <C>
2.1* Combination Agreement dated as of May 10, 1996, between Digicon
Inc. and Veritas Energy Services Inc.
(Filed herewith.)
20.1 News Release of Digicon Inc. dated May 10, 1996.
(Filed herewith.)
</TABLE>
-------------------
* This Agreement omits certain schedules which will be provided upon
request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 17, 1996
DIGICON INC.
By: /s/ RICHARD W. MCNAIRY
-------------------------------
Richard W. McNairy,
Vice President and Principal
Financial Officer
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EXHIBIT INDEX
Exhibit No. Exhibit
----------- -------
2.1* Combination Agreement dated as of May 10, 1996, between Digicon
Inc. and Veritas Energy Services Inc.
(Filed herewith.)
20.1 News Release of Digicon Inc. dated May 10, 1996.
(Filed herewith.)
-------------------
* This Agreement omits certain schedules which will be provided upon
request.
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EXHIBIT 2.1
COMBINATION AGREEMENT
THIS COMBINATION AGREEMENT (this "Agreement") is entered into as of May
10, 1996, by and between Digicon Inc., a Delaware corporation ("Digicon"), and
Veritas Energy Services Inc., an Alberta corporation ("Veritas").
RECITALS
WHEREAS, the respective boards of directors of Digicon and Veritas have
approved the transactions contemplated by this Agreement, and the board of
directors of Veritas has agreed to submit the Plan of Arrangement (as defined
in Section 1.1) and other transactions contemplated hereby to its shareholders
and optionholders (as hereinafter defined) for approval.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
GENERAL
1.1 PLAN OF ARRANGEMENT. As promptly as practicable after the execution
of this Agreement, Veritas will apply to the Court of Queen's Bench of Alberta
(the "Court") pursuant to Part 15 of the Business Corporations Act (Alberta)
(the "ABCA") for an interim order in form and substance satisfactory to Digicon
(such approval not to be unreasonably withheld or delayed) (the "Interim
Order") providing for, among other things, the calling and holding of the
Veritas Meetings (as defined below) for the purpose of considering and, if
deemed advisable, approving the arrangement (the "Arrangement") under Part 15
of the ABCA and pursuant to this Agreement and the Plan of Arrangement
substantially in the form of EXHIBIT A hereto (the "Plan of Arrangement"). If
the Veritas shareholders and optionholders approve the Arrangement, thereafter
Veritas will take the necessary steps to submit the Arrangement to the Court
and apply for a final order of the Court approving the Arrangement in such
fashion as the Court may direct (the "Final Order"). At 12:01 a.m. (the
"Effective Time") on the date (the "Effective Date") shown on the certificate
of arrangement issued by the Registrar under the ABCA giving effect to the
Arrangement, the following reorganization of capital shall occur and shall be
deemed to occur in the following order without any further act or formality:
(a) The articles of amalgamation of Veritas shall be amended to (i)
delete the First Preferred Shares and Second Preferred Shares
from the authorized share capital and (ii) authorize an unlimited number of
exchangeable shares (the "Exchangeable Shares") and one Class A Preferred Share
(the "Class A Preferred Share");
(b) Veritas shall issue to Digicon one Class A Preferred Share in
consideration of the issuance to Veritas of one share of the common stock, $.01
par value per share, of Digicon (the
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"Digicon Common Stock"). The stated capital of the Class A Preferred
Share shall be equal to the fair market value, as determined by the board of
directors of Veritas, of a share of Digicon Common Stock. No certificate shall
be issued in respect of the Class A Preferred Share;
(c) Each of the common shares of Veritas (the "Veritas Common Shares")
(other than Veritas Common Shares held by holders who have exercised
their rights of dissent in accordance with the Plan of Arrangement and who are
ultimately entitled to be paid the fair value for such shares) will be
exchanged for a number of Exchangeable Shares at an exchange ratio equal to 0.8
of an Exchangeable Share per Veritas Common Share (the "Exchange Ratio"), and
each such holder of Veritas Common Shares will receive that whole number of
Exchangeable Shares resulting from the exchange of such holder's Veritas Common
Shares. In lieu of fractional Exchangeable Shares, each holder of a Veritas
Common Share who otherwise would be entitled to receive a fraction of an
Exchangeable Share shall be paid by Veritas an amount determined in accordance
with the Plan of Arrangement;
(d) Upon the exchange referred to in paragraph (c) above, each holder
of a Veritas Common Share shall cease to be such a holder, shall have his
name removed from the register of holders of Veritas Common Shares and shall
become a holder of the number of fully paid Exchangeable Shares to which he is
entitled as a result of the exchange referred to in paragraph (c) and such
holder's name shall be added to the register of holders of Exchangeable Shares
accordingly;
(e) The aggregate stated capital of the Exchangeable Shares will be
equal to the aggregate stated capital of the Veritas Common Shares
immediately prior to the Arrangement that are exchanged pursuant to paragraph
(c) above, thereby excluding the stated capital attributed to the fractional
shares paid in cash as contemplated in paragraph (c) above;
(f) The articles of amalgamation of Veritas shall be amended to reduce
the number of authorized Veritas Common Shares to one and the following
restriction will be added to the rights, privileges, restrictions and
conditions attaching to the Veritas Common Shares:
"RESTRICTION
So long as any of the Exchangeable Shares of the Corporation are
outstanding, the Corporation shall not at any time without, but
may at any time with, the approval of the board of directors of
the holder of the common shares issue any further Exchangeable
Shares of the Corporation, except as specifically required in
accordance with the rights, privileges, restrictions and
conditions attaching to the Exchangeable Shares of the
Corporation."
(g) The one outstanding Class A Preferred Share will be exchanged for one
Veritas Common Share, and the holder thereof shall cease to be a holder of the
Class A Preferred Share, shall have its name removed from the register of
holders of Class A Preferred Shares and shall become a holder of the one fully
paid and non-assessable Veritas Common Share to which it is entitled as a
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result of the exchange referred to in this paragraph (g) and such holder's
name shall be added to the register of holders of Veritas Common Shares
accordingly;
(h) The stated capital of the one Veritas Common Share shall be equal
to the stated capital of the one Class A Preferred Share immediately prior to
the exchange of such Class A Preferred Share pursuant to paragraph (g) above;
(i) The articles of amalgamation of Veritas shall be amended to delete
the Class A Preferred Shares from the authorized share capital; and
(j) Each of the then outstanding options to purchase Veritas Common
Shares (collectively, the "Veritas Options") (which includes all outstanding
options granted under Veritas' Stock Option Plan for Directors, Officers and
Key Employees (the "Veritas Option Plan")) will and without any further action
on the part of any holder thereof (herein, an "optionholder"), be exchanged for
an option to purchase that number of shares of Digicon Common Stock determined
by multiplying the number of Veritas Common Shares subject to such Veritas
Option at the Effective Time by the Exchange Ratio, at an exercise price per
share of Digicon Common Stock equal to the exercise price per share of such
Veritas Option immediately prior to the Effective Time, divided by the Exchange
Ratio. On the Effective Date, such option price shall be converted into a
United States dollar equivalent based on the noon spot rate of exchange of the
Bank of Canada on such date. If the foregoing calculation results in an
exchanged Veritas Option being exercisable for a fraction of a share of Digicon
Common Stock, then the number of shares of Digicon Common Stock subject to such
option will be rounded down to the nearest whole number of shares, and the
total exercise price for the option will be reduced by the exercise price of
the fractional share. The term, exerciseability, vesting schedule, and all
other terms and conditions of the Veritas Options will otherwise be unchanged
by the provisions of this paragraph (j) and shall operate in accordance with
their terms. All shares of Digicon Common Stock issued upon exercise of the
Veritas Options shall be registered under an effective Form S-8 registration
statement (or other comparable form) filed with the Securities and Exchange
Commission (the "SEC").
1.2 ADJUSTMENTS FOR CAPITAL CHANGES. If, prior the Effective Time,
Digicon or Veritas recapitalizes through a subdivision of its outstanding
shares into a greater number of shares, or a combination of its outstanding
shares into a lesser number of shares, or reorganizes, reclassifies or
otherwise changes its outstanding shares into the same or a different number of
shares of other classes, or declares a dividend on its outstanding shares
payable in shares of its capital stock or securities convertible or
exchangeable into shares of its capital stock, then the Exchange Ratio will be
adjusted appropriately so as to maintain the relative proportionate interests
of the holders of Veritas Common Shares and the holders of the shares of
Digicon Common Stock. No such changes shall be made by either Digicon or
Veritas other than those made in accordance with this Agreement.
1.3 DISSENTING SHARES. Holders of Veritas Common Shares and Veritas
Options may exercise rights of dissent with respect to such shares and/or
options in connection with the Arrangement pursuant to and in the manner set
forth in Section 184 of the ABCA and Section 3.1
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of the Plan of Arrangement (such holders referred to as "Dissenters" or as
"Dissenting Shareholders" when referring exclusively to Veritas Shareholders).
Veritas shall give Digicon (i) prompt notice of any written demands of a right
of dissent, withdrawals of such demands, and any other instruments served
pursuant to the ABCA and received by Veritas and (ii) the opportunity to
participate in all negotiations and proceedings with respect to such rights.
Without the prior written consent of Digicon, except as required by applicable
law, Veritas shall not make any payment with respect to any such rights or
offer to settle or settle any such rights. All payments to Dissenters shall be
the sole responsibility of Veritas, and Digicon will not directly or indirectly
provide any funds for the purposes of making payments to Dissenters. In the
event that Veritas does not have sufficient funds to make payments to
Dissenters, Veritas will undertake to borrow the funds necessary to make such
payments from sources other than Digicon or any Digicon Subsidiary.
1.4 VERITAS EMPLOYEE SHARE PURCHASE PLAN. As soon as practicable, but
not later than the date of the mailing of the Joint Proxy Statement,
Veritas shall, except as to rights of employees existing at such date,
terminate the Veritas Employee Share Purchase Plan (the "Veritas Employee Share
Purchase Plan").
1.5 OTHER EFFECTS OF THE ARRANGEMENT. At the Effective Time: (a) the
bylaws of Veritas immediately prior to the Effective Time will continue as the
bylaws of Veritas, subject to later amendment; (b) the directors of Veritas
will be David B. Robson, Lawrence C. Fichtner, a third individual to be
determined by mutual agreement of Veritas and Digicon prior to the Effective
Time, and Stephen J. Ludlow; (c) the officers of Veritas will be as designated
by the board of directors of Veritas prior to the Effective Time, subject to
later removal and appointment of other officers; (d) each Veritas Common Share
and each Veritas Option outstanding immediately prior to the Effective Time
will be exchanged as provided in Section 1.1; and (e) the Arrangement will,
from and after the Effective Time, have all of the effects provided by
applicable law, including, without limitation, the ABCA.
1.6 RESTATED DIGICON CHARTER. Prior to the Closing, Digicon shall have
restated its certificate of incorporation as set forth in EXHIBIT B hereto (the
"Restated Digicon Charter").
1.7 JOINT PROXY STATEMENT; S-3 REGISTRATION STATEMENT.
(a) As promptly as practicable after execution of this Agreement,
Digicon and Veritas shall prepare and file with the SEC a preliminary joint
management information circular and proxy statement (the "Joint Proxy
Statement"), together with any other documents required by the Securities Act
of 1933, as amended (the "Securities Act"), or the Securities Exchange Act of
1934, as amended (the "Exchange Act"), in connection with the Arrangement and
the other transactions contemplated hereby. The Joint Proxy Statement shall
constitute (i) the management information circular of Veritas with respect to
the meetings of shareholders and optionholders of Veritas relating the
Arrangement and the approval of certain matters in connection therewith (the
"Veritas Meetings") and (ii) the proxy statement of Digicon with respect to the
meeting of stockholders of Digicon with respect to the issuance of Digicon
Common Stock from time to time upon exchange of the
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Exchangeable Shares and certain other matters (including the approval of the
Restated Digicon Charter) relating to the agreements of Digicon contained
herein (the "Digicon Stockholders Meeting"). As promptly as practicable after
the preliminary Joint Proxy Statement is cleared by the SEC, Digicon and
Veritas shall cause the Joint Proxy Statement to be mailed to each company's
respective stockholders and/or optionholders, as the case may be. If Digicon
determines on the advice of its outside counsel (with the concurrence of
outside counsel for Veritas) that it is necessary to file a registration
statement on Form S-3 (the "Form S-3") in order to register the Digicon Common
Stock to be issued from time to time after the Effective Time upon exchange of
the Exchangeable Shares, then Digicon shall file the Form S-3 with the SEC and
use its best efforts to maintain the effectiveness of such registration for the
period that such Exchangeable Shares remain outstanding, and Digicon and
Veritas shall use their best efforts to cause the Form S-3 to become effective.
Notwithstanding anything herein to the contrary, Digicon shall be under no
obligation to file the Form S-3 if it shall have determined on the advice of
its outside counsel (with the concurrence of outside counsel for Veritas) that
the issuance of shares of Digicon Common Stock upon exchange of the
Exchangeable Shares after the Effective Time is exempt from the registration
requirements of Section 5 of the Securities Act by virtue of Section 3(a)(9)
and/or 3(a)(10) thereof. In connection with such determination, Digicon and
Veritas shall prepare and file with the SEC a request for no action (the "No
Action Request") seeking to confirm the availability of such an exemption.
(b) Each party shall promptly furnish to the other party all information
concerning such party and its stockholders as may be reasonably required in
connection with any action contemplated by this Section 1.7. The Joint Proxy
Statement and, if required, the Form S-3, shall comply in all material respects
with all applicable requirements of law. Each of Digicon and Veritas will
notify the other promptly of the receipt of any comments from the SEC and of
any request by the SEC for amendments or supplements to the Joint Proxy
Statement or the Form S-3, if required, or for additional information, and will
supply the other with copies of all correspondence with the SEC with respect to
the Joint Proxy Statement or the Form S-3, if required. Whenever any event
occurs which should be set forth in an amendment or supplement to the Joint
Proxy Statement or the Form S-3, if required, Digicon or Veritas, as the case
may be, shall promptly inform the other of such occurrence and cooperate in
filing with the SEC, and/or mailing to stockholders of Digicon and Veritas, as
may be applicable, such amendment or supplement.
(c) Digicon and Veritas shall take any action required to be taken
under any applicable provincial or state securities laws (including "blue
sky" laws) in connection with the issuance of the Digicon Common Stock and the
Arrangement; provided, however, that with respect to the blue sky and Canadian
provincial qualifications, neither Digicon nor Veritas shall be required to
register or qualify as a foreign corporation or reporting issuer (other than
Alberta, Canada, in the case of Veritas, and Delaware in the case of Digicon)
where any such entity is not now so registered or qualified except as to
matters and transactions arising solely from the offer and sale of the Digicon
Common Stock or the issuance of the Exchangeable Shares.
1.8 REORGANIZATION. The parties intend to adopt this Agreement and the
Plan of Arrangement (i) as a plan of reorganization under Section 368(a)(1)
of the Internal Revenue Code
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of 1986, as amended (the "Code"), (ii) as a reorganization of capital of
Veritas under Section 86 of the Income Tax Act (Canada) (the "ITA") for those
Veritas shareholders who hold the Veritas Common Shares on capital account and
(iii) such that the Arrangement will be treated as a "pooling of interests" for
accounting purposes.
1.9 MATERIAL ADVERSE EFFECT. In this Agreement, any reference to any
event, change or effect being "material" with respect to any entity or group
of entities means any material event, change or effect related to the condition
(financial or otherwise), properties or business of such entity or group of
entities. In this Agreement, the term "Material Adverse Effect" used with
respect to any party means any event, change or effect that is materially
adverse to the condition (financial or otherwise), properties or business of
such party and its subsidiaries, taken as a whole; provided, that a Material
Adverse Effect shall not include any adverse effect resulting from changes in
general economic conditions or conditions generally affecting the industries in
which Digicon or Veritas operate.
1.10 CURRENCY. Unless otherwise specified, all references in this
Agreement to "dollars" or "$" shall mean United States dollars.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF VERITAS
Except as set forth in a letter dated the date of this Agreement and
delivered by Veritas to Digicon concurrently herewith (the "Veritas Disclosure
Letter"), Veritas hereby represents and warrants to Digicon that:
2.1 ORGANIZATION AND STANDING. Veritas and each partnership, joint
venture, corporation, association or other business entity of which more
than 50% of the total voting power of shares of stock or units of ownership or
beneficial interest entitled to vote in the election of directors (or members
of a comparable governing body) is owned or controlled, directly or indirectly,
by Veritas (the "Veritas Subsidiaries"), is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, has full requisite power and authority to carry
on its business as it is currently conducted, and to own, lease and operate the
properties currently owned, leased and operated by it, and is duly qualified or
licensed to do business and is in good standing as a foreign corporation or
organization authorized to do business in all jurisdictions in which the
character of the properties owned or leased or the nature of the business
conducted by it would make such qualification or licensing necessary, except
where the failure to be so qualified or licensed would not have a Material
Adverse Effect on Veritas. The Veritas Disclosure Letter sets forth a complete
list of the Veritas Subsidiaries, the percentage of each subsidiary's
outstanding capital stock or other ownership interest owned by Veritas or
another Veritas Subsidiary (and a description of any lien, charge, mortgage,
security interest, option, preferential purchase right or other right or
interest of any other person (collectively, an "Encumbrance")) on such stock or
other ownership interest and a complete list of each jurisdiction
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in which each of Veritas and each Veritas Subsidiary is duly qualified and in
good standing to do business.
2.2 AGREEMENT AUTHORIZED AND ITS EFFECT ON OTHER OBLIGATIONS. Veritas
has all requisite corporate power and authority to enter into this
Agreement and, subject to approval of this Agreement and the Arrangement by the
shareholders and optionholders of Veritas and approval by the Court, to perform
its obligations hereunder and to consummate the Arrangement and the other
transactions contemplated by this Agreement. The execution and delivery of
this Agreement by Veritas and, subject to approval of this Agreement and the
Arrangement by the shareholders and optionholders of Veritas and approval by
the Court, the consummation by Veritas of the Arrangement and the other
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Veritas. This Agreement has been duly executed
and delivered by Veritas and is the valid and binding obligation of Veritas,
enforceable in accordance with its terms, except that such enforceability may
be subject to (i) bankruptcy, insolvency, reorganization or other similar laws
affecting or relating to enforcement of creditors' rights generally and (ii)
general equitable principles.
(b) Neither the execution, delivery and performance of this Agreement
or the Arrangement by Veritas, nor the consummation of the transactions
contemplated hereby or thereby by Veritas nor compliance with the provisions
hereof or thereof by Veritas will: (i) conflict with, or result in any
violations of, the articles of amalgamation or bylaws of Veritas or any
equivalent document of any of the Veritas Subsidiaries, or (ii) result in any
breach of or cause a default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, amendment, cancellation or
acceleration of any obligation contained in, or the loss of any material
benefit under, or result in the creation of any Encumbrance upon any of the
material properties or assets of Veritas or any of the Veritas Subsidiaries
under, any term, condition or provision of any loan or credit agreement, note,
bond, mortgage, indenture, lease or other material agreement, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Veritas or
any of the Veritas Subsidiaries or their respective properties or assets, other
than any such breaches, defaults, losses, or encumbrances which, individually
or in the aggregate, would not have a Material Adverse Effect on Veritas.
2.3 GOVERNMENTAL CONSENTS. No consent, approval, order or authorization
of, or registration, declaration or filing with, any court, administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign (each a "Governmental Entity"), is required to be obtained
by Veritas or any of the Veritas Subsidiaries in connection with the execution
and delivery of this Agreement or the Plan of Arrangement or the consummation
of the transactions contemplated hereby or thereby, except for: (i) the filing
with the applicable Canadian provincial securities commissions or regulatory
authorities (the "Commissions") and the Court and the mailing to shareholders
and optionholders of Veritas of the Joint Proxy Statement relating to the
Veritas Meetings to be held with respect to the approval of this Agreement and
the Arrangement, (ii) the furnishing to the SEC of such reports and information
under the Exchange Act and the rules and regulations promulgated by the SEC
thereunder, as may be required in connection with this Agreement and the
transactions contemplated hereby (the "SEC Filings"); (iii) approval by the
Court
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of the Arrangement and the filings of the articles of arrangement and other
required arrangement or other documents as required by the ABCA; (iv) such
filings, authorizations, orders and approvals as may be required under state
"control share acquisition," "anti-takeover" or other similar statutes, any
other applicable federal, provincial or state securities laws and the rules of
the American Stock Exchange (the "ASE") or The Toronto Stock Exchange ("TSE");
(v) such filings and notifications as may be necessary under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"); (vi) such notices and filings as may be necessary under the Investment
Canada Act and under the Competition Act (Canada); and (vii) where the failure
to obtain such consents, approvals, etc., would not prevent or delay the
consummation of the Arrangement or otherwise prevent Veritas from performing
its obligations under this Agreement and would not reasonably be expected to
have a Material Adverse Effect on Veritas.
2.4 CAPITALIZATION. The authorized capital stock of Veritas consists
of an unlimited number of Veritas Common Shares, no par value, and an
unlimited number of First Preferred Shares, no par value, and Second Preferred
Shares, no par value (collectively, the "Veritas Preferred Shares"). At the
close of business on April 30, 1996, 8,689,952 Veritas Common Shares were
issued and outstanding, and no Veritas Common Shares were held by Veritas in
its treasury. As of April 30, 1996, (i) an aggregate of 544,758 Veritas Common
Shares were reserved for issuance pursuant to outstanding Veritas Options
granted under the Veritas Option Plan and (ii) an aggregate of 100,000 Veritas
Common Shares were reserved for issuance pursuant to the Veritas Employee Share
Purchase Plan. Prior to the date hereof, all of the Veritas Options have vested
in accordance with their terms, without regard to the transactions contemplated
hereby. No Veritas Preferred Shares are issued or outstanding. All issued and
outstanding Veritas Common Shares have been duly authorized, validly issued and
are fully paid and non-assessable.
2.5 SECURITIES REPORTS AND FINANCIAL STATEMENTS. Veritas has filed all
forms, reports and documents with the Commissions required to be filed by it
pursuant to relevant Canadian securities statutes, regulations, policies and
rules (collectively, the "Veritas Securities Reports"), all of which have
complied in all material respects with all applicable requirements of such
statutes, regulations, policies and rules. None of the Veritas Securities
Reports, at the time filed or as subsequently amended, 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 made therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of Veritas contained in the Veritas Securities Reports
complied in all material respects with the then applicable accounting
requirements and the published rules and regulations of the relevant Canadian
securities statutes with respect thereto, were prepared in accordance with
Canadian generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may have been indicated in the notes
thereto or, in the case of unaudited statements, as permitted by applicable
laws, rules or regulations) and fairly present (subject, in the case of the
unaudited statements, to normal, year-end audit adjustments) the consolidated
financial position of Veritas and its consolidated Veritas Subsidiaries as at
the respective dates thereof and the consolidated results of their operations
and cash flows for the respective periods then ended. There has been no change
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in Veritas' accounting policies or the methods of making accounting estimates
or changes in estimates that are material to such financial statements, except
as described in the notes thereto.
2.6 LIABILITIES. Veritas and the Veritas Subsidiaries do not have any
liabilities or obligations, either accrued, absolute, contingent, or otherwise,
or have any knowledge of any potential liabilities or obligations, other than
those (i) disclosed in the Veritas Securities Reports, (ii) set forth in the
Veritas Disclosure Letter or (iii) incurred in the ordinary course of business
since October 31, 1995.
2.7 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Veritas for inclusion or incorporation by reference in the
Joint Proxy Statement (and, if filed, the Form S-3) will, at the time the Joint
Proxy Statement is mailed to the shareholders and optionholders of Veritas and
at the time of the Veritas Meetings (and, if filed, at the time the Form S-3 is
declared effective), contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made,
not misleading. The Joint Proxy Statement will comply as to form in all
material respects with the provisions of the ABCA and applicable Canadian
securities laws and the rules and regulations promulgated thereunder.
2.8 NO DEFAULTS. Neither Veritas nor any Veritas Subsidiary is, or has
received notice that it would be with the passage of time, in default or
violation of any term, condition or provision of (i) its charter documents or
bylaws; (ii) any judgment, decree or order applicable to it; or (iii) any loan
or credit agreement, note, bond, mortgage, indenture, material contract,
agreement, lease, license or other instrument to which Veritas or any Veritas
Subsidiary is now a party or by which it or any of its properties or assets may
be bound, except in the case of item (iii) for defaults and violations which,
individually or in the aggregate, would not have a Material Adverse Effect on
Veritas.
2.9 LITIGATION; INVESTIGATIONS. There is no claim, action, suit or
proceeding pending or, to the knowledge of Veritas, threatened, which
would, if adversely determined, individually or in the aggregate, have a
Material Adverse Effect on Veritas, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against Veritas or any of the Veritas Subsidiaries having, or which, insofar as
reasonably can be foreseen, in the future could have, any such effect. There
is no investigation pending or, to the knowledge of Veritas, threatened,
against Veritas or any of the Veritas Subsidiaries before any Governmental
Entity.
2.10 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in the
Veritas Disclosure Letter, other than as a result of the transactions
contemplated by this Agreement, since October 31, 1995, there has not been:
(a) Financial Change. Any material adverse change in the financial
condition, backlog, operations, assets, liabilities or business of Veritas
or the Veritas Subsidiaries;
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(b) Property Damage. Any material damage, destruction, or loss to the
business or properties of Veritas or the Veritas Subsidiaries (whether or not
covered by insurance);
(c) Dividends or Redemptions. Any declaration, setting aside, or
payment of any dividend or other distribution in respect of the capital
stock of Veritas, or any direct or indirect redemption, purchase or any other
acquisition by Veritas of any such stock;
(d) Capitalization Change. Any change in the capital stock or in the
number of shares or classes of Veritas' authorized or outstanding capital
stock as described in Section 2.4 (other than as a result of exercises of
currently outstanding Veritas Options or acquisitions of shares under currently
existing rights under the Veritas Employee Share Purchase Plan);
(e) Labor Matters. Any labor dispute or charge of unfair labor practice
(other than routine individual grievances), any activity or proceeding by a
labor union or representative thereof to organize any employees of Veritas or
any Veritas Subsidiary or any campaign being conducted to solicit authorization
from employees to be represented by such labor union; or
(f) Other Material Changes. Any other event or condition known to
Veritas particularly pertaining to and adversely affecting the operations,
assets or business of Veritas or the Veritas Subsidiaries (other than events or
conditions which are of a general or industry-wide nature and of general public
knowledge) which would constitute a Material Adverse Effect on Veritas.
2.11 ADDITIONAL VERITAS INFORMATION. The Veritas Disclosure Letter
contains true, complete and correct lists of the following items with
respect to Veritas and the Veritas Subsidiaries, and Veritas agrees that upon
the request of Digicon, it will furnish to Digicon true, complete and correct
copies of any documents referred to in such lists:
(a) Real Estate. All real property and structures thereon owned,
leased or subject to a contract of purchase and sale, or lease
commitment, with a description of the nature and amount of any Encumbrance
thereon;
(b) Insurance. All insurance policies or bonds currently maintained,
including title insurance policies, including those covering properties,
buildings, machinery, equipment, fixtures, employees and operations, as well as
a listing of any premiums, audit adjustments or retroactive adjustments due or
pending on such policies or any predecessor policies;
(c) Material Contracts. All contracts which involve, or may involve,
aggregate payments by any party thereto of $500,000 or more, which are to be
performed in whole or in part after the Effective Time;
(d) Employee Compensation Plans. All bonus, incentive compensation,
deferred compensation, profit-sharing, retirement, pension, welfare,
group insurance, death benefit, or other fringe benefit plans, arrangements or
trust agreements together with copies of the most recent reports
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with respect to such plans, arrangements, or trust agreements filed with any
Governmental Entity and all tax determination letters that have been received
with respect to such plans;
(e) Employee Agreements. Any collective bargaining agreements with any
labor union or other representative of employees, including amendments,
supplements, and all employment and consulting agreements;
(f) Patents. All patents, trademarks, copyrights and other material
intellectual property rights owned, licensed or used;
(g) Trade Names. All trade names and fictitious names used or held,
whether and where such names are registered and where used;
(h) Promissory Notes. All long-term and short-term promissory notes,
installment contracts, loan agreements, credit agreements, and any other
agreements relating thereto or with respect to collateral securing the same;
and
(i) Guaranties. All indebtedness, liabilities and commitments of others
and as to which it is a guarantor, endorser, co-maker, surety, or
accommodation maker, or is contingently liable therefor (excluding liabilities
as an endorser of checks and the like in the ordinary course of business) and
all letters of credit, whether stand-by or documentary, issued by any third
party.
2.12 CERTAIN AGREEMENTS. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
will (i) result in any payment (including without limitation, severance,
unemployment compensation, parachute payment, bonus or otherwise) becoming due
to any director, employee or independent contractor of Veritas or the Veritas
Subsidiaries under any Veritas Plan (as hereinafter defined) or otherwise, (ii)
materially increase any benefits otherwise payable under any Veritas Plan or
otherwise or (iii) result in the acceleration of the time of payment or vesting
of any such benefits.
2.13 EMPLOYEE BENEFIT PLANS. Except for health insurance, vacation,
severance and similar plans which are set forth in the Veritas Disclosure
Letter ("Veritas Plans"), there are no employee benefits plans covering active,
former or retired employees of Veritas and the Veritas Subsidiaries. Each
Veritas Plan has been maintained and administered in material compliance with
its terms and with the requirements prescribed by any and all applicable
statutes, orders, rules and regulations. No Veritas Plan is subject to the
requirements of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and no Veritas Plan is intended to be qualified under Section 401(a)
of the Code.
2.14 INTELLECTUAL PROPERTY. Veritas or the Veritas Subsidiaries owns or
possesses licenses to use all patents, patent applications, trademarks and
service marks (including registrations and applications therefor), trade names,
copyrights and written know-how, trade secrets and all other similar
proprietary data and the goodwill associated therewith (collectively, the
"Veritas Intellectual
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Property") that are either material to the business of Veritas or any Veritas
Subsidiary or that are necessary for the manufacture, use, license or sale of
any services or products manufactured, used, licensed or sold by Veritas or the
Veritas Subsidiaries, including all such intellectual property listed in the
Veritas Disclosure Letter. The Veritas Intellectual Property is owned or
licensed by Veritas or the Veritas Subsidiaries free and clear of any
Encumbrance other than such Encumbrances as are listed in the Veritas
Disclosure Letter. Except as otherwise indicated in such letter or in the
ordinary course of business, neither Veritas nor the Veritas Subsidiaries has
granted to any other person any license to use any Veritas Intellectual
Property. Neither Veritas nor the Veritas Subsidiaries has received any notice
of infringement, misappropriation, or conflict with, the intellectual property
rights of others in connection with the use by Veritas or the Veritas
Subsidiaries of the Veritas Intellectual Property.
2.15 TITLE TO PROPERTIES. Except for goods and other property sold, used
or otherwise disposed of in the ordinary course of business for fair
value, Veritas has good and indefeasible title to all its properties, interests
in properties and assets, real and personal, reflected in its October 31, 1995
financial statements, free and clear of any Encumbrance, except (i)
Encumbrances reflected in the balance sheet of Veritas dated October 31, 1995,
(ii) liens for current taxes not yet due and payable, and (iii) such
imperfections of title, easements and Encumbrances, if any, as are not
substantial in character, amount, or extent and do not and will not materially
detract from the value, or interfere with the present use, of the property
subject thereto or affected thereby, or otherwise materially impair business
operations. All leases pursuant to which Veritas or any Veritas Subsidiary
leases (whether as lessee or lessor) any substantial amount of real or personal
property are in good standing, valid, and effective; and there is not, under
any such leases, any existing or prospective default or event of default or
event which with notice or lapse of time, or both, would constitute a default
by Veritas or any Veritas Subsidiary and in respect to which Veritas or a
Veritas Subsidiary has not taken adequate steps to prevent a default from
occurring. The buildings and premises of Veritas and the Veritas Subsidiaries
that are used in its business are in good operating condition and repair,
subject only to ordinary wear and tear. All major items of operating equipment
of Veritas and the Veritas Subsidiaries are in good operating condition and in
a state of reasonable maintenance and repair, ordinary wear and tear excepted,
and are free from any known defects except as may be repaired by routine
maintenance and such minor defects as to not substantially interfere with the
continued use thereof in the conduct of normal operations.
2.16 ENVIRONMENTAL MATTERS. Except as set forth in the Veritas Disclosure
Letter:
(a) Environmental Conditions. There are no environmental conditions or
circumstances, such as the presence or release of any hazardous substance, on
any property presently or previously owned or leased by Veritas or the Veritas
Subsidiaries that could result in a Material Adverse Effect on Veritas;
(b) Permits, etc. Veritas and the Veritas Subsidiaries have in full
force and effect all environmental permits, licenses, approvals and other
authorizations required to conduct their operations and are operating in
material compliance thereunder;
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(c) Compliance. Veritas' and the Veritas Subsidiaries' operations and
use of their assets do not violate any applicable United States or Canadian or
other federal, provincial, state or local law, statute, ordinance, rule,
regulation, order or notice requirement pertaining to (a) the condition or
protection of air, groundwater, surface water, soil, or other environmental
media, (b) the environment, including natural resources or any activity which
affects the environment, or (c) the regulation of any pollutants, contaminants,
waste, substances (whether or not hazardous or toxic), including, without
limitation, the Comprehensive Environmental Response Compensation and Liability
Act (42 U.S.C. Section 9601 et seq.), the Hazardous Materials Transportation
Act (49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery
Act (42 U.S.C. Section 1609 et seq.) the Clean Water Act (33 U.S.C. 1251 et
seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic
Substances Control Act (17 U.S.C. Section 2601 et seq.), the Safe Drinking
Water Act (42 U.S.C. Section 201 and Section 300f et seq.), the Rivers and
Harbors Act (33 U.S.C. Section 401 et seq.), the Oil Pollution Act (33 U.S.C.
Section 2701 et seq.) and analogous, Canadian, foreign, provincial, state and
local provisions, as any of the foregoing may have been amended or supplemented
from time to time (collectively the "Applicable Environmental Laws"), except
for violations which, either singly or in the aggregate, would not result in a
Material Adverse Effect on Veritas;
(d) Past Compliance. None of the operations or assets of Veritas or the
Veritas Subsidiaries has ever been conducted or used by Veritas or the Veritas
Subsidiaries in such a manner as to constitute a violation of any of the
Applicable Environmental Laws, except for violations which, either singly or in
the aggregate, would not result in a Material Adverse Effect on Veritas;
(e) Environmental Claims. No notice has been served on Veritas or any
Veritas Subsidiaries from any entity, governmental agency or individual
regarding any existing, pending or threatened investigation or inquiry related
to alleged violations under any Applicable Environmental Laws, or regarding any
claims for remedial obligations or contribution under any Applicable
Environmental Laws, other than any of the foregoing which, either singly or in
the aggregate, would not result in a Material Adverse Effect on Veritas;
(f) Renewals. Veritas does not know of any reason it or Digicon would
not be able to renew any of the permits, licenses, or other authorizations
required pursuant to any Applicable Environmental Laws to operate and use any
of Veritas' or the Veritas Subsidiaries' assets for their current purposes and
uses; and
(g) Asbestos and PCBs. No asbestos or polychlorinated biphenyls
("PCBs") are currently being used or have ever been used by Veritas or the
Veritas Subsidiaries in their operations or on their properties.
2.17 COMPLIANCE WITH OTHER LAWS. Except as set forth in the Veritas
Disclosure Letter, neither Veritas nor any Veritas Subsidiary is in
violation of or in default with respect to, or in alleged violation of or
alleged default with respect to any other applicable law or any applicable
rule, regulation, or any writ or decree of any court or any governmental
commission, board, bureau, agency, or instrumentality, or delinquent with
respect to any report required to be filed with any
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Governmental Entity, except for violations which, either singly or in the
aggregate, do not and are not expected to result in a Material Adverse Effect
on Veritas.
2.18 TAXES. Except with respect to failures which, in the aggregate,
would not result in a Material Adverse Effect on Veritas, proper and
accurate federal, provincial, state and local income, capital, withholding,
value added, sales, use, franchise, gross revenue, turnover, excise, payroll,
property, employment, customs duties and any and all other tax returns,
reports, and estimates have been filed with appropriate governmental agencies,
domestic and foreign, by Veritas and each of the Veritas Subsidiaries for each
period for which any returns, reports, or estimates were due (taking into
account any extensions of time to file before the date hereof); all taxes shown
by such returns to be payable and any other taxes due and payable have been
paid other than those being contested in good faith by Veritas or a Veritas
Subsidiary; and the tax provision reflected in Veritas' financial statements as
of October 31, 1995, is adequate, in accordance with Canadian generally
accepted accounting principles, to cover liabilities of Veritas and the Veritas
Subsidiaries at the date thereof for all taxes, including any interest,
penalties and additions to taxes of any character whatsoever applicable to
Veritas and the Veritas Subsidiaries or their assets or businesses. No waiver
of any statute of limitations executed by Veritas or a Veritas Subsidiary with
respect to any tax is in effect for any period. Except as set forth in the
Veritas Disclosure Letter, Veritas has not received any notice of reassessment
from Revenue Canada. There are no tax liens on any assets of Veritas or the
Veritas Subsidiaries except for taxes not yet currently due and those which
could not reasonably be expected to result in a Material Adverse Effect on
Veritas.
2.19 VOTE REQUIRED. Except as may be provided in the Interim Order, at
the Veritas Meetings at which quorums are present, (i) the affirmative vote
of the holders of two-thirds of the Veritas Common Shares present is required
and (ii) the affirmative vote of two-thirds of the Veritas Options present is
required, in each case, to approve this Agreement, the Arrangement and the
consummation of the transactions contemplated hereby.
2.20 POOLING MATTERS. Neither Veritas nor any of its affiliates has
taken or agreed to take any action that, without giving effect to any
action taken or agreed to be taken by Digicon or any of its affiliates, would
prevent Digicon from accounting for the business combination to be effected by
the Arrangement as a pooling of interests.
2.21 BROKERS AND FINDERS. Other than Rauscher Pierce Refsnes, Inc. in
accordance with the terms of its engagement letter in its final form, a copy of
which has previously been provided to Digicon, none of Veritas or any of the
Veritas Subsidiaries nor any of their respective directors, officers or
employees has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or similar payments in
connection with the transactions contemplated by this Agreement.
2.22 DISCLOSURE. No representation or warranty made by Veritas in this
Agreement, nor any document, written information, statement, financial
statement, certificate or Exhibit prepared and furnished or to be prepared and
furnished by Veritas or its representatives pursuant hereto or in
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connection with the transactions contemplated hereby, when taken together,
contained any untrue statement of a material fact when made, or omitted to
state a material fact necessary to make the statements or facts contained
herein or therein not misleading in light of the circumstances under which they
were furnished.
2.23 FAIRNESS OPINION. Veritas' board of directors has received a written
opinion from Rauscher Pierce Refsnes, Inc. that the Exchange Ratio is fair to
Veritas' shareholders from a financial point of view.
2.24 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no material agreement,
judgment, injunction, order or decree binding upon Veritas or any Veritas
Subsidiary that has or could reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of Veritas or any
Veritas Subsidiary, any acquisition of property by Veritas or any Veritas
Subsidiary or the conduct of business by Veritas or any Veritas Subsidiary as
currently conducted.
2.25 BOOKS AND RECORDS. The books, records and accounts of Veritas and
the Veritas Subsidiaries (a) have been maintained in accordance with good
business practices on a basis consistent with prior years, (b) are stated in
reasonable detail and accurately and fairly reflect the transactions and
dispositions of the assets of Veritas and the Veritas Subsidiaries and (c)
accurately and fairly reflect the basis for the Veritas financial statements.
Veritas has devised and maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (a) transactions are executed
in accordance with management's general or specific authorization; and (b)
transactions are recorded as necessary (i) to permit preparation of financial
statements in conformity with Canadian generally accepted accounting principles
or any other criteria applicable to such statements and (ii) to maintain
accountability for assets.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DIGICON
Except as set forth in a letter dated the date of this Agreement and
delivered by Digicon to Veritas concurrently herewith (the "Digicon Disclosure
Letter"), Digicon hereby represents and warrants to Veritas that:
3.1 ORGANIZATION AND STANDING. Digicon and each partnership, joint
venture, corporation, association or other business entity of which more
than 50% of the total voting power of shares of stock or units of ownership or
beneficial interest entitled to vote in the election of directors (or members
of a comparable governing body) is owned or controlled, directly or indirectly,
by Digicon (the "Digicon Subsidiaries"), is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, has full requisite power and authority to carry
on its business as it is currently conducted, and to own, lease and operate the
properties currently owned, leased and operated by it, and is duly qualified or
licensed to do business and is in good standing as a foreign corporation or
organization authorized to do business in all jurisdictions in which the
character of the properties owned or leased or the nature of
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the business conducted by it would make such qualification or licensing
necessary, except where the failure to be so qualified or licensed would not
have a Material Adverse Effect on Digicon. The Digicon Disclosure Letter sets
forth a complete list of the Digicon Subsidiaries, the percentage of each
subsidiary's outstanding capital stock or other ownership interest owned by
Digicon or another Digicon Subsidiary (and a description of any Encumbrance on
such stock or other ownership interest) and a complete list of each
jurisdiction in which each of Digicon and each Digicon Subsidiary is duly
qualified and in good standing to do business.
3.2 AGREEMENT AUTHORIZED AND ITS EFFECT ON OTHER OBLIGATIONS. Digicon
has all requisite corporate power and authority to enter into this
Agreement and, subject to approval of Digicon's stockholders as provided in
this Agreement, to perform its obligations hereunder and to consummate the
Arrangement and the other transactions contemplated by this Agreement. The
execution and delivery of this Agreement by Digicon and, subject to approval of
Digicon's stockholders as provided in this Agreement, the consummation by
Digicon of the Arrangement and the other transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Digicon.
This Agreement has been duly executed and delivered by Digicon and is the valid
and binding obligation of Digicon, enforceable in accordance with its terms,
except that such enforceability may be subject to (i) bankruptcy, insolvency,
reorganization or other similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) general equitable principles. Neither the
execution, delivery and performance of this Agreement or the Arrangement by
Digicon, nor the consummation of the transactions contemplated hereby or
thereby by Digicon nor compliance with the provisions hereof or thereof by
Digicon will: (i) conflict with, or result in any violations of, the
certificate of incorporation or bylaws of Digicon or any equivalent document of
any of the Digicon Subsidiaries, or (ii) result in any breach of or cause a
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, amendment, cancellation or acceleration of any
obligation contained in, or the loss of any material benefit under, or result
in the creation of any Encumbrance upon any of the material properties or
assets of Digicon or any of the Digicon Subsidiaries under, any term, condition
or provision of any loan or credit agreement, note, bond, mortgage, indenture,
lease or other material agreement, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Digicon or any of the Digicon
Subsidiaries or their respective properties or assets, other than any such
breaches, defaults, losses, or encumbrances which, individually or in the
aggregate, would not have a Material Adverse Effect on Digicon. Without
limiting the generality of the foregoing, upon the consummation of the
Arrangement, except as contemplated by Section 5.1(1) hereof, no person or
group of persons shall have any right, contingent or otherwise, to elect,
designate or appoint any director of Digicon and no person or group of persons
shall have any right, contingent or otherwise that is inconsistent with the
provisions of Section 5.1(l).
3.3 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Governmental Entity, is required to be obtained by Digicon or any of the
Digicon Subsidiaries in connection with the execution and delivery of this
Agreement or the Plan of Arrangement or the consummation of the transactions
contemplated hereby or thereby,
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except for: (i) the filing with the Commissions and the mailing to stockholders
of Digicon of the Joint Proxy Statement relating to the Digicon Stockholders
Meeting, (ii) the furnishing to the SEC of SEC Filings; (iii) approval by the
Court of the Arrangement and the filings of the articles of arrangement and
other required arrangement or other documents as required by the ABCA; (iv)
such filings, authorizations, orders and approvals as may be required under
state "control share acquisition," "anti-takeover" or other similar statutes,
any other applicable federal, provincial or state securities laws and the rules
of the ASE or the TSE; (v) such filings and notifications as may be necessary
under the HSR Act; (vi) such notices and filings as may be necessary under the
Investment Canada Act and under the Competition Act (Canada); and (vii) where
the failure to obtain such consents, approvals, etc., would not prevent or
delay the consummation of the Arrangement or otherwise prevent Digicon from
performing its obligations under this Agreement and would not reasonably be
expected to have a Material Adverse Effect on Digicon.
3.4 CAPITALIZATION. The authorized capital stock of Digicon consists of
20,000,000 common shares, $.01 par value ("Digicon Common Stock," which term
shall include for all purposes of this Agreement the related preferred share
purchase rights issuable under that certain "Rights Agreement" dated as of
March 15, 1996, between Digicon and Chemical Mellon Shareholder Services,
L.L.C., as Rights Agent) and 1,000,000 shares of preferred stock, par value
$.01 per share ("Digicon Preferred Stock"). As of April 30, 1996, there were
11,123,422 shares of Digicon Common Stock outstanding, and 1,356,401 shares of
Digicon Common Stock were reserved for issuance upon the exercise of stock
options outstanding under Digicon's stock option plans and upon the exercise of
outstanding warrants; at the same date, no shares of Digicon Preferred Stock
were outstanding and 250,000 shares had been designated as Class A Preferred
Stock and reserved for issuance pursuant to the Rights Agreement.
3.5 SECURITIES REPORTS AND FINANCIAL STATEMENTS. Digicon has filed all
forms, reports and documents required to be filed by it by the SEC or
pursuant to relevant United States securities statutes, regulations, policies
and rules (collectively, the "Digicon Securities Reports"), all of which have
complied in all material respects with all applicable requirements of such
statutes, regulations, policies and rules. None of the Digicon Securities
Reports, at the time filed or as subsequently amended, 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 made therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of Digicon contained in the Digicon Securities Reports
complied in all material respects with the then applicable accounting
requirements and the published rules and regulations of the relevant United
States securities statutes with respect thereto, were prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may have been indicated
in the notes thereto or, in the case of unaudited statements, as permitted by
applicable laws, rules or regulations) and fairly present (subject, in the case
of the unaudited statements, to normal, year-end audit adjustments) the
consolidated financial position of Digicon and its consolidated Digicon
Subsidiaries as at the respective dates thereof and the consolidated results of
their operations and cash flows for the respective periods then ended. There
has been no change
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in Digicon's accounting policies or the methods of making accounting estimates
or changes in estimates that are material to such financial statements, except
as described in the notes thereto.
3.6 LIABILITIES. Digicon and the Digicon Subsidiaries do not have any
liabilities or obligations, either accrued, absolute, contingent, or otherwise,
or have any knowledge of any potential liabilities or obligations, other than
those (i) disclosed in the Digicon Securities Reports, (ii) set forth in the
Digicon Disclosure Letter or (iii) incurred in the ordinary course of business
since July 31, 1995.
3.7 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Digicon for inclusion or incorporation by reference in the
Joint Proxy Statement (and, if filed, the Form S-3) will, at the time the Joint
Proxy Statement is mailed to the shareholders of Digicon and at the time of the
Digicon Stockholders Meeting (and, if filed, at the time the Form S-3 is
declared effective), contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made,
not misleading. The Joint Proxy Statement will comply as to form in all
material respects with the provisions of applicable United States securities
laws and the rules and regulations of the SEC.
3.8 NO DEFAULTS. Neither Digicon nor any Digicon Subsidiary is, or has
received notice that it would be with the passage of time, in default or
violation of any term, condition or provision of (i) its charter documents or
bylaws; (ii) any judgment, decree or order applicable to it; or (iii) any loan
or credit agreement, note, bond, mortgage, indenture, material contract,
agreement, lease, license or other instrument to which Digicon or any Digicon
Subsidiary is now a party or by which it or any of its properties or assets may
be bound, except in the case of item (iii) for defaults and violations which,
individually or in the aggregate, would not have a Material Adverse Effect on
Digicon.
3.9 LITIGATION; INVESTIGATIONS. There is no claim, action, suit or
proceeding pending or, to the knowledge of Digicon, threatened, which
would, if adversely determined, individually or in the aggregate, have a
Material Adverse Effect on Digicon, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against Digicon or any of the Digicon Subsidiaries having, or which, insofar as
reasonably can be foreseen, in the future could have, any such effect. There
is no investigation pending or, to the knowledge of Digicon, threatened,
against Digicon or any of the Digicon Subsidiaries before any Governmental
Entity.
3.10 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in the
Digicon Disclosure Letter, other than as a result of the transactions
contemplated by this Agreement, since July 31, 1995, there has not been:
(a) Financial Change. Any material adverse change in the financial
condition, backlog, operations, assets, liabilities or business of Digicon
or the Digicon Subsidiaries;
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(b) Property Damage. Any material damage, destruction, or loss to the
business or properties of Digicon or the Digicon Subsidiaries (whether or not
covered by insurance);
(c) Dividends or Redemptions. Any declaration, setting aside, or
payment of any dividend or other distribution in respect of the capital
stock of Digicon, or any direct or indirect redemption, purchase or any other
acquisition by Digicon of any such stock;
(d) Capitalization Change. Any change in the capital stock or in the
number of shares or classes of Digicon's authorized or outstanding capital
stock as described in Section 3.4 (other than as a result of exercises
currently outstanding options or warrants to purchase Digicon Common Stock);
(e) Labor Matters. Any labor dispute or charge of unfair labor practice
(other than routine individual grievances), any activity or proceeding by a
labor union or representative thereof to organize any employees of Digicon or
any Digicon Subsidiary or any campaign being conducted to solicit authorization
from employees to be represented by such labor union; or
(f) Other Material Changes. Any other event or condition known to
Digicon particularly pertaining to and adversely affecting the operations,
assets or business of Digicon or the Digicon Subsidiaries (other than events or
conditions which are of a general or industry-wide nature and of general public
knowledge) which would constitute a Material Adverse Effect on Digicon.
3.11 ADDITIONAL DIGICON INFORMATION. The Digicon Disclosure Letter
contains true, complete and correct lists of the following items with
respect to Digicon and the Digicon Subsidiaries, and Digicon agrees that upon
the request of Veritas, it will furnish to Veritas true, complete and correct
copies of any documents referred to in such lists:
(a) Real Estate. All real property and structures thereon owned,
leased or subject to a contract of purchase and sale, or lease
commitment, with a description of the nature and amount of any Encumbrance
thereon;
(b) Insurance. All insurance policies or bonds currently maintained,
including title insurance policies, including those covering properties,
buildings, machinery, equipment, fixtures, employees and operations, as well as
a listing of any premiums, audit adjustments or retroactive adjustments due or
pending on such policies or any predecessor policies;
(c) Material Contracts. All contracts which involve, or may involve,
aggregate payments by any party thereto of $500,000 or more, which are to be
performed in whole or in part after the Effective Time;
(d) Employee Compensation Plans. All bonus, incentive compensation,
deferred compensation, profit-sharing, retirement, pension, welfare,
group insurance, death benefit, or other fringe benefit plans, arrangements or
trust agreements, together with copies of the most recent reports
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with respect to such plans, arrangements, or trust agreements filed with any
Governmental Entity and all tax determination letters that have been received
with respect to such plans;
(e) Employee Agreements. Any collective bargaining agreements with any
labor union or other representative of employees, including amendments,
supplements, and all employment and consulting agreements;
(f) Patents. All patents, trademarks, copyrights and other material
intellectual property rights owned, licensed or used;
(g) Trade Names. All trade names and fictitious names used or held,
whether and where such names are registered and where used;
(h) Promissory Notes. All long-term and short-term promissory notes,
installment contracts, loan agreements, credit agreements, and any other
agreements relating thereto or with respect to collateral securing the same;
and
(i) Guaranties. All indebtedness, liabilities and commitments of
others and as to which it is a guarantor, endorser, co-maker, surety, or
accommodation maker, or is contingently liable therefor (excluding liabilities
as an endorser of checks and the like in the ordinary course of business) and
all letters of credit, whether stand-by or documentary, issued by any third
party.
3.12 CERTAIN AGREEMENTS. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
will (i) result in any payment (including without limitation, severance,
unemployment compensation, parachute payment, bonus or otherwise) becoming due
to any director, employee or independent contractor of Digicon or the Digicon
Subsidiaries under any Digicon Plan (as hereinafter defined) or otherwise (ii)
materially increase any benefits otherwise payable under any Digicon Plan or
otherwise or (iii) result in the acceleration of the time of payment or vesting
of any such benefits.
3.13 EMPLOYEE BENEFIT PLANS. All employee benefits plans covering active,
former or retired employees of Digicon and the Digicon Subsidiaries are listed
in the Digicon Disclosure Letter (the "Digicon Plans"). Digicon has made
available to Veritas a copy of each Digicon Plan, any related trust agreement
and annuity or insurance contract, if any, and each plan's most recent annual
report filed with the Internal Revenue Service, if any, and: (i) each Digicon
Plan has been maintained and administered in material compliance with its terms
and with the requirements prescribed by any and all applicable statutes,
orders, rules and regulations, and is, to the extent required by applicable law
or contract, fully funded without having any deficit or unfunded actuarial
liability; (ii) all required employer contributions under any such plans have
been made and the applicable funds have been funded in accordance with the
terms thereof and no past service funding liabilities exist thereunder; (iii)
each Digicon 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, and nothing has occurred since the date of the last
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qualification, registration or approval to adversely affect, or cause, the
appropriate governmental agency or authority to revoke such qualification,
registration or approval; (iv) to the extent applicable, the Digicon Plans
comply, in all material respects, with the requirements of ERISA, and the Code,
and any Digicon Plan intended to be qualified under Section 401(a) of the Code
has been determined by the Internal Revenue Service to be so qualified and
nothing has occurred to cause the loss of such qualified status; (v) no Digicon
Plan is covered by Title IV of ERISA or Section 412 of the Code; (vi) there are
no pending or anticipated material claims against or otherwise involving any of
the Digicon Plans and no suit, action or other litigation (excluding claims for
benefits incurred in the ordinary course of Digicon Plan activities) has been
brought against or with respect to any Digicon Plan; (vii) all material
contributions, reserves or premium payments, required to be made as of the date
hereof to the Digicon Plans have been made or provided for; (viii) neither
Digicon nor any Digicon Subsidiary has incurred any liability under subtitle C
or D of Title IV of ERISA with respect to any "single-employer plan," within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained
by Digicon, any Digicon Subsidiary or any entity which is considered one
employer with Digicon under Section 4001 of ERISA; (ix) neither Digicon nor any
Digicon Subsidiary has incurred any withdrawal liability under Subtitle E of
Title IV of ERISA with respect to any "multiemployer plan," within the meaning
of Section 4001(a)(3) of ERISA; and (x) neither Digicon nor any Digicon
Subsidiary has any obligations for retiree health and life benefits under any
Digicon Plan, except as set forth on the Digicon Disclosure Letter and there
are no restrictions on the rights of Digicon or the Digicon Subsidiaries to
amend or terminate any such Digicon Plan without incurring any liability
thereunder.
3.14 INTELLECTUAL PROPERTY. Digicon or the Digicon Subsidiaries owns or
possesses licenses to use all patents, patent applications, trademarks and
service marks (including registrations and applications therefor), trade names,
copyrights and written know-how, trade secrets and all other similar
proprietary data and the goodwill associated therewith (collectively, the
"Digicon Intellectual Property") that are either material to the business of
Digicon or any Digicon Subsidiary or that are necessary for the manufacture,
use, license or sale of any services or products manufactured, used, licensed
or sold by Digicon or the Digicon Subsidiaries, including all such intellectual
property listed in the Digicon Disclosure Letter. The Digicon Intellectual
Property is owned or licensed by Digicon or the Digicon Subsidiaries free and
clear of any Encumbrance other than such Encumbrances as are listed in the
Digicon Disclosure Letter. Except as otherwise indicated in such letter or in
the ordinary course of business, neither Digicon nor the Digicon Subsidiaries
has granted to any other person any license to use any Digicon Intellectual
Property. Neither Digicon nor the Digicon Subsidiaries has received any notice
of infringement, misappropriation, or conflict with, the intellectual property
rights of others in connection with the use by Digicon or the Digicon
Subsidiaries of the Digicon Intellectual Property.
3.15 TITLE TO PROPERTIES. Except for goods and other property sold, used
or otherwise disposed of in the ordinary course of business for fair
value, Digicon has good and indefeasible title to all its properties, interests
in properties and assets, real and personal, reflected in its July 31, 1995
financial statements, free and clear of any Encumbrance, except (i)
Encumbrances reflected in the balance sheet of Digicon dated July 31, 1995,
(ii) liens for current taxes not yet due and payable, and
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(iii) such imperfections of title, easements and Encumbrances, if any, as are
not substantial in character, amount, or extent and do not and will not
materially detract from the value, or interfere with the present use, of the
property subject thereto or affected thereby, or otherwise materially impair
business operations. All leases pursuant to which Digicon or any Digicon
Subsidiary leases (whether as lessee or lessor) any substantial amount of real
or personal property are in good standing, valid, and effective; and there is
not, under any such leases, any existing or prospective default or event of
default or event which with notice or lapse of time, or both, would constitute
a default by Digicon or any Digicon Subsidiary and in respect to which Digicon
or a Digicon Subsidiary has not taken adequate steps to prevent a default from
occurring. The buildings and premises of Digicon and the Digicon Subsidiaries
that are used in its business are in good operating condition and repair,
subject only to ordinary wear and tear. All major items of operating equipment
of Digicon and the Digicon Subsidiaries are in good operating condition and in
a state of reasonable maintenance and repair, ordinary wear and tear excepted,
and are free from any known defects except as may be repaired by routine
maintenance and such minor defects as to not substantially interfere with the
continued use thereof in the conduct of normal operations.
3.16 ENVIRONMENTAL MATTERS. Except as set forth in the Digicon Disclosure
Letter:
(a) Environmental Conditions. There are no environmental conditions or
circumstances, such as the presence or release of any hazardous substance, on
any property presently or previously owned or leased by Digicon or the Digicon
Subsidiaries that could result in a Material Adverse Effect on Digicon.
(b) Permits, etc. Digicon and the Digicon Subsidiaries have in full
force and effect all environmental permits, licenses, approvals and other
authorizations required to conduct their operations and are operating in
material compliance thereunder.
(c) Compliance. Digicon's and the Digicon Subsidiaries' operations and
use of their assets do not violate any applicable United States or Canadian or
other federal, provincial, state or local law, statute, ordinance, rule,
regulation, order or notice requirement pertaining to (a) the condition or
protection of air, groundwater, surface water, soil, or other environmental
media, (b) the environment, including natural resources or any activity which
affects the environment, or (c) the regulation of any pollutants, contaminants,
waste, substances (whether or not hazardous or toxic), including, without
limitation, the Applicable Environmental Laws, except for violations which,
either singly or in the aggregate, would not result in a Material Adverse
Effect on Digicon.
(d) Past Compliance. None of the operations or assets of Digicon or the
Digicon Subsidiaries has ever been conducted or used by Digicon or the Digicon
Subsidiaries in such a manner as to constitute a violation of any of the
Applicable Environmental Laws, except for violations which, either singly or in
the aggregate, would not result in a Material Adverse Effect on Digicon.
(e) Environmental Claims. No notice has been served on Digicon or any
Digicon Subsidiaries from any entity, governmental agency or individual
regarding any existing, pending or
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threatened investigation or inquiry related to alleged violations under
any Applicable Environmental Laws, or regarding any claims for remedial
obligations or contribution under any Applicable Environmental Laws, other than
any of the foregoing which, either singly or in the aggregate, would not result
in a Material Adverse Effect on Digicon.
(f) Renewals. Digicon does not know of any reason it would not be able
to renew any of the permits, licenses, or other authorizations required
pursuant to any Applicable Environmental Laws to operate and use any of
Digicon's or the Digicon Subsidiaries' assets for their current purposes and
uses.
(g) Asbestos and PCBs. No asbestos or PCBs are currently being used or
have ever been used by Digicon or the Digicon Subsidiaries in their
operations or on their properties.
3.17 COMPLIANCE WITH OTHER LAWS. Except as set forth in the Digicon
Disclosure Letter, neither Digicon nor any Digicon Subsidiary is in
violation of or in default with respect to, or in alleged violation of or
alleged default with respect to any other applicable law or any applicable
rule, regulation, or any writ or decree of any court or any governmental
commission, board, bureau, agency, or instrumentality, or delinquent with
respect to any report required to be filed with any Governmental Entity, except
for violations which, either singly or in the aggregate, do not and are not
expected to result in a Material Adverse Effect on Digicon.
3.18 TAXES. Except with respect to failures which, in the aggregate,
would not result in a Material Adverse Effect on Digicon, proper and
accurate federal, state and local income, capital, withholding, value added,
sales, use, franchise, gross revenue, turnover, excise, payroll, property,
employment, customs duties and any and all other tax returns, reports, and
estimates have been filed with appropriate governmental agencies, domestic and
foreign, by Digicon and each of the Digicon Subsidiaries for each period for
which any returns, reports, or estimates were due (taking into account any
extensions of time to file before the date hereof); all taxes shown by such
returns to be payable and any other taxes due and payable have been paid other
than those being contested in good faith by Digicon or a Digicon Subsidiary;
and the tax provision reflected in Digicon's financial statements as of July
31, 1995, is adequate, in accordance with United States generally accepted
accounting principles, to cover liabilities of Digicon and the Digicon
Subsidiaries at the date thereof for all taxes, including any interest,
penalties and additions to taxes of any character whatsoever applicable to
Digicon and the Digicon Subsidiaries or their assets or businesses. No waiver
of any statute of limitations executed by Digicon or a Digicon Subsidiary with
respect to any tax is in effect for any period. The income tax returns of
Digicon and the Digicon Subsidiaries have never been examined by the Internal
Revenue Service. There are no tax liens on any assets of Digicon or the
Digicon Subsidiaries except for taxes not yet currently due and those which
could not reasonably be expected to result in a Material Adverse Effect on
Digicon.
3.19 VOTE REQUIRED. At a stockholders meeting at which a quorum is
present, (i) the affirmative vote of the holders of a majority of the
outstanding shares of Digicon Common Stock present at the meeting is required
to approve the issuance of the Digicon Common Stock pursuant
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to this Agreement upon exchange of the Exchangeable Shares and (ii) the
affirmative vote of the holders of a majority of the issued and outstanding
shares of Digicon Common Stock is necessary to approve the Digicon Restated
Charter.
3.20 POOLING MATTERS. Neither Digicon nor any of its affiliates has
taken or agreed to take any action that, without giving effect to any
action taken or agreed to be taken by Veritas or any of its affiliates, would
prevent Veritas from accounting for the business combination to be effected by
the Arrangement as a pooling of interests.
3.21 BROKERS AND FINDERS. Other than PaineWebber Incorporated in
accordance with the terms of its engagement letter in its final form, a
copy of which has previously been provided to Veritas, none of Digicon or any
of the Digicon Subsidiaries nor any of their respective directors, officers or
employees has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or similar payments in
connection with the transactions contemplated by this Agreement.
3.22 DISCLOSURE. No representation or warranty made by Digicon in this
Agreement, nor any document, written information, statement, financial
statement, certificate or Exhibit prepared and furnished or to be prepared and
furnished by Digicon or its representatives pursuant hereto or in connection
with the transactions contemplated hereby, when taken together, contained any
untrue statement of a material fact when made, or omitted to state a material
fact necessary to make the statements or facts contained herein or therein not
misleading in light of the circumstances under which they were furnished.
3.23 FAIRNESS OPINION. Digicon's board of directors has received a
written opinion from PaineWebber Incorporated that the Exchange Ratio is fair
to Digicon's stockholders from a financial point of view.
3.24 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no material agreement,
judgment, injunction, order or decree binding upon Digicon or any Digicon
Subsidiary that has or could reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of Digicon or any
Digicon Subsidiary, any acquisition of property by Digicon or any Digicon
Subsidiary or the conduct of business by Digicon or any Digicon Subsidiary as
currently conducted.
3.25 BOOKS AND RECORDS. The books, records and accounts of Digicon and
the Digicon Subsidiaries (a) have been maintained in accordance with
good business practices on a basis consistent with prior years, (b) are stated
in reasonable detail and accurately and fairly reflect the transactions and
dispositions of the assets of Digicon and the Digicon Subsidiaries and (c)
accurately and fairly reflect the basis for the Digicon financial statements.
Digicon has devised and maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (a) transactions are executed
in accordance with management's general or specific authorization; and (b)
transactions are recorded as necessary (i) to permit preparation of financial
statements in conformity
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with United States generally accepted accounting principles or any other
criteria applicable to such statements and (ii) to maintain accountability for
assets.
ARTICLE IV
OBLIGATIONS PENDING EFFECTIVE DATE
4.1 AGREEMENTS OF DIGICON AND VERITAS. Digicon and Veritas agree to
take the following actions after the date hereof:
(a) Regulatory Approvals. Each party will promptly execute and file or
join in the execution and filing of any application or other document that
may be necessary in order to obtain the authorization, approval or consent of
any Governmental Entity which may be reasonably required, or which the other
party may reasonably request, in connection with the consummation of the
transactions contemplated by this Agreement. Each party will use its
commercially reasonable efforts to promptly obtain such authorizations,
approvals and consents. Without limiting the generality of the foregoing, as
promptly as practicable after the execution of this Agreement, each party shall
make all required filings with the Federal Trade Commission (the "FTC") and the
Antitrust Division of the Department of Justice (the "DOJ"), a pre-merger
notification report under the HSR Act and shall make such filings as are
necessary under the Investment Canada Act and the Competition Act (Canada).
(b) Access to Information. Each party will allow the other and its
agents reasonable access to the files, books, records and offices of the other
and the other's subsidiaries, including, without limitation, any and all
information relating to such party's tax matters, contracts, leases, licenses
and real, personal and intangible property and financial condition. Each party
will cause its accountants to cooperate with the other in making available to
the other party all financial information reasonably requested, including,
without limitation, the right to examine all working papers pertaining to tax
matters and financial statements prepared or audited by such accountants.
(c) Joint Proxy Statement. Digicon and Veritas shall cooperate in the
preparation and prompt filing of the Joint Proxy Statement (and, if required,
the Form S-3) with the SEC;
(d) Notice of Material Developments. Each of Digicon and Veritas will
promptly notify the other in writing (i) of any event occurring subsequent to
the date of this Agreement which would render any representation and warranty
of such party contained in this Agreement untrue or inaccurate in any material
respect, (ii) of any Material Adverse Effect on such party and (iii) of any
breach by such party of any covenant or agreement contained in this Agreement;
and
(e) Satisfaction of Conditions Precedent. During the term of this
Agreement, each of Digicon and Veritas will use its commercially
reasonable efforts to satisfy or cause to be satisfied all the conditions
precedent that are set forth in Article V hereof, and each of Digicon and
Veritas will use its commercially reasonable efforts to cause the Arrangement
and the other transactions contemplated by this Agreement to be consummated.
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4.2 ADDITIONAL AGREEMENTS OF VERITAS. Veritas agrees that from the
date hereof to the Effective Date, it will, and will cause each of the Veritas
Subsidiaries to:
(a) Operate in Ordinary Course. Other than as contemplated by this
Agreement, operate its business only in the usual, regular, and ordinary
manner so as to maintain the goodwill it now enjoys and, to the extent
consistent with such operation, use all commercially reasonable efforts to
preserve intact its present business organization, keep available the services
of its present officers and employees, and preserve its relationships with
customers, suppliers, distributors, and others having business dealings with
it;
(b) Maintenance of Properties. Maintain all of its property and assets
in customary repair, order, and condition, reasonable wear and use and
damage by fire or unavoidable casualty excepted;
(c) Maintenance of Books and Records. Maintain its books of account and
records in the usual, regular, and ordinary manner, in accordance with
generally accepted accounting principles applied on a consistent basis;
(d) Compliance with Law. Duly comply in all material respects with all
laws applicable to it and to the conduct of its business;
(e) Employment Matters. Not (i) enter into any contracts of employment
which (1) cannot be terminated on notice of 14 days or less or (2) provide
for any severance payments or benefits covering a period beyond the termination
date of such employment contract, except as may be required by law or (ii)
amend any employee benefit plan or stock option plan, except as may be required
for compliance with applicable law or as contemplated by this Agreement;
(f) Prohibition of Certain Loans. Not incur any borrowings except (i)
the refinancing of indebtedness now outstanding or additional borrowings
under its existing revolving credit facilities, (ii) the prepayment by
customers of amounts due or to become due for goods sold or services rendered
or to be rendered in the future, (iii) trade payables incurred in the ordinary
course of business, (iv) other borrowings incurred in the ordinary course of
business to finance normal operations or (v) as is otherwise agreed to in
writing by Digicon;
(g) Prohibition of Certain Commitments. Not enter into commitments of a
capital expenditure nature or incur any contingent liability which would exceed
$500,000, in the aggregate, except (i) as may be necessary for the maintenance
of existing facilities, machinery and equipment in good operating condition and
repair in the ordinary course of business, (ii) as may be required by law or
(iii) as is otherwise agreed to in writing by Digicon;
(h) Disposal of Assets. Not sell, dispose of, or encumber, any
property or assets, except (i) in the ordinary course of business, (ii) as may
be reasonably required in connection with borrowings under Section 4.2(f), or
(iii) as is otherwise agreed to in writing by Digicon;
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(i) Maintenance of Insurance. Maintain insurance upon all its
properties and with respect to the conduct of its business of such
kinds and in such amounts as is customary in the type of business in which it
is engaged, but not less than that presently carried by it;
(j) No Amendment to Charter Documents, etc. Except as otherwise
provided in this Agreement, not amend its charter documents or bylaws or
other organizational documents or merge or consolidate with or into any other
corporation or change in any manner the rights of its capital stock or the
character of its business;
(k) No Issuance, Sale, or Purchase of Securities. Except as otherwise
provided in this Agreement, not issue or sell (except upon the exercise of
outstanding options), or issue options or rights to subscribe to, or enter into
any contract or commitment to issue or sell, any shares of its capital stock or
subdivide or in any way reclassify any shares of its capital stock, or acquire,
or agree to acquire, any shares of its capital stock;
(l) Prohibition on Dividends. Not declare or pay any dividend on
shares of its capital stock or make any other distribution of assets to the
holders thereof;
(m) Supplemental Financial Statements. Deliver to Digicon, within 45
days after the end of each fiscal quarter of Veritas beginning April 30,
1996, and through the Effective Date, unaudited consolidated balance sheets and
related unaudited statements of income, retained earnings and cash flows as of
the end of each fiscal quarter of Veritas, and as of the corresponding fiscal
quarter of the previous fiscal year. Veritas hereby represents and warrants
that such unaudited consolidated financial statements shall (i) be complete in
all material respects except for the omission of notes and schedules contained
in audited financial statements, (ii) present fairly the financial condition of
Veritas as at the dates indicated and the results of operations for the
respective periods indicated, (iii) shall have been prepared in accordance with
Canadian generally accepted accounting principles applied on a consistent
basis, except as noted therein and (iv) shall contain all adjustments which
Veritas considers necessary for a fair presentation of its results for each
respective fiscal period; and
(n) Exclusivity; Acquisition Proposals. Unless and until this
Agreement shall have been terminated by either party pursuant to Article VI
hereof, it shall not (and it shall use its best efforts to ensure that none of
its officers, directors, agents, representatives or affiliates) take or cause
to take (or cause any of the Veritas Subsidiaries to take), directly of
indirectly, any of the following actions with any party other than Digicon and
its designees: (i) solicit, encourage, initiate or participate in any
negotiations, inquiries or discussions with respect to any offer or proposal to
acquire all or any significant part of its business, assets or capital shares
whether by arrangement, amalgamation, merger, consolidation, other business
combination, purchase of assets, tender or exchange offer or otherwise (each of
the foregoing, an "Acquisition Transaction"), (ii) disclose any information not
customarily disclosed to any person concerning its business or properties or
afford to any person or entity access to its properties, books or records,
except in the ordinary course of business and as required by law or pursuant to
a governmental request for information, (iii) enter into or execute any
agreement relating to an Acquisition Transaction, plan of reorganization, or
other agreement calling
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for the sale of all or any significant part of its business and properties; or
(iv), except as required by law, make or authorize any public statement,
recommendation or solicitation with respect to any Acquisition Transaction or
any offer or proposal relating to an Acquisition Transaction other than with
respect to the Arrangement.
4.3 ADDITIONAL AGREEMENTS OF DIGICON. Digicon agrees that from the date
hereof to the Effective Date, it will, and will cause each of the Digicon
Subsidiaries to:
(a) Operate in Ordinary Course. Other than as contemplated by this
Agreement, operate its business only in the usual, regular, and ordinary
manner so as to maintain the goodwill it now enjoys and, to the extent
consistent with such operation, use all commercially reasonable efforts to
preserve intact its present business organization, keep available the services
of its present officers and employees, and preserve its relationships with
customers, suppliers, distributors, and others having business dealings with
it;
(b) Maintenance of Properties. Maintain all of its property and assets
in customary repair, order, and condition, reasonable wear and use and
damage by fire or unavoidable casualty excepted;
(c) Maintenance of Books and Records. Maintain its books of account and
records in the usual, regular, and ordinary manner, in accordance with
generally accepted accounting principles applied on a consistent basis;
(d) Compliance with Law. Duly comply in all material respects with all
laws applicable to it and to the conduct of its business;
(e) Employment Matters. Not (i) enter into any contracts of employment
which (1) cannot be terminated on notice of 14 days or less or (2) provide
for any severance payments or benefits covering a period beyond the termination
date of such employment contract, except as may be required by law or (ii)
amend any employee benefit plan or stock option plan, except as may be required
for compliance with this Agreement or applicable law;
(f) Prohibition of Certain Loans. Not incur any borrowings except (i)
the refinancing of indebtedness now outstanding or additional borrowings
under its existing revolving credit facilities, (ii) the prepayment by
customers of amounts due or to become due for goods sold or services rendered
or to be rendered in the future, (iii) trade payables incurred in the ordinary
course of business, (iv) other borrowings incurred in the ordinary course of
business to finance normal operations or (v) as is otherwise agreed to in
writing by Veritas;
(g) Prohibition of Certain Commitments. Not enter into commitments of
a capital expenditure nature or incur any contingent liability which would
exceed $500,000, in the aggregate, except (i) as may be necessary for the
maintenance of existing facilities, machinery and equipment in
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good operating condition and repair in the ordinary course of business, (ii) as
may be required by law or (iii) as is otherwise agreed to in writing by
Veritas;
(h) Disposal of Assets. Not sell, dispose of, or encumber, any property
or assets, except (i) in the ordinary course of business, (ii) as may be
reasonably required in connection with borrowings under Section 4.3(f), or
(iii) as is otherwise agreed to in writing by Veritas;
(i) Maintenance of Insurance. Maintain insurance upon all its
properties and with respect to the conduct of its business of such kinds and
in such amounts as is customary in the type of business in which it is engaged,
but not less than that presently carried by it;
(j) No Amendment to Charter Documents, etc. Except as otherwise
provided in this Agreement, not amend its charter documents or bylaws or
other organizational documents or merge or consolidate with or into any other
corporation or change in any manner the rights of its capital stock or the
character of its business;
(k) No Issuance, Sale, or Purchase of Securities. Except as otherwise
provided in this Agreement, not issue or sell (except upon the exercise of
outstanding options or warrants), or issue options or rights to subscribe to,
or enter into any contract or commitment to issue or sell, any shares of its
capital stock or subdivide or in any way reclassify any shares of its capital
stock, or acquire, or agree to acquire, any shares of its capital stock;
(l) Prohibition on Dividends. Not declare or pay any dividend on
shares of its capital stock or make any other distribution of assets to
the holders thereof;
(m) Supplemental Financial Statements. Deliver to Veritas, within 45
days after the end of each fiscal quarter of Digicon beginning April 30,
1996, and through the Effective Date, unaudited consolidated balance sheets and
related unaudited statements of income, retained earnings and cash flows as of
the end of each fiscal quarter of Digicon, and as of the corresponding fiscal
quarter of the previous fiscal year. Digicon hereby represents and warrants
that such unaudited consolidated financial statements shall (i) be complete in
all material respects except for the omission of notes and schedules contained
in audited financial statements, (ii) present fairly the financial condition of
Digicon as at the dates indicated and the results of operations for the
respective periods indicated, (iii) shall have been prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis, except as noted therein and (iv) shall contain all adjustments which
Digicon considers necessary for a fair presentation of its results for each
respective fiscal period;
(n) Exclusivity; Acquisition Proposals. Unless and until
this Agreement shall have been terminated by either party pursuant to Article
VI hereof, it shall not (and it shall use its best efforts to ensure that none
of its officers, directors, agents, representatives or affiliates) take or
cause to take (or cause any of the Digicon Subsidiaries to take), directly of
indirectly, any of the following actions with any party other than Veritas and
its designees: (i) solicit, encourage, initiate or participate in any
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negotiations, inquiries or discussions with respect to any Acquisition
Transaction, (ii) disclose any information not customarily disclosed to any
person concerning its business or properties or afford to any person or entity
access to its properties, books or records, except in the ordinary course of
business and as required by law or pursuant to a governmental request for
information, (iii) enter into or execute any agreement relating to an
Acquisition Transaction, plan of reorganization, or other agreement calling for
the sale of all or any significant part of its business and properties; or (iv)
except as may be required by law, make or authorize any public statement,
recommendation or solicitation with respect to any Acquisition Transaction or
any offer or proposal relating to an Acquisition Transaction other than with
respect to the Arrangement; and
(o) Listings. Use its commercially reasonable efforts to cause (i) the
shares of Digicon Common Stock to be listed upon the Closing on the
NYSE and the TSE and (ii) with the cooperation and assistance of Veritas, the
Exchangeable Shares to be listed on a mutually acceptable Canadian stock
exchange.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF VERITAS. The obligations of
Veritas to consummate and effect the transactions contemplated hereunder shall
be subject to the satisfaction of the following conditions, or to the waiver
thereof by Veritas in the manner contemplated by this Agreement before the
Effective Date:
(a) Representations and Warranties of Digicon True at Effective Date.
The representations and warranties of Digicon herein contained to the
extent qualified as to materiality shall be accurate in all respects, and to
the extent not so qualified shall be accurate in all material respects at the
Effective Date, with the same effect as though made at such date, except as
affected by transactions permitted or contemplated by this Agreement; Digicon
shall have performed and complied with all covenants required by this Agreement
to be performed or complied with, in all material respects, by Digicon before
the Effective Date; and Digicon shall have delivered to Veritas a certificate,
dated the Effective Date and signed by its chairman of the board or its
president, and by its chief financial or accounting officer, and its secretary,
to both such effects;
(b) Opinion of Digicon Counsel. Veritas shall have received opinions,
dated as of the Effective Date, from Porter & Hedges, L.L.P., United States
counsel for Digicon, and from Burnet, Duckworth & Palmer, Canadian counsel for
Digicon in form and substance satisfactory to Veritas;
(c) Consents of Certain Parties in Privity with Digicon. Veritas shall
have received all written consents, assignments, waivers, authorizations or
other certificates necessary to provide for the continuation in full force and
effect of all material contracts and leases of Digicon and for Digicon to
consummate the transactions contemplated hereby, except when the failure to
receive such consents or other certificates would not have a Material Adverse
Effect on Digicon;
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(d) Shareholder Approval. This Agreement, the Arrangement and the other
transactions contemplated hereby shall have been approved and adopted by the
Veritas shareholders and optionholders in accordance with applicable law and
Veritas' articles of amalgamation and bylaws, and Veritas shall not have
received on or prior to the Effective Time notice from the holders of more than
5% of the Veritas Common Shares of their intention to exercise their rights of
dissent under section 184 of the ABCA;
(e) Digicon Approvals. The issuance of Digicon Common Stock from time
to time upon the exchange of the Exchangeable Shares shall have been approved
by the Digicon stockholders in accordance with the rules of the ASE, with
applicable law and Digicon's certificate of incorporation and bylaws, and the
Digicon stockholders shall have approved the other proposals described in
Section 7.1 hereof;
(f) No Legal Action. No temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the
consummation of the Arrangement shall have been issued by any Canadian or
United States federal, provincial or state court and remain in effect, nor
shall any proceeding seeking any of the foregoing be pending. There shall be
no order, decree or ruling by any governmental agency or threat thereof, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Arrangement, which would prohibit or render illegal the
transactions contemplated by this Agreement;
(g) Tax Opinion. Veritas shall have received an opinion in form and
substance satisfactory to Veritas of Felesky Flynn, tax counsel for
Veritas, to the effect that the Arrangement will be generally treated for
Canadian federal income tax purposes as a reorganization of capital for those
Veritas shareholders who hold their Veritas Common Shares as capital property
for purposes of the ITA;
(h) Pooling Matters. Veritas shall have received from Deloitte &
Touche and Price Waterhouse an opinion, in form and substance satisfactory
to Veritas and Digicon, that the Arrangement will be treated as a "pooling of
interests" for accounting purposes. In addition, no event shall have occurred
which would establish with reasonable certainty that the Arrangement will not
be treated as a "pooling of interests" for accounting purposes;
(i) Court Approval. The Court shall have issued its final order
approving the Arrangement in form and substance satisfactory to Digicon and
Veritas (such approvals not to be unreasonably withheld or delayed by Digicon
or Veritas) and reflecting the terms hereof;
(j) Commissions, etc. All necessary orders shall have been obtained
from the Commissions and other relevant United States and Canadian
securities regulatory authorities in connection with the Arrangement. All
waiting periods required by HSR shall have expired with respect to the
transactions contemplated by this Agreement, or early termination with respect
thereto shall have been obtained without the imposition of any governmental
request or order requiring the sale or disposition or holding separate (through
a trust or otherwise) of particular assets or businesses
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of Veritas or Digicon. Digicon and Veritas shall each have filed all notices
and information (if any) required under Part IX of the Competition Act (Canada)
and the applicable waiting periods and any extensions thereof shall have
expired or the parties shall have received an Advance Ruling Certificate
pursuant to Section 102 of the Competition Act (Canada) setting out that the
Director under such Act is satisfied he would not have sufficient grounds on
which to apply for an order in respect of the Arrangement. The Arrangement
shall have received the allowance or approval or deemed allowance or approval
by the responsible Minister under the Investment Canada Act in respect of the
Arrangement, to the extent such allowance or approval is required, on terms and
conditions satisfactory to the parties;
(k) SEC Filings. The Form S-3, if filed, shall have been declared
effective under the Securities Act and shall not be the subject of any
stop-order or proceedings seeking a stop-order, and the Joint Proxy Statement
shall on the Closing Date not be subject to any similar proceedings commenced
or threatened by the SEC or the Commissions;
(l) Election of Digicon Board and Nominating Committee. At or prior to
the Effective Time, (i) such number of directors of Digicon shall resign or
be removed such that there shall be no more than six directors of Digicon
("Digicon Designees") serving in such a capacity, (ii) the size of the board of
directors of Digicon shall be increased so that it shall initially consist of
ten directors and (iii) a nominating committee (the "Nominating Committee")
will be created. At the Effective Time, four individuals designated by Veritas
(the "Veritas Designees") shall be elected to the board of directors of
Digicon. The Nominating Committee (i) shall consist initially of two outside
directors who are Veritas Designees and two outside directors who are Digicon
Designees, (ii) shall take action by the vote of a majority of its authorized
number of members and (iii) shall nominate directors for election for not less
than the two annual stockholder meetings of Digicon (or special meetings in
lieu thereof) following the Closing. Any member of the Nominating Committee
who ceases to be such a member (whether by reason of resignation from the
Nominating Committee or death, disability, removal or resignation as a director
or otherwise) shall be promptly replaced with a Digicon director designated by
a majority of the Veritas Designees or the Digicon Designees, as applicable.
Digicon shall put forth those individuals nominated by the Nominating Committee
for election to its board of directors and will solicit proxies for its
stockholder's meetings in favor of the election of each such individual.
(m) Redemption of Rights. Digicon shall have given a binding notice of
redemption of the Rights (as therein defined) under the Rights Agreement in
accordance with Section 23 of the Rights Agreement, and shall have taken any
other action required under the Rights Agreement and applicable law such that
the only right at the Effective Time and thereafter of the holders of Rights
shall be to receive the Redemption Price (as defined in the Rights Agreement)
for each Right so held.
(n) Chief Executive Officer. The board of directors of Digicon shall
have taken such action as may be necessary in the reasonable opinion of
Veritas to confer upon David B. Robson ("Robson") at the Effective Date the
positions and titles of Chairman of the Board and Chief Executive Officer of
Digicon;
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(o) Listings. The Digicon Common Stock shall have been approved for
listing on the TSE, and the Exchangeable Shares shall be listed on a reasonably
acceptable Canadian stock exchange, in each case subject to notice of issuance;
and
(p) Certificates and Resolutions. Veritas shall have received such other
certificates and resolutions of Digicon as may be reasonably required in
connection with the consummation of this Agreement.
5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF DIGICON. The obligations of
Digicon to consummate and effect the transactions contemplated hereunder shall
be subject to the satisfaction of the following conditions, or to the waiver
thereof by Digicon in the manner contemplated by this Agreement before the
Effective Date:
(a) Representations and Warranties of Veritas True at Effective Date.
The representations and warranties of Veritas herein contained to the extent
qualified as to materiality shall be accurate in all respects, and to the
extent not so qualified shall be accurate in all material respects at the
Effective Date with the same effect as though made at such date, except as
affected by transactions permitted or contemplated by this Agreement; Veritas
shall have performed and complied with all covenants required by this Agreement
to be performed or complied with, in all material respects, by Veritas before
the Effective Date; and Veritas shall have delivered to Digicon a certificate,
dated the Effective Date and signed by its chairman of the board or its
president, and by its chief financial or accounting officer, and its secretary,
to both such effects;
(b) Opinion of Veritas Counsel. Digicon shall have received opinions,
dated as of the Effective Date, from Vinson & Elkins, L.L.P., United States
counsel to Veritas, and Bennett Jones Verchere, Canadian counsel to Veritas, in
form and substance satisfactory to Digicon;
(c) Consents of Certain Parties in Privity with Veritas. Digicon shall
have received all written consents, assignments, waivers, authorizations or
other certificates necessary to provide for the continuation in full force and
effect of all material contracts and leases of Veritas and for Veritas to
consummate the transactions contemplated hereby, except when the failure to
receive such consents or other certificates would not have a Material Adverse
Effect on Veritas;
(d) Stockholder Approval. The issuance of Digicon Common Stock from
time to time upon the exchange of the Exchangeable Shares and the other
proposals described in Section 7.1 shall have been approved by the Digicon
stockholders in accordance with the rules of the ASE, applicable law and
Digicon's certificate of incorporation and bylaws;
(e) Veritas Approvals. This Agreement and the Arrangement shall have
been approved and adopted by the Veritas shareholders and optionholders in
accordance with applicable law and Veritas' articles of amalgamation and
bylaws, and Veritas shall not have received on or prior to the Effective Time
notice from the holders of more than 5% of the Veritas Common Shares of their
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intention to exercise their rights of dissent under Section 184 of the ABCA.
In addition, the Veritas stockholders shall have approved the other proposals
described in Section 7.1 hereof;
(f) No Legal Action. No temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the
consummation of the Arrangement shall have been issued by any Canadian or U.S.
federal, provincial or state court and remain in effect, nor shall any
proceeding seeking any of the foregoing be pending. There shall be no order,
decree or ruling by any governmental agency or threat thereof, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to
the Arrangement, which would prohibit or render illegal the transactions
contemplated by this Agreement;
(g) Pooling Matters. Digicon shall have received from Deloitte &
Touche and Price Waterhouse an opinion, in form and substance satisfactory
to Digicon and Veritas, that the Arrangement will be treated as a "pooling of
interests" for accounting purposes. In addition, no event shall have occurred
which would establish with reasonable certainty that the Arrangement will not
be treated as a "pooling of interests" for accounting purposes;
(h) Court Approval. The Court shall have issued its final order
approving the Arrangement in form and substance satisfactory to Veritas and
Digicon (such approvals not to be unreasonably withheld or delayed by Veritas
or Digicon) and reflecting the terms hereof;
(i) Commissions, etc. All necessary orders shall have been obtained
from the Commissions and other relevant United States and Canadian
securities regulatory authorities in connection with the Arrangement. All
waiting periods required by HSR shall have expired with respect to the
transactions contemplated by this Agreement, or early termination with respect
thereto shall have been obtained without the imposition of any governmental
request or order requiring the sale or disposition or holding separate (through
a trust or otherwise) of particular assets or businesses of Digicon or
Veritas. Veritas and Digicon shall each have filed all notices and information
(if any) required under Part IX of the Competition Act (Canada) and the
applicable waiting periods and any extensions thereof shall have expired or the
parties shall have received an Advance Ruling Certificate pursuant to Section
102 of the Competition Act (Canada) setting out that the Director under such
Act is satisfied he would not have sufficient grounds on which to apply for an
order in respect of the Arrangement. The Arrangement shall have received the
allowance or approval or deemed allowance or approval by the responsible
Minister under the Investment Canada Act in respect of the Arrangement, to the
extent such allowance or approval is required, on terms and conditions
satisfactory to the parties;
(j) SEC Filings. The Form S-3, if filed, shall have been declared
effective under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop-order and the Joint Proxy Statement
shall on the Closing Date not be subject to any similar proceedings commenced
or threatened by the SEC or the Commissions; and
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(k) Certificates and Resolutions. Digicon shall have received such other
certificates and resolutions of Veritas as may be reasonably required in
connection with the consummation of this Agreement.
ARTICLE VI
TERMINATION
6.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the
transactions contemplated hereby by the stockholders of Digicon or Veritas, as
follows:
(a) by mutual agreement of Veritas and Digicon;
(b) by Veritas, if there has been a breach by Digicon of any
representation, warranty, covenant or agreement set forth in this Agreement on
the part of Digicon, or if any representation or warranty of Digicon shall have
become untrue, in either case which has or can reasonably be expected to have a
Material Adverse Effect on Digicon, and which Digicon fails to cure within 15
business days after written notice thereof from Veritas (except that no cure
period shall be provided for a breach by Digicon which by its nature cannot be
cured);
(c) by Digicon, if there has been a breach by Veritas of any
representation, warranty, covenant or agreement set forth in this Agreement on
the part of Veritas, or if any representation or warranty of Veritas shall have
become untrue, in either case which has or can reasonably be expected to have a
Material Adverse Effect on Veritas, and which Veritas fails to cure within 15
business days after written notice thereof from Digicon (except that no cure
period shall be provided for a breach by Veritas which by its nature cannot be
cured);
(d) by either party if the shareholders of Veritas do not approve the
Arrangement (and the other matters to be approved at such meeting as provided
in Section 7.1 hereof) at the Veritas Shareholders Meeting or the stockholders
of Digicon do not approve at the Digicon Stockholders Meeting the issuance of
Digicon Common Stock issuable upon the exchange of the Exchangeable Shares (and
the other matters to be approved at such meeting as provided in Section 7.1
hereof);
(e) by either party, if all the conditions for Closing the Arrangement
shall not have been satisfied or waived on or before 5:00 p.m.,
Houston, Texas time on September 30, 1996, other than as a result of a breach
of this Agreement by the terminating party; or
(f) by either Digicon or Veritas if any suit, action, or other proceeding
shall be pending or threatened by any United States or Canadian federal,
provincial or state government before any Governmental Entity, in which it is
sought to restrain, prohibit, or otherwise affect the consummation of the
transactions contemplated hereby.
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6.2 NOTICE OF TERMINATION. Any termination of this Agreement under
Section 6.1 above will be effective by the delivery of written notice by the
terminating party to the other party hereto.
6.3 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Veritas or Digicon as provided in Section 6.1, this
Agreement shall forthwith become void and have no effect, and there shall be no
liability or obligation on the part of Digicon or Veritas or their respective
officers or directors, except that (i) the provisions of the Confidentiality
Agreement dated February 27, 1996 shall survive any such termination and
abandonment, and (ii) no party shall be released or relieved from any liability
arising from the willful breach by such party of any of its representations,
warranties, covenants or agreements as set forth in this Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
Digicon and Veritas each agree to take the following actions after the
execution of this Agreement.
7.1 MEETINGS. Veritas and Digicon shall each duly call a meeting of its
stockholders and/or optionholders, as applicable, to be held within 45 days
after the SEC has indicated that it has no further comments on the Joint Proxy
Statement for the purpose of (a) in the case of Veritas, voting upon (i) the
Plan of Arrangement and the transactions contemplated hereby and thereby, and
(b) in the case of Digicon, voting upon (i) a proposal to approve the issuance
of such number of shares of Digicon Common Stock as are necessary to consummate
the Arrangement, (ii) a proposal that upon the Effective Date the corporate
name of Digicon shall be changed to "Veritas DGC Inc.," (iii) a proposal to
adopt the Digicon Restated Charter and effect the reclassification of the
currently outstanding shares of Digicon Common Stock and (iv) such other
matters relating to the Arrangement, if any, as shall be legally required in
the reasonable opinion of Digicon; and each shall, through its board of
directors, recommend to their stockholders approval of such matters and shall
coordinate and cooperate with respect to the timing of such meetings.
7.2 THE CLOSING. Subject to the termination of this Agreement as
provided in Article VI, the Closing of the transactions contemplated by
this Agreement (the "Closing") will take place at the offices of Bennett Jones
Verchere, Calgary, Alberta, Canada on a date (the "Closing Date") and at a time
to be mutually agreed upon by the parties, which date shall be no later than
the fifth business day after all conditions to Closing set forth herein shall
have been satisfied or waived, unless another place, time and date is mutually
selected by Veritas and Digicon. Concurrently with the Closing, the Plan of
Arrangement will be filed with the Registrar under the ABCA.
7.3 ANCILLARY DOCUMENTS/RESERVATION OF SHARES.
(a) Provided all other conditions of this Agreement have been satisfied
or waived, Veritas shall, on the Closing Date, file Articles of
Arrangement pursuant to Part 15 of the ABCA to give
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effect to the Plan of Arrangement, such Articles of Arrangement to contain
share conditions for Exchangeable Shares substantially in the form of those
contained in EXHIBIT A hereto.
(b) On the Effective Date:
(i) Digicon shall execute and deliver a Support Agreement containing
the terms and conditions set forth in EXHIBIT D hereto, together with
such other terms and conditions as may be agreed to by the parties hereto
acting reasonably;
(ii) Digicon, Veritas and a Canadian trust company to be mutually
agreeable to Digicon and Veritas, acting reasonably, shall execute and
deliver a Voting and Exchange Trust Agreement containing the terms and
conditions set forth in EXHIBIT E hereto, together with such other terms and
conditions as may be agreed to by the parties hereto acting reasonably; and
(iii) Digicon shall file with the Secretary of State of Delaware a Restated
Certificate of Incorporation which shall be in substantially the form set forth
in EXHIBIT B hereto.
(c) On or before the Effective Date, Digicon will reserve for issuance
such number of shares of Digicon Common Stock as shall be necessary to give
effect to the exchanges and assumptions or exchanges of options contemplated
hereby.
7.4 EXCHANGE OF OPTIONS. Promptly after the Effective Time, Digicon will
notify in writing each holder of a Veritas Option of the exchange of such
Veritas Option for a option to purchase Digicon Common Stock in accordance with
Section 1.1(j) hereof.
7.5 INDEMNIFICATION AND RELATED MATTERS.
(a) Digicon agrees that all rights to indemnification existing in favor
of the present or former directors and officers of Veritas (as such) or any of
the Veritas Subsidiaries or present or former directors and officers (as such)
of Veritas or any of the Veritas Subsidiaries serving or who served at Veritas'
or any of the Veritas Subsidiaries' request as a director or officer of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, as provided in Veritas' charter or bylaws or similar documents of
any of the Veritas Subsidiaries in effect as of the date hereof with respect to
matters occurring prior to the Effective Time, shall survive and shall continue
in full force and effect and without modification for a period of not less than
the statutes of limitations applicable to such matters.
(b) From and after the Effective Time, Digicon shall and shall cause
Veritas to indemnify and hold harmless to the fullest extent permitted under
the ABCA, each director and officer of Veritas or any Veritas Subsidiary
including, without limitation, officers and directors, serving on or prior to
the date hereof against any costs and expenses (including reasonable attorney's
fees on a solicitor and his own client basis), judgments, fines, losses, claims
and damages and liabilities, and amounts paid in settlement thereof with the
consent of the indemnifying party, in connection with any claim, action,
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suit, proceeding or investigation relating to any of the transactions
contemplated hereby or the Arrangement. In the event of any such claim,
action, suit, proceeding or investigation, Digicon shall cause Veritas to pay
the reasonable fees and expenses of counsel in advance of the final disposition
of any such claim, action, suit, proceeding or investigation to the fullest
extent permitted by law subject to the limitations imposed by the ABCA.
Without limiting the foregoing, in the event any such claim, action, suit,
proceeding or investigation is brought against any indemnified parties, (i) the
indemnified parties may retain counsel reasonably satisfactory to Digicon and,
subject to limitations imposed by the ABCA, Veritas shall (or Digicon shall
cause Veritas to) pay all reasonable fees and expenses of such counsel for the
indemnified parties promptly as statements therefor are received; and (ii)
Digicon will use all reasonable efforts to assist in the defense of such
matter; provided, however, that neither Veritas nor Digicon shall be liable for
any settlement effected without its prior written consent. Any indemnified
party wishing to claim indemnification under this section, upon learning of any
such claim, action, suit, proceeding or investigation, shall notify Digicon
(but the failure to so notify shall not relieve a party from any liability
which it may have under this section except to the extent such failure
prejudices such party). The indemnified parties as a group may retain only one
law firm in any jurisdiction to represent them with respect to each such matter
unless such counsel determines that there is, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of any two or more indemnified parties, in which event such additional counsel
may be required to be retained by the indemnified parties.
(c) Subject to limitations imposed by the ABCA, Veritas shall (or Digicon
shall cause Veritas to) pay all expenses, including attorney's fees on a
solicitor and his own client basis, as the same may be incurred by any
indemnified parties in any action by any indemnified party or parties seeking
to enforce the indemnity or other obligations provided for in this section;
provided, however, that Veritas will be entitled to reimbursement for any
advances made under this section to any indemnified party who ultimately proves
unsuccessful in enforcing the indemnity as finally determined by a
non-appealable judgment in a court of competent jurisdiction, and payment of
such expenses in advance of the final disposition of the action shall be made
only upon receipt of any undertaking by the indemnified party to reimburse all
amounts advanced if such action ultimately proves unsuccessful.
(d) This section, which shall survive the consummation of this
Agreement and the Arrangement, is intended to benefit each person or entity
indemnified hereunder.
7.6 AFFILIATE AGREEMENTS.
(a) To ensure that the Arrangement will be accounted for as a "pooling of
interests" and to ensure compliance with Rule 145 of the rules and regulations
promulgated by the SEC and the Securities Act, Veritas' Affiliates have
concurrently signed and delivered to Digicon the Veritas affiliate agreements
in the form of EXHIBIT F. The identity of all such Veritas Affiliates is set
forth on such exhibit. For purposes of this Agreement, an "Affiliate" shall
have the meaning referred to in Rule 145 under the Securities Act.
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(b) To ensure that the Arrangement will be accounted for as a "pooling of
interests" Digicon's Affiliates have concurrently signed and delivered to
Digicon the Digicon Affiliate Agreements in the form of EXHIBIT G. The
identity of all such Digicon Affiliates is set forth on such exhibit.
7.7 EMPLOYEE MATTERS. Digicon shall take all actions necessary or
appropriate such that each individual employed by Veritas or a Veritas
Subsidiary immediately prior to the Effective Date (a "Veritas Employee") shall
have the benefit of all of such employee's accrued benefits under the Veritas
Plans from and after the Effective Date. Notwithstanding the foregoing, if any
such Veritas Plan is terminated or discontinued on or after the Effective Date,
Digicon shall take all actions necessary or appropriate to permit the Veritas
Employees to immediately thereafter participate in the comparable employee
benefit plan or program, if any, maintained by Digicon or any Digicon
Subsidiary for its employees generally (the "Digicon Benefit Plans"); provided,
however, that, if Veritas' group health plan is so terminated or discontinued,
Digicon shall permit each Veritas Employee and his or her eligible dependents
(including, without limitation, all such Veritas Employee's dependents covered
by Veritas' group health plan as of the time such coverage ceases) to be
covered under a Digicon Benefit Plan that (i) provides medical and any other
benefits to the Veritas Employee and such eligible dependents effective
immediately upon the cessation of coverage of such individuals under Veritas'
group health plan, (ii) credits such Veritas Employee, for the year during
which such coverage under such Digicon Benefit Plan begins, with any
deductibles and copayments already incurred during such year under Veritas'
group health plan, and (iii) waives any preexisting condition restrictions to
the extent necessary to provide immediate coverage. Digicon, the Digicon
Subsidiaries, and the Digicon Benefit Plans shall recognize each Veritas
Employee's years of service and level of seniority with Veritas and the Veritas
Subsidiaries for purposes of terms of employment and eligibility, vesting and
benefit determination under the Digicon Benefit Plans (other than benefit
accruals under any defined benefit pension plan).
ARTICLE VIII
MISCELLANEOUS
8.1 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of the parties contained in this Agreement will remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of the parties to this Agreement, until the earlier of the
termination of this Agreement or the Closing Date, whereupon such
representations and warranties will expire and be of no further force or
effect. All agreements and covenants of the parties shall survive the Closing
Date, except as otherwise set forth in this Agreement.
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8.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, by facsimile
(receipt confirmed) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Digicon to:
Digicon Inc.
3701 Kirby Drive, Suite 960
Houston, Texas 77098
Attention: President
Facsimile No. 713/630-4464
with a copy to Porter & Hedges, L.L.P.
700 Louisiana Street
35th Floor
Houston, Texas 77002
Attention: T. William Porter
Facsimile No. 713/228-1331
and Burnet, Duckworth & Palmer
1499-350 7th Avenue S.W.
Calgary, Alberta
T2P 3N9
Attention: Alan R. Twa
Facsimile No. 403/260-0330
(b) if to Veritas to:
Veritas Energy Services, Inc.
615 Third Avenue S.W.
Suite 300
Calgary, Alberta
T2P 0G6
Attention: President
Facsimile No. 403/266-9359
with a copy to Bennett Jones Verchere
4500 Bankers Hall East
855 2nd Street S.W.
Calgary, Alberta
T2P 4K7
Attention: Neil Stevenson
Facsimile No. 403/265-7219
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and Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002
Attention: J. Mark Metts
Facsimile No. 713/758-2346
8.3 INTERPRETATION. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section or Exhibit to
this Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used therein shall be deemed in each case to be followed by
the words "without limitation." 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.
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to each of the other parties, it being understood
that all parties need not sign the same counterpart.
8.5 MISCELLANEOUS. This Agreement, each of the agreements attached as an
exhibit hereto and any other documents referred to herein or contemplated
hereby (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof; (b) is not intended to confer upon any other person any
rights or remedies hereunder (except as otherwise expressly provided herein and
except that Section 7.5 is for the benefit of Veritas' directors and officers,
Section 1.1(j) is for the benefit of holders of Veritas Options, and Section
7.7 is for the benefit of the Veritas Employees (and said sections are intended
to confer rights on such persons); and (c) shall not be assigned by operation
of law or otherwise except as otherwise specifically provided.
8.6 GOVERNING LAW. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the Province of
Alberta and the federal laws of Canada applicable therein.
8.7 AMENDMENT AND WAIVERS. Any term or provision of this Agreement may
be amended, and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively
or prospectively) only by a writing signed by the party to be bound thereby.
The waiver by a party of any breach hereof or default in the performance hereof
will not be deemed to constitute a waiver of any other default or any
succeeding breach or default. The Agreement may be amended by the parties
hereto at any time before or after approval of the Veritas shareholders or
optionholders or the Digicon stockholders, but, after such approval, no
amendment will be made which by applicable law requires the further approval of
the Veritas shareholders or optionholders or the Digicon stockholders without
obtaining such further approval.
41
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8.8 EXPENSES. Each party will bear its respective expenses and legal
fees incurred with respect to this Agreement, and the transactions contemplated
hereby.
IN WITNESS WHEREOF, Digicon and Veritas have caused this Agreement to be
signed by their respective officers thereunder duly authorized, all as of the
date first written above.
DIGICON INC.
By: /s/STEPHEN J. LUDLOW
-----------------------------------------
Name: Stephen J. Ludlow
----------------------------------------
Title: President and Chief Executive Officer
VERITAS ENERGY SERVICES, INC.
By: /s/ DAVID B. ROBSON
-----------------------------------------
Name: David B. Robson
---------------------------------------
Title: President
By: /s/ LARRY C. FICHTNER
-----------------------------------------
Name: Larry C. Fichtner
---------------------------------------
Title: Executive Vice President
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EXHIBIT A
PLAN OF ARRANGEMENT AND EXCHANGEABLE SHARE PROVISIONS
<PAGE> 44
PLAN OF ARRANGEMENT
UNDER SECTION 186
OF THE BUSINESS CORPORATIONS ACT (ALBERTA)
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS. In this Plan of Arrangement unless there is something in the
subject matter or context inconsistent therewith, the following terms shall
have the respective meanings set out below and grammatical variations of such
terms shall have corresponding meanings:
"ABCA" means the Business Corporations Act (Alberta), as amended;
"Arrangement" means the arrangement under section 186 of the ABCA on the terms
and subject to the conditions set out in this Plan of Arrangement, subject to
any amendments thereto made in accordance with Section 6.1 hereof or made at
the direction of the Court in the Final Order;
"Arrangement Resolution" means the special resolution(s) passed by the holders
of the Veritas Common Shares and by the Optionholders at the Meetings;
"ASE" means the American Stock Exchange;
"Automatic Redemption Date" has the meaning attributed thereto in the
Exchangeable Share Provisions;
"Average Closing Price" means the average closing price (computed and rounded
to the third decimal point) of shares of Digicon Common Stock on the ASE
during the 10 trading days ending on the last trading day prior to the
Effective Date;
"Business Day" has the meaning attributed thereto in the Exchangeable Share
Provisions;
"Class A Preferred Share" means the one authorized Class A Preferred Share of
Veritas having the rights, privileges, restrictions and conditions set out in
Appendix A annexed hereto;
"Combination Agreement" means the agreement by and among Digicon and Veritas,
dated as of May 10, 1996, as the same may be amended and restated, providing
for, among other things, the Arrangement;
"Court" means the Court of Queen's Bench of Alberta;
"Depositary" means The R-M Trust Company at its principal office in Calgary,
Alberta;
"Digicon" has the meaning attributed thereto in the Exchangeable Share
Provisions;
"Digicon Common Stock" has the meaning attributed thereto in the Exchangeable
Share Provisions;
"Dissent Procedures" has the meaning set out in Section 3.1;
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"Effective Date" means the date shown on the certificate of arrangement issued
by the Registrar under the ABCA giving effect to the Arrangement;
"Effective Time" means 12:01 a.m. on the Effective Date;
"Exchange Ratio" is equal to 0.8 Exchangeable Shares for each Veritas Common
Share;
"Exchangeable Share Consideration" shall have the meaning attributed thereto in
the Exchangeable Share Provisions;
"Exchangeable Share Price" shall have the meaning attributed thereto in the
Exchangeable Share Provisions;
"Exchangeable Share Provisions" means the rights, privileges, restrictions and
conditions attaching to the Exchangeable Shares, which are set forth in
Appendix A hereto;
"Exchangeable Shares" means the Exchangeable Shares in the capital of Veritas;
"Final Order" means the final order of the Court approving the Arrangement as
such order may be amended by the Court at any time prior to the Effective
Time;
"Liquidation Call Right" has the meaning attributed thereto in Section 5.1;
"Liquidation Date" has the meaning attributed thereto in the Exchangeable
Share Provisions;
"Meetings" means the special meetings of the shareholders of Veritas and of the
Optionholders to be held to consider the Arrangement;
"Options" means the various outstanding option agreements held by directors,
officers and employees of Veritas to purchase Veritas Common Shares granted
pursuant to Veritas' stock option plan;
"Optionholders" means holders of Options;
"Proxy Statement" means the Joint Management Information Circular and Proxy
Statement of Veritas and Digicon dated ____________, 1996;
"Redemption Call Purchase Price" has the meaning attributed thereto in Section
5.2;
"Redemption Call Right" has the meaning attributed thereto in Section 5.2;
"Subsidiary" shall have the meaning attributed thereto in the Exchangeable
Share Provisions;
"Veritas" means Veritas Energy Services Inc., a corporation existing under the
ABCA; and
"Veritas Common Shares" means the common shares in the capital of Veritas.
1.2 SECTIONS AND HEADINGS. The division of this Plan of Arrangement into
sections and the insertion of headings are for reference purposes only and
shall not affect the interpretation of this
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Plan of Arrangement. Unless otherwise indicated, any reference in this Plan
of Arrangement to a section or an Appendix refers to the specified section of
or Appendix to this Plan of Arrangement.
1.3 NUMBER, GENDER AND PERSONS. In this Plan of Arrangement, unless the
context otherwise requires, words importing the singular number include the
plural and vice versa, words importing any gender include all genders and words
importing persons include individuals, corporations, partnerships,
associations, trusts, unincorporated organizations, governmental bodies and
other legal or business entities of any kind.
ARTICLE 2
ARRANGEMENT
2.1 ARRANGEMENT. At the Effective Time on the Effective Date, the following
reorganization of capital and other transactions shall occur and shall be
deemed to occur in the following order without any further act or formality:
(a) The Articles of Amalgamation of Veritas shall be amended
to (i) delete the First Preferred Shares and Second Preferred
Shares from the authorized share capital and (ii) authorize an
unlimited number of Exchangeable Shares and one Class A Preferred
Share.
(b) Veritas shall issue to Digicon one Class A Preferred Share
in consideration of the issuance to Veritas of one share of
Digicon Common Stock. The stated capital of the Class A Preferred
Share shall be equal to the fair market value, as determined by
the board of directors of Veritas, of a share of Digicon Common
Stock. No certificate shall be issued in respect of the Class A
Preferred Share.
(c) Each Veritas Common Share (other than Veritas Common
Shares held by holders who have exercised their rights of dissent
in accordance with Section 3.1 hereof and who are ultimately
entitled to be paid the fair value for such shares and other than
Veritas Common Shares held by Digicon or any Subsidiary thereof)
will be exchanged at the Exchange Ratio for a number of
Exchangeable Shares, and each such holder thereof will receive that
whole number of Exchangeable Shares resulting from the exchange of
all such holder's Veritas Common Shares for Exchangeable Shares.
In lieu of fractional Exchangeable Shares, each holder of a
Veritas Common Share who otherwise would be entitled to receive a
fraction of an Exchangeable Share on the exchange of all such
holder's Veritas Common Shares shall be paid by Veritas an amount
determined as set forth in Section 4.3 hereto.
(d) Upon the exchange referred to in subsection (c) above, each such
holder of a Veritas Common Share shall cease to be such
a holder, shall have his name removed from the register of holders
of Veritas Common Shares and shall become a holder of the number
of fully paid Exchangeable Shares to which he is entitled as a
result of the exchange referred to in subsection (c) and such
holder's name shall be added to the register of holders of
Exchangeable Shares accordingly.
(e) The aggregate stated capital of the Exchangeable Shares
will be equal to the aggregate stated capital of the Veritas
Common Shares immediately prior to the Arrangement that are
exchanged pursuant to such Subsection 2.1(c) above, thereby
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<PAGE> 47
excluding the stated capital attributable to the fractional shares
paid in cash as contemplated in Section 2.1(c).
(f) The Articles of Amalgamation of Veritas shall be amended
to reduce the number of authorized Veritas Common Shares to one and
the following restriction will be added to the rights, privileges,
restrictions and conditions attaching to the Veritas Common Shares:
"RESTRICTION
So long as any of the Exchangeable Shares of the
Corporation are outstanding, the Corporation shall not
at any time without, but may at any time with, the
approval of the board of directors of the holder of
the common shares issue any further Exchangeable
Shares of the Corporation, except as specifically
required in accordance with the rights, privileges,
restrictions and conditions attaching to the
Exchangeable Shares of the Corporation."
(g) The one outstanding Class A Preferred Share will be
exchanged for one Veritas Common Share and the holder thereof
shall cease to be a holder of the Class A Preferred Share, shall
have its name removed from the register of holders of Class A
Preferred Shares and shall become a holder of one fully paid and
non-assessable Veritas Common Share to which it is entitled as a
result of the exchange referred to in this subsection (g) and such
holder's name shall be added to the register as holder of the
Veritas Common Share accordingly.
(h) The stated capital of the one Veritas Common Share shall
be equal to the stated capital of the one Class A Preferred Share
immediately prior to the exchange of such Class A Preferred Share
pursuant to subsection (g).
(i) The Articles of Amalgamation of Veritas shall be amended
to delete the Class A Preferred Share from the authorized share
capital.
(j) Each of the then outstanding Options will without any
further action on the part of any Optionholder, be exchanged for an
option to purchase that number of shares of Digicon Common Stock
determined by multiplying the number of Veritas Common Shares
subject to such Option at the Effective Time by the Exchange Ratio,
at an exercise price per share of Digicon Common Stock equal to the
exercise price per share of such Option immediately prior to the
Effective Time, divided by the Exchange Ratio. On the Effective
Date, such option price shall be converted into a United States
dollar equivalent based on the noon spot rate of exchange of the
Bank of Canada on such date. If the foregoing calculation results
in an exchanged Option being exercisable for a fraction of a share
of Digicon Common Stock, then the number of shares of Digicon
Common Stock subject to such Option will be rounded down to the
nearest whole number of shares, and the total exercise price for
the Option will be reduced by the exercise price of the fractional
share. The term, exercisability, vesting schedule, and all other
terms and conditions of the Options will otherwise be unchanged by
the provisions of this paragraph (j) and shall operate in
accordance with their terms.
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ARTICLE 3
RIGHTS OF DISSENT
3.1 RIGHTS OF DISSENT. Holders of Veritas Common Shares or Options may
exercise rights of dissent with respect to such shares or options pursuant to
and in the manner set forth in section 184 of the ABCA and this Section 3.1
(the "Dissent Procedures") in connection with the Arrangement and holders who
duly exercise such rights of dissent and who:
(a) are ultimately entitled to be paid the fair value for
their Veritas Common Shares or Options shall be deemed to have
transferred such Veritas Common Shares or Options to Veritas for
cancellation on the Effective Date; or
(b) are ultimately not entitled, for any reason, to be paid
the fair value for their Veritas Common Shares or Options shall be
deemed to have participated in the Arrangement on the same basis
as any non-dissenting holder of Veritas Common Shares or Options,
but in no case shall Veritas be required to recognize such holders as holders
of Veritas Common Shares or Options on and after the Effective Date, and the
names of such holders of Veritas Common Shares or Options shall be deleted from
the register of holders of Veritas Common Shares or Options on the Effective
Date.
ARTICLE 4
CERTIFICATES AND FRACTIONAL SHARES
4.1 ISSUANCE OF CERTIFICATES REPRESENTING EXCHANGEABLE SHARES. At or promptly
after the Effective Time, Veritas shall deposit with the Depositary, for the
benefit of the holders of Veritas Common Shares exchanged pursuant to
subsection 2.1(c), certificates representing the Exchangeable Shares issued
pursuant to subsection 2.1(c) upon the exchange of outstanding Veritas Common
Shares. Upon surrender to the Depositary for cancellation of a certificate
which immediately prior to the Effective Time represented outstanding Veritas
Common Shares that were exchanged for Exchangeable Shares, together with such
other documents and instruments as would have been required to effect the
transfer of the shares formerly represented by such certificate under the ABCA
and the by-laws of Veritas and such additional documents and instruments as the
Depositary may reasonably require, the holder of such surrendered certificate
shall be entitled to receive in exchange therefor, and the Depositary shall
deliver to such holder, a certificate representing that number (rounded down to
the nearest whole number) of Exchangeable Shares which such holder has the
right to receive (together with any dividends or distributions with respect
thereto pursuant to Section 4.2 and any cash in lieu of fractional Exchangeable
Shares pursuant to Section 4.3), and the certificate so surrendered shall
forthwith be cancelled. In the event of a transfer of ownership of Veritas
Common Shares which is not registered in the transfer records of Veritas, a
certificate representing the proper number of Exchangeable Shares may be issued
to a transferee if the certificate representing such Veritas Common Shares is
presented to the Depositary, accompanied by all documents required to evidence
and effect such transfer. Until surrendered as contemplated by this Section
4.1, each certificate which immediately prior to the Effective Time represented
outstanding Veritas Common Shares that were exchanged for Exchangeable Shares
shall be deemed at any time after the Effective Time to represent only the
right to receive upon such surrender (a) the certificate representing
Exchangeable Shares as contemplated by this Section 4.1, (b) a cash payment in
lieu of
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any fractional Exchangeable Shares as contemplated by Section 4.3 and (c) any
dividends or distributions with a record date after the Effective Time
theretofore paid or payable with respect to Exchangeable Shares as contemplated
by Section 4.2.
4.2 DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES. No dividends or
other distributions declared or made after the Effective Time with respect to
Exchangeable Shares with a record date after the Effective Time shall be paid
to the holder of any unsurrendered certificate which, immediately prior to the
Effective Time, represented outstanding Veritas Common Shares that were
exchanged pursuant to Section 2.1, and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section 4.3, (and no
interest will be earned or payable on these proceeds) unless and until such
certificate shall be surrendered in accordance with Section 4.1. Subject to
applicable law and to Section 4.5, at the time of such surrender of any such
certificate (or, in the case of clause (c) below, at the appropriate payment
date), there shall be paid to the record holder of the certificates
representing whole Exchangeable Shares without interest, (a) the amount of any
cash payable in lieu of a fractional Exchangeable Share to which such holder is
entitled pursuant to Section 4.3, (b) the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole Exchangeable Share, and (c) the amount of dividends or
other distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole Exchangeable Share.
4.3 NO FRACTIONAL SHARES. No certificates or scrip representing fractional
Exchangeable Shares shall be issued upon the surrender for exchange of
certificates pursuant to Section 4.1 and no dividend, stock split or other
change in the capital structure of Veritas shall relate to any such fractional
security and such fractional interests shall not entitle the owner thereof to
vote or to exercise any rights as a security holder of Veritas. In lieu of any
such fractional securities, each person entitled to a fractional interest in an
Exchangeable Share will receive an amount of cash (rounded to the nearest whole
cent), without interest, equal to the the product of (a) such fraction,
multiplied by (b) the Average Closing Price of the Digicon Common Stock, such
amount to be provided to the Depositary by Veritas upon request.
4.4 LOST CERTIFICATES. If any certificate which immediately prior to the
Effective Time represented outstanding Veritas Common Shares that were
exchanged pursuant to Section 2.1 has been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such certificate to
be lost, stolen or destroyed, the Depositary will issue in exchange for such
lost, stolen or destroyed certificate, certificates representing Exchangeable
Shares (and any dividends or distributions with respect thereto and any cash
pursuant to Section 4.3) deliverable in respect thereof as determined in
accordance with Section 2.1. When authorizing such payment in exchange for any
lost, stolen or destroyed certificate, the person to whom certificates
representing Exchangeable Shares are to be issued shall, as a condition
precedent to the issuance thereof, give a bond satisfactory to Veritas, Digicon
and Veritas' transfer agent (the "Transfer Agent"), as the case may be, in such
sum as Veritas may direct or otherwise indemnify Veritas or Digicon in a manner
satisfactory to Veritas and the Transfer Agent against any claim that may be
made against Veritas, Digicon or the Transfer Agent with respect to the
certificate alleged to have been lost, stolen or destroyed.
4.5 EXTINGUISHMENT OF RIGHTS. Any certificate which immediately prior to the
Effective Time represented outstanding Veritas Common Shares that were
exchanged pursuant to Section 2.1 and has not been deposited, with all other
instruments required by Section 4.1, on or prior to the tenth anniversary of
the Effective Date shall cease to represent a claim or interest of any kind or
nature as
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<PAGE> 50
a shareholder of Veritas. On such date, the Exchangeable Shares to which the
former registered holder of the certificate referred to in the preceding
sentence was ultimately entitled shall be deemed to have been surrendered to
Veritas together with all entitlements to dividends, distributions and
interests thereon held for such former registered holder for no consideration.
ARTICLE 5
CERTAIN RIGHTS OF DIGICON TO ACQUIRE
EXCHANGEABLE SHARES
5.1 DIGICON LIQUIDATION CALL RIGHT.
(a) Digicon shall have the overriding right (the "Liquidation
Call Right"), in the event of and notwithstanding the proposed
liquidation, dissolution or winding-up of Veritas pursuant to
Article 5 of the Exchangeable Share Provisions, to purchase from
all but not less than all of the holders (other than Digicon and
any Subsidiary thereof) of Exchangeable Shares on the Liquidation
Date all but not less than all of the Exchangeable Shares held by
each such holder on payment by Digicon to the holder of the
Exchangeable Share Price applicable on the last Business Day prior
to the Liquidation Date (the "Liquidation Call Purchase Price").
In the event of the exercise of the Liquidation Call Right by
Digicon, each holder shall be obligated to sell all the
Exchangeable Shares held by the holder to Digicon on the
Liquidation Date on payment by Digicon to the holder of the
Liquidation Call Purchase Price for each such share.
(b) To exercise the Liquidation Call Right, Digicon must
notify Veritas's Transfer Agent in writing, as agent for the
holders of Exchangeable Shares, and Veritas of Digicon's intention
to exercise such right at least 55 days before the Liquidation Date
in the case of a voluntary liquidation, dissolution or winding-up
of Veritas and at least five Business Days before the Liquidation
Date in the case of an involuntary liquidation, dissolution or
winding-up of Veritas. The Transfer Agent will notify the holders
of Exchangeable Shares as to whether or not Digicon has exercised
the Liquidation Call Right forthwith after the expiry of the date
by which the same may be exercised by Digicon. If Digicon
exercises the Liquidation Call Right, on the Liquidation Date
Digicon will purchase and the holders will sell all of the
Exchangeable Shares then outstanding for a price per share equal to
the Liquidation Call Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable
Shares pursuant to the Liquidation Call Right, Digicon shall
deposit with the Transfer Agent, on or before the Liquidation Date,
the Exchangeable Share Consideration representing the total
Liquidation Call Purchase Price. Provided that such Exchangeable
Share Consideration has been so deposited with the Transfer Agent,
on and after the Liquidation Date the rights of each holder of
Exchangeable Shares will be limited to receiving such holder's
proportionate part of the total Liquidation Call Purchase Price
payable by Digicon without interest upon presentation and surrender
by the holder of certificates representing the Exchangeable Shares
held by such holder and the holder shall on and after the
Liquidation Date be considered and deemed for all purposes to be
the holder of the Digicon Common Stock delivered to it. Upon
surrender to the Transfer Agent of a certificate or certificates
representing Exchangeable Shares, together with such other
documents and instruments as may be required to effect a
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transfer of Exchangeable Shares under the ABCA and the by-laws
of Veritas and such additional documents and instruments as the
Transfer Agent may reasonably require, the holder of such
surrendered certificate or certificates shall be entitled to
receive in exchange therefor, and the Transfer Agent on behalf of
Digicon shall deliver to such holder, the Exchangeable Share
Consideration to which the holder is entitled. If Digicon does not
exercise the Liquidation Call Right in the manner described above,
on the Liquidation Date the holders of the Exchangeable Shares will
be entitled to receive in exchange therefor the liquidation price
otherwise payable by Veritas in connection with the liquidation,
dissolution or winding-up of Veritas pursuant to Article 5 of the
Exchangeable Share Provisions. Notwithstanding the foregoing, until
such Exchangeable Share Consideration is delivered to the
holder, the holder shall be deemed to still be a holder of
Exchangeable Shares for purposes of all voting rights with respect
thereto under the Voting and Exchange Trust Agreement.
5.2 DIGICON REDEMPTION CALL RIGHT.
(a) Digicon shall have the overriding right (the "Redemption
Call Right"), notwithstanding the proposed redemption of the
Exchangeable Shares by Veritas pursuant to Article 7 of the
Exchangeable Share Provisions, to purchase from all but not less
than all of the holders (other than Digicon or any Subsidiary
thereof) of Exchangeable Shares on the Automatic Redemption Date
all but not less than all of the Exchangeable Shares held by each
such holder on payment by Digicon to the holder of the
Exchangeable Share Price applicable on the last Business Day prior
to the Automatic Redemption Date (the "Redemption Call Purchase
Price"). In the event of the exercise of the Redemption Call Right
by Digicon, each holder shall be obligated to sell all the
Exchangeable Shares held by the holder to Digicon on the Automatic
Redemption Date on payment by Digicon to the holder of the
Redemption Call Purchase Price for each such share.
(b) To exercise the Redemption Call Right, Digicon must notify
the Transfer Agent in writing, as agent for the holders of
Exchangeable Shares, and Veritas of Digicon's intention to exercise
such right at least 125 days before the Automatic Redemption Date.
The Transfer Agent will notify the holders of the Exchangeable
Shares as to whether or not Digicon has exercised the Redemption
Call Right forthwith after the date by which the same may be
exercised by Digicon. If Digicon exercises the Redemption Call
Right, on the Automatic Redemption Date Digicon will purchase and
the holders will sell all of the Exchangeable Shares then
outstanding for a price per share equal to the Redemption Call
Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable
Shares pursuant to the Redemption Call Right, Digicon shall
deposit with the Transfer Agent, on or before the Automatic
Redemption Date, the Exchangeable Share Consideration representing
the total Redemption Call Purchase Price. Provided that such
Exchangeable Share Consideration has been so deposited with the
Transfer Agent, on and after the Automatic Redemption Date the
rights of each holder of Exchangeable Shares will be limited to
receiving such holder's proportionate part of the total Redemption
Call Purchase Price payable by Digicon upon presentation and
surrender by the holder of certificates representing the
Exchangeable Shares held by such holder and the holder shall on and
after the Automatic Redemption Date be considered and
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deemed for all purposes to be the holder of the Digicon Common
Stock delivered to such holder. Upon surrender to the Transfer
Agent of a certificate or certificates representing Exchangeable
Shares, together with such other documents and instruments as may
be required to effect a transfer of Exchangeable Shares under
the ABCA and the by-laws of Veritas and such additional documents
and instruments as the Transfer Agent may reasonably require, the
holder of such surrendered certificate or certificates shall be
entitled to receive in exchange therefor, and the Transfer Agent on
behalf of Digicon shall deliver to such holder, the Exchangeable
Share Consideration to which the holder is entitled. If Digicon
does not exercise the Redemption Call Right in the manner described
above, on the Automatic Redemption Date the holders of the
Exchangeable Shares will be entitled to receive in exchange
therefor the redemption price otherwise payable by Veritas in
connection with the redemption of the Exchangeable Shares pursuant
to Article 7 of the Exchangeable Share Provisions. Notwithstanding
the foregoing, until such Exchangeable Share Consideration is
delivered to the holder, the holder shall be deemed to still be a
holder of Exchangeable Shares for purposes of all voting rights
with respect thereto under the Voting and Exchange Trust Agreement.
ARTICLE 6
AMENDMENT
6.1 PLAN OF ARRANGEMENT AMENDMENT. Veritas reserves the right to amend, modify
and/or supplement this Plan of Arrangement at any time and from time to time
provided that any such amendment, modification, or supplement must be contained
in a written document that is (a) agreed to by Digicon, (b) filed with the
Court and, if made following the Meetings, approved by the Court and (c)
communicated to holders of Veritas Common Shares and Options in the manner
required by the Court (if so required).
Any amendment, modification or supplement to this Plan of Arrangement may
be proposed by Veritas at any time prior to or at the Meetings (provided that
Digicon shall have consented thereto) with or without any other prior notice or
communication, and if so proposed and accepted by the persons voting at the
Meetings (other than as may be required under the Court's interim order), shall
become part of this Plan of Arrangement for all purposes.
Any amendment, modification or supplement to this Plan of Arrangement that
is approved by the Court following the Meetings shall be effective only (a) if
it is consented to by Veritas, (b) if it is consented to by Digicon and (c) if
required by the Court or applicable law, it is consented to by the holders of
the Exchangeable Shares and Options.
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APPENDIX A TO PLAN OF ARRANGEMENT
OF VERITAS ENERGY SERVICES INC.
PROVISIONS ATTACHING TO THE CLASS A PREFERRED SHARE
The Class A Preferred Share in the capital of the Corporation shall have
attached thereto the following rights, privileges, restrictions and conditions:
DIVIDENDS
Subject to the prior rights of the holders of any shares ranking senior to
the Class A Preferred Share with respect to priority in the payment of
dividends, the holder of Class A Preferred Share shall be entitled to receive
dividends and the Corporation shall pay dividends thereon, as and when declared
by the board of directors of the Corporation as cumulative dividends in the
amount of $1.00 per share per annum payable annually on October 31 in each year
in arrears. Such dividends shall accrue from the date of issue to and
including the date to which the computation of dividends is to be made. A
cheque for the amount of the dividend less any required deduction shall be
mailed by first class mail to the address of the registered holder thereof.
DISSOLUTION
In the event of the dissolution, liquidation or winding-up of the
Corporation, whether voluntary or involuntary, or any other distribution of
assets of the Corporation among its shareholders for the purpose of winding-up
its affairs, subject to the prior rights of the holders of any shares ranking
senior to the Class A Preferred Share with respect to priority in the
distribution of assets upon dissolution, liquidation or winding-up, the holder
of the Class A Preferred Share shall be entitled to receive the stated capital
in respect of the Class A Preferred Share and dividends remaining unpaid,
including all cumulative dividends, whether or not declared. After payment to
the holder of the Class A Preferred Share of such amounts, such holder shall
not be entitled to share in any further distribution of the assets of the
Corporation.
VOTING RIGHTS
Except where specifically provided by the Business Corporations Act
(Alberta), the holder of the Class A Preferred Share shall not be entitled to
receive notice of or to attend meetings of the shareholders of the Corporation
and shall not be entitled to vote at any meeting of shareholders of the
Corporation.
PROVISIONS ATTACHING TO EXCHANGEABLE SHARES
The Exchangeable Shares in the capital of the Corporation shall have the
following rights, privileges, restrictions and conditions.
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ARTICLE 1
INTERPRETATION
For the purposes of these share provisions:
1.1 "Aggregate Equivalent Vote Amount" means, with respect to any matter,
proposition or question on which holders of Digicon Common Stock are entitled
to vote, consent or otherwise act, the product of (i) the number of shares of
Exchangeable Shares issued and outstanding and held by holders thereof (other
than Digicon and its Subsidiaries) multiplied by (ii) the number of votes to
which a holder of one share of Digicon Common Stock is entitled with respect to
such matter, proposition or question.
"Automatic Redemption Date" means the date for the automatic redemption by
the Corporation of Exchangeable Shares pursuant to Article 7 of these share
provisions, which date shall be ___________, 2014 unless (a) such date shall be
extended at any time or from time to time to a specified later date by the
Board of Directors but not later than ________, 2021 or (b) such date shall be
accelerated at any time to a specified earlier date by the Board of Directors
if at such time there are less than 250,000 Exchangeable Shares outstanding
(other than Exchangeable Shares held by Digicon and its Subsidiaries) and as
such number of shares may be adjusted as deemed appropriate by the Board of
Directors to give effect to any subdivision or consolidation of or stock
dividend on the Exchangeable Shares, any issuance or distribution of rights to
acquire Exchangeable Shares or securities exchangeable for or convertible into
Exchangeable Shares, any issue or distribution of other securities or rights or
evidences of indebtedness or assets, or any other capital reorganization or
other transaction affecting the Exchangeable Shares), in each case upon at
least 60 days' prior written notice of any such extension or acceleration, as
the case may be, to the registered holders of the Exchangeable Shares, in which
case the Automatic Redemption Date shall be such later or earlier date;
provided, however, that the accidental failure or omission to give any such
notice of extension or acceleration, as the case may be, to less than 10% of
such holders of Exchangeable Shares shall not affect the validity of such
extension or acceleration.
"Board of Directors" means the Board of Directors of the Corporation.
"Business Day" means any day other than a Saturday, a Sunday or a day when
banks are not open for business in either or both of Houston, Texas and
Calgary, Alberta.
"Class A Preferred Share" means the Class A Preferred Share in the capital
of the Corporation.
"Common Shares" means the common shares in the capital of the Corporation.
"Corporation" means Veritas Energy Services Inc., a corporation
incorporated under the laws of the Province of Alberta.
"Current Market Price" means, in respect of a share of Digicon Common
Stock on any date, the average of the closing bid and asked prices of Digicon
Common Stock during a period of 20 consecutive trading days ending not more
than five trading days before such date on the American Stock Exchange, or, if
the Digicon Common Stock is not then traded on the American Stock Exchange, on
such other principal U.S. stock exchange or automated quotation system on which
the Digicon Common Stock is listed or quoted, as the case may be, as may be
selected by the Board of
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Directors for such purpose; provided, however, that if in the opinion of the
Board of Directors the public distribution or trading activity of Digicon
Common Stock during such period does not create a market which reflects the
fair market value of a share of Digicon Common Stock, then the Current Market
Price of a share of Digicon Common Stock shall be determined by the Board of
Directors based upon the advice of such qualified independent financial
advisors as the Board of Directors may deem to be appropriate, and provided
further that any such selection, opinion or determination by the Board of
Directors shall be conclusive and binding.
"Digicon" means Digicon Inc., a corporation organized and existing under
the laws of the State of Delaware, and any successor corporation.
"Digicon Call Notice" has the meaning ascribed thereto in Section 6.3 of
these share provisions.
"Digicon Common Stock" mean the shares of common stock of Digicon, with a
par value of U.S. $0.01 per share, having voting rights of one vote per share,
and any other securities into which such shares may be changed.
"Digicon Dividend Declaration Date" means the date on which the board of
directors of Digicon declares any dividend on the Digicon Common Stock.
"Digicon Special Share" means the one share of Special Voting Stock of
Digicon with a par value of U.S. $0.01 and having voting rights at meetings of
holders of Digicon Common Stock equal to the Aggregate Equivalent Voting
Amount.
"Exchangeable Share Consideration" means, for any acquisition of
Exchangeable Shares pursuant to these share provisions, the Plan of
Arrangement, the Support Agreement or the Voting and Exchange Trust Agreement:
(a) certificates representing the aggregate number of shares of
Digicon Common Stock deliverable in connection with such
acquisition;
(b) a cheque or cheques payable at par at any branch of the
bankers of the payor in the amount of declared and unpaid cash
dividends deliverable in connection with such acquisition; and
(c) such stock or property constituting any declared and unpaid
non-cash dividends deliverable in connection with such acquisition.
provided that any such stock or property shall be duly issued as fully paid and
non-assessable, in the case of stock, and free and clear of any lien, claim and
encumbrance, security interest or adverse claim and provided further that such
consideration shall be paid less any tax required to be deducted and withheld
therefrom and without interest.
"Exchangeable Share Price" means, for each Exchangeable Share:
(a) the Current Market Price of a share of Digicon Common
Stock, which shall be satisfied in full by causing to be delivered
one share of Digicon Common Stock; plus
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(b) an additional amount equal to the full amount of all cash
dividends declared and unpaid on such Exchangeable Share; plus
(c) the stock or other non-cash assets, if any, representing
non-cash dividends declared and unpaid on such Exchangeable Share.
"Exchangeable Shares" mean the Exchangeable Shares of the Corporation
having the rights, privileges, restrictions and conditions set forth herein.
"Liquidation Amount" has the meaning attributed thereto in Section 5.1 of
these share provisions.
"Liquidation Call Right" has the meaning attributed thereto in the Plan of
Arrangement.
"Liquidation Date" has the meaning attributed thereto in Section 5.1 of
these share provisions.
"Plan of Arrangement" means the plan of arrangement relating to the
arrangement of the Corporation under section 186 of the Business Corporations
Act (Alberta), to which plan these share provisions are attached.
"Purchase Price" has the meaning attributed thereto in Section 6.3 of
these share provisions.
"Redemption Call Purchase Price" has the meaning attributed thereto in the
Plan of Arrangement.
"Redemption Call Right" has the meaning attributed thereto in the Plan of
Arrangement.
"Redemption Price" has the meaning attributed thereto in Section 7.1 of
these share provisions.
"Retracted Shares" has the meaning attributed thereto in Subsection 6.1(i)
of these share provisions.
"Retraction Call Right" has the meaning attributed thereto in Subsection
6.1(iii) of these share provisions.
"Retraction Date" has the meaning attributed thereto in Subsection 6.1(ii)
of these share provisions.
"Retraction Price" has the meaning attributed thereto in Section 6.1 of
these share provisions.
"Retraction Request" has the meaning attributed thereto in Section 6.1 of
these share provisions.
"Subsidiary" of any person means each partnership, joint venture,
corporation, association or other business entity of which more than 50% of the
total voting power of shares of stock or units of ownership or beneficial
interest entitled to vote in the election of directors (or members of a
comparable governing body) which is owned or controlled, directly or
indirectly, by such person.
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"Support Agreement" means the Support Agreement between Digicon and the
Corporation, made as of _________, 1996.
"Transfer Agent" means The R-M Trust Company or such other person as may
from time to time be the registrar and transfer agent for the Exchangeable
Shares.
"Trustee" means The R-M Trust Company and any successor trustee appointed
under the Voting and Exchange Trust Agreement.
"Voting and Exchange Trust Agreement" means the Voting and Exchange Trust
Agreement between the Corporation, Digicon and the Trustee, made as of _______,
1996.
ARTICLE 2
RANKING OF EXCHANGEABLE SHARES
2.1 The Exchangeable Shares shall rank junior to the Class A Preferred Share,
and shall be entitled to a preference over the Common Shares and any other
shares ranking junior to the Exchangeable Shares, with respect to the payment
of dividends and the distribution of assets in the event of the liquidation,
dissolution or winding-up of the Corporation, whether voluntary or involuntary,
or any other distribution of the assets of the Corporation among its
shareholders for the purpose of winding-up its affairs.
ARTICLE 3
DIVIDENDS
3.1 A holder of an Exchangeable Share shall be entitled to receive and the
Board of Directors shall, subject to applicable law, on each Digicon Dividend
Declaration Date, declare a dividend on each Exchangeable Share (a) in the case
of a cash dividend declared on the Digicon Common Stock, in an amount in cash
for each Exchangeable Share equal to the cash dividend declared on each share
of Digicon Common Stock or (b) in the case of a stock dividend declared on the
Digicon Common Stock to be paid in Digicon Common Stock, in such number of
Exchangeable Shares for each Exchangeable Share as is equal to the number of
shares of Digicon Common Stock to be paid on each share of Digicon Common Stock
or (c) in the case of a dividend declared on the Digicon Common Stock in
property other than cash or Digicon Common Stock, in such type and amount of
property for each Exchangeable Share as is the same as the type and amount of
property declared as a dividend on each share of Digicon Common Stock. Such
dividends shall be paid out of money, assets or property of the Corporation
properly applicable to the payment of dividends, or out of authorized but
unissued shares of the Corporation.
3.2 Cheques of the Corporation payable at par at any branch of the bankers of
the Corporation shall be issued in respect of any cash dividends contemplated
by Subsection 3.1(a) hereof and the sending of such a cheque to each holder of
an Exchangeable Share (less any tax required to be deducted and withheld from
such dividends paid or credited by the Corporation) shall satisfy the cash
dividend represented thereby unless the cheque is not paid on presentation.
Certificates registered in the name of the registered holder of Exchangeable
Shares shall be issued or transferred in respect of any stock dividends
contemplated by Subsection 3.1(b) hereof and the sending of such a certificate
to each holder of an Exchangeable Share shall satisfy the stock dividend
represented thereby. Such other type and amount of property in respect of any
dividends contemplated by Subsection 3.1(c) hereof shall be issued, distributed
or transferred by the Corporation in such manner as it shall
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determine and the issuance, distribution or transfer thereof by the Corporation
to each holder of an Exchangeable Share shall satisfy the dividend
represented thereby (subject to any adjustment for the tax required to be
deducted and withheld from such dividends paid or credited by the Corporation).
No holder of an Exchangeable Share shall be entitled to recover by action or
other legal process against the Corporation any dividend that is represented by
a cheque that has not been duly presented to the Corporation's bankers for
payment or that otherwise remains unclaimed for a period of six years from the
date on which such dividend was payable.
3.3 The record date for the determination of the holders of Exchangeable Shares
entitled to receive payment of, and the payment date for, any dividend declared
on the Exchangeable Shares under Section 3.1 hereof shall be the same dates as
the record date and payment date, respectively, for the corresponding dividend
declared on the Digicon Common Stock.
3.4 If on any payment date for any dividends declared on the Exchangeable
Shares under Section 3.1 hereof the dividends are not paid in full on all of
the Exchangeable Shares then outstanding, any such dividends that remain unpaid
shall be paid on a subsequent date or dates determined by the Board of
Directors on which the Corporation shall have sufficient moneys, assets or
property properly applicable to the payment of such dividends (subject to any
adjustment for the tax required to be deducted and withheld from such dividends
paid or credited by the Corporation).
3.5 Except as provided in this Article 3, the holders of Exchangeable Shares
shall not be entitled to receive dividends in respect thereof.
ARTICLE 4
CERTAIN RESTRICTIONS
4.1 So long as any of the Exchangeable Shares are outstanding, the Corporation
shall not at any time without, but may at any time with, the approval of the
holders of the Exchangeable Shares given as specified in Section 9.2 of these
share provisions:
(a) pay any dividends on the Common Shares, or any other
shares ranking junior to the Exchangeable Shares, other than stock
dividends payable in any such other shares ranking junior to the
Exchangeable Shares;
(b) redeem or purchase or make any capital distribution in
respect of Common Shares or any other shares ranking junior to the
Exchangeable Shares;
(c) redeem or purchase any other shares of the Corporation
ranking equally with the Exchangeable Shares with respect to the
payment of dividends or on any liquidation distribution;
(d) issue any Exchangeable Shares or any other shares of the
Corporation ranking equally with, or superior to, the Exchangeable
Shares other than by way of stock dividends to the holders of such
Exchangeable Shares or as contemplated by the Support Agreement;
or
(e) amend the articles or by-laws of the Corporation.
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The restrictions in Subsections 4.1(a), 4.1(b), and 4.1(c) above shall not
apply if all dividends on the outstanding Exchangeable Shares corresponding to
dividends declared to date on the Digicon Common Stock shall have been declared
on the Exchangeable Shares and paid in full.
ARTICLE 5
DISTRIBUTION ON LIQUIDATION
5.1 In the event of the liquidation, dissolution or winding-up of the
Corporation or any other distribution of the assets of the Corporation among
its shareholders for the purpose of winding-up its affairs, a holder of
Exchangeable Shares shall be entitled, subject to applicable law, to receive
from the assets of the Corporation in respect of each Exchangeable Share held
by such holder on the effective date (the "Liquidation Date") of such
liquidation, dissolution or winding-up, before any distribution of any part of
the assets of the Corporation to the holders of the Common Shares or any other
shares ranking junior to the Exchangeable Shares, an amount equal to the
Exchangeable Share Price applicable on the last Business Day prior to the
Liquidation Date (the "Liquidation Amount"). In connection with payment of the
Liquidation Amount, the Corporation shall be entitled to liquidate some of the
Digicon Common Stock that would otherwise be deliverable to the particular
holder of Exchangeable Shares in order to fund any statutory withholding tax
obligation.
5.2 On or promptly after the Liquidation Date, and subject to the exercise by
Digicon of the Liquidation Call Right, the Corporation shall cause to be
delivered to the holders of the Exchangeable Shares the Liquidation Amount for
each such Exchangeable Share upon presentation and surrender of the
certificates representing such Exchangeable Shares, together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the Business Corporations Act (Alberta) and the
by-laws of the Corporation and such additional documents and instruments as the
Transfer Agent may reasonably require, at the registered office of the
Corporation or at any office of the Transfer Agent as may be specified by the
Corporation by notice to the holders of the Exchangeable Shares. Payment of
the total Liquidation Amount for such Exchangeable Shares shall be made by
delivery to each holder, at the address of the holder recorded in the
securities register of the Corporation for the Exchangeable Shares or by
holding for pick up by the holder at the registered office of the Corporation
or at any office of the Transfer Agent as may be specified by the Corporation
by notice to the holders of Exchangeable Shares, on behalf of the Corporation
of the Exchangeable Share Consideration representing the total Liquidation
Amount. On and after the Liquidation Date, the holders of the Exchangeable
Shares shall cease to be holders of such Exchangeable Shares and shall not be
entitled to exercise any of the rights of holders in respect thereof, other
than the right to receive their proportionate part of the total Liquidation
Amount, unless payment of the total Liquidation Amount for such Exchangeable
Shares shall not be made upon presentation and surrender of share certificates
in accordance with the foregoing provisions, in which case the rights of the
holders shall remain unaffected until the total Liquidation Amount has been
paid in the manner hereinbefore provided. The Corporation shall have the right
at any time on or after the Liquidation Date to deposit or cause to be
deposited the Exchangeable Share Consideration in respect of the Exchangeable
Shares represented by certificates that have not at the Liquidation Date been
surrendered by the holders thereof in a custodial account or for safe keeping,
in the case of non-cash items, with any chartered bank or trust company in
Canada. Upon such deposit being made, the rights of the holders of
Exchangeable Shares after such deposit shall be limited to receiving their
proportionate part of the total Liquidation Amount for such Exchangeable Shares
so deposited, against presentation and surrender of the said certificates held
by them, respectively, in accordance with the foregoing provisions. Upon such
payment or deposit of such Exchangeable Share Consideration, the holders of the
Exchangeable Shares shall thereafter be considered and deemed for
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all purposes to be the holders of the Digicon Common Stock delivered to them.
Notwithstanding the foregoing, until such Exchangeable Share Consideration is
delivered to the holder, the holder shall be deemed to still be a holder of
Exchangeable Shares for purposes of all voting rights with respect thereto
under the Voting and Exchange Trust Agreement.
5.3 After the Corporation has satisfied its obligations to pay the holders of
the Exchangeable Shares the Liquidation Amount per Exchangeable Share pursuant
to Section 5.1 of these share provisions, such holders shall not be entitled to
share in any further distribution of the assets of the Corporation.
ARTICLE 6
RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
6.1 A holder of Exchangeable Shares shall be entitled at any time, subject to
the exercise by Digicon of the Retraction Call Right and otherwise upon
compliance with the provisions of this Article 6, to require the Corporation to
redeem any or all of the Exchangeable Shares registered in the name of such
holder for an amount equal to the Exchangeable Share Price applicable on the
last Business Day prior to the Retraction Date (the "Retraction Price"). In
connection with payment of the Retraction Price, the Corporation shall be
entitled to liquidate some of the Digicon Common Stock that would otherwise be
deliverable to the particular holder of Exchangeable Shares in order to fund
any statutory withholding tax obligation. To effect such redemption, the
holder shall present and surrender at the registered office of the Corporation
or at any office of the Transfer Agent as may be specified by the Corporation
by notice to the holders of Exchangeable Shares the certificate or certificates
representing the Exchangeable Shares which the holder desires to have the
Corporation redeem, together with such other documents and instruments as may
be required to effect a transfer of Exchangeable Shares under the Business
Corporations Act (Alberta) and the by-laws of the Corporation and such
additional documents and instruments as the Transfer Agent may reasonably
require, and together with a duly executed statement (the "Retraction Request")
in the form of Schedule A hereto or in such other form as may be acceptable to
the Corporation:
(i) specifying that the holder desires to have all or any number
specified therein of the Exchangeable Shares represented by such
certificate or certificates (the "Retracted Shares") redeemed by the
Corporation;
(ii) stating the Business Day on which the holder desires to have
the Corporation redeem the Retracted Shares (the "Retraction Date"),
provided that the Retraction Date shall be not less than five Business
Days nor more than 10 Business Days after the date on which the
Retraction Request is received by the Corporation and further provided
that, in the event that no such Business Day is specified by the holder
in the Retraction Request, the Retraction Date shall be deemed to be the
tenth Business Day after the date on which the Retraction Request is
received by the Corporation; and
(iii) acknowledging the overriding right (the "Retraction Call
Right") of Digicon to purchase all but not less than all the Retracted
Shares directly from the holder and that the Retraction Request shall be
deemed to be a revocable offer by the holder to sell the Retracted
Shares to Digicon in accordance with the Retraction Call Right on the
terms and conditions set out in Section 6.3 below.
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6.2 Subject to the exercise by Digicon of the Retraction Call Right, upon
receipt by the Corporation or the Transfer Agent in the manner specified in
Section 6.1 hereof of a certificate or certificates representing the number of
Exchangeable Shares which the holder desires to have the Corporation redeem,
together with a Retraction Request, and provided that the Retraction Request is
not revoked by the holder in the manner specified in Section 6.7, the
Corporation shall redeem the Retracted Shares effective at the close of
business on the Retraction Date and shall cause to be delivered to such holder
the total Retraction Price with respect to such shares. If only a part of the
Exchangeable Shares represented by any certificate are redeemed (or purchased
by Digicon pursuant to the Retraction Call Right), a new certificate for the
balance of such Exchangeable Shares shall be issued to the holder at the
expense of the Corporation.
6.3 Upon receipt by the Corporation of a Retraction Request, the Corporation
shall immediately notify Digicon thereof. In order to exercise the Retraction
Call Right, Digicon must notify the Corporation in writing of its determination
to do so (the "Digicon Call Notice") within two Business Days of notification
to Digicon by the Corporation of the receipt by the Corporation of the
Retraction Request. If Digicon does not so notify the Corporation within such
two Business Day period, the Corporation will notify the holder as soon as
possible thereafter that Digicon will not exercise the Retraction Call Right.
If Digicon delivers the Digicon Call Notice within such two Business Day time
period, and provided that the Retraction Request is not revoked by the holder
in the manner specified in Section 6.7, the Retraction Request shall thereupon
be considered only to be an offer by the holder to sell the Retracted Shares to
Digicon in accordance with the Retraction Call Right. In such event, the
Corporation shall not redeem the Retracted Shares and Digicon shall purchase
from such holder and such holder shall sell to Digicon on the Retraction Date
the Retracted Shares for a purchase price (the "Purchase Price") per share
equal to the Retraction Price per share. For the purposes of completing a
purchase pursuant to the Retraction Call Right, Digicon shall deposit with the
Transfer Agent, on or before the Retraction Date the Exchangeable Share
Consideration representing the total Purchase Price. Provided that such
Exchangeable Share Consideration has been so deposited with the Transfer Agent,
the closing of the purchase and sale of the Retracted Shares pursuant to the
Retraction Call Right shall be deemed to have occurred as at the close of
business on the Retraction Date and, for greater certainty, no redemption by
the Corporation of such Retracted Shares shall take place on the Retraction
Date. In the event that Digicon does not deliver a Digicon Call Notice within
such two Business Day period or otherwise comply with these Exchangeable Share
provisions in respect thereto, and provided that Retraction Request is not
revoked by the holder in the manner specified in Section 6.7, the Corporation
shall redeem the Retracted Shares on the Retraction Date and in the manner
otherwise contemplated in this Article 6.
6.4 The Corporation or Digicon, as the case may be, shall deliver or cause the
Transfer Agent to deliver to the relevant holder, at the address of the holder
recorded in the securities register of the Corporation for the Exchangeable
Shares or at the address specified in the holder's Retraction Request or by
holding for pick up by the holder at the registered office of the Corporation
or at any office of the Transfer Agent as may be specified by the Corporation
by notice to the holders of Exchangeable Shares, the Exchangeable Share
Consideration representing the total Retraction Price or the total Purchase
Price, as the case may be, and such delivery of such Exchangeable Share
Consideration to the Transfer Agent shall be deemed to be payment of and shall
satisfy and discharge all liability for the total Retraction Price or total
Purchase Price, as the case may be, unless any cheque included therein is not
paid on due presentation.
6.5 On and after the close of business on the Retraction Date, the holder of
the Retracted Shares shall cease to be a holder of such Retracted Shares and
shall not be entitled to exercise any of the
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rights of a holder in respect thereof, other than the right to receive his
proportionate part of the total Retraction Price or total Purchase Price, as
the case may be, unless upon presentation and surrender of certificates in
accordance with the foregoing provisions, payment of the total Retraction Price
or the total Purchase Price, as the case may be, shall not be made, in which
case the rights of such holder shall remain unaffected until the total
Retraction Price or the total Purchase Price, as the case may be, has been paid
in the manner hereinbefore provided. On and after the close of business on the
Retraction Date, provided that presentation and surrender of certificates and
payment of the total Retraction Price or the total Purchase Price, as the case
may be, has been made in accordance with the foregoing provisions, the holder
of the Retracted Shares so redeemed by the Corporation or purchased by Digicon
shall thereafter be considered and deemed for all purposes to be a holder of
the Digicon Common Stock delivered to it. Notwithstanding the foregoing, until
such Exchangeable Share Consideration is delivered to the holder, the holder
shall be deemed to still be a holder of Exchangeable Shares for purposes of all
voting rights with respect thereto under the Voting and Exchange Trust
Agreement.
6.6 Notwithstanding any other provision of this Article 6, the Corporation
shall not be obligated to redeem Retracted Shares specified by a holder in a
Retraction Request to the extent that such redemption of Retracted Shares would
be contrary to liquidity or solvency requirements or other provisions of
applicable law. If the Corporation believes that on any Retraction Date it
would not be permitted by any of such provisions to redeem the Retracted Shares
tendered for redemption on such date, and provided that Digicon shall not have
exercised the Retraction Call Right with respect to the Retracted Shares, the
Corporation shall only be obligated to redeem Retracted Shares specified by a
holder in a Retraction Request to the extent of the maximum number that may be
so redeemed (rounded down to a whole number of shares) as would not be contrary
to such provisions and shall notify the holder at least two Business Days prior
to the Retraction Date as to the number of Retracted Shares which will not be
redeemed by the Corporation. In any case in which the redemption by the
Corporation of Retracted Shares would be contrary to liquidity or solvency
requirements or other provisions of applicable law, the Corporation shall
redeem Retracted Shares in accordance with Section 6.2 of these share
provisions on a PRO RATA basis and shall issue to each holder of Retracted
Shares a new certificate, at the expense of the Corporation, representing the
Retracted Shares not redeemed by the Corporation pursuant to Section 6.2
hereof. Provided that the Retraction Request is not revoked by the holder in
the manner specified in Section 6.7, the holder of any such Retracted Shares
not redeemed by the Corporation pursuant to Section 6.2 of these share
provisions as a result of liquidity or solvency requirements of applicable law
shall be deemed by giving the Retraction Request to require Digicon to purchase
such Retracted Shares from such holder on the Retraction Date or as soon as
practicable thereafter on payment by Digicon to such holder of the Purchase
Price for each such Retracted Share, all as more specifically provided in the
Voting and Exchange Trust Agreement, and Digicon shall make such purchase.
6.7 A holder of Retracted Shares may, by notice in writing given by the holder
to the Corporation before the close of business on the Business Day immediately
preceding the Retraction Date, withdraw its Retraction Request in which event
such Retraction Request shall be null and void and, for greater certainty, the
revocable offer constituted by the Retraction Request to sell the Retracted
Shares to Digicon shall be deemed to have been revoked.
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ARTICLE 7
REDEMPTION OF EXCHANGEABLE SHARES BY THE CORPORATION
7.1 Subject to applicable law, and if Digicon does not exercise the Redemption
Call Right, the Corporation shall on the Automatic Redemption Date redeem the
whole of the then outstanding Exchangeable Shares for an amount equal to the
Exchangeable Share Price applicable on the last Business Day prior to the
Automatic Redemption Date (the "Redemption Price"). In connection with payment
of the Redemption Price, the Corporation shall be entitled to liquidate some of
the Digicon Common Stock that would otherwise be deliverable to the particular
holder of Exchangeable Shares in order to fund any statutory withholding tax
obligation.
7.2 In any case of a redemption of Exchangeable Shares under this Article 7,
the Corporation shall, at least 120 days before the Automatic Redemption Date,
send or cause to be sent to each holder of Exchangeable Shares a notice in
writing of the redemption by the Corporation or the purchase by Digicon under
the Redemption Call Right, as the case may be, of the Exchangeable Shares held
by such holder. Such notice shall set out the formula for determining the
Redemption Price or the Redemption Call Purchase Price, as the case may be, the
Automatic Redemption Date and, if applicable, particulars of the Redemption
Call Right.
7.3 On or after the Automatic Redemption Date and subject to the exercise by
Digicon of the Redemption Call Right, the Corporation shall cause to be
delivered to the holders of the Exchangeable Shares to be redeemed the
Redemption Price for each such Exchangeable Share upon presentation and
surrender at the registered office of the Corporation or at any office of the
Transfer Agent as may be specified by the Corporation in such notice of the
certificates representing such Exchangeable Shares, together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the Business Corporations Act (Alberta) and the
by-laws of the Corporation and such additional documents and instruments as the
Transfer Agent may reasonably require. Payment of the total Redemption Price
for such Exchangeable Shares shall be made by delivery to each holder, at the
address of the holder recorded in the securities register of the Corporation or
by holding for pick up by the holder at the registered office of the
Corporation or at any office of the Transfer Agent as may be specified by the
Corporation in such notice, on behalf of the Corporation of the Exchangeable
Share Consideration representing the total Redemption Price. On and after the
Automatic Redemption Date, the holders of the Exchangeable Shares called for
redemption shall cease to be holders of such Exchangeable Shares and shall not
be entitled to exercise any of the rights of holders in respect thereof, other
than the right to receive their proportionate part of the total Redemption
Price, unless payment of the total Redemption Price for such Exchangeable
Shares shall not be made upon presentation and surrender of certificates in
accordance with the foregoing provisions, in which case the rights of the
holders shall remain unaffected until the total Redemption Price has been paid
in the manner hereinbefore provided. The Corporation shall have the right at
any time after the sending of notice of its intention to redeem the
Exchangeable Shares as aforesaid to deposit or cause to be deposited the
Exchangeable Share Consideration with respect to the Exchangeable Shares so
called for redemption, or of such of the said Exchangeable Shares represented
by certificates that have not at the date of such deposit been surrendered by
the holders thereof in connection with such redemption, in a custodial account
or for safe keeping, in the case of non-cash items, with any chartered bank or
trust company in Canada named in such notice. Upon the later of such deposit
being made and the Automatic Redemption Date, the Exchangeable Shares in
respect whereof such deposit shall have been made shall be redeemed and the
rights of the holders thereof after such deposit or Automatic Redemption Date,
as the case may be, shall be limited to
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receiving their proportionate part of the total Redemption Price for such
Exchangeable Shares so deposited, against presentation and surrender of the
said certificates held by them, respectively, in accordance with the foregoing
provisions. Upon such payment or deposit of such Exchangeable Share
Consideration, the holders of the Exchangeable Shares shall thereafter be
considered and deemed for all purposes to be holders of the Digicon Common
Stock delivered to them. Notwithstanding the foregoing, until such
Exchangeable Share Consideration is delivered to the holder, the holder shall
be deemed to still be a holder of Exchangeable Shares for purposes of all
voting rights with respect thereto under the Voting and Exchange Trust
Agreement.
ARTICLE 8
VOTING RIGHTS
8.1 Except as required by applicable law and the provisions hereof, the
holders of the Exchangeable Shares shall not be entitled as such to receive
notice of or to attend any meeting of the shareholders of the Corporation or to
vote at any such meeting.
ARTICLE 9
AMENDMENT AND APPROVAL
9.1 The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed but, except as
hereinafter provided, only with the approval of the holders of the Exchangeable
Shares given as hereinafter specified.
9.2 Any approval given by the holders of the Exchangeable Shares to add to,
change or remove any right, privilege, restriction or condition attaching to
the Exchangeable Shares or any other matter requiring the approval or consent
of the holders of the Exchangeable Shares shall be deemed to have been
sufficiently given if it shall have been given in accordance with applicable
law subject to a minimum requirement that such approval be evidenced by
resolution passed by not less than two-thirds of the votes cast on such
resolution by persons represented in person or by proxy at a meeting of holders
of Exchangeable Shares duly called and held at which the holders of at least
50% of the outstanding Exchangeable Shares at that time are present or
represented by proxy (excluding Exchangeable Shares beneficially owned by
Digicon or its Subsidiaries). If at any such meeting the holders of at least
50% of the outstanding Exchangeable Shares at that time are not present or
represented by proxy within one-half hour after the time appointed for such
meeting then the meeting shall be adjourned to such date not less than 10 days
thereafter and to such time and place as may be designated by the Chairman of
such meeting. At such adjourned meeting the holders of Exchangeable Shares
present or represented by proxy thereat may transact the business for which the
meeting was originally called and a resolution passed thereat by the
affirmative vote of not less than two-thirds of the votes cast on such
resolution by persons represented in person or by proxy at such meeting shall
constitute the approval or consent of the holders of the Exchangeable Shares.
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ARTICLE 10
RECIPROCAL CHANGES, ETC. IN RESPECT
OF DIGICON COMMON STOCK
10.1 (a) Each holder of an Exchangeable Share acknowledges that the
Support Agreement provides, in part, that Digicon will not without the prior
approval of the Corporation and the prior approval of the holders of the
Exchangeable Shares given in accordance with Section 9.2 of these share
provisions:
(i) issue or distribute Digicon Common Stock (or securities
exchangeable for or convertible into or carrying rights to acquire
Digicon Common Stock) to the holders of all or substantially all of the
then outstanding Digicon Common Stock by way of stock dividend or other
distribution; or
(ii) issue or distribute rights, options or warrants to the holders
of all or substantially all of the then outstanding Digicon Common Stock
entitling them to subscribe for or to purchase shares of Digicon Common
Stock (or securities exchangeable for or convertible into or carrying
rights to acquire shares of Digicon Common Stock); or
(iii) issue or distribute to the holders of all or substantially all
of the then outstanding shares of Digicon Common Stock (A) shares or
securities of Digicon of any class other than Digicon Common Stock
(other than shares convertible into or exchangeable for or carrying
rights to acquire Digicon Common Stock), (B) rights, options or warrants
other than those referred to in Section 10.1(a)(ii) above, (C) evidences
of indebtedness of Digicon or (D) assets of Digicon;
unless the Corporation is permitted under applicable law to issue or
distribute the equivalent on a per share basis of such rights, options,
securities, shares, evidences of indebtedness or other assets to holders
of the Exchangeable Shares and the Corporation shall issue or distribute
such rights, options, securities, shares, evidences of indebtedness or
other assets simultaneously to holders of the Exchangeable Shares.
(b) Each holder of an Exchangeable Share acknowledges that the Support
Agreement further provides, in part, that Digicon will not without the prior
approval of the Corporation and the prior approval of the holders of the
Exchangeable Shares given in accordance with Section 9.2 of these share
provisions:
(i) subdivide, redivide or change the then outstanding shares of
Digicon Common Stock into a greater number of shares of Digicon Common
Stock; or
(ii) reduce, combine or consolidate or change the then outstanding
shares of Digicon Common Stock into a lesser number of shares of Digicon
Common Stock; or
(iii) reclassify or otherwise change the shares of Digicon Common
Stock or effect an amalgamation, merger, reorganization or other
transaction affecting the shares of Digicon Common Stock;
unless the Corporation is permitted under applicable law to
simultaneously make the same or an equivalent change to, or in the rights
of holders of, the Exchangeable Shares and
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the same or an equivalent change is made to, or in the rights of the
holders of, the Exchangeable Shares.
The Support Agreement further provides, in part, that the aforesaid
provisions of the Support Agreement shall not be changed without the approval
of the holders of the Exchangeable Shares given in accordance with Section 9.2
of these share provisions.
ARTICLE 11
ACTIONS BY THE CORPORATION UNDER
SUPPORT AGREEMENT
11.1 The Corporation will take all such actions and do all such things as shall
be necessary or advisable to perform and comply with and to ensure performance
and compliance by Digicon with all provisions of the Support Agreement, the
Voting Trust and Exchange Agreement and with all provisions of Digicon's
Restated Certificate of Incorporation applicable to the Corporation and
Digicon, respectively, in accordance with the terms thereof including, without
limitation, taking all such actions and doing all such things as shall be
necessary or advisable to enforce to the fullest extent possible for the direct
benefit of the Corporation all rights and benefits in favour of the Corporation
under or pursuant thereto.
11.2 The Corporation shall not propose, agree to or otherwise give effect to
any amendment to, or waiver or forgiveness of its rights or obligations under,
the Support Agreement, the Voting Trust and Exchange Agreement or Digicon's
Restated Certificate of Incorporation without the approval of the holders of
the Exchangeable Shares given in accordance with Section 9.2 of these share
provisions other than such amendments, waivers and/or forgiveness as may be
necessary or advisable for the purposes of:
(a) adding to the covenants of the other party or parties to
such agreement for the protection of the Corporation or the
holders of Exchangeable Shares; or
(b) making such provisions or modifications not inconsistent
with such agreement as may be necessary or desirable with respect
to matters or questions arising thereunder which, in the opinion
of the Board of Directors, it may be expedient to make, provided
that the Board of Directors shall be of the opinion, after
consultation with counsel, that such provisions and modifications
will not be prejudicial to the interests of the holders of the
Exchangeable Shares; or
(c) making such changes in or corrections to such agreement
which, on the advice of counsel to the Corporation, are required
for the purpose of curing or correcting any ambiguity or defect or
inconsistent provision or clerical omission or mistake or manifest
error contained therein, provided that the Board of Directors
shall be of the opinion, after consultation with counsel, that
such changes or corrections will not be prejudicial to the
interests of the holders of the Exchangeable Shares.
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<PAGE> 67
ARTICLE 12
LEGEND
12.1 The certificates evidencing the Exchangeable Shares shall contain or have
affixed thereto a legend, in form and on terms approved by the Board of
Directors, with respect to the Support Agreement, the provisions of the Plan of
Arrangement relating to the Liquidation Call Right and the Redemption
Call Right, and the Voting and Exchange Trust Agreement (including the
provisions with respect to the voting rights, exchange right and automatic
exchange thereunder).
ARTICLE 13
MISCELLANEOUS
13.1 Any notice, request or other communication to be given to the Corporation
by a holder of Exchangeable Shares shall be in writing and shall be valid and
effective if given by mail (postage prepaid) or by telecopy or by delivery to
the registered office of the Corporation and addressed to the attention of the
President. Any such notice, request or other communication, if given by mail,
telecopy or delivery, shall only be deemed to have been given and received upon
actual receipt thereof by the Corporation.
13.2 Any presentation and surrender by a holder of Exchangeable Shares to the
Corporation or the Transfer Agent of certificates representing Exchangeable
Shares in connection with the liquidation, dissolution or winding-up of the
Corporation or the retraction or redemption of Exchangeable Shares shall be
made by registered mail (postage prepaid) or by delivery to the registered
office of the Corporation or to such office of the Transfer Agent as may be
specified by the Corporation, in each case addressed to the attention of the
President of the Corporation. Any such presentation and surrender of
certificates shall only be deemed to have been made and to be effective upon
actual receipt thereof by the Corporation or the Transfer Agent, as the case
may be. Any such presentation and surrender of certificates made by registered
mail shall be at the sole risk of the holder mailing the same.
13.3 Any notice, request or other communication to be given to a holder of
Exchangeable Shares by or on behalf of the Corporation shall be in writing and
shall be valid and effective if given by mail (postage prepaid) or by delivery
to the address of the holder recorded in the securities register of the
Corporation or, in the event of the address of any such holder not being so
recorded, then at the last known address of such holder. Any such notice,
request or other communication, if given by mail, shall be deemed to have been
given and received on the fifth Business Day following the date of mailing and,
if given by delivery, shall be deemed to have been given and received on the
date of delivery. Accidental failure or omission to give any notice, request
or other communication to one or more holders of Exchangeable Shares shall not
invalidate or otherwise alter or affect any action or proceeding to be taken by
the Corporation pursuant thereto.
13.4 All Exchangeable Shares acquired by the Corporation upon the redemption or
retraction thereof shall be cancelled.
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SCHEDULE A
NOTICE OF RETRACTION
To the Corporation and Digicon Inc.
This notice is given pursuant to Article 6 of the provisions (the "Share
Provisions") attaching to the share(s) represented by this certificate and all
capitalized words and expressions used in this notice which are defined in the
Share Provisions have the meanings attributed to such words and expressions in
such Share Provisions.
The undersigned hereby notifies the Corporation that, subject to the
Retraction Call Right referred to below, the undersigned desires to have the
Corporation redeem in accordance with Article 6 of the Share Provisions:
/ / all share(s) represented by this certificate; or
/ / _____________________ share(s) only.
The undersigned hereby notifies the Corporation that the Retraction Date
shall be _________________________________ .
NOTE: The Retraction Date must be a Business Day and must not be less than
five Business Days nor more than 10 Business Days after the date upon
which this notice is received by the Corporation. In the event that no
such Business Day is specified above, the Retraction Date shall be deemed
to be the tenth Business Day after the date on which this notice is
received by the Corporation.
The undersigned acknowledges the Retraction Call Right of Digicon Inc. to
purchase all but not less than all the Retracted Shares from the undersigned
and that this notice shall be deemed to be a revocable offer by the undersigned
to sell the Retracted Shares to Digicon Inc. in accordance with the Retraction
Call Right on the Retraction Date for the Retraction Price and on the other
terms and conditions set out in Section 6.3 of the Share Provisions. If
Digicon Inc. determines not to exercise the Retraction Call Right, the
Corporation will notify the undersigned of such fact as soon as possible. This
notice of retraction, and offer to sell the Retracted Shares to Digicon Inc.,
may be revoked and withdrawn by the undersigned by notice in writing given to
the Corporation at any time before the close of business on the Business Day
immediately preceding the Retraction Date.
The undersigned acknowledges that if, as a result of liquidity or solvency
provisions of applicable law, the Corporation is unable to redeem all Retracted
Shares, the undersigned will be deemed to have exercised the Exchange Right (as
defined in the Voting and Exchange Trust Agreement) so as to require Digicon
Inc. to purchase the unredeemed Retracted Shares.
The undersigned hereby represents and warrants to the Corporation and
Digicon Inc. that the undersigned has good title to, and owns, the share(s)
represented by this certificate to be acquired by the Corporation or Digicon
Inc., as the case may be, free and clear of all liens, claims and encumbrances.
___________________ __________________________ ________________________
(Date) (Signature of Shareholder) (Guarantee of Signature)
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/ / Please check box if the legal or beneficial owner of the Retracted
Shares is a non-resident of Canada.
/ / Please check box if the securities and any cheque(s) or other non-cash
assets resulting from the retraction or purchase of the Retracted Shares
are to be held for pick-up by the shareholder at the principal transfer
office of The R-M Trust Company (the "Transfer Agent") in Calgary,
Alberta, failing which the securities and any cheque(s) or other
non-cash assets will be delivered to the last address of the shareholder
as it appears on the register by such means as the Corporation deems
appropriate.
NOTE: This panel must be completed and this certificate, together with such
additional documents as the Transfer Agent may require, must be
deposited with the Transfer Agent at its principal transfer office in
Calgary, Alberta. The securities and any cheque(s) or other non-cash
assets resulting from the retraction or purchase of the Retracted
Shares will be issued and registered in, and made payable to, or
transferred into, respectively, the name of the shareholder as it
appears on the register of the Corporation and the securities, cheque(s)
and other non-cash assets resulting from such retraction or purchase will
be delivered to such shareholder as indicated above, unless the form
appearing immediately below is duly completed.
__________________________________________ Date _____________________________
Name of Person in Whose Name Securities or
Cheque(s) or Other Non-cash Assets Are To
Be Registered, Issued or Delivered (please
print)
__________________________________________ __________________________________
Street Address or P.O. Box Signature of Shareholder
__________________________________________ __________________________________
City - Province Signature Guaranteed by
NOTE: If the notice of retraction is for less than all of the share(s)
represented by this certificate, a certificate representing the
remaining shares of the Corporation will be issued and registered in the name
of the shareholder as it appears on the register of the Corporation, unless
the Share Transfer Power on the share certificate is duly completed in respect
of such shares.
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EXHIBIT B
RESTATED CERTIFICATE OF INCORPORATION
<PAGE> 71
RESTATED
CERTIFICATE OF INCORPORATION
(WITH AMENDMENTS)
OF
DIGICON INC.
Digicon Inc., a corporation organized and existing under the laws of
Delaware (the "Corporation"), hereby certifies as follows:
FIRST: The present name of the Corporation is Digicon Inc.
SECOND: This Restated Certificate of Incorporation (with Amendments) was
duly adopted in accordance with the provisions of Section 245 of the General
Corporation Law of the State of Delaware.
THIRD: Pursuant to Sections 242 and 245 of the General Corporation Law of
the State of Delaware, this Restated Certificate of Incorporation (with
Amendments) restates and integrates and further amends the provisions of the
Certificate of Incorporation of the Corporation.
FOURTH: The text of the Restated Certificate of Incorporation (with
Amendments) as heretofore amended and supplemented is hereby restated and
further amended to read in its entirety as follows:
ARTICLE I
The name of the Corporation is Veritas DGC Inc.
ARTICLE II
The registered office of the Corporation in the State of Delaware is
located at 1209 Orange Street in the City of Wilmington, County of New Castle.
The name and address of its registered agent at such address is The Corporation
Trust Company.
ARTICLE III
The nature of the business and the objects and purposes to be transacted,
promoted or carried on by the Corporation are to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE IV
Section 1. The aggregate number of shares which the Corporation will have
authority to issue is 41,000,000, of which 40,000,000 will be common shares,
par value $.01 per share, ("Ordinary
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Shares") and 1,000,000 will be shares of preferred stock, par value $.01
per share ("Preferred Stock").
Section 2. Preferred Stock. Shares of Preferred Stock may be issued from
time to time in one or more series, each of which is to have a distinctive
designation specified in the resolution or resolutions of the Board of
Directors providing for the issuance of such Preferred Stock from time to time.
Each series of Preferred Stock:
(a) may have such number of shares;
(b) may have such voting powers, full or limited;
(c) may be subject to redemption upon such terms and conditions;
(d) may be entitled to receive dividends (which may be cumulative or
noncumulative) payable in cash, property, rights or securities at such rate or
rates, on such conditions, from such date or dates, and at such times, and
payable in preference to, or in such relation to, the dividends payable on any
other class or series of stock;
(e) may have such rights and preferences upon the dissolution or
liquidation (whether voluntary or involuntary) of the Corporation;
(f) may be made convertible into or exchangeable for other securities, or
cash, or other property or rights at such price or prices or at such rates of
exchange, and with such adjustments;
(g) may be entitled to the benefit of a sinking fund to be applied to the
redemption of shares of such series upon such terms and in such amount or
amounts;
(h) may be subject to such restrictions as to issuance or as to the
powers, preferences or rights of any such other series; and
(i) may have such other preferences, privileges and relative rights;
as in such instance is stated in the resolution or resolutions of the Board of
Directors providing for the issuance of such Preferred Stock. Except where
otherwise set forth in such resolution or resolutions, the number of shares
comprising such series may be increased or decreased (but not below the number
of shares then outstanding from time to time) by like action of the Board of
Directors. Shares of any series of Preferred Stock, which have been redeemed
(whether through the operation of a sinking fund or otherwise) by the
Corporation, or which, if convertible or exchangeable, have been converted into
or exchanged for shares of stock of any other class, will have the status of
authorized but unissued shares of Preferred Stock and may be reissued as a part
of the series of which they were originally a part or may be reclassified and
reissued as part of a new series of Preferred Stock created by resolution or
resolutions of the Board of Directors or as part of any other series of
Preferred Stock, all subject to the conditions or restrictions on
issuance set forth in the
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resolution or resolutions adopted by the Board of Directors providing for
the issuance of any series of Preferred Stock and to any filing required by
law.
Section 3. Ordinary Shares. Ordinary Shares may be issued from time to
time in one or more series. The designations, powers, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions thereon, of the Ordinary Shares of
each series shall be such as are stated and expressed herein, and to the extent
not stated and expressed herein, shall be such as may be fixed by the Board of
Directors and stated and expressed in the resolution or resolutions providing
for the issuance of such Ordinary Shares from time to time; provided, however,
that:
(a) except as otherwise provided by law or by the resolution or
resolutions of the Board of Directors providing for the issuance of any series
of Preferred Stock, Ordinary Shares will have the exclusive right to vote for
the election of directors and for all other purposes;
(b) all outstanding Ordinary Shares shall vote together as a single class
on all matters presented to stockholders, with each outstanding share of each
series of Ordinary Shares to have such number of votes as specified herein or
as set forth in the resolution or resolutions of the Board of Directors
authorizing such series; and
(c) no series of Ordinary Shares (except for such series as are herein
designated and except for any increase in the number of shares constituting
such a series) shall be designated by resolution of the Board of Directors
except upon the unanimous approval of all outstanding Ordinary Shares.
Section 4. Special Voting Stock Designated. A series of Ordinary Shares,
consisting of one such share, is hereby designated as "Special Voting Stock."
Each outstanding share of Special Voting Stock shall be entitled at any
relevant date to the number of votes determined in accordance with the "Plan of
Arrangement" (as that term is defined in that certain "Combination Agreement"
dated as of May 10, 1996, by and between Digicon Inc. and Veritas Energy
Services Inc. ("Veritas")) on all matters presented to the stockholders. No
dividend or distribution of assets shall be paid to the holders of Special
Voting Stock. The Special Voting Stock is not convertible into any other class
or series of the capital stock of the Corporation or into cash, property or
other rights, and may not be redeemed. Any shares of Special Voting Stock
purchased or otherwise acquired by the Corporation shall be deemed retired and
shall be canceled and may not thereafter be reissued or otherwise disposed of
by the Corporation. So long as any "Exchangeable Shares" (as that term is
defined in the Combination Agreement) shall be outstanding, the number of
shares comprising the Special Voting Stock shall not be increased or decreased
and no other term of the Special Voting Stock shall be amended, except upon the
unanimous approval of all outstanding Ordinary Shares.
Section 5. Common Stock Designated. All Ordinary Shares not otherwise
designated as to series herein or in a resolution of the Board of Directors
creating another series of Ordinary Shares, is designated as "Common Stock."
Such resulting number of shares may be decreased by resolution of the
Board of Directors and without stockholder action; provided, however, that no
decrease shall reduce the number of shares of Common Stock to a number less
than the number of
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<PAGE> 74
shares then outstanding plus the number of shares reserved for issuance upon
the exercise of outstanding options, rights and/or warrants, the conversion
of any outstanding convertible securities and/or the exchange of any
outstanding exchangeable securities which are directly or indirectly
exercisable for, convertible into or exchangeable for Common Stock. Each
outstanding share of Common Stock shall be entitled to one vote on all matters
presented to the stockholders. Subject to the rights and preferences of any
Preferred Stock which may be designated and issued, the holders of Common Stock
are entitled (i) to receive such dividends as may be declared thereon from time
to time by the Board of Directors in its discretion, out of any assets of the
Corporation at the time legally available for the payment of dividends and (ii)
in the event of liquidation, dissolution or winding up of the affairs of the
Corporation, whether voluntary or involuntary, or in the event of its
insolvency, to receive any net assets of the Corporation remaining after the
holders of any other classes or series of the Corporation's capital stock which
by their respective terms are senior to the Common Stock as to dividends and
distributions of assets have been paid in full the amounts to which they
respectively are entitled or a sum sufficient for such payment in full has been
set aside.
Section 6. No holder of securities of the Corporation shall have any
preemptive right to acquire any shares or securities of any kind, whether now
or hereafter authorized, which may at any time be issued, sold or offered for
sale by the Corporation.
ARTICLE V
The existence of the Corporation is to be perpetual.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized:
(a) to authorize and cause to be executed mortgages and liens upon the
real and personal property of the Corporation;
(b) to set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created; and
(c) when and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called upon such notice as is required by statute to
sell, lease or exchange all or substantially all of the property and assets of
the Corporation, including its goodwill and its corporate franchises, upon such
terms and conditions and for such consideration, which may consist in whole or
in part of money or property including securities of any other corporation or
corporations, as the Board of Directors shall deem expedient and for the best
interests of the Corporation.
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<PAGE> 75
ARTICLE VII
Meetings of stockholders may be held within or without the State of
Delaware, at such date and time as is requested by the person or persons
calling the meeting, within the limits fixed by law. Special meetings of
stockholders of the Corporation for any purpose or purposes may only be called
by a majority of the entire Board of Directors, by the Chairman of the Board or
the President of the Corporation. Special meetings may not be called by any
other person or persons. The books of the Corporation may be kept (subject to
any provision contained in the statutes) outside the State of Delaware at such
place or places as may be designated from time to time by the Board of
Directors or in the Bylaws of the Corporation. Elections of directors need not
be by written ballot unless the Bylaws of the Corporation shall so provide.
ARTICLE VIII
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Restated Certificate of Incorporation (with
Amendments), in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
ARTICLE IX
The number of directors of the Corporation shall be not less than three
nor more than ten, the exact number to be fixed by the Board of Directors as
provided in the Bylaws. Any vacancy created by an increase in the number of
directors in accordance with the Bylaws may only be filled by the Board of
Directors. A director of the Corporation may only be removed by a majority
vote of the stockholders entitled to elect such director.
ARTICLE X
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that the foregoing clause shall not
apply to any liability of a director (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit.
If the Delaware General Corporation Law hereafter is amended to authorize
the further elimination or limitation of the liability of directors, then the
liability of a director of the Corporation, in addition to the limitation on
personal liability provided herein, shall be limited to the fullest extent
permitted by the amended Delaware General Corporation Law. Any repeal or
modification of this paragraph by the stockholders of the Corporation shall be
prospective only, and shall not adversely affect any limitation on the personal
liability of a director of the Corporation existing at the time of such repeal
or modification.
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The Corporation shall indemnify its officers and directors to the fullest
extent permitted by the Delaware General Corporation Law as the same may be in
effect from time to time.
ARTICLE XI
The Corporation expressly elects not to be governed by Section 203 of the
Delaware General Corporation Law.
ARTICLE XII
Notwithstanding any other provisions herein to the contrary, so long as
any Exchangeable Shares are outstanding, the Corporation shall (i) fully comply
with all terms of the Exchangeable Shares and with all contractual obligations
of the Corporation associated with such Exchangeable Shares and (ii) not amend,
alter, change or repeal this Article XII except upon the unanimous approval of
all outstanding Ordinary Shares.
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<PAGE> 77
EXHIBIT C
[reserved]
<PAGE> 78
EXHIBIT D
FORM OF SUPPORT AGREEMENT
<PAGE> 79
SUPPORT AGREEMENT
MEMORANDUM OF AGREEMENT made as of _________, 1996.
B E T W E E N:
DIGICON INC.,
a corporation existing under the laws of the State of Delaware,
(hereinafter referred to as "Digicon"),
OF THE FIRST PART,
- and -
VERITAS ENERGY SERVICES INC.
a corporation existing under the laws of the Province of Alberta,
(hereinafter referred to as "Veritas"),
OF THE SECOND PART.
WHEREAS pursuant to a combination agreement dated as of April ___, 1996,
by and between Digicon and Veritas (such agreement as it may be amended or
restated is hereinafter referred to as the "Combination Agreement") the parties
agreed that on the Effective Date (as defined in the Combination Agreement),
Digicon and Veritas would execute and deliver a Support Agreement containing
the terms and conditions set forth in Exhibit _____ to the Combination
Agreement together with such other terms and conditions as may be agreed to by
the parties to the Combination Agreement acting reasonably;
AND WHEREAS pursuant to an arrangement (the "Arrangement") effected by
Articles of Arrangement dated o, 1996 filed pursuant to the Business
Corporations Act (Alberta) each issued and outstanding common share of Veritas
(a "Veritas Common Share") was exchanged for 0.8 issued and outstanding
Exchangeable Shares of Veritas (the "Exchangeable Shares"), and thereafter,
Veritas' sole issued and outstanding Class A Preferred Share was exchanged by
the holder thereof for one issued and outstanding Veritas Common Share;
AND WHEREAS the above-mentioned Articles of Arrangement set forth the
rights, privileges, restrictions and conditions (collectively the "Exchangeable
Share Provisions") attaching to the Exchangeable Shares;
AND WHEREAS the parties hereto desire to make appropriate provision and to
establish a procedure whereby Digicon will take certain actions and make
certain payments and deliveries necessary to ensure that Veritas will be able
to make certain payments and to deliver or cause to be delivered shares of
Digicon Common Stock in satisfaction of the obligations of Veritas under the
Exchangeable Share Provisions with respect to the payment and satisfaction of
dividends, Liquidation Amounts, Retraction Prices and Redemption Prices, all
in accordance with the Exchangeable Share Provisions;
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<PAGE> 80
NOW THEREFORE in consideration of the respective covenants and agreements
provided in this agreement and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties agree as
follows:
1. DEFINITIONS AND INTERPRETATION
(a) DEFINED TERMS. Each term denoted herein by initial capital
letters and not otherwise defined herein shall have the meaning
attributed thereto in the Exchangeable Share Provisions, unless the
context requires otherwise.
(b) INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division
of this agreement into articles, sections and paragraphs and the
insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this
agreement.
(c) NUMBER, GENDER, ETC. Words importing the singular number
only shall include the plural and vice versa. Words importing the
use of any gender shall include all genders.
(d) DATE FOR ANY ACTION. If any date on which any action is
required to be taken under this agreement is not a Business Day,
such action shall be required to be taken on the next succeeding
Business Day.
2. COVENANTS OF DIGICON AND VERITAS
(a) COVENANTS OF DIGICON REGARDING EXCHANGEABLE SHARES. So long
as any Exchangeable Shares are outstanding, Digicon will:
(i) not declare or pay any dividend on Digicon
Common Stock unless (A) Veritas will have
sufficient assets, funds and other property
available to enable the due declaration and the due
and punctual payment in accordance with applicable
law of an equivalent dividend on the Exchangeable
Shares and (B) subsection 2(a)(ii) shall be
complied with in connection with such dividend;
(ii) cause Veritas to declare simultaneously with
the declaration of any dividend on Digicon Common
Stock an equivalent dividend on the Exchangeable
Shares and, when such dividend is paid on Digicon
Common Stock, cause Veritas to pay simultaneously
therewith such equivalent dividend on the
Exchangeable Shares, in each case in accordance
with the Exchangeable Share Provisions;
(iii) advise Veritas sufficiently in advance of the
declaration by Digicon of any dividend on Digicon
Common Stock and take all such other actions as
are necessary, in cooperation with Veritas, to
ensure that the respective declaration date,
record date and payment date for a dividend on the
Exchangeable Shares shall be the same as the record
date, declaration date and payment date for the
corresponding dividend on Digicon Common Stock
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<PAGE> 81
and such dividend on the Exchangeable Shares shall
correspond with any requirement of the principal
stock exchange on which the Exchangeable Shares are
listed;
(iv) ensure that the record date for any dividend
declared on Digicon Common Stock is not less than
10 Business Days after the declaration date for
such dividend;
(v) take all such actions and do all such things as
are necessary or desirable to enable and permit
Veritas, in accordance with applicable law, to pay
and otherwise perform its obligations with respect
to the satisfaction of the Liquidation Amount in
respect of each issued and outstanding
Exchangeable Share upon the liquidation,
dissolution or winding-up of Veritas, including
without limitation all such actions and all such
things as are necessary or desirable to enable and
permit Veritas to cause to be delivered shares of
Digicon Common Stock to the holders of Exchangeable
Shares in accordance with the provisions of
Article 5 of the Exchangeable Share Provisions;
(vi) take all such actions and do all such things
as are necessary or desirable to enable and permit
Veritas, in accordance with applicable law, to pay
and otherwise perform its obligations with respect
to the satisfaction of the Retraction Price and
the Redemption Price, including without limitation
all such actions and all such things as are
necessary or desirable to enable and permit
Veritas to cause to be delivered shares of Digicon
Common Stock to the holders of Exchangeable Shares,
upon the retraction or redemption of the
Exchangeable Shares in accordance with the
provisions of Article 6 or Article 7 of the
Exchangeable Share Provisions, as the case may be;
and
(vii) not exercise its vote as a shareholder to
initiate the voluntary liquidation, dissolution or
winding-up of Veritas nor take any action or omit
to take any action that is designed to result in
the liquidation, dissolution or winding-up of
Veritas.
(b) SEGREGATION OF FUNDS. Digicon will cause Veritas to deposit
a sufficient amount of funds in a separate account and segregate a
sufficient amount of such assets and other property as is necessary
to enable Veritas to pay or otherwise satisfy the applicable
dividends, Liquidation Amount, Retraction Price or Redemption Price,
in each case for the benefit of holders from time to time of the
Exchangeable Shares, and Veritas will use such funds, assets and
other property so segregated exclusively for the payment of
dividends and the payment or other satisfaction of the Liquidation
Amount, the Retraction Price or the Redemption Price, as applicable,
net of any corresponding withholding tax obligations and for the
remittance of such withholding tax obligations.
(c) RESERVATION OF SHARES OF DIGICON COMMON STOCK. Digicon
hereby represents, warrants and covenants that it has irrevocably
reserved for issuance and will at all times keep available, free
from pre-emptive and other rights, out of its
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<PAGE> 82
authorized and unissued capital stock such number of shares of
Digicon Common Stock (or other shares or securities into which
Digicon Common Stock may be reclassified or changed as contemplated
by section 2(g) hereof) (i) as is equal to the sum of (A) the number
of Exchangeable Shares issued and outstanding from time to time and
(B) the number of Exchangeable Shares issuable upon the exercise of
all rights to acquire Exchangeable Shares outstanding from time to
time and (ii) as are now and may hereafter be required to enable and
permit Veritas to meet its obligations hereunder, under the Voting
and Exchange Trust Agreement, under the Exchangeable Share
Provisions and under any other security or commitment pursuant to
the Arrangement with respect to which Digicon may now or hereafter
be required to issue shares of Digicon Common Stock.
(d) NOTIFICATION OF CERTAIN EVENTS. In order to assist Digicon
to comply with its obligations hereunder, Veritas will give Digicon
notice of each of the following events at the time set forth below:
(i) in the event of any determination by the Board
of Directors of Veritas to institute voluntary
liquidation, dissolution or winding-up proceedings
with respect to Veritas or to effect any other
distribution of the assets of Veritas among its
shareholders for the purpose of winding-up its
affairs, at least 60 days prior to the proposed
effective date of such liquidation, dissolution,
winding-up or other distribution;
(ii) immediately, upon the earlier of (A) receipt
by Veritas of notice of, and (B) Veritas otherwise
becoming aware of, any threatened or instituted
claim, suit, petition or other proceedings with
respect to the involuntary liquidation,
dissolution or winding-up of Veritas or to effect
any other distribution of the assets of Veritas
among its shareholders for the purpose of
winding-up its affairs;
(iii) immediately, upon receipt by Veritas of a
Retraction Request (as defined in the Exchangeable
Share Provisions);
(iv) at least 130 days prior to any accelerated
Automatic Redemption Date determined by the Board
of Directors of Veritas in accordance with the
Exchangeable Share Provisions; and
(v) as soon as practicable upon the issuance by
Veritas of any Exchangeable Shares or rights to
acquire Exchangeable Shares.
(e) DELIVERY OF SHARES OF DIGICON COMMON STOCK. In furtherance
of its obligations hereunder, upon notice of any event which
requires Veritas to cause to be delivered shares of Digicon Common
Stock to any holder of Exchangeable Shares, Digicon shall forthwith
issue and deliver the requisite shares of Digicon Common Stock to or
to the order of the former holder of the surrendered Exchangeable
Shares, as Veritas shall direct. All such shares of Digicon Common
Stock shall be duly issued
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<PAGE> 83
as fully paid and non-assessable and shall be free and clear of any
lien, claim, encumbrance, security interest or adverse claim.
(f) QUALIFICATION OF SHARES OF DIGICON COMMON STOCK. Digicon
covenants that if any shares of Digicon Common Stock (or other
shares or securities into which Digicon Common Stock may be
reclassified or changed as contemplated by Section 2(g) hereof) to
be issued and delivered hereunder, including for greater certainty,
pursuant to the Exchangeable Share Provisions, or pursuant to the
Exchange Right or the Automatic Exchange Rights (both as defined in
the Voting and Exchange Trust Agreement) require registration or
qualification with or approval of or the filing of any document
including any prospectus or similar document or the taking of any
proceeding with or the obtaining of any order, ruling or consent
from any governmental or regulatory authority under any Canadian or
United States federal, provincial or state law or regulation or
pursuant to the rules and regulations of any regulatory authority or
the fulfillment of any other legal requirement (collectively, the
"Applicable Laws") before such shares (or other shares or securities
into which Digicon Common Stock may be reclassified or changed as
contemplated by Section 2(g) hereof) may be issued and delivered by
Digicon to the initial holder thereof (other than Veritas) or in
order that such shares may be freely traded thereafter (other than
any restrictions on transfer by reason of a holder being a "control
person" of Digicon for purposes of Canadian federal or provincial
securities law or an "affiliate" of Digicon for purposes of United
States federal or state securities law), Digicon will in good faith
expeditiously take all such actions and do all such things as are
necessary to cause such shares of Digicon Common Stock (or other
shares or securities into which Digicon Common Stock may be
reclassified or changed as contemplated by Section 2(g) hereof) to
be and remain duly registered, qualified or approved. Digicon
represents and warrants that it has in good faith taken all actions
and done all things as are necessary under Applicable Laws as they
exist on the date hereof to cause the shares of Digicon Common Stock
(or other shares or securities into which Digicon Common Stock may
be reclassified or changed as contemplated by Section 2(g) hereof)
to be issued and delivered hereunder, including for greater
certainty, pursuant to the Exchangeable Share Provisions, or
pursuant to the Exchange Right and the Automatic Exchange Rights to
be freely tradeable thereafter (other than restrictions on transfer
by reason of a holder being a "control person" of Digicon for the
purposes of Canadian federal and provincial securities law or an
"affiliate" of Digicon for the purposes of United States federal or
state securities law). Digicon will in good faith expeditiously
take all such actions and do all such things as are necessary to
cause all shares of Digicon Common Stock (or other shares or
securities into which Digicon Common Stock may be reclassified or
changed as contemplated by Section 2(g) hereof) to be delivered
hereunder, including for greater certainty, pursuant to the
Exchangeable Share Provisions, or pursuant to the Exchange Right or
the Automatic Exchange Rights to be listed, quoted or posted for
trading on all stock exchanges and quotation systems on which such
shares are listed, quoted or posted for trading at such time.
Digicon will in good faith expeditiously take all such action and do
all such things as are necessary to cause all Exchangeable Shares to
be and to continue to be listed and posted for trading on a stock
exchange in Canada. Digicon will in good faith expeditiously take
all such
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<PAGE> 84
action and do all such things as are necessary to cause all
the shares of Digicon Common Stock to be and to continue to be
listed and posted for trading on The Toronto Stock Exchange.
(g) EQUIVALENCE.
(i) Digicon will not without the prior approval of
Veritas and the prior approval of the holders of
the Exchangeable Shares given in accordance with
Section 9.2 of the Exchangeable Share Provisions:
(A) issue or distribute shares of Digicon Common Stock (or
securities exchangeable for or convertible into or carrying
rights to acquire shares of Digicon Common Stock) to
the holders of all or substantially all of the then
outstanding Digicon Common Stock by way of stock dividend or
other distribution; or
(B) issue or distribute rights, options or warrants to the
holders of all or substantially all of the then
outstanding shares of Digicon Common Stock entitling them
to subscribe for or to purchase shares of Digicon Common
Stock (or securities exchangeable for or convertible into or
carrying rights to acquire shares of Digicon Common Stock);
or
(C) issue or distribute to the holders of all or substantially
all of the then outstanding shares of Digicon Common
Stock (I) shares or securities of Digicon of any class
other than Digicon Common Stock (other than shares
convertible into or exchangeable for or carrying rights to
acquire shares of Digicon Common Stock), (II) rights,
options or warrants other than those referred to in
subsection 2(g)(i)(A) above, (III) evidences of indebtedness
of Digicon or (IV) assets of Digicon;
unless (D) Veritas is permitted under applicable law to issue or
distribute the equivalent on a per share basis of such rights,
options, securities, shares, evidences of indebtedness or other
assets to holders of the Exchangeable Shares and (E) Veritas shall
issue or distribute such rights, options, securities, shares,
evidences of indebtedness or other assets simultaneously to holders
of the Exchangeable Shares.
(ii) Digicon will not without the prior approval of Veritas and the
prior approval of the holders of the Exchangeable Shares given
in accordance with Section 9.2 of the Exchangeable Share
Provisions:
(A) subdivide, redivide or change the then outstanding shares
of Digicon Common Stock into a greater number of shares
of Digicon Common Stock; or
(B) reduce, combine or consolidate or change the then
outstanding shares of Digicon Common Stock into a lesser
number of shares of Digicon Common Stock; or
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<PAGE> 85
(C) reclassify or otherwise change the shares of Digicon
Common Stock or effect an amalgamation, merger,
reorganization or other transaction affecting the shares
of Digicon Common Stock;
unless (I) Veritas is permitted under applicable law to
simultaneously make the same or an equivalent change to, or in the
rights of holders of, the Exchangeable Shares and (II) the same or
an equivalent change is made to, or in the rights of the holders of,
the Exchangeable Shares.
(iii) Digicon will ensure that the record date for any event
referred to in section 2(g)(i) or 2(g)(ii) above, or (if no
record date is applicable for such event) the effective
date for any such event, is not less than 20 Business Days
after the date on which such event is declared or announced by
Digicon (with simultaneous notice thereof to be given by
Digicon to Veritas).
(h) TENDER OFFERS, ETC. In the event that a tender offer, share
exchange offer, issuer bid, take-over bid or similar transaction
with respect to Digicon Common Stock (an "Offer") is proposed by
Digicon or is proposed to Digicon or its shareholders and is
recommended by the Board of Directors of Digicon, or is otherwise
effected or to be effected with the consent or approval of the Board
of Directors of Digicon, Digicon shall take all such actions and do
all such things as are necessary or desirable to enable and permit
holders of Exchangeable Shares to participate in such Offer to the
same extent and on an equivalent basis as the holders of shares of
Digicon Common Stock, without discrimination, including, without
limiting the generality of the foregoing, Digicon will use its good
faith efforts expeditiously to (and shall, in the case of a
transaction proposed by Digicon or where Digicon is a participant in
the negotiation thereof) ensure that holders of Exchangeable Shares
may participate in all such Offers without being required to retract
Exchangeable Shares as against Veritas (or, if so required, to
ensure that any such retraction shall be effective only upon, and
shall be conditional upon, the closing of the Offer and only to the
extent necessary to tender or deposit to the Offer).
(i) OWNERSHIP OF OUTSTANDING SHARES. Without the prior approval
of Veritas and the prior approval of the holders of the Exchangeable
Shares given in accordance with Section 9.2 of the Exchangeable
Share Provisions, Digicon covenants and agrees in favour of Veritas
that, as long as any outstanding Exchangeable Shares are owned by
any person or entity other than Digicon or any of its Subsidiaries,
Digicon will be and remain the direct or indirect beneficial
owner of all issued and outstanding shares in the capital of Veritas
and all outstanding securities of Veritas carrying or otherwise
entitled to voting rights in any circumstances, in each case other
than the Exchangeable Shares.
(j) DIGICON NOT TO VOTE EXCHANGEABLE SHARES. Digicon covenants
and agrees that it will appoint and cause to be appointed
proxyholders with respect to all Exchangeable Shares held by Digicon
and its Subsidiaries for the sole purpose of attending each meeting
of holders of Exchangeable Shares in order to be counted as
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<PAGE> 86
part of the quorum for each such meeting. Digicon further covenants
and agrees that it will not, and will cause its Subsidiaries not
to, exercise any voting rights which may be exercisable by holders
of Exchangeable Shares from time to time pursuant to the
Exchangeable Share Provisions or pursuant to the provisions of the
Business Corporations Act (Alberta) (or any successor or other
corporate statute by which Veritas may in the future be governed)
with respect to any Exchangeable Shares held by it or by its
Subsidiaries in respect of any matter considered at any meeting of
holders of Exchangeable Shares.
(k) DUE PERFORMANCE. On and after the Effective Date, Digicon
shall duly and timely perform all of its obligations provided for in
the Plan of Arrangement, including any obligations that may arise
upon the exercise of Digicon's rights under the Exchangeable Share
Provisions.
(l) ELECTION OF DIGICON BOARD AND NOMINATING COMMITTEE. At or
prior to the Effective Time (as defined in the Combination
Agreement), (i) such number of directors of Digicon shall resign or
be removed such that there shall be no more than six directors of
Digicon ("Digicon Designees") serving in such a capacity, (ii) the
size of the board of directors of Digicon shall be increased so that
it shall initially consist of ten directors and (iii) a nominating
committee (the "Nominating Committee") will be created. At the
Effective Time, four individuals designated by Veritas (the "Veritas
Designees") shall be elected to the board of directors of Digicon.
The Nominating Committee (i) shall consist initially of two outside
directors who are Veritas Designees and two outside directors who
are Digicon Designees, (ii) shall take action by the vote of a
majority of its authorized number of members and (iii) shall
nominate directors for election for not less than the two annual
stockholder meetings of Digicon (or special meetings in lieu
thereof) following the Closing (as defined in the Combination
Agreement). Any member of the Nominating Committee who ceases to be
such a member (whether by reason of resignation from the Nominating
Committee or death, disability, removal or resignation as a director
or otherwise) shall be promptly replaced with a Digicon director
designated by a majority of the Veritas Designees or the Digicon
Designees, as applicable. Digicon shall put forth those
individuals nominated by the Nominating Committee for election to
its board of directors and will solicit proxies for its
stockholder's meetings in favour of the election of each such
individual.
3. GENERAL
(a) TERM. This agreement shall come into force and be effective
as of the date hereof and shall terminate and be of no further force
and effect at such time as no Exchangeable Shares (or securities or
rights convertible into or exchangeable for or carrying rights to
acquire Exchangeable Shares) are held by any party other than
Digicon and any of its Subsidiaries.
(b) CHANGES IN CAPITAL OF DIGICON AND VERITAS. Notwithstanding
the provisions of section 3(d) hereof, at all times after the
occurrence of any event effected pursuant to section 2(g) or 2(h)
hereof, as a result of which either Digicon
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<PAGE> 87
Common Stock or the Exchangeable Shares or both are in any way
changed, this agreement shall forthwith be amended and modified as
necessary in order that it shall apply with full force and effect,
mutatis mutandis, to all new securities into which Digicon Common
Stock or the Exchangeable Shares or both are so changed and the
parties hereto shall execute and deliver an agreement in writing
giving effect to and evidencing such necessary amendments and
modifications.
(c) SEVERABILITY. If any provision of this agreement is held to
be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remainder of this agreement shall not in any
way be affected or impaired thereby and this agreement shall be
carried out as nearly as possible in accordance with its original
terms and conditions.
(d) AMENDMENTS, MODIFICATIONS, ETC. This agreement may not be
amended or modified except by an agreement in writing executed by
Veritas and Digicon and approved by the holders of the Exchangeable
Shares in accordance with Section 9.2 of the Exchangeable Share
Provisions.
(e) MINISTERIAL AMENDMENTS. Notwithstanding the provisions of
section 3(d), the parties to this agreement may in writing, at any
time and from time to time, without the approval of the holders of
the Exchangeable Shares, amend or modify this agreement for the
purposes of:
(i) adding to the covenants of either or both
parties for the protection of the holders of the
Exchangeable Shares;
(ii) making such amendments or modifications not
inconsistent with this agreement as may be
necessary or desirable with respect to matters or
questions which, in the opinion of the board of
directors of each of Veritas and Digicon, it may be
expedient to make, provided that each such boards
of directors shall be of the opinion that such
amendments or modifications will not be
prejudicial to the interests of the holders of the
Exchangeable Shares; or
(iii) making such changes or corrections which, on
the advice of counsel to Veritas and Digicon, are
required for the purpose of curing or correcting
any ambiguity or defect or inconsistent provision
or clerical omission or mistake or manifest error,
provided that the boards of directors of each of
Veritas and Digicon shall be of the opinion that
such changes or corrections will not be
prejudicial to the interests of the holders of the
Exchangeable Shares.
(f) MEETING TO CONSIDER AMENDMENTS. Veritas, at the request of
Digicon, shall call a meeting or meetings of the holders of the
Exchangeable Shares for the purpose of considering any proposed
amendment or modification requiring approval of such shareholders.
Any such meeting or meetings shall be called and held in accordance
with the by-laws of Veritas, the Exchangeable Share Provisions and
all applicable laws.
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(g) AMENDMENTS ONLY IN WRITING. No amendment to or modification
or waiver of any of the provisions of this agreement otherwise
permitted hereunder shall be effective unless made in writing and
signed by both of the parties hereto.
(h) INUREMENT. This agreement shall be binding upon and inure to
the benefit of the parties hereto and the holders, from time to
time, of Exchangeable Shares and each of their respective heirs,
successors and assigns.
(i) NOTICES TO PARTIES. All notices and other communications
between the parties shall be in writing and shall be deemed to have
been given if delivered personally or by confirmed telecopy to the
parties at the following addresses (or at such other address for
either such party as shall be specified in like notice):
(i) if to Digicon at: Digicon Inc.
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Attention: President
Telecopy: (713) 526-5611
(ii) if to Veritas at: Veritas Energy Services Inc.
Suite 300, 615 - Third Avenue S.W.
Calgary, Alberta T2P 0G6
Attention: President
Telecopy: (403) 266-9359
Any notice or other communication given personally shall
be deemed to have been given and received upon delivery
thereof and if given by telecopy shall be deemed to have
been given and received on the date of confirmed receipt
thereof unless such day is not a Business Day in which
case it shall be deemed to have been given and received
upon the immediately following Business Day.
(j) COUNTERPARTS. This agreement may be executed in
counterparts, each of which shall be deemed an original, and all of
which taken together shall constitute one and the same instrument.
(k) JURISDICTION. This agreement shall be construed and enforced
in accordance with the laws of the Province of Alberta and the laws
of Canada applicable therein.
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(l) ATTORNMENT. Digicon agrees that any action or proceeding
arising out of or relating to this agreement may be instituted in
the courts of Alberta, waives any objection which it may have now or
hereafter to the venue of any such action or proceeding, irrevocably
submits to the jurisdiction of the said courts in any such action or
proceeding, agrees to be bound by any judgment of the said courts
and not to seek, and hereby waives, any review of the merits of any
such judgment by the courts of any other jurisdiction and hereby
appoints Veritas at its registered office in the Province of Alberta
as Digicon's attorney for service of process.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
duly executed as of the date first above written.
DIGICON INC. VERITAS ENERGY SERVICES INC.
Per: ____________________ Per: ________________________
Per: ____________________ Per: ________________________
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EXHIBIT E
FORM OF VOTING AND EXCHANGE
TRUST AGREEMENT
<PAGE> 91
VOTING AND EXCHANGE TRUST AGREEMENT
MEMORANDUM OF AGREEMENT MADE AS OF THE ____ DAY OF ________, 1996.
B E T W E E N:
DIGICON INC.,
a corporation existing under the
laws of the State of Delaware
(hereinafter referred to as
"Digicon")
OF THE FIRST PART,
- and -
VERITAS ENERGY SERVICES INC.,
a corporation existing under
the laws of the Province of
Alberta
(hereinafter referred to as
"Veritas")
OF THE SECOND PART,
- and -
THE R-M TRUST COMPANY,
a trust company existing under the laws of Canada
(hereinafter referred to as the
"Trustee")
OF THE THIRD PART.
WHEREAS pursuant to a combination agreement dated as of May 10, 1996, by
and between Digicon and Veritas (such agreement as it may be amended or
restated is hereinafter referred to as the "Combination Agreement") the parties
agreed that on the Effective Date (as defined in the Combination Agreement),
Digicon and Veritas would execute and deliver a Voting and Exchange Trust
Agreement containing the terms and conditions set forth in Exhibit _____ to the
Combination Agreement together with such other terms and conditions as may be
agreed to by the parties to the Combination Agreement acting reasonably;
AND WHEREAS pursuant to an arrangement (the "Arrangement") effected by
Articles of Arrangement dated ________, 1996 filed pursuant to the Business
Corporations Act (Alberta), each issued and outstanding common share of Veritas
(a "Veritas Common Share") was exchanged for 0.8 issued and outstanding
Exchangeable Shares of Veritas (the "Exchangeable Shares"), and thereafter,
Veritas's sole issued and outstanding Class A Preferred Share was exchanged by
the holder thereof for one issued and outstanding Veritas Common Share;
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AND WHEREAS the above-mentioned Articles of Arrangement set forth the
rights, privileges, restrictions and conditions (collectively, the
"Exchangeable Share Provisions") attaching to the Exchangeable Shares;
AND WHEREAS Digicon is to provide voting rights in Digicon to each holder
(other than Digicon and its Subsidiaries) from time to time of Exchangeable
Shares, such voting rights per Exchangeable Share to be equivalent to the
voting rights per share of Digicon Common Stock (the "Digicon Common Stock");
AND WHEREAS Digicon is to grant to and in favour of the holders (other
than Digicon and its Subsidiaries) from time to time of Exchangeable Shares the
right, in the circumstances set forth herein, to require Digicon to purchase
from each such holder all or any part of the Exchangeable Shares held by the
holder;
AND WHEREAS the parties desire to make appropriate provision and to
establish a procedure whereby voting rights in Digicon shall be exercisable by
holders (other than Digicon and its Subsidiaries) from time to time of
Exchangeable Shares by and through the Trustee, which will hold legal title to
one share of Digicon Special Voting Stock (the "Digicon Special Voting Stock")
to which voting rights attach for the benefit of such holders and whereby the
rights to require Digicon to purchase Exchangeable Shares from the holders
thereof (other than Digicon and its Subsidiaries) shall be exercisable by such
holders from time to time of Exchangeable Shares by and through the Trustee,
which will hold legal title to such rights for the benefit of such holders;
AND WHEREAS these recitals and any statements of fact in this agreement
are made by Digicon and Veritas and not by the Trustee;
NOW THEREFORE in consideration of the respective covenants and agreements
provided in this agreement and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties agree as
follows:
1. DEFINITIONS AND INTERPRETATION
(a) DEFINITIONS. In this agreement, the
following terms shall have the following meanings:
"Aggregate Equivalent Vote Amount" means, with respect to any matter,
proposition or question on which holders of Digicon Common Stock are entitled
to vote, consent or otherwise act, the product of (i) the number of shares of
Exchangeable Shares issued and outstanding and held by Holders multiplied by
(ii) the number of votes to which a holder of one share of Digicon Common Stock
is entitled with respect to such matter, proposition or question.
"Exchangeable Share Consideration" has the meaning attributed thereto in the
Exchangeable Share Provisions.
"Exchangeable Share Price" has the meaning attributed thereto in the
Exchangeable Share Provisions.
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<PAGE> 93
"Arrangement" has the meaning attributed thereto in the recitals hereto.
"Automatic Exchange Rights" means the benefit of the obligation of Digicon to
effect the automatic exchange of shares of Digicon Common Stock for
Exchangeable Shares pursuant to Section 5(l) hereof.
"Board of Directors" means the Board of Directors of Veritas.
"Business Day" has the meaning attributed thereto in the Exchangeable Share
Provisions;
"Digicon Common Stock" has the meaning attributed thereto in the recitals
hereto.
"Digicon Consent" has the meaning attributed thereto in Section 4(b) hereof.
"Digicon Meeting" has the meaning attributed thereto in Section 4(b) hereof.
"Digicon Special Voting Stock" has the meaning attributed thereto in the
recitals hereto.
"Digicon Successor" has the meaning attributed thereto in subsection 11(a)(i)
hereof.
"Equivalent Vote Amount" means, with respect any matter, proposition or
question on which holders of Digicon Common Stock are entitled to vote, consent
or otherwise act, the number of votes to which a holder of one share of Digicon
Common Stock is entitled with respect to such matter, proposition or question.
"Exchange Right" has the meaning attributed thereto in Article 5 hereof.
"Exchangeable Share Provisions" has the meaning attributed thereto in the
recitals hereto.
"Exchangeable Shares" has the meaning attributed thereto in the recitals
hereto.
"Holder Votes" has the meaning attributed thereto in Section 4(b) hereof.
"Holders" means the registered holders from time to time of Exchangeable
Shares, other than Digicon and its Subsidiaries.
"Insolvency Event" means the institution by Veritas of any proceeding to be
adjudicated a bankrupt or insolvent or to be dissolved or wound-up, or the
consent of Veritas to the institution of bankruptcy, insolvency, dissolution
or winding-up proceedings against it, or the filing of a petition, answer or
consent seeking dissolution or winding-up under any bankruptcy, insolvency or
analogous laws, including without limitation the Companies Creditors'
Arrangement Act (Canada) and the Bankruptcy and Insolvency Act (Canada), and
the failure by Veritas to contest in good faith any such proceedings commenced
in respect of Veritas within 15 days of becoming aware thereof, or the consent
by Veritas to the filing of any such petition or to the appointment of a
receiver, or the making by Veritas of a general assignment for the benefit of
creditors, or the admission in writing by Veritas of its inability to pay its
debts generally as they become due, or Veritas not being
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<PAGE> 94
permitted, pursuant to liquidity or solvency requirements of applicable law,
to redeem any Retracted Shares pursuant to Section 6.6 of the Exchangeable
Share Provisions.
"Liquidation Call Right" has the meaning attributed thereto in the Exchangeable
Share Provisions.
"Liquidation Event" has the meaning attributed thereto in subsection 5(l)(ii)
hereof.
"Liquidation Event Effective Date" has the meaning attributed thereto in
subsection 5(l)(iii) hereof.
"List" has the meaning attributed thereto in Section 4(f) hereof.
"Officer's Certificate" means, with respect to Digicon or Veritas, as the case
may be, a certificate signed by any one of the Chairman of the Board, the
Vice-Chairman of the Board, the President, any Vice-President or any other
senior officer of Digicon or Veritas, as the case may be.
"Person" includes an individual, partnership, corporation, company,
unincorporated syndicate or organization, trust, trustee, executor,
administrator and other legal representative.
"Plan of Arrangement" has the meaning attributed thereto in the Exchangeable
Share Provisions.
"Redemption Call Right" has the meaning attributed thereto in the Exchangeable
Share Provisions.
"Retracted Shares" has the meaning attributed thereto in Section 5(g) hereof.
"Retraction Call Right" has the meaning attributed thereto in the Exchangeable
Share Provisions.
"Subsidiary" has the meaning attributed thereto in the Exchangeable Share
Provisions.
"Support Agreement" means that certain support agreement made as of even date
hereof between Veritas and Digicon.
"Trust" means the trust created by this agreement.
"Trust Estate" means the Voting Share, any other securities, the Exchange
Right, the Automatic Exchange Rights and any money or other property which may
be held by the Trustee from time to time pursuant to this agreement.
"Trustee" means The R-M Trust Company and, subject to the provisions of Article
10 hereof, includes any successor trustee or permitted assigns.
"Veritas Common Shares" has the meaning attributed thereto in the recitals
hereto.
"Voting Rights" means the voting rights attached to the Voting Share.
"Voting Share" means the one share of Digicon Special Voting Stock, U.S. $0.01
par value, issued by Digicon to and deposited with the Trustee, which entitles
the holder of record to a number of
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votes at meetings of holders of Digicon Common Stock equal to the Aggregate
Equivalent Vote Amount.
(b) INTERPRETATION NOT AFFECTED BY HEADINGS,
ETC. The division of this agreement into articles,
sections and paragraphs and the insertion of headings are
for convenience of reference only and shall not affect the
construction or interpretation of this agreement.
(c) NUMBER, GENDER, ETC. Words importing the
singular number only shall include the plural and vice
versa. Words importing the use of any gender shall
include all genders.
(d) DATE FOR ANY ACTION. If any date on
which any action is required to be taken under this
agreement is not a Business Day, such action shall be
required to be taken on the next succeeding Business Day.
2. PURPOSE OF AGREEMENT
The purpose of this agreement is to create the Trust for the
benefit of the Holders, as herein provided. The Trustee will
hold the Voting Share in order to enable the Trustee to
exercise the Voting Rights and will hold the Exchange Right and
the Automatic Exchange Rights in order to enable the Trustee to
exercise such rights, in each case as trustee for and on behalf
of the Holders as provided in this agreement.
3. VOTING SHARE
(a) ISSUANCE AND OWNERSHIP OF THE VOTING
SHARE. Digicon hereby issues to and deposits with the
Trustee the Voting Share to be hereafter held of record by
the Trustee as trustee for and on behalf of, and for the
use and benefit of, the Holders and in accordance with the
provisions of this agreement. Digicon hereby acknowledges
receipt from the Trustee as trustee for and on behalf of
the Holders of good and valuable consideration (and the
adequacy thereof) for the issuance of the Voting Share by
Digicon to the Trustee. During the term of the Trust and
subject to the terms and conditions of this agreement, the
Trustee shall possess and be vested with full legal
ownership of the Voting Share and shall be entitled to
exercise all of the rights and powers of an owner with
respect to the Voting Share, provided that the Trustee
shall:
(i) hold the Voting Share and the legal title
thereto as trustee solely for the use and benefit
of the Holders in accordance with the provisions of
this agreement; and
(ii) except as specifically authorized by this
agreement, have no power or authority to sell,
transfer, vote or otherwise deal in or with the
Voting Share and the Voting Share shall not be used
or disposed of by the Trustee for any purpose
other than the purposes for which this Trust is
created pursuant to this agreement.
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(b) LEGENDED SHARE CERTIFICATES. Veritas
will cause each certificate representing Exchangeable
Shares to bear an appropriate legend notifying the Holders
of their right to instruct the Trustee with respect to the
exercise of the Voting Rights with respect to the
Exchangeable Shares held by a Holder.
(c) SAFE KEEPING OF CERTIFICATE. The
certificate representing the Voting Share shall at all
times be held in safe keeping by the Trustee or its agent.
4. EXERCISE OF VOTING RIGHTS
(a) VOTING RIGHTS. The Trustee, as the
holder of record of the Voting Share, shall be entitled to
all of the Voting Rights, including the right to consent
to or to vote in person or by proxy the Voting Share, on
any matter, question or proposition whatsoever that may
properly come before the stockholders of Digicon at a
Digicon Meeting or in connection with a Digicon Consent
(in each case, as hereinafter defined). The Voting Rights
shall be and remain vested in and exercised by the
Trustee. Subject to Section 7(o) hereof, the Trustee
shall exercise the Voting Rights only on the basis of
instructions received pursuant to this Article 4 from
Holders entitled to instruct the Trustee as to the voting
thereof at the time at which a Digicon Consent is sought
or a Digicon Meeting is held. To the extent that no
instructions are received from a Holder with respect to
the Voting Rights to which such Holder is entitled, the
Trustee shall not exercise or permit the exercise of such
Holder's Voting Rights.
(b) NUMBER OF VOTES. With respect to all
meetings of stockholders of Digicon at which holders of
shares of Digicon Common Stock are entitled to vote (a
"Digicon Meeting") and with respect to all written
consents sought by Digicon from its stockholders including
the holders of shares of Digicon Common Stock (a "Digicon
Consent"), each Holder shall be entitled to instruct the
Trustee to cast and exercise, in the manner instructed, a
number of votes equal to the Equivalent Vote Amount for
each Exchangeable Share owned of record by such Holder on
the record date established by Digicon or by applicable
law for such Digicon Meeting or Digicon Consent, as the
case may be (the "Holder Votes") in respect of each
matter, question or proposition to be voted on at such
Digicon Meeting or to be consented to in connection with
such Digicon Consent.
(c) MAILINGS TO SHAREHOLDERS. With respect
to each Digicon Meeting and Digicon Consent, the Trustee
will mail or cause to be mailed (or otherwise communicate
in the same manner as Digicon utilizes in communications
to holders of Digicon Common Stock, subject to the
Trustee's ability to provide this method of communication
and upon being advised in writing of such method) to each
of the Holders named in the List on the same day as the
initial mailing or notice (or other communication) with
respect thereto is given by Digicon to its stockholders:
(i) a copy of such notice, together with any proxy
or information statement and related materials to
be provided to stockholders of the Digicon;
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<PAGE> 97
(ii) a statement that such Holder is entitled to
instruct the Trustee as to the exercise of the
Holder Votes with respect to such Digicon Meeting
or Digicon Consent, as the case may be, or,
pursuant to Section 4(g) hereof, to attend such
Digicon Meeting and to exercise personally the
Holder Votes thereat;
(iii) a statement as to the manner in which such
instructions may be given to the Trustee,
including an express indication that instructions
may be given to the Trustee to give:
(A) a proxy to such Holder or his designee to
exercise personally the Holder Votes; or
(B) a proxy to a designated agent or other
representative of the management of Digicon
to exercise such Holder Votes;
(iv) a statement that if no such instructions are
received from the Holder, the Holder Votes to
which such Holder is entitled will not be
exercised;
(v) a form of direction whereby the Holder may so
direct and instruct the Trustee as contemplated
herein; and
(vi) a statement of (A) the time and date by which
such instructions must be received by the Trustee
in order to be binding upon it, which in the case
of a Digicon Meeting shall not be earlier than the
close of business on the Business Day prior to such
meeting, and (B) the method for revoking or
amending such instructions.
The materials referred to above are to be provided by Digicon
to the Trustee, but shall be subject to review and comment by
the Trustee.
For the purpose of determining Holder Votes to which a Holder
is entitled in respect of any such Digicon Meeting or Digicon
Consent, the number of Exchangeable Shares owned of record by
the Holder shall be determined at the close of business on the
record date established by Digicon or by applicable law for
purposes of determining stockholders entitled to vote at such
Digicon Meeting or to give written consent in connection with
such Digicon Consent. Digicon will notify the Trustee in
writing of any decision of the board of directors of Digicon
with respect to the calling of any such Digicon Meeting or the
seeking of any such Digicon Consent and shall provide all
necessary information and materials to the Trustee in each case
promptly and in any event in sufficient time to enable the
Trustee to perform its obligations contemplated by this Section
4(c).
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<PAGE> 98
(d) COPIES OF STOCKHOLDER INFORMATION. Digicon will deliver
to the Trustee copies of all proxy materials,
(including notices of Digicon Meetings but excluding
proxies to vote shares of Digicon Common Stock),
information statements, reports (including without
limitation all interim and annual financial statements)
and other written communications that are to be
distributed from time to time to holders of Digicon Common
Stock in sufficient quantities and in sufficient time so
as to enable the Trustee to send those materials to each
Holder at the same time as such materials are first sent
to holders of Digicon Common Stock. The Trustee will mail
or otherwise send to each Holder, at the expense of
Digicon, copies of all such materials (and all materials
specifically directed to the Holders or to the Trustee for
the benefit of the Holders by Digicon) received by the
Trustee from Digicon at the same time as such materials
are first sent to holders of Digicon Common Stock. The
Trustee will make copies of all such materials available
for inspection by any Holder at the Trustee's principal
office in the cities of Calgary and Toronto.
(e) OTHER MATERIALS. Immediately after receipt by Digicon or
any stockholder of Digicon of any material sent or
given generally to the holders of Digicon Common Stock by
or on behalf of a third party, including without
limitation dissident proxy and information circulars (and
related information and material) and tender and exchange
offer circulars (and related information and material),
Digicon shall use its best efforts to obtain and deliver
to the Trustee copies thereof in sufficient quantities so
as to enable the Trustee to forward such material (unless
the same has been provided directly to Holders by such
third party) to each Holder as soon as possible
thereafter. As soon as practicable after receipt thereof,
the Trustee will mail or otherwise send to each Holder, at
the expense of Digicon, copies of all such materials
received by the Trustee from Digicon. The Trustee will
also make copies of all such materials available for
inspection by any Holder at the Trustee's principal office
in the cities of Toronto and Vancouver.
(f) LIST OF PERSONS ENTITLED TO VOTE. Veritas shall, (i) prior
to each annual, general and special Digicon Meeting or
the seeking of any Digicon Consent and (ii) forthwith upon
each request made at any time by the Trustee in writing,
prepare or cause to be prepared a list (a "List") of the
names and addresses of the Holders arranged in
alphabetical order and showing the number of Exchangeable
Shares held of record by each such Holder, in each case at
the close of business on the date specified by the Trustee
in such request or, in the case of a List prepared in
connection with a Digicon Meeting or a Digicon Consent, at
the close of business on the record date established by
Digicon or pursuant to applicable law for determining the
holders of Digicon Common Stock entitled to receive notice
of and/or to vote at such Digicon Meeting or to give
consent in connection with such Digicon Consent. Each
such List shall be delivered to the Trustee promptly after
receipt by Veritas of such request or the record date for
such meeting or seeking of consent, as the case may be,
and in any event within sufficient time as to enable the
Trustee to perform its obligations under this agreement.
Digicon agrees to give Veritas written notice (with a copy
to the Trustee) of the calling of any Digicon Meeting or
the seeking of any Digicon Consent, together with the
record dates therefor, sufficiently prior to the date
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<PAGE> 99
of the calling of such meeting or seeking of such
consent so as to enable Veritas to perform its obligations
under this Section 4(f).
(g) ENTITLEMENT TO DIRECT VOTES. Any Holder named in a List
prepared in connection with any Digicon Meeting or any
Digicon Consent will be entitled (i) to instruct the
Trustee in the manner described in Section 4(c) hereof
with respect to the exercise of the Holder Votes to which
such Holder is entitled or (ii) to attend such meeting and
personally to exercise thereat (or to exercise with
respect to any written consent), as the proxy of the
Trustee, the Holder Votes to which such Holder is
entitled.
(h) VOTING BY TRUSTEE, AND ATTENDANCE OF TRUSTEE
REPRESENTATIVE, AT MEETING.
(i) In connection with each Digicon Meeting and
Digicon Consent, the Trustee shall exercise, either
in person or by proxy, in accordance with the
instructions received from a Holder pursuant to
Section 4(c) hereof, the Holder Votes as to which
such Holder is entitled to direct the vote (or any
lesser number thereof as may be set forth in the
instructions); provided, however, that such written
instructions are received by the Trustee from the
Holder prior to the time and date fixed
by it for receipt of such instructions in the
notice given by the Trustee to the Holder pursuant
to Section 4(c) hereof.
(ii) The Trustee shall cause such representatives
as are empowered by it to sign and deliver, on
behalf of the Trustee, proxies for Voting Rights to
attend each Digicon Meeting. Upon submission by a
Holder (or its designee) of identification
satisfactory to the Trustee's representatives, and
at the Holder's request, such representatives shall
sign and deliver to such Holder (or its designee) a
proxy to exercise personally the Holder Votes as to
which such Holder is otherwise entitled hereunder
to direct the vote, if such Holder either (A) has
not previously given the Trustee instructions
pursuant to Section 4(c) hereof in respect of such
meeting, or (B) submits to the Trustee's
representatives written revocation of any such
previous instructions. At such meeting, the Holder
exercising such Holder Votes shall have the same
rights as the Trustee to speak at the meeting in
respect of any matter, question or proposition, to
vote by way of ballot at the meeting in respect of
any matter, question or proposition and to vote at
such meeting by way of a show of hands in respect
of any matter, question or proposition.
(i) DISTRIBUTION OF WRITTEN MATERIALS. Any written materials
to be distributed by the Trustee to the Holders
pursuant to this agreement shall be delivered or sent by
mail (or otherwise communicated in the same manner as
Digicon utilizes in communications to holders of Digicon
Common Stock) to each Holder at its address as shown on
the books of Veritas. Veritas shall provide or cause to
be provided to the Trustee for this purpose, on a timely
basis and without charge or other expense:
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(A) current lists of the Holders; and
(B) upon the request of the Trustee, mailing
labels to enable the Trustee to carry out its
duties under this agreement.
The materials referred to above are to be provided by
Digicon to the Trustee, but shall be subject to review
and comment by the Trustee.
(j) TERMINATION OF VOTING RIGHTS. Except as otherwise
provided herein or in the Exchangeable Share
provisions, all of the rights of a Holder with respect to
the Holder Votes exercisable in respect of the
Exchangeable Shares held by such Holder, including the
right to instruct the Trustee as to the voting of or to
vote personally such Holder Votes, shall be deemed to be
surrendered by the Holder to Digicon and such Holder Votes
and the Voting Rights represented thereby shall cease
immediately upon the delivery by such Holder to the
Trustee of the certificates representing such Exchangeable
Shares in connection with the exercise by the Holder of
the Exchange Right or the occurrence of the automatic
exchange of Exchangeable Shares for shares of Digicon
Common Stock, as specified in Article 5 hereof (unless in
either case Digicon shall not have delivered the
Exchangeable Share Consideration deliverable in exchange
therefor to the Trustee for delivery to the Holders), or
upon the redemption of Exchangeable Shares pursuant to
Article 6 or Article 7 of the Exchangeable Share
Provisions, or upon the effective date of the liquidation,
dissolution or winding-up of Veritas pursuant to Article 5
of the Exchangeable Share Provisions, or upon the purchase
of Exchangeable Shares from the holder thereof by Digicon
pursuant to the exercise by Digicon of the Retraction Call
Right, the Redemption Call Right or the Liquidation Call
Right.
5. EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
(a) GRANT AND OWNERSHIP OF THE EXCHANGE RIGHT. Digicon hereby
grants to the Trustee as trustee for and on behalf of,
and for the use and benefit of, the Holders (i) the right
(the "Exchange Right"), upon the occurrence and during the
continuance of an Insolvency Event, to require Digicon to
purchase from each or any Holder all or any part of the
Exchangeable Shares held by the Holders, and (ii) the
Automatic Exchange Rights, all in accordance with the
provisions of this agreement. Digicon hereby acknowledges
receipt from the Trustee as trustee for and on behalf of
the Holders of good and valuable consideration (and the
adequacy thereof) for the grant of the Exchange Right and
the Automatic Exchange Rights by Digicon to the Trustee.
During the term of the Trust and subject to the terms and
conditions of this agreement, the Trustee shall possess
and be vested with full legal ownership of the Exchange
Right and the Automatic Exchange Rights and shall be
entitled to exercise all of the rights and powers of an
owner with respect to the Exchange Right and the Automatic
Exchange Rights, provided that the Trustee shall:
(iii) hold the Exchange Right and the Automatic Exchange
Rights and the legal title thereto as trustee
solely for the use and benefit of the Holders in
accordance with the provisions of this agreement;
and
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(iv) except as specifically authorized by this
agreement, have no power or authority to
exercise or otherwise deal in or with the Exchange
Right or the Automatic Exchange Rights, and the
Trustee shall not exercise any such rights for
any purpose other than the purposes for which this
Trust is created pursuant to this agreement.
(b) LEGENDED SHARE CERTIFICATES. Veritas will cause each
certificate representing Exchangeable Shares to bear an
appropriate legend notifying the Holders of:
(i) their right to instruct the Trustee with
respect to the exercise of the Exchange Right in
respect of the Exchangeable Shares held by a
Holder; and
(ii) the Automatic Exchange Rights.
(c) GENERAL EXERCISE OF EXCHANGE RIGHT. The Exchange Right
shall be and remain vested in and exercised by the
Trustee. Subject to Section 7(o) hereof, the Trustee
shall exercise the Exchange Right only on the basis of
instructions received pursuant to this Article 5 from
Holders entitled to instruct the Trustee as to the
exercise thereof. To the extent that no instructions are
received from a Holder with respect to the Exchange Right,
the Trustee shall not exercise or permit the exercise of
the Exchange Right.
(d) PURCHASE PRICE. The purchase price payable by Digicon for
each Exchangeable Share to be purchased by Digicon
under the Exchange Right shall be an amount equal to the
Exchangeable Share Price on the last Business Day prior to
the day of closing of the purchase and sale of such
Exchangeable Share under the Exchange Right. In
connection with each exercise of the Exchange Right,
Digicon will provide to the Trustee an Officer's
Certificate setting forth the calculation of the
Exchangeable Share Price for each Exchangeable Share. The
Exchangeable Share Price for each such Exchangeable Share
so purchased may be satisfied only by Digicon issuing and
delivering or causing to be delivered to the Trustee, on
behalf of the relevant Holder, the Exchangeable Share
Consideration representing the total Exchangeable Share
Price.
(e) EXERCISE INSTRUCTIONS. Subject to the terms and
conditions herein set forth, a Holder shall be
entitled, upon the occurrence and during the continuance
of an Insolvency Event, to instruct the Trustee to
exercise the Exchange Right with respect to all or any
part of the Exchangeable Shares registered in the name of
such Holder on the books of Veritas. To cause the
exercise of the Exchange Right by the Trustee, the Holder
shall deliver to the Trustee, in person or by certified or
registered mail, at its principal office in Calgary,
Alberta or at such other places in Canada as the Trustee
may from time to time designate by written notice to the
Holders, the certificates representing the Exchangeable
Shares which such Holder desires Digicon to purchase, duly
endorsed in blank, and accompanied by such other documents
and instruments as may be required to effect a transfer of
Exchangeable Shares under the Business Corporations Act
(Alberta) and the by-laws of Veritas and such additional
documents
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and instruments as the Trustee may reasonably require
together with (i) a duly completed form of notice of
exercise of the Exchange Right, contained on the reverse
of or attached to the Exchangeable Share certificates,
stating (A) that the Holder thereby instructs the Trustee
to exercise the Exchange Right so as to require Digicon
to purchase from the Holder the number of Exchangeable
Shares specified therein, (B) that such Holder has good
title to and owns all such Exchangeable Shares to be
acquired by Digicon free and clear of all liens, claims
and encumbrances, (C) the names in which the certificates
representing Digicon Common Stock issuable in connection
with the exercise of the Exchange Right are to be issued
and (D) the names and addresses of the persons to whom
the Exchangeable Share Consideration should be delivered
and (ii) payment (or evidence satisfactory to the
Trustee, Veritas and Digicon of payment) of the taxes (if
any) payable as contemplated by Section 5(h) of this
agreement. If only a part of the Exchangeable Shares
represented by any certificate or certificates delivered
to the Trustee are to be purchased by Digicon under the
Exchange Right, a new certificate for the balance of such
Exchangeable Shares shall be issued to the Holder at the
expense of Veritas.
(f) DELIVERY OF EXCHANGEABLE SHARE CONSIDERATION; EFFECT OF
EXERCISE. Promptly after receipt of the certificates
representing the Exchangeable Shares which the Holder
desires Digicon to purchase under the Exchange Right
(together with such documents and instruments of transfer
and a duly completed form of notice of exercise of the
Exchange Right), duly endorsed for transfer to Digicon,
the Trustee shall notify Digicon and Veritas of its
receipt of the same, which notice to Digicon and Veritas
shall constitute exercise of the Exchange Right by the
Trustee on behalf of the Holder of such Exchangeable
Shares, and Digicon shall immediately thereafter deliver
or cause to be delivered to the Trustee, for delivery to
the Holder of such Exchangeable Shares (or to such other
persons, if any, properly designated by such Holder), the
Exchangeable Share Consideration deliverable in connection
with the exercise of the Exchange Right; provided,
however, that no such delivery shall be made unless and
until the Holder requesting the same shall have paid (or
provided evidence satisfactory to the Trustee, Veritas and
Digicon of the payment of) the taxes (if any) payable as
contemplated by Section 5(h) of this agreement.
Immediately upon the giving of notice by the Trustee to
Digicon and Veritas of the exercise of the Exchange Right,
as provided in this Section 5(f), the closing of the
transaction of purchase and sale contemplated by the
Exchange Right shall be deemed to have occurred, and the
Holder of such Exchangeable Shares shall be deemed to have
transferred to Digicon all of its right, title and
interest in and to such Exchangeable Shares and in the
related interest in the Trust Estate and shall cease to be
a holder of such Exchangeable Shares and shall not be
entitled to exercise any of the rights of a holder in
respect thereof, other than the right to receive his
proportionate part of the total purchase price therefor,
unless such Exchangeable Share Consideration is not
delivered by Digicon to the Trustee, for delivery to such
Holder (or to such other persons, if any, properly
designated by such Holder), within five Business Days of
the date of the giving of such notice by the Trustee, in
which case the rights of the Holder shall remain
unaffected until such Exchangeable Share Consideration is
delivered by Digicon and any cheque included therein is
paid. Concurrently with such Holder ceasing to be a
holder of Exchangeable Shares, the Holder shall be
considered and
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<PAGE> 103
deemed for all purposes to be the holder of the shares of
Digicon Common Stock delivered to it pursuant to the
Exchange Right. Notwithstanding the foregoing until the
Exchangeable Share Consideration is delivered to the
Holder, the Holder shall be deemed to still be a holder of
the sold Exchangeable Shares for purposes of voting rights
with respect thereto under this agreement.
(g) EXERCISE OF EXCHANGE RIGHT SUBSEQUENT TO RETRACTION. In
the event that a Holder has exercised its right under
Article 6 of the Exchangeable Share Provisions to require
Veritas to redeem any or all of the Exchangeable Shares
held by the Holder (the "Retracted Shares") and is
notified by Veritas pursuant to Section 6.6 of the
Exchangeable Share Provisions that Veritas will not be
permitted as a result of liquidity or solvency
requirements of applicable law to redeem all such
Retracted Shares, subject to receipt by the Trustee of
written notice to that effect from Veritas and provided
that Digicon shall not have exercised the Retraction Call
Right with respect to the Retracted Shares and that the
Holder has not revoked the retraction request delivered by
the Holder to Veritas pursuant to Section 6.1 of the
Exchangeable Share Provisions, the retraction request will
constitute and will be deemed to constitute notice from
the Holder to the Trustee instructing the Trustee to
exercise the Exchange Right with respect to those
Retracted Shares which Veritas is unable to redeem. In
any such event, Veritas hereby agrees with the Trustee and
in favour of the Holder immediately to notify the Trustee
of such prohibition against Veritas redeeming all of the
Retracted Shares and immediately to forward or cause to be
forwarded to the Trustee all relevant materials delivered
by the Holder to Veritas or to the transfer agent of the
Exchangeable Shares (including without limitation a copy
of the retraction request delivered pursuant to Section
6.1 of the Exchangeable Share Provisions) in connection
with such proposed redemption of the Retracted Shares and
the Trustee will thereupon exercise the Exchange Right
with respect to the Retracted Shares that Veritas is not
permitted to redeem and will require Digicon to purchase
such shares in accordance with the provisions of this
Article 5.
(h) STAMP OR OTHER TRANSFER TAXES. Upon any sale of
Exchangeable Shares to Digicon pursuant to the Exchange
Right or the Automatic Exchange Rights, the share
certificate or certificates representing Digicon Common
Stock to be delivered in connection with the payment of
the total purchase price therefor shall be issued in the
name of the Holder of the Exchangeable Shares so sold or
in such names as such Holder may otherwise direct in
writing without charge to the holder of the Exchangeable
Shares so sold, provided, however, that such Holder (i)
shall pay (and neither Digicon, Veritas nor the Trustee
shall be required to pay) any documentary, stamp, transfer
or other similar taxes that may be payable in respect of
any transfer involved in the issuance or delivery of such
shares to a person other than such Holder or (ii) shall
have established to the satisfaction of the Trustee,
Digicon and Veritas that such taxes, if any, have been
paid.
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(i) NOTICE OF INSOLVENCY EVENT. Immediately upon the
occurrence of an Insolvency Event or any event which
with the giving of notice or the passage of time or both
would be an Insolvency Event, Veritas and Digicon shall
give written notice thereof to the Trustee. As soon as
practicable after receiving notice from Veritas and
Digicon or from any other Person of the occurrence of an
Insolvency Event, the Trustee will mail to each Holder, at
the expense of Digicon, a notice of such Insolvency Event
in the form provided by Digicon, which notice shall
contain a brief statement of the right of the Holders with
respect to the Exchange Right.
(j) QUALIFICATION OF DIGICON COMMON STOCK. Digicon covenants
that if any shares of Digicon Common Stock to be issued
and delivered pursuant to the Exchange Right or the
Automatic Exchange Rights require registration or
qualification with or approval of or the filing of any
document including any prospectus or similar document or
the taking of any proceeding with or the obtaining of any
order, ruling or consent from any governmental or
regulatory authority under any Canadian or United States
federal, provincial or state law or regulation or pursuant
to the rules and regulations of any regulatory authority
or the fulfillment of any other legal requirement
(collectively, the "Applicable Laws") before such shares
may be issued and delivered by Digicon to the initial
holder thereof (other than Veritas) or in order that such
shares may be freely traded thereafter (other than any
restrictions on transfer by reason of a holder being a
"control person" of Digicon for purposes of Canadian
federal or provincial securities law or an "affiliate" of
Digicon for purposes of United States federal or state
securities law), Digicon will in good faith expeditiously
take all such actions and do all such things as are
necessary to cause such shares of Digicon Common Stock to
be and remain duly registered, qualified or approved.
Digicon represents and warrants that it has in good faith
taken all actions and done all things as are necessary
under Applicable Laws as they exist on the date hereof to
cause the shares of Digicon Common Stock to be issued and
delivered pursuant to the Exchange Right and the Automatic
Exchange Rights and to be freely tradeable thereafter
(other than restrictions on transfer by reason of a holder
being a "control person" of Digicon for the purposes of
Canadian federal and provincial securities law or an
"affiliate" of Digicon for the purposes of United States
federal or state securities law). Digicon will in good
faith expeditiously take all such actions and do all such
things as are necessary to cause all shares of Digicon
Common Stock to be delivered pursuant to the Exchange
Right or the Automatic Exchange Rights to be listed,
quoted or posted for trading on all stock exchanges and
quotation systems on which such shares are listed, quoted
or posted for trading at such time.
(k) RESERVATION OF SHARES OF DIGICON COMMON STOCK.
Digicon hereby represents, warrants and covenants that it
has irrevocably reserved for issuance and will at all
times keep available, free from pre-emptive and other
rights, out of its authorized and unissued capital stock
such number of shares of Digicon Common Stock (i) as is
equal to the sum of (A) the number of Exchangeable Shares
issued and outstanding from time to time and (B) the
number of Exchangeable Shares issuable upon the exercise
of all rights to acquire Exchangeable Shares outstanding
from time to time and (ii) as are now and may hereafter
be required to enable and
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permit Veritas to meet its obligations hereunder, under
the Restated Certificate of Incorporation of Digicon,
under the Support Agreement, under the Exchangeable Share
Provisions and under any other security or commitment
pursuant to the Arrangement with respect to which Digicon
may now or hereafter be required to issue shares of
Digicon Common Stock.
(l) AUTOMATIC EXCHANGE ON LIQUIDATION OF DIGICON.
(i) Digicon will give the Trustee written notice of
each of the following events at the time set forth
below:
(A) in the event of any determination by the
board of directors of the Digicon to
institute voluntary liquidation,
dissolution or winding-up proceedings with
respect to Digicon or to effect any other
distribution of assets of Digicon among its
stockholders for the purpose of winding-up
its affairs, at least 60 days prior to the
proposed effective date of such liquidation,
dissolution, winding-up or other distribution;
and
(B) immediately, upon the earlier of (I) receipt
by Digicon of notice of and (II)
Digicon otherwise becoming aware of any
threatened or instituted claim, suit,
petition or other proceedings with respect to
the involuntary liquidation, dissolution or
winding-up of Digicon or to effect any other
distribution of assets of Digicon among its
stockholders for the purpose of winding-up
its affairs.
(ii) Immediately following receipt by the Trustee
from Digicon of notice of any event (a "Liquidation
Event") contemplated by Section 5(l)(i) above, the
Trustee will give notice thereof to the Holders.
Such notice will be provided by Digicon to the
Trustee and shall include a brief description of
the automatic exchange of Exchangeable Shares for
shares of Digicon Common Stock provided for in
Section 5(l)(iii) below.
(iii) In order that the Holders will be able to
participate on a PRO RATA basis with the holders of
Digicon Common Stock in the distribution of assets
of Digicon in connection with a Liquidation Event,
immediately prior to the effective time (the
"Liquidation Event Effective Time") of a
Liquidation Event all of the then outstanding
Exchangeable Shares shall be automatically
exchanged for shares of Digicon Common Stock. To
effect such automatic exchange, Digicon shall be
deemed to have purchased each Exchangeable Share
outstanding immediately prior to the Liquidation
Event Effective Time and held by Holders, and each
Holder shall be deemed to have sold the
Exchangeable Shares held by it at such time, for a
purchase price per share equal to the Exchangeable
Share Price applicable at such time. In connection
with such automatic exchange, Digicon will provide
to the Trustee an Officer's Certificate setting
forth the calculation of the purchase price for
each Exchangeable Share.
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<PAGE> 106
(iv) The closing of the transaction of purchase and
sale contemplated by Section 5(l)(iii) above shall
be deemed to have occurred immediately prior to the
Liquidation Event Effective Time, and each Holder
of Exchangeable Shares shall be deemed to have
transferred to Digicon all of the Holder's right,
title and interest in and to such Exchangeable
Shares and the related interest in the Trust Estate
and shall cease to be a holder of such Exchangeable
Shares and Digicon shall deliver to the Holder the
Exchangeable Share Consideration deliverable upon
the automatic exchange of Exchangeable Shares.
Concurrently with such Holder ceasing to be a
holder of Exchangeable Shares, the Holder shall be
considered and deemed for all purposes to be
the holder of the shares of Digicon
Common Stock issued to it pursuant to the automatic
exchange of Exchangeable Shares for Digicon Common
Stock and the certificates held by the Holder
previously representing the Exchangeable Shares
exchanged by the Holder with Digicon pursuant to
such automatic exchange shall thereafter be deemed
to represent the shares of Digicon Common Stock
issued to the Holder by Digicon pursuant to such
automatic exchange. Upon the request of a Holder
and the surrender by the Holder of Exchangeable
Share certificates deemed to represent shares of
Digicon Common Stock, duly endorsed in blank and
accompanied by such instruments of transfer as
Digicon may reasonably require, Digicon shall
deliver or cause to be delivered to the Holder
certificates representing the shares of Digicon
Common Stock of which the Holder is the holder.
Notwithstanding the foregoing until each Holder is
actually entered on the register of holders of
Digicon Common Stock, such Holder shall be deemed
to still be a holder of the transferred
Exchangeable Shares for purposes of all voting
rights with respect thereto under this agreement.
6. RESTRICTIONS ON ISSUANCE OF DIGICON SPECIAL VOTING STOCK
During the term of this agreement, Digicon will not issue any
shares of Digicon Special Voting Stock in addition to the
Voting Share.
7. CONCERNING THE TRUSTEE
(a) POWERS AND DUTIES OF THE TRUSTEE. The rights, powers and
authorities of the Trustee under this agreement, in its
capacity as trustee of the Trust, shall include:
(i) receipt and deposit of the Voting Share from
Digicon as trustee for and on behalf of the
Holders in accordance with the provisions of this
agreement;
(ii) granting proxies and distributing materials to
Holders as provided in this agreement;
(iii) voting the Holder Votes in accordance with
the provisions of this agreement;
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<PAGE> 107
(iv) receiving the grant of the Exchange Right and
the Automatic Exchange Rights from Digicon as
trustee for and on behalf of the Holders in
accordance with the provisions of this agreement;
(v) exercising the Exchange Right and enforcing the
benefit of the Automatic Exchange Rights, in each
case in accordance with the provisions of this
agreement, and in connection therewith receiving
from Holders Exchangeable Shares and other
requisite documents and distributing to such
Holders the shares of Digicon Common Stock and
cheques, if any, to which such Holders are
entitled upon the exercise of the Exchange Right or
pursuant to the Automatic Exchange Rights, as the
case may be;
(vi) holding title to the Trust Estate;
(vii) investing any moneys forming, from time to
time, a part of the Trust Estate as provided in
this agreement;
(viii) taking action at the direction of a Holder
or Holders to enforce the obligations of Digicon
under this agreement; and
(ix) taking such other actions and doing such other
things as are specifically provided in this
agreement.
In the exercise of such rights, powers and authorities the
Trustee shall have (and is granted) such incidental and
additional rights, powers and authority not in conflict with
any of the provisions of this agreement as the Trustee, acting
in good faith and in the reasonable exercise of its discretion,
may deem necessary, appropriate or desirable to effect the
purpose of the Trust. Any exercise of such discretionary
rights, powers and authorities by the Trustee shall be final,
conclusive and binding upon all persons. For greater
certainty, the Trustee shall have only those duties as are set
out specifically in this agreement.
The Trustee in exercising its rights, powers, duties and
authorities hereunder shall act honestly and in good faith with
a view to the best interests of the Holders and shall exercise
the care, diligence and skill that a reasonably prudent trustee
would exercise in comparable circumstances.
The Trustee shall not be bound to give any notice or do or take
any act, action or proceeding by virtue of the powers conferred
on it hereby unless and until it shall be specifically required
to do so under the terms hereof; nor shall the Trustee be
required to take any notice of, or to do or to take any act,
action or proceeding as a result of any default or breach of
any provision hereunder, unless and until notified in writing
of such default or breach, which notices shall distinctly
specify the default or breach desired to be brought to the
attention of the Trustee and in the absence of such notice the
Trustee may for all purposes of this agreement conclusively
assume that no default or breach has been made in the
observance or performance of any of the representations,
warranties, covenants, agreements or conditions contained
herein.
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<PAGE> 108
(b) NO CONFLICT OF INTEREST. The Trustee represents to
Veritas and Digicon that at the date of execution and
delivery of this agreement there exists no material
conflict of interest in the role of the Trustee as a
fiduciary hereunder and the role of the Trustee in any
other capacity. The Trustee shall, within 90 days after
it becomes aware that such a material conflict of interest
exists, either eliminate such material conflict of
interest or resign in the manner and with the effect
specified in Article 10 hereof. If, notwithstanding the
foregoing provisions of this Section 7(b), the Trustee has
such a material conflict of interest, the validity and
enforceability of this agreement shall not be affected in
any manner whatsoever by reason only of the existence of
such material conflict of interest. If the Trustee
contravenes the foregoing provisions of this Section 7(b),
any interested party may apply to the Alberta Court of
Queen's Bench an order that the Trustee be replaced as
trustee hereunder.
(c) DEALINGS WITH TRANSFER AGENTS, REGISTRARS, ETC. Veritas
and Digicon irrevocably authorize the Trustee, from time
to time, to:
(i) consult, communicate and otherwise deal with
the respective registrars and transfer agents, and
with any such subsequent registrar or transfer
agent, of the Exchangeable Shares and Digicon
Common Stock; and
(ii) requisition, from time to time, (A) from any
such registrar or transfer agent any information
readily available from the records maintained by
it which the Trustee may reasonably require for the
discharge of its duties and responsibilities under
this agreement and (B) from the transfer agent of
Digicon Common Stock, and any subsequent transfer
agent of such shares, the share certificates
issuable upon the exercise from time to time of
the Exchange Right and pursuant to the Automatic
Exchange Rights in the manner specified in Article
5 hereof.
Veritas and Digicon irrevocably authorize their respective
registrars and transfer agents to comply with all such
requests. Digicon covenants that it will supply its transfer
agent with duly executed share certificates for the purpose of
completing the exercise from time to time of the Exchange Right
and the Automatic Exchange Rights, in each case pursuant to
Article 5 hereof.
(d) BOOKS AND RECORDS. The Trustee shall keep available for
inspection by Digicon and Veritas, at the Trustee's
principal office in Calgary, Alberta, correct and complete
books and records of account relating to the Trustee's
actions under this agreement, including without limitation
all information relating to mailings and instructions to
and from Holders and all transactions pursuant to the
Voting Rights, the Exchange Right and the Automatic
Exchange Rights for the term of this agreement. On or
before June 30, 1997, and on or before June 30 in every
year thereafter, so long as the Voting Share is on deposit
with the Trustee, the Trustee shall transmit to Digicon
and Veritas a brief report, dated as of the preceding
March 31, with respect to:
(i) the property and funds comprising the Trust
Estate as of that date;
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(ii) the number of exercises of the Exchange Right,
if any, and the aggregate number of Exchangeable
Shares received by the Trustee on behalf of
Holders in consideration of the issue and delivery
by Digicon of shares of Digicon Common Stock in
connection with the Exchange Right, during the
calendar year ended on such date; and
(iii) all other actions taken by the Trustee in the
performance of its duties under this agreement
which it had not previously reported.
(e) INCOME TAX RETURNS AND REPORTS. The Trustee shall, to the
extent necessary, prepare and file on behalf of the
Trust appropriate United States and Canadian income tax
returns and any other returns or reports as may be
required by applicable law or pursuant to the rules and
regulations of any securities exchange or other trading
system through which the Exchangeable Shares are traded
and, in connection therewith, may obtain the advice and
assistance of such experts as the Trustee may consider
necessary or advisable. If requested by the Trustee,
Digicon shall retain such experts for purposes of
providing such advice and assistance.
(f) INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE. The
Trustee shall exercise any or all of the rights,
duties, powers or authorities vested in it by this
agreement at the request, order or direction of any Holder
upon such Holder furnishing to the Trustee reasonable
funding, security and indemnity against the costs,
expenses and liabilities which may be incurred by the
Trustee therein or thereby, provided that no Holder shall
be obligated to furnish to the Trustee any such funding,
security or indemnity in connection with the exercise by
the Trustee of any of its rights, duties, powers and
authorities with respect to the Voting Share pursuant to
Article 4 hereof, subject to Section 7(o) hereof, and with
respect to the Exchange Right pursuant to Article 5
hereof, subject to Section 7(o) hereof, and with respect
to the Automatic Exchange Rights pursuant to Article 5
hereof.
None of the provisions contained in this agreement shall
require the Trustee to expend or risk its own funds or
otherwise incur financial liability in the exercise of
any of its rights, powers, duties or authorities unless
funded, given funds, security and indemnified as
aforesaid.
(g) ACTIONS BY HOLDERS. No Holder shall have the right to
institute any action, suit or proceeding or to exercise
any other remedy authorized by this agreement for the
purpose of enforcing any of its rights or for the
execution of any trust or power hereunder unless the
Holder has requested the Trustee to take or institute such
action, suit or proceeding and furnished the Trustee with
the funding, security and indemnity referred to in Section
7(f) hereof and the Trustee shall have failed to act
within a reasonable time thereafter. In such case, but
not otherwise, the Holder shall be entitled to take
proceedings in any court of competent jurisdiction such as
the Trustee might have taken; it being understood and
intended that no one or more Holders shall have any right
in any manner whatsoever to affect, disturb or prejudice
the rights hereby created by any such action, or to
enforce any right hereunder or under the
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<PAGE> 110
Voting Rights, the Exchange Right or the Automatic
Exchange Rights, except subject to the conditions and in
the manner herein provided, and that all powers and trusts
hereunder shall be exercised and all proceedings at law
shall be instituted, had and maintained by the Trustee,
except only as herein provided, and in any event for the
equal benefit of all Holders.
(h) RELIANCE UPON DECLARATIONS. The Trustee
shall not be considered to be in contravention of any of
its rights, powers, duties and authorities hereunder if,
when required, it acts and relies in good faith upon
lists, mailing labels, notices, statutory declarations,
certificates, opinions, reports or other papers or
documents furnished pursuant to the provisions hereof or
required by the Trustee to be furnished to it in the
exercise of its rights, powers, duties and authorities
hereunder and such lists, mailing labels, notices,
statutory declarations, certificates, opinions, reports or
other papers or documents comply with the provisions of
Section 7(i) hereof, if applicable, and with any other
applicable provisions of this agreement.
(i) EVIDENCE AND AUTHORITY TO TRUSTEE.
Veritas and/or Digicon shall furnish to the Trustee
evidence of compliance with the conditions provided for in
this agreement relating to any action or step required or
permitted to be taken by Veritas and/or Digicon or the
Trustee under this agreement or as a result of any
obligation imposed under this agreement, including,
without limitation, in respect of the Voting Rights or the
Exchange Right or the Automatic Exchange Rights and the
taking of any other action to be taken by the Trustee at
the request of or on the application of Veritas and/or
Digicon forthwith if and when:
(i) such evidence is required by any other section
of this agreement to be furnished to the Trustee in
accordance with the terms of this Section 7(i); or
(ii) the Trustee, in the exercise of its rights,
powers, duties and authorities under this
agreement, gives Veritas and/or Digicon written
notice requiring it to furnish such evidence in
relation to any particular action or obligation
specified in such notice.
Such evidence shall consist of an Officer's Certificate
of Veritas and/or Digicon or a statutory declaration or a
certificate made by persons entitled to sign an Officer's
Certificate stating that any such condition has been
complied with in accordance with the terms of this
agreement.
Whenever such evidence relates to a matter other than the
Voting Rights or the Exchange Right or the Automatic
Exchange Rights, and except as otherwise specifically
provided herein, such evidence may consist of a report or
opinion of any solicitor, auditor, accountant, appraiser,
valuer, engineer or other expert or any other person
whose qualifications give authority to a statement made
by him, provided that if such report or opinion is
furnished by a director, officer or employee of Veritas
and/or Digicon it shall be in the form of an Officer's
Certificate or a statutory declaration.
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Each statutory declaration, certificate, opinion or
report furnished to the Trustee as evidence of compliance
with a condition provided for in this agreement shall
include a statement by the person giving the evidence:
(iii) declaring that he has read and understands
the provisions of this agreement relating to the
condition in question:
(iv) describing the nature and scope of the
examination or investigation upon which he based
the statutory declaration, certificate, statement
or opinion; and
(v) declaring that he has made such examination or
investigation as he believes is necessary to
enable him to make the statements or give the
opinions contained or expressed therein.
(j) EXPERTS, ADVISERS AND AGENTS. The Trustee may:
(i) in relation to these presents act and rely on
the opinion or advice of or information obtained
from or prepared by any solicitor, auditor,
accountant, appraiser, valuer, engineer or other
expert, whether retained by the Trustee or by
Veritas and/or Digicon or otherwise, and may employ
such assistants as may be necessary to the proper
determination and discharge of its powers and
duties and determination of its rights hereunder
and may pay proper and reasonable compensation for
all such legal and other advice or assistance as
aforesaid; and
(ii) employ such agents and other assistants as it
may reasonably require for the proper determination
and discharge of its powers and duties hereunder,
and may pay reasonable remuneration for all
services performed for it (and shall be entitled to
receive reasonable remuneration for all services
performed by it) in the discharge of the trusts
hereof and compensation for all disbursements,
costs and expenses made or incurred by it in the
determination and discharge of its duties hereunder
and in the management of the Trust.
(k) INVESTMENT OF MONEYS HELD BY TRUSTEE.
Unless otherwise provided in this agreement, any moneys
held by or on behalf of the Trustee which under the terms
of this agreement may or ought to be invested or which may
be on deposit with the Trustee or which may be in the
hands of the Trustee may be invested and reinvested in the
name or under the control of the Trustee in securities in
which, under the laws of the Province of Alberta, trustees
are authorized to invest trust moneys, provided that such
securities are stated to mature within two years after
their purchase by the Trustee, and the Trustee shall so
invest such moneys on the written direction of Veritas.
Pending the investment of any moneys as hereinbefore
provided, such moneys may be deposited in the name of the
Trustee in any chartered bank in Canada or, with the
consent of Veritas, in the deposit department of the
Trustee or any other loan or trust company authorized to
accept deposits under the laws of Canada or any province
thereof at the rate of interest then current on similar
deposits.
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<PAGE> 112
(l) TRUSTEE NOT REQUIRED TO GIVE SECURITY.
The Trustee shall not be required to give any bond or
security in respect of the execution of the trusts,
rights, duties, powers and authorities of this agreement
or otherwise in respect of the premises.
(m) TRUSTEE NOT BOUND TO ACT ON REQUEST.
Except as in this agreement otherwise specifically
provided, the Trustee shall not be bound to act in
accordance with any direction or request of Veritas and/or
Digicon or of the directors thereof until a duly
authenticated copy of the instrument or resolution
containing such direction or request shall have been
delivered to the Trustee, and the Trustee shall be
empowered to act and rely upon any such copy purporting to
be authenticated and believed by the Trustee to be
genuine.
(n) AUTHORITY TO CARRY ON BUSINESS. The
Trustee represents to Veritas and Digicon that at the date
of execution and delivery by it of this agreement it is
authorized to carry on the business of a trust company in
the Province of Alberta but if, notwithstanding the
provisions of this Section 7(n), it ceases to be so
authorized to carry on business, the validity and
enforceability of this agreement and the Voting Rights,
the Exchange Right and the Automatic Exchange Rights shall
not be affected in any manner whatsoever by reason only of
such event but the Trustee shall, within 90 days after
ceasing to be authorized to carry on the business of a
trust company in the Province of Alberta, either become so
authorized or resign in the manner and with the effect
specified in Article 10 hereof.
(o) CONFLICTING CLAIMS. If conflicting
claims or demands are made or asserted with respect to any
interest of any Holder in any Exchangeable Shares,
including any disagreement between the heirs,
representatives, successors or assigns succeeding to all
or any part of the interest of any Holder in any
Exchangeable Shares resulting in conflicting claims or
demands being made in connection with such interest, then
the Trustee shall be entitled, at its sole discretion, to
refuse to recognize or to comply with any such claim or
demand. In so refusing, the Trustee may elect not to
exercise any Voting Rights, Exchange Right or Automatic
Exchange Rights subject to such conflicting claims or
demands and, in so doing, the Trustee shall not be or
become liable to any person on account of such election or
its failure or refusal to comply with any such conflicting
claims or demands. The Trustee shall be entitled to
continue to refrain from acting and to refuse to act
until:
(i) the rights of all adverse claimants with
respect to the Voting Rights, Exchange Right or
Automatic Exchange Rights subject to such
conflicting claims or demands have been adjudicated
by a final judgment of a court of competent
jurisdiction; or
(ii) all differences with respect to the Voting
Rights, Exchange Right or Automatic Exchange
Rights subject to such conflicting claims or
demands have been conclusively settled by a valid
written agreement binding on all
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<PAGE> 113
such adverse claimants, and the Trustee
shall have been furnished with an executed copy of
such agreement.
If the Trustee elects to recognize any claim or comply
with any demand made by any such adverse claimant, it may
in its discretion require such claimant to furnish such
surety bond or other security satisfactory to the Trustee
as it shall deem appropriate fully to indemnify it as
between all conflicting claims or demands.
(p) ACCEPTANCE OF TRUST. The Trustee hereby
accepts the Trust created and provided for by and in this
agreement and agrees to perform the same upon the terms
and conditions herein set forth and to hold all rights,
privileges and benefits conferred hereby and by law in
trust for the various persons who shall from time to time
be Holders, subject to all the terms and conditions herein
set forth.
8. COMPENSATION
(a) Digicon and Veritas jointly and severally
agree to pay to the Trustee reasonable compensation for
all of the services rendered by it under this agreement
and will reimburse the Trustee for all reasonable expenses
(including but not limited to taxes, compensation paid to
experts, agents and advisors and travel expenses) and
disbursements, including the cost and expense of any suit
or litigation of any character and any proceedings before
any governmental agency reasonably incurred by the Trustee
in connection with its rights and duties under this
agreement; provided that Digicon and Veritas shall have no
obligation to reimburse the Trustee for any expenses or
disbursements paid, incurred or suffered by the Trustee in
any suit or litigation in which the Trustee is determined
to have acted in bad faith or with negligence or willful
misconduct.
9. INDEMNIFICATION AND LIMITATION OF LIABILITY
(a) INDEMNIFICATION OF THE TRUSTEE. Digicon
and Veritas jointly and severally agree to indemnify and
hold harmless the Trustee and each of its directors,
officers, employees and agents appointed and acting in
accordance with this agreement (collectively, the
"Indemnified Parties") against all claims, losses,
damages, costs, penalties, fines and reasonable expenses
(including reasonable expenses of the Trustee's legal
counsel on a solicitor and his own client basis) which,
without fraud, negligence, willful misconduct or bad faith
on the part of such Indemnified Party, may be paid,
incurred or suffered by the Indemnified Party by reason of
or as a result of the Trustee's acceptance or
administration of the Trust, its compliance with its
duties set forth in this agreement, or any written or oral
instructions delivered to the Trustee by Digicon or
Veritas pursuant hereto. In no case shall Digicon or
Veritas be liable under this indemnity for any claim
against any of the Indemnified Parties unless Digicon and
Veritas shall be notified by the Trustee of the written
assertion of a claim or of any action commenced against
the Indemnified Parties, promptly after any of the
Indemnified Parties shall have received any such written
assertion of a claim or shall have been served with a
summons or other first legal process giving information as
to the nature and basis of the claim. Subject to (ii),
below, Digicon and Veritas shall
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<PAGE> 114
be entitled to participate at their own expense in the
defense and, if Digicon or Veritas so elect at any time
after receipt of such notice, either of them may assume
the defense of any suit brought to enforce any such claim.
The Trustee shall have the right to employ separate
counsel in any such suit and participate in the defense
thereof but the fees and expenses of such counsel shall be
at the expense of the Trustee unless: (i) the employment
of such counsel has been authorized by Digicon or Veritas,
such authorization not to be unreasonably withheld; or
(ii) the named parties to any such suit include both the
Trustee and Digicon or Veritas and the Trustee shall have
been advised by counsel acceptable to Digicon or Veritas
that there may be one or more legal defenses available to
the Trustee that are different from or in addition to
those available to Digicon or Veritas and that an actual
or potential conflict of interest exists (in which case
Digicon and Veritas shall not have the right to assume the
defense of such suit on behalf of the Trustee but shall be
liable to pay the reasonable fees and expenses of counsel
for the Trustee).
(b) LIMITATION OF LIABILITY. The Trustee
shall not be held liable for any loss which may occur by
reason of depreciation of the value of any part of the
Trust Estate or any loss incurred on any investment of
funds pursuant to this agreement, except to the extent
that such loss is attributable to the fraud, negligence,
willful misconduct or bad faith on the part of the
Trustee.
10. CHANGE OF TRUSTEE
(a) RESIGNATION. The Trustee, or any trustee
hereafter appointed, may at any time resign by giving
written notice of such resignation to Digicon and Veritas
specifying the date on which it desires to resign,
provided that such notice shall never be given less than
60 days before such desired resignation date unless
Digicon and Veritas otherwise agree and provided further
that such resignation shall not take effect until the date
of the appointment of a successor trustee and the
acceptance of such appointment by the successor trustee.
Upon receiving such notice of resignation, Digicon and
Veritas shall promptly appoint a successor trustee by
written instrument in duplicate, one copy of which shall
be delivered to the resigning trustee and one copy to the
successor trustee. Failing acceptance by a successor
trustee, a successor trustee may be appointed by an order
of the Alberta Court of Queen's Bench upon application of
one or more of the parties hereto.
(b) REMOVAL. The Trustee, or any trustee
hereafter appointed, may be removed with or without cause,
at any time on 60 days' prior notice by written instrument
executed by Digicon and Veritas, in duplicate, one copy of
which shall be delivered to the trustee so removed and one
copy to the successor trustee, provided that, in
connection with such removal, provision is made for a
replacement trustee similar to that contemplated in
Section 10(a).
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<PAGE> 115
(c) SUCCESSOR TRUSTEE. Any successor trustee
appointed as provided under this agreement shall execute,
acknowledge and deliver to Digicon and Veritas and to its
predecessor trustee an instrument accepting such
appointment. Thereupon the resignation or removal of the
predecessor trustee shall become effective and such
successor trustee, without any further act, deed or
conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor under
this agreement, with like effect as if originally named as
trustee in this agreement. However, on the written
request of Digicon and Veritas or of the successor
trustee, the trustee ceasing to act shall, upon payment of
any amounts then due it pursuant to the provisions of this
agreement, execute and deliver an instrument transferring
to such successor trustee all the rights and powers of the
trustee so ceasing to act. Upon the request of any such
successor trustee, Digicon, Veritas and such predecessor
trustee shall execute any and all instruments in writing
for more fully and certainly vesting in and confirming to
such successor trustee all such rights and powers.
(d) NOTICE OF SUCCESSOR TRUSTEE. Upon
acceptance of appointment by a successor trustee as
provided herein, Digicon and Veritas shall cause to be
mailed notice of the succession of such trustee hereunder
to each Holder specified in a List. If Digicon or Veritas
shall fail to cause such notice to be mailed within 10
days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to
be mailed at the expense of Digicon and Veritas.
11. DIGICON SUCCESSORS
(a) CERTAIN REQUIREMENTS IN RESPECT OF
COMBINATION, ETC. Digicon shall not enter into any
transaction (whether by way of reconstruction,
reorganization, consolidation, merger, transfer, sale,
lease or otherwise) whereby all or substantially all of
its undertaking, property and assets would become the
property of any other Person or, in the case of a merger,
of the continuing corporation resulting therefrom unless,
but may do so if:
(i) such other Person or continuing corporation
(the "Digicon Successor"), by operation of law,
becomes, without more, bound by the terms and
provisions of this agreement or, if not so bound,
executes, prior to or contemporaneously with the
consummation of such transaction an agreement
supplemental hereto and such other instruments (if
any) as are satisfactory to the Trustee and in the
opinion of legal counsel to the Trustee are
necessary or advisable to evidence the assumption
by the Digicon Successor of liability for all
moneys payable and property deliverable hereunder
and the covenant of such Digicon Successor to pay
and deliver or cause to be delivered the same and
its agreement to observe and perform all the
covenants and obligations of Digicon under this
agreement; and
(ii) such transaction shall, to the satisfaction of
the Trustee and in the opinion of legal counsel to
the Trustee, be upon such terms as substantially
to preserve and not to impair in any material
respect any of the rights, duties, powers and
authorities of the Trustee or of the Holders
hereunder.
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<PAGE> 116
(b) VESTING OF POWERS IN SUCCESSOR. Whenever
the conditions of Section 11(a) hereof have been duly
observed and performed, the Trustee, if required, by
Section 11(a) hereof, the Digicon Successor and Veritas
shall execute and deliver the supplemental agreement
provided for in Article 12 hereof and thereupon the
Digicon Successor shall possess and from time to time may
exercise each and every right and power of Digicon under
this agreement in the name of Digicon or otherwise and any
act or proceeding by any provision of this agreement
required to be done or performed by the board of directors
of Digicon or any officers of Digicon may be done and
performed with like force and effect by the directors or
officers of such Digicon Successor.
(c) WHOLLY-OWNED SUBSIDIARIES. Nothing
herein shall be construed as preventing the amalgamation
or merger of any wholly-owned subsidiary of Digicon with
or into Digicon or the winding-up, liquidation or
dissolution of any wholly-owned subsidiary of Digicon
provided that all of the assets of such subsidiary are
transferred to Digicon or another wholly-owned subsidiary
of Digicon, and any such transactions are expressly
permitted by this Article 11.
12. AMENDMENTS AND SUPPLEMENTAL AGREEMENTS
(a) AMENDMENTS, MODIFICATIONS, ETC. This
agreement may not be amended or modified except by an
agreement in writing executed by Veritas, Digicon and the
Trustee and approved by the Holders in accordance with
Section 9.2 of the Exchangeable Share Provisions.
(b) MINISTERIAL AMENDMENTS. Notwithstanding
the provisions of Section 12(a) hereof, the parties to
this agreement may in writing, at
any time and from time to time, without the approval of
the Holders, amend or modify this agreement for the
purposes of:
(i) adding to the covenants of any or all of the
parties hereto for the protection of the Holders
hereunder;
(ii) making such amendments or modifications not
inconsistent with this agreement as may be
necessary or desirable with respect to matters or
questions which, in the opinion of the board of
directors of each of Digicon and Veritas and in the
opinion of the Trustee and its counsel, having in
mind the best interests of the Holders as a whole,
it may be expedient to make, provided that such
boards of directors and the Trustee and its counsel
shall be of the opinion that such amendments and
modifications will not be prejudicial to the
interests of the Holders as a whole; or
(iii) making such changes or corrections which, on
the advice of counsel to Veritas, Digicon and the
Trustee, are required for the purpose of curing or
correcting any ambiguity or defect or inconsistent
provision or clerical omission or mistake or
manifest error, provided that the Trustee and its
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<PAGE> 117
counsel and the board of directors of each of
Veritas and Digicon shall be of the opinion that
such changes or corrections will not be
prejudicial to the interests of the Holders as a
whole.
(c) MEETING TO CONSIDER AMENDMENTS. Veritas,
at the request of Digicon, shall call a meeting or
meetings of the Holders for the purpose of considering any
proposed amendment or modification requiring approval
pursuant hereto. Any such meeting or meetings shall be
called and held in accordance with the by-laws of Veritas,
the Exchangeable Share Provisions and all applicable laws.
(d) CHANGES IN CAPITAL OF DIGICON AND
VERITAS. At all times after the occurrence of any event
effected pursuant to Section 2(g) or Section 2(h) of the
Support Agreement, as a result of which either Digicon
Common Stock or the Exchangeable Shares or both are in any
way changed, this agreement shall forthwith be amended and
modified as necessary in order that it shall apply with
full force and effect, mutatis mutandis, to all new
securities into which Digicon Common Stock or the
Exchangeable Shares or both are so changed and the parties
hereto shall execute and deliver a supplemental agreement
giving effect to and evidencing such necessary amendments
and modifications.
(e) EXECUTION OF SUPPLEMENTAL AGREEMENTS. No
amendment to or modification or waiver of any of the
provisions of this agreement otherwise permitted
hereunder shall be effective unless made in writing and
signed by all of the parties hereto. From time to time
Veritas (when authorized by a resolution of its Board of
Directors), Digicon (when authorized by a resolution of
its board of directors) and the Trustee may, subject to
the provisions of these presents, and they shall, when so
directed by these presents, execute and deliver by their
proper officers, agreements or other instruments
supplemental hereto, which thereafter shall form part
hereof, for any one or more of the following purposes:
(i) evidencing the succession of any Digicon
Successors to Digicon and the covenants of and
obligations assumed by each such Digicon Successors
in accordance with the provisions of Article 11 and
the successor of any successor trustee in
accordance with the provisions of Article 10;
(ii) making any additions to, deletions from or
alterations of the provisions of this agreement or
the Voting Rights, the Exchange Right or the
Automatic Exchange Rights which, in the opinion of
the Trustee and its counsel, will not be
prejudicial to the interests of the Holders as a
whole or are in the opinion of counsel to the
Trustee necessary or advisable in order to
incorporate, reflect or comply with any legislation
the provisions of which apply to Digicon, Veritas,
the Trustee or this agreement; and
(iii) for any other purposes not inconsistent with
the provisions of this agreement, including without
limitation to make or evidence any amendment or
modification to this agreement as contemplated
hereby, provided that, in the
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<PAGE> 118
opinion of the Trustee and its counsel, the
rights of the Trustee and the Holders as a whole
will not be prejudiced thereby.
13. TERMINATION
(a) TERM. The Trust created by this
agreement shall continue until the earliest to occur of
the following events:
(i) no outstanding Exchangeable Shares are held by
a Holder;
(ii) each of Veritas and Digicon elects in writing
to terminate the Trust and such termination is
approved by the Holders of the Exchangeable Shares
in accordance with Section 9.2 of the Exchangeable
Share Provisions; and
(iii) 21 years after the death of the last survivor
of the descendants of His Majesty King George VI of
the United Kingdom of Great Britain and Northern
Ireland living on the date of the creation of the
Trust.
(b) SURVIVAL OF AGREEMENT. This agreement
shall survive any termination of the Trust and shall
continue until there are no Exchangeable Shares
outstanding held by a Holder; provided, however, that the
provisions of Articles 8 and 9 hereof shall survive any
such termination of this agreement.
14. GENERAL
(a) SEVERABILITY. If any provision of this
agreement is held to be invalid, illegal or unenforceable,
the validity, legality or enforceability of the remainder
of this agreement shall not in any way be affected or
impaired thereby and the agreement shall be carried out as
nearly as possible in accordance with its original terms
and conditions.
(b) INUREMENT. This agreement shall be
binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted
assigns and to the benefit of the Holders.
(c) NOTICES TO PARTIES. All notices and
other communications between the parties hereunder shall
be in writing and shall be deemed to have been given if
delivered personally or by confirmed telecopy to the
parties at the following addresses (or at such other
address for such party as shall be specified in like
notice):
(i) if to Digicon at:
Digicon Inc.
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Attention: President
Telecopy:(713) 526-5611
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<PAGE> 119
(ii) if to Veritas at:
Veritas Energy Services Inc.
Suite 300, 615 - Third Avenue S.W.
Calgary, Alberta T2P 0G6
Attention: President
Telecopy:(403) 266-9359
(iii)if to the Trustee at:
if by mail or delivery:
The R-M Trust Company
600 The Dome Tower
333 - 7th Avenue S.W.
Calgary, Alberta T2P 2Z1
Attention: _______________
Telecopy: (403) 232-2400
Any notice or other communication given personally shall be
deemed to have been given and received upon delivery thereof
and if given by telecopy shall be deemed to have been given and
received on the date of receipt thereof unless such day is not
a Business Day in which case it shall be deemed to have been
given and received upon the immediately following Business Day.
(d) NOTICE OF HOLDERS. Any and all notices
to be given and any documents to be sent to any Holders
may be given or sent to the address of such Holder shown
on the register of Holders of Exchangeable Shares in any
manner permitted by the Exchangeable Share Provisions and
shall be deemed to be received (if given or sent in such
manner) at the time specified in such Exchangeable Share
Provisions, the provisions of which the Exchangeable Share
Provisions shall apply mutatis mutandis to notices or
documents as aforesaid sent to such Holders.
(e) RISK OF PAYMENTS BY POST. Whenever
payments are to be made or documents are to be sent to any
Holder by the Trustee, by Veritas or by Digicon or by such
Holder to the Trustee or to Digicon or Veritas, the making
of such payment or sending of such document sent through
the post shall be at the risk of Veritas or Digicon, in
the case of payments made or documents sent by the Trustee
or Veritas or Digicon, and the Holder, in the case of
payments made or documents sent by the Holder.
(f) COUNTERPARTS. This agreement may be
executed in counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute
one and the same instrument.
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<PAGE> 120
(g) JURISDICTION. This agreement shall be
construed and enforced in accordance with the laws of the
Province of Alberta and the laws of Canada applicable
therein.
(h) ATTORNMENT. Digicon agrees that any
action or proceeding arising out of or relating to this
agreement may be instituted in the courts of Alberta,
waives any objection which it may have now or hereafter to
the venue of any such action or proceeding, irrevocably
submits to the jurisdiction of the said courts in any such
action or proceeding, agrees to be bound by any judgment
of the said courts and agrees not to seek, and hereby
waives, any review of the merits of any such judgment by
the courts of any other jurisdiction and hereby appoints
Veritas at its registered office in the Province of
Alberta as Digicon's attorney for service of process.
IN WITNESS WHEREOF, the parties hereby have caused this agreement to be
duly executed as of the date first above written.
DIGICON INC.
Per:
------------------------------
------------------------------
VERITAS ENERGY SERVICES INC.
Per:
------------------------------
------------------------------
THE R-M TRUST COMPANY
Per:
------------------------------
------------------------------
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<PAGE> 121
EXHIBIT F
VERITAS AFFILIATE'S AGREEMENT
<PAGE> 122
VERITAS ENERGY SERVICES INC.
AFFILIATE'S AGREEMENT
Digicon Inc.
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Veritas Energy Services Inc.
Suite 300, 615 - Third Avenue S.W.
Calgary, Alberta T2P 0G6
Ladies and Gentlemen:
I have been advised that as of the date hereof, I may be deemed to be an
"affiliate" of Veritas Energy Services Inc., a company existing under the laws
of the Province of Alberta ("Veritas"), as that term is defined for purposes of
paragraphs (c) and (d) of Rule 145 of the Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act").
I understand that pursuant to an arrangement (the "Arrangement") to be
effected by Articles of Arrangement filed pursuant to the Business Corporations
Act (Alberta), each issued and outstanding common share of Veritas (a "Veritas
Common Share") will be exchanged for 0.8 issued and outstanding Exchangeable
Shares of Veritas (the "Exchangeable Shares"). I further understand that the
Arrangement is being entered into pursuant to a Combination Agreement dated as
of May __, 1996 (the "Combination Agreement") by and between Veritas and Digicon
Inc., a Delaware corporation ("Digicon").
I further understand that the Arrangement will be treated for financial
accounting purposes as a "pooling of interests" in accordance with generally
accepted accounting principles and that the staff of the SEC has issued certain
guidelines that should be followed to ensure the pooling of the entities.
In consideration of the agreements contained herein, Digicon's and
Veritas's reliance on this letter in connection with the consummation of the
Arrangement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, I hereby represent, warrant and
agree that (i) I will not make any sale, transfer or other disposition of
Veritas Common Stock prior to the earlier of the Effective Time (as defined in
the Combination Agreement) and the termination of the Combination Agreement in
circumstances where the Arrangement is not completed and (ii) I will not make
any sale, transfer or other disposition of any Exchange Shares owned by me
during the period commencing 30 days prior to the Effective Time and ending at
such time as financial results that include at least 30 days of combined
operations of Veritas and Digicon after the Arrangement shall have been
published, unless I shall have delivered to Digicon prior to any such sale,
transfer or other disposition, a written opinion from the independent public
accountants for
<PAGE> 123
Digicon, or a written no-action letter from the accounting staff of the SEC, in
either case in form and substance reasonably satisfactory to Digicon, to the
effect that such sale, transfer or other disposition will not cause the
Arrangement not to be treated as a "pooling of interests" for financial
accounting purposes in accordance with generally accepted accounting
principles, the Rules and Regulations and interpretations of the SEC. I have
been advised that since I may be deemed to be an affiliate of Veritas at the
time the Arrangement is submitted for a vote of the stockholders of Veritas,
the Exchangeable Shares acquird by me at the Effective Time pursuant
to the Arrangement can be sold by me only (i) pursuant to an effective
registration statement under the Securities Act, (ii) in conformity with the
volume and other limitations of Rule 145 promulgated by the SEC under the
Securities Act, or (iii) in reliance upon an exemption from registration that
is available under the Securities Act.
By its execution hereof, Digicon agrees that it will, as long as I own any
Exchangeable Shares acquired by me at the Effective Time pursuant to the
Arrangement, take all reasonable efforts to make timely filings with the SEC of
all reports required to be filed by it pursuant to the Securities Exchange Act
of 1934, as amended, and will promptly furnish upon written request of the
undersigned a written statement confirming that such reports have been so timely
filed.
If you are in agreement with the foregoing, please so indicate by signing
below and returning a copy of this letter to the undersigned, at which time
this letter shall become a binding agreement between us.
Very truly yours,
By:
Name:
Title:
Date:
Address:
ACCEPTED this ___ day
of __________, 1996
DIGICON INC.
By__________________________________
Name:
Title:
2
<PAGE> 124
VERITAS ENERGY SERVICES INC.
By__________________________________
Name:
Title:
3
<PAGE> 125
EXHIBIT 6
DIGICON AFFILIATE'S LETTER
<PAGE> 126
DIGICON INC.
AFFILIATE'S AGREEMENT
Digicon Inc.
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Veritas Energy Services Inc.
Suite 300, 615 - Third Avenue S.W.
Calgary, Alberta T2P 0G6
Ladies and Gentlemen:
I have been advised that as of the date hereof, I may be deemed to be an
"affiliate" of Digicon Inc., a Delaware corporation ("Digicon"), as that term
is defined for purposes of paragraphs (c) and (d) of Rule 145 of the Rules and
Regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"Securities Act").
I understand that pursuant to an arrangement (the "Arrangement") to be
effected by Articles of Arrangement 1996 filed pursuant to the Business
Corporations Act (Alberta), each issued and outstanding common share (a
"Veritas Common Share") of Veritas Energy Services Inc., a company existing
under the laws of the Province of Alberta ("Veritas"), will be exchanged for
0.8 issued and outstanding Exchangeable Shares of Veritas (the "Exchangeable
Shares"). I further understand that the Arrangement is being entered into
pursuant to a Combination Agreement dated as of May __, 1996 (the "Combination
Agreement") by and between Veritas and Digicon.
I further understand that the Arrangement will be treated for financial
accounting purposes as a "pooling of interests" in accordance with generally
accepted accounting principles and that the staff of the SEC has issued certain
guidelines that should be followed to ensure the pooling of the entities.
In consideration of the agreements contained herein, Digicon's and
Veritas's reliance on this letter in connection with the consummation of the
Arrangement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, I hereby represent, warrant and
agree that (i) I will not make any sale, transfer or other disposition of
common stock, par value $.01 per share, of Digicon ("Digicon Common Stock")
prior to the earlier of the Effective Time (as defined in the Combination
Agreement) and the termination of the Combination Agreement in circumstances
where the Arrangement is not completed and (ii) I will not make any sale,
transfer or other disposition of any shares of Digicon Common Stock owned by me
during the period commencing 30 days prior to the Effective Time and ending at
such time as financial results that include at least 30 days of combined
operations of Veritas and Digicon after the Arrangement shall have been
published, unless I shall have delivered to Digicon prior to any such sale,
transfer or other
<PAGE> 127
disposition, a written opinion from the independent public accountants for
Digicon, or a written no-action letter from the accounting staff of the SEC, in
either case in form and substance reasonably satisfactory to Digicon, to the
effect that such sale, transfer or other disposition will not cause the
Arrangement not to be treated as a "pooling of interests" for financial
accounting purposes in accordance with generally accepted accounting
principles, the Rules and Regulations and interpretations of the SEC. I have
been advised that since I may be deemed to be an affiliate of Digicon at the
time the Arrangement is submitted for a vote of the stockholders of Digicon,
the shares of Digicon Common Stock owned by me at the Effective Time pursuant
to the Arrangement can be sold by me only (i) pursuant to an effective
registration statement under the Securities Act, (ii) in conformity with the
volume and other limitations of Rule 145 promulgated by the SEC under the
Securities Act, or (iii) in reliance upon an exemption from registration that
is available under the Securities Act.
By its execution hereof, Digicon agrees that it will, as long as I own any
shares of Digicon Common Stock owned by me at the Effective Time, take all
reasonable efforts to make timely filings with the SEC of all reports required
to be filed by it pursuant to the Securities Exchange Act of 1934, as amended,
and will promptly furnish upon written request of the undersigned a written
statement confirming that such reports have been so timely filed.
If you are in agreement with the foregoing, please so indicate by signing
below and returning a copy of this letter to the undersigned, at which time
this letter shall become a binding agreement between us.
Very truly yours,
By:
Name:
Title:
Date:
Address:
ACCEPTED this ___ day
of __________, 1996
DIGICON INC.
By__________________________________
Name:
Title:
2
<PAGE> 128
VERITAS ENERGY SERVICES INC.
By__________________________________
Name:
Title:
3
<PAGE> 1
EXHIBIT - 20.1
DIGICON, INC. VERITAS ENERGY SERVICES INC.
HOUSTON, TEXAS, U.S.A. CALGARY, ALBERTA CANADA
JOINT PRESS RELEASE
HOUSTON, TEXAS -- May 10, 1996 -- Digicon, Inc. (American Stock Exchange,
Symbol - DGC) and Veritas Energy Services, Inc. (Toronto Stock Exchange, Symbol
- VES) reported today the signing of a definitive combination agreement related
to the previously announced proposed merger of the two companies to form
Veritas DGC Inc.
The terms of the agreement substantively provide for the exchange by
Digicon of 0.80 Digicon shares for each Veritas share in a pooling-of-interests
transaction on tax deferred basis. The transaction has been approved by the
Board of Directors of each company. Fairness opinions regarding the
transaction have been rendered by PaineWebber Incorporated, on behalf of the
Digicon shareholders, and Rauscher Pierce Refsnes, Inc., on behalf of the
Veritas shareholders.
The transaction is subject to approval by the shareholders of each company
at meetings expected to be held in July. The proposed merger also remains
subject to applicable Canadian and United States regulatory approvals, and it
is expected that all regulatory filings will be made shortly. The companies
expect the transaction to close prior to July 31, 1996.
Digicon is a Houston-based provider of geophysical services that presently
operates seismic survey ships, land data acquisition crews and geophysical data
processing centers in North America, South America, Europe and the Asia
Pacific. Veritas is a Calgary-based provider of land seismic acquisition and
data processing and petroleum information services in Canada, the United States
and South America.
For additional information, please contact:
At Digicon Inc.: At Veritas Energy Services Inc.:
Stephen J. Ludlow or Richard W. McNairy Dave Robson or Larry Fichtner
3701 Kirby Drive 300, 615-3rd Avenue S.W.
Houston, Texas 77098 Calgary, Alberta T2P 0G6
(713) 526-5611 or 1-800-DIGICON (403) 266-9350
