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 earliest event reported) March 16, 1999
RADAR RESOURCES, INC.
(Exact Name of Registrant as Specified in its Charter)
033-55254-19 87-0434285
(Commission File Number) (IRS Employer Identification No.)
885 Third Avenue, New York, NY 10019
(Address of Principal Executive Offices) (Zip Code)
212-829-5777
(Registrant's Telephone Number, Including Area Code)
3098 S Highland Drive, Suite 460, Salt Lake City, UT 84106
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
REPORT OF FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
ITEM 2. Business Combination
On March 16, 1999 Radar Resources, Inc. (the "Company" or "Radar")
signed a definitive Merger Agreement (the "Agreement") to effect a business
combination with Vianet Technologies, Inc. ("Vianet"). The transaction will be
accounted for as a merger and accordingly the Company will include the results
of Vianet from the date of the merger.
Summary of the acquisition
On March 16, 1999 the Company entered into a Merger Agreement with
Vianet under the terms of which Vianet and Vianet will merge with and into Radar
(the "Merger"). Subject to the terms and conditions of this Merger Agreement,
the Company will to issue to the shareholders of Vianet, four shares of fully
paid and nonassessable Radar shares of common stock, $.001 per value par share
in exchange for each share of Vianet's outstanding capital stock. All shares of
Vianet's Series A convertible preferred stock issued and outstanding immediately
prior to the merger will be deemed to have been converted into an aggregate of
250,000 shares of Vianet's common stock. Accordingly, the Company will issue an
aggregate of 2,400,000 common shares to the holders of Vianet common stock and
Series A convertible preferred stock. Upon completion of the Merger the Company
will have an authorized capital of 100,000,000 shares of the par value of $0.001
each of which 3,400,000 shares will be issued and outstanding. As part of the
merger, the Company will change its anme to Vianet Technologies, Inc., a Nevada
corporation ("New Vianet").
The Business of Vianet
Vianet was formed under the Laws of Delaware on March 20, 1998 initially to
acquire Develcon Electronics Ltd., an Ontario, Canada corporation ("Develcon")
and a license for SPS Technology ("SPS"). SPS is a technology developed to
exploit the convergence of telecommunications and data transmission methods. SPS
allows a true quality of service delivery of voice, video and data over the
Internet through bandwidth management. Vianet plans to integrate the SPS
technology into Develcon's product lines and to develop other adaptations to
further expand Develcon's product's capabilities.
Pursuant to the proposed transaction to acquire Develcon, Vianet plans on
issuing shares of its common stock in exchange for 100% of Develcon's stock as
more fully described below. The result will be that Develcon will become a
wholly owned subsidiary of Vianet. Develcon is publicly traded on the Toronto
Stock Exchange (symbol DLC) and is a global provider of enterprise network
solutions and LAN/WAN connectivity - see below "Business of Develcon"
Acquisition of Develcon
On February 26, 1999 Vianet entered into an Arrangement Agreement (the
"Arrangement") with Develcon as described below. As part of the Arrangement New
Vianet has acceded to the rights of Vianet in the Arrangement.
Details of the Arrangement
Under the terms of the Arrangement, Develcon will amalgamate with a
specially formed subsidiary of Develcon ("Subco") and New Vianet will acquire
all of the outstanding Develcon Shares through an exchange of shares pursuant to
which holders of the outstanding Develcon Shares will receive one Vianet Share
for each 123 Develcon Share held by them (the "Exchange Ratio"). The Exchange
Ratio is based on a nominal price for Vianet common stock of US$4.00 per share
(the price at which Vianet recently issued common stock on an arm's length
basis), a price of C$0.05 per common share of Develcon and a currency exchange
rate of C$1.00= US$0.65.
<PAGE>
The amalgamated Develcon ("Amalco") will be a wholly owned subsidiary
of New Vianet and will carry on business under the name Develcon Electronics
Ltd. Shareholders of Develcon will have no direct ownership interest in Amalco.
All the assets and liabilities of Develcon and Subco will become the assets and
liabilities of Amalco upon the Arrangement. Subco was incorporated for the sole
purpose of amalgamating with Develcon under the Arrangement, has not carried on
any business and has no material assets or liabilities.
Under the Arrangement, the convertible debentures of Develcon
("Convertible Debentures") will be converted into Develcon Shares, which will be
exchanged for New Vianet Shares, so that holders of Convertible Debentures will
receive 0.04875 of a New Vianet Share for each C$1.00 principal amount of
Convertible Debentures held by them. All interest on the Convertible Debentures
accrued but not paid as of the Effective Date will be forgiven.
Holders of Convertible Debentures and holders of Develcon Shares who
receive 2,000 or more New Vianet Shares under the Arrangement will be subject to
resale restrictions with respect to such New Vianet shares received by them.
Under the resale restrictions, such holders will be entitled to dispose of 20%
of their New Vianet Shares received under the Arrangement from and after the
Effective Date and will be entitled to dispose of an additional 20% of their
Vianet Shares received under their Arrangement during each successive six month
period from the Effective Date.
The outstanding options and warrants to purchase Develcon Shares will
be exchanged for options and warrants to purchase that number of New Vianet
shares which the holder would have received under the Arrangement had the holder
exercised his or her options and/or warrants to purchase Develcon Shares
immediately before the Effective Date. The exercise price of the outstanding
options and warrants will be appropriately adjusted based on the Exchange Ratio.
Support of Arrangement Proposal
New Vianet and Develcon have agreed to cooperate with each other and
take all actions necessary or advisable to permit the completion of the
Arrangement. Develcon has agreed that it will not, directly or indirectly,
solicit or encourage the initiation of any inquires or proposals, regarding any
merger, amalgamation, arrangement, take-over bid, sale of substantial assets,
sale of treasury shares or similar transactions or any financings which
individually or in aggregate are in excess of C$1,000,000 involving Develcon or
any of its subsidiaries (an "Acquisition Proposal") subject to the fiduciary
obligations of the Board of Directors of Develcon to respond, under certain
circumstances, to the unsolicited Acquisition Proposal, under certain
circumstances, determined to be more favourable to the Shareholders than the
Arrangement (an "Alternative Proposal").
<PAGE>
Mutual Conditions
The obligations of each of New Vianet and Develcon to complete the
Arrangement are subject to the fulfilment of the following conditions (other
than conditions which have been previously satisfied or waived) among others:
(i) the Board of Directors of Develcon will be required to recommend
approval of the Arrangement to the securityholders and the debenture-
holders in an information circular to be sent to such holders in
connection with the Arrangement, subject to there being no Alternative
Proposal and the receipt by the Board of Directors of Develcon of a
fairness opinion advising that the relevant aspects of the Arrangement
are fair from a financial point of view to the securityholders and the
debentureholders;
(ii) the Arrangement and such amendments to the Convertible Debentures
and related trust indenture as may be necessary to give effect to the
Arrangement shall have been approved by holders of the required
majority of the principal amount of the Convertible Debentures in
compliance with the terms of the Convertible Debentures and in
compliance with applicable law;
(iii) no judgment or order shall have been issued by any regulatory
authority or governmental agency, no action, suit or proceeding shall
have been threatened or taken by any person, and no law, regulation or
policy shall have been proposed, enacted, or promulgated or applied,
(A) which could reasonably be expected to have the effect of
cease trading, enjoining, prohibiting or imposing material
limitations or conditions on the completion of the
Arrangement, or
(B) that, if the Arrangement were completed, could reasonably
be expected to be materially adverse to either New Vianet,
Subco, Develcon or its subsidiaries;
(iv) each of the Develcon and New Vianet shall have received a legal
opinion from counsel to the other party, in form and substance
acceptable to it, acting reasonably, as to certain matters; the issue
of common shares of New Vianet pursuant to the Arrangement is exempt
from the registration requirements of Section 5 of the Securities Act
of 1933, as amended; subject to obtaining such rulings, consents and
approvals and making such filings and payments as may be necessary or
desirable, the issuance by Vianet of Vianet Shares to the Security-
holders and Debentureholders under the Arrangement and the issuance by
New Vianet of New Vianet Shares pursuant to the exercise on or after
the Effective Date of options or warrants issued to holders of Existing
Options pursuant to the Arrangement are exempt from the registration
and prospectus requirements of those Provinces of Canada in which
holders thereof reside at the time of the Arrangement and the first
trade of New Vianet Shares received by such holder will not be subject
to any statutory hold period under the Canadian provincial securities
legislation where such holder resides, provided that such first trade
is made in compliance with the provisions of such legislation, that
such holder is not a "control person" and that no unusual effort is
made to prepare the market for any such sale or create a demand for
such securities and no extraordinary commission or consideration is
paid in respect of the trade;
<PAGE>
(vii) each of the Develcon and New Vianet shall effect or cause to be
effected all necessary or advisable registrations, filings and
submissions in connection with the Arrangement and the Loan and in
compliance with applicable legislation (including filings, if any,
required by the Investment Canada Act (Canada)); (viii) each of the
Develcon and New Vianet shall obtain, prior to the Effective Date, all
licences, consents, approvals, authorizations and orders of Agencies as
may be necessary or desirable for the consummation of the Arrangement;
(ix) all necessary corporate actions shall have been taken by each of
Develcon and New Vianet to authorize the Arrangement; (x) each of
Develcon and Vianet shall have performed in all material respects the
obligations to be performed by it under the Arrangement Agreement on or
before the Effective Date; and the representations and warranties made
by each of Develcon and New Vianet in the Arrangement Agreement shall
be true and correct in all respects on and as of the Effective Date.
Conditions in Favour of New Vianet
The obligations of New Vianet to complete the Arrangement are subject
to the fulfilment, or the waiver by New Vianet, of certain additional conditions
(other than conditions which have been previously satisfied or waived),
including:
(i) all documents to be entered into to give effect to the Arrangement
shall be in form and substance satisfactory to New Vianet, acting
reasonably;
(ii) New Vianet shall have conducted and completed its investigation
of Develcon and its subsidiaries, their respective businesses and
assets, and New Vianet, in its sole discretion, shall have been
satisfied with the results of such investigation and shall not have
determined, acting reasonably, not to proceed with the Arrangement on
the basis of such investigation;
(iii) there shall not have been any change, condition, event or
occurrence that, individually or in the aggregate, has been, or could
reasonably be expected to be, materially adverse to Develcon and there
shall not have been any change, condition, event or occurrence beyond
the control of New Vianet or Subco that, individually or in the
aggregate, has been, or could reasonably be expected to be, materially
adverse to New Vianet or Subco; and
(iv) the holders of not more than 2% of the outstanding Develcon
Shares (after conversion of the Convertible Debentures into Develcon
Shares as contemplated by the Arrangement) and no other holder of
securities of the Develcon have exercised dissent rights with respect
to the Arrangement.
Conditions in Favour of Develcon
The obligations of Develcon to complete the Arrangement are subject to
the fulfillment, or the waiver by Develcon, of the following conditions (other
than conditions which have been previously satisfied or waived), among others,
in addition to the conditions set out under the heading "Mutual Conditions":
(i) there shall not have been any change, condition, event or
occurrence that, individually or in the aggregate, has been, or could
reasonably be expected to be, materially adverse to New Vianet or
Subco; and
<PAGE>
(ii) on or prior to the Arrangement, a current director of the board of
directors of Develcon shall be elected to serve on the board of
directors of New Vianet for a period of not less than one year.
Representations and Warranties
The Arrangement contains various representations and warranties of New
Vianet and Develcon relating to, among other things, the following matters
(which representations and warranties are subject, in certain cases, to
specified exceptions): the organization and good standing of the relevant party
affecting the relevant party; the authority of the relevant party to enter into
and perform its obligations under the Arrangement and the binding effect of the
Arrangement on the relevant party; absence of certain changes affecting the
relevant party; the absence of litigation involving the relevant party;
compliance by the party with its constating documents, agreements to which it is
subject and applicable law; the accuracy of the financial statements and
disclosure documents; the title to its assets; the status of material agreements
to which the relevant party is subject; and to the effect that the relevant
party has made full disclosure regarding its business.
In addition, Develcon made representations and warranties relating to
the following matters (which representations and warranties are subject, in
certain cases, to specified exceptions: its status as a reporting issuer or the
equivalent under, and compliance with, applicable securities laws and stock
exchange requirements; and certain tax, environmental and intellectual property
matters affecting Develcon.
Competing Offer
Develcon has agreed to notify New Vianet if it receives an Acquisition
Proposal and covenanted that, if any particular Acquisition Proposal would
result in a transaction more favourable to Develcon's shareholders than the
Arrangement, the Develcon will not enter into any agreement regarding such an
Alternative Proposal (the "Proposed Alternative Transaction") without providing
New Vianet an opportunity to amend the Arrangement to provide for similar or
equivalent terms to those included in the Proposed Alternative Transaction.
Develcon has agreed that, if the Board of Directors of Develcon approves or
recommends to Develcon's shareholders or Develcon enters into any agreement
regarding a Proposed Alternative Transaction prior to the Closing Date, or
Develcon consummates any transactions relating to an Acquisition Proposal prior
to August 12, 1999, then Develcon is required to pay New Vianet a fee of
C$1,000,000.
Termination of Arrangement Agreement
The Arrangement may be terminated by Develcon or New Vianet at any time
before the Effective Date: (i) with the written agreement of the other party;
(ii) if the Arrangement has not been completed by April 23, 1999 or such earlier
or later date as may be mutually agreed to by Vianet and Develcon (the "Closing
Date"); or (iii) if it becomes apparent that one or more of the conditions for
the benefit of the terminating party cannot be satisfied and will not be waived
by the terminating party prior to the Closing Date. New Vianet may also
terminate the Arrangement if the Board of Directors of Develcon votes in favour
of an Alternative Proposal prior to the Closing Date or any senior officer of
Develcon expresses his support for an Alternative Proposal prior to the Closing
Date. Develcon may also terminate the Arrangement upon the payment to Vianet of
C$1,000,000 in the circumstances described above under the heading "The
Arrangement Agreement - Competing Offer" and the repayment of all amounts owing
by Develcon to New Vianet at the time of termination (including the indebtedness
of the Develcon to Jeremy Posner which was assigned by Jeremy Posner, a director
of New Vianet, to New Vianet, which indebtedness is evidenced by a Promissory
Note issued by the Develcon to Jeremy Posner in the principal amount of
US$530,000 and dated December 12, 1997).
<PAGE>
Except for the payment obligations of Develcon described above under
the heading "The Arrangement Agreement - Competing Offer" and except for certain
confidentiality obligations of Develcon and Vianet, the terms of the Arrangement
would become void and of no force and effect upon its termination and there
would be no liability on the part of any party or their respective officers and
directors except to the extent that any such party is in default of any of its
obligations under the Arrangement.
Interim Financing Transaction
In accordance with the Arrangement, on February 26, 1999 Vianet loaned
C$1,500,000 to Develcon at the prime rate of interest of the Royal Bank of
Canada plus 2% per annum (the "Loan"). The Loan has a term which expires on the
earlier of (i) five years from the date of advance or (ii) repayment to Royal
Bank Capital by Develcon of its loan of $1,500,000 to the Develcon dated
November 2, 1995 or (iii) the occurrence of an "event of default", as defined in
the loan agreement between Vianet and Develcon dated February 26, 1999.
Prior to the Arrangement becoming effective, the Loan will rank in
priority to all other secured indebtedness of the Develcon, other than the
existing indebtedness of the Develcon secured by a charge against non-material
portions of the assets of the Develcon and the operating line of credit provided
to the Develcon by the Royal Bank of Canada in the maximum amount of C$500,000.
Following the Arrangement becoming effective, unless and until Vianet enters
into such transactions or arrangement pursuant to which it will receive equity
from Amalco equal to all amounts outstanding under all loans from Vianet to the
Develcon (including interest thereon), the loans from Vianet to the Develcon
(including interest thereon) will be postponed and subordinated to the existing
loans from each of EMAC Limited and Royal Bank Capital to Develcon.
The principal amount of the Loan and the interest then outstanding will
become immediately due and payable if Develcon consummates any transactions
relating to an Acquisition Proposal within the term of the Loan and before
completion of the Arrangement.
Certain conditions to the completion by Vianet of the Loan were met, including
the following:
(a) all secured creditors of the Develcon, other than Royal Bank of
Canada and entities holding charges against non-material portions of
the assets of the Develcon agreed in writing that Vianet's security in
respect of the Loan ranks in advance of their secured indebtedness from
the Develcon;
(b) the payment terms of the secured loan made by Neil Jamieson to
Develcon evidenced by a promissory note issued by the Develcon in
favour of Neil Jamieson in the principal amount of C$750,000 dated
December 2, 1997 were rescheduled; and
(c) Develcon obtained written agreements to the Arrangement from the
holders of at least 25 million Common Shares, from the holders of at
least 75% of the principal amount of the Convertible Debentures and
from certain holders of Existing Options.
The Plan of Arrangement
The Plan of Arrangement provides for, among other things, the mechanics
for the implementation of the Arrangement.
The Plan of Arrangement provides that no fractional New Vianet Shares
will be issued in connection with the Arrangement. In lieu of the issuance of
fractional Vianet Shares, each person who would otherwise be entitled to receive
a fraction of a share of New Vianet common stock, will be paid by check an
amount in Canadian dollars equal to that obtained by multiplying such fractional
New Vianet Share entitlement by the quotient of 4 divided by 0.65 (subject to
adjustment, in certain circumstances).
<PAGE>
Upon completion of the Merger and the Arrangement with Develcon, New
Vianet will own 100% of the outstanding capital of Develcon. The following is
a description of Develcon's business:
Business of Develcon
Develcon is a global provider of enterprise network solutions and LAN/WAN
connectivity. Develcon designs high quality products and implements innovative
services based on a wide range of flexible and modular communications platforms
that deliver extremely efficient and cost effective networks. Develcon products
seamlessly integrate diverse LAN, legacy and voice applications using
technologies such as frame relay, ISDN, PPP and packet switching. Telephone
companies, PTT's, Internet Service Providers and public network carriers around
the world have adopted Develcon solutions to provide network infrastructure,
edge switching and multi-protocol network access. Large public and private
organizations use Develcon products for end to end enterprise applications and
to access the Internet, corporate Intranets and public frame relay services.
Competition
Develcon deals with two primary competitive arenas. The first is the
traditional edge switching LAN/WAN market with dominant forces such as CISCO
Systems, Ascend, 3Com, Cabletron, The second is caused by the company's interest
in expanding its products with traditional telco features involving voice
interfaces such as those marketed by Ericcson, Motorola, Nortel, Lucent,
Alcatel, Siemens, etc.
New Vianet intends to compete by providing a more effective convergence
of the telco and data worlds. The convergence will leverage the current gaps in
the market with effective integrations of protocols such as SS7 with
applications such as Voice over IP using algorithms such as SPS. The company
also intends to compete more effectively on the low end of Develcon's current
product line by leveraging the SPS technology to provide quality of service
policing features that are not currently available in the market.
Patents and Proprietary Technology
SPS License - New Vianet has obtained a license for the SPS technology
NewCom Technologies, Inc. The license entitles Vianet to use certain
intellectual property rights. This license includes any patents associated with
the SPS technology along with the current preferred embodiment of the patent.
This embodiment is a hardware/firmware implementation that provides the IP
protocol-policing algorithm required to execute the SPS bandwidth management
scheme. The license provides Vianet with all of the source code and
documentation required to allow the company to integrate the technology into its
products. The license provides for quarterly updates from NewCom of the
hardware/firmware. The current embodiment provides for a field programmable gate
array capable of supporting two 100 megabit ethernet interfaces, switching IP
packets between them at wireline rates while providing the SPS policing and
queuing algorithm.
Develcon - Due to the rapid technological change which is characteristic
of the data communications industry, Develcon has generally not sought patent
protection for its products. While certain of Develcon's products are either not
patentable, or would yield patents that are too easily circumventable to provide
adequate protection, they are proprietary in that it takes many years of
experience to develop the operating codes in an efficient and cost effective
form. Develcon Management believes that innovative engineering and design are
more important to its efforts to compete effectively and maintain pace with the
rapid technological changes in the industry than the potential protection
afforded by patents.
<PAGE>
Develcon has registered the "Develcon" and "DevelNet" trademarks in
Canada and the "Develcon" trademark in the United States. Develcon has
registered the "Athena" trademark in France, Germany and the Benelux countries
and has applied for the registration of such trademark in Canada, the United
States and the United Kingdom. Develcon has registered the "Orbitor" trademark
in Canada and applied for its registration in the United States.
Employees
As of March 16, 1999 Vianet had no full-time employees. Develcon has
approximately 120 full time employees.
Facilities
Develcon's operation occupies approximately 20,000 square feet in
Toronto, Canada and Saskatoon, Canada which Vianet believes is adequate for both
Vianet and Develcon's current needs.
ITEM 7. Financial Statements and Exhibits
(a) Financial statements of business combination - Audited and
proforma financial statements will be filed within sixty days in
accordance with Rules 3.05(b) B(4)(ii) of Regulation S-X.
(b) Exhibits:
2(i) Merger Agreement dated March 16, 1999 by and between the
Company and Vianet.
2(ii) Arrangement Agreement dated February 26, 1999 between
Vianet and Develcon.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1933,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RADAR RESOURCES, INC.
(Registrant)
March 17, 1999 BY: /s/ PETER G. LEIGHTON
- -------------- ---------------------------
(Date) (Signature)
Peter G. Leighton
Chief Executive Officer
<PAGE>
EXHIBIT 2(i)
MERGER AGREEMENT
THIS AGREEMENT is made this 16th day of March, 1999 by Radar Resources,
Inc., a Nevada corporation ("Radar") and Vianet Technologies, Inc., a Delaware
corporation ("Vianet").
RECITALS:
THIS AGREEMENT contemplates the merger of Vianet with and into Radar
(the "Merger") with Radar as the surviving corporation (the "Surviving
Corporation").
NOW, THEREFORE, in consideration of the mutual promises, covenants and
representations contained in this agreement and for other consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
EXCHANGE OF SECURITIES
1.01 The Merger. The "Effective Time" shall be the time at which Radar
and Vianet file certificates of merger or other appropriate documents prepared
and executed in accordance with the relevant provisions of the Delaware General
Corporation Law (the "Certificate of Merger") with the Secretary of State of
Delaware and Nevada General Corporation Law the Secretary of State of Nevada.
The Merger shall have the effects set forth in Section 92A. 110 of the Nevada
General Corporation Law.
1.02 Issuance of Radar Shares.
(a) Subject to all of the terms and conditions of this
Agreement, Radar agrees to issue to the shareholders of Vianet, four shares of
fully paid and nonassessable shares of Radar common stock, $.001 per value
("Radar Common Stock") per share in exchange for each share of the outstanding
Vianet capital stock (the "Conversion Ratio"). For purposes hereof, the parties
will deem all shares of Vianet's convertible preferred stock issued and
outstanding immediately prior to the Effective Time to have converted into an
aggregate of 250,000 shares of Vianet common stock.
(b) Each share of Vianet capital stock held in Vianet's
treasury immediately prior to the Effective Time, if any, and each share of
Vianet capital stock owned beneficially by Radar, if any, shall be cancelled and
retired without payment of any consideration therefor.
1.03 Additional Action. The Surviving Corporation may, at any time
after the Effective Time, take any action, including executing and delivering
any document in the name and on behalf of either Radar or Vianet, in order to
consummate the transactions contemplated by this Agreement.
<PAGE>
1.04 Options and Warrants.
(a) As of the Effective Time, all options to purchase shares
of Vianet capital stock issued by Vianet pursuant to its stock option plans or
otherwise ("Options"), whether vested or unvested, shall be assumed by Radar.
Immediately after the Effective Time, each Option outstanding immediately prior
to the Effective Time shall be deemed to constitute an option to acquire, on the
same terms and conditions as were applicable under such Option at the Effective
Time, such number of shares of Radar Common Stock as is equal to the number of
shares of Vianet capital stock subject to the unexercised portion of such Option
multiplied by the Conversion Ratio (with any fraction resulting from such
multiplication to be rounded up or down to the nearest whole number or, in the
case of .5, to the nearest odd number). The exercise price per share of each
such assumed Option shall be equal to the exercise price of such Option
immediately prior to the Effective Time, divided by the Conversion Ratio. The
term, exercisability, vesting schedule, status as an "incentive stock option"
under Section 422 of the Internal Revenue Code of 1986 (as amended, the "Code"),
if applicable, and all of the other terms of the Options shall otherwise remain
unchanged.
(b) As soon as practicable after the Effective Time, Radar or
the Surviving Corporation shall deliver to the holders of Options appropriate
notices setting forth such holders' rights pursuant to such Options, as amended
by this Section 1.04, and the agreements evidencing such Options shall continue
in effect on the same terms and conditions (subject to the amendments provided
for in this Section 1.04 and such notice).
(c) Radar shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Radar Common Stock for delivery
upon exercise of the Options assumed in accordance with this Section 1.04. As
soon as practicable after the Effective Time, Radar shall file a registration
statement under the Securities Act of 1933 (as amended, the "Securities Act")
with respect to all shares of Radar Common Stock subject to such Options that
may be registered on such registration statement, and shall use its best efforts
to maintain the effectiveness of such registration statement for so long as such
Options remain outstanding.
(d) Radar shall assume, as of the Effective Time, all warrants
to purchase shares of Vianet capital stock (the "Warrants"), subject to
proportionate adjustment of the number of shares subject to the Warrant and the
exercise price thereof in accordance with the Conversion Ratio.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF VIANET
VIANET hereby represents and warrants that:
2.01 Organization. Vianet is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has all
necessary corporate powers to own its properties and to carry on its business as
now owned and operated by it, is duly qualified to do business and is in good
standing in any jurisdiction its business requires qualification.
2.02 Capital. The authorized capital stock of Vianet consists of (a)
3,000,000 shares of common stock, of which 350,000 shares are currently issued
and outstanding, and (b) 1,000,000 shares of convertible preferred stock, of
which 250,000 shares are currently issued and outstanding. All of the issued and
outstanding shares are validly issued, fully paid and non-assessable.
<PAGE>
2.03 Subsidiaries. Vianet does not have any subsidiaries.
2.04 Authority. The Board of Directors of Vianet authorized the
execution of this Agreement and the consummation of the transactions
contemplated herein and has full power and authority to execute, deliver and
perform this Agreement.
2.05 Ability to Carry Out Obligations. The execution and delivery
of this Agreement by Vianet and the performance of its obligations hereunder
in the time and manner contemplated will not cause, constitute or conflict with
or result in (a) any breach of the provisions of any license, indenture,
mortgage, charter, instrument, certificate of incorporation, by-law or other
agreement or instrument to which it is a party or by which it may be bound,
nor will any consents or authorizations of any party other than those
hereto be required, (b) an event that would permit any party to any agreement
or instrument to terminate it or to accelerate the maturity of any indebtedness
or other obligation, or (c) an event that would result in the creation or
imposition of any item, charge or encumbrance on any asset.
2.06 Receipt of Revelant Information. Vianet has received from
Radar financial and other information concerning Radar and it's promoters,
officers and directors contained in Radar's Prospectus dated June 30, 1993, and
Annual Report on Form 10-K for the year ending December 31, 1998, as filed
with the Securities and Exchange Commission, and all other documents and
information they have requested.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF RADAR
Radar represents and warrants to Vianet as follows that:
3.01 Organization. Radar is a corporation duly organized, validly
existing, and in good corporate and tax standing under the laws of Nevada. Radar
has all necessary corporate powers and authority to own properties and to carry
on its business as now owned and operated by it, is duly qualified to do
business and is in good standing in each of the jurisdictions where its business
requires qualification. Radar has furnished to Vianet true and complete copies
of its Certificate of Incorporation and By-laws, each as amended and as in
effect on the date hereof. Radar is not in default under or in violation of any
provision of its Certificate of Incorporation or By-laws.
3.02 Capital. The authorized capital stock of Radar consists of
100,000,000 shares of $.001 par value common stock of which 1,000,000 shares are
currently issued and outstanding. All of the issued and outstanding shares are
validly issued, fully paid and non-assessable. All currently outstanding shares
of Radar Common Stock have been issued in compliance with applicable federal and
states securities laws. There are no outstanding options, warrants or other
rights to purchase or acquire any shares of capital stock or other securities of
Radar, or any commitments to issue the foregoing, and there are no outstanding
securities convertible into or exchangeable for capital stock of Radar, or
commitments to issue the foregoing.
3.03 Subsidiaries. Radar has no subsidiaries and does not own any
interest in any other enterprise, whether or not such enterprise is a
corporation.
3.04 Directors and Officers. Exhibit 3.04 to this Agreement contains
the names and titles of all officers and directors of Radar as of the date of
this Agreement.
<PAGE>
3.05 Financial Statements. Exhibit 3.05 to this Agreement includes
Radar's audited financial statements as of December 31, 1998. The financial
statements have been prepared in accordance with generally accepted accounting
principles and practices consistently followed throughout the period indicated
and fairly present the financial position of Radar as of the dates of the
balance sheets included in the financial statements and the results of
operations for the periods indicated.
3.06 Absence of Changes. Since the date of Radar's most recent
financial statements, there has not been any change in its financial condition
or operations except for changes in the ordinary course of business.
3.07 Absence of Undisclosed Liabilities. As of the date of Radar's most
recent balance sheet, included in Exhibit 3.05, Radar did not have any debt,
liability or obligation of any nature, whether accrued, absolute, contingent or
otherwise, and whether due or to become due (including, without limitation, any
liability associated with taxes, litigation, product liability, employee
benefits, environmental matters, legal compliance and relationships with
affiliates), that is not reflected in such balance sheet.
3.08 Tax Returns. Within the times and in the manner prescribed by
law, Radar has filed all federal, state or local tax returns required by law,
has paid all taxes, assessments and penalties due and payable and has made
adequate provision on its most recent balance sheet for any unpaid taxes. There
are no present disputes as to taxes of any nature payable by Radar.
3.09 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein, Vianet
shall have the opportunity to meet with Radar's accountants and attorneys to
discuss the financial condition of Radar. Radar shall make available to Vianet
and its attorneys, accountants or other representatives, all books and records
of Radar.
3.10 Patents, Trade Names and Rights. Radar does not use any patents,
trade marks, service marks, trade names or copyrights in its business.
3.11 Compliance with Laws. To the best of Radar's knowledge and belief
Radar has complied with, and is not in violation of, applicable federal, state
or local statutes, laws and regulations affecting its properties, securities or
the operation of its business.
3.12 Litigation. Except as disclosed in Radar's periodic filings with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), Radar is not a party to, nor is there
pending or threatened, any suit, action, arbitration or legal, administrative or
other proceedings, or governmental investigation concerning its business, assets
or financial condition. Radar is not in default with respect to any order, writ,
injunction or decree of any federal, state, local or foreign court or agency,
nor is it engaged in, nor does it anticipate it will be necessary to engage in
any lawsuits to recover money or real or personal property.
3.13 Authority. The Board of Directors of Radar has authorized the
execution of this Agreement and the transactions contemplated herein, and Radar
has full power and authority to execute, deliver and perform this Agreement.
<PAGE>
3.14 Ability to Carry Out Obligations. The execution and delivery of
this Agreement by Radar and the performance of its obligations hereunder will
not cause, constitute, conflict with or result in (a) any breach of the
provisions of any license, indenture, mortgage, instrument, Certificate of
Incorporation, By-law or other agreement or instrument to which it is a party or
by which it may be bound, nor will any consents or authorizations of any party
other than those hereto be required, (b) an event that would permit any party to
any agreement or instrument to terminate it or to accelerate the maturity of any
indebtedness or other obligation, or (c) an event that would result in a
creation or imposition of any lien, charge or encumbrance on any asset.
3.15 Full Disclosure. None of the representations and warranties made
by Radar herein, or in any exhibit, certificate or memorandum furnished or to be
furnished by it or on its behalf, contains or will contain any untrue statement
of a material fact, or omits any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the statement
made herein or therein not misleading. Radar has disclosed to Vianet all
material information relating to its business or the transactions contemplated
by this Agreement.
3.16 Assets. Radar has good and marketable title to all of its property
free and clear of any and all liens, claims and encumbrances, except as may be
indicated in Exhibit 3.05.
3.17 Contracts. Radar is not a party to any contract, agreement or
commitment whatsoever except for the contract with National Stock Transfer, Inc.
included as Exhibit 3.17 to this agreement.
3.18 Validity of Radar Shares. The Radar Common Stock to be issued
pursuant to this Agreement will be duly authorized, validly issued, fully paid
and nonassessable under Nevada law, and shall not be subject to any lien,
encumbrance, or preemptive or other similar right, by contract or at law.
3.19 Noncontravention. Subject to compliance with the applicable
requirements of federal and state securities laws and the filing of the
Certificate of Merger as required by the Delaware General Corporation Law and
the Nevada General Corporation Law, neither the execution and delivery of this
Agreement by Radar, nor the consummation by Radar of the transaction
contemplated hereby, will (a) conflict with or violate any provision of its
Certificate of Incorporation or By-laws, (b) require on the part of Radar any
filing with, or any permit, authorization, consent or approval of, any court,
arbitrational tribunal, administrative agency or commission or other
governmental or regulatory authority or agency (a "Governmental Entity"), (c)
conflict with, result in a breach of, constitute (with or without due notice or
lapse or time or both) a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify or cancel, or require any
notice, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument or indebtedness, Security Interest or other arrangement to
which Radar is a party or by which Radar is bound or to which any of their
assets is subject, (d) result in the imposition of any Security Interest
(defined below) upon any assets of Radar or (e) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Radar, or an of
its properties or assets. For purposes of this Agreement, "Security Interest"
means any mortgage, pledge, security interest, encumbrance, charge, or other
lien (whether arising by contract or by operation of law), other than (i)
mechanics, materialmen's, and similar liens, (ii) liens arising under worker's
compensation, unemployment insurance, social security, retirement, and similar
legislation, and (iii) liens on goods in transit incurred pursuant to
documentary letters of credit, in each case arising in the ordinary course of
business consistent with past custom and practice.
<PAGE>
3.20 1934 Act Registration Matters. Radar has not filed and, as of the
date of this agreement, is not required to file, any registration statement
under Section 12 of the Exchange Act.
ARTICLE IV
ACTIONS PRIOR TO CLOSING
4.01 Investigative Rights. Prior to the Closing Date, each party shall
provide to the other parties, including the parties' counsel, accountants and
other authorized representatives, full access during normal business hours (upon
reasonable advance written notice) to such parties' books and records.
4.02 Conduct of Business. Prior to the Closing Date, Radar shall
conduct its business in the normal course and shall not pledge, assign or
otherwise encumber any assets, without the prior written approval of Vianet.
Radar shall not amend its Certificate of Incorporation or By-laws, declare
dividends, redeem or sell stock or other securities, incur additional
liabilities, acquire or dispose of any assets, change employment terms, enter
into any contract, guarantee obligations of any third party, settle or discharge
any obligation, balance sheet receivable or any other liability without the
prior written consent of Vianet.
4.03 Special Meeting, Proxy Statement.
(a) Radar shall comply with all applicable provisions of and
rules under the Nevada General Corporation Law in connection with the obtaining
of the written consent of the stockholders of Radar holding the requisite number
of shares required to approve the Merger.
ARTICLE V
CONDITIONS TO CONSUMMATION OF MERGER
5.01 Condition to Each Party's Obligation. The respective obligations
of each party to consummate the transaction are subject to the satisfaction of
the following conditions:
(a) This Agreement shall have received the requisite stockholder
approval of each party; and
(b) no action, suit or proceeding shall be pending or threatened
against either party wherein an unfavorable judgment, order or decree would
prevent consummation of the transactions contemplated of this Agreement or
otherwise frustrate the purpose of this Agreement.
5.02 Conditions to the Obligations of Radar. The obligation of Radar to
consummate the transaction shall be subject to (a) Vianet's representation and
warranties contained herein to be true in all material respects as of the
Closing, (b) the receipt by Radar of appropriate closing certificates, and (c)
the receipt by Radar of executed investment representation letters,
substantially in the form of Exhibit A hereto, from Vianet's stockholders.
5.03 Conditions to the Obligations of Vianet. The obligation of Vianet
to consummate the transaction is subject to the satisfaction, in Vianet's sole
discretion, of the following conditions:
(a) The representations and warranties of Radar contained
herein shall be true in all respects as of the Closing;
(b) Radar shall have complied with all covenants contained
herein, including those contained in Article IV.
<PAGE>
(c) Vianet and its attorneys, accountants and other authorized
representatives shall have completed their due diligence review, and the results
of such review must be satisfactory to Vianet, in its sole discretion;
(d) Radar's officers and directors shall have submitted
written resignations in form and substance satisfactory to Vianet, in its sole
discretion, before Closing; and
(e) Vianet shall have received from Radar (i) appropriate
closing certificates (including a certification as to Radar's fees and expenses
pursuant to Section 8.09) and (ii) a legal opinion from counsel to Radar, in
form and substance acceptable to Vianet, in its sole discretion, covering, among
other things, due authorization, execution and delivery of this Agreement,
capitalization and outstanding securities of Radar, absence of litigation, no
conflict of the merger with charter, by-laws, contracts, law or judgments, the
obtaining of all requisite consents and approvals (including Board and
Stockholder approvals) and effectiveness of the Merger under Nevada Law.
ARTICLE VI
TERMINATION
6.01 Termination of Agreement. The parties may terminate this Agreement
prior to the Effective Time (whether before or after requisite stockholder
approval) as provided below:
(a) the parties may terminate this Agreement by mutual written
consent;
(b) Vianet may terminate this Agreement by giving written
notice to Radar in the event Radar is in breach, and Radar may terminate this
Agreement by giving written notice to Vianet in the event Vianet is in breach,
of any representation, warranty or covenant contained in this Agreement, and
such breach is not remedied within 5 days of written notice thereof; and
(c) any party may terminate this Agreement by giving written
notice to the other parties at any time after the respective stockholders of
Vianet and Radar have voted on whether to approve this Agreement and the Merger
in the event this Agreement and the Merger failed to receive the requisite
stockholder approval.
6.02 Effect of Termination. If any party terminates this Agreement
pursuant to Section 6.01, all obligations of the parties hereunder shall
terminate without any liability of any party to any other party (except for any
liability of any party for breaches of this Agreement).
ARTICLE VII
CLOSING
7.01 Closing. The closing (the "Closing") of this transaction
shall be held at the offices of Radar, or such other place as shall be mutually
agreed upon, on or before March 17, 1999 (the "Closing Date") and the following
shall be delivered:
(a) Radar shall issue to Vianet's stockholders an aggregate of
2,400,000 shares of Radar Common Stock in a certificate or certificates
representing such shares.
(b) The Vianet stockholders shall deliver the certificates
representing 100% of the shares of Vianet capital stock (600,000 shares after
giving effect to the conversion of all outstanding shares of Vianet's
convertible preferred stock as set forth in Section 1.01(a)).
<PAGE>
(c) Radar shall deliver a signed consent or minutes of its
Board of Directors, approving this Agreement and authorizing the matters set
forth herein;
(d) Vianet shall deliver a signed consent or minutes of its
Board of Directors approving this Agreement and authorizing the matters set
forth herein;
(e) Radar's existing Board of Directors will (i) elect two new
directors, as named by Vianet to act as officers and directors of Radar in the
capacities set forth in Exhibit 7.01 and (ii) the two current directors will
resign their positions with Radar effective the Closing Date.
(f) Radar and Vianet shall execute appropriate articles or
certificates of merger for filing in the State of Delaware and the State of
Nevada.
(g) The closing certificates, legal opinion and resignations
referred to in Section 5.03 (d) and (e).
ARTICLE VIII
MISCELLANEOUS
8.01 Captions and Headings. The article and paragraph headings
throughout this Agreement are for convenience and reference only and shall not
be deemed to define, limit or add to the meaning of any provision of this
Agreement.
8.02 No Oral Change. This Agreement may not be changed or modified
except in writing signed by the party against whom enforcement of any change or
modification is sought.
8.03 Non-Waiver. Except as otherwise expressly provided herein, no
waiver of a covenant, condition or provision of this Agreement shall be deemed
to have been made unless executed in writing and signed by the party against
whom such waiver is charged. The failure of any party to insist in any one or
more cases upon the performance of any covenant, condition or provision of this
Agreement shall not be construed as a waiver or relinquishment for the future of
any such covenant, condition or provision. No waiver by any party of one breach
by the other shall be construed as a waiver with respect to a subsequent breach.
8.04 Time of Essence. Time is of the essence of this Agreement as of
each and every provision hereof.
8.05 Entire Agreement. This Agreement (including the documents included
herein) contains the entire agreement and understanding between the parties and
supersedes all prior agreements and understandings.
8.06 Choice of Law. This Agreement and it application, shall be
governed under the laws of the State of Nevada without regard to its conflicts
of laws principles.
8.07 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which when
taken together shall constitute one and the same instrument.
8.08 Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been given
on the date of delivery if delivered personally or by telecopy to the party to
whom notice is to be given, or on the third day after mailing if mailed to the
party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed as follows:
<PAGE>
RADAR
3098 So. Highland Drive, Suite 460
Salt Lake City, Utah 84106
Telecopy Number: 801.485.7774
VIANET
885 Third Avenue
New York, New York 10019
Telecopy Number: 212.829.5777
8.09 Expenses. The parties will pay their own legal, accounting and
other expenses incurred in connection with this Agreement; provided that it
shall be a condition precedent to Vianet's obligations under this Agreement that
Radar's aggregate fees and expenses in connection with its performance under
this Agreement shall not exceed $10,000.
8.10 Survival of Representations and Warranties. The representations,
warranties and covenants set forth in this Agreement or in any instrument,
certificate, opinion or other writing provided for in it, shall survive the
Closing.
8.11 Further Documents. The parties agree to execute any and all other
documents and to take such other action or corporate proceedings as may be
necessary or desirable to carry out the terms hereof.
8.12 Press Releases and Announcements. Radar shall not issue any press
release or public disclosure relating to the subject matter of this Agreement
without the prior written approval of Vianet; provided, however, that Radar may
make any public disclosure it believes in good faith is required by law or
regulation (in which case the disclosing party shall advise the other parties
and provide them with a copy of the proposed disclosure prior to making the
disclosure).
8.13 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
8.14 Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. No party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other party.
8.15 Specific Performance. Each of the parties acknowledges and agrees
that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the parties agrees that
the other party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
parties and the matter (subject to the provisions of Section 8.16), in addition
to any other remedy to which it may be entitled, at law or in equity.
<PAGE>
8.16 Submission to Jurisdiction. Any and all disputes and controversies
of every kind and nature between the parties hereto arising out of or relating
to this agreement relating to the existence, construction, validity,
interpretation or meaning, performance, non-performance, enforcement, operation,
breach, continuance or termination thereof shall be subject to an arbitration
mutually agreeable to the parties or, in the absence of such mutual Agreement,
then subject to arbitration in accordance with the rules of the American
Arbitration Association. It is the intent of the parties hereto and the purpose
of this provision to make the submission to arbitration of any dispute or
controversy arising hereunder an express condition precedent to any legal or
equitable action or proceeding of any nature whatsoever.
8.17 Construction. The language used in this Agreement shall be deemed
to be the language chosen by the parties hereto to express their mutual intent,
and no rule of strict construction shall be applied against any party. Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise.
8.18 Incorporation of Exhibits and Schedules. The Exhibits identified
in this Agreement are incorporated herein by reference and made a part hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under seal as of the date first above written.
RADAR RESOURCES, INC.
By: s\Krista Nielson
---------------------------
President
VIANET TECHNOLOGIES, INC.
By: s\Peter Leighton
----------------------------
President
<PAGE>
EXHIBIT 2(ii)
ARRANGEMENT AGREEMENT
THIS AGREEMENT made as of the 11th day of February, 1999
BETWEEN:
VIANET TECHNOLOGIES INC., a corporation incorporated under the laws of Delaware,
(hereinafter referred to as "Vianet")
- - and -
DEVELCON ELECTRONICS LTD., a corporation continued under the laws of Canada,
(hereinafter referred to as the "Corporation")
WHEREAS:
A. Vianet and the Corporation wish to propose an arrangement involving the
Corporation, the holders of common shares of the Corporation, the holders of
options and warrants issued by the Corporation, the holders of convertible
debentures issued by the Corporation, Vianet and a newly incorporated wholly-
owned subsidiary of Vianet ("Subco"), in order to reorganize the Corporation's
affairs and therefore wishes to carry out certain transactions on the basis
hereinafter set forth;
B. The parties hereto intend to carry out the transactions contemplated
herein pursuant to an arrangement under the CBCA;
C. In addition to the arrangement, the parties intend to enter into
certain other transactions including certain loans by Vianet to the Corporation;
D. The board of directors of the Corporation has determined that it would
be advisable and in the best interests of the Corporation for it to enter into
this Agreement;
NOW THEREFORE in consideration of the mutual covenants set out in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which is acknowledged, Vianet and the Corporation agree as follows:
1. The Transactions
1.1 Process. Subject to the terms and conditions of this Agreement:
(a) as soon as reasonably practicable, the Corporation shall apply
to the Court pursuant to Section 192 of the CBCA for an order approving the
Arrangement and in connection with such application shall:
(i) in due course file, proceed with and diligently
prosecute an application for an Interim Order under Section 192(4) of the CBCA
providing for, among other things, the calling and holding of the Special
Meeting for the purpose of the Securityholders considering and, if deemed
advisable, approving the Arrangement and the calling and holding of the
Debentureholders Special Meeting, or circulation of a written resolution to the
Convertible Debentureholders, for the purpose of the Convertible Debenture-
holders considering and, if deemed advisable, approving the Arrangement and
other procedural matters; and
<PAGE>
(ii) subject to obtaining the approval of the Security-
holders and Convertible Debentureholders as contemplated in the Interim Order
and as may be directed by the Court in the Interim Order, take the steps
necessary to submit the Arrangement to the Court and apply for the Final Order;
and, subject to the fulfilment or waiver of the conditions set
forth in Schedules C and D, shall file with the Director Articles of Arrangement
and such other documents as may be required to give effect to the Arrangement;
(b) the Arrangement shall become effective on the Effective Date;
(c) as soon as reasonably practicable after the execution of this
Agreement, the Corporation shall call and hold the Special Meeting on or before
the Meeting Date to consider and approve, inter alia, the Arrangement and Vianet
shall provide commercially reasonable cooperation to the Corporation in respect
of this matter;
(d) as soon as is reasonably practicable after the execution of
this Agreement, the Corporation shall call and hold a meeting of, or circulate a
written resolution to, the Debentureholders on or before the Meeting Date to
consider and approve, inter alia, the Arrangement and Vianet shall provide
commercially reasonable cooperation in respect of this matter; and
(e) in furtherance of completing the Arrangement, Vianet and the
Corporation shall work together to prepare a management information circular in
connection with the Special Meeting and Debentureholders Special Meeting (or the
written resolution to be executed by the Convertible Debentureholders in respect
of those matters which would otherwise be considered at the Debentureholders
Special Meeting), relevant filings and applications to be made by Vianet with
the SEC and the NASD and such other documents as may be necessary or desirable.
1.2 Compliance with Legislation. Vianet and the Corporation shall cause the
Arrangement to be implemented in compliance with the Legislation.
2. Conditions of Transaction
2.1 Conditions in Favour of Vianet. The obligations of Vianet to complete
the Arrangement shall be subject to the fulfilment, or the waiver by Vianet, of
the conditions set out in Schedule C, each of which is for the exclusive benefit
of Vianet and may be waived by Vianet at any time, in whole or in part, in its
sole discretion without prejudice to any other rights that it may have. The
obligations of Vianet to complete the Priority Advance shall be subject to the
fulfilment, or the waiver by Vianet, of the conditions precedent to the priority
advance set out in Schedule B and the conditions precedent in Sections (i), (j),
(k), (l), (q), (s), (t) and (u) of Schedule C (as they relate to the Priority
Advance and as of the date of the Priority Advance), each of which is for the
exclusive benefit of Vianet and may be waived by Vianet at any time, in whole or
in part, in its sole discretion without prejudice to any other rights that it
may have.
2.2 Conditions in Favour of the Corporation. The obligations of the
Corporation to complete the Arrangement shall be subject to the fulfilment, or
the waiver by the Corporation, of the conditions set out in Schedule D, each of
which is for the exclusive benefit of the Corporation and may be waived by the
Corporation at any time, in whole or in part, in its sole discretion without
prejudice to any other rights that it may have.
3. Representations and Warranties
3.1 Representations and Warranties of the Corporation. The Corporation
represents and warrants to Vianet as to those matters set forth in Schedule E.
<PAGE>
3.2 Representations and Warranties of Vianet. Vianet represents and
warrants to the Corporation as to those matters set forth in Schedule F.
4. Implementation of the Arrangement
4.1 General. Each of Vianet and the Corporation shall, and the Corporation
shall cause its Subsidiaries to and Vianet shall cause Subco to, use all
reasonable efforts to satisfy each of the conditions precedent to be satisfied
by it and to take, or cause to be taken, all other action and to do, or cause to
be done, all other things necessary, proper or advisable to permit the
completion of the Priority Advance and Arrangement in accordance with this
Agreement and to cooperate with each other in connection therewith, including
the following by the relevant Party:
(a) the Corporation will in a timely and expeditious manner and as
soon as practicable, but in any event not later than March 15, 1999, file,
proceed with and diligently prosecute an application to the Court under Section
192(4) of CBCA for an Interim Order with respect to the Arrangement; providing
for, among other things, the calling and holding of the Special Meeting for the
purpose of the Securityholders considering and, if deemed advisable, approving
the Arrangement and the calling and holding of the Debentureholders Special
Meeting, or circulation of a written resolution to the Convertible Debenture-
holders, for the purpose of the Convertible Debentureholders considering and, if
deemed advisable, approving the Arrangement;
(b) the Corporation will, in a timely and expeditious manner and
as soon as practicable:
(i) comply with the terms of the Interim Order;
(ii) file the Information Circular in all jurisdictions
where the same is required to be filed and mail the same to Securityholders and
holders of Convertible Debentures as ordered by the Interim Order and in
accordance with applicable law, in all jurisdictions where the same is required,
complying in all material respects with all applicable legal requirements on the
date of mailing thereof;
(iii) convene the Special Meeting and Debentureholders
Special Meeting (or circulate a written resolution to the Debentureholders to
approve those matters which would otherwise be considered at the Debenture-
holders Special Meeting) in each case as ordered by the Interim Order;
(iv) subject to the provisions hereof, solicit proxies to
be voted at the Special Meeting and Debentureholders Special Meeting, if any, in
favour of the Arrangement;
(v) provide notice to Vianet of the Special Meeting and
the Debentureholders Special Meeting, if any, and allow Vianet's representatives
to attend the Special Meeting and the Debentureholders Special Meeting, if any,
unless such attendance is prohibited by the Interim Order; and
(vi) conduct the Special Meeting and the Debentureholders
Special Meeting, if any, in accordance with the Interim Order, the by-laws of
the Corporation and any instrument governing such meeting, as applicable, and as
otherwise required by law;
<PAGE>
(c) the Corporation shall permit Vianet and its counsel to
participate fully in the preparation of all material to be filed by the
Corporation with the Court in connection with the Arrangement prior to the
service and filing of that material; the Corporation shall also provide counsel
to Vianet on a timely basis with copies of any notice of appearance and evidence
served on the Corporation or its counsel in respect of the application for the
Final Order or any appeal therefrom and of notice (written or oral) received by
the Corporation indicating any intention to appeal the Final Order;
(d) the Corporation will permit Vianet and its counsel to
participate fully in the preparation of all documentation to be sent to Security
holders and holders of Convertible Debentures in connection with the approvals
being sought in respect of the Arrangement;
(e) each of the Parties shall cooperate with each other on a
timely basis in connection with the preparation of, and shall furnish to each
other such information as may be reasonably necessary for inclusion in, the
Information Circular and all documents and information necessary or desirable to
be filed by Vianet with the SEC or NASD in connection with the Arrangement;
(f) the Information Circular shall be prepared by the Corporation
in accordance with all applicable laws and, without limiting the generality of
the foregoing, will provide the Securityholders and holders of Convertible
Debentures with information in sufficient detail to permit them to form a
reasoned judgment concerning the matters before them and such other disclosure
as is required by applicable law provided that, with respect to the portions of
the Information Circular relating solely to Vianet, the Corporation will rely
entirely upon the information provided by or on behalf of Vianet expressly for
the purpose of inclusion in the Information Circular, without having to make or
rely upon any independent inquiries as to the accuracy or completeness thereof,
and shall have no further obligation, responsibility or liability for its
accuracy, completeness or correctness;
(g) the Corporation shall prepare (in co-operation with Vianet)
the Information Circular which shall include the Plan of Arrangement, a copy of
this Agreement and fairness opinion and the Corporation shall use reasonable
commercial efforts to mail the Information Circular to Securityholders and
holders of Convertible Debentures by no later than March 25, 1999 (or such later
date as may be agreed to by Vianet);
(h) the Corporation shall, subject to there being no Alternative
Proposal and the Corporation's board of directors receiving a "fairness
opinion" advising that the relevant aspects of the Arrangement are fair from a
financial point of view to the Securityholders, use all commercially reasonable
efforts to obtain the approval of the Securityholders to the Arrangement at the
Special Meeting in compliance with the Interim Order and the Legislation and
the Corporation covenants that, subject to there being no Alternative
Proposal and the Corporation's board of directors receiving a "fairness
opinion" advising that the relevant aspects of the Arrangement are fair from a
financial point of view to the Securityholders, the Information Circular shall
contain a recommendation of the board of directors of the Corporation that the
Securityholders approve the Arrangement;
<PAGE>
(i) the Corporation shall, subject to there being no Alternative
Proposal and the Corporation's board of directors receiving a "fairness
opinion" advising that the relevant aspects of the Arrangement are fair from a
financial point of view to the holders of the Convertible Debentures, use all
commercially reasonable efforts to obtain approval of the Arrangement by the
holders of the required majority of the principal amount of the Convertible
Debentures in accordance with the Interim Order and the Legislation and terms of
the Convertible Debentures and the Corporation covenants, subject to there
being no Alternative Proposal and the Corporation's board of directors receiving
a fairness opinion advising that the relevant aspects of the Arrangement are
fair from a financial point of view to the holders of Convertible Debentures,
the Information Circular shall contain a recommendation of the board of
directors of the Corporation that the holders of the Convertible Debentures
approve the Arrangement;
(j) subject to there being no Alternative Proposal and the
Corporation's board of directors receiving a fairness opinion as described in
Sections 4.1(h) and (i) above, the Corporation shall, in all public comments
(whether oral or written) in relation to the Arrangement, be consistent with and
supportive of the recommendation of the Corporation's board of directors
described in Sections 4.1(h) and (i); and neither the board of directors of the
Corporation nor the Corporation shall act or fail to act in any way that might
reasonably be expected to discourage Securityholders or holders of Convertible
Debentures from voting in favour of the Arrangement or that might encourage
Securityholders or holders Convertible Debentures to vote against the
Arrangement;
(k) the Corporation shall promptly reaffirm its recommendation of
the Plan of Arrangement by press release after: (i) any Acquisition Proposal
(which is determined not to be an Alternative Proposal) is publicly announced or
made; or (ii) Vianet has agreed to amend this Agreement to provide for
substantially similar or equivalent terms to those included in any Proposed
Alternative Transaction;
(l) the Corporation shall comply with such provisions of the
Ontario Securities Commission's Policy Statement No. 9.1 and the Quebec
Securities Commission's Policy Q-27 as are applicable in connection with the
Arrangement and the Priority Advance;
(m) each of the Corporation and Vianet shall effect or cause to be
effected all necessary or advisable registrations, filings and submissions in
connection with the Arrangement and the Priority Advance and in compliance with
the Legislation (including filings, if any, required by the Investment Canada
Act (Canada));
(n) each of the Parties shall obtain, prior to the Effective Date,
all licences, consents, approvals, authorizations and orders of Agencies as may
be necessary or desirable for the consummation of the Arrangement;
(o) the Corporation shall, and shall cause its Subsidiaries to,
provide notice regarding the Priority Advance and the Arrangement to, and obtain
all necessary or desirable waivers, consents and approvals or releases regarding
the Priority Advance and the Arrangement from, other parties to agreements,
understandings or other documents to which it is a party or by which it is or
its properties are bound or affected (including, without limitation, loan
agreements, leases, pledges, guarantees and security);
(p) the Corporation shall co-operate with Vianet in obtaining any
approval, consent, waiver or order required to be obtained from any regulatory
or governmental authority or private party in connection with the approval or
completion of the Arrangement, including obtaining an exemption order from the
Commission des valeurs mobilieres du Quebec;
<PAGE>
(q) the Corporation (and its Subsidiaries) and Vianet shall each
use reasonable commercial efforts to satisfy (or cause the satisfaction of) the
conditions precedent set forth in Schedules C and D , to the extent the same is
within its control and to take, or cause to be taken, all other action and to
do, or cause to be done, all other things necessary, proper or advisable under
applicable laws and regulations to complete the Arrangement;
(r) each of the Corporation (and its Subsidiaries) and Vianet will
not take any action, refrain from taking any action, or permit any action to be
taken or not taken, inconsistent with this Agreement or which might reasonably
be expected to, directly or indirectly, interfere with or adversely affect the
consummation of the Arrangement;
(s) the Corporation will, except for proxies and other non-
substantive communications with Securityholders and holders of Convertible
Debentures, furnish promptly to Vianet a copy of each material notice, report,
schedule or other document or communication delivered, filed or received by the
Corporation in connection with the Arrangement, the Special Meeting, the
Debentureholders Special Meeting or any other meeting of the Corporation's
security holders or class of security holders which all such holders, as the
case may be, are entitled to attend, any material filings under applicable laws
and any material dealings with regulatory agencies in connection with, or in any
way affecting, the transactions contemplated herein;
(t) the Corporation will, subject to the approval of the
Arrangement at the Special Meeting and Debentureholders Special Meeting (or by
written resolution of the Convertible Debentureholders) in accordance with the
provisions of the Interim Order, as soon as practicable, but in any event not
later than April 19, 1999 file, proceed with and diligently prosecute an
application for the Final Order;
(u) the Corporation will comply with the terms of the Final Order
and, subject to the receipt of the Final Order and satisfaction or waiver of the
conditions set out in Schedule D, will file Articles of Arrangement and such
other documents as may be required to give effect to the Arrangement with the
Director in order for the Arrangement to become effective on or before April 21,
1999;
(v) the Corporation shall use commercially reasonable efforts to
obtain approval in writing for the Arrangement within five (5) days from the
date hereof from shareholders who in aggregate hold not less than twenty-five
(25) million common shares of the Corporation and from the holders of Existing
Options described in Schedule G, such approval to be in the form of a written
agreement in form and substance satisfactory to Vianet and to which Vianet shall
be a party and pursuant to which each such Person shall, among other things,
(i) agree to vote to approve the Arrangement at the Special Meeting and appoint
Vianet or such Person as Vianet may designate as such Securityholder's
proxy for such meeting to vote in the foregoing manner and in respect of all
other matters considered at the Special Meeting or any adjournment or
extension thereof and appoint Vianet or any such Person as Vianet may designate
as such Securityholder's attorney-in-fact and agent for, in the name of and on
behalf of the Securityholder to vote the Securityholder's Common Shares or
Existing Options, as the case may be, at the Special Meeting and (ii) agree to
vote to approve the Arrangement in such manner and form and by such date as may
be satisfactory to The Toronto Stock Exchange in order to obtain such approvals
and consents as may be necessary or desirable to obtain from The Toronto Stock
Exchange in connection with the Arrangement; and
<PAGE>
(w) the Corporation shall use commercially reasonable efforts to
obtain approval in writing for the Arrangement within five (5) days from the
date hereof from holders of 75% of the principal amount of Convertible
Debentures, such approval to be in the form of a written agreement in form and
substance satisfactory to Vianet and to which Vianet shall be a party and
pursuant to which such holders of the Convertible Debentures shall, among other
things, agree to vote to approve the Arrangement at the Debentureholders Special
Meeting, or in the written resolution of the holders of the Convertible
Debentures to consider and approve the Arrangement and appoint Vianet or such
Person as Vianet may designate as such holder of Convertible Debentures' proxy
for such meeting to vote in the foregoing manner and in respect of all other
matters considered at such meeting or any adjournment or extension thereof and
appoint Vianet or any such Person as Vianet may designate as such holder
of Convertible Debentures' attorney-in-fact and agent for, in the name of and on
behalf of such holder of Convertible Debentures, to exercise such holder
of the Convertible Debentures' right to vote at such meeting or in respect of
such written resolution.
(x) subject to Section 4.1(y), as soon as practicable following
the Arrangement, Vianet shall file with the U.S. Securities and Exchange
Commission registration statements relating to the common shares of Vianet (i)
issued pursuant to the Arrangement (to the extent necessary or desirable) and
(ii) issuable upon exercise of the options and warrants issued by Vianet
pursuant to the Arrangement to holders of Existing Options and Vianet shall use
commercially reasonable efforts to make such registration statement effective as
soon as practicable after the filing thereof unless in the reasonable opinion of
Vianet, acting in good faith, it is unlikely that such a registration statement
would be made effective;
(y) provided that a registration statement has not been filed
pursuant to Section 4.1(x), the first registration statement filed by Vianet
with the U.S. Securities and Exchange Commission following the Arrangement (in
addition to possibly relating to other securities of Vianet) shall relate to the
common shares of Vianet (i) issued pursuant to the Arrangement (to the extent
necessary or desirable) and (ii) issuable upon exercise of the options and
warrants issued by Vianet pursuant to the Arrangement to holders of Existing
Options and Vianet shall use commercially reasonable efforts to make such
registration statement effective in respect of such common shares of Vianet
unless in the reasonable opinion of Vianet, acting in good faith, it unlikely
that such a registration statement would be made effective; and
(z) Vianet will use commercially reasonable efforts to have its
common shares authorized for quotation on The Nasdaq Small Cap Market as soon as
practicable following the Arrangement.
4.2 Defence of Proceedings. Each of Vianet and the Corporation shall
vigorously defend, or cause to be defended, any lawsuits or other legal
proceedings brought against it or any of its affiliates challenging this
Agreement or the completion of all or part of the Arrangement. None of Vianet
or the Corporation shall settle or compromise any claim brought in connection
with the Arrangement prior to the Effective Date by Persons that are or purport
to be holders of any of its securities without prior consultation with the
other.
<PAGE>
4.3 Business in the Ordinary Course. Prior to the Effective Date, unless
Vianet shall otherwise agree in writing (such agreement not to be unreasonably
withheld) or as otherwise expressly contemplated or permitted by this Agreement,
the Corporation shall (and shall cause each of its Subsidiaries to) conduct its
and their respective businesses in the ordinary course of business consistent
with past practice. Without limitation, the Corporation shall:
(a) not, and shall cause each of its Subsidiaries to not, do or
permit to occur any of the following (directly or indirectly) outside of the
ordinary course of business consistent with past practice, except to the extent
necessary to give effect to obligations under this Agreement or otherwise
existing at the date of this Agreement:
(i) issue, sell, pledge, lease, dispose of, encumber or
agree to issue, sell, pledge, dispose of or encumber:
(A) any securities, including, for greater certainty,
options or stock appreciation rights (other than the issuance
of Common Shares upon the exercise of the Existing Options or
conversion of the Convertible Debentures or the Convertible
Note); or
(B) any material assets;
(i) amend or propose to amend articles or by-laws of the
Corporation or any of its Subsidiaries;
(ii) declare or make any distribution (in cash, securities
or other property) in respect of any securities, other than payments required to
be made in respect of the Convertible Debentures, the Convertible Note and
existing credit facilities;
(iii) redeem, purchase or offer to purchase any securities;
(iv) reorganize, amalgamate or merge with any other Person
(other than as contemplated hereby);
(v) reduce its stated capital;
(vi) acquire or agree to acquire (by a merger,
amalgamation, acquisition of stock or assets or otherwise) any Person;
(vii) incur, or commit to incur, otherwise than under
current operating lines of credit, (i) any indebtedness for borrowed money
(except as contemplated hereunder) or (ii) any obligations for capital
expenditures (other than $50,000 per month for research and development and
demonstration equipment on the premises of the Corporation or its clients)
without the prior written consent of Vianet, which shall not be unreasonably
withheld; or
(viii) enter into or modify any contract, agreement,
commitment or arrangement with respect to any of the matters set forth in this
Section 4.3(a);
(b) not, and shall cause each of its Subsidiaries to not, except
in the ordinary course of business and consistent with past practice or as
contemplated herein:
<PAGE>
(i) without the approval of Vianet, enter into or modify
any employment, severance, collective bargaining or similar agreements or
arrangements with, or grant any salary increases, severance or termination pay
to, any officers or directors other than pursuant to agreements in effect on the
date of this Agreement or pursuant to ongoing labour negotiations;
(ii) in the case of employees who are not officers or
directors, take any action with respect to the grant of any bonuses, salary
increases, severance or termination pay other than pursuant to agreements and
policies in effect on the date of this Agreement; or
(iii) adopt or amend any bonus, profit sharing compensation
stock option, pension, retirement, deferred compensation, employment or other
employee benefit plan, agreement, trust, fund or arrangement for the benefit or
welfare of any employee except to enable Common Shares issued or issuable
thereunder to vest and be voted at the Special Meeting.
(c) use its commercially reasonable efforts to cause the current
insurance policies of it and its Subsidiaries not to be cancelled or terminated
or any other coverage thereunder to lapse, unless simultaneously with such
termination, cancellation or lapse, replacement policies underwritten by
insurance companies of nationally recognized standing providing coverage
substantially equal to or greater than the coverage under the cancelled,
terminated or lapsed policies for substantially similar premiums are in full
force and effect; and
(d) use its commercially reasonable efforts, and cause each of its
Subsidiaries to use its commercially reasonable efforts to preserve intact their
respective business organizations and goodwill, to keep available the services
of their respective officers and employees as a group and to maintain
satisfactory relationships with suppliers, distributors, customers and others
with whom they have business relationships.
4.4 Access to Information. The Corporation shall, and shall cause its
Subsidiaries and the officers, directors, employees and agents of it and its
Subsidiaries to, provide to Vianet and its officers, employees and agents
complete access at all reasonable times and on reasonable notice to the
respective businesses, properties, assets, officers, employees, agents, books
and records (including all financial, operating, personnel, compensation, tax
and other data and information) of the Corporation and its Subsidiaries as
Vianet or its respective officers, employees or agents, may reasonably request.
5. Commitment to the Transaction.
5.1 Other Proposals.
(1) The Corporation shall not, directly or indirectly, through any
officer, director, employee, representative or agent of the Company or any of
its Subsidiaries, solicit or encourage (including by way of furnishing non-
public information or entering into any form of agreement, arrangement or
understanding) the initiation of any inquiries or proposals regarding any
merger, amalgamation, arrangement, take-over bid, sale of substantial assets,
sale of treasury shares or similar transactions or any financings which
individually or in aggregate are in excess of Cdn.$1,000,000 involving the
Corporation or any Subsidiaries of the Corporation (any of the foregoing
inquiries or proposals being referred to herein as an "Acquisition Proposal").
Subject to compliance with Section 5.2, nothing contained in this Section 5.1 or
other provision of this Agreement shall prevent the board of directors of the
Corporation from responding to, considering, negotiating, approving and
recommending to the shareholders of the Corporation an unsolicited bona
fide written Acquisition Proposal for which adequate financial arrangements have
been made, which the board of directors of the Corporation determines in good
faith (after consultation with its financial advisors, and after receiving
a written opinion of outside counsel, or advice of outside counsel that is
reflected in the minutes of the board of directors of the Corporation, to the
effect that the board of directors is required to do so in order to discharge
properly its fiduciary duties) would, if consummated in accordance with its
terms, result in a transaction more favourable to the shareholders of the
Corporation than the Arrangement (any such Acquisition Proposal being referred
to herein as an "Alternative Proposal").
<PAGE>
(2) The Corporation shall immediately cease and cause to be
terminated any existing discussions or negotiations with any parties (other than
Vianet) with respect to any actual or potential Acquisition Proposal. The
Corporation agrees not to release any third party from any confidentiality or
standstill agreement to which the Corporation and such third party is a party.
(3) The Corporation shall notify Vianet of any existing
Acquisition Proposals and shall within one business day thereafter, notify
Vianet of any future Acquisition Proposal or any request for non-public
information relating to the Corporation or any of its Subsidiaries in connection
with an Acquisition Proposal or for access to the properties, books or records
of the Corporation or any Subsidiary by any Person that, to the knowledge of the
Corporation, informs any member of the board of directors of the Corporation or
its Subsidiaries that it is considering making, or has made, an Acquisition
Proposal. Such notice to Vianet shall be made, from time to time, orally and in
writing and shall indicate such details of the proposal, inquiry or contact
known to such Person as Vianet may reasonably request including the identity of
the Person making such proposal, inquiry or contact.
(4) If the board of directors of the Corporation receives an
unsolicited request for material non-public information from a party who
proposes to the Corporation a bona fide Acquisition Proposal and the board of
directors of the Corporation determines that such proposal is an Alternative
Proposal pursuant to Section 5.1, then, and only in such case, the Corporation
may, subject to the execution of a confidentiality agreement, provide such party
with access to information regarding the Corporation.
(5) The Corporation shall ensure that the officers, directors and
employees of the Corporation and its Subsidiaries and any investment bankers or
other advisors or representatives retained by the Corporation are aware of the
provisions of this Section, and the Corporation shall be responsible for any
breach of this Section 5.1 by such bankers, advisors or representatives.
5.2 Right of First Refusal. The Corporation covenants that neither the
board of directors of it or its Subsidiaries will approve or recommend to its
shareholder(s), and neither it nor any of its Subsidiaries will enter into any
agreement regarding, an Alternative Proposal (the "Proposed Alternative
Transaction") without providing Vianet with an opportunity to amend this
Agreement to provide for substantially similar or equivalent terms to those
included in the Proposed Alternative Transaction. In particular, the Corporation
covenants to provide Vianet with a copy of any Proposed Alternative Transaction
as executed by the party making the proposal, at least 5 days prior to its
proposed execution by the Corporation or any of its Subsidiaries. In the event
Vianet agrees to amend this Agreement as provided above, the Corporation
covenants to not enter into the Proposed Alternative Transaction.
6. Expenses
6.1 Reimbursement Expenses. If:
(a) the board of directors of the Corporation or any of its
Subsidiaries approves or recommends to its Shareholder(s), or the Corporation or
any of its Subsidiaries enters into, a Proposed Alternative Transaction prior to
the Closing Date; or
(b) the Corporation consummates any transactions relating to an
Acquisition Proposal prior to the sixth month anniversary of the date first
written above;
<PAGE>
then, unless this Agreement is terminated pursuant to Section 7.1(a), the
Corporation shall pay or cause to be paid to Vianet (or as it may direct) on the
day the circumstances in clause (a) occur (if the circumstances in clause (a)
occur) or on or prior to the consummation of any transactions relating to an
Acquisition Proposal (if the circumstances in clause (b) occur), a fee equal to
Cdn.$1,000,000 by bank draft in full and final satisfaction of a genuine
pre-estimate of Vianet's opportunity cost and all direct and indirect costs and
expenses paid or accrued by Vianet in connection with, relating to or arising
from the proposed Arrangement and all prior matters culminating in entering into
this Agreement and all ancillary matters including, all costs, fees and expenses
incurred in connection with financing arrangements pertaining to the Arrangement
and for its investment advisors and counsel. The Corporation agrees that the fee
is a genuine pre-estimate of the foregoing costs and expenses and not a penalty.
The Corporation shall not be liable to Vianet for any other direct or indirect
costs or expenses paid or accrued by Vianet in connection with the Arrangement.
This Section 6.1 is in addition and not in substitution of any other rights and
remedies which may be available to Vianet.
7. Termination of Agreement
7.1 Termination by Vianet. This Agreement may be terminated by Vianet at
any time before the Effective Date:
(a) with the written agreement of the Corporation;
(b) if the Arrangement has not been completed by the Closing Date;
(c) if it becomes apparent that, one or more of the conditions for
the benefit of Vianet in Schedule C cannot be satisfied and will not be waived
by Vianet prior to the Closing Date; or
(d) the board of directors or shareholders of the Corporation
votes in favour of an Alternative Proposal prior to the Closing Date or any
senior officer of the Corporation expresses its support for an Alternative
Proposal prior to the Closing Date.
7.2 Termination by Corporation. This Agreement may be terminated by the
Corporation at any time before the Effective Date:
(a) with the written agreement of Vianet;
(b) if the Arrangement have not been completed by the Closing
Date;
(c) if it becomes apparent that one or more of the conditions for
the benefit of the Corporation in Schedule D cannot be satisfied and will not be
waived by the Corporation prior to the Closing Date; or
(d) the Corporation makes a payment to Vianet pursuant to Section
6.1 and repays all amounts owing by the Corporation to Vianet at the time of
termination (including, the indebtedness of the Corporation to Jeremy Posner
which was assigned by Jeremy Posner to Vianet, which indebtednes is evidenced by
a Promissory Note issued by the Corporation to Jeremy Posner in the principal
amount of US$530,000 and dated December 12, 1997); or
(e) Vianet does not make the Priority Advance and all of the
conditions precedent in Section 9 of Schedule B and Sections (i), (j), (k), (l),
(q), (s), (t) and (u) of Schedule C (as they relate to the Priority Advance and
as of the date of the Priority Advance) have been satisfied.
<PAGE>
7.3 Notice of Termination. If any Party proposes to terminate this
Agreement pursuant to Sections 7.1(c), in the case of Vianet, or 7.2(c), in the
case of the Corporation, it shall provide five days prior notice to the other
Party of its intention to do so, so as to permit that Party the opportunity to
provide reasonable satisfaction to such Party that the specified condition
precedent can be satisfied.
7.4 Obligations upon Termination. In the event of the termination of this
Agreement hereunder, this Agreement, except for Section 8 and the payment
obligations in Section 6, shall become void and of no further force and effect
and there shall be no liability on the part of any Party hereto or their
respective officers and directors, except to the extent that any such Party is
in default of any of its obligations hereunder.
8. Confidentiality and Public Disclosure
8.1 Confidential Information. Except as required by this Agreement or the
Legislation, this Agreement shall be kept strictly confidential and none of
Vianet or the Corporation shall make any public announcement or statement with
respect to this Agreement or the Arrangement without the approval of each other
Party, which approval:
(a) shall not be unreasonably withheld;
(b) may be oral; and
(c) may be given on behalf of a Party by its counsel.
The Parties shall consult with the other as to the timing and wording of press
releases or other disclosure required by the Legislation relating to the
Arrangement. Notwithstanding the foregoing, the Parties shall be entitled to
describe this Agreement and provide copies thereof to Agencies, their respective
boards of directors, entities whose approvals are required in connection with
the matters contemplated hereby and to those employees, bankers and professional
advisors that need to know details about this Agreement in order for the Parties
to perform their covenants or satisfy the conditions set out in this Agreement.
8.2 Idem. Each of the Parties shall (and shall cause each of its
Representatives (as defined below) to) hold in strictest confidence and not use
in any manner, other than as expressly contemplated by this Agreement, any
Confidential Information (as defined below).
For the purposes of this Section 8.2:
(a) "Confidential Information" at any time means any and all
confidential information disclosed by one Party or its Representatives to the
other in connection herewith but not including any information that has become
generally available to the public other than as a result of a disclosure by the
recipient or any of its Representatives in contravention hereof.
(b) "Representatives" means in respect of each of the Parties,
its affiliates and their respective directors, officers, employees, agents and
other representatives and advisers.
9. General Provisions
<PAGE>
9.1 Assignment by Vianet. This Agreement shall enure to the benefit of and
be binding on the Parties and their respective successors and assigns. The
Corporation acknowledges and agrees that (a) prior to the Arrangement becoming
effective, Vianet may amalgamate, merge or enter into a business combination or
arrangement with another corporation (the "Pre-arrangement Transaction"), which
corporation is "public corporation" in the United States of America or Canada
and (b) such other corporation may be a successor to Vianet and its rights and
obligations and representations and warranties hereunder or such other
corporation may assume Vianet's obligations and representations and warranties
hereunder and be the assignee of Vianet's rights and benefits hereunder. In the
event a Pre-arrangement Transaction is effected and such other corporation is
not a successor to Vianet by operation of law as a result of the Pre-arrangement
Transaction, all references herein to Vianet shall be read as references to such
other corporation and Vianet shall have no rights or obligations or
representations and warranties hereunder whatsoever upon the Pre-arrangement
Transaction being effected; provided Vianet has provided written notice to the
Corporation regarding such substitution of such other corporation for Vianet.
Vianet may also assign its rights and obligations and representations and
warranties under this Agreement to one or more affiliates. This Agreement shall
not otherwise be assignable by any Party.
9.2 Binding Effect. This Agreement shall be binding upon and shall enure to
the benefit of and be enforceable by the Parties and their respective successors
and permitted assigns.
9.3 Expenses. Except as otherwise expressly provided in this Agreement,
each Party to this Agreement shall pay its own expenses incurred in connection
with this Agreement and the completion of the transactions contemplated hereby.
For greater certainty, the Corporation may be obligated to pay the fees and
expenses of an independent financial advisor in connection herewith and the
Independent Legal Advisor in connection with the Arrangement, which fees and
expenses are not expected to exceed $50,000 in the aggregate.
9.4 Time. Time shall be of the essence of this Agreement in each and every
matter or thing herein provided.
9.5 Non-Merger. Except where otherwise indicated, the covenants contained
in this Agreement shall survive its execution and delivery and the closing of
the transactions contemplated herein and the representations and warranties
contained herein shall survive for a period of three years from the date hereof
except for the representations and warranties which relate to incorporation of a
Person, due authorization of this Agreement, the enforceability of obligations
under this Agreement, title matters or intellectual property matters, which will
survive indefinitely. No investigation by or on behalf of any Party shall
mitigate, diminish or affect the representations and warranties made by any
other Party.
9.6 Notices.
(1) Each Party shall give prompt notice to the other of:
(a) the occurrence or failure to occur of any event,
which occurrence or failure causes, or could reasonably be
expected to cause any representation or warranty on its part
contained in this Agreement to be untrue or inaccurate in any
respect at any time from the date of this Agreement to the
Effective Date; and
<PAGE>
(b) any failure of such party, or any officer,
director, employee or agent thereof to comply with or satisfy
any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement.
(2) Vianet agrees that any notice given by it to Securityholders
or holders of Convertible Debentures pursuant to or in connection with the
Arrangement shall concurrently be provided to the Corporation and its counsel.
(3) Any notice or other communication required or permitted to be
given hereunder shall be sufficiently given if delivered in person or if sent by
facsimile transmission (provided such transmission is confirmed):
(a) in the case of Vianet, to the following address:
Vianet Technologies Inc.
3rd Floor
83 Mercer Street
New York, NY 10012-4437
Facsimile No.: (212) 966-1735
Attention: Messrs. Peter Leighton and Jeremy Posner
with a copy to
Chaiton & Chaiton
185 Sheppard Avenue West
Toronto, Ontario
M2N 1M9
Facsimile No.: (416) 218-1838
Attention: Harvey Tanzer
(b) in the case of the Corporation, to the following
address:
Develcon Electronics Ltd.
18 Dyas Road
Toronto, Ontario
M3B 1V5
Facsimile No.: (416) 385-1592
Attention: Geoffrey H. Bennett
with a copy to
Lawson Lundell Lawson & McIntosh
1600-925 West Georgia Street
Vancouver, British Columbia
V6C 3L2
Facsimile No.: (604) 669-1620
Attention: Jerrold W. Schramm
or at such other address as the Party to which such notice or other
communication is to be given has last notified the party giving the same in the
manner provided in this Section, and if so given the same shall be deemed to
have been received on the date of such delivery or sending.
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9.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein (excluding any conflict of laws, rule or principle which
might refer such construction to the laws of another jurisdiction). Each party
hereto irrevocably submits to the non-exclusive jurisdiction of the courts of
Ontario with respect to any matter arising hereunder or related hereto.
9.8 Injunctive Relief. The Parties hereto agree that the remedy at law for
any breach of the provisions of this Agreement will be inadequate and that the
Party that is not in breach, on any application to a court, shall be entitled to
temporary and permanent relief, specific performance and any other equitable
relief against the other Party.
9.9 Currency. Except as expressly indicated otherwise, all sums of money
referred to in this Agreement are expressed and shall be payable in Canadian
dollars. All payments shall be in immediately available funds.
9.10 Definitions. For the purposes of this Agreement, those terms defined
in Schedule A shall have the meanings attributed to them in that Schedule.
9.11 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such prohibition or unenforceability and shall be severed from
the balance of this Agreement, all without affecting the remaining provisions of
this Agreement or affecting the validity or enforceability of such provision in
any other jurisdiction.
9.12 Entire Agreement. The Schedules hereto form an integral part of this
Agreement. This Agreement constitutes the entire obligation of the Parties with
respect to the subject matter hereof and shall supersede any prior expression of
interest or understandings with respect to the subject matter hereof and shall
supersede any prior expression of interest or understandings with respect to the
transactions contemplated hereby. For greater certainty, none of the Parties
makes any representation or warranty, express or implied, except as set forth
herein. This Agreement may be amended only by an instrument in writing signed
by the Parties.
9.13 Further Assurances. Each of the Parties shall do, and Vianet shall
cause Subco to do and the Corporation shall cause its Subsidiaries to do, all
acts and things (including, executing appropriate documents) reasonably
necessary to give full effect to the transactions contemplated in this
Agreement.
9.14 Counterparts. This Agreement may be signed in any number of
counterparts.
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IN WITNESS WHEREOF the Parties have executed this Agreement as
of the date first written above.
VIANET TECHNOLOGIES INC.
By: s/Jeremy Posner
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DEVELCON ELECTRONICS LTD.
By: s/Geoffrey Bennett
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