<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
<TABLE>
<S> <C> <C>
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): March 2, 1999
-------------
PRI AUTOMATION, INC.
- --------------------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
</TABLE>
<TABLE>
<S> <C> <C>
Massachusetts 0-24934 04-2495703
- -------------------------------------------------------------------------------
(STATE OR OTHER (COMMISSION FILE NUMBER) (IRS EMPLOYER
JURISDICTION OF IDENTIFICATION NO.)
INCORPORATION)
</TABLE>
<TABLE>
<S> <C>
805 Middlesex Turnpike, Billerica, 01821-3986
Massachusetts
- --------------------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
<TABLE>
<S> <C>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (978) 670-4270
--------------
</TABLE>
Not Applicable
- --------------------------------------------------------------------------------
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 2, 1999, PRI Automation, Inc., a Massachusetts corporation ("PRI"),
acquired Promis Systems Corporation Ltd., a Canadian corporation ("Promis"),
pursuant to a plan of arrangement (the "Plan of Arrangement") under Section 192
of the Canada Business Corporations Act (the "CBCA"). The terms of the
acquisition were the results of arm's-length negotiations between PRI and
Promis. PRI intends to account for the acquisition as a pooling of interests. In
accordance with the Plan of Arrangement:
(a) Promis has issued 0.1353 exchangeable shares of Promis in exchange
for each outstanding common share of Promis, or an aggregate of 1,139,874
exchangeable shares. Each exchangeable share of Promis may be exchanged at
any time for one share of common stock, par value $0.01 per share, of PRI
("Common Stock"). PRI has registered all of these shares of Common Stock on
a registration statement on Form S-3 (registration number 333-69721) for
issuance upon the exchange or redemption of the exchangeable shares of
Promis.
(b) PRI's wholly owned subsidiary, 1325949 Ontario Inc., an Ontario
corporation, now holds the only outstanding common share of Promis.
(c) PRI has assumed Promis' obligations under all options issued under
the Promis Systems Corporation Ltd. Amended and Restated Stock Option Plan
dated as of September 30, 1998 (the "Promis Plan"). Each option outstanding
under the Promis Plan has been converted into an option to purchase 0.1353
shares of Common Stock per Promis common share subject to the option,
rounded down to the nearest whole share. The exercise price of each option
has been converted into a new exercise price equal to the previous exercise
price divided by 0.1353 and converted from Canadian dollars to U.S. dollars
at the rate of 0.6641 U.S. dollars per Canadian dollar.
(d) PRI has also assumed Promis' obligations under a warrant issued to
LSI Logic Corporation (the "Warrant"). The Warrant has been converted into a
warrant to purchase 13,530 shares of Common Stock. The exercise prices of
the Warrant have been converted into new exercise prices equal to the
previous exercise prices divided by 0.1353 and converted from Canadian
dollars to U.S. dollars at the rate of 0.6641 U.S. dollars per Canadian
dollar.
Two holders of an aggregate of 250,100 common shares of Promis have elected
to exercise their dissenters' rights under Section 190 of the CBCA to require
Promis to pay the holders the "fair value" for their Promis common shares.
Promis is currently in discussions with the two dissenters.
A copy of the press release announcing the completion of the acquisition is
attached as Exhibit 99.1 to this Current Report on Form 8-K.
On March 11, 1999, Promis changed its name to PRI Automation (Canada), Inc.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
i
<PAGE>
(c) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
*2.1 Combination Agreement dated as of November 24, 1998 among PRI Automation, Inc., 1325949 Ontario Inc. and
Promis Systems Corporation Ltd.
99.1 Press Release dated March 3, 1999, entitled "PRI Automation Completes Acquisition of Promis Systems
Corporation Ltd."
99.2 Articles of Arrangement of Promis Systems Corporation Ltd., as filed with the Director under the Canada
Business Corporations Act on March 2, 1999
99.3 Voting and Exchange Trust Agreement dated as of March 2, 1999 among PRI, 1325949 Ontario Inc., Promis
Systems Corporation Ltd. and Montreal Trust Company of Canada, as trustee
99.4 Support Agreement dated as of March 2, 1999 among PRI, 1325949 Ontario Inc. and Promis Systems
Corporation Ltd.
</TABLE>
- ------------------------
* Incorporated by reference to the similarly numbered Exhibit to PRI's
Registration Statement on Form S-3, File No 333-69721, as filed on December
24, 1998.
ii
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
<TABLE>
<S> <C><C>
PRI AUTOMATION, INC.
By: /s/ STEPHEN D. ALLISON
------------------------------------
Stephen D. Allison
Date: March 16, 1999 Chief Financial Officer
</TABLE>
iii
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
99.1 Press Release dated March 3, 1999, entitled "PRI Automation Completes Acquisition of Promis Systems
Corporation Ltd."
99.2 Articles of Arrangement of Promis Systems Corporation Ltd., as filed with the Director under the Canada
Business Corporations Act on March 2, 1999
99.3 Voting and Exchange Trust Agreement dated as of March 2, 1999 among PRI, 1325949 Ontario Inc., Promis
Systems Corporation Ltd. and Montreal Trust Company of Canada, as trustee
99.4 Support Agreement dated as of March 2, 1999 among PRI, 1325949 Ontario Inc. and Promis Systems
Corporation Ltd.
</TABLE>
<PAGE>
EXHIBIT 99.1
PRESS RELEASE FOR IMMEDIATE RELEASE
For information, contact:
PRI Automation, Inc.
Buck Howe
978-670-4270, ext. 3024
[email protected]
PRI AUTOMATION COMPLETES ACQUISITION OF
PROMIS SYSTEMS CORPORATION LTD.
BILLERICA, MA--MARCH 3, 1999-- PRI Automation, Inc. (NASDAQ:PRIA), a leader in
semiconductor factory automation, announced today it had completed the
acquisition of Promis Systems Corporation Ltd., a leading developer of
Manufacturing Execution Systems (MES) software solutions for semiconductor and
precision electronics manufacturers.
In connection with the acquisition, which is to be accounted for as a
pooling of interests, Promis Systems will issue 0.1353 exchangeable shares for
each outstanding Promis common share. The exchangeable shares, which will
commence trading on The Toronto Stock Exchange (TSE) on Thursday, March 4, 1999
under the symbol "PRJ", may be exchanged at any time for an equivalent number of
shares of PRI stock. Promis Systems, a Toronto based company, has become a
wholly owned subsidiary of PRI Automation.
"The acquisition of Promis Systems has generated considerable positive
excitement," said Mitch Tyson, president and chief executive officer of PRI
Automation. "We believe our customers and trade analysts will immediately
recognize the potential benefits of this combination. With Promis Systems'
leading products and deep software domain expertise, PRI now has the critical
hardware and software components to provide a complete wafer flow logistics
management solution to optimize the flow of wafers throughout the fab. We
believe by integrating these components into a complete system, PRI can offer
customers a more integrated and optimized solution that will improve the
productivity of their manufacturing environment."
"Promis Systems and PRI Automation have successfully worked together on
numerous projects for years, so combining our two companies is a logical
progression in providing incremental value to our customers as we go forward,"
said Ian McKinnon, president and chief executive officer of Promis Systems.
"Shareholders, employees, and customers will all benefit from this partnership."
Promis Systems will become the core of the PRI Software Division
responsible for all of PRI Automation's software products, including its own
Promis Encore!-Registered Trademark- and PROMIS-Registered Trademark- MES,
TransNet-TM-, PRI's material control software, and the Leverage-TM- suite of
advanced planning and scheduling software products. Ian McKinnon will become
vice president and general manager of PRI's Software Division, based in
Toronto. In his new role, Mr. McKinnon will report directly to Mitch Tyson.
<PAGE>
About PRI Automation
PRI Automation, Inc., with headquarters in Billerica, Massachusetts, is a
leading global supplier of advanced factory automation systems that enhance the
competitiveness of semiconductor manufacturers and OEM equipment suppliers. PRI
provides a tightly integrated and flexible hardware and software solution that
optimizes the flow of wafers throughout the fab. For more information, visit the
PRI Web site at www.pria.com.
Some of the statements made in this release are forward-looking, and
actual results could differ materially from these statements. Such
forward-looking statements include, but are not limited to, statements that
relate to the company's future revenue and operating expenses, management's
plans and objectives for future operations and the effect of any contemplated
consolidation or restructuring of operations on the company's future
profitability; statements about the company's acquisition of Promis Systems; and
statements relating to the continued downturn in the semiconductor industry.
Promis Encore! and PROMIS are registered trademarks of Promis Systems
Corporation Ltd. Leverage is a trademark of Interval Logic Corporation, a
subsidiary of PRI Automation. TransNet is a trademark of PRI Automation, Inc.
<PAGE>
[Logo] Industry Canada Industrie Canada
Canada Business Loi canadienne sur
Corporations Act les societes par actions
I HEREBY CERTIFY THAT THE JE CERTIFIE, PAR LES PRESENTES, QUE LE
ATTACHED IS A TRUE COPY OF THE DOCUMENT CI-JOINT EST UNE COPIE
DOCUMENT MAINTAINED IN THE EXACTE D'UN DOCUMENT CONTENU
RECORDS OF THE DIRECTOR. DANS LES LIVRES TENUS PAR LE
DIRECTEUR.
[Signed]
Deputy Director - Director adjoint Date [Seal]
Canada Business Corporations Act
Mar 02 1999
Loi Canadienns sur
Les Societes par actions
Canada [logo]
<PAGE>
[Logo] Industry Canada Industrie Canada
CERTIFICATE OF ARRANGEMENT CERTIFICAT D'ARRANGEMENT
Canada Business Corporations Act Loi canadienne sur les societes par actions
PROMIS SYSTEMS CORPORATION LTD. 240838-4
- ------------------------------------------------- ----------------------
Name of CBCA corporation(s) involved- Corporation number -
Denomination(s) de la (des) societe Numero de la societe
L.C.S.A concernied(s)
I hereby certify that the arrangement set Je certifie que l'arrangement
out in the attached articles of mentionne dans les clauses
arrangement, involving the above-referenced d'arrangement annexees,
corporation(s), has been effected under concernant la (les)
section 192 of the Canada Business societe(s) susmentionnee(s),
Corporations Act. a pris effet en vertu de
l'article 192 de la Loi
canadienne sur les societes
par actions.
March 2, 1999/le 2 mars 1999
[Signed]
Director - Directeur Date of Arrangement - Date de
l'arrangement
Canada
<PAGE>
<TABLE>
<S> <C> <C> <C>
[Logo] Consumer and Consommation et
Corporate Affairs Canada Affaires commerciales Canada
FORM 14.1 FORMULE 14.1
Canada Business Loi regissant les societes ARTICLES OF ARRANGEMENT CLAUSES D'ARRANGEMENT
Corporations Act par actions de regime federal (SECTION 192) (ARTICLE 192)
</TABLE>
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- -Name of applicant corporation(s) - Denomination de la(des) requerante(s) 2 - Corporation No(s). -
No.(s) de la(des) societe(s)
PROMIS SYSTEMS CORPORATION LTD. 240838 - 4
- ---------------------------------------------------------------------------------------------------------------------------------
- -Name of the corporation(s) the articles of which are amended, if applicable 4 - Corporation No(s). -
Denomination de la (des) societe(s) dont les statuts sont modifies, le cas echeant No.(s) de la(des) societe(s)
PROMIS SYSTEMS CORPORATION LTD. 240838 - 4
- ---------------------------------------------------------------------------------------------------------------------------------
- -Name of the corporation(s) created by amalgamation. If applicable 6 - Corporation No(s). -
Denomination de la(des) societe(s) issue(s) de la (des) fusion(s), le cas echeant No-(s) de la(des) societe(s)
N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------------
- -Name of the dissolved corporation(s), if applicable 8 - Corporation No(s). -
Denomination de la(des) societe(s) dissoute(s), le cas echeant No.(s) de la(des)
societe(s)
N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Name of other bodies corporate involved, if applicable 10-Corporation No(s). or jurisdiction
Denomination des autres personnes morales en cause, of incorporation-No.(s)de la(des)
le cas echeant societe(s)/ou lol sous la regime
de laquelle elle est constituee
PRI AUTOMATION, INC. MASSACHUSETTS
- ---------------------------------------------------------------------------------------------------------------------------------
- -in accordance with the order approving the arrangement Conformement aux termes de l'ordonnance
approuvant l'arrangement
</TABLE>
<TABLE>
<S> <C>
(a) the articles of the above-named corporation(s) are /X/ les statuts de la(des) societe(s) susmentionnee(s)
amended in accordance with the attached plan of arrangement sont modifies en conformite avec le plan
d'arrangement ci-joint;
(b) the following bodies corporate are amalgamated in accordance with / / les personnes morales suivantes sont fusionnees
the attached plan of arrangement conformement au plan d'arrangement ci-joint:
(c) the above-named corporation(s) is(are) liquidated and dissolved / / la(les) societe(s) susmentionnees(s) est(sont)
in accordance with the attached plan of arrangement liquidee(s) et dissoute(s) conformement au plan
d'arrangement ci-joint
(d) the plan of arrangement attached hereto, involving the above-named /x / le plan d'arrangement ci-joint portant sur
body(ies), corporate is hereby effected la(les) personne(s) morale(s) susmentionnee(a)
prend effet
</TABLE>
- -------------------------------------------------------------------------------
Date Signature Title - Titre
1999.03.02 /s/Ian Mckinnon PRESIDENT AND CHIEF EXECUTIVE OFFICER
- -------------------------------------------------------------------------------
FOR DEPARTMENTAL USE ONLY- A L'USAGE
DU MINISTERE SEULEMENT
Field
1999.03.02
-------------------------------------
<PAGE>
PLAN OF ARRANGEMENT
UNDER SECTION 192
OF THE CANADA BUSINESS CORPORATIONS ACT
INVOLVING AND AFFECTING PROMIS SYSTEMS CORPORATION LTD.
AND THE HOLDERS OF ITS COMMON SHARES AND
OPTIONS
ARTICLE 1
INTERPRETATION
Section 1.1 DEFINITIONS. In this Plan of Arrangement unless there is
something in the subject matter or context inconsistent therewith, the following
terms shall have the respective meanings set out below and grammatical
variations of such terms shall have corresponding meanings:
"ARRANGEMENT" means the arrangement under section 192 of the CBCA on
the terms and subject to the conditions set out in this Plan of
Arrangement, subject to any amendments thereto made (i) in accordance
with Section 2.1 of the Combination Agreement, (ii) in accordance with
Section 6.1 hereof or (iii) at the direction of the Court in the Final
Order;
"ARRANGEMENT RESOLUTION" means the special resolution passed by the
holders of the Promis Common Shares and at the Meeting;
"AUTOMATIC REDEMPTION DATE" has the meaning provided in the
Exchangeable Share Provisions;
"AVERAGE CLOSING PRICE" means the average closing price (computed and
rounded to the third decimal point) of shares of PRI Common Stock on
NASDAQ during the 20 trading days ending on the third trading day prior
to the Effective Date;
"BUSINESS DAY" has the meaning provided in the Exchangeable Share
Provisions;
"CBCA " means the Canada Business Corporations Act;
"CLASS X PREFERRED SHARE" means the one authorized Class X Preferred
Share of Promis having the rights, privileges, restrictions and
conditions set out in Appendix A annexed hereto;
"COMBINATION AGREEMENT" means the agreement by and among PRI, Subco and
Promis, dated as of November 24, 1998, as amended and restated from
time to time, providing for, among other things, this Plan of
Arrangement and the Arrangement;
"COURT" means the Ontario Court of Justice (General Division);
"DEPOSITARY" means Montreal Trust Company of Canada at its principal
transfer office in Toronto, Ontario;
"DIRECTOR" means the Director appointed under the CBCA;
"DISSENT PROCEDURES" has the meaning set out in Section 3.1;
"EFFECTIVE DATE" means the date shown on the certificate of arrangement
issued by the Director under the CBCA giving effect to the Arrangement;
"EFFECTIVE TIME" means 12:01 a.m. on the Effective Date;
<PAGE>
2
"EXCHANGE PUT RIGHT" has the meaning provided in Section 5.3;
"EXCHANGE RATIO" means the ratio of exchange of Exchangeable Shares for
Promis Common Shares, as determined under the Combination Agreement,
being 0.1691 Exchangeable Shares for each Promis Common Share, subject
to adjustment as provided therein and herein;
"EXCHANGEABLE SHARE CONSIDERATION" has the meaning provided in the
Exchangeable Share Provisions;
"EXCHANGEABLE SHARE PRICE" has the meaning provided in the Exchangeable
Share Provisions;
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges,
restrictions and conditions attaching to the Exchangeable Shares, which
are set forth in Appendix A hereto;
"EXCHANGEABLE SHARES" means the Exchangeable Shares in the capital of
Promis provided for in this Plan of Arrangement;
"FINAL ORDER" means the final order of the Court approving the
Arrangement;
"LIQUIDATION CALL PURCHASE PRICE" has the meaning provided in Section
5.1;
"LIQUIDATION CALL RIGHT" has the meaning provided in Section 5.1;
"LIQUIDATION DATE" has the meaning provided in the Exchangeable Share
Provisions;
"MEETING" means the special meeting of the shareholders of Promis to be
held to consider this Plan of Arrangement;
"NASDAQ" means The Nasdaq Stock Market, Inc.;
"OPTIONS" means all options to purchase Promis Common Shares
outstanding as at the Effective Date under Promis' Amended and Restated
Stock Option Plan dated September 30, 1998 (the "Promis Option Plan")
and under all private stock option agreements;
"OPTIONHOLDERS" means holders of Options;
"PRI" means PRI Automation, Inc., a corporation organized and existing
under the laws of The Commonwealth of Massachusetts;
"PRI COMMON STOCK" has the meaning provided in the Exchangeable Share
Provisions;
"PROMIS" means Promis Systems Corporation Ltd., a corporation existing
under the CBCA;
"PROMIS COMMON SHARES" means the common shares in the capital of
Promis;
"REDEMPTION CALL PURCHASE PRICE" has the meaning provided in Section
5.2;
"REDEMPTION CALL RIGHT" has the meaning provided in Section 5.2;
"SUBCO" means 1325949 Ontario Inc., a corporation existing under the
BUSINESS CORPORATIONS ACT (Ontario) and a wholly-owned subsidiary of
PRI;
"SUBSIDIARY" has the meaning provided in the Exchangeable Share
Provisions;
<PAGE>
3
"TRANSFER AGENT" means the duly appointed transfer agent for the time
being of the Exchangeable Shares, and if there is more than one such
agent then the principal Canadian agent; and
"VOTING AND EXCHANGE TRUST AGREEMENT" means the agreement so entitled
between PRI, Subco, Promis and the Trustee named therein to be dated as
of the Effective Date and provided for in the Combination Agreement, as
amended from time to time.
"WARRANTS" means the warrants to purchase 100,000 Promis Common Shares
granted by the Company to LSI Logic Corporation pursuant to a warrant
dated May 1, 1996; and
"WARRANTHOLDERS" means holders of Warrants.
Section 1.2 SECTIONS, HEADINGS AND APPENDIXES. The division of this
Plan of Arrangement into sections and the insertion of headings are for
reference purposes only and shall not affect the interpretation of this Plan of
Arrangement. Unless otherwise indicated, any reference in this Plan of
Arrangement to a section or an Appendix refers to the specified section of or
Appendix to this Plan of Arrangement. The Appendixes are incorporated herein and
are part hereof.
Section 1.3 NUMBER, GENDER AND PERSONS. In this Plan of Arrangement,
unless the context otherwise requires, words importing the singular number
include the plural and vice versa, words importing any gender include all
genders and words importing persons include individuals, bodies corporate,
partnerships, associations, trusts, unincorporated organizations, governmental
bodies and other legal or business entities of any kind.
Section 1.4 DATE FOR ANY ACTION. In the event that any date on or by
which any action is required or permitted to be taken hereunder is not a
Business Day, such action shall be required or permitted to be taken on or by
the next succeeding day which is a Business Day.
Section 1.5 CURRENCY. Unless otherwise expressly stated herein, all
references to currency and payments in cash or money in this Plan of Arrangement
are to United States dollars.
Section 1.6 STATUTORY REFERENCES. Any reference in this Plan of
Arrangement to a statute includes such statute as amended, consolidated or
re-enacted from time to time, all regulations made thereunder, all amendments to
such regulations from time to time, and any statute or regulation which
supersedes such statute or regulations.
ARTICLE 2
ARRANGEMENT
Section 2.1 ARRANGEMENT. At the Effective Time on the Effective Date,
the following reorganization of capital and other transactions shall occur and
shall be deemed to occur in the following order without any further act or
formality and shall become effective at, and be binding at and after, the
Effective Time on (i) PRI and Subco; (ii) Promis; (iii) all holders of Promis
Common Shares; (iv) all holders of Exchangeable Shares; and (v) all holders of
Options and Warrants:
(a) The Articles of Incorporation of Promis shall be amended to
create and authorize an unlimited number of Exchangeable
Shares and one Class X Preferred Share.
(b) Promis shall issue to Subco one Class X Preferred Share in
consideration for the payment by Subco to Promis of an amount
equal to the fair market value, as determined by the board of
directors of Promis, of one Promis Common Share. No
certificate shall be issued in respect of the Class X
Preferred Share.
<PAGE>
4
(c) Each Promis Common Share (other than Promis Common Shares
held by holders who have exercised their rights of dissent in
accordance with Section 3.1 hereof and who are ultimately
entitled to be paid the fair value for such shares and other
than Promis Common Shares held by PRI or any Subsidiary
thereof) will be exchanged at the Exchange Ratio for a number
of Exchangeable Shares, and each such holder thereof will
receive a whole number of Exchangeable Shares resulting
therefrom. In lieu of fractional Exchangeable Shares, each
such holder who otherwise would be entitled to receive a
fraction of an Exchangeable Share on the exchange shall be
paid by Promis an amount determined as set forth in Section
4.3.
(d) Upon the exchange referred to in subsection (c) above, each
such holder of a Promis Common Share shall cease to be such a
holder, shall have his name removed from the register of
holders of Promis Common Shares and shall become a holder of
the number of fully paid Exchangeable Shares to which he is
entitled as a result of the exchange referred to in subsection
(c), and such holder's name shall be added to the register of
holders of Exchangeable Shares accordingly.
(e) The aggregate stated capital of the Exchangeable Shares will
be equal to the aggregate stated capital immediately prior to
the Effective Date of the Promis Common Shares which are
exchanged pursuant to such subsection 2.1(c) above, thereby
excluding the stated capital attributable to the fractional
shares for which payment is made as contemplated in subsection
(c) above.
(f) The Articles of Incorporation of Promis shall be amended to
reduce the number of authorized Promis Common Shares to one
and the rights, privileges, restrictions and conditions
attaching to the Promis Common Share shall be changed and
restated as set forth in Appendix A.
(g) The one outstanding Class X Preferred Share will be exchanged
for one fully-paid and non-assessable Promis Common Share and
the holder thereof shall cease to be a holder of the Class X
Preferred Share, shall have its name removed from the register
of holders of the Class X Preferred Share and shall become a
holder of the Promis Common Share to which it is entitled as a
result of the exchange referred to in this subsection (g), and
such holder's name shall be added to the register as holder of
the Promis Common Share accordingly.
(h) The stated capital of the one Promis Common Share shall be
equal to the stated capital of the one Class X Preferred Share
immediately prior to the exchange contemplated in subsection
(g).
(i) The Articles of Incorporation of Promis shall be amended to
delete the Class X Preferred Share and the authorized but
unissued Class of Preferred Shares in the capital of Promis
from the authorized share capital so that, after giving effect
to the foregoing provisions of this section 2.1, the
authorized capital of Promis shall consist of an unlimited
number of Exchangeable Shares having the rights, privileges,
restrictions and conditions set forth in Appendix A hereto and
one Common Share having the rights, privileges, restrictions
and conditions set forth in Appendix A hereto.
(j) Each of the then outstanding Options and Warrants will,
without any further action on the part of any Optionholder or
Warrantholder, be converted into an option or warrant, as the
case may be, to purchase the number of shares of PRI Common
Stock equal to the number determined by multiplying the number
of Promis Common Shares subject to such Option or Warrant at
the Effective Time by the Exchange Ratio, at an exercise price
per share of PRI Common Stock equal to the exercise price per
share of such Option or Warrant immediately prior to the
Effective Time divided by the Exchange Ratio and converted
from Canadian dollars to U.S. dollars at the noon spot
exchange rate announced by the Bank of Canada on the third
Business Day immediately preceding the Effective Date. If the
foregoing calculation results in an exchanged Option or
Warrant being exercisable for a fraction of a
<PAGE>
5
share of PRI Common Stock, then the number of shares of PRI
Common Stock subject to such Option or Warrant will be rounded
down to the nearest whole number of shares, and the exercise
price per whole share of PRI Common Stock will be as
determined above. The Promis Options or Warrants as so
converted will (without further action on the part of the
Optionholders or Warrants as the case may be) be further
modified as necessary to effect such conversion; provided,
however, the term, exercisability, vesting schedule, and all
other terms and conditions of the Options or Warrants will
otherwise be unchanged by the provisions of this paragraph (j)
and shall operate in accordance with their terms. The
obligations of Promis under the Promis Options or Warrants as
so converted shall be assumed by PRI and PRI shall be
substituted for Promis as the sponsor of the Promis Option
Plan.
(k) All rights outstanding under the Shareholders Rights Plan
Agreement between Promis and Montreal Trust Company of Canada
dated as of January 27, 1997 (the "Rights Plan") immediately
prior to the Effective Date shall, at the Effective Time, be
redeemed and cancelled, all on the terms and with the effects
and results contained in the Rights Plan, and the Rights Plan
shall be terminated.
ARTICLE 3
RIGHTS OF DISSENT
Section 3.1 RIGHTS OF DISSENT. Holders of Promis Common Shares may
exercise rights of dissent with respect to such shares pursuant to and in the
manner set forth in section 190 of the CBCA and this Section 3.1 (the "Dissent
Procedures") in connection with the Arrangement, provided that, notwithstanding
subsection 190(5) of the CBCA, the written objection to the Arrangement
Resolution referred to in subsection 190(5) of the CBCA must be received by
Promis not later than 5:00 p.m. (Toronto time) on the Business Day preceding the
Meeting. Holders of Promis Common Shares who duly exercise such rights of
dissent and who:
(a) are ultimately entitled to be paid fair value for their Promis
Common Shares shall be deemed to have transferred such Promis
Common Shares to Promis for cancellation on the Effective Date
at the Effective Time; or
(b) are ultimately not entitled, for any reason, to be paid the
fair value for their Promis Common Shares shall be deemed to
have participated in the Arrangement on the same basis as any
non dissenting holder of Promis Common Shares,
but in no case shall Promis or any other person be required to recognize such
holders as holders of Promis Common Shares on and after the Effective Time, and
the names of such persons shall be deleted from the registers of holders of
Promis Common Shares as at the Effective Time.
ARTICLE 4
CERTIFICATES AND FRACTIONAL SHARES
Section 4.1 ISSUANCE OF CERTIFICATES REPRESENTING EXCHANGEABLE SHARES.
At or promptly after the Effective Time, Promis shall deposit with the
Depositary, for the benefit of the holders of Promis Common Shares exchanged
pursuant to subsection 2.1(c), certificates representing the Exchangeable Shares
issued pursuant to subsection 2.1(c) upon the exchange. Upon surrender to the
Depositary of a certificate which immediately prior to the Effective Time
represented outstanding Promis Common Shares together with such other documents
and instruments as would have been required to effect the transfer of the shares
formerly represented by such certificate under the CBCA and the by-laws of
Promis and such additional documents and instruments as the Depositary may
reasonably require, the holder of such surrendered certificate shall be entitled
to receive in exchange therefor, and the Depositary shall deliver to such
holder, a certificate representing that number (rounded down to the nearest
whole number) of Exchangeable Shares which such holder has the right to receive
(together with any dividends or distributions with respect thereto pursuant to
<PAGE>
6
Section 4.2 and any cash in lieu of fractional Exchangeable Shares pursuant to
Section 4.3), and the certificate so surrendered shall forthwith be cancelled.
In the event of a transfer of ownership of Promis Common Shares which is not
registered in the transfer records of Promis, a certificate representing the
proper number of Exchangeable Shares may be issued to a transferee if the
certificate representing such Promis Common Shares is presented to the
Depositary, accompanied by all documents required to evidence and effect such
transfer. Until surrendered as contemplated by this Section 4.1, each
certificate which immediately prior to the Effective Time represented
outstanding Promis Common Shares, shall be deemed at any time after the
Effective Time, but subject to Section 4.5, to represent only the right to
receive upon such surrender (a) the certificate representing Exchangeable Shares
as contemplated by this Section 4.1, (b) a cash payment in lieu of any
fractional Exchangeable Shares as contemplated by Section 4.3 and (c) any
dividends or distributions with a record date after the Effective Time
theretofore paid or payable with respect to Exchangeable Shares as contemplated
by Section 4.2.
Section 4.2 DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES.
No dividends or other distributions declared or made after the Effective Time
with respect to Exchangeable Shares with a record date after the Effective Time
shall be paid to the holder of any formerly outstanding Promis Common Shares
which were exchanged pursuant to Section 2.1, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 4.3,
unless and until the certificate representing such shares shall be surrendered
in accordance with Section 4.1. Subject to applicable law and to Section 4.5, at
the time of such surrender of any such certificate (or, in the case of clause
(c) below, at the appropriate payment date), there shall be paid to the holder
of the Exchangeable Shares resulting from exchange, in all cases without
interest, (a) the amount of any cash payable in lieu of a fractional
Exchangeable Share to which such holder is entitled pursuant to Section 4.3, (b)
the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such Exchangeable Shares, and
(c) the amount of dividends or other distributions with a record date after the
Effective Time but prior to surrender and a payment date subsequent to surrender
payable with respect to such Exchangeable Shares.
Section 4.3 NO FRACTIONAL SHARES. No certificates or scrip representing
fractional Exchangeable Shares shall be issued upon the surrender for exchange
of certificates pursuant to Section 4.1, and such fractional interests shall not
entitle the owner thereof to vote or to possess or exercise any rights as a
security holder of Promis. In lieu of any such fractional interests, each person
entitled thereto will receive an amount of cash (rounded to the nearest whole
cent), without interest, equal to the product of (a) such fractional interest,
multiplied by (b) the Average Closing Price, such amount to be provided to the
Depositary by Promis upon request.
Section 4.4 LOST CERTIFICATES. If any certificate which immediately
prior to the Effective Time represented outstanding Promis Common Shares which
were exchanged pursuant to Section 2.1 has been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such certificate
to be lost, stolen or destroyed, the Depositary will issue in exchange for such
lost, stolen or destroyed certificate, certificates representing Exchangeable
Shares (and any dividends or distributions with respect thereto and any cash
pursuant to Section 4.3) deliverable in respect thereof as determined in
accordance with Section 2.1. When authorizing such payment in exchange for any
lost, stolen or destroyed certificate, the person to whom certificates
representing Exchangeable Shares are to be issued shall, as a condition
precedent to the issuance thereof, give a bond satisfactory to Promis, PRI,
Subco and the Transfer Agent, as the case may be, in such sum as Promis may
direct, or otherwise indemnify Promis, PRI, Subco and the Transfer Agent in a
manner satisfactory to Promis, PRI, Subco and the Transfer Agent against any
claim that may be made against Promis, PRI, Subco or the Transfer Agent with
respect to the certificate alleged to have been lost, stolen or destroyed.
Section 4.5 EXTINGUISHMENT OF RIGHTS. Any certificate which immediately
prior to the Effective Time represented outstanding Promis Common Shares which
were exchanged pursuant to Section 2.1 and has not been deposited, with all
other instruments required by Section 4.1, on or prior to the tenth anniversary
of the Effective Date shall cease to represent a claim or interest of any kind
or nature as a shareholder of Promis. On such date, the Exchangeable Shares to
which the former registered holder of the certificate referred to in the
preceding sentence was ultimately entitled shall be deemed to have been
surrendered to Promis, together with all entitlements to dividends,
distributions and interest thereon held for such former registered holder, for
no
<PAGE>
7
consideration and shall thereupon be cancelled and the name of the former
registered holder shall be removed from the register of holders of such shares.
Section 4.6 WITHHOLDING RIGHTS. Promis, Subco and the Depositary shall
be entitled to deduct and withhold from any dividend or consideration otherwise
payable to any holder of Promis Common Shares or Exchangeable Shares such
amounts as Promis, Subco or the Depositary is required or permitted to deduct
and withhold with respect to such payment under the Income Tax Act (Canada), the
United States Internal Revenue Code of 1986 or any provision of provincial,
state, local or foreign tax law, in each case, as amended. To the extent that
amounts are so withheld, such withheld amounts shall be treated for all purposes
hereof as having been paid to the holder of the shares in respect of which such
deduction and withholding was made, provided that such withheld amounts are
actually remitted to the appropriate taxing authority. To the extent that the
amount so required or permitted to be deducted or withheld from any payment to a
holder exceeds the cash portion of the consideration otherwise payable to the
holder, Promis, Subco and the Depositary are hereby authorized to sell or
otherwise dispose of such portion of the consideration as is necessary to
provide sufficient funds to Promis, Subco or the Depositary, as the case may be,
to enable it to comply with such deduction or withholding requirement and
Promis, Subco or the Depositary shall notify the holder thereof and remit any
unapplied balance of the net proceeds of such sale.
ARTICLE 5
CERTAIN RIGHTS AND OBLIGATIONS OF
SUBCO TO ACQUIRE EXCHANGEABLE SHARES
Section 5.1 SUBCO LIQUIDATION CALL RIGHT.
(a) Subco shall have the overriding right (the "LIQUIDATION
CALL RIGHT"), in the event of and notwithstanding the proposed
liquidation, dissolution or winding-up of Promis as referred
to in Article 5 of the Exchangeable Share Provisions, to
purchase from all but not less than all of the holders (other
than PRI and any Subsidiary thereof) of Exchangeable Shares on
the Liquidation Date all but not less than all of the
Exchangeable Shares held by such holders on payment by Subco
to each holder of the Exchangeable Share Price applicable on
the last Business Day prior to the Liquidation Date (the
"LIQUIDATION CALL PURCHASE PRICE"). In the event of the
exercise of the Liquidation Call Right by Subco, each holder
shall be obligated to sell all the Exchangeable Shares held by
the holder to Subco on the Liquidation Date on payment by
Subco to the holder of the Liquidation Call Purchase Price for
each such share.
(b) To exercise the Liquidation Call Right, Subco must notify
the Transfer Agent in writing, as agent for the holders of
Exchangeable Shares, and Promis of Subco's intention to
exercise such right at least 55 days before the Liquidation
Date in the case of a voluntary liquidation, dissolution or
winding-up of Promis and at least five Business Days before
the Liquidation Date in the case of an involuntary
liquidation, dissolution or winding-up of Promis. Subco shall
also notify the Transfer Agent accordingly if it does not
intend to exercise the Liquidation Call Right. The Transfer
Agent will notify the holders of Exchangeable Shares as to
whether or not Subco has exercised the Liquidation Call Right
forthwith after the expiry of the date by which the same may
be exercised by Subco. If Subco exercises the Liquidation Call
Right, on the Liquidation Date Subco will purchase and the
holders will sell all of the Exchangeable Shares then
outstanding for a price per share equal to the Liquidation
Call Purchase Price.
(c) For the purposes of completing the purchase of the
Exchangeable Shares pursuant to the Liquidation Call Right,
Subco shall deposit with the Transfer Agent, on or before the
Liquidation Date, the Exchangeable Share Consideration
representing the total Liquidation Call Purchase Price.
Provided that such Exchangeable Share Consideration has been
so deposited with the Transfer Agent, on and after the
Liquidation Date the right of each holder of Exchangeable
Shares will be limited to receiving such holder's
proportionate part of the total Liquidation Call Purchase
Price payable by Subco without interest upon presentation
<PAGE>
8
and surrender by the holder of certificates representing the
Exchangeable Shares held by such holder and the holder shall
on and after the Liquidation Date be considered and deemed for
all purposes to be the holder of the PRI Common Stock
delivered to it. Upon surrender to the Transfer Agent of a
certificate or certificates representing Exchangeable Shares,
together with such other documents and instruments as may be
required to effect a transfer of Exchangeable Shares under the
CBCA and the by-laws of Promis and such additional documents
and instruments as the Transfer Agent may reasonably require,
the holder of such surrendered certificate or certificates
shall be entitled to receive in exchange therefor, and the
Transfer Agent on behalf of Subco shall deliver to such
holder, the Exchangeable Share Consideration to which the
holder is entitled. If Subco does not exercise the Liquidation
Call Right in the manner described above, on the Liquidation
Date the holders of the Exchangeable Shares will be entitled
to receive in exchange therefor the liquidation price
otherwise payable by Promis in connection with the
liquidation, dissolution or winding-up of Promis pursuant to
Article 5 of the Exchangeable Share Provisions.
Notwithstanding the foregoing, until such Exchangeable Share
Consideration is delivered to the holder, the holder shall be
deemed to still be a holder of Exchangeable Shares for
purposes of all voting rights with respect thereto under the
Voting and Exchange Trust Agreement.
Section 5.2 SUBCO REDEMPTION CALL RIGHT.
(a) Subco shall have the overriding right (the "REDEMPTION
CALL RIGHT"), notwithstanding the proposed redemption of the
Exchangeable Shares by Promis pursuant to Article 7 of the
Exchangeable Share Provisions, to purchase from all but not
less than all of the holders (other than PRI or any Subsidiary
thereof) of Exchangeable Shares on the Automatic Redemption
Date all but not less than all of the Exchangeable Shares held
by each such holder on payment by Subco to the holder of the
Exchangeable Share Price applicable on the last Business Day
prior to the Automatic Redemption Date (the "REDEMPTION CALL
PURCHASE PRICE"). In the event of the exercise of the
Redemption Call Right by Subco, each holder shall be obligated
to sell all the Exchangeable Shares held by the holder to
Subco on the Automatic Redemption Date on payment by Subco to
the holder of the Redemption Call Purchase Price for each such
share.
(b) To exercise the Redemption Call Right, Subco must notify the
Transfer Agent in writing, as agent for the holders of
Exchangeable Shares, and Promis of Subco's intention to
exercise such right not later than the date by which Promis is
required to give notice of the Automatic Redemption Date. If
Subco exercises the Redemption Call Right, on the Automatic
Redemption Date Subco will purchase and the holders will sell
all of the Exchangeable Shares then outstanding for a price
per share equal to the Redemption Call Purchase Price.
(c) For the purposes of completing the purchase of the
Exchangeable Shares pursuant to the Redemption Call Right,
Subco shall deposit with the Transfer Agent, on or before the
Automatic Redemption Date, the Exchangeable Share
Consideration representing the total Redemption Call Purchase
Price. Provided that such Exchangeable Share Consideration has
been so deposited with the Transfer Agent, on and after the
Automatic Redemption Date the rights of each holder of
Exchangeable Shares will be limited to receiving such holder's
proportionate part of the total Redemption Call Purchase Price
payable by Subco upon presentation and surrender by the holder
of certificates representing the Exchangeable Shares held by
such holder and the holder shall on and after the Automatic
Redemption Date be considered and deemed for all purposes to
be the holder of the PRI Common Stock delivered to such
holder. Upon surrender to the Transfer Agent of a certificate
or certificates representing Exchangeable Shares, together
with such other documents and instruments as may be required
to effect a transfer of Exchangeable Shares under the CBCA and
the by-laws of Promis and such additional documents and
instruments as the Transfer Agent may reasonably require, the
holder of such surrendered certificate or certificates shall
be entitled to receive in exchange therefor, and the Transfer
Agent on behalf of Subco shall deliver to such holder, the
Exchangeable Share Consideration to which the holder is
entitled. If Subco
<PAGE>
9
does not exercise the Redemption Call Right in the manner
described above, on the Automatic Redemption Date the holders
of the Exchangeable Shares will be entitled to receive in
exchange therefor the redemption price otherwise payable by
Promis in connection with the redemption of the Exchangeable
Shares pursuant to Article 7 of the Exchangeable Share
Provisions. Notwithstanding the foregoing, until such
Exchangeable Share Consideration is delivered to the holder,
the holder shall be deemed to still be a holder of
Exchangeable Shares for purposes of all voting rights with
respect thereto under the Voting and Exchange Trust Agreement.
Section 5.3 EXCHANGE PUT RIGHT. Upon and subject to the terms and
conditions contained in the Exchangeable Share Provisions and the Voting and
Exchange Trust Agreement:
(a) a holder of Exchangeable Shares shall have the right (the
"EXCHANGE PUT RIGHT") at any time to require Subco to purchase
all or any part of the Exchangeable Shares of the holder; and
(b) upon the exercise by the holder of the Exchange Put Right, the
holder shall be required to sell to Subco, and Subco shall be
required to purchase from the holder, no later than the time
or times prescribed therefor herein or in the Exchangeable
Share Provisions or the Voting and Exchange Trust Agreement,
that number of Exchangeable Shares in respect of which the
Exchange Put Right is exercised, in consideration of the
payment by Subco of the Exchangeable Share Price applicable
thereto and delivery by or on behalf of Subco of the
Exchangeable Share Consideration representing the total
applicable Exchangeable Share Price.
ARTICLE 6
AMENDMENT
Section 6.1 PLAN OF ARRANGEMENT AMENDMENT. Promis reserves the right to
amend, modify and/or supplement this Plan of Arrangement at any time and from
time to time provided that any such amendment, modification or supplement must
be contained in a written document that is (a) agreed to by Subco and PRI, (b)
filed with the Court and, if made following the Meeting, approved by the Court
and (c) communicated to holders of Promis Common Shares in the manner required
by the Court (if so required).
Any amendment, modification or supplement to this Plan of Arrangement
may be proposed by Promis at any time prior to or at the Meeting (provided that
PRI and Subco shall have consented thereto) with or without any other prior
notice or communication, and if so proposed and accepted by the persons voting
at the Meeting (other than as may be required under the Court's interim order),
shall become part of this Plan of Arrangement for all purposes.
Any amendment, modification or supplement to this Plan of Arrangement
which is approved by the Court following the Meeting shall be effective only (a)
if it is consented to by Promis, (b) if it is consented to by PRI and Subco and
(c) if required by the Court or applicable law, it is consented to by the
holders of the Promis Common Shares or the Exchangeable Shares as the case may
be.
<PAGE>
APPENDIX A TO THE PLAN
OF ARRANGEMENT OF PROMIS
PROVISIONS ATTACHING TO THE CLASS X PREFERRED SHARE
The Class X Preferred Share in the capital of the Corporation shall
have attached thereto the following rights, privileges, restrictions and
conditions:
DIVIDENDS
Subject to the prior rights of the holders of any shares ranking senior
to the Class X Preferred Share with respect to priority in the payment of
dividends, the holder of Class X Preferred Share shall be entitled to receive
dividends and the Corporation shall pay dividends thereon, as and when declared
by the board of directors of the Corporation as cumulative dividends in the
amount of $1.00 per share per annum payable annually on December 31 in each year
in arrears. Such dividends shall accrue from the date of issue to and including
the date to which the computation of dividends is to be made. A cheque for the
amount of the dividend less any required deduction shall be mailed by first
class mail to the address of the registered holder thereof. Notwithstanding the
foregoing, no dividend shall be payable if the Class X Share is cancelled on the
same day it is issued.
DISSOLUTION
In the event of the liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or any other distribution of
assets of the Corporation among its shareholders for the purpose of winding-up
its affairs, subject to the prior rights of the holders of any shares ranking
senior to the Class X Preferred Share with respect to priority in the
distribution of assets upon liquidation, dissolution or winding-up, the holder
of the Class X Preferred Share shall be entitled to receive an amount equal to
the stated capital in respect of the Class X Preferred Share and dividends
remaining unpaid, including all cumulative dividends, whether or not declared.
After payment to the holder of the Class X Preferred Share of such amounts, such
holder shall not be entitled to share in any further distribution of the assets
of the Corporation.
VOTING RIGHTS
Except where specifically provided by the Act, the holder of the Class
X Preferred Share shall not be entitled to receive notice of or to attend
meetings of the shareholders of the Corporation and shall not be entitled to
vote at any meeting of shareholders of the Corporation.
PROVISIONS ATTACHING TO EXCHANGEABLE SHARES
The Exchangeable Shares in the capital of the Corporation shall have
the following rights, privileges, restrictions and conditions:
ARTICLE 1
INTERPRETATION
For the purposes of these rights, privileges, restrictions and
conditions:
1.1 "ACT" means the CANADA BUSINESS CORPORATIONS ACT, as amended,
consolidated or reenacted from time to time.
<PAGE>
A2
"AGGREGATE EQUIVALENT VOTE AMOUNT" means, with respect to any matter,
proposition or question on which holders of PRI Common Stock are entitled to
vote, consent or otherwise act, the product of (i) the number of Exchangeable
Shares then issued and outstanding and held by holders other than PRI and its
Subsidiaries multiplied by (ii) the number of votes to which a holder of one
share of PRI Common Stock is entitled with respect to such matter, proposition
or question.
"AUTOMATIC REDEMPTION DATE" means the date for the automatic redemption
by the Corporation of Exchangeable Shares pursuant to Article 7 of these share
provisions, which date shall be the first to occur of (a) the seventh
anniversary of the Effective Date of the Arrangement, (b) the date selected by
the Promis Board of Directors at a time when less than 15% of the Exchangeable
Shares issuable on the Effective Date (other than Exchangeable Shares held by
PRI and its Subsidiaries and as such number of shares may be adjusted as deemed
appropriate by the Board of Directors to give effect to any subdivision or
consolidation of or stock dividend on the Exchangeable Shares, any issuance or
distribution of rights to acquire Exchangeable Shares or securities exchangeable
for or convertible into or carrying rights to acquire Exchangeable Shares, any
issue or distribution of other securities or rights or evidences of indebtedness
or assets, or any other capital reorganization or other transaction involving or
affecting the Exchangeable Shares) are outstanding, (c) the Business Day prior
to the record date for any meeting or vote of the shareholders of the
Corporation to consider any matter on which the holders of Exchangeable Shares
would be entitled to vote as shareholders of the Corporation, but excluding any
meeting or vote as described in clause (d) below or (d) the Business Day
following the day on which the holders of Exchangeable Shares fail to take the
necessary action at a meeting or other vote of holders of Exchangeable Shares,
if and to the extent such action is required, to approve or disapprove, as
applicable, any change to, or in the rights of the holders of, Exchangeable
Shares, if the approval or disapproval, as applicable, of such change would be
required to maintain the economic and legal equivalence of the Exchangeable
Shares and the PRI Common Stock, or (e) a PRI Control Transaction or a Promis
Control Transaction occurs, in which case, provided the Board of Directors
determines, in good faith and in its sole discretion, that it is not reasonably
practicable in the circumstances of such PRI Control Transaction or Promis
Control Transaction to substantially replicate the terms and conditions of the
Exchangeable Shares in connection with such PRI Control Transaction or Promis
Control Transaction and that the redemption of all but not less than all of the
outstanding Exchangeable Shares is necessary to enable the completion of such
PRI Control Transaction or Promis Control Transaction in accordance with its
terms, the Board of Directors may accelerate such redemption date to such date
prior to the seventh anniversary of the Effective Date of the Arrangement as
they may determine, upon such number of days' prior written notice to the
registered holders of the Exchangeable Shares as the Board of Directors may
determine to be reasonably practicable in such circumstances.
"BOARD OF DIRECTORS" means the Board of Directors of the Corporation
and any committee thereof acting within its authority.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
when banks are not open for business in one or more Toronto, Ontario and Boston,
Massachusetts.
"CANADIAN DOLLAR EQUIVALENT" means in respect of an amount expressed in
a foreign currency (the "Foreign Currency Amount") at any date the product
obtained by multiplying:
(a) the Foreign Currency Amount by,
(b) the noon spot exchange rate on such date for such foreign
currency expressed in Canadian dollars as reported by the Bank
of Canada or, in the event such spot exchange rate is not
available, such spot exchange rate on such date for such
foreign currency expressed in Canadian dollars as may be
deemed by the Board of Directors to be appropriate for such
purpose.
"CLASS X PREFERRED SHARE" means the Class X Preferred Share in the
capital of the Corporation.
"COMMON SHARES" means the common shares in the capital of the
Corporation.
<PAGE>
A3
"CORPORATION" means Promis Systems Corporation Ltd., a corporation
under the laws of Canada and includes any successor corporation.
"CURRENT MARKET PRICE" means, in respect of a share of PRI Common Stock
on any date, the average of the closing prices of PRI Common Stock during the
period of 20 consecutive trading days ending not more than five trading days
before such date on NASDAQ, or, if PRI Common Stock is not then traded on
NASDAQ, on such other principal U.S. Stock exchange or automated quotation
system on which the PRI Common Stock is listed or quoted, as the case may be, as
may be selected by the Board of Directors for such purpose; provided, however,
that if in the opinion of the Board of Directors the public distribution or
trading activity of PRI Common Stock during such period does not create a market
which reflects the fair market value of a share of PRI Common Stock, then the
Current Market Price of a share of PRI Common Stock shall be determined by the
Board of Directors based upon the advice of such qualified independent financial
advisors as the Board of Directors may deem to be appropriate, and provided
further that any such selection, opinion or determination by the Board of
Directors shall be conclusive and binding.
"EXCHANGE PUT DATE" has the meaning provided in Section 8.2.
"EXCHANGE PUT RIGHT" has the meaning provided in Section 8.1(a).
"EXCHANGEABLE SHARE CONSIDERATION" means, for any acquisition of or
redemption of or distribution of assets of the Corporation in respect of or
purchase pursuant to the Exchange Put Right of Exchangeable Shares pursuant to
these share provisions, the Plan of Arrangement, the Support Agreement or the
Voting and Exchange Trust Agreement:
(a) certificates representing the aggregate number of shares of
PRI Common Stock deliverable in connection with such action;
(b) a cheque or cheques payable at par at any branch of the
bankers of the payor in the amount of all declared and unpaid
and undeclared but payable cash dividends deliverable in
connection with such action; and
(c) such stock or property constituting any declared and unpaid
non-cash dividends deliverable in connection with such action;
provided that (i) that part of the consideration which is the Current Market
Price of a share of PRI Common Stock shall be fully paid and satisfied by the
delivery of one share of PRI Common Stock, (ii) that part of the consideration
which represents non-cash dividends remaining unpaid shall be fully paid and
satisfied by delivery of such non-cash items, (iii) any such stock shall be duly
issued as fully paid and non-assessable and any such property shall be delivered
free and clear of any lien, claim, encumbrance, security interest or adverse
claim or interest and (iv) such consideration shall be paid less any tax
required to be deducted or withheld therefrom and without interest.
"EXCHANGEABLE SHARE PRICE" means, for each Exchangeable Share, an
amount equal to the aggregate of:
(a) the Current Market Price of a share of PRI Common Stock; plus
(b) an additional amount equal to the full amount of all cash
dividends declared and unpaid on such Exchangeable Share; plus
(c) an additional amount equal to all dividends declared on PRI
Common Stock which have not been declared on Exchangeable
Shares in accordance herewith; plus
(d) an additional amount representing non-cash dividends declared
and unpaid on such Exchangeable Share.
<PAGE>
A4
"EXCHANGEABLE SHARES" means the Exchangeable Shares of the Corporation
having the rights, privileges, restrictions and conditions set forth herein.
"LIQUIDATION AMOUNT" has the meaning provided in Section 5.1.
"LIQUIDATION CALL RIGHT" has the meaning provided in the Plan of
Arrangement.
"LIQUIDATION DATE" has the meaning provided in Section 5.1.
"NASDAQ" means The Nasdaq Stock Market, Inc.
"PRI" means PRI Automation, Inc., a corporation organized and existing
under the laws of the Commonwealth of Massachusetts and includes any successor
corporation.
"PRI COMMON STOCK" means the shares of common stock of PRI, with a par
value of U.S. $0.01 per share, having voting rights of one vote per share, and
any other securities resulting from the application of section 2.7 of the
Support Agreement.
"PRI CONTROL TRANSACTION" means any merger, amalgamation, tender offer,
material sale or capital distribution of shares or assets or rights or interests
therein or any similar transaction involving PRI, or any proposal to do so.
"PRI DIVIDEND DECLARATION DATE" means the date on which the board of
directors of PRI declares any dividend on the PRI Common Stock.
"PRI SPECIAL SHARE" means the one share of Special Voting Stock of PRI
with a par value of U.S. $0.01 and having voting rights at meetings of holders
of PRI Common Stock equal to the Aggregate Equivalent Voting Amount.
"PLAN OF ARRANGEMENT" means the plan of arrangement involving and
affecting the Corporation and the holders of its Common Shares, options and
shareholder rights under section 192 of the Act, to which plan of arrangement
these share provisions are an appendix.
"PROMIS CONTROL TRANSACTION" means any sale of a majority of the
outstanding voting shares of the Corporation by Subco, PRI or any affiliate of
PRI to an arm's length third party, or any proposal to do so.
"PURCHASE PRICE" has the meaning provided in Section 6.3.
"REDEMPTION CALL PURCHASE PRICE" has the meaning provided in the Plan
of Arrangement.
"REDEMPTION CALL RIGHT" has the meaning provided in the Plan of
Arrangement.
"REDEMPTION PRICE" has the meaning provided in Section 7.1.
"RETRACTED SHARES" has the meaning provided in subsection 6.1(i).
"RETRACTION CALL RIGHT" has the meaning provided in subsection
6.1(iii).
"RETRACTION DATE" has the meaning provided in subsection 6.1(ii).
"RETRACTION PRICE" has the meaning provided in Section 6.1.
"RETRACTION REQUEST" has the meaning provided in Section 6.1.
"SUBCO CALL NOTICE" has the meaning provided in Section 6.3.
<PAGE>
A5
"SUBSIDIARY", in relation to any person, means any body corporate,
partnership, joint venture, association or other entity of which more than 50%
of the total voting power of shares of stock or units of ownership or beneficial
interest entitled to vote in the election of directors (or members of a
comparable governing body) is owned or controlled, directly or indirectly, by
such person.
"SUPPORT AGREEMENT" means the Support Agreement between PRI, Subco and
the Corporation made as of [EFFECTIVE DATE], 1999.
"TRANSFER AGENT" means the duly appointed transfer agent for the time
being of the Exchangeable Shares, and if there is more than one such agent then
the principal Canadian agent.
"TRUSTEE" means the Trustee appointed under the Voting and Exchange
Trust Agreement, and any successor trustee.
"VOTING AND EXCHANGE TRUST AGREEMENT" means the Voting and Exchange
Trust Agreement between the Corporation, PRI, Subco and the Trustee made as of
[EFFECTIVE DATE], 1999.
ARTICLE 2
RANKING OF EXCHANGEABLE SHARES
2.1 The Exchangeable Shares shall rank junior to the Class X Preferred
Share, and shall be entitled to a preference over the Common Shares and any
other shares ranking junior to the Exchangeable Shares, with respect to the
payment of dividends and the distribution of assets in the event of the
liquidation, dissolution or winding-up of the Corporation, whether voluntary or
involuntary, or any other distribution of the assets of the Corporation among
its shareholders for the purpose of winding-up its affairs.
ARTICLE 3
3.1 A holder of an Exchangeable Share shall be entitled to receive and
the Board of Directors shall, subject to applicable law, on each PRI Dividend
Declaration Date, declare a dividend on each Exchangeable Share (a) in the case
of a cash dividend declared on the PRI Common Stock, in an amount in cash for
each Exchangeable Share in U.S. dollars, or the Canadian Dollar Equivalent
thereof on the PRI Dividend Declaration Date, in each case, corresponding to the
cash dividend declared on each share of PRI Common Stock or (b) in the case of a
stock dividend declared on the PRI Common Stock to be paid in PRI Common Stock,
in such number of Exchangeable Shares for each Exchangeable Share as is equal to
the number of shares of PRI Common Stock to be paid on each share of PRI Common
Stock or (c) in the case of a dividend declared on the PRI Common Stock in
property other than cash or PRI Common Stock, in such type and amount of
property for each Exchangeable Share as is the same as the type and amount of
property declared as a dividend on each share of PRI Common Stock. Such
dividends shall be paid out of money, assets or property of the Corporation
properly applicable to the payment of dividends, or out of authorized but
unissued shares of the Corporation.
3.2 Cheques of the Corporation payable at par at any branch of the
bankers of the Corporation shall be issued in respect of any cash dividends
contemplated by subsection 3.1(a) hereof and the sending of such a cheque to
each holder of an Exchangeable Share (less any tax required to be deducted and
withheld from such dividends paid or credited by the Corporation) shall satisfy
the cash dividends represented thereby unless the cheque is not paid on
presentation. Certificates registered in the name of the registered holder of
Exchangeable Shares shall be issued or transferred in respect of any stock
dividends contemplated by subsection 3.1(b) hereof and the sending of such a
certificate to each holder of an Exchangeable Share shall satisfy the stock
dividend represented thereby. Such other type and amount of property in respect
of any dividends contemplated by subsection 3.1(c) hereof shall be issued,
distributed or transferred by the Corporation in such manner as it shall
determine and the issuance, distribution or transfer thereof by the Corporation
to each holder of an Exchangeable Share shall satisfy the dividend represented
thereby. In all cases any such dividends shall be subject to any reduction or
adjustment for tax required to be deducted and withheld
<PAGE>
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from such dividends paid or credited by the Corporation. No holder of an
Exchangeable Share shall be entitled to recover by action or other legal process
against the Corporation any dividend which is represented by a cheque that has
not been duly presented to the Corporation's bankers for payment or which
otherwise remains unclaimed for a period of six years from the date on which
such dividend was payable.
3.3 The record date for the determination of the holders of
Exchangeable Shares entitled to receive payment of, and the payment date for,
any dividend declared on the Exchangeable Shares under Section 3.1 hereof shall
be the same dates as the record date and payment date, respectively, for the
corresponding dividend declared on the PRI Common Stock.
3.4 If on any payment date for any dividends declared on the
Exchangeable Shares under Section 3.1 hereof the dividends are not paid in full
on all of the Exchangeable Shares then outstanding, any such dividends which
remain unpaid shall be paid on a subsequent date or dates determined by the
Board of Directors on which the Corporation shall have sufficient moneys, assets
or property properly applicable to the payment of such dividends.
3.5 Except as provided in this Article 3, the holders of Exchangeable
Shares shall not be entitled to receive dividends in respect thereof.
ARTICLE 4
CERTAIN RESTRICTIONS
4.1 So long as any of the Exchangeable Shares are outstanding, the
Corporation shall not at any time without, but may at any time with, the
approval of the holders of the Exchangeable Shares given as specified in Article
10 of these share provisions:
(a) pay any dividends on the Common Shares, or any other shares
ranking junior to the Exchangeable Shares, other than stock
dividends payable in any such other shares ranking junior to
the Exchangeable Shares;
(b) redeem or purchase or make any capital distribution in respect
of Common Shares or any other shares ranking junior to the
Exchangeable Shares with respect to the payment of dividends
or on any liquidation distribution;
(c) redeem or purchase any other shares of the Corporation ranking
equally with the Exchangeable Shares with respect of the
payment of dividends or on any liquidation distribution.
The restrictions in subsections 4.1(a), 4.1(b), and 4.1(c) above shall not apply
if all dividends on the outstanding Exchangeable Shares corresponding to
dividends declared with a record date on or following the effective date of the
Plan of Arrangement on the PRI Common Stock shall have been declared on the
Exchangeable Shares and paid in full.
ARTICLE 5
DISTRIBUTION ON LIQUIDATION
5.1 In the event of the liquidation, dissolution or winding-up of the
Corporation or any other distribution of the assets of the Corporation among its
shareholders for the purpose of winding-up its affairs, a holder of Exchangeable
Shares shall be entitled, subject to applicable law, to receive from the assets
of the Corporation in respect of each Exchangeable Share held by such holder on
the effective date of such liquidation, dissolution or winding-up (the
"LIQUIDATION DATE"), before any distribution of any part of the assets of the
Corporation to the holders of the Common Shares or any other shares ranking
junior to the Exchangeable Shares, an amount equal to the Exchangeable Share
Price applicable on the last Business Day prior to the Liquidation Date (the
"LIQUIDATION AMOUNT"). In connection with payment of the Liquidation
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Amount, the Corporation shall be entitled to liquidate some of the PRI Common
Stock which would otherwise be deliverable to the particular holder of
Exchangeable Shares in order to fund any statutory withholding tax obligation.
5.2 On or promptly after the Liquidation Date, and subject to the
exercise by Subco of the Liquidation Call Right, the Corporation shall cause to
be delivered to the holders of the Exchangeable Shares the Liquidation Amount
for each such Exchangeable Share upon presentation and surrender of the
certificates representing such Exchangeable Shares, together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the Act and the by-laws of the Corporation and such
additional documents and instruments as the Transfer Agent may reasonably
require, at the registered office of the Corporation or at any office of the
Transfer Agent as may be specified by the Corporation by notice to the holders
of the Exchangeable Shares. Payment of the total Liquidation Amount for such
Exchangeable Shares shall be made by delivery to each holder, at the address of
the holder recorded in the securities register of the Corporation for the
Exchangeable Shares or by holding for pick up by the holder at the registered
office of the Corporation or at any office of the Transfer Agent as may be
specified by the Corporation by notice to the holders of Exchangeable Shares, on
behalf of the Corporation of the Exchangeable Share Consideration representing
the total Liquidation Amount. On and after the Liquidation Date, the holders of
the Exchangeable Shares shall cease to be holders of such Exchangeable Shares
and shall not be entitled to exercise any of the rights of holders in respect
thereof, other than the right to receive their proportionate part of the total
Liquidation Amount, unless payment of the total Liquidation Amount for such
Exchangeable Shares shall not be made upon presentation and surrender of share
certificates in accordance with the foregoing provisions, in which case the
rights of the holders shall remain unaffected until the total Liquidation Amount
has been paid in the manner hereinbefore provided. The Corporation shall have
the right at any time on or after the Liquidation Date to deposit or cause to be
deposited the Exchangeable Share Consideration in respect of the Exchangeable
Shares represented by certificates that have not at the Liquidation Date been
surrendered by the holders thereof in a custodial account or for safe keeping,
in the case of non-cash items, with any chartered bank or trust company in
Canada. Upon such deposit being made, the rights of the holders of Exchangeable
Shares after such deposit shall be limited to receiving their proportionate part
of the total Liquidation Amount for such Exchangeable Shares so deposited,
against presentation and surrender of the said certificates held by them,
respectively, in accordance with the foregoing provisions. Upon such payment or
deposit of such Exchangeable Share Consideration, the holders of the
Exchangeable Shares shall thereafter be considered and deemed for all purposes
to be the holders of the PRI Common Stock delivered to them. Notwithstanding the
foregoing, until such payment or deposit of such Exchangeable Share
Consideration, the holder shall be deemed to still be a holder of Exchangeable
Shares for purposes of all voting rights with respect thereto under the Voting
and Exchange Trust Agreement.
5.3 After the Corporation has satisfied its obligations to pay the
holders of the Exchangeable Shares the Liquidation Amount per Exchangeable
Share, such holders shall not be entitled to share in any further distribution
of the assets of the Corporation.
ARTICLE 6
RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
6.1 A holder of Exchangeable Shares shall be entitled at any time
subject to the exercise by Subco of the Retraction Call Right and otherwise upon
compliance with the provisions of this Article 6, to require the Corporation to
redeem any or all of the Exchangeable Shares registered in the name of such
holder for an amount equal to the Exchangeable Share Price applicable on the
last Business Day prior to the Retraction Date (the "RETRACTION PRICE"). In
connection with payment of the Retraction Price, the Corporation shall be
entitled to liquidate some of the PRI Common Stock that would otherwise be
deliverable to the particular holder of Exchangeable Shares in order to fund any
statutory withholding tax obligation. To effect such redemption, the holder
shall present and surrender at the registered office of the Corporation or at
any office of the Transfer Agent as may be specified by the Corporation in
Schedule A hereto or by notice to the holders of Exchangeable Shares the
certificate or certificates representing the Exchangeable Shares which the
holder desires to have the Corporation redeem, together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the Act and the by-laws of the Corporation and such
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additional documents and instruments as the Transfer Agent may reasonably
require, and together with a duly executed statement (the "RETRACTION REQUEST")
in the form of Schedule A hereto or in such other form as may be acceptable to
the Corporation:
(i) specifying that the holder desires to have all or any number
specified therein of the Exchangeable Shares represented by
such certificate or certificates (the "RETRACTED SHARES")
redeemed by the Corporation;
(ii) stating the Business Day on which the holder desires to have
the Corporation redeem the Retracted Shares (the "RETRACTION
DATE"), provided that the Retraction Date shall be not less
than five Business Days nor more than 10 Business Days after
the date on which the Retraction Request is received by the
Corporation and further provided that, in the event that no
such Business Day is specified by the holder in the Retraction
Request, the Retraction Date shall be deemed to be the tenth
Business Day after the date on which the Retraction Request is
received by the Corporation; and
(iii) acknowledging the overriding right (the "RETRACTION CALL
RIGHT") of Subco to purchase all but not less than all of the
Retracted Shares directly from the holder and that the
Retraction Request shall be deemed to be a revocable offer by
the holder to sell the Retracted Shares in accordance with the
Retraction Call Right on the terms and conditions set out in
Section 6.3 below.
6.2 Subject to the exercise by Subco of the Retraction Call Right, upon
receipt by the Corporation or the Transfer Agent in the manner specified in
Section 6.1 hereof of a certificate or certificates representing the number of
Exchangeable Shares which the holder desires to have the Corporation redeem,
together with a Retraction Request, and provided that the Retraction Request is
not revoked by the holder in the manner specified in Section 6.7, the
Corporation shall redeem the Retracted Shares effective at the close of business
on the Retraction Date and shall cause to be delivered to such holder the total
Retraction Price with respect to such shares in accordance with Section 6.4
hereof. If only a part of the Exchangeable Shares represented by any certificate
are redeemed or purchased by Subco pursuant to the Retraction Call right, a new
certificate for the balance of such Exchangeable Shares shall be issued to the
holder at the expense of the Corporation.
6.3 Upon receipt by the Corporation of a Retraction Request, the
Corporation shall immediately notify Subco and PRI thereof. In order to exercise
the Retraction Call Right, Subco must notify the Corporation in writing of its
determination to do so (the "SUBCO CALL NOTICE") within two Business Days of
such notification. If Subco does not so notify the Corporation within two
Business Days, the Corporation will notify the holder as soon as possible
thereafter that Subco will not exercise the Retraction Call Right. If Subco
delivers the Subco Call Notice within such two Business Days, and provided that
the Retraction Request is not revoked by the holder in the manner specified in
Section 6.7, the Retraction Request shall thereupon be considered only to be an
offer by the holder to sell the Retracted Shares to Subco in accordance with the
Retraction Call Right. In such event, the Corporation shall not redeem the
Retracted Shares and Subco shall purchase from such holder and such holder shall
sell to Subco on the Retraction Date the Retracted Shares for a purchase price
(the "PURCHASE PRICE") per share equal to the Retraction Price per share. For
the purposes of completing a purchase pursuant to the Retraction Call Right,
Subco shall deposit with the Transfer Agent, on or before the Retraction Date
the Exchangeable Share Consideration representing the total Purchase Price.
Provided that such Exchangeable Share Consideration has been so deposited with
the Transfer Agent, the closing of the purchase and sale of the Retracted Shares
pursuant to the Retraction Call Right shall be deemed to have occurred as at the
close of business on the Retraction Date and, for greater certainty, no
redemption by the Corporation of such Retracted Shares shall take place on the
Retraction Date. In the event that Subco does not deliver a Subco Call Notice
within two Business Days or otherwise comply with these Exchangeable Share
provisions in respect thereto, and provided that Retraction Request is not
revoked by the holder in the manner specified in Section 6.7, the Corporation
shall redeem the Retracted Shares on the Retraction Date and in the manner
otherwise contemplated in this Article 6.
<PAGE>
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6.4 The Corporation or Subco, as the case may be, shall deliver or
cause the Transfer Agent to deliver to the relevant holder, at the address of
the holder recorded in the securities register of the Corporation for the
Exchangeable Shares or at the address specified in the holder's Retraction
Request or by holding for pick up by the holder at the registered office of the
Corporation or at any office of the Transfer Agent as may be specified by the
Corporation by notice to the holders of Exchangeable Shares, the Exchangeable
Share Consideration representing the total Retraction Price or the total
Purchase Price, as the case may be, and such delivery of such Exchangeable Share
Consideration to the Transfer Agent shall be deemed to be payment of and shall
satisfy and discharge all liability for the total Retraction Price or total
Purchase Price, as the case may be, except as to any cheque included therein
which is not paid on due presentation.
6.5 On and after the close of business on the Retraction Date, the
holder of the Retracted Shares shall not be entitled to exercise any of the
rights of a holder in respect thereof, other than the right to receive his
proportionate part of the total Retraction Price or total Purchase Price, as the
case may be, unless upon presentation and surrender of certificates in
accordance with the foregoing provisions, payment of the total Retraction Price
or the total Purchase Price, as the case may be, shall not be made, in which
case the rights of such holder shall remain unaffected until the Exchangeable
Share Consideration representing the total Retraction Price or the total
Purchase Price, as the case may be, has been paid in the manner hereinbefore
provided. On and after the close of business on the Retraction Date, provided
that presentation and surrender of certificates and payment of the Exchangeable
Share Consideration representing the total Retraction Price or the total
Purchase Price, as the case may be, has been made in accordance with the
foregoing provisions, the holder of the Retracted Shares so redeemed by the
Corporation or purchased by Subco shall thereafter be considered and deemed for
all purposes to be a holder of the PRI Common Stock delivered to it.
Notwithstanding the foregoing, until payment of such Exchangeable Share
Consideration to the holder, the holder shall be deemed to still be a holder of
Exchangeable Shares for purposes of all voting rights with respect thereto under
the Voting and Exchange Trust Agreement.
6.6 Notwithstanding any other provision of this Article 6, the
Corporation shall not be obligated to redeem Retracted Shares specified by a
holder in a Retraction Request to the extent that such redemption of Retracted
Shares would be contrary to liquidity or solvency requirements or other
provisions of applicable law. If the Corporation believes that on any Retraction
Date it would not be permitted by any of such provisions to redeem the Retracted
Shares tendered for redemption on such date, and provided that Subco shall not
have exercised the Retraction Call Right with respect to the Retracted Shares,
the Corporation shall only be obligated to redeem Retracted Shares specified by
a holder in a Retraction Request to the extent of the maximum number that may be
so redeemed (rounded down to a whole number of shares) as would not be contrary
to such provisions and shall notify the holder at least two Business Days prior
to the Retraction Date as to the number of Retracted Shares which will not be
redeemed by the Corporation. In any case in which the redemption by the
Corporation of Retracted Shares would be contrary to liquidity or solvency
requirements or other provisions of applicable law, the Corporation shall redeem
Retracted Shares in accordance with Section 6.2 of these share provisions on a
pro rata basis and shall issue to each holder of Retracted Shares a new
certificate, at the expense of the Corporation, representing the Retracted
Shares not redeemed by the Corporation pursuant to Section 6.2 hereof. Provided
that the Retraction Request is not revoked by the holder in the manner specified
in section 6.7, the holder of any such Retracted Shares not redeemed by the
Corporation pursuant to Section 6.2 of these share provisions as a result of
liquidity or solvency requirements or applicable law shall be deemed by giving
the Retraction Request to require Subco to purchase such Retracted Shares from
such holder on the Retraction Date or as soon as practicable thereafter on
payment by Subco to such holder of the Purchase Price for each such Retracted
Share, all as more specifically provided in the Voting and Exchange Trust
Agreement, and Subco shall make such purchase.
6.7 A holder of Retracted Shares may, by notice in writing given by the
holder to the Corporation before the close of business on the Business Day
immediately preceding the Retraction Date, withdraw its Retraction Request in
which event such Retraction Request shall be null and void and, for greater
certainty, the revocable offer constituted by the Retraction Request to sell the
Retracted Shares to Subco shall be deemed to have been revoked.
<PAGE>
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ARTICLE 7
REDEMPTION OF EXCHANGEABLE SHARES BY THE CORPORATION
7.1 Subject to applicable law, and if Subco does not exercise the
Redemption Call Right, the Corporation shall on the Automatic Redemption Date
redeem the whole of the then outstanding Exchangeable Shares for an amount equal
to the Exchangeable Share Price applicable on the last Business Day prior to the
Automatic Redemption Date (the "REDEMPTION PRICE"). In connection with payment
of the Redemption Price, the Corporation shall be entitled to liquidate some of
the PRI Common Stock which would otherwise be deliverable to the particular
holder of Exchangeable Shares in order to fund any statutory withholding tax
obligation.
7.2 In any case of a redemption of Exchangeable Shares under this
Article 7, the Corporation, or the Transfer Agent on behalf of the Corporation,
shall, at least 45 days before the relevant Automatic Redemption Date or such
number of days as the Board of Directors may determine to be reasonably
practicable under the circumstances in respect of a possible Automatic
Redemption Date arising in connection with a PRI Control Transaction, a Promis
Control Transaction, or a matter described in paragraphs (c) or (d) of the
definition of Automatic Redemption Date in Article 1.1, the Corporation shall
send to each holder of Exchangeable Shares a notice in writing of the redemption
or possible redemption by the Corporation or the purchase by Subco under the
Redemption Call Right, as the case may be, of the Exchangeable Shares held by
such holder. Such notice shall set out the formula for determining the
Redemption Price or the Redemption Call Purchase Price, as the case may be, the
Automatic Redemption Date and, if applicable, particulars of the Redemption Call
Right. In the case of any notice given in connection with a possible Automatic
Redemption Date, such notice will be given contingently and will be withdrawn if
the contingency does not occur.
7.3 On or after the Automatic Redemption Date and subject to the
exercise by Subco of the Redemption Call Right, the Corporation shall cause to
be delivered to the holders of the Exchangeable Shares to be redeemed the
Redemption Price for each such Exchangeable Share upon presentation and
surrender at the registered office of the Corporation or at any office of the
Transfer Agent as may be specified by the Corporation in such notice of the
certificates representing such Exchangeable Shares, together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the Act and the by-laws of the Corporation and such
additional documents and instruments as the Transfer Agent may reasonably
require. Payment of the total Redemption Price for such Exchangeable Shares
shall be made by delivery to each holder, at the address of the holder recorded
in the securities register or at any office of the Transfer Agent as may be
specified by the Corporation in such notice, on behalf of the Corporation of the
Exchangeable Share Consideration representing the total Redemption Price. On and
after the Automatic Redemption Date, the holders of the Exchangeable Shares
called for redemption shall cease to be holders of such Exchangeable Shares and
shall not be entitled to exercise any of the rights of holders in respect
thereof, other than the right to receive their proportionate part of the total
Redemption Price, unless payment of the total Redemption Price for such
Exchangeable Shares shall not be made upon presentation and surrender of
certificates in accordance with the foregoing provisions, in which case the
rights of the holders shall remain unaffected until the total Redemption Price
has been paid in the manner hereinbefore provided. The Corporation shall have
the right at any time after the sending of notice of its intention to redeem the
Exchangeable Shares as aforesaid to deposit or cause to be deposited the
Exchangeable Shares Consideration with respect to the Exchangeable Shares so
called for redemption, or of such of the said Exchangeable Shares represented by
certificates that have not at the date of such deposit been surrendered by the
holders thereof in connection with such redemption, in a custodial account or
for safe keeping, in the case of non-cash items, with any chartered bank or
trust company in Canada named in such notice, Upon the later of such deposit
being made and the Automatic Redemption Date, the Exchangeable Shares in respect
whereof such deposit shall have been made shall be redeemed and the rights of
the holders thereof after such deposit or Automatic Redemption Date, as the case
may be, shall be limited to receiving their proportionate part of the total
Redemption Price for
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such Exchangeable Shares so deposited, against presentation and surrender of the
said certificates held by them, respectively, in accordance with the foregoing
provisions. Upon such payment or deposit of such Exchangeable Share
Consideration, the holders of the Exchangeable Shares shall thereafter be
considered and deemed for all purposes to be holders of the PRI Common Stock
delivered to them. Notwithstanding the foregoing, until such payment or deposit
of such Exchangeable Share Consideration is made, the holder shall be deemed to
still be a holder of Exchangeable Shares for purposes of all voting rights with
respect thereto under the Voting and Exchange Trust Agreement.
ARTICLE 8
EXCHANGE PUT RIGHT
8.1 Upon and subject to the terms and conditions contained in the
Exchangeable Share Provisions and the Voting and Exchange Trust Agreement:
(a) a holder of Exchangeable Shares shall have the right (the
"Exchange Put Right") at any time to require Subco to purchase
all or any part of the Exchangeable Shares of the holder; and
(b) upon the exercise by the holder of the Exchange Put Right
and provided that, at the time of purchase, the Exchangeable
Shares are listed on a recognized Canadian stock exchange, the
holder shall be required to sell to Subco, and Subco shall be
required to purchase from the holder, that number of
Exchangeable Shares in respect of which the Exchange Put Right
is exercised, in consideration of the payment by Subco of the
Exchangeable Share Price applicable thereto (which shall be
the Exchangeable Share Price applicable on the last Business
Day prior to receipt of notice required under section 8.2) and
delivery by or on behalf of Subco of the Exchangeable Share
Consideration representing the total applicable Exchangeable
Share Price.
8.2 The Exchange Put Right provided in section 8.1 hereof and in
Article 5 of the Voting and Exchange Trust Agreement may be exercised at any
time by notice in writing given by the holder to and received by the Trustee
(the date of such receipt, the "Exchange Put Date") accompanied by presentation
and surrender of the certificates representing such Exchangeable Shares,
together with such documents and instruments as may be required to effect a
transfer of Exchangeable Shares under the Act and the by-laws of the Corporation
and such additional documents and instruments as the Trustee may reasonably
require, at the principal transfer office in Toronto, Ontario of the Trustee, or
at such other office or offices of the Trustee or of other persons designated by
the Trustee for that purpose as may from time to time be maintained by the
Trustee for that purpose. Such notice may be (i) in the form of the panel, if
any, on the certificates representing Exchangeable Shares, (ii) in the form of
the notice and election contained in any letter of transmittal distributed or
made available by the Corporation for that purpose, or (iii) in other form
satisfactory to the Trustee (or such other persons aforesaid), shall stipulate
the number of Exchangeable Shares in respect of which the right is exercised
(which may not exceed the number of shares represented by certificates
surrendered to the Trustee), shall be irrevocable unless the exchange is not
completed in accordance herewith and with the Voting and Exchange Trust
Agreement and shall constitute the holder's authorization to the Trustee (and
such other persons aforesaid) to effect the exchange on behalf of the holder.
8.3 The completion of the sale and purchase referred to in section
8.1 shall be required to occur, and Subco shall be required to take all actions
on its part necessary to permit it to occur, not later than the close of
business on the third Business Day following the Exchange Put Date.
8.4 The surrender by the holder of Exchangeable Shares under
section 8.2 shall constitute the representation, warranty and covenant of the
holder that the Exchangeable Shares so purchased are sold free and clear of any
lien, encumbrance, security interest or adverse claim or interest.
8.5 If a part only of the Exchangeable Shares represented by any
certificate are to be sold and purchased pursuant to the exercise of the
Exchange Put Right, a new certificate for the balance of such Exchangeable
Shares shall be issued to the holder at the expense of the Corporation.
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8.6 Upon receipt by the Trustee of the notice, certificates and
other documents or instruments required by section 8.2, the Trustee shall
deliver or cause to be delivered, on behalf of Subco and subject to receipt by
the Trustee from Subco of the applicable Exchangeable Share Consideration, to
the relevant holder at the address of the holder specified in the notice or by
holding for pick-up by the holder at the registered office of the Corporation or
at any office of the Trustee (or other persons aforesaid) maintained for that
purpose, the Exchangeable Share Consideration representing the total applicable
Exchangeable Share Price, within the time stipulated in section 8.3. Delivery by
Subco to the Trustee of such Exchangeable Share Consideration shall be deemed to
be payment of and shall satisfy and discharge all liability for the total
applicable Exchangeable Share Price, except as to any cheque included therein
which is not paid on due presentation.
8.7 On and after the close of business on the Exchange Put Date,
the holder of the Exchangeable Shares in respect of which the Exchange Put Right
is exercised shall not be entitled to exercise any of the rights of a holder in
respect thereof, other than the right to receive the total applicable
Exchangeable Share Price, unless upon presentation and surrender of certificates
in accordance with the foregoing provisions, payment of the Exchangeable Share
Consideration shall not be made, in which case the rights of such holder shall
remain unaffected until such payment has been made. On and after the close of
business on the Exchange Put Date provided that presentation and surrender of
certificate and payment of the Exchangeable Share Consideration has been made in
accordance with the foregoing provisions, the holder of the Exchangeable Shares
so purchased by Subco shall thereafter be considered and deemed for all purposes
to be a holder of the PRI Common Stock delivered to it. Notwithstanding the
foregoing, until payment of the Exchangeable Share Consideration to the holder,
the holder shall be deemed to still be a holder of Exchangeable Shares for
purposes of all voting rights with respect thereto under the Voting and Exchange
Trust Agreement.
ARTICLE 9
VOTING RIGHTS
9.1 Except as required by applicable law and the provisions
hereof, the holders of the Exchangeable Shares shall not be entitled as such to
receive notice of or to attend any meeting of the shareholders of the
Corporation or to vote at any such meeting.
ARTICLE 10
AMENDMENT AND APPROVAL
10.1 The rights, privileges, restrictions and conditions attaching
to the Exchangeable Shares may be added to, changed or removed but, except, as
hereinafter provided, only with the approval of the holders of the Exchangeable
Shares given as hereinafter specified.
10.2 Any approval given by the holders of the Exchangeable Shares to
add to, change or remove any right, privilege, restriction or condition
attaching to the Exchangeable Shares or any other matter requiring the approval
or consent of the holders of the Exchangeable Shares shall be deemed to have
been sufficiently given if it shall have been given in accordance with
applicable law subject to a minimum requirement that such approval be evidenced
by resolution passed by not less than 50% (or such higher percentage as may be
required by law) of the votes cast on such resolution by persons represented in
person or by proxy at a meeting of holders of Exchangeable Shares duly called
and held at which the holders of at least 50% of the outstanding Exchangeable
Shares at that time are present or represented by proxy (excluding Exchangeable
Shares beneficially owned by PRI or its Subsidiaries). If at any such meeting
the holders of at least 50% of the outstanding Exchangeable Shares at that time
are not present or represented by proxy within one-half hour after the time
appointed for such meeting then the meeting shall be adjourned to such date not
less than 10 days thereafter and to such time and place as may be designated by
the Chairman of such meeting. At such
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adjourned meeting the holders of Exchangeable Shares present or represented by
proxy thereat may transact the business for which the meeting was originally
called and a resolution passed thereat by the affirmative vote of not less than
50% (or such higher percentage as may be required by law) of the votes cast on
such resolution by persons represented in person or by proxy at such meeting
shall constitute the approval or consent of the holders of the Exchangeable
Shares. For the purposes of this section, any spoiled votes, illegible votes,
defective votes and abstinences shall be deemed to be votes not cast.
ARTICLE 11
RECIPROCAL CHANGES, ETC. IN RESPECT OF PRI COMMON STOCK
11.1 (a) Each holder of an Exchangeable Share acknowledges that the
Support Agreement provides, in part, that PRI will not:
(i) issue or distribute PRI Common Stock (or securities
exchangeable for or convertible into or carrying rights to
acquire shares of PRI Common Stock) to the holders of all or
substantially all of the then outstanding PRI Common Stock by
way of stock dividend or other distribution; or
(ii) issue or distribute rights, options or warrants to the holders
of all or substantially all of the then outstanding PRI Common
Stock entitling them to subscribe for or to purchase shares of
PRI Common Stock (or securities exchangeable for or
convertible into or carrying rights to acquire shares of PRI
Common Stock); or
(iii) issue or distribute to the holders of all or substantially all
of the then outstanding shares of PRI Common Stock (A) shares
or securities of PRI of any class other than PRI Common Stock
(other than shares convertible into or exchangeable for or
carrying rights to acquire PRI Common Stock), (B) rights,
options or warrants other than those referred to in subsection
11.1(a)(ii) above, (C) evidences of indebtedness of PRI or (D)
assets of PRI;
unless one or both of the Corporation and PRI is permitted under applicable law
to issue and distribute the economic equivalent on a per share basis of such
rights, options, warrants, securities, shares, evidences of indebtedness or
assets and the items referred to in clauses (i), (ii) and (iii) above, as
applicable, are issued or distributed simultaneously to holders of Exchangeable
Shares.
(b) Each holder of an Exchangeable Share acknowledges that the
Support Agreement further provides, in part, that PRI will not:
(i) subdivide, redivide or change the then outstanding shares of
PRI Common Stock into a greater number of shares of PRI Common
Stock; or
(ii) reduce, combine or consolidate or change the then outstanding
shares of PRI Common Stock into a lesser number of shares of
PRI Common Stock; or
(iii) reclassify or otherwise change the shares of PRI Common Stock
or effect an amalgamation, merger, reorganization or other
transaction involving or affecting the shares of PRI Common
Stock;
unless the Corporation is permitted under applicable law to simultaneously make
the same or an economically equivalent change to, or in the rights of the
holders of, the Exchangeable Shares and the same or an economically equivalent
change is simultaneously made to, or in the rights of the holders of, the
Exchangeable Shares.
<PAGE>
A14
The Support Agreement further provides, in part, that, with the
exception of certain ministerial amendments, the aforesaid provisions of the
Support Agreement shall not be changed without the approval of PRI, Subco, the
Corporation and the holders of the Exchangeable Shares given in accordance with
Article 10 of these share provisions.
ARTICLE 12
ACTIONS BY THE CORPORATION UNDER SUPPORT AGREEMENT
12.1 The Corporation will take all such actions and do all such
things as shall be necessary or advisable to perform and comply with and to
ensure performance and compliance by Subco and PRI with all provisions of the
Support Agreement, the Voting and Exchange Trust Agreement and PRI's Restated
Articles of Organization applicable to the Corporation, Subco and PRI,
respectively, in accordance with the terms thereof including, without
limitation, taking all such actions and doing all such things as shall be
necessary or advisable to enforce to the fullest extent possible for the direct
benefit of the Corporation all rights and benefits in favour of the Corporation
under or pursuant thereto.
12.2 The Corporation shall not propose, agree to or otherwise give
effect to any amendment to, or waiver or forgiveness of its rights or
obligations under, the Support Agreement, the Voting and Exchange Trust
Agreement or PRI's Restated Articles of Organization without the approval of the
holders of the Exchangeable Shares given in accordance with Article 10 of these
share provisions other than such amendments, waivers and/or forgiveness as may
be necessary or advisable for the purpose of:
(a) adding to the covenants of the other party or parties to such
agreement for the protection of the Corporation or the holders
of Exchangeable Shares;
(b) making such provisions or modifications not inconsistent with
such agreement or certificate as may be necessary or desirable
with respect to matters or questions arising thereunder which,
in the opinion of the Board of Directors, it may be expedient
to make, provided that the Board of Directors shall be of the
opinion, after consultation with counsel, that such provisions
and modifications will not be prejudicial to the interests of
the holders of the Exchangeable Shares; or
(c) making such changes in or corrections to such agreement or
certificate which, on the advice of counsel to the
Corporation, are required for the purpose of curing or
correcting any ambiguity or defect or inconsistent provision
or clerical omission or mistake or manifest error contained
therein, provided that the Board of Directors shall be of the
opinion, after consultation with counsel, that such changes or
corrections will not be prejudicial to the interests of the
holders of the Exchangeable Shares.
ARTICLE 13
LEGEND
13.1 The certificate evidencing the Exchangeable Shares shall
contain or have affixed thereto a legend, in form and on terms approved by the
Board of Directors, with respect to the Support Agreement, the provisions of the
Plan of Arrangement relating to the Liquidation Call Right, the Retraction Call
Right and the Redemption Call Right, and the Voting and Exchange Trust Agreement
(including the provisions with respect to the voting rights and exchange
provisions thereunder).
<PAGE>
A15
ARTICLE 14
MISCELLANEOUS
14.1 ny notice, request or other communication to be given to the
Corporation by a holder of Exchangeable Shares shall be in writing and shall be
valid and effective if given by mail (postage prepaid) or by telecopy or by
delivery to the registered office of the Corporation and addressed to the
attention of the President. Any such notice, request or other communication, if
given by mail, telecopy or delivery, shall be deemed to have been given and
received upon actual receipt thereof by the Corporation.
14.2 Any presentation and surrender by a holder of Exchangeable
Shares to the Corporation or the Transfer Agent of certificates representing
Exchangeable Shares in connection with the liquidation, dissolution or
winding-up of the Corporation or the retraction, redemption or exchange of
Exchangeable Shares shall be made by registered mail (postage prepaid) or by
delivery to the registered office of the Corporation or to such office of the
Transfer Agent as may be specified by the Corporation, in each case addressed to
the attention of the President of the Corporation. Any such presentation and
surrender of certificates shall only be deemed to have been made and to be
effective upon actual receipt thereof by the Corporation or the Transfer Agent,
as the case may be, and the method of any such presentation and surrender of
certificates shall be at the sole risk of the holder.
14.3 Any notice, request or other communication to be given to a
holder of Exchangeable Shares by or on behalf of the Corporation shall be in
writing and shall be valid and effective if given by mail (postage prepaid) or
by delivery to the address of the holder recorded in the securities register of
the Corporation or, in the event of the address of any such holder not being so
recorded, then at the last known address of such holder. Any such notice,
request or other communication, if given by mail, shall be deemed to have been
given and received on the fifth Business Day following the date of mailing and,
if given by delivery, shall be deemed to have been given and received on the
date of delivery. Accidental failure or omission to give any notice, request or
other communication to one or more holders of Exchangeable Shares shall not
invalidate or otherwise alter or affect any action or proceeding to be or
intended to be taken by the Corporation.
14.4 For greater certainty, the Corporation shall not be required
for any purpose under these share provisions to recognize or take account of
persons who are not so recorded in such securities register.
14.5 All Exchangeable Shares acquired by the Corporation upon the
redemption or retraction thereof shall be cancelled.
PROVISIONS ATTACHING TO THE COMMON SHARE
The common share ("Common Share") in the capital of the Corporation
shall have attached thereto the following rights, privileges, restrictions and
conditions:
DIVIDENDS
Subject to the prior rights of the Exchangeable Shares and any other
shares ranking prior to the Common Share, the holder of the Common Share shall
be entitled to receive such dividends as may be declared by the Board of
Directors out of property of the Corporation legally available therefor.
LIQUIDATION
Subject to the prior rights of the Exchangeable Shares and any other
shares ranking prior to the Common Share, the holder of the Common Share shall,
upon any liquidation, dissolution or winding-up of the Corporation, whether
voluntary or involuntary, or other distribution of the assets of the Corporation
of the purpose of winding-up its affairs, be entitled to receive the remaining
property and assets of the Corporation.
<PAGE>
A16
VOTING
The holder of the Common Share shall be entitled to receive notice of
and to attend all meetings of shareholders (other than separate meetings of
other classes or series of shares), and the Common Share shall be entitled to
one vote.
RESTRICTIONS
So long as any of the Exchangeable Shares of the Corporation are
outstanding, the Corporation shall not at any time without, but may at any time
with, the approval of the Board of Directors and of the holder of the Common
Share issue any further Exchangeable Shares of the Corporation, except as
specifically required in accordance with the rights, privileges, restrictions
and conditions attaching to the Exchangeable Shares of the Corporation.
<PAGE>
SCHEDULE "A"
Under the rights, privileges, restrictions or conditions attached to
the shares represented by this certificate pursuant to the articles of the
Corporation (the "Share Provisions"), the shares are subject to certain
overriding purchase rights of 1325949 Ontario Inc. ("Subco"), a wholly-owned
subsidiary of PRI Automation, Inc. ("PRI"), upon the proposed liquidation,
dissolution or winding up of the Corporation and upon the proposed retraction by
the holder or redemption by the Corporation of the shares represented hereby.
Unless otherwise provided herein, all capitalized words used in this certificate
which are defined in the Share Provisions have the meanings ascribed to such
words in the Share Provisions.
The holder hereof also has certain rights and is entitled to certain
benefits pursuant to the Voting and Exchange Trust Agreement (the "Trust
Agreement") among the Corporation, Subco, PRI and Montreal Trust Company of
Canada (the "Trustee"), including the right to instruct the Trustee with respect
to the exercise of (i) voting rights in respect of a share of special voting
stock of PRI and (ii) the right to exchange the shares represented hereby for
shares of common stock of PRI, pursuant to the terms and conditions of the Trust
Agreement. The Corporation, PRI and Subco have entered into an agreement (the
"Support Agreement") pursuant to which PRI and Subco agreed to take certain
actions to ensure that the Corporation will be able to make certain payments and
cause to be delivered common stock of PRI in satisfaction of the obligations of
the Corporation under the rights, privileges, restrictions and conditions
attaching to the shares represented hereby.
Upon exchange or redemption of the shares represented by this
certificate for shares of common stock of PRI, the certificate representing such
shares of common stock of PRI shall also evidence and entitle the holder thereof
to certain Rights as set forth in a Rights Agreement dated as of December 9,
1998, as it may be amended from time to time (the "Rights Agreement"), between
PRI and State Street Bank and Trust Company, as Rights Agent, a copy of which is
on file at the principal executive offices of the Corporation. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will not be evidenced by the certificate
representing such shares of common stock of PRI. Rights beneficially owned by
Acquiring Persons or their Affiliates or Associates (as such terms are defined
in the Rights Agreement) and by any subsequent holder of such Rights are null
and void and non-transferable.
The registered holder of the shares represented by this certificate is
entitled to instruct the Trustee to vote, on a per share equivalent basis, the
shares represented by this certificate and owned of record by the registered
holder on the record date for any meeting at which holders of common stock of
PRI are entitled to vote. If such instructions are not received by the Trustee
by the time any such meeting is held, then such voting rights will not be
exercised. The registered holder is also entitled to receive dividends, on a per
share equivalent basis, in amounts (or property in the case of non-cash
dividends) which are the same as, and which are payable at the same time as,
dividends declared on common stock of PRI.
The terms of the Share Provisions, Trust Agreement and Rights Agreement
are incorporated herein by reference and a copy thereof will be mailed to any
holder without charge after receipt by the Corporation of a written request
therefor.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SHARE TRANSFER POWER
Please insert social insurance number of
transferee, if applicable
<S> <C>
For value received, the undersigned hereby sells, assigns and transfers unto
-----------------------------------------------------------------------------------------------------------------------
(Please print or typewrite name and address of transferee)
shares represented by
--------------------------------------------------------
this certificate,
and does hereby irrevocably constitute and appoint attorney to transfer the said
shares on the registers of the within named Corporation with full power of
substitution in the premises.
------------------------------------------ --------------------------- ------------------------
(Date) (Signature of Shareholder) (Guarantee of Signature)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
2
NOTICE OF RETRACTION
To the Corporation, PRI and Subco
c/o Montreal Trust Company of Canada (the "Transfer Agent")
Pursuant to Article 6 of the Share Provisions the undersigned hereby
notifies the Corporation that, subject to the Retraction Call Right referred to
below, the undersigned desires to have the Corporation redeem on the Retraction
Date in accordance with Article 6 of the Share Provisions:
/ / all shares represented by this certificate; or
/ / shares only.
---------------------------------------
The undersigned hereby notifies the Corporation that the Retraction
Date shall be . NOTE: The Retraction Date must be a Business Day
and must not be less than five Business Days nor more than 10 Business Days
after the date upon which this notice and the accompanying shares are received
by the Corporation. In the event that no such business day is correctly
specified above, the Retraction Date shall be deemed to be the tenth Business
Day after the date on which this notice is received by the Corporation.
The undersigned acknowledges the Retraction Call Right of Subco to
purchase all but not less than all the Retracted Shares from the undersigned and
that this notice shall be deemed to be a revocable offer by the undersigned to
sell the Retracted Shares to Subco in accordance with the Retraction Call Right
on the Retraction Date for a price per share equal to the Retraction Price and
on the other terms and conditions set out in Section 6.3 of the Share
Provisions. If Subco determines not to exercise the Retraction Call Right, the
Corporation will notify the undersigned of such fact as soon as possible. This
notice of retraction, and offer to sell the Retracted Shares to Subco, may be
revoked and withdrawn by the undersigned by notice in writing given to the
Corporation at any time before the close of business on the Business Day
immediately preceding the Retraction Date.
The undersigned acknowledges that if, as a result of liquidity or
solvency requirements or other provisions of applicable law, the Corporation is
unable to redeem all Retracted Shares an Insolvency Event (as defined in the
Trust Agreement) shall, to the extent it shall not theretofore have occurred, be
deemed thereupon to have occurred, and the undersigned will be deemed to have
exercised the Exchange Right (as defined in the Trust Agreement) so as to
require Subco to purchase the unredeemed Retracted Shares.
The undersigned hereby represents and warrants to the Corporation, PRI
and Subco that the undersigned:
/ / is (select one)
/ / is not
a non-resident of Canada for purposes of the Income Tax Act (Canada). THE
UNDERSIGNED ACKNOWLEDGES THAT IN THE ABSENCE OF AN INDICATION THAT THE
UNDERSIGNED IS NOT A NON-RESIDENT OF CANADA, WITHHOLDING ON ACCOUNT OF CANADIAN
TAX WILL BE MADE FROM THE AMOUNTS PAYABLE TO THE UNDERSIGNED ON THE REDEMPTION
OR PURCHASE OF THE RETRACTED SHARES.
The undersigned hereby represents and warrants to the Corporation, PRI
and Subco that the undersigned has full power and authority to give this notice
and that the acquirer will acquire good title to the shares represented by this
certificate to be acquired, free and clear of all liens, claims, encumbrances,
security interests and adverse claims and interests.
- ------------------ -------------------------- --------------------------
(Date) (Signature of Shareholder) (Guarantee of Signature)
/ / Please check box if the securities and any cheque(s) or other non-cash
assets resulting from the retraction or purchase of the Retracted Shares
are to be held for pick-up by the shareholder at the principal transfer
office of the Transfer Agent in Toronto, Ontario, failing which the
securities and any cheque(s) or other non-cash assets will be mailed to
the last address of the shareholder as it appears on the register.
<PAGE>
3
NOTE: This panel must be completed and this certificate, together with such
additional documents as the Transfer Agent and the Corporation may require, must
be deposited with the Transfer Agent at its principal transfer office in
Toronto, Ontario. The securities and any cheque(s) or other non-cash assets
resulting from the retraction or purchase of the Retracted Shares will be issued
and registered in, and made payable to, or transferred into, respectively, the
name of the shareholder as it appears on the register of the Corporation and the
securities, cheque(s) or other non-cash assets resulting from such retraction or
purchase will be delivered to such shareholder as indicated above, unless the
form appearing immediately below is duly completed and all exigible transfer
taxes are paid.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------- -------------------------------------
Name of Person in Whose Name Securities or Cheque(s) or Other Non-Cash Assets Are Date
to Be Registered, Issued or Delivered (please print)
- ----------------------------------------------------------------------------------- -------------------------------------
<S> <C>
Street Address or P.O. Box Signature of Shareholder
- ----------------------------------------------------------------------------------- -------------------------------------
City - Province Signature Guaranteed By
- ----------------------------------------------------------------------------------- -------------------------------------
</TABLE>
NOTE: If the notice of retraction is for less than all of the shares represented
by this certificate, a certificate representing the remaining shares will be
issued and registered in the name of the shareholder as it appears on the
register of the Corporation, unless the Share Transfer Power hereon is duly
completed in respect of such shares.
U.S. Residents/Citizens must provide their Taxpayer Identification Number here:
<PAGE>
4
NOTICE OF EXERCISE OF EXCHANGE RIGHT UPON INSOLVENCY EVENT
To the Corporation, the Trustee and Subco
In accordance with, and subject to, the Trust Agreement, the
undersigned hereby instructs the Trustee to exercise the Exchange Right (as
defined in the Trust Agreement) upon the occurrence and during continuance of an
Insolvency Event (as defined in the Trust Agreement) so as to require Subco to
purchase from the undersigned:
/ / all shares represented by this certificate; or
/ / shares only.
------------------------------------
The undersigned hereby represents and warrants to the Corporation, PRI
and Subco that the undersigned:
/ / is (select one)
/ / is not
a non-resident of Canada for purposes of the Income Tax Act (Canada). THE
UNDERSIGNED ACKNOWLEDGES THAT IN THE ABSENCE OF AN INDICATION THAT THE
UNDERSIGNED IS NOT A NON-RESIDENT OF CANADA, WITHHOLDING ON ACCOUNT OF CANADIAN
TAX WILL BE MADE FROM THE AMOUNTS PAYABLE TO THE UNDERSIGNED ON THE PURCHASE OF
THE RETRACTED SHARES.
The undersigned hereby represents and warrants to the Corporation and
Subco that the undersigned has full power and authority to give this notice and
that Subco will acquire good title to the shares represented by this certificate
to be acquired, free and clear of all liens, claims, encumbrances, security
interests and adverse claims and interests.
- -------------- -------------------------- ----------------------------
(Date) (Signature of Shareholder) (Guarantee of Signature)
/ / Please check box if the securities and any cheque(s) or other non-cash
assets resulting from the exercise of the Exchange Right are to be held
for pick-up by the shareholder at the principal transfer office of
Montreal Trust Company of Canada in Toronto, failing which the securities
and any cheque(s) or other non-cash assets will be mailed to the last
address of the shareholder as it appears on the register.
NOTE: This panel must be completed and this certificate, together with such
additional documents as the Transfer Agent and the Corporation may require, must
be deposited with the Transfer Agent at its principal transfer office in
Toronto, Ontario. The securities and any cheque(s) or other non-cash assets
resulting from the exercise of the Exchange Right will be issued and registered
in, and made payable to, or transferred into, respectively, the name of the
shareholder as it appears on the register of the Corporation and the securities
and cheque(s) or other non-cash assets resulting from such exchange will be
delivered to such shareholder as indicated above, unless the form appearing
immediately below is duly completed and all exigible transfer taxes are paid.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------- -------------------------------------
Name of Person in Whose Name Securities or Cheque(s) or Other Non-Cash Assets Are Date
to Be Registered, Issued or Delivered (please print)
- ----------------------------------------------------------------------------------- -------------------------------------
<S> <C>
Street Address or P.O. Box Signature of Shareholder
- ----------------------------------------------------------------------------------- -------------------------------------
City - Province Signature Guaranteed By
- ----------------------------------------------------------------------------------- -------------------------------------
</TABLE>
NOTE: If the election to exchange is for less than all of the shares represented
by this certificate, a certificate representing the remaining shares will be
issued and registered in the name of the shareholder as it appears on the
register of the Corporation, unless the Share Transfer Power hereon is duly
completed in respect of such shares.
U.S. Residents/Citizens must provide their Taxpayer Identification Number here:
<PAGE>
5
NOTICE: THE SIGNATURE TO THE SHARE TRANSFER POWER, NOTICE OF RETRACTION OR
NOTICE OF EXERCISE OF EXCHANGE RIGHT MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THIS CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A BANK, TRUST
COMPANY, MEMBER OF A RECOGNIZED STOCK EXCHANGE IN CANADA OR A MEMBER OF THE
SECURITIES TRANSFER ASSOCIATION MEDALLION (STAMP) PROGRAM.
<PAGE>
Exhibit 99.3
EXECUTION COPY
VOTING AND EXCHANGE TRUST AGREEMENT
THIS VOTING AND EXCHANGE TRUST AGREEMENT is entered into as of March 2,
1999, by and among PRI Automation, Inc., a corporation existing under laws of
the Commonwealth of Massachusetts ("Parent"), 1325949 Ontario Inc., a
corporation existing under the laws of Ontario and a wholly owned subsidiary of
Parent ("Subco"), Promis Systems Corporation Ltd., a corporation existing under
the laws of Canada (the "Company"), and Montreal Trust Company of Canada, a
trust company incorporated under the laws of Canada ("Trustee").
WHEREAS, pursuant to a Combination Agreement dated November 24, 1998
(the "Combination Agreement"), by and among the Company, Parent and Subco, the
parties agreed that on the Effective Date (as defined in the Combination
Agreement), Parent, Subco, the Company and the Trustee would execute and deliver
a Voting and Exchange Trust Agreement substantially in the form of this
Agreement;
WHEREAS, pursuant to an arrangement (the "Arrangement") effected by the
Articles of Arrangement dated March 2, 1999 (the "Articles of Arrangement")
filed pursuant to the Canada Business Corporations Act (the "CBCA"), each issued
and outstanding common share (a "Common Share") of the Company (other than those
Common Shares held by dissenters who have exercised their dissenters' rights in
accordance with Section 190 of the CBCA and Section 3.1 of the plan of
arrangement (the "Plan of Arrangement") contained in the Articles of Arrangement
and who are ultimately entitled to be paid the fair value for such Common
Shares, and other than those Common Shares held by Parent or any of its
Subsidiaries) was exchanged for a maximum of 1,390,010 issued and outstanding
Exchangeable Shares of the Company, subject to reduction in respect of
fractional interests (the "Exchangeable Shares"), and thereafter, the Company's
sole issued and outstanding Class X Preferred Share was exchanged by Subco for
one issued and outstanding Common Share;
WHEREAS, the above-mentioned Articles of Arrangement sets forth the
rights, privileges, restrictions and conditions attaching to the Exchangeable
Shares (collectively, the "Exchangeable Share Provisions");
WHEREAS, Parent is to provide voting rights in Parent to each holder
(other than Parent and its Subsidiaries) from time to time of Exchangeable
Shares, such voting rights per Exchangeable Share to be equivalent to the voting
rights per share of Parent Common Stock;
WHEREAS, Parent and Subco are to grant to and in favor of the holders
(other than Parent and its Subsidiaries) from time to time of Exchangeable
Shares certain rights, in the circumstances set forth herein, to require Parent
and/or Subco to purchase from each such holder all or any part of the
Exchangeable Shares held by the holder;
WHEREAS, the parties desire to make appropriate provision and to
establish a procedure whereby voting rights in Parent shall be exercisable by
holders (other than Parent and its Subsidiaries) from time to time of
Exchangeable Shares by and through the Trustee, which will hold
<PAGE>
legal title to one share of Special Voting Stock of Parent, par value US$.01
(the "Parent Special Voting Stock") to which voting rights attach for the
benefit of such holders and whereby the rights to require Subco to purchase
Exchangeable Shares from the holders thereof (other than Parent and its
Subsidiaries) shall be exercisable by such holders from time to time of
Exchangeable Shares by and through the Trustee, which will hold legal title to
such rights for the benefit of such holders; and
WHEREAS, these recitals and any statements of fact in this Agreement
are made by Parent, Subco and the Company and not by the Trustee;
NOW, THEREFORE, in consideration of the respective covenants and
agreements provided in this Agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS. In this Agreement, the following terms shall have the
following meanings:
"AGGREGATE EQUIVALENT VOTE AMOUNT" means, with respect to any matter,
proposition or question on which holders of Parent Common Stock are entitled to
vote, consent or otherwise act, the product of (a) the number of Exchangeable
Shares then issued and outstanding and held by Holders (as hereinafter defined)
multiplied by (b) the number of votes to which a holder of one share of Parent
Common Stock is entitled with respect to such matter, proposition or question.
"APPLICABLE LAWS" has the meaning provided in Section 5.11 hereof.
"ARRANGEMENT" has the meaning provided in the recitals hereto.
"ARTICLES OF ARRANGEMENT" has the meaning provided in the recitals
hereto.
"AUTOMATIC EXCHANGE RIGHTS" means the benefit of the joint and several
obligation of Parent and Subco to effect the automatic exchange of shares of
Parent Common Stock for Exchangeable Shares pursuant to Section 5.13 hereof.
"BOARD OF DIRECTORS" means the board of directors of the Company.
"BUSINESS DAY" has the meaning provided in the Exchangeable Share
Provisions;
"COMMON SHARES" has the meaning provided in the recitals hereto.
"EQUIVALENT VOTE AMOUNT" means, with respect any matter, proposition or
question on which holders of Parent Common Stock are entitled to vote, consent
or otherwise act, the number of votes to which a holder of one share of Parent
Common Stock is entitled with respect to such matter, proposition or question.
2
<PAGE>
"EXCHANGE PUT RIGHT" has the meaning provided in the Exchangeable Share
Provisions.
"EXCHANGE RIGHT" has the meaning provided in Section 5.1 hereof.
"EXCHANGEABLE SHARE CONSIDERATION" has the meaning provided in the
Exchangeable Share Provisions.
"EXCHANGEABLE SHARE PRICE" has the meaning provided in the Exchangeable
Share Provisions.
"EXCHANGEABLE SHARE PROVISIONS" has the meaning provided in the
recitals hereto.
"EXCHANGEABLE SHARES" has the meaning provided in the recitals hereto.
"HOLDER VOTES" has the meaning provided in Section 4.3 hereof.
"HOLDERS" means the registered holders from time to time of
Exchangeable Shares, other than Parent and its subsidiaries.
"INSOLVENCY EVENT" means the institution by the Company of any
proceeding to be adjudicated a bankrupt or insolvent or to be dissolved or
wound-up, or the consent of the Company to the institution of bankruptcy,
insolvency, dissolution or winding-up proceedings against it, or the filing of a
petition, answer or consent seeking dissolution or winding-up under any
bankruptcy, insolvency or analogous laws, including without limitation the
Companies Creditors' Arrangement Act (Canada) and the Bankruptcy and Insolvency
Act (Canada), and the failure by the Company to contest in good faith any such
proceedings commenced in respect of the Company within 30 days of becoming aware
thereof, or the consent by the Company to the filing of any such petition or to
the appointment of a receiver, or the making by the Company of a general
assignment for the benefit of creditors, or the admission in writing by the
Company of its inability to pay its debts generally as they become due, or the
Company not being permitted, pursuant to liquidity or solvency requirements of
applicable law, to redeem any Retracted Shares pursuant to Section 6.6 of the
Exchangeable Share Provisions.
"LIQUIDATION CALL RIGHT" has the meaning provided in the Articles of
Arrangement.
"LIQUIDATION EVENT" has the meaning provided in subsection 5.13(b)
hereof.
"LIQUIDATION EVENT EFFECTIVE TIME" has the meaning provided in
subsection 5.13(c) hereof.
"LIST" has the meaning provided in Section 4.7 hereof.
"OFFICER'S CERTIFICATE" means, with respect to Parent or the Company,
as the case may be, a certificate signed by the Chief Executive Officer or Chief
Financial Officer of Parent or the Company, as the case may be and, with respect
to Subco, a certificate signed by the President or Treasurer of Subco.
3
<PAGE>
"PARENT COMMON STOCK" means a share of common stock of Parent, par
value US$.01.
"PARENT CONSENT" has the meaning provided in Section 4.3 hereof.
"PARENT MEETING" has the meaning provided in Section 4.3 hereof.
"PARENT SPECIAL VOTING STOCK" has the meaning provided in the recitals
hereto.
"PARENT SUCCESSOR" has the meaning provided in subsection 11.1(a)
hereof.
"PERSON" includes an individual, body corporate, partnership, company,
unincorporated syndicate or organization, trust, trustee, executor,
administrator and other legal representative.
"PLAN OF ARRANGEMENT" has the meaning provided in the recitals hereto.
"REDEMPTION CALL RIGHT" has the meaning provided in the Plan of
Arrangement.
"RETRACTED SHARES" has the meaning provided in Section 5.8 hereof.
"RETRACTION CALL RIGHT" has the meaning provided in the Exchangeable
Share Provisions.
"SUBSIDIARY" has the meaning provided in the Exchangeable Share
Provisions.
"SUPPORT AGREEMENT" means that certain support agreement made as of
even date hereof by and between Parent, Subco and the Company.
"TRUST" means the trust created by this Agreement.
"TRUST ESTATE" means the Voting Share, any other securities, the
Exchange Put Right, the Exchange Right, the Automatic Exchange Rights and any
money or other property which may be held by the Trustee from time to time
pursuant to this Agreement.
"TRUSTEE" means Montreal Trust Company of Canada and, subject to the
provisions of Article 10 hereof, includes any successor trustee or permitted
assigns.
"VOTING RIGHTS" means the voting rights attached to the Voting Share.
"VOTING SHARE" means the one share of Parent Special Voting Stock
issued by Parent to and deposited with the Trustee, which entitles the holder of
record to a number of votes at meetings of holders of Parent Common Stock equal
to the Aggregate Equivalent Vote Amount.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this
Agreement into articles, sections and paragraphs and the insertion of headings
are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement. Unless otherwise indicated, all references to
an "Article" or "Section" followed by a number and/or a letter refer to the
specified
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Article or Section of this Agreement. The terms "this Agreement", "hereof",
"herein" and "hereunder" and similar expressions refer to this Agreement and not
to any particular Article, Section or other portion hereof and include any
agreement or instrument supplementary or ancillary hereto.
1.3 NUMBER, GENDER, ETC. Words importing the singular number only shall
include the plural and vice versa. Words importing the use of any gender shall
include all genders.
1.4 DATE FOR ANY ACTION. If any date on which any action is required to
be taken under this Agreement is not a Business Day, such action shall be
required to be taken on the next succeeding Business Day.
ARTICLE 2
PURPOSE OF AGREEMENT
2.1 ESTABLISHMENT OF TRUST. The purpose of this Agreement is to create
the Trust for the benefit of the Holders, as herein provided. The Trustee will
hold the Voting Share in order to enable the Trustee to exercise the Voting
Rights and will hold the Exchange Put Right, the Exchange Right and the
Automatic Exchange Rights in order to enable the Trustee to exercise such
rights, in each case as trustee for and on behalf of the Holders as provided in
this Agreement.
ARTICLE 3
VOTING SHARE
3.1 ISSUANCE AND OWNERSHIP OF THE VOTING SHARE. Parent hereby issues to
and deposits with the Trustee the Voting Share to be hereafter held of record by
the Trustee as trustee for and on behalf of, and for the use and benefit of, the
Holders and in accordance with the provisions of this Agreement. Parent hereby
acknowledges receipt from the Trustee as trustee for and on behalf of the
Holders of good and valuable consideration (and the adequacy thereof) for the
issuance of the Voting Share by Parent to the Trustee. During the term of the
Trust and subject to the terms and conditions of this Agreement, the Trustee
shall possess and be vested with full legal ownership of the Voting Share and
shall be entitled to exercise all of the rights and powers of an owner with
respect to the Voting Share, provided that the Trustee shall:
(a) hold the Voting Share and the legal title thereto as trustee solely
for the use and benefit of the Holders in accordance with the provisions of this
Agreement; and
(b) except as specifically authorized by this Agreement, have no power
or authority to sell, transfer, vote or otherwise deal in or with the Voting
Share, and the Voting Share shall not be used or disposed of by the Trustee for
any purpose other than the purposes for which this Trust is created pursuant to
this Agreement.
3.2 LEGENDED SHARE CERTIFICATES. The Company will cause each
certificate representing Exchangeable Shares to bear an appropriate legend
notifying the Holders of their right to instruct the Trustee with respect to the
exercise of the Voting Rights with respect to the Exchangeable Shares held by
the Holders.
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3.3 SAFE KEEPING OF CERTIFICATE. The certificate representing the
Voting Share shall at all times be held in safe keeping by the Trustee.
ARTICLE 4
EXERCISE OF VOTING RIGHTS
4.1 VOTING RIGHTS. The Trustee, as the holder of record of the Voting
Share, shall be entitled to all of the Voting Rights, including the right to
consent to or to vote in person or by proxy the Voting Share, on any matter,
question or proposition whatsoever that may properly come before the
stockholders of Parent at a Parent Meeting or in connection with a Parent
Consent. The Voting Rights shall be and remain vested in and exercised by the
Trustee. Subject to Section 7.15 hereof:
(a) the Trustee shall exercise the Voting Rights only on the basis of
instructions received pursuant to this Article 4 from Holders entitled to
instruct the Trustee as to the voting thereof at the time at which a Parent
Consent is sought or a Parent Meeting is held; and
(b) to the extent that no instructions are received from a Holder with
respect to the Voting Rights to which such Holder is entitled, the Trustee shall
not exercise or permit the exercise of such Holder's Voting Rights.
The Trustee acknowledges that, in accordance with the terms of the
Parent Special Voting Stock, the holder of the Voting Share and the holders of
shares of Parent Common Stock shall vote or consent as a single class in respect
of each matter, question or proposition to be voted on at a Parent Meeting or
being consented to in connection with a Parent Consent, it being further
acknowledged that, in certain circumstances, the holder of the Voting Share
shall, in addition, have a further vote as a separate class or series in respect
of any particular matter, question or proposition.
4.2 CLASS MEETINGS OF VOTING SHARE. Provided that the holder of the
Voting Share is also entitled to vote with the holders of Parent Common Stock as
a single class in accordance with the terms of the Parent Special Voting Stock,
with respect to any vote proposed for consideration by the holder of the Voting
Share voting separately as a series or class, either at a Parent Meeting or by
Parent Consent, other than a vote which, if passed, would affect the Voting
Rights of each Holder, the clerk of Parent shall instruct the Trustee as to the
manner in which the votes attached to the Voting Share shall be cast in such
class or series vote. When the holder of the Voting Share is not entitled to
vote with the holders of Parent Common Stock as a single class in accordance
with the terms of the Parent Special Voting Stock, the Holders may instruct the
Trustee as to the exercise of the votes attached to the Voting Share in such
class or series vote.
4.3 NUMBER OF VOTES. With respect to all meetings of stockholders of
Parent at which holders of shares of Parent Common Stock are entitled to vote (a
"Parent Meeting") and with respect to all written consents sought by Parent from
its stockholders including the holders of shares of Parent Common Stock (a
"Parent Consent"), each Holder shall be entitled to instruct the Trustee to cast
and exercise, in the manner instructed, a number of votes equal to the
Equivalent Vote Amount for each Exchangeable Share owned of record by such
Holder on the record date established by Parent or by applicable law for such
Parent Meeting or Parent Consent, as the case may be, (the
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"Holder Votes") in respect of each matter, question or proposition to be voted
on at such Parent Meeting or to be consented to in connection with such Parent
Consent.
4.4 MAILINGS TO SHAREHOLDERS. With respect to each Parent Meeting and
Parent Consent, the Trustee will mail or cause to be mailed (or otherwise
communicate in the same manner as Parent utilizes in communications to holders
of Parent Common Stock) to each of the Holders named in the List on the same day
as the initial mailing or notice (or other communication) with respect thereto
is commenced or given by Parent to its stockholders:
(a) a copy of such notice, together with any related materials to be
provided to stockholders of Parent;
(b) a statement that such Holder is entitled to instruct the Trustee as
to the exercise of the Holder Votes with respect to such Parent Meeting or
Parent Consent, as the case may be, or, pursuant to Section 4.8 hereof, to
attend such Parent Meeting and to exercise personally the Holder Votes thereat;
(c) a statement as to the manner in which such instructions may be
given to the Trustee, including an express indication that instructions may be
given to the Trustee to give:
(i) a proxy to such Holder or his designee to exercise
personally the Holder Votes; or
(ii) a proxy to a designated agent or other representative of
the management of Parent to exercise such Holder Votes;
(d) a statement that if no such instructions are received from the
Holder, the Holder Votes to which such Holder is entitled will not be exercised;
(e) a form of direction whereby the Holder may so direct and instruct
the Trustee as contemplated herein; and
(f) a statement of the time and date by which such instructions must be
received by the Trustee in order to be binding upon it, which in the case of a
Parent Meeting shall not be earlier than the close of business on the second
Business Day prior to such meeting, and the method for revoking or amending such
instructions.
The materials referred to above are to be provided by Parent to the
Trustee, but shall be subject to review and comment by the Trustee.
For the purpose of determining Holder Votes to which a Holder is
entitled in respect of any such Parent Meeting or Parent Consent, the number of
Exchangeable Shares owned of record by the Holder shall be determined at the
close of business on the record date established by Parent or by applicable law
for purposes of determining stockholders entitled to vote at such Parent Meeting
or to give written consent in connection with such Parent Consent. Parent will
notify the Trustee of
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any decision of the board of directors of Parent with respect to the calling of
any such Parent Meeting or the seeking of any such Parent Consent and shall
provide all necessary information and materials to the Trustee in each case
promptly and in any event in sufficient time to enable the Trustee to perform
its obligations contemplated by this Section 4.4.
4.5 COPIES OF STOCKHOLDER INFORMATION. Parent will deliver to the
Trustee copies of all proxy materials, (including notices of Parent Meetings,
but excluding proxies to vote shares of Parent Common Stock), information
statements, reports (including without limitation all interim and annual
financial statements) and other written communications that are to be
distributed from time to time to holders of Parent Common Stock in sufficient
quantities and in sufficient time so as to enable the Trustee to send those
materials to each Holder at the same time as such materials are first sent to
holders of Parent Common Stock. The Trustee will mail or otherwise send to each
Holder, at the expense of Parent, copies of all such materials (and all
materials specifically directed to the Holders or to the Trustee for the benefit
of the Holders by Parent) received by the Trustee from Parent at the same time
as such materials are first sent to holders of Parent Common Stock. The Trustee
will also make available for inspection by any Holder at the Trustee's principal
trust office in the city of Toronto all proxy materials, information statements,
reports and other written communications that are:
(a) received by the Trustee as the registered holder of the Parent
Special Voting Stock and made available by Parent generally to holders of Parent
Common Stock; or
(b) specifically directed to the Holders or to the Trustee for the
benefit of the Holders by Parent.
4.6 OTHER MATERIALS. As soon as reasonably practicable after receipt by
Parent or any stockholder of Parent (if such receipt is known by Parent) of any
material sent or given generally to the holders of Parent Common Stock by or on
behalf of a third party, including without limitation dissident proxy and
information circulars (and related information and material) and tender and
exchange offer circulars (and related information and material), Parent shall
use its reasonable efforts to obtain and deliver to the Trustee copies thereof
in sufficient quantities so as to enable the Trustee to forward such material
(unless the same has been provided directly to Holders by such third party) to
each Holder as soon as possible thereafter. As soon as practicable after receipt
thereof, the Trustee will mail or otherwise send to each Holder, at the expense
of Parent, copies of all such materials received by the Trustee from Parent. The
Trustee will also make copies of all such materials available for inspection by
any Holder at the Trustee's principal trust office in the city of Toronto.
4.7 LIST OF PERSONS ENTITLED TO VOTE. The Company shall, (a) prior to
each annual and special Parent Meeting or the seeking of any Parent Consent and
(b) forthwith upon each request made at any time by the Trustee in writing,
prepare or cause to be prepared a list (a "List") of the names and addresses of
the Holders arranged in alphabetical order and showing the number of
Exchangeable Shares held of record by each such Holder, in each case at the
close of business on the date specified by the Trustee in such request or, in
the case of a List prepared in connection with a Parent Meeting or a Parent
Consent, at the close of business on the record date established by Parent or
pursuant to applicable law for determining the holders of Parent Common Stock
entitled
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to receive notice of and/or to vote at such Parent Meeting or to give consent in
connection with such Parent Consent. Each such List shall be delivered to the
Trustee promptly after receipt by the Company of such request or the record date
for such meeting or seeking of consent, as the case may be, and in any event
within sufficient time as to enable the Trustee to perform its obligations under
this Agreement. Parent agrees to give the Company written notice (with a copy to
the Trustee) of the calling of any Parent Meeting or the seeking of any Parent
Consent, together with the record dates therefor, sufficiently prior to the date
of the calling of such meeting or seeking of such consent so as to enable the
Company to perform its obligations under this Section 4.7.
4.8 ENTITLEMENT TO DIRECT VOTES. Any Holder named in a List prepared in
connection with any Parent Meeting or any Parent Consent will be entitled (a) to
instruct the Trustee in the manner described in Section 4.4 hereof with respect
to the exercise of the Holder Votes to which such Holder is entitled or (b) to
attend such meeting and personally to exercise thereat (or to exercise with
respect to any written consent), as the proxy of the Trustee, the Holder Votes
to which such Holder is entitled.
4.9 VOTING BY TRUSTEE, AND ATTENDANCE OF TRUSTEE REPRESENTATIVE, AT
MEETING.
(a) In connection with each Parent Meeting and Parent Consent, the
Trustee shall exercise, either in person or by proxy, in accordance with the
instructions received from a Holder pursuant to Section 4.4 hereof, the Holder
Votes as to which such Holder is entitled to direct the vote (or any lesser
number thereof as may be set forth in the instructions); provided, however, that
such written instructions are received by the Trustee from the Holder prior to
the time and date fixed by the Trustee for receipt of such instructions in the
notice given by the Trustee to the Holder pursuant to Section 4.4 hereof.
(b) The Trustee shall cause a representative who is empowered by it to
sign and deliver, on behalf of the Trustee, proxies for Voting Rights to attend
each Parent Meeting. Upon submission by a Holder (or its designee) of
identification satisfactory to the Trustee's representative, and at the Holder's
request, such representative shall sign and deliver to such Holder (or its
designee) a proxy to exercise personally the Holder Votes as to which such
Holder is otherwise entitled hereunder to direct the vote, if such Holder
either:
(i) has not previously given the Trustee instructions pursuant
to Section 4.4 hereof in respect of such meeting, or
(ii) submits to the Trustee's representative written
revocation of any such previous instructions.
At such meeting, the Holder exercising such Holder Votes shall have the
same rights as the Trustee to speak at the meeting in respect of any matter,
question or proposition, to vote by way of ballot at the meeting in respect of
any matter, question or proposition, and to vote at such meeting by way of a
show of hands in respect of any matter, question or proposition.
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4.10 DISTRIBUTION OF WRITTEN MATERIALS. Any written materials to be
distributed by the Trustee to the Holders pursuant to this Agreement shall be
sent by mail (or otherwise communicated in the same manner as Parent utilizes in
communications to holders of Parent Common Stock) to each Holder at its address
as shown on the books of the Company. The Company shall provide or cause to be
provided to the Trustee for this purpose, on a timely basis and without charge
or other expense:
(a) a current List; and
(b) on the request of the Trustee, mailing labels to enable the Trustee
to carry out its duties under this Agreement.
4.11 TERMINATION OF VOTING RIGHTS. Except as otherwise provided herein
or in the Exchangeable Share Provisions, all of the rights of a Holder with
respect to the Holder Votes exercisable in respect of the Exchangeable Shares
held by such Holder, including the right to instruct the Trustee as to the
voting of or to vote personally such Holder Votes, shall be deemed to be
surrendered by the Holder to Parent or Subco, as the case may be, and such
Holder Votes and the Voting Rights represented thereby shall cease immediately,
upon the delivery by such Holder to the Trustee of the certificates representing
such Exchangeable Shares in connection with the exercise by the Holder of the
Exchange Put Right or the Exchange Right or the occurrence of the automatic
exchange of Exchangeable Shares for shares of Parent Common Stock, as specified
in Article 5 hereof (unless in any case Parent or Subco shall not have delivered
the Exchangeable Share Consideration deliverable in exchange therefor to the
Trustee for delivery to the Holders), or upon the redemption of Exchangeable
Shares pursuant to Article 6 or Article 7 of the Exchangeable Share Provisions,
or upon the effective date of the liquidation, dissolution or winding-up of the
Company or any other distribution of the assets of the Company among its
shareholders for the purpose of winding up its affairs pursuant to Article 5 of
the Exchangeable Share Provisions, or upon the purchase of Exchangeable Shares
from the holder thereof by Subco pursuant to the exercise by Subco of the
Retraction Call Right, the Redemption Call Right or the Liquidation Call Right.
ARTICLE 5
EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
5.1 GRANT AND OWNERSHIP OF THE EXCHANGE RIGHT. Subco hereby grants to
the Trustee as trustee for and on behalf of, and for the use and benefit of, the
Holders (a) the Exchange Put Right and (b) the right (the "Exchange Right"),
upon the occurrence and during the continuance of an Insolvency Event, to
require Subco to purchase from each or any Holder all or any part of the
Exchangeable Shares held by the Holders, all in accordance with the provisions
of this Agreement and the Exchangeable Share Provisions, as the case may be.
Subco hereby acknowledges receipt from the Trustee as trustee for and on behalf
of the Holders of good and valuable consideration (and the adequacy thereof) for
the grant of the Exchange Put Right and the Exchange Right by Subco to the
Trustee. During the term of the Trust and subject to the terms and conditions of
this Agreement, the Trustee shall possess and be vested with full legal
ownership of the Exchange Put Right and the Exchange Right and shall be entitled
to exercise all of the rights and powers of an owner with respect to the
Exchange Put Right and the Exchange Right, provided that the Trustee shall:
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(i) hold the Exchange Put Right and the Exchange Right and the legal
title thereto as trustee solely for the use and benefit of the Holders in
accordance with the provisions of this Agreement; and
(ii) except as specifically authorized by this Agreement, have no power
or authority to exercise or otherwise deal in or with the Exchange Put Right or
the Exchange Right, and the Trustee shall not exercise any such rights for any
purpose other than the purposes for which this Trust is created pursuant to this
Agreement.
5.2 GRANT AND OWNERSHIP OF THE AUTOMATIC EXCHANGE RIGHTS. Parent and
Subco hereby jointly and severally grant to the Trustee as trustee for and on
behalf of, and for the use and benefit of, the Holders the Automatic Exchange
Rights in accordance with the provisions of this Agreement. Parent and Subco
hereby acknowledge receipt from the Trustee as trustee for and on behalf of the
Holders of good and valuable consideration (and the adequacy thereof) for the
grant of the Automatic Exchange Rights by Parent and Subco to the Trustee.
During the term of the Trust and subject to the terms and conditions of this
Agreement, the Trustee shall possess and be vested with full legal ownership of
the Automatic Exchange Rights and shall be entitled to exercise all of the
rights and powers of an owner with respect to the Automatic Exchange Rights,
provided that the Trustee shall:
(a) hold the Automatic Exchange Rights and the legal title thereto as
trustee solely for the use and benefit of the Holders in accordance with the
provisions of this Agreement; and
(b) except as specifically authorized by this Agreement, have no power
or authority to exercise or otherwise deal in or with the Automatic Exchange
Rights, and the Trustee shall not exercise such rights for any purpose other
than the purposes for which this Trust is created pursuant to this Agreement.
5.3 LEGENDED SHARE CERTIFICATES. The Company will cause each
certificate representing Exchangeable Shares to bear an appropriate legend
notifying the Holders of:
(a) their right to instruct the Trustee with respect to the exercise of
the Exchange Put Right and the Exchange Right in respect of the Exchangeable
Shares held by a Holder, and
(b) the Automatic Exchange Rights.
5.4 GENERAL EXERCISE OF EXCHANGE PUT RIGHT AND EXCHANGE RIGHT. The
Exchange Put Right and the Exchange Right shall be and remain vested in and
exercised by the Trustee. Subject to Section 7.15 hereof, the Trustee shall
exercise the Exchange Put Right and the Exchange Right only on the basis of
instructions received pursuant to this Article 5 from Holders entitled to
instruct the Trustee as to the exercise thereof. To the extent that no
instructions are received from a Holder with respect to the Exchange Put Right
and the Exchange Right, the Trustee shall not exercise or permit the exercise of
the Exchange Put Right and the Exchange Right.
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5.5 PURCHASE PRICE. The purchase price payable by Subco for each
Exchangeable Share to be purchased by Subco (a) under the Exchange Put Right
shall be the amount determined under the Exchangeable Share Provisions, and (b)
under the Exchange Right shall be an amount equal to the Exchangeable Share
Price on the last Business Day prior to the day of closing of the purchase and
sale of such Exchangeable Share under the Exchange Right. In connection with
each exercise of the Exchange Right, Subco will provide to the Trustee an
Officer's Certificate setting forth the calculation of the applicable
Exchangeable Share Price for each Exchangeable Share. The applicable
Exchangeable Share Price for each such Exchangeable Share so purchased may be
satisfied only by Subco's issuing and delivering or causing to be delivered to
the Trustee, on behalf of the relevant Holder, the applicable Exchangeable Share
Consideration representing the total applicable Exchangeable Share Price (less
any amounts withheld pursuant to Section 5.14 hereof).
5.6 EXERCISE INSTRUCTIONS. Subject to the terms and conditions set
forth herein, a Holder shall be entitled, upon the occurrence and during the
continuance of an Insolvency Event, to instruct the Trustee to exercise the
Exchange Right with respect to all or any part of the Exchangeable Shares
registered in the name of such Holder on the books of the Company. To cause the
exercise of the Exchange Right by the Trustee, the Holder shall deliver to the
Trustee, in person or by certified or registered mail, at its principal trust
office in Toronto, Ontario or at such other places in Canada as the Trustee may
from time to time designate by written notice to the Holders, the certificates
representing the Exchangeable Shares which such Holder desires Subco to
purchase, duly endorsed in blank, and accompanied by such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares under
the CBCA and the by-laws of the Company and such additional documents and
instruments as the Trustee may reasonably require, together with:
(a) a duly completed form of notice of exercise of the Exchange Right,
contained on the reverse of or attached to the Exchangeable Share certificates,
stating:
(i) that the Holder thereby instructs the Trustee to exercise
the Exchange Right so as to require Subco to purchase from the Holder
the number of Exchangeable Shares specified therein,
(ii) that such Holder has good title to and owns all such
Exchangeable Shares to be acquired by Subco free and clear of all
liens, claims, encumbrances, security interests and adverse claims or
interests,
(iii) the names in which the certificates representing Parent
Common Stock issuable in connection with the exercise of the Exchange
Right are to be issued, and
(iv) the names and addresses of the persons to whom the
Exchangeable Share Consideration should be delivered; and
(b) payment (or evidence satisfactory to the Trustee, the Company and
Subco of payment) of the taxes (if any) payable as contemplated by Section 5.9
of this Agreement.
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If only a part of the Exchangeable Shares represented by any
certificate or certificates delivered to the Trustee are to be purchased by
Subco under the Exchange Right, a new certificate for the balance of such
Exchangeable Shares shall be issued to the Holder at the expense of the Company.
5.7 DELIVERY OF EXCHANGEABLE SHARE CONSIDERATION; EFFECT OF EXERCISE.
Promptly after receipt of the certificates duly endorsed for transfer to Subco
representing the Exchangeable Shares which the Holder desires Subco to purchase
under the Exchange Put Right or the Exchange Right, together with such documents
and instruments of transfer and a duly completed form of notice of exercise of
the Exchange Put Right or the Exchange Right (and payment of taxes, if any,
payable as contemplated by Section 5.9 hereof), the Trustee shall notify Subco
and the Company of its receipt of the same, which notice to Subco and the
Company shall constitute exercise of the Exchange Put Right or the Exchange
Right by the Trustee on behalf of the Holder of such Exchangeable Shares, and
Subco shall immediately thereafter deliver or cause to be delivered to the
Trustee, for delivery to the Holder of such Exchangeable Shares (or to such
other persons, if any, properly designated by such Holder), the Exchangeable
Share Consideration deliverable in connection with the exercise of the Exchange
Put Right or the Exchange Right (less any amounts withheld pursuant to Section
5.14 hereof); provided, however, that no such delivery shall be made unless and
until the Holder requesting the same shall have paid (or provided evidence
satisfactory to the Trustee, the Company and Subco of the payment of) the taxes
(if any) payable as contemplated by Section 5.9 of this Agreement. Immediately
upon the giving of notice by the Trustee to Subco and the Company of the
exercise of the Exchange Put Right or the Exchange Right, as provided in this
Section 5.7, (a) the closing of the transaction of purchase and sale
contemplated by the Exchange Put Right or the Exchange Right shall be deemed to
have occurred, (b) Subco shall be required to take all action necessary to
permit it to occur, including delivery to the Trustee of the relevant
Exchangeable Share Consideration, no later than the close of business on the
fifth Business Day following the receipt by the Trustee of notice, certificates
and other documents as aforesaid and (c) the Holder of such Exchangeable Shares
shall be deemed to have transferred to Subco all of its right, title and
interest in and to such Exchangeable Shares and the related interest in the
Trust Estate, shall cease to be a holder of such Exchangeable Shares and shall
not be entitled to exercise any of the rights of a holder in respect thereof,
other than the right to receive his proportionate part of the total purchase
price therefor, unless such Exchangeable Share Consideration is not delivered by
Subco to the Trustee by the date specified above, in which case the rights of
the Holder shall remain unaffected until such Exchangeable Share Consideration
is delivered by Subco and any check included therein is paid. Concurrently with
such Holder ceasing to be a holder of Exchangeable Shares, the Holder shall be
considered and deemed for all purposes to be the holder of the shares of Parent
Common Stock delivered to it pursuant to the Exchange Put Right or the Exchange
Right. Notwithstanding the foregoing until the Exchangeable Share Consideration
is delivered to the Holder, the Holder shall be deemed to still be a holder of
the sold Exchangeable Shares for purposes of voting rights with respect thereto
under this Agreement.
5.8 EXERCISE OF EXCHANGE RIGHT SUBSEQUENT TO RETRACTION. In the event
that a Holder has exercised its right under Article 6 of the Exchangeable Share
Provisions to require the Company to redeem any or all of the Exchangeable
Shares held by the Holder (the "Retracted Shares") and is notified by the
Company pursuant to Section 6.6 of the Exchangeable Share Provisions that the
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Company will not be permitted as a result of liquidity or solvency requirements
of applicable law to redeem all such Retracted Shares, subject to receipt by the
Trustee of written notice to that effect from the Company and provided that
Subco shall not have exercised the Retraction Call Right with respect to the
Retracted Shares and that the Holder has not revoked the retraction request
delivered by the Holder to the Company pursuant to Section 6.1 of the
Exchangeable Share Provisions, the retraction request will constitute and will
be deemed to constitute notice from the Holder to the Trustee instructing the
Trustee to exercise the Exchange Right with respect to those Retracted Shares
which the Company is unable to redeem. In any such event, the Company hereby
agrees with the Trustee and in favor of the Holder immediately to notify the
Trustee of such prohibition against the Company's redeeming all of the Retracted
Shares and immediately to forward or cause to be forwarded to the Trustee all
relevant materials delivered by the Holder to the Company or to the transfer
agent of the Exchangeable Shares (including without limitation a copy of the
retraction request delivered pursuant to Section 6.1 of the Exchangeable Share
Provisions) in connection with such proposed redemption of the Retracted Shares,
and the Trustee will thereupon exercise the Exchange Right with respect to the
Retracted Shares which the Company is not permitted to redeem and will require
Subco to purchase such shares in accordance with the provisions of this
Article 5.
5.9 STAMP OR OTHER TRANSFER TAXES. Upon any sale of Exchangeable Shares
to Subco pursuant to the Exchange Put Right or the Exchange Right or any sale of
Exchangeable Shares to Parent or Subco pursuant to the Automatic Exchange
Rights, the share certificate or certificates representing Parent Common Stock
to be delivered in connection with the payment of the total purchase price
therefor shall be issued in the name of the Holder of the Exchangeable Shares so
sold or in such names as such Holder may otherwise direct in writing without
charge to the holder of the Exchangeable Shares so sold, provided, however, that
such Holder:
(a) shall pay (and none of Parent, Subco, the Company or the Trustee
shall be required to pay) any documentary, stamp, transfer or other taxes that
may be payable in respect of any transfer involved in the issuance or delivery
of such shares to a person other than such Holder, or
(b) shall have established to the satisfaction of the Trustee, Subco,
Parent (in the case of the sale of Exchangeable Shares to Parent pursuant to the
Automatic Exchange Rights) and the Company that such taxes, if any, have been
paid.
5.10 NOTICE OF INSOLVENCY EVENT. As soon as practicable following the
occurrence of an Insolvency Event or any event which with the giving of notice
or the passage of time or both would be an Insolvency Event, the Company and
Subco shall give written notice thereof to the Trustee. As soon as practicable
after receiving notice from the Company or Subco of the occurrence of an
Insolvency Event, the Trustee will mail to each Holder, at the expense of Subco,
a notice of such Insolvency Event in the form provided by Subco, which notice
shall contain a brief statement of the right of the Holders with respect to the
Exchange Right.
5.11 QUALIFICATION OF PARENT COMMON STOCK. Parent covenants that if any
shares of Parent Common Stock to be issued and delivered pursuant to the
Exchange Put Right, the Exchange Right or the Automatic Exchange Rights require
registration or qualification with or approval of or the filing of any document
including any prospectus or similar document, the taking of any
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proceeding with or the obtaining of any order, ruling or consent from any
governmental or regulatory authority under any Canadian or United States
federal, provincial or state law or regulation or pursuant to the rules and
regulations of any regulatory authority, or the fulfillment of any other legal
requirement (collectively, the "Applicable Laws") before such shares may be
issued and delivered by Parent or Subco to the initial holder thereof (other
than the Company) or in order that such shares may be freely traded thereafter
(other than contractual restrictions and any restrictions on transfer by reason
of a holder being a "CONTROL PERSON" of Parent for purposes of Canadian federal
or provincial securities law or an "AFFILIATE" of Parent or the Company for
purposes of United States federal or state securities law), Parent will in good
faith expeditiously take all such actions and do all such things as are
necessary to cause such shares of Parent Common Stock to be and remain duly
registered, qualified or approved. Parent represents and warrants that it has in
good faith taken all actions and done all things as are necessary under
Applicable Laws as they exist on the date hereof to cause the shares of Parent
Common Stock to be issued and delivered pursuant to the Exchange Put Right, the
Exchange Right and the Automatic Exchange Rights and to be freely tradeable
thereafter (other than contractual restrictions and restrictions on transfer by
reason of a holder being a "CONTROL PERSON" of Parent for the purposes of
Canadian federal and provincial securities law or an "AFFILIATE" of Parent or
the Company for the purposes of United States federal or state securities law).
Parent will in good faith expeditiously take all such actions and do all such
things as are necessary to cause all shares of Parent Common Stock to be
delivered pursuant to the Exchange Put Right, the Exchange Right or the
Automatic Exchange Rights to be listed, quoted or posted for trading on all
stock exchanges and quotation systems on which such shares are listed, quoted or
posted for trading at such time.
5.12 PARENT COMMON STOCK. Parent hereby represents, warrants and
covenants that the Parent Common Stock issuable and deliverable as described
herein will be duly authorized and validly issued as fully paid and
non-assessable.
5.13 AUTOMATIC EXCHANGE ON LIQUIDATION OF PARENT.
(a) Parent will give the Trustee written notice of each of the
following events at the time set forth below:
(i) in the event of any determination by the board of
directors of Parent to institute voluntary liquidation, dissolution or
winding-up proceedings with respect to Parent or to effect any other
distribution of assets of Parent among its stockholders for the purpose
of winding up its affairs, at least 60 days prior to the proposed
effective date of such liquidation, dissolution, winding-up or other
distribution; and
(ii) as soon as practicable following the earlier of:
(A) receipt by Parent of notice of and
(B) Parent's otherwise becoming aware of any
threatened or instituted claim, suit, petition or
other proceedings with respect to the involuntary
liquidation, dissolution or winding-up of Parent or
to effect any other distribution of
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assets of Parent among its stockholders for the
purpose of winding up its affairs, in each case where
Parent has failed to contest in good faith any such
proceeding commenced in respect of Parent within 30
days of becoming aware thereof.
(b) Immediately following receipt by the Trustee from Parent of notice
of any event (a "Liquidation Event") contemplated by Section 5.13(a)(i) or
5.13(a)(ii) above, the Trustee will give notice thereof to the Holders. Such
notice shall include a brief description of the automatic exchange of
Exchangeable Shares for shares of Parent Common Stock provided for in Section
5.13(c).
(c) In order that the Holders will be able to participate on a pro rata
basis with the holders of Parent Common Stock in the distribution of assets of
Parent in connection with a Liquidation Event, immediately prior to the
effective time (the "Liquidation Event Effective Time") of a Liquidation Event,
all of the then outstanding Exchangeable Shares shall be automatically exchanged
for shares of Parent Common Stock. To effect such automatic exchange, Parent or
Subco, as determined by Parent and notified in writing to the Trustee, or upon
failure of such notice, Parent, shall be deemed to have purchased each
Exchangeable Share outstanding immediately prior to the Liquidation Event
Effective Time and held by Holders, and each Holder shall be deemed to have sold
the Exchangeable Shares held by it at such time, for a purchase price per share
equal to the Exchangeable Share Price applicable at such time. In connection
with such automatic exchange, Parent will provide to the Trustee an Officer's
Certificate setting forth the calculation of the purchase price for each
Exchangeable Share.
(d) The closing of the transaction of purchase and sale contemplated by
Section 5.13(c) above shall be deemed to have occurred immediately prior to the
Liquidation Event Effective Time, and each Holder of Exchangeable Shares shall
be deemed to have transferred to Parent or Subco, as the case may be, all of the
Holder's right, title and interest in and to such Exchangeable Shares and the
related interest in the Trust Estate and shall cease to be a holder of such
Exchangeable Shares, and Parent or Subco, as the case may be, shall deliver to
the Holder the Exchangeable Share Consideration deliverable upon the automatic
exchange of Exchangeable Shares (less any amounts withheld pursuant to Section
5.14 hereof). Concurrently with such Holder's ceasing to be a holder of
Exchangeable Shares, the Holder shall be considered and deemed for all purposes
to be the holder of the shares of Parent Common Stock delivered to it pursuant
to the automatic exchange of Exchangeable Shares for Parent Common Stock, and
the certificates held by the Holder previously representing the Exchangeable
Shares exchanged by the Holder with Parent or Subco, as the case may be,
pursuant to such automatic exchange shall thereafter be deemed to represent the
shares of Parent Common Stock delivered to the Holder pursuant to such automatic
exchange. Upon the request of a Holder and the surrender by the Holder of
Exchangeable Share certificates deemed to represent shares of Parent Common
Stock, duly endorsed in blank and accompanied by such instruments of transfer as
Parent or Subco, as the case may be, may reasonably require, Parent or Subco, as
the case may be, shall deliver or cause to be delivered to the Holder
certificates representing the shares of Parent Common Stock of which the Holder
is the holder. Notwithstanding the foregoing, until each Holder is actually
entered on the register of holders of Parent Common Stock, such Holder shall be
deemed to still be a holder of the transferred Exchangeable Shares for purposes
of all voting rights with respect thereto under this Agreement.
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5.14 WITHHOLDING RIGHTS. Parent, Subco and the Trustee shall be
entitled to deduct and withhold from any consideration otherwise payable under
this Agreement to any holder of Exchangeable Shares or Parent Common Stock such
amounts as Parent, Subco or the Trustee is required or permitted to deduct and
withhold with respect to such payment under the Income Tax Act (Canada), the
United States Internal Revenue Code of 1986 or any provision of provincial,
state, local or foreign tax law, in each case as amended or succeeded. To the
extent that amounts are so withheld, such withheld amounts shall be treated for
all purposes as having been paid to the holder of the shares in respect of which
such deduction and withholding was made, provided that such withheld amounts are
actually remitted to the appropriate taxing authority. To the extent that the
amount so required or permitted to be deducted or withheld from any payment to a
holder exceeds the cash portion of the consideration otherwise payable to the
holder, Parent, Subco and the Trustee are hereby authorized to sell or otherwise
dispose of such portion of the consideration as is necessary to provide
sufficient funds to Parent, Subco or the Trustee, as the case may be, to enable
it to comply with such deduction or withholding requirement and Parent, Subco or
the Trustee shall notify the holder thereof and remit to such holder any
unapplied balance of the net proceeds of such sale.
ARTICLE 6
RESTRICTIONS ON ISSUANCE OF PARENT SPECIAL VOTING STOCK
During the term of this Agreement, Parent will not, without the consent
of the holders at the relevant time of the Exchangeable Shares given in
accordance with Article 10 of the Exchangeable Share Provisions, issue any
shares of Parent Special Voting Stock in addition to the Voting Share.
ARTICLE 7
CONCERNING THE TRUSTEE
7.1 POWERS AND DUTIES OF THE TRUSTEE. The rights, powers and
authorities of the Trustee under this Agreement, in its capacity as trustee of
the Trust, shall include:
(a) receipt and deposit of the Voting Share from Parent as trustee for
and on behalf of the Holders in accordance with the provisions of this
Agreement;
(b) granting proxies and distributing materials to Holders as provided
in this Agreement;
(c) voting the Holder Votes in accordance with the provisions of this
Agreement;
(d) receiving the grant of the Exchange Put Right and the Exchange
Right from Subco and receiving the grant of the Automatic Exchange Rights from
Parent and Subco as trustee for and on behalf of the Holders in accordance with
the provisions of this Agreement;
(e) exercising the Exchange Put Right and the Exchange Right and
enforcing the benefit of the Automatic Exchange Rights, in each case in
accordance with the provisions of this Agreement, and in connection therewith
receiving from Holders Exchangeable Shares and other requisite documents and
distributing to such Holders the shares of Parent Common Stock and checks, if
any,
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to which such Holders are entitled upon the exercise of the Exchange Put Right
and the Exchange Right or pursuant to the Automatic Exchange Rights, as the case
may be;
(f) holding title to the Trust Estate;
(g) investing any moneys forming, from time to time, a part of the
Trust Estate as provided in this Agreement;
(h) taking action at the direction of a Holder or Holders to enforce
the obligations of Parent, Subco and the Company under this Agreement; and
(i) taking such other actions and doing such other things as are
specifically provided in this Agreement.
In the exercise of such rights, powers and authorities the Trustee
shall have (and is granted) such incidental and additional rights, powers and
authority not in conflict with any of the provisions of this Agreement as the
Trustee, acting in good faith and in the reasonable exercise of its discretion,
may deem necessary, appropriate or desirable to effect the purpose of the Trust.
Any exercise of such discretionary rights, powers and authorities by the Trustee
shall be final, conclusive and binding upon all persons. The Trustee in
exercising its rights, powers, duties and authorities hereunder shall act
honestly and in good faith with a view to the best interests of the Holders and
shall exercise the care, diligence and skill that a reasonably prudent trustee
would exercise in comparable circumstances.
7.2 NO CONFLICT OF INTEREST. The Trustee represents to the Company,
Parent and Subco that at the date of execution and delivery of this Agreement
there exists no material conflict of interest in the role of the Trustee as a
fiduciary hereunder and the role of the Trustee in any other capacity. The
Trustee shall within 60 days after it becomes aware that such a material
conflict of interest exists, either eliminate such material conflict of interest
or resign in the manner and with the effect specified in Article 10 hereof. If,
notwithstanding the foregoing provisions of this Section 7.2, the Trustee has
such a material conflict of interest, the validity and enforceability of this
Agreement shall not be affected in any manner whatsoever by reason only of the
existence of such material conflict of interest. If the Trustee contravenes the
foregoing provisions of this Section 7.2, any interested party may apply to the
Ontario Court of Justice (General Division) for an order that the Trustee be
replaced as trustee hereunder.
7.3 DEALINGS WITH TRANSFER AGENTS, REGISTRARS, ETC. The Company, Parent
and Subco irrevocably authorize the Trustee, from time to time, to:
(a) consult, communicate and otherwise deal with the respective
registrars and transfer agents, and with any such subsequent registrar or
transfer agent, of the Exchangeable Shares and Parent Common Stock; and
(b) requisition, from time to time,
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(i) from any such registrar or transfer agent any information
readily available from the records maintained by it which the Trustee
may reasonably require for the discharge of its duties and
responsibilities under this Agreement and
(ii) from the transfer agent of Parent Common Stock, and any
subsequent transfer agent of such shares, to complete the exercise from
time to time of the Exchange Put Right, the Exchange Right and the
Automatic Exchange Rights in the manner specified in Article 5 hereof,
the share certificates issuable upon such exercise.
The Company, Parent and Subco irrevocably authorize their respective
registrars and transfer agents to comply with all such requests. Parent
covenants that it will supply its transfer agent with duly executed share
certificates for the purpose of completing the exercise from time to time of the
Exchange Put Right, the Exchange Right and the Automatic Exchange Rights, in
each case pursuant to Article 5 hereof.
7.4 BOOKS AND RECORDS. The Trustee shall keep available for inspection
by Parent, Subco and the Company, at the Trustee's principal trust office in
Toronto, Ontario, correct and complete books and records of account relating to
the Trustee's actions under this Agreement, including without limitation, all
information relating to mailings and instructions to and from Holders and all
transactions pursuant to the Voting Rights, the Exchange Put Right, the Exchange
Right and the Automatic Exchange Rights for the term of this Agreement. On or
before March 31, 2000, and on or before March 31 in every year thereafter, so
long as the Voting Share is on deposit with the Trustee, the Trustee shall
transmit to Parent and the Company a brief report, dated as of the preceding
December 31, with respect to:
(a) property and funds comprising the Trust Estate as of that date;
(b) the number of exercises of the Exchange Put Right and the Exchange
Right, if any, and the aggregate number of Exchangeable Shares received by the
Trustee on behalf of Holders in consideration of the issue and delivery by
Parent of shares of Parent Common Stock in connection with the Exchange Put
Right and the Exchange Right, during the calendar year ended on such date; and
(c) all other actions taken by the Trustee in the performance of its
duties under this Agreement which it had not previously reported.
7.5 INCOME TAX RETURNS AND REPORTS. The Trustee shall to the extent
necessary, prepare and file on behalf of the Trust appropriate United States and
Canadian income tax returns and any other returns or reports as may be required
by applicable law or pursuant to the rules and regulations of any securities
exchange or other trading system through which the Exchangeable Shares are
traded.
7.6 INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE. The Trustee
shall exercise any or all of the rights, duties, powers or authorities vested in
it by this Agreement at the request, order or direction of any Holder upon such
Holder's furnishing to the Trustee reasonable funding,
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security and indemnity against the costs, expenses and liabilities which may be
incurred by the Trustee therein or thereby; provided that no Holder shall be
obligated to furnish to the Trustee any such funding, security or indemnity in
connection with the exercise by the Trustee of any of its rights, duties, powers
and authorities with respect to the Voting Share pursuant to Article 4 hereof,
subject to Section 7.15 hereof, and with respect to the Exchange Put Right and
the Exchange Right pursuant to Article 5 hereof, subject to Section 7.15 hereof,
and with respect to the Automatic Exchange Rights pursuant to Article 5 hereof.
None of the provisions contained in this Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
exercise of any of its rights, powers, duties or authorities unless funded,
given funds, security and indemnified as aforesaid.
7.7 ACTIONS BY HOLDERS. No Holder shall have the right to institute any
action, suit or proceeding or to exercise any other remedy authorized by this
Agreement for the purpose of enforcing any of its rights or for the execution of
any trust or power hereunder unless the Holder has requested the Trustee to take
or institute such action, suit or proceeding and furnished the Trustee with the
funding, security and indemnity referred to in Section 7.6 hereof and the
Trustee shall have failed to act within a reasonable time thereafter. In such
case, but not otherwise, the Holder shall be entitled to take proceedings in any
court of competent jurisdiction such as the Trustee might have taken; it being
understood and intended that no one or more Holders shall have any right in any
manner whatsoever to affect, disturb or prejudice the rights hereby created by
any such action, or to enforce any right hereunder or under the Voting Rights,
the Exchange Put Right, the Exchange Right or the Automatic Exchange Rights,
except subject to the conditions and in the manner herein provided, and that all
powers and trusts hereunder shall be exercised and all proceedings at law shall
be instituted, had and maintained by the Trustee, except only as herein
provided, and in any event for the equal benefit of all Holders.
7.8 RELIANCE UPON DECLARATIONS. The Trustee shall not be considered to
be in contravention of any of its rights, powers, duties and authorities
hereunder if, when required, it acts and relies in good faith upon lists,
mailing labels, notices, statutory declarations, certificates, opinions, reports
or other papers or documents furnished pursuant to the provisions hereof or
required by the Trustee to be furnished to it in the exercise of its rights,
powers, duties and authorities hereunder, and such lists, mailing labels,
notices, statutory declarations, certificates, opinions, reports or other papers
or documents comply with the provisions of Section 7.9 hereof, if applicable,
and with any other applicable provisions of this Agreement.
7.9 EVIDENCE AND AUTHORITY TO TRUSTEE. The Company, Parent and Subco
shall furnish to the Trustee evidence of compliance with the conditions provided
for in this Agreement relating to any action or step required or permitted to be
taken by any of them or the Trustee under this Agreement or as a result of any
obligation imposed under this Agreement, including, without limitation, in
respect of the Voting Rights or the Exchange Put Right, the Exchange Right or
the Automatic Exchange Rights and the taking of any other action to be taken by
the Trustee at the request of or on the application of the Company, Parent or
Subco forthwith if and when:
(a) such evidence is required by any other section of this Agreement to
be furnished to the Trustee in accordance with the terms of this Section 7.9; or
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(b) the Trustee, in the exercise of its rights, powers, duties and
authorities under this Agreement, gives the Company, Parent or Subco written
notice requiring it to furnish such evidence in relation to any particular
action or obligation specified in such notice.
Such evidence shall consist of an Officer's Certificate of the Company,
Parent or Subco or a statutory declaration or a certificate made by persons
entitled to sign an Officer's Certificate stating that any such condition has
been complied with in accordance with the terms of this Agreement.
Whenever such evidence relates to a matter other than the Voting Rights
or the Exchange Put Right, the Exchange Right or the Automatic Exchange Rights,
and except as otherwise specifically provided herein, such evidence may consist
of a report or opinion of any solicitor, auditor, accountant, appraiser, valuer,
engineer or other expert or any other person whose qualifications give authority
to a statement made by such person, provided that if such report or opinion is
furnished by a director, officer or employee of the Company, Parent or Subco it
shall be in the form of an Officer's Certificate or a statutory declaration.
Each statutory declaration, Officer's Certificate, opinion or report
furnished to the Trustee as evidence of compliance with a condition provided for
in this Agreement shall include a statement by the person giving the evidence:
(a) declaring that such person has read and understands the provisions
of this Agreement relating to the condition in question;
(b) describing the nature and scope of the examination or investigation
upon which such person based the statutory declaration, Officer's Certificate,
opinion or report; and
(c) declaring that such person has made such examination or
investigation as such person believes is necessary to enable such person to make
the statements or give the opinions contained or expressed therein.
7.10 EXPERTS, ADVISERS AND AGENTS. The Trustee may:
(a) in relation to these presents act and rely on the opinion or advice
of or information obtained from or prepared by any solicitor, auditor,
accountant, appraiser, valuer, engineer or other expert, whether retained by the
Trustee or by any of the Company, Parent and Subco or otherwise, and may employ
such assistants as may be necessary to the proper determination and discharge of
its powers and duties and determination of its rights hereunder and may pay
proper and reasonable compensation for all such legal and other advice or
assistance as aforesaid; and
(b) employ such agents and other assistants as it may reasonably
require for the proper determination and discharge of its powers and duties
hereunder, and may pay reasonable remuneration for all services performed for it
(and shall be entitled to receive reasonable remuneration for all services
performed by it) in the discharge of the trusts hereof and compensation for all
disbursements, costs and expenses made or incurred by it in the determination
and discharge of its duties hereunder and in the management of the Trust.
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7.11 INVESTMENT OF MONEYS HELD BY TRUSTEE. Unless otherwise provided in
this Agreement, any moneys held by or on behalf of the Trustee which under the
terms of this Agreement may or ought to be invested or which may be on deposit
with the Trustee or which may be in the hands of the Trustee, may be invested
and reinvested in the name or under the control of the Trustee in securities in
which, under the laws of the Province of Ontario, trustees are authorized to
invest trust moneys; provided that such securities are stated to mature within
two years after their purchase by the Trustee, and the Trustee shall so invest
such moneys on the written direction of the Company. Pending the investment of
any moneys as hereinbefore provided, such moneys may be deposited in the name of
the Trustee in any chartered bank in Canada or, with the consent of the Company,
in the deposit department of the Trustee or any other loan or trust company
authorized to accept deposits under the laws of Canada or any province thereof
at the rate of interest then current on similar deposits.
7.12 TRUSTEE NOT REQUIRED TO GIVE SECURITY. The Trustee shall not be
required to give any bond or security in respect of the execution of the trusts,
rights, duties, powers and authorities of this Agreement or otherwise in respect
of the premises.
7.13 TRUSTEE NOT BOUND TO ACT ON REQUEST. Except as otherwise
specifically provided in this Agreement, the Trustee shall not be bound to act
in accordance with any direction or request of the Company, Parent or Subco or
of the directors thereof until a duly authenticated copy of the instrument or
resolution containing such direction or request shall have been delivered to the
Trustee, and the Trustee shall be empowered to act and rely upon any such copy
purporting to be authenticated and believed by the Trustee to be genuine.
7.14 AUTHORITY TO CARRY ON BUSINESS. The Trustee represents to the
Company, Parent and Subco that at the date of execution and delivery by it of
this Agreement it is authorized to carry on the business of a trust company in
each of the Provinces of Canada but if, notwithstanding the provisions of this
Section 7.14, it ceases to be so authorized to carry on business, the validity
and enforceability of this Agreement and the Voting Rights, the Exchange Put
Right, the Exchange Right and the Automatic Exchange Rights shall not be
affected in any manner whatsoever by reason only of such event; provided,
however, the Trustee shall within 60 days after ceasing to be authorized to
carry on the business of a trust company in any Province of Canada, either
become so authorized or resign in the manner and with the effect specified in
Article 10 hereof.
7.15 CONFLICTING CLAIMS. If conflicting claims or demands are made or
asserted with respect to any interest of any Holder in any Exchangeable Shares,
including any disagreement between the heirs, representatives, successors or
assigns succeeding to all or any part of the interest of any Holder in any
Exchangeable Shares resulting in conflicting claims or demands being made in
connection with such interest, then the Trustee shall be entitled, at its sole
discretion, to refuse to recognize or to comply with any such claim or demand.
In so refusing, the Trustee may elect not to exercise any Voting Rights,
Exchange Put Right, Exchange Right or Automatic Exchange Rights subject to such
conflicting claims or demands and, in so doing, the Trustee shall not be or
become liable to any person on account of such election or its failure or
refusal to comply with any such conflicting claims or demands. The Trustee shall
be entitled to continue to refrain from acting and to refuse to act until:
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(a) the rights of all adverse claimants with respect to the Voting
Rights, Exchange Put Right, Exchange Right or Automatic Exchange Rights subject
to such conflicting claims or demands have been adjudicated by a final judgment
of a court of competent jurisdiction; or
(b) all differences with respect to the Voting Rights, Exchange Put
Right, Exchange Right or Automatic Exchange Rights subject to such conflicting
claims or demands have been conclusively settled by a valid written agreement
binding on all such adverse claimants, and the Trustee shall have been furnished
with an executed copy of such agreement.
If the Trustee elects to recognize any claim or comply with any demand
made by any such adverse claimant, it may in its discretion require such
claimant to furnish such surety bond or other security satisfactory to the
Trustee as it shall deem appropriate fully to indemnity it as between all
conflicting claims or demands.
7.16 ACCEPTANCE OF TRUST. The Trustee hereby accepts the Trust created
and provided for by and in this Agreement and agrees to perform the same upon
the terms and conditions herein set forth and to hold all rights, privileges and
benefits conferred hereby and by law in trust for the various persons who shall
from time to time be Holders, subject to all the terms and conditions herein set
forth.
ARTICLE 8
COMPENSATION
Parent, Subco and the Company jointly and severally agree to pay to the
Trustee reasonable compensation for all of the services rendered by it under
this Agreement and will reimburse the Trustee for all reasonable expenses
(including taxes other than taxes based on the net income of the Trustee) and
disbursements, including the cost and expense of any suit or litigation of any
character and any proceedings before any governmental agency, reasonably
incurred by the Trustee in connection with its rights and duties under this
Agreement; provided that Parent, Subco and the Company shall have no obligation
to reimburse the Trustee for any expenses or disbursements paid, incurred or
suffered by the Trustee in any suit or litigation in which the Trustee is
determined to have acted fraudulently or in bad faith or with negligence,
recklessness or willful misconduct.
ARTICLE 9
INDEMNIFICATION AND LIMITATION OF LIABILITY
9.1 INDEMNIFICATION OF THE TRUSTEE. Parent, Subco and the Company
jointly and severally agree to indemnity and hold harmless the Trustee and each
of its directors, officers and agents appointed and acting in accordance with
this Agreement (collectively, the "Indemnified Parties") against all claims,
losses, damages, costs, penalties, fines and reasonable expenses (including
reasonable expenses of the Trustee's legal counsel) which, without fraud,
negligence, recklessness, willful misconduct or bad faith on the part of such
Indemnified Party, may be paid, incurred or suffered by the Indemnified Party by
reason of or as a result of the Trustee's acceptance or administration of the
Trust, its compliance with its duties set forth in this Agreement, or any
written or oral instructions delivered to the Trustee by Parent, Subco or the
Company pursuant
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hereto. In no case shall Parent, Subco or the Company be liable under this
indemnity for any claim against any of the Indemnified Parties until Parent,
Subco and the Company shall be notified by the Trustee of the written
assertion of a claim or of any action commenced against the Indemnified
Parties, after any of the Indemnified Parties shall have received any such
written assertion of a claim or shall have been served with a summons or
other first legal process giving information as to the nature and basis of
the claim. Subject to (ii) below, Parent, Subco and the Company shall be
entitled to participate at their own expense in the defense and, if Parent,
Subco or the Company so elect at any time after receipt of such notice, any
of them may assume the defense of any suit brought to enforce any such claim.
The Trustee shall have the right to employ separate counsel in any such suit
and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Trustee unless: (i) the employment of
such counsel has been authorized by Parent, Subco or the Company; or (ii) the
named parties to any such suit include both the Trustee and Parent, Subco or
the Company and the Trustee shall have been advised by counsel acceptable to
Parent, Subco or the Company that there may be one or more legal defenses
available to the Trustee that are different from or in addition to those
available to Parent, Subco or the Company and that, in the judgement of such
counsel, would present a conflict of interest were a joint representation to
be undertaken (in which case Parent, Subco and the Company shall not have the
right to assume the defense of such suit on behalf of the Trustee, but shall
be liable to pay the reasonable fees and expenses of counsel for the
Trustee). This indemnity shall survive the removal of the Trustee.
9.2 LIMITATION OF LIABILITY. The Trustee shall not be held liable for
any loss which may occur by reason of depreciation of the value of any part of
the Trust Estate or any loss incurred on any investment of funds pursuant to
this Agreement, except to the extent that such loss is attributable to the
fraud, negligence, recklessness, willful misconduct or bad faith on the part of
the Trustee.
ARTICLE 10
CHANGE OF TRUSTEE
10.1 RESIGNATION. The Trustee, or any trustee hereafter appointed, may
at any time resign by giving written notice of such resignation to Parent, Subco
and the Company specifying the date on which it desires to resign, provided that
such notice shall never be given less than 60 days before such desired
resignation date unless Parent, Subco and the Company otherwise agree and
provided further that such resignation shall not take effect until the date of
the appointment of a successor trustee and the acceptance of such appointment by
the successor trustee. Upon receiving such notice of resignation, Parent, Subco
and the Company shall promptly appoint a successor trustee by written instrument
in duplicate, one copy of which shall be delivered to the resigning trustee and
one copy to the successor trustee. Failing acceptance by a successor trustee, a
successor trustee may be appointed by an order of the Ontario Court of Justice
(General Division) upon application of one or more of the parties hereto.
10.2 REMOVAL. The Trustee, or any trustee hereafter appointed, may be
removed with or without cause, at any time on not less than 30 days' prior
notice by written instrument executed by Parent , Subco and the Company, in
duplicate, one copy of which shall be delivered to the trustee so removed and
one copy to the successor trustee, provided that, in connection with such
removal, provision is made for a replacement trustee similar to that
contemplated in Section 10.1.
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10.3 SUCCESSOR TRUSTEE. Any successor trustee appointed as provided
under this Agreement shall execute, acknowledge and deliver to Parent, Subco and
the Company and to its predecessor trustee an instrument accepting such
appointment. Thereupon the resignation or removal of the predecessor trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessor under this Agreement, with like effect as if
originally named as trustee in this Agreement. However, on the written request
of Parent, Subco and the Company or of the successor trustee, the trustee
ceasing to act shall, upon payment of any amounts then due it pursuant to the
provisions of this Agreement, execute and deliver an instrument transferring to
such successor trustee all the rights and powers of the trustee so ceasing to
act. Upon the request of any such successor trustee, Parent, Subco, the Company
and such predecessor trustee shall execute any and all instruments in writing
for more fully and certainly vesting in and confirming to such successor trustee
all such rights and powers.
10.4 NOTICE OF SUCCESSOR TRUSTEE. Upon acceptance of appointment by a
successor trustee as provided herein, Parent, Subco and the Company shall cause
to be mailed notice of the succession of such trustee hereunder to each Holder
specified in a List. If Parent, Subco or the Company shall fail to cause such
notice to be mailed within 10 days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be mailed at
the expense of Parent, Subco and the Company.
ARTICLE 11
PARENT SUCCESSORS
11.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC. Parent shall
not enter into any transaction (whether by way of reconstruction,
reorganization, consolidation, merger, transfer, sale, lease or otherwise)
whereby all or substantially all of its undertaking, property and assets would
become the property of any other Person or, in the case of a merger, of the
continuing corporation resulting therefrom, but may do so if:
(a) such other Person or continuing corporation (the "Parent
Successor"), by operation of law, becomes, without more, bound by the terms and
provisions of this Agreement or, if not so bound, executes, prior to or
contemporaneously with the consummation of such transaction an Agreement
supplemental hereto and such other instruments (if any) as are satisfactory to
the Trustee, acting reasonably, and in the opinion of legal counsel to the
Trustee are necessary or advisable to evidence the assumption by the Parent
Successor of liability for all moneys payable and property deliverable
hereunder, the covenant of such Parent Successor to pay and deliver or cause to
be delivered the same and its agreement to observe and perform all the covenants
and obligations of Parent under this Agreement; and
(b) such transaction shall, to the satisfaction of the Trustee and in
the opinion of legal counsel to the Trustee, be upon such terms which
substantially preserve and do not impair in any material respect any of the
rights, duties, powers and authorities of the Trustee or of the Holders
hereunder.
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11.2 VESTING OF POWERS IN PARENT SUCCESSOR. Whenever the conditions of
Section 11.1 hereof have been duly observed and performed, the Trustee, if
required by Section 11.1 hereof, the Parent Successor, Subco and the Company
shall execute and deliver the supplemental agreement provided for in Article 12
hereof, and thereupon the Parent Successor shall possess and from time to time
may exercise each and every right and power of Parent under this Agreement in
the name of Parent or otherwise and any act or proceeding by any provision of
this Agreement required to be done or performed by the board of directors of
Parent or any officers of Parent may be done and performed with like force and
effect by the directors or officers of such Parent Successor.
11.3 WHOLLY-OWNED SUBSIDIARIES. Nothing herein shall be construed as
preventing the amalgamation or merger of any wholly-owned subsidiary of Parent
with or into Parent or the winding-up, liquidation or dissolution of any
wholly-owned subsidiary of Parent provided that all of the assets of such
subsidiary are transferred to Parent or another wholly-owned subsidiary of
Parent, and any such transactions are expressly permitted by this Article 11.
ARTICLE 12
AMENDMENTS AND SUPPLEMENTAL AGREEMENTS
12.1 AMENDMENTS, MODIFICATIONS, ETC. Subject to Section 12.4, this
Agreement may not be amended, modified or waived except by an agreement in
writing executed by the Company, Subco, Parent and the Trustee and approved by
the Holders in accordance with Section Article 10 of the Exchangeable Share
Provisions. No amendment to or modification or waiver of any of the provisions
of this Agreement otherwise permitted hereunder shall be effective unless made
in writing and signed by all of the parties hereto.
12.2 MINISTERIAL AMENDMENTS. Notwithstanding the provisions of Section
12.1 hereof, the parties to this Agreement may in writing, at any time and from
time to time, without the approval of the Holders, amend or modify this
Agreement for the purposes of:
(a) adding to the covenants of any or all of the parties hereto for the
protection of the Holders hereunder;
(b) making such amendments or modifications not inconsistent with this
Agreement as may be necessary or desirable with respect to matters or questions
which, in the opinion of the board of directors of each of Parent, Subco and the
Company and in the opinion of the Trustee and its counsel, having in mind the
best interests of the Holders as a whole, it may be expedient to make, provided
that such boards of directors and the Trustee and its counsel shall be of the
opinion that such amendments and modifications will not be prejudicial to the
interests of the Holders as a whole; or
(c) making such changes or corrections which, on the advice of counsel
to the Company, Subco, Parent and the Trustee, are required for the purpose of
curing or correcting any ambiguity or defect or inconsistent provision or
clerical omission or mistake or manifest error; provided that the Trustee and
its counsel and the board of directors of each of the Company, Subco and Parent
26
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shall be of the opinion that such changes or corrections will not be prejudicial
to the interests of the Holders as a whole.
12.3 MEETING TO CONSIDER AMENDMENTS. The Company, at the request of
Parent or Subco, shall call a meeting or meetings of the Holders for the purpose
of considering any proposed amendment or modification requiring approval
pursuant hereto. Any such meeting or meetings shall be called and held in
accordance with the by-laws of the Company, the Exchangeable Share Provisions
and all applicable laws.
12.4 CHANGES IN CAPITAL OF PARENT AND THE COMPANY. At all times after
the occurrence of any event effected pursuant to Section 2.7 or Section 2.8 of
the Support Agreement, as a result of which either Parent Common Stock or the
Exchangeable Shares or both are in any way changed, this Agreement shall
forthwith be amended and modified as necessary in order that it shall apply with
full force and effect, mutatis mutandis, to all new securities into which Parent
Common Stock or the Exchangeable Shares or both are so changed, and the parties
hereto shall execute and deliver a supplemental agreement giving effect to and
evidencing such necessary amendments and modifications.
12.5 EXECUTION OF SUPPLEMENTAL AGREEMENTS. From time to time the
Company (when authorized by a resolution of its Board of Directors), Parent
(when authorized by a vote of its board of directors), Subco (when authorized by
a resolution of its board of directors) and the Trustee may, subject to the
provisions of these presents, and they shall, when so directed by these
presents, execute and deliver by their proper officers, agreements or other
instruments supplemental hereto, which thereafter shall form part hereof, for
any one or more of the following purposes:
(a) evidencing the succession of any Parent Successors to Parent and
the covenants of and obligations assumed by each such Parent Successor in
accordance with the provisions of Article 11 and the successor of any successor
trustee in accordance with the provisions of Article 10;
(b) making any additions to, deletions from or alterations of the
provisions of this Agreement or the Voting Rights, the Exchange Put Right, the
Exchange Right or the Automatic Exchange Rights which, in the opinion of the
Trustee and its counsel, will not be prejudicial to the interests of the Holders
as a whole or are in the opinion of counsel to the Trustee necessary or
advisable in order to incorporate, reflect or comply with any legislation the
provisions of which apply to Parent, Subco, the Company, the Trustee or this
Agreement; and
(c) for any other purposes not inconsistent with the provisions of this
Agreement, including, without limitation, to make or evidence any amendment or
modification to this Agreement as contemplated hereby, provided that, in the
opinion of the Trustee and its counsel, the rights of the Trustee and the
Holders as a whole will not be prejudiced thereby.
ARTICLE 13
TERMINATION
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13.1 TERM. The Trust created by this Agreement shall continue until the
earliest to occur of the following events:
(a) no outstanding Exchangeable Shares are held by a Holder,
(b) each of the Company, Subco and Parent elects in writing to
terminate the Trust and such termination is approved by the Holders in
accordance with Article 10 of the Exchangeable Share Provisions; and
(c) 21 years after the death of the last survivor of the descendants of
His Majesty King George VI of the United Kingdom of Great Britain and Northern
Ireland living on the date of the creation of the Trust.
13.2 SURVIVAL OF AGREEMENT. This Agreement shall survive any
termination of the Trust and shall continue until there are no Exchangeable
Shares outstanding held by a Holder, provided, however, that the provisions of
Articles 8 and 9 hereof shall survive any such termination of this Agreement.
ARTICLE 14
GENERAL
14.2 SEVERABILITY. If any provision of this Agreement is held to be
invalid, illegal or unenforceable, the validity, legality or enforceability of
the remainder of this Agreement shall not in any way be affected or impaired
thereby, and the Agreement shall be carried out as nearly as possible in
accordance with its original terms and conditions.
14.3 INUREMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns and to the benefit of the Holders.
14.3 NOTICES TO PARTIES. All notices and other communications between
the parties hereunder shall be in writing and shall be deemed to have been given
if delivered personally or by confirmed telecopy to the parties at the following
addresses (or at such other address for such party as shall be specified in like
notice):
TO PARENT OR SUBCO:
PRI Automation, Inc.
805 Middlesex Turnpike
Billerica, MA 01821-3986
Attention: Chief Executive Officer
FACSIMILE NUMBER: (978) 671-9430
28
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WITH COPIES TO:
Foley, Hoag & Eliot LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Robert L. Birnbaum, Esq.
FACSIMILE NUMBER: (617) 832-7000
AND
Blake, Cassels & Graydon
Box 25, Commerce Court West
Toronto, Ontario M5L 1A9
CANADA
Attention: Alan F. Brown, Esq.
FACSIMILE NUMBER: (416) 863-2653
TO THE COMPANY:
Promis Systems Corporation Ltd.
170 University Avenue, Suite 1200
Toronto, Ontario M5H 3B3
CANADA
Attention: Chief Executive Officer
FACSIMILE NUMBER: (416) 977-2016
WITH A COPY TO:
Cassels, Brock & Blackwell
Scotia Plaza, Suite 2100
40 King Street West
Toronto, Ontario M5H 3C2
CANADA
Attention: Lawrence D. Wilder, Esq.
FACSIMILE NUMBER: (416) 350-6904
TO THE TRUSTEE:
Any notice or other communication given personally shall be deemed to have been
given and received upon delivery thereof, and if given by telecopy shall be
deemed to have been given and received on the date of receipt thereof unless
such day is not a Business Day in which case it shall be deemed to have been
given and received upon the immediately following Business Day.
29
<PAGE>
14.4 NOTICE TO HOLDERS. Any and all notices to be given and any
documents to be sent to any Holders may be given or sent to the address of such
Holder shown on the register of Holders of Exchangeable Shares in any manner
permitted by the Exchangeable Share Provisions and shall be deemed to be
received (if given or sent in such manner) at the time specified in such
Exchangeable Share Provisions, the provisions of which Exchangeable Share
Provisions shall apply mutatis mutandis to notices or documents as aforesaid
sent to such Holders.
14.5 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
14.6 JURISDICTION. This Agreement shall be construed and enforced in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
14.7 ATTORNMENT. Parent agrees that any action or proceeding arising
out of or relating to this Agreement may be instituted in the courts of Ontario,
waives any objection which it may have now or hereafter to the venue of any such
action or proceeding, irrevocably submits to the jurisdiction of such courts in
any such action or proceeding, agrees to be bound by any judgment of such courts
and agrees not to seek, and hereby waives, any review of the merits of any such
judgment by the courts of any other jurisdiction and hereby appoints the Company
at its registered office in the Province of Ontario as attorney for service of
process.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
30
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IN WITNESS WHEREOF, the parties hereby have caused this Voting and
Exchange Trust Agreement to be duly executed as of the date first above written.
PRI AUTOMATION, INC.
By: /S/ MITCHELL G. TYSON
----------------------------------------------
Mitchell G. Tyson, Chief Executive Officer
1325949 ONTARIO INC.
By: /S/ MITCHELL G. TYSON
----------------------------------------------
Mitchell G. Tyson, Chief Executive Officer
PROMIS SYSTEMS CORPORATION LTD.
By: /S/ IAN MCKINNON
----------------------------------------------
Ian McKinnon, Chief Executive Officer
MONTREAL TRUST COMPANY OF CANADA
By: /S/ LARRY GREEN
----------------------------------------------
Larry Green, Senior Corporate Trust Officer
/s/ Rhonda Goldberg
Rhonda Goldberg, Corporate Trust Officer
31
<PAGE>
EXECUTION COPY
SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT is entered into as of March 2, 1999, by and
among by and among PRI Automation, Inc., a corporation existing under laws of
the Commonwealth of Massachusetts ("Parent"), 1325949 Ontario Inc., a
corporation existing under the laws of Ontario and a wholly owned subsidiary of
Parent ("Subco"), and Promis Systems Corporation Ltd., a corporation existing
under the laws of Canada (the "Company").
WHEREAS, pursuant to a Combination Agreement dated November 24, 1998
(the "Combination Agreement"), by and among the Company, Parent and Subco, the
parties agreed that on the Effective Date (as defined in the Combination
Agreement), Parent, Subco, and the Company would execute and deliver a Support
Agreement substantially in the form of this Agreement;
WHEREAS, pursuant to an arrangement (the "Arrangement") effected by the
Articles of Arrangement dated March 2, 1999 (the "Articles of Arrangement")
filed pursuant to the Canada Business Corporations Act (the "CBCA"), each issued
and outstanding common share (a "Common Share") of the Company (other than those
Common Shares held by dissenters exercising their dissenters' rights in
accordance with Section 190 of the CBCA and Section 3.1 of the plan of
arrangement (the "Plan of Arrangement" contained in the Articles of
Arrangement) was exchanged for a maximum of 1,390,010 issued and outstanding
Exchangeable Shares of the Company, subject to reduction in respect of
fractional interests (the "Exchangeable Shares"), and thereafter, the Company's
sole issued and outstanding Class X Preferred Share was exchanged by Subco for
one issued and outstanding Common Share;
WHEREAS, the above-mentioned Articles of Arrangement sets forth the
rights, privileges, restrictions and conditions attaching to the Exchangeable
Shares (collectively, the "Exchangeable Share Provisions");
WHEREAS, the parties hereto desire to make appropriate provision and to
establish a procedure whereby Parent and Subco will take certain actions and
make certain payments and deliveries necessary to ensure that the Company will
be able to make certain payments and to deliver or cause to be delivered shares
of common stock of Parent, par value US$.01 per share ("Parent Common Stock") in
satisfaction of the obligations of the Company under the Exchangeable Share
Provisions with respect to the payment and satisfaction of dividends,
Liquidation Amounts, Retraction Prices and Redemption Prices, all in accordance
with the Exchangeable Share Provisions;
WHEREAS, the parties hereto desire to make appropriate provision and to
establish a procedure whereby Parent will take certain actions and make certain
payments and deliveries necessary to ensure that Subco will be able to deliver
or cause to be delivered shares of Parent Common Stock in satisfaction of the
obligations of Subco under the Voting and Exchange Trust Agreement and the
Exchangeable Share Provisions with respect to the payment and satisfaction of
the Liquidation Call Purchase Price (as defined in the Articles of Arrangement)
and the Redemption Call Purchase Price (as defined in the Articles of
Arrangement) or with respect to satisfaction of the
<PAGE>
Exchange Put Right, the Exchange Right (as defined in the Voting and Exchange
Trust Agreement) and the Automatic Exchange Rights (as defined herein);
NOW, THEREFORE, in consideration of the respective covenants and
agreements provided in this Agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 DEFINED TERMS. Each term denoted herein by initial capital letters and
not otherwise defined herein shall have the meaning attributed thereto in the
Exchangeable Share Provisions, unless the context otherwise requires.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this
Agreement into Articles, Sections and paragraphs and the insertion of headings
are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement. Unless otherwise indicated, all references to
an "Article" or "Section" followed by a number and/or a letter refer to the
specified Article or Section of this Agreement. The terms "this Agreement",
Ahereof A, "herein" and "hereunder" and similar expressions refer to this
Agreement and not to any particular Article, Section or other portion hereof and
include any agreement or instrument supplementary or ancillary hereto.
1.3 NUMBER, GENDER, ETC. Words importing the singular number only shall
include the plural and vice versa. Words importing the use of any gender shall
include all genders.
1.4 DATE FOR ANY ACTION. If any date on which any action is required to be
taken under this Agreement is not a Business Day, such action shall be required
to be taken on the next succeeding Business Day.
ARTICLE II
COVENANTS OF PARENT, SUBCO AND THE COMPANY
2.1 COVENANTS OF PARENT AND SUBCO REGARDING EXCHANGEABLE SHARES. So long as
any Exchangeable Shares are outstanding:
(a) Parent will not declare or pay any dividend on Parent Common Stock
unless (i) the Company will have sufficient assets, funds and other property
available to enable the due declaration and the due and punctual payment in
accordance with applicable law of an equivalent dividend on the Exchangeable
Shares and (ii) subsection 2.1(b) shall be complied with in connection with such
dividend;
(b) Parent and Subco will cause the Company to declare simultaneously
with the declaration of any dividend on Parent Common Stock an equivalent
dividend on the Exchangeable Shares and, when such dividend is paid on Parent
Common Stock, cause the Company to pay
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<PAGE>
simultaneously therewith such equivalent dividend on the Exchangeable Shares, in
each case in accordance with the Exchangeable Share Provisions; (1)
(c) Parent will advise Subco and the Company sufficiently in advance
of the declaration by Parent of any dividend on Parent Common Stock and take all
such other actions as are necessary, in cooperation with Subco and the Company,
to ensure that the respective declaration date, record date and payment date for
a dividend on the Exchangeable Shares shall be the same as the record date,
declaration date and payment date for the corresponding dividend on Parent
Common Stock and that such dividend on the Exchangeable Shares will correspond
with any requirement of the principal stock exchange on which the Exchangeable
Shares are listed;
(d) Parent will ensure that the record date for any dividend declared
on Parent Common Stock is not less than ten Business Days after the declaration
date for such dividend;
(e) Parent and Subco will take all such actions and do all such things
as are reasonably necessary or desirable to enable and permit the Company, in
accordance with applicable law, to pay and otherwise perform its obligations
with respect to the satisfaction of the Liquidation Amount, the Retraction Price
or the Redemption Price in respect of each issued and outstanding Exchangeable
Share upon the liquidation, dissolution or winding-up of the Company, the
delivery of a Retraction Request by a holder of Exchangeable Shares or a
redemption of Exchangeable Shares by the Company, as the case may be, including,
without limitation, all such actions and all such things as are reasonably
necessary or desirable to enable and permit the Company to cause to be delivered
Parent Common Stock to the holders of Exchangeable Shares in accordance with the
provisions of Article 5, 6 or 7, as the case may be, of the Exchangeable Share
Provisions; and
(f) Parent will take all such actions and do all such things as are
reasonably necessary or desirable to enable and permit Subco, in accordance with
applicable law, to perform its obligations arising upon (i) the exercise by
Subco of the Liquidation Call Right, the Retraction Call Right or the Redemption
Call Right or (ii) the exercise by a holder of Exchangeable Shares of such
holder's Exchange Put Right or Exchange Right or (iii) the automatic exchange of
a holder's Exchangeable Shares in accordance with the rights set forth in
Section 5.13 of the Voting and Exchange Trust Agreement (the "Automatic Exchange
Rights"), including, without limitation, all such actions and all such things
as are reasonably necessary or desirable to enable and permit Subco to cause
Parent Common Stock to be delivered to the holders of Exchangeable Shares in
accordance with the Exchangeable Share Provisions and the Voting and Exchange
Trust Agreement.
2.2 SEGREGATION OF FUNDS. Parent and Subco will cause the Company to
deposit a sufficient amount of funds in a separate account and segregate a
sufficient amount of such assets and other property as is necessary to enable
the Company to pay or otherwise satisfy the applicable dividends, Liquidation
Amount, Retraction Price or Redemption Price, in each case for the benefit of
holders from time to time of the Exchangeable Shares, and the Company will use
such funds, assets and other property so segregated exclusively for the payment
of dividends and the payment or other satisfaction of the Liquidation Amount,
the Retraction Price or the Redemption Price, as applicable, net of any
corresponding withholding tax obligations and for the remittance of such
withholding tax obligations.
3
<PAGE>
2.3 RESERVATION OF SHARES OF PARENT COMMON STOCK. Parent hereby
represents, warrants and covenants that it has irrevocably reserved for issuance
and will at all times keep available, free from preemptive and other rights, out
of its authorized and unissued capital stock such number of shares of Parent
Common Stock (or other shares or securities into which Parent Common Stock may
be reclassified or changed as contemplated by section 2.7 hereof) (a) as is
equal to the sum of (i) the number of Exchangeable Shares issued and outstanding
from time to time and (ii) the number of Exchangeable Shares issuable upon the
exercise of all rights to acquire Exchangeable Shares outstanding from time to
time and (b) as are now and may hereafter be required to enable and permit
Parent to meet its obligations hereunder, under the Voting and Exchange Trust
Agreement and under any other security or commitment pursuant to which Parent
may now or hereafter be required to issue Parent Common Stock, to enable and
permit Subco to meet its respective obligations or exercise its rights
hereunder, under the Voting and Exchange Trust Agreement and the Exchangeable
Share Provisions and to enable and permit the Company to meet its respective
obligations or exercise its rights hereunder and under the Exchangeable Share
Provisions.
2.4 NOTIFICATION OF CERTAIN EVENTS. In order to (a) assist Parent to
comply with its obligations hereunder and under the Voting and Exchange Trust
Agreement, (b) assist Subco to comply with its obligations hereunder, under the
Voting and Exchange Trust Agreement and under the Exchangeable Share Provisions
and (c) permit Subco to exercise its rights under the Exchangeable Share
Provisions, the Company will give or cause the Transfer Agent to give Subco and
Parent notice of each of the following events at the time set forth below:
(i) immediately, in the event of any determination by the
Board of Directors of the Company to take any action which would require a vote
of the holders of Exchangeable Shares for approval;
(ii) immediately, upon the earlier of (A) receipt by the
Company of notice of, and (B) the Company otherwise becoming aware of, any
threatened or instituted claim, suit, petition or other proceedings with respect
to the involuntary liquidation, dissolution or winding-up of the Company or to
effect any other distribution of the assets of the Company among its
shareholders for the purpose of winding-up its affairs;
(iii) immediately, upon receipt by the Company of a Retraction
Request;
(iv) at least 130 days prior to any Automatic Redemption Date
determined by the Board of Directors of the Company in accordance with clause
(b) of the definition of Automatic Redemption Date in the Exchangeable Share
Provisions; and
(v) as soon as practicable upon the issuance by the Company of
any Exchangeable Shares or rights to acquire Exchangeable Shares (other than the
issuance of Exchangeable Shares and rights to acquire Exchangeable Shares in
exchange for outstanding Common Shares pursuant to the Arrangement).
4
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2.5 DELIVERY OF SHARES OF PARENT COMMON STOCK. In furtherance of its
obligations hereunder, upon notice from the Company or Subco of any event which
requires the Company or Subco to cause to be delivered shares of Parent Common
Stock to any holder of Exchangeable Shares, Parent shall forthwith issue and
deliver or cause to be delivered to the Company or Subco the requisite shares of
Parent Common Stock to be received by, and issued to the order of, the former
holder of the surrendered Exchangeable Shares, as the Company or Subco shall
direct. All such shares of Parent Common Stock shall be duly issued as fully
paid and non-assessable. In consideration of the issuance and delivery of each
such share of Parent Common Stock, the Company or Subco, as the case may be,
shall issue to Parent, or as Parent shall direct, shares or other securities
having equivalent value.
2.60 QUALIFICATION OF SHARES OF PARENT COMMON STOCK. If any shares of
Parent Common Stock (or other shares or securities into which Parent Common
Stock may be reclassified or changed as contemplated by Section 2.7 hereof) to
be issued and delivered hereunder require registration or qualification with or
approval of or the filing of any document including any prospectus or similar
document, the taking of any proceeding with or the obtaining of any order,
ruling or consent from any governmental or regulatory authority under any
Canadian or United States federal, provincial or state law or regulation or
pursuant to the rules and regulations of any regulatory authority, or the
fulfillment of any other legal requirement (collectively, the "Applicable Laws")
before such shares (or such other shares or securities) may be issued by Parent
and delivered by Parent at the direction of Subco or the Company, if applicable,
to the holder of surrendered Exchangeable Shares or in order that such shares
(or such other shares or securities) may be freely traded thereafter (other than
contractual restrictions or any restrictions on transfer by reason of a holder
being a "control person" of Parent for purposes of Canadian federal or
provincial securities law or an "affiliate" of Parent or the Company for
purposes of United States federal or state securities law), Parent will in good
faith expeditiously take all such actions and do all such things as are
necessary to cause such shares of Parent Common Stock (or such other shares or
securities) to be and remain duly registered, qualified or approved. Parent will
in good faith take all actions and do all things as are reasonably necessary or
desirable under Applicable Laws as they exist on the date hereof to cause the
shares of Parent Common Stock (and such other shares or securities) to be issued
and delivered hereunder to be freely tradeable thereafter (other than
contractual restrictions or any restrictions on transfer by reason of a holder
being a "control person" of Parent for the purposes of Canadian federal and
provincial securities law or an "affiliate" of Parent or the Company for
purposes of United States federal or state securities law). Parent will in good
faith expeditiously take all such actions and do all such things as are
reasonably necessary to cause all shares of Parent Common Stock (or such other
shares or securities) to be delivered hereunder to be listed, quoted or posted
for trading on all stock exchanges and quotation systems on which outstanding
shares of Parent Common Stock (or such other shares or securities) are listed,
quoted or posted for trading at such time.
2.7 ECONOMIC EQUIVALENCE.
(a) Parent will not, without the prior approval of the Company and
the prior approval of the holders of the Exchangeable Shares given in accordance
with Article 10 of the Exchangeable Share Provisions:
5
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(i) issue or distribute shares of Parent Common Stock (or
securities exchangeable for or convertible into or carrying rights to
acquire shares of Parent Common Stock) to the holders of all or
substantially all of the then outstanding shares of Parent Common
Stock by way of stock dividend or other distribution; or
(ii) issue or distribute rights, options or warrants to the
holders of all or substantially all of the then outstanding shares of
Parent Common Stock entitling them to subscribe for or to purchase
shares of Parent Common Stock (or securities exchangeable for or
convertible into or carrying rights to acquire shares of Parent Common
Stock); or
(iii) issue or distribute to the holders of all or
substantially all of the then outstanding shares of Parent Common
Stock (A) shares or securities of Parent of any class other than
Parent Common Stock (other than shares convertible into or
exchangeable for or carrying rights to acquire shares of Parent Common
Stock), (B) rights, options or warrants other than those referred to
in subsection 2.7(a)(ii) above, (C) evidences of indebtedness of
Parent or (D) assets of Parent;
unless one or both of the Company and Parent is permitted under applicable law
to issue and distribute the economic equivalent on a per share basis of such
rights, options, warrants, securities, shares, evidences of indebtedness or
assets to holders of the Exchangeable Shares and the economic equivalent on per
share basis of the items referred to in subsections 2.7(a)(i), (ii) and (iii)
above, as applicable, is simultaneously issued or distributed to the holders of
the Exchangeable Shares.
(b) Parent will not, without the prior approval of the
Company and the prior approval of the holders of the Exchangeable Shares given
in accordance with Article 10 of the Exchangeable Share Provisions:
(i) subdivide, redivide or change the then
outstanding shares of Parent Common Stock into a greater number of
shares of Parent Common Stock; or
(ii) reduce, combine or consolidate or change the
then outstanding shares of Parent Common Stock into a lesser number of
shares of Parent Common Stock, or
(iii) reclassify or otherwise change the shares of
Parent Common Stock or effect an amalgamation, merger, reorganization
or other transaction affecting the shares of Parent Common Stock;
unless the Company is permitted under applicable law to make the same or an
economically equivalent change to, or in the rights of holders of, the
Exchangeable Shares and the same or an economically equivalent change is
simultaneously made to, or in the rights of, the holders of the Exchangeable
Shares.
(c) Parent will ensure that the record date for any event
referred to in subsection 2.7 (a) or 2.7 (b) above, or (if no record date is
applicable for such event) the effective date for any
6
<PAGE>
such event, is not less than 20 Business Days after the date on which such event
is declared or announced by Parent (with simultaneous notice thereof to be given
by Parent to Subco and the Company). (1)
(d) Subco and the Company agree that, to the extent required, upon
due notice from Parent, Subco and the Company will use their best efforts to
take or cause to be taken such steps as may be necessary for the purposes of
ensuring that appropriate dividends are paid or other distributions are made by
the Company, or subdivisions, redivisions or changes are made to the
Exchangeable Shares, in order to implement the required economic equivalence
with respect to the Parent Common Stock and Exchangeable Shares as provided for
in this Section 2.7.
(e) The Board of Directors of the Company shall determine, in good
faith and in its sole discretion, economic equivalence for the purposes of any
event referred to in section 2.7(a) or 2.7(b) above and each such determination
shall be conclusive and binding on Parent. In making each such determination,
the following factors shall, without excluding other factors determined by the
Board of Directors of the Company to be relevant, be considered by the Board of
Directors of the Company:
(i) in the case of any stock dividend or other
distribution payable in Parent Common Stock, the number of such
shares issued in proportion to the number of shares of Parent Common
Stock previously outstanding;
(ii) in the case of the issuance or distribution of any
rights, options or warrants to subscribe for or purchase Parent Common
Stock (or securities exchangeable for or convertible into or carrying
rights to acquire Parent Common Stock), the relationship between the
exercise price of each such right, option or warrant and the current
market value (as determined by the Board of Directors of the Company
in the manner contemplated below) of a share of Parent Common Stock;
(iii) in the case of the issuance or distribution of any
other form of property (including without limitation any shares or
securities of Parent of any class other than Parent Common Stock, any
rights, options or warrants other than those referred to in subsection
2.7 (e)(ii) above, any evidences of indebtedness of Parent or any
assets of Parent), the relationship between the fair market value (as
determined by the Board of Directors of the Company in the manner
contemplated below) of such property to be issued or distributed with
respect to each outstanding share of Parent Common Stock and the
current market value (as determined by the Board of Directors of the
Company in the manner contemplated below) of a share of Parent Common
Stock;
(iv) in the case of any subdivision, redivision or change
of the then outstanding shares of Parent Common Stock into a greater
number of shares of Parent Common Stock or the reduction, combination,
consolidation or change of the then outstanding shares of Parent
Common Stock into a lesser number of shares of Parent Common Stock or
any amalgamation, merger, reorganization or other transaction
affecting
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Parent Common Stock, the effect thereof upon the then outstanding
shares of Parent Common Stock; and
(v) in all such cases, the general taxation consequences
of the relevant event to holders of Exchangeable Shares to the extent
that such consequences may differ from the taxation consequences to
holders of Parent Common Stock as a result of differences between
taxation laws of Canada and the United States (except for any
differing consequences arising as a result of differing marginal
taxation rates and without regard to the individual circumstances of
holders of Exchangeable Shares).
For purposes of the foregoing determinations, the current market value of any
security listed and traded or quoted on a securities exchange shall be the
weighted average of the daily trading prices of such security during a period of
not less than 20 consecutive trading days ending not more than three trading
days before the date of determination on the principal securities exchange on
which such securities are listed and traded or quoted; provided, however, that
if in the opinion of the Board of Directors of the Company the public
distribution or trading activity of such securities during such period does not
create a market which reflects the fair market value of such securities, then
the current market value thereof shall be determined by the Board of Directors
of the Company, in good faith and in its sole discretion, and provided further
that any such determination by the Board of Directors of the Company shall be
conclusive and binding on Parent.
2.8 TENDER OFFERS, ETC. In the event that a tender offer,
share exchange offer, issuer bid, take-over bid or similar transaction with
respect to Parent Common Stock (an "Offer") is proposed by Parent or is proposed
to Parent or its shareholders and is recommended by the board of directors of
Parent, or is otherwise effected or to be effected with the consent or approval
of the board of directors of Parent, and the Exchangeable Shares are not
redeemed by the Company or purchased by Subco pursuant to the Redemption Call
Right, Parent will use its reasonable efforts expeditiously and in good faith to
take all such actions and do all such things as are necessary or desirable to
enable and permit holders of Exchangeable Shares to participate in such Offer to
the same extent and on an equivalent basis as the holders of shares of Parent
Common Stock, without discrimination. Without limiting the generality of the
foregoing, Parent will use its reasonable efforts expeditiously and in good
faith to ensure that holders of Exchangeable Shares may participate in all such
Offers without being required to retract Exchangeable Shares as against the
Company (or, if so required, to ensure that any such retraction shall be
effective only upon, and shall be conditional upon, the closing of the Offer and
only to the extent necessary to tender or deposit to the Offer). Nothing herein
shall affect or limit the rights of the Company to redeem or Subco to purchase
pursuant to the Redemption Call Right, Exchangeable Shares, as applicable, in
the event of an Offer or an Automatic Redemption Date.
2.9 OWNERSHIP OF OUTSTANDING SHARES OF SUBCO AND THE COMPANY. Without
the prior approval of the Company and the prior approval of the holders of the
Exchangeable Shares given in accordance with Article 10 of the Exchangeable
Share Provisions, Parent covenants and agrees in favor of the Company that, as
long as any outstanding Exchangeable Shares are owned by any person or entity
other than Parent or any of its Subsidiaries, Parent will be and remain the
direct or indirect beneficial owner of all issued and outstanding voting shares
in the capital of Subco and the
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Company. Notwithstanding the foregoing, nothing contained herein shall affect or
limit the rights of the Company to redeem or Subco to purchase pursuant to the
Redemption Call Right, Exchangeable Shares, as applicable, in the event of an
Automatic Redemption Date.
2.10 PARENT AND SUBSIDIARIES NOT TO VOTE EXCHANGEABLE SHARES. Parent
covenants and agrees that it will appoint and cause to be appointed proxy
holders with respect to all Exchangeable Shares held by Parent and its
Subsidiaries for the sole purpose of attending each meeting of holders of
Exchangeable Shares in order to be counted as part of the quorum for each such
meeting. Parent further covenants and agrees that it will not, and will cause
its Subsidiaries not to, exercise any voting rights which may be exercisable by
holders of Exchangeable Shares from time to time pursuant to the Exchangeable
Share Provisions or pursuant to the provisions of the CBCA (or any successor or
other corporate statute by which the Company may in the future be governed) with
respect to any Exchangeable Shares held by it or by its Subsidiaries in respect
of any matter considered at any meeting of holders of Exchangeable Shares.
2.11 STOCK EXCHANGE LISTING. Parent covenants and agrees in favor of
the Company that, as long as any outstanding Exchangeable Shares are owned by
any person or entity other than Parent or any of its Subsidiaries, Parent will
use its reasonable efforts to maintain a listing for such Exchangeable Shares on
a Canadian stock exchange which is listed in section 3200 of the Regulations
made under the Income Tax Act (Canada).
2.12 RULE L0B-18 PURCHASES. Nothing contained in this Agreement,
including without limitation the obligations of Parent contained in Section 2.8
hereof, shall limit the ability of Parent or any Subsidiary to make a "Rule
l0b-18 Purchase" of Parent Common Stock pursuant to Rule l0b-18 of the U.S.
Securities Exchange Act of 1934, as amended, or any successor provisions
thereof.
ARTICLE III
PARENT SUCCESSORS
3.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC. Parent shall
not enter into any transaction (whether by way of reconstruction,
reorganization, consolidation, merger, transfer, sale, lease or otherwise)
whereby all or substantially all of its undertaking, property and assets would
become the property of any other Person or, in the case of a merger, of the
continuing corporation resulting therefrom, but may do so if:
(a) such other Person or continuing corporation (the "Parent
Successor"), by operation of law, becomes, without more, bound by the terms and
provisions of this Agreement or, if not so bound, executes, prior to or
contemporaneously with the consummation of such transaction an agreement
supplemental hereto and such other instruments (if any) as are reasonably
necessary or advisable to evidence the assumption by the Parent Successor of
liability for all moneys payable and property deliverable hereunder and the
covenant of such Parent Successor to pay and deliver or cause to be delivered
the same and its agreement to observe and perform all the covenants and
obligations of Parent under this Agreement; and
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(b) such transaction be upon such terms as substantially
preserve and do not impair in any material respect any of the rights, duties,
powers and authorities of the other parties hereunder.
3.2 VESTING OF POWERS IN PARENT SUCCESSOR. Whenever the conditions of
Section 3.1 hereof have been duly observed and performed, the parties, if
required by Section 3.1 hereof, shall execute and deliver the supplemental
agreement hereto and thereupon the Parent Successor shall possess and from time
to time may exercise each and every right and power of Parent under this
Agreement in the name of Parent or otherwise and any act or proceeding by any
provision of this Agreement required to be done or performed by the board of
directors of Parent or any officers of Parent may be done and performed with
like force and effect by the directors or officers of such Parent Successor.
3.3 WHOLLY-OWNED SUBSIDIARIES. Nothing herein shall be construed as
preventing the amalgamation or merger of any wholly-owned subsidiary of Parent
with or into Parent or the winding-up, liquidation or dissolution of any
wholly-owned subsidiary of Parent provided that all of the assets of such
subsidiary are transferred to Parent or another wholly-owned subsidiary of
Parent, and any such transactions are expressly permitted by this Article 3.
ARTICLE IV
GENERAL
4.1 TERM. This Agreement shall come into force and be effective as of
the date hereof and shall terminate and be of no further force and effect at
such time as no Exchangeable Shares (or securities or rights convertible into or
exchangeable for or carrying rights to acquire Exchangeable Shares) are held by
any party other than Parent and any of its Subsidiaries.
4.2 CHANGES IN CAPITAL OF PARENT AND THE COMPANY. Notwithstanding the
provisions of Section 4.4 hereof, at all times after the occurrence of any event
effected pursuant to Section 2.7 or 2.8 hereof, as a result of which either
Parent Common Stock or the Exchangeable Shares or both are in any way changed,
this Agreement shall forthwith be amended and modified as necessary in order
that it shall apply with full force and effect, mutatis mutandis, to all new
securities into which Parent Common Stock or the Exchangeable Shares or both are
so changed, and the parties hereto shall execute and deliver an agreement in
writing giving effect to and evidencing such necessary amendments and
modifications.
4.3 SEVERABILITY. If any provision of this Agreement is held to be
invalid, illegal or unenforceable, the validity, legality or enforceability of
the remainder of this Agreement shall not in any way be affected or impaired
thereby and this Agreement shall be carried out as nearly as possible in
accordance with its original terms and conditions.
4.4 AMENDMENTS, MODIFICATIONS, ETC. This Agreement may not be amended,
modified or waived except by an agreement in writing executed by the Company,
Subco and Parent and approved by the holders of the Exchangeable Shares in
accordance with Article 10 of the Exchangeable Share Provisions.
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4.5 MINISTERIAL AMENDMENTS. Notwithstanding the provisions of section
4.4, the parties to this Agreement may in writing, at any time and from time to
time, without the approval of the holders of the Exchangeable Shares, amend or
modify this Agreement for the purposes of:
(a) adding to the covenants of any or all parties provided that the
board of directors of each of Parent, Subco and the Company shall be of the good
faith opinion that such additions will not be prejudicial to the rights or
interests of the holders of the Exchangeable Shares;
(b) making such amendments or modifications not inconsistent with
this Agreement as may be necessary or desirable with respect to matters or
questions which, in the opinion of the board of directors of each of Parent,
Subco and the Company, it may be expedient to make, provided that each such
board of directors shall be of the opinion that such amendments or modifications
will not be prejudicial to the interests of the holders of the Exchangeable
Shares; or
(c) making such changes or corrections which, on the advice of
counsel to Parent, Subco and the Company, are required for the purpose of curing
or correcting any ambiguity or defect or inconsistent provision or clerical
omission or mistake or manifest error, provided that the boards of directors of
each of Parent, Subco and the Company shall be of the good faith opinion that
such changes or corrections will not be prejudicial to the interests of the
holders of the Exchangeable Shares.
4.6 MEETING TO CONSIDER AMENDMENTS. The Company, at the request of
Parent, shall call a meeting or meetings of the holders of the Exchangeable
Shares for the purpose of considering any proposed amendment or modification
requiring approval of such shareholders pursuant to Section 4.4 hereof. Any such
meeting or meetings shall be called and held in accordance with the by-laws of
the Company, the Exchangeable Share Provisions and all applicable laws.
4.7 AMENDMENTS ONLY IN WRITING. No amendment to or modification or
waiver of any of the provisions of this Agreement otherwise permitted hereunder
shall be effective unless made in writing and signed by all of the parties
hereto.
4.8 INUREMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and the holders, from time to time, of
Exchangeable Shares and each of their respective heirs, successors and assigns.
4.9 NOTICE. All notices and other communications hereunder shall be in
writing and shall be deemed given to a party if delivered by hand, sent by
facsimile transmission with confirmation of transmission, sent via a reputable
overnight delivery service with confirmation of receipt requested, or mailed by
registered or certified mail (postage prepaid and return receipt requested) to
the party at the following address and facsimile number (or at such other
address or facsimile number for the party as the party shall specify by like
notice), and shall be deemed given on the date on which delivered by hand or
otherwise on the date of confirmation of receipt or transmission:
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TO PARENT OR SUBCO:
PRI Automation, Inc.
805 Middlesex Turnpike
Billerica, MA 01821-3986
Attention: Chief Executive Officer
FACSIMILE NUMBER: (978) 671-9430
WITH COPIES TO:
Foley, Hoag & Eliot LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Robert L. Birnbaum, Esq.
FACSIMILE NUMBER: (617) 832-7000
AND
Blake, Cassels & Graydon
Box 25, Commerce Court West
Toronto, Ontario M5L 1A9
CANADA
Attention: Alan F. Brown, Esq.
FACSIMILE NUMBER: (416) 863-2653
TO THE COMPANY:
Promis Systems Corporation Ltd.
170 University Avenue, Suite 1200
Toronto, Ontario M5H 3B3
CANADA
Attention: Chief Executive Officer
FACSIMILE NUMBER: (416) 977-2016
WITH A COPY TO:
Cassels, Brock & Blackwell
Scotia Plaza, Suite 2100
40 King Street West
Toronto, Ontario M5H 3C2
CANADA
Attention: Lawrence D. Wilder, Esq.
FACSIMILE NUMBER: (416) 350-6904
4.10 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.
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4.11 JURISDICTION. This Agreement shall be construed and enforced in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
4.12 ATTORNMENT. Parent agrees that any action or proceeding arising
out of or relating to this Agreement may be instituted in the courts of Ontario,
waives any objection which it may have now or hereafter to the venue of any such
action or proceeding, irrevocably submits to the jurisdiction of such courts in
any such action or proceeding, agrees to be bound by any judgment of such courts
and not to seek, and hereby waives, any review of the merits of any such
judgment by the courts of any other jurisdiction and hereby appoints the Company
at its registered office in the Province of Ontario as attorney for service of
process.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Support Agreement to
be signed by their respective officers thereunder duly authorized, all as of the
date first written above.
PRI AUTOMATION, INC.
By: /S/ MITCHELL G. TYSON
----------------------------------------------
Mitchell G. Tyson, Chief Executive Officer
1325949 ONTARIO INC.
By: /S/ MITCHELL G. TYSON
----------------------------------------------
Mitchell G. Tyson, Chief Executive Officer
PROMIS SYSTEMS CORPORATION LTD.
By: /S/ IAN MCKINNON
----------------------------------------------
Ian McKinnon, Chief Executive Officer
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