Exhibit 10.25
ARRANGEMENT
AGREEMENT
AMONG
HUMMINGBIRD LTD.
AND
OPEN TEXT
CORPORATION
AND
6575064 CANADA
INC.
August 4,
2006
ARRANGEMENT
AGREEMENT
THIS ARRANGEMENT AGREEMENT dated
August 4, 2006,
AMONG:
Open Text Corporation, a corporation
existing under the Canada Business Corporations Act
(“Parent”),
6575064 Canada Inc., a corporation
existing under the Canada Business Corporations Act and a
wholly-owned subsidiary of Parent (“Acquisition
Sub”),
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Hummingbird Ltd., a corporation
existing under the Canada Business Corporations Act
(“Hummingbird”),
THIS AGREEMENT WITNESSES
THAT, in consideration of
the respective covenants and agreements herein contained and other
good and valuable consideration (the receipt and sufficiency of
which are hereby acknowledged), and intending to be legally bound
hereby, Parent, Acquisition Sub and Hummingbird hereby agree as
follows:
ARTICLE 1
INTERPRETATION
In this Agreement, unless the
context otherwise requires:
“Acquisition
Proposal” means
(i) any merger, amalgamation, arrangement, recapitalization,
liquidation, dissolution, share exchange, business combination or
similar transaction (other than a transaction the sole parties to
which are one or more of Hummingbird and its wholly-owned
subsidiaries), (ii) any acquisition, directly or indirectly,
of assets which individually or in the aggregate exceed 20% of the
market capitalization of Hummingbird on the date the proposal in
respect of such acquisition is made (or any lease, long term supply
agreement or other arrangement having the same economic effect as a
material sale of assets), (iii) any tender offer, take-over
bid or other acquisition, directly or indirectly, by any person or
“group” within the meaning of Section 13(d) of the
Exchange Act, of beneficial ownership of 20% or more of the
outstanding Hummingbird Shares (or rights or interests in or to
Hummingbird Shares), in the case of each of (i), (ii) and
(iii) in a single transaction or a series of related
transactions or similar transactions involving Hummingbird and/or
its subsidiaries, or a proposal or offer (binding or non binding,
oral or written, conditional or unconditional, or otherwise) or
communication, announcement or other indication of an intention to
do any of the foregoing, or any amendment or modification or
proposed amendment or modification of any of the foregoing,
excluding the Arrangement or any transaction to which Parent or an
affiliate of Parent is a party;
“affiliate” has the meaning ascribed thereto in the
Securities Act;
“Arrangement”
means the arrangement contemplated
herein to be made on the terms set out in the Plan of Arrangement,
subject to any amendments or variations thereto made in accordance
with this Agreement and Section 5.1 of the Plan of Arrangement
or made at the direction of the Court in the Final Order (with the
consent of Parent and Hummingbird, each acting
reasonably);
“Arrangement
Resolution” means
the special resolution of the Hummingbird Shareholders to be
considered at the Meeting, to be substantially in the form set out
in Schedule B hereto;
“Articles of
Arrangement” means
the articles of arrangement of Hummingbird in respect of the
Arrangement, to be filed with the Director after the Final Order is
made;
“business
day” means any day,
other than a Saturday, a Sunday or a statutory holiday in Toronto,
Ontario, Canada;
“Canadian Securities
Administrators” means the securities regulatory authorities in
each of the provinces of Canada;
“CBCA”
means the Canada Business
Corporations Act and the regulations made thereunder, as
promulgated or amended from time to time;
“Certificate of
Arrangement” means
the certificate of arrangement giving effect to the Arrangement,
issued pursuant to subsection 192(7) of the CBCA;
“Circular”
means the notice of the meeting and
accompanying management proxy circular and other materials to be
sent by Hummingbird to Hummingbird Shareholders in connection with
the Meeting;
“Code”
has the meaning ascribed thereto in
Section 2.13; “Commitment Letter” has the
meaning ascribed thereto in Section 4.1(d);
“Competition Act” means the Competition
Act (Canada), as amended from time to time;
“Contract”
means any contract, agreement,
license, franchise, lease, arrangement, commitment, understanding
or other right or obligation to which Hummingbird or any of its
subsidiaries is a party or by which Hummingbird or any of its
subsidiaries is bound or affected or to which any of their
respective properties or assets is subject;
“Court”
means the Ontario Superior Court of
Justice (Commercial List);
“Depositary” means CIBC Mellon Trust Company and any other
trust company, bank or equivalent financial institution agreed to
in writing by Parent and Hummingbird and appointed to carry out any
of the duties of the Depositary hereunder;
“Director”
means the Director appointed
pursuant to section 260 of the CBCA;
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“Disclosure
Letter” means that
certain letter dated as of even date herewith and delivered to
Parent by Hummingbird;
“Dissent
Rights” means the
rights of dissent in respect of the Arrangement described in the
Plan of Arrangement;
“Dissenting
Shareholder” means
any Hummingbird Shareholder who has duly exercised its Dissent
Rights and has not withdrawn or been deemed to have withdrawn such
Dissent Rights;
“Dissenting
Shares” means all
the Hummingbird Shares registered in the name of a holder and in
respect of which Dissent Rights are exercised and not withdrawn in
accordance with the Plan of Arrangement;
“Effective
Date” means the
date of the Certificate of Arrangement giving effect to the
Arrangement;
“Effective
Time” means 9:00
a.m. (Toronto time) on the Effective Date;
“Environmental
Condition” means
the presence of any Hazardous Substance in material breach of any
Environmental Laws, or in quantities or conditions which exceed
criteria published in any applicable Laws, policies, standards or
guidance documents of any Governmental Entity of competent
jurisdiction;
“Environmental
Laws” means all
applicable Laws, including applicable civil and common laws,
relating to the protection of human health and safety or pollution
or protection of the environment, or relating to the regulation of
Hazardous Substances;
“Environmental
Permits” means all
Permits necessary under Environmental Laws for Hummingbird and its
subsidiaries to own, lease, license and operate their properties
and conduct their businesses as presently conducted;
“ERISA”
has the meaning ascribed thereto in
Section 3.1(s);
“Exchange”
means the Toronto Stock Exchange or
the Nasdaq, and “Exchanges” means both of
them;
“Exchange
Act” means the
United States Securities Exchange Act of 1934, as
amended;
“Exchange
Factor” means
0.8879, which is the exchange rate for 1 Canadian dollar into
United States dollars based on the noon rate of exchange of the
Bank of Canada on the business day immediately preceding the date
of this Agreement;
“Expiry
Date” means the
Expiry Date under the Open Text Offer;
“Final
Order” means the
final order of the Court approving the Arrangement, as such order
may be amended by the Court (with the consent of Parent and
Hummingbird, each acting reasonably) at any time prior to the
Effective Date or, if appealed, then, unless such appeal is
withdrawn or denied, as affirmed or amended on appeal (in each case
with the consent of Parent and Hummingbird, each acting
reasonably);
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“Financial
Contract” means a
Contract that creates, governs or guarantees, or that is otherwise
entered into in connection with or with respect to, Financial
Indebtedness;
“Financial
Indebtedness” means
in relation to a person (the “debtor”), an
obligation or liability (contingent or otherwise) of the debtor
(a) for borrowed money (including overdrafts and including
amounts in respect of principal, premium, interest or any other sum
payable in respect of borrowed money) or for the deferred purchase
price of property or services, (b) under any loan, stock,
bond, note, debenture or other similar instrument or debt security,
(c) under any acceptance credit, bankers’ acceptance,
letter of credit or other similar facilities, (d) under any
conditional sale, hire purchase or title retention agreement with
respect to property, under any capitalized lease arrangement, under
any sale and lease back arrangement or under any lease or any other
agreement having the commercial effect of a borrowing of money or
treated as a finance lease or capital lease in accordance with
applicable accounting principles, (e) under any foreign
exchange transaction, any interest or currency swap transaction,
any fuel or commodity hedging transaction or any other kind of
derivative transaction, (f) in respect of any counterindemnity
obligation in respect of a guarantee, indemnity, bond, standby or
documentary letter of credit or any other instrument issued by a
bank or financial institution, (g) in respect of preferred
stock (namely capital stock of any class that is preferred as to
the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary
liquidation or dissolution, over the capital stock of any other
class) or redeemable capital stock (namely any class or series of
capital stock that, either by its terms, by the terms of any
security into which it is convertible or exchangeable or by
contract or otherwise, is, or upon the happening of an event or
passage of time would be, required to be redeemed on a specified
date or is redeemable at the option of the holder thereof at any
time, or is convertible into or exchangeable for debt securities at
any time), or (h) for any amount raised under any transaction
similar in nature to those described in paragraphs (a) to
(g) of this definition, or otherwise having the commercial
effect of borrowing money, or (i) under a guarantee, indemnity
or similar obligation entered into by the debtor in respect of an
obligation or liability of another person which would fall within
paragraphs (a) to (h) of this definition if the
references to the debtor referred to the other person; for greater
certainty, Financial Indebtedness includes obligations and
liabilities of another person which would fall within paragraphs
(a) to (h) of this definition where such obligations or
liabilities are secured by (or where such other person has a right
to require that such obligations or liabilities be secured by) a
security interest over any property of the debtor even though the
debtor has not assumed or become liable for the payment of such
obligations or liabilities or receivables sold, assigned, or
discounted;
“GAAP”
means United States generally
accepted accounting principles;
“Governmental
Entity” means
(a) any multinational, federal, provincial, state, regional,
municipal, local or other government, governmental or public
department, central bank, court, tribunal, arbitral body (whether
or not governmental), commission, board, bureau or agency, domestic
or foreign, (b) any subdivision, agent or authority of any of
the foregoing or (c) any quasi-governmental or private body,
including any tribunal, commission, regulatory agency or
self-regulatory organization, exercising any regulatory,
expropriation or taxing authority under or for the account of any
of the foregoing;
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“Hazardous
Substance” means
any pollutant, contaminant, petroleum, hydrocarbons, hazardous
substance, waste, hazardous material, toxic substance, dangerous or
potentially dangerous substance or dangerous good as defined,
judicially interpreted or identified in, or any substance regulated
pursuant to, any applicable Law;
“HSR Act”
means the United States
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended from time to time;
“Hummingbird Financial
Statements” has the
meaning ascribed thereto in Section 3.1(i);
“Hummingbird
IP” means all
Intellectual Property Rights that are used or held for use by
Hummingbird or any of its subsidiaries in connection with the
business of Hummingbird and its subsidiaries;
“Hummingbird
Option” means an
option to purchase Hummingbird Shares pursuant to the Hummingbird
Stock Option Plan;
“Hummingbird
Plans” has the
meaning ascribed thereto in Section 3.1(s);
“Hummingbird Public
Disclosure Record” means all documents filed on the System for
Electronic Document Analysis and Retrieval (SEDAR) or the
Electronic Document Gathering, Analysis and Retrieval System
(EDGAR) after September 30, 2003;
“Hummingbird
Securityholders” means Hummingbird Shareholders and the holders
of Hummingbird Options;
“Hummingbird
Shareholders” means
the registered holders of Hummingbird Shares;
“Hummingbird
Shares” means the
common shares in the capital of Hummingbird;
“Hummingbird Stock Option
Plan” means the
1996 Employee Stock Option Plan of Hummingbird;
“Hummingbird Source
Code” means all
source code that is part of the Owned Hummingbird IP or the
Hummingbird products;
“Identified Hummingbird
Monetary Representations” means the representations and warranties of
Hummingbird set forth in Section 3.l(d)(i)(C) and
Section 3.1(ee);
“Identified Hummingbird
Representations” means the representations and warranties of
Hummingbird set forth in Section 3.1(e) and
Section 3.1(gg);
“including” means including without limitation, and
“include” and “includes” have a
corresponding meaning;
“Intellectual Property
Rights” means:
(a) all United States, international and foreign patents and
applications therefor and all reissues, divisions, divisional,
renewals, extensions, provisionals, continuations and
continuations-in-part thereof, and all patents, applications,
documents and filings claiming priority to or serving as a basis
for priority
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thereof (
“Patents” ); (b) all inventions (whether or
not patentable), invention disclosures, improvements, trade
secrets, proprietary information, know how, computer software
programs (in both source code and object code form), technology,
business methods, technical data and customer lists, tangible or
intangible proprietary information, and all documentation relating
to any of the foregoing; (c) all copyrights, copyrights
registrations and applications therefor, and all other rights
corresponding thereto throughout the world (
“Copyrights” ); (d) all industrial designs
and any registrations and applications therefor throughout the
world; (e) all trade names, logos, common law trademarks and
service marks, trademark and service mark registrations and
applications therefor throughout the world (
“Trademarks” ); (f) all databases and data
collections and all rights therein throughout the world;
(g) all moral and economic rights of authors and inventors,
however denominated, throughout the world; (h) all Web
addresses, domain names and numbers, uniform resource locators (
“URLs” ) and other names and locators associated
with the Internet ( “Domain Names” ); and
(i) any similar or equivalent rights to any of the foregoing
anywhere in the world;
“Interim
Order” means the
interim order of the Court, as the same may be amended by the Court
(with the consent of Parent and Hummingbird, each acting
reasonably), containing a declaration and directions in respect of
the notice to be given in respect of and the conduct of the
Meeting;
“knowledge of
Hummingbird” means
collectively, the actual knowledge of Fred Sorkin, Alan Barry
Litwin and Inder P.S. Duggal;
“Law”
or “Laws” means
all international trade agreements, codes and conventions, laws,
by-laws, statutes, rules, regulations, principles of law and
equity, orders, rulings, ordinances, judgments, injunctions,
determinations, awards, decrees or other requirements and the terms
and conditions of any grant of approval, permission, authority or
license of any Governmental Entity or self-regulatory authority
(including either of the Exchanges), and the term
“applicable” with respect to such Laws and in a
context that refers to one or more Parties, means such laws as are
applicable to such Party or its business, undertaking, property or
securities and emanate from, a person having jurisdiction over the
Party or Parties or its or their business, undertaking, property or
securities;
“Legal
Requirements” means
any and all applicable federal, state, local, municipal, foreign or
other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation,
ruling or requirement issues, enacted, adopted, promulgated,
implemented or otherwise put into effect by or under the authority
of any Governmental Entity;
“Lender
Sub” means one or
more wholly-owned subsidiaries of Hummingbird selected by Parent
for purposes of making the loans contemplated under
Section 5.5(1);
“Licensed Hummingbird
IP” shall mean all
Hummingbird IP other than the Owned Hummingbird IP;
“Lien”
means any hypothec, mortgage, lien,
charge, security interest, encumbrance and adverse right or
claim;
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“Loan
Alternative” means
the provision by Lender Sub of the loans contemplated under
Section 5.5(1) at the request of Parent in accordance with the
terms and conditions of the Plan of Arrangement;
“Loan
Amount” means an
amount up to $58 million or such other amount requested in
Section 5.5 (but which, for greater certainty, may be
$0);
“Material Adverse
Effect” means, when
used in connection with a person, any change, effect, event,
occurrence or state of facts that is, or could reasonably be
expected to be, material and adverse to the business, assets,
rights, liabilities, capitalization, operations, results of
operations or financial condition of that person and its
subsidiaries, taken as a whole, other than any change, effect,
event, occurrence or state of facts resulting from (a) changes
in the global economy or political conditions or securities markets
in general, (b) changes in the worldwide industries or markets
in which such party and its subsidiaries operate, (c) the
commencement, occurrence, continuation or material worsening of any
war, armed hostilities or acts of terrorism, (d) the
announcement or pendency of the transactions contemplated by this
Agreement, the Open Text Offer or the Symphony Arrangement
Agreement, (e) any change in the trading price or volume of
the Hummingbird Shares, provided, however, that this clause
(e) shall not exclude from the definition of Material Adverse
Effect any change, effect, event, occurrence or state of facts
relating to the person or its subsidiaries which caused such change
in trading price or volume, (f) any failure by Hummingbird to
meet the published revenue or earnings predictions in respect of
Hummingbird of equity analysts, provided, however, that this clause
(f) shall not exclude from the definition of Material Adverse
Effect any change, effect, event, occurrence or state of facts
relating to the person or its subsidiaries which caused such
failure, (g) the compliance with the terms of this Agreement,
(h) generally applicable changes in Law, (i) generally
applicable changes in GAAP, or (j) Hummingbird’s
compliance with its obligations under the Symphony Arrangement
Agreement including, to the extent applicable, the payment of fees
by Hummingbird as required under Sections 7.3 or 7.4 thereof;
provided, that nothing in clauses (a), (b) or (c) shall
include any change, effect, event, occurrence or state of facts
which disproportionately affects that person and its subsidiaries,
taken as a whole;
“material
fact” has the
meaning ascribed thereto in the Securities Act;
“Maximum Cash
Amount” means the
aggregate amount of cash in United States dollars equal to
(a) the product obtained by multiplying (i) the number of
Hummingbird Shares outstanding immediately prior to the Effective
Time by (ii) the Purchase Price less (b) the Share Loan
Amount;
“MD&A”
has the meaning ascribed thereto in
Section 3.1(i);
“Meeting”
means the special meeting of
Hummingbird Shareholders, and all adjournments and postponements
thereof, called and held to, among other things, consider and
approve the Arrangement Resolution;
“Nasdaq”
means The Nasdaq Global Market, or
any successor inter-dealer quotation system operated by Nasdaq
Stock Market Inc., or any successor thereto;
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“Non-Disclosure
Agreement” means
the letter agreement dated July 20, 2006 between Parent and
Hummingbird providing Parent access to confidential information of
Hummingbird in connection with or relating to this Agreement and
the Transactions;
“Open Text
Offer” means the
offer dated July 10, 2006 by Acquisition Sub to purchase for
cash all of the outstanding Common Shares of Hummingbird not
currently owned by Open Text and its affiliates at a price of
U.S.$27.75 per Common Share;
“Option Loan
Amount” means the
aggregate amount of cash required to be paid by or on behalf of
Hummingbird pursuant to Section 2.3(b)(i) of the Plan of
Arrangement in respect of the Hummingbird Options;
“Order”
means any judgment, decision,
decree, injunction, ruling, writ, assessment or order of any
Governmental Entity that is binding on any person or its property
under applicable Legal Requirements;
“Outside
Date” means
(a) October 21, 2006, subject to the right of either
Hummingbird or Parent to postpone the Outside Date for up to an
additional 90 days (in 30-day increments) if the Regulatory
Approvals have not been obtained and have not been denied by a
non-appealable decision of a Governmental Entity by giving written
notice to the other to such effect no later than the date that is
two (2) business days prior to the original Outside Date (or
any subsequent Outside Date, as applicable) or (b) such later
date as may be agreed to in writing by the Parties;
“Owned Hummingbird
IP” means all
Intellectual Property Rights owned by, or filed in the name of,
Hummingbird or any of its subsidiaries;
“Parties”
means Hummingbird, Acquisition Sub
and Parent, and “Party” means any of
them;
“Permit”
means any material license, permit,
certificate, consent, order, grant, approval, classification,
registration or other authorization of and from any Governmental
Entity;
“person”
includes an individual, partnership,
limited partnership, association, body corporate, trustee, trust,
executor, administrator, legal representative, government
(including any Governmental Entity) or any other entity, whether or
not having legal status;
“Plan of
Arrangement” means
the plan of arrangement substantially in the form of Schedule C
hereto as amended or varied pursuant to the terms hereof and
thereof;
“Purchase
Price” means the
sum of $27.85 per Hummingbird Share, payable in cash;
“Regulatory
Approvals” means
those sanctions, rulings, consents, orders, exemptions, permits and
other approvals (including the lapse, without objection, of a
prescribed time under a statute or regulation that states that a
transaction may be implemented if a prescribed time lapses
following the giving of notice without an objection being made) of
Governmental Entities as set out in Schedule A hereto;
“Response
Period” has the
meaning ascribed thereto in Section 7.2(l)(b);
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“Returns”
means all reports, forms, elections,
estimates, declarations of estimated tax, information statements
and returns relating to, or required to be filed in connection with
any Taxes;
“Securities
Act” means the
Securities Act (Ontario) and the rules and regulations made
thereunder, as now in effect and as they may be promulgated or
amended from time to time;
“Securities
Regulators” means
the Canadian Securities Administrators and the United States
Securities and Exchange Commission;
“Securities
Laws” means the
Securities Act and all other applicable Canadian provincial and
territorial and United States federal securities laws, rules and
regulations thereunder;
“Shareholder
Approval” has the
meaning ascribed thereto in Section 2.7;
“Share Loan
Amount” means the
difference obtained by subtracting the Option Loan Amount from the
Loan Amount; provided that if the Loan Amount is $0 the Share Loan
Amount shall also be $0;
“subsidiary” means, with respect to a specified body
corporate, any body corporate of which more than 50% of the
outstanding shares ordinarily entitled to elect a majority of the
board of directors thereof (whether or not shares of any other
class or classes shall or might be entitled to vote upon the
happening of any event or contingency) are at the time owned
directly or indirectly by such specified body corporate and shall
include any body corporate, partnership, joint venture or other
entity over which such specified body corporate exercises direction
or control or which is in a like relation to a
subsidiary;
“Superior
Proposal” has the
meaning ascribed thereto in Section 7.1(1);
“Symphony Arrangement
Agreement” means
the arrangement agreement dated May 25, 2006 among Symphony
Technology II-A, L.P., Linden Management Corporation, Linden
Acquisition Ltd. and Hummingbird;
“Tax Act”
means the Income Tax Act
(Canada), as amended from time to time;
“Taxes”
or “Tax” means
all taxes, imposts, levies and withholdings, however denominated
and instalments in respect thereof, including any interest,
penalties, fines or other additions that have been, are or will
become payable in respect thereof, imposed by any Governmental
Entity;
“Transaction
Documents” means
this Agreement and the Plan of Arrangement;
“Transactions”
means, collectively, the
transactions contemplated herein and in the Plan of Arrangement;
and
“Vendor
Contract” means a
Contract to which Hummingbird or any of its subsidiaries is a party
and pursuant to which Hummingbird or any of subsidiaries contracts
to purchase or acquire goods and services.
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1.2
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Interpretation Not Affected by
Headings
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The division of this Agreement into
Articles, Sections, subsections and paragraphs and the insertion of
headings are for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement. Unless
the contrary intention appears, references in this Agreement to an
Article, Section, subsection, paragraph or Schedule by number or
letter or both refer to the Article, Section, subsection, paragraph
or Schedule, respectively, bearing that designation in this
Agreement.
In this Agreement, unless the
contrary intention appears, words importing the singular include
the plural and vice versa, and words importing gender include all
genders.
If the date on which any action is
required to be taken hereunder by a Party is not a business day,
such action shall be required to be taken on the next succeeding
day which is a business day.
Unless otherwise stated, all
references in this Agreement to sums of money are expressed in
lawful money of United States of America and “$” refers
to United States dollars.
Unless otherwise stated, all
accounting terms used in this Agreement in respect of Hummingbird
shall have the meanings attributable thereto under GAAP and all
determinations of an accounting nature in respect of Hummingbird
required to be made shall be made in a manner consistent with GAAP
consistently applied.
The following Schedules are annexed
to this Agreement and are incorporated by reference into this
Agreement and form a part hereof:
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Schedule A
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Regulatory
Approvals
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Schedule B
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Arrangement
Resolution
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Schedule C
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Plan of
Arrangement
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Schedule D
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Holding Company
Participation Agreement
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ARTICLE 2
THE ARRANGEMENT
The Arrangement shall be comprised
of substantially the events or transactions, taken in the sequence
indicated, in Schedule C to this Agreement.
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2.2
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News
Release Announcing the Arrangement
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Subject to compliance with
Securities Laws, Parent and Hummingbird shall issue a mutually
agreed joint news release as soon as possible after execution of
this Agreement.
As soon as practicable following the
execution and delivery of this Agreement, and in any event not
later than August 25, 2006 (subject to the availability of the
Court), Hummingbird shall apply to the Court pursuant to section
192 of the CBCA for the Interim Order for the purpose of obtaining
the approval of the Hummingbird Shareholders set forth in
Section 2.7 and the granting of Dissent Rights.
If the Interim Order and the
approval of Hummingbird Shareholders set forth in Section 2.7
are obtained, Hummingbird shall promptly thereafter take all steps
necessary or desirable to submit the Arrangement to the Court and
apply for the Final Order.
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2.5
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Articles
of Arrangement and Effective Date
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Subject to the satisfaction or
waiver of the conditions set forth in Article 6 (other than
delivery of items to be delivered at the Effective Time and other
than satisfaction of those conditions that by their nature are to
be satisfied at the Effective Time, it being understood that the
occurrence of the Effective Time shall remain subject to the
delivery of such items and the satisfaction or waiver of such
conditions at the Effective Time), on (a) the earlier of
(i) October 2, 2006, provided that such conditions shall
have been satisfied and/or waived by such date, (ii) the date
that is five (5) business days after the satisfaction and/or
waiver of such conditions (provided that such date is not earlier
than October 2, 2006 nor later than the Outside Date), and
(iii) the Outside Date or (b) such other date as
Hummingbird and Parent shall mutually agree, Hummingbird and Parent
shall cause to be filed, pursuant to subsection 192(6) of the CBCA,
articles of arrangement to give effect to the Arrangement and
implement the Plan of Arrangement. The steps of the Arrangement
shall become effective in the order set out in the Plan of
Arrangement.
Subject to receipt of the Interim
Order:
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(a)
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Hummingbird shall, as promptly as
practicable following the execution of this Agreement and in any
event within three business days following the date of the Interim
Order: (i) prepare and complete the Circular in consultation
with Parent and provide Parent with a reasonable opportunity to
review and comment on drafts of the Circular and Hummingbird shall
give reasonable consideration to such comments; (ii) as
promptly as practicable thereafter, subject to obtaining any
Regulatory Approvals required in connection with the mailing of the
Circular, file the Circular in all jurisdictions where the same is
required to be filed by the Interim Order and applicable Law; and
(iii) mail the Circular and other
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documentation required in
connection with the Meeting to the Hummingbird Securityholders in
accordance with the Interim Order and applicable Law;
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(b)
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Hummingbird
shall, subject to Section 7.1, (i) through
Hummingbird’s Board of Directors, recommend that Hummingbird
Shareholders vote in favour of the Arrangement Resolution and
include such recommendation in the Circular; and (ii) use its
commercially reasonable efforts to secure the approval of the
Arrangement Resolution by Hummingbird Shareholders;
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(c)
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subject to
Section 7.1, Hummingbird shall duly call, convene and hold the
Meeting in accordance with the Interim Order, the by-laws of
Hummingbird and applicable Laws as soon as practicable for the
purpose of considering the Arrangement Resolution (and, subject to
the other terms and conditions herein, for any other proper purpose
as may be set out in the notice of such meeting and agreed to by
Parent, acting reasonably; provided that the Arrangement Resolution
shall be voted on before any other matter at the Meeting, unless
otherwise agreed by Parent) and Hummingbird shall provide notice to
Parent and Acquisition Sub of the Meeting and allow the
representatives of Parent and Acquisition Sub to attend the
Meeting;
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(d)
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subject to
Section 7.1 and except as required for quorum purposes or
otherwise permitted under this Agreement, Hummingbird shall not
adjourn (except as required by Law, by the Court or by valid
Hummingbird Shareholder action), and Hummingbird shall not postpone
or cancel (or propose for adjournment, postponement or
cancellation) or fail to call the Meeting without Parent’s
prior consent, such consent not to be unreasonably withheld or
delayed;
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(e)
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subject to
Section 7.1, Hummingbird shall use commercially reasonable
efforts to solicit from Hummingbird Shareholders proxies in favour
of the Arrangement Resolution, using the services of dealers and
proxy solicitation services, and take all other action that is
necessary or desirable to secure the approval of the Arrangement
Resolution by Hummingbird Shareholders;
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(f)
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Hummingbird
shall permit Parent and its counsel to review and comment upon
drafts of all material to be filed or circulated by Hummingbird in
connection with the Arrangement, including the applications for the
Interim Order, the Circular and the Final Order and any supplement
or amendment thereof and Hummingbird shall give reasonable
consideration to any comments provided by Parent; and
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(g)
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subject to
Section 2.5 and subject to obtaining the Final Order and the
satisfaction or waiver of the other conditions herein contained in
favour of each Party, Hummingbird shall file Articles of
Arrangement and such other documents as may be required in
connection therewith under the CBCA to give effect to the
Arrangement.
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2.7
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Approval
of Hummingbird Shareholders
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Hummingbird’s application for
the Interim Order will request that the Interim Order provide that
the Arrangement Resolution be subject to the approval of two-thirds
of the votes
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cast by or on behalf of those Hummingbird
Shareholders present or represented by proxy at the Meeting (the
“Shareholder Approval” ).
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2.8
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Securities and Corporate
Compliance
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(a)
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Hummingbird
shall diligently do all such acts and things as may be necessary to
comply, in all material respects, with applicable Laws, including
National Instrument 54-101 of the Canadian Securities
Administrators, in relation to the Meeting.
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(b)
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Each of Parent
and Hummingbird shall furnish to the other all such information
concerning it, its affiliates and its shareholders and, in the case
of Hummingbird, the Hummingbird Securityholders, as may be required
to prepare the Circular or any application to Securities Regulators
or other Governmental Entity and effect the actions described in
the Plan of Arrangement. Each of Parent and Hummingbird shall
ensure that no information that is so furnished by it contains any
untrue statement of a material fact or omits to state a material
fact required to be stated in any such document or necessary in
order to make any information so furnished for use in any such
document not misleading in light of the circumstances in which it
is furnished or to be used.
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(c)
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Parent and
Hummingbird shall each promptly notify the other if at any time
before the Effective Time it becomes aware that the Circular or any
application to Securities Regulators or other Governmental Entity
for an order contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading
in light of the circumstances in which they are made, or that
otherwise requires an amendment or supplement to the Circular or
such application.
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(d)
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In the event
that notice is given by a Party under Section 2.8(c) in
respect of a document, the Party which filed, distributed or
delivered such document shall prepare a supplement or amendment to
such document, as required and as the case may be, and, if required
by applicable Law, shall cause the same to be distributed to
Hummingbird Securityholders and filed with the applicable
Securities Regulators and the Court, as applicable. For greater
certainty, in the event that notice is given by a Party under
Section 2.8(c) in respect of the Circular, Hummingbird shall,
if and to the extent required by applicable Law, prepare a
supplement or amendment to the Circular and cause the same to be
distributed to Hummingbird Securityholders and filed with the
applicable Securities Regulators and the Court, as applicable; and
if such notice relates to a portion of the Circular provided by
Parent or Acquisition Sub expressly for incorporation into the
Circular, Parent shall cooperate in the preparation of the
aforementioned supplement or amendment.
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Hummingbird shall give Parent:
(a) prompt notice of any written demand for dissent received
by Hummingbird prior to the Effective Time, any withdrawal of any
such demand and any other demand, notice or instrument delivered to
Hummingbird prior to the Effective Time
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that relates to such demand; and (b) the
opportunity to participate in all negotiations and proceedings with
respect to any such demand, notice or instrument. Hummingbird shall
not make any payment or settlement offer prior to the Effective
Time with respect to any such demand, notice or instrument unless
Parent shall have given its written consent to such payment or
settlement offer.
The closing of the Arrangement will
take place at the offices of Goodmans LLP, 250 Yonge Street, Suite
2400 Toronto, Ontario, Canada, at 9:00 a.m. (Toronto time) on the
Effective Date.
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2.11
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Preparation of Filings
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Parent and Hummingbird shall
co-operate in the preparation of any application for the Interim
Order, the Final Order, the Articles of Arrangement, the Regulatory
Approvals and any other orders, registrations, consents, filings,
rulings, exemptions, no-action letters and approvals and the
preparation of any documents reasonably deemed by either of the
Parties to be necessary to discharge its respective obligations or
otherwise advisable under applicable Laws in connection with this
Agreement and the Transactions.
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(a)
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No Party nor
any of its affiliates shall issue any press release or otherwise
make public statements with respect to this Agreement or the
Arrangement without the consent of Hummingbird and Parent (such
consent not to be unreasonably withheld or delayed).
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(b)
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Neither
Hummingbird nor Parent shall make any filing with any Governmental
Entity with respect to the Transactions without giving the other
Party a reasonable opportunity to review and comment on such
filing. Each of Hummingbird and Parent shall reasonably consider
comments provided by the other Party in respect of any such filing
with a Government Entity.
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(c)
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Sections
2.12(a) and 2.12(b) shall be subject to each Party’s (and its
affiliates’) overriding obligation to make any disclosure or
filing required under applicable Laws and stock exchange rules, and
the Party (or affiliate) making such disclosure shall use all
commercially reasonable efforts to give prior oral or written
notice to the other Party and reasonable opportunity to review or
comment on the disclosure or filing, and if such prior notice is
not possible, to give such notice immediately following the making
of such disclosure or filing.
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(d)
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Each of Parent and Hummingbird
shall promptly notify the other Party of any communication to a
Party from any Governmental Entity in respect of the Transactions,
and neither Hummingbird nor Parent shall participate in any meeting
with any Governmental Entity in respect of any filings,
investigations or other inquiry related to the Transactions unless
it consults with the other Party in advance and, to the extent
permitted by such Governmental Entity, gives the other Party the
reasonable opportunity to attend and participate thereat. Each of
Parent
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and Hummingbird shall, upon
request, furnish to the other all such information concerning it
and, in the case of Hummingbird, the Hummingbird Shareholders, as
may be reasonably required for purposes of the
foregoing.
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(e)
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Hummingbird
agrees that Parent may at any time directly or through a soliciting
dealer actively solicit proxies in favour of the Arrangement and
that the Circular shall constitute a proxy circular of Parent and
shall disclose that Parent may make such solicitations; provided
that in exercising such rights, Parent and its agents shall
co-operate with Hummingbird.
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(f)
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Parent shall be
entitled, at any time prior to the Meeting, to propose
modifications to the Arrangement to: (i) increase the
consideration it or Acquisition Sub is prepared to make available
to Hummingbird Shareholders pursuant to the Arrangement, whether or
not the Board of Directors of Hummingbird has changed its
recommendation, provided that Parent shall use its commercially
reasonable efforts to provide not less than one business
day’s prior written notice of such proposal to Hummingbird;
or (ii) modify the terms of the Arrangement to achieve tax
planning objectives of Parent, Acquisition Sub or any affiliate of
Parent, including to provide for one or more amalgamations of
subsidiaries of Parent and/or Hummingbird, which, in the opinion of
Hummingbird, acting reasonably, (A) would not prejudice it or
the Hummingbird Shareholders, or (B) would not impede or
materially delay the completion of the transactions contemplated
hereby provided that Parent or Acquisition Sub has provided notice
of such modification to Hummingbird not less than 15 business days
prior to the Meeting Date. Parent agrees that such modifications
and any transactions or steps taken in accordance therewith shall
not be considered in determining whether any representation or
warranty of Hummingbird under this Agreement has been breached if
such modifications, transactions and steps are the sole cause of
such breach. The Parties shall enter into an amended agreement
reflecting Parent’s proposed amendments to the Arrangement
(provided that such agreement shall be on and subject to the same
terms and conditions as this Agreement, mutatis mutandis,
except with respect to the modifications proposed by Parent), the
Plan of Arrangement shall be modified accordingly in accordance
with its terms and Hummingbird and Parent shall use their
respective commercially reasonable efforts to communicate any such
modifications to Hummingbird Shareholders and to ensure that any
such modifications are presented to Hummingbird Shareholders at the
Meeting.
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(a)
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Each of Parent and Acquisition
Sub shall be entitled to directly or indirectly deduct and withhold
from the amount otherwise payable pursuant to this Agreement or the
Plan of Arrangement to any Hummingbird Securityholder such amounts
as are required to be deducted and withheld with respect to the
making of such payment under the Tax Act, the United States
Internal Revenue Code of 1986, as amended (the
“Code”) or any other provision of domestic or foreign
(whether national, federal, state, provincial, local or otherwise)
Law relating to Taxes. To the extent the amounts are so deducted
and withheld and paid to the appropriate taxing authorities
directly or indirectly by Parent or its affiliates, such
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deducted and withheld amounts
shall be treated for all purposes of this Agreement or the Plan of
Arrangement as having been paid to the Hummingbird Securityholder
in respect of which such deduction and withholding was made by
Parent or Acquisition Sub, as the case may be.
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(b)
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Hummingbird
shall be entitled to directly or indirectly deduct and withhold
from the amount otherwise payable pursuant to this Agreement or the
Plan of Arrangement to any Hummingbird Securityholder, such amounts
as are required to be deducted and withheld with respect to the
making of such payment under the Tax Act, the Code or any other
provision of domestic or foreign (whether national, federal, state,
provincial, local or otherwise) Law relating to Taxes. To the
extent the amounts are so deducted and withheld and paid to the
appropriate taxing authorities directly or indirectly by
Hummingbird or its affiliates, such deducted and withheld amounts
shall be treated for all purposes of this Agreement or the Plan of
Arrangement as having been paid to the Hummingbird Securityholder
in respect of which such deduction and withholding was made by
Hummingbird.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
HUMMINGBIRD
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3.1
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Representations and
Warranties
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Hummingbird hereby represents and
warrants to and in favour of Parent as follows and acknowledges
that Parent is relying upon such representations and warranties in
connection with the entering into of this Agreement and the
completion of the Plan of Arrangement:
(i) The Hummingbird Board of
Directors, at a meeting duly called and held prior to the execution
and delivery of this Agreement, acting on the unanimous
recommendation in favour of the Arrangement by the special
committee of the Hummingbird Board of Directors, has duly and
unanimously (with the exception of Andrew J. Malik, who has
abstained from voting solely due to his being a Managing Director
of Lehman Brothers Inc., a financial advisor to the Board of
Directors of Hummingbird and the Special Committee of the Board of
Directors of Hummingbird), adopted resolutions:
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(A)
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authorizing and
approving this Agreement and the Arrangement,
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(B)
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authorizing
Hummingbird to execute and deliver this Agreement,
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(C)
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authorizing
Hummingbird and its subsidiaries to consummate this Agreement on
the terms set forth herein and in the Plan of
Arrangement,
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(D)
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determining
that the Plan of Arrangement is fair to Hummingbird Shareholders
and is in the best interests of Hummingbird,
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(E)
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directing that
the Arrangement Resolution be submitted to a vote at a meeting of
Hummingbird Shareholders, and
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(F)
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recommending
that Hummingbird Shareholders approve the Arrangement
Resolution,
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which resolutions have not been
subsequently rescinded, modified or withdrawn in any way prior to
the date of this Agreement.
(ii) As of the date hereof, all of
the directors of Hummingbird have advised Hummingbird that they
intend to vote or cause to be voted all Hummingbird Shares
beneficially held by them in favour of the Arrangement Resolution
and Hummingbird shall make a statement to that effect in the
Circular.
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(b)
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Organization
and Qualification .
Hummingbird and each of its subsidiaries is a corporation duly
incorporated, continued, amalgamated or an entity duly created,
validly organized and existing under the laws of its jurisdiction
of incorporation, continuance, amalgamation or creation and, except
as would not have a Material Adverse Effect on Hummingbird, has the
requisite corporate or other power and authority to own its
properties as now owned and to carry on its business as it is now
being conducted. Hummingbird and each of its subsidiaries is
registered, qualified or otherwise authorized to do business and
each is, to the extent that such concept is legally recognized, in
good standing in each jurisdiction in which the character of its
properties, owned, leased, licensed or otherwise held, or the
nature of its activities makes such registration necessary, except
where the failure to be so registered or in good standing would not
have a Material Adverse Effect, individually or in the aggregate,
on Hummingbird. Copies of the articles and bylaws of Hummingbird
furnished to Parent are accurate and complete and have not been
amended or superseded and no steps or proceedings have been taken
or are pending or contemplated to amend or supersede such
constating documents. Section 3.1(b) of the Disclosure Letter
sets forth a correct and complete list of each jurisdiction where
Hummingbird or any of its subsidiaries has made filings for the
purpose of becoming qualified, registered or otherwise authorized
to do business.
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(c)
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Authority Relative to this
Agreement . Hummingbird
has the requisite corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder and to fulfill
its obligations under the Arrangement. The execution, delivery and
performance of this Agreement have been duly authorized by the
Board of Directors of Hummingbird, and other than (i) with
respect to the Circular and other matters relating solely thereto,
the approval of the Board of Directors of Hummingbird and
(ii) the Shareholder Approval, no other corporate proceedings
on the part of Hummingbird are necessary to authorize the execution
and delivery by it of this Agreement or the making or completion of
the Plan of Arrangement. This Agreement has been duly and validly
executed and delivered by Hummingbird and, assuming the due
authorization, execution and delivery by Parent and Acquisition
Sub, constitutes a legal, valid and binding obligation of
Hummingbird enforceable against Hummingbird in accordance with its
terms, subject to the qualification that such enforceability may be
limited by bankruptcy,
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insolvency, reorganization or
other laws of general application relating to or affecting rights
of creditors and that equitable remedies, including specific
performance, are discretionary and may not be ordered.
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(i) Neither the execution and
delivery of this Agreement by Hummingbird nor the completion of the
Arrangement, nor compliance by Hummingbird with any of the
provisions hereof will: (A) except as set forth in
Section 3.1(d) of the Disclosure Letter, violate, conflict
with, change the rights or obligations of any party under or result
in a breach of any provision of, require any consent, approval or
notice under, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) or
result in a right of termination or acceleration under, or result
in the creation of any Lien upon, any of the properties or assets
of Hummingbird or any of its subsidiaries, or in any such Lien
becoming (or being capable of becoming) enforceable against any
such properties or assets, or cause any indebtedness to come due
before its stated maturity or cause any credit commitment or
obligation to cease to be available or cause any payment or other
obligation to be imposed on Hummingbird or any of its subsidiaries
under any of the terms, conditions or provisions of (1) their
respective charters or bylaws or other comparable organizational
documents or (2) any note, bond, mortgage, indenture, loan
agreement, deed of trust, Lien, or other Contract to which
Hummingbird or any of its subsidiaries is a party or by which any
of them, or any of their respective properties or assets is bound;
(B) subject to obtaining the Regulatory Approvals and except
for distributing and filing the Circular in accordance with
applicable corporate and securities Laws and obtaining the
Shareholder Approval, (1) violate any Law applicable to
Hummingbird or any of its subsidiaries or any of their respective
properties or assets; or (2) cause the suspension or
revocation of any Permit currently in effect; or (C) except as
set form in Section 3.1(d) of the Disclosure Letter,
(1) result in any payment (including severance, unemployment
compensation, golden parachute, change of control, retention, bonus
or otherwise) becoming due to any current or former director,
officer or employee of, or consultant to, Hummingbird or any of its
subsidiaries, or (2) result in any increase or acceleration of
contributions, liabilities or benefits, or acceleration of vesting,
under any Hummingbird Plan or restriction imposed on any asset held
in connection with a Hummingbird Plan or otherwise (except, in the
case of each of clauses (A)(2) and (B) above only, for such
violations, conflicts, changes in rights or obligations, breaches,
defaults, terminations, accelerations or creations of Liens which,
or any consents, approvals or notices which if not given or
received, would not’, individually or in the aggregate, have
any Material Adverse Effect on Hummingbird), and except, in the
case of clause (C) above, for such payments that do not in the
aggregate exceed $250,000.
(ii) Subject to obtaining the
Regulatory Approvals and except for distributing and filing the
Circular in accordance with applicable corporate and securities
Laws and obtaining the Shareholder Approval, (A) there is no
legal impediment to the execution and delivery of this Agreement by
Hummingbird, and (B) no
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filing or registration with, or
authorization, consent or approval of, any Governmental Entity is
required of Hummingbird or its subsidiaries in connection with the
execution and delivery of this Agreement and the Transaction
Documents by Hummingbird or the completion of the Arrangement,
except for such filings or registrations which, if not made, or for
such authorizations, consents or approvals which, if not received,
would not, individually or in the aggregate, have a Material
Adverse Effect on Hummingbird.
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(e)
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Capitalization . The authorized share capital of Hummingbird
consists of an unlimited number of Hummingbird Shares and an
unlimited number of preference shares issuable in series. As of the
close of business on August 3, 2006, there were issued and
outstanding 17,617,449 Hummingbird Shares, and there were
outstanding no other shares of any class or series in the capital
of Hummingbird. As of the close of business on August 3, 2006,
an aggregate of 1,227,287 Hummingbird Options were outstanding
(whether or not vested) (the aggregate in-the-money value of which
(being the aggregate amount by which the Purchase Price exceeds the
product obtained by multiplying the exercise price (in Canadian
dollars) of each such Hummingbird Option by the Exchange Factor) is
$3,615,836) and an aggregate of up to 1,227,287 Hummingbird Shares
were issuable upon the exercise of Hummingbird Options, and except
as set forth above and except for Acquisition Sub’s right
hereunder, there were no options, warrants or other rights,
shareholder rights plans, agreements or commitments of any
character whatsoever requiring or which may require the issuance,
sale or transfer by Hummingbird of any shares in the capital of
Hummingbird (including Hummingbird Shares) or any securities
convertible into, or exchangeable or exercisable for, or otherwise
evidencing a right to acquire, any shares in the capital of
Hummingbird (including Hummingbird Shares). All outstanding
Hummingbird Shares have been duly authorized and validly issued,
are fully paid and non-assessable and are not subject to, nor were
they issued in violation of, any pre-emptive rights, and all
Hummingbird Shares issuable upon the exercise of rights under the
Hummingbird Options in accordance with their respective terms have
been duly authorized and, upon issuance, will be validly issued as
fully paid and non-assessable and will not be subject to any
pre-emptive rights. All securities of Hummingbird (including the
Hummingbird Shares and the Hummingbird Options and all options,
rights or other convertible or exchangeable securities) have been
issued in compliance, in all material respects, with all applicable
Securities Laws. There are no securities of Hummingbird or of any
of its subsidiaries outstanding which have the right to vote
generally (or are convertible into or exchangeable for securities
having the right to vote generally) with the Hummingbird
Shareholders on any matter. There are no outstanding contractual or
other obligations of Hummingbird or any subsidiary to repurchase,
redeem or otherwise acquire any of its securities or with respect
to the voting or disposition of any outstanding securities of any
of its subsidiaries.
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(f)
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Opinion of Financial
Advisor . The Board of
Directors of Hummingbird and the Special Committee of the Board of
Directors of Hummingbird have received the opinion, dated
August 3, 2006, of Banc of America Securities LLC (addressed
to the Board of Directors and the Special Committee) to the effect
that, as of the date
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thereof and subject to the
qualifications and limitations set forth therein, the Purchase
Price to be received under the Arrangement by the holders of
Hummingbird Shares (other than Parent, Acquisition Sub and their
respective affiliates) is fair, from a financial point of view, to
such holders.
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(g)
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Reporting
Status and Securities Laws Matters . Hummingbird is a reporting issuer under
applicable Canadian provincial Securities Laws and is not on the
list of reporting issuers in default under such Securities Laws and
is a foreign private issuer under United States federal Securities
Laws and is not in material default of any material requirements of
any Securities Laws. No delisting, suspension of trading in or
cease trading order with respect to any securities of Hummingbird,
and, to the knowledge of Hummingbird, no inquiry, review or
investigation (formal or informal) of any Securities Regulator or
Exchange, is in effect or ongoing or, to the knowledge of
Hummingbird, expected to be implemented or undertaken.
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(h)
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Ownership of
Subsidiaries .
Section 3.1(h) of the Disclosure Letter includes a complete
and accurate list of all subsidiaries, together with its
jurisdiction of incorporation or organization, owned, directly or
indirectly, by Hummingbird, each of which is wholly-owned except as
otherwise noted in such list. All of the outstanding shares of
capital stock and other ownership interests in Hummingbird’s
subsidiaries are duly authorized, validly issued, fully paid and
non-assessable, and all such shares and other ownership interests
held directly or indirectly by Hummingbird are, except as disclosed
in Section 3.1(h) of the Disclosure Letter, owned free and
clear of all Liens, and there are no outstanding options, rights,
entitlements, understandings or commitments (contingent or
otherwise) regarding the right to acquire any such shares of
capital stock or other ownership interests in or material assets or
properties of any of Hummingbird’s subsidiaries except as set
forth in Section 3.1(h) of the Disclosure Letter.
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(i)
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Reports
. As of their respective dates or,
where no such date is specified, the date of filing with Securities
Regulators (i) Hummingbird’s audited financial
statements as at and for the fiscal years ended September 30,
2005, 2004 and 2003 (including the notes thereto and related
management’s discussion and analysis (
“MD&A” )), and Hummingbird’s unaudited
interim financial statements as at and for the three months ended
December 31, 2005 and as at and for the six months ended
March 31, 2006 (including the notes thereto and related
MD&A) (collectively, the “Hummingbird Financial
Statements”); (ii) Hummingbird’s annual
information form dated December 29, 2005 (including all
documents incorporated by reference therein);
(iii) Hummingbird’s management information circular
dated February 6, 2006 in respect of the annual meeting of
Hummingbird Shareholders for fiscal year 2005 and management
information circular dated June 23, 2006 in respect of a
special meeting of Hummingbird Shareholders; (iv) all material
change reports and other documents filed with the Securities
Regulators since September 30, 2005; and (v) all
prospectuses and other documents filed by Hummingbird in the
offering of its securities with Securities Regulators or any
Exchange since September 30, 2003: (1) did not at the
respective effective dates contain any untrue statement of a
material fact or omit
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to state a material fact required
to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not
misleading; and (2) complied in all material respects with
Securities Laws. The Hummingbird Financial Statements and all
financial statements of Hummingbird and its subsidiaries included
or incorporated by reference in information circulars, forms,
reports, statements, prospectuses and other documents since
September 30, 2003 were prepared in accordance with GAAP
consistently applied (except (A) as otherwise indicated in
such financial statements and the notes thereto or, in the case of
audited statements, in the related report of Hummingbird’s
independent auditors, (B) in the case of unaudited interim
statements, are subject to normal year-end adjustments and may omit
notes which are not required by applicable Laws in the unaudited
statements or (C) as items in such financial statements have
been reclassified) and fairly present in all material respects the
consolidated financial position, results of operations and changes
in financial position of Hummingbird and its subsidiaries as of the
dates thereof and for the periods indicated therein (subject, in
the case of any unaudited interim financial statements, to normal
period-end adjustments) and reflect reserves required by GAAP
consistently applied in respect of all contingent liabilities, if
any, of Hummingbird and its subsidiaries on a consolidated basis.
Hummingbird is not currently aware of any year-end adjustments that
are expected to be material. There has been no change in
Hummingbird’s accounting policies, except as described in the
notes to the Hummingbird Financial Statements, since
September 30, 2005. Except as set forth in the Hummingbird
Financial Statements, neither Hummingbird nor any of its
subsidiaries have any documents creating any material off-balance
sheet arrangements. Neither Hummingbird nor any of its subsidiaries
is a party to, or has any commitment to become a party to, any
joint venture, partnership agreement or any similar contract
(including any contract relating to any transaction, arrangement or
relationship between or among Hummingbird or any of its
subsidiaries, on the one hand, and any unconsolidated affiliate,
including any structured finance, special purpose or limited
purpose entity or person, on the other hand) where the purpose or
intended effect of such arrangement is to avoid disclosure of any
material transaction involving Hummingbird or any of its
subsidiaries in the Hummingbird Financial Statements. Neither
Hummingbird nor any of its subsidiaries, has, directly or
indirectly, made or arranged for any extension or maintaining of
credit, or renewal of an extension of credit, in the form of a
personal loan to or for any director, employee or security holder
of or consultant to Hummingbird or any of its subsidiaries or to
any director or employee of or consultant to any such security
holder.
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(j)
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Litigation . Except as set forth in Section 3.1(j) of
the Disclosure Letter, there are no claims, actions, suits or
proceedings pending or, to the knowledge of Hummingbird, threatened
and to the knowledge of Hummingbird there are no material
investigations or inquiries pending or threatened, affecting
Hummingbird or any of its subsidiaries or affecting any of their
respective property or assets at law or in equity before or by any
Governmental Entity. Neither Hummingbird nor any of its
subsidiaries nor their respective assets or properties is subject
to any material outstanding judgment, order, writ, injunction or
decree.
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- 21 -
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(k)
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Taxes . Hummingbird and each of its subsidiaries has
duly and timely filed all Returns required to be filed by it prior
to the date hereof, other than those which have been
administratively waived or those set forth in Section 3.1(k)
of the Disclosure Letter, and all such Returns are complete and
correct, except for any failure to file or errors or omissions
that, individually or in the aggregate, would not have a Material
Adverse Effect on Hummingbird. Hummingbird and each of its
subsidiaries has paid on a timely basis all Taxes which are due and
payable, all assessments and reassessments, and all other Taxes due
and payable by it on or before the date hereof, other than those
(i) which are being or have been contested in good faith and
in respect of which reserves have been provided in the most
recently published Hummingbird Financial Statements and
(ii) any Taxes in excess of such reserves which the failure to
pay would not, individually or in the aggregate, result in a
Material Adverse Effect on Hummingbird. Except as provided for in
the Hummingbird Financial Statements and except as disclosed in
Section 3.1(k) of the Disclosure Letter, no deficiencies,
litigation, proposed adjustments or matters in controversy exist or
have been asserted in writing with respect to Taxes of Hummingbird
or any of its subsidiaries, and neither Hummingbird nor any of its
subsidiaries is a party to any action or proceeding for assessment
or collection of Taxes, except to the extent that such
deficiencies, litigation, proposed adjustments or matters in
controversy or action or proceeding would not have, individually or
in the aggregate, a Material Adverse Effect on Hummingbird.
Hummingbird and each of its subsidiaries has properly withheld all
Taxes required to have been withheld in connection with amounts
paid or credited or deemed to be paid or credited by any of them to
or for the account or benefit of any person, including any
shareholder, employee, creditor, independent contractor, or other
third party and has duly and timely remitted to the appropriate
authority such Taxes and other amounts required by Law to be
remitted by any of them, except to the extent that failure to so
withhold or remit has not or would not, individually or in the
aggregate, have a Material Adverse Effect on Hummingbird. None of
Hummingbird or any of its subsidiaries has any liability for the
Taxes of any person (other than any of Hummingbird or its
subsidiaries) under Treas. Reg. § 1.1502-6 (or any similar
provision of state, local, or non-US law), as a transferee or
successor, by contract, or otherwise. No material claim has ever
been made by a taxing authority in a jurisdiction where Hummingbird
or any of its subsidiaries does not file Returns that such person
is or may be subject to taxation by such jurisdiction. None of
Hummingbird or its subsidiaries has consented to extend the time,
or is the beneficiary of any extension of time, in which any Tax
may be assessed or collected by any taxing authority. None of
Hummingbird or its subsidiaries is a party to any agreement,
contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in the payment of any “excess
parachute payment” within the meaning of Code § 280G (or
any corresponding provision of state, local or non-US income Tax
law).
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(l)
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Absence of Undisclosed
Liabilities . Except as
disclosed in the Hummingbird Public Disclosure Record or the
Hummingbird Financial Statements, neither Hummingbird nor any of
its subsidiaries has any obligations or liabilities of any nature
(matured or unmatured, fixed or contingent) except for liabilities
(i)
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- 22 -
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incurred in connection with the
transactions contemplated by this Agreement, (ii) incurred in
the ordinary course of business consistent with past practice since
March 31, 2006 or (iii) that, individually or in the
aggregate, would not result in a Material Adverse Effect on
Hummingbird.
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(m)
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No Material
Adverse Effect . Since
March 31, 2006 there has not been any Material Adverse Effect
on Hummingbird and no event, change or development has occurred,
including any material damage, destruction or other casualty loss
with respect to any material asset owned, leased or otherwise used
by Hummingbird or any of its subsidiaries, whether or not covered
by insurance, which would have a Material Adverse Effect on
Hummingbird; During the period since March 31, 2006,
Hummingbird and its subsidiaries have conducted their businesses
only in the ordinary course consistent with past practice and have
not taken any of the actions described in any of clauses
(i) through (viii) and clause (x) of
Section 5.1(d), except for the execution of the Symphony
Arrangement Agreement and actions taken by Hummingbird in
satisfaction of its obligations thereunder.
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(n)
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Environmental . All operations of Hummingbird and each of its
subsidiaries have been and are now being conducted in material
compliance with all applicable Environmental Laws. There is no
Environmental Condition present at, and to the knowledge of
Hummingbird, there has been no use, release, threatened release,
disposal, or arrangement for disposal, generation, handling or
transportation of, or exposure to, any Hazardous Substance on, at,
under or from, any property currently or, to the knowledge of
Hummingbird, formerly owned or leased by Hummingbird or any of its
subsidiaries and, to the knowledge of Hummingbird, neither
Hummingbird nor any of its subsidiaries is aware of, or is subject
to: (i) any proceeding, application, order, directive,
investigation, claim or complaint which relates to environmental,
health or safety matters, and which may require any material work,
repairs, construction, expenditures, obligations or liabilities;
(ii) any demand, investigation or notice with respect to the
breach of any Environmental Laws applicable to Hummingbird or any
of its subsidiaries; or (iii) any changes to the terms of any
Environmental Permits or any review by any Governmental Entity of
such Environmental Permits, in each case as would, individually or
in the aggregate, have a Material Adverse Effect on
Hummingbird.
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(o)
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Owned Real Property;
Assets .
Section 3.1(o) of the Disclosure Letter sets out a list of all
owned real property interests of Hummingbird or any of its
subsidiaries. Hummingbird and/or each of its subsidiaries has good,
marketable and valid title in fee simple to its owned real property
interests, free and ‘clear of all Liens, including mortgages,
other than (i) easements, zoning restrictions and restrictive
covenants which do not materially interfere with the use or market
value of such owned real property interests in the operation of the
business of Hummingbird and its subsidiaries, and (ii) Liens
incurred not in connection with the borrowing of money which do not
and would not, individually or in the aggregate, have a Material
Adverse Effect on the occupancy, use or value of the affected
assets. Hummingbird and its subsidiaries are the beneficial owners
of, and have title to,
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- 23 -
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all the material assets owned by
Hummingbird and its subsidiaries which are used in connection with
their respective businesses.
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(p)
|
Leased Real
Property .
Section 3.1(p) of the Disclosure Letter lists all real
property leases to which Hummingbird or one of its subsidiaries is
a party (a “Lease” ). Each Lease has been
validly executed and delivered by the tenant and is unmodified
except as set forth in Section 3.1(p) of the Disclosure Letter
and is in full force and effect. Each Lease represents the entire
agreement between the landlord and the tenant in respect of the
leased premises. Hummingbird and its subsidiaries are not in
default of any of their material obligations under any Lease and
there is no outstanding material dispute between Hummingbird, its
subsidiaries and the landlord in respect of any Lease.
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(q)
|
Material
Contracts . All of the
following Contracts (the “Material Contracts”)
are either listed in Section 3.1(q) of the Disclosure Letter
or another Section of the Disclosure Letter:
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(i) any commission or sales
agreement with an employee, individual consultant or salesperson,
or under which a firm or other organization provides commission or
sales-based services to Hummingbird or any of its subsidiaries,
except for those agreements entered into in the ordinary course of
business;
(ii) any stock option
plan;
(iii) any fidelity or surety bond or
completion bond;
(iv) any lease of personal property
having aggregate outstanding ongoing obligations of Hummingbird or
any of its subsidiaries in excess of $250,000;
(v) the Symphony Arrangement
Agreement, any amendments or variations to the Symphony Arrangement
Agreement and any agreement whether oral or in writing with any of
the parties to the Symphony Arrangement Agreement or their
affiliates or parties related to such parties;
(vi) other than standard customer
contracts previously provided to Parent or that contain
indemnification or guaranty provisions in favour of any person that
do not impose any obligation or liability (contingent or otherwise)
on Hummingbird or any of its subsidiaries greater than those
contained in contracts previously provided to Parent, any agreement
of indemnification or guaranty to any person;
(vii) any agreement containing any
covenant materially limiting the freedom of Hummingbird or any of
its subsidiaries to engage in any line of business or in any
geographic territory or to compete with any person, or which grants
to any person any exclusivity to any geographic territory, any
customer, or any product or service;
(viii) any agreement relating to
capital expenditures and involving future payments in excess of
$250,000;
- 24 -
(ix) any agreement relating to the
disposition of assets or any interest in any business enterprise
outside the ordinary course of business or any agreement relating
to the acquisition of assets or any interest in any business
enterprise outside the ordinary course of business;
(x) any mortgages, indentures, loans
or credit agreements, security agreements or other agreements or
instruments relating to the borrowing of money or the extension of
credit (other than security agreements for office or similar
equipment where the value of the assets secured does not exceed
$250,000);
(xi) any dealer, distribution, joint
marketing (including any pilot program), development, content
provider, destination site or merchant agreement, joint venture,
partnership, strategic alliance or agreement involving the sharing
of profits, losses, costs or liabilities with any person or any
development, original equipment manufacturer, value added
re-seller, remarketer or other agreement for distribution,
data-sharing, marketing, resale, distribution or similar
arrangement relating to any product or service of Hummingbird or
any of its subsidiaries or the products or services of any other
person that involved payments by Hummingbird and its subsidiaries
of $500,000 or more in the 12 month period ended March 31,
2006;
(xii) any material liability of
Hummingbird or any of its subsidiaries pursuant to a customer
contract that does not limit the liability of Hummingbird or any of
its subsidiaries to the amount of the total fees paid to
Hummingbird or any of its subsidiaries under such
contract;
(xiii) any material commitment to
any customer of Hummingbird or any of its subsidiaries or other
person to develop or customize any product or service, or to
customize or develop any third-party product, service or platform,
in either case without compensation in an amount in excess of the
cost to Hummingbird or any of its subsidiaries to perform such
commitment;
(xiv) to the knowledge of
Hummingbird, any agreement pursuant to which Hummingbird or any of
its subsidiaries agreed to provide “most favoured
nation” pricing or others terms and conditions to any person
with respect to the sale, distribution, license or support of any
products or services;
(xv) except as disclosed in clauses
(i) through (xiii) above, any agreement that involved
payments or receipts of more than $500,000 in the 12 month period
ended September 30, 2005 or that Hummingbird expects to
involve payments or receipts of $500,000 or more; or
(xvi) any agreement, the termination
or loss of which would have a Material Adverse Effect on
Hummingbird. Section 3.1(q) of the Disclosure Letter also sets
forth a list of any customer or counterparty of Hummingbird or any
of its subsidiaries that had purchase orders or contracts
(including for services) involving payments to Hummingbird of more
than $250,000 in the 12-month period ended March 31, 2006 (the
“Material Purchase Orders”). None of
- 25 -
Hummingbird, its subsidiaries nor,
to the knowledge of Hummingbird, any of the other parties thereto,
is in default or breach of, nor has Hummingbird or its subsidiaries
received any written notice of default or breach of, or termination
under, any Material Contract or Material Purchase Order, and, to
the knowledge of Hummingbird, there exists no state of facts which
after notice or lapse of time or both would constitute a default or
breach of any such Contract except as would not, individually or in
the aggregate, have a Material Adverse Effect on Hummingbird.
Except as set forth in Section 3.1(q) of the Disclosure
Letter, no Material Contract: (a) would be violated,
contravened or breached by, or under which a default would occur;
(b) requires any consent or prior approval be obtained from
any person (including consents relating to the change of control of
Hummingbird and its subsidiaries) or notice (prior to or following
the Effective Time); or (c) would terminate; in each case,
upon the execution of this Agreement or the completion of the
Transactions. No state of facts exists in relation to Financial
Indebtedness (as defined in any of the debt instruments of
Hummingbird or any of its subsidiaries) of Hummingbird or any
subsidiary of Hummingbird that (i) would constitute a default
or an event of default (or a matter that with the giving of notice,
the passage of time or the fulfillment of any other condition would
result in the occurrence of a default or an event of default) under
any such Financial Indebtedness, (ii) has resulted in any such
Financial Indebtedness becoming due and payable, or being capable
of being declared due and payable, prior to its stated maturity
date, (iii) has resulted in any party to any Contract with
respect to any such Financial Indebtedness having a right to
terminate, cancel or suspend its commitment or any of its
obligations under any such Contract or (iv) has resulted in
any Lien securing any such Financial Indebtedness becoming, or
being capable of becoming, enforceable, except, in each case, as
would not, individually or in the aggregate, have a Material
Adverse Effect on Hummingbird.
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(r)
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Permits . Hummingbird and each of its subsidiaries has
obtained and is in compliance with all Permits, including
Environmental Permits, required by applicable Laws, necessary to
conduct its current businesses as they are now being conducted,
other than where the absence of such Permits or the failure to
comply would not, individually or in the aggregate, have a Material
Adverse Effect on Hummingbird. No suspension or cancellation of any
of the Permits is pending or, to Hummingbird’s knowledge,
threatened, which would have a Material Adverse Effect on
Hummingbird.
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(s)
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Pension and
Employee Benefits .
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(i) Hummingbird and each of its
subsidiaries has complied, in all material respects, with the terms
of all agreements, health, welfare, supplemental unemployment
benefit, bonus, incentive compensation, profit sharing, deferred
compensation, stock purchase, stock appreciation rights, stock
compensation, disability, pension or retirement plans and other
employee compensation or benefit plans, policies or arrangements
which are maintained by or binding upon Hummingbird or such
subsidiary or in respect of which Hummingbird or any of its
subsidiaries has any actual or potential liability (collectively,
the
- 26 -
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“Hummingbird
Plans”) and with
all applicable Laws relating thereto. Section 3.1(s) of the
Disclosure Letter sets out a complete and accurate list of all
Hummingbird Plans.
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(ii) All of the Hummingbird Plans
are and have been (where required) established, registered,
qualified, invested and administered in all material respects in
accordance with all applicable Laws, and in all material respects
in accordance with their terms and the terms of agreements between
Hummingbird and/or any of its subsidiaries, as the case may be, and
their respective employees and former employees. To the knowledge
of Hummingbird, no fact or circumstance exists that could adversely
affect the existing tax status of a Hummingbird Plan.
(iii) All current obligations of
Hummingbird or any of its subsidiaries regarding the Hummingbird
Plans have been satisfied in all material respects and no Taxes are
owing or exigible under any of the Hummingbird Plans except as
would not have a Material Adverse Effect on Hummingbird. All
contributions or premiums required to be made by Hummingbird or any
of its subsidiaries, as the case may be, under the terms of each
Hummingbird Plan or by applicable Laws have been made in a timely
fashion in accordance with applicable Laws and the terms of the
Hummingbird Plans except as would not have a Material Adverse
Effect on Hummingbird.
(iv) Except as set out in
Section 3.1(s) of the Disclosure Letter, none of the
Hummingbird Plans provides retirement benefits on a defined benefit
basis.
(v) No Hummingbird Plan is subject
to any pending investigation, examination or other proceeding,
action or claim initiated by any Governmental Entity, or by any
other party (other than routine claims for benefits), and, to the
knowledge of Hummingbird, there exists no state of facts which
after notice or lapse of time or both could reasonably be expected
to give rise to any such investigation, examination or other
proceeding, action or claim or to affect the registration or
qualification of any Hummingbird Plan required to be registered or
qualified.
(vi) All liabilities of Hummingbird
and each of its subsidiaries (whether accrued, absolute, contingent
or otherwise) related to the Hummingbird Plans have been fully and
accurately accrued and disclosed, and reported in accordance with
GAAP consistently applied in the Hummingbird Financial Statements.
The value of benefits that may be provided under any of the
Hummingbird Plans will not be calculated on the basis of the
occurrence of the Transactions.
(vii) Neither Hummingbird nor any of
its subsidiaries has any liability or potential liability
(including, but not limited to, withdrawal liability) with respect
to (A) any “employee pension benefit plan”
(as such term is defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended (
“ERISA” )) that is or was subject to
Section 302 of Title I of ERISA, Title IV of ERISA or
Section 412 of the Code, (B) any “multiemployer
plan” (as such term is defined in Section 3(37) of
ERISA), (C) any employee benefit plan that
- 27 -
provides health or life insurance
benefits or other welfare-type benefits to former employees, except
as specifically required by law, or (D) any nonqualified deferred compensation plan within
the meaning of Section 409A(d)(1) of the Code, except for
severance provided under the employment agreements listed in
Section 3.1(t) of the Disclosure Letter or under employment
agreements that are not material to the business of
Hummingbird.
(viii) Except as set out in
Section 3.1(s) of the Disclosure Letter, neither Hummingbird
nor any of its subsidiaries has agreed or committed to institute
any plan, program, arrangement or agreement for the benefit of
employees or former employees of Hummingbird or its subsidiaries
other than the Hummingbird Plans, or to make any amendments to any
of the Hummingbird Plans. Except as set out in Section 3.1(s)
of the Disclosure Letter, no Hummingbird Plan provides benefits to
any individual who is not an employee, officer or director of
Hummingbird or its subsidiaries, or the dependents or other
beneficiaries of any such employee, officer or director.
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(t)
|
Employment
Agreements and Collective Agreements . Except as set forth in Section 3.1(t) of
the Disclosure Letter, neither Hummingbird nor any of its
subsidiaries is a party to or bound or governed by:
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(i) any employment, retention,
change of control or other agreement with any officer, employee,
contractor, consultant or advisor whose base annual compensation is
at least $250,000;
(ii) any collective bargaining or
union agreement or any actual or, to the knowledge of Hummingbird,
threatened application for certification or bargaining rights in
respect of Hummingbird or any of its subsidiaries;
(iii) any labour dispute, strike or
lock-out relating to or involving any employee of Hummingbird or
any of its subsidiaries or has, in the 24 months prior to date
hereof, been a party to any such dispute, strike or lock-out;
or
(iv) claims or, to the knowledge of
Hummingbird, threatened claims arising out of or in connection with
employment by Hummingbird or any of its subsidiaries or the
termination thereof that exceed, in the aggregate,
$250,000.
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(u)
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Compliance
with Laws . Hummingbird
and its subsidiaries are in compliance with applicable Laws, other
than non-compliance or violations which would, individually or in
the aggregate, not have a Material Adverse Effect on
Hummingbird.
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(v)
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Intellectual
Property and Software .
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(i) Section 3.1(v)(i) of the
Disclosure Letter contains a complete and accurate copy of
Hummingbird’s current price book, which lists all material
products and services currently marketed by Hummingbird.
- 28 -
(ii) Section 3.1(v)(ii) of the
Disclosure Letter contains a complete and accurate list of the
following Owned Hummingbird IP: (A) all Domain Names,
(B) all registered Trademarks and material unregistered
Trademarks; (C) all Patents; and (D) all registered
Copyrights, in each case listing, as applicable, (1) the name
of the applicant/registrant and current owner, (2) the
jurisdiction of the application/registration and (3) the
application or registration number. To the knowledge of
Hummingbird, none of the material Owned Hummingbird IP is invalid
or unenforceable.
(iii) To the knowledge of
Hummingbird, in each case in which Hummingbird or any of its
subsidiaries has acquired ownership of any registered Trademarks,
registered Copyrights or Patents included in the Owned Hummingbird
IP from another person, Hummingbird or its appropriate subsidiary
has recorded or had recorded such acquisition with the U.S. Patent
and Trademark Office, the U.S. Copyright Office, or their
respective equivalents in the applicable jurisdiction, in each case
in accordance with all applicable Legal Requirements.
(iv) Section 3.1(v)(iv) of the
Disclosure Letter contains a complete and accurate list of all
material Contracts (A) under which Hummingbird or any of its
subsidiaries uses or has the right to use any Licensed Hummingbird
IP, other than licenses and related services agreements for
generally commercially available software that is not distributed
by Hummingbird or incorporated by Hummingbird into any Hummingbird
products (B) under which Hummingbird or any of its
subsidiaries has licensed to any other person the right to use or
agreed to transfer to any other person any of the Hummingbird IP,
other than customer licenses and other agreements entered into in
the ordinary course of business, or (C) which grant, or which
may require Hummingbird or any of its subsidiaries to grant, to
others the right, whether contingent or otherwise, to use or access
any Hummingbird Source Code or which creates or governs any source
code escrow arrangement (such Contracts referred to in the
foregoing clauses (A) and (B) being referred to herein as
the “Hummingbird IP Agreements” ). Except as set
forth in Section 3.1(v)(iv) of the Disclosure Letter, neither
Hummingbird nor any of its subsidiaries has granted to any other
person any material exclusive license or other exclusive rights
under any Hummingbird IP. To the knowledge of Hummingbird, no third
parties to the Hummingbird IP Agreements are in material breach
thereof. To the knowledge of Hummingbird, there are no material
pending disputes regarding the scope of such Hummingbird IP
Agreements, performance under the Hummingbird IP Agreements, or
with respect to payments made or received under such Hummingbird IP
Agreements. To the knowledge of Hummingbird, all Hummingbird IP
Agreements are binding and are in full force and effect.
(v) To the knowledge of Hummingbird,
the Owned Hummingbird IP, together with the Licensed Hummingbird
IP, is sufficient for the conduct of the business of Hummingbird
and its subsidiaries as currently conducted.
(vi) Hummingbird and its
subsidiaries own all right, title and interest in the Owned
Hummingbird IP, free and clear of all material Liens other than
(A) encumbrances, restrictions or other obligations arising
under any of the
- 29 -
Hummingbird IP Agreements and
(B) non-exclusive licenses granted by Hummingbird and its
subsidiaries in the ordinary course of business.
(vii) Hummingbird and each of its
subsidiaries have taken reasonable and appropriate steps to protect
and preserve the confidentiality of the trade secrets that comprise
any part of the Hummingbird IP and, to the knowledge of
Hummingbird, there has been no material unauthorized use,
disclosure or infringement of any such trade secrets by any person.
Hummingbird and its subsidiaries have a policy requiring all
employees, consultants and contractors to execute confidentiality
and invention assignment agreements substantially in
Hummingbird’s standard form previously provided to Parent.
Except as discussed in Section 3.1(v)(vii) of the Disclosure
Letter, Hummingbird and its subsidiaries have obtained from all
persons (including employees, consultants and contractors) who have
created any material portion of, or otherwise who would have any
material rights in or to, the Owned Hummingbird IP valid and
enforceable written assignments of any such work, invention,
improvement or other rights in favour of Hummingbird and its
subsidiaries.
(viii) To the knowledge of
Hummingbird, none of the products or services of Hummingbird or any
of its subsidiaries nor any other aspect of the conduct of
Hummingbird’s or its subsidiaries’ respective
businesses has infringed upon or otherwise violated, or is
infringing upon or otherwise violating, in any respect the
Intellectual Property Rights of any third party. To the knowledge
of Hummingbird, no third party is infringing upon in any material
respect any Owned Hummingbird IP.
(ix) Other than as disclosed in
Section 3.1(j) of the Disclosure Letter, there is no suit,
claim, action, investigation or proceeding made, conducted or
brought by any third party that has been served upon or, to the
knowledge of Hummingbird, filed or threatened with respect to, and
Hummingbird has not been notified in writing of, any alleged
infringement or other violation in any material respect by
Hummingbird or any of its subsidiaries of any Intellectual Property
Rights of any third party. Other than as disclosed in
Section 3.1(j) of the Disclosure Letter, to the knowledge of
Hummingbird, there is no pending or threatened claim challenging
the validity or enforceability of, or contesting
Hummingbird’s or any of its subsidiaries’ ownership of
or other rights with respect to any of the Hummingbird IP.
Hummingbird and its subsidiaries are not subject to any Order of
any Governmental Entity that restricts or impairs the use of any
Hummingbird IP. ‘
(x) Except as set forth in
Section 3.1(v)(x) of the Disclosure Letter, the execution and
delivery of this Agreement and the consummation of the Transactions
will not result in (A) any right of termination of
cancellation under any Hummingbird IP Agreement or any loss of
rights in or to any Hummingbird IP that is material to the business
of Hummingbird and its subsidiaries as currently conducted or
(B) after consummation of the Transactions, Parent or any of
its subsidiaries being required, under the terms of any agreement
to which Hummingbird or any of its subsidiaries is a party, to
grant any third party any
- 30 -
license or other rights in or to any
of Parent’s or any of its subsidiaries’ Intellectual
Property Rights.
(xi) Except as specified in
Section 3.1(v)(xi) of the Disclosure Letter, no Hummingbird
product (including any Hummingbird product currently under
development) contains or is distributed with any code that is, in
whole or in part, subject to the provisions of any license to
software that is made generally available to the public without
requiring payment of fees or royalties (including without
limitation any obligation or condition under any “open
source” license such as, without limitation, the GNU General
Public License, GNU Lesser General Public License, Mozilla Public
License or BSD licenses) ( “Publicly Available
Software” ). No Hummingbird product is subject to any
license terms that require, or condition the use or distribution of
such Hummingbird product on, the disclosure, licensing or
distribution of any source code for any portion of such Hummingbird
product.
(xii) To the knowledge of
Hummingbird, no condition has occurred that would be sufficient to
entitle the beneficiary under any source code escrow arrangement to
require release of any Hummingbird Source Code. The consummation of
the Transactions will not constitute a condition sufficient to
entitle the beneficiary under any source code escrow arrangement to
require release of any Hummingbird Source Code for any current
Hummingbird product, nor to the knowledge of Hummingbird, that
would require release of any source code for any former Hummingbird
product.
(xiii) Hummingbird’s and its
subsidiaries’ collection and dissemination of personal
customer information in connection with their respective businesses
has been conducted in all material respects in accordance with
applicable privacy policies published or otherwise adopted by
Hummingbird and its subsidiaries and any applicable Legal
Requirements.
(xiv) There are no currently pending
or, to Hummingbird’s knowledge, threatened warranty claims
with respect to any Hummingbird product. Section 3.1(v)(xiv)
of the Disclosure Letter contains copies of the terms of
Hummingbird’s and its subsidiaries’ current forms of
standard product warranties. Except as set forth in
Section 3.1(v)(xiv) of the Disclosure Letter, Hummingbird and
its subsidiaries have made no express warranties with respect to
any Hummingbird products other than such standard product
warranties. There are no written notices by any Government Entity
or any product testing laboratory stating that any product of
Hummingbird and its subsidiaries is unsafe or fails to meet any
standards promulgated by such Governmental Entity or testing
laboratory.
(xv) There are no currently pending
or, to Hummingbird’s knowledge, threatened warranty or other
claims with respect to services provided by Hummingbird or any of
its subsidiaries to any Person ( “Services”
).
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(w)
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Insurance
. Hummingbird and its subsidiaries
have policies of insurance with responsible insurers in full force
and effect naming Hummingbird and its
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subsidiaries, as applicable, as
insured which provide coverage on a basis that is customary in the
industries in which it and they participate and that, having regard
to the nature of their risk, are reasonable. Hummingbird and its
subsidiaries have such policies of insurance as are listed in
Section 3.1(w) of the Disclosure Letter, and Hummingbird is in
compliance with all requirements with respect thereto.
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(x)
|
Corrupt
Practices Legislation .
There have been no actions taken by or, to the knowledge of
Hummingbird, on behalf of Hummingbird or its subsidiaries that
would cause Hummingbird to be in violation of the Foreign Corrupt
Practices Act of the United States of America or the Corruption of
Foreign Public Officials Act (Canada).
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(y)
|
Brokers and
Advisors . Except for
Lehman Brothers and Bane of America Securities LLC, no broker,
finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission from, or to the
reimbursement of any of its expenses by, Hummingbird in connection
with this Agreement or the Plan of Arrangement. Hummingbird has
provided to Parent a correct and complete copy of all agreements
relating to the arrangements between it and its financial advisors
which are in effect at the date hereof.
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(z)
|
Investment
Canada Act . Neither
Hummingbird nor any of its subsidiaries is engaged in a
“cultural business” for purposes of subsection 14.1(5)
of the Investment Canada Act (Canada).
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(aa)
|
No
“Collateral Benefit” Under Ontario Rule
. No related party of Hummingbird
(within the meaning of Ontario Securities Commission Rule 61-501
– Insider Bids, Issuer Bids, Business Combination and
Related Party Transactions) together with its associated
entities, beneficially owns or exercises control or direction over
1% or more of the outstanding Hummingbird Shares, except for
related parties who will not receive a “collateral
benefit” (within the meaning of such Rule) from Hummingbird
or any of its subsidiaries as a consequence of the
Transactions.
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(bb)
|
Books and
Records . The financial
books, records and accounts of Hummingbird and its subsidiaries in
all material respects (i) have been maintained in accordance
with good business practices on a basis consistent with prior
years, (ii) are stated in reasonable detail and accurately and
fairly reflect the material transactions and dispositions of the
assets of Hummingbird and its subsidiaries and
(iii) accurately and fairly reflect the basis for the
Hummingbird Financial Statements. Hummingbird has devised and
maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (A) transactions are
executed in accordance with management’s general or specific
authorization; and (B) transactions are recorded as necessary
to permit preparation of financial statements in conformity with
GAAP. Hummingbird’s and its subsidiaries’ corporate
records and minute books have been maintained in compliance in all
material respects with applicable Laws and are complete and
accurate in all material respects.
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(cc)
|
Restrictions
on Business Activities .
There is no agreement, judgment, injunction, order or decree
binding upon Hummingbird or any of its subsidiaries that has or
could have the effect of prohibiting, restricting or impairing any
business practices of Hummingbird or such subsidiary, except as
would not have a Material Adverse Effect on Hummingbird.
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(dd)
|
Disclosure/Internal Controls
. Hummingbird has designed
disclosure controls and procedures to ensure that material
information relating to Hummingbird, including its subsidiaries, is
made known to the management of Hummingbird by others within those
entities. With respect to Hummingbird’s most recent annual
report on Form 40-F, Hummingbird’s principal executive
officer and its principal financial officer have disclosed, based
on their most recent evaluation, to Hummingbird’s auditors
(i) all significant deficiencies in the design or operation of
the internal controls that are reasonably likely to adversely
affect Hummingbird’s ability to record, process, summarize
and report financial data and have identified for
Hummingbird’s auditors any material weakness in internal
controls, and (ii) any fraud, whether or not material, that
involves management or other employees who have a significant role
in Hummingbird’s internal controls.
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(ee)
|
Cash .
On March 31, 2006, Hummingbird and its subsidiaries had not
less than $94 million of consolidated cash (as defined by
GAAP).
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(ff)
|
Hummingbird
Stock Option Plan . Since
the original date of adoption by Hummingbird of its 1996 Stock
Option Plan, there has not been a “Triggering Event”
(as such term is defined in the Hummingbird Stock Option Plan),
other than any Triggering Event resulting from the Open Text
Offer.
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(gg)
|
Financial
Institution. Hummingbird
is not a “financial institution” for the purpose of
Section 142.2 of the Tax Act.
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3.2
|
Survival
of Representations and Warranties
|
The representations and warranties
of Hummingbird contained in this Agreement shall survive, and shall
not be affected by, any investigation of the subject matter thereof
by Parent, Acquisition Sub or any affiliate thereof or by any
representative of any of the foregoing, or any knowledge of any
such person with respect thereto. The representations and
warranties of Hummingbird contained in this Agreement shall expire
and be terminated on the earlier of the Effective Date and the date
on which this Agreement is terminated in accordance with its
terms.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
PARENT,
HOLDCO AND ACQUISITION
SUB
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4.1
|
Representations and
Warranties
|
Parent and Acquisition Sub hereby
represent and warrant to and in favour of Hummingbird as follows
and acknowledge that Hummingbird is relying upon such
representations and warranties in connection with the entering into
of this Agreement:
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(a)
|
Organization
and Qualification . Each
of Parent and Acquisition Sub is a corporation duly incorporated or
an entity duly created, validly existing and in good standing under
the laws of its jurisdiction of incorporation, continuance or
creation and has the requisite corporate or other power and
authority to own its properties as now owned and to carry on its
business as it is now being conducted.
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(b)
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Authority
Relative to this Agreement . Each of Parent and Acquisition Sub has the
requisite corporate authority to enter into this Agreement and to
carry out its obligations hereunder and to fulfill its obligations
under the Arrangement. The execution, delivery and performance of
this Agreement and the completion of the Plan of Arrangement by
each of Parent and Acquisition Sub contemplated hereby have been
duly authorized by the Board of Directors or equivalent governing
body of each of Parent and Acquisition Sub and no other corporate
proceedings on the part of Parent and Acquisition Sub are necessary
to authorize the execution and delivery by it of this Agreement or
the making or completion of the Plan of Arrangement. This Agreement
has been duly executed and delivered by each of Parent and
Acquisition Sub and constitutes a legal, valid and binding
obligation of each of Parent and Acquisition Sub enforceable
against it in accordance with its terms, subject to the
qualification that such enforceability may be limited by
bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting rights of creditors and that
equitable remedies, including specific performance, are
discretionary and may not be ordered.
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(i) Neither the execution and
delivery of this Agreement by each of Parent and Acquisition Sub
nor the completion of the Arrangement nor compliance by each of
Parent and Acquisition Sub with any of the provisions hereof will
violate, conflict with, or result in a breach of any provision of,
require any consent, approval or notice under, or constitute a
default (or an event which, with notice or lapse of time or both,
would constitute a default) under (A) the respective articles
or by-laws or other comparable organizational documents of each of
Parent and Acquisition Sub or (B) any material contract or
other instrument or obligation to which Parent and Acquisition Sub
is a party or to which it, or any of its properties or assets, may
be subject or by which Parent or Acquisition Sub is bound (except,
in the case of each of clauses (A) and (B) above, for
such violations, conflicts, breaches, defaults, terminations or
accelerations, or any consents, approvals or notices which, if not
given or received, would not, in each case, individually or in the
aggregate, materially adversely affect the ability of any of Parent
or Acquisition Sub to perform its obligations under this
Agreement).
(ii) Subject to obtaining the
Regulatory Approvals and other than in connection with or in
compliance with the provisions of applicable corporate,
competition, antitrust and securities Laws, (A) there is no
legal impediment to the completion of the Plan of Arrangement by
Parent or Acquisition Sub, and (B) no filing or registration
with, or authorization, consent or approval of, any Governmental
Entity is required of Parent or Acquisition Sub in connection with
completion of the Plan of Arrangement, except for such filings or
registrations which, if not made, or for such authorizations,
consents or approvals which, if not
- 34 -
received, would not prevent or
materially delay the making and completion of the Plan of
Arrangement by Parent or Acquisition Sub.
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(d)
|
Commitment
Letters . Parent has
delivered to Hummingbird a true and complete copy of a fully
executed commitment letter from Royal Bank of Canada (the
“Commitment Letter”) which, together with the
loans, if any, from Lender Sub referred to in Section 2.3 of
the Plan of Arrangement and a direct or indirect equity investment
by Parent, will provide sufficient funds to permit Acquisition Sub,
subject to the satisfaction of all relevant conditions set forth in
this Agreement, to pay the Purchase Price in respect of, in
reliance on the representations and warranties of Hummingbird
regarding, each of the outstanding Hummingbird Shares.
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(e)
|
Litigation . There is no litigation pending or, to the
knowledge of P. Thomas Jenkins and John Shackleton of Parent,
threatened against Parent or Acquisition Sub that, if determined
adversely to Parent or Acquisition Sub, would materially adversely
affect the ability of Parent or Acquisition Sub to consummate the
Transactions.
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4.2
|
Survival
of Representations and Warranties
|
The representations and warranties
of Parent and Acquisition Sub contained in this Agreement shall
expire and be terminated on the earlier of the Effective Date and
the date on which this Agreement is terminated in accordance with
its terms.
ARTICLE 5
COVENANTS
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5.1
|
Covenants
of Hummingbird Regarding the Conduct of Business
|
Hummingbird covenants and agrees
that, during the period from the date of this Agreement until the
earlier of the Effective Date and the time that this Agreement is
terminated in accordance with its terms, unless Parent shall
otherwise consent in writing (which consent shall not be
unreasonably withheld or delayed) or as is otherwise expressly
permitted or specifically contemplated by this Agreement or as is
set forth in Section 5.1 of the Disclosure Letter:
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(a)
|
the business of
Hummingbird and its subsidiaries shall be conducted only, and
Hummingbird and its subsidiaries shall not take any action except,
in the usual and ordinary course of business consistent with past
practice, and Hummingbird shall use all commercially reasonable
efforts to maintain and preserve its and its subsidiaries’
business organization, assets, customers, employees, goodwill and
business relationships and, without limiting the generality of the
foregoing, neither Hummingbird nor any of its subsidiaries shall
manage accounts receivable other than in the ordinary course of
business in a manner comparable to the management of accounts
receivable in the 12 months preceding the date hereof;
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(b)
|
Hummingbird shall not, and shall
not permit any of its subsidiaries to, directly or indirectly:
(i) amend its articles, charter or by-laws or other
comparable
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organizational documents;
(ii) declare, set aside or pay any dividend or other
distribution or payment (whether in cash, shares or property) in
respect of the Hummingbird Shares owned by any person or the
securities’ of any subsidiary owned by a person other than
Hummingbird or a subsidiary of Hummingbird; (iii) issue,
grant, sell, encumber or pledge or authorize or agree to issue,
grant, sell, encumber or pledge any shares of Hummingbird or its
subsidiaries, or securities convertible into or exchangeable or
exercisable for, or otherwise evidencing a right to acquire, shares
of Hummingbird or its subsidiaries or any other ownership interest
(including any phantom interest or other right linked to any shares
of Hummingbird or its subsidiaries in any manner), other than
(A) the issuance of Hummingbird Shares issuable pursuant to
the terms of the Hummingbird Options that are outstanding as of the
date of this Agreement, or (B) transactions between two or
more Hummingbird wholly-owned subsidiaries or between Hummingbird
and a Hummingbird wholly-owned subsidiary; (iv) redeem,
purchase or otherwise acquire any of its outstanding securities,
other than in transactions between two or more Hummingbird
wholly-owned subsidiaries or between Hummingbird and a Hummingbird
wholly-owned subsidiary; (v) amend the terms of any of its
securities or reclassify, combine, split or subdivide any of its
securities; (vi) adopt a plan of liquidation or resolution
providing for the liquidation or dissolution of Hummingbird or any
of its subsidiaries, or undertake any merger, consolidation or a
reorganization of Hummingbird or any of its subsidiaries except as
such plans have been explicitly set forth in this Agreement;
(vii) amend its accounting policies or adopt new accounting
policies, in each case except as required in accordance with GAAP;
(viii) make any material Tax election or settle or compromise
any material Tax liability; or (ix) enter into, modify or
terminate any Contract with respect to any of the
foregoing;
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(c)
|
Hummingbird
shall promptly notify Parent in writing of any circumstance or
development that has had or would have a Material Adverse Effect on
Hummingbird or any change in any material fact set forth in the
Disclosure Letter;
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(d)
|
Hummingbird shall not, and shall
not permit any of its subsidiaries to, directly or indirectly:
(i) except sales of inventory or obsolete items in the
ordinary course of business consistent with past practice, sell,
pledge, lease, dispose of or encumber any assets of Hummingbird or
of any subsidiary; (ii) acquire (by merger, amalgamation,
consolidation or acquisition of shares or assets) any corporation,
partnership or other business organization or division thereof, or
make any investment either by the purchase of securities or
contributions of capital (other than to wholly-owned subsidiaries),
(iii) acquire any material property or assets of any other
person except for purchases of inventory in the ordinary course of
business; (iv) other than loans between one or more of
Hummingbird and its wholly-owned subsidiaries for purposes of
funding Lender Sub for purposes of this Agreement, incur any
indebtedness for borrowed money or for any other liability or
obligation of a financial nature or issue any debt securities or
assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other person, or make any
loans or advances except for intercompany loans and borrowings
under existing credit facilities, in each case in
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the ordinary course and
consistent with past practices; (v) pay, discharge or satisfy
any claims, liabilities or obligations other than the payment,
discharge or satisfaction of liabilities reflected or reserved
against in the Hummingbird Financial Statements or made in the
ordinary course of business consistent with past practice;
(vi) waive, release, grant or transfer any rights of material
value; (vii) without the approval in writing by Parent, such
approval not to be unreasonably withheld or delayed, make or commit
to make capital expenditures that are, in the aggregate, in excess
of $600,000; (viii) take any action or make any change with
respect to accounting policies or procedures, other than actions or
changes required by GAAP or by applicable Law or as set forth in
the Hummingbird Financial Statements; (ix) take any action
that would cause any of the representations or warranties set forth
in Article 3 to be untrue as of the date of this Agreement or as of
the Effective Time; or (x) authorize or propose any of the
foregoing, or enter into or modify any Contract to do any of the
foregoing;
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(e)
|
Hummingbird
shall not, and shall not permit any of its subsidiaries to,
directly or indirectly, enter into, terminate or modify any
Material Contract (including Material Contracts listed or referred
to in the Disclosure Letter) outside the ordinary course of
business consistent with past practice, provided that the
restrictions in this Section 5.1(e) shall not apply to
entering into, modifying or terminating Material Contracts:
(i) that do not involve the receipt or payment by Hummingbird
or any of its subsidiaries of more than $500,000, in the aggregate,
over the remaining life of the contract, or (ii) that have a
term of less than 24 months and are terminable by Hummingbird or
its subsidiaries on notice of six months or less (both prior to and
following any such modification);
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(f)
|
neither
Hummingbird nor any of its subsidiaries shall orally or in writing
(i) grant to any officer, director or employee of Hummingbird
or any of its subsidiaries an increase in compensation in any form,
except in the ordinary course of business and upon receipt of
approval in writing by the Parent, such approval not to be
unreasonably withheld or delayed, (ii) grant any general
salary increase, (iii) commit to or make any loan to any
officer, director or employee of Hummingbird or any of its
subsidiaries, (iv) take any action with respect to the grant
of any bonus or similar payment or benefit to, or the grant of any
severance, retention, retirement, change of control or termination
pay to or, except in connection with new hires of employees who are
not officers or directors of Hummingbird or any of its subsidiaries
in the ordinary course of business, the entering into of any
employment agreement with any officer, director or employee of
Hummingbird or any of its subsidiaries (other than as required by
applicable Law or employment agreements, or severance plans,
agreements or arrangements in existence on May 25,2006),
(v) increase any benefits payable under its current severance,
change of control or termination pay policies, or (vi) adopt
or amend in any material respect or make any voluntary contribution
to any Hummingbird Plan;
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(g)
|
Hummingbird shall not, and shall
not permit any of its subsidiaries to, hire any employee except for
(i) the replacement of any current employee whose employment
with Hummingbird or any subsidiary is terminated or resigns for any
reason (with such replacement employee receiving substantially
similar or lesser
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compensation and benefits as such
terminated or resigned employee) and (ii) with approval in
writing by Parent, such approval not to be unreasonably withheld or
delayed, a new employee who does not replace any current employee
pursuant to clause (i) above (A) whose annual
noncontingent cash compensation and annual target commission
payments does not exceed, in the aggregate, $250,000 and
(B) whose annual noncontingent cash compensation and annual
target commission or bonus payments, when aggregated with the
annual noncontingent cash compensation and annual target commission
or bonus payments of all other such new employees, does not exceed
$2,000,000;
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(h)
|
Hummingbird
shall, whether through its Board of Directors or otherwise,
facilitate as necessary the acceleration of the vesting of any
unvested Hummingbird Options under the Hummingbird Stock Option
Plan but shall not otherwise amend, vary or modify the Hummingbird
Stock Option Plan or any Hummingbird Options;
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(i)
|
Hummingbird
shall not, and shall not permit any of its subsidiaries to, settle
or compromise (i) any material action, claim or proceeding
brought against it and/or any of its subsidiaries, except with
respect to such settlements and compromises that do not, in the
aggregate, oblige Hummingbird and its subsidiaries to make cash
payments exceeding $1,000,000; or (ii) any action, claim or
proceeding brought by any present, former or purported holder of
its securities or any other person in connection with the
transactions contemplated by this Agreement or the
Arrangement;
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(j)
|
Hummingbird
shall use its commercially reasonable efforts to cause the current
insurance (or re-insurance) policies maintained by Hummingbird or
any of its subsidiaries, including directors’ and
officers’ insurance, not to be cancelled or terminated or any
of the coverage thereunder to lapse, unless simultaneously with
such termination, cancellation or lapse, replacement policies
underwritten by insurance or re-insurance companies of nationally
recognized standing having comparable deductions and providing
coverage similar to or greater than the coverage under the
cancelled, terminated or lapsed policies for substantially similar
premiums are in full force and effect; provided that none of
Hummingbird or any of its subsidiaries shall obtain or renew any
insurance (or re-insurance) policy for a term exceeding 12 months
from the date hereof;
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(k)
|
Hummingbird
shall not approve, adopt or implement a shareholder rights plan or
similar poison pill arrangement; and
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(1)
|
Hummingbird
shall provide to Parent, as soon as practicable, but in no event
later than the 14th day following the end of each calendar month, a
calculation of the amount of cash of Lender Sub and the additional
aggregate amount of cash of Hummingbird and its subsidiaries, in
each case as of the end of such month.
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5.2
|
Covenants
of Hummingbird Regarding the Performance of
Obligations
|
Subject to Section 7.1,
Hummingbird shall and shall cause its subsidiaries to perform all
obligations required or desirable to be performed
