EXHIBIT 1
January 1, 2003
COGNICASE INC.
The Cite Multimedia
111 Duke Street
9th Floor
Montreal, Quebec
H3C 2M1
ATTENTION: THE BOARD OF DIRECTORS
Dear Sir:
Re: Revised Offer to acquire all of the outstanding Common Shares of
Cognicase Inc.
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The purpose of this Agreement is to set forth the terms and conditions upon
which CGI Group Inc. (the "Offeror") agrees to make a revised offer to purchase
all of the outstanding Common Shares (including any Common Shares which may
become outstanding pursuant to the exercise of outstanding options and other
securities, instruments and rights convertible or exchangeable into Common
Shares or entitling the holder thereof to acquire Common Shares) (collectively,
the "Shares") in the share capital of Cognicase Inc. (the "Corporation") on the
basis described in Schedule A (the "Revised Offer"). All terms not otherwise
defined herein shall have the meaning ascribed thereto in Schedule B.
1. THE REVISED OFFER
1.1 AGREEMENT AND TIMING
(a) The Offeror and the Corporation shall contemporaneously,
promptly after the execution hereof, publicly announce the
Revised Offer.
(b) The Offeror shall modify the Initial Offer pursuant to a notice of
variation (the "Notice of Variation") describing the terms of the
Revised Offer in both English and French in compliance with the
Securities Laws. The Corporation and its counsel will be given a
reasonable opportunity to review the Notice of Variation which shall
be delivered in accordance with the notice provisions of Section 6.5
hereof, and comment thereon, prior to it being mailed to holders of
record of Common Shares (the "Shareholders") and filed with applicable
securities regulatory authorities (the "Securities Authorities"). The
Notice of Variation, when filed with the Securities Authorities and
mailed to the Shareholders, shall
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contain all information which is required to be included therein in
accordance with the Securities Laws, and shall in all material
respects comply with requirements of the Securities Laws. The terms of
the Revised Offer shall comply with the terms of this Agreement. The
Offeror agrees that the Notice of Variation shall be mailed as soon as
practicable after the public announcement of the Revised Offer and, in
any event, not later than January 3, 2003 (the date of such mailing
being referred to herein as the "Notice of Variation Mailing Date").
(c) The Corporation shall prepare, for mailing to the Shareholders and
filing with the Securities Authorities, a notice of change to the
Directors' Circular (together with all amendments, supplements and
exhibits thereto) (the "New Directors' Circular") in English and in
French which shall contain the recommendation of the Corporation's
Board of Directors to accept the Revised Offer, together with the
fairness opinion contemplated pursuant to Subsection 2.3(p) hereof.
The Corporation shall comply with all Securities Laws in respect of
the Revised Offer. The Offeror and its counsel will be given a
reasonable opportunity to review the New Directors' Circular, which
shall be delivered in accordance with the notice provisions of Section
6.5 hereof, and comment thereon, prior to it being mailed to
Shareholders and filed with the Securities Authorities. The
Corporation agrees that the New Directors' Circular shall be mailed as
soon as practicable after the public announcement of the Revised Offer
and, in any event, not later than January 6, 2003 (the date of such
mailing being referred to herein as the "Directors' Circular Mailing
Date").
(d) It is understood and agreed that, while the Revised Offer shall be
subject to the conditions set forth in the Initial Offer, as varied as
set forth in Schedule A, and identified as being for the benefit of
the Offeror, the Offeror may, in its sole discretion, waive any of the
conditions of the Revised Offer.
1.2 CONDITIONS PRECEDENT TO MAKING THE REVISED OFFER
The obligation of the Offeror to proceed with the Revised Offer shall be
conditional upon the following:
(a) the written favourable fairness opinion of BMO Nesbitt Burns Inc.
(the "Financial Advisor"), financial advisor to the special committee
(the "Special Committee") of the Corporation's Board of Directors,
dated the date hereof, in respect of the Revised Offer shall not have
been modified or withdrawn;
(b) the Board of Directors of the Corporation shall not have modified
or withdrawn its decision to recommend that the holders of Shares
accept the Revised Offer;
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(c) no circumstances shall exist and no event shall have occurred that
render it impracticable for the conditions of the Revised Offer set
forth in Schedule A to be satisfied;
(d) all of the representations and warranties of the Corporation set
out in this Agreement shall be true and correct in all material
respects at the Directors' Circular Mailing Date as if made on that
date and all of the covenants and obligations of the Corporation set
out in this Agreement shall have been complied with at the Directors'
Circular Mailing Date and this Agreement shall not have been
terminated in accordance with the terms hereof; and
(e) no Superior Proposal shall have been announced.
The foregoing conditions precedent to making the Revised Offer are for
the exclusive benefit of the Offeror and may be waived by the Offeror
at any time and from time to time in whole or in part, without
prejudice to any other rights which the Offeror may have.
1.3 CONDITIONS PRECEDENT TO PERFORMANCE OF CORPORATION'S OBLIGATIONS
The performance by the Corporation of its obligations under
Subsection 1.1(c) is conditional upon the following:
(a) all of the representations and warranties of the Offeror set out
in this Agreement shall be true and correct in all material respects
at the Notice of Variation Mailing Date as if made on that date and
all of the covenants and obligations of the Offeror set out in this
Agreement shall have been complied with at the Notice of Variation
Mailing Date and this Agreement shall not have been terminated in
accordance with the terms hereof;
(b) the written favourable fairness opinion of the Financial Advisor,
dated the date hereof, in respect of the Revised Offer shall not have
been modified or withdrawn;
(c) no Superior Proposal shall have been announced; and
(d) the Revised Offer has not been made in accordance with the terms
of this Agreement.
The foregoing conditions precedent are for the exclusive benefit of
the Corporation and may be waived by the Corporation at any time and
from time to time in whole or in part, without prejudice to any other
rights which the Corporation may have.
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2. ACKNOWLEDGMENTS, REPRESENTATIONS AND WARRANTIES
2.1 The Offeror represents and warrants to the Corporation as follows (and
acknowledges that the Corporation is relying upon these representations
and warranties in entering into this Agreement):
(a) The authorized share capital of the Offeror is comprised of an
unlimited number of First Preferred Shares, issuable in series, Second
Preferred Shares, issuable in series, Class A Subordinate Shares and
Class B Shares (multiple voting) of which, as at September 30, 2002,
339,900,257 Class A Subordinate Shares and 40,799,774 Class B Shares
were validly issued and outstanding as fully paid and non-assessable.
The Class A Subordinate Shares of the Offeror are listed and posted
for trading on the Toronto Stock Exchange and New York Stock Exchange;
(b) The Offeror is duly incorporated and organized and is validly
existing under the laws of the Province of Quebec;
(c) The Offeror has the corporate power and capacity to enter into,
and to perform its obligations under, this Agreement. The execution
and delivery of this Agreement by the Offeror and the performance of
its obligations hereunder have been duly authorized by all necessary
corporate action on the part of the Offeror and this Agreement
constitutes a valid and binding obligation of the Offeror enforceable
against the Offeror in accordance with its terms, subject to the usual
exceptions as to bankruptcy, insolvency and similar laws of general
application and the availability of equitable remedies;
(d) None of (A) the execution and delivery by the Offeror of this
Agreement, (B) the performance by the Offeror of its obligations
hereunder or (C) the completion of the transactions contemplated
herein will result in the imposition of any encumbrance, charge or
lien upon any of the assets of the Offeror or give rise to any right
of termination or acceleration of indebtedness, or cause any
indebtedness to come due before its stated maturity, under any
material agreement, contract, indenture, deed of trust, mortgage,
bond, instrument, license, franchise or permit to which the Offeror is
a party or by which it is bound or permit or result in any loss of any
material rights or assets or any interest therein held by the Offeror;
(e) Other than in connection with or in compliance with the provisions
of applicable Securities Laws, the Competition Act (Canada) and the
Hart Scott Rodino Antitrust Improvements Act of 1976 (United States),
no authorization, consent or approval of, or filing with, any public
body, court or authority, and no authorization, consent or approval of
any other party, is necessary for the
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consummation by the Offeror of its obligations under this Agreement or
for the consummation by the Offeror of the Revised Offer;
(f) The Offeror is not a party to, bound or affected by or subject to
any charter or by-law provision, statute, regulation, judgement,
order, decree or law which would be violated, contravened, breached by
or under which default would occur as a result of the execution and
delivery or performance of this Agreement or the Revised Offer and
which violation, contravention, breach or default would be reasonably
expected to result in a Material Adverse Change with respect to the
Offeror;
(g) There is no material default by the Offeror in its filings
required to be made pursuant to applicable Securities Laws;
(h) The Offeror has filed with Canadian securities regulators true and
complete copies of all forms, reports, schedules, statements and other
documents required to be filed by it since January 1, 2002, which
documents, at the time filed, (i) complied in all material respects
with the requirements of applicable Securities Laws and (ii) did not
contain any material misrepresentation or any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements made therein (in
light of the circumstances under which they were made) not misleading,
and the Offeror has not filed any such documents on a confidential
basis with any Canadian securities regulatory authority since January
1, 2002;
(i) The Class A Subordinate Shares to be issued pursuant to the
Revised Offer will be (A) duly authorized, (B) validly issued as fully
paid and non-assessable, (C) listed and posted for trading on the
Toronto and New York stock exchanges and (D) freely tradeable by the
holder without restrictions if, as and when the Shares are taken up
and paid for by the Offeror under the Revised Offer, and the Offeror
will keep reserved, from its authorized but unissued shares, a
sufficient number of Class A Subordinate Shares to issue in exchange
for all of the Shares tendered to the Revised Offer;
(j) Except as publicly disclosed, no Material Adverse Change has
occurred since the date of the latest published audited consolidated
annual financial statements of the Offeror;
(k) Except as disclosed in its filings made pursuant to applicable
Securities Laws, no claim, litigation, action, suit or other
proceeding by or before any domestic or foreign arbitrator, court or
tribunal or governmental agency or other regulatory authority or
administrative agency or commission is pending or, to the knowledge
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of the Offeror, threatened against the Offeror or any of its
Subsidiaries that would be reasonably likely to cause a Material
Adverse Change with respect to the Offeror; and
(l) There is no event of default under any instrument or agreement to
which the Offeror or any of its Subsidiaries is a party or by which it
is bound which would be reasonably expected to result in a Material
Adverse Change with respect to the Offeror.
2.2 The Offeror acknowledges that some of the entitlements mentioned under
the heading "Other Information Other Rights" in the Directors' Circular
cannot be accelerated or prepaid at the option of the Corporation.
2.3 The Corporation hereby represents and warrants to the Offeror as
follows (and acknowledges that the Offeror is relying upon these
representations and warranties in entering into this Agreement and
conducting the Revised Offer) and acknowledges that it is a condition
to the Offeror making the Revised Offer and taking-up the Shares under
the Revised Offer, that all of the representations and warranties set
forth herein shall be true and correct in all material respect on the
Directors' Circular Mailing Date as if made on that date and true and
correct in all material respect on the Effective Date:
(a) The authorized share capital of the Corporation is comprised of an
unlimited number of Common Shares and an unlimited number of Preferred
Shares, issuable in series;
(b) The Directors' Circular sets out, as of the date thereof, the
issued share capital of the Corporation as well as all outstanding
options to acquire Common Shares and other securities, instruments and
rights convertible or exchangeable into Common Shares or entitling the
holder thereof to acquire Common Shares;
(c) The Corporation is duly incorporated and organized and is validly
existing under the CBCA;
(d) The Corporation has the corporate power and capacity to enter
into, and to perform its obligations under, this Agreement. The
execution and delivery of this Agreement by the Corporation have been
authorized by all necessary corporate action on the part of the
Corporation and constitutes a valid and binding obligation of the
Corporation enforceable against the Corporation in accordance with its
terms, subject to usual exceptions as to bankruptcy, insolvency, and
similar laws of general application and the availability of equitable
remedies;
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(e) Except as set forth in the Directors' Circular, neither the
execution and delivery by the Corporation of this Agreement or the
performance by it of its obligations hereunder or the completion of
the transaction contemplated herein will result in the imposition of
any encumbrance, charge or lien upon any of the assets of the
Corporation or any of its Subsidiaries or give rise to any right of
termination or acceleration of indebtedness, or cause any indebtedness
to come due before its stated maturity, under any material agreement,
contract, indenture, deed of trust, mortgage, bond, instrument,
license, franchise or permit to which the Corporation and its
Subsidiaries taken as a whole is a party or by which it is bound, give
rise to any rights of first refusal (except for such rights which
would not result in a Material Adverse Change) or trigger any change
in control or influence provisions or any restriction or limitation
under any such agreement, contract, indenture, deed of trust,
mortgage, bond, instrument, license, franchise or permit or result in
any loss of any material rights or assets or any interest therein held
by the Corporation and its Subsidiaries taken as a whole;
(f) Other than in connection with or in compliance with the provisions
of applicable Securities Laws, the Competition Act (Canada) and the
Hart Scott Rodino Antitrust Improvements Act of 1976 (United States),
no authorization, consent or approval of, or filing with, any public
body, court or authority, and no authorization, consent or approval of
any other party, is necessary for the consummation by the Corporation
of its obligations under this Agreement or for the consummation by the
Offeror of the Revised Offer;
(g) The Corporation has filed with Canadian securities regulators true
and complete copies of all forms, reports, schedules, statements and
other documents required to be filed by it since January 1, 2002,
which documents, at the time filed, (i) complied in all material
respects with the requirements of applicable Securities Laws and (ii)
did not contain any material misrepresentation or any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made
therein (in light of the circumstances under which they were made) not
misleading, and the Corporation has not filed any such documents on a
confidential basis with any Canadian securities regulatory authority
since January 1, 2002;
(h) Except as publicly disclosed, no Material Adverse Change has
occurred since the date of the latest published audited consolidated
annual financial statements of the Corporation;
(i) There is no material default by the Corporation in its filings
required to be made pursuant to applicable Securities Laws;
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(j) Except as disclosed in the Directors' Circular, there is no
agreement, understanding or commitment between the Corporation or any
of its Subsidiaries, on the one hand, and one or more executives of
the Corporation or any of its Subsidiaries, on the other hand, which
may be affected by a change of control of the Corporation or any of
its Subsidiaries, except for options to purchase Common Shares which
may have accelerated vesting or exercise provisions;
(k) Except as disclosed in its filings made pursuant to applicable
Securities Laws, no claim, litigation, action, suit or other
proceeding by or before any domestic or foreign arbitrator, court or
tribunal or governmental agency or other regulatory authority or
administrative agency or commission is pending or, to the knowledge of
the Corporation, threatened against the Corporation or any of its
Subsidiaries that would be reasonably likely to cause a Material
Adverse Change with respect to the Corporation;
(l) There is no covenant, term or condition, other than customary
termination provisions in customers/services agreements, of any
instrument or agreement of the Corporation or its Subsidiaries that,
upon the purchase by the Offeror of the Shares, would result in a
Material Adverse Change;
(m) Except as disclosed in the Directors' Circular, there is no event
of default under any instrument or agreement to which the Corporation
or any of its Subsidiaries is a party or by which it is bound which
would be reasonably expected to result in a Material Adverse Change
with respect to the Corporation;
(n) Except as disclosed in the Directors' Circular, neither the
Corporation nor any of its Subsidiaries is a party to, bound or
affected by or subject to any charter or by-law provision, statute,
regulation, judgement, order, decree or law which would be violated,
contravened, breached by or under which default would occur as a
result of the execution and delivery or performance of this Agreement
or the Revised Offer and which violation, contravention, breach or
default would be reasonably expected to result in a Material Adverse
Change with respect to the Corporation;
(o) Except for the purpose of the services rendered by the Financial
Advisor in accordance with the terms of the engagement letter dated
December 7, 2002, including the fairness opinion, no agent, broker,
investment banker or other firm or person is or will be entitled to
any broker's or finder's fee or other commission or similar fee
incurred by the Corporation or any of its Subsidiaries in connection
with the consummation of the transactions contemplated hereby or by
the Revised Offer;
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(p) The Financial Advisor has delivered to the Board of Directors of
the Corporation a written opinion to the effect that the consideration
provided by the Revised Offer is fair, from a financial point of view,
to the holders of the Shares;
(q) The Board of Directors of the Corporation has concluded that the
consideration provided by the Revised Offer is fair, from a financial
point of view, to the holders of the Shares, has approved this
Agreement and has determined to recommend, subject to Section 5
hereof, that such holders accept the Revised Offer; and
(r) The Board of Directors of the Corporation has resolved to waive
the application of the shareholder rights plan of the Corporation
dated December 19, 2002 (the "Rights Plan") to the Revised Offer in
order to allow the Offeror to proceed with the Revised Offer and
take-up and pay for Shares deposited into the Revised Offer without
any dilutive effects.
3. COVENANTS
3.1 The Corporation covenants and agrees that, prior to the Effective
Time, unless the Offeror shall otherwise agree in writing or as
otherwise expressly contemplated or permitted by this Agreement:
(a) The Corporation shall, and shall cause each of its Subsidiaries
to, conduct its business only in, not take any action except in, and
maintain its facilities in, the usual, ordinary and regular course of
business and consistent with past practice (except in respect of its
European operations) and neither the Corporation nor any of its
Subsidiaries shall make any material change to the conduct of such
business or incur or commit to incur any material capital expenditure
or settle any income tax audit with taxation authorities or make any
material amendment to, or reset any amounts under, any material
agreement to which it is a party or by which it is bound;
(b) The Corporation shall not directly or indirectly (including,
without limitation, through a Subsidiary), do or permit to occur, or
enter into any new agreement, proposal or commitment to do or permit
to occur, any of the following:
(i) Issue, sell, pledge, lease, dispose of, or encumber:
(A) Any additional shares of, or any options, warrants, calls,
conversion privileges or rights of the Corporation (other
than pursuant to the exercise of outstanding options and
other rights convertible or exchangeable into Common Shares
or entitling the
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holder thereof to acquire Common Shares
(other than the Rights Plan)) to purchase Shares; or
(B) Any assets of the Corporation or any of its Subsidiaries
except in the ordinary course of business or in connection
with the Special Retention Program disclosed in the
Directors' Circular;
(ii) Amend, or propose to amend, its articles or by-laws;
(iii) Split, combine or reclassify any outstanding Common Shares, or
declare, set aside or pay any dividend or other distribution
payable in cash, securities, property or otherwise with respect
to the Common Shares, or change the exercise, conversion or
exchange price or any other term of any outstanding options to
purchase Common Shares or of any securities, instruments or
rights convertible or exchangeable into Common Shares or
entitling the holder thereof to acquire Common Shares;
(iv) Purchase or lease any asset the value of which is greater than
$1,000,000;
(v) Redeem, purchase or offer to purchase any Common Shares or other
securities of the Corporation, except in accordance with the
terms thereof;
(vi) Reorganize, amalgamate or merge the Corporation or any of its
Subsidiaries with any other person, company, partnership or
other business organization whatsoever, except between the
Corporation and its wholly-owned Subsidiaries;
(vii) Reduce the stated capital of any class of securities of the
Corporation;
(viii) Acquire or agree to acquire (by merger, amalgamation,
acquisition of stock or assets or otherwise) any person,
corporation, partnership or other business organization or
division or make any investment either by purchase of shares or
securities, contributions of capital, property transfer or
purchase of, any property or assets of any other person,
company, partnership or other business organization, except in
the ordinary course of business; or
(ix) Create, incur, guarantee or indemnify against (or commit to do
any of the foregoing) any indebtedness for borrowed money,
except in connection with the Special Retention Program
disclosed in the Directors' Circular, or any long term debt or
other obligations or issue any debt securities or make any loans
or advances;
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(c) Except as disclosed in the Directors' Circular, the Corporation shall
not, nor shall it permit any of its Subsidiaries to:
(i) Enter into, or agree to enter into, any employment, severance or
similar agreements or arrangements with, or grant, or agree to
grant, any bonuses, salary increases, severance or termination
pay to, any senior officers or directors; or
(ii) In the case of employees who are not officers or directors, take
or agree to take any action other than in the ordinary, regular
and usual course of business and consistent with past practice
(none of which actions shall be unreasonable or unusual) with
respect to the grant of any bonuses, salary increases, severance
or termination pay or with respect to any increase of benefits
payable in effect on the date hereof;
(d) Except as disclosed in the Directors' Circular, neither the
Corporation nor any of its Subsidiaries shall adopt or amend, or agree
to adopt or amend, the Corporation's stock option plan or any other
bonuses, profit sharing, incentive, compensation, stock option,
pension, retirement, deferred compensation, employment or other
employee benefit plan, agreement, trust, fund or arrangement for the
benefit or welfare of any employee;
(e) Pursuant to the Plan (as defined in the Directors' Circular), the
Board of Directors of the Corporation shall provide that any options
outstanding as at the date hereof, which are not then exercisable,
shall become fully exercisable, and that as at the Effective Time, any
option not exercised by an option holder prior to such time shall
expire;
(f) The Corporation shall use its reasonable commercial efforts to cause
its current insurance (or re-insurance) policies and those of its
Subsidiaries (or any of them) 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 and reinsurance companies of nationally recognized
standing providing coverage equal to or greater than the coverage
under the cancelled, terminated or lapsed policies for substantially
similar premiums are in full force and effect;
(g) Neither the Corporation nor any of its Subsidiaries shall enter into,
materially breach or amend, modify or consent to any amendment,
variation or departure or grant or transfer any rights of value from
any material contract, agreement, commitment or arrangement or enter
into any agreement with a term of longer than
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twelve (12) months other than in the ordinary course of business
consistent with past practice and as described in the
Directors' Circular;
(h) The Corporation shall take all action prior to the Effective Time to
waive the dilutive effects of the Rights Plan in order to allow the
Offeror to proceed with the Revised Offer and take-up and pay for
Shares deposited into the Revised Offer; and
(i) The Corporation shall use its reasonable commercial efforts to ensure
that the representations and warranties contained herein remain true
and accurate in all material respects during the term hereof.
3.2 The Offeror covenants and agrees that, unless the Corporation shall
otherwise agree in writing or as otherwise expressly contemplated or
permitted by this Agreement:
(i) if all of the conditions of the Revised Offer are either met or
waived at or prior to the expiry of the Revised Offer, the
Offeror shall take up the Shares deposited into the Revised
Offer and pay for such Shares as soon as practicable after, and
in any event within five business days of the first date on
which the Offeror is permitted to do so under applicable
Securities Laws;
(ii) in the event that the Offeror increases the consideration per
Share offered under the Revised Offer (but, for greater
certainty, excluding any greater consideration paid as a result
of any proceeding in respect of fair value under the CBCA or any
other Subsequent Acquisition Transition), the Offeror will pay
such increased consideration to each holder of Shares in respect
of all Shares tendered, notwithstanding that such Shares have
previously been taken up and paid for by the Offeror;
(iii) until the Effective Date, it shall not proceed with any material
transaction out of the ordinary course of business which would
be reasonably expected to result in a Material Adverse Change
with respect to the Offeror;
(iv) the Offeror agrees not to amend, modify or change the Revised
Offer without the prior written consent of the Corporation other
than to increase the consideration under the Revised Offer, to
waive any conditions to the Revised Offer, to extend the
expiration date of the Revised Offer until a date or dates not
later than February 3, 2003 or comply with the legal obligations
of the Offeror with respect to any amendment, modification or
change of the Revised Offer. The Offeror shall provide a draft
of any
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proposed amendment, modification or change to the Revised Offer
to the Corporation and shall consult with the Corporation with
respect to the terms and conditions of such proposed amendment,
modification or change of the Revised Offer; and
(v) the Offeror further covenants that, if all of the conditions of
the Revised Offer are either met or waived at or prior to the
expiry of the Revised Offer:
(A) the by-laws of the Corporation or of any corporation
continuing following the amalgamation, merger, plan of
arrangement, consolidation or winding-up of the Corporation
with or into one or more other persons (a "Surviving
Corporation") shall contain the provisions with respect to
indemnifications now set forth in the Corporation's by-law
which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Date
in any manner that would adversely affect the rights
thereunder of individuals who, immediately prior to the
Effective Date, were directors, officers, employees or
agents of the Corporation, unless required by law, and the
Offeror shall ensure that the obligations of the Corporation
under any indemnification agreements between the Corporation
and its directors and certain officers are assumed by the
Surviving Corporation;
(B) from the time that it first takes up and pays for Common
Shares under the Offer until the sixth anniversary of the
Effective Date, it will maintain or cause the Corporation or
any Surviving Corporation to maintain the Corporation's
current directors' and officers' insurance or another
insurance policy, on terms and conditions which are no less
advantageous to the directors and officers of the
Corporation and providing no less coverage than the
Corporation's existing directors' and officers' insurance,
for all present and former directors and officers of the
Corporation, covering claims made prior to or within such
period of time; and
(C) it will cause the Corporation or any Surviving Corporation
to honour or perform its obligations pursuant to the Special
Retention Program and employment agreements referred to
under "Agreements between Cognicase and its directors and
senior officers" in the Directors' Circular.
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4. TERMINATION, AMENDMENT AND WAIVER
4.1 This Agreement may be terminated, subject to Section 4.4:
(a) By mutual consent of the Offeror and the Corporation;
(b) By the Corporation if: (i) the Notice of Variation has not been mailed
by the Notice of Variation Mailing Date; (ii) the Revised Offer (or
any amendment thereto, other than an amendment that has been mutually
agreed to by the parties) does not conform in all material respects
with the description in Schedule A or any amendment thereof that has
been mutually agreed to by the parties; (iii) by the Corporation at
any time on or after the eleventh (11th) day following the expiry of
the initial period during which the Revised Offer is open for
acceptance if such Revised Offer is not extended as permitted
hereunder (the "Initial Offer Period"), provided that the Offeror may
extend the period during which the Revised Offer is open for
acceptance by ten (10) days (the "Extended Offer Period") and for a
further period of ten (10) days (the "Second Extended Offer Period"),
as of the expiry of the Extended Offer Period, as the case may be, if,
as of the expiry of the Initial Offer Period or the Extended Offer
Period, any of the conditions of the Revised Offer have not been
satisfied or waived by the Offeror and reasonable commercial efforts
are being made by the Offeror or others to cause such conditions to be
satisfied, in which event this Agreement may be terminated by the
Corporation at any time on or after the expiry of the Second Extended
Offer Period; (iv) the Revised Offer has been terminated, withdrawn or
expired;
(c) By the Offeror if any condition in favour of the Offeror has not been
satisfied or waived at the expiry of the Revised Offer (as the same
may be extended) and the Offeror has not elected to waive such
condition or extend the Revised Offer;
(d) By either the Offeror or the Corporation if any permanent order,
decree, ruling or other action of a court or other competent authority
restraining, enjoining or otherwise preventing the consummation of the
Revised Offer shall have become final and non-appealable (provided
that such right of termination shall not be available to any party if
such party shall have failed to make reasonable efforts to prevent or
consents to the imposition of such injunction or action and such
failure materially contributed to such position);
(e) By either the Offeror or the Corporation at any time following the
occurrence of a Fee Event (as hereinafter defined);
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(f) By the Offeror if any representation or warranty of the Corporation
set out herein is untrue in any material respect or the Corporation is
in default, in any material respect, of its obligations, covenants and
agreements set out herein; and
(g) By the Corporation if any representation or warranty of the Offeror
set out herein is untrue in any material respect or the Offeror is in
default, in any material respect, of its obligations, covenants and
agreements set out herein, including without limitation pursuant to
Section 3.2(i).
4.2 This Agreement may not be amended except by an instrument in writing
signed by each of the parties hereto.
4.3 At any time and from time to time, either party hereto may:
(a) Extend the time for the performance of any of the obligations or other
acts of the other party hereto; or
(b) Waive compliance with any of the agreements of the other party or with
any conditions to its own obligation;
in each case only to the extent such obligations, agreements and conditions
are intended for its benefit.
4.4 If this Agreement is terminated as provided in Section 4.1, it shall become
void except as to the obligation of the Corporation, if any, to pay the Fee
provided for in Section 5.1, and there shall be no liability or further
obligation on the part of any party hereto or any of their respective
shareholders, officers or directors, except as set forth in Section 5.1 and
except for liability arising from a breach of this Agreement.
5. FEE, EXPENSES AND NO SHOP
5.1 Provided that the Offeror is not in breach of its material obligations,
covenants and agreements under this Agreement, the Corporation agrees that
if:
(a) The Board of Directors of the Corporation shall have modified or
withdrawn in a manner adverse to the Offeror, its recommendation in
favour of the Revised Offer;
(b) The Board of Directors of the Corporation shall have recommended to
holders of Shares acceptance of a take-over bid or any other
transaction other than the Revised Offer, including a Competing
Proposal (as hereinafter defined);
(c) The Corporation shall have entered into a Proposed Agreement (as
hereinafter defined);
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(each of the foregoing events being a "Fee Event"), the Corporation shall
pay to the Offeror an amount equal to $0.09 per Share which are the object
of the Revised Offer (the "Fee") within five business days following the
occurrence of such Fee Event.
5.2 NO SHOP:
(a) From and after the date hereof until this Agreement is terminated, the
Corporation shall not, and shall use its reasonable commercial efforts
to ensure that its directors, officers, employees, representatives,
agents and advisors do not, directly or indirectly:
(i) Solicit, initiate, or engage in discussions or negotiations with
any person, encourage submission of any inquiries, proposals or
offers by, or take any other action intended or designed to
facilitate the efforts of any person, other than the Offeror,
relating to:
(A) The possible acquisition of, or business combination with,
the Corporation or any of its Subsidiaries (whether by way
of amalgamation, arrangement, consolidation, take-over bid,
purchase of shares, purchase of assets, or otherwise), other
than transactions between the Corporation and one or more of
its wholly-owned Subsidiaries or between one or more of the
Corporation's wholly-owned Subsidiaries;
(B) The possible acquisition of any material portion of its
securities or assets or those of any of its Subsidiaries,
other than transactions between the Corporation and one or
more of its wholly-owned Subsidiaries or between one or more
of the Corporation's wholly-owned Subsidiaries; or
(C) Any take-over bid, stock exchange take-over bid or other
purchase or acquisition of equity securities that, if
consummated, would result in any person beneficially owning
10% or more of any class of securities of the Corporation;
(any of the foregoing, a "Competing Proposal"); or
(ii) Provide any information with respect to the Corporation or any of
its Subsidiaries, or afford any access to the properties, books
or records of the Corporation or any of its Subsidiaries, to any
person, other than the Offeror, that may wish to propose or
pursue a Competing Proposal;
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provided, however, that, if in response to an unsolicited bona fide inquiry
or proposal from a third party with whom the Corporation deals at arm's
length (as such term is interpreted for purposes of the Income Tax Act
(Canada)) the Corporation determines in good faith that a failure to so
respond would be inconsistent with the Board of Directors' fiduciary
obligations under applicable law (having received advice from outside legal
counsel to such effect) and could reasonably be expected to result in a
Superior Proposal being made by such party, the Corporation may:
(A) Furnish information with respect to the Corporation and any
of its Subsidiaries to the person making such inquiry or
proposal pursuant to a customary confidentiality agreement
including standstill provision for a minimum period of six
months with such person; and
(B) Participate in discussions or negotiations regarding such
Competing Proposal.
Subject to the exception contained in the immediately preceding paragraph
in response to an unsolicited bona fide inquiry or proposal from a third
party with whom the Corporation deals at arm's length, the Corporation and
its directors, officers, employees, representatives, agents and advisors
shall immediately cease any and all activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the actions
mentioned in paragraphs 5.2(a)(i) and 5.2(a)(ii).
(b) The Corporation shall immediately advise the Offeror orally and in
writing of any Competing Proposal;
including the material terms and conditions of such Competing Proposal or
with respect to which such action is taken and whether or not the
Corporation believes any Competing Proposal so reported is a Superior
Proposal.
The Corporation will keep the Offeror fully and timely informed of the
status and details (including amendments or proposed amendments) of any
such Competing Proposal.
(c) The Corporation covenants that it will not enter into any agreement
regarding a Superior Proposal (a "Proposed Agreement") pursuant to the
provision contained in this Section 5 without providing the Offeror
with a copy of the Proposed Agreement, together with details in
writing of such agreement, not less than three business days prior to
the proposed date of execution of the Proposed Agreement by the
Corporation. If the Offeror does not agree to and does not announce
publicly and increase the consideration under the Revised Offer to an
amount that is at least equal to that offered under the Proposed
Agreement within those three
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business days, the Corporation will be entitled to enter into the
Proposed Agreement, subject to the payment of the Fee, as provided
in Section 5.1.
6. GENERAL PROVISIONS
6.1 Subject to the conditions herein provided, each of the parties hereto
agrees to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective, as promptly as is practicable,
the transactions contemplated by the Revised Offer and this Agreement,
including the execution and delivery of such documents as the other party
hereto may reasonably require, and use its reasonable commercial efforts to
obtain all necessary waivers, consents and approvals, and to effect all
necessary registrations and filings, including, but not limited to, filings
under the applicable laws and submissions of information requested by
governmental authorities. Each of the parties hereto, where appropriate,
shall reasonably co-operate with the other party in taking such actions.
6.2 Each party shall give prompt notice to the other of:
(a) The occurrence or failure to occur of any event, which occurrence or
failure would cause or may cause any representation or warranty on its
part contained in this Agreement to be untrue or inaccurate in any
respect at any time; and
(b) Any failure of such party, or any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder.
6.3 Except as required by applicable law, neither the Offeror nor the
Corporation shall make any public announcement or statement with respect to
the Revised Offer or this Agreement, without the approval of the
Corporation or the Offeror, as the case may be. Moreover, each party agrees
to give prior notice to the other of any public announcement relating to
the Revised Offer or affairs of the Corporation, and agrees to consult with
the other prior to issuing any such public announcement.
6.4 Each party hereto shall pay its own legal and financial advisors and other
expenses incurred in connection with this Agreement and the Revised Offer.
6.5 All notices, requests, demands and other communications hereunder shall be
deemed to have been duly given and made if in writing and if delivered, or
if sent by telecopier, upon receipt of confirmation that such transmission
has been received, to the person at the address or telecopier number set
forth below, or such other address or telecopier number as may be
designated in writing hereafter, in the same manner, by such person:
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(a) If to the Offeror:
CGI GROUP INC.
1130 Sherbrooke Street West
5th Floor
Montreal, Quebec
H3A 2M8
Attention: Serge Godin
Chairman of the Board and Chief
Executive Officer
Telecopier No.: (514) 841-3294
with a copy to:
MCCARTHY TETRAULT LLP
Barrister and Solicitors
"Le Windsor"
1170 Peel Street
Montreal, Quebec
H3B 4S8
Attention: Jean-Rene Gauthier
Telecopier No.: (514) 875-6246
If to the Corporation:
COGNICASE INC.
The Cite Multimeeia
111 Duke Street
9th Floor
Montreal, Quebec
H2C 2M1
Attention: Ronald Brisebois
President, Chief Executive Officer and
Chairman of the Board
Telecopier No.: (514) 228-8955
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With a copy to:
OGILVY RENAULT
Barrister and Solicitors
1981 McGill College Avenue
11th Floor
Montreal, Quebec
H3A 3C1
Attention: Paul Raymond
Telecopier No.: (514) 286-5474
6.6 The representations, warranties and agreements of this Agreement shall
terminate at the Effective Time of the Revised Offer or upon termination of
this Agreement pursuant to Section 4, subject to Section 4.4.
6.7 The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement. References to Sections refer to sections of this Agreement
unless otherwise stated. Unless the context otherwise requires, words used
herein importing the singular include the plural and vice versa.
6.8 If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated and the parties shall negotiate in good
faith to modify the Agreement to preserve each party's anticipated benefits
under the Agreement.
6.9 Each of the parties recognizes and acknowledges that this Agreement is an
integral part of the transactions contemplated in the Revised Offer, that
the Offeror would not contemplate causing the Revised Offer to be made, and
the Corporation would not agree to facilitate the Revised Offer, unless
this Agreement was executed and that a breach by a party of any covenants
or other commitments contained in this Agreement will cause the other party
to sustain injury for which it would not have an adequate remedy at law for
money damages. Therefore, each of the parties agrees that in the event of
any such breach, the aggrieved party shall be entitled to the remedy of
specific performance of such covenants or commitments and preliminary and
permanent injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity, and the parties
further agree to waive any requirement for the securing or posting of any
bond in connection with the obtaining of any such injunctive or other
equitable relief.
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6.10 This Agreement:
(a) Constitutes the entire agreement, and supersedes all other prior
agreements and undertakings, both written and oral, among the parties
with respect to the subject matter hereof;
(b) Is not intended to confer upon any other person any rights or remedies
hereunder;
(c) Shall not be assigned by operation of law or otherwise; and
(d) Shall be governed in all respects, including validity, interpretation
and effect, by the laws of the Province of Quebec and the laws of
Canada applicable therein, without giving effect to the principles of
conflict of laws thereof.
6.11 Time shall be of the essence hereof.
6.12 This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be original and all of which taken together
shall be deemed to constitute one and the same instrument.
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Yours very truly,
CGI GROUP INC.
By: (SIGNED) SERGE GODIN
----------------------------------
Serge Godin, Chairman of the Board
and Chief Executive Officer
The foregoing is hereby accepted and agreed to on January 1, 2003.
COGNICASE INC.
By: (SIGNED) J.V. RAYMOND CYR
-----------------------------------------
J.V. Raymond Cyr
Director and Chairman of the Special Committee
of the Board of Directors
SCHEDULE A
THE REVISED OFFER
1. The terms and conditions of the Revised Offer shall be those contained
in the Initial Offer, as amended as follows:
(A) The consideration payable under the Revised Offer shall be increased
from $4.25 to $4.50 per Share and the Maximum Cash Consideration (as
defined in the Initial Offer) shall mean an amount in cash equal to
56% of the total consideration payable pursuant to the Revised Offer
on any Take-Up Date (as defined in the Initial Offer) and the Maximum
Share Consideration (as defined in the Initial Offer) shall mean such
number of CGI Shares (as defined in the Initial Offer) of the Offeror
having an aggregate value equal to 44% of the total consideration
payable pursuant to the Revised Offer on any Take-Up Date using a CGI
Share price of $7.13 (or 0.6311 CGI Shares for each Share);
(B) The conditions of the Initial Offer contained under Section 4
"CONDITIONS OF THE OFFER" in the Initial Offer shall be modified so
that they read as follows:
"(a) there shall have been validly deposited under the Offer and not
withdrawn at least (i) 66?% of the outstanding Cognicase Shares
and (ii) 50.01% of the outstanding Cognicase Shares other than
those Cognicase Shares held by persons whose Cognicase Shares
would not be included as part of the "minority" in connection
with any Subsequent Acquisition Transaction (collectively, the
"Minimum Condition");
(b) all outstanding Rights which are, by their terms, accelerated or
vested by reason of the Offer (without any third-party
notification) and all outstanding Options shall have been
exercised in full by the beneficiaries or holders thereof,
converted, cancelled or otherwise dealt with in a manner
satisfactory to the Offeror, in its entire discretion;
(c) the waiting period pursuant to Section 123 of the Competition Act
shall have expired or been earlier terminated and the Offeror
shall not have received a letter from the Commissioner of
Competition, or his authorized representative, indicating that
the Commissioner intends to make an application under Section 92
of the Competition Act;
(d) any applicable waiting periods under the HSR Act shall have
expired or been earlier terminated;
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(e) all material necessary regulatory approvals (including, without
limitation, those of any stock exchange or other regulatory
authorities), other than those listed in paragraphs (c) and (d)
above, will have been obtained or concluded on terms satisfactory
to the Offeror, acting reasonably, and any applicable
governmental or regulatory waiting periods shall have expired or
been terminated;
(f) (i) no act, action, suit or proceeding shall have been threatened
to be taken or taken before or by any domestic or foreign
arbitrator, court or tribunal or governmental agency or other
regulatory authority or administrative agency or commission or by
any elected or appointed public official or private person
(including, without limitation, any individual, company, firm,
group or other entity) in Canada or elsewhere, whether or not
having the force of law, and (ii) no law, regulation, rule or
policy shall have been proposed, enacted, promulgated or applied,
in the case of either (i) or (ii) above:
(A) to cease trade, enjoin, prohibit or impose material
limitations or conditions on the purchase by or the sale to
the Offeror of any of the Cognicase Shares or the rights of
the Offeror to own or exercise full rights of ownership of
all of the Cognicase Shares; or
(B) which, if the Offer was consummated, could materially
adversely affect Cognicase and its Subsidiaries considered
on a consolidated basis;
(g) there shall not exist any prohibition at law against the Offeror
making the Offer or taking up and paying for the Cognicase Shares
deposited under the Offer;
(h) all of the material covenants and obligations of the Corporation
set out in the Support Agreement shall have been complied with on
or before the date on which the Offeror takes up Cognicase Shares
deposited under the Offer; and
(i) no representation or warranty of the Corporation in the Support
Agreement shall be, as of the date on which the Offeror takes up
Cognicase Shares deposited under the Offer, untrue or incorrect
in any material respect and all of the covenants and obligations
of the Corporation set out in the Support Agreement shall have
been complied with on or before such date in all material
respects."
SCHEDULE B
DEFINITIONS
"AGREEMENT" means the agreement of which this Schedule forms part and includes
all Schedules thereto;
"CBCA" the Canada Business Corporations Act;
"COMMON SHARES" means common shares in the share capital of the Corporation;
"COMPULSORY ACQUISITION" means a transaction pursuant to any statutory right to
acquire Common Shares following the completion of a take-over bid or similar
transaction;
"DIRECTORS' CIRCULAR" means the directors' circular of the Corporation dated
December 19, 2002;
"EFFECTIVE DATE" means the date on which the Offeror first acquires Shares under
the Revised Offer;
"EFFECTIVE TIME" means the time of take-up of Shares on the Effective Date;
"INITIAL OFFER" means the offer to purchase all outstanding Shares dated
December 6, 2002, as amended on December 16, 2002 and December 18, 2002;
"LOCK-UP AGREEMENT" means the lock-up agreement entered into between the Offeror
and National Bank of Canada on December 6, 2002;
"MATERIAL ADVERSE CHANGE" means, in relation to any corporation, any change (or
any condition, event or development involving a prospective change) in the
business, operations, affairs, assets, liabilities (including any contingent
liabilities that may arise through outstanding, pending or threatened litigation
or otherwise), capitalization, financial condition, licenses, permits, rights or
privileges, or prospects of the corporation or any of its Subsidiaries which
would reasonably be expected to materially and adversely affect the corporation
and its Subsidiaries taken as a whole;
"SECURITIES LAWS" means the Securities Act (Quebec) and all other applicable,
Canadian or U.S. provincial, federal or state securities laws and the respective
regulations and rules made thereunder together with all applicable policy
statements, instruments, notices, interpretation notes and blanket orders and
rulings of the relevant securities commissions and similar regulatory
authorities;
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"SHARES" means all outstanding Common Shares (including any Common Shares which
may become outstanding pursuant to the exercise of outstanding stock options to
acquire Common Shares and pursuant to any other securities, instruments and
rights convertible or exchangeable into Common Shares or entitling the holder
thereof to acquire Common Shares);
"SUBSEQUENT ACQUISITION TRANSACTION" means any transaction involving the
Offeror, whether by amalgamation, statutory arrangement or otherwise, pursuant
to which the Offeror acquires all of the Shares not deposited under the Revised
Offer and includes a Compulsory Acquisition;
"SUBSIDIARIES" has the meaning ascribed to such term in the Securities Act
(Quebec); and
"SUPERIOR PROPOSAL" shall mean any bona fide written Competing Proposal from a
third party with whom the Corporation deals at arms' length (as such term is
interpreted for purposes of the Income Tax Act (Canada)) that has the following
characteristics: (i) is a proposal to acquire, directly or indirectly, (x) not
less than 50% of the outstanding Shares, or (y) all or substantially all of the
assets and liabilities of the Corporation or its Subsidiaries; (ii) the Board of
Directors of the Corporation shall have determined in good faith (after
receiving an opinion of the Financial Advisor) that such proposal provides
consideration, on a cash equivalent basis, to holders of Shares that is in
excess of the consideration provided by the Revised Offer (after taking into
account any amendments to the Revised Offer made by the Offeror) to holders of
Shares; and (iii) the transactions envisioned by such proposal, in the good
faith judgment of the Board of Directors of the Corporation are readily
financeable and are reasonably likely to be consummated without unreasonable
delay compared to the Revised Offer.