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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of, August 2006
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Commission File Number 000-23464
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Hummingbird Ltd.
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(Translation of registrant's name into English)
1 Sparks Avenue, Toronto, Ontario, Canada M2H 2W1
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40F:
Form 20-F Form 40-F X
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Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1): ______
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7): ______
Indicate by check mark whether by furnishing the information contained
in this Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
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If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-_______________
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DOCUMENTS INCLUDED AS PART OF THIS REPORT
Document
1 Notice of Special Meeting of Shareholders of Hummingbird Ltd.
and Management Information Circular, dated August 18, 2006.
2 Letter of Transmittal with Respect to the Common Shares of
Hummingbird Ltd.
3 Form of Proxy solicited by and on behalf of Hummingbird Ltd.
4 News Release, dated August 28, 2006 ("Hummingbird Ltd. Confirms
Mailing of Management Information Circular and Receipt of
Interim Order").
DOCUMENT 1
[HUMMINGBIRD LOGO GRAPHIC OMITTED]
ARRANGEMENT
involving
HUMMINGBIRD LTD.
and
Open Text Corporation
and
6575064 Canada Inc.
SPECIAL MEETING OF SHAREHOLDERS
OF
HUMMINGBIRD LTD.
TO BE HELD ON SEPTEMBER 15, 2006
NOTICE OF SPECIAL MEETING AND
MANAGEMENT INFORMATION CIRCULAR
August 18, 2006
These materials are important and require your immediate attention. They require
Shareholders to make an important decision. If you are in doubt as to how to
make such decision, please contact your financial, legal or other professional
advisors. If you have any questions or require more information with regard to
voting your Common Shares, please contact Georgeson Shareholder Communications
Canada Inc. at 1.866.500.8075 or CIBC Mellon Trust Company at 416.643.5500 or
1.800.387.0825.
[HUMMINGBIRD LOGO GRAPHIC OMITTED]
August 18, 2006
Dear Fellow Shareholder:
The Board of Directors cordially invites you to attend the special
meeting of shareholders of Hummingbird Ltd. ("Hummingbird") to be held
commencing at 10:00 a.m. (Toronto time) on Friday, September 15, 2006 at The
Hummingbird Centre for the Performing Arts, 1 Front Street East, Toronto,
Ontario.
At the meeting, shareholders will be asked to consider and vote on,
among other things, a special resolution, approving a statutory arrangement
pursuant to Section 192 of the Canada Business Corporations Act whereby 6575064
Canada Inc., a wholly-owned subsidiary of Open Text Corporation, will acquire
all of the outstanding common shares of Hummingbird for US$27.85 in cash per
common share.
The Board of Directors of Hummingbird (other than Mr. Malik who did not
vote due to his employment as a Managing Director at Lehman Brothers Inc., a
financial advisor to Hummingbird), based in part on the unanimous recommendation
of the Special Committee of independent members of the Board of Directors, has
unanimously approved the arrangement and has determined that the arrangement is
fair to Hummingbird's shareholders and in the best interests of Hummingbird.
To be effective, the arrangement must be approved by a resolution
passed by at least two-thirds of the votes cast at the special meeting. The
arrangement is also subject to certain customary conditions, as well as the
approval of the Ontario Superior Court of Justice. The Board of Directors (other
than Mr. Malik, who abstained for the reason cited above) unanimously recommends
that Hummingbird's shareholders vote FOR the resolution approving the
arrangement. All of the directors and executive officers of Hummingbird have
advised Hummingbird that they intend to vote or cause to be voted all common
shares beneficially held by them in favour of the resolution approving the
arrangement. Mr. Litwin and I agreed with Open Text to vote our shares in favour
of the resolution.
The accompanying Notice of Special Meeting and Management Information
Circular describe the arrangement and include certain additional information to
assist you in considering how to vote on the special resolution. You are urged
to read this information carefully and, if you require assistance, to consult
your financial, legal or other professional advisor.
Your vote is important regardless of the number of Hummingbird common
shares you own. If you are unable to be present at the meeting in person, we
encourage you to take the time now to complete, sign, date and return the
enclosed form of proxy so that your shares can be voted at the meeting in
accordance with your instructions. We also encourage you to complete, sign, date
and return the enclosed Letter of Transmittal so that, if the proposed
arrangement is approved, payment for your shares can be sent to you as soon as
possible following the implementation of the arrangement.
Subject to obtaining court approval and satisfying other customary
conditions, including the approval of Hummingbird's shareholders, it is
anticipated that the arrangement will be completed on or about October 2, 2006.
If you have any questions, please contact our proxy solicitation agent,
Georgeson Shareholder Communications Canada Inc. at 1.866.500.8075, or CIBC
Mellon Trust Company at 416.643.5500 or 1.800.387.0825.
On behalf of Hummingbird, I would like to thank all of our shareholders
for their ongoing support as we prepare to take part in this important event in
Hummingbird's history.
Yours very truly,
"Fred E. Sorkin"
Fred E. Sorkin
Chairman of the Board of Directors
HUMMINGBIRD LTD.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that a special meeting (the "Meeting") of
shareholders of Hummingbird Ltd. ("Hummingbird") will be held commencing at
10:00 a.m. (Toronto time) on Friday, September 15, 2006 at The Hummingbird
Centre for the Performing Arts, 1 Front Street East, Toronto, Ontario for the
following purposes:
1. to consider, pursuant to an interim order of the Ontario Superior Court of
Justice (Commercial List) dated August 18, 2006 (the "Interim Order") and,
if deemed advisable, to pass, with or without variation, a special
resolution (the "Arrangement Resolution") to approve an arrangement (the
"Arrangement") under Section 192 of the Canada Business Corporations Act
involving Hummingbird, its shareholders and other securityholders, and
6575064 Canada Inc. ("Acquisition Sub") and Open Text Corporation,
involving, among other things, the acquisition by Acquisition Sub of all
of the outstanding common shares of Hummingbird (the "Common Shares") for
US$27.85 in cash for each Common Share, all as more particularly described
in the accompanying Management Information Circular of Hummingbird (the
"Circular");
2. to consider, and, if deemed advisable, to pass, with or without variation,
an ordinary resolution ratifying the grant of 50,000 options to purchase
Common Shares to each of Hadley C. Ford, John B. Wade III and John A.
MacDonald on March 3, 2006; and
3. to transact such further or other business as may properly come before the
Meeting or any adjournment or postponement thereof.
The Board of Directors of Hummingbird has fixed the close of business
on August 21, 2006 as the record date for determining shareholders of
Hummingbird who are entitled to receive notice of and vote at the Meeting.
The Arrangement and the Arrangement Resolution are described in the
Circular and the full text of the Arrangement Resolution is set out in Appendix
A to the Circular. The Circular, a form of proxy and a Letter of Transmittal
accompany this Notice of Meeting.
Registered shareholders of Hummingbird unable to attend the Meeting in
person are requested to complete, date, sign and return (in the envelope
provided for that purpose) the accompanying form of proxy for use at the
Meeting. To be used at the Meeting, proxies must be received by Hummingbird's
transfer agent, CIBC Mellon Trust Company, P.O. Box 721, Agincourt, Ontario M1S
0A1 before 5:00 p.m. (Toronto time) on September 14, 2006 or, in the case of any
adjournment or postponement of the Meeting, no later than 5:00 p.m. (Toronto
time) on the business day before the date that any adjourned or postponed
Meeting is reconvened or held, as the case may be. Non-registered, beneficial
shareholders of Hummingbird should seek instructions on how to complete their
form of proxy and vote their Common Shares from their broker, trustee, financial
institution or other nominee.
Pursuant to the Interim Order, registered holders of Common Shares have
a right to dissent in respect of the Arrangement Resolution and to be paid an
amount equal to the fair value of their Common Shares. This right is described
in the Circular. The dissent procedures require that a registered holder of
Common Shares who wishes to dissent must send to Hummingbird (a) at 1 Sparks
Avenue, Toronto, Ontario, M2H 2W1 (Attention: Corporate Secretary) or (b) by
facsimile transmission to (416) 496-2207 (Attention: Corporate Secretary),
to be received not later than 5:00 p.m. (Toronto time) on
September 13, 2006 (or 5:00 p.m. (Toronto time) on the day which is two
business days immediately preceding the date that any adjourned or postponed
Meeting is reconvened or held, as the case may be), a written notice of
objection to the Arrangement Resolution and must otherwise strictly comply with
the dissent procedures described in the Circular. Failure to strictly comply
with these dissent procedures may result in the loss or unavailability of the
right to dissent. See the Section entitled "Dissenting Holders' Rights" in the
Circular and Appendix G to the Circular. Beneficial owners of Common Shares
registered in the name of a broker, trustee, financial institution or other
nominee who wish to dissent should be aware that only registered owners of
Common Shares are entitled to dissent.
Dated at Toronto, Ontario on August 18, 2006.
By Order of the Board of Directors,
"Inder P.S. Duggal"
Inder P.S. Duggal
Corporate Secretary
TABLE OF CONTENTS
NOTICE TO SHAREHOLDERS IN THE UNITED STATES....................................1
CURRENCY ......................................................................1
CAUTIONARY STATEMENT WITH RESPECT TO FORWARD LOOKING STATEMENTS................1
INFORMATION CONTAINED IN THIS CIRCULAR.........................................2
SUMMARY OF MANAGEMENT INFORMATION CIRCULAR.....................................3
Meeting of Shareholders...................................................3
The Arrangement...........................................................3
Recommendation of the Special Committee...................................3
Recommendation of the Board...............................................3
Reasons for the Arrangement...............................................4
Opinion of Banc of America Securities LLC.................................5
Required Shareholder Approval.............................................6
Support Agreements........................................................6
Arrangement Mechanics.....................................................6
Sources of Funds for the Arrangement......................................6
Interests of Senior Management and Others in the Arrangement..............7
Superior Proposals........................................................7
Conditions to the Arrangement Becoming Effective..........................7
Court Approval............................................................7
Regulatory Matters........................................................8
Closing...................................................................8
Termination of the Arrangement Agreement..................................8
Termination Payment and Expense Reimbursement.............................8
Dissenting Holders' Rights................................................8
Certain Canadian Federal Income Tax Considerations........................9
Certain Material United States Federal Income Tax Considerations..........9
INFORMATION CONCERNING THE MEETING AND VOTING.................................10
THE ARRANGEMENT...............................................................14
Background to the Arrangement Agreement..................................14
Description of the Arrangement...........................................14
Recommendation of the Special Committee..................................17
Recommendation of the Board..............................................17
Reasons for the Arrangement..............................................17
Opinion of Banc of America Securities LLC................................19
Required Shareholder Approval............................................20
Arrangement Mechanics....................................................20
Interests of Directors, Senior Management and Others in the Arrangement..31
Intentions of Hummingbird Directors and Executive Officers...............25
Sources of Funds for the Arrangement.....................................25
OTHER TERMS OF THE ARRANGEMENT AGREEMENT......................................26
Conditions Precedent to the Arrangement..................................26
Representations and Warranties...........................................27
Conduct of Hummingbird's Business........................................27
Covenants................................................................27
Covenants of Hummingbird Regarding Non-Solicitation......................28
Right to Match...........................................................30
Termination..............................................................30
Termination Payment......................................................31
Expense Reimbursement....................................................31
HOLDING COMPANY ALTERNATIVE...................................................32
RATIFICATION OF STOCK OPTION GRANTS...........................................34
PRINCIPAL LEGAL MATTERS.......................................................34
Court Approval of the Arrangement and Completion of the Arrangement......34
Regulatory Matters.......................................................35
Stock Exchange De-Listing and Reporting Issuer Status....................36
DISSENTING HOLDERS' RIGHTS....................................................36
INFORMATION CONCERNING HUMMINGBIRD............................................38
Principal Shareholders...................................................39
Indebtedness of Directors, Officers and Employees........................39
Auditors.................................................................39
Capitalization...........................................................39
INFORMATION CONCERNING ACQUISITION SUB AND OPEN TEXT..........................39
HUMMINGBIRD MARKET PRICE AND TRADING VOLUME DATA..............................40
CERTAIN TAX CONSIDERATIONS FOR SHAREHOLDERS...................................41
Certain Canadian Federal Income Tax Considerations.......................41
Currency Translation.....................................................42
Shareholders Resident in Canada..........................................42
Shareholders Not Resident in Canada......................................43
Certain Material United States Federal Income Tax Considerations.........44
LEGAL MATTERS.................................................................45
ADDITIONAL INFORMATION........................................................46
QUESTIONS AND FURTHER ASSISTANCE..............................................46
APPROVAL OF HUMMINGBIRD.......................................................47
GLOSSARY OF TERMS.............................................................48
APPENDIX A ARRANGEMENT RESOLUTION............................................A-1
APPENDIX B ARRANGEMENT AGREEMENT.............................................B-1
APPENDIX C OPINION OF BANC OF AMERICA SECURITIES LLC.........................C-1
APPENDIX D PLAN OF ARRANGEMENT UNDER SECTION 192 OF THE CANADA
BUSINESS CORPORATIONS ACT....................................................D-1
APPENDIX E INTERIM ORDER.....................................................E-1
APPENDIX F NOTICE OF APPLICATION FOR THE FINAL ORDER.........................F-1
APPENDIX G SECTION 190 OF THE CANADA BUSINESS CORPORATIONS ACT...............G-1
HUMMINGBIRD LTD.
MANAGEMENT INFORMATION CIRCULAR
THIS CIRCULAR AND ACCOMPANYING FORM OF PROXY ARE FURNISHED IN
CONNECTION WITH THE SOLICITATION OF PROXIES BY AND ON BEHALF OF THE MANAGEMENT
OF HUMMINGBIRD LTD. ("HUMMINGBIRD") FOR USE AT THE MEETING AND AT ANY
ADJOURNMENT OR POSTPONEMENT THEREOF AND FOR THE PURPOSES SET FORTH IN THE
ACCOMPANYING NOTICE OF MEETING. A GLOSSARY OF CERTAIN TERMS USED IN THIS
CIRCULAR CAN BE FOUND AT PAGE 48 OF THIS CIRCULAR.
Except where otherwise indicated, the information contained in this Circular is
given as of August 18, 2006.
NOTICE TO SHAREHOLDERS IN THE UNITED STATES
Hummingbird is a corporation existing under the laws of Canada. The
solicitation of proxies and the transactions contemplated in this Circular
involve securities of a Canadian issuer and are being effected in accordance
with Canadian corporate and securities laws. The proxy solicitation rules under
the United States Securities Exchange Act of 1934, as amended, are not
applicable to Hummingbird or this solicitation and therefore this solicitation
is not being effected in accordance with U.S. securities laws. Shareholders
should be aware that disclosure requirements under Canadian laws may be
different from such requirements under U.S. securities laws. Shareholders should
also be aware that other requirements under Canadian laws may differ from
requirements under U.S. corporate and securities laws.
The enforcement by investors of civil liabilities under U.S. securities
laws may be affected adversely by the fact that each of Hummingbird and
Acquisition Sub exists under the laws of Canada, that some or all of its
respective officers and directors are not residents of the United States and a
substantial portion of its respective assets may be located outside the United
States. You may not be able to sue a Canadian company or its officers or
directors in a Canadian court for violations of U.S. securities laws. It may be
difficult to compel a Canadian company and its Affiliates to subject themselves
to a judgment by a U.S. court.
Certain information concerning tax consequences of the Arrangement for
Shareholders who are United States taxpayers is set forth in "Certain Tax
Considerations for Shareholders -- Certain Canadian Federal Income Tax
Considerations -- Shareholders Not Resident in Canada" and "Certain Tax
Considerations for Shareholders -- Certain Material United States Federal Income
Tax Considerations". Shareholders should be aware that the transactions
contemplated herein may have tax consequences both in Canada and in the United
States. Such consequences may not be described fully herein. Shareholders should
consult with their legal, tax, financial and accounting advisors.
CURRENCY
All currency amounts referred to in this Circular are expressed in U.S.
dollars, unless otherwise indicated. On August 18, 2006, the exchange rate for
one U.S. dollar expressed in Canadian dollars based on the noon spot rate of the
Bank of Canada was $1.12.
CAUTIONARY STATEMENT WITH RESPECT TO FORWARD LOOKING STATEMENTS
This Circular contains forward looking statements about Hummingbird's
objectives, strategies, financial condition, results of operations, cash flows
and businesses. These forward looking statements can be identified by the use of
terminology such as: "plan", "expect", "believe", "anticipate", "foresee",
"should", "intend", "will", "may", "suspect", "estimate", "outlook", "continue",
"project" and similar expressions concerning matters that are not historical
facts. These statements are based on certain factors and assumptions including,
but not limited to, market trends, competitive activities, market acceptance of
new products, expected growth, regulatory requirements, foreign exchange rates,
the economic environment and other assumptions, which we believe are reasonable
based on currently available information. Forward looking statements are not
guarantees of future performance and involve risks, uncertainties and
assumptions, which could cause actual results to differ materially from those
anticipated in these forward looking statements. In addition to other factors
and matters contained or incorporated in this Circular, Hummingbird believes the
following factors could cause actual results to differ materially from those
discussed in the forward looking statements: failure to satisfy the conditions
to complete the Arrangement, including the receipt
1
of the required shareholder, court or regulatory approvals; the occurrence of
any event, change or other circumstance that could give rise to the termination
of the Arrangement Agreement; and retention of customers, suppliers and
personnel being adversely affected by the uncertainty surrounding the
Arrangement. In light of these risks, which are inherent in forward looking
statements, readers are cautioned not to place undue reliance on these forward
looking statements. Furthermore, the forward looking statements contained in
this Circular are made as of the date of this Circular. Unless otherwise
required by applicable law, Hummingbird does not undertake any obligation to
update or to revise any of the included forward looking statements, whether as
a result of new information, future events or otherwise.
INFORMATION CONTAINED IN THIS CIRCULAR
No person has been authorized to give information or to make any
representations in connection with the Arrangement other than those contained or
incorporated by reference in this Circular and, if given or made, any such
information or representations should not be relied upon in making a decision as
to how to vote on the Arrangement Resolution or be considered to have been
authorized by Hummingbird.
This Circular does not constitute an offer to buy, or a solicitation of
an offer to sell, any securities, or the solicitation of a proxy, by any person
in any jurisdiction in which such an offer or solicitation is not authorized or
in which the person making such an offer or solicitation is not qualified to do
so or to any person to whom it is unlawful to make such an offer or
solicitation.
Shareholders should not construe the contents of this Circular as
legal, tax or financial advice and should consult with their own professional
advisors as to the relevant legal, tax, financial or other matters in connection
herewith.
THIS CIRCULAR AND THE TRANSACTIONS CONTEMPLATED BY THE ARRANGEMENT
AGREEMENT AND THE PLAN OF ARRANGEMENT HAVE NOT BEEN APPROVED OR DISAPPROVED BY
ANY SECURITIES REGULATORY AUTHORITY NOR HAS ANY SECURITIES REGULATORY AUTHORITY
PASSED UPON THE FAIRNESS OR MERITS OF SUCH TRANSACTIONS OR UPON THE
ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS CIRCULAR. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
2
SUMMARY OF MANAGEMENT INFORMATION CIRCULAR
The following is a summary of the contents of this Circular. This
summary is provided for convenience only and the information contained in this
summary should be read in conjunction with, and is qualified in its entirety by,
the more detailed information appearing or referred to elsewhere in this
Circular, including the Appendices and documents incorporated by reference
herein. Certain capitalized words and terms used in this summary and the
Circular are defined in the Glossary of Terms found at page 48 of this Circular.
Meeting of Shareholders
The Meeting will be held on Friday, September 15, 2006, at 10:00 a.m.
(Toronto time) at The Hummingbird Centre for the Performing Arts, 1 Front Street
East, Toronto, Ontario.
At the Meeting, the Shareholders will be asked to consider and, if
deemed advisable, to pass the Arrangement Resolution and the Options Resolution.
Shareholders of record at the close of business on August 21, 2006 will
be entitled to attend and vote at the Meeting or any adjournment or postponement
thereof.
The Arrangement
If the Arrangement Resolution is passed by the affirmative vote of at
least two-thirds of the votes cast by the Shareholders present in person or by
proxy and entitled to vote at the Meeting and all of the other conditions to
closing of the Arrangement are satisfied or waived, the Arrangement will be
implemented by way of a court approved plan of arrangement under the CBCA.
Pursuant to the Arrangement, all of the Common Shares will be transferred by the
Shareholders to Acquisition Sub for $27.85 in cash per Common Share. In
addition, all Options that are outstanding immediately prior to the Effective
Time will be transferred to Hummingbird in exchange for a cash payment from or
on behalf of Hummingbird equal to the amount (if any) by which $27.85 exceeds
the exercise price payable under such Options (as converted into U.S. dollars
pursuant to the Plan of Arrangement).
See "The Arrangement -- Arrangement Mechanics".
As at the close of business on August 18, 2006, there were issued and
outstanding 17,618,199 Common Shares and Options to purchase an aggregate of
1,226,537 Common Shares.
Recommendation of the Special Committee
The Special Committee of independent members of the Board has
considered the Arrangement. THE SPECIAL COMMITTEE HAS UNANIMOUSLY DETERMINED
THAT THE ARRANGEMENT IS FAIR TO SHAREHOLDERS AND IN THE BEST INTERESTS OF
HUMMINGBIRD AND HAS UNANIMOUSLY RECOMMENDED THAT THE BOARD APPROVE THE
ARRANGEMENT AND RECOMMEND THAT SHAREHOLDERS VOTE FOR THE ARRANGEMENT RESOLUTION.
SEE "THE ARRANGEMENT -- RECOMMENDATION OF THE SPECIAL COMMITTEE".
Recommendation of the Board
The Board (other than Andrew Malik who did not vote due to his
employment as a Managing Director at Lehman Brothers Inc., a financial advisor
to Hummingbird) has unanimously determined that the Arrangement is fair to
Shareholders and is in the best interests of Hummingbird. Accordingly, the Board
has approved the Arrangement Agreement and unanimously recommends that
Shareholders vote FOR the Arrangement Resolution. All of the directors and
executive officers of Hummingbird have advised Hummingbird that they intend to
vote or cause to be voted all Common Shares beneficially held by them in favour
of the Arrangement Resolution. Fred Sorkin, Hummingbird's Chairman, and Barry
Litwin, Hummingbird's Chief Executive Officer, have agreed with Open Text to
vote all Common Shares beneficially owned by them in favour of the Arrangement
Resolution. See "The Arrangement -- Recommendation of the Board".
3
Reasons for the Arrangement
The Special Committee and the Board considered a number of factors in
concluding that the Arrangement is in the best interests of Hummingbird and is
fair to Shareholders, including:
(a) the consideration to be received by Shareholders for each Common
Share under the Arrangement represents a premium of approximately
20.5% over the closing trading price of the Common Shares on the
NASDAQ on May 25, 2006, the last trading day on the NASDAQ prior
to the announcement of the Symphony Arrangement, and is $1.10 per
share more than the price per share under the Symphony Arrangement
representing a premium of 4.1%;
(b) prior to entering into the Symphony Arrangement Agreement,
Hummingbird had participated in numerous discussions and
negotiations with other potentially interested third parties, none
of which led to a transaction for various reasons;
(c) that the Arrangement consideration is all cash, which provides
certainty of value to Shareholders compared to a transaction in
which Shareholders would receive all or part of their payment in
non-cash consideration;
(d) the lack of liquidity in Hummingbird's shares in recent years and
the negative impact this has had on Shareholders and on the
ability of Hummingbird to engage in strategic transactions;
(e) the opinion, dated August 3, 2006, of Banc of America Securities
LLC to the Special Committee and the Board as to the fairness,
from a financial point of view and as of the date of the opinion,
of the consideration to be received by the holders of Common
Shares (other than Open Text, Acquisition Sub, and their
respective affiliates) pursuant to the proposed Arrangement. See
"The Arrangement -- Opinion of Banc of America Securities LLC";
(f) Open Text's receipt of a signed copy of the debt Commitment
Letter, containing only limited, customary conditions;
(g) under the Arrangement, all Shareholders are treated the same and
no Shareholder receives any collateral benefit;
(h) the terms and conditions of the Arrangement Agreement do not
prevent an unsolicited third party from making a Superior Proposal
or, provided Hummingbird complies with the terms of the
Arrangement Agreement (including the payment of the Termination
Payment in certain circumstances), preclude the Board from
considering and acting on a Superior Proposal;
(i) the terms and conditions of the Arrangement Agreement, including
Hummingbird's, Open Text's and Acquisition Sub's representations,
warranties and covenants, and the conditions to their respective
obligations are, in the judgment of Hummingbird, after
consultation with its legal counsel and Lehman Brothers Inc.,
reasonable and are, with certain limited exceptions, the same as
the terms and conditions of the Symphony Arrangement Agreement,
which were the product of extensive negotiations between
Hummingbird and such advisors and Symphony and its advisors;
(j) the Arrangement Resolution must be passed by at least two-thirds
of the votes cast by Shareholders present in person or represented
by proxy at the Meeting and entitled to vote, and the fact that if
a higher offer is made to Shareholders prior to the Meeting,
Shareholders are free to support such a higher offer and vote
against the Arrangement Resolution;
(k) the Arrangement Resolution must be approved by the Court, which
will consider, among other things, the fairness and reasonableness
of the Arrangement to Shareholders; and
(l) the availability of Dissent Rights.
4
The Special Committee and the Board also considered a number of
potential risks relating to the Arrangement, including:
(a) the risks to Hummingbird if the Arrangement is not completed,
including the costs to Hummingbird in pursuing the Arrangement,
including payment of the $11.7 million termination payment to
Symphony Affiliates, and the diversion of management attention
away from the conduct of Hummingbird's business in the ordinary
course;
(b) the fact that, following the Arrangement, Hummingbird will no
longer exist as an independent public company and Shareholders
will forego any future increase in value that might result from
future growth and the potential achievement of Hummingbird's
long-term plans;
(c) the conditions to Open Text's obligation to complete the
Arrangement and the right of Open Text to terminate the
Arrangement Agreement under certain limited circumstances;
(d) the limitations contained in the Arrangement Agreement on
Hummingbird's ability to solicit additional interest from third
parties, as well as the fact that if the Arrangement Agreement is
terminated under certain circumstances, Hummingbird must pay a
$12.4 million (approximately) Termination Payment to Open Text and
that, under certain circumstances, Hummingbird must reimburse Open
Text and Acquisition Sub for certain expenses, as described in
"Other Terms of the Arrangement Agreement -- Termination Payment"
and "Other Terms of the Arrangement Agreement -- Expense
Reimbursement"; and
(e) the fact that the Arrangement will be a taxable transaction and,
as a result, Shareholders will generally be required to pay taxes
on any gains that result from their receipt of the consideration
in the Arrangement.
In reaching its determination, the Special Committee and the Board also
considered and evaluated, among other things:
(a) information concerning the business, operations, property, assets,
financial condition, operating results and prospects of
Hummingbird;
(b) current industry, economic and market conditions and trends; and
(c) historical market prices and trading information with respect to
Common Shares.
See "The Arrangement -- Reasons for the Arrangement".
Opinion of Banc of America Securities LLC
In connection with the Arrangement, Banc of America Securities LLC
delivered to the Special Committee and the Board a written opinion, dated August
3, 2006, as to the fairness, from a financial point of view and as of the date
of the opinion, of the consideration to be received by the holders of Common
Shares pursuant to the proposed Arrangement (other than Open Text, Acquisition
Sub and their respective affiliates).
The full text of the written opinion, dated August 3, 2006, of Banc of
America Securities LLC, which states, among other things, the assumptions made,
procedures followed, factors considered and limitations on the review
undertaken, is attached as Appendix C to this Circular and incorporated by
reference in its entirety into this Circular. Holders of Common Shares are
encouraged to read this opinion carefully in its entirety. The opinion was
provided to the Special Committee and the Board in connection with their
evaluation of the consideration to be received pursuant to the Arrangement, does
not address any other aspect of the Arrangement and does not constitute a
recommendation as to how Shareholders should vote or act with respect to the
Arrangement. See "The Arrangement -- Opinion of Banc of America Securities LLC".
5
Required Shareholder Approval
The approval of the Arrangement Resolution will require the
affirmative vote of at least two-thirds of the votes cast by Shareholders
present in person or represented by proxy at the Meeting and entitled to vote
in order for Hummingbird to seek the Final Order and implement the Arrangement
on the Effective Date in accordance with the Final Order. See "The Arrangement
- -- Required Shareholder Approval".
Support Agreements
Mr. Sorkin, Hummingbird's Chairman, and Mr. Litwin, Hummingbird's Chief
Executive Officer, collectively own approximately 12.15% of the outstanding
Common Shares as at August 18, 2006 and have entered into support agreements
with Open Text and Acquisition Sub pursuant to which, among other things, they
have agreed that they will vote their Common Shares in favour of the
Arrangement. See "The Arrangement -- Description of the Arrangement -- Support
Agreements".
Arrangement Mechanics
Pursuant to the Arrangement, the following transactions, among others,
will occur in the order set out in the Plan of Arrangement:
o Hummingbird will, if requested by Open Text, cause Lender Sub to
lend an aggregate amount of up to $58 million, plus any
additional amount that Open Text may reasonably request, to
Hummingbird and Acquisition Sub as follows:
o the aggregate amount required to be paid by Hummingbird in
respect of its acquisition of Options pursuant to the Plan of
Arrangement will, if requested by Open Text, be lent to
Hummingbird; and
o the balance will be lent to Acquisition Sub;
o all Options that are outstanding immediately prior to the
Effective Time shall be deemed to be conditionally vested and
will be transferred to Hummingbird in exchange for a cash payment
from or on behalf of Hummingbird equal to the amount (if any) by
which $27.85 exceeds the exercise price payable under such
Options (as converted into U.S. dollars pursuant to the Plan of
Arrangement); and
o each Common Share outstanding at the Effective Time and held by a
Shareholder shall be transferred to Acquisition Sub in exchange
for $27.85 in cash per Common Share.
See "The Arrangement -- Arrangement Mechanics".
In order to receive the above cash consideration for the Common Shares,
a Shareholder must complete, sign, date and return the enclosed Letter of
Transmittal in accordance with the instructions set out therein.
Sources of Funds for the Arrangement
Under the terms of the Arrangement Agreement, Acquisition Sub will pay
an aggregate of approximately $491 million to acquire all of the outstanding
Common Shares (assuming no Shareholders exercise their Dissent Rights and no
Options are exercised between August 18, 2006 and the Effective Time). Open
Text has obtained a commitment, subject to certain conditions, from a Schedule
I Canadian bank to provide $450 million in term debt financing and borrowing
availability under a $75 million revolving credit facility to fund a portion of
this amount. Pursuant to the Arrangement Agreement, the balance of the funds,
if any, required by Acquisition Sub to acquire the Common Shares will be funded
by way of an equity investment by Open Text (or one of its Affiliates) and, if
requested by Open Text, a loan from a subsidiary of Hummingbird to Acquisition
Sub. See "The Arrangement -- Sources of Funds for the Arrangement".
6
Interests of Senior Management and Others in the Arrangement
In considering the recommendations of the Special Committee and the
Board with respect to the Arrangement, Shareholders should be aware that certain
members of Hummingbird's senior management and Board have certain interests in
connection with the Arrangement that may present them with actual or potential
conflicts of interest in connection with the Arrangement. The Special Committee
and the Board are aware of these interests and considered them along with other
matters described in "The Arrangement -- Interests of Senior Management and
Others in the Arrangement".
Superior Proposals
In the Arrangement Agreement, Hummingbird has agreed not to, directly
or indirectly, among other things, solicit, initiate, facilitate or encourage
(including by way of furnishing information or entering into any form of
agreement, arrangement or understanding) any inquiries or proposals regarding an
Acquisition Proposal. Nonetheless, the Board is permitted to consider and accept
a Superior Proposal under certain conditions. Open Text is entitled to a
five-business day period within which to exercise a right to match any Superior
Proposal that the Board proposes to accept, approve or recommend. If the Board
accepts a Superior Proposal, Hummingbird is required to pay to Open Text the
Termination Payment as set out in the Arrangement Agreement. See "Other Terms of
the Arrangement Agreement -- Covenants of Hummingbird Regarding
Non-Solicitation".
Conditions to the Arrangement Becoming Effective
The implementation of the Arrangement is subject to a number of
conditions being satisfied or waived by one or both of Hummingbird and Open Text
at or before the Effective Time, including:
o the accuracy of the representations and warranties of Hummingbird
and Open Text contained in the Arrangement Agreement;
o the performance by Hummingbird and Open Text of their covenants
under the Arrangement Agreement;
o the approval of the Arrangement Resolution at the Meeting in
accordance with the CBCA and the Interim Order;
o receipt of all Regulatory Approvals;
o the absence of any Law that makes the Arrangement illegal or
otherwise prevents or prohibits consummation of the Arrangement;
o the absence of any pending or overtly threatened proceeding by or
before any Governmental Entity seeking to prevent or challenge
the consummation of the Arrangement;
o no Material Adverse Effect on Hummingbird having occurred;
o Dissent Rights shall not have been exercised and remain
outstanding at the Effective Time with respect to more than 10%
of the outstanding Common Shares in connection with the
Arrangement; and
o the satisfaction of the conditions precedent set forth in the
Commitment Letter.
See "Other Terms of the Arrangement Agreement -- Conditions Precedent
to the Arrangement".
Court Approval
The Arrangement requires approval by the Court under Section 192 of the
CBCA. Prior to the mailing of the Circular, Hummingbird obtained the Interim
Order, which provides for the calling and holding of the Meeting, the Dissent
Rights and other procedural matters. A copy of the Interim Order is attached as
Appendix E to this
7
Circular. Subject to the approval of the Arrangement Resolution by at least
two-thirds of votes cast by Shareholders at the Meeting, the hearing in respect
of the Final Order is currently scheduled to take place on September 22, 2006.
At the hearing, the Court will consider, among other things, the
fairness and reasonableness of the Arrangement. The Court may approve the
Arrangement in any manner the Court may direct, subject to compliance with such
terms and conditions, if any, as the Court deems fit. See "Principal Legal
Matters -- Court Approval of the Arrangement and Completion of the Arrangement".
Regulatory Matters
The Arrangement is conditional upon the receipt of certain Regulatory
Approvals, including receipt of an advance ruling certificate or a "no action"
letter from the Commissioner of Competition under the Competition Act and
expiration of the applicable waiting period under the HSR Act. See "Principal
Legal Matters -- Regulatory Matters".
Closing
The Arrangement Agreement provides that the Effective Date is to occur
on the earlier of (a) (i) October 2, 2006, provided that all closing conditions
have been satisfied or waived by such date, (ii) five business days after
satisfaction or waiver of the conditions to closing (but no earlier than
October 2, 2006 or later than the Outside Date), and (iii) the Outside Date, or
(b) on such other date as Hummingbird and Open Text may agree. The "Outside
Date" is defined as October 21, 2006, subject to postponement for up to 90 days
by Hummingbird or Open Text if the Regulatory Approvals have not been obtained
and have not been denied by a non-appealable decision of a Governmental Entity,
and may be extended to such later date as may be agreed to in writing by
Hummingbird, Open Text and Acquisition Sub. The Effective Date is currently
expected to occur on or about October 2, 2006.
Termination of the Arrangement Agreement
Hummingbird and Open Text may agree in writing to terminate the
Arrangement Agreement and abandon the Arrangement at any time prior to the
Effective Time. In addition, either Hummingbird or Open Text may terminate the
Arrangement Agreement and abandon the Arrangement at any time prior to the
Effective Time if certain specified events occur. See "Other Terms of the
Arrangement Agreement -- Termination" and "Other Terms of the Arrangement
Agreement -- Termination Payment".
Termination Payment and Expense Reimbursement
The Arrangement Agreement provides that Hummingbird will pay to Open
Text the Termination Payment of approximately $12.4 million in certain
circumstances, including if the Arrangement Agreement is terminated by
Hummingbird in connection with its acceptance of any Superior Proposal. See
"Other Terms of the Arrangement Agreement -- Termination Payment".
The Arrangement Agreement also provides that, if the Arrangement
Agreement is terminated in certain circumstances, Hummingbird will pay to Open
Text up to $2 million as reimbursement of the charges and expenses incurred by
Open Text and Acquisition Sub in connection with the Arrangement. See "Other
Terms of the Arrangement Agreement -- Termination Payment".
Dissenting Holders' Rights
Registered Shareholders are entitled to exercise Dissent Rights by
providing written notice to Hummingbird at or before 5:00 p.m. (Toronto time) on
September 13, 2006 (or on the day that is two business days immediately
preceding any adjourned or postponed Meeting) in the manner described under the
heading "Dissenting Holders' Rights" below. If a Registered Shareholder
dissents, and the Arrangement is completed, the Dissenting Holder is entitled to
be paid the "fair value" of its Dissenting Common Shares as of the close of
business on the day before the day the Arrangement Resolution is adopted. This
amount may be the same as, more than or less than the $27.85 in cash per Common
Share offered under the Arrangement. Only Registered Shareholders are entitled
to dissent. Shareholders should carefully read the Section in this Circular
entitled "Dissenting Holders' Rights" if they wish to exercise Dissent Rights.
8
Certain Canadian Federal Income Tax Considerations
Residents of Canada. Generally, a Resident Shareholder who holds Common
Shares as capital property will realize a capital gain (or a capital loss) equal
to the amount by which the cash received by such Shareholder, net of any
reasonable costs of disposition, exceeds (or is less than) the adjusted cost
base to the Shareholder of such Common Shares.
Non-Residents of Canada. Generally, a Non-Resident Shareholder whose
Common Shares do not constitute "taxable Canadian property" for purposes of the
Tax Act will not be subject to tax under the Tax Act on any gain realized on
the exchange of such Common Shares for cash under the Arrangement.
The foregoing is a brief summary of Canadian federal income tax
consequences only. Shareholders should read carefully the information in the
Circular under the heading "Certain Tax Considerations for Shareholders --
Certain Canadian Federal Income Tax Considerations", which qualifies the summary
set forth above. Shareholders are urged to consult their own tax advisors to
determine the particular tax consequences to them of the Arrangement.
Certain Material United States Federal Income Tax Considerations
U.S. Holders. The Arrangement will be a taxable transaction for United
States federal income tax purposes. As a result, a U.S. holder (as defined under
the heading "Certain Tax Considerations for Shareholders -- Certain Material
United States Federal Income Tax Considerations") of Common Shares will
generally recognize gain or loss in an amount equal to the difference between
the holder's adjusted tax basis in the Common Shares transferred in the
Arrangement and the amount of the cash received in the Arrangement. Provided
that Hummingbird is not a passive foreign investment company for U.S. federal
income tax purposes, this gain or loss will generally be treated as a capital
gain or loss if the U.S. holder held the Common Shares as capital assets and
will be long-term if the U.S. holder's holding period for the Common Shares
exceeds one year.
Non-U.S. Holders. A non-U.S. holder (as defined under the heading
"Certain Tax Considerations for Shareholders -- Certain Material United States
Federal Income Tax Considerations") of Common Shares will generally not be
subject to United States federal income tax as a result of the Arrangement
provided that any gain attributable to the Common Shares is not effectively
connected with the conduct of a trade or business in the United States by the
non-U.S. holder, and in the case of a non-U.S. holder that is an individual,
such holder has not been present in the United States for 183 days or more in
the taxable year of the Arrangement and certain other conditions are satisfied.
Shareholders should read carefully the information in the Circular
under the heading "Certain Tax Considerations for Shareholders -- Certain
Material United States Federal Income Tax Considerations", which qualifies the
summary set forth above. Shareholders are urged to consult their own tax
advisors to determine the particular tax consequences to them of the
Arrangement.
TO ENSURE COMPLIANCE WITH UNITED STATES TREASURY DEPARTMENT CIRCULAR
230, SHAREHOLDERS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF UNITED STATES
FEDERAL TAX ISSUES IN THIS CIRCULAR IS NOT INTENDED OR WRITTEN TO BE RELIED
UPON, AND CANNOT BE RELIED UPON BY SUCH SHAREHOLDERS, FOR THE PURPOSE OF
AVOIDING PENALTIES THAT MAY BE IMPOSED ON SUCH SHAREHOLDERS UNDER THE CODE; (B)
SUCH DISCUSSION IS BEING USED IN CONNECTION WITH THE PROMOTION OR MARKETING
(WITHIN THE MEANING OF CIRCULAR 230) OF THE TRANSACTIONS OR MATTERS ADDRESSED
HEREIN; AND (C) EACH SHAREHOLDER SHOULD SEEK ADVICE BASED ON ITS PARTICULAR
CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
9
INFORMATION CONCERNING THE MEETING AND VOTING
Q: Who is soliciting my proxy?
A: Your proxy is being solicited by management of Hummingbird. The costs
of solicitation will be borne by Hummingbird. This Circular is
furnished in connection with that solicitation. It is expected that
solicitation will be made primarily by mail, but proxies may also be
solicited personally or by telephone or other communication by
directors, officers and employees of Hummingbird without special
compensation. Georgeson Shareholder Communications Canada Inc. is
acting as Hummingbird's proxy solicitation agent, for which it will be
paid a fee of up to approximately CAD$85,000, plus a "per call" fee
for each telephone call to Shareholders made by Georgeson and
reimbursement of Georgeson's costs and expenses in connection with the
solicitation. Proxies are to be used at the Meeting to be held in
Toronto, Ontario on September 15, 2006, at The Hummingbird Centre for
the Performing Arts, 1 Front Street East and for the purposes set out
in the accompanying Notice of Meeting. Under the Arrangement
Agreement, Hummingbird has agreed that Open Text may, at its cost, at
any time directly or through a soliciting dealer actively solicit
proxies in favour of the Arrangement pursuant to this Circular.
Q: What am I voting on?
A: You are being asked to vote to pass the Arrangement Resolution
approving the Arrangement, which, among other things, will result in
the indirect acquisition by Open Text of all of the outstanding Common
Shares, other than Common Shares owned by Open Text and its
Affiliates. You are also being asked to vote to ratify the grant of
50,000 Options to each of Hadley C. Ford, John B. Wade and John A.
MacDonald.
Q: How much will I receive for my Common Shares?
A: If the Arrangement is completed, you will be entitled to receive
$27.85 in cash for each outstanding Common Share that you own as of
the effective date of the Arrangement.
Q: Am I entitled to receive notice of the Meeting and attend the Meeting?
A: Yes, if you are a Shareholder as of the close of business on August
21, 2006, which is the record date for the Meeting. All such
Shareholders are entitled to receive notice of, attend and be heard at
the Meeting.
Q: Am I entitled to vote?
A: Yes, if you are a Shareholder as of the close of business on August
21, 2006, you are entitled to one vote per share on the Arrangement
Resolution. On August 18, 2006, there were 17,618,199 Common Shares
outstanding. Your vote is important regardless of the number of Common
Shares you own.
Q: Are holders of Options able to vote at the Meeting?
A: No. Only holders of Common Shares as of August 21, 2006 are eligible
to vote at the Meeting.
Q: What vote is required to pass the Arrangement Resolution?
A: The Arrangement Resolution must be passed by at least two-thirds of
the votes cast at the Meeting in person or by proxy and entitled to
vote.
Q: How does Hummingbird's board of directors recommend that I vote?
A: Hummingbird's Board (other than Andrew Malik, who has abstained from
voting due to a potential conflict of interest arising out of his
employment with Lehman Brothers Inc., a financial advisor to
Hummingbird) unanimously recommends that Shareholders vote for the
Arrangement Resolution to approve the Arrangement.
10
Q: How can I vote my Common Shares?
A: You can vote your Common Shares by either attending and voting your
Common Shares at the Meeting or, if you cannot attend the Meeting, by
having your Common Shares voted by proxy. How you exercise your vote
depends on whether you are a Registered or Non-Registered Shareholder:
o You are a Registered Shareholder if you have a share certificate
registered in your name.
o You are a Non-Registered Shareholder if your Common Shares are
registered in the name of an Intermediary (for example, a bank, a
trustee or investment dealer) or the name of a clearing agency of
which the Intermediary is a participant.
Voting by attending the Meeting
If you are a Registered Shareholder, you are entitled to attend the
Meeting and cast your vote in person.
If you are a Non-Registered Shareholder, you are entitled to attend the
Meeting and cast your vote in person, provided you have properly
appointed yourself as a proxy appointee, inserting your name as
proxyholder in the blank space provided and returning it in the
envelope provided. When you arrive at the Meeting, advise the
registration staff that you are a proxy appointee. If you have received
a voting instruction form, please follow the instructions on the form.
Voting by Proxy
How you vote by proxy depends on whether you are a Registered
Shareholder or a Non-Registered Shareholder.
1. Voting by proxy -- Registered Shareholders
If you are a Registered Shareholder, you may vote your proxy by paper
proxy to be returned by mail or delivery.
To vote by mail or delivery, your paper proxy must be completed, signed
and returned in accordance with the instructions on the paper proxy.
Whichever method you choose, your proxy must be received by the
Corporate Secretary of Hummingbird, c/o CIBC Mellon Trust Company, no
later than 5:00 p.m. (Toronto time) on September 14, 2006 or, if the
Meeting is adjourned or postponed, by 5:00 p.m. (Toronto time) on the
business day prior to the date on which the adjourned or postponed
Meeting is reconvened or held, as the case may be.
2. Voting by proxy -- Non-Registered Shareholders
If you are a Non-Registered Shareholder and you receive materials
entitling you to vote through an investment dealer or other
Intermediary, complete and return the materials in accordance with the
instructions provided to you by the investment dealer or other
Intermediary.
Q: Who votes my Common Shares?
A: Each person named in the proxy to represent Shareholders at the Meeting
is a director and/or officer of Hummingbird. If you vote by mail or
delivery, you can appoint someone else to represent you at the Meeting;
however, you must appoint that person or company by inserting his or
her name in the appropriate space on the proxy form, or completing
another acceptable paper proxy. The person or company you appoint does
not need to be a Shareholder but must attend the Meeting in order for
your vote to be cast.
11
Q: How will my Common Shares be voted if I return a proxy?
A: By completing and returning a proxy, you are authorizing the person
named in the proxy to attend the Meeting and vote your Common Shares on
each item of business you are entitled to vote on, according to your
instructions. If there are no instructions with respect to your proxy,
your Common Shares will be voted FOR the Arrangement Resolution and the
Options Resolution.
The person you appoint to vote on your behalf may vote as he or she
sees fit on any amendment or variation to any of the matters identified
in the Notice of Meeting and any other matters that may properly be
brought before the Meeting. As of August 18, 2006, neither the Board
nor management of Hummingbird is aware of any variation, amendment or
other matter to be presented for a vote at the Meeting.
Q: Can I revoke a proxy?
A: Yes, if you are a Registered Shareholder and have voted by paper, you
may revoke it by delivering a duly executed proxy by paper with a
later date or a form of revocation of proxy or other instrument in
writing signed by you or by your attorney authorized in writing (or if
you are a corporation, by a duly authorized officer or attorney).
These instruments can be delivered to the Corporate Secretary of
Hummingbird, c/o CIBC Mellon Trust Company, 320 Bay Street, Banking
Hall Level, Toronto, Ontario M5H 4A6, up to 5:00 p.m. (Toronto time)
on September 14, 2006, or if the Meeting is adjourned or postponed, no
later than 5:00 p.m. (Toronto time) on the business day preceding the
date on which the adjourned or postponed Meeting is reconvened or
held, as the case may be.
Alternatively, if you are a Registered Shareholder you may revoke your
proxy and vote in person, by delivering a form of revocation of proxy
or a signed instrument in writing to the Chairman of the Meeting at the
Meeting or any adjournment or postponement thereof. You may also revoke
your proxy in any other manner permitted by law.
If you are a Non-Registered Shareholder, you should contact your
nominee to discuss what procedure to follow.
Q: In addition to the approval of Shareholders, are there any other
approvals required for the Arrangement?
A: Yes, the Arrangement requires the approval of the Ontario Superior
Court of Justice (Commercial List) and is also subject to the receipt
of certain antitrust, competition and other regulatory approvals,
including in Canada and the United States. See "Principal Legal
Matters -- Regulatory Matters".
Q: Will the Common Shares continue to be listed on the TSX or NASDAQ
after the Arrangement?
A: No. The Common Shares will be owned by Acquisition Sub and will be
de-listed from the TSX and NASDAQ shortly after the completion of the
Arrangement.
Q: What if I acquire ownership of Common Shares after August 21, 2006?
A: Only persons on the list of Registered Shareholders prepared by
Hummingbird as of August 21, 2006 are entitled to vote at the Meeting.
Q: When will the Arrangement be implemented?
A: Hummingbird and Open Text will implement the Arrangement when all of
the conditions to closing have been satisfied or waived (where
permitted), but in any event not earlier than October 2, 2006. Because
the Arrangement is subject to a number of conditions, some of which
are beyond Hummingbird's and Open Text's control, the exact timing of
implementation of the Arrangement cannot be predicted with certainty,
although it is currently expected that the closing will occur on or
about October 2, 2006.
12
Q: When can I expect to receive consideration for my Common Shares?
A: As soon as practicable after the completion of the Arrangement and the
receipt by the Depositary from you of a properly completed and duly
executed Letter of Transmittal (or a manually executed facsimile
thereof) together with your certificates representing Common Shares
and all other relevant documents required by the instructions set out
in the Letter of Transmittal, the Depositary will make a payment to
you in the amount of your portion of the consideration. If you hold
your Common Shares through a broker, trustee, financial institution or
other nominee, your broker or other nominee will surrender your Common
Shares in exchange for your portion of the consideration.
Q: Am I entitled to Dissent Rights?
A: Pursuant to the Interim Order, Shareholders have a right to dissent in
respect of the Arrangement Resolution. Registered Shareholders who
properly exercise their Dissent Rights will be entitled to be paid the
fair value of their Common Shares. This amount may be the same as,
more than or less than the $27.85 in cash per Common Share offered
under the Arrangement. If you wish to dissent, you must provide
written notice to Hummingbird at or before 5:00 p.m. (Toronto time) on
September 13, 2006 (or on the day which is two business days
immediately preceding the date that any adjourned or postponed Meeting
is reconvened or held, as the case may be) in the manner described
under the heading "Dissenting Holders' Rights". It is important that
you strictly comply with this requirement, otherwise your Dissent
Right may not be recognized. You must also strictly comply with the
other requirements of the dissent procedure. Only Registered
Shareholders may exercise Dissent Rights.
Q: What are the tax consequences of the Arrangement to me?
A: Your receipt of the consideration under the Arrangement in exchange
for your Common Shares will be a taxable transaction. For further
information on certain tax consequences of the Arrangements, see
"Certain Tax Considerations for Shareholders". Your tax consequences
will depend on your particular situation. You should consult your own
tax advisor for a full understanding of the applicable federal,
provincial, state, local, foreign and other tax consequences to you
resulting from the Arrangement.
Q: Who can I contact if I have questions?
A: Shareholders who have additional questions about the Arrangement,
including the procedures for voting, should contact Georgeson
Shareholder Communications Canada Inc. at 1.866.500.8075. Shareholders
who have questions about deciding how to vote should contact their
professional advisors.
13
THE ARRANGEMENT
Background to the Arrangement Agreement
The provisions of the Arrangement Agreement are the result of arm's
length negotiations conducted between representatives of Hummingbird and Open
Text. The following is a summary of the events leading up to the negotiation of
the Arrangement Agreement and the meetings, negotiations, discussions and
actions between the parties that preceded the execution and public announcement
of the Arrangement Agreement.
Description of the Arrangement
In early 2006, Hummingbird and Symphony Technology Group ("Symphony")
began discussing a potential transaction involving the acquisition of
Hummingbird by Symphony. As discussed in further detail in Hummingbird's
management information circular dated June 23, 2006, these discussions evolved
into negotiations that ultimately resulted in Hummingbird entering into an
arrangement agreement (the "Symphony Arrangement Agreement") dated May 25, 2006
with entities affiliated with Symphony (the "Symphony Affiliates"). Pursuant to
the Symphony Arrangement Agreement, a Symphony Affiliate agreed to acquire all
of the issued and outstanding Common Shares at a price of $26.75 in cash per
Common Share by way of a statutory plan of arrangement (the "Symphony
Arrangement").
On May 18, 2006, Open Text sent a letter to an independent Hummingbird
director expressing interest in exploring a potential business combination
between Open Text and Hummingbird. The director advised the Board of his receipt
of this letter and the Board determined that it would not be appropriate for
Hummingbird to immediately respond to Open Text's letter given, among other
things, (i) the imminent execution of the Symphony Arrangement Agreement, (ii)
the very general nature of Open Text's inquiry and (iii) that commencing
discussions with Open Text would significantly prejudice Hummingbird's ability
to proceed with a transaction with Symphony.
On May 26, 2006, Hummingbird announced the execution of the Symphony
Arrangement Agreement.
Open Text Tender Offer and Arrangement Negotiations
On May 30, 2006, Barry Litwin, Hummingbird's President and Chief
Executive Officer, sent a letter to John Shackleton, Open Text's President and
Chief Executive Officer, acknowledging receipt of Open Text's letter of May 18,
2006 and requesting that all future business combination related inquiries be
directed to Stephen Crane, the Chairman of the Special Committee.
On June 14, 2006, Tom Jenkins, the Executive Chairman of Open Text's
board of directors, sent an email to Mr. Crane expressing Open Text's continued
interest in pursuing a business combination with Hummingbird. Mr. Jenkins also
indicated that Open Text was willing to consider the acquisition of all of the
outstanding Common Shares at a price per share greater than the price under the
Symphony Arrangement. Later that day, Mr. Jenkins contacted Mr. Crane via
telephone. During their ensuing conversation, Mr. Crane informed Mr. Jenkins
that, under the terms of the Symphony Arrangement Agreement, Hummingbird was
unable to respond to anything other than a written proposal outlining the terms
and conditions of a business combination.
On June 16, 2006, Open Text wrote to Mr. Crane to propose the
acquisition of all of the issued and outstanding Common Shares at a price of
$27.25 per share in cash, subject to satisfactory completion of due diligence by
Open Text and certain other customary conditions.
The Special Committee met via teleconference on June 17, 2006 and the
Board met via teleconference on June 19, 2006 and June 20, 2006 to discuss the
Open Text letter and Hummingbird's response thereto. At the Board meeting on
June 19, 2006, the Board determined, after receiving advice from its outside
legal counsel and its financial advisor, Lehman Brothers Inc., that Open Text's
letter of June 16, 2006 constituted a "Superior Proposal" under the terms of the
Symphony Arrangement Agreement, which enabled Hummingbird to pursue negotiations
with Open Text. During the Board meeting on June 20, 2006, the Board also
determined, despite its conclusion that the Open Text proposal constituted a
"Superior Proposal", that, prior to engaging in any discussions with Open Text,
it would be prudent for Hummingbird to receive more detail concerning Open
Text's financing arrangements relating to the proposed transaction. Mr. Crane
communicated this requirement to Mr. Jenkins later that day.
14
On June 28, 2006, Hummingbird received a copy of a letter from a
Schedule I Canadian bank to Open Text in which the bank stated that it was
"highly confident" that it would be able to underwrite senior secured lending
facilities sufficient to enable Open Text to acquire all of the issued and
outstanding Common Shares.
On June 29, 2006, Mr. Crane wrote to Mr. Jenkins to confirm that the
Open Text proposal constituted a "Superior Proposal" and that the Board was
willing to engage in further discussions with Open Text. Mr. Crane's letter also
stated that the Board was concerned that pursuing a transaction with Open Text
at a time when the Symphony Arrangement was at an advanced stage would raise new
transaction and business risks for Hummingbird and its shareholders. Therefore,
Mr. Crane's letter advised Open Text that Hummingbird would be willing to pursue
Open Text's proposal only if it were sufficiently attractive from a financial
point of view and had an extremely high certainty of closing. In this regard,
among other things, Mr. Crane's letter stated that an offer price of
substantially more than $27.25 per share would be required to compensate
Hummingbird's shareholders for the incremental risks associated with the Open
Text proposal and that Open Text would be required to commit to an expeditious
due diligence process. Attached to the letter was a form of non-disclosure
agreement that Hummingbird requested Open Text sign in order to facilitate due
diligence.
On July 5, 2006, Open Text announced that it intended to make an
unsolicited offer for all of the outstanding Common Shares at a price of $27.75
per Common Share (the "Open Text Tender Offer") and that it had entered into
lock-up agreements with Hummingbird shareholders that, as of that date,
collectively held approximately 18.0% of the Common Shares that were issued and
outstanding on June 19, 2006. The Board met via teleconference on July 7, 2006
to consider Open Text's announcement. Later that day, Hummingbird issued a press
release responding to Open Text's announcement in which Hummingbird indicated,
among other things, that the Board continued to be willing to negotiate with
Open Text regarding the terms of its offer and to provide Open Text with
appropriate access to non-public information regarding Hummingbird.
On July 10, 2006, Open Text formally made the Open Text Tender Offer
and delivered a copy of the offering circular to Hummingbird.
Between July 13, 2006 and July 20, 2006, Hummingbird and Open Text
discussed the circumstances in which they would be willing to enter into
negotiations regarding a transaction in which Open Text would acquire all of the
issued and outstanding Common Shares at a price of $27.85 per share in cash. As
part of these discussions, Open Text and Hummingbird agreed upon the terms and
conditions of "change of control" agreements that Hummingbird proposed to offer
to certain of its key employees as a means of ensuring that their commitment to
Hummingbird and job performance would not be adversely affected by the potential
that Hummingbird might be acquired by a direct competitor, notwithstanding the
significant uncertainty regarding their future with the company caused by Open
Text's offer to acquire Hummingbird.
On July 20, 2006, Hummingbird and Open Text executed a non-disclosure
agreement that, in addition to imposing confidentiality obligations on Open Text
with respect to information provided to it by Hummingbird, provided, among other
things, that (i) until October 31, 2006, Open Text may not, without the consent
of the Board, acquire or attempt to acquire Hummingbird at a price of less than
$27.85 per share (subject to certain exceptions), (ii) Hummingbird and Open Text
would use commercially reasonable efforts to ensure that Open Text completed its
due diligence review of Hummingbird by July 30, 2006 and (iii) Open Text would
use commercially reasonable efforts to settle a definitive agreement relating to
a transaction with Hummingbird by July 30, 2006.
On July 21, 2006, Hummingbird announced the execution of the
non-disclosure agreement, Open Text began its due diligence review of
Hummingbird and Open Text provided Hummingbird with a draft arrangement
agreement that contemplated the acquisition of all of the issued and outstanding
Common Shares by Acquisition Sub at a price of $27.85 per share in cash.
Also on July 21, 2006, Hummingbird convened a previously scheduled
special meeting of its shareholders that was called to consider the Symphony
Arrangement. In light of the uncertain status of a potential transaction between
Open Text and Hummingbird, Hummingbird adjourned this meeting until August 18,
2006 before shareholders voted on the Symphony Arrangement.
On July 25, 2006, the Board of Directors met to finalize its response
to the Open Text Tender Offer. The Board unanimously agreed to recommend that
Hummingbird Shareholders reject the Open Text Tender Offer and
15
not tender their Common Shares to the Open Text Tender Offer. The Board's
recommendation was communicated to Shareholders pursuant to a directors'
circular dated July 25, 2006. The resolutions of the Board were unanimous, but
excluded Andrew Malik who recused himself from voting due to his employment as
a Managing Director at Lehman Brothers Inc., Hummingbird's financial advisor.
Given the uncertain status of a potential transaction with Open Text, at that
time the Board also continued to recommend that shareholders vote in favour of
the Symphony Arrangement.
On August 3, 2006, Open Text completed its due diligence review of
Hummingbird and Open Text and Hummingbird settled the terms of the Arrangement
Agreement.
Approval of the Arrangement Agreement
On August 3, 2006, the Board and the Special Committee held a joint
meeting at which all of the directors were present. The Special Committee and
the Board received a comprehensive briefing from legal counsel on the terms and
conditions of the Arrangement Agreement as well as the Commitment Letter that
Open Text had obtained in connection with its financing, and consulted Lehman
Brothers Inc. on certain matters. Counsel responded to a variety of questions
from the directors on various aspects of the Arrangement Agreement and the
Commitment Letter. Banc of America Securities LLC, which had been retained to
evaluate, and render an opinion with respect to, the consideration to be
received by the holders of Common Shares (other than Open Text, Acquisition Sub
and their respective affiliates) pursuant to the proposed Arrangement, delivered
to the Special Committee and the Board an oral opinion, which was confirmed by
delivery of a written opinion dated August 3, 2006, to the effect that, as of
that date and subject to various assumptions and limitations described in its
opinion, the consideration to be received by the holders of Common Shares (other
than Open Text, Acquisition Sub, and their respective affiliates) was fair, from
a financial point of view, to such holders.
The Special Committee met separately with legal counsel and Banc of
America Securities LLC to consider its recommendation to the Board. The Special
Committee considered the proposed transaction from a business, financial and
legal perspective and the reasons for the Arrangement set forth under "Reasons
for the Arrangement". The Special Committee concluded that the Arrangement is
substantively and procedurally fair to the Shareholders and that the Arrangement
is in the best interests of Hummingbird. The Special Committee unanimously
resolved to recommend to the Board that it approve the Arrangement.
The Board received the report of the Special Committee and, following
discussion, resolved that the Arrangement is fair to the Shareholders and is in
the best interests of Hummingbird. It also resolved to approve the Arrangement
Agreement and authorized management of Hummingbird to finalize the terms of,
execute and deliver the Arrangement Agreement, and further resolved to submit
the Arrangement Agreement to the Shareholders for approval. The resolutions of
the Board were unanimous, but excluded Mr. Malik who recused himself from voting
due to his employment as a Managing Director at Lehman Brothers Inc.,
Hummingbird's financial advisor.
Support Agreements
Open Text and Acquisition Sub entered into support agreements with Mr.
Sorkin, Hummingbird's Chairman, and Mr. Litwin, Hummingbird's Chief Executive
Officer, as of August 4, 2006. As of such date, Mr. Sorkin held 1,217,523 Common
Shares, representing approximately 6.91% of the outstanding Common Shares, and
Mr. Litwin held 923,107 Common Shares, representing approximately 5.24% of the
outstanding Common Shares. Pursuant to each agreement, and subject to the terms
and conditions contained in each agreement, each of Mr. Litwin and Mr. Sorkin
has agreed, among other things, that until the earlier of the Effective Date and
the termination of his agreement, he will:
o vote or to cause to be voted his Common Shares in favour of the
Plan of Arrangement at the Meeting;
o exercise the voting rights attaching to his Common Shares to
oppose any proposed action by Hummingbird, its shareholders, any
of its subsidiaries or any other Person: (i) in respect of any
Acquisition Proposal, (ii) which might reasonably be regarded as
being directed towards or likely to prevent or delay the
successful completion of the Plan of Arrangement, or (iii) which
might reasonably be expected to have a Material Adverse Effect;
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o subject to the proxy granted pursuant to each agreement, not
grant or agree to grant any proxy or other right to vote his
Common Shares, or enter into any voting trust, vote pooling or
other agreement with respect to the right to vote, call meetings
of shareholders or give consents or approval of any kind as to
his Common Shares; and
o not option, sell, transfer, pledge, encumber, grant a security
interest in, hypothecate or otherwise convey his Common Shares,
or any right or interest therein (legal or equitable), to any
Person or agree to do any of the foregoing.
Mr. Sorkin and Mr. Litwin have the right to terminate these agreements
if the Arrangement Agreement is terminated in accordance with its terms.
Execution and Delivery of the Arrangement Agreement
The Arrangement Agreement was executed and delivered by the parties
thereto on August 4, 2006. Prior to executing the Arrangement Agreement,
Hummingbird terminated the Symphony Arrangement Agreement and, in connection
therewith, paid the $11.7 million (approximate) termination payment to a
Symphony Affiliate as required by the terms of the Symphony Arrangement
Agreement. The Arrangement Agreement was announced by way of a press release by
each of Hummingbird and Open Text on August 4, 2006.
Expiry of the Open Text Tender Offer
On August 15, 2006, the Open Text Tender Offer expired in accordance
with its terms. No Common Shares were taken up by Open Text under the Open Text
Tender Offer.
Recommendation of the Special Committee
The Special Committee has determined that the Arrangement is fair to
Shareholders and is in the best interests of Hummingbird. Accordingly, the
Special Committee has unanimously recommended that the Board approve the
Arrangement and recommend that Shareholders vote FOR the Arrangement Resolution.
Recommendation of the Board
The Board (other than Mr. Malik who did not vote due to his employment
as a Managing Director at Lehman Brothers Inc., a financial advisor to
Hummingbird) has unanimously determined that the Arrangement is fair to
Shareholders and is in the best interests of Hummingbird. Accordingly, the Board
has approved the Arrangement Agreement and unanimously recommends that
Shareholders vote FOR the Arrangement Resolution.
Reasons for the Arrangement
In evaluating and approving the Arrangement and in making its
recommendation, the Special Committee and the Board considered a number of
factors. In view of the variety of factors considered, each of the Special
Committee and the Board did not find it practicable to, and did not, quantify or
otherwise assign relative weights to the specific factors considered in reaching
its determination as to the fairness of the Arrangement and its recommendation
to Shareholders to vote for the Arrangement Resolution. The factors considered
by the Special Committee and the Board included:
(a) the consideration to be received by Shareholders for each Common
Share under the Arrangement represents a premium of approximately
20.5% over the closing trading price of the Common Shares on the
NASDAQ on May 25, 2006, the last trading day on the NASDAQ prior
to the announcement of the Symphony Arrangement, and is $1.10 per
share more than the price per share under the Symphony
Arrangement representing a premium of 4.1%;
(b) prior to entering into the Symphony Arrangement Agreement,
Hummingbird had participated in numerous discussions and
negotiations with other potentially interested third parties,
none of which led to a transaction for various reasons;
17
(c) that the Arrangement consideration is all cash, which provides
certainty of value to Shareholders compared to a transaction in
which Shareholders would receive all or part of their payment in
non-cash consideration;
(d) the lack of liquidity in Hummingbird's shares in recent years and
the negative impact this has had on Shareholders and on the
ability of Hummingbird to engage in strategic transactions;
(e) the opinion of Banc of America Securities LLC, dated August 3,
2006, to the Special Committee and the Board as to the fairness,
from a financial point of view and as of the date of the opinion,
of the consideration to be received by the holders of Common
Shares (other than Open Text, Acquisition Sub and their
respective affiliates) pursuant to the proposed Arrangement. See
"The Arrangement -- Opinion of Banc of America Securities LLC";
(f) Open Text's receipt of a signed copy of the debt Commitment
Letter, containing only limited, customary conditions;
(g) under the Arrangement, all Shareholders are treated the same and
no Shareholder receives any collateral benefit;
(h) the terms and conditions of the Arrangement Agreement do not
prevent an unsolicited third party from making a Superior
Proposal or, provided Hummingbird complies with the terms of the
Arrangement Agreement (including the payment of the Termination
Payment in certain circumstances), preclude the Board from
considering and acting on a Superior Proposal;
24
(i) the terms and conditions of the Arrangement Agreement, including
Hummingbird's, Open Text's and Acquisition Sub's representations,
warranties and covenants, and the conditions to their respective
obligations are, in the judgment of Hummingbird, after
consultation with its legal counsel and Lehman Brothers Inc.,
reasonable and are, with certain limited exceptions, the same as
the terms and conditions of the Symphony Arrangement Agreement,
which were the product of extensive negotiations between
Hummingbird and such advisors and Symphony and its advisors;
(j) the Arrangement Resolution must be passed by at least two-thirds
of the votes cast by Shareholders present in person or
represented by proxy at the Meeting and entitled to vote, and the
fact that if a higher offer is made to Shareholders prior to the
Meeting, Shareholders are free to support such a higher offer and
vote against the Arrangement Resolution;
(k) the Arrangement Resolution must be approved by the Court, which
will consider, among other things, the fairness and
reasonableness of the Arrangement to Shareholders; and
(l) the availability of Dissent Rights.
The Special Committee and the Board also considered a number of
potential risks relating to the Arrangement, including:
(a) the risks to Hummingbird if the Arrangement is not completed,
including the costs to Hummingbird in pursuing the Arrangement,
including payment of the $11.7 million termination payment to
Symphony Affiliates, and the diversion of management attention
away from the conduct of Hummingbird's business in the ordinary
course;
(b) the fact that, following the Arrangement, Hummingbird will no
longer exist as an independent public company and Shareholders
will forego any future increase in value that might result from
future growth and the potential achievement of Hummingbird's
long-term plans;
(c) the conditions to Open Text's obligation to complete the
Arrangement and the right of Open Text to terminate the
Arrangement Agreement under certain limited circumstances;
18
(d) the limitations contained in the Arrangement Agreement on
Hummingbird's ability to solicit additional interest from third
parties, as well as the fact that if the Arrangement Agreement is
terminated under certain circumstances, Hummingbird must pay a
$12.4 million (approximately) Termination Payment to Open Text
and that, under certain circumstances, Hummingbird must reimburse
Open Text and Acquisition Sub for certain expenses, as described
in "Other Terms of the Arrangement Agreement -- Termination
Payment" and "Other Terms of the Arrangement Agreement -- Expense
Reimbursement"; and
(e) the fact that the Arrangement will be a taxable transaction and,
as a result, Shareholders will generally be required to pay taxes
on any gains that result from their receipt of the consideration
in the Arrangement.
In reaching its determination, the Special Committee and the Board also
considered and evaluated, among other things:
(a) information concerning the business, operations, property,
assets, financial condition, operating results and prospects of
Hummingbird;
(b) current industry, economic and market conditions and trends; and
(c) historical market prices and trading information with respect to
Common Shares.
The foregoing discussion of the information and consideration of such
factors by the Special Committee and the Board is not intended to be exhaustive
but is believed to include all material factors considered by the Special
Committee and the Board. In reaching its determination to approve and
unanimously recommend the Arrangement, the Special Committee and the Board did
not assign any relative or specific weights to the foregoing factors which were
considered, and individual directors may have given different weights to
different factors. The Special Committee was, however, unanimous in its
recommendation that the Board approve the Arrangement and the Special Committee
and the Board recommend that the Shareholders vote in favour of the Arrangement
Resolution.
Opinion of Banc of America Securities LLC
Banc of America Securities LLC was retained to evaluate, and render an
opinion to the Special Committee and the Board with respect to, the
consideration to be received by the holders of Common Shares (other than Open
Text, Acquisition Sub and their respective affiliates) pursuant to the proposed
Arrangement. Banc of America Securities LLC is an internationally recognized
investment banking firm which is regularly engaged in the valuation of
businesses and securities in connection with mergers and acquisitions,
negotiated underwritings, secondary distributions of listed and unlisted
securities, private placements and valuations for corporate and other purposes.
Hummingbird and the Special Committee selected Banc of America Securities LLC on
the basis of Banc of America Securities LLC's experience in transactions similar
to the Arrangement and its reputation in the technology industry and investment
community.
On August 3, 2006, at a joint meeting of the Special Committee and the
Board held to evaluate the Arrangement, Banc of America Securities LLC delivered
to the Special Committee and the Board an oral opinion, which was confirmed by
delivery of a written opinion dated August 3, 2006, to the effect that, as of
the date of the opinion and based on and subject to various assumptions and
limitations stated in its opinion, the consideration to be received by the
holders of Common Shares (other than Open Text, Acquisition Sub and their
respective affiliates) pursuant to the proposed Arrangement was fair, from a
financial point of view, to such holders.
THE FULL TEXT OF BANC OF AMERICA SECURITIES LLC'S WRITTEN OPINION TO
THE SPECIAL COMMITTEE AND THE BOARD, WHICH STATES, AMONG OTHER THINGS, THE
ASSUMPTIONS MADE, PROCEDURES FOLLOWED, FACTORS CONSIDERED AND LIMITATIONS ON
THE REVIEW UNDERTAKEN, IS ATTACHED AS APPENDIX C TO THIS CIRCULAR AND IS
INCORPORATED BY REFERENCE IN ITS ENTIRETY INTO THIS CIRCULAR. HOLDERS OF COMMON
SHARES ARE ENCOURAGED TO READ THE OPINION CAREFULLY IN ITS ENTIRETY. BANC OF
AMERICA SECURITIES LLC DELIVERED ITS OPINION TO THE SPECIAL COMMITTEE AND THE
BOARD FOR THE BENEFIT AND USE OF THE SPECIAL COMMITTEE AND THE BOARD IN
CONNECTION WITH AND FOR PURPOSES OF THEIR EVALUATION OF THE CONSIDERATION TO BE
RECEIVED BY THE HOLDERS OF COMMON SHARES PURSUANT TO
19
THE ARRANGEMENT. BANC OF AMERICA SECURITIES LLC'S OPINION DOES NOT ADDRESS ANY
OTHER ASPECT OF THE ARRANGEMENT AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY
SHAREHOLDER AS TO HOW TO VOTE OR ACT IN CONNECTION WITH THE ARRANGEMENT.
The decision to enter into the Arrangement Agreement was solely that of
the Special Committee and the Board. As described above, Banc of America
Securities LLC's opinion was only one of many factors considered by the Special
Committee and the Board in evaluating the Arrangement and should not be viewed
as determinative of the views of the Special Committee, the Board or the
management of Hummingbird with respect to the Arrangement or the consideration
to be received pursuant to the Arrangement.
Hummingbird agreed to pay Banc of America Securities LLC a customary
fee upon the rendering of its opinion. Hummingbird also has agreed to reimburse
Banc of America Securities LLC for all reasonable expenses, including reasonable
fees and disbursements of Banc of America Securities LLC's counsel, incurred in
connection with Banc of America Securities LLC's engagement, and to indemnify
Banc of America Securities LLC, any controlling person of Banc of America
Securities LLC and each of their respective directors, officers, employees,
agents, affiliates and representatives against specified liabilities, including
liabilities under applicable securities laws.
Banc of America Securities LLC previously was retained to evaluate, and
render an opinion to the Special Committee with respect to, the consideration
provided for pursuant to the Symphony Arrangement, for which services
compensation is payable. In the ordinary course of their businesses, Banc of
America Securities LLC and its affiliates may actively trade or hold securities
or loans of Hummingbird and Open Text for their own accounts or for the accounts
of customers and, accordingly, Banc of America Securities LLC or its affiliates
may at any time hold long or short positions in such securities or loans.
Required Shareholder Approval
At the Meeting, Shareholders will be asked to consider and, if deemed
advisable, to pass the Arrangement Resolution. The approval of the Arrangement
Resolution will require the affirmative vote of at least two-thirds of the votes
cast by holders of outstanding Common Shares entitled to vote and present in
person or represented by proxy at the Meeting. The Arrangement Resolution must
be passed by the requisite two-thirds majority in order for Hummingbird to seek
the Final Order and implement the Arrangement on the Effective Date in
accordance with the Final Order. Notwithstanding the approval by Shareholders of
the Arrangement Resolution, Hummingbird reserves the right in certain
circumstances to not proceed with the Arrangement in accordance with the terms
of the Arrangement Agreement such as circumstances in which conditions to
completion of the Arrangement in favour of Hummingbird have not been satisfied
or waived or in which the Arrangement Agreement has been terminated in
accordance with its terms. See "Other Terms of the Arrangement Agreement --
Termination".
Arrangement Mechanics
The following description is qualified in its entirety by reference to
the full text of the Plan of Arrangement which is attached as Appendix D to this
Circular. Upon the Arrangement becoming effective, the following transactions,
among others, will occur and will be deemed to occur in the order set out in the
Plan of Arrangement:
o Hummingbird will, if requested by Open Text, cause Lender Sub to
lend an aggregate amount of up to $58 million, plus any
additional amount that Open Text may reasonably request, to
Hummingbird and Acquisition Sub as follows:
o the aggregate amount required to be paid by Hummingbird in
respect of its acquisition of Options pursuant to the Plan
of Arrangement will, if required by Open Text, be lent to
Hummingbird; and
o the balance will be lent to Acquisition Sub;
o notwithstanding the terms of the Stock Option Plan, all Options
that are outstanding immediately prior to the Effective Time
shall be deemed to be conditionally vested and will be
transferred to Hummingbird in exchange for a cash payment from
or on behalf of Hummingbird equal to the amount
20
(if any) by which $27.85 exceeds the exercise price payable
under such Options (as converted into U.S. dollars pursuant to
the Plan of Arrangement); and
o each Common Share outstanding at the Effective Time and held by
a Shareholder shall be transferred to Acquisition Sub in
exchange for $27.85 in cash per Common Share.
Letter of Transmittal
If you are a Registered Shareholder, you should have received with this
Circular a Letter of Transmittal. If the Arrangement Resolution is passed and
the Arrangement is implemented, in order to receive the payment for your Common
Shares, Registered Shareholders must complete and sign the Letter of Transmittal
enclosed with this Circular and deliver it (or a manually executed facsimile
thereof) together with your certificates representing Common Shares and the
other relevant documents required by the instructions set out therein to the
Depositary in accordance with the instructions contained in the Letter of
Transmittal. You can request additional copies of the Letter of Transmittal by
contacting the Depositary. The Letter of Transmittal is also available as a
Hummingbird document at the SEDAR website at www.sedar.com.
The Letter of Transmittal contains procedural information relating to
the Arrangement and should be reviewed carefully. The deposit of Common Shares
pursuant to the procedures in the Letter of Transmittal will constitute a
binding agreement between the depositing Shareholder and Acquisition Sub upon
the terms and subject to the conditions of the Arrangement.
In all cases, payment for Common Shares deposited will be made only
after timely receipt by the Depositary of certificates representing Common
Shares, together with a properly completed and duly executed Letter of
Transmittal in the form accompanying this Circular, or a manually executed
facsimile thereof, relating to such Common Shares, with signatures guaranteed
if so required in accordance with the instructions in the Letter of
Transmittal, and any other required documents.
Where a certificate for Common Shares has been destroyed, lost or
stolen, the Registered Shareholder of that certificate should immediately
contact CIBC Mellon Trust Company at www.cibcmellon.com or P.O. Box 7010,
Adelaide Street Postal Station, Toronto, Ontario M5C 2W9. A replacement
certificate will be issued upon the Registered Shareholder satisfying the
requirements of the Transfer Agent and Hummingbird relating to replacement
Common Shares certificate(s).
Except as otherwise provided in the instructions to the Letter of
Transmittal, the signature on the Letter of Transmittal must be guaranteed by an
Eligible Institution. If a Letter of Transmittal is executed by a person other
than the registered holder of the certificate(s) deposited therewith, the
certificate(s) must be endorsed or be accompanied by an appropriate securities
transfer power of attorney duly and properly completed by the registered holder,
with the signature on the endorsement panel, or securities transfer power of
attorney guaranteed by an Eligible Institution.
All questions as to validity, form, eligibility (including timely
receipt) and acceptance of any Common Shares deposited pursuant to the
Arrangement will be determined by Acquisition Sub in its sole discretion.
Depositing Shareholders agree that such determination shall be final and
binding. Acquisition Sub reserves the absolute right to reject any and all
deposits which Acquisition Sub determines not to be in proper form or which may
be unlawful for it to accept under the laws of any jurisdiction. Acquisition Sub
reserves the absolute right to waive any defect or irregularity in the deposit
of any Shares. There shall be no duty or obligation on Acquisition Sub,
Hummingbird, the Depositary or any other person to give notice of any defect or
irregularity in any deposit of Common Shares and no liability shall be incurred
by any of them for failure to give such notice. Acquisition Sub's interpretation
of the terms and conditions of the Arrangement (including the Circular and the
Letter of Transmittal) shall be final and binding.
The method of delivery of certificates representing Common Shares and
all other required documents is at the option and risk of the person depositing
the same. Hummingbird recommends that such documents be delivered by hand to the
Depositary and a receipt obtained or, if mailed, that registered mail with
return receipt requested be used and that appropriate insurance be obtained.
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If you are a Non-Registered Shareholder, you should carefully follow
the instructions from the broker, investment dealer, bank or other intermediary
that holds Common Shares on your behalf in order to receive payment for your
Common Shares.
Delivery of Consideration
It is contemplated that as part of the completion of the Arrangement,
at or before the Effective Time Acquisition Sub will deliver payment for the
Common Shares to the Depositary (which payment will include any funds loaned to
Acquisition Sub by Lender Sub described below under "Sources of Funds for the
Arrangement -- Loans from Lender Sub") to be held in escrow for the benefit of
Shareholders and Hummingbird will deposit with the Depositary payment for the
Options (which payment will consist of the funds loaned to Hummingbird by
Lender Sub or Acquisition Sub described below under "Sources of Funds for the
Arrangement -- Loans from Lender Sub"). The cash deposited with the Depositary
shall be held in an interest bearing trust account, and any interest earned on
such funds shall be for the account of Acquisition Sub or Hummingbird, as
applicable. Under no circumstances will interest accrue or be paid to persons
depositing Common Shares on the purchase price for Common Shares purchased by
Acquisition Sub, regardless of any delay in making such payment.
The Depositary will act as the agent of persons who have deposited
Common Shares pursuant to the Arrangement for the purpose of receiving payment
from Acquisition Sub and transmitting payment from Acquisition Sub to such
persons, and receipt of payment by the Depositary will be deemed to constitute
receipt of payment by persons depositing Common Shares.
Upon surrender to the Depositary for cancellation of certificate(s)
which immediately prior to the Effective Time represented one or more Common
Shares, together with the Letter of Transmittal and such additional documents
and instruments duly executed and completed as the Depositary may reasonably
require, the Shareholder of such surrendered certificate(s) shall be entitled to
receive in exchange therefor, and the Depositary shall deliver to such
Shareholder as soon as practicable after the Effective Time by first-class
insured mail, postage prepaid, a cheque (except for payments exceeding the
equivalent of CAD$25 million, which will be made by wire transfer) representing
the cash which such Shareholder has the right to receive under the Arrangement,
less any amounts withheld pursuant to the Plan of Arrangement, and the
certificate so surrendered shall forthwith be cancelled. Until surrendered, each
certificate which immediately prior to the Effective Time represented Common
Shares shall be deemed after the Effective Time to represent only the right to
receive upon such surrender a cash payment in lieu of such certificate, less any
amounts withheld pursuant to the Plan of Arrangement.
Unless otherwise directed in the Letter of Transmittal, cheques will be
issued in the name of the registered holder of Common Shares so deposited.
Unless the person who deposits Common Shares instructs the Depositary to hold a
cheque for pick-up by checking the appropriate box in the Letter of Transmittal,
cheques will be forwarded by first-class insured mail to the address provided in
the Letter of Transmittal. If no address is provided, cheques will be forwarded
to the address of the person as shown on the applicable register of Hummingbird.
Notwithstanding the provisions of the Arrangement and the Letter of
Transmittal, cheques in payment of Common Shares deposited pursuant to the
Arrangement and certificates representing Common Shares to be returned will not
be mailed if Acquisition Sub determines that delivery thereof by mail may be
delayed. Persons entitled to cheques and other relevant documents which are not
mailed for the foregoing reason may take delivery thereof at the office of the
Depositary at which the deposited certificates representing Common Shares in
respect of which cheques are being issued were originally deposited upon
application to the Depositary, until such time as Acquisition Sub has determined
that delivery by mail will no longer be delayed. Cheques, certificates and other
relevant documents not mailed for the foregoing reason will be conclusively
deemed to have been delivered on the first day upon which they are available for
delivery at the office of the Depositary at which the Common Shares were
deposited and payment for those Common Shares shall be deemed to have been
immediately made upon such deposit.
On or as soon as practicable after the Effective Date, the Depositary
shall deliver on behalf of Hummingbird to each Optionholder as reflected on
Hummingbird's books and records a cheque (except for payments exceeding the
equivalent of CAD$25 million, which will be made by wire transfer) representing
the payment to which such holder is entitled in accordance with the Plan of
Arrangement (net of any applicable
22
withholdings), against receipt of such documentation as Open Text or
Hummingbird may reasonably require acknowledging the transfer and termination
of the Options held by such Optionholder.
Subject to any applicable escheat laws any payment made by way of
cheque by the Depositary on behalf of Acquisition Sub or Hummingbird that has
not been deposited or has been returned to the Depositary or that otherwise
remains unclaimed, in each case on or before the sixth anniversary of the
Effective Date, shall cease to represent a right or claim of any kind or nature
and the right of the Shareholder or Optionholder to receive the consideration
for Common Shares or Options, as the case may be, pursuant to the Plan of
Arrangement shall terminate and be deemed to be surrendered and forfeited to
Hummingbird for no consideration.
Hummingbird, Acquisition Sub, Open Text and the Depositary will be
entitled to deduct and withhold from any consideration otherwise payable to a
Shareholder or an Optionholder such amounts as Hummingbird, Acquisition Sub,
Open Text or the Depositary is required or permitted to deduct and withhold with
respect to such payment under applicable laws.
The Depositary will receive reasonable and customary compensation for
its services in connection with the Arrangement, will be reimbursed for certain
out of pocket expenses and will be indemnified by Hummingbird against certain
liabilities under applicable securities laws and expenses in connection
therewith.
Interests of Directors, Senior Management and Others in the Arrangement
In considering the recommendations of the Special Committee and the
Board with respect to the Arrangement, Shareholders should be aware that certain
members of Hummingbird's senior management and Board have certain interests in
connection with the Arrangement that may present them with actual or potential
conflicts of interest in connection with the Arrangement. The Special Committee
and the Board are aware of these interests and considered them along with other
matters described above.
The executive officers and directors of Hummingbird beneficially own,
directly or indirectly, or exercise control or direction over, in the aggregate,
2,141,630 Common Shares (excluding the Common Shares issuable upon the exercise
of the Options), representing approximately 12.16% of the Common Shares
outstanding as of the close of business on August 18, 2006. All of the Common
Shares held by the executive officers and directors of Hummingbird will be
treated in the same fashion under the Arrangement as Common Shares held by any
other Shareholder.
The executive officers and directors of Hummingbird beneficially own,
directly or indirectly, or exercise control or direction over, in the aggregate,
992,500 Options, representing approximately 80.92% of the Options outstanding as
of the close of business on August 18, 2006. All of the Options held by the
executive officers and directors of Hummingbird will be treated in the same
manner under the Arrangement as Options held by every other holder of Options.
The aggregate consideration payable to the executive officers and directors of
Hummingbird under the Arrangement in respect of their Options is approximately
$3.2 million (less applicable withholdings), assuming none of them exercises any
Options prior to the Effective Date.
Barry Litwin and Inder Duggal have written employment agreements with
Hummingbird that require Hummingbird to pay 30 months' salary, benefits and
bonus (based on the largest bonus in the preceding years) in the event of
termination of employment without cause or termination of employment following a
change of control of Hummingbird.
Mr. Crane, as Chairman of the Special Committee, will be paid a fee for
his services as such.
Following the announcement of the Open Text Tender Offer, the Board
determined that it would be in the best interests of Hummingbird and its
shareholders to ensure that the on-going operations of Hummingbird would not be
compromised by the loss of one or more key employees due to the uncertainty
created by a potential change of control of Hummingbird. After consultations
with Hummingbird's management and legal advisors, and based upon the
recommendation of the Special Committee, the Board agreed to offer retention
arrangements to certain key employees of Hummingbird as a means of ensuring that
their commitment to Hummingbird and job performance would not be adversely
affected by the potential that Hummingbird might be acquired by a direct
competitor. Hummingbird discussed the terms of the proposed retention
arrangements with Open Text in order to determine the
23
impact that the proposed arrangements would have on Open Text's willingness to
enter into a transaction with Hummingbird.
Pursuant to the terms of the proposed retention arrangements, each of
the key employees who agree to such arrangements would be entitled to a payment
based upon the employee's base salary if the employee is terminated or resigns
for "good reason" within 12 months of a change of control of Hummingbird that
occurs on or prior to December 31, 2006 (other than a change of control
involving the acquisition of Hummingbird by Symphony or, in the Board's
discretion, any other "financial" buyer). Certain executives have agreed to
accept these arrangements, but there can be no assurance that all of the
executives will do so.
Further information with respect to the compensation and the financial
holdings and interests of the Hummingbird's executive officers is contained in
Hummingbird's Director's Circular dated July 25, 2006 with respect to the Open
Text Tender Offer and Hummingbird's Management Information Circular dated
February 6, 2006 with respect to the annual meeting of shareholders held on
March 3, 2006, both of which are incorporated by reference into this Circular.
See "Additional Information" below.
Mr. Sorkin, Hummingbird's Chairman, and Mr. Litwin, Hummingbird's Chief
Executive Officer, collectively own approximately 12.15% of the outstanding
Common Shares as at August 18, 2006 and have entered into support agreements
with Open Text and Acquisition Sub pursuant to which, among other things, they
have agreed that they will vote their Common Shares in favour of the
Arrangement. See "The Arrangement -- Description of the Arrangement -- Support
Agreements".
Mr. Malik, a member of the Board, is employed as a Managing Director by
Lehman Brothers Inc., a financial advisor to Hummingbird.
Indemnification and Insurance
The Arrangement Agreement provides that Open Text will, or will cause
Acquisition Sub to, at Open Text's option, either (a) maintain in effect without
any reduction in scope or coverage for not less than six years from the
Effective Date, customary policies of directors' and officers' liability
insurance providing protection no less favourable to the protection provided by
the policies maintained by Hummingbird in favour of the directors and officers
of Hummingbird and each of its subsidiaries which are in effect immediately
prior to the Effective Date and providing protection in respect of claims
arising from facts or events which occurred prior to the Effective Time, or (b)
purchase as an extension of Hummingbird's current insurance policies, prepaid
non cancellable run-off directors' and officers' liability insurance providing
coverage comparable to that contained in Hummingbird's existing policy for six
years from the Effective Time with respect to claims arising from or related to
facts or events that occurred at or prior to the Effective Time.
Open Text has also agreed that all rights to indemnification or
exculpation existing in favour of the directors or officers of Hummingbird or
any subsidiary of Hummingbird as at the date of the Non-Disclosure Agreement, as
such term is defined in the Arrangement Agreement (the "Hummingbird D&O
Rights"), as provided in Hummingbird's articles or by-laws or as disclosed in
connection with the Arrangement Agreement shall survive the transactions
contemplated by the Arrangement Agreement and shall continue in full force and
effect for a period of not less than six years from the Effective Time. For a
period of six years from the Effective Date, Open Text will, or will cause
Acquisition Sub or Hummingbird to, perform the obligations of Hummingbird under
the Hummingbird D&O Rights.
Furthermore, in the event Hummingbird or any of its successors or
assigns (a) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (b) transfers all or substantially all of its properties and assets to
any person, then, and in such case, proper provision shall be made so that such
successors and assigns of Hummingbird or, at Open Text's option, Open Text,
shall assume the indemnity obligations set forth in the Arrangement Agreement.
Finally, Open Text has agreed that such obligations will survive the
Arrangement and will continue in full force and effect in accordance with their
terms.
24
Intentions of Hummingbird Directors and Executive Officers
All directors and executive officers of Hummingbird, who beneficially
own, directly or indirectly, or exercise control or direction over, in the
aggregate, 2,141,630 Common Shares as at August 18, 2006, representing
approximately 12.16% of the outstanding Common Shares, have indicated that they
intend to vote FOR the Arrangement Resolution.
Mr. Sorkin, Hummingbird's Chairman, and Mr. Litwin, Hummingbird's Chief
Executive Officer, have entered into support agreements with Open Text and
Acquisition Sub pursuant to which they have agreed that they will vote their
Common Shares in favour of the Arrangement. See "The Arrangement -- Description
of the Arrangement -- Support Agreements".
Sources of Funds for the Arrangement
Assuming no Shareholders exercise their Dissent Rights and no Options
are exercised between August 18, 2006 and the Effective Time, under the terms of
the Arrangement Agreement:
o approximately $491 million will be required to fund Acquisition
Sub's acquisition of all of the outstanding Common Shares; and
o approximately $3.6 million will be required to fund Hummingbird's
acquisition of all of the outstanding Options.
Loans from Lender Sub
Pursuant to the Arrangement Agreement, Hummingbird will, if requested
by Open Text, cause Lender Sub to lend an aggregate amount of up to $58 million,
plus any additional amount that Open Text may reasonably request, to Hummingbird
and Acquisition Sub as follows:
o the aggregate amount required to be paid by Hummingbird in
respect of its acquisition of Options pursuant to the Plan of
Arrangement will, if requested by Open Text, be lent to
Hummingbird; and
o the balance will be lent to Acquisition Sub.
If Open Text does not request Lender Sub to make the loans described
above, Open Text may instead cause Acquisition Sub to loan to Hummingbird the
aggregate amount required to be paid by Hummingbird in respect of its
acquisition of Options pursuant to the Plan of Arrangement.
Debt Financing
Open Text has obtained a commitment, under the Commitment Letter dated
August 3, 2006, from a Schedule I Canadian bank to provide $450 million in term
debt financing and borrowing availability under a $75 million revolving credit
facility for the Arrangement. This commitment is subject to conditions that
Hummingbird believes are customary for commercial lending transactions of this
kind. The commitment will expire on October 21, 2006 if the conditions precedent
to the initial extension of credit have not been satisfied by that date.
Equity Financing
Pursuant to the Arrangement Agreement, Open Text has represented to
Hummingbird that the loans, if any, from Lender Sub or Acquisition Sub and the
debt financing described above will, together with direct or indirect equity
investment by Open Text (or one of its affiliates), provide sufficient funds to
permit Acquisition Sub to pay for Acquisition Sub's acquisition of all of the
outstanding Common Shares pursuant to the Arrangement.
25
OTHER TERMS OF THE ARRANGEMENT AGREEMENT
The following description of certain material provisions of the
Arrangement Agreement is a summary only, is not comprehensive and is qualified
in its entirety by reference to the full text of the Arrangement Agreement, a
copy of which is attached as Appendix B to this Circular.
Conditions Precedent to the Arrangement
Mutual Conditions Precedent
The Arrangement Agreement provides that the obligations of the parties
to complete the transactions contemplated by the Arrangement Agreement are
subject to the fulfillment, on or before the Effective Time, of each of the
following conditions precedent, each of which may only be waived by the mutual
consent of Open Text and Hummingbird: (a) the Arrangement Resolution shall have
been approved, adopted and authorized at the Meeting in accordance with the CBCA
and the Interim Order; (b) the Interim Order and the Final Order shall each have
been obtained in form and substance reasonably satisfactory to each of Open Text
and Hummingbird and shall not have been set aside or modified in a manner that
is reasonably unacceptable to such parties, acting reasonably, on appeal or
otherwise; (c) no Governmental Entity shall have enacted, issued, promulgated,
enforced or entered any Law which is then in effect and has the effect of making
the Arrangement illegal or otherwise preventing or prohibiting consummation of
the Arrangement; (d) all Regulatory Approvals (other than those relating to any
and all safe-income tuck-in transactions, being those transactions described
under "Holding Company Alternative") shall have been obtained or concluded; and
(e) there shall not be pending or overtly threatened by or before any
Governmental Entity any proceeding seeking an injunction, judgment, decree or
other order to prevent or challenge the consummation of the Arrangement or any
other transactions contemplated by the Arrangement Agreement.
Additional Conditions Precedent to the Obligations of Open Text
The Arrangement Agreement provides that the obligations of Open Text
to complete the transactions contemplated by the Arrangement Agreement are also
subject to the fulfillment of certain additional conditions precedent, each of
which is for Open Text's exclusive benefit and may be waived by Open Text,
including: (a) disregarding any Material Adverse Effect or materiality
qualifiers therein, all representations and warranties of Hummingbird set forth
in the Arrangement Agreement shall be true and correct in all respects on the
date of the Arrangement Agreement and as of the Effective Date as if made on
and as of such date or, in the case of representations and warranties which
speak solely as of an earlier date, as of such earlier date in either case
except (other than in the case of certain specified representations and
warranties) to the extent that the failure of such representations and
warranties to be so true and correct would not have, individually or in the
aggregate, a Material Adverse Effect on Hummingbird; (b) all covenants of
Hummingbird under the Arrangement Agreement to be performed on or before the
Effective Time shall have been duly performed by Hummingbird in all material
respects, or in all respects, in certain cases; (c) Dissent Rights shall not
have been exercised and remain outstanding at the Effective Time with respect
to more than 10% of the outstanding Common Shares in connection with the
Arrangement; (d) the satisfaction, in accordance with the terms of the
Commitment Letter, of certain of the conditions precedent set forth therein;
(e) Hummingbird shall have paid not more than EUR13,500,000 to the selling
shareholders under the acquisition agreement pursuant to which Hummingbird
acquired on June 21, 2005 RedDot Solutions AG in full and final satisfaction of
all amounts owing to such selling shareholders under the provisions providing
for contingent payments by Hummingbird based on the financial performance of
RedDot Solutions AG for its fiscal year ended December 31, 2005; (f) all safe
income tuck in transactions shall have been completed in a manner satisfactory
to Open Text; and (g) all regulatory approvals relating to any and all safe
income tuck in transactions shall have been obtained or concluded.
Additional Conditions Precedent to the Obligations of Hummingbird
The obligations of Hummingbird to complete the transactions
contemplated by the Arrangement Agreement are also subject to certain additional
conditions precedent, each of which is for the exclusive benefit of Hummingbird
and may be waived by Hummingbird, including: (a) the representations and
warranties of Open Text set forth in the Arrangement Agreement that are
qualified by materiality shall be true and correct on the date of the
Arrangement Agreement in all respects and those that are not so qualified shall
be true and correct in all material respects, in each case and as of the
Effective Time as if made on and as of such time (except for representations and
26
warranties which speak solely as of an earlier date, the accuracy of which shall
be determined as of such earlier date); (b) all covenants of Open Text under the
Arrangement Agreement to be performed on or before the Effective Time shall have
been duly performed by Open Text in all material respects; (c) the board of
directors of Open Text and Acquisition Sub shall have adopted all necessary
resolutions and all other necessary corporation actions shall have been taken by
each of Open Text and Acquisition Sub to permit the consummation of the
Transactions; and (d) Open Text or Acquisition Sub shall have deposited with the
Depositary in escrow the funds required to effect payment in full for all of the
Common Shares to be acquired pursuant to the Arrangement.
Representations and Warranties
The Arrangement Agreement contains customary representations and
warranties on the part of Hummingbird relating to, among other things: board
approval; organization and qualification; authority relative to the Arrangement
Agreement; no violations; capitalization; opinion of financial advisor;
reporting status and securities law matters; ownership of subsidiaries; reports;
litigation; taxes; absence of undisclosed liabilities; no material adverse
effect; environmental; owned real property; leased real property; material
contracts; permits; pension and employee benefits; employment agreements and
collective agreements; compliance with laws; intellectual property; insurance;
corrupt practices legislation; brokers and advisors; Investment Canada Act; no
"collateral benefit"; books and records; restrictions on business activities;
disclosure/internal controls; cash; financial institution; and stock option plan
matters.
The Arrangement Agreement also contains representations and warranties
of Open Text and Acquisition Sub relating to certain customary matters relating
to, among other things: organization and qualification; authority relative to
the Arrangement Agreement; no violations; commitment letters; and litigation.
Conduct of Hummingbird's Business
In the Arrangement Agreement, Hummingbird agreed that, until the
earlier of the Effective Date and the termination of the Arrangement Agreement,
Hummingbird will, and will cause each of its subsidiaries to, conduct its
business in, and not take any action except in, the ordinary course of business
and consistent with past practice, to use its commercially reasonable efforts
to preserve, among other things, the assets and goodwill of such entities and
not to undertake certain types of restricted activities unless Open Text
otherwise agrees in writing.
Covenants
In the Arrangement Agreement each of Hummingbird and Open Text agreed
to, and to cause its subsidiaries to, perform all obligations required or
desirable to be performed by it or any of its subsidiaries under the Arrangement
Agreement in order to consummate and make effective, as soon as reasonably
practicable, the Arrangement and to co-operate with each other in connection
therewith. In furtherance of these covenants, each of Hummingbird and Open Text
agreed to and where appropriate agreed to cause its subsidiaries to take a
number of specific actions relating to the implementation of the Arrangement.
In addition, Hummingbird has covenanted that it will use its
commercially reasonable efforts to ensure that, immediately prior to the
Effective Time, Lender Sub will, if Open Text requests loans from Lender Sub in
connection with the completion of the Arrangement, have at least $58 million,
plus any additional amount that Open Text may reasonably request, in cash which
amount will be lent to Acquisition Sub and Hummingbird as part of the Plan of
Arrangement as described under "Sources of Funds for the Arrangement -- Loans
from Lender Sub". None of the funds so lent to Acquisition Sub may come from
Hummingbird or any of its subsidiaries organized or incorporated under the laws
of Canada or any jurisdiction in Canada. Hummingbird has also covenanted that
following payment by Hummingbird and Acquisition Sub for the Options and Common
Shares acquired under the Arrangement, it will have consolidated cash in an
amount that is not less than the sum of:
o Hummingbird's then current bona fide estimate of its unpaid fees,
costs and expenses in connection with the Symphony Arrangement
Agreement, the Open Text Tender Offer and Arrangement; plus
o Hummingbird's then current bona fide estimate of the unpaid
amounts payable to the selling shareholders under the acquisition
agreement pursuant to which Hummingbird acquired RedDot Solutions
AG; plus
27
o $22 million, less the amount of the termination payment paid to
Symphony Affiliates; plus
o if Hummingbird's consolidated accounts payable is greater than
$13.5 million, the amount of such difference.
Hummingbird also agreed in the Arrangement Agreement to effect such
reorganization of its business, operations and assets or such other transactions
(each, a "Pre-Acquisition Reorganization") as Open Text may request, acting
reasonably, prior to the Effective Date, and the Plan of Arrangement, if
required, shall be modified accordingly; provided, however, that Hummingbird
need not effect a Pre-Acquisition Reorganization which would prejudice it or
Shareholders or would impede or materially delay completion of the Arrangement.
Pursuant to the Arrangement Agreement, Open Text shall also be
entitled, at any time prior to the Meeting, to propose modifications to the
Arrangement to: (a) increase the consideration it or Acquisition Sub is
prepared to make available to Shareholders pursuant to the Arrangement, whether
or not the Board has changed its recommendation, provided that Open Text shall
use its commercially reasonable efforts to provide not less than one business
day's prior written notice of such proposal to Hummingbird; or (b) modify the
terms of the Arrangement to achieve tax planning objectives of Open Text and
Acquisition Sub or any affiliate of Open Text, including to provide for one or
more amalgamations of subsidiaries of Open Text and/or Hummingbird, which, in
the opinion of Hummingbird, acting reasonably, (i) would not prejudice it or
Shareholders, or (ii) would not impede or materially delay the completion of
the transactions contemplated by the Arrangement Agreement provided that Open
Text or Acquisition Sub has provided notice of such modification to Hummingbird
not less than 15 business days prior to the Meeting date.
Covenants of Hummingbird Regarding Non-Solicitation
The Arrangement Agreement contains certain "non-solicitation"
provisions pursuant to which Hummingbird has agreed that it will not, directly
or indirectly, through any officer, director, employee, representative or agent
of Hummingbird or any of its subsidiaries:
o solicit, initiate, facilitate or encourage (including by way of
furnishing information or entering into any form of agreement,
arrangement or understanding, but excluding compliance by
Hummingbird with its continuous reporting obligations under
applicable securities Laws in the ordinary course consistent with
past practice) any inquiries or proposals regarding, constituting
or that would reasonably be expected to lead to, an Acquisition
Proposal;
o participate in any discussions or negotiations regarding an
Acquisition Proposal;
o withdraw or modify, or propose publicly to withdraw or modify, in
a manner adverse to Open Text, the approval of the Board of the
Plan of Arrangement;
o approve or recommend, or propose publicly to approve or
recommend, any Acquisition Proposal; or
o accept or enter into, or propose publicly to accept or enter
into, any agreement, understanding or arrangement in respect of
an Acquisition Proposal.
The Arrangement Agreement provides that, notwithstanding the foregoing
restrictions, the Board is not prevented from taking any of the actions
described above in respect of an unsolicited bona fide written Acquisition
Proposal received after the date of the Arrangement Agreement that:
o did not result from a breach of any agreement between the person
making such Acquisition Proposal and Hummingbird or any of its
subsidiaries, or the provisions of the Arrangement Agreement
governing Hummingbird's non-solicitation covenants;
o involves not less than 66 2/3 percent of the outstanding Common
Shares or not less than 66 2/3 percent of the consolidated assets
(measured on a fair value) of Hummingbird; and
28
o in respect of which the Board determines in its good faith
judgment pursuant to the exercise of its fiduciary duties under
applicable Laws, after consultation with its financial advisors
and its outside counsel, that there is a substantial likelihood
that any required financing will be obtained and that the
Acquisition Proposal would, if consummated in accordance with its
terms (but not assuming away any risk of non-completion), result
in a transaction that: (i) is reasonably capable of completion in
accordance with its terms without significant additional delay,
taking into account all legal, financial, regulatory, financing
and other aspects of such Acquisition Proposal and the person
making such Acquisition Proposal; and (ii) is more favourable
from a financial point of view to Shareholders than under the
Plan of Arrangement on a cash-equivalent basis taking into
account any approval requirements and all other financial, legal,
regulatory and other aspects of such proposal (including any
proposal made by Open Text or Acquisition Sub in response to such
Acquisition Proposal or otherwise),
any such Acquisition Proposal being referred to in the Arrangement Agreement as
a "Superior Proposal".
Hummingbird was also required, as of the date of the Arrangement
Agreement, to immediately terminate any existing discussions or negotiations
with any parties (other than Open Text) with respect to any proposal that
constitutes, or may reasonably be expected to constitute, an Acquisition
Proposal. Hummingbird has agreed not to release any third party from (a) any
confidentiality agreement or (b) any standstill agreement or provision in each
case to which such third party is a party unless such third party has made a
Superior Proposal and Hummingbird has accepted such Superior Proposal.
If Hummingbird receives a request for material non-public information
from a Person who proposes an unsolicited bona fide Acquisition Proposal,
Hummingbird may request clarifications in writing from such Person solely for
purposes of valuing, and solely in respect of, any non-cash consideration that
is offered under such Acquisition Proposal, provided that such clarifications
are reasonably necessary as part of the efforts of the Board to ascertain
whether such Acquisition Proposal is, or is reasonably likely to be, if
consummated in accordance with its terms, a Superior Proposal.
If Hummingbird receives a request for material non-public information
from a person who proposes an unsolicited bona fide Acquisition Proposal and the
Board of Directors of Hummingbird determines that such proposal would reasonably
likely be, if consummated in accordance with its terms, a Superior Proposal,
then, and only in such case, the Board of Directors of Hummingbird may, subject
to the execution by such person of a confidentiality agreement having
substantially the same terms as the Non-Disclosure Agreement, provide such
person with access in accordance with the requirements set forth above to such
information regarding Hummingbird, acting reasonably, provided however that the
person making the Acquisition Proposal shall not be precluded thereunder from
making the Acquisition Proposal, and provided further that Hummingbird sends
immediately a copy of any such confidentiality agreement to Open Text upon its
execution and Open Text is immediately provided with a list and copies of all
information provided to such person not previously provided to Open Text and is
immediately provided with access to information similar to that which was
provided to such person.
Hummingbird has agreed to immediately notify Open Text of, at first
orally and then, within 24 hours, in writing, any Acquisition Proposal or
inquiry that would reasonably be expected to lead to an Acquisition Proposal, of
which any of its directors or officers become aware, or any amendments to the
foregoing, or any request for non-public information relating to Hummingbird or
any of its subsidiaries in connection with an Acquisition Proposal or for access
to the properties, books or records of Hummingbird or any of its subsidiaries by
any person that informs Hummingbird or such subsidiary that it is considering
making, or has made, an Acquisition Proposal and any amendment thereto.
Hummingbird has agreed to keep Open Text promptly and reasonably informed from
time to time of the status, including any change to the material terms of any
such Acquisition Proposal or inquiry. Such notice shall include or be
accompanied by a copy of all documentation relating to any Acquisition Proposal
and any amendment thereto and a description of all material terms of any oral or
other communications related to any Acquisition Proposal, including the identity
of the person making such Acquisition Proposal and such other details as Open
Text may reasonably request.
Hummingbird has agreed that it shall ensure that its officers and
directors and those of its subsidiaries and any financial or other advisors,
agents or representatives retained by it are aware of the non-solicitation
provisions of
29
the Arrangement Agreement, and Hummingbird shall be responsible
for any breach of such provisions by any such Person or its advisors or
representatives.
Acceptance of a Superior Proposal
Hummingbird is not permitted to accept, approve or recommend, nor enter
into any agreement relating to, a Superior Proposal (other than a
confidentiality agreement contemplated by the Arrangement Agreement) unless:
o Hummingbird has complied fully with, among other provisions, the
non-solicitation restrictions in the Arrangement Agreement
described above;
o a period of five business days shall have elapsed from the date
on which Open Text received both a copy of the Superior Proposal
together with written notice from the Board that the Board
determined, subject only to compliance with the Arrangement
Agreement, to accept, approve, recommend or enter into a binding
agreement to proceed with the Superior Proposal;
o it provides Open Text with an opportunity (within five business
days) to propose to amend the terms of the Arrangement, as
described below; and
o it pays to Open Text the Termination Payment as described below
under "-- Termination Payment".
Right to Match
During the five-business day period referred to above, Open Text shall
have the right, but not the obligation, to offer to amend the terms of the
Transactions. The Board will review any such proposal by Open Text to amend the
terms of the Transactions, including an increase in, or modification of, the
consideration to be received by the holders of Common Shares, to determine
whether the Acquisition Proposal to which Open Text is responding would be a
Superior Proposal when assessed against the Transactions as it is proposed by
Open Text to be amended. If the Board does not so determine, the Board will
promptly reaffirm its recommendation of the Transactions as amended and
Hummingbird will not implement the proposed Superior Proposal.
Termination
Hummingbird and Open Text may agree in writing to terminate the
Arrangement Agreement and abandon the Arrangement at any time prior to the
Effective Date, even after Shareholders have passed the Arrangement Resolution
at the Meeting. The Arrangement Agreement may also be terminated and the
Arrangement may be abandoned at any time prior to the Effective Time:
(a) by Open Text if there shall have occurred up to and including
the Effective Date, a Material Adverse Effect in respect of
Hummingbird;
(b) by Open Text or by Hummingbird, if any Law makes the completion
of the Transactions illegal or otherwise prohibited;
(c) subject to applicable cure periods, by Open Text, if there has
been a breach of or failure to perform any representation,
warranty, covenant or agreement on the part of Hummingbird set
forth in the Arrangement Agreement or any such representation
and warranty shall have become untrue after the date of the
Agreement, such that the closing conditions in Open Text's
favour relating to the accuracy of Hummingbird's representations
and warranties or the performance by Hummingbird of its
covenants would not be satisfied;
(d) subject to applicable cure periods, by Hummingbird, if there has
been a breach of or failure to perform any representation,
warranty, covenant or agreement on the part of Open Text set
forth in the Arrangement Agreement or any such representation
and warranty shall have become untrue after the date of the
Arrangement Agreement, such that the closing conditions in
Hummingbird's favour relating to the accuracy of Open Text's
representations and warranties or the performance by Hummingbird
of its covenants would not be satisfied;
30
(e) by Open Text, if the Board shall have: (i) withdrawn, withheld,
qualified or modified in a manner adverse to Open Text its
recommendation of the Arrangement Agreement (it being understood
that the taking of a neutral position or no position with respect
to an Acquisition Proposal shall be considered an adverse
modification), (ii) after being requested by Open Text in
writing, failed to reaffirm its recommendation of the Arrangement
as promptly as practicable (but in any event within two business
days) after receipt of any written request to do so from Open
Text or (iii) approved or recommended an Acquisition Proposal or
entered into a binding written agreement in respect of an
Acquisition Proposal (other than a confidentiality agreement
permitted by the Arrangement Agreement);
(f) by Hummingbird, in order to enter into a binding written
agreement with respect to a Superior Proposal (subject to
certain exceptions), subject to compliance with the
non-solicitation and right to match provisions of the
Arrangement Agreement and provided that no such termination
shall be effective unless and until Hummingbird shall have paid
the Termination Payment to Open Text;
(g) by Open Text or by Hummingbird, if the Effective Time shall not
have occurred on or before the Outside Date; provided, that such
right to terminate shall not be available to any party that has
breached in any material respect its obligations under the
Arrangement Agreement in any manner that shall have proximately
contributed to the occurrence of the failure of the Effective
Time to occur on or before such date; or
(h) by Open Text, if the Arrangement Resolution shall have failed to
receive the requisite approval of at least two-thirds of the
votes cast at the Meeting or at any adjournment or postponement
thereof in accordance with the CBCA.
Termination Payment
Hummingbird must make a Termination Payment of $12,356,544 (less any
amounts paid in accordance with the provisions described under "-- Expense
Reimbursement" below) to Open Text, if:
o the Arrangement Agreement is terminated in the circumstances set
out in paragraphs (e) or (f) under "-- Termination" above;
o (A) the Arrangement Agreement is terminated in the circumstances
set out in: (1) paragraphs (g) or (h) under "-- Termination"
above and the Arrangement has failed to receive the requisite
approval of the Shareholders in accordance with applicable Law;
or (2) paragraph (c) under "-- Termination" above, provided that
in the case of a breach of a representation or warranty such
breach was made knowingly by Hummingbird; (B) an Acquisition
Proposal has been negotiated or discussed with Hummingbird
(directly or indirectly through any officer, director, employee,
representative or agent of Hummingbird or any of its
subsidiaries), made or publicly announced or an inquiry to
Hummingbird (directly or indirectly through any officer,
director, employee, representative or agent of Hummingbird or
any of its subsidiaries) concerning an Acquisition Proposal has
been made, in each case prior to the termination of the
Arrangement Agreement; and (C)(1) an agreement or a letter of
intent in respect of any Acquisition Proposal has been entered
into by Hummingbird on or before the first anniversary of the
termination of this Agreement and such Acquisition Proposal has
been completed; or (2) any Acquisition Proposal, in respect of
which Hummingbird has not entered into an agreement or a letter
of intent, has been completed on or before the first anniversary
of the termination of this Agreement; or
o Hummingbird has breached its obligations under non-solicitation
and right to match provisions of the Arrangement Agreement.
Expense Reimbursement
Hummingbird must reimburse Open Text within 5 days following Open
Text's request for all of the charges and expenses incurred by Open Text and
Acquisition Sub in connection with the Arrangement Agreement, the Transactions
and the financing thereof if the Arrangement Agreement is terminated:
o in the circumstances set out in paragraphs (a) or (c) under "--
Termination" above; or
31
o in the circumstances set out in paragraphs (g) or (h) under "--
Termination" above and the Arrangement has failed to receive the
requisite approval of the Shareholders in accordance with
applicable Law.
The maximum amount that Hummingbird will be required to pay to Open
Text as expense reimbursement will be $2 million (which maximum amount will be
reduced to $1 million if the Arrangement Agreement has been terminated in the
circumstances set out in paragraph (h) under "Termination" above where the
Shareholders have voted on the Arrangement Resolution at the Meeting but the
Arrangement Resolution failed to receive the requisite approval of at least
two-thirds of the votes cast at the Meeting). No expense reimbursement will be
payable in circumstances where Open Text has already received a Termination
Payment.
HOLDING COMPANY ALTERNATIVE
If you hold Common Shares directly or indirectly through one or more
federal Canadian holding companies incorporated after June 19, 2006, you will
have the option of completing a corporate reorganization with Hummingbird after
the Meeting but prior to the Effective Time of the Arrangement. Under this
"holding company alternative," Hummingbird will purchase all of the issued and
outstanding shares of your Canadian holding company in exchange for the issuance
by Hummingbird of the same number of Common Shares as are held by your holding
company at the time of the purchase and sale. If you participate in the holding
company alternative, you will receive, directly or indirectly, the same
consideration under the Arrangement that you would otherwise have received. Your
holding company will become a wholly owned subsidiary of Hummingbird under the
holding company alternative. Hummingbird has agreed to commence the voluntary
liquidation or dissolution of all those holding companies under the CBCA and to
cancel all the Common Shares held by such holding companies prior to the
Effective Time of the Arrangement.
Choosing the holding company alternative will require you to implement
a complex corporate structure through which to hold Common Shares. The holding
company alternative may have favourable Canadian federal income tax consequences
for you that are not described in this document. If you wish to avail yourself
of the holding company alternative, you should consult your own financial, tax
and legal advisors.
In order to participate in the holding company alternative, all of the
following terms and conditions must be satisfied:
o you advise Hummingbird c/o Hummingbird's Corporate Secretary at
1 Sparks Avenue, Toronto, Ontario M2H 2W1, not later than 5:00
p.m. (Toronto time) on September 18, 2006, in writing, that you
wish to participate in the holding company alternative;
o you hold or will hold Common Shares indirectly through a holding
company that was incorporated under the CBCA after June 19, 2006
and was used solely in relation to the holding company
alternative, has at all times since its incorporation been
validly in existence and in good standing under the CBCA, and is
a resident of Canada and a "taxable Canadian corporation" for
the purposes of the Tax Act;
o you and your holding company enter into a holding company
participation agreement, as described below, with, among others,
Hummingbird, substantially in the form of agreement attached as
Appendix C to the Arrangement Agreement, as amended;
o you provide Hummingbird and Open Text with security satisfactory
to Hummingbird and Open Text in respect of your obligations
under the holding company participation agreement;
o your holding company has not declared or paid any dividends
(except through one or more increases to the stated capital
account maintained in respect of its common shares as
contemplated by Schedule A of the holding company participation
agreement) or made any distributions or redemptions;
o the holding company participation agreement, together with any
accompanying required documentation is completed, executed and
returned to Hummingbird's Corporate Secretary at 1 Sparks
Avenue, Toronto, Ontario M2H 2W1 not later than 5:00 p.m.
(Toronto time) on September 18, 2006
32
or, if the Meeting is adjourned or postponed, on the day which
is five business days immediately preceding the Effective Date;
o any exemptions requested from any applicable Canadian securities
regulatory authority and the court in the interim order are
obtained; and
o all other terms and conditions of the holding company
alternative are satisfactory to Hummingbird and Open Text,
acting reasonably.
Hummingbird will be applying for orders from the applicable Canadian
securities regulatory authorities exempting Hummingbird from the issuer bid
requirements of the Canadian provincial securities legislation in connection
with the holding company alternative.
You must prepare, at your expense, all tax returns of the holding
company in respect of all periods ending on or prior to the completion of the
holding company alternative, and must not file the returns without the prior
approval of Hummingbird and Open Text of all the returns as to form and
substance.
You must also deliver to Hummingbird and Open Text no later than
September 18, 2006 all draft documentation relating to your proposed holding
company alternative, and all reasonable comments of Hummingbird and Open Text
shall be reflected in the final documentation executed in respect of the holding
company alternative.
The form of the holding company participation agreement referred to
above provides for the purchase by Hummingbird of all of the holding company's
issued and outstanding shares in exchange for the issuance by Hummingbird of
the same number of Common Shares as are held by the holding company at the time
of the purchase and sale. This agreement contains representations and
warranties, covenants and conditions that are customary for transactions of
this nature, including representations and warranties that you must make in
respect of your holding company to the effect that:
o the holding company is a corporation duly incorporated
subsequent to June 19, 2006 and validly existing and in good
standing under the CBCA;
o all of the issued and outstanding shares of the holding company
are held directly or indirectly by you;
o upon completion of the holding company alternative, Hummingbird
will acquire the sole legal and beneficial ownership of all of
the issued and outstanding shares of the holding company;
o the holding company has no material assets other than the Common
Shares and has no liabilities whatsoever;
o since incorporation, the sole activities of the holding company
have been the acquisition and ownership of the Common Shares and
other matters expressly contemplated by the holding company
participation agreement;
o the holding company is not a party to nor bound or affected by
any agreements, commitments or undertakings of any nature
whatsoever other than the holding company participation
agreement and except as agreed to by Hummingbird and Open Text;
o in respect of tax matters, the holding company:
o has duly and timely paid all taxes which are or have been
due and payable by it;
o has duly and timely filed with the appropriate taxing or
other governmental authority all tax returns required to be
filed by it;
o is a "taxable Canadian corporation" for purposes of the
Tax Act; and
33
o there are no suits, actions, litigation, or other proceedings in
progress, pending or threatened against or relating to the
holding company.
The form of holding company participation agreement also provides for:
o the payment by you of all costs and expenses incurred by any of
Hummingbird, Open Text, Acquisition Sub or the holding company
in connection with any transaction entered into under the
holding company participation agreement;
o an indemnity in favour of Hummingbird, Open Text, Acquisition
Sub and the holding company (and their respective directors and
officers, employees, advisors and agents) from all actions,
claims, demands, processes, proceedings, losses, damages,
liabilities, deficiencies, taxes, costs and expenses suffered or
incurred by Hummingbird, Open Text, Acquisition Sub and the
holding company (and their respective directors and officers,
employees, advisors and agents), in connection with the holding
company alternative as a result of:
o any breach by you or the vendors of any representation,
warranty, obligation or covenant of you or the vendors to
Hummingbird;
o any liability sustained, incurred, assumed or acquired by
the holding company on or before the completion of the
holding company alternative; or
o the holding company participation agreement and the
transactions contemplated thereby, including the
winding-up of the holding company into Hummingbird prior
to the Effective Time; and
o a release of Hummingbird, Open Text, Acquisition Sub (and their
respective successors, assigns, Open Text companies,
subsidiaries, affiliated companies, and all of the present and
former directors, officers, employees, advisors and agents of
these entities) from all liabilities suffered or incurred as a
result of or with respect to or in any way connected with the
transactions contemplated by the holding company participation
agreement.
RATIFICATION OF STOCK OPTION GRANTS
Hummingbird's Stock Option Plan expired in accordance with its terms on
February 6, 2006. On March 3, 2006, in accordance with Hummingbird's usual
practice, Hummingbird granted Options to acquire 50,000 Common Shares to each of
Hadley C. Ford, John B. Wade III and John A. MacDonald in connection with their
election to the Board. These Options have an exercise price of CDN$26.20, expire
on March 3, 2012 and otherwise have the same terms and conditions as Options
granted under the Stock Option Plan. Because these Options were not granted
pursuant to the Stock Option Plan, TSX rules require that Hummingbird
shareholders ratify these Option grants. At the Meeting, Shareholders (excluding
Hadley C. Ford, John B. Wade III and John A. MacDonald, if applicable) will be
asked to consider, and if deemed advisable, to pass, with or without variation,
an ordinary resolution ratifying the issuance of these Options. If Shareholders
do not pass such ordinary resolution, the Option grants will be rescinded, but
in these circumstances the Arrangement Agreement provides that, if the
Arrangement is completed, Hummingbird will pay to each of Hadley C. Ford, John
B. Wade III and John A. MacDonald an amount equal to the amount each of them
would have received in respect of the Options under the terms of the Plan of
Arrangement had the Options been outstanding at the Effective Time.
PRINCIPAL LEGAL MATTERS
Court Approval of the Arrangement and Completion of the Arrangement
An arrangement under the CBCA requires Court approval. Prior to the
mailing of this Circular, Hummingbird obtained the Interim Order, which provides
for the calling and holding of the Meeting, the Dissent Rights and other
procedural matters. A copy of the Interim Order is attached as Appendix E to
this Circular.
Subject to approval of the Arrangement Resolution by Shareholders at
the Meeting, the hearing in respect of the Final Order is currently scheduled to
take place on September 22, 2006 at 10:00 a.m. (Toronto time) in the
34
Court at 393 University Avenue, Toronto, Ontario. Any Shareholder or other
person who wishes to appear, or to be represented, and to present evidence or
arguments must serve and file a notice of appearance (a "Notice of Appearance")
as set out in the Notice of Application for the Final Order and satisfy any
other requirements of the Court. The Court will consider, among other things,
the fairness and reasonableness of the Arrangement. The Court may approve the
Arrangement in any manner the Court may direct, subject to compliance with any
terms and conditions, if any, as the Court deems fit. In the event that the
hearing is postponed, adjourned or rescheduled then, subject to further order
of the Court, only those persons having previously served a Notice of
Appearance in compliance with the Notice of Application and the Interim Order
will be given notice of the postponement, adjournment or rescheduled date. A
copy of the Notice of Application for the Final Order is attached as Appendix F
to this Circular.
Assuming the Final Order is granted and the other conditions to closing
contained in the Arrangement Agreement are satisfied or waived to the extent
legally permissible, then Articles of Arrangement will be filed with the
Director to give effect to the Arrangement.
Regulatory Matters
The Arrangement is conditional upon the receipt of certain regulatory
approvals or decisions, including under the Competition Act and the HSR Act
(described below).
Competition Act
The Competition Act (Canada) requires that parties to certain merger
transactions that exceed specified size thresholds provide to the Commissioner
of Competition (the "Commissioner") appointed under the Competition Act prior
notice of, and information relating to, the merger transaction. Notification
must be made either on the basis of a short-form filing (in respect of which
there is a 14-day statutory waiting period from the time a complete notification
is made) or a long-form filing (in respect of which there is a 42-day waiting
period from the time a complete notification is made).
As an alternative to filing a notification, parties may request an
advance ruling certificate, which if issued, exempts the proposed transaction
from notification. Under Section 113(c) of the Competition Act, the Commissioner
may also waive the obligation to notify where substantially similar information
was previously provided pursuant to a request for an advance ruling certificate.
The Commissioner's review of a proposed transaction may take longer
than the statutory waiting period. Upon completion of the Commissioner's review,
the Commissioner may decide to (i) challenge the proposed transaction, if the
Commissioner concludes that it is likely to substantially lessen or prevent
competition, (ii) issue a "no action" letter stating that the Commissioner does
not intend to challenge the proposed transaction at that time but retains the
authority to do so for three years after completion of the proposed transaction,
or (iii) issue an advance ruling certificate. Where an advance ruling
certificate is issued and the proposed transaction to which the advance ruling
certificate relates is substantially completed within one year after the advance
ruling certificate is issued, the Commissioner cannot seek an order of the
Competition Tribunal in respect of the proposed transaction solely on the basis
of information that is the same or substantially the same as the information on
the basis on which the advance ruling certificate was issued. On August 8, 2006,
the Commissioner issued an advance ruling certificate with respect to the
Arrangement. This satisfies the regulatory condition relating to the Competition
Act.
HSR Act
Under the HSR Act, certain acquisition or merger transactions may not
be consummated until a Pre-Merger Notification and Report Form is filed (an "HSR
Filing") with the Antitrust Division of the United States Department of Justice
(the "Antitrust Division") and the United States Federal Trade Commission (the
"FTC") and the applicable waiting period has expired or been terminated. On July
20, 2006, Hummingbird made an HSR Filing in connection with the Open Text Tender
Offer. On July 10, 2006, Open Text made an HSR Filing in connection with the
Open Text Tender Offer. On July 25, 2006, the waiting period expired without
comment from the Antitrust Division or the FTC. Under the HSR Act and applicable
regulations, no additional HSR Filing is required in connection with the
Arrangement provided that the Arrangement is consummated on or before July 25,
2007.
35
In addition to the authority vested in the FTC and Antitrust Division
under the HSR Act, the U.S. government may scrutinize the legality under federal
antitrust law of transactions such as the proposed acquisition of Common Shares
by Open Text pursuant to the Arrangement. At any time before or after the
purchase by Open Text of Common Shares pursuant to the Arrangement, the FTC or
the Antitrust Division may take such action under United States antitrust laws
as it deems necessary or desirable in the public interest, including seeking to
enjoin the purchase of Common Shares pursuant to the Arrangement or seeking the
divestiture of Common Shares purchased by Open Text or the divestiture of
substantial assets of Open Text, its subsidiaries or Hummingbird. Private
parties (including individual States) also may seek to take legal action under
United States and/or state antitrust laws under certain circumstances.
Based upon an examination of publicly available information and the
results of its due diligence of the businesses in which Hummingbird and its
subsidiaries are engaged, Open Text believes that the Arrangement will not
violate U.S. antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Arrangement will not be made or, if such a challenge is made,
that the outcome will be favourable to Hummingbird or Open Text.
Stock Exchange De-Listing and Reporting Issuer Status
The Common Shares are expected to be de-listed from the TSX and NASDAQ
on or following the Effective Date. Hummingbird will also seek to be deemed to
have ceased to be a reporting issuer under the securities legislation of each of
the provinces in Canada under which it is currently a reporting issuer (or
equivalent) and will terminate the registration of its Common Shares under the
United States Securities Exchange Act of 1934, as amended.
DISSENTING HOLDERS' RIGHTS
Section 190 of the CBCA provides registered shareholders of a
corporation with the right to dissent from certain resolutions that effect
extraordinary corporate transactions or fundamental corporate changes. The
Interim Order expressly provides Registered Shareholders with the right
to dissent from the Arrangement Resolution pursuant to Section 190 of the CBCA,
with modifications to the provisions of Section 190 as provided in the Plan of
Arrangement and the Interim Order ("Dissent Rights"). Any Registered
Shareholder who dissents from the Arrangement Resolution in compliance with
Section 190 of the CBCA, as modified by the Plan of Arrangement and the Interim
Order, will be entitled, in the event the Arrangement becomes effective, to be
paid the fair value of Common Shares held by such Dissenting Holder determined
as of the close of business on the day before the day the Arrangement
Resolution is adopted. Shareholders are cautioned that fair value could be
determined to be less than the $27.85 payable pursuant to the terms of the
Arrangement.
Section 190 of the CBCA provides that a dissenting shareholder may only
make a claim under that Section with respect to all of the shares of a class
held by the dissenting shareholder on behalf of any one beneficial owner and
registered in the dissenting shareholder's name. ONE CONSEQUENCE OF THIS
PROVISION IS THAT ONLY A REGISTERED SHAREHOLDER MAY EXERCISE THE DISSENT RIGHTS
IN RESPECT OF COMMON SHARES THAT ARE REGISTERED IN THAT SHAREHOLDER'S NAME.
In many cases, shares beneficially owned by a Non-Registered Holder are
registered either (a) in the name of an Intermediary or (b) in the name of a
clearing agency (such as CDS) of which the Intermediary is a participant.
Accordingly, a Non-Registered Shareholder will not be entitled to exercise its
Dissent Rights directly (unless the shares are re-registered in the
Non-Registered Shareholder's name). A Non-Registered Shareholder who wishes to
exercise Dissent Rights should immediately contact the Intermediary with whom
the Non-Registered Shareholder deals in respect of its shares and either (i)
instruct the Intermediary to exercise the Dissent Rights on the Non-Registered
Shareholder's behalf (which, if the Common Shares are registered in the name of
CDS or other clearing agency, may require that such Common Shares first be
re-registered in the name of the Intermediary), or (ii) instruct the
Intermediary to re-register such Common Shares in the name of the Non-Registered
Shareholder, in which case the Non-Registered Shareholder would be able to
exercise the Dissent Rights directly.
A REGISTERED SHAREHOLDER WHO WISHES TO DISSENT MUST PROVIDE A DISSENT
NOTICE TO HUMMINGBIRD (A) AT 1 SPARKS AVENUE, TORONTO, ONTARIO, M2H 2W1
(ATTENTION: CORPORATE SECRETARY) OR (B) BY FACSIMILE TRANSMISSION TO (416)
496-2207 (ATTENTION: CORPORATE SECRETARY) TO BE RECEIVED NOT LATER THAN 5:00
P.M. (TORONTO TIME) ON SEPTEMBER 13, 2006 (OR 5:00 P.M. (TORONTO TIME) ON THE
DAY WHICH IS TWO BUSINESS DAYS
36
IMMEDIATELY PRECEDING ANY ADJOURNED OR POSTPONED
MEETING). FAILURE TO STRICTLY COMPLY WITH THESE DISSENT PROCEDURES MAY RESULT IN
THE LOSS OR UNAVAILABILITY OF THE RIGHT TO DISSENT.
The filing of a Dissent Notice does not deprive a Registered
Shareholder of the right to vote at the Meeting. However, the CBCA provides, in
effect, that a Registered Shareholder who has submitted a Dissent Notice and
who votes FOR the Arrangement Resolution will no longer be considered a
Dissenting Holder with respect to that class of shares voted FOR the
Arrangement Resolution, being the Common Shares. The CBCA does not provide, and
Hummingbird will not assume, that a proxy submitted instructing the proxyholder
to vote against the Arrangement Resolution, a vote against the Arrangement
Resolution or an abstention constitutes a Dissent Notice, but a Registered
Shareholder need not vote its Common Shares against the Arrangement Resolution
in order to dissent. Similarly, the revocation of a proxy conferring authority
on the proxyholder to vote FOR the Arrangement Resolution does not constitute a
Dissent Notice. However, any proxy granted by a Registered Shareholder who
intends to dissent, other than a proxy that instructs the proxyholder to vote
against the Arrangement Resolution, should be validly revoked in order to
prevent the proxyholder from voting such Common Shares in favour of the
Arrangement Resolution and thereby causing the Registered Shareholder to
forfeit its Dissent Rights. See "Information Concerning the Meeting and
Voting".
Hummingbird (or its successor) is required, within ten (10) days after
Shareholders adopt the Arrangement Resolution, to notify each Dissenting Holder
that the Arrangement Resolution has been adopted. Such notice is not required to
be sent to any Shareholder who voted for the Arrangement Resolution or who has
withdrawn its Dissent Notice.
A Dissenting Holder who has not withdrawn its Dissent Notice prior to
the Meeting must then, within twenty (20) days after receipt of notice that the
Arrangement Resolution has been adopted, or if the Dissenting Holder does not
receive such notice, within twenty (20) days after learning that the Arrangement
Resolution has been adopted, send to Hummingbird c/o the Transfer Agent a
written notice (a "Demand for Payment") containing its name and address, the
number of Common Shares in respect of which he or she dissents (the "Dissenting
Common Shares"), and a demand for payment of the fair value of such Common
Shares. Within thirty (30) days after sending the Demand for Payment, the
Dissenting Holder must send to Hummingbird or the Transfer Agent certificates
representing Common Shares in respect of which he or she dissents. The Transfer
Agent will endorse on share certificates received from a Dissenting Holder a
notice that the holder is a Dissenting Holder and will forthwith return the
share certificates to the Dissenting Holder. A Dissenting Holder who fails to
make a Demand for Payment in the time required or to send certificates
representing Dissenting Common Shares has no right to make a claim under Section
190 of the CBCA.
Under Section 190 of the CBCA, after sending a Demand for Payment, a
Dissenting Holder ceases to have any rights as a Shareholder in respect of its
Dissenting Common Shares other than the right to be paid the fair value of the
Dissenting Common Shares as determined pursuant to the Interim Order, unless (i)
the Dissenting Holder withdraws its Dissent Notice before Acquisition Sub (or
its successor) makes an Offer to Pay, or (ii) Acquisition Sub (or its successor)
fails to make an Offer to Pay in accordance with subsection 190(12) of the CBCA
and the Dissenting Holder withdraws the Demand for Payment, in which case the
Dissenting Holder's rights as a Shareholder will be reinstated. Pursuant to the
Plan of Arrangement, in no case shall Hummingbird or any other person be
required to recognize any Dissenting Holder as a Shareholder after the Effective
Date, and the names of such Shareholders shall be deleted from the list of
Registered Shareholders at the Effective Date.
Pursuant to the Plan of Arrangement, Dissenting Holders who are
ultimately determined to be entitled to be paid fair value for their Dissenting
Common Shares shall be deemed to have transferred such Dissenting Common Shares
to Acquisition Sub on the Effective Date.
Pursuant to the Plan of Arrangement, Dissenting Holders who are
ultimately determined not to be entitled, for any reason, to be paid fair value
for their Dissenting Common Shares, shall be deemed to have participated in the
Arrangement on the same basis as any non-Dissenting Holder.
Acquisition Sub is required, not later than seven (7) days after the
later of the Effective Date or the date on which a Demand for Payment is
received from a Dissenting Holder, to send to each Dissenting Holder who has
sent a Demand for Payment an Offer to Pay for its Dissenting Common Shares in an
amount considered by the Board to be the fair value of the Common Shares,
accompanied by a statement showing the manner in which the fair value
37
was determined. Every Offer to Pay must be on the same terms. Acquisition Sub
must pay for the Dissenting Common Shares of a Dissenting Holder within ten
(10) days after an Offer to Pay has been accepted by a Dissenting Holder, but
any such offer lapses if Acquisition Sub does not receive an acceptance within
thirty (30) days after the Offer to Pay has been made.
If Acquisition Sub (or its successor) fails to make an Offer to Pay for
a Dissenting Holder's Common Shares, or if a Dissenting Holder fails to accept
an Offer to Pay that has been made, Acquisition Sub may, within fifty (50) days
after the Effective Date or within such further period as a court may allow,
apply to a court to fix a fair value for the Common Shares of Dissenting
Holders. If Acquisition Sub fails to apply to a court, a Dissenting Holder may
apply to a court for the same purpose within a further period of twenty (20)
days or within such further period as a court may allow. A Dissenting Holder is
not required to give security for costs in such an application.
If Acquisition Sub or a Dissenting Holder makes an application to
court, Acquisition Sub will be required to notify each affected Dissenting
Holder of the date, place and consequences of the application and of its right
to appear and be heard in person or by counsel. Upon an application to a court,
all Dissenting Holders who have not accepted an Offer to Pay will be joined as
parties and be bound by the decision of the court. Upon any such application to
a court, the court may determine whether any person is a Dissenting Holder who
should be joined as a party, and the court will then fix a fair value for the
Dissenting Common Shares of all Dissenting Holders. The final order of a court
will be rendered against Acquisition Sub in favour of each Dissenting Holder for
the amount of the fair value of its Dissenting Common Shares as fixed by the
court. The court may, in its discretion, allow a reasonable rate of interest on
the amount payable to each Dissenting Holder from the Effective Date until the
date of payment.
Registered Shareholders who are considering exercising Dissent Rights
should be aware that there can be no assurance that the fair value of their
Common Shares as determined under the applicable provisions of the CBCA (as
modified by the Plan of Arrangement and the Interim Order) will be more than or
equal to the consideration under the Arrangement. In addition, any judicial
determination of fair value will result in delay of receipt by a Dissenting
Holder of consideration for such Dissenting Holder's Dissenting Common Shares.
THE FOREGOING IS ONLY A SUMMARY OF THE DISSENTING HOLDER PROVISIONS OF
THE CBCA (AS MODIFIED BY THE PLAN OF ARRANGEMENT AND THE INTERIM ORDER), WHICH
ARE TECHNICAL AND COMPLEX. A COMPLETE COPY OF SECTION 190 OF THE CBCA IS
ATTACHED AS APPENDIX G TO THIS CIRCULAR. IT IS RECOMMENDED THAT ANY REGISTERED
SHAREHOLDER WISHING TO AVAIL ITSELF OF ITS DISSENT RIGHTS UNDER THOSE PROVISIONS
SEEK LEGAL ADVICE, AS FAILURE TO COMPLY STRICTLY WITH THE PROVISIONS OF THE CBCA
(AS MODIFIED BY THE PLAN OF ARRANGEMENT AND THE INTERIM ORDER) MAY PREJUDICE ITS
DISSENT RIGHTS.
For a general summary of certain income tax implications to a
Dissenting Holder, see "Certain Tax Considerations for Shareholders".
INFORMATION CONCERNING HUMMINGBIRD
The following information about Hummingbird is a general summary only
and is not intended to be comprehensive.
Hummingbird was incorporated under the CBCA on September 27, 1984 as
135748 Canada Inc. Its corporate name was changed to Voiceterm Inc. on December
12, 1984, to Hummingbird Communications Ltd. on February 20, 1985, and to
Hummingbird Ltd. on March 31, 2000. Hummingbird is a leading global provider of
enterprise software solutions. Hummingbird's software offerings fall into two
principal product families: (i) enterprise content management; and (ii) network
connectivity solutions. Hummingbird's products are sold and supported in
approximately 100 countries worldwide. Hummingbird sells its products directly
to customers and indirectly through distributors, value added resellers, systems
integrators and original equipment manufacturers. Hummingbird's products and
solutions are used in a wide range of industries -- predominantly in law firms
and corporate legal departments, government (national and international, local
and regional), financial services, energy, utilities and manufacturing.
Additional information about Hummingbird can be found on SEDAR at
www.sedar.com and on the web site of the SEC at www.sec.gov.
38
Principal Shareholders
According to securities filings made by AMVESCAP PLC Aim Funds
Management, Inc. as at December 31, 2005, AMVESCAP PLC Aim Funds Management,
Inc. controlled 2,466,100 Common Shares representing approximately 14.2% of
Common Shares as of such date.
Other than AMVESCAP PLC Aim Funds Management, Inc., the directors and
officers of Hummingbird are not aware of any person who, as at August 18, 2006,
beneficially owned, directly or indirectly, or exercised control or direction
over, more than 10% of the Common Shares.
Indebtedness of Directors, Officers and Employees
As of August 18, 2006, no individual who is, or at any time during the
most recent completed financial year of Hummingbird was, a director or officer
of Hummingbird, nor any associate of any one of them is, or at any time since
the beginning of the most recent completed financial year of Hummingbird has
been, indebted to Hummingbird or any of its subsidiaries or was indebted to
another entity, which such indebtedness is, or was at any time during the most
recent completed financial year of Hummingbird, the subject of a guarantee,
support agreement, letter of credit or other similar arrangement or
understanding provided by Hummingbird or any of its subsidiaries.
Auditors
Deloitte & Touche LLP is the auditor of Hummingbird.
Capitalization
The authorized share capital of Hummingbird consists of an unlimited
number of common shares and an unlimited number of preference shares issuable in
series. As at August 18, 2006, Hummingbird has issued and outstanding 17,618,199
Common Shares, each of which entitles the holder thereof to one vote at meetings
of Shareholders other than those meetings where only the holders of shares of
another class or of a particular series are entitled to vote. There are
presently no preferred shares issued and outstanding. In addition, as at August
18, 2006, there are outstanding Options to purchase 1,226,537 Common Shares.
INFORMATION CONCERNING ACQUISITION SUB AND OPEN TEXT
The following information about Acquisition Sub and Open Text is a
general summary only and is not intended to be comprehensive.
Acquisition Sub is a wholly-owned subsidiary of Open Text. Acquisition
Sub was incorporated under the CBCA on May 26, 2006 and was organized solely for
the purpose of making the Open Text Tender Offer and entering into a business
combination with Hummingbird and has not otherwise carried on any activities to
date other than those incidental to its formation. Acquisition Sub currently
carries on no business other than in respect of the Arrangement. The registered
office of Acquisition Sub is located at Open Text's head office, which is
located at 275 Frank Tompa Drive, Waterloo, Ontario, Canada N2L 0A1.
As of the date hereof, Open Text and its affiliates and associates own
764,850 Common Shares or approximately 4.34% of the issued and outstanding
Common Shares as of August 18, 2006, which Common Shares were acquired through
market purchases.
Open Text is a public corporation that was incorporated on June 26,
1991 and continued under the CBCA. Open Text is an independent software vendor
that develops, markets, sells and supports Enterprise Content Management ("ECM")
solutions for use by global organizations on intranets, extranets and the
Internet. Open Text's flagship product line is Livelink ECM(TM), which combines
collaboration and content management and transforms information into knowledge.
Open Text's software enables organizations to effectively address a diverse
range of business needs including the ability to comply with increasing and
changing regulatory requirements, to classify and organize information and to
manage the retention and archiving of massive information volumes. Open Text
offers a selection of business solutions built on the Livelink ECM(TM) platform
and provides a series of specialized
39
collaboration, content, and knowledge-based products that are sold
independently or in combination with offerings based on the Livelink ECM(TM)
platform. In addition, Open Text provides consulting, training, documentation,
and technical support services that accelerate its customers' implementation of
its products.
Open Text presently supports approximately 20 million seats across
13,000 deployments in 114 countries and 12 languages worldwide. For fiscal 2005,
the total revenue of Open Text was US$414.8 million. Open Text's Internet
address is www.opentext.com.
The common shares of Open Text are listed on the TSX and NASDAQ under
the symbols "OTC" and "OTEX", respectively. Additional information about Open
Text can be found on SEDAR at www.sedar.com and on the website of the SEC at
www.sec.gov.
HUMMINGBIRD MARKET PRICE AND TRADING VOLUME DATA
The Common Shares are listed and posted for trading on the TSX under
the symbol "HUM" and on NASDAQ under the symbol "HUMC". The following table
summarizes the market prices and volumes of trading of the Common Shares on the
TSX for the previous 12 months:
High Low Volume
-------- ------- ----------
CAD$ CAD$
2005
August............................ 27.56 20.51 478,916
September......................... 28.70 24.80 310,711
October........................... 26.58 24.75 272,128
November.......................... 27.36 24.70 309,297
December.......................... 25.50 22.05 287,009
2006
January........................... 28.99 23.55 168,603
February.......................... 28.00 25.50 217,567
March............................. 28.99 25.79 354,746
April............................. 28.00 27.50 181,139
May............................... 31.04 25.57 677,039
June.............................. 31.20 29.74 2,676,285
July.............................. 32.38 30.00 203,426
August 1 - 17..................... 32.20 30.50 189,927
The following table summarizes the market prices and volumes of trading
of the Common Shares on the NASDAQ for the previous 12 months:
High Low Volume
-------- ------- ----------
$ $
2005
August............................. 23.22 16.98 247,854
September.......................... 23.90 21.16 96,853
October............................ 22.70 21.20 74,068
November........................... 22.97 21.40 135,040
December........................... 22.17 19.07 220,818
40
2006
January............................ 24.80 20.40 155,738
February........................... 24.77 22.23 149,974
March.............................. 25.04 22.68 194,942
High Low Volume
-------- ------- ----------
$ $
April.............................. 24.89 23.57 86,893
May................................ 28.15 23.00 341,212
June............................... 28.00 26.75 437,553
July............................... 28.88 27.25 544,695
August 1 - 17...................... 28.34 27.31 488,559
The $27.85 per Common Share payable pursuant to the Arrangement
represents a premium of approximately 20.5% over the closing trading price of
the Common Shares of $23.12 on the NASDAQ on May 25, 2006, the last trading day
on the NASDAQ prior to the announcement of the Symphony Arrangement, and is
$1.10 per share more than the price per share under the Symphony Arrangement
representing a premium of 4.1%.
CERTAIN TAX CONSIDERATIONS FOR SHAREHOLDERS
Certain Canadian Federal Income Tax Considerations
In the opinion of Goodmans LLP, Canadian counsel to Hummingbird, the
following summary describes the principal Canadian federal income tax
considerations generally applicable to a Shareholder who disposes of its Common
Shares under the Arrangement and who, for the purposes of the Tax Act and at all
relevant times, holds its Common Shares as capital property, deals at arm's
length with Hummingbird, Open Text and Acquisition Sub, and is not affiliated
with Hummingbird, Open Text or Acquisition Sub. Generally, Common Shares will be
capital property to a Shareholder unless the Common Shares are held or were
acquired in the course of carrying on a business of buying and selling
securities or as part of an adventure or concern in the nature of trade. Certain
Shareholders who are residents of Canada for purposes of the Tax Act and whose
Common Shares might not otherwise be capital property may, in some
circumstances, be entitled to make an irrevocable election in accordance with
subsection 39(4) of the Tax Act to have such Common Shares and every other
"Canadian security" (as defined in the Tax Act) owned by them in the taxation
year in which the election is made or any subsequent taxation year deemed to be
capital property in those years. Such Shareholders should consult their own tax
advisors for advice with respect to whether an election under subsection 39(4)
of the Tax Act is available or advisable in their particular circumstances.
This summary is based upon the current provisions of the Tax Act, the
regulations thereunder (the "Regulations") and counsel's understanding of the
current administrative policies and assessing practices of the CRA made publicly
available prior to the date hereof. This summary also takes into account all
specific proposals to amend the Tax Act and the Regulations publicly announced
by or on behalf of the Minister of Finance (Canada) prior to the date hereof
(the "Proposed Amendments") and assumes that all Proposed Amendments will be
enacted in the form proposed. However, no assurances can be given that the
Proposed Amendments will be enacted as proposed, or at all. This summary does
not otherwise take into account or anticipate any changes in law or
administrative policies or assessing practices, whether by legislative,
regulatory, administrative or judicial action or decision, nor does it take into
account provincial, territorial or foreign tax legislation or considerations,
which may be different from those discussed in this summary. This summary
assumes that the Common Shares will be listed on the TSX or NASDAQ at the time
they are disposed of by a Shareholder, pursuant to the Plan of Arrangement (the
"Disposition Time").
THIS SUMMARY IS NOT APPLICABLE TO A SHAREHOLDER THAT IS, FOR THE
PURPOSES OF CERTAIN RULES IN THE TAX ACT APPLICABLE TO SECURITIES HELD BY
FINANCIAL INSTITUTIONS, A "FINANCIAL INSTITUTION" (AS DEFINED IN THE TAX ACT).
THIS SUMMARY DOES NOT ADDRESS ALL THE CONSEQUENCES RELEVANT TO A SHAREHOLDER WHO
ACQUIRED ITS COMMON SHARES UPON THE EXERCISE OF AN OPTION. THIS SUMMARY DOES NOT
ADDRESS THE CONSEQUENCES OF THE ARRANGEMENT
41
TO OPTIONHOLDERS. EACH OPTIONHOLDER IS URGED TO CONSULT ITS OWN TAX ADVISORS
CONCERNING THE TAX CONSEQUENCES OF THE ARRANGEMENT FOR THEM. FURTHERMORE, THIS
SUMMARY DOES NOT ADDRESS THE TAX CONSEQUENCES OF PARTICIPATING IN THE HOLDING
COMPANY ALTERNATIVE AS DESCRIBED UNDER "HOLDING COMPANY ALTERNATIVE."
THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT, AND IS NOT
INTENDED TO BE, LEGAL OR TAX ADVICE TO ANY PARTICULAR SHAREHOLDER. THIS SUMMARY
IS NOT EXHAUSTIVE OF ALL CANADIAN FEDERAL INCOME TAX CONSIDERATIONS.
ACCORDINGLY, SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO
THE CANADIAN FEDERAL INCOME TAX CONSEQUENCES OF THE ARRANGEMENT HAVING REGARD TO
THEIR OWN PARTICULAR CIRCUMSTANCES.
Currency Translation
All amounts relevant to the computation of income under the Tax Act
must be reported in Canadian dollars. Any amount that is expressed or
denominated in a currency other than Canadian dollars, including adjusted cost
base and proceeds of disposition, must be converted into Canadian dollars based
on the spot currency exchange rate prevailing on the date each such amount
arises.
Shareholders Resident in Canada
The following portion of this summary is generally applicable to a
Shareholder who is a Resident Shareholder.
Disposition of Common Shares
A Resident Shareholder who disposes of Common Shares under the
Arrangement will realize a capital gain (or capital loss) equal to the amount by
which the cash received by the Resident Shareholder under the Arrangement, net
of any reasonable costs of disposition, exceeds (or is less than) the adjusted
cost base of the Common Shares to the Resident Shareholder.
Generally, a Resident Shareholder is required to include in computing
its income for a taxation year one-half of the amount of any capital gain (a
"taxable capital gain") realized by the Resident Shareholder in the year. A
Resident Shareholder is required to deduct one-half of the amount of any capital
loss (an "allowable capital loss") realized in a taxation year from taxable
capital gains realized by the Resident Shareholder in the year, and allowable
capital losses in excess of taxable capital gains may be carried back and
deducted in any of the three (3) preceding taxation years or carried forward and
deducted in any subsequent taxation year against net taxable capital gains
realized by the Resident Shareholder in such years, to the extent and in the
circumstances prescribed by the Tax Act.
The amount of any capital loss realized by a Resident Shareholder that
is a corporation on the disposition of a Common Share may be reduced by the
amount of any dividends received (or deemed to be received) by it on such Common
Share to the extent and under the circumstances prescribed by the Tax Act.
Similar rules may apply where the corporation is a member of a partnership or a
beneficiary of a trust that owns Common Shares or where a partnership or trust
of which a corporation is a member or a beneficiary is a member of a partnership
or a beneficiary of a trust that owns Common Shares. Resident Shareholders to
whom these rules may apply should consult their own tax advisors.
A Resident Shareholder that is throughout the year a "Canadian
controlled private corporation" (as defined in the Tax Act) may be liable for a
refundable tax of 6 2/3% on its "aggregate investment income", which is defined
to include an amount in respect of taxable capital gains.
Capital gains realized by an individual or a trust, other than certain
trusts, may give rise to alternative minimum tax under the Tax Act. Resident
Shareholders should consult their own advisors with respect to alternative
minimum tax provisions.
Dissenting Holders
A Resident Shareholder who exercises Dissent Rights (a "Resident
Dissenting Holder") will transfer such holder's Common Shares to Acquisition Sub
in exchange for payment by Acquisition Sub (or Acquisition Sub, or its
successor) of the fair value of such Common Shares. In general, a Resident
Dissenting Holder will realize a capital
42
gain (or capital loss) equal to the amount by which the cash received by the
Resident Dissenting Holder in respect of the fair value of such holder's Common
Shares (other than in respect of interest awarded by a court), net of any
reasonable costs of disposition, exceeds (or is less than) the adjusted cost
base to the Resident Dissenting Holder of such Common Shares. See "Disposition
of Common Shares" above. Interest awarded by a court to a Resident Dissenting
Holder will be included in the shareholder's income for the purposes of the Tax
Act. A Resident Dissenting Holder that is throughout the year a "Canadian
controlled private corporation" (as defined in the Tax Act) may be liable for
the refundable tax described above under "Disposition of Common Shares" in
respect of taxable capital gains and interest. Resident Dissenting Holders
should consult their own tax advisors.
Shareholders Not Resident in Canada
The following portion of this summary is applicable to a Shareholder
who is a Non-Resident Shareholder. Special rules, which are not discussed in
this summary, may apply to a Non-Resident Shareholder that is an insurer
carrying on business in Canada and elsewhere. Such Non-Resident Shareholders
should consult their own tax advisors.
Disposition of Common Shares
A Non-Resident Shareholder will not be subject to tax under the Tax Act
on any capital gain realized on the disposition of Common Shares under the
Arrangement unless the Common Shares are "taxable Canadian property" (within the
meaning of the Tax Act) to the Non-Resident Shareholder at the Disposition Time.
Generally, Common Shares will not be taxable Canadian property to a
Non-Resident Shareholder at the Disposition Time provided that (a) the Common
Shares are listed on a prescribed stock exchange (which includes the TSX and
NASDAQ) at that time, and (b) the Non-Resident Shareholder, persons with whom
the Non-Resident Shareholder does not deal at arm's length, or the Non-Resident
Shareholder together with all such persons, has not owned 25% or more of the
issued shares of any class or series of the capital stock of Hummingbird at any
time during the sixty (60) month period that ends at the Disposition Time.
Notwithstanding the foregoing, Common Shares may be deemed to be taxable
Canadian property in certain circumstances specified in the Tax Act.
Even if Common Shares are considered to be taxable Canadian property of
a Non-Resident Shareholder at the Disposition Time, any capital gain realized by
the Non-Resident Shareholder on a disposition of the Common Shares under the
Arrangement may be exempt from tax under the Tax Act pursuant to the terms of an
applicable income tax treaty between Canada and the country in which the
Non-Resident Shareholder is resident. Non-Resident Shareholders should consult
their own tax advisors with respect to the availability of any relief under the
terms of any applicable income tax treaty in their particular circumstances.
In the event that the Common Shares constitute taxable Canadian
property to a Non-Resident Shareholder and any capital gain realized by the
Non-Resident Shareholder on the disposition of Common Shares under the
Arrangement is not exempt from tax under the Tax Act by virtue of an applicable
income tax treaty, then the tax consequences described above under the heading
"Shareholders Resident in Canada -- Disposition of Common Shares" will generally
apply.
Dissenting Holders
A Non-Resident Shareholder who exercises Dissent Rights (a
"Non-Resident Dissenting Holder") will transfer such holder's Common Shares to
Acquisition Sub in exchange for payment by Acquisition Sub (or its successor) of
the fair value of such Common Shares. In general, the tax treatment of a
Non-Resident Dissenting Holder will be similar to that of a Non-Resident
Shareholder who participates in the Arrangement. See "Disposition of Common
Shares" above.
The amount of any interest awarded by a court to a Non-Resident
Dissenting Holder will be subject to Canadian withholding tax at a rate of 25%
unless the rate is reduced under the provisions of an applicable income tax
treaty between Canada and the country in which the Non-Resident Shareholder is
resident. Non-Resident Dissenting Holders should consult their own tax advisors
with respect to the availability of any relief under the terms of an applicable
income tax treaty in their particular circumstances.
43
Certain Material United States Federal Income Tax Considerations
The following summary describes certain material U.S. federal income
tax consequences of the Arrangement to Shareholders. This discussion does not
purport to consider all aspects of U.S. federal income taxation that might be
relevant to Shareholders. This discussion is based on current provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations,
proposed regulations, Internal Revenue Service rulings and pronouncements and
judicial decisions currently in effect, all of which are subject to change at
any time, possibly with retroactive effect. Hummingbird has not sought and will
not seek any rulings from the Internal Revenue Service with respect to the
consequences discussed below. The discussion below is not binding on the
Internal Revenue Service or the courts. The discussion applies only to
Shareholders who hold shares as capital assets within the meaning of the Code.
This discussion does not apply to certain types of Shareholders (such as
insurance companies, tax-exempt organizations, financial institutions, persons
who acquired Common Shares pursuant to the exercise of an employee stock option
or right or otherwise as compensation, traders, broker dealers, persons who
hold or have held Common Shares as part of a straddle or a hedging, integrated
constructive sale or conversion transaction for tax purposes, pass-through
entities and investors in such entities, mutual and common trust funds,
regulated investment companies, real estate investment trusts, persons that
actually or constructively hold (or have ever held) 10% or more of the total
voting power of all outstanding Hummingbird voting stock, or holders who
acquired their Common Shares upon the conversion or exchange of other stock or
securities) who may be subject to special rules. This discussion does not
address any aspect of state, local or foreign or other tax Laws, or estate or
gift tax considerations, or the alternative minimum tax.
For purposes of this discussion, a "U.S. holder" is (a) a citizen or
individual resident of the United States, (b) a corporation or other entity
taxable as a corporation for U.S. federal income tax purposes organized in the
United States or under the laws of the United States or any political
subdivision thereof, (c) a trust if a United States court is able to exercise
primary supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of the
trust or that was in existence on August 20, 1996 and that has a valid election
in effect under applicable United States Treasury Regulations to be treated as a
U.S. person, or (d) an estate that is subject to U.S. federal income tax on its
income regardless of its source. A "non-U.S. holder" is a beneficial owner of
Common Shares that is not a U.S. holder.
If a partnership holds Common Shares, the tax treatment of a partner
generally will depend upon the status of the partner and the activities of the
partnership. A partner in a partnership that is a beneficial owner of Common
Shares should consult its own tax advisor.
THE MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES SET FORTH
BELOW ARE FOR GENERAL INFORMATION PURPOSES ONLY AND ARE NOT INTENDED TO
CONSTITUTE A COMPLETE DESCRIPTION OF ALL TAX CONSEQUENCES RELATING TO THE
ARRANGEMENT. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, HUMMINGBIRD STRONGLY
URGES SHAREHOLDERS TO CONSULT WITH THEIR TAX ADVISOR REGARDING THE APPLICABILITY
OF THE RULES DISCUSSED BELOW TO THEM AND THE PARTICULAR TAX EFFECTS TO THEM OF
THE ARRANGEMENT, INCLUDING THE APPLICATION OF STATE, LOCAL AND FOREIGN TAX LAWS.
TO ENSURE COMPLIANCE WITH UNITED STATES TREASURY DEPARTMENT CIRCULAR
230, SHAREHOLDERS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF UNITED STATES
FEDERAL TAX ISSUES IN THIS CIRCULAR IS NOT INTENDED OR WRITTEN TO BE RELIED
UPON, AND CANNOT BE RELIED UPON BY SUCH SHAREHOLDERS, FOR THE PURPOSE OF
AVOIDING PENALTIES THAT MAY BE IMPOSED ON SUCH SHAREHOLDERS UNDER THE CODE; (B)
SUCH DISCUSSION IS BEING USED IN CONNECTION WITH THE PROMOTION OR MARKETING
(WITHIN THE MEANING OF CIRCULAR 230) OF THE TRANSACTIONS OR MATTERS ADDRESSED
HEREIN; AND (C) EACH SHAREHOLDER SHOULD SEEK ADVICE BASED ON ITS PARTICULAR
CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
Certain Material Federal Income Tax Considerations for U.S. Holders of
Common Shares
The receipt of cash by a U.S. holder for Common Shares pursuant to the
Arrangement will be a taxable transaction for U.S. federal income tax purposes.
In general, a U.S. holder who surrenders Common Shares for cash
44
pursuant to the Arrangement will recognize a capital gain or loss for U.S.
federal income tax purposes equal to the difference, if any, between the amount
of cash received and the U.S. holder's adjusted tax basis in the shares
surrendered. Gain or loss will be determined separately for each block of
shares (i.e., shares acquired at the same cost in a single transaction)
surrendered for cash pursuant to the Arrangement. Provided that Hummingbird is
not a passive foreign investment company (as described below), if the holding
period in Common Shares surrendered pursuant to the Arrangement is greater than
one year as of the closing date of the Arrangement, the gain or loss will be
long-term capital gain or loss. The deductibility of a capital loss is subject
to limitations under the Code.
Passive Foreign Investment Company
The Code provides special, generally adverse, rules regarding certain
distributions received by U.S. persons with respect to, and sales, exchanges and
other dispositions, of shares of stock of, a "passive foreign investment
company" ("PFIC"). A foreign corporation is treated as a PFIC for any taxable
year if 75% or more of its gross income for the taxable year is passive income
or the average percentage of its assets, generally by value, that produce or are
held for the production of passive income is at least 50%. If Hummingbird were
to be classified as a PFIC for the taxable year that includes the closing of the
Arrangement or any other prior taxable year included in a U.S. holder's holding
period for the Common Shares, the U.S. holder would generally be required to
treat any gain recognized on the surrender of Common Shares for cash pursuant to
the Arrangement as ordinary income and pay an interest charge on the value of
the deferral of their U.S. federal income tax attributable to such gain, subject
to certain mitigation rules. Hummingbird believes that it will not be a PFIC for
its current taxable year and has not been a PFIC in any past year. However, the
determination of whether a company is a PFIC is a factual determination, and no
assurance can be provided that Hummingbird will not be treated as a PFIC for the
current year or in any past year. U.S. holders are strongly urged to consult
their tax advisors regarding the status of Hummingbird as a PFIC and the U.S.
federal income tax consequences thereof.
Backup Withholding
Backup federal withholding tax generally will be withheld at a rate of
28% from all cash payments to which a U.S. holder of Common Shares is entitled
pursuant to the Arrangement, unless the U.S. holder (a) qualifies for certain
exempt categories, including corporations and financial institutions, or (b)
provides a certified taxpayer identification number on Form W-9 or Substitute
Form W-9 and otherwise complies with backup withholding rules. Backup
withholding is not an additional tax, but an advance payment. Any amounts
withheld under the backup withholding rules will be refunded or allowed as a
credit against the U.S. holder's U.S. federal income tax liability, if any,
provided that the required information or appropriate claim for refund is filed
with the Internal Revenue Service.
Federal Income Tax Considerations for Non-U.S. Holders of Common Shares
The receipt of cash by a non-U.S. holder for Common Shares will not be
subject to U.S. federal income tax, provided that:
o any gain or loss is not effectively connected with the conduct
by that non-U.S. holder of a trade or business within the United
States; and
o in the case of an individual, the non-U.S. holder has not been
present in the United States for 183 days or more during the
taxable year in which the Arrangement is effected and certain
other conditions exist.
Non-U.S. holders may be required to provide an IRS Form W-8BEN or other
appropriate IRS Form W-8. A failure to properly complete and furnish the
appropriate IRS Form W-8 may result in backup federal withholding tax at a rate
of 28% on the proceeds otherwise payable to the non-U.S. holder pursuant to the
Arrangement.
LEGAL MATTERS
Certain legal matters in connection with the Arrangement will be passed
upon by Goodmans LLP, as Canadian counsel, and Skadden, Arps, Slate, Meagher &
Flom LLP, as U.S. counsel, on behalf of Hummingbird.
45
ADDITIONAL INFORMATION
Information contained herein is given as of August 18, 2006, except as
otherwise noted. If any matters which are not now known should properly come
before the Meeting, the accompanying form of proxy will be voted on such matters
in accordance with the best judgment of the person voting it.
Additional information relating to Hummingbird, including Hummingbird's
most current Annual Information Form (together with documents incorporated
therein by reference), the comparative consolidated financial statements of
Hummingbird for the financial year ended September 30, 2005, together with the
report of the auditors thereon, management's discussion and analysis of
Hummingbird's financial condition and results of operations for fiscal 2005
which provide financial information concerning Hummingbird, and Hummingbird's
Management Information Circular dated February 6, 2006 with respect to the
annual meeting of Shareholders held on March 3, 2006 (which is incorporated by
reference into this Circular) can be found on SEDAR at www.sedar.com or on the
EDGAR database maintained by the SEC at www.sec.gov. Copies of those documents,
as well as any additional copies of this Circular, are available upon written
request to the Corporate Secretary, free of charge or, where applicable, upon
payment of a reasonable charge.
Hummingbird is subject to the information requirements of the U.S.
Securities Exchange Act of 1934, as amended, and in accordance therewith files
reports and other information with the SEC. You may read any document that
Hummingbird has filed with the SEC at the SEC's public reference room in
Washington, D.C. You may also obtain copies of those documents from the public
reference room of the SEC at 100 F Street, N.E., Washington, D.C. 20549 by
paying a fee. You should call the SEC at 1-800-SEC-0330 or access its website
at www.sec.gov for further information about the public reference rooms. You
may read and download some of the documents Hummingbird has filed with the
SEC's Electronic Data Gathering and Retrieval System at www.sec.gov.
QUESTIONS AND FURTHER ASSISTANCE
If you have any questions about the information contained in this
Circular or require assistance in completing your proxy form, please contact
Georgeson Shareholder Communications Canada Inc., Hummingbird's proxy
solicitation agent, at:
100 University Avenue
11th Floor, South Tower
Toronto, Ontario
M5J 2Y1
North American Toll Free Number: 1.866.500.8075
46
APPROVAL OF HUMMINGBIRD
The contents and mailing to Shareholders of this Circular have been
approved by the Board.
Toronto, Ontario "Inder P.S. Duggal"
August 18, 2006
INDER P.S. DUGGAL
Corporate Secretary
47
GLOSSARY OF TERMS
The following glossary of terms used in this Circular, including the
Summary, but not including the Appendices, is provided for ease of reference:
"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 Common Shares (or rights or interests in or to Common 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 Open Text or an Affiliate
of Open Text is a party.
"Acquisition Sub" means 6575064 Canada Inc., a corporation existing under the
laws of Canada.
"Affiliate" has the meaning ascribed to it in the Securities Act.
"allowable capital loss" has the meaning ascribed to it under "Certain Tax
Considerations for Shareholders -- Certain Canadian Federal Income Tax
Considerations -- Shareholders Resident in Canada -- Disposition of Common
Shares".
"Antitrust Division" has the meaning ascribed to it under "Principal Legal
Matters -- Regulatory Matters -- HRS Act".
"Arrangement" means the proposed arrangement under the provisions of Section 192
of the CBCA as set out in the Plan of Arrangement, subject to any amendments or
variations thereto made in accordance with the Arrangement Agreement or Section
5.1 of the Plan of Arrangement or made at the direction of the Court in the
Final Order.
"Arrangement Agreement" means the Arrangement Agreement dated as of August 4,
2006, between Open Text, Acquisition Sub and Hummingbird and any amendment
thereto made in accordance with such agreement.
"Arrangement Resolution" means the special resolution of Shareholders approving
the Plan of Arrangement to be considered at the Meeting and set out in Appendix
A to this Circular.
"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.
"Associate" has the meaning ascribed to it in the Securities Act.
"Board" or "Board of Directors" means the board of directors of Hummingbird.
"business day" means any day other than a Saturday, a Sunday or a statutory
holiday in Toronto, Ontario, Canada.
"CBCA" means the Canada Business Corporations Act and the regulations made
thereunder, as promulgated or amended from time to time.
"CDS" means The Canadian Depository for Securities Limited.
48
"Certificate of Arrangement" means the Certificate of Arrangement to be issued
by the Director pursuant to Section 192(7) of the CBCA in respect of the
Arrangement.
"Circular" means this management information circular of Hummingbird, including
the Notice of Meeting and all schedules, appendices and exhibits and all
documents incorporated by reference herein.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Commitment Letter" means the debt commitment letter dated August 3, 2006 from a
Schedule I Canadian bank in favour of Open Text.
"Commissioner" has the meaning ascribed thereto under "Principal Legal Matters
- -- Regulatory Matters -- Competition Act".
"Common Shares" means the common shares in the capital of Hummingbird.
"Court" means the Superior Court of Justice of Ontario (Commercial List).
"CRA" means the Canada Revenue Agency.
"Demand for Payment" has the meaning ascribed to it under "Dissenting Holders'
Rights".
"Depositary" means CIBC Mellon Trust Company and any other trust company, bank
or equivalent financial institution agreed to in writing by Open Text and
Hummingbird and appointed to carry out any of the duties of the depositary under
the Arrangement Agreement.
"Director" means the Director appointed pursuant to Section 260 of the CBCA.
"Disposition Time" means the time at which Common Shares are disposed of by the
Shareholders pursuant to the Plan of Arrangement.
"Dissent Notice" means the written objection of a Registered Shareholder to the
Arrangement Resolution, submitted to Hummingbird in accordance with the Dissent
Procedures.
"Dissent Procedures" means the dissent procedures, as described under the
heading "Dissenting Holders' Rights".
"Dissent Rights" has the meaning ascribed to it under "Dissenting Holders
Rights".
"Dissenting Common Shares" means the Common Shares in respect of which a
Dissenting Holder dissents.
"Dissenting Holder" has the meaning ascribed thereto in 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.
"Eligible Institution" means a Canadian Schedule 1 chartered bank, a major trust
company in Canada, a member of the Securities Transfer Agents Medallion Program
(STAMP), a member of the Stock Exchange Medallion Program (SEMP) or a member of
the New York Stock Exchange Inc. Medallion Signature Program (MSP).
"Final Order" means the order of the Court approving the Arrangement, as such
order may be amended by the Court at any time prior to the Effective Date or, if
appealed, then, unless such appeal is withdrawn or denied, as affirmed or as
amended on appeal.
"FTC" has the meaning ascribed to it under "Principal Legal Matters --
Regulatory Matters -- HSR Act".
49
"GAAP" means United States generally accepted accounting principles.
"Georgeson" means Georgeson Shareholder Communications Canada Inc.
"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.
"HSR Act" means the United States Hart-Scott Rodino Antitrust Improvements Act
of 1976, as amended.
"HSR Filing" has the meaning ascribed to it under "Principal Legal Matters --
Regulatory Matters -- HSR Act".
"Hummingbird" means Hummingbird Ltd., a corporation existing under the laws of
Canada.
"Interim Order" means the interim order of the Court, providing for, among other
things, the calling and holding of the Meeting, a copy of which is attached as
Appendix E to this Circular, as the same may be amended.
"Intermediary" means an intermediary with which a Non-Registered Holder may
deal, including banks, trust companies, securities dealers or brokers and
trustees or administrators of self-directed trusts governed by registered
retirement savings plans, registered retirement income funds, registered
education savings plans (collectively, as defined in the Tax Act) and similar
plans, and their nominees.
"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 TSX or NASDAQ), 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.
"Lender Sub" means one or more wholly owned subsidiaries of Hummingbird selected
by Open Text for purposes of making the loans contemplated in the Arrangement
Agreement.
"Letter of Transmittal" means the letter of transmittal to be sent by
Hummingbird to Shareholders for use in connection with the Arrangement.
"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 the Arrangement
Agreement, the Open Text Tender Offer or the Symphony Arrangement Agreement, (e)
any change in the trading price or volume of the Common 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
50
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 the Arrangement 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.
"Meeting" means the special meeting of Shareholders, and all adjournments and
postponements thereof, called and held to consider and pass 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.
"Non-Registered Shareholder" means a non-registered beneficial holder of Common
Shares whose shares are held through an Intermediary.
"Non-Resident Dissenting Holder" means a Non-Resident Shareholder who exercises
Dissent Rights.
"Non-Resident Shareholder" means a Shareholder who, for the purposes of the Tax
Act and at all relevant times, (i) has not been and is not resident or deemed to
be resident in Canada and (ii) does not use or hold and is not deemed to use or
hold Common Shares in connection with carrying on a business in Canada.
"Notice of Appearance" has the meaning ascribed thereto in "Principal Legal
Matters -- Court Approval of the Arrangement and Completion of the Arrangement".
"Notice of Meeting" means the Notice of Special Meeting of Shareholders of
Hummingbird dated August 18, 2006.
"Offer to Pay" means the written offer of Acquisition Sub (or its successor) to
each Dissenting Holder who has sent a Demand for Payment to pay for its Common
Shares in an amount considered by the Board to be the fair value of the shares,
all in compliance with the Dissent Procedures.
"Open Text" means Open Text Corporation.
"Open Text Tender Offer" means the offer dated July 10, 2006 by Acquisition Sub
to purchase for cash all of the outstanding Common Shares not owned by Open Text
or its affiliates at a price of $27.75 per share.
"Optionholders" means holders of Options.
"Options" means options to acquire Common Shares granted under the Stock Option
Plan and options to acquire Common Shares that have been granted subsequent to
the expiry of the Stock Option Plan.
"Options Resolution" means the resolution of Shareholders ratifying the granting
of 50,000 Options to purchase Common Shares to each of Hadley C. Ford, John B.
Wade and John A. MacDonald on March 3, 2006.
"Outside Date" means (a) October 21, 2006, subject to the right of either
Hummingbird or Open Text 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 to the Arrangement Agreement.
"Person" includes any 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 a legal status.
"PFIC" means passive foreign investment company.
51
"Plan of Arrangement" means the plan of arrangement substantially in the form of
Appendix D hereto as amended or varied pursuant to the terms hereof and thereof.
"Pre-Acquisition Reorganization" has the meaning ascribed to it under "Other
Terms of the Arrangement Agreement -- Covenants".
"Proposed Amendments" means all specific proposals to amend the Tax Act and the
Regulations publicly announced by or on behalf of the Minister of Finance
(Canada) prior to the date hereof.
"Record Date" means August 21, 2006.
"Registered Shareholder" means a registered holder of Common Shares as recorded
in the Hummingbird shareholders' register maintained by the Transfer Agent.
"Regulations" means the regulations under the Tax Act.
"Regulatory Approvals" means those sanctions, rulings, consents, orders,
exemptions, permits, waivers, authorizations, agreements, certificates and other
approvals (including the lapse, without objection, of a prescribed time under a
statute or regulation that provides that a transaction may only be implemented
if a prescribed time lapses following the giving of notice without an objection
being made) of any Governmental Entity as set out in Schedule A to the
Arrangement Agreement.
"Resident Dissenting Holder" means a Resident Shareholder who exercises
Dissent Rights.
"Resident Shareholder" means a Shareholder who, for purposes of the Tax Act and
any applicable income tax treaty, at all relevant times, is or is deemed to be
resident in Canada.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act (Ontario), as amended.
"SEDAR" means the System for Electronic Document Analysis and Retrieval of the
Canadian Securities Administrators.
"Shareholders" means holders of Common Shares.
"Special Committee" means the special committee of the Board formed to consider,
among other things, the Arrangement.
"Stock Option Plan" means the 1996 Employee Stock Option Plan of Hummingbird.
"Superior Proposal" has the meaning ascribed to it under "Other Terms of the
Arrangement Agreement -- Covenants of Hummingbird Regarding Non-Solicitation".
"Symphony" means Symphony Technology Group, LLC.
"Symphony Affiliates" means Symphony Technology II-A, L.P., Linden Management
Corporation and Linden Acquisition Ltd.
"Symphony Arrangement" means the plan of arrangement contemplated by the
Symphony Arrangement Agreement involving the acquisition of all of the issued
and outstanding Common Shares by a Symphony Affiliate at a price of $26.75 in
cash per Common Share.
"Symphony Arrangement Agreement" means the arrangement agreement dated May 25,
2006 among the Symphony Affiliates and Hummingbird.
"Tax Act" means the Income Tax Act (Canada), as amended.
52
"taxable capital gain" has the meaning ascribed to it under "Certain Tax
Considerations for Shareholders -- Certain Canadian Federal Income Tax
Considerations -- Shareholders Resident in Canada -- Disposition of Common
Shares".
"Termination Payment" means the approximately $12.4 million termination payment
payable to by Hummingbird in certain circumstances under the terms of the
Arrangement Agreement.
"Transactions" means, collectively, the transactions contemplated in the
Arrangement Agreement and in the Plan of Arrangement.
"Transfer Agent" means CIBC Mellon Trust Company.
"TSX" means the Toronto Stock Exchange.
53
APPENDIX A
ARRANGEMENT RESOLUTION
SPECIAL RESOLUTION OF THE SHAREHOLDERS OF
HUMMINGBIRD LTD.
BE IT RESOLVED, AS A SPECIAL RESOLUTION, THAT:
1. The arrangement (the "Arrangement") under Section 192 of the Canada
Business Corporations Act (the "CBCA") involving Hummingbird Ltd. (the
"Company"), as more particularly described and set forth in the
management information circular (the "Circular") of the Company
accompanying the notice of this meeting (as the Arrangement may be
modified or amended in accordance with its terms) is hereby authorized,
approved and adopted.
2. The plan of arrangement (the "Plan of Arrangement") involving the
Company, the full text of which is set out as Schedule C to the
Arrangement Agreement made as of August 4, 2006 among Open Text
Corporation, 6575064 Canada Inc. and the Company (the "Arrangement
Agreement"), (as the Plan of Arrangement may be modified or amended in
accordance with its terms) is hereby authorized, approved and adopted.
3. The Arrangement Agreement, the actions of the directors of the Company
in approving the Arrangement Agreement and the actions of the directors
and officers of the Company in executing and delivering the Arrangement
Agreement and any amendments thereto in accordance with its terms are
hereby ratified and approved.
4. Notwithstanding that this resolution has been passed (and the Plan of
Arrangement adopted) by the shareholders of the Company or that the
Arrangement has been approved by the Ontario Superior Court of Justice,
the directors of the Company are hereby authorized and empowered
without further notice to or approval of the shareholders of the
Company (i) to amend the Arrangement Agreement or the Plan of
Arrangement, to the extent permitted by the Arrangement Agreement, and
(ii) subject to the terms of the Arrangement Agreement, not to proceed
with the Arrangement.
5. Any director or officer of the Company be and is hereby authorized and
directed for and on behalf of the Company to execute, under the
corporate seal of the Company or otherwise, and to deliver to the
Director under the CBCA for filing articles of arrangement and such
other documents as are necessary or desirable to give effect to the
Arrangement and the Plan of Arrangement in accordance with the
Arrangement Agreement.
6. Any director or officer of the Company is hereby authorized and
directed for and on behalf of the Company to execute or cause to be
executed, under the seal of the Company or otherwise, and to deliver or
cause to be delivered, all such other documents and instruments and to
perform or cause to be performed all such other acts and things as in
such person's opinion may be necessary or desirable to give full effect
to the foregoing resolutions and the matters authorized thereby, such
determination to be conclusively evidenced by the execution and
delivery of such document, agreement or instrument or the doing of any
such act or thing.
A-1
APPENDIX B
ARRANGEMENT AGREEMENT
B-1
(Execution Version)
ARRANGEMENT AGREEMENT
AMONG
HUMMINGBIRD LTD.
AND
OPEN TEXT CORPORATION
AND
6575064 CANADA INC.
August 4, 2006
B-2
ARRANGEMENT AGREEMENT
THIS ARRANGEMENT AGREEMENT dated August 4, 2006,
A M O N G:
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"),
- and -
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
1.1 Definitions
-----------
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;
B-3
"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;
B-4
"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);
B-5
"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;
B-6
"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
3.1(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, divisionals, 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
B-7
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(1)(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 Interpretation Not Affected by Headings
---------------------------------------
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.
1.3 Number and Gender
-----------------
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.
1.4 Date for Any Action
-------------------
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.
1.5 Currency
--------
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.
1.6 Accounting Matters
------------------
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.
1.7 Schedules
---------
The following Schedules are annexed to this Agreement and are
incorporated by reference into this Agreement and form a part hereof:
Schedule A - Regulatory Approvals
Schedule B - Arrangement Resolution
Schedule C - Plan of Arrangement
Schedule D - Holding Company Participation Agreement
ARTICLE 2
THE ARRANGEMENT
2.1 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 News Release Announcing the Arrangement
---------------------------------------
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.
2.3 Interim Order
-------------
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.
2.4 Final Order
-----------
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.
2.5 Articles of Arrangement and Effective Date
------------------------------------------
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.
2.6 Meeting
-------
Subject to receipt of the Interim Order:
(a) 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;
(b) 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;
(c) 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;
(d) 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;
(e) 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;
(f) 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
(g) 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.
2.7 Approval of Hummingbird Shareholders
------------------------------------
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").
2.8 Securities and Corporate Compliance
-----------------------------------
(a) 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.
(b) 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.
(c) 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.
(d) 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.
2.9 Dissent
-------
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.
2.10 Closing
-------
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. 2.11 Preparation of Filings
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.
2.12 Communications
--------------
(a) 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).
(b) 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.
(c) 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.
(d) 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.
(e) 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.
(f) 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.
2.13 Withholding
-----------
(a) 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.
(b) 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.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF HUMMINGBIRD
3.1 Representations and Warranties
------------------------------
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:
(a) Board Approval.
(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:
(A) authorizing and approving this Agreement and the
Arrangement,
(B) authorizing Hummingbird to execute and deliver this
Agreement,
(C) authorizing Hummingbird and its subsidiaries to
consummate this Agreement on the terms set forth
herein and in the Plan of Arrangement,
(D) determining that the Plan of Arrangement is fair to
Hummingbird Shareholders and is in the best interests
of Hummingbird,
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(E) directing that the Arrangement Resolution be submitted
to a vote at a meeting of Hummingbird Shareholders,
and
(F) recommending that Hummingbird Shareholders approve the
Arrangement Resolution,
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.
(b) 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.
(c) 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.
(d) No Violations.
(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 forth 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.
(e) 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.
(f) 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.
(g) 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.
(h) 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.
(i) 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.
(j) 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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(k) 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. ss. 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 ss.
280G (or any corresponding provision of state, local or non-US
income Tax law).
(l) 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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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.
(m) 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.
(n) 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.
(o) 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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all the material assets owned by Hummingbird and its subsidiaries
which are used in connection with their respective businesses.
(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.
(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:
(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;
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(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
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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.
(r) 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.
(s) Pension and Employee Benefits.
(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
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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.
(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
B-29
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.
(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:
(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.
(u) 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.
(v) Intellectual Property and Software.
(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.
B-30
(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
B-31
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 or 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
B-32
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").
(w) Insurance. Hummingbird and its subsidiaries have policies of
insurance with responsible insurers in full force and effect
naming Hummingbird and its
B-33
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.
(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).
(y) Brokers and Advisors. Except for Lehman Brothers and Banc 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.
(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).
(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.
(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.
B-34
(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.
(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.
(ee) Cash. On March 31, 2006, Hummingbird and its subsidiaries had
not less than $94 million of consolidated cash (as defined by
GAAP).
(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.
(gg) Financial Institution. Hummingbird is not a "financial
institution" for the purpose of Section 142.2 of the Tax Act.
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
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:
B-35
(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.
(b) 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.
(c) No Violations.
(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
B-36
received, would not prevent or materially delay the making and
completion of the Plan of Arrangement by Parent or Acquisition
Sub.
(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.
(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.
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
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:
(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;
(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
B-37
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;
(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;
(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
B-38
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;
(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);
(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;
(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
B-39
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;
(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;
(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;
(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;
(k) Hummingbird shall not approve, adopt or implement a
shareholder rights plan or similar poison pill arrangement;
and
(l) 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.
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 by
Hummingbird or any of its subsidiaries
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under this Agreement, co-operate with Parent in connection therewith, in order
to consummate and make effective, as soon as reasonably practicable, the
Arrangement and, without limiting the generality of the foregoing, Hummingbird
shall and, where appropriate, shall cause its subsidiaries to:
(a) subject to Section 2.5, carry out the terms of the Interim
Order and the Final Order applicable to it and use
commercially reasonable efforts to comply promptly with all
requirements which applicable Law may impose on Hummingbird or
its subsidiaries with respect to the Arrangement;
(b) apply for and use all commercially reasonable efforts to
obtain all Regulatory Approvals relating to Hummingbird or any
of its subsidiaries which are required in order to consummate
the Arrangement under this Agreement and, in doing so, keep
Parent reasonably informed as to the status of the proceedings
related to obtaining the Regulatory Approvals, including
providing Parent with copies of all related applications and
notifications excluding any part thereof constituting
confidential information, in draft form, in order for Parent
to provide its comments thereon; provided that Hummingbird
shall not make any commitments, provide any undertakings or
assume any obligations, in each case that are or could
reasonably be expected to be material to Hummingbird or Parent
without the prior written consent of Parent, which shall not
be unreasonably withheld or delayed;
(c) subject to the approval of the Arrangement Resolution at the
Meeting in accordance with the provisions of the Interim
Order, (i) it will as soon as practicable thereafter, file,
proceed with and diligently pursue an application for the
Final Order in cooperation with Parent and Acquisition Sub
and, in applying for the Final Order, it will seek to cause
the terms thereof to be consistent with the provisions of this
Agreement and will oppose any proposal from any party that the
Final Order contain any provision inconsistent with this
Agreement, and (ii) if at any time after the issuance of the
Final Order and prior to the Effective Date, Hummingbird is
required by the terms of the Final Order or by Law to return
to Court with respect to the Final Order, it shall do so after
notice to, and in consultation and cooperation with, Parent
and Acquisition Sub;
(d) furnish promptly to Parent and Acquisition Sub a copy of each
notice, report, schedule or other document or communication
delivered or filed by Hummingbird in connection with the
Arrangement or the Interim Order or the Meeting with any
Governmental Entity in connection with, or in any way
affecting, the transactions contemplated herein;
(e) defend all lawsuits or other legal, regulatory or other
proceedings against Hummingbird challenging or affecting this
Agreement or the making or completion of the Arrangement;
(f) use commercially reasonable efforts to assist in effecting the
resignations of the Hummingbird directors and cause them to be
replaced as of the Effective Date by persons nominated by
Parent;
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(g) use commercially reasonable efforts to: (i) assist Parent in
obtaining all Regulatory Approvals referred to in Section
5.3(1)(a); (ii) obtain all necessary or desirable consents,
waivers or approvals under Material Contracts; provided that
Hummingbird and its subsidiaries shall not, without the prior
written consent of Parent (not to be unreasonably withheld or
delayed), pay or commit to pay any money or issue or commit to
issue any guarantee of any obligations in connection with
Hummingbird obtaining such consents, waivers or approvals; and
(iii) give all necessary or desirable notices under Material
Contracts;
(h) provide, on a timely basis, all reasonable cooperation in
connection with the arrangement of any financing as may be
reasonably requested by Parent, including (i) participation in
meetings and due diligence sessions upon reasonable notice,
(ii) furnishing Parent and its financing sources with
historical financial and other pertinent information regarding
Hummingbird and is subsidiaries as may be reasonably requested
by Parent, including historical financial statements and
financial data, (iii) providing Parent with historical
financial data to be used by Parent in connection with its
financing of the Transactions, (iv) providing and executing
documents as may be reasonably requested by Parent, and (v)
reasonably facilitating the provision and registration of
security and pledge of collateral (including, without
limitation, facilitating or obtaining any title policies or
surveys, removing liens or encumbrances and providing
affidavits, indemnity or other assurance reasonably
requested); provided that (A) none of Hummingbird or any
subsidiary shall be required to pay any commitment or other
similar fee or incur any other liability in connection with
any such financing prior to the Effective Time and (B) nothing
in this Section 5.2(h) shall be deemed to govern the matters
covered by Section 5.2(i);
(i) provide, on a timely basis, all reasonable cooperation in
connection with any dealings by Parent with any Canadian Tax
authority or Canadian Governmental Entity with oversight of
any Canadian Tax matters concerning any element of the
Transactions (including, without limitation, any element that
may be effected after the Effective Time by Parent) as may be
requested by Parent, including (i) participation in meetings,
(ii) furnishing Parent (or the relevant Governmental Entity)
with historical financial and other pertinent information
regarding Hummingbird and its subsidiaries as may be
reasonably requested by Parent and (iii) if required,
providing and executing an advance income tax ruling request
and documents related thereto; provided that Parent covenants
and agrees that no advance income tax ruling request or other
submissions of any kind shall be made to the Canada Revenue
Agency or any other Canadian Tax Authority or Canadian
Governmental Entity with respect to Canadian Tax matters that
identify or relate to Hummingbird or any of its subsidiaries
in any way without Hummingbird's prior written consent, such
consent not to be unreasonably withheld, delayed or
conditioned;
(j) provide or cause to be provided to Parent from time to time
all proxy return information and dissent notices with respect
to the Meeting on a timely basis;
(k) provide lists of Hummingbird Shareholders prepared by its
transfer agent and a list of holders of Hummingbird Options
(with full particulars as to the purchase,
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exercise or conversion price, vesting and expiry date) as well as
a security position listing from each depositary, including The
Canadian Depositary for Securities Limited, and deliver any such
lists to Parent promptly following the date hereof and promptly
deliver to Parent upon demand thereafter supplemental lists
setting out changes thereto; and
(l) subject to applicable Laws,
(i) effect such reorganizations of its business, operations and
assets or such other transactions as Parent may request, acting
reasonably (each a "Pre-Acquisition Reorganization") and
co-operate with Parent and its advisors in order to determine the
nature of the Pre-Acquisition Reorganizations that might be
undertaken and the manner in which they might most effectively be
undertaken; provided that the Pre-Acquisition Reorganizations are
not prejudicial or potentially prejudicial to Hummingbird or the
Hummingbird Shareholders, or would not impede or materially delay
the completion of the Transactions. Parent shall provide written
notice to Hummingbird of any proposed Pre-Acquisition
Reorganization at least ten business days prior to the Effective
Time. Upon receipt of such notice, Parent and Hummingbird shall,
if Hummingbird is required to do so pursuant to the immediately
preceding sentence, work co-operatively and use commercially
reasonable efforts to prepare prior to the Effective Time all
documentation necessary and do all such other acts and things as
are necessary to give effect to such Pre-Acquisition
Reorganization. If Parent does not acquire all of the Hummingbird
Shares, Parent shall promptly reimburse Hummingbird for all
reasonable costs and expenses, including reasonable legal fees
and disbursements, incurred in connection with any proposed
Pre-Acquisition Reorganization,
(ii) assist Parent in developing the detailed operating,
staffing, financial and other business models for Hummingbird's
consolidated business in order to facilitate prompt
implementation of such models following the Effective Time,
(iii) not take material action inconsistent with such models
except where necessary, in the opinion of Hummingbird, to avoid
prejudice to it or the Hummingbird Shareholders or to avoid
impeding or materially delaying the completion of the
transactions contemplated hereby, and
(iv) at the request of Parent made at any time following the
expiration or termination of the waiting or review period under
the HSR Act, the Competition Act (Canada), the Investment Canada
Act (Canada) or under any other anti-trust, competition or
merger-review Law, commence implementation of such models at
Parent's expense to the extent that such implementation would
not, in the opinion of Hummingbird, prejudice it or the
Hummingbird Shareholders, or impede or materially delay the
completion of the transactions contemplated hereby, provided that
in no event shall Hummingbird be obligated to terminate any
employees.
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5.3 Covenants of Parent Regarding the Performance of Obligations
------------------------------------------------------------
(1) Parent shall, and shall cause its subsidiaries to, perform all
obligations required or desirable to be performed by Parent or any of its
subsidiaries under this Agreement, co-operate with Hummingbird in connection
therewith, in order to consummate and make effective, as soon as reasonably
practicable, the Arrangement and, without limiting the generality of the
foregoing, Parent shall and where appropriate shall cause its subsidiaries to:
(a) apply for and use all commercially reasonable efforts to
obtain all Regulatory Approvals relating to Parent or any of
its subsidiaries which are required in order to consummate the
Arrangement under this Agreement and, in doing so, keep
Hummingbird reasonably informed as to the status of the
proceedings related to obtaining the Regulatory Approvals,
including providing Hummingbird with copies of all related
applications and notifications excluding any part thereof
constituting confidential and/or privileged information, in
draft form, in order for Hummingbird to provide its reasonable
comments thereon; provided that, for greater certainty,
nothing contained in this Agreement shall restrict or limit
Parent from making such commitments or providing such
undertakings or assuming such obligations as it considers, in
its sole discretion, necessary or desirable in order to obtain
the Regulatory Approvals or any other sanctions, rulings,
consents, orders, exemptions, permits and other approvals
required by applicable antitrust or competition Law; provided
further that nothing herein shall require Parent to make any
such commitments, provide any such undertakings or assume any
such obligations;
(b) use commercially reasonable efforts to: (i) assist Hummingbird
in obtaining the Regulatory Approvals referred to in Section
5.2(b); and (ii) assist Hummingbird in obtaining all consents,
waivers or approvals that Hummingbird is to use commercially
reasonable efforts to obtain pursuant to Section 5.2(g),
provided that Parent shall not be obligated to pay any fees or
guarantee any obligations in connection with Hummingbird
obtaining such consents, waivers or approvals;
(c) furnish promptly to Hummingbird a copy of each notice, report,
schedule or other document or communication delivered or filed by
Parent in connection with the Arrangement or the Interim Order or
the Meeting with any Governmental Entity in connection with, or
in any way affecting, the transactions contemplated herein
excluding any part thereof constituting confidential and/or
privileged information;
(d) defend all lawsuits or other legal, regulatory or other
proceedings against Parent challenging or affecting this
Agreement or the making or completion of the Arrangement;
(e) without the consent of Hummingbird, which shall not be
unreasonably withheld or delayed, not amend the agreement among
Parent, Acquisition Sub and Fred Sorkin (as a Hummingbird
shareholder) or the agreement among Parent, Acquisition Sub and
Alan Barry Litwin (as a Hummingbird shareholder), in each case
providing for, among other things, the Hummingbird shareholder
voting in favour of the Plan of Arrangement at the Meeting; and
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(2) Each of Parent and Acquisition Sub shall use commercially
reasonable efforts to ensure that Acquisition Sub has funds in an
amount not less than the Maximum Cash Amount to be deposited with
the Depositary no later than immediately prior to the Effective
Time.
(3) Parent shall cause the Open Text Offer to expire in accordance
with its terms, and shall cause the conditions in the Open Text
Offer to not be amended or waived, provided that: (a) this
Agreement has not been terminated for any reason; (b) there has
been no breach of or failure to perform any representation,
warranty, covenant or agreement on the part of Hummingbird set
forth in this Agreement, and no such representation and warranty
shall have become untrue after the date of this Agreement, such
that Section 6.2(a) or 6.2(b) would not be satisfied on the date
of expiry of the Open Text Offer.
5.4 Mutual Covenants
----------------
Each of the Parties covenants and agrees that, except as contemplated
in this Agreement, during the period from the date of this Agreement until the
earlier of the Effective Time and the time that this Agreement is terminated in
accordance with its terms:
(a) subject to the limitations set forth in Sections 5.2 and 5.3, it
shall, and shall cause its subsidiaries to, use all commercially
reasonable efforts to satisfy (or cause the satisfaction of) the
conditions precedent to its obligations hereunder as set forth in
Article 6 to the extent the same is within its control and to
take, or cause to be taken, all other action and to do, or cause
to be done, all other things necessary, proper or advisable under
all applicable Laws to complete the Plan of Arrangement,
including using its commercially reasonable efforts to, subject
to the limitations set forth in Sections 5.2 and 5.3: (i) obtain
all Regulatory Approvals required to be obtained by it; (ii)
effect all necessary registrations, filings and submissions of
information requested by Governmental Entities required to be
effected by it in connection with the Plan of Arrangement; (iii)
oppose, lift or rescind any injunction or restraining order
against it or other order or action against it seeking to stop,
or otherwise adversely affecting its ability to make and
complete, the Plan of Arrangement; (iv) co-operate with the other
Party in connection with the performance by it and its
subsidiaries of their obligations hereunder; (v) co-operate with
the other Party to enable Parent to satisfy the conditions set
out in the Commitment Letter, including by providing Parent with
cash flow and other financial information on a legal entity basis
with respect to subsidiaries of Hummingbird and by taking such
actions to facilitate the provision of security relating to the
loans described in the Commitment Letter; and
(b) it shall not take any action or refrain from taking any
commercially reasonable action which is inconsistent with this
Agreement, including, without limitation, purporting to terminate
this Agreement other than in accordance with Section 8.2(1), or
which could reasonably be expected to impede the consummation of
the transactions contemplated by this Agreement.
5.5 Cash; Accounts Payable and Accounts Receivable
----------------------------------------------
(1) Hummingbird agrees that it shall use its commercially reasonable
efforts to ensure that Lender Sub shall have such amount of cash of Hummingbird
or its subsidiaries that Parent
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requests sufficiently in advance of the Effective Date to be used for the
purpose of consummating the Transactions (which additional cash shall not be
in an amount that would reasonably be expected to result in a breach of
Section 5.5(2)), provided that Hummingbird shall in any event, if Parent
requests the Loan Alternative by providing written notice to Hummingbird at
least ten business days prior to the Effective Time, ensure that Lender Sub
shall have not less than $58 million in cash immediately prior to the
Effective Time. In connection with the completion of the Plan of Arrangement
and as set forth in the Plan of Arrangement, Lender Sub will, if requested by
Parent in accordance with the terms of such plan, make a loan to Acquisition
Sub in an amount equal to the sum of (a) the Share Loan Amount, plus (b) any
additional cash of Hummingbird or its subsidiaries that Parent requests in
accordance with the foregoing. In connection with the completion of the Plan
of Arrangement and as set forth in the Plan of Arrangement, Lender Sub will,
if requested by Parent in accordance with the terms of such plan, make a loan
to Hummingbird in an amount equal to the Option Loan Amount to be used to
satisfy the payment obligations of Hummingbird under Section 2.3(b) of the
Plan of Arrangement. Each of Hummingbird and Parent will consult and cooperate
with each other to accomplish the cash transfers contemplated by this Section
5.5(1) in a commercially reasonable manner. Hummingbird agrees that it shall
ensure that none of the cash constituting the loan referred to in the second
sentence of this Section 5.1(1) shall have come from Hummingbird or any of its
subsidiaries organized or incorporated under the laws of Canada or any
jurisdiction in Canada.
(2) Hummingbird agrees that it shall ensure that Hummingbird and its
subsidiaries shall have, immediately prior to three minutes after the Effective
Time (and, without limitation, after disbursement of the loans referred to in
the second and third sentences of Section 5.5(1), the deposit of funds
contemplated by Section 6.3(e) and the payments of the amounts contemplated
under Sections 2.3(b) and 2.3(c) of the Plan of Arrangement), consolidated cash
(as defined by GAAP) in an amount which is not less that the sum of:
(i) Hummingbird's then-current bona fide estimate of all of the fees,
costs and expenses (including legal fees, accounting fees,
financial advisory fees, regulatory fees, disbursements of
advisors and printing and mailing costs) that Hummingbird and any
of its subsidiaries has incurred, or will incur, in connection
with the Symphony Arrangement Agreement, the Open Text Offer and
this Agreement and the Transactions which have not already been
paid (but, for greater certainty, not including any such fees of
Parent or Acquisition Sub or the fees or expenses of the lenders
under the Commitment Letter in connection with the Commitment
Letter or the related loans by such lender), plus
(ii) Hummingbird's then current bona fide estimate of amounts payable
to the selling shareholders under the acquisition agreement
pursuant to which Hummingbird acquired on June 21, 2005 RedDot
Solutions AG in full and final satisfaction of all amounts owing
to such selling shareholders under the provisions providing for
contingent payments by Hummingbird based on the financial
performance of RedDot Solutions AG for its fiscal year ended
December 31, 2005 which have not already been paid, plus
(iii) $22 million, less the aggregate amount paid or payable by
Hummingbird under Sections 7.3 or 7.4 of the Symphony Arrangement
Agreement, plus
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(iv) if the consolidated accounts payable (as defined by GAAP) of
Hummingbird and its subsidiaries is greater than $13,500,000, the
amount of such difference.
5.6 Deliveries
----------
In connection with the Effective Time, Hummingbird shall deliver to
Parent: (a) a certificate of compliance for Hummingbird issued pursuant to the
CBCA dated within three (3) days prior to the Effective Date; (b) a certified
copy of the resolutions of the Board of Directors of Hummingbird and the
Hummingbird Shareholders approving the Transactions; (c) a certified copy of
Hummingbird's constating documents; and (d) such other documents relating to the
transactions contemplated by this Agreement as Parent may reasonably request.
5.7 Interim Financials
------------------
Hummingbird's unaudited interim financial statements as at and for the
nine months ended June 30, 2006 (including the notes thereto and related MD&A)
(the "Interim Financials"): (a) will comply in all material respects with
Securities Laws. The Interim Financials will be prepared in accordance with GAAP
consistently applied (except (a) as otherwise indicated in such financial
statements and the notes thereto, (b) as unaudited interim statements they 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 will 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 to normal period-end
adjustments) and reflect reserves required by GAAP consistently applied in
respect of all material contingent liabilities, if any, of Hummingbird and its
subsidiaries on a consolidated basis.
5.8 Other Deliveries
----------------
Hummingbird shall, as soon as practicable following the date of this
Agreement and, in any event, on or before August 9, 2006, deliver or otherwise
make available to Parent for its review any employment, retention, change of
control or other agreement with any officer, employee, contractor, consultant or
advisor whose base annual compensation is at least $100,000, in each case which
Hummingbird or any of its subsidiaries is a party to or bound or governed by,
other than such agreements as have been delivered or made available to Parent
prior to the date of this Agreement.
5.9 Options
-------
Hummingbird shall propose as additional business at the Meeting the
ratification by Hummingbird Shareholders of the grant of 50,000 Hummingbird
Options to each of Hadley C. Ford, John B. Wade III and John A. MacDonald on
March 3, 2006. However, if such grants of Hummingbird Options are not approved
by Hummingbird Shareholders at the Meeting in accordance with applicable law and
stock exchange requirements, Hummingbird agrees to, promptly following the
effectiveness of the Arrangement on the Effective Date, make or cause to be made
to each of such individuals in respect of each of his 50,000 Hummingbird Options
purported to be held a cash payment equal to the amount (if any) by which the
Purchase Price exceeds the product of (x) the exercise price thereof (in
Canadian dollars), being $26.20 per Hummingbird Share, multiplied by (y) the
Exchange Factor.
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ARTICLE 6
CONDITIONS TO ARRANGEMENT
6.1 Conditions to the Obligations of Each Party
-------------------------------------------
The respective obligations of Parent and Hummingbird to consummate the
Arrangement are subject to the satisfaction or, if permissible, waiver of the
following conditions:
(a) Hummingbird Shareholder Approval. The Arrangement Resolution
shall have been approved, adopted and authorized by the
Shareholder Approval at the Meeting, or at any adjournment or
postponement thereof, in accordance with the CBCA and the Interim
Order.
(b) Court Orders. The Interim Order and the Final Order shall have
been obtained in form and substance reasonably satisfactory to
each of Parent and Hummingbird and shall not have been set aside
or modified in a manner that is reasonably unacceptable to such
Parties, acting reasonably, on appeal or otherwise.
(c) No Contrary Order. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any Law which is then in
effect and has the effect of making the Arrangement illegal or
otherwise preventing or prohibiting consummation of the
Arrangement.
(d) Regulatory Approvals. All Regulatory Approvals (other than those
relating to any and all Safe Income Transactions (as defined in
Section 7.8)) shall have been obtained or concluded.
(e) Proceedings. There shall not be pending or overtly, threatened by
or before any Governmental Entity any proceeding seeking an
injunction, judgment, decree or other order to prevent or
challenge the consummation of the Arrangement or any of the other
transactions contemplated hereby.
6.2 Conditions to the Obligations of Parent
---------------------------------------
The obligations of Parent to consummate the Arrangement are subject to
the satisfaction or, if permissible, waiver of the following additional
conditions (and in the case of Section 6.2(a) and Section 6.2(b)(i), subject to
Section 8.2(3)):
(a) Representations and Warranties. (i) Disregarding any Material
Adverse Effect or materiality qualifiers contained therein, all
representations and warranties of Hummingbird set forth in this
Agreement other than the Identified Hummingbird Representations
and the Identified Hummingbird Monetary Representations shall
be true and correct in all respects except to the extent the
failure of such representations or warranties to be so true and
correct would not have, individually or in the aggregate, a
Material Adverse Effect on Hummingbird, (ii) the Identified
Hummingbird Representations shall be true and correct in all
respects except to the extent that a failure of such
representations or warranties to
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be so true and correct relates to the number of Hummingbird
Shares issuable upon the exercise of Hummingbird Options and the
true and correct number of Hummingbird Shares issuable upon the
exercise of Hummingbird Options does not exceed the number of
such Hummingbird Shares set out in Section 3.1(e) by more than
10,000, and (iii) the Identified Hummingbird Monetary
Representations shall be true and correct in all respects except
to the extent that any and all deficiencies in the monetary
amount disclosed by Hummingbird in the Identified Hummingbird
Monetary Representations that are not true and correct do not
exceed, in the aggregate, $500,000, in the case of each of (i),
(ii) and (iii): (A) as of the date of this Agreement and (B) as
of the Effective Date as though then made on and as of the
Effective Date, except for those representations and warranties
that address matters only as of a particular date (in which case
(1) disregarding any Material Adverse Effect or materiality
qualifiers contained therein, all representations and warranties
other than the Identified Hummingbird Representations and the
Identified Hummingbird Monetary Representations shall be true and
correct in all respects as of such date except to the extent the
failure of such representations or warranties to be so true and
correct would not have, individually or in the aggregate, a
Material Adverse Effect on Hummingbird, (2) the Identified
Hummingbird Representations shall be true and correct in all
respects as of such date except to the extent that a failure of
such representations or warranties to be so true and correct
relates to the number of Hummingbird Shares issuable upon the
exercise of Hummingbird Options and the true and correct number
of Hummingbird Shares issuable upon the exercise of Hummingbird
Options does not exceed the number of such Hummingbird Shares set
out in Section 3.1(e) by more than 10,000, and (3) the Identified
Hummingbird Monetary Representations shall be true and correct in
all respects as of such date except to the extent that any and
all deficiencies in the monetary amount disclosed by Hummingbird
in the Hummingbird Monetary Representation that are not true and
correct do not exceed, in the aggregate, $500,000).
(b) Agreements and Covenants. Hummingbird shall have performed or
complied: (i) in all material respects with all agreements and
covenants required by this Agreement (other than Sections 5.5,
7.1 and 7.2) to be performed or complied with by Hummingbird at
or prior to the Effective Time; and (ii) in all respects with
Section 5.5 immediately prior to the Effective Time and
Sections 7.1 and 7.2 at and prior to the Effective Time.
(c) Officer's Certificate. Hummingbird shall have delivered to
Parent a certificate, dated the Effective Date, signed by each
of the chief executive officer and the chief financial officer
of Hummingbird (on Hummingbird's behalf and without personal
liability), certifying as to the satisfaction or, if
permissible, waiver of the conditions specified in Sections
6.2(a) and 6.2(b).
(d) Dissent. Dissent Rights shall not have been exercised and
remain outstanding at the Effective Time with respect to more
than 10% of the outstanding Hummingbird Shares in connection
with the Arrangement.
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(e) Satisfaction of Commitment Letter Conditions. The satisfaction,
in accordance with the terms of the Commitment Letter as in
effect as of the date hereof, of the conditions precedent set
forth in the Commitment Letter.
(f) RedDot Solutions AG. Hummingbird shall have paid not more than
13,500,000 Euros to the selling shareholders under the
acquisition agreement pursuant to which Hummingbird acquired on
June 21, 2005 RedDot Solutions AG in full and final
satisfaction of all amounts owing to such selling shareholders
under the provisions providing for contingent payments by
Hummingbird based on the financial performance of RedDot
Solutions AG for its fiscal year ended December 31, 2005.
(g) Completion of Safe Income Transactions. All Safe Income
Transactions (as defined in Section 7.8) shall have been
completed in a manner satisfactory to Parent acting reasonably,
and, without limiting the generality of the foregoing, each
holding company involved in any Safe Income Transaction ("SI
Holdco") shall have been wound up for purposes of the Tax Act
(having regard to the published administrative policy of the
Canada Revenue Agency), and all Hummingbird Shares owned at any
time by such SI Holdco shall have been distributed by such SI
Holdco to Hummingbird on such winding-up, and all such
Hummingbird Shares shall have been cancelled and shall no
longer be outstanding.
(h) Regulatory Approvals. All Regulatory Approvals relating to any
and all Safe Income Transactions shall have been obtained or
concluded.
6.3 Conditions to the Obligations of Hummingbird
--------------------------------------------
The obligations of Hummingbird to consummate the Arrangement are
subject to the satisfaction or, if permissible, waiver of the following
additional conditions (and in the case of Section 6.3(a) and Section 6.3(b),
subject to Section 8.2(3)):
(a) Representations and Warranties. The representations and
warranties of Parent in this Agreement that are qualified by
materiality shall be true and correct in all respects, and the
representations and warranties of Parent contained in this
Agreement that are not so qualified shall be true and correct
in all material respects, in each case, (i) as of the date of
this Agreement and (ii) as of the Effective Date as though then
made on and as of the Effective Date, except for those
representations and warranties that address matters only as of
a particular date (in which case such representations and
warranties that are qualified by materiality shall be true and
correct as of such date and all other representations and
warranties shall be true and correct in all material respects
as of such date).
(b) Agreements and Covenants. Parent shall have performed or
complied with in all material respects all agreements and
covenants required by this Agreement to be performed or
complied with by Parent at or prior to the Effective Time.
(c) Officer's Certificate. Parent shall have delivered to
Hummingbird a certificate, dated the Effective Date, signed by
an officer of Parent (on Parent's behalf and
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without personal liability), certifying as to the satisfaction
or, if permissible, waiver of the conditions specified in
Sections 6.3(a) and 6.3(b).
(d) Authority. The Board of Directors of each of Parent and
Acquisition Sub shall have adopted all necessary resolutions
and all other necessary corporate actions shall have been taken
by each of Parent and Acquisition Sub to permit the
consummation of the Transactions.
(e) Deposit. Parent shall have deposited, or caused Acquisition Sub
to deposit, with the Depositary in escrow the Maximum Cash
Amount.
ARTICLE 7
ADDITIONAL AGREEMENTS
7.1 Non-Solicitation
----------------
(1) Hummingbird shall not, directly or indirectly, through any
officer, director, employee, representative or agent of Hummingbird or any of
its subsidiaries, (a) solicit, initiate, facilitate or encourage (including by
way of furnishing information or entering into any form of agreement,
arrangement or understanding, but excluding compliance by Hummingbird with its
continuous reporting obligations under applicable securities Laws in the
ordinary course consistent with past practice) any inquiries or proposals
regarding, constituting or that would reasonably be expected to lead to, an
Acquisition Proposal, (b) participate in any discussions or negotiations
regarding an Acquisition Proposal, (c) withdraw or modify, or propose publicly
to withdraw or modify, in a manner adverse to Parent, the approval of the
Board of Directors of Hummingbird of the Plan of Arrangement, (d) approve or
recommend, or propose publicly to approve or recommend, any Acquisition
Proposal or (e) accept or enter into, or propose publicly to accept or enter
into, any agreement, understanding or arrangement in respect of an Acquisition
Proposal; provided that nothing contained in this Agreement shall prevent the
Board of Directors of Hummingbird from taking any of the actions described in
clauses (a) through (e) above in respect of an unsolicited bona fide written
Acquisition Proposal received after the date hereof that:
(a) did not result from a breach of any agreement between the
person making such Acquisition Proposal and Hummingbird or any
of its subsidiaries, or this Section 7.1;
(b) involves not less than 66? percent of the outstanding
Hummingbird Shares or not less than 66? percent of the
consolidated assets (measured on a fair value) of Hummingbird;
and
(c) in respect of which the Board of Directors of Hummingbird
determines in its good faith judgment pursuant to the exercise
of its fiduciary duties under applicable Laws, after
consultation with its financial advisors and its outside
counsel, that there is a substantial likelihood that any
required financing will be obtained and that the Acquisition
Proposal would, if consummated in accordance with its terms
(but not assuming away any risk of non-completion), result in a
transaction that: (i) is reasonably capable of completion in
accordance with its terms without significant additional delay,
taking into account all legal, financial, regulatory,
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financing and other aspects of such Acquisition Proposal and the
person making such Acquisition Proposal; and (ii) is more
favourable from a financial point of view to Hummingbird
Shareholders than under the Plan of Arrangement on a
cash-equivalent basis taking into account any approval
requirements and all other financial, legal, regulatory and
other aspects of such proposal (including any proposal made by
Parent or Acquisition Sub in response to such Acquisition
Proposal or otherwise)
(any such Acquisition Proposal being referred to herein as a "Superior
Proposal").
(2) Hummingbird shall, and shall cause the officers, directors,
employees, representatives and agents of Hummingbird and its subsidiaries to,
immediately terminate any existing discussions or negotiations with any
parties (other than Parent) with respect to any proposal that constitutes, or
may reasonably be expected to constitute, an Acquisition Proposal. Hummingbird
agrees not to release any third party from (a) any confidentiality agreement
or (b) any standstill agreement or provision in each case to which such third
party is a party unless such third party has made a Superior Proposal and
Hummingbird has accepted such Superior Proposal. Hummingbird shall immediately
following the public announcement by the Parties of this Agreement request the
return or destruction of all information provided to any third party which, at
any time since January 1, 2005, has entered into a confidentiality agreement
with Hummingbird relating to a potential Acquisition Proposal except to the
extent that a request has previously been made that such information be
returned or destroyed, and, upon the request of Parent, shall use all
commercially reasonable efforts to ensure that such requests are honoured.
(3) Hummingbird shall immediately notify Parent of, at first orally
and then, within 24 hours, in writing, any Acquisition Proposal or inquiry
that would reasonably be expected to lead to an Acquisition Proposal, in each
case received after the date hereof of which any of its directors or officers
become aware, or any amendments to the foregoing, or any request for nonpublic
information relating to Hummingbird or any of its subsidiaries in connection
with an Acquisition Proposal or for access to the properties, books or records
of Hummingbird or any of its subsidiaries by any person that informs
Hummingbird or such subsidiary that it is considering making, or has made, an
Acquisition Proposal and any amendment thereto. Hummingbird shall keep Parent
promptly and reasonably informed from time to time of the status, including
any change to the material terms of any such Acquisition Proposal or inquiry.
Such notice shall include or be accompanied by a copy of all documentation
relating to any Acquisition Proposal and any amendment thereto and a
description of all material terms of any oral or other communications related
to any Acquisition Proposal, including the identity of the person making such
Acquisition Proposal and such other details as Parent may reasonably request.
(4) If Hummingbird receives a request for material non-public
information from a person who proposes an unsolicited bona fide Acquisition
Proposal, Hummingbird may request clarifications in writing from such person
solely for purposes of valuing, and solely in respect of, any non-cash
consideration that is offered under such Acquisition Proposal, provided that
such clarifications are reasonably necessary as part of the efforts of the
Board of Directors of Hummingbird to ascertain whether such Acquisition
Proposal is, or is reasonably likely to be, if consummated in accordance with
its terms, a Superior Proposal. If Hummingbird receives a request for material
non-public information from a person who proposes an unsolicited bona fide
Acquisition Proposal and the Board of Directors of Hummingbird determines that
such proposal would reasonably likely be, if consummated in accordance with
its terms, a Superior Proposal,
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then, and only in such case, the Board of Directors of Hummingbird
may, subject to the execution by such person of a confidentiality agreement
having substantially the same terms as the Non-Disclosure Agreement, provide
such person with access in accordance with subsection (1) to such information
regarding Hummingbird, acting reasonably, provided however that the person
making the Acquisition Proposal shall not be precluded thereunder from making
the Acquisition Proposal, and provided further that Hummingbird sends
immediately a copy of any such confidentiality agreement to Parent upon its
execution and Parent is immediately provided with a list and copies of all
information provided to such person not previously provided to Parent and is
immediately provided with access to information similar to that which was
provided to such person.
(5) Hummingbird shall ensure that its officers and directors and
those of its subsidiaries and any financial or other advisors, agents or
representatives retained by it are aware of the provisions of this Section,
and Hummingbird shall be responsible for any breach of this Section by any
such person or its advisors or representatives.
(6) Nothing contained in this Section 7.1 shall prohibit the Board of
Directors of Hummingbird from making any disclosure to all of the Hummingbird
Shareholders prior to the Outside Date if, in the good faith judgment of the
Board of Directors of Hummingbird, after consultation with outside counsel,
the failure to make such disclosure would be inconsistent with its fiduciary
duties or would contravene applicable Laws (including Section 99 of the
Securities Act (Ontario)), provided that any such disclosure that relates to
an Acquisition Proposal shall be deemed to constitute a basis for termination
of this Agreement by Parent pursuant to Section 8.2(1)(e) unless the Board of
Directors of Hummingbird reaffirms its recommendation to the Hummingbird
Shareholders to accept the Offer in such disclosure.
7.2 Right to Match
--------------
(1) Subject to Section 7.2(2), Hummingbird covenants that it will not
accept, approve, recommend or enter into any agreement, understanding or
arrangement in respect of a Superior Proposal (other than a confidentiality
agreement permitted by Section 7.1(4)) unless:
(a) Hummingbird has complied with its obligations under Section 7.1
and the other provisions of this Article 7 and has provided
Parent with a copy of all material documentation and a summary
of any material oral or other communications relating to the
Superior Proposal (the "Superior Proposal Information");
(b) a period (the "Response Period") of five (5) business days
shall have elapsed from the date on which Parent received both
the Superior Proposal Information together with written notice
from the Board of Directors of Hummingbird that the Board of
Directors of Hummingbird determined, subject only to compliance
with this Section 7.2, to accept, approve, recommend or enter
into a binding agreement to proceed with the Superior Proposal
Information; and
(c) if the Response Period would not terminate on or before the
date fixed for the Meeting, Hummingbird shall, upon the written
request of Parent, adjourn the Meeting to a date selected by
Parent that is not less than two nor more than 20 business days
after the expiration of the Response Period.
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(2) During the Response Period, Parent will have the right, but not
the obligation, to offer to amend the terms of the Transactions. The Board of
Directors of Hummingbird will review any such proposal by Parent to amend the
terms of the Transactions, including an increase in, or modification of, the
consideration to be received by the holders of Hummingbird Shares, to
determine whether the Acquisition Proposal to which Parent is responding would
be a Superior Proposal when assessed against the Transactions as it is
proposed by Parent to be amended. If the Board of Directors of Hummingbird
does not so determine, the Board of Directors of Hummingbird will promptly
reaffirm its recommendation of the Transactions as amended and Hummingbird
will not implement the proposed Superior Proposal. If the Board of Directors
of Hummingbird does so determine, Hummingbird may on termination of this
Agreement in accordance with Section 8.2(1)(g) and payment of the fee to
Parent pursuant to Section 7.3, approve, recommend, accept or enter into an
agreement, understanding or arrangement to proceed with the Superior Proposal.
(3) Each successive amendment to any Acquisition Proposal that
results in an increase in, or modification of, the consideration (or value of
such consideration) to be received by the holders of Hummingbird Shares shall
constitute a new Acquisition Proposal for the purposes of this Section 7.2 and
Parent shall be afforded a new Response Period in respect of each such
Acquisition Proposal.
7.3 Certain Payments
----------------
(1) Notwithstanding any other provision relating to the payment of
fees, including the payment of brokerage fees, in the event that:
(a) Parent has terminated this Agreement pursuant to Section
8.2(1)(e);
(b) Hummingbird has terminated this Agreement pursuant to Section
8.2(1)(g);
(c) (i) (A)(1) this Agreement has been terminated pursuant to
Section 8.2(1)(h) or 8.2(1)(i) and (2) the Arrangement has
failed to receive the requisite approval of the Hummingbird
Shareholders in accordance with applicable Law; or
(B)(1) this Agreement has been terminated pursuant to
Section 8.2(1)(c), provided that in the case of a
breach of a representation or warranty such breach
was made knowingly by Hummingbird;
(ii) an Acquisition Proposal has been negotiated or discussed
with Hummingbird (directly or indirectly through any officer,
director, employee, representative or agent of Hummingbird or
any of its subsidiaries), made or publicly announced or an
inquiry to Hummingbird (directly or indirectly through any
officer, director, employee, representative or agent of
Hummingbird or any of its subsidiaries) concerning an
Acquisition Proposal has been made, in each case prior to the
termination of this Agreement; and
(iii) (A) an agreement or a letter of intent in respect of any
Acquisition Proposal has been entered into by Hummingbird on or
before the first anniversary
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of the termination of this Agreement and such Acquisition
Proposal has been completed; or
(B) any Acquisition Proposal, in respect of which
Hummingbird has not entered into an agreement or a
letter of intent, has been completed on or before the first
anniversary of the termination of this Agreement; or
(d) Hummingbird has breached its obligations under Section 7.1 or
Section 7.2,
then Hummingbird shall promptly, but in no event later than the Payment Deadline
(defined below), make a payment to Parent in the amount of $12,356,544, less any
amounts paid to Parent pursuant to Section 7.4 by wire transfer of immediately
available funds to an account designated by Parent. Hummingbird acknowledges
that the agreements contained in this Section 7.3(1) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
Parent and Acquisition Sub would not enter into this Agreement. Notwithstanding
anything to the contrary, this Section 7.3 shall survive completion of any and
all of the Transactions. Payment Deadline means: the fifth business day
following termination of this Agreement in the case of a payment to be made
under Section 7.3(1)(a); the time of termination of this Agreement in the case
of a payment to be made under Section 7.3(1)(b); the fifth business day
following completion of an Acquisition Proposal in the case of a payment to be
made under Section 7.3(1)(c); and the fifth business day following Parent's
request for payment in the case of a payment to be made under Section 7.3(1)(d).
7.4 Fees and Expenses
-----------------
(1) Subject to subsections (2) and (3) of this Section 7.4, each
Party shall pay all fees, costs and expenses, including legal fees, accounting
fees, financial advisory fees, regulatory fees, stock exchange fees,
disbursements of advisors and printing and mailing costs, incurred by such
Party in connection with this Agreement and the Transactions and any financing
thereof.
(2) In the event that:
(a) this Agreement is terminated pursuant to Section 8.2(1)(a) or
8.2(1)(c); or
(b) (i) this Agreement is terminated pursuant to Section 8.2(1)(h)
or 8.2(1)(i); and
(ii) the Arrangement has failed to receive the requisite
approval of the Hummingbird Shareholders in accordance with
applicable Law, then Hummingbird shall promptly, but in no
event later than five business days following the request by
Parent, pay all of the charges and expenses incurred by Parent
and Acquisition Sub in connection with this Agreement and the
Transactions and the financing thereof, subject to a maximum of
$2,000,000 (which maximum amount will be reduced to $1,000,000
if the Agreement has been terminated pursuant to Section
8.2(1)(i) in circumstances where the Hummingbird Shareholders
have voted on the Arrangement Resolution at the Meeting but the
Arrangement Resolution failed to receive the requisite approval
of at least two-thirds of the votes cast at the Meeting), as
reimbursement to Parent and Acquisition Sub payable by wire
transfer of same day funds to or to the order
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of Parent, provided however, that no payment under Section 7.4(2)
shall be made if a payment has been made under Section 7.3.
(3) Each Party acknowledges that the agreements contained in this
Section 7.4 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, neither Party would enter into
this Agreement. Notwithstanding anything to the contrary, this Section 7.4
shall survive completion of any and all of the Transactions.
7.5 Liquidated Damages and Injunctive Relief
----------------------------------------
Each of the Parties acknowledges that all of the payment amounts set
out in Sections 7.3 and 7.4 are payments of liquidated damages which are a
genuine pre-estimate of the damages Parent and Acquisition Sub, on the one hand,
or Hummingbird, on the other hand (as the case may be) will suffer or incur as a
result of the event giving rise to such payment and the resultant termination of
this Agreement and are not penalties. Each of the Parties irrevocably waives any
right it may have to raise as a defense that any such liquidated damages are
excessive or punitive. For greater certainty, the Parties agree that, subject to
Sections 7.3 and 7.4, payment of the amounts determined pursuant to Sections 7.3
and/or 7.4 in the manner provided in respect thereof is the sole monetary remedy
of the Party receiving such payment. Nothing contained herein shall preclude a
Party from seeking injunctive relief to restrain any breach or threatened breach
of the covenants or agreements set forth in this Agreement or otherwise to
obtain specific performance of any of such acts, covenants or agreements,
without the necessity of posting a bond or security in connection therewith.
7.6 Access to Information; Confidentiality
--------------------------------------
(1) From the date hereof until the earlier of the Effective Time and
the termination of this Agreement, upon reasonable notice and subject to
applicable Law, including pre-merger notification and other competition law
requirements, Hummingbird shall, and shall cause its subsidiaries and their
respective officers, directors, employees, independent auditors, accounting
advisers and agents to, afford to Parent and to the officers, employees,
agents and representatives of Parent such access as Parent may reasonably
require at all reasonable times, including for the purpose of facilitating
integration business planning, to their officers, employees, agents,
properties, books, records and Contracts, and shall furnish Parent with all
data and information as Parent may reasonably request. Parent and Hummingbird
acknowledge and agree that information furnished pursuant to this Section
shall be subject to the terms and conditions of the Non-Disclosure Agreement.
(2) Parent and Hummingbird acknowledge that information received
pursuant to this Section 7.6 may be personal information under applicable
privacy and other Laws, or non-public or proprietary in nature and therefore
all such information shall be deemed to be and shall be treated as
confidential information for purposes of the Non-Disclosure Agreement. Parent
and Hummingbird further acknowledge their obligation to maintain the
confidentiality of such confidential information in accordance with the
Non-Disclosure Agreement. If any material is withheld by Hummingbird or any of
its subsidiaries because of the confidential nature of such material, or
otherwise, Hummingbird or such subsidiary shall inform Parent as to the
general nature of what is being withheld and such information may, in the sole
discretion of Hummingbird, be disclosed to external advisors of Parent.
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7.7 Insurance and Indemnification
-----------------------------
(1) Parent will, or will cause Acquisition Sub to, at Parent's
option, either (a) maintain in effect without any reduction in scope or
coverage for not less than six years from the Effective Date customary
policies of directors' and officers' liability insurance providing protection
no less favourable to the protection provided by the policies maintained by
Hummingbird in favour of the directors and officers of Hummingbird and each of
its subsidiaries which are in effect immediately prior to the Effective Date
and providing protection in respect of claims arising from facts or events
which occurred prior to the Effective Time or (b) purchase as an extension of
Hummingbird's current insurance policies, prepaid non cancellable run-off
directors' and officers' liability insurance providing coverage comparable to
that contained in Hummingbird's existing policy for six years from the
Effective Time with respect to claims arising from or related to facts or
events that occurred at or prior to the Effective Time.
(2) Parent agrees that all rights to indemnification or exculpation
existing in favour of the directors or officers of Hummingbird or any
subsidiary of Hummingbird as at the date of the Non-Disclosure Agreement (the
"Hummingbird D&O Rights") as provided in Hummingbird's articles or by-laws or
as disclosed in Section 7.7 of the Disclosure Letter shall survive the
transactions contemplated hereby and shall continue in full force and effect
for a period of not less than six years from the Effective Time. For a period
of six years from the Effective Date, Parent will, or will cause Acquisition
Sub or Hummingbird to, perform the obligations of Hummingbird under the
Hummingbird D&O Rights.
(3) In the event Hummingbird or any of its successors or assigns (a)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger
or (b) transfers all or substantially all of its properties and assets to any
person, then, and in such case, proper provision shall be made so that such
successors and assigns of Hummingbird or, at Parent's option, Parent, shall
assume the obligations set forth in this Section 7.7.
(4) This Section 7.7 shall survive the consummation of the
Arrangement, is intended to benefit Hummingbird and each of its directors and
officers and their respective heirs and personal representatives and shall be
enforceable by such directors and officers and their respective heirs and
personal representatives.
7.8 Safe Income
-----------
Subject to the terms of the Interim Order and the receipt of all necessary
approvals or exemptive relief orders from applicable Governmental Entities,
Hummingbird Shareholders will be permitted to effect a "safe income tuck-in"
transaction (a "Safe Income Transaction") in accordance with applicable Laws
to be effective shortly prior to the Effective Date, on the terms and subject
to the conditions and limitations described in the holding company
participation agreement attached as Schedule D hereto (the "Participation
Amendment"); provided that: (a) no Shareholder will be permitted to effect a
Safe Income Transaction unless the terms and conditions of such Safe Income
Transaction are satisfactory to Hummingbird and Parent acting reasonably; (b)
draft documentation regarding any Hummingbird Shareholder's proposed Safe
Income Transaction (including with respect to any transfers or deemed
dividends) shall be delivered to Hummingbird and Parent no later than
September 18, 2006, and Hummingbird and Parent shall have a reasonable
opportunity to review and comment on such draft documentation,
B-57
and all reasonable comments of Hummingbird and Parent shall be reflected in
the final documentation executed in respect of such Safe Income Transaction;
and (c) in the event that (i) the terms and conditions of such Safe Income
Transaction are not satisfactory to the Director or the Court or (ii) any
securities regulatory authority, including any of the Canadian Securities
Administrators, refuses to grant any relief required or, in the opinion of
Parent, desirable, in connection with any such Safe Income Transaction (for
greater certainty, including exemptive relief from the issuer bid requirements
under applicable Canadian securities laws) or such relief is not granted prior
to the date of the Meeting, then the agreement under this Section 7.8 shall be
immediately terminated and of no further force or effect and none of Parent,
Acquisition Sub or Hummingbird shall be obligated to consider, facilitate or
assist in any alternative or amended form of "safe income" transaction for
Hummingbird Shareholders.
ARTICLE 8
TERM, TERMINATION, AMENDMENT AND WAIVER
8.1 Term
----
This Agreement shall be effective from the date hereof until the
earlier of the Effective Time and the termination of this Agreement in
accordance with its terms.
8.2 Termination
-----------
(1) This Agreement may, at any time prior to the Effective Time:
(a) be terminated by Parent if there shall have occurred after the
date hereof (or prior to such date to the extent that the
relevant change, event, occurrence or development shall have
been disclosed generally or to Parent only after the date of
this Agreement) up to and including the Effective Date, a
Material Adverse Effect in respect of Hummingbird;
(b) be terminated either by Parent or by Hummingbird, if any Law
makes the completion of the transactions contemplated by this
Agreement illegal or otherwise prohibited;
(c) subject to Section 8.2(3), be terminated by Parent, if there
has been a breach of or failure to perform any representation,
warranty, covenant or agreement on the part of Hummingbird set
forth in this Agreement or any such representation and
warranty shall have become untrue after the date of this
Agreement, such that Section 6.2(a) or 6.2(b) would not be
satisfied;
(d) subject to Section 8.2(3), be terminated by Hummingbird, if
there has been a breach of or failure to perform any
representation, warranty, covenant or agreement on the part of
Parent set forth in this Agreement or any such representation
and warranty shall have become untrue after the date of this
Agreement, such that Section 6.3(a) or 6.3(b) would not be
satisfied;
(e) be terminated by Parent, if the Board of Directors of
Hummingbird shall have: (i) withdrawn, withheld, qualified or
modified in a manner adverse to Parent its recommendation of
this Agreement (it being understood that the taking of a
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neutral position or no position with respect to an Acquisition
Proposal shall be considered an adverse modification), (ii)
after being requested by Parent in writing, failed to reaffirm
its recommendation of the Arrangement as promptly as
practicable (but in any event within two (2) business days)
after receipt of any written request to do so from Parent or
(iii) approved or recommended an Acquisition Proposal or
entered into a binding written agreement in respect of an
Acquisition Proposal (other than a confidentiality agreement
permitted by Section 7.1(4));
(f) be terminated by the mutual written consent of Parent and
Hummingbird;
(g) be terminated by Hummingbird, in order to enter into a binding
written agreement with respect to a Superior Proposal (other
than a confidentiality agreement permitted by Section 7.1(4)),
subject to compliance with Sections 7.1 and 7.2 and provided
that no termination under this Section 8.2(1)(g) shall be
effective unless and until Hummingbird shall have paid to
Parent the amount required to be paid pursuant to Section 7.3;
(h) be terminated either by Parent or by Hummingbird, if the
Effective Time shall not have occurred on or before the
Outside Date; provided, that the right to terminate this
Agreement pursuant to this Section 8.2(1)(h) shall not be
available to any party that has breached in any material
respect its obligations under this Agreement in any manner
that shall have proximately contributed to the occurrence of
the failure of the Effective Time to occur on or before such
date; or
(i) be terminated by Parent, if the Arrangement Resolution shall
have failed to receive the requisite approval of at least
two-thirds of the votes cast at the Meeting or at any
adjournment or postponement thereof in accordance with the
CBCA.
(2) If this Agreement is terminated in accordance with the foregoing
provisions of this Section, this Agreement shall forthwith become void and of
no further force or effect and no Party shall have any further obligations
hereunder except as provided in Sections 7.3 and 7.4 and the Non-Disclosure
Agreement.
(3) None of Parent, Acquisition Sub or Hummingbird may elect to not
consummate the transactions contemplated hereby pursuant to the conditions
under Section 6.2(a), Section 6.2(b)(i), Section 6.3(a) or Section 6.3(b) (the
"Specified Conditions") or to exercise the termination rights under Section
8.2(1)(c) (as it relates to Section 6.2(a) or Section 6.2(b)(i)) or Section
8.2(1)(d) (the "Specified Termination Rights") unless Parent or Hummingbird,
as the case may be, has delivered a written notice to the other specifying in
reasonable detail all breaches of covenants, agreements or representations and
warranties which Parent or Hummingbird, as the case may be, is asserting as
the basis for non-fulfilment of the applicable Specified Condition or the
exercise of the applicable Specified Termination Right, as the case may be. If
any such notice is delivered, provided that Parent or Hummingbird, as the case
may be, is proceeding diligently to cure such matter and such matter is
capable of being cured, the other may not terminate this Agreement until the
earlier of the Outside Date and the expiration of a period of 30 days from
such notice (and then only if such breach remains uncured). If such notice has
been delivered prior to the date of the Special Meeting, such meeting shall be
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postponed until the expiry of such period. For greater certainty, in the event
that such matter is cured within the time period referred to herein, this
Agreement may not be terminated as a result of the cured breach. Also for
greater certainty, this Section 8.2(3) does not apply to a Party electing to
not consummate the transactions contemplated hereby pursuant to any condition
precedent contained herein other than the Specified Conditions or exercising
any termination rights herein other than the Specified Termination Rights.
8.3 Amendment
---------
This Agreement may be amended by the parties hereto by action taken by
or on behalf of their respective boards of directors at any time prior to the
Effective Time; provided, however, that, after receipt of approval of
Hummingbird Shareholders there shall be made no amendment that by Law requires
further approval by Hummingbird Shareholders at the Meeting without the further
approval of such holders. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
8.4 Waiver
------
Any Party may (a) extend the time for the performance of any of the
obligations or acts of the other Party, (b) waive compliance with any of the
other Party's agreements or the fulfilment of any conditions to its own
obligations contained herein, or (c) waive inaccuracies in any of the other
Party's representations or warranties contained herein or in any document
delivered by the other Party; provided, however, that any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such Party and, unless otherwise provided in the written waiver, will
be limited to the specific breach or condition waived.
ARTICLE 9
GENERAL PROVISIONS
9.1 Notices
-------
All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered or sent if delivered personally or sent by facsimile or
e-mail transmission, or as of the following business day if sent by prepaid
overnight courier, to the Parties at the following addresses (or at such other
addresses as shall be specified by either Party by notice to the other given in
accordance with these provisions):
(1) if to Parent or Acquisition Sub:
275 Frank Tompa Drive
Waterloo, Ontario N2L 0A1
Attention: P. Thomas Jenkins
Telephone: 519.888.7111
Facsimile: 519.888.0254
with a copy to:
Osler, Hoskin & Harcourt LLP
B-44
Box 50, 1 First Canadian Place
Toronto, Ontario M5X 1B8
Attention: Clay Horner
Telephone: 416.862.6590
Facsimile: 416.862.6666
with a copy to:
Mayer, Brown, Rowe & Maw LLP
1675 Broadway
New York, NY 10019
Attention: Wayne C. Matus, Esq.
Telephone: 212.506.2122
Facsimile: 212.849.5922
(2) if to Hummingbird:
1 Sparks Avenue,
Toronto, Ontario
M2H 2W1
Attention: Inder P.S. Duggal
Telephone: 416.496.2200
Facsimile: 416.496.2207
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
222 Bay Street, Suite 1750
Toronto, Ontario
M5K 1J5
Attention: Christopher W. Morgan
Telephone: 416.777.4700
Facsimile: 416.777.4747
with a copy to:
Goodmans LLP
250 Yonge Street, Suite 2400
Toronto, Ontario, Canada M5B 2M6
Attention: Stephen Halperin/Michael Partridge
Telephone: 416.597.4115/416.597.5498
Facsimile: 416.979.1234
B-61
9.2 Miscellaneous
-------------
This Agreement constitutes the entire agreement and supersedes all
other prior agreements and understandings, both written and oral, between the
Parties with respect to the subject-matter hereof save for the Non-Disclosure
Agreement and is not intended to confer upon any person other than the Parties
any rights or remedies hereunder. The Parties shall be entitled to rely upon
delivery of an executed facsimile or similar electronic copy of this Agreement,
and such facsimile or similar electronic copy shall be legally effective to
create a valid and binding agreement between the Parties.
9.3 Governing Law
-------------
This Agreement shall be governed, including as to validity,
interpretation and effect, by the laws of the Province of Ontario and the
federal laws of Canada applicable therein, and shall be construed and treated in
all respects as an Ontario contract. Each of the Parties hereby irrevocably
submits to the non-exclusive jurisdiction of the Courts of the Province of
Ontario in respect of all matters arising under and in relation to this
Agreement and the Plan of Arrangement.
9.4 Injunctive Relief
-----------------
The Parties agree that irreparable harm would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached for which money damages would
not be an adequate remedy at law. It is accordingly agreed that the Parties
shall be entitled to an injunction or injunctions and other equitable relief to
prevent breaches of this Agreement, any requirement for the securing or posting
of any bond in connection with the obtaining of any such injunctive or other
equitable relief hereby being waived.
9.5 Time of Essence
---------------
Time shall be of the essence in this Agreement.
9.6 Binding Effect and Assignment
-----------------------------
Parent may, without the prior written consent of Hummingbird, assign
all or any part of its rights under this Agreement (a) to, and its obligations
under this Agreement may be assumed by, a wholly-owned subsidiary of Parent,
provided that if such assignment and/or assumption takes place, Parent shall
continue to be liable jointly and severally with such subsidiary for all of its
obligations hereunder or (b) for collateral security purposes, to any lender
providing financing to Parent or any of its affiliates. This Agreement shall be
binding on and shall enure to the benefit of the Parties and their respective
successors and permitted assigns. Except as expressly permitted by the terms
hereof, neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by either of the Parties without the prior written
consent of the other Party.
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9.7 Severability
------------
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
Party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
9.8 Counterparts
------------
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
9.9 No Recourse
-----------
(1) Notwithstanding anything that may be expressed or implied in this Agreement,
except as provided in Article 7, Hummingbird covenants, agrees and acknowledges
that no recourse under this Agreement shall be had against any current or future
affiliates, shareholders or agents of Parent, Acquisition Sub or their
respective affiliates, as such, or any current or former director, officer,
employee, member, general or limited partner or shareholder of any of the
foregoing, as such, whether by the enforcement of any assessment or by any legal
or equitable proceeding, or by virtue of any Law, it being expressly agreed and
acknowledged that no personal liability whatsoever shall attach to, be imposed
on or otherwise be incurred by any current or future affiliate, shareholder or
agent of Parent, Acquisition Sub or their respective affiliates, as such, or any
current or future director, officer, employee, member, general or limited
partner or shareholder of any of the foregoing, as such, for any obligation of
Parent, Acquisition Sub or their respective affiliates under this Agreement.
Notwithstanding anything that may be expressed or implied in this
Agreement, except as provided in Article 7, each of Parent and Acquisition Sub
covenants, agrees and acknowledges that no recourse under this Agreement shall
be had against any current or future affiliates, shareholders or agents of
Hummingbird, as such, or any current or former director, officer, employee or
shareholder of any of the foregoing, as such, whether by the enforcement of any
assessment or by any legal or equitable proceeding, or by virtue of any Law, it
being expressly agreed and acknowledged that no personal liability whatsoever
shall attach to, be imposed on or otherwise be incurred by any current or future
affiliate, shareholder or agent of Hummingbird, as such, or any current or
future director, officer, employee or shareholder of any of the foregoing, as
such, for any obligation of Hummingbird under this Agreement.
IN WITNESS WHEREOF, each of Parent, Acquisition Sub and Hummingbird has
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
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OPEN TEXT CORPORATION
By: "John Shackleton"
-------------------------------------
Name: John Shackleton
Title: President and Chief Executive Officer
6575064 CANADA INC.
By: "John Shackleton"
-------------------------------------
Name: John Shackleton
Title: President
HUMMINGBIRD LTD.
By: "Alan Barry Litwin"
-------------------------------------
Name: Alan Barry Litwin
Title: President and Chief Executive Officer
B-64
Schedule A
----------
To the Arrangement Agreement
Regulatory Approvals
--------------------
Part A - Canada
o Expiration of the applicable waiting period related to merger
pre-notification under Part IX of the Competition Act or earlier
termination or waiver thereof in accordance with the Competition Act,
and the Commissioner of Competition will have advised Parent in writing
(which advice will not have been rescinded or amended), that she does
not intend to oppose the purchase of the Hummingbird Shares under the
Plan of Arrangement and will not have made or have threatened to make
application under Part VIII of the Competition Act in respect of the
purchase of the Hummingbird Shares under the Plan of Arrangement, or
the Commissioner will have issued an advance ruling certificate in
respect of the purchase of the Hummingbird Shares pursuant to Section
102 of the Competition Act.
o Approvals of the Canadian Securities Administrators and any other
securities regulatory authorities, as required or, in the opinion of
Parent, desirable, (including exemptive relief from the issuer bid
requirements under applicable Canadian securities Laws in respect of
any and all Safe Income Transactions)
Part B - United States
o Expiration of all applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended ("HSR
Act"), including any voluntary agreed extensions thereof, or earlier
termination thereof in accordance with the HSR Act.
Part C - Germany
o Notification (Anmeldung) to the German Federal Cartel Office
(Bundeskartellant) in Bonn pursuant to the German Act Against
Restraints of Competition (Gesetz gegen Wettbewerbsbeschrankungen).
B-65
SCHEDULE B
----------
ARRANGEMENT RESOLUTION
BE IT RESOLVED, AS A SPECIAL RESOLUTION, THAT:
(1) The arrangement (the "Arrangement") under section 192 of the Canada
Business Corporations Act (the "CBCA") involving Hummingbird Ltd. (the
"Company"), as more particularly described and set forth in the management
information circular (the "Circular") of the Company accompanying the notice of
this meeting (as the Arrangement may be modified or amended in accordance with
its terms) is hereby authorized, approved and adopted.
(2) The plan of arrangement (the "Plan of Arrangement") involving the
Company, the full text of which is set out as Schedule C to the Arrangement
Agreement made as of August 4, 2006 among Open Text Corporation, 6575064 Canada
Inc. and the Company (the "Arrangement Agreement"), (as the Plan of Arrangement
may be modified or amended in accordance with its terms) is hereby authorized,
approved and adopted.
(3) The Arrangement Agreement, the actions of the directors of the
Company in approving the Arrangement Agreement and the actions of the directors
and officers of the Company in executing and delivering the Arrangement
Agreement and any amendments thereto in accordance with its terms are hereby
ratified and approved.
(4) Notwithstanding that this resolution has been passed (and the Plan
of Arrangement adopted) by the shareholders of the Company or that the
Arrangement has been approved by the Ontario Superior Court of Justice, the
directors of the Company are hereby authorized and empowered without further
notice to or approval of the shareholders of the Company (i) to amend the
Arrangement Agreement or the Plan of Arrangement, to the extent permitted by the
Arrangement Agreement, and (ii) subject to the terms of the Arrangement
Agreement, not to proceed with the Arrangement.
(5) Any director or officer of the Company be and is hereby authorized
and directed for and on behalf of the Company to execute, under the corporate
seal of the Company or otherwise, and to deliver to the Director under the CBCA
for filing articles of arrangement and such other documents as are necessary or
desirable to give effect to the Arrangement and the Plan of Arrangement in
accordance with the Arrangement Agreement.
(6) Any director or officer of the Company is hereby authorized and
directed for and on behalf of the Company to execute or cause to be executed,
under the corporate seal of the Company or otherwise, and to deliver or cause to
be delivered, all such other documents and instruments and to perform or cause
to be performed all such other acts and things as in such person's opinion may
be necessary or desirable to give full effect to the foregoing resolutions and
the matters authorized thereby, such determination to be conclusively evidenced
by the execution and delivery of such document, agreement or instrument or the
doing of any such act or thing.
B-66
SCHEDULE C
PLAN OF ARRANGEMENT
UNDER SECTION 192
OF THE CANADA BUSINESS CORPORATIONS ACT
ARTICLE 1
INTERPRETATION
1.1 Definitions
-----------
In this Plan of Arrangement, unless there is something in the subject
matter or context inconsistent therewith, the following terms shall have the
respective meanings set out below and grammatical variations of such terms shall
have corresponding meanings:
"Acquisition Sub" means 6575064 Canada Inc., a corporation incorporated
under the CBCA and being a wholly-owned subsidiary of Parent;
"Arrangement" means the arrangement under section 192 of the CBCA on
the terms and subject to the conditions set out in this Plan of
Arrangement, subject to any amendments or variations thereto made in
accordance with Section 8.3 of the Arrangement Agreement or Article 5
hereof;
"Arrangement Agreement" means the agreement dated August 4, 2006 among
Parent, Acquisition Sub and Hummingbird providing for, among other
things, the Arrangement;
"Articles of Arrangement" means the articles of arrangement of
Hummingbird in respect of the Arrangement that are required by the CBCA
to be sent to the Director after the Final Order is made;
"Business Day" means any day, other than a Saturday or Sunday or a
statutory holiday in Ontario, Canada;
"CBCA" means the Canada Business Corporations Act, as amended;
"Certificate of Arrangement" means the certificate of arrangement
issued by the Director pursuant to subsection 192(7) of the CBCA in
respect of the Articles of Arrangement;
"Circular" means the notice of the Meeting and accompanying management
proxy circular, including all schedules thereto, to be sent by
Hummingbird to Shareholders in connection with the Meeting;
"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;
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"Director" means the Director appointed pursuant to section 260 of the
CBCA;
"Dissent Rights" means the rights of dissent in respect of the
Arrangement described in Section 3.1;
"Dissenting Holder" means any Shareholder who has duly exercised its
Dissent Rights and has not withdrawn or been deemed to have withdrawn
such Dissent Rights;
"Effective Date" means the date shown on the Certificate of Arrangement
giving effect to the Arrangement;
"Effective Time" means 9:00 a.m. (Toronto time) on the Effective Date;
"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended;
"Exchange Factor" means 0.8879, which is the exchange rate for one
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 the Arrangement Agreement.
"Final Order" means the order of the Court approving the Arrangement as
such order may be amended at any time prior to the Effective Date or,
if appealed, then, unless such appeal is withdrawn or denied, as
affirmed or as amended on appeal;
"Hummingbird" means Hummingbird Ltd., a corporation existing under the
CBCA;
"Hummingbird Option" means any option to purchase Hummingbird Shares
granted pursuant to the Hummingbird Stock Option Plan or any other
stock option plan of Hummingbird or any predecessor of Hummingbird, or
any option assumed or adopted by Hummingbird;
"Hummingbird Shares" means the common shares in the capital of
Hummingbird;
"Hummingbird Stock Option Plan" means Hummingbird's 1996 Employee Stock
Option Plan;
"Interim Order" means the interim order of the Court providing for,
among other things, the calling and holding of the Meeting, as such
order may be amended, as contemplated by the Arrangement Agreement;
"Lender Sub" means one or more wholly-owned subsidiaries of Hummingbird
selected by Parent for purposes of making the loans contemplated in
Section 2.3(a);
"Lender Sub Option Note" has the meaning ascribed thereto in Section
2.3(a);
"Lender Sub Share Note" has the meaning ascribed thereto in Section
2.3(a);
"Letter of Transmittal" means the letter of transmittal forwarded by
Hummingbird to Shareholders in connection with the Arrangement, in the
form accompanying the Circular;
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"Loan Alternative" means the provision by Lender Sub of the loans
contemplated under Section 2.3(a);
"Loan Amount" means such amount of cash of Hummingbird or its
subsidiaries that Parent requests in accordance with Section 5.5 of the
Arrangement Agreement, provided that in any event, if so requested by
Parent, such amount shall be not less than $58,000,000 and may be $0;
"Mailing Date" means the date of mailing of the Circular to
Shareholders;
"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;
"Meeting" means the special meeting of Shareholders to be held to
consider the Arrangement Resolution, including any adjournment or
postponement thereof, to be called and held in accordance with the
Interim Order;
"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) in
respect of the Hummingbird Options;
"Optionholders" means the holders of Hummingbird Options;
"Parent" means Open Text Corporation, a corporation existing under the
CBCA;
"Person" means an individual, corporation, partnership, limited
partnership, limited liability company, joint venture, estate,
association, trust, unincorporated organization or other entity of any
kind or nature, as well as any syndicate or group that would be deemed
to be a person under section 13(d)(3) of the Exchange Act;
"Purchase Price" means the sum of $27.85 per Hummingbird Share, payable
in cash;
"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;
"Shareholders" means the holders of Hummingbird Shares whose names
appear in the register of holders of Hummingbird Shares maintained by
or on behalf of Hummingbird and, where the context so provides,
includes joint holders of such Hummingbird Shares; and
"Tax Act" means the Income Tax Act (Canada), as amended.
1.2 Interpretation Not Affected by Headings, Etc.
---------------------------------------------
The division of this Plan of Arrangement into articles, sections and
other portions and the insertion of headings are for reference purposes only and
shall not affect the interpretation of this Plan of Arrangement. Unless
otherwise indicated, any reference in this Plan of Arrangement to
B-69
"Article" or "section" followed by a number refers to the specified Article or
section of this Plan of Arrangement. The terms "this Plan of Arrangement",
"hereof", "herein", "hereunder" and similar expressions refer to this Plan of
Arrangement, including any appendices hereto, and any amendments, variations or
supplements hereto made in accordance with the terms hereof or the Arrangement
Agreement or made at the direction of the Court in the Final Order and do not
refer to any particular Article, section or other portion of this Plan of
Arrangement.
1.3 Rules of Construction
---------------------
In this Plan of Arrangement, unless the context otherwise requires, (a)
words importing the singular number include the plural and vice versa, (b) words
importing any gender include all genders, and (c) "include", "includes" and
"including" shall be deemed to be followed by the words "without limitation".
1.4 Date of Any Action
------------------
In the event that any date on which any action is required to be taken
hereunder by any of the parties hereto is not a Business Day, such action shall
be required to be taken on the next succeeding day which is a Business Day.
1.5 Time
----
Time shall be of the essence in every matter or action contemplated
hereunder. All times expressed herein or in the Letter of Transmittal are local
time (Toronto, Ontario) unless otherwise stipulated herein or therein.
1.6 Currency
--------
Unless otherwise stated, all references in this Plan of Arrangement to
sums of money are expressed in lawful money of the United States of America.
1.7 Statutes
--------
Any reference to a statute includes all rules and regulations made
pursuant to such statute and, unless otherwise specified, the provisions of any
statute or regulations or rule which amends, supplements or supersedes any such
statute, regulation or rule.
ARTICLE 2
ARRANGEMENT
2.1 Arrangement Agreement
---------------------
This Plan of Arrangement is made pursuant to, is subject to the
provisions of and forms part of the Arrangement Agreement.
2.2 Binding Effect
--------------
This Plan of Arrangement will become effective at, and be binding at
and after, the Effective Time on (i) Hummingbird, (ii) Parent and Acquisition
Sub, (iii) all Shareholders and
B-70
beneficial owners of Hummingbird Shares and (iv) all registered and beneficial
owners of Hummingbird Options.
2.3 Arrangement
-----------
Commencing at the Effective Time, the following events set out in this
Section 2.3 shall occur and shall be deemed to occur consecutively in the order
and at the times set out in this Section 2.3 without any further authorization,
act or formality (subject to the order of Sections 2.3(b) and 2.3(c) being
reversed if so requested by Parent in the notice referred to in Section 2.3(a)
below):
(a) If Parent has provided written notice to Hummingbird of Parent's
request for the Loan Alternative at least ten business days prior
to the Effective Time and such notice sets out the Loan Amount,
the Share Loan Amount and the Option Loan Amount, then effective
at the Effective Time, (i) if the Share Loan Amount is not $0,
Hummingbird shall cause Lender Sub to loan an amount equal to the
Share Loan Amount to Acquisition Sub, and Acquisition Sub shall
deliver to Lender Sub a duly issued and executed promissory note
(the "Lender Sub Share Note") in the form attached as Appendix A
hereto to evidence such loan and the full amount of such loan
shall be immediately deposited with the Depositary to be held in
a segregated account by the Depositary for the exclusive purpose
of paying a portion of the aggregate Purchase Price for the
Hummingbird Shares, (ii) Hummingbird shall cause Lender Sub to
loan an amount equal to the Option Loan Amount to Hummingbird,
and Hummingbird shall deliver to Lender Sub a duly issued and
executed promissory note (the "Lender Sub Option Note") in the
form attached as Appendix A hereto to evidence such loan and the
full amount of such loan shall be immediately deposited with the
Depositary to be held in a segregated account by the Depositary
for the exclusive purpose of making the payments contemplated by
Section 2.3(b)(i), and (iii) the Maximum Cash Amount held by the
Depositary shall cease to be held in escrow and shall be held in
a segregated account by the Depositary for the exclusive purpose
of paying a portion of the aggregate Purchase Price for the
Hummingbird Shares. If Parent has not provided written notice to
Hummingbird of Parent's request for the Loan Alternative but
Parent provides written notice to Hummingbird at least ten
business days prior to the Effective Time that it wishes
Acquisition Sub to fund Hummingbird to enable Hummingbird to make
the payments contemplated by Section 2.3(b)(i), then effective at
the Effective Time, Acquisition Sub shall loan an amount equal to
the Option Loan Amount to Hummingbird, and Hummingbird shall
deliver to Acquisition Sub a duly issued and executed promissory
note (the "Acquisition Sub Option Note") in the form attached as
Appendix A hereto to evidence such loan and the full amount of
such loan shall be immediately deposited with the Depositary to
be held in a segregated account by the Depositary for the
exclusive purpose of making the payments contemplated by Section
2.3(b)(i).
(b) Effective at one minute after the Effective Time (or, if
specified in the notice referred to in Section 2.3(a) above,
effective at two minutes after the Effective Time) each
Hummingbird Option, notwithstanding any contingent vesting
B-71
provisions to which it might otherwise have been subject, shall
be deemed to be conditionally vested and exercisable only as part
of the Arrangement and:
(i) each Hummingbird Option shall be transferred by the
Optionholder to Hummingbird in exchange for a cash payment from
or on behalf of Hummingbird equal to the amount (if any) by which
the Purchase Price exceeds the product of (x) the exercise price
thereof (in Canadian dollars) multiplied by (y) the Exchange
Factor, which amount shall be paid from the funds deposited with
the Depositary under Section 2.3(a);
(ii) each Hummingbird Option shall immediately be cancelled and
all option agreements related thereto shall be terminated and the
Optionholders shall thereafter have only the right to receive the
consideration to which they are entitled pursuant to this Section
2.3(b) at the time and in the manner specified in Article 4; and
(iii) the Hummingbird Stock Option Plan shall be terminated and
none of Hummingbird or any of its affiliates shall have any
liabilities or obligations with respect to such plan except
pursuant to this Section 2.3(b).
(c) Effective at two minutes after the Effective Time (or, if
specified in the notice referred to in Section 2.3(a) above,
effective at one minute after the Effective Time), each
Hummingbird Share outstanding immediately prior to the Effective
Time shall be transferred to Acquisition Sub in exchange for the
Purchase Price from Acquisition Sub, which amount shall be paid
from the funds deposited with the Depositary under Sections
2.3(a)(i) and (iii), and the names of the holders of such
Hummingbird Shares transferred to Acquisition Sub shall be
removed from the applicable registers of Shareholders, and
Acquisition Sub shall be recorded as the registered holder of the
Hummingbird Shares so acquired and shall be deemed the legal and
beneficial owner thereof; subject to the right of Dissenting
Holders to be paid the fair value of the Hummingbird Shares held
prior to the Effective Time by such Dissenting Holders in
accordance with Section 3.1.
(d) Effective at three minutes after the Effective Time, all
directors of Hummingbird shall cease to be directors and the
following persons shall become the directors of Hummingbird (the
"New Directors"): John Shackleton, Paul McFeeters and John Trent.
ARTICLE 3
RIGHTS OF DISSENT
3.1 Rights of Dissent
-----------------
(a) A Shareholder may exercise rights of dissent (the "Dissent
Rights") pursuant to and in the manner set forth in section 190
of the CBCA and this section 3.1 in connection with the
Arrangement; provided, however, that, (i) notwithstanding
subsection 190(5) of the CBCA, any written objections to the
Arrangement Resolution must be received by Hummingbird not later
than 5:00 p.m. (Toronto time) on the day which is two Business
Days preceding the Meeting, and (ii)
B-72
notwithstanding section 190 of the CBCA, Acquisition Sub and not
Hummingbird shall be required to pay fair market value for the
Hummingbird Shares held by holders who duly exercise Dissent
Rights. A Shareholder who duly exercises such Dissent Rights and
who:
(i) is ultimately entitled to be paid fair value for its
Hummingbird Shares shall be deemed to have transferred such
Hummingbird Shares to Acquisition Sub on the Effective Date
contemporaneously with the event described in Section 2.3(d) in
exchange for the fair value of such Hummingbird Shares; or
(ii) is ultimately not entitled, for any reason, to be paid fair
value for its Hummingbird Shares shall be deemed to have
participated in the Arrangement on the same basis as a
non-dissenting Shareholder.
(b) In no circumstances shall Parent, Acquisition Sub, Hummingbird or
any other Person be required to recognize a Person exercising
Dissent Rights unless such Person is a Shareholder of those
Hummingbird Shares in respect of which such rights are sought to
be exercised.
(c) For greater certainty, in no case shall Parent, Acquisition Sub,
Hummingbird or any other Person be required to recognize a
Dissenting Holder as a Shareholder after the Effective Time, and
the name of each Dissenting Holder shall be deleted from the
register of Shareholders on the Effective Date at the same time
as the events described in Section 2.3(d) occur.
ARTICLE 4
CERTIFICATES AND PAYMENTS
4.1 Letter of Transmittal
---------------------
At the time of mailing the Circular or as soon as practicable
thereafter, Hummingbird shall forward to each Shareholder and each Optionholder
at the address of such holder as it appears on the register maintained by or on
behalf of Hummingbird in respect of the holders of Hummingbird Shares or
Hummingbird Options, as the case may be, a letter of transmittal in the case of
the holders of Hummingbird Shares and, in the case of Optionholders,
instructions for obtaining delivery of the consideration payable to
Optionholders following the Effective Date pursuant to this Plan of Arrangement.
4.2 Exchange of Certificates for Cash
---------------------------------
(a) At or before the Effective Time, Acquisition Sub shall deposit
the Maximum Cash Amount with the Depositary to be held in escrow
until Section 2.3(a) takes effect. Upon surrender to the
Depositary for cancellation of a certificate which immediately
prior to the Effective Time represented outstanding Hummingbird
Shares, together with a duly completed and executed Letter of
Transmittal and such additional documents and instruments as the
Depositary may reasonably require, the Shareholder of such
surrendered certificate shall be entitled to receive in exchange
therefor, and the Depositary shall deliver to such Shareholder as
soon as practicable after the Effective Time, a cheque
representing the cash which such
B-73
Shareholder has the right to receive under the Arrangement for
such Hummingbird Shares, less any amounts withheld pursuant to
Section 4.4, and any certificate so surrendered shall forthwith
be cancelled. The cash deposited with the Depositary shall be
held in an interest-bearing account, and any interest earned on
such funds shall be for the account of Acquisition Sub.
(b) Until surrendered as contemplated by this Section 4.2, each
certificate which immediately prior to the Effective Time
represented any Hummingbird Shares shall be deemed after the
Effective Time to represent only the right to receive upon such
surrender a cash payment in lieu of such certificate as
contemplated in this Section 4.2, less any amounts withheld
pursuant to Section 4.4. Any such certificate formerly
representing Hummingbird Shares not duly surrendered on or before
the sixth anniversary of the Effective Date shall cease to
represent a claim by or interest of any former Shareholder of any
kind or nature against or in Hummingbird, Parent or Acquisition
Sub. On such anniversary date, all certificates representing
Hummingbird Shares shall be deemed to have been surrendered to
Acquisition Sub and cash to which such former holder was
entitled, together with any entitlements to dividends,
distributions and interest thereon, shall be deemed to have been
surrendered to Hummingbird.
(c) On or as soon as practicable after the Effective Date, the
Depositary shall deliver on behalf of Hummingbird to each
Optionholder as reflected on the books and records of
Hummingbird a cheque representing the payment to which such
holder is entitled in accordance with Section 2.3(b) of this
Plan of Arrangement, against receipt of such documentation as
Parent or Hummingbird may reasonably require acknowledging the
transfer and termination of the Hummingbird Options held by such
Optionholder.
(d) Any payment made by way of cheque by the Depositary on behalf of
Acquisition Sub or Hummingbird that has not been deposited or
has been returned to the Depositary or that otherwise remains
unclaimed, in each case on or before the sixth anniversary of
the Effective Date, shall cease to represent a right or claim of
any kind or nature and the right of the Shareholder or
Optionholder to receive the consideration for Hummingbird Shares
or Hummingbird Options, as the case may be, pursuant to this
Plan of Arrangement shall terminate and be deemed to be
surrendered and forfeited to Hummingbird for no consideration.
4.3 Lost Certificates
-----------------
In the event any certificate which immediately prior to the
Effective Time represented one or more outstanding Hummingbird Shares that
were transferred pursuant to Section 2.3 shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person
claiming such certificate to be lost, stolen or destroyed, the Depositary
will issue in exchange for such lost, stolen or destroyed certificate, cash
deliverable in accordance with such holder's Letter of Transmittal. When
authorizing such payment in exchange for any lost, stolen or destroyed
certificate, the Person to whom such cash is to be delivered shall as a
condition precedent to the delivery of such cash, give a bond satisfactory to
Hummingbird and the Depositary in such sum as Hummingbird may direct, or
otherwise indemnify Hummingbird in a manner satisfactory to
B-74
Hummingbird, against any claim that may be made against Acquisition Sub and
Hummingbird with respect to the certificate alleged to have been lost, stolen
or destroyed.
4.4 Withholding Rights
------------------
Hummingbird, Acquisition Sub, Parent and the Depositary and any
affiliate of Hummingbird shall be entitled to deduct and withhold from any
consideration otherwise payable to any Shareholder or Optionholder such amounts
as Hummingbird, Acquisition Sub, Parent or the Depositary is required or
permitted to deduct and withhold with respect to such payment under the Tax Act,
the United States Internal Revenue Code of 1986 or any provision of federal,
provincial, state, local or foreign tax law, in each case, as amended. To the
extent that amounts are so withheld, such withheld amounts shall be treated for
all purposes hereof as having been paid to the holder of the Hummingbird Shares
or Hummingbird Options in respect of which such deduction and withholding was
made, provided that such withheld amounts are actually remitted to the
appropriate taxing authority.
ARTICLE 5
AMENDMENTS
5.1 Amendments to Plan of Arrangement
---------------------------------
(a) Hummingbird may amend, modify and/or supplement this Plan of
Arrangement at any time and from time to time prior to the
Effective Date, provided that each such amendment,
modification and/or supplement must be (i) set out in writing,
(ii) approved by Parent and Acquisition Sub, (iii) filed with
the Court and, if made following the Meeting, approved by the
Court, and (iv) communicated to Shareholders if and as
required by the Court.
(b) Any amendment, modification or supplement to this Plan of
Arrangement may be proposed by Hummingbird at any time prior
to the Meeting (provided that Parent and Acquisition Sub shall
have consented thereto) with or without any other prior notice
or communication, and if so proposed and accepted by the
Persons voting at the Meeting (other than as may be required
under the Interim Order), shall become part of this Plan of
Arrangement for all purposes.
(c) Any amendment, modification or supplement to this Plan of
Arrangement that is approved or directed by the Court
following the Meeting shall be effective only if (i) it is
consented to by each of Hummingbird, Parent and Acquisition
Sub (in each case, acting reasonably) and (ii) if required by
the Court, it is consented to by Shareholders voting in the
manner directed by the Court.
(d) This Plan of Arrangement may be withdrawn prior to the
occurrence of any of the events in Section 2.3 in accordance
with the terms of the Arrangement Agreement.
(e) Any amendment, modification or supplement to this Plan of
Arrangement may be made following the Effective Date
unilaterally by Parent, provided that it concerns a matter
which, in the reasonable opinion of Parent, is of an
administrative nature required to better give effect to
the implementation of this
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Plan of Arrangement and is not adverse to the economic interest
of any former Shareholder.
ARTICLE 6
FURTHER ASSURANCES
6.1 Notwithstanding that the transactions and events set out herein shall
occur and be deemed to occur in the order set out in this Plan of
Arrangement without any further act, authorization or formality, each
of the parties to the Arrangement Agreement shall make, do and execute,
or cause to be made, done and executed, all such further acts, deeds,
agreements, transfers, assurances, instruments or documents as may
reasonably be required by any of them in order further to document or
evidence any of the transactions or events set out herein.
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PLAN OF ARRANGEMENT
APPENDIX A
FORM OF PROMISSORY NOTE
-----------------------
Promissory Note
---------------
Date: o
FOR VALUE RECEIVED the undersigned unconditionally promises to
pay on demand to o (the "Lender") or anyone else who the Lender may specify at
o, or such other place as the Lender may direct in writing, the sum of $o with
interest calculated daily from the date of this promissory note on the
outstanding balance of such sum and payable monthly on the last day of each
month at the same place, both before and after demand, default and judgment, at
a nominal annual rate of interest equal to o percent and with interest on
overdue interest payable at the same time, place and rate.
The undersigned agrees to provide the Lender with a written
acknowledgement of its indebtedness to the Lender hereunder within thirty (30)
days prior to each anniversary of this promissory note or as otherwise requested
by the Lender from time to time.
This promissory note shall be governed by, and construed in
accordance with, the laws of the Province of Ontario and the laws of Canada
applicable in that Province. The undersigned waives presentment for payment,
notice of dishonour, protest and notice of protest in respect of this promissory
note. This promissory note shall become effective when it has been executed and
delivered. Time shall be of the essence of this promissory note in all respects.
This promissory note constitutes the entire agreement of the parties pertaining
to the indebtedness evidenced by this promissory note and supersedes all prior
agreements, understandings, negotiations and discussions with respect to such
indebtedness, whether oral or written.
[BORROWER]
By:
---------------------------------
Name:
Title:
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SCHEDULE D
HOLDING COMPANY PARTICIPATION AGREEMENT
---------------------------------------
THIS AGREEMENT made the o day of o , 2006.
BETWEEN:
o ,
a corporation incorporated under the Canada Business
Corporations Act
(hereinafter referred to as "HoldCo")
- and -
o ,
the sole shareholder of HoldCo, [a corporation
incorporated established under the laws of o ]
(hereinafter referred to as the "Vendor")
- and -
HUMMINGBIRD LTD.,
a corporation incorporated under the Canada Business
Corporations Act
(hereinafter referred to as "Hummingbird")
- and -
OPEN TEXT CORPORATION
a corporation incorporated under the Canada Business
Corporations Act
(hereinafter referred to as "Parent")
- and -
6575064 CANADA INC.
a corporation incorporated under the Canada Business
Corporations Act
(hereinafter referred to as "Acquisition Sub")
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WHEREAS pursuant to an arrangement agreement made as of o , 2006 (the
"Arrangement Agreement") between Parent, Acquisition Sub and Hummingbird,
Acquisition Sub will acquire all of the outstanding common shares of
Hummingbird;
AND WHEREAS a shareholder who owns Hummingbird common shares directly or
indirectly through one or more Canadian holding companies may choose to transfer
to Hummingbird all of the issued and outstanding shares of a holding company
holding Hummingbird common shares in return for new Hummingbird common shares
issued from treasury (the "Holding Company Alternative");
AND WHEREAS the Vendor is the registered and beneficial owner of all of the
issued and outstanding common shares of HoldCo;
AND WHEREAS HoldCo is the registered and beneficial owner of Hummingbird Shares;
NOW THEREFORE in consideration of the respective covenants and agreement herein
contained and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged by the parties hereto), the parties
hereby agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Defined Terms
In this Agreement, capitalized terms used herein and not otherwise defined shall
have the meaning ascribed to such terms in the Arrangement Agreement. The
following terms shall have the respective meanings set out below:
(a) "Claim" has the meaning set out in Section 6.2;
(b) "Closing Date" means the date on which the Closing Time
occurs; INTD: No later than 5 business days prior to Effective
Date
(c) "Closing Time" has the meaning set out in Section 5.1;
(d) "Contract" means any agreement, indenture, contract, deed of
donation, lease, deed of trust, licence, option, instrument or
other commitment or undertaking, whether written or oral;
(e) "Direct Claim" has the meaning set out in Section 6.2;
(f) "HoldCo Documents" has the meaning set out in Section 4.1;
(g) "HoldCo Shares" means all of the issued and outstanding common
shares in the capital of HoldCo;
(h) "Indemnified Party" has the meaning set out in Section 6.2;
(i) "Indemnifying Party" has the meaning set out in Section 6.2;
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(j) "ITA" means the Income Tax Act (Canada), as amended from time
to time;
(k) "Liabilities" has the meaning set out in Section 6.1;
(l) "Reorganization" means the Agreements and transactions set
forth in Schedule
(m) "Subject Shares" means the o Hummingbird Shares currently
owned beneficially and of record by HoldCo;
(n) "Tax Returns" includes all returns, reports, declarations,
elections, notices, filings, forms, statements and other
documents (whether in tangible, electronic or other form) and
including any amendments, schedules, attachments, supplements,
appendices and exhibits thereto, made, prepared, filed or
required to be made, prepared or filed by Law in respect of
Taxes;
(o) "Taxes" includes any taxes, duties, fees, premiums,
assessments, imposts, levies and other charges of any kind
whatsoever imposed by any Governmental Authority, including
all interest, penalties, fines, additions to tax or other
additional amounts imposed by any Governmental Authority in
respect thereof, and including those levied on, or measured
by, or referred to as, income, gross receipts, profits,
capital, transfer, land transfer, sales, goods and services,
harmonized sales, use, value-added, excise, stamp,
withholding, business, franchising, property, development,
occupancy, employer health, payroll, employment, health,
social services, education and social security taxes, all
surtaxes, all customs duties and import and export taxes,
countervail and anti-dumping, all licence, franchise and
registration fees and all employment insurance, health
insurance and Canada, Quebec and other government pension plan
premiums or contributions;
(p) "Third Party" has the meaning set out in Section 6.4;
(q) "Third Party Claim" has the meaning set out in Section 6.2;
and
1.2 Sections and Headings
The division of this Agreement into Sections and the insertion of headings are
for convenience of reference only and shall not affect the interpretation of
this Agreement. Unless otherwise indicated, any reference in this Agreement to a
Section refers to the specified Section of this Agreement. Whenever the word
"including" is used it means including without limitation.
1.3 Currency
All amounts in this Agreement are expressed in Canadian dollars.
1.4 Number, Gender and Persons
In this Agreement, words importing the singular number only shall include the
plural and vice versa, words importing gender shall include all genders and
words importing persons shall include individuals, corporations, partnerships,
associations, shareholders, unincorporated organizations, governmental bodies
and other legal or business entities.
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1.5 Applicable Law
This Agreement shall be construed, interpreted and enforced in accordance with,
and the respective rights and obligations of the parties shall be governed by,
the laws of the Province of Ontario and the federal laws of Canada applicable
therein, and each party hereby irrevocably and unconditionally submits to the
non-exclusive jurisdiction of the courts of such province and all courts
competent to hear appeals therefrom.
1.6 Severability
If any provision of this Agreement is determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.
1.7 Amendment and Waivers
No amendment or waiver of any provision of this Agreement shall be binding on
any party unless consented to in writing by such party. No waiver of any
provision of this Agreement shall constitute a waiver of any other provision,
nor shall any waiver constitute a continuing waiver unless otherwise expressly
provided.
1.8 Entire Agreement
This Agreement including the Schedule(s) hereto constitutes the entire agreement
between the parties pertaining to the subject matter of such documents. There
are no warranties, conditions or representations (including any that may be
implied by statute) and there are no agreements in connection with the subject
matter of such documents except as specifically set forth or referred to in such
documents.
ARTICLE 2
PURCHASE AND SALE OF HOLDCO SHARES
2.1 Purchase and Sale of HoldCo Shares
Subject to the terms and conditions hereof, the Vendor covenants and agrees to
sell, assign and transfer to Hummingbird and Hummingbird agrees to purchase from
the Vendor at the Closing Time all of the HoldCo Shares in consideration for the
issuance and the allotment by Hummingbird to the Vendor of o fully paid and
non-assessable Hummingbird Shares (the "New Hummingbird Shares"). [Note to
Draft: The number of Subject Shares owned by HoldCo will be equal to the number
of New Hummingbird Shares.]
2.2 Listing of New Hummingbird Shares
Hummingbird shall use commercially reasonable efforts cause the New Hummingbird
Shares to be listed for trading on the Toronto Stock Exchange as soon as
possible after the Closing Time.
2.3 Expenses
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The Vendor shall be responsible for all costs and expenses (including counsel's
fees and expenses and fees and expenses of auditors) incurred by HoldCo, Parent,
Acquisition Sub or Hummingbird respectively, in connection with the negotiation
and settlement of this Agreement and the transactions contemplated hereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Vendor
The Vendor hereby represents, warrants and covenants to Parent, Acquisition Sub
and Hummingbird as follows, and hereby acknowledges that Parent, Acquisition Sub
and Hummingbird are relying on such representations, warranties and covenants in
connection with the purchase by Hummingbird of the HoldCo Shares:
(a) the execution and delivery of this Agreement by the Vendor and
HoldCo and the completion by the Vendor and HoldCo of the
transactions contemplated hereby:
(i) do not and will not conflict with, result in the breach of
or constitute a default under the articles, by-laws or
resolutions of the Vendor (if applicable) or HoldCo, or any
Contract to which the Vendor or HoldCo is a party or is
otherwise bound; and
(ii) do not and will not violate any law or any judicial or
administrative award, judgment or decree binding upon the
Vendor or HoldCo;
(b) the Vendor is not a non-resident of Canada within the meaning
of the ITA or any applicable provincial or territorial
legislation;
(c) HoldCo is a corporation duly incorporated on o [Note: Must be
incorporated after o , 2006] and HoldCo is duly incorporated
and organized and validly existing and in good standing under
the Canada Business Corporations Act, and has the corporate
power to enter into and perform its obligations under this
Agreement;
(d) [the Vendor is a corporation duly incorporated on o and the
Vendor is duly incorporated and organized and validly existing
and in good standing under the o Act, and has the corporate
power to enter into and perform its obligations under this
Agreement];
(e) this Agreement has been duly executed and delivered by each of
the Vendor and HoldCo and is a valid and binding obligation of
each of the Vendor and HoldCo enforceable against each of them
in accordance with its terms, subject to applicable
bankruptcy, insolvency and other laws affecting the
enforcement of creditors' rights generally and provided that
equitable remedies will only be awarded in the discretion of a
court of competent jurisdiction;
(f) no person has any Contract, entitlement, warrant or option or
any right capable of becoming a Contract, entitlement, warrant
or option whether under statute or
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otherwise for the purchase from the Vendor of any of the HoldCo
Shares or from HoldCo of any HoldCo Shares or of any of the
Subject Shares;
(g) the authorized share capital of HoldCo consists solely of an
unlimited number of common shares, of which o common shares,
being all of the HoldCo Shares, are validly issued and
outstanding as fully paid and non-assessable shares;
(h) all of the HoldCo Shares are registered in the name of, and
are beneficially owned by the Vendor with good and marketable
title thereto free and clear of any Liens;
(i) upon completion of the transactions contemplated hereby,
Hummingbird will acquire the sole ownership of all of the
HoldCo Shares with good and marketable title thereto free and
clear of any Liens;
(j) HoldCo is the sole registered and beneficial owner of the
Subject Shares, all of which are held and owned by HoldCo with
good and marketable title thereto free and clear of any Liens;
(k) since its incorporation, the sole activity of HoldCo has been
the entering into and performance under this Agreement;
(l) HoldCo does not own or hold and has never owned or held any
property or assets or any interests therein of any nature or
kind whatsoever other than the Subject Shares and HoldCo has
never carried on nor currently carries on any active business;
(m) HoldCo has no obligations or liabilities (whether actual or
contingent) including indebtedness to any person including,
without limitation, any liabilities in respect of Taxes of any
nature or kind whatsoever, or in respect of any judgments,
orders, fines, penalties, awards or decrees of any court,
tribunal or governmental, administrative or regulatory
department, commission, board, bureau, agency or
instrumentality, domestic or foreign;
(n) HoldCo has not, and at the Closing Date will not have,
declared or paid any dividends, except through one or more
increases to the stated capital account maintained in respect
of its common shares as contemplated by Schedule A, or made
any distribution in respect of any of its shares or
repurchased, redeemed or otherwise acquired any of its shares;
(o) the paid-up capital for purposes of the ITA and any applicable
provincial or territorial legislation in respect of the HoldCo
Shares is $o;
(p) HoldCo has no subsidiaries and is not a party to, bound by or
affected by any Contract;
(q) HoldCo has no employees and its directors and officers receive
no remuneration or compensation from HoldCo;
(r) HoldCo has not paid any amounts to any non-residents of Canada
within the meaning of the ITA;
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(s) HoldCo is not a partner, co-tenant, joint venturer or
otherwise a participant in any partnership, joint venture,
co-tenancy or other jointly owned business;
(t) there are no claims, investigations, actions, suits or
proceedings commenced, pending or threatened by, against or
affecting: (i) HoldCo, whether at law or in equity before any
Governmental Entity; or (ii) the Vendor, whether at law or in
equity before any Governmental Entity, that would adversely
affect in any manner the ability of the Vendor to enter into
this Agreement and perform its obligations hereunder;
(u) both HoldCo and the Vendor are in full compliance with all
laws, rules or regulations to which they are subject
(including all laws, rules and regulations relating to its
ownership of the Subject Shares);
(v) no consent, waiver, approval, authorization, exemption,
registration, license or declaration of or by, or filing with,
or notification to any Governmental Entity or other person is
required to be made or obtained by the Vendor or HoldCo in
connection with the execution, delivery, performance or
enforcement of this Agreement;
(w) HoldCo does not maintain any depository account, trust account
or safety deposit box and has not granted any powers of
attorney;
(x) the books and records of HoldCo fairly and correctly set out
and disclose in all respects, in accordance with generally
accepted accounting principles in Canada consistently applied,
the financial position of HoldCo as of the date hereof and all
financial transactions of HoldCo have been accurately recorded
in such books and records;
(y) the corporate records and minute books of HoldCo contain
complete and accurate minutes of all meetings or resolutions
of the directors and shareholders of HoldCo held since its
incorporation and all such meetings were duly called and held
and the share certificate books, register of shareholders,
register of transfers and register of directors and officers
of HoldCo are complete and accurate;
(z) the Subject Shares are not subject to any contractual or other
restrictions (including on transferability or voting) and
neither the Vendor nor HoldCo is a party to or otherwise bound
by any agreement (including a voting trust or similar
agreement) in respect of the Subject Shares;
(aa) the HoldCo Shares are not subject to any contractual or other
restrictions (including on transferability or voting) and
neither the Vendor nor HoldCo is a party to or otherwise bound
by any agreement (including a voting trust or similar
agreement) in respect of the HoldCo Shares;
(bb) all issuances and transfers of HoldCo Shares, including the
transfer of HoldCo Shares contemplated hereunder, have been
and will be made in compliance with applicable law and have
not conflicted, resulted in the breach of or constituted, and
will not conflict with, result in the breach of or constitute
a default under the
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articles, by-laws or resolutions of HoldCo, or any Contract to
which HoldCo or the Vendor was or is a party or was or is
otherwise bound, and did not, do not and will not violate any
law or any judicial or administrative award, judgment or
decree binding upon HoldCo or the Vendor;
(cc) with respect to tax matters:
(i) HoldCo has duly and in a timely manner filed its Tax
Returns with the appropriate taxing or other
governmental authority or agency or if not timely
filed has paid any penalties imposed as a result
thereof and has duly, completely and correctly
reported all income and all other amounts and
information required to be reported thereon;
(ii) HoldCo has duly and in a timely manner paid all
Taxes, including all instalments on account of Taxes
for the current year, that are due and payable by it
and Taxes that are not yet due and payable and that
relate to periods ending on or prior to the Closing
Date;
(iii) HoldCo has duly and timely withheld from any amount
paid or credited by it to or for the benefit of any
person, the amount of all Taxes and other deductions
required by applicable Law, rule or regulation or the
administration thereof, to be withheld from such
amount and has duly and timely remitted the same to
the appropriate taxing or other Governmental Entity;
(iv) there are no actions, suits, proceedings,
investigations, audits, assessments or reassessments
or claims now pending or (after due inquiry)
threatened against HoldCo in respect of any Taxes and
there are no matters under discussion, audit or
appeal with any taxing or other governmental
authority or agency relating to Taxes;
(v) HoldCo has not requested, nor entered into, any
agreement or other arrangement or executed any waiver
providing for, an extension of time within which: (A)
to file any Tax Return covering any Taxes for which
HoldCo is or may be liable, (B) to file any
elections, designations or similar things relating to
Taxes for which HoldCo is or may be liable, (C)
HoldCo is required to pay or remit any Taxes or
amounts on account of Taxes, or (D) any taxing or
other governmental authority or agency may assess or
collect Taxes for which HoldCo is or may be liable;
(vi) except as provided in Section 3.1 (q)(ii), HoldCo has
not paid or credited to or for the account or benefit
of any person, including, without limitation, any of
its directors or any non-resident person, any amounts
which under any applicable law, rule or regulation
would require any Taxes or other deductions to be
withheld therefrom;
(vii) HoldCo is a resident of Canada and is a taxable
Canadian corporation for the purposes of the ITA and
is not a non-resident owned investment corporation
for the purposes of the ITA;
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(viii) no amount has been deducted under paragraph 53(2)(g.
1) of the ITA in computing the adjusted cost based to
HoldCo of the Subject Shares at any time;
(ix) the Subject Shares have an adjusted cost base (as
such term is defined in the ITA) to HoldCo of $o per
share;
(x) for purposes of the ITA, the cost to Hummingbird of
the HoldCo Shares will be greater than or equal to
the paid-up capital of such shares;
(xi) the Subject Shares are capital property to HoldCo for
the purposes of the ITA and any applicable provincial
or territorial legislation;
(xii) HoldCo has not been a party to any transactions with
any person with whom it did not deal at arm's length
within the meaning of the ITA which would result in
any liability for Taxes under the provisions of
section 160 of the ITA or an analogous provision of
any applicable provincial or territorial legislation;
(xiii) the HoldCo Shares are not "taxable preferred shares"
for purposes of the ITA;
(dd) no person has taken or will take any action in connection with
any rights to dissent in respect of the Subject Shares; and
(ee) none of the foregoing representations, warranties and
statements of fact contains any untrue statement of fact or
omits to state any material fact necessary to make any such
statement or representation not misleading to a prospective
purchaser of the HoldCo Shares seeking full information as to
HoldCo, its property, business and affairs.
3.2 Representations and Warranties of Hummingbird
---------------------------------------------
Hummingbird hereby represents and warrants to the Vendor and HoldCo as follows
and hereby acknowledges and confirms that the Vendor and HoldCo are relying on
such representations and warranties in connection with the sale of the HoldCo
Shares:
(a) Hummingbird is a corporation incorporated and validly existing
under the laws of Canada and has the corporate power to enter
into and perform its obligations under this Agreement; and
(b) this Agreement has been executed and delivered by Hummingbird
and is a valid and binding obligation of Hummingbird
enforceable against Hummingbird in accordance with its terms,
subject to applicable bankruptcy, insolvency and other laws
affecting the enforcement of creditors' rights generally and
provided that equitable remedies will only be awarded in the
discretion of a court of competent jurisdiction.
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ARTICLE 4
COVENANTS
4.1 Availability of HoldCo Documents
The Vendor shall forthwith make available to Hummingbird, Parent and their
respective authorized representatives all minute books, share certificate books,
share registers, books of account, accounting records, corporate documents and
all other books or records, documents, information or data relating to HoldCo
(collectively, the "HoldCo Documents"). If the transactions contemplated herein
are not completed for any reason, Parent, Acquisition Sub and Hummingbird agree
that, except as authorized by the Vendor or as required by applicable law,
Parent, Acquisition Sub and Hummingbird and any of their respective
representatives will not disclose to any Third Party any confidential
information or data relating to HoldCo or the Vendor discovered by Parent,
Acquisition Sub and Hummingbird or their respective representatives as a result
of their review of the HoldCo Documents.
4.2 Compliance with the Law
The parties shall comply with all applicable securities and other laws of Canada
and the provinces in connection with the sale of the HoldCo Shares to
Hummingbird.
4.3 Directors and Officers
All officers and directors of HoldCo shall resign as at the Closing Date and
Hummingbird shall cause the filing of the Form 6 with Industry Canada.
4.4 Financial Statements
The Vendor shall provide all reasonable assistance to Hummingbird and Parent to
enable all financial statements of HoldCo for all fiscal years ending
immediately before the Closing Time to be prepared.
4.5 Tax Returns
The Vendor further agrees that it will, at its own cost and expense, duly and
timely file all Tax Returns of HoldCo not yet filed for all periods ending on or
prior to the Closing Date, that such returns as filed will be complete and
correct, that such returns will be approved by Parent and Hummingbird as to form
and substance, that all Taxes payable by HoldCo in respect of such periods shall
be paid on a timely basis by the Vendor, that copies of all returns filed will
be provided to Hummingbird and Parent forthwith after they have been filed and
that in any event all such Tax Returns will be filed and all Taxes payable
pursuant thereto will be paid at the latest two months after the Closing Date.
4.6 Elections
In connection with the transfer of the HoldCo Shares to Hummingbird, the Vendor
and Hummingbird undertake and agree to make joint elections under subsection
85(1) of the ITA (and any analogous provision of any applicable provincial or
territorial legislation) such that the Vendor's proceeds of disposition and the
cost to Hummingbird of the HoldCo Shares will be $o, subject to the provisions
respectively of subsection 85(1) of the ITA (and any analogous
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provision of any applicable provincial or territorial legislation); provided
that the agreed amount in such elections will be such an amount as ensures
that, for purposes of the ITA, the cost to Hummingbird of such HoldCo Shares
shall be greater than or equal to the paid-up capital of such shares.
Hummingbird shall have no liability whatsoever for the proper completion of or
timely filing of such election forms which shall be prepared at the expense of
and by the Vendor. The Vendor shall deliver such election forms to Hummingbird
on the Closing Date, and Hummingbird agrees to sign properly completed forms and
return them to the Vendor within three Business Days of receipt.
The Vendor and Hummingbird shall ensure that all such elections, and any other
elections to which Hummingbird or HoldCo is a party in respect of transactions
occurring on or prior to the Closing Date, will be filed on or prior to the
Business Day prior to the Effective Date.
4.7 Winding Up
The Vendor acknowledges that Hummingbird will, prior to the Effective Time,
cause HoldCo to be wound-up for purposes of the ITA (having regard to the
published administrative policy of the Canada Revenue Agency), and all Subject
Shares owned at any time by HoldCo shall have been distributed by HoldCo to
Hummingbird on such winding-up, and all such Subject Shares shall have been
cancelled and shall no longer be outstanding at the Effective Time.
4.8 Documents
The Vendor and HoldCo shall consider and accept all reasonable comments and
requests from each of Hummingbird and Parent in respect of, and make the
corresponding changes to, any and all draft documents and other instruments
that, in their final form, are executed and delivered prior to, at, or following
closing of the transactions contemplated hereunder.
ARTICLE 5
CLOSING
5.1 Place of Closing
The closing shall take place on o at the offices of Osler, Hoskin & Harcourt,LLP
at 10:00 a.m. (Toronto time) (the "Closing Time"), or at such other time and
place as the parties may in writing agree.
5.2 Conditions of Closing for Benefit of Each of Hummingbird and Parent
The purchase and sale of the HoldCo Shares is subject to the following terms and
conditions for the exclusive benefit of each of Hummingbird and Parent, to be
fulfilled or performed at or prior to the Closing Time:
(a) the representations and warranties of the Vendor contained in
this Agreement shall be true and correct at the Closing Time,
with the same force and effect as if such representations and
warranties were made at and as of such time, and a certificate
of an officer or other duly authorized representative of the
Vendor dated as of the Closing Date to that effect shall have
been delivered by the Vendor
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at the Closing Time, in form and substance satisfactory to each
of Hummingbird and Parent;
(b) all of the obligations and covenants contained in this
Agreement to be complied with or performed by the Vendor and
HoldCo at or before the Closing Time shall be complied with or
performed to the satisfaction of each of Hummingbird and
Parent;
(c) without limiting the generality of the foregoing conditions
set out in Section 5.2(a) and 5.2(b), the results of the
review of the HoldCo Documents provided for in Section 4.1
shall be satisfactory to each of Hummingbird and Parent, and
all necessary proceedings (including corporate proceedings) or
other actions of the Vendor and HoldCo in connection with this
Agreement shall have been taken to the satisfaction of each of
Hummingbird and Parent, and certified or other copies dated as
of the Closing Date and otherwise acceptable to each of
Hummingbird, Parent and their respective counsel shall have
been provided of all resolutions and documents of HoldCo
relating thereto;
(d) the minute books and all corporate records of HoldCo including
copies of all filings made with any governmental or regulatory
body shall have been delivered to Hummingbird;
(e) there shall have been provided such security, if any, in
favour of each of Parent, Acquisition Sub and Hummingbird and
their directors, officers, employees, advisors and agents
(including but not limited to a guarantee in the form set out
in Schedule "B" to this agreement from one or more of the
shareholders of the Vendor, if applicable, and any security
therefor), in the form satisfactory to each of Hummingbird and
Parent, which either of Hummingbird or Parent may require in
respect of the representations, warranties, obligations, and
covenants of the Vendor and HoldCo contained in this Agreement
in order to secure the indemnity obligations of the Vendor and
HoldCo under Article 6 (the "Security");
(f) any exemptions requested, or in the opinion of Parent,
desirable, from any applicable Canadian securities regulatory
authority in connection with the transactions contemplated
hereby have been obtained and are of full force and effect;
(g) the Arrangement Agreement has not been terminated in
accordance with its terms;
(h) each of Vendor and HoldCo shall have provided to each of
Hummingbird and Parent and Acquisition Sub an opinion of
counsel dated as of the Closing Date acceptable to each of
Hummingbird and Parent as to such matters as may be requested
by either Hummingbird or Parent, acting reasonably, including
the due incorporation and organization of each of the Vendor
and HoldCo and any person executing and delivering the
Security (the "Debtor"), the power and capacity of the Debtor,
the Vendor and HoldCo, the due authorization by the Debtor,
the Vendor and HoldCo of the transactions contemplated by this
Agreement including the Reorganization, the due execution and
delivery by the Vendor and HoldCo of this Agreement and any
other material documents required to be executed in
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connection herewith, including the Reorganization, the due
execution and delivery by the Debtor of the Security and
related documents, the legal, valid and binding nature of the
obligations of the Vendor and HoldCo under this Agreement and
such other documents and of the Debtor under the Security and
related documents, the enforceability of this Agreement and
such other documents against the Vendor and HoldCo in
accordance with their terms and of the Security and related
documents against the Debtor in accordance with its terms, the
authorized and issued share capital of HoldCo, the HoldCo
Shares being duly issued and fully paid and non-assessable
shares and registered in the name of Hummingbird on the
Closing Date and compliance with applicable laws by the
Debtor, Vendor and HoldCo relating to the Holding Company
Alternative, such opinion to be in such form and subject to
such customary qualifications and exceptions as are acceptable
to the respective counsel for Hummingbird and Parent, acting
reasonably;
(i) all documents and instruments executed and delivered by the
Vendor and/or HoldCo in connection with the transactions
contemplated hereunder at or prior to the Closing Time, the
Security and related documents, if any, executed and delivered
at or prior to the Closing Time, and all actions taken or
proposed to be taken by any person or entity other than Parent
or Acquisition Sub in connection with the transactions
contemplated hereunder (including the Reorganization and the
Winding-Up) shall be in form and substance acceptable to each
of Hummingbird and Parent;
(j) no Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any Law which is then in
effect and has the effect of making the transactions
contemplated by this Agreement (including the Reorganization
and Winding-Up) illegal or otherwise preventing or prohibiting
consummation of such transactions, and no Governmental Entity
(including for the avoidance of doubt the Canada Revenue
Agency and any applicable provincial or territorial taxing
authority) shall have enacted, issued, promulgated, enforced
or entered any Law which is or is proposed to be then in
effect, or changed or introduced any administrative policy or
assessing practice, the result of which has caused or, in the
opinion of either Hummingbird or Parent, in their respective
sole discretion, could cause the transactions contemplated by
this Agreement (including the Reorganization and Winding-Up)
to have an adverse effect on any of HoldCo, Hummingbird,
Acquisition Sub or Parent; and
(k) there shall not be pending or threatened by or before any
Governmental Entity any proceeding the result of which has
caused or, in the opinion of either Hummingbird or Parent, in
their respective sole discretion, could cause the transactions
contemplated by this Agreement (including the Reorganization
and Winding-Up) to have an adverse effect on any of HoldCo,
Hummingbird, Acquisition Sub or Parent.
5.3 Conditions for the Benefit of the Vendor
The purchase and sale of the HoldCo Shares is subject to the following terms and
conditions for the exclusive benefit of the Vendor, to be fulfilled or performed
at or prior to the Closing Time:
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(a) the representations and warranties of Hummingbird contained in
this Agreement shall be true and correct in all material
respects at the Closing Time with the same force and effect as
if such representations and warranties were made at and as of
such time, and a certificate of a senior officer of
Hummingbird dated as of the Closing Date to that effect shall
have been delivered by Hummingbird at the Closing Time;
(b) all of the obligations and covenants contained in this
Agreement to be complied with or performed by Hummingbird at
or before the Closing Time shall be complied with or performed
in all material respects;
(c) any exemptions required from any applicable Canadian
securities regulatory authority in connection with the
transactions contemplated hereby have been obtained and are of
full force and effect; and
(d) the Arrangement Agreement has not been terminated in
accordance with its terms.
5.4 Closing Deliveries
(a) At the Closing Time, the Vendor shall deliver to each of
Hummingbird and Parent:
(i) certificates representing the HoldCo Shares duly
endorsed by the Vendor for transfer to Hummingbird;
(ii) certificates representing the Subject Shares
registered in the name of HoldCo;
(iii) the HoldCo Documents;
(iv) the certificates referred to in Section 5.2(a);
(v) the certified copies of the resolutions and documents
of HoldCo referred to in Section 5.2(c); and
(vi) the resignations of, and the unconditional release of
HoldCo and its past, present and future shareholders
by, all directors and officers of HoldCo dated the
Closing Date which shall take effect at the Closing
Time in form and substance acceptable to each of
Hummingbird and Parent;
and such other documents as Hummingbird or Parent may reasonably request
including the guarantee and documents relating to any security referred to in
Section 5.2(e).
(b) At the Closing Time, Hummingbird shall deliver to the Vendor:
(i) the certificate referred to in Section 5.3(a); and
(ii) certificates representing the New Hummingbird Shares
registered in accordance with a letter of direction
executed by the Vendor.
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5.5 Further Assurances
The Vendor covenants and agrees that, from time to time, subsequent to the
Closing Time, the Vendor will, at the request of any other party to this
Agreement, execute and deliver all such documents, including, without
limitation, all such additional conveyances, transfers, consents, tax elections
(or any amendment thereto) and other assurances and do all such other acts and
things as any such requesting party, acting reasonably, may from time to time
request to be executed or done in order to better evidence, perfect or
effectuate any provision of this Agreement or any of the respective obligations
intended to be created hereby.
ARTICLE 6
INDEMNIFICATION
6.1 Obligations to Indemnify
The Vendor agrees to indemnify and save harmless Parent, Acquisition Sub,
Hummingbird and HoldCo (and their directors and officers, employees, advisors
and agents) from all actions, claims, demands, processes, proceedings, losses,
damages, liabilities, deficiencies, Taxes (whether or not such Taxes have been
assessed or reassessed as at the date hereof), and any instalments with respect
thereto, costs and expenses (including, without limitation, all legal and other
professional fees and disbursements, interest, penalties and amounts paid in
settlement) (collectively "Liabilities") whether resulting from a breach of
contract, by the commission of a fault or otherwise suffered or incurred by
Parent, Acquisition Sub, Hummingbird and HoldCo (and their directors, officers,
employees and agents), the whole to be computed on an after-tax basis, as a
result of or arising directly or indirectly out of or in connection with:
(a) any breach by the Vendor of any of its representations,
warranties, obligations or covenants contained in this
Agreement or any certificate or document delivered pursuant
hereto;
(b) any Liability sustained, incurred, assumed or acquired by
HoldCo on or before, or related to any matter occurring on or
before, the purchase of the HoldCo Shares hereunder; and
(c) this Agreement and the transactions contemplated hereby
(including the negotiation, execution, delivery and
performance of this Agreement), the Reorganization or the
Winding Up, including all Liabilities which, as a result of
the Reorganization or Winding Up, are assumed or incurred by
Parent, Acquisition Sub, Hummingbird and HoldCo.
6.2 Notice of Claim
In the event that a party to this Agreement (the "Indemnified Party") shall
become aware of any claim, proceeding or other matter (a "Claim") in respect
of which another party to this Agreement (the "Indemnifying Party") agreed to
indemnify the Indemnified Party pursuant to this Agreement, the Indemnified
Party shall promptly give written notice thereof to the Indemnifying Party.
Such notice shall specify whether the Claim arises as a result of a claim by
a person against the Indemnified Party (a "Third Party Claim") or whether the
Claim does not so arise (a "Direct Claim"), and shall also specify with
reasonable particularity (to the extent that
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the information is available) the factual basis for the Claim and the amount
of the Claim, if known. If, through the gross negligence or wilful misconduct
of the Indemnified Party, the Indemnifying Party does not receive notice of
any Claim in time to contest effectively the determination of any liability
susceptible of being contested, the Indemnifying Party shall be entitled to
set off against the amount claimed by the Indemnified Party the amount of any
Liabilities incurred by the Indemnifying Party resulting from the Indemnified
Party's failure to give such notice on a timely basis.
6.3 Direct Claims
With respect to any Direct Claim, following receipt of notice from the
Indemnified Party of the Claim, the Indemnifying Party shall have 30 days to
make such investigation of the Claim as is considered necessary or desirable.
For the purpose of such investigation, the Indemnified Party shall make
available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If both parties
agree at or prior to the expiration of such 30-day~ period (or any mutually
agreed upon extension thereof) to the validity and amount of such Claim, the
Indemnifying Party shall immediately pay to the Indemnified Party the full
agreed upon amount of the Claim.
6.4 Third Party Claims
With respect to any Third Party Claim, the Indemnified Party shall have the
exclusive right, at the expense of the Indemnifying Party, to contest, settle or
pay the amount claimed and to retain counsel and other experts or advisors
selected by the Indemnified Party in its sole discretion in connection
therewith; provided, however, that the Indemnified Party shall not settle any
Third Party Claim without the written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld or delayed; provided, however, that
the Indemnifying Party shall remain liable for the settlement amount even if any
such consent is not obtained for any reason. If the. Indemnified Party elects to
assume such control, the Indemnifying Party shall have the right, at its sole
expense, to participate in the negotiation, settlement or defence of such Third
Party Claim. If any Third Party Claim is of a nature such that the Indemnified
Party is required by applicable law to make a payment to any person (a "Third
Party") with respect to the Third Party Claim before the completion of
settlement negotiations or related legal proceedings, the Indemnified Party may
make such payment and the Indemnifying Party shall, forthwith after demand by
the Indemnified Party, reimburse the Indemnified Party for such payment. If the
amount of any liability of the indemnified Party under the Third Party Claim in
respect of which such payment was made, as finally determined, is less than the
amount that was paid by the Indemnifying Party to the Indemnified Party, the
Indemnified Party shall, forthwith after receipt of the difference from the
Third Party, pay the amount of such difference to the Indemnifying Party.
6.5 Reduction, Set-off, Payment and Co-operation
The Indemnifying Party shall pay to the Indemnified Party all amounts for which
the Indemnifying Party is liable pursuant to this Section 6 promptly after the
Indemnified Party incurs the Liability in respect of which such liability
arises. If such amount is not so paid, the Indemnified Party may deduct or
set-off such amount from any obligation it may have to the Indemnifying Party.
The Indemnified Party and the Indemnifying Party shall co-operate fully
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with each other with respect to Third Party Claims, and shall keep each other
fully advised with respect thereto (including supplying copies of all
relevant documentation promptly as it becomes available).
ARTICLE 7
RELEASE
7.1 Release
Each of the Vendor and HoldCo, together with their respective assigns, estates,
heirs, executors, administrators and holders of any beneficial interest in any
of them (i) grants to Parent, Acquisition Sub and Hummingbird (and their
respective successors, assigns, parent companies, subsidiaries, affiliated
companies, and all such entities' present and former directors, officers,
employees, advisors and agents) a full and final release from any and all
Liabilities suffered or incurred as a result of or with respect to or in any way
connected with the transactions contemplated hereby including the computation of
"safe income" for purposes of the ITA and any relevant provincial or territorial
legislation and any information in that regard provided by any of Parent,
Acquisition Sub and Hummingbird (and their respective directors, officers,
employees, advisors and agents) to the Vendor, the adequacy or completeness of
any such information or the failure of any of Parent, Acquisition Sub and
Hummingbird (and their respective directors, officers, employees, advisors and
agents) to provide information with respect to the transactions contemplated
hereby; and (ii) acknowledges it has relied exclusively on its own tax advisors
and has not received or relied upon any statements or representations whatsoever
from Parent, Acquisition Sub, Hummingbird or their respective affiliates or
advisors.
ARTICLE 8
NON-COMPLETION OF ARRANGEMENT
8.1 Non-Completion
In the event the Arrangement Agreement is terminated with the result that the
Transaction is not completed, the rights and benefits and obligations and
responsibilities of Parent and Acquisition Sub contained in this Agreement shall
automatically and without further action of the parties hereto terminate as of
the same date as the termination of the Arrangement Agreement. In such event,
Parent and Acquisition Sub shall have no right to enforce any such rights and
benefits thereafter and this Agreement shall be read as if Parent and
Acquisition Sub were not parties to the Agreement. Parent and Acquisition Sub
shall have no liabilities in connection with this Agreement and shall maintain
the benefit of the release of any indemnity for any costs incurred.
ARTICLE 9
MISCELLANEOUS
9.1 Addresses for Notices
Any notice or other communication required or permitted to be given hereunder
shall be in writing and shall be delivered in person, transmitted by telecopy or
similar means of recorded electronic communications, addressed as follows:
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(a) If to HoldCo:
o
Phone: o
Fax: o
Attention: o
with a copy to: o
o
Phone: o
Fax: o
Attention: o
(b) if to the Vendor:
o
Phone: o
Fax: o
Attention: o
with a copy to: o
o
Phone: o
Fax: o
Attention: o
(c) if to Hummingbird:
1 Sparks Avenue,
Toronto, Ontario
M2H2W1
Attention: Inder P.S. Duggal
Telephone: 416.496.2200
Facsimile: 416.496.2207
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
222 Bay Street, Suite 1750
Toronto, Ontario
M5K 1J5
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Attention: Christopher W. Morgan
Telephone: 416.777.4700
Facsimile: 416.777.4747
with a copy to:
Goodmans LLP
250 Yonge Street, Suite 2400
Toronto, Ontario, Canada M5B 2M6
Attention: Stephen Halperin/Michael Partridge
Telephone: 416.597.4115/416.597.5498
Facsimile: 416.979.1234
(d) if to Parent or Acquisition Sub:
o
Attention: o
Telephone: o
Facsimile: o
with a copy to:
o
Attention: o
Telephone: o
Facsimile: o
with a copy to:
Osler, Hoskin & Harcourt LLP
100 King Street West
1 First Canadian Place
Suite 6100, P.O. Box 50
Toronto, Ontario
M5X 1B8
Attention: o
Telephone: 416.862.o
Facsimile: 416.862-6666
9.2 Date of Notice
Any such notice or other communication shall be deemed to have been given and
received on the date on which it was delivered or received (or, unless actually
received by the addressee, if such day is not a Business Day at the place of
receipt, on the next following Business Day).
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9.3 Change of Address
Any party may at any time change its address for notice from time to time by
giving notice to the other parties in accordance with Section 9.1.
9.4 Binding Nature of the Agreement
The provisions of this Agreement shall enure to the benefit of and shall be
binding upon the parties hereto and their respective heirs, legal personal
representatives, successors and permitted assigns. This agreement may not be
assigned by the Vendor or HoldCo without the prior written consent of
Hummingbird and Parent.
9.5 Survival of Covenants, Representations and Warranties
The covenants, obligations and agreements to the extent that they have not been
fully performed at or prior to the Closing Time, and the representations and
warranties herein contained and in all certificates and documents delivered
pursuant to or contemplated by this Agreement shall survive the consummation of
the transactions contemplated hereby and shall continue in full force and effect
following the Closing Time, without limitation of time, notwithstanding such
closing nor any investigation made by or on behalf of the party entitled to the
benefit thereof.
9.6 Counterparts and Facsimile
This Agreement may be executed in counterparts, each of which shall be deemed an
original, and all of which taken together shall constitute one and the same
instrument, and delivery of counterparts may be effected by means of a
telecopied transmission.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on the date
first above mentioned.
[HOLDCO]
By:
----------------------------------
Name: o
Title: o
[VENDOR]
By:
----------------------------------
Name: o
Title: o
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HUMMINGBIRD LTD.
By:
----------------------------------
Name: o
Title: o
OPEN TEXT CORPORATION
By:
----------------------------------
Name: o
Title: o
6575064 CANADA INC.
By:
----------------------------------
Name: o
Title: o
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SCHEDULE "A"
The following is a list of agreements and transactions intended to implement the
Holding Company Alternative:
(i) the transfer by the Vendor to HoldCo of the Subject Shares in
exchange for o common shares in the capital of HoldCo on a
tax-deferred basis (to the extent possible) pursuant to
subsection 85(1) of the ITA (and any analogous provision of
any applicable provincial or territorial legislation);
(ii) HoldCo Will implement one or more increases to the stated
capital account maintained in respect of its common shares;
and
(iii) the transfer by the Vendor to Hummingbird of all of the HoldCo
Shares pursuant to this Holding Company Participation
Agreement.
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SCHEDULE "B"
GUARANTEE
THIS GUARANTEE, dated as of June o, 2006, made by [Full legal name of guarantor]
(the "Guarantor"), with its [address/principal place of business] at o, in
favour of HUMMINGBIRD LTD. ("Hummingbird"), with its principal place of business
at 1 Sparks Avenue, Toronto, Ontario M2H 2W1, OPEN TEXT CORPORATION ("Parent"),
6575064 CANADA INC. ("Acquisition Sub") and the directors officers, employees
and agents (collectively the "Related Parties") of Hummingbird, Parent and
Acquisition Sub (Hummingbird, Parent, Acquisition Sub and the Related Parties,
together in each case with their respective successors and assigns, being
collectively the "Creditors" and individually a "Creditor"),
WHEREAS:
A. o ("HoldCo"), o ("Vendor", and collectively with HoldCo, the "Debtors")
Hummingbird, Parent and Acquisition Sub are parties to a Holding
Company Participation Agreement dated as of o, 2006 (such agreement as
it may from time to time be supplemented, amended, consolidated or
restated being the "Participation Agreement") providing for the
purchase by Hummingbird from the Vender of the issued and outstanding
common shares of HoldCo in consideration for the issue and allotment by
Hummingbird to HoldCo of fully paid and non-assessable common shares of
Hummingbird.
B. The Guarantor directly or indirectly owns [shares] of the Vendor.
C. A condition to Hummingbird completing the transactions provided for
under the Participation Agreement is that the Guarantor execute and
deliver this guarantee.
D. All capitalized terms used but not defined in this guarantee have the
meanings specified in the Participation Agreement.
THIS GUARANTEE WITNESSES THAT, in consideration for Hummingbird completing the
transactions provided for under the Participation Agreement and for other good
and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged by the Guarantor), the Guarantor agrees to, with and in favour of
each of the Creditors as follows:
1. Guarantee: The Guarantor hereby unconditionally and irrevocably
guarantees to each of the Creditors the due and punctual payment and
performance in full of all present and future indebtedness, liabilities and
obligations of each of the Debtors under, pursuant to or in respect of the
Participation Agreement and all certificates and documents delivered by each
of the Debtors pursuant thereto or in connection therewith (collectively the
"Participation Documents") (including without limitation all such
indebtedness, liabilities and obligations arising as a result of, in
connection with or in respect of a breach of covenant, or a breach of a
representation or warranty, by a Debtor under a Participation Document or
arising pursuant to or in respect of any indemnity liability or obligation of
a Debtor contained in a Participation Document), and any ultimate unpaid
balance thereof (collectively the "Liabilities").
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2. Demand for Payment: The Guarantor shall from time to time pay to
Hummingbird for the account of the Creditors forthwith after written demand on
the Guarantor from Hummingbird, at the address specified in such demand, the
amount of the liability of the Guarantor hereunder specified in such demand
(the Guarantor acknowledging that Hummingbird may make demand on the Guarantor
on its own behalf and on behalf of any one or more of the other Creditors). All
amounts payable hereunder by the Guarantor shall be paid in the currency in
which the related amounts are owed by the applicable Debtor. The Guarantor
hereby waives any and all presentments, demands, notices and protests in the
enforcement of this guarantee, other than as may be required by applicable law.
3. Continuing Guarantee: This guarantee shall be a continuing
guarantee and shall be binding as a continuing obligation of the Guarantor. For
all purposes of the liability of the Guarantor hereunder including without
limitation the calculation of the amount of the Liabilities at any time, every
sum of money which is now or which may hereafter from time to time be due or
owing to any Creditor by any Debtor (or would have become so due or owing were
it not for the insolvency, bankruptcy, reorganization or winding-up of such
Debtor) shall be deemed to be and to continue due and owing to such Creditor
until the same shall be actually paid in cash to such Creditor, notwithstanding
the insolvency, bankruptcy, reorganization or winding-up of such Debtor or any
other event whatsoever. The Guarantor agrees that, if at any time all or any
part of any payment previously applied by any Creditor to any of the
Liabilities is or must be rescinded or returned by such Creditor for any reason
whatsoever (including without limitation the insolvency, bankruptcy,
reorganization or winding-up of a Debtor), such Liability shall, for the
purpose of this guarantee, to the extent that such payment is or must be
rescinded or returned, be deemed to have continued in existence,
notwithstanding such application by such Creditor, and this guarantee shall
continue to be effective or be reinstated, as the case may be, as to such
Liability, all as though such application had not been made. No assurance,
security or payment which may be rescinded or avoided under any law relating to
insolvency, bankruptcy, reorganization or winding-up and no release,
settlement, discharge or arrangement which may have been given or made on the
faith of any such assurance, security or payment shall prejudice or affect the
right of the Creditors to recover from the Guarantor to the full extent of this
guarantee as if such assurance, security, payment, release, settlement,
discharge or arrangement had never been granted, given or made. Any such
release, settlement, discharge or arrangement shall as between the Creditors
and the Guarantor, be deemed to have been given or made upon the express
condition that it shall become and be wholly void and of no effect if the
assurance, security or payment on the faith of which it was made or given shall
at any time thereafter be rescinded or avoided as aforesaid, to the intent so
that the Creditors shall become and be entitled at any time after any such
recission or avoidance to exercise all or any of the rights conferred upon the
Creditors hereunder and of all other rights which by virtue and as a
consequence of this guarantee the Creditors would have been entitled to
exercise but for such release, settlement, discharge or arrangement.
4. Enforcing Rights Against Guarantor: The Guarantor hereby waives
the benefits of division and discussion. Without limiting the foregoing, no
Creditor shall be obliged to take any action or to exhaust any recourse
against any Debtor, any other person, or any security held at any time by any
Creditor, nor to value any security held by any Creditor, before requiring,
or being entitled to, payment from, and to enforce its rights and remedies
against, the Guarantor under this guarantee. No Creditor shall be obliged to
marshall any assets in favour of the
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Guarantor. Any third party dealing with any Creditor shall not be concerned
to see or inquire as to the validity of any demand under this guarantee.
5. Guarantee Absolute:
(1) The liability of the Guarantor hereunder shall be absolute and
unconditional and shall not be released, discharged, diminished,
limited or in any way affected by any matter, act, failure to
act, or circumstance whatsoever, including without limitation:
(a) any lack of enforceability of any agreement between any
Creditor and any Debtor or any document provided by any Debtor
to any Creditor; (b) any failure on the part of any Debtor to
carry out any rights or obligations under any agreement or
document; (c) any change in the name, objects, powers,
organization, share capital, constating documents, business,
shareholders, directors or management of any Debtor; (d) any
amalgamation, merger or consolidation of any Debtor into or with
any other person or entity, or any sale, lease or transfer of
all or any of the assets of any Debtor to any other person or
entity; (e) any lack or limitation of power, incapacity or
disability on the part of any Debtor or any of its directors,
officers, shareholders, partners, employees or agents, or any
other irregularity, defect or informality, or any fraud, on the
part of any Debtor or any of its directors, officers,
shareholders, employees or agents with respect to any or all of
the Liabilities; (f) any impossibility, impracticability,
frustration of purpose, illegality, force majeure or act of
government or governmental authority; (g) the insolvency,
bankruptcy, reorganization, winding-up or financial condition of
any Debtor or any other person at any time; (h) any loss of or
in respect of any security held by or on behalf of any Creditor,
whether occasioned through the fault of a Creditor or otherwise;
(i) any law, regulation, limitation period or other matter or
circumstance which might otherwise constitute a defence
available to, or a discharge of, a Debtor with respect to any or
all of the Liabilities; (j) any loss or impairment of any right
of the Guarantor to subrogation, reimbursement or contribution,
whether or not as a result of any action taken or omitted to be
taken by any Creditor; and (k) anything done, omitted to be
done, suffered or permitted by any Creditor in connection with
all or any of the Liabilities or otherwise or in connection with
any security held by or on behalf of any Creditor (whether
relating to the Liabilities or otherwise), or which might
otherwise operate to release, discharge, diminish or limit in
any way the liability of, or otherwise provide a defence to, a
guarantor or surety.
(2) The Creditors may, with respect to all or any of the Liabilities
and without releasing, discharging, limiting or otherwise
affecting in whole' or in part the Guarantor's liability
hereunder: (a) amend, alter or vary any of their agreements with
any of the Debtors or any other person; (b) grant time,
renewals, extensions, indulgences, releases and discharges to
any Debtor or any other person; (c) increase or reduce the rate
of interest on all or any of the Liabilities; (d) alter,
compromise, accelerate, extend or change the time or manner for
payment by any Debtor of, or by any other person or persons
liable to the Creditors in respect of any or all of the
Liabilities; (e) take or abstain from taking security from any
Debtor or any other person or from completing or perfecting any
security taken; (f) release or add one or more guarantors or
sureties, accept additional or
B-102
substituted security, or release or subordinate any security; (g)
accept compromises from any Debtor or any other person; (h)
apply all money at any time received from any Debtor or from any
person other than the Guarantor or from any security upon such
part of the Liabilities as the Creditors may see fit, and change
any such application from time to time in their discretion, or
keep such money in a separate account for such period as the
Creditors may determine without application to the Liabilities;
and (i) otherwise deal with the Debtors, the Guarantor and all
other persons and security as the Creditors may determine. The
Creditors may apply all money at any time received from the
Guarantor hereunder upon such part of the Liabilities as the
Creditors may see fit, and may change any such application from
time to time in their discretion.
6. Indemnity: If any amount in respect of the Liabilities is not
recoverable from the Guarantor hereunder on the basis of a guarantee, then,
notwithstanding any other provision hereof, (a) the Guarantor shall be liable
hereunder as principal debtor in respect of the due payment of such amount, and
shall pay such amount to Hummingbird for the benefit of the Creditors after
demand as herein provided, and (b) the Guarantor shall indemnify and saves each
of the Creditors harmless from and against all losses, costs, damages,
expenses, claims and liabilities that such Creditor may suffer or incur in
connection with or in respect of any failure by the applicable Debtor for any
reason to pay or perform any such Liability and shall pay the amount of such
loss, cost, damage, expense, claim or liability to Hummingbird for the benefit
of the applicable Creditor after written demand for same by Hummingbird.
7. Conclusive Statement: Any account settled or stated by or between a
Creditor and a Debtor at any time respecting the Liabilities shall be prima
facie evidence that the balance or amount thereof appearing due to the
applicable Creditor is so due.
8. Stay of Acceleration, etc.: If acceleration of the time for
payment, or the liability of a Debtor to make any payment, of any amount
specified to be payable by a Debtor in respect of the Liabilities is stayed,
prohibited or otherwise affected upon the insolvency, bankruptcy,
reorganization or winding-up of such Debtor or any moratorium affecting the
payment of the Liabilities by such Debtor, all such amounts otherwise subject
to acceleration or payment shall nonetheless be deemed for all purposes of this
guarantee to be and to become due and payable by such Debtor and shall be
payable by the Guarantor hereunder forthwith after demand by Hummingbird.
9. Subrogation, etc.: Until the Liabilities have been indefeasibly
paid in full, the Guarantor shall not exercise or enforce any right of
subrogation against any Debtor. In case of the insolvency, bankruptcy,
reorganization or winding-up of a Debtor (whether voluntary or compulsory) or
in the event that a Debtor shall make a bulk sale of any assets or scheme of
arrangement with creditors, all dividends and other payments which may be due
or payable to the Guarantor are hereby assigned and transferred to and shall be
due and paid to Hummingbird for the benefit of the Creditors on account of the
Liabilities, and for such payment to Hummingbird this shall be a sufficient
warrant and authority to any person making the same. The Guarantor shall
continue to be liable under this guarantee for any balance of the Liabilities
which may be owing to the Creditors by a Debtor, and in the event of the
valuation by the Creditors of any of their security and/or retention thereof by
the Creditors in accordance with the Bankruptcy and Insolvency Act (Canada) or
any other applicable legislation, such valuation and/or continuation
B-103
shall not as between the Creditors and the Guarantor, be considered as a
purchase of such security, or as payment or satisfaction or reduction of all
or any part of the Liabilities.
10. Amounts Owed by Debtors. All present and future indebtedness and
liabilities of each of the Debtors to the Guarantor are, effective from and
after the date of any demand under this guarantee, postponed and subordinated
to the full and final payment of all Liabilities, and until otherwise agreed in
writing by the Creditors, all moneys received by the Guarantor in respect of
any such indebtedness and liabilities at any such time shall be received as
mandatary and agent for the Creditors, shall be kept by the Guarantor separate
and apart from its other assets, and shall be paid over to Hummingbird on
account of the Liabilities.
11. Alteration or Waiver: No alteration or waiver of this guarantee or
of any of its terms, provisions or conditions shall be binding on the Creditors
unless made in writing by an authorized officer of Hummingbird. No failure on
the part of any Creditor to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right hereunder preclude the other or further exercise thereof
or the exercise of any other right.
12. Rights Not Exhaustive: All rights, powers and remedies of the
Creditors hereunder shall be in addition to all rights, powers and remedies
given to the Creditors at law, in equity, under statute, by agreement or
otherwise. All such rights, powers and remedies are cumulative and not
alternative and shall not be exhausted by any exercise thereof against the
Guarantor or by any number of successive actions until and unless all of the
Liabilities have been paid and each of the Guarantor's obligations hereunder
has been fully performed. This guarantee is in addition to and not in
substitution for any security held at any time by any of the Creditors.
13. Severability: Any provision of this guarantee which is or is
deemed to be void, prohibited or unenforceable in any jurisdiction shall be
severed from this guarantee with respect to such jurisdiction, without in any
way invalidating the remaining provisions of this guarantee and without
affecting such provision in any other jurisdiction.
14. Delivery and Completeness of Guarantee: Upon this guarantee,
bearing the signature of the Guarantor, coming into the possession of
Hummingbird, the same shall be deemed to be finally executed and delivered by
the Guarantor and shall not be subject to or affected by any promise or
condition affecting or limiting the Guarantor's liability except as set forth
herein, and no statement, representation, agreement or promise on the part of
any officer, employee or agent of any Creditor, unless contained herein, forms
any part of this guarantee or has induced the making of this guarantee or shall
be deemed in any way to affect the Guarantor's liability hereunder. This
guarantee and the Participation Documents constitute the entire agreement
between the Creditors and the Guarantor with respect to the subject matter
hereof and cancels and supersedes any prior understandings and agreements
between them with respect thereto.
15. Financial Condition: The Guarantor is fully aware of the financial
condition of each of the Debtors, has made all inquiries which the Guarantor
feels are necessary and acknowledges that the Guarantor has received no
information from any Creditor regarding any Debtor or its financial condition.
B-104
16. No Set-off: All payments to be made by the Guarantor hereunder
shall be made in immediately. available funds and shall be made without
set-off, or counterclaim and without deduction for any Taxes, levies, duties,
fees, deductions, withholdings, restrictions or conditions of any nature
whatsoever. If at any time any applicable law, regulation or international
agreement requires the Guarantor to make any such deduction or withholding from
any such payment, the sum due from the Guarantor with respect to such payment
will be increased to the extent necessary to ensure that, after the making of
such deduction or withholding, the Creditors receive ao net sum equal to the
sum which they would have received had no deduction or withholding been
required.
17. Expenses: The Guarantor shall from time to time forthwith after
demand by Hummingbird pay to Hummingbird all liabilities, costs and expenses
(including reasonable legal fees and expenses on a solicitor and own client
basis and any sales, goods and services or other similar taxes payable to any
governmental authority with respect to any such liabilities, costs and
expenses) incurred by the Creditors in the preservation or enforcement of any
of their rights hereunder.
18. Interest: The liability of the Guarantor to make any payments
under this guarantee will bear interest at a nominal rate per annum equal to
the Prime Rate in effect from time to time plus 2%, which rate per annum will
change automatically without notice to the Guarantor as and when the Prime Rate
changes. Such interest will be payable by the Guarantor on demand and will be
calculated, but not compounded, daily (both before and after judgement) from
and including the date such payment becomes due and payable by the Guarantor
under this guarantee to but not including the date of payment. The term "Prime
Rate" shall mean the reference rate of interest (however designated) of o for
determining interest chargeable by it on Cdn. dollar commercial loans made in
Canada.
19. Communications: Any notice or communication to be given hereunder
may be effectively given by delivering the same at the addresses set forth in
the first paragraph hereof or by sending the same by prepaid registered mall or
facsimile transmission to the parties at such addresses to the attention of o
in the case of the Guarantor and Inder P.S. Duggal in the case of Hummingbird.
The facsimile number for the Guarantor is o and for Hummingbird is (416)
496-2207. Any notice so mailed shall be deemed to have been received on the
fifth Business Day next following the mailing thereof, provided that postal
service is in normal operation during such time. Any delivered or facsimile
notice shall be deemed to have been received on transmission if the date
thereof is a Business Day and if sent prior to 5:00 p.m. (local time of the
recipient), and if not, on the next Business Day following transmission. Either
party may from time to time notify the other party, in accordance with the
provisions hereof, of any change of its address which thereafter, until changed
by like notice, shall be the address of such party for all purposes of this
guarantee.
20. Amalgamation. The Guarantor acknowledges that if a Debtor
amalgamates or consolidates with any other body corporate or person, this
guarantee will extend to and include all indebtedness, liabilities and
obligations of the amalgamated body corporate or consolidated person; the term
"Debtor", where used in this guarantee, will extend to and include the
amalgamated body corporate or consolidated person; and the term "Liabilities",
where used in this guarantee, will extend to and include the indebtedness,
liabilities and obligations of the amalgamated body corporate or consolidated
person of the nature described in paragraph 1 hereof.
B-105
21. Governing Law: This guarantee shall be conclusively deemed to be a
contract made under, and shall for all purposes be governed by and construed in
accordance with the laws of the Province of Ontario, excluding any conflict of
laws rule or principle which might refer such construction to the laws of
another jurisdiction, and without prejudice to or limitation of any other
rights or remedies available to the Creditors under the laws of any
jurisdiction where property or assets of the Guarantor may be found. The
Guarantor hereby irrevocably attorns to the non-exclusive jurisdiction of the
courts of the Province of Ontario without prejudice to the right of the
Creditors to commence an action against the Guarantor in any other
jurisdiction.
22. Time: Time is of the essence with respect to this guarantee and
the time for performance of the obligations of the Guarantor hereunder may be
strictly enforced by the Creditors.
23. Interpretation: Any word herein importing the singular number
shall include the plural and vice versa and any reference herein to a person
shall include reference to an individual, a firm, a partnership, a corporation,
an association, a government and any other entity of any nature whatsoever and
vice versa. The headings used in this guarantee are for convenience only and do
not form a part of this guarantee nor are they intended to interpret, define or
limit the scope, extent or intent of this guarantee or any provision hereof.
24. Binding Nature: This guarantee shall extend to and enure to the
benefit of the Creditors andoo their respective successors and assigns and
shall be binding on the Guarantor and its successors. The Guarantor may not
assign its obligations under this guarantee.
25. Counterparts: This guarantee may be executed by the parties in
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument, and delivery of
counterparts may be effected by means of a telecopied transmission.
IN WITNESS OF WHICH, the Guarantor has caused this guarantee to be duly executed
as of the date indicated on the first page of this guarantee.
By:
--------------------------------
Name: o
Title: o
Read and Accepted as of the date indicated on the first page of this guarantee.
B-106
HUMMINGBIRD LTD., on its own behalf
and on behalf of its Related Parties
By:
--------------------------------
Name: o
Title: o
OPEN TEXT CORPORATION, on its own
behalf and on behalf of its Related Parties
By:
--------------------------------
Name: o
Title: o
6575064 CANADA INC., on its own behalf
and on behalf of its Related Parties
By:
--------------------------------
Name: o
Title: o
B-107
APPENDIX C
OPINION OF BANC OF AMERICA SECURITIES LLC
C-1
August 3, 2006
The Special Committee of the Board of Directors
The Board of Directors
Hummingbird Ltd.
1 Sparks Avenue
Toronto, Ontario M2H 2W1 Canada
Members of the Special Committee and the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of common shares of Hummingbird Ltd. ("Hummingbird"), other
than Open Text Corporation ("Open Text"), Sub (as defined below) and their
respective affiliates, of the Consideration (as defined below) to be received by
such holders pursuant to (i) an Arrangement Agreement (the "Agreement") to be
entered into among Hummingbird, Open Text and 6575064 Canada Inc., a wholly
owned subsidiary of Open Text ("Sub"), and (ii) a Plan of Arrangement to be
implemented in accordance with the Agreement (the "Plan of Arrangement"). As
more fully described in the Agreement and related Plan of Arrangement, Open Text
will acquire Hummingbird by way of an arrangement (the "Transaction") pursuant
to which each outstanding common share in the capital of Hummingbird (each, a
"Hummingbird Common Share") will be transferred to Sub in exchange for $27.85 in
cash (the "Consideration"). The terms and conditions of the Transaction are more
fully set forth in the Agreement and related Plan of Arrangement.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and
other business and financial information of Hummingbird;
(ii) reviewed certain internal financial statements and other
financial and operating data concerning Hummingbird;
(iii) reviewed certain financial forecasts relating to Hummingbird
prepared by the management of Hummingbird (the "Hummingbird
Forecasts");
(iv) discussed the past and current operations, financial
condition and prospects of Hummingbird with senior executives
of Hummingbird;
(v) reviewed the reported prices and trading activity for
Hummingbird Common Shares;
C-2
The Special Committee of the Board of Directors
The Board of Directors
Hummingbird Ltd.
August 3, 2006
Page 2
(vi) compared the financial performance of Hummingbird and the
prices and trading activity of Hummingbird Common Shares with
that of certain other publicly traded companies we deemed
relevant;
(vii) compared certain financial terms of the Transaction to
financial terms, to the extent publicly available, of certain
other business combination transactions we deemed relevant;
(viii) reviewed a draft dated August 2, 2006 of the Agreement (the
"Draft Agreement") and the form of the Plan of Arrangement
attached as a schedule to the Agreement (the "Form Plan of
Arrangement");
(ix) reviewed certain public filings and statements made by
Hummingbird and Open Text with respect to the offer commenced
by Open Text on July 10, 2006 to acquire all outstanding
Hummingbird Common Shares (the "Open Text Offer"), including
the fact that the Board of Directors of Hummingbird publicly
disclosed that it had determined that the Open Text Offer was
a Superior Proposal under the terms of the Arrangement
Agreement, dated May 25, 2006, among Hummingbird and certain
affiliates of Symphony Technology Group (collectively,
"Symphony" and, the transaction contemplated by such
arrangement agreement, the "Symphony Transaction"); and
(x) performed such other analyses and considered such other
factors as we have deemed appropriate.
We have assumed and relied upon, without independent verification, the accuracy
and completeness of the financial and other information reviewed by us for the
purposes of this opinion. With respect to the Hummingbird Forecasts, we have
assumed, at the direction of Hummingbird, that they have been reasonably
prepared on bases reflecting the best currently available estimates and good
faith judgments of the management of Hummingbird as to the future financial
performance of Hummingbird. We have not made any independent valuation or
appraisal of the assets or liabilities of Hummingbird, nor have we been
furnished with any such valuations or appraisals. We have assumed, at the
direction of Hummingbird, that the final Agreement and Plan of Arrangement will
not differ in any respect material to our analyses from the Draft Agreement and
the Form Plan of Arrangement reviewed by us. We also have assumed, with the
consent of Hummingbird, that the Transaction will be consummated as provided in
the Draft Agreement and the Form Plan of Arrangement, with full satisfaction of
all covenants and conditions set forth in the Draft Agreement and the Form Plan
of Arrangement and without any waivers thereof. We further have assumed, with
the consent of Hummingbird, that all third party consents and approvals
necessary for the consummation of the Transaction will be obtained without any
adverse effect on Hummingbird or the Transaction.
C-3
The Special Committee of the Board of Directors
The Board of Directors
Hummingbird Ltd.
August 3, 2006
Page 3
We express no view or opinion as to any terms or aspects of the Transaction
(other than the Consideration to the extent expressly specified herein),
including, without limitation, the form or structure of the Transaction or tax
or accounting aspects thereof. As you are aware, we were not requested to, and
we did not, solicit proposals from third parties regarding the acquisition of
all or a portion of Hummingbird although, in addition to Symphony and Open Text,
we understand that, from time to time in the past, representatives of
Hummingbird have held discussions with, and received indications of interest
from, certain third parties with respect to a potential acquisition of
Hummingbird. We also were not requested to, and we did not, assist the Board of
Directors or the Special Committee of Hummingbird in their evaluation of
alternatives for Hummingbird, or in the negotiations of the terms of the
Transaction, nor were we requested to, and we did not, provide any advice or
services in connection with the Transaction other than the delivery of this
opinion. We express no view or opinion as to any such matters and have assumed,
with the consent of Hummingbird, that the terms of the Agreement and related
Plan of Arrangement are, from the perspective of Hummingbird, the most
beneficial terms that could be negotiated among the parties to the Agreement and
related Plan of Arrangement and the transactions contemplated thereby. In
addition, we express no view or opinion as to the relative merits of the
Transaction in comparison to other transactions available to Hummingbird or in
which Hummingbird might engage or as to whether any transaction might be more
favorable to Hummingbird as an alternative to the Transaction, nor are we
expressing any opinion as to the underlying business decision of the Board of
Directors or the Special Committee of Hummingbird to proceed with or effect the
Transaction.
We have acted as financial advisor to the Special Committee of Hummingbird
solely to render this opinion and will receive a fee for our services payable
upon rendering this opinion. We provided certain financial advisory services to
the Special Committee of Hummingbird in connection with the Symphony
Transaction, for which services compensation is payable. In the ordinary course
of our businesses, we and our affiliates may actively trade or hold securities
or loans of Hummingbird and Open Text for our own accounts or for the accounts
of customers and, accordingly, we or our affiliates may at any time hold long or
short positions in such securities or loans.
It is understood that this letter is for the benefit and use of the Special
Committee and the Board of Directors of Hummingbird in connection with and for
purposes of their evaluation of the Transaction. In addition, we express no
opinion or recommendation as to how the shareholders of Hummingbird should vote
or act in connection with the Transaction.
Our opinion is necessarily based on economic, market and other conditions as in
effect on, and the information made available to us as of, the date hereof. It
should be understood that subsequent developments may affect this opinion and we
do not have any obligation to update, revise or reaffirm this opinion.
C-4
The Special Committee of the Board of Directors
The Board of Directors
Hummingbird Ltd.
August 3, 2006
Page 4
Based upon and subject to the foregoing, including the various assumptions and
limitations set forth herein, we are of the opinion on the date hereof that the
Consideration to be received by the holders of Hummingbird Common Shares (other
than Open Text, Sub and their respective affiliates) in the proposed Transaction
is fair, from a financial point of view, to such holders.
Very truly yours,
/s/ Banc of America Securities LLC
BANC OF AMERICA SECURITIES LLC
C-5
APPENDIX D
PLAN OF ARRANGEMENT UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT
D-1
PLAN OF ARRANGEMENT
UNDER SECTION 192
OF THE CANADA BUSINESS CORPORATIONS ACT
ARTICLE 1
INTERPRETATION
1.1 Definitions
-----------
In this Plan of Arrangement, unless there is something in the subject
matter or context inconsistent therewith, the following terms shall have the
respective meanings set out below and grammatical variations of such terms shall
have corresponding meanings:
"Acquisition Sub" means 6575064 Canada Inc., a corporation
incorporated under the CBCA and being a wholly-owned subsidiary of
Parent;
"Arrangement" means the arrangement under section 192 of the CBCA on
the terms and subject to the conditions set out in this Plan of
Arrangement, subject to any amendments or variations thereto made in
accordance with Section 8.3 of the Arrangement Agreement or Article 5
hereof;
"Arrangement Agreement" means the agreement dated August 4, 2006 among
Parent, Acquisition Sub and Hummingbird providing for, among other
things, the Arrangement;
"Articles of Arrangement" means the articles of arrangement of
Hummingbird in respect of the Arrangement that are required by the CBCA
to be sent to the Director after the Final Order is made;
"Business Day" means any day, other than a Saturday or Sunday or a
statutory holiday in Ontario, Canada;
"CBCA" means the Canada Business Corporations Act, as amended;
"Certificate of Arrangement" means the certificate of arrangement
issued by the Director pursuant to subsection 192(7) of the CBCA in
respect of the Articles of Arrangement;
"Circular" means the notice of the Meeting and accompanying management
proxy circular, including all schedules thereto, to be sent by
Hummingbird to Shareholders in connection with the Meeting;
"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;
D-2
"Dissent Rights" means the rights of dissent in respect of the
Arrangement described in Section 3.1;
"Dissenting Holder" means any Shareholder who has duly exercised its
Dissent Rights and has not withdrawn or been deemed to have withdrawn
such Dissent Rights;
"Effective Date" means the date shown on the Certificate of Arrangement
giving effect to the Arrangement;
"Effective Time" means 9:00 a.m. (Toronto time) on the Effective Date;
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended;
"Exchange Factor" means 0.8879, which is the exchange rate for one
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 the Arrangement Agreement.
"Final Order" means the order of the Court approving the Arrangement as
such order may be amended at any time prior to the Effective Date or,
if appealed, then, unless such appeal is withdrawn or denied, as
affirmed or as amended on appeal;
"Hummingbird" means Hummingbird Ltd., a corporation existing under the
CBCA;
"Hummingbird Option" means any option to purchase Hummingbird Shares
granted pursuant to the Hummingbird Stock Option Plan or any other
stock option plan of Hummingbird or any predecessor of Hummingbird, or
any option assumed or adopted by Hummingbird;
"Hummingbird Shares" means the common shares in the capital of
Hummingbird;
"Hummingbird Stock Option Plan" means Hummingbird's 1996 Employee
Stock Option Plan;
"Interim Order" means the interim order of the Court providing for,
among other things, the calling and holding of the Meeting, as such
order may be amended, as contemplated by the Arrangement Agreement;
"Lender Sub" means one or more wholly-owned subsidiaries of
Hummingbird selected by Parent for purposes of making the loans
contemplated in Section 2.3(a);
"Lender Sub Option Note" has the meaning ascribed thereto in Section
2.3(a);
"Lender Sub Share Note" has the meaning ascribed thereto in Section
2.3(a);
"Letter of Transmittal" means the letter of transmittal forwarded by
Hummingbird to Shareholders in connection with the Arrangement, in the
form accompanying the Circular;
"Loan Alternative" means the provision by Lender Sub of the loans
contemplated under Section 2.3(a);
D-3
"Loan Amount" means such amount of cash of Hummingbird or its
subsidiaries that Parent requests in accordance with Section 5.5 of
the Arrangement Agreement, provided that in any event, if so requested
by Parent, such amount shall be not less than $58,000,000 and may be
$0;
"Mailing Date" means the date of mailing of the Circular to
Shareholders;
"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;
"Meeting" means the special meeting of Shareholders to be held to
consider the Arrangement Resolution, including any adjournment or
postponement thereof, to be called and held in accordance with the
Interim Order;
"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) in
respect of the Hummingbird Options;
"Optionholders" means the holders of Hummingbird Options;
"Parent" means Open Text Corporation, a corporation existing under the
CBCA;
"Person" means an individual, corporation, partnership, limited
partnership, limited liability company, joint venture, estate,
association, trust, unincorporated organization or other entity of any
kind or nature, as well as any syndicate or group that would be deemed
to be a person under section 13(d)(3) of the Exchange Act;
"Purchase Price" means the sum of $27.85 per Hummingbird Share,
payable in cash;
"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;
"Shareholders" means the holders of Hummingbird Shares whose names
appear in the register of holders of Hummingbird Shares maintained by
or on behalf of Hummingbird and, where the context so provides,
includes joint holders of such Hummingbird Shares; and
"Tax Act" means the Income Tax Act (Canada), as amended.
1.2 Interpretation Not Affected by Headings, Etc.
---------------------------------------------
The division of this Plan of Arrangement into articles, sections and
other portions and the insertion of headings are for reference purposes only
and shall not affect the interpretation of this Plan of Arrangement. Unless
otherwise indicated, any reference in this Plan of Arrangement to "Article"
or "section" followed by a number refers to the specified Article or section
of this Plan of Arrangement. The terms "this Plan of Arrangement", "hereof",
"herein", "hereunder" and
D-4
similar expressions refer to this Plan of Arrangement, including any appendices
hereto, and any amendments, variations or supplements hereto made in accordance
with the terms hereof or the Arrangement Agreement or made at the direction of
the Court in the Final Order and do not refer to any particular Article,
section or other portion of this Plan of Arrangement.
1.3 Rules of Construction
---------------------
In this Plan of Arrangement, unless the context otherwise requires, (a)
words importing the singular number include the plural and vice versa, (b) words
importing any gender include all genders, and (c) "include", "includes" and
"including" shall be deemed to be followed by the words "without limitation".
1.4 Date of Any Action
------------------
In the event that any date on which any action is required to be taken
hereunder by any of the parties hereto is not a Business Day, such action shall
be required to be taken on the next succeeding day which is a Business Day.
1.5 Time
----
Time shall be of the essence in every matter or action contemplated
hereunder. All times expressed herein or in the Letter of Transmittal are local
time (Toronto, Ontario) unless otherwise stipulated herein or therein.
1.6 Currency
--------
Unless otherwise stated, all references in this Plan of Arrangement to
sums of money are expressed in lawful money of the United States of America.
1.7 Statutes
--------
Any reference to a statute includes all rules and regulations made
pursuant to such statute and, unless otherwise specified, the provisions of any
statute or regulations or rule which amends, supplements or supersedes any such
statute, regulation or rule.
ARTICLE 2
ARRANGEMENT
2.1 Arrangement Agreement
---------------------
This Plan of Arrangement is made pursuant to, is subject to the
provisions of and forms part of the Arrangement Agreement.
2.2 Binding Effect
--------------
This Plan of Arrangement will become effective at, and be binding at
and after, the Effective Time on (i) Hummingbird, (ii) Parent and Acquisition
Sub, (iii) all Shareholders and beneficial owners of Hummingbird Shares and (iv)
all registered and beneficial owners of Hummingbird Options.
D-5
2.3 Arrangement
-----------
Commencing at the Effective Time, the following events set out in this
Section 2.3 shall occur and shall be deemed to occur consecutively in the order
and at the times set out in this Section 2.3 without any further authorization,
act or formality (subject to the order of Sections 2.3(b) and 2.3(c) being
reversed if so requested by Parent in the notice referred to in Section 2.3(a)
below):
(a) If Parent has provided written notice to Hummingbird of
Parent's request for the Loan Alternative at least ten
business days prior to the Effective Time and such notice sets
out the Loan Amount, the Share Loan Amount and the Option Loan
Amount, then effective at the Effective Time, (i) if the Share
Loan Amount is not $0, Hummingbird shall cause Lender Sub to
loan an amount equal to the Share Loan Amount to Acquisition
Sub, and Acquisition Sub shall deliver to Lender Sub a duly
issued and executed promissory note (the "Lender Sub Share
Note") in the form attached as Appendix A hereto to evidence
such loan and the full amount of such loan shall be
immediately deposited with the Depositary to be held in a
segregated account by the Depositary for the exclusive purpose
of paying a portion of the aggregate Purchase Price for the
Hummingbird Shares, (ii) Hummingbird shall cause Lender Sub to
loan an amount equal to the Option Loan Amount to Hummingbird,
and Hummingbird shall deliver to Lender Sub a duly issued and
executed promissory note (the "Lender Sub Option Note") in the
form attached as Appendix A hereto to evidence such loan and
the full amount of such loan shall be immediately deposited
with the Depositary to be held in a segregated account by the
Depositary for the exclusive purpose of making the payments
contemplated by Section 2.3(b)(i), and (iii) the Maximum Cash
Amount held by the Depositary shall cease to be held in escrow
and shall be held in a segregated account by the Depositary
for the exclusive purpose of paying a portion of the aggregate
Purchase Price for the Hummingbird Shares. If Parent has not
provided written notice to Hummingbird of Parent's request for
the Loan Alternative but Parent provides written notice to
Hummingbird at least ten business days prior to the Effective
Time that it wishes Acquisition Sub to fund Hummingbird to
enable Hummingbird to make the payments contemplated by
Section 2.3(b)(i), then effective at the Effective Time,
Acquisition Sub shall loan an amount equal to the Option Loan
Amount to Hummingbird, and Hummingbird shall deliver to
Acquisition Sub a duly issued and executed promissory note
(the "Acquisition Sub Option Note") in the form attached as
Appendix A hereto to evidence such loan and the full amount of
such loan shall be immediately deposited with the Depositary
to be held in a segregated account by the Depositary for the
exclusive purpose of making the payments contemplated by
Section 2.3(b)(i).
(b) Effective at one minute after the Effective Time (or, if
specified in the notice referred to in Section 2.3(a) above,
effective at two minutes after the Effective Time) each
Hummingbird Option, notwithstanding any contingent vesting
provisions to which it might otherwise have been subject,
shall be deemed to be conditionally vested and exercisable
only as part of the Arrangement and:
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(i) each Hummingbird Option shall be transferred by the
Optionholder to Hummingbird in exchange for a cash payment
from or on behalf of Hummingbird equal to the amount (if any)
by which the Purchase Price exceeds the product of (x) the
exercise price thereof (in Canadian dollars) multiplied by (y)
the Exchange Factor, which amount shall be paid from the funds
deposited with the Depositary under Section 2.3(a);
(ii) each Hummingbird Option shall immediately be cancelled
and all option agreements related thereto shall be terminated
and the Optionholders shall thereafter have only the right to
receive the consideration to which they are entitled pursuant
to this Section 2.3(b) at the time and in the manner specified
in Article 4; and
(iii) the Hummingbird Stock Option Plan shall be terminated
and none of Hummingbird or any of its affiliates shall have
any liabilities or obligations with respect to such plan
except pursuant to this Section 2.3(b).
(c) Effective at two minutes after the Effective Time (or, if
specified in the notice referred to in Section 2.3(a) above,
effective at one minute after the Effective Time), each
Hummingbird Share outstanding immediately prior to the
Effective Time shall be transferred to Acquisition Sub in
exchange for the Purchase Price from Acquisition Sub, which
amount shall be paid from the funds deposited with the
Depositary under Sections 2.3(a)(i) and (iii), and the names
of the holders of such Hummingbird Shares transferred to
Acquisition Sub shall be removed from the applicable registers
of Shareholders, and Acquisition Sub shall be recorded as the
registered holder of the Hummingbird Shares so acquired and
shall be deemed the legal and beneficial owner thereof;
subject to the right of Dissenting Holders to be paid the fair
value of the Hummingbird Shares held prior to the Effective
Time by such Dissenting Holders in accordance with Section
3.1.
(d) Effective at three minutes after the Effective Time, all
directors of Hummingbird shall cease to be directors and the
following persons shall become the directors of Hummingbird
(the "New Directors"): John Shackleton, Paul McFeeters and
John Trent.
ARTICLE 3
RIGHTS OF DISSENT
3.1 Rights of Dissent
-----------------
(a) A Shareholder may exercise rights of dissent (the
"Dissent Rights") pursuant to and in the manner set forth in
section 190 of the CBCA and this section 3.1 in connection
with the Arrangement; provided, however, that, (i)
notwithstanding subsection 190(5) of the CBCA, any written
objections to the Arrangement Resolution must be received by
Hummingbird not later than 5:00 p.m. (Toronto time) on the
day which is two Business Days preceding the Meeting, and
(ii) notwithstanding section 190 of the CBCA, Acquisition
Sub and not Hummingbird shall be required to pay fair market
value for the Hummingbird Shares held by
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holders who duly exercise Dissent Rights. A Shareholder who
duly exercises such Dissent Rights and who:
(i) is ultimately entitled to be paid fair value for its
Hummingbird Shares shall be deemed to have transferred
such Hummingbird Shares to Acquisition Sub on the
Effective Date contemporaneously with the event
described in Section 2.3(d) in exchange for the fair
value of such Hummingbird Shares; or
(ii) is ultimately not entitled, for any reason, to be paid
fair value for its Hummingbird Shares shall be deemed
to have participated in the Arrangement on the same
basis as a non-dissenting Shareholder.
(b) In no circumstances shall Parent, Acquisition Sub, Hummingbird
or any other Person be required to recognize a Person
exercising Dissent Rights unless such Person is a Shareholder
of those Hummingbird Shares in respect of which such rights
are sought to be exercised.
(c) For greater certainty, in no case shall Parent, Acquisition
Sub, Hummingbird or any other Person be required to recognize
a Dissenting Holder as a Shareholder after the Effective Time,
and the name of each Dissenting Holder shall be deleted from
the register of Shareholders on the Effective Date at the same
time as the events described in Section 2.3(d) occur.
ARTICLE 4
CERTIFICATES AND PAYMENTS
4.1 Letter of Transmittal
---------------------
At the time of mailing the Circular or as soon as practicable
thereafter, Hummingbird shall forward to each Shareholder and each Optionholder
at the address of such holder as it appears on the register maintained by or on
behalf of Hummingbird in respect of the holders of Hummingbird Shares or
Hummingbird Options, as the case may be, a letter of transmittal in the case of
the holders of Hummingbird Shares and, in the case of Optionholders,
instructions for obtaining delivery of the consideration payable to
Optionholders following the Effective Date pursuant to this Plan of Arrangement.
4.2 Exchange of Certificates for Cash
---------------------------------
(a) At or before the Effective Time, Acquisition Sub shall deposit
the Maximum Cash Amount with the Depositary to be held in escrow
until Section 2.3(a) takes effect. Upon surrender to the
Depositary for cancellation of a certificate which immediately
prior to the Effective Time represented outstanding Hummingbird
Shares, together with a duly completed and executed Letter of
Transmittal and such additional documents and instruments as the
Depositary may reasonably require, the Shareholder of such
surrendered certificate shall be entitled to receive in exchange
therefor, and the Depositary shall deliver to such Shareholder as
soon as practicable after the Effective Time, a cheque
representing the cash which such Shareholder has the right to
receive under the Arrangement for such Hummingbird Shares, less
any amounts withheld pursuant to Section 4.4, and any
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certificate so surrendered shall forthwith be cancelled. The cash
deposited with the Depositary shall be held in an
interest-bearing account, and any interest earned on such funds
shall be for the account of Acquisition Sub.
(b) Until surrendered as contemplated by this Section 4.2, each
certificate which immediately prior to the Effective Time
represented any Hummingbird Shares shall be deemed after the
Effective Time to represent only the right to receive upon such
surrender a cash payment in lieu of such certificate as
contemplated in this Section 4.2, less any amounts withheld
pursuant to Section 4.4. Any such certificate formerly
representing Hummingbird Shares not duly surrendered on or before
the sixth anniversary of the Effective Date shall cease to
represent a claim by or interest of any former Shareholder of any
kind or nature against or in Hummingbird, Parent or Acquisition
Sub. On such anniversary date, all certificates representing
Hummingbird Shares shall be deemed to have been surrendered to
Acquisition Sub and cash to which such former holder was
entitled, together with any entitlements to dividends,
distributions and interest thereon, shall be deemed to have been
surrendered to Hummingbird.
(c) On or as soon as practicable after the Effective Date, the
Depositary shall deliver on behalf of Hummingbird to each
Optionholder as reflected on the books and records of Hummingbird
a cheque representing the payment to which such holder is
entitled in accordance with Section 2.3(b) of this Plan of
Arrangement, against receipt of such documentation as Parent or
Hummingbird may reasonably require acknowledging the transfer and
termination of the Hummingbird Options held by such Optionholder.
(d) Any payment made by way of cheque by the Depositary on behalf of
Acquisition Sub or Hummingbird that has not been deposited or has
been returned to the Depositary or that otherwise remains
unclaimed, in each case on or before the sixth anniversary of the
Effective Date, shall cease to represent a right or claim of any
kind or nature and the right of the Shareholder or Optionholder
to receive the consideration for Hummingbird Shares or
Hummingbird Options, as the case may be, pursuant to this Plan of
Arrangement shall terminate and be deemed to be surrendered and
forfeited to Hummingbird for no consideration.
4.3 Lost Certificates
-----------------
In the event any certificate which immediately prior to the Effective
Time represented one or more outstanding Hummingbird Shares that were
transferred pursuant to Section 2.3 shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
certificate to be lost, stolen or destroyed, the Depositary will issue in
exchange for such lost, stolen or destroyed certificate, cash deliverable in
accordance with such holder's Letter of Transmittal. When authorizing such
payment in exchange for any lost, stolen or destroyed certificate, the Person to
whom such cash is to be delivered shall as a condition precedent to the delivery
of such cash, give a bond satisfactory to Hummingbird and the Depositary in such
sum as Hummingbird may direct, or otherwise indemnify Hummingbird in a manner
satisfactory to Hummingbird, against any claim that may be made against
Acquisition Sub and Hummingbird with respect to the certificate alleged to have
been lost, stolen or destroyed.
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4.4 Withholding Rights
------------------
Hummingbird, Acquisition Sub, Parent and the Depositary and any
affiliate of Hummingbird shall be entitled to deduct and withhold from any
consideration otherwise payable to any Shareholder or Optionholder such amounts
as Hummingbird, Acquisition Sub, Parent or the Depositary is required or
permitted to deduct and withhold with respect to such payment under the Tax Act,
the United States Internal Revenue Code of 1986 or any provision of federal,
provincial, state, local or foreign tax law, in each case, as amended. To the
extent that amounts are so withheld, such withheld amounts shall be treated for
all purposes hereof as having been paid to the holder of the Hummingbird Shares
or Hummingbird Options in respect of which such deduction and withholding was
made, provided that such withheld amounts are actually remitted to the
appropriate taxing authority.
ARTICLE 5
AMENDMENTS
5.1 Amendments to Plan of Arrangement
---------------------------------
(a) Hummingbird may amend, modify and/or supplement this Plan of
Arrangement at any time and from time to time prior to the
Effective Date, provided that each such amendment, modification
and/or supplement must be (i) set out in writing, (ii) approved
by Parent and Acquisition Sub, (iii) filed with the Court and, if
made following the Meeting, approved by the Court, and (iv)
communicated to Shareholders if and as required by the Court.
(b) Any amendment, modification or supplement to this Plan of
Arrangement may be proposed by Hummingbird at any time prior to
the Meeting (provided that Parent and Acquisition Sub shall have
consented thereto) with or without any other prior notice or
communication, and if so proposed and accepted by the Persons
voting at the Meeting (other than as may be required under the
Interim Order), shall become part of this Plan of Arrangement for
all purposes.
(c) Any amendment, modification or supplement to this Plan of
Arrangement that is approved or directed by the Court following
the Meeting shall be effective only if (i) it is consented to by
each of Hummingbird, Parent and Acquisition Sub (in each case,
acting reasonably) and (ii) if required by the Court, it is
consented to by Shareholders voting in the manner directed by the
Court.
(d) This Plan of Arrangement may be withdrawn prior to the occurrence
of any of the events in Section 2.3 in accordance with the terms
of the Arrangement Agreement.
(e) Any amendment, modification or supplement to this Plan of
Arrangement may be made following the Effective Date unilaterally
by Parent, provided that it concerns a matter which, in the
reasonable opinion of Parent, is of an administrative nature
required to better give effect to the implementation of this Plan
of Arrangement and is not adverse to the economic interest of any
former Shareholder.
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ARTICLE 6
FURTHER ASSURANCES
6.1 Notwithstanding that the transactions and events set out herein shall
occur and be deemed to occur in the order set out in this Plan of
Arrangement without any further act, authorization or formality, each
of the parties to the Arrangement Agreement shall make, do and execute,
or cause to be made, done and executed, all such further acts, deeds,
agreements, transfers, assurances, instruments or documents as may
reasonably be required by any of them in order further to document or
evidence any of the transactions or events set out herein.
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PLAN OF ARRANGEMENT
APPENDIX A
FORM OF PROMISSORY NOTE
-----------------------
Promissory Note
---------------
Date: o
FOR VALUE RECEIVED the undersigned unconditionally promises to
pay on demand to o (the "Lender") or anyone else who the Lender may specify at
o, or such other place as the Lender may direct in writing, the sum of $o with
interest calculated daily from the date of this promissory note on the
outstanding balance of such sum and payable monthly on the last day of each
month at the same place, both before and after demand, default and judgment, at
a nominal annual rate of interest equal to o percent and with interest on
overdue interest payable at the same time, place and rate.
The undersigned agrees to provide the Lender with a written
acknowledgement of its indebtedness to the Lender hereunder within thirty (30)
days prior to each anniversary of this promissory note or as otherwise requested
by the Lender from time to time.
This promissory note shall be governed by, and construed in
accordance with, the laws of the Province of Ontario and the laws of Canada
applicable in that Province. The undersigned waives presentment for payment,
notice of dishonour, protest and notice of protest in respect of this promissory
note. This promissory note shall become effective when it has been executed and
delivered. Time shall be of the essence of this promissory note in all respects.
This promissory note constitutes the entire agreement of the parties pertaining
to the indebtedness evidenced by this promissory note and supersedes all prior
agreements, understandings, negotiations and discussions with respect to such
indebtedness, whether oral or written.
[BORROWER]
By:
--------------------------------
Name:
Title:
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APPENDIX E
INTERIM ORDER
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Commercial List Court File No. 06-CL-6594
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
THE HONOURABLE MADAM ) FRIDAY, THE 18th DAY
)
JUSTICE PEPALL ) OF AUGUST, 2006
IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA
BUSINESS CORPORATIONS ACT, R.S.C. 1985, c. C-44, AS AMENDED, AND RULES
14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE
AND IN THE MATTER OF A PROPOSED PLAN OF ARRANGEMENT OF HUMMINGBIRD
LTD., CONCERNING THE ACQUISITION BY 6575064 CANADA INC. OF ALL OF THE
SHARES OF HUMMINGBIRD LTD.
HUMMINGBIRD LTD.
Applicant
ORDER
THIS MOTION made by the Applicant, Hummingbird Ltd. ("Hummingbird"),
pursuant to section 192(4) of the Canada Business Corporations Act, R.S.C. 1985,
c. C-44, as amended (the "CBCA"), for an interim order for advice and directions
in connection with the within application (the "Application"), was heard this
day at 393 University Avenue, Toronto, Ontario.
ON READING the Notice of Application, Notice of Motion and the
Affidavit of Inder P.S. Duggal sworn August 15, 2006 (the "Duggal Affidavit"),
and the exhibits thereto, and on hearing the submissions of counsel for
Hummingbird and counsel for Open Text Corporation ("Open Text") and 6575064
Canada Inc. ("Acquisition Sub"), and on being advised of the letter of
non-appearance delivered by the Director appointed under the CBCA,
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Definitions
1. THIS COURT ORDERS that all capitalized terms not otherwise defined in
this Order shall have the meanings ascribed thereto in the Plan of
Arrangement attached as Appendix D to the draft management information
circular of Hummingbird Ltd. (the "Circular") attached as Exhibit "A"
to the Duggal Affidavit.
The Meeting
2. THIS COURT ORDERS that Hummingbird shall be permitted to call, hold and
conduct the Meeting, at which Shareholders will be asked to, among
other things, consider and, if deemed advisable, pass, with or without
variation, the Arrangement Resolution, a copy of which is attached as
Appendix A to the draft Circular, to, among other things, authorize,
adopt and approve the Arrangement and Plan of Arrangement.
3. THIS COURT ORDERS that the record date (the "Record Date") shall be the
close of business (Toronto time) on August 21, 2006.
4. THIS COURT ORDERS that the Meeting shall be called, held and conducted
in accordance with the notice of special meeting forming part of the
Circular (the "Notice"), the CBCA, the articles and by-laws of
Hummingbird (including the quorum requirements thereof) and the terms
of this Order and any further Order of this Honourable Court.
5. THIS COURT ORDERS that the only persons entitled to attend or speak at
the Meeting shall be: (a) the Shareholders or their respective proxy
holders; (b) the officers, directors, auditors and advisors of
Hummingbird; (c) representatives of Open Text and Acquisition Sub; (d)
the Director; and (e) other persons who may receive the permission of
the Chair of the Meeting.
6. THIS COURT ORDERS that at the Meeting, Hummingbird may also transact
such other business as is contemplated by the Circular or as otherwise
may be properly brought before the Meeting.
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Amendments to the Arrangement and Plan of Arrangement
7. THIS COURT ORDERS that Hummingbird is authorized, subject to the terms
of the Arrangement Agreement, to make such amendments, revisions and/or
supplements to the Arrangement and to the Plan of Arrangement as it may
determine and the Arrangement and the Plan of Arrangement, as so
amended, revised and/or supplemented, shall be the Arrangement and the
Plan of Arrangement to be submitted to the Shareholders at the Meeting
and shall be the subject of the Arrangement Resolution.
Adjournments and Postponements
8. THIS COURT ORDERS that Hummingbird, if it deems advisable and subject
to the terms of the Arrangement Agreement, is specifically authorized
to adjourn or postpone the Meeting on one or more occasions, without
the necessity of first convening the Meeting or first obtaining any
vote of Shareholders respecting the adjournment or postponement. Notice
of any such adjournment or postponement shall be given by such method
as Hummingbird may determine is appropriate in the circumstances.
Notice of the Meeting
9. THIS COURT ORDERS that Hummingbird shall give notice of the Meeting,
substantially in the form of the Notice, subject to Hummingbird's
ability to change dates and other relevant information in the final
form of Notice. The Notice shall be mailed or delivered in accordance
with paragraph 11 of this Order. Failure or omission to give notice in
accordance with paragraph 11 of this Order, as a result of mistake or
of events beyond the control of Hummingbird, shall not constitute a
breach of this Order or a defect in the calling of the Meeting and
shall not invalidate any resolution passed or proceedings taken at the
Meeting, but if any such failure or omission is brought to the
attention of Hummingbird, then Hummingbird shall use its best efforts
to rectify it by the method and in the time most reasonably practicable
in the circumstances.
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Solicitation of Proxies
10. THIS COURT ORDERS that Hummingbird is authorized to use proxies at the
Meeting, substantially in the form accompanying the Circular, subject
to Hummingbird's ability to insert dates and other relevant information
in the final form of proxy. Hummingbird, Open Text and Acquisition Sub
are authorized, at their expense, to solicit proxies, directly and
through their officers, directors and employees, and through such
agents or representatives as they may retain for that purpose, and by
mail or such other forms of personal or electronic communication as
they may determine. Hummingbird may waive, in its discretion, the time
limits for the deposit of proxies by Shareholders if Hummingbird deems
it advisable to do so.
Method of Distribution of Meeting Materials and Court Materials
11. THIS COURT ORDERS that Hummingbird is hereby authorized to distribute
the Notice of Application, this Order, the Notice, the Circular, the
form of proxy, the letter of transmittal and any other communications
or documents determined by Hummingbird to be necessary or desirable
(collectively, the "Meeting Materials"), as applicable:
(a) to registered Shareholders, to the directors of Hummingbird and
to the auditor of Hummingbird, respectively, by mailing same by
pre-paid ordinary mail (or, alternatively, by delivery, in person
or by courier), not later than twenty-one (21) days prior to the
date established for the Meeting in the Notice. Distribution to
such persons shall be to their addresses as they appear on the
books and records of Hummingbird as of the Record Date, or such
later date as Hummingbird may determine in accordance with the
CBCA; and
(b) to non-registered Shareholders by Hummingbird complying with its
obligations under National Instrument No. 54-101 of the Canadian
Securities Administrators.
12. THIS COURT ORDERS that Hummingbird is hereby authorized to distribute
the Notice of Application, this Order, the Notice, the Circular, and
any other communications or documents determined by Hummingbird to be
necessary or desirable (collectively, the "Court Materials"), to the
holders of Hummingbird Options by mailing same by pre-paid
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ordinary mail (or, alternatively, by delivery, in person, by courier,
by facsimile, or by email), concurrently with the distribution
described in paragraph 11 of this Order. Distribution to such persons
shall be to their addresses as they appear on the books and records of
Hummingbird as of the Record Date.
13. THIS COURT ORDERS that Hummingbird is hereby authorized to make such
amendments, revisions or supplements ("Additional Information") to the
Meeting Materials and Court Materials as Hummingbird may determine in
accordance with the terms of the Arrangement Agreement, and Hummingbird
shall distribute such Additional Information by the method and in the
time most reasonably practicable in the circumstances.
14. THIS COURT ORDERS that distribution of the Meeting Materials and Court
Materials pursuant to paragraphs 11 and 12 of this Order shall
constitute good and sufficient service and notice thereof upon all such
persons of the Meeting and the within Application. Further, no other
form of service of the Meeting Materials or the Court Materials or any
portion thereof need be made, or notice given or other material served
in respect of these proceedings and/or the Meeting to the persons
described in paragraphs 11 and 12 of this Order or to any other
persons.
15. THIS COURT ORDERS that a failure or omission to distribute the Meeting
Materials and Court Materials in accordance with paragraphs 11 and 12
of this Order as a result of mistake or of events beyond the control of
Hummingbird, shall not constitute a breach of this Order and shall not
invalidate any resolution passed or proceedings taken at the Meeting,
but if any such failure or omission is brought to the attention of
Hummingbird, then Hummingbird shall use its best efforts to rectify it
by the method and in the time most reasonably practicable in the
circumstances.
Voting
16. THIS COURT ORDERS that the only persons entitled to vote in person or
by proxy on the Arrangement Resolution shall be the Shareholders as at
the close of business on the Record Date.
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17. THIS COURT ORDERS that the Arrangement Resolution must be passed at the
Meeting by the affirmative vote of at least two-thirds of the votes
cast in respect of the Arrangement Resolution by the Shareholders
present in person or represented by proxy at the Meeting. Such vote
shall be sufficient to authorize and direct Hummingbird to do all such
acts and things as may be necessary or desirable to give effect to the
Arrangement and the Plan of Arrangement on a basis consistent with what
is provided for in the Circular without the necessity of any further
approval by the Shareholders, subject only to final approval of the
Arrangement by this Honourable Court.
18. THIS COURT ORDERS that in respect of the vote on the Arrangement
Resolution, each Shareholder is entitled to one vote for each
Hummingbird Share held. Illegible votes, spoiled votes, defective votes
and abstentions shall be deemed not to be votes cast. Proxies that are
properly signed and dated but which do not contain voting instructions
shall be voted in favour of the Arrangement Resolution.
19. THIS COURT ORDERS that in respect of matters properly brought before
the Meeting pertaining to items of business affecting Hummingbird
(other than in respect of the Arrangement Resolution), each Shareholder
is entitled to one vote for each Hummingbird Share held. Illegible
votes, spoiled votes, defective votes and abstentions shall be deemed
not to be votes cast.
Dissent Rights
20. THIS COURT ORDERS that each registered Shareholder shall be entitled to
exercise Dissent Rights with respect to the Arrangement Resolution, in
accordance with and in compliance with section 190 of the CBCA, as
varied by the Plan of Arrangement, provided that,
(a) notwithstanding subsection 190(5) of the CBCA, the written
objection to the Arrangement Resolution referred to in subsection
190(5) of the CBCA must be received by Hummingbird not later than
5:00 p.m. (Toronto time) on the day which is two Business Days
preceding the Meeting; and
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(b) notwithstanding section 190 of the CBCA, Acquisition Sub and not
Hummingbird shall be required to pay fair market value for the
Hummingbird Shares held by holders who duly exercise Dissent
Rights.
21. THIS COURT ORDERS that a registered Shareholder who duly exercises such
Dissent Rights and who:
(a) is ultimately entitled to be paid fair value for its Hummingbird
Shares shall be deemed to have transferred such Hummingbird
Shares to Acquisition Sub on the Effective Date contemporaneously
with the event described in section 2.3(d) of the Plan of
Arrangement in exchange for the fair value of such Hummingbird
Shares; or
(a) is ultimately not entitled, for any reason, to be paid fair value
for its Hummingbird Shares shall be deemed to have participated
in the Arrangement on the same basis as a non-dissenting
Shareholder
but, for greater certainty, in no case shall Open Text, Acquisition
Sub, Hummingbird or any other Person be required to recognize a Person
exercising Dissent Rights unless such Person is a registered
Shareholder of those Hummingbird Shares in respect of which such rights
are sought to be exercised, and in no case shall Open Text, Acquisition
Sub, Hummingbird or any other Person be required to recognize a
Dissenting Holder as a Shareholder after the Effective Time, and the
name of each Dissenting Holder shall be deleted from the register of
Shareholders on the Effective Date at the same time as the events
described in Section 2.3(d) of the Plan of Arrangement occur.
Hearing of Application for Approval of the Arrangement
22. THIS COURT ORDERS that, upon the passing of the Arrangement Resolution
pursuant to the provisions of paragraph 17 hereof, Hummingbird shall be
permitted to apply to this Honourable Court for final approval of the
Arrangement pursuant to the within Notice of Application.
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23. THIS COURT ORDERS that the only persons entitled to appear and be heard
at the hearing of the within Application shall be:
(a) Hummingbird;
(b) Open Text and Acquisition Sub;
(c) the Director; and
(d) any person who has filed a Notice of Appearance herein in
accordance with the provisions hereof, the Notice of Application
and the Rules of Civil Procedure.
24. THIS COURT ORDERS that any Notice of Appearance served in response to
the Notice of Application shall be served on counsel for Hummingbird at
the following address: Goodmans LLP, 250 Yonge Street, Suite 2400,
Toronto, Ontario, M5B 2M6, Attention: Tom Friedland / Rachelle
Dickinson, with a copy to counsel for Open Text and Acquisition Sub at
the following address: Osler, Hoskin & Harcourt LLP, 1 First Canadian
Place, PO Box 50, Stn. 1st Can. Pl., Toronto, Ontario, M5X 1B8,
Attention: Laura Fric / Craig Lockwood.
25. THIS COURT ORDERS that in the event the within Application for final
approval does not proceed on the date set forth in the Notice of
Application, and is adjourned, only those persons set out in paragraph
23 shall be entitled to be given notice of the adjourned date.
26. THIS COURT ORDERS that any materials to be filed by Hummingbird in
support of the within Application for final approval of the Arrangement
may be filed up to two days prior to the hearing of the Application
without further order of this Honourable Court.
27. THIS COURT ORDERS that, to the extent of any inconsistency or
discrepancy between this Order and the terms of any instrument
creating, governing or collateral to the Hummingbird Shares, the
Hummingbird Options or the articles or by-laws of Hummingbird, this
Interim Order shall govern.
E-9
- 9 -
28. THIS COURT ORDERS that Hummingbird shall be entitled to seek leave to
vary this order upon such terms and upon the giving of such notice as
this Honourable Court may direct.
/s/ The Honourable Madam Justice Pepall
---------------------------------------
ENTERED AT/INSCRIT A TORONTO
ON/BOOK NO:
LE/DANS LE REGISTRE NO.
AUG 18 2006
E-10
HUMMINGBIRD LTD. IN THE MATTER OF AN APPLICATION UNDER Commercial List Court File: 06-CL-6594
SECTION 192 OF THE CANADA BUSINESS
Applicant CORPORATIONS ACT, R.S.C. 1985, c. C-44, AS
AMENDED, AND RULES 14.05(2) AND 14.05(3) OF
THE RULES OF CIVIL PROCEDURE
- ---------------------------------------------------------------------------------------------------------------
|
| ONTARIO
| SUPERIOR COURT OF JUSTICE
| COMMERCIAL LIST
|
|
| Proceeding commenced at Toronto
|======================================================================
|
|
| ORDER
|======================================================================
|
| Goodmans LLP
| Barristers & Solicitors
| 250 Yonge Street
| Suite 2400
| Toronto, Ontario
| M5B 2M6
|
| Tom Friedland LSUC #: 31848L
| Rachelle Dickinson LSUC #: 51264U
|
| Tel: (416) 979-2211
| Fax: (416) 979-1234
|
| Solicitors for the Applicant
| Hummingbird Ltd.
|
|
APPENDIX F
NOTICE OF APPLICATION FOR THE FINAL ORDER
Court File No. 06-CL-6594
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA
BUSINESS CORPORATIONS ACT, R.S.C. 1985, c. C-44, AS AMENDED, AND RULES
14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE
AND IN THE MATTER OF A PROPOSED PLAN OF ARRANGEMENT OF HUMMINGBIRD
LTD., CONCERNING THE ACQUISITION BY 6575064 CANADA INC. OF ALL OF THE
SHARES OF HUMMINGBIRD LTD.
HUMMINGBIRD LTD.
Applicant
NOTICE OF APPLICATION
TO THE RESPONDENTS:
A LEGAL PROCEEDING HAS BEEN COMMENCED by the Applicant. The claim made
by the applicant appears on the following page.
THIS APPLICATION will come on for a hearing before a Judge presiding
over the Commercial List on Friday, September 22, 2006, at 10:00 a.m., or as
soon after that time as the application may be heard, at 393 University Avenue,
Toronto, Ontario.
IF YOU WISH TO OPPOSE THIS APPLICATION, to receive notice of any step
in the application or to be served with any documents in the application, you or
an Ontario lawyer acting for you must forthwith prepare a notice of appearance
in Form 38A prescribed by the Rules of Civil Procedure, serve it on the
applicant's lawyer or, where the applicant does not have a lawyer, serve it on
the applicant, and file it, with proof of service, in this court office, and you
or your lawyer must appear at the hearing.
IF YOU WISH TO PRESENT AFFIDAVIT OR OTHER DOCUMENTARY EVIDENCE TO THE
COURT OR TO EXAMINE OR CROSS-EXAMINE WITNESSES ON THE APPLICATION, you or your
lawyer must, in addition to serving your notice of appearance, serve a copy of
the evidence on the applicant's lawyer or, where the applicant does not have a
lawyer, serve it on the applicant, and file it, with proof of service, in the
court office where the application is to be heard as soon as possible, but not
later than 2 p.m. on the day before the hearing.
F-2
- 2 -
IF YOU FAIL TO APPEAR AT THE HEARING, JUDGMENT MAY BE GIVEN IN YOUR
ABSENCE AND WITHOUT FURTHER NOTICE TO YOU. IF YOU WISH TO OPPOSE THIS
APPLICATION BUT ARE UNABLE TO PAY LEGAL FEES, LEGAL AID MAY BE AVAILABLE TO YOU
BY CONTACTING A LOCAL LEGAL AID OFFICE.
Date August 11, 2006 Issued by
------------------------------
Local registrar
Address of 393 University Avenue
court office Toronto, Ontario M5G 1E6
TO: ALL HOLDERS OF COMMON SHARES OF HUMMINGBIRD LTD. AS AT AUGUST 21, 2006
AND TO: ALL HOLDERS OF OPTIONS OF HUMMINGBIRD LTD. AS AT AUGUST 21, 2006
AND TO: ALL DIRECTORS OF HUMMINGBIRD LTD.
AND TO: Deloitte & Touche LLP
BCE Place
181 Bay Street Suite 1400
Toronto, ON
Canada M5J 2V1
AND TO: THE DIRECTOR
Compliance & Policy Directorate
Corporations Canada, Industry Canada
9th Floor, Jean Edmonds Tower South
365 Laurier Avenue West
Ottawa, Ontario, K1A 0C8
F-3
- 3 -
AND TO: OSLER, HOSKIN & HARCOURT LLP
1 First Canadian Place
PO Box 50, Stn. 1st Can. Pl.
Toronto, Canada, M5X 1B8
Laura Fric LSUC#: 36545Q
Craig Lockwood LSUC#: 46668M
Tel: 416-362-2111
Fax: 416-862-6666
Solicitors for 6575064 Canada Inc.
and Open Text Corporation
F-4
- 4 -
APPLICATION
1. THE APPLICANT MAKES APPLICATION FOR:
a) an interim order for advice and directions pursuant to section
192(4) of the Canada Business Corporations Act, R.S.C. 1985, c.
C-44, as amended (the "CBCA") with respect to a proposed
arrangement (the "Arrangement") of Hummingbird Ltd.
("Hummingbird"), concerning the acquisition by 6575064 Canada
Inc., a wholly-owned subsidiary of Open Text Corporation, of all
of the shares of Hummingbird;
b) an order approving the Arrangement pursuant to sections 192(3)
and 192(4) of the CBCA; and
c) such further and other relief as this Honourable Court may deem
just.
2. THE GROUNDS FOR THE APPLICATION ARE:
a) Hummingbird is a corporation governed by the CBCA, with its head
office in North York, Ontario and with its common shares listed
and traded on the TSX and NASDAQ;
b) section 192 of the CBCA,
c) all statutory requirements under the CBCA have been fulfilled or
will be fulfilled by the date of the return of this Application;
d) Hummingbird is not insolvent;
e) it is not practicable for Hummingbird to effect the Arrangement
under any other provision of the CBCA;
f) the Arrangement is in the best interests of Hummingbird;
F-5
- 5 -
g) the Arrangement is procedurally and substantively fair and
reasonable overall to all affected parties;
h) the directions set out and shareholder approvals required
pursuant to any interim order this Court may grant have been
followed and obtained, or will be followed and obtained, by the
date of the return of this Application;
i) certain of the holders of common shares of Hummingbird are
resident outside of Ontario and will be served at their addresses
as they appear on the books and records of Hummingbird as at
August 21, 2006, pursuant to rules 17.02(n) and 17.02(o) of the
Rules of Civil Procedure and the terms of any interim Order for
advice and directions granted by this Honourable Court;
j) rules 14.05(2), 14.05(3) and 38 of the Rules of Civil Procedure;
and
k) such further and other grounds as counsel may advise and this
Honourable Court may permit.
3. THE FOLLOWING DOCUMENTARY EVIDENCE WILL BE USED AT THE HEARING OF
THE APPLICATION:
a) such interim Order as may be granted by this Honourable Court;
b) an Affidavit of Inder P.S. Duggal, Chief Financial Officer of
Hummingbird, to be sworn on behalf of Hummingbird, with exhibits
thereto, outlining the basis for the within application and for
an interim Order for advice and directions;
c) a further Affidavit, to be sworn on behalf of Hummingbird, with
exhibits thereto, reporting as to compliance with any interim
Order and the results of any meeting conducted pursuant to such
interim Order, with exhibits thereto; and
d) such further and other material as counsel may advise and this
Honourable Court may permit.
F-6
- 6 -
August 11, 2006 GOODMANS LLP
Barristers & Solicitors
250 Yonge Street, Suite 2400
Toronto, Canada M5B 2M6
Tom Friedland LSUC #: 31848L
Rachelle Dickinson LSUC#: 51264U
Tel: (416) 979-2211
Fax: (416) 979-1234
Solicitors for the Applicant,
Hummingbird Ltd.
F-7
HUMMINGBIRD LTD. IN THE MATTER OF AN APPLICATION UNDER Court File No: 06-CL-6594
SECTION 192, CANADA BUSINESS
Applicant CORPORATIONS ACT, R.S.C. 1985, c. C-44, AS
AMENDED
- ------------------------------------------------------------------------------------------------------
|
|
| ONTARIO SUPERIOR COURT OF JUSTICE
| COMMERCIAL LIST
|
|
| Proceeding commenced at Toronto
|
|=============================================================
|
| NOTICE OF APPLICATION
| (returnable September 22, 2006)
|
|=============================================================
|
| GOODMANS LLP
| Barristers & Solicitors
| 250 Yonge Street, Suite 2400
| Toronto, Canada M5B 2M6
|
| Tom Friedland LSUC#: 31848L
| Rachelle Dickinson LSUC#: 51264U
|
| Tel: (416) 979-2211
| Fax: (416) 979-1234
|
| Solicitors for the Applicant,
| Hummingbird Ltd.
|
|
|
|
F-8
APPENDIX G
SECTION 190 OF THE CANADA BUSINESS CORPORATIONS ACT
190. (1) Right to dissent -- Subject to Sections 191 and 241, a holder
of shares of any class of a corporation may dissent if the corporation is
subject to an order under paragraph 192(4)(d) that affects the holder or if the
corporation resolves to
(a) amend its articles under Section 173 or 174 to add, change or
remove any provisions restricting or constraining the issue,
transfer or ownership of shares of that class;
(b) amend its articles under Section 173 to add, change or remove any
restriction on the business or businesses that the corporation
may carry on;
(c) amalgamate otherwise than under Section 184;
(d) be continued under Section 188;
(e) sell, lease or exchange all or substantially all its property
under subsection 189(3); or
(f) carry out a going private transaction or a squeeze-out
transaction.
(2) Further right -- A holder of shares of any class or series of
shares entitled to vote under Section 176 may dissent if the corporation
resolves to amend its articles in a manner described in that Section.
(2.1) If one class of shares -- The right to dissent described in
subsection (2) applies even if there is only one class of shares.
(3) Payment for shares -- In addition to any other right the
shareholder may have, but subject to subsection (26), a shareholder who complies
with this Section is entitled, when the action approved by the resolution from
which the shareholder dissents or an order made under subsection 192(4) becomes
effective, to be paid by the corporation the fair value of the shares in respect
of which the shareholder dissents, determined as of the close of business on the
day before the resolution was adopted or the order was made.
(4) No partial dissent -- A Dissenting Holder may only claim under this
Section with respect to all the shares of a class held on behalf of any one
beneficial owner and registered in the name of the Dissenting Holder.
(5) Objection -- A Dissenting Holder shall send to the corporation, at
or before any meeting of shareholders at which a resolution referred to in
subsection (1) or (2) is to be voted on, a written objection to the resolution,
unless the corporation did not give notice to the shareholder of the purpose of
the meeting and of their right to dissent.
(6) Notice of resolution -- The corporation shall, within ten days
after the shareholders adopt the resolution, send to each shareholder who has
filed the objection referred to in subsection (5) notice that the resolution
has been adopted, but such notice is not required to be sent to any shareholder
who voted for the resolution or who has withdrawn their objection.
(7) Demand for payment -- A Dissenting Holder shall, within twenty days
after receiving a notice under subsection (6) or, if the shareholder does not
receive such notice, within twenty days after learning that the resolution has
been adopted, send to the corporation a written notice containing
(a) the shareholder's name and address;
(b) the number and class of shares in respect of which the
shareholder dissents; and
(c) a demand for payment of the fair value of such shares.
G-1
(8) Common Share certificate -- A Dissenting Holder shall, within
thirty days after sending a notice under subsection (7), send the certificates
representing the shares in respect of which the shareholder dissents to the
corporation or its transfer agent.
(9) Forfeiture -- A Dissenting Holder who fails to comply with
subsection (8) has no right to make a claim under this Section.
(10) Endorsing certificate -- A corporation or its transfer agent shall
endorse on any share certificate received under subsection (8) a notice that the
holder is a Dissenting Holder under this Section and shall forthwith return the
share certificates to the Dissenting Holder.
(11) Suspension of rights -- On sending a notice under subsection (7),
a Dissenting Holder ceases to have any rights as a shareholder other than to be
paid the fair value of their shares as determined under this Section except
where
(a) the shareholder withdraws that notice before the corporation
makes an offer under subsection (12),
(b) the corporation fails to make an offer in accordance with
subsection (12) and the shareholder withdraws the notice, or
(c) the directors revoke a resolution to amend the articles under
subsection 173(2) or 174(5), terminate an amalgamation agreement
under subsection 183(6) or an application for continuance under
subsection 188(6), or abandon a sale, lease or exchange under
subsection 189(9),
in which case the shareholder's rights are reinstated as of the date the
notice was sent.
(12) Offer to pay -- A corporation shall, not later than seven days
after the later of the day on which the action approved by the resolution is
effective or the day the corporation received the notice referred to in
subsection (7), send to each Dissenting Holder who has sent such notice
(a) a written offer to pay for their shares in an amount considered
by the directors of the corporation to be the fair value,
accompanied by a statement showing how the fair value was
determined; or
(b) if subsection (26) applies, a notification that it is unable
lawfully to pay Dissenting Holders for their shares.
(13) Same terms -- Every offer made under subsection (12) for shares of
the same class or series shall be on the same terms.
(14) Payment -- Subject to subsection (26), a corporation shall pay for
the shares of a Dissenting Holder within ten days after an offer made under
subsection (12) has been accepted, but any such offer lapses if the corporation
does not receive an acceptance thereof within thirty days after the offer has
been made.
(15) Corporation may apply to court -- Where a corporation fails to
make an offer under subsection (12), or if a Dissenting Holder fails to accept
an offer, the corporation may, within fifty days after the action approved by
the resolution is effective or within such further period as a court may allow,
apply to a court to fix a fair value for the shares of any Dissenting Holder.
(16) Shareholder application to court -- If a corporation fails to
apply to a court under subsection (15), a Dissenting Holder may apply to a court
for the same purpose within a further period of twenty days or within such
further period as a court may allow.
(17) Venue -- An application under subsection (15) or (16) shall be
made to a court having jurisdiction in the place where the corporation has its
registered office or in the province where the Dissenting Holder resides if the
corporation carries on business in that province.
G-2
(18) No security for costs -- A Dissenting Holder is not required to
give security for costs in an application made under subsection (15) or (16).
(19) Parties -- On an application to a court under subsection (15) or
(16),
(a) all Dissenting Holders whose shares have not been purchased by
the corporation shall be joined as parties and are bound by the
decision of the court; and
(b) the corporation shall notify each affected Dissenting Holder of
the date, place and consequences of the application and of their
right to appear and be heard in person or by counsel.
(20) Powers of court -- On an application to a court under subsection
(15) or (16), the court may determine whether any other person is a Dissenting
Holder who should be joined as a party, and the court shall then fix a fair
value for the shares of all Dissenting Holders.
(21) Appraisers -- A court may in its discretion appoint one or more
appraisers to assist the court to fix a fair value for the shares of the
Dissenting Holders.
(22) Final order -- The final order of a court shall be rendered
against the corporation in favour of each Dissenting Holder and for the amount
of his shares as fixed by the court.
(23) Interest -- A court may in its discretion allow a reasonable rate
of interest on the amount payable to each Dissenting Holder from the date the
action approved by the resolution is effective until the date of payment.
(24) Notice that subsection (26) applies -- If subsection (26) applies,
the corporation shall, within ten days after the pronouncement of an order under
subsection (22), notify each Dissenting Holder that it is unable lawfully to pay
Dissenting Holders for their shares.
(25) Effect where subsection (26) applies -- If subsection (26)
applies, a Dissenting Holder, by written notice delivered to the corporation
within thirty days after receiving a notice under subsection (24), may (a)
withdraw their notice of dissent, in which case the corporation is deemed to
consent to the withdrawal and the shareholder is reinstated to their full rights
as a shareholder, or (b) retain a status as a claimant against the corporation,
to be paid as soon as the corporation is lawfully able to do so or, in a
liquidation, to be ranked subordinate to the rights of creditors of the
corporation but in priority to its shareholders.
(26) Limitation -- A corporation shall not make a payment to a
Dissenting Holder under this Section if there are reasonable grounds for
believing that (a) the corporation is or would after the payment be unable to
pay its liabilities as they become due; or (b) the realizable value of the
corporation's assets would thereby be less than the aggregate of its
liabilities.
G-3
Questions and Further Assistance
If you have any questions about the information contained in this document or
require assistance in completing your proxy form, please contact Hummingbird's
proxy solicitation agent, at:
Georgeson
100 University Avenue
11th Floor, South Tower
Toronto, Ontario
M5J 2Y1
North American Toll Free Number: 1-866-500-8075
FINANCIAL ADVISOR
-----------------
LEHMAN BROTHERS INC.
745 Seventh Avenue
New York, NY 10019
USA
Telephone: 212-526-7000
OFFICES OF THE DEPOSITARY, CIBC MELLON TRUST COMPANY, FOR THIS ARRANGEMENT:
---------------------------------------------------------------------------
By Mail
CIBC Mellon Trust Company
P.O. Box 1036
Adelaide Street Postal Station
Toronto, Ontario
M5C 2K4
By Hand, Registered Mail or Courier
CIBC Mellon Trust Company
199 Bay Street
Commerce Court West
Securities Level
Toronto, Ontario
M5L 1G9
Attn: Courier Window
Telephone: (416) 643 5500
Toll Free: (800) 387 0825
E mail: inquiries@cibcmellon.com
DOCUMENT 2
LETTER OF TRANSMITTAL
WITH RESPECT TO THE
COMMON SHARES OF
HUMMINGBIRD LTD.
This Letter of Transmittal is for use by registered holders ("Shareholders") of
common shares (the "Common Shares") of Hummingbird Ltd. ("Hummingbird") in
connection with the proposed arrangement (the "Arrangement") involving
Hummingbird, Open Text Corporation ("Parent") and 6575064 Canada Inc.
("Acquisition Sub"), a wholly-owned subsidiary of Parent, that is being
submitted for approval at the special meeting of Shareholders to be held on
September 15, 2006 (the "Meeting"). Shareholders are referred to the Notice of
Meeting of Shareholders of Hummingbird and Management Information Circular (the
"Circular") dated August 18, 2006 that accompanies this Letter of Transmittal.
Capitalized terms used but not defined in this Letter of Transmittal that are
defined in the Circular have the meaning set out in the Circular.
CIBC MELLON TRUST COMPANY (THE "DEPOSITARY")
(SEE THE LAST PAGE OF THIS LETTER OF TRANSMITTAL FOR ADDRESS AND
TELEPHONE NUMBER)
OR YOUR BROKER OR OTHER FINANCIAL ADVISOR WILL BE ABLE
TO ASSIST YOU IN COMPLETING THIS LETTER OF TRANSMITTAL
The Effective Date of the Arrangement is anticipated to be on or about October
2, 2006. On the Effective Date, Shareholders (other than Dissenting Holders)
will be entitled to receive, in exchange for each Common Share, US$27.85 in
cash.
In order for Shareholders to receive the cash consideration for their Common
Shares, Shareholders are required to deposit the certificates representing the
Common Shares held by them with the Depositary. This Letter of Transmittal,
properly completed and duly executed, together with all other required
documents, must accompany all certificates for Common Shares deposited for
payment pursuant to the Arrangement.
Please read the Circular and the instructions set out below carefully before
completing this Letter of Transmittal. Delivery of this Letter of Transmittal
to an address other than as set forth herein will not constitute a valid
delivery. If shares are registered in different names, a separate Letter of
Transmittal must be submitted for each different registered owner. See
Instruction 2.
DEPOSIT
In connection with the Arrangement being considered for approval at
the Meeting, the undersigned hereby deposits with the Depositary for transfer
and cancellation upon the Arrangement becoming effective, the enclosed
certificate(s) representing Common Shares, details of which are as follows:
(Please print or type.)
- ---------------------------------- -------------------------------------- -----------------------------------
| Certificate Number(s) | Name of Registered Holder | Number of Common Shares |
|---------------------------------|--------------------------------------|-----------------------------------|
| | | |
|---------------------------------|--------------------------------------|-----------------------------------|
| | | |
|---------------------------------|--------------------------------------|-----------------------------------|
| | | |
|---------------------------------|--------------------------------------|-----------------------------------|
| | | |
- ---------------------------------- -------------------------------------- -----------------------------------
NOTE: If the space provided above is insufficient, details may be listed on a
separate schedule to this Letter of Transmittal.
It is understood that, upon receipt of this Letter of Transmittal and of the
certificate(s) representing the Common Shares deposited herewith (the
"Deposited Shares") and following the Effective Time of the Arrangement, the
Depositary will send to the undersigned a cheque representing the amount of
cash the undersigned is entitled to
receive in payment for the Deposited Shares, or hold such cheque for pick-up in
accordance with the instructions set out below, and the certificate(s)
representing the Deposited Shares shall forthwith be cancelled.
The undersigned holder of Common Shares represents and warrants in favour of
Acquisition Sub that: (i) the undersigned is the registered holder of the
Deposited Shares; (ii) such shares are owned by the undersigned free and clear
of all mortgages, liens, charges, encumbrances, security interests and adverse
claims; (iii) the undersigned has full power and authority to execute and
deliver this Letter of Transmittal and to deposit, sell, assign, transfer and
deliver the Deposited Shares and that, when the acquisition consideration is
paid, none of Acquisition Sub, Parent, Holdco, Hummingbird or any successor
thereto will be subject to any adverse claim in respect of such Deposited
Shares; (iv) the Deposited Shares have not been sold, assigned or transferred,
nor has any agreement been entered into to sell, assign or transfer any such
Deposited Shares to any other person; (v) the surrender of the Deposited Shares
complies with applicable laws; and (vi) unless the undersigned shall have
revoked this Letter of Transmittal by notice in writing given to the Depositary
by no later than 5:00 p.m. (Toronto time) on September 14, 2006, or if the
Meeting is adjourned or postponed, no later than 5:00 p.m. (Toronto time) on
the business day preceding the date that any adjourned or postponed Meeting is
reconvened or held, as the case may be, the undersigned will not, prior to such
time, transfer or permit to be transferred any of such Deposited Shares. These
representations and warranties shall survive the completion of the Arrangement.
Except for any proxy deposited with respect to the vote on the Arrangement
Resolution in connection with the Meeting, the undersigned revokes any and all
authority, other than as granted in this Letter of Transmittal, whether as
agent, attorney-in-fact, proxy or otherwise, previously conferred or agreed to
be conferred by the undersigned at any time with respect to the Deposited
Shares and no subsequent authority, whether as agent, attorney-in-fact, proxy
or otherwise will be granted with respect to the Deposited Shares.
The undersigned hereby acknowledges that the delivery of the Deposited Shares
shall be effected and the risk of loss and title to such Deposited Shares shall
pass only upon proper receipt thereof by the Depositary. The undersigned will,
upon request, execute any signature guarantees or additional documents deemed
by the Depositary to be reasonably necessary or desirable to complete the
transfer of the Deposited Shares.
The undersigned surrenders to Acquisition Sub, effective at the Effective Time,
all right, title and interest in and to the Deposited Shares and irrevocably
appoints and constitutes the Depositary lawful attorney of the undersigned,
with full power of substitution to deliver the certificates representing the
Deposited Shares pursuant to the Arrangement and to effect the transfer of the
Deposited Shares on the books of Hummingbird.
Each authority conferred or agreed to be conferred by the undersigned in this
Letter of Transmittal shall survive the death or incapacity of the undersigned
and any obligation of the undersigned hereunder shall be binding upon the
heirs, personal representatives, successors and assigns of the undersigned.
The authority herein conferred, coupled with an interest, is not intended to be
a continuing power of attorney within the meaning of and governed by the
Substitute Decisions Act (Ontario), or any similar power of attorney under
equivalent legislation in any of the provinces or territories of Canada (a
"CPOA"). The execution of this Letter of Transmittal shall not terminate any
such CPOA granted by the undersigned previously and shall not be terminated by
the execution by the undersigned in the future of the CPOA, and the undersigned
hereby agrees not to take any action in future which results in the termination
of the authority herein conferred.
The undersigned instructs the Depositary to mail the cheque representing
payment for the Deposited Shares promptly after the Effective Time, by
first-class insured mail, postage prepaid, to the undersigned, or to hold such
cheque for pick-up, in accordance with the instructions given below.
By reason of the use of the undersigned of an English language form of Letter
of Transmittal, the undersigned shall be deemed to have required that any
contract evidenced by the Arrangement as entered into through this Letter of
Transmittal, as well as any documents related thereto, be drawn exclusively in
the English language. En raison de l'utilisation d'une version anglaise de la
presente lettre denvoi, le soussigne, ce dernier et les destinataires sont
reputes avoir demande que tout contrat atteste par l'arrangement, telle qu'il
est accepte au moyen de cette lettre d'envoi, de meme que tous les documents
qui s'y rapportant, soient rediges exclusivement en anglais.
2
If the Arrangement is not completed or proceeded with, the enclosed
certificate(s) and all other ancillary documents will be returned forthwith to
the undersigned at the address set out below in Box D, or failing such address
being specified, to the undersigned at the last address of the undersigned as
it appears on the securities register of Hummingbird.
It is understood that the undersigned will not receive payment in respect of
the Deposited Shares until the certificate(s) representing the Deposited
Shares, if applicable, owned by the undersigned are received by the Depositary
at the address set forth below, together with such additional documents as the
Depositary may require, and until the same are processed for payment by the
Depositary. It is further understood that no interest will accrue on the
purchase price payable in respect of the Deposited Shares in connection with
the Arrangement. The undersigned further represents and warrants that the
payment of the purchase price in respect of the Deposited Shares will
completely discharge any obligations of Acquisition Sub, Parent, Hummingbird
and the Depositary with respect to the matters contemplated by this Letter of
Transmittal.
3
PLEASE COMPLETE EITHER BOX A OR BOX B. SEE INSTRUCTION 5 BELOW.
|--------------------------------------------------------------- ---------------------------------------------
| BOX A | | BOX B |
| PAYMENT AND DELIVERY INSTRUCTIONS | | PICK-UP INSTRUCTIONS |
| | | |
| |_| | | |_| |
| | | |
| ISSUE A CHEQUE in the name of the undersigned and SEND THE | | HOLD CHEQUE FOR PICK-UP AT THE |
| CHEQUE to the address of the undersigned as it appears on | | OFFICE OF THE DEPOSITARY |
| the Hummingbird register of Shareholders or to the | | |
| following address: | | |
| | ---------------------------------------------
| (please print or type) |
| | ---------------------------------------------
|--------------------------------------------------------------| | BOX C |
| (Name) | | |
| | | TO BE COMPLETED BY ALL SHAREHOLDERS |
| | | BY SELECTING ONE BOX BELOW |
|--------------------------------------------------------------| | |
| (Street Address and Number) | | Indicate whether you are a resident of |
| | | Canada for tax purposes; |
| | | |
|--------------------------------------------------------------| | |_| The owner signing above represents |
| (City and Province or State) | | that it is a resident of Canada |
| | | for tax purposes; |
| | | OR |
|--------------------------------------------------------------| | -- |
| (Country and Postal (or Zip) Code) | | |_| The owner signing above represents |
| | | that it is not a resident of |
| | | Canada for tax purposes. |
| | |--------------------------------------------|
|--------------------------------------------------------------|
| (Telephone - Business Hours) |
| |
| |
|--------------------------------------------------------------|
| (Tax Identification, Social Insurance or |
| Social Security Number) |
| |
- ---------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
| BOX D |
| DELIVERY INSTRUCTIONS |
| (in the event that the Arrangement is not completed) |
| |
| TO BE COMPLETED BY ALL SHAREHOLDERS BY SELECTING ONE BOX BELOW. |
| SEE INSTRUCTIONS 5 AND 8 BELOW |
| |
| Mail certificate(s) to (Please fill in address for mailing): |
| |
|-------------------------------------------------------------------------------------------------------------------|
| |
|-------------------------------------------------------------------------------------------------------------------|
| |
|-------------------------------------------------------------------------------------------------------------------|
| OR |
| -- |
| |
| |_| Hold certificate(s) for pick-up at the office of the Depositary listed in Box B |
| |
- --------------------------------------------------------------------------------------------------------------------
4
- ---------------------------------------------------------------------------------------------------------------------
| |
| BOX E |
| |
| TO BE COMPLETED BY ALL SHAREHOLDERS BY SELECTING ONE BOX BELOW. |
| Indicate whether you are a U.S. Shareholder or are acting on behalf of a U.S. Shareholder. |
| |_| The owner signing above represents that it is not a U.S. Shareholder and is not acting on behalf |
| of a U.S. Shareholders; |
| OR |
| -- |
| |_| The owner signing above is a U.S. Shareholder or is acting on behalf of a U.S. Shareholder. |
| A U.S. Shareholder is any Shareholder that is either (A) providing an address in Box "A" that is located |
| federal income tax within the United States or any territory or possession thereof, or (B) a U.S. person |
| for United States purposes. |
| If you are a U.S. Shareholder or are acting on behalf of a U.S. Shareholder, then in order to avoid backup |
| withholding you must complete the Substitute Form W-9 included below or otherwise provide certification |
| that you are exempt from backup withholding, as provided in the instructions. If you require a Form W-8, |
| please contact the Depositary. See Instruction 9 for more information. |
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
| BOX F |
| |
| TO BE COMPLETED BY ALL SHAREHOLDERS |
| |
| Signature guaranteed by |
| (if required under Instruction 3): Date __________________________ 2006 |
| |
|-------------------------------------------------- -------------------------------------------------------|
| Authorized Signature of Guarantor Signature of Shareholder or Authorized |
| Representative - See Instruction 4 |
| |
| |
|-------------------------------------------------- -------------------------------------------------------|
| Name of Guarantor (please print or type) Name of Shareholder (please print or type) |
| |
| |
| -------------------------------------------------------|
| Taxpayer Identification, Social Insurance or Social |
| Security Number of Shareholder (please print or type) |
| |
| |
|-------------------------------------------------- -------------------------------------------------------|
| Address of Guarantor (please print or type) Name of Authorized Representative, if applicable |
| (please print or type) |
| |
| -------------------------------------------------------|
| Daytime telephone number of Shareholder or |
| Authorized Representative |
| |
| |
| -------------------------------------------------------|
| Daytime facsimile number of Shareholder or |
| Authorized Representative |
| |
- ---------------------------------------------------------------------------------------------------------------------
5
- -------------------------------------------------------------------------------------------------------------
| |
| SUBSTITUTE FORM W-9 |
| |
| TO BE COMPLETED BY U.S. SHAREHOLDERS ONLY |
| |
|------------------------------------------------------------------------------------------------------------
| SUBSTITUTE | | |
| FORM W-9 | Part 1 - Please provide your name in | |
| | the box at right. |------------------------------|
| Department of the Treasury | | Name |
| Internal Revenue Service | Taxpayer Identification Number | |
| | ("TIN") - ENTER YOUR TIN IN THE BOX | |
| Request for Taxpayer | AT RIGHT. (For most individuals, |------------------------------|
| Identification Number and | this is your social security number. | |
| Certification | If you do not have a TIN, see | Social Security Number(s) |
| | "Obtaining a Number in the Guidelines | (If awaiting TIN, write |
| | included in this form). CERTIFY BY | "Applied For") |
| | SIGNING AND DATING BELOW | |
| | | OR |
| | | |
| | |------------------------------|
| | | Employer Identification |
| | | Number(s) (If awaiting TIN, |
| | | write "Applied For") |
| | | |
| |----------------------------------------------|------------------------------|
| | Part 2 - For payees exempt from backup withholding, please write "exempt" |
| | here (see Instructions): |
| | |
|------------------------------|-----------------------------------------------------------------------------|
| | Part 3 - Certification - Under penalties of perjury, I certify that: |
| | |
| | (1) The number shown on this form is my correct TIN (or I am waiting for |
| | a TIN to be issued to me) and |
| | (2) I am not subject to backup withholding because (a) I am exempt from |
| | backup withholding, (b) I have not been notified by the Internal |
| | Revenue Service ("IRS") that I am subject to backup withholding as a |
| | result of a failure to report all interest or dividends, or (c) the |
| | IRS has notified me that I am no longer subject to backup |
| | withholding; and |
| | (3) I am a U.S. person (including a U.S. resident alien). |
| | |
| | Certificate Instructions. You must cross out Item (2) above if you have |
| | been notified by the IRS that you are currently subject to backup |
| | withholding because you have failed to report all interest and dividends |
| | on your tax return. |
| | |
| | The IRS does not require your consent to any provision of this document |
| | other than the certifications required to avoid backup withholding. |
| | |
| | Signature of U.S. person ___________________ Date: _______________ 2006 |
| | |
- -------------------------------------------------------------------------------------------------------------
NOTE: Failure to furnish your correct TIN may result in penalties imposed by the Internal Revenue Service
and in backup withholding of 28% of the gross amount of consideration paid to you pursuant to the
arrangement. For additional details, please review the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" that follow the instructions accompanying this Letter of
Transmittal.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN PART 1 OF SUBSTITUTE FORM W-9.
- -------------------------------------------------------------------------------------------------------------
| |
| CERTIFICATION OF AWAITING TAXPAYER IDENTIFICATION NUMBER |
| |
| I certify under penalties of perjury that a taxpayer identification number has not been issued to me, |
| and either (a) I have mailed or delivered an application to receive a taxpayer identification number to |
| the appropriate IRS Center or Social Security Administration Office or (b) I intend to mail or deliver an |
| application in the near future. I understand that if I do not provide a taxpayer identification number |
| by the time of payment, 28% of the gross proceeds of such payment made to me will be withheld. |
| |
| Signature: _________________________________ Date _______________________ 2006 |
| |
- -------------------------------------------------------------------------------------------------------------
6
INSTRUCTIONS
1. Use of Letter of Transmittal
(a) In order to permit the timely receipt of the cash proceeds, it is
recommended that this Letter of Transmittal (or a manually signed
facsimile thereof), together with accompanying certificate(s)
representing Common Shares, be received by the Depositary at the
office specified below before 5:00 p.m. (Toronto time) on September
14, 2006, or in the case of any adjournment or postponement of the
Meeting, no later than 5:00 p.m. (Toronto time) on the business day
before the day that any adjourned or postponed Meeting is reconvened
or held, as the case may be. Do not send the certificate(s) or this
Letter of Transmittal to Hummingbird or Acquisition Sub.
(b) The method used to deliver this Letter of Transmittal and any
accompanying certificate(s) representing Common Shares is at the
option and risk of the holder surrendering them, and delivery will be
deemed effective only when such documents are actually received.
Hummingbird recommends that the necessary documentation be hand
delivered to the Depositary at the address specified below, and a
receipt obtained therefor; otherwise the use of registered mail with
return receipt requested, and with proper insurance obtained, is
recommended. Shareholders whose Common Shares are registered in the
name of a broker, investment dealer, bank, trust company or other
nominee should contact that nominee for assistance in delivering
those Common Shares.
2. Signatures
This Letter of Transmittal must be completed, dated and signed by the
holder of Common Shares or by such holder's duly authorized representative
(in accordance with Instruction 4).
(a) If this Letter of Transmittal is signed by the registered owner(s) of
the accompanying certificate(s), such signature(s) on this Letter of
Transmittal must correspond with the name(s) as registered or as
written on the face of such certificate(s) without any change
whatsoever, and the certificate(s) need not be endorsed. If such
transmitted certificate(s) are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
(b) If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the accompanying certificate(s), or if a
cheque is to be issued to a person other than the registered owners:
(i) such deposited certificate(s) must be endorsed or be accompanied
by appropriate share transfer power(s) of attorney properly
completed by the registered owner(s); and
(ii) the signature(s) on such endorsement or power(s) of attorney
must correspond exactly to the name(s) of the registered
owner(s) as registered or as appearing on the certificate(s) and
must be guaranteed as noted in Instruction 3.
(c) If any of the surrendered Common Shares are registered in different
names on several certificates, it will be necessary to complete, sign
and submit as many separate Letters of Transmittal as there are
different registrations of Common Shares.
3. Guarantee of Signatures
No signature guarantee is required on this Letter of Transmittal if this
Letter of Transmittal is signed by the registered holder(s) of Common
Shares surrendered herewith. If this Letter of Transmittal is signed by a
person other than the registered owner(s) of the Common Shares or if
payment is to be sent to a person other than the registered owner(s) of
the Common Shares, such signature must be guaranteed by an Eligible
Institution (as defined below), or in some other manner satisfactory to
the Depositary (except that no guarantee is required if the signature is
that of an Eligible Institution).
7
An "Eligible Institution" means a Canadian Schedule I chartered bank, a
major trust company in Canada, a member of the Securities Transfer Agents
Medallion Program (STAMP), a member of the Stock Exchanges Medallion
Program (SEMP) or a member of the New York Stock Exchange Inc. Medallion
Signature Program (MSP).
4. Fiduciaries, Representatives and Authorizations
Where this Letter of Transmittal or any share transfer power(s) of
attorney are executed by a person as an executor, administrator, trustee
or guardian, or on behalf of a corporation, partnership or association or
by any other person acting in a representative capacity, such person
should so indicate when signing and, this Letter of Transmittal must be
accompanied by satisfactory evidence of such authority to act.
Each of Hummingbird, Acquisition Sub or the Depositary, at their
discretion, may require additional evidence of authority or additional
documentation.
5. Payment and Delivery Instructions
In all cases, either Box "A" or Box "B" should be completed and Box "D"
entitled "Delivery Instructions" should be completed. If those boxes are
not completed, the cheque for the Common Shares or the certificate(s) in
respect of the Common Shares (if the Arrangement is not completed) will be
mailed to the depositing Shareholder at the address of the Shareholder as
it appears on the securities register of Hummingbird.
6. Miscellaneous
(a) If the space on this Letter of Transmittal is insufficient to list
all certificates for Common Shares, additional certificate numbers
and numbers of shares may be included on a separate signed list
affixed to this Letter of Transmittal.
(b) If Common Shares are registered in different forms (e.g. "John Doe"
and "J. Doe"), a separate Letter of Transmittal should be signed for
each different registration.
(c) No alternative, conditional or contingent deposits of Common Shares
will be accepted.
(d) Additional copies of this Letter of Transmittal may be obtained from
the Depositary at the office specified on the last page of this
Letter of Transmittal. This Letter of Transmittal is also available
on the website maintained by The Canadian Depository for Securities
Limited at www.sedar.com.
(e) It is strongly recommended that prior to completing this Letter of
Transmittal, the undersigned read the accompanying Circular.
(f) Hummingbird and Acquisition Sub reserve the right, if either so
elects in its absolute discretion, to instruct the Depositary to
waive any defect or irregularity contained in any Letter of
Transmittal received by it.
(g) This Letter of Transmittal will be construed in accordance with and
governed by the laws of the Province of Ontario and the federal laws
of Canada applicable therein.
7. Lost Certificates
If a certificate representing Common Shares has been lost, stolen or
destroyed, this Letter of Transmittal should be completed as fully as
possible and forwarded, together with an explanation of the relevant
circumstances, to the Depositary. The Depositary and/or the registrar and
transfer agent for the Common Shares will respond with the replacement
requirements in order for you to receive your entitlement, which shall
include a requirement to provide an affidavit and such other requirements
as the Depositary may determine in its sole discretion, including a bond
and indemnification against any claim that may be made against Acquisition
Sub with respect to the certificate alleged to have been lost, stolen or
destroyed.
8
8. Return of Certificates
If the Arrangement does not proceed for any reason, any certificate(s) for
Common Shares received by the Depositary will be returned to you forthwith
in accordance with your delivery instructions in Box "D".
9. United States Holders and Substitute Form W-9
United States federal income tax law generally requires that a United
States Holder (as defined below) who receives cash in exchange for Common
Shares provide the Depositary with his correct Taxpayer Identification
Number ("TIN") which, in the case of a holder of Common Shares who is an
individual, is generally the individual's social security number. If the
Depositary is not provided with the correct TIN or an adequate basis for
an exemption, as the case may be, such holder may be subject to penalties
imposed by the Internal Revenue Service and backup withholding in an
amount equal to 28% of the gross proceeds of any payment received
hereunder. If withholding results in an overpayment of taxes, a refund may
be obtained by the holder from the Internal Revenue Service.
To prevent backup withholding, each United States Holder must provide his
correct TIN by completing the Substitute Form W-9 set out in this
document, which requires such holder to certify under penalty of perjury:
(1) that the TIN provided is correct (or that such holder is awaiting a
TIN); (2) that (i) the holder is exempt from backup withholding; (ii) the
holder has not been notified by the Internal Revenue Service that he is
subject to backup withholding as a result of a failure to report all
interest or dividends; or (iii) the Internal Revenue Service has notified
the holder that he is no longer subject to backup withholding; and (3)
that the holder is a U.S. person (including a U.S. resident alien).
Certain holders (including, among others, all corporations) are exempt
recipients not subject to these backup withholding requirements. To
prevent possible erroneous backup withholding, an exempt holder must enter
its correct TIN in Part 1 or Substitute Form W-9, write "Exempt" in Part 2
of such form, and sign and date the form. See the "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9"
(the "W-9 Guidelines") that follow these instructions.
If Common Shares are held in more than one name or are not in the name of
the actual owner, consult the W-9 Guidelines for information on which TIN
to report.
If a United States Holder does not have a TIN, such holder should: (i)
consult the W-9 Guidelines for instructions on applying for a TIN; (ii)
write "Applied For" in the space for the TIN in Part I of the Substitute
Form W-9; and (iii) sign and date the Substitute Form W-9 and the
Certificate of Awaiting Taxpayer Identification Number set out in this
document. In such case, the Depositary may withhold 28% of the gross
proceeds of any payment made to such holder prior to the time a properly
certified TIN is provided to the Depositary, and if the Depositary is not
provided with a TIN within sixty (60) days, such amounts will be paid over
to the Internal Revenue Service.
If the Substitute Form W-9 is not applicable to a United States Holder
because such holder is not a U.S. person for United States federal income
tax purposes, such holder will instead need to submit an appropriate and
properly completed IRS Form W-8 Certificate of Foreign Status, signed
under penalty of perjury. An appropriate IRS Form W-8 (W-8BEN, W-8EXP or
other form) may be obtained from the Depositary.
For purposes of these instructions, a "United States Holder" is (i) a
citizen or individual resident of the United States, (ii) a corporation
(including an entity taxable as a corporation) or partnership created
under the laws of the United States or any political subdivision thereof,
(iii) an estate the income of which is subject to United States federal
income tax regardless of its source or (iv) a trust if (a) a court within
the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust or (b) the
trust has a valid election in effect under applicable Treasury regulations
to be treated as a U.S. person.
9
A UNITED STATES HOLDER WHO FAILS TO PROPERLY COMPLETE THE SUBSTITUTE FORM
W-9 SET OUT IN THIS LETTER OF TRANSMITTAL OR, IF APPLICABLE, THE
APPROPRIATE IRS FORM W-8 MAY BE SUBJECT TO BACKUP WITHHOLDING OF 28% OF
THE GROSS PROCEEDS OF ANY PAYMENTS MADE TO SUCH HOLDER PURSUANT TO THE
ARRANGEMENT. BACKUP WITHHOLDING IS NOT AN ADDITIONAL TAX. RATHER, THE TAX
LIABILITY OF PERSONS SUBJECT TO BACKUP WITHHOLDING WILL BE REDUCED BY THE
AMOUNT OF TAX WITHHELD.
IF WITHHOLDING RESULTS IN AN OVERPAYMENT OF TAXES, A REFUND MAY BE
OBTAINED BY FILING A TAX RETURN WITH THE IRS. THE DEPOSITARY CANNOT REFUND
AMOUNTS WITHHELD BY REASON OF BACKUP WITHHOLDING.
TO ENSURE COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230, SHAREHOLDERS
ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES IN
THIS LETTER OF TRANSMITTAL IS NOT INTENDED OR WRITTEN TO BE RELIED UPON,
AND CANNOT BE RELIED UPON, BY SUCH SHAREHOLDERS FOR THE PURPOSE OF
AVOIDING PENALTIES THAT MAY BE IMPOSED ON SUCH SHAREHOLDERS UNDER THE
INTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS BEING USED IN CONNECTION
WITH THE PROMOTION OR MARKETING (WITHIN THE MEANING OF CIRCULAR 230) OF
THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) EACH SHAREHOLDER
SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN
INDEPENDENT TAX ADVISOR.
10
FOR UNITED STATES HOLDERS ONLY
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number for the Payee (You)
To Give the Depositary--Social security numbers have nine digits separated by
two hyphens: i.e., 000-00-0000. Employee identification numbers have nine
digits separated by only one hyphen: i.e., 00-0000000. The table below will
help determine the number to give the Depositary. All "Section" references are
to the Internal Revenue Code of 1986, as amended. "IRS" is the Internal Revenue
Service.
- ---------------------------------------------------------------------------------------------------------------------
| For This Type of Account: | Give The Taxpayer Identification |
|------------------------------------------------------------|------------------------------------------------------|
| 1. Individual | The individual |
|------------------------------------------------------------|------------------------------------------------------|
| 2. Two or more individuals (joint account) | The actual owner of the account or, if combined |
| | funds, the first individual on the account(1) |
|------------------------------------------------------------|------------------------------------------------------|
| 3. Custodian account of a minor (Uniform Gift to | The minor(2) |
| Minors Act) | |
|------------------------------------------------------------|------------------------------------------------------|
| 4. a. The usual revocable savings trust (grantor is | The grantor-trustee(1) |
| also trustee) | |
|------------------------------------------------------------|------------------------------------------------------|
| b. So-called trust that is not a legal or valid | The actual owner(1) |
| trust under state law | |
|------------------------------------------------------------|------------------------------------------------------|
| 5. Sole proprietorship or single-owner LLC | The owner(3) |
|------------------------------------------------------------|------------------------------------------------------|
| 6. A valid trust, estate or pension trust | The legal entity(4) |
|------------------------------------------------------------|------------------------------------------------------|
| 7. Corporate or LLC electing corporate status on | The corporation |
| Form 8832 | |
|------------------------------------------------------------|------------------------------------------------------|
| 8. Association, club, religious, charitable, | The organization |
| educational, or other tax-exempt organization | |
|------------------------------------------------------------|------------------------------------------------------|
| 9. Partnership or multi-member LLC | The partnership |
|------------------------------------------------------------|------------------------------------------------------|
| 10. A broker or registered nominee | The broker or nominee |
|------------------------------------------------------------|------------------------------------------------------|
| 11. Account with the Department of Agriculture in the | The public entity |
| name of a public entity (such as a state or local | |
| government, school district, or prison) that | |
| receives agricultural program payments | |
- --------------------------------------------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If only one person on a joint account
has a social security number, that person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or "doing business as" name. You may
use either your social security number or your employer identification number (if you have one). If you are a
sole proprietor, IRS encourages you to use your social security number.
(4) List first and circle the name of the legal trust, estate or pension trust. (Do not furnish the taxpayer
identification number of the personal representative or trustee unless the legal entity itself is not
designated in the account title.)
NOTE: If no name is circled when there is more than one name listed, the number will be considered to be that of the
first name listed.
11
OBTAINING A NUMBER Payments of interest generally exempt
from backup withholding include:
If you don't have a taxpayer
identification number or you don't know (i) Payments of interest on
your number, obtain Form SS-5, obligations issued by
Application for a Social Security Card, individuals. Note: You
or Form SS-4, Application for Employer may be subject to backup
Identification Number, at an office of withholding if this
the Social Security Administration or interest is $600 or more
the Internal Revenue Service and apply and you have not
for a number. provided your correct
taxpayer identification
PAYEES EXEMPT FROM BACKUP WITHHOLDING number to the payer.
Payees specifically exempted from backup (ii) Payments of tax-exempt
withholding include: interest (including
exempt-interest
(i) An organization exempt from tax dividends under Section
under Section 501(a), an 852).
individual retirement account
(IRA), or a custodial account (iii) Payments described in
under Section 403(b)(7), if the Section 6049(b)(5) to
account satisfies the non-resident aliens.
requirements of Section
401(f)(2). (iv) Payments on tax-free
covenant bonds under
(ii) The United States or a state Section 1451.
thereof, the District of
Columbia, a possession of the (v) Payments made by certain
United States, or a political foreign organizations.
subdivision or wholly-owned
agency or instrumentality of (vi) Mortgage interest
any one or more of the paid to you.
foregoing.
Certain payments, other than
payments of interest, dividends, and
(iii) An international organization patronage dividends, that are exempt
or any agency or from information reporting are also
instrumentality thereof. exempt from backup withholding. For
details, see the regulations under
(iv) A foreign government and any sections 6041. 6041A, 6042, 6044,
political subdivision, agency 6045, 6049, 6050A and 6050N.
or instrumentality thereof.
Exempt payees described above must
Payees that may be exempt from backup file a Substitute Form W-9 included
withholding include: in this Letter of Transmittal to
avoid possible erroneous backup
(i) A corporation. withholding. FILE THIS FORM WITH THE
PAYER, FURNISH YOUR TAXPAYER
(ii) A financial institution. IDENTIFICATION NUMBER, WRITE
"EXEMPT" IN PART 2 OF THE FORM, SIGN
(iii) A dealer in securities or AND DATE THE FORM AND RETURN IT TO
commodities required to THE PAYER.
register in the United States,
the District of Columbia, or a PRIVACY ACT NOTICE--Section 6109
possession of the Untied requires you to provide your correct
States. taxpayer identification number to
payers, who must report the payments
(iv) A real estate investment trust. to the IRS. The IRS uses the number
for identification purposes and may
(v) A common trust fund operated by also provide this information to
a bank under Section 584(a). various government agencies for tax
enforcement or litigation purposes.
(vi) An entity registered at all Payers must be given the numbers
times during the tax year under whether or not recipients are
the Investment Company Act of required to file tax returns. Payers
1940. must generally withhold 28% of
taxable interest, dividend, and
(vii) A middleman known in the certain other payments to a payee
investment community as a who does not furnish a taxpayer
nominee or custodian. identification number to payer.
Certain penalties may also apply.
(viii) A futures commission merchant
registered with the Commodity PENALTIES
Futures Trading Commission.
(1) Failure to Furnish Taxpayer
(ix) A foreign central bank of Identification Number--If you
issue. fail to furnish your taxpayer
identification number to a
(x) A trust exempt from tax under payer, you are subject to a
Section 664 or described in penalty of $50 for each such
Section 4947. failure unless your failure is
due to reasonable cause and
Payments of dividends and patronage not to wilful neglect.
dividends generally exempt from
backup withholding include: (2) Civil Penalty for False
Information With Respect to
(i) Payments to non-resident aliens Withholding--If you make a
subject to withholding under false statement with no
Section 1441. reasonable basis that results
in no backup withholding, you
(ii) Payments to partnerships not are subject to a $500 penalty.
engaged in a trade or business
in the United States and that (3) Criminal Penalty for
have at least one non-resident Falsifying
partner. Information--Wilfully
falsifying certificates or
(iii) Payments of patronage dividends affirmations may subject you
not paid in money. to criminal penalties
including fines and/or
(iv) Payments made by certain imprisonment.
foreign organizations.
For additional information, consult
(v) Section 404(k) payments made by your tax consultant or the IRS.
an ESOP.
12
OFFICES OF THE DEPOSITARY, CIBC MELLON TRUST COMPANY, FOR THIS ARRANGEMENT:
By Mail
CIBC Mellon Trust Company
P.O. Box 1036
Adelaide Street Postal Station
Toronto, Ontario
M5C 2K4
By Hand, Registered Mail or Courier
CIBC Mellon Trust Company
199 Bay Street
Commerce Court West
Securities Level
Toronto, Ontario
M5L 1G9
Attn: Courier Window
Telephone: (416) 643-5500
Toll Free: (800) 387-0825
E-mail: inquiries@cibcmellon.com
Any questions and requests for assistance may be directed by
Shareholders to the Depositary at the telephone number
and locations set out above.
DOCUMENT 3
HUMMINGBIRD LTD.
Form of Proxy -- Special Meeting of Shareholders of Hummingbird Ltd. (the
"Company") to be held on Friday, September 15, 2006.
This Form of Proxy is solicited by and on behalf of Management of the Company.
Notes to proxy
1. Every registered shareholder has the right to appoint some other person or
company of their choice, who need not be a shareholder, to attend and act
on their behalf at the meeting. If you wish to appoint a person or company
other than the persons whose names are printed herein, please insert the
name of your chosen proxyholder in the space provided (see reverse).
2. If the securities are registered in the name of more than one owner (for
example, joint ownership, trustees, executors, etc.), then all those
registered should sign this proxy. If you are voting on behalf of a
corporation or another individual you may be required to provide
documentation evidencing your power to sign this proxy with signing
capacity stated.
3. This proxy should be signed in the exact manner as the name appears on the
proxy.
4. If this proxy is not dated, it will be deemed to bear the date on which it
is mailed by Management to the shareholder.
5. This Proxy, when properly executed, will be voted in the manner directed
herein and in the discretion of Management as to any other business that
may properly come before the meeting. If no directions are made, this
proxy will be voted "FOR" the Special Resolution and "FOR" the Ordinary
Resolution.
6. The securities represented by this proxy will be voted in accordance with
the instructions of the shareholder on any ballot that may be called for
and, if the shareholder has specified a choice with respect to any matter
to be acted on, the securities will be voted accordingly.
7. This proxy confers discretionary authority in respect of amendments to
matters identified in the notice of meeting or other matters that may
properly come before the meeting.
Please date and sign this form of proxy and return it in the enclosed envelope
addressed to Proxy Department, CIBC Mellon Trust Company, P.O. Box 721
Agincourt, Ontario, M1S 0A1 or fax it to CIBC Mellon Trust Company Proxy
Department (416) 368.2502 so that it is received before 5:00 p.m. (Toronto time)
on Thursday, September 14, 2006.
Appointment of Proxyholder
I/We, being registered Print the name of the ------------------
shareholder(s) of person you are appointing | |
Hummingbird Ltd. OR if this person is someone | |
hereby appoint: other than Barry Litwin ------------------
Barry Litwin
as my/our proxyholder with full power of substitution and to vote in accordance
with the following direction (or if no directions have been given, as
recommended by Management) and all other matters that may properly come before
the Special Meeting of Shareholders of Hummingbird Ltd. to be held at The
Hummingbird Centre for the Performing Arts, 1 Front Street East, Toronto,
Ontario on Friday September 15, 2006 at 10:00 a.m. (Toronto time) (the
"Meeting") and at any adjournment or postponement thereof.
Management recommends a vote FOR the following resolutions:
1 Special Resolution For Against
The special resolution approving the arrangement (the [ ] [ ]
"Arrangement ") under section 192 of the Canada Business
Corporations Act involving Hummingbird Ltd. (the "Company "),
Open Text Corporation and 6575064 Canada Inc. in the form
attached as Appendix A to the management information circular
of the Company dated August 18, 2006.
2 Ordinary Resolution For Against
The ordinary resolution ratifying the issuance of options to [ ] [ ]
acquire 50,000 Common Shares to each of Hadley C. Ford, John
B. Wade III and John A. MacDonald on March 3, 2006.
Authorized Signature(s) -- Sign Here --
This section must be completed for your
instructions to be executed.
I/We authorize you to act in accordance
with my/our instructions set out above.
I/We hereby revoke any proxy previously
given with respect to the Meeting. If no
voting instructions are indicated above,
this Proxy will be voted "FOR" the
Special Resolution and "FOR" the
Ordinary Resolution.
Signature(s)
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Date
DOCUMENT 4
[HUMMINGBIRD LOGO GRAPHIC OMITTED]
HUMMINGBIRD LTD. CONFIRMS MAILING OF MANAGEMENT INFORMATION CIRCULAR
AND RECEIPT OF INTERIM ORDER
TORONTO, AUGUST 28, 2006 - Hummingbird Ltd. (NASDAQ: HUMC; TSX: HUM), a leading
global provider of integrated enterprise content management (ECM) solutions and
network connectivity solutions, announced today that on August 25, 2006 it
mailed to its shareholders a Management Information Circular in connection with
the proposed statutory plan of arrangement under which all of Hummingbird's
common shares will be acquired by a wholly-owned subsidiary of Open Text
Corporation (NASDAQ: OTEX; TSX: OTC). The arrangement will be considered by
shareholders at a special meeting scheduled for September 15, 2006. Hummingbird
also confirmed that on August 18, 2006, it obtained an interim order from the
Ontario Superior Court of Justice (Commercial List) concerning the arrangement.
The Management Information Circular is available at www.sedar.com and
www.sec.gov.
About Hummingbird
Hummingbird Ltd. (NASDAQ: HUMC; TSX: HUM) is a leading global provider of
enterprise software solutions. The Company's enterprise software solutions fall
into two principal categories: enterprise content management (ECM) solutions,
and network connectivity solutions. Hummingbird's ECM solutions enable
organizations to manage the lifecycle of enterprise content from creation to
disposition, thereby enabling organizations to address critical business needs,
such as information management, business continuity, compliance and risk
mitigation. The network connectivity solutions provide a comprehensive set of
core network technologies that enables the enterprise to connect to any type of
legacy system.
Founded in 1984, Hummingbird employs over 1,400 people and serves more than
33,000 customers, including 90% of Fortune 100. Hummingbird solutions are sold
directly from 40 offices worldwide and through an Alliance Network of partners
and resellers. For more information, visit http://www.hummingbird.com.
Forward-Looking Statements
Forward-looking statements in this press release, including statements relating
to the special meeting date, are made pursuant to the safe harbor provisions of
the United States Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on assumptions made by and information
currently available to Hummingbird. Investors are cautioned that these
forward-looking statements are subject to risks and uncertainties that may
cause future results to differ materially from those expected. Such risks
include, but are not limited to Hummingbird's ability to close the transaction
in the time period anticipated, if at all, which is dependent upon
Hummingbird's ability to receive the requisite regulatory approvals and to
comply with the closing conditions to the transactions, some of which are
beyond Hummingbird's control. Forward-looking statements are based on
management's current plans, estimates, opinions and projections, and
Hummingbird assumes no obligation to update forward-looking statements if
assumptions related to these plans, estimates, opinions and projections should
change.
For more information, please contact:
Inder Duggal
Chief Financial Officer
Hummingbird Ltd.
Tel: 416 496-2200 ext.2205
inder.duggal@hummingbird.com
Dan Coombes
Director, Investor Relations
Hummingbird Ltd.
Tel: 416 496-2200 ext. 6359
daniel.coombes@hummingbird.com
Michele Stevenson
Senior Manager, Corporate Communications
Hummingbird Ltd.
Tel: 416 496-2200 ext. 2623
michele.stevenson@hummingbird.com
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HUMMINGBIRD LTD.
-----------------------------------------
(Registrant)
Date: August 28, 2006 By: /S/ INDER P.S. DUGGAL
------------------------- -------------------------------------
Name: Inder P.S. Duggal
Title: Chief Financial Officer,
Secretary and Treasurer