CUSIP
No. 669954109
Item 1. Security and Issuer.
The title of the class of
equity securities to which this Schedule 13D relates is common shares, no par
value, (the “Shares”) of NovAtel Inc. (“NovAtel”). NovAtel is a corporation incorporated under
the federal laws of Canada, with its principal offices located at 1120-68th
Avenue N.E., Calgary, Alberta, Canada T2E 8S5.
Item 2. Identity and Background.
This Statement is being
filed by Hexagon AB (“Hexagon”), a public limited company organized under the
laws of Sweden. The address of Hexagon’s principal executive office is
Cylindervägen 12, Nacka Strand, Sweden, SE-131 26. Hexagon is a global
technology company with strong market positions within measurement technologies
and polymers. Hexagon has approximately 8,200 employees in 30 countries. Its
class B shares are quoted among Large Cap companies on the Stockholm Stock
Exchange’s Nordic List and have a secondary listing on the SWX Swiss Exchange.
Also attached as Schedule
A hereto, and incorporated herein by reference, is a list of all executive
officers and directors of Hexagon. Such Schedule A also sets forth for each of
the executive officers and directors of Hexagon the following information: (i)
residence or business address, (ii) present principal occupation or employment,
and the name, principal business and address of any corporation or other
organization in which such employment is conducted and (iii) citizenship.
Unless otherwise indicated, each such person has held his or her present
occupation as set forth in Schedule A hereto for the past five years.
Neither Hexagon nor any
person listed on Schedule A hereto, during the last five years, has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which such person
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.
Item 3: Sources and Amount of Funds or Other Consideration.
On October 8, 2007,
pursuant to the Subscription and Support Agreement (the “Support Agreement”)
between Hexagon and NovAtel, Hexagon agreed to acquire an aggregate amount of
953,864 Shares of NovAtel and a U.S.$38,202,250 principal amount, 4.0% senior
unsecured debenture convertible into 764,045 Shares, subject to adjustment (the
“Convertible Debenture”), at a purchase price of U.S.$50.00 per Share
(collectively, the “Private Placement”). The Support Agreement is further
described in Item 6. The Private Placement was consummated on October 17, 2007.
The aggregate consideration paid by Hexagon to NovAtel in connection with the
Private Placement was U.S.$85,895,450. Hexagon funded the Private Placement by
using available cash on hand.
Item 4:
Purpose of
Transaction.
On October 8, 2007, in
connection with the acquisition of the Shares under the Private Placement,
Hexagon and NovAtel entered into the Support Agreement pursuant to which
Hexagon, by itself or through a subsidiary (the “Offeror”), agreed to commence
a tender offer (the “Offer”) for all of the issued and outstanding Shares
together with Shares issuable upon exercise of options or any right to acquire
Shares (“Options”) at a purchase price of U.S.$50.00 in cash per Share. The
purpose of the Offer is to acquire all of the Shares. Hexagon agreed to make
the Offer because Hexagon wants to acquire control of, and ultimately be in a
position to acquire all of the Shares.
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In order to induce the
parties to enter into the transaction and ensure that Hexagon will have a
continued interest in NovAtel and to allow for the better alignment of
interests between NovAtel and its most significant customer, Leica Geosystems,
AG, a wholly-owned subsidiary of Hexagon, the parties structured the
transaction in the form of an Offer coupled with a Private Placement.
If all the conditions of
the Offer are satisfied or waived by the Offeror, as soon as the Offeror takes
up and pays for the Shares pursuant to the Offer, NovAtel has agreed to enable
Hexagon to appoint all of NovAtel’s directors. If, within 120 days after the
date of the Offer, NovAtel shareholders that hold not less than 90% of the
Shares (calculated on a fully-diluted basis), other than Shares held by Hexagon
or one of Hexagon’s affiliates or associates, have accepted the Offer and
Hexagon acquires the deposited Shares, then Hesagon currently intends and is
obligated under the terms of the Support Agreement, subject to certain
conditions thereunder, to acquire the Shares not deposited under the Offer on
the same terms as the Shares acquired under the Offer in a compulsory
acquisition. If Hexagon accepts and pays for the Shares validly deposited under
the Offer and a compulsory acquisition is not available or Hexagon elects not
to proceed with a compulsory acquisition subject to the terms of the Support
Agreement, Hexagon currently intends to take the necessary action, including
causing a meeting of NovAtel shareholders to be held, to consider a subsequent
acquisition transaction involving NovAtel and Hexagon or an affiliate of
Hexagon, for the purpose of enabling Hexagon or an affiliate of Hexagon to
acquire all Shares not acquired under the Offer.
If, as a result of the
Offer and any subsequent transaction, the number of NovAtel shareholders is
sufficiently reduced, to the extent permitted by applicable law, Hexagon
intends to take certain measures, including, potentially delisting the Shares
from the NASDAQ Global Select Market and to cause NovAtel to cease to be a
public company.
Item 5: Interest in Securities of the Issuer.
(a) As a result of
the Private Placement, Hexagon is the beneficial owner of 953,864 Shares
acquired upon the closing of the Private Placement on October 17, 2007 and will
be the beneficial owner of 764,054 (subject to adjustment) Shares issuable upon
the conversion of the Convertible Debenture, representing in the aggregate
1,717,909 Shares or 16.6% of the issued and outstanding Shares after giving
effect to the number of Shares issued and issuable to Hexagon in the Private
Placement. Consummation of the Private Placement was subject to approval by
NASDAQ of the transaction, which was obtained on October 12, 2007. Pursuant to
its terms, the Convertible Debenture may not be converted into Shares prior to
January 15, 2008.
(b) With regards to
such Shares, Hexagon has the sole power to vote and the sole power to dispose
or to direct the disposition of 953,864 Shares.
In addition, upon the conversion of the Convertible Debenture, Hexagon
shall have the sole power to vote and the sole power to dispose or to direct
the disposition of an additional 764,045 Shares issuable pursuant to the
Convertible Debenture.
The responses to Items 6
and 7 of this Schedule 13D are incorporated herein by reference.
(c) Except as
described in Items 3, 4 and 6 of this Schedule 13D, which are incorporated
herein by reference, Hexagon has not effected any other transaction in the
Shares during the past 60 days, and, to the knowledge of Hexagon, none of the
persons named in Schedule A, incorporated by reference into Item 2 herein, has
effected transactions in the Shares during the past 60 days.
(d) To the
knowledge of Hexagon, no other person has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, Shares
beneficially owned by Hexagon.
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(e) Not applicable.
Item 6: Contracts, Arrangements, Understandings or Relationship with
Respect to Securities of the Issuer.
Other than as described
below, Hexagon and, to the knowledge of Hexagon, none of the persons named in
Schedule A hereto, are a party to any contract, arrangement, understanding or
relationship with respect to any securities of NovAtel, including but not
limited to transfer or voting of any of the securities, finder’s fees, joint
ventures, loan or option agreements, puts or calls, guarantees of profits,
divisions of profits or losses or the giving or withholding of proxies.
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The Support
Agreement
The following summarizes material provisions of the
Support Agreement, a copy of which is attached to this Schedule 13D as
Exhibit 1 and is incorporated by reference into this Item 6. This
summary does not purport to be complete and may not contain all of the
information about the transactions contemplated under the Support Agreement. The
direct rights and obligations of Hexagon and NovAtel are governed by the
express terms of the Support Agreement and not by this summary or any other
information contained in this Schedule 13D.
Hexagon’s, and NovAtel’s representations, warranties
and covenants were made as of specific dates and only for purposes of the
Support Agreement and are subject to important exceptions and limitations,
including a contractual standard of materiality. Certain of the representations,
warranties and covenants in the Support Agreement are qualified by information
NovAtel filed with the Securities and Exchange Commission prior to the date of
the Support Agreement, as well as by a disclosure letter of NovAtel delivered to
Hexagon at the date of signing the Support Agreement (the “disclosure letter”).
The disclosure letter has not been made public because, among other reasons, it
includes confidential or proprietary information.
Under the terms of the Support Agreement, Hexagon may
assign all or any part of its rights or obligations under the Support Agreement
to one or more of its direct or indirect wholly-owned Subsidiaries; provided,
however, that if such assignment takes place, the Subsidiary or Subsidiaries
shall become party to the Support Agreement and Hexagon shall continue to be
liable to NovAtel for any default in performance by the assignee. Hexagon has
assigned certain of its rights and obligations under the Support Agreement to its
wholly-owned direct subsidiary, Hexagon Canada Acquisition Inc. (the “Offeror”).
The Offer
Hexagon and NovAtel have entered into the Support
Agreement pursuant to which Hexagon agreed to make an offer (the “Offer”) to
acquire all of the common shares of NovAtel (the “Shares”). The Support
Agreement provides that the Offer is subject to certain conditions including,
among other things, that Shares representing at least 66
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%
(unless waived by the Offer or to 50.1%) of the Shares calculated on a fully
diluted basis at the expiry time of the Offer will have been validly deposited
or tendered and not withdrawn. The Support Agreement provides, among other
things, that Hexagon and the Offeror expressly reserves the right to: (i) waive, in whole or in part, any term
or condition of the Offer for its benefit provided that if the Offeror takes up
and pays for any Shares, it shall acquire not less than the Minimum Required
Shares (as defined in the Support Agreement); and (ii) amend or change any
term or condition of the Offer, except that, without the prior written consent
of NovAtel, the Offeror shall not (A) reduce the Offer price; (B) change
the form of consideration payable under the Offer; (C) add to, amend or
change any term or condition in a manner that is materially adverse to the
Shareholders in aggregate; (D) impose additional conditions to the Offer;
and (E) change the minimum required shares to less than 50.1% of the
outstanding Shares or to greater than 66⅔% of the
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outstanding Shares, in each case exclusive of Shares
held by Hexagon or its affiliates; provided any extension of the expiry time of
the Offer, or other action taken, in accordance with the Support Agreement
shall not be considered adverse.
Approval by
NovAtel Directors
Pursuant to the Support Agreement, NovAtel confirmed
that the board of directors of NovAtel (the “Board of Directors”), upon
consultation with its advisors, has determined that the Offer is fair to the
Shareholders of NovAtel (“Shareholders”) and is in the best interests of
NovAtel and the Shareholders and, the Board of Directors will unanimously
recommend that shareholders accept the Offer, which recommendation may not be
withdrawn, modified, qualified or changed in any manner except as described
below under “Non-Solicitation” or in the event of the termination of the
Support Agreement.
Non-Solicitation
Pursuant to the
Support Agreement, NovAtel has agreed that it shall not, directly or
indirectly, through any officer, director, employee, representative or agent of
NovAtel or any of its subsidiaries, (i) solicit, initiate or encourage
(including by way of furnishing information or entering into any form of
agreement, arrangement or understanding) the initiation or continuation of any
inquiries, discussions, negotiations, proposals or offers from any person or
group of persons (other than Hexagon or any affiliate of Hexagon) in respect of
any matter or thing inconsistent with the successful completion of the Offer,
including, without limitation, any acquisition proposal (as defined in the
Support Agreement) ; (ii) provide any non-public information to,
participate in any discussions or negotiations relating to any such matter or
thing with, or otherwise cooperate with or assist or participate in any effort
to take such action by, any person or group of persons; (iii) withdraw,
modify, qualify or change any of its recommendations or determinations referred
to above under “Approval by NovAtel Directors” in a manner adverse to Hexagon
or the Board of Directors or any committee thereof resolves to do so; or (iv) accept,
recommend, approve or enter into any agreement to implement an acquisition proposal;
provided, however, that notwithstanding any other provision of the Support
Agreement, NovAtel and the officers, directors, advisors and other
representatives of NovAtel may:
(a)
enter
into, or participate in, any discussions or negotiations with a third party who
seeks to initiate (without solicitation or encouragement) such discussions or
negotiations and, may furnish to such third party information concerning
NovAtel and its business, properties and assets, in each case if, and only to
the extent that:
(i)
the
third party has first made an acquisition proposal which the Board of Directors
has determined, in good faith and acting reasonably, if pursued would be
reasonably likely to constitute a superior proposal and after receiving the
advice of outside counsel has determined that the failure to take such action
would be reasonably likely to constitute a breach by the members of the Board
of Directors of their fiduciary duties to Shareholders under applicable Law;
and
(ii)
prior
to furnishing such information to or entering into or participating in any such
discussions or negotiations with such third party, NovAtel provides prompt
notice to the Offeror to the effect that it is furnishing information to or
entering into or participating in discussions or negotiations with such third
party and if not previously provided to the Offeror, copies of all information
provided to such third party concurrently with the provision of such
information to such third party;
provided that this paragraph (a) shall cease to apply
after the expiry of four business days from the time such third party made the acquisition
proposal referred to in subparagraph (a)(i) above, unless within such four business
day period the Board of Directors determines that the acquisition proposal is a
superior proposal (as defined in the Support Agreement) and after receiving the
advice of outside counsel has
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determined that the failure to take such action would
be reasonably likely to constitute a breach by the members of the Board of
Directors of their fiduciary duties to Shareholders under applicable law;
(b)
subject
to paragraphs (a) and (c), comply with applicable securities laws relating to
the provision of directors’ circulars and making appropriate disclosure with
respect thereto to Shareholders; and
(c)
withdraw,
modify, qualify or change any of its recommendations or determinations referred
to above under “Approval by NovAtel Directors” in a manner adverse to the
Offeror or resolve to do so or accept, recommend, approve or implement any superior
proposal if NovAtel has complied with the terms of the Support Agreement in
respect of the superior proposal and prior to such acceptance, recommendation,
approval or implementation:
(i)
after
consultation with its financial advisors, and after receiving advice of outside
counsel the Board of Directors concludes in good faith such action is necessary
for the Board of Directors to comply with its fiduciary duties under applicable
law;
(ii)
in
arriving at such conclusion, the Board of Directors gives consideration to any
amendment proposed by the Offeror in writing in compliance with the Support
Agreement; and
(iii)
NovAtel concurrently
pays the fee provided in the Support Agreement and referred to below under “Termination
Fees” to the Offeror.
Pursuant to the Support Agreement, NovAtel also agreed
that it shall, and shall direct and use reasonable efforts to cause its
officers, directors, employees, representatives and agents to, immediately
cease and cause to be terminated any existing discussions or negotiations with
any parties (other than Hexagon or any affiliate of Hexagon) with respect to
any potential acquisition proposal. NovAtel agreed to immediately close any and
all data rooms which may have been opened and not to waive, in whole or in
part, or release, in whole or in part, any third party from, or consent to any
action pursuant to, any confidentiality or standstill agreement with respect to
NovAtel or any of its subsidiaries to which such third party is a party except
in respect of a superior proposal in accordance with the terms of the support agreement.
NovAtel further agreed that it has notified the
Offeror of any existing acquisition proposals and that it shall notify the
Offeror promptly (and in any event within 24 hours) of any future acquisition proposal
(including, without limitation, any amended, supplemented, replaced or renewed acquisition
proposal (whether or not previously notified) in respect of which the Board of
Directors has made the determinations referred to in subparagraph (a)(i) above)
or any request for non-public information relating to NovAtel or any of its subsidiaries
or for access to the properties, books or records of NovAtel or any subsidiary
of NovAtel by any person.
The Support Agreement provides that if the Board of
Directors determines that an acquisition proposal constitutes a superior proposal,
NovAtel shall give immediate notice of such determination and shall give the
Offeror not less than four business days advance notice of any action to be
taken by the Board of Directors to withdraw, modify, qualify or change any
recommendation regarding the Offer or to enter into any agreement to implement
the superior proposal and the Board of Directors shall not withdraw, modify,
qualify or change any recommendation with respect to the Offer, as so amended,
and neither NovAtel nor the Board of Directors shall take any action to approve
or implement the superior proposal, including, without limitation, any release
of the party making the superior proposal from any standstill or
confidentiality obligation, any further consideration or negotiation of the superior
proposal or entry into of any agreement regarding the superior proposal before
the expiry of such four business day period.
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Representations,
Warranties and Covenants
Under the Support
Agreement, NovAtel has made certain representations, warranties and covenants
to Hexagon. Among other things, NovAtel has made representations and warranties
to Hexagon in respect of:
(a)
the
due incorporation or formation under applicable law and valid existence of each
of NovAtel and its subsidiaries;
(b)
the
issued and outstanding capital of NovAtel;
(c)
NovAtel
having the requisite corporate power and authority to enter into the Support
Agreement and to perform its obligations thereunder;
(d)
the
absence of impediments to the consummation of the transactions contemplated by
the Support Agreement;
(e)
NovAtel’s
financial statements being in accordance with Canadian generally accepted
accounting principles;
(f)
compliance
with the applicable requirements of the Securities and Exchange Act of 1934,
the Securities Act of 1933 (the “Exchange Act”), the NASDAQ rules and the
Sarbanes-Oxley Act of 2002, as amended and NovAtel’s public record not
containing any untrue statement of a material fact or omitting to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(g)
the
absence of material changes to NovAtel and its subsidiaries since December 31,
2006;
(h)
all
material contracts of NovAtel and its subsidiaries being valid and subsisting
and the absence of any default under such material contracts;
(i)
NovAtel’s
employment agreements and benefit plans;
(j)
compliance
with all laws applicable to the operation of the business of NovAtel and its subsidiaries;
(k)
the
absence of material litigation against or relating to NovAtel or any of its subsidiaries
or affecting any of their properties or assets;
(l)
good
title to all real property and personal property and assets of NovAtel and its subsidiaries;
(m)
compliance
with environmental laws and permits and the absence of release or exposure to
hazardous materials;
(n)
ownership
of all right, title and interest in and to all intellectual property rights;
and:
(o)
NovAtel
and its subsidiaries having filed all tax returns required to be filed on a
timely basis and paid or provided adequate accruals for income taxes and
related deferred taxes in conformity with generally accepted accounting
principles in Canada.
In addition to the
covenants described above under “Non-Solicitation”, pursuant to the Support
Agreement NovAtel has covenanted and agreed, among other things, to:
(a)
conduct
its business only in, and not take action except in, the usual, ordinary and
regular course of business consistent with past practice;
(b)
not
issue, sell, pledge, lease, dispose of, encumber any additional Shares or
rights of any kind to acquire any shares of NovAtel or its subsidiaries or
except in the ordinary course of business, consistent with past practice and
not exceeding U.S.$100,000 individually or U.S.$1 million in the aggregate, any
assets of NovAtel or its subsidiaries or agree to do any of the foregoing;
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(c)
not
amend or propose to amend its articles, bylaws or other governing documents;
(d)
not
split, combine or reclassify any outstanding Shares, or declare, set aside or
pay any dividend or other distribution payable in cash, stock, property or
otherwise with respect to the Shares;
(e)
not
reorganize, amalgamate or merge NovAtel or any of its subsidiaries with any
other person;
(f)
except
in the ordinary and regular course of business consistent with past practice:
not (A) pay, discharge or satisfy any material claims, liabilities or
obligations, including settling, compromising or otherwise resolving any
pending litigation or other legal proceedings involving NovAtel or one of its subsidiaries;
or (B) except such as have been reserved against in NovAtel’s financial
statements delivered to the Offeror, relinquish any material contractual
rights;
(g)
not
authorize, recommend or propose any release or relinquishment of any material
contract right or abandon or fail to diligently pursue any application for any
material license, permit, order, authorization, consent, approval or
registration, other than in the ordinary and regular course of business
consistent with past practice;
(h)
except
pursuant to existing contracts or commitments, not make or commit to make
capital expenditures in excess of U.S.$1,750,000 in the aggregate;
(i)
not
adopt a plan of complete or partial liquidation, dissolution, or
reorganization;
(j)
not
enter into, assume or modify any employment, severance, retention, collective
bargaining or similar agreements, policies or arrangements with, or grant any
bonuses, salary or other compensation increases, severance or termination pay
to, any officers or directors of NovAtel or any of its subsidiaries other than
pursuant to agreements in effect (without amendment) on the date of the Support
Agreement;
(k)
not
create, enter into, assume or modify any employee benefit plan, employee
obligations or collective bargaining or similar agreements;
(l)
not
terminate, amend or waive any rights under or in relation to Point, Inc.;
(m)
use
its reasonable efforts, and cause each of its subsidiaries to use its
reasonable efforts, to preserve intact their respective business organizations
and goodwill, to keep available the services of its officers and employees as a
group and to maintain satisfactory relationship with suppliers, agents,
distributors, customers and others having business relationships with it or its
subsidiaries;
(n)
not
take any action, or permit any of its subsidiaries to take any action, that
would render, or that reasonably may be expected to render, any representation
or warranty made by it in the Support Agreement untrue in any material respect
at any time prior to the effective time of the Support Agreement if then made;
and
(o)
confer
on a regular basis with the Offeror with respect to operational matters but in
such a manner that the carrying on of business in the ordinary course is not
unreasonably interfered with.
Termination Fees
The Support Agreement provides that if at any time
after the date of the Support Agreement (and provided that Hexagon or the
Offeror have not prior thereto, breached in any material respect any of their
respective representations, warranties or covenants set forth in the Support
Agreement, which breach has not been cured within five business days of a
notice to Hexagon thereof or which has not been waived by NovAtel):
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(a)
the
Board of Directors has failed to make or has withdrawn, modified, qualified or
changed, during the term of the Offer, any of its recommendations or
determinations referred to above under “Approval by NovAtel Directors” in a
manner adverse to Hexagon or shall have resolved to do so;
(b)
the
Board of Directors shall have failed to reaffirm its recommendation of the
Offer by press statement within five days after the public announcement or
commencement of any acquisition proposal and in a Directors’ Circular (as
defined in the Support Agreement) within 15 days after the mailing of any such acquisition
proposal;
(c)
the
Board of Directors recommends that any of its Shareholders deposit their Shares
under, vote in favor of, or otherwise accept, an acquisition proposal;
(d)
NovAtel
enters into any agreement, commitment or understanding with any person or other
entity or group with respect to an acquisition proposal prior to the expiry of
the Offer, excluding a confidentiality agreement entered into in compliance
with the Support Agreement;
(e)
an
acquisition proposal is made to the Shareholders or to NovAtel, and upon the
expiry of the Offer any such acquisition proposal has either been accepted or
has not expired or been withdrawn, and the Minimum Condition (as defined in the
Support Agreement) of the Offer has not been satisfied and (within nine months
of the expiry of the Offer) an acquisition proposal is consummated;
(f)
it
is publicly disclosed or Hexagon becomes aware that beneficial ownership
(determined for the purposes of this paragraph (f) as set forth in Rule 13d-3
of the Exchange Act) of 20% or more of the outstanding Shares are acquired by
any Person other than Hexagon by any means whatsoever during the term of the
Offer and within nine months of the expiry of the Offer, such person or any person
acting jointly or in concert with such person makes an acquisition proposal;
(g)
NovAtel
is in breach of any of its covenants referred to above under “Non-Solicitation”;
(h)
NovAtel
is in breach of any of its covenants made in the Support Agreement (other than
the covenants referred to above under “Approval by NovAtel Directors” and “Non-Solicitation”)
which breach (without giving effect to, applying or taking into consideration
any materiality, Material Adverse Change (as defined in the Support Agreement) or
Material Adverse Effect (as defined in the Support Agreement) qualification
contained therein) individually or in the aggregate causes or would reasonably
be expected to have a Material Adverse Effect or materially impede completion
of the Offer, and NovAtel fails to cure such breach within five Business Days
after receipt of written notice thereof from Hexagon or the Offeror (except
that no cure period shall be provided for a breach which by its nature cannot
be cured and, in no event, shall any cure period extend beyond the expiry of
the Offer); or
(i)
NovAtel
is in breach of any of its representations or warranties made in the Support
Agreement which breach (without giving effect to, applying or taking into
consideration any materiality, Material Adverse Change or Material Adverse
Effect qualification contained therein) individually or in the aggregate causes
or would reasonably be expected to have a Material Adverse Effect or materially
impede completion of the Offer, and NovAtel fails to cure such breach within
five business days after receipt of written notice thereof from Hexagon or the
Offeror (except that no cure period shall be provided for a breach which by its
nature cannot be cured and, in no event, shall any cure period extend beyond
the expiry of the Offer),
(each of the above
being a “Fee Event”), then NovAtel shall:
(j)
(i) in respect of the first to occur of
the events described above in (a) through and including (g) above;
(ii)
in
the case of (h) and (i) above where due to a wilful breach or fraud;
and
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(iii)
in the case of (h) and
(i) above if within 6 months of the expiry of the Offer an acquisition proposal
is consummated,
pay to the Offeror U.S.$13,430,000; or
(k)
in
the case of (h) and (i) above (other than where due to a wilful breach or
fraud), pay to the Offeror its and Hexagon’s reasonable documented expenses
incurred in connection with the transactions contemplated by the Support
Agreement, such payment not to exceed U.S.$2,500,000;
in immediately available funds to an account
designated by the Offeror within one business day after the first to occur of
the events described above plus interest thereon at the rate of 8% per annum if
payment is not made when due, provided that NovAtel shall only be obligated to
make one payment pursuant to this section entitled “Termination Fees” and in
the event that payment is made pursuant to paragraph (j)(iii) above after
the amount payable pursuant to paragraph (k) above has been paid to the
Offeror, NovAtel’s obligation pursuant to paragraph (j)(iii) above shall
be reduced by the amount paid pursuant to paragraph (k) above.
Options
Pursuant to the Support Agreement, NovAtel agreed to
use all commercially reasonable efforts to provide that persons holding options
to acquire shares who may do so under securities laws and in accordance with NovAtel’s
outstanding stock option plans (or pursuant to the terms of the Support
Agreement), shall be entitled to exercise all of their Options and tender all
Shares issued in connection therewith under the Offer. The Offeror has agreed
that all options to acquire shares that are duly surrendered for exercise,
conditional on the Offeror taking up Shares under the Offer and with
appropriate instructions that the Shares issuable upon such exercise are to be
tendered pursuant to the Offer, shall be deemed to be exercised immediately
prior to the take-up of Shares by the Offeror under the Offer.
Termination
The Support
Agreement may, subject to its specific terms, be terminated at any time prior
to the effective time of the Support Agreement:
(a)
by
mutual written consent of Hexagon and NovAtel;
(b)
by
either Hexagon or NovAtel after February 16, 2008, if the Offeror has not
purchased Shares pursuant to the Offer, provided that such right of termination
shall not be available to Hexagon if any action of Hexagon or the Offeror or
any breach of or failure to perform its obligations by Hexagon or the Offeror
under the Support Agreement resulted in such condition not being satisfied;
(c)
by
Hexagon, if the conditions to the Offer have not been satisfied or waived by Hexagon
on or before the Expiry Time, provided that such right of termination shall not
be available if any action of Hexagon or the Offeror or any breach of or
failure to perform its obligations by Hexagon or the Offeror under the Support
Agreement resulted in such condition not being satisfied;
(d)
by
NovAtel, if the Board of Directors withdraws, modifies, qualifies or changes
any recommendations or determinations referred to above under “Approval by
NovAtel Directors” in a manner adverse to Hexagon (or any of its affiliates) or
shall have resolved to do so before the expiry of the Offer, and NovAtel has
complied with the obligation referred to above under “Non-Solicitation”;
(e)
by
either Hexagon or NovAtel, if any governmental entity shall have issued an
order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the making, or consummation, of the Offer or
the consummation of the Private Placement and such
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order, decree, ruling or
other action shall have become final and non-appealable, provided that the
party seeking to terminate the Support Agreement pursuant to this section shall
have used all commercially reasonable efforts to remove such order, decree,
ruling or injunction;
(f)
by
Hexagon, if a Fee Event has occurred;
(g)
by
either Hexagon or NovAtel if there has been a breach by the other party of any
representation, warranty or covenant contained in the Support Agreement
individually or in the aggregate (without giving effect to, applying or taking
into consideration any materiality, Material Adverse Change or Material Adverse
Effect qualification contained therein) which would have, or would reasonably
be likely to have, a material adverse effect on the party seeking to terminate
the Support Agreement or would materially impede completion of the Offer,
provided that the breaching party has been given notice of and five business days
to cure such misrepresentation, breach or non performance except that no cure
period shall be provided for a breach which, by its nature, cannot be cured and
in no event shall any cure period extend beyond February 16, 2008;
(h)
by
Hexagon, if it has the right pursuant to the Support Agreement to refuse to
make the Offer due to the non-satisfaction of any of the conditions to the
Offeror’s obligation to commence the Offer as set forth in the Support
Agreement, including, without limitation:
(i)
no
Material Adverse Change shall have occurred and be continuing and no
circumstance, fact, change, occurrence or event shall have occurred or come
into existence that would reasonably be expected to make it impossible to
satisfy one or more of the conditions set forth in the Offer at or prior to the
expiry of the Offer, excluding any such circumstance, fact, change, occurrence
or event that occurs or comes into existence as a result of any act or omission
of Hexagon or the Offeror in breach of its obligations under the Support
Agreement;
(ii)
no
Fee Event shall have occurred;
(iii)
the Support Agreement
shall not have been terminated pursuant to the rights referred to herein under “Termination”;
(iv)
no
cease trade order, injunction or other prohibition or other lawful order in
Canada or the United States shall be threatened or exist that would preclude Hexagon
or the Offeror from making the Offer or taking up or paying for the Shares
deposited under the Offer or requiring Hexagon or the Offeror to purchase or
offer to acquire any other securities;
(v)
no
Person shall have commenced any action or other proceeding for injunctive
relief against the performance of the Support Agreement or the completion of
the Offer which might reasonably be expected to be successful; and
(vi)
receipt
of all regulatory approvals, clearances, waivers and consents to the making of
the Offer which may reasonably be considered as necessary or on the reasonable
advice of counsel to Hexagon advisable; and
(i)
by
NovAtel, if Hexagon or the Offeror has not mailed the Offer documents by October 22,
2007 provided the failure to mail is not due to the non-satisfaction of any of
the conditions in section 2.1(f) of the Support Agreement or otherwise due
to any act or failure to act of NovAtel.
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Private Placement
Pursuant to the Support Agreement, Hexagon agreed to
purchase the Placement Shares and Convertible Debenture from NovAtel for an
aggregate purchase price of U.S.$85,895,450. The Private Placement closed on October 17,
2007.
The Convertible
Debenture
The following summarizes
the material provisions of the Convertible Debenture, a copy of which is
attached to this Schedule 13D as Exhibit 2 and is incorporated by
reference into this Item 6. This summary does not purport to be complete
and may not contain all of the information about the transactions contemplated
under the Support Agreement and the Convertible Debenture. Hexagon encourages
you to read carefully the Convertible Debenture in its entirety because the direct
rights and obligations of Hexagon and NovAtel governed by the express terms of
the Convertible Debenture and not by this summary as any other information
contained in this Schedule 13D.
Hexagon’s and NovAtel’s representations, warranties
and covenants were made as of specific dates and only for purposes of the
Convertible Debenture and are subject to important exceptions and limitations,
including a contractual standard of materiality.
General
Pursuant to the Private Placement, NovAtel issued the
Convertible Debenture to Hexagon. The Convertible Debenture was dated as of October 17,
2007 and will mature on October 17, 2012 (the “Maturity Date”). The
Convertible Debenture bears interest from the date of issue at 4.0% per annum,
calculated and compounded annually and payable on the first day of June and
the first day of December of each year commencing June 1, 2008.
Conversion
Hexagon has the right from and after January 15,
2008, to convert the whole, but not less than the whole, of the principal
amount of the Convertible Debenture into fully paid and non-assessable Shares,
at a conversion price of U.S.$50.00 per Share.
Provided that an Event of Default (as described below)
shall not have occurred and be continuing at the time, NovAtel has the right
from and after the first anniversary of the date of issue of the Convertible
Debenture and prior to 4:00 p.m. (Calgary time) on the business day prior
to the Maturity Date, to require Hexagon to convert the whole, but not less
than the whole, of the principal amount of the Convertible Debenture into fully
paid and non-assessable Shares.
Subject to the provisions thereof, the Convertible
Debenture provides for the adjustment of the conversion price in certain events
including: (a) the subdivision or
redivision of the issued and outstanding Shares into a greater number of
Shares; or (b) the combination, reduction or consolidation of the issued
and outstanding Shares into a lesser number of Shares. There will be no
adjustment of the conversion price unless the cumulative effect of such
adjustments would change the conversion price by at least 1%.
In the case of any reclassification or capital
reorganization of the Shares or in the case of any consolidation, merger or
amalgamation of NovAtel with, or into, another person resulting in a
reclassification of the Shares issued and outstanding or a change of Shares
into other shares or securities,
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or in the case of any
transaction whereby all or substantially all of the undertaking and assets of
NovAtel become the property of another person (any such event being herein
called a “Corporate Reorganization”), the terms of the conversion privilege
shall be adjusted so that Hexagon shall, after such Corporate Reorganization,
be entitled to receive and shall accept, in lieu of the Shares to which Hexagon
would otherwise have been entitled, the kind and number or amount of shares or
other securities or property that Hexagon would have been entitled to receive
as a result of such Corporate Reorganization if, on the effective date thereof,
it had been the registered holder of the number of Shares which it would have
received if it exercised the right of conversion immediately before such
effective date.
Events of Default
The Convertible
Debenture provides that an Event of Default will occur if any one or more of the
following described events occurs:
(a)
if
NovAtel fails to pay the principal amount of the Convertible Debenture on the
day the same becomes due and payable pursuant to its terms;
(b)
if
NovAtel fails to pay interest or other amount, other than the principal amount
of the Convertible Debenture, when due and payable and such failure continues
for three business days after receipt by NovAtel of written notice of such
failure from Hexagon;
(c)
if
NovAtel defaults in a material way in the observance or performance of any
covenant in the Convertible Debenture and such default remains unremedied or
uncured for a period of 30 days after receipt of notice of the occurrence
thereof;
(d)
if
any representation or warranty made by NovAtel in the Convertible Debenture
shall be untrue in any material respect on the date of issue of the Convertible
Debenture or on, and as of, any subsequent date and remains unremedied or
uncured for a period of 30 days after receipt of notice of the occurrence
thereof;
(e)
if
NovAtel fails to pay the principal of, or premium or interest on, any of its
debt (other than the Convertible Debenture) which is outstanding in an
aggregate principal amount exceeding U.S.$5,000,000 when such amount becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure continues after the
applicable grace period, if any, specified in the agreement or instrument
relating to the debt without waiver of failure by the holder of the debt; or
any other event occurs or condition exists and continues after the applicable
grace period, if any, specified in any agreement relating to any such debt
without waiver by the holder of the debt, if its effect is to accelerate, or
permit the acceleration of the debt; or any such debt shall be declared to be
due and payable prior to its stated maturity and the declaration has not been
rescinded by the holder of the debt;
(f)
if
a final judgment or judgments for the payment of money shall be rendered
against NovAtel in an amount in excess of U.S.$5,000,000 in the aggregate and
the same shall remain undischarged for a period of 30 days during which period
such judgment or judgments shall not be on appeal or execution thereof shall
not be effectively stayed, other than a judgment described in the disclosure letter;
(g)
if
one or more writs of execution, attachment or similar processes shall be issued
or levied against the property of NovAtel in connection with any final
judgments, orders or decisions requiring the payment, in the aggregate, of more
than U.S.$5,000,000 by NovAtel and such writs of execution, attachment or
similar processes are not released, bonded, satisfied, discharged, vacated or
stayed within 30 days after their entry, commencement or levy;
(h)
if
NovAtel shall:
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(i)
apply
for or consent to the appointment of a receiver, trustee or liquidator of
itself or of all or a substantial part of its assets;
(ii)
make
or threaten to make a general assignment for the benefit of creditors or make
or threaten to make a bulk sale of its assets;
(iii)
commence any case,
proceeding or other action under any existing or future law relating to
bankruptcy, insolvency, reorganization or relief of debtors seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or (other than as permitted under the Convertible
Debenture) seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts or an arrangement with creditors or taking advantage of any insolvency
law or proceeding for the relief of debtors, or file an answer admitting the
material allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding; or
(iv)
take
corporate action for the purpose of effecting any of the foregoing;
(i)
if
any case, proceeding or other action shall be instituted in any court of
competent jurisdiction against NovAtel seeking in respect of NovAtel an
adjudication in bankruptcy, reorganization, dissolution, winding-up,
liquidation, a composition or arrangement with creditors, a readjustment of
debts, the appointment of a trustee, receiver, liquidator or the like of
NovAtel or of all or any substantial part of its assets, or any other like
relief in respect of NovAtel under any bankruptcy or insolvency law and, if
such case, proceeding or other action is being contested by NovAtel in good
faith, the same shall continue undismissed or unstayed and in effect for any
period of 30 consecutive days (or such longer period, not exceeding 60
days, as is required to dismiss or stay or render ineffective such case,
proceeding or other action); provided that if an order, decree or judgment is
granted (whether or not entered or subject to appeal) against NovAtel
thereunder, or a trustee, receiver or liquidator is appointed, in the interim
and such order, decree, judgment or appointment is not stayed or discharged
within five days of it being granted, such grace period shall cease to apply;
(j)
if
NovAtel shall:
(i)
be
unable to pay its debts generally as they become due or admit that it is unable
to do so; or
(ii)
commit
or threaten to commit an act of bankruptcy under the Bankruptcy and Insolvency
Act (Canada) or any statute passed in substitution therefor, as amended from
time to time; or
(k)
if
it shall have been publicly disclosed that beneficial ownership (determined for
the purposes of this paragraph as set forth in Rule 13d-3
promulgated under the Exchange Act) of 20% or more of the outstanding Shares
has been acquired by any person (including, without limitation, NovAtel or any
of its subsidiaries or affiliates), other than Hexagon or any of its
affiliates.
If an Event of Default has occurred Hexagon may by
notice to NovAtel declare the principal amount of the Convertible Debenture,
all unpaid accrued interest thereon and all other amounts payable thereunder to
be due and payable. Notwithstanding the foregoing, upon the occurrence of an
Event of Default specified in paragraphs (g) or (h) above, all such
indebtedness automatically becomes due and payable.
Representations
and Warranties
Under the
Convertible Debenture, NovAtel has made certain representations and warranties
to Hexagon. Among other things, NovAtel represented and warranted to Hexagon as
follows:
(a)
the
due incorporation or formation under applicable law and valid existence of
NovAtel;
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(b)
NovAtel
having the requisite corporate power and authority to enter into the
Convertible Debenture and to perform its obligations thereunder; and
(d)
the
absence of impediments to the consummation of the transactions contemplated by
the Convertible Debenture.
Covenants
Under the
Convertible Debenture, NovAtel has made certain covenants to Hexagon. Among
other things, NovAtel has agreed to:
(a)
advise
Hexagon immediately upon becoming aware of any Event of Default and deliver to Hexagon
upon request a certificate in form and substance satisfactory to Hexagon signed
by a senior officer certifying that no Event of Default has occurred or, if
such is not the case, specifying all Events of Default and their nature and
status;
(b)
at
all times reserve and keep available out of its authorized Shares and solely
for the purpose of conversion as provided in the Convertible Debenture, and
conditionally allot to Hexagon, such number of Shares as shall then be issuable
upon the conversion;
(c)
not
declare or agree to declare a dilutive rights offering or stock dividend or a
distribution or dividend
of shares of NovAtel other
than Shares, evidence of indebtedness, assets of NovAtel
or rights, options or warrants to acquire any Shares or securities convertible
into Shares or other securities or property of NovAtel;
(d)
not
commence or announce an intention to commence an issuer bid;
(e)
until
the Convertible Debenture becomes convertible in accordance with its terms, not
issue or agree to issue any Shares or other shares of NovAtel, nor any right,
warrant, option or other security directly or indirectly exercisable into,
convertible into or exchangeable for any Share or other share of NovAtel,
whether or not on conditions other than the issuance of options to purchase
Shares in accordance with NovAtel’s stock option plans and the issue of Shares
upon the exercise of options thereunder; and
(f)
other
than in connection with a delisting as a result of a successful tender offer,
use its commercially reasonable efforts to maintain the listing of the Shares
upon a recognized stock exchange in North America and cause the Shares issuable
upon the conversion of the whole or any part of the principal amount of the
Convertible Debenture to be included within the listed shares of NovAtel.
Item 7: Material to be Filed as Exhibits.
Exhibit 1. Subscription
and Support Agreement, dated as of October 8, 2007, by and between NovAtel and
Hexagon.
Exhibit 2. 4%
Senior Unsecured Convertible Debenture Issued by NovAtel, dated as of October
17, 2007.
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