Softchoice is a corporation incorporated under the CBCA. The registered and principal executive office of the Company is located at 173 Dufferin Street, Suite 200, Toronto, Ontario, M6K 3H7.
Price Range and Trading Volume of Common Shares
The Common Shares are listed and trade on the TSX under the trading symbol “SO”. The following table sets forth the price range for and the volume history of the Common Shares as reported by the TSX for the periods indicated:
Toronto Stock Exchange High
($)
Low
($) Volume
2012
May... 13.30 10.91 611,675 June... 12.45 11.18 289,749 July ... 13.37 12.02 312,387 August ... 12.41 11.38 305,317 September ... 12.00 10.51 459,172 October ... 13.51 11.52 338,222 November ... 12.80 11.60 292,939 December... 12.00 11.20 553,733 2013
January... 12.20 11.45 711,982 February... 15.70 11.90 840,189 March... 17.81 15.38 547,862 April ... 20.19 15.75 4,979,195 May (1 – 9) ... 20.20 19.93 1,040,464
On April 22, 2013, the last trading day on which the Common Shares traded prior to announcement of the Arrangement, the closing price of the Common Shares on the TSX was $16.85. On May 9, 2013, the closing price of the Common Shares on the TSX was $19.94.
Voting Securities and Principal Holders Thereof
The authorized capital of the Company consists of an unlimited number of Common Shares. The Common Shares are the Company’s only outstanding class of shares. As at the close of business on May 9, 2013, there were 19,653,762 Common Shares issued and outstanding. Each Common Share carries the right to one vote on any matter properly coming before the Meeting.
To the knowledge of the directors or Senior Officers of the Company, as at May 7, 2013, no Person or company, beneficially owns, or exercises control or direction over, directly or indirectly, Common Shares in aggregate entitled to 10% or more of the vote which may be cast at the Meeting other than Burgundy Asset Management Ltd. in respect of 3,323,454 Common Shares representing 16.9% of the issued and outstanding Common Shares. As of May 7, 2013 all directors and executive officers of the Company, as a group, beneficially owned, or exercised control or direction over, 383,075 Common Shares representing approximately 1.95% of the issued and outstanding Common Shares. As of May 7, 2013, principals of Birch Hill beneficially owned, or exercised control or direction over 6,200 Common Shares.
Ownership of Securities of the Company
Except as set forth below, none of (a) any directors or officers of the Company or (b) to the knowledge of the directors and officers of the Company, after reasonable enquiry, any insider of the Company (other than a director or officer) or any associate or affiliate of an insider of the Company or any associate or affiliate of the Company or any Person acting jointly or in concert with the Company, beneficially owns, directly or indirectly, or controls or exercises direction over, or has the right to acquire, any securities of the Company.
Keith Coogan Director 10,000 N/A N/A 7,429
Gilles Lamoureux Director 80,000 N/A N/A 21,700
Robert W. Luba Director 23,000 N/A N/A 26,546
Name Position and Offices Held within the
Company
Number of Common Shares held
Directly or Indirectly or
Controlled
Number of Options held
Number of RSUs held
Number of DSUs held
Carol S. Perry Director N/A N/A N/A 5,559
Lawrence Pentland Director N/A N/A N/A 1,102
Allan Reesor Director 21,500 N/A N/A 26,546
Mary Ritchie Director N/A N/A N/A 5,559
William P. Robinson Director 4,300 N/A N/A 26,546
Commitments to Acquire Securities of the Company
Except pursuant to the Option Plan, the DSU Plan and the RSU Plan, there are no agreements, commitments or understandings to acquire securities of the Company by (a) the Company, (b) any directors or officers of the Company or (c) to the knowledge of the directors and officers of the Company, after reasonable enquiry, by any insider of the Company (other than a director or officer) or any associate or affiliate of such insider or any associate or affiliate of the Company or any Person acting jointly or in concert with the Company.
Intentions with Respect to the Arrangement
Pursuant to the terms of the Voting Agreements, each director who owns Common Shares and each Senior Officer has indicated his or her intention to vote in favour of the Arrangement Resolution.
Material Changes in the Affairs of the Company
Except as publicly disclosed or otherwise described in this Circular, the directors and officers are not aware of any plans or proposals for material changes in the affairs of the Company.
Previous Purchases and Sales
The Company has not sold any Common Shares within the 12 month period prior to the date of the Arrangement Agreement (other than pursuant to the exercise of Options). The following table summarizes the purchases by the Company of Common Shares within the 12 month period prior to the date of the Arrangement Agreement. The purchase of Common Shares in the following table all relate to the Company’s Normal Course Issuer Bid that was renewed on August 13, 2012 for the period from April 27, 2012 to April 26, 2013.
Previous Distributions
No Common Shares have been distributed by the Company during the five years preceding the date of the Arrangement Agreement, except as follows:
Date
January 11, 2008 589 Exercise of Options 6.82 4,017
January 11, 2008 1,516 Exercise of Options 5.20 7,883
February 21, 2008 463 Exercise of Options 6.82 3,158
February 21, 2008 925 Exercise of Options 4.10 3,793
March 5, 2008 589 Exercise of Options 6.82 4,017
March 11, 2008 2,105 Exercise of Options 6.82 14,356
March 13, 2008 21,050 Exercise of Options 6.82 143,561
March 13, 2008 9,600 Exercise of Options 4.10 39,360
March 24, 2008 253 Exercise of Options 6.82 1,725
March 27, 2008 463 Exercise of Options 6.82 3,158
March 27, 2008 1,642 Exercise of Options 5.20 8,538
April 1, 2008 2,148 Exercise of Options 6.82 14,649
April 22, 2008 42 Exercise of Options 5.20 218
April 25, 2008 12,630 Exercise of Options 6.82 86,137
April 28, 2008 21,050 Exercise of Options 6.82 143,561
May 6, 2008 463 Exercise of Options 6.82 3,158
May 12, 2008 463 Exercise of Options 6.82 3,158
May 15, 2008 379 Exercise of Options 6.82 2,585
May 20, 2008 379 Exercise of Options 6.82 2,585
May 30, 2008 931 Exercise of Options 6.82 6,349
June 2, 2008 379 Exercise of Options 5.20 1,971
June 2, 2008 506 Exercise of Options 6.82 3,450
June 3, 2008 926 Exercise of Options 6.82 6,316
June 3, 2008 842 Exercise of Options 5.20 4,378
June 4, 2008 463 Exercise of Options 6.82 3,158
June 5, 2008 1,979 Exercise of Options 6.82 13,497
June 6, 2008 1,516 Exercise of Options 6.82 10,339
June 9, 2008 1,516 Exercise of Options 6.82 10,339
June 10, 2008 813 Exercise of Options 6.82 5,544
June 11, 2008 1,124 Exercise of Options 6.82 7,665
June 12, 2008 624 Exercise of Options 6.82 4,256
June 13, 2008 555 Exercise of Options 6.82 3,785
Date
July 30, 2008 65 Exercise of Options 6.82 443
July 31, 2008 188 Exercise of Options 6.82 1,282
December 10, 2009 2,250,000 Prospectus offering 7.75 17,437,500
January 1, 2010 2,105 Exercise of Options 5.20 10,946
January 8, 2010 842 Exercise of Options 5.20 4,378
January 14, 2010 253 Exercise of Options 5.20 1,315
January 15, 2010 989 Exercise of Options 5.20 5,143
January 19, 2010 337 Exercise of Options 5.20 1,753
January 20, 2010 1,453 Exercise of Options 5.20 7,556
January 21, 2010 1,979 Exercise of Options 5.20 10,290
January 22, 2010 337 Exercise of Options 5.20 1,753
January 25, 2010 1,348 Exercise of Options 5.20 7,009
January 26, 2010 6,862 Exercise of Options 5.20 35,682
January 27, 2010 1,958 Exercise of Options 5.20 10,181
January 28, 2010 505 Exercise of Options 5.20 2,626
January 29, 2010 632 Exercise of Options 5.20 3,287
August 20, 2010 1,250 Exercise of Options 8.00 10,000
June 15, 2011 1,250 Exercise of Options 8.00 10,000
September, 6, 2011 7,349 Exercise of Options 8.00 58,792
April 2, 2012 11,200 Exercise of Options 8.00 89,600
May 25, 2012 11,389 Exercise of Options 8.00 91,112
September 12, 2012 17,562 Exercise of Options 8.00 140,496
Dividends
The Company reinstated a quarterly dividend in August 8, 2012. A dividend of $0.07 per share was declared on both August 8, 2012 and November 13, 2012 and paid to shareholders of record (as of the close of business August 31, 2012 and November 30, 2012, respectively) on September 14, 2012 and December 14, 2012, respectively. A dividend of $0.09 per share was declared on February 19, 2013 and paid to shareholders of record (as of the close of business March 1, 2013) on March 15, 2013. The Company’s banking arrangements prohibit the payment of dividends, if certain financial covenants are not met. The Company has always satisfied such financial covenants.
Indebtedness of Directors and Executive Officers
The Company is not aware of any individuals who are, or who at any time during the most recently completed financial year were, a director or executive officer of the Company, or an associate of any of those directors, executive officers, who are, or have been at any time since the beginning of the most recently completed financial year of the Company, indebted to the Company or any of its subsidiaries or whose indebtedness to another entity is, or at any time since the beginning of the most
recently completed financial year of the Company has been, the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Company or any of its subsidiaries.
Auditors, Transfer Agent and Registrar
The auditors of the Company are KPMG LLP, Chartered Accountants, Licensed Public Accountants, Toronto, Ontario (“KPMG”). KPMG were appointed auditors on March 11, 2010 replacing PricewaterhouseCoopers LLP.
Computershare Investor Services Inc. at its offices in Toronto, Ontario is the transfer agent and registrar for the Common Shares.
Other Information
There is no information or matter not disclosed in this Circular but known to the Company that would be reasonably expected to affect the decision of the Shareholders to vote for or against the Arrangement Resolution.
Legal Matters
Certain legal matters in connection with the Arrangement as they pertain to the Company will be passed upon by Borden Ladner Gervais LLP. Certain legal matters in connection with the Arrangement as they pertain to the Purchaser and the Birch Hill Group will be passed upon by Stikeman Elliott LLP.
Additional Information
The information contained in this Circular is given as of May 9, 2013, except as otherwise indicated.
Additional information relating to the Company, including:
the Company’s 2012 annual report containing the consolidated financial statements of the Company for the financial years ended December 31, 2012 and 2011, together with the report of auditors thereon, and the 2012 MD&A;
the Company’s Annual Information Form dated April 1, 2013;
the Company’s audit committee charter; and
the Company’s code of business conduct,
can be found on SEDAR at www.sedar.com. Relevant financial information relating to the Company is provided in the Company’s comparative annual financial statements and management discussion and analysis of the Company’s financial condition and results of operation for its most recently completed financial year. Copies of those documents, as well as any additional copies of this Circular and copies of the Company’s interim financial report that will be filed for any period after the end of the Company’s most recently completed financial year, may be obtained from the Company’s website at www.softchoice.com or by mail, free of charge, upon request from the Company at 173 Dufferin Street, Suite 200, Toronto, Ontario, M6K 3H7 (Attn: Corporate Affairs).
Information contained in or otherwise accessible through the Company’s website does not form a part of this Circular and is not incorporated by reference into this Circular.
Interested Persons may also access disclosure documents and any reports, statements or other information that the Company files with the Canadian Securities Administrators through the Company’s SEDAR profile at www.sedar.com.
PART III—INFORMATION CONCERNING BIRCH HILL GROUP AND PURCHASER The following information about the Birch Hill Group and the Purchaser is a general summary only and is not intended to be comprehensive. All information contained in this Circular concerning the Birch Hill Group, the Purchaser and their affiliates has been supplied by Birch Hill. Neither the Board of Directors nor the Company assumes any responsibility for the accuracy or completeness of such information, nor for the failure by the Birch Hill Group to disclose events, which may have occurred or may affect the completeness or accuracy of such information but which are unknown to the Company.
Birch Hill Group
Birch Hill is the general partner of each of the partnerships comprising Birch Hill Fund IV and is charged, pursuant to the terms of the relevant partnership agreements governing Birch Hill Fund IV, with the responsibility for making all investment decisions on behalf of Birch Hill Fund IV.
Birch Hill is the leader in long-term value creation in the Canadian mid-market private equity business, with over $2.0 billion in capital under management, 22 current partner companies and 32 fully-realized investments since 1994. Birch Hill Fund IV closed in January 2011 and has over
$1 billion of committed capital from leading Canadian, US and international institutional investors. The 20-member team of investment professionals at Birch Hill has many years of experience working together as active partners with top management teams in building long-term value. Since 1994, Birch Hill has invested over $2 billion of capital in 53 transactions.
The Purchaser
The Purchaser was incorporated under the CBCA on April 19, 2013 and is wholly-owned by Birch Hill Fund IV. The Purchaser was incorporated for the sole purpose of the Arrangement and has not otherwise carried on any material business or activity. The registered office of the Purchaser is located at 100 Wellington Street West, Suite 2300, Toronto, Ontario.
PART IV — GENERAL PROXY MATTERS