Exhibit 4.58
GLOBAL COMMUNICATIONS LIMITED
- AND -
CANWEST GLOBAL COMMUNICATIONS CORP.
- AND -
OSPREY MEDIA HOLDINGS INC.
SHARE PURCHASE AGREEMENT
JANUARY 24, 2003
OSLER, XXXXXX & HARCOURT LLP
DAVIES XXXX XXXXXXXX & XXXXXXXX LLP
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION............................................ 1
1.1 Definitions.................................................................... 1
1.2 Certain Rules of Interpretation................................................ 11
1.3 Entire Agreement............................................................... 12
1.4 Schedules and Exhibits......................................................... 13
ARTICLE 2
PURCHASE AND SALE....................................................................... 14
2.1 Action by Vendor and Purchaser................................................. 14
2.2 Place of Closing............................................................... 14
2.3 Tender......................................................................... 15
ARTICLE 3
SHAREHOLDER LOAN AMOUNT AND SHARE PURCHASE PRICE........................................ 15
3.1 Advance of Shareholder Loan Amount............................................. 15
3.2 Share Purchase Price........................................................... 15
3.3 Payment of Aggregate Consideration............................................. 15
3.4 Net Working Capital Adjustment................................................. 15
3.5 Objection to Closing Statement................................................. 16
3.6 Allocation of Share Purchase Price and Repayment of Shareholder Loans.......... 17
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE VENDOR............................................ 17
4.1 Incorporation and Registration................................................. 17
4.2 Residence of the Vendor........................................................ 17
4.3 Right to Sell.................................................................. 17
4.4 Capitalization................................................................. 18
4.5 Title to the Assets............................................................ 18
4.6 Due Authorization.............................................................. 18
4.7 Enforceability of Obligations.................................................. 18
4.8 Absence of Conflicting Agreements.............................................. 18
4.9 Regulatory Approvals........................................................... 19
4.10 Financial Statements and Interim Financial Statements.......................... 19
4.11 Absence of Undisclosed Liabilities............................................. 19
4.12 Absence of Changes and Unusual Transactions.................................... 19
4.13 Absence of Guarantees.......................................................... 21
4.14 Condition of Assets............................................................ 21
4.15 Inventories.................................................................... 21
4.16 Collectibility of Accounts Receivable.......................................... 21
4.17 Business in Compliance with Law................................................ 21
4.18 Governmental Authorizations.................................................... 21
4.19 Intellectual Property.......................................................... 21
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TABLE OF CONTENTS
(CONTINUED)
PAGE
4.20 Owned Real Property............................................................ 23
4.21 Leased Real Property........................................................... 23
4.22 Real Property Generally........................................................ 24
4.23 Environmental Matters.......................................................... 25
4.24 Employment Matters............................................................. 27
4.25 Collective Agreements.......................................................... 28
4.26 Pension and Other Benefits..................................................... 28
4.27 Insurance...................................................................... 29
4.28 Material Contracts............................................................. 29
4.29 Litigation..................................................................... 30
4.30 Tax Matters.................................................................... 30
4.31 Trade Allowances............................................................... 31
4.32 No Subsidiaries................................................................ 31
4.33 Corporate Records.............................................................. 31
4.34 Books of Account............................................................... 32
4.35 Customers and Suppliers........................................................ 32
4.36 Non-Arm's Length Transactions.................................................. 32
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER......................................... 32
5.1 Incorporation.................................................................. 32
5.2 Due Authorization.............................................................. 32
5.3 Enforceability of Obligations.................................................. 33
5.4 Absence of Conflicting Agreements.............................................. 33
5.5 Investment Canada.............................................................. 33
5.6 Litigation..................................................................... 33
5.7 Financing...................................................................... 33
5.8 Competition Act Approval....................................................... 34
ARTICLE 6
NON-WAIVER; SURVIVAL.................................................................... 34
6.1 Non-Waiver..................................................................... 34
6.2 Nature and Survival............................................................ 34
ARTICLE 7
PURCHASER'S CONDITIONS PRECEDENT........................................................ 35
7.1 Truth and Accuracy of Representations of Vendor at the Closing Time............ 35
7.2 Performance of Obligations..................................................... 35
7.3 Receipt of Closing Documentation............................................... 35
7.4 Opinion of Counsel for Vendor.................................................. 36
7.5 Consents, Authorizations and Registrations..................................... 36
7.6 No Proceedings................................................................. 36
7.7 Encumbrances................................................................... 36
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TABLE OF CONTENTS
(CONTINUED)
PAGE
7.8 Directors and Officers......................................................... 36
7.9 Closing Agreements............................................................. 37
7.10 Xxxxxxxxx ROFR................................................................. 37
7.11 No Adverse Legislation......................................................... 37
7.12 Operational Services Agreements................................................ 37
ARTICLE 8
VENDOR'S CONDITIONS PRECEDENT........................................................... 37
8.1 Truth and Accuracy of Representations of the Purchaser at Closing Time......... 37
8.2 Performance of Obligations..................................................... 38
8.3 Receipt of Closing Documentation............................................... 38
8.4 Opinion of Counsel for Purchaser............................................... 38
8.5 Consents, Authorizations and Registrations..................................... 38
8.6 No Proceedings................................................................. 38
8.7 Closing Agreements............................................................. 39
8.8 Xxxxxxxxx ROFR................................................................. 39
8.9 Operational Services Agreements................................................ 39
8.10 Purchaser's Certificate........................................................ 39
ARTICLE 9
OTHER COVENANTS OF THE PARTIES.......................................................... 39
9.1 Conduct of Business Prior to Closing........................................... 39
9.2 Access for Investigation....................................................... 42
9.3 Actions to Satisfy Closing Conditions.......................................... 42
9.4 Preservation of Records and Access to Personnel................................ 42
9.5 Accounts Receivable/Allowance for Doubtful Accounts............................ 43
9.6 Stub Period Returns............................................................ 43
9.7 Purchaser's Option if Damage, Etc.............................................. 43
9.8 Consent to Jurisdiction........................................................ 44
9.9 Defamation Insurance........................................................... 44
9.10 Change of Website Address and Masthead......................................... 44
9.11 LTD Employees.................................................................. 44
9.12 Excluded Employee.............................................................. 45
9.13 Inactive St. Catharines Employees.............................................. 45
9.14 Mutual Understanding Regarding Amendments...................................... 45
9.15 Inter-Affiliate Accounts....................................................... 45
ARTICLE 10
INDEMNIFICATION......................................................................... 46
10.1 Indemnification for Breaches of Covenants and Warranty, etc.................... 46
10.2 Indemnification Procedures for Third Party Claims and Governmental Orders...... 47
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TABLE OF CONTENTS
(CONTINUED)
PAGE
10.3 Additional Indemnification Procedures for Remediation Orders and Remediation... 48
10.4 Good Faith..................................................................... 50
10.5 Disputes....................................................................... 50
ARTICLE 11
GENERAL................................................................................. 51
11.1 Public Notices................................................................. 51
11.2 Expenses....................................................................... 51
11.3 Notices........................................................................ 51
11.4 Assignment..................................................................... 52
11.5 Arbitration.................................................................... 52
11.6 Amendment...................................................................... 52
11.7 Further Assurances............................................................. 52
11.8 Execution and Counterparts..................................................... 53
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THIS SHARE PURCHASE AGREEMENT is made as of January 24, 2003.
BETWEEN:
GLOBAL COMMUNICATIONS LIMITED, a corporation governed by the
laws of Manitoba, (the "Vendor"),
- and -
CANWEST GLOBAL COMMUNICATIONS CORP., a corporation governed by
the laws of Canada, ("CanWest"),
- and -
OSPREY MEDIA HOLDINGS INC., a corporation governed by the laws
of Ontario, (the "Purchaser").
RECITALS:
A. The Vendor beneficially owns and controls all of the issued and
outstanding shares of the corporations listed in Exhibit A, each of
which is governed by the laws of Canada (each a "Company" and,
collectively, the "Companies").
B. The Purchaser has agreed (a) to cause its wholly-owned subsidiary,
Osprey Media Group Inc., to advance certain funds to the Companies so
as to permit them to repay certain indebtedness to the Vendor and (b)
to purchase from the Vendor all of the issued and outstanding shares of
the Companies, and the Vendor has agreed (i) to cause the Companies to
repay certain indebtedness to the Vendor and (ii) to sell to the
Purchaser all of the issued and outstanding shares of the Companies,
all on the terms and conditions of this Agreement.
C. CanWest has agreed to provide the Purchaser with the indemnities set
forth in this Agreement.
THEREFORE, the parties agree as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINITIONS
Whenever used in this Agreement, the following words and terms have the meanings
set out below:
"ACCOUNTS PAYABLE" means amounts due and owing by the Companies to
Employees, traders, suppliers and other Persons in the ordinary course
of business but, for certainty, not including the Shareholder Loans;
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"ACCOUNTS RECEIVABLE" means accounts receivable, bills receivable,
trade accounts, book debts and insurance claims recorded as receivable
in the books and records of the Companies and any other amount due to
the Companies including any refunds and rebates, and the benefit of all
security (including cash deposits), guarantees and other collateral
held by the Companies;
"ACCRUED LIABILITIES" means accrued liabilities of the Companies
incurred in the ordinary course of business, including the liabilities
associated with prepaid subscriptions, deferred revenue, accruals in
respect of Employees, customer rebates and allowances other than
deferred income taxes and other deferred credits but, for certainty,
not including the Shareholder Loans;
"AFFILIATE" means, at any time, and with respect to any Person, any
other Person that at such time, directly or indirectly through one or
more intermediaries, Controls, or is Controlled by, or is under common
Control with, such first Person. As used in this definition, "CONTROL"
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise;
"AGGREGATE CONSIDERATION" has the meaning given it in Section 3.3;
"AGREEMENT" means this Share Purchase Agreement, including all
schedules, and all amendments or restatements, as permitted, and
references to "ARTICLE" or "SECTION" mean the specified Article or
Section of this Agreement;
"ARBITRATION PROCEDURES" means the procedures described in Schedule
1.1(a);
"BALANCE SHEET" means the audited balance sheet of the Companies on a
combined basis as at August 31, 2002, forming part of the Financial
Statements, and including an audited opening balance sheet of the
Companies on a combined basis as at August 31, 2001;
"BENEFIT PLANS" means all plans, arrangements, agreements, programs,
policies, practices or undertakings, to or by which any of the
Companies or the Vendor is a party or bound or under which any of the
Companies or the Vendor has any liability, relating to: (a) Pension
Plans; (b) Insurance Plans; or (c) Compensation Plans, with respect to
any Employees or former employees of the Companies (or any dependants
or beneficiaries of any such Employees or former employees), other than
Union Plans and Statutory Plans;
"BUSINESS" means the business of owning, operating, publishing and
distributing the newspapers and related publications and businesses,
including the printing operations, identified in Exhibit A;
"BUSINESS DAY" means any day, other than a Saturday or Sunday, on which
the principal commercial banks in the Cities of Toronto and Winnipeg
are open for commercial banking business during normal banking hours;
"CANWEST" means CanWest Global Communications Corp.;
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"CANWEST/SOUTHAM INTELLECTUAL PROPERTY" means all intellectual property
rights of CanWest and any of its Affiliates (other than the Companies)
which are used by more than one of CanWest's Affiliates;
"CLAIMS" means any written claim, demand, action, cause of action,
grievance or complaint, but excluding any Remediation Order and
proceedings with respect to Remediation Orders;
"CLOSING" means the completion of the sale to and purchase by the
Purchaser of the Purchased Shares under this Agreement;
"CLOSING AGREEMENTS" means, collectively, the Pension and Employee
Benefits Plans Agreement, the Transitional Services Agreement and the
Non-Competition Agreement, substantially in the form attached as
Exhibits B, C and D, respectively;
"CLOSING DATE" means February 14, 2003;
"CLOSING NET WORKING CAPITAL" has the meaning given it in Section 3.2;
"CLOSING STATEMENT" has the meaning given it in Section 3.4;
"CLOSING TIME" means 10:00 o'clock a.m., Toronto time, on the Closing
Date or such other time on such date as the Parties may agree in
writing as the time at which the Closing shall take place;
"COLLECTIVE AGREEMENTS" means collective agreements and memoranda of
settlement for the renewal of collective agreements with trade unions
acting as bargaining agents for Employees by which any of the Companies
is bound;
"COMPANIES" has the meaning given it in Recital A;
"COMPENSATION PLANS" means any and all employment benefits relating to
bonus, commission, incentive pay or compensation, performance
compensation, deferred compensation, profit sharing or deferred profit
sharing, share purchase, share option, stock appreciation, phantom
stock, vacation or vacation pay, sick pay, severance or termination
pay, employee loans or separation from service benefits, or any other
type of arrangement providing for compensation or benefits additional
to base pay or salary;
"COMPETITION ACT APPROVAL" means:
(a) the issuance of an advance ruling certificate ("ARC") pursuant
to Section 102 of the Competition Act (Canada) (the
"Competition Act") by the Commissioner of Competition
appointed under the Competition Act (the "Commissioner") to
the effect that he is satisfied that he would not have
sufficient grounds upon which to apply to the Competition
Tribunal for an order under Section 92 of the Competition Act
with respect to the transactions contemplated by this
Agreement and the Commissioner shall not have subsequently
withdrawn or purported to withdraw the ARC and the
Commissioner shall not have indicated that he has obtained new
information as a result of which he is no longer satisfied
that he
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would not have sufficient grounds on which to apply to the
Competition Tribunal under Section 92 with respect to the
transactions contemplated by this Agreement; or
(b) the applicable waiting period under Section 123 of the
Competition Act has expired, and the Purchaser shall have been
advised in writing by the Commissioner that the Commissioner
does not currently intend to make an application for an order
under Section 92 of the Competition Act in respect of the
transactions contemplated by this Agreement and neither the
Commissioner nor any of his representatives shall have
rescinded or amended such advice and that any terms and
conditions attached to any such advice shall be acceptable to
the Purchaser and the Vendor;
"COMPLETION REPORT" means a written report from a properly qualified
consultant confirming that a Remediation has been completed in
compliance with the Remediation Plan and Environmental Laws and shall
include:
(c) a detailed description of the Remediation work performed;
(d) except where an SSRA has been performed, to the extent that
the consultant is able to do so within normal practices in the
consulting industry, a statement that the consultant is of the
opinion that any of the Environmental Conditions considered in
the Remediation Plan were addressed in accordance with the
Remediation Plan and that this conclusion was made in
accordance with all generally accepted engineering and
environmental practices;
(e) where an SSRA is performed, that the SSRA was conducted in
accordance with the requirements and procedures specified in
all applicable Environmental Laws and generally accepted
engineering and environmental practices; and
(f) copies of all test pit, borehole or monitoring well logs, test
reports, drawings, sketches and other information or materials
generally included in such reports in accordance with
generally accepted engineering and environmental practices;
"CONFIDENTIAL INFORMATION MEMORANDUM" means the Confidential
Information Memorandum dated March 2002 regarding selected small market
daily and community newspapers of the Vendor;
"CONTENT" means all text, data, information and graphics included in
any newspapers, magazines, publications or websites published or
operated by the Companies;
"CONTRACT" means any contract, licence, lease, agreement, commitment,
entitlement or engagement to which any of the Companies is a party or
by which it is bound or under which any of the Companies has, or will
have, any liability or contingent liability, and includes any
quotation, order or tender for any contract which remains open for
acceptance and any warranty, guarantee or commitment (express or
implied);
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"EBITDA" means earnings before interest expense, income taxes,
depreciation and amortization and before central charges and add-backs;
"EMPLOYEES" means those individuals employed or retained by the
Companies on a full-time, part-time or temporary basis, including those
employees on disability leave, parental leave or other absence (other
than the Excluded Employee);
"ENCUMBRANCE" means any pledge, lien, charge, security interest, lease,
title retention agreement, mortgage, restriction, development or
similar agreement, easement, right-of-way, title defect, option or
adverse claim, or encumbrance of any kind or character whatsoever,
including the Xxxxxxxxx ROFR;
"ENVIRONMENT" means the natural environment as defined in any
Environmental Laws and includes air, surface water, ground water, land
surface, soil, subsurface strata and any sewer system;
"ENVIRONMENTAL APPROVAL" means any approval, permit, certificate,
licence, authorization, consent, agreement, instruction, direction,
registration, or other similar approval issued, granted, conferred or
required by a Governmental Authority pursuant to an Environmental Law
with respect to the operations, business or assets of the Companies;
"ENVIRONMENTAL CONDITION" means any condition or circumstance arising
out of or in connection with the presence of any Hazardous Substance
in, on, under or migrating from any Real Property at or prior to the
Closing Date (other than any Hazardous Substance the existence of which
is specifically disclosed in any of the environmental reports or other
materials listed in Schedule 4.23) where: (i) any Governmental
Authority issues a Remediation Order to the Purchaser, the Companies or
the Vendor as a result or relating to such Hazardous Substance; or (ii)
any Claim is commenced against the Purchaser or the Companies by any
Person as a result of or relating to such Hazardous Substance;
"ENVIRONMENTAL DEDUCTIBLE" has the meaning given it in Section 10.1(e);
"ENVIRONMENTAL LAWS" means those Laws relating to the Environment in
effect as of the Closing Date, and includes any Laws relating to the
storage, generation, use, handling, manufacture, processing, labelling,
advertising, sale, display, transportation, treatment, reuse,
recycling, Release and disposal of Hazardous Substances, and excludes
Occupational Health and Safety Laws;
"EQUIPMENT" means fixed assets, machinery, equipment, fixtures,
furniture, furnishings, vehicles, material handling equipment,
implements, parts, tools, jigs, dies, molds, patterns and tooling,
owned or used or held by the Companies, including any which are in
storage or in transit, and other tangible property and facilities used
by the Companies whether located in or on the premises of the Companies
or elsewhere;
"EQUIPMENT CONTRACTS" means motor vehicle leases, equipment leases,
conditional sales contracts, title retention agreements and other
similar agreements relating to equipment used by the Companies;
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"EXCLUDED EMPLOYEE" means Xxxxxx XxxXxxxxx;
"FINANCIAL STATEMENTS" means the audited financial statements for the
Companies on a combined basis for the period September 1, 2001 to
August 31, 2002, including the notes to such financial statements,
together with the report of the Vendor's auditors thereon, a copy of
which is annexed as Schedule 4.10(a);
"GAAP" means the accounting principles recommended, from time to time,
in the Handbook of the Canadian Institute of Chartered Accountants;
"GOVERNMENTAL AUTHORITY" means any government, regulatory authority,
governmental department, agency, commission, board, tribunal, dispute
settlement panel or body, bureau, official, minister, Crown
corporation, court or other law, rule or regulation-making entity
having or purporting to have jurisdiction on behalf of any nation, or
province or state or other geographic or political subdivision thereof;
"GOVERNMENTAL AUTHORIZATION" means any authorization, approval,
including any Environmental Approval, certificate, order, consent,
directive, notice, licence, permit, variance, registration or similar
right issued to or required by any of the Companies by or from any
Governmental Authority;
"GUARANTEES" means (i) the guarantee agreements by each of the
Companies and each of its respective predecessors, each dated as of
November 16, 2000 or November 22, 2000, made in favour of The Bank of
Nova Scotia, as administrative agent, and concerning senior secured
credit facilities of CanWest Media Inc., an Affiliate of CanWest and
(ii) the guarantees provided by each of the Companies in connection
with senior subordinated notes due in 2011 issued by CanWest Media Inc.
pursuant to an Indenture dated as of May 17, 2001;
"HAZARDOUS SUBSTANCE" means any pollutant, contaminant, waste of any
nature, hazardous substance, hazardous material, toxic substance,
prohibited substance, dangerous substance or dangerous good as defined,
judicially interpreted or identified in any Environmental Laws
including any asbestos or asbestos-containing materials;
"XXXXXXXXX ROFR" means the right of first refusal of Xxxxxxxxx Inc. and
certain of its Affiliates to acquire the assets of the Companies;
"INACTIVE ST. CATHARINES EMPLOYEES" means those former employees listed
in Schedule 9.13 who are not actively engaged in the business of the
St. Catharines Standard Group Inc.;
"INTELLECTUAL PROPERTY" means all patents, copyrights, Trade-marks
(including registrations of and applications for all of the foregoing
in any jurisdiction and renewals, divisions, extensions and reissues,
where applicable, relating thereto), trade secrets, confidential
information, Technology and all other intellectual property rights of
any kind or nature, other than CanWest/Southam Intellectual Property;
"INTER-AFFILIATE ACCOUNTS" has the meaning given it in Section 9.14;
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"INSURANCE PLANS" means any and all employment benefits relating to
disability or wage continuation during periods of absence from work
(including short-term disability, long-term disability and workers'
compensation), hospitalization, health, eye care, medical or dental
treatments or expenses, life insurance, death or survivor's benefits
and supplementary employment insurance, in each case regardless of
whether or not such benefits are insured or self-insured;
"INTERIM FINANCIAL STATEMENTS" means the in-house unaudited statements
of profit and loss of each of the Publishing Groups for each of the
four months ended September 30, October 31, November 30 and December
31, 2002, together with comparisons to the corresponding four months of
2001, copies of which are annexed as Schedule 4.10;
"INVENTORIES" means inventories of the Companies of every kind and
nature and wheresoever situate, including inventories of raw materials,
works-in-progress, finished goods and by-products, spare parts,
operating supplies and packaging materials;
"LAWS" means applicable laws, statutes, by-laws, rules, regulations,
orders, ordinances, protocols, codes, treaties, notices, directions and
judicial, arbitral, administrative, ministerial or departmental
judgements, awards or other requirements having the force of law of any
Governmental Authority;
"LEASED REAL PROPERTY" means premises used by the Companies which are
leased, subleased, licensed or otherwise occupied by the Companies and
the interest of the Companies in all fixtures and improvements situate
on or forming part of such premises;
"LENDERS" means the lenders to CanWest and/or its Affiliates under its
senior secured lending facility, its senior subordinated notes and its
subordinated notes;
"LOSS" means any damage, loss, costs, liability or expense (including
Remediation Costs) suffered or incurred in connection with a Claim or
Remediation Order, including reasonable professional fees, reasonable
legal fees on a solicitor and client basis and all costs incurred in
investigating or pursuing a Claim or Remediation Order or any
proceeding relating to a Claim or Remediation Order;
"LTD EMPLOYEES" means all Employees who are not members of a union, are
not actively engaged in the business of the Companies as of the Closing
Date and are receiving benefits under any long-term disability plan, as
set forth on Schedule 4.24;
"MATERIAL ADVERSE EFFECT" means, in respect of any Company or the
Companies as a whole, as the context requires, any condition, event or
development which is or reasonably could be expected to result in or
represent a material adverse effect or change, individually or in the
aggregate, on or in the financial condition, assets, business,
operations or prospects, results of operations, liabilities or rights
of, or which has a significant adverse effect on the value of the
business of, such Company, or of the Companies as a whole, as the case
may be;
"MATERIAL CONTRACT" means any (a) Collective Agreement; (b) Real
Property Lease in respect of which the annual rent exceeds $25,000; (c)
Trade-Xxxx license; (d) Pension
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Plan; and (e) Contract (i) involving a one-time cost or annual payments
to or by any of the Companies in excess of $25,000, (ii) involving
rights or obligations of any of the Companies that may reasonably
extend beyond one year which cannot be terminated without penalty on
less than three months notice and which has annual payments in excess
of $25,000, (iii) which is outside the ordinary course of business, or
(iv) containing any material restriction on the ability of any of the
Companies to carry on its business;
"NET WORKING CAPITAL" means, for the Companies on a combined basis, the
aggregate of: cash and cash equivalents of the Companies; plus the
value of all Accounts Receivable, less a reasonable allowance for
doubtful accounts; plus the value of all Inventories; plus the value of
prepaid expenses of the Companies; less the aggregate value of all
Accounts Payable and Accrued Liabilities, the whole as determined in
accordance with Schedule 3.4 and otherwise in accordance with GAAP;
"NOTES" means the notes dated November 3, 2000 issued by each of the
Companies (other than CanWest St. Catharines R.P. Holdings Inc.) to
either Xxxxxxxxx Canadian Newspaper, Limited Partnership or Southam
Inc., which notes were subsequently assigned to the Vendor;
"NOTICE" has the meaning given in Section 11.3;
"OCCUPATIONAL HEALTH AND SAFETY LAWS" means all Laws relating in full
or in part to the protection of employee or worker health and safety;
"OPERATIONAL SERVICES AGREEMENTS" means the following agreements, each
dated as of April 30, 2002: (a) the Advertising Representation
Agreement between CanWest Media Sales Limited and each of the
Companies; (b) the CanWest News Services Agreement between CanWest
Publications Inc. and each of the Companies; (c) the CanWest Editorial
Services Agreement between CanWest Publications Inc. and each of the
Companies; and (d) the Electronic Distribution Agreement between
Infomart Limited and each of the Companies;
"OWNED REAL PROPERTY" means real property owned by the Companies
including all fixtures and improvements situate on or forming part of
such real property;
"PARTIES" means the Vendor and the Purchaser collectively, and "Party"
means any one of them;
"PENSION PLANS" means all benefit plans relating to retirement or
retirement savings including pension plans, pensions or supplemental
pensions, "registered retirement savings plans" (as defined in the
Income Tax Act (Canada)), "registered pension plans" (as defined in the
Income Tax Act (Canada)) and "retirement compensation arrangements" (as
defined in the Income Tax Act (Canada)) including SERAs;
"PERMITTED ENCUMBRANCES" means the Encumbrances listed in Schedule
1.1(b);
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"PERSON" means any individual, sole proprietorship, partnership, firm,
entity, unincorporated association, unincorporated syndicate,
unincorporated organization, trust, body corporate, Governmental
Authority, and where the context requires, any of the foregoing when
acting as trustee, executor, administrator or other legal
representative;
"PUBLISHING GROUPS" means: Brantford Expositer Group Inc., Flamborough
Review Newspaper Inc., Hamilton Printing Group Inc., Niagara Newspaper
Group Inc., Peninsula Newspaper Group Inc., St. Catharines Standard
Group Inc., SOCN - Brabant Group (consisting of Ancaster News, Dundas
Star News, Hamilton News -Mountain Edition, and Stoney Creek newspapers
and related shoppers and administration), SOCN - Fairway Group
(consisting of New Hamburg Independent, Cambridge Times, Guelph Tribune
and Waterloo Chronicle newspapers and related shoppers and
administration) and SOCN - Administration (consisting of administration
for SOCN - Brabant Group and SOCN - Fairway Group);
"PURCHASED SHARES" means all of the issued and outstanding shares in
the capital of the Companies;
"REAL PROPERTY" means the Owned Real Property and the Leased Real
Property;
"REAL PROPERTY LEASES" means all agreements to lease, leases, subleases
or licences or other agreements or rights pursuant to which the
Companies use or occupy the Leased Real Property;
"RELEASE" has the meaning prescribed in any Environmental Laws and
includes, any sudden, intermittent or gradual release, spill, leak,
pumping, addition, pouring, emission, emptying, discharge, injection,
escape, leaching, disposal, dumping, deposit, spraying, burial,
abandonment, incineration, seepage, placement or introduction, whether
accidental or intentional;
"REMEDIATION" means any work reasonably required to:
(a) investigate, control, treat, extract, remediate, remove or
dispose of any Environmental Condition; and
(b) develop an SSRA to address any Environmental Condition and
implement any actions required in any such SSRA,
and "REMEDIATE" has a similar meaning;
"REMEDIATION COSTS" means the commercially reasonable out-of-pocket
costs and expenses actually incurred with respect to a Remediation Plan
and a Remediation;
"REMEDIATION ORDER" means any legally binding administrative complaint,
direction, order or sanction issued, filed, imposed or threatened by
any Governmental Authority pursuant to any Environmental Laws and
includes, any order requiring investigation or remediation of any site
or any remediation or clean-up of any Hazardous Substance, or requiring
that any Release or any other activity be reduced, modified or
eliminated or
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requiring any form of payment or co-operation be provided to any
Governmental Authority;
"REMEDIATION PLAN" means a written plan developed by a properly
qualified consultant to Remediate an Environmental Condition;
"SERA" means a supplemental executive retirement arrangement;
"SHAREHOLDER LOANS" means, collectively, the indebtedness of each of
the Companies to the Vendor pursuant to the Notes;
"SHAREHOLDER LOAN AMOUNT" means the amount of the principal and accrued
interest outstanding under the Shareholder Loans on the Closing Date;
"SHARE PURCHASE PRICE" has the meaning given it in Section 3.3;
"SSRA" means a site specific risk assessment conducted in accordance
with any Environmental Laws or the Guideline for Use at Contaminated
Sites in Ontario and the Guidance on Site Specific Risk Assessment for
Use at Contaminated Sites in Ontario (including, without limitation,
any requirement regarding submission to, review by and approval by any
Governmental Authority and any requirement for peer review);
"STATUTORY PLANS" means statutory benefit plans with which the
Companies are required to comply, including the Canada Pension Plan and
plans administered pursuant to applicable health tax, workers'
compensation and unemployment insurance legislation;
"TAX RETURNS" includes, all returns, reports, declarations, elections,
notices, filings, information returns and statements filed or required
to be filed in respect of Taxes;
"TAXES" means 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 in respect
thereof, 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, employer health,
payroll, employment, health, social services, education and social
security taxes, all surtaxes, all customs duties and import and export
taxes, all licence, franchise and registration fees and all employment
insurance, health insurance and Canada, Quebec and other government
pension plan premiums or contributions;
"TECHNOLOGY" means any computer software and hardware, equipment,
device, tool, method, process, procedure, technique, formula, design,
plan, technical information, research data, discovery, know-how,
concept or invention, whether or not patentable, and any other subject
matter of a technical or functional nature, but not including any
CanWest/Southam Intellectual Property owned or used by the Companies;
"TRADE-MARKS" means trade-marks, brand names, internet domain names,
trade names, slogans, URLs, designs, graphics and logos, and other
indicia of origin, whether or not
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registered or used by the Companies, but not including any
CanWest/Southam Intellectual Property used by the Companies;
"UNION PLANS" means benefit plans which are or are required to be
established and maintained pursuant to a Collective Agreement and which
are not maintained or administered by the Companies or any of their
Affiliates; and
"WORKING CAPITAL ADJUSTMENT" has the meaning given it in Section 3.4.
1.2 CERTAIN RULES OF INTERPRETATION
In this Agreement:
(a) CONSENT - Whenever a provision of this Agreement requires an
approval or consent and such approval or consent is not
delivered within the applicable time limit, then, unless
otherwise specified, the Party whose consent or approval is
required shall be conclusively deemed to have withheld its
approval or consent.
(b) CURRENCY - Unless otherwise specified, all references to money
amounts are to lawful currency of Canada.
(c) GOVERNING LAW - This Agreement is a contract made under and
shall be governed by and construed in accordance with the laws
of the Province of Ontario and the federal laws of Canada
applicable in the Province of Ontario.
(d) HEADINGS - Headings of Articles and Sections are inserted for
convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
(e) INCLUDING - Where the word "including" or "includes" is used
in this Agreement, it means "including (or includes) without
limitation".
(f) NO STRICT CONSTRUCTION - The language used in this Agreement
is the language chosen by the Parties to express their mutual
intent, and no rule of strict construction shall be applied
against any Party.
(g) NUMBER AND GENDER - Unless the context otherwise requires,
words importing the singular include the plural and vice versa
and words importing gender include all genders.
(h) SEVERABILITY - If, in any jurisdiction, any provision of this
Agreement or its application to any Party or circumstance is
restricted, prohibited or unenforceable, such provision shall,
as to such jurisdiction, be ineffective only to the extent of
such restriction, prohibition or unenforceability without
invalidating the remaining provisions of this Agreement and
without affecting the validity or enforceability of such
provision in any other jurisdiction or without affecting its
application to other Parties or circumstances.
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(i) STATUTORY REFERENCES - A reference to a statute includes all
regulations made pursuant to such statute and, unless
otherwise specified, the provisions of any statute or
regulation which amends, supplements or supersedes any such
statute or any such regulation.
(j) TIME - Time is of the essence in the performance of the
Parties' respective obligations.
(k) TIME PERIODS - Unless otherwise specified, time periods within
or following which any payment is to be made or act is to be
done shall be calculated by excluding the day on which the
period commences and including the day on which the period
ends and by extending the period to the next Business Day
following if the last day of the period is not a Business Day.
(l) GAAP - All accounting terms not otherwise defined in this
Agreement have the meanings assigned to them in accordance
with GAAP.
(m) KNOWLEDGE - Reference to the knowledge of the Vendor or the
Vendor's knowledge means to the best of the knowledge,
information and belief of Xxxxxx Xxxxxxx and the senior
executives of CanWest, after due enquiry (including due
enquiry of the publishers of the Companies).
(n) MADE AVAILABLE - Any reference to information or materials
being made available by the Vendor to the Purchaser shall mean
that such information or materials were, on or before the date
of this Agreement: (i) placed in the due diligence data room
located at the offices of Osler, Xxxxxx & Harcourt LLP,
counsel to the Vendor and reflected on the data room index
provided to the Purchaser or its representatives; or (ii)
provided directly to the Purchaser or its representatives by
CanWest or its Affiliates or any of their respective
representatives.
(o) DISCLOSURE SCHEDULES - Except as otherwise expressly provided
in this Agreement, disclosure in a Schedule shall not be
considered to be disclosure for the purposes of any other
Schedule.
1.3 ENTIRE AGREEMENT
This Agreement, together with the agreements and other documents required to be
delivered pursuant to this Agreement, constitutes the entire agreement between
the Parties and set out all the covenants, promises, warranties,
representations, conditions, understandings and agreements between the Parties
pertaining to the subject matter of this Agreement and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, except for the Confidentiality Agreement dated March 28, 2002. There
are no covenants, promises, warranties, representations, conditions,
understandings or other agreements, oral or written, express, implied or
collateral between the Parties in connection with the subject matter of this
Agreement except as specifically set forth in this Agreement and any document
required to be delivered pursuant to this Agreement.
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1.4 SCHEDULES AND EXHIBITS
The schedules and exhibits to this Agreement, as listed below, are an integral
part of this Agreement:
SCHEDULE/EXHIBIT DESCRIPTION
---------------- -----------
Exhibit A List of Companies and Publications/Operations
Exhibit B Form of Pension and Employee Benefits Plans Agreement
Exhibit C Form of Transitional Services Agreement
Exhibit D Form of Non-Competition Agreement
Exhibit E Form of Opinion of Xxxx Xxxxxxx LLP
Exhibit F Form of Advertising Representation Agreement
Exhibit G Form of CanWest News Services Agreement
Exhibit H Form of CanWest Editorial Services Agreement
Exhibit I Form of Electronic Distribution Agreement
Schedule 1.1(a) Arbitration Procedures
Schedule 1.1(b) Permitted Encumbrances
Schedule 3.4 Net Working Capital Calculation
Schedule 3.6 Allocation of Share Purchase Price
Schedule 4.4 Capitalization
Schedule 4.10(a) Financial Statements
Schedule 4.10(b) Interim Financial Statements
Schedule 4.12 Changes and Unusual Transactions
Schedule 4.18 Governmental Authorizations
Schedule 4.19 Intellectual Property
Schedule 4.20 Owned Real Property
Schedule 4.21 Leased Real Property
Schedule 4.23 Environmental Matters
Schedule 4.24 Employment Matters
Schedule 4.25 Collective Agreements
Schedule 4.26 Pension and Benefit Plans
Schedule 4.28 Material Contracts
Schedule 4.29 Litigation
Schedule 4.30 Tax Matters
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Schedule 4.35 Commercial Print Customers
Schedule 4.36 Services Provided to the Companies
Schedule 9.12 Inactive St. Catharines Employees
ARTICLE 2
PURCHASE AND SALE
2.1 ACTION BY VENDOR AND PURCHASER
Subject to the provisions of this Agreement, at the Closing Time:
(a) REPAYMENT OF SHAREHOLDER LOANS - the Purchaser shall cause its
wholly-owned subsidiary, Osprey Media Group Inc., to advance
the Companies the Shareholder Loan Amount and the Vendor shall
cause the Companies to use such funds to repay the Shareholder
Loans in full, all as provided in Section 3.3;
(b) RELEASE OF OBLIGATIONS UNDER THE SHAREHOLDER LOANS - the
Vendor shall deliver to the Companies a full release of all of
the obligations of the Companies under the Shareholder Loans;
(c) PURCHASE AND SALE OF PURCHASED SHARES - the Vendor shall sell
and the Purchaser shall purchase the Purchased Shares;
(d) PAYMENT OF SHARE PURCHASE PRICE - the Purchaser shall pay the
Share Purchase Price to the Vendor, as provided in Sections
3.2 and 3.3;
(e) TRANSFER AND DELIVERY OF THE PURCHASED SHARES - the Vendor
shall transfer and deliver to the Purchaser share certificates
representing the Purchased Shares duly endorsed in blank for
transfer, or accompanied by irrevocable security transfer
powers of attorney duly executed in blank, in either case by
the holders of record, and shall take such steps as shall be
necessary to cause each of the Companies to enter the
Purchaser or its nominee(s) upon the books of such Company as
the holder of the relevant Purchased Shares and to issue one
or more share certificates to the Purchaser or its nominee(s)
representing the relevant Purchased Shares; and
(f) OTHER DOCUMENTS - the Vendor and Purchaser shall deliver such
other documents as may be necessary to complete the
transactions provided for in this Agreement.
2.2 PLACE OF CLOSING
The Closing shall take place at the Closing Time at the offices of Osler, Xxxxxx
& Harcourt LLP, counsel to the Vendor, located at 0 Xxxxx Xxxxxxxx Xxxxx,
Xxxxxxx, Xxxxxxx, or at such other place as may be agreed upon by the Vendor and
the Purchaser.
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2.3 TENDER
Any tender of documents or money under this Agreement may be made upon the
Parties or their respective counsel. Money shall be tendered under this
Agreement by wire transfer of immediately available funds to the account
specified by the receiving Party.
ARTICLE 3
SHAREHOLDER LOAN AMOUNT AND SHARE PURCHASE PRICE
3.1 ADVANCE OF SHAREHOLDER LOAN AMOUNT
No later than three (3) days prior to the Closing Date, the Vendor shall provide
written notice to the Purchaser of the Shareholder Loan Amount, together with
each Company's proportionate share thereof. On Closing, the Purchaser shall
cause its wholly-owned subsidiary, Osprey Media Group Inc., to advance to each
of the Companies an amount equal to such Company's proportionate share of the
Shareholder Loan Amount and the Vendor shall cause the Companies to repay the
Shareholder Loans.
3.2 SHARE PURCHASE PRICE
Subject to Section 3.4, the aggregate amount to be paid by the Purchaser to the
Vendor for the Purchased Shares (the "Share Purchase Price"), exclusive of all
applicable sales and transfer taxes, shall be the amount of $193.5 million, (a)
less the Shareholder Loan Amount, (b) plus the amount, if any, by which the Net
Working Capital as at the close of business on the Closing Date (the "Closing
Net Working Capital") exceeds $4 million, and (c) less the amount, if any, by
which the Closing Net Working Capital is less than $4 million.
3.3 PAYMENT OF AGGREGATE CONSIDERATION
The Purchaser shall cause its wholly-owned subsidiary, Osprey Media Group Inc.,
to advance the Shareholder Loan Amount and shall pay and satisfy the Share
Purchase Price (such amounts, collectively, the "Aggregate Consideration") by:
(a) causing its wholly-owned subsidiary, Osprey Media Group Inc., to advance the
Shareholder Loan Amount in cash to, or as directed by, the Companies; (b) paying
the amount by which $193.5 million exceeds the Shareholder Loan Amount in cash
to the Vendor; and (c) paying the Working Capital Adjustment, if applicable, to
the Vendor in accordance with Section 3.4.
3.4 NET WORKING CAPITAL ADJUSTMENT
As soon as reasonably practical after the Closing Date and in any event not
later than 60 days thereafter, the Purchaser shall prepare and deliver to the
Vendor a statement of the Closing Net Working Capital ("Closing Statement")
which takes into account the transactions to reduce or settle Inter-Affiliate
Accounts as described in Section 9.15 and which has been audited by the
Purchaser's auditors in accordance with generally accepted auditing standards.
The Purchaser and the Vendor and their respective auditors shall co-operate in
the preparation of the Closing Statement and the Purchaser shall provide the
Vendor and its auditors with access to the relevant Employees and auditors'
working papers and any other documents considered necessary by the Vendor's
auditors to review the Closing Statement. Subject to Section 3.5, within 10 days
after
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delivery by the Purchaser to the Vendor of the Closing Statement, if the Closing
Net Working Capital exceeds $4 million, the Purchaser shall pay to the Vendor
the amount of the excess as an adjustment to the Share Purchase Price and, if
the Closing Net Working Capital is less than the $4 million, the Vendor shall
pay to the Purchaser the amount of the difference as an adjustment to the Share
Purchase Price (each of such amounts being the "Working Capital Adjustment").
The Working Capital Adjustment shall be paid in cash together with an additional
amount payable in cash compounded monthly from the Closing Date to the date of
payment at the rate of 10% per annum.
3.5 OBJECTION TO CLOSING STATEMENT
(a) DELIVERY OF OBJECTION NOTICE - In the event that the Vendor
objects in good faith to any aspect of the Closing Statement,
the Vendor shall so advise the Purchaser by delivery to the
Purchaser of a written notice (the "Objection Notice") within
10 days after the delivery to the Vendor of the Closing
Statement. The Objection Notice shall set out the reasons for
the Vendor's objection, as well as the amount under dispute
and reasonable details of the calculation of such amount.
(b) AGREEMENT OF PARTIES - In the event that the Parties agree on
a resolution of the dispute set out in the Objection Notice,
the Parties shall confirm this resolution in writing and shall
thereafter be bound by such resolution.
(c) ARBITRATION - In the event that the Parties are unable to
settle any dispute with respect to the Closing Statement
within 15 days after the delivery by the Vendor to the
Purchaser of the Objection Notice, the dispute shall
forthwith, and in any event within 30 days after the delivery
by the Vendor to the Purchaser of the Objection Notice, be
referred to Deloitte & Touche LLP as arbitrator. The
arbitration shall, except to the extent provided for in this
Section 3.5(c), be conducted in Toronto in accordance with the
Arbitration Procedures. Arbitration under this Section 3.5(c)
shall be in substitution for and precludes the bringing of any
action in any court in connection with any objection made by
the Vendor pursuant to this Section 3.5(c).
(d) DETERMINATION OF ARBITRATOR - The determination of the
arbitrator shall be delivered to each of the Vendor and the
Purchaser within 30 days after the date on which the dispute
was referred to it and the determination of the arbitrator
shall be final and binding on all Parties. The Closing
Statement and the Share Purchase Price shall be adjusted in
accordance with the determination of the arbitrator.
(e) PAYMENT IN ACCORDANCE WITH DETERMINATION - Within 5 days after
resolution, by agreement of the Parties, of the dispute which
was the subject of the Objection Notice or, failing such
resolution, within 5 days after the final determination of the
arbitrator, the Vendor or the Purchaser, as the case may be,
shall pay to the other the amount by which the Share Purchase
Price is to be adjusted as a result of such resolution or
final determination in the manner contemplated by Section 3.4.
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3.6 ALLOCATION OF SHARE PURCHASE PRICE AND REPAYMENT OF SHAREHOLDER LOANS
The Share Purchase Price shall be allocated in accordance with the provisions of
Schedule 3.6. The Vendor and the Purchaser agree to report the purchase and sale
of the Purchased Shares in any returns required to be filed under the Income Tax
Act (Canada) and other taxation statute, in accordance with the provisions of
Schedule 3.6. The Vendor and the Purchaser agree to report the repayment of the
Shareholder Loans in any returns required to be filed under the Income Tax Act
(Canada) and other taxation statutes in accordance with the provisions of
Section 3.1.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE VENDOR
The Vendor represents and warrants to the Purchaser and acknowledges and agrees
that the Purchaser is relying on such representations and warranties in entering
into the Agreement, as follows:
4.1 INCORPORATION AND REGISTRATION
Each of the Companies is a corporation validly existing under the laws of Canada
and has all necessary corporate power, authority and capacity to own its
property and assets and to carry on its business as currently conducted. Neither
the nature of its business nor the location or character of the property owned
or leased by each of the Companies requires it to be registered, licensed or
otherwise qualified as an extra-provincial or foreign corporation in any
jurisdiction and other than jurisdictions where the failure to be so registered,
licensed or otherwise qualified would not have a Material Adverse Effect on such
Company.
4.2 RESIDENCE OF THE VENDOR
The Vendor is not a non-resident of Canada for the purposes of the Income Tax
Act (Canada).
4.3 RIGHT TO SELL
The Vendor is a corporation duly incorporated and validly existing under the
laws of Manitoba. The Vendor is the registered and beneficial owner of the
Purchased Shares free and clear of all Encumbrances other than the Permitted
Encumbrances. The Vendor has the exclusive right to dispose of the Purchased
Shares as provided in this Agreement and such disposition will not violate,
contravene, breach or offend against or result in any default under any
indenture, mortgage, lease, agreement, obligation, instrument, charter or by-law
provision, order, judgment, decree, licence, permit or Laws, to which the Vendor
is a party or subject or by which the Vendor is bound or affected other than (a)
any violations or defaults which would not have a Material Adverse Effect on any
of the Companies or affect the ability of the Purchaser to acquire the Purchased
Shares, and (b) under the Permitted Encumbrances which will be discharged prior
to Closing. The Purchased Shares are not subject to the terms of any
shareholders agreement, pooling agreement, voting trust or other agreement or
understanding with respect to the voting of the Purchased Shares.
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4.4 CAPITALIZATION
The authorized and issued share capital of each of the Companies is as set forth
in Schedule 4.4. All of the Purchased Shares have been duly and validly issued
and are outstanding as fully paid and non-assessable shares. Except for the
Permitted Encumbrances, there are no outstanding agreements, warrants, options,
rights or privileges, pre-emptive or contractual, capable of becoming an
agreement, including convertible or exchangeable securities, to subscribe for,
purchase or otherwise acquire or otherwise obligating any of the Companies to
issue, any shares of the Companies or securities convertible into or
exchangeable for shares or other forms of ownership interests of the Companies.
4.5 TITLE TO THE ASSETS
Each of the Companies is the sole beneficial owner of all of its assets, real
and personal (other than the Intellectual Property and assets which are leased
or licensed), with good and valid title, subject only to Permitted Encumbrances.
In particular, without limiting the generality of the foregoing, there has been
no assignment, subletting or granting of any licence (of occupation or
otherwise) of or in respect of any Company's assets or any granting of any
agreement or right capable of becoming an agreement or option for the purchase
of any of such assets other than (a) pursuant to the provisions of, or as
disclosed in this Agreement, or (b) by reason of certain Permitted Encumbrances
which will be discharged prior to Closing. With the exception of inventory in
transit, all the tangible assets used in the businesses of the Companies are
situate at the Owned Real Properties or the Leased Real Properties. As of the
Closing Time, the Companies will own or lease sufficient assets, property and
rights or have contractual entitlements through the Closing Agreements and the
Operational Services Agreements to enable them collectively to carry on the
Business in the ordinary course and consistent with past practice, except for
those services noted on Schedule 4.36 as services which the Vendor is not
providing in such agreements and which the Purchaser is replacing.
4.6 DUE AUTHORIZATION
The Vendor has all necessary corporate power, authority and capacity to enter
into this Agreement and to carry out its obligations under this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of the Vendor.
4.7 ENFORCEABILITY OF OBLIGATIONS
This Agreement constitutes a valid and binding obligation of the Vendor
enforceable against it in accordance with its terms.
4.8 ABSENCE OF CONFLICTING AGREEMENTS
Except for the consents listed in Schedule 4.21, the Permitted Encumbrances and
the requirement for Competition Act Approval, none of the Companies is a party
to, bound or affected by or subject to any indenture, mortgage, lease,
agreement, obligation, instrument, charter or by-law provision, order, judgment,
decree, licence, Laws or Governmental Authorizations which would be violated,
contravened, breached by, or under which default would occur or an Encumbrance
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would be created as a result of the execution and delivery of this Agreement or
any other agreement to be entered into under the terms of this Agreement, or the
performance by the Vendor or any of the Companies of any of its obligations
under this Agreement or any other agreement to be entered into under the terms
of this Agreement, except for any violation, contravention or breach which would
not result in a Material Adverse Effect on any of the Companies.
4.9 REGULATORY APPROVALS
Other than Competition Act Approval and the filing of pension plan documentation
with applicable regulatory authorities, no approval, order, consent of or filing
with any Governmental Authority is required on the part of the Vendor or any of
the Companies in connection with the execution, delivery and performance of this
Agreement or any other documents and agreements to be delivered under this
Agreement or the performance of the Vendor's obligations under this Agreement or
any other documents and agreements to be delivered under this Agreement.
4.10 FINANCIAL STATEMENTS AND INTERIM FINANCIAL STATEMENTS
(a) The Financial Statements have been prepared in accordance with
GAAP and present fairly:
(i) the assets, liabilities and financial position of the
Companies on a combined basis as at August 31, 2002;
and
(ii) the sales, earnings, results of operations and
changes in financial position of the Companies on a
combined basis for the twelve-month period ended
August 31, 2002;
and there has been no material adverse change in the financial
position of the Companies from those reflected in the
Financial Statements.
(b) The Interim Financial Statements have been prepared on a basis
consistent with past practice and consistent with the interim
financial statements included in the Confidential Information
Memorandum (except for any adjustments to normalize EBITDA).
4.11 ABSENCE OF UNDISCLOSED LIABILITIES
At the Closing Date, the Companies will not have incurred any financial
liabilities or financial obligations (whether accrued, absolute, contingent or
otherwise) in an amount, individually or in the aggregate, in excess of $500,000
which continue to be outstanding, except: (a) as disclosed in the Financial
Statements; (b) as reflected on the Closing Statement; or (c) those liabilities
or obligations to Employees or former Employees of the Companies in respect of
their pension and post-retirement non-pension benefits.
4.12 ABSENCE OF CHANGES AND UNUSUAL TRANSACTIONS
Except as described in Schedule 4.12, since August 31, 2002 or as contemplated
by Section 9.15 of this Agreement:
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(a) there has not been any material change in the financial
condition, or operations of any of the Companies;
(b) there has not been any damage, destruction, loss, labour
dispute, organizing drive, application for certification or
other event, development or condition of any character
(whether or not covered by insurance) materially and adversely
affecting the business, assets or properties of any of the
Companies;
(c) none of the Companies has transferred, assigned, sold or
otherwise disposed of any of the assets shown or reflected in
the Balance Sheet or cancelled any debts or entitlements
except, in each case, in the ordinary course of business and
consistent with past practice;
(d) none of the Companies has granted any bonuses or made any
general wage or salary increases in respect of its Employees,
other than as provided for in the Collective Agreements, or
changed the terms of employment for any Employee in any
material respect, except in the ordinary course of business
and consistent with past practice and as disclosed to the
Purchaser;
(e) except as disclosed as a Permitted Encumbrance, none of the
Companies has mortgaged, pledged, subjected to lien, granted a
security interest in or otherwise encumbered any of its assets
or property, whether tangible or intangible;
(f) other than cash distributions made by the Companies to the
Vendor and/or its Affiliates and set-offs of accounts payable
and accounts receivable as between the Companies and the
Vendor and/or its Affiliates, none of the Companies, directly
or indirectly, has declared or paid any dividends or declared
or made any other payments or distributions on or in respect
of any of its shares;
(g) none of the Companies has, directly or indirectly, purchased
or otherwise acquired any of its shares;
(h) there has been no gift by any of the Companies, other than
donations made in the ordinary course of business and
consistent with past practice and disclosed to the Purchaser;
(i) there has been no sale or other disposition by the Companies
of any single fixed or capital asset having a fair market
value, in excess of $50,000 and, in the case of all sales and
dispositions, in excess of $250,000 in the aggregate;
(j) there have been no capital expenditures by the Companies, in
the case of any single capital expenditure, in excess of
$250,000 and, in the case of all capital expenditures, in
excess of $1 million in the aggregate;
(k) there has been no material change in the manner of xxxxxxxx,
or the credit terms made available to, any customers of the
Companies; and
(l) none of the Companies has authorized, agreed or otherwise
become committed to do any of the foregoing.
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4.13 ABSENCE OF GUARANTEES
Except for the Guarantees or in respect of Permitted Encumbrances which will be
discharged on or prior to Closing, none of the Companies has given or agreed to
give, or is not a party to or bound by, any guarantee, surety or indemnity in
respect of indebtedness, or other obligations, of any Person, or any other
commitment by which any of the Companies is, or is contingently, responsible for
such indebtedness or other obligations.
4.14 CONDITION OF ASSETS
The Equipment taken as a whole is in good condition, repair and (where
applicable) proper working order, having regard to their use and age, normal
wear and tear excepted.
4.15 INVENTORIES
All Inventories are valued on the books of the Companies at cost. Inventories
are merchantable or usable and are in quantities usable or saleable in the
ordinary course of business. The Inventory levels of the Companies have been
maintained at those amounts as are required for the operation of the business of
the Companies as previously conducted and those Inventory levels are adequate
for that operation.
4.16 COLLECTIBILITY OF ACCOUNTS RECEIVABLE
The Accounts Receivable are good and collectible at the aggregate recorded
amounts, except to the extent of any reserves provided for such accounts in the
books and records of the Companies and, to the knowledge of the Vendor, are not
subject to any defence, counterclaim or set-off.
4.17 BUSINESS IN COMPLIANCE WITH LAW
The operations of the Companies have been and are now conducted in compliance,
in all material respects, with all Laws of each jurisdiction in which the
Companies carry on or have carried on business and the Companies have not
received any notice of any alleged violation of any such Laws which has not been
cured.
4.18 GOVERNMENTAL AUTHORIZATIONS
The Governmental Authorizations listed in Schedule 4.18 are all the material
authorizations required by each of the Companies to enable it to carry on its
business in compliance with all Laws. Such Governmental Authorizations are in
full force and effect in accordance with their terms and there have been no
violations of such Governmental Authorizations and no proceedings are pending
or, to the knowledge of the Vendor, threatened, which could result in their
revocation or limitation, except for any violations which individually or in the
aggregate would not have a Material Adverse Effect on any of the Companies.
4.19 INTELLECTUAL PROPERTY
(a) Schedule 4.19 sets forth a complete list and brief description
of all Intellectual Property used by the Companies which has
been registered by or on behalf of the
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Companies or for which applications for registration have been
filed (the "Listed Intellectual Property").
(b) The Intellectual Property owned by the Companies or in respect
of which the Companies' have valid licences comprises all
intellectual property rights, including all trade-marks, trade
names, business names, domain names, know how, copyrights and
brand marks, necessary to conduct the business of the
Companies.
(c) The registrations of the Listed Intellectual Property are
valid and subsisting. All applications for the Listed
Intellectual Property have been duly filed and are being
diligently prosecuted and there is no written objection or
opposition or, to the knowledge of the Vendor, threatened
objection or opposition, to the registration of the Listed
Intellectual Property which, if successful, would have a
Material Adverse Effect on any of the Companies. The Companies
do not register copyrights in the normal course of operations.
To the knowledge of the Vendor, the practice of the Companies
with respect to registering or applying to register the
Intellectual Property owned by the Companies, and to
protecting the Companies' rights in the Intellectual Property
owned or used by the Companies, is consistent with practices
generally prevailing in the newspaper publishing industry in
Canada.
(d) Except as disclosed in Schedule 4.19, the Companies are the
beneficial owners of all right, title and interest in and to
the Listed Intellectual Property and, to the knowledge of the
Vendor, all other Intellectual Property used by the Companies,
except for any Intellectual Property used by the Companies
which is licensed to the Companies. The Intellectual Property
which is not owned by the Companies is being used by the
Companies only with the consent of or licence from the
rightful owner and all such licences are in full force and
effect.
(e) Schedule 4.19 sets forth an accurate and complete list of (i)
all material licenses or other agreements with third persons
and Affiliates of the Vendor pursuant to which the Companies
have acquired rights to use Intellectual Property owned by
such Persons, and (ii) all material licenses or other
agreements pursuant to which the Companies have granted any
Persons the right to use any Intellectual Property owned or
used by the Companies. All such licenses and agreements are in
writing, valid and binding on the other parties to such
agreements, or in the case of licences to Affiliates of the
Vendor, will be on Closing, and except as disclosed in
Schedule 4.19, assignable to the Purchaser. Copies of all
material third party licenses have been delivered to the
Purchaser.
(f) Except as disclosed in Schedule 4.19, the Intellectual
Property owned by the Companies is in full force and effect in
all material respects and has not been used or enforced or
failed to be used or enforced in a manner that would result in
its abandonment, cancellation or unenforceability, except to
the extent such failure to use or enforce would not have a
Material Adverse Effect on any of the Companies. Except as
disclosed on Schedule 4.19, none of the Companies has
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sold, assigned, transferred or otherwise disposed of any
proprietary interest that it has at any time owned in any
Intellectual Property.
(g) Except as disclosed in Schedule 4.19, the Vendor has not
received notice of, nor is it party to, any Claim of adverse
ownership, invalidity or other opposition to or conflict in
respect of any of the Intellectual Property owned or used by
the Companies nor is there any pending or, to the knowledge of
the Vendor, threatened Claim, whether or not in writing,
against the Companies relating to such Intellectual Property.
(h) Except as disclosed in Schedule 4.19, none of the products or
services which the Companies produce, use, sell or distribute,
the processes, methods, or materials used by the Companies,
including the Content, or the use of any of the Intellectual
Property owned or used by the Companies breaches, violates,
infringes or interferes with any intellectual property rights
of any third Person or requires any material payment for the
use of any intellectual property right of a third Person
(other than payment for content to third party providers of
content in the ordinary course of business), except for any
breaches which individually or in the aggregate would not have
a Material Adverse Effect on any of the Companies.
4.20 OWNED REAL PROPERTY
Schedule 4.20 sets forth a complete list of the Owned Real Property. Except as
disclosed in Schedule 4.20, the Company identified in Schedule 4.20 is the legal
and beneficial owner of the Owned Real Property set forth beside its name and
has good title in fee simple to such Owned Real Property and the unrestricted
right to sell such Owned Real Property, subject only to Permitted Encumbrances.
4.21 LEASED REAL PROPERTY
(a) Schedule 4.21 sets forth a complete list of the Leased Real
Property by reference to municipal address and Real Property
Leases by reference to all relevant documents including
details of parties thereto, dates of documents, expiry dates
and lease payments.
(b) Except as set out in Schedule 4.21, the Real Property Leases
have not been altered or amended and are in full force and
effect.
(c) There are no material agreements or understandings between the
landlord and tenant, or sublandlord and subtenant, or other
relevant parties, other than as contained in the Real Property
Leases, pertaining to the rights and obligations of the
parties thereto relating to the use and occupation of the
Leased Real Property.
(d) All interests held by the Companies as lessee or occupant
under the Real Property Leases are subject only to Permitted
Encumbrances.
(e) All payments required to be made by the Companies pursuant to
the Real Property Leases have been paid and none of the
Companies is in default in
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meeting any obligations under any Real Property Lease which
would entitle a landlord thereunder to terminate such Real
Property Lease.
(f) To the knowledge of the Vendor, none of the landlords or
sublandlords under any of the Real Property Leases is in
default in any material respect in meeting any of its
obligations under Real Property Leases to which it is a party.
(g) The Companies do not have any option, right of first refusal
or other contractual right relating to the Leased Real
Property, other than as set out in the Real Property Leases.
4.22 REAL PROPERTY GENERALLY
(a) The Companies do not use or occupy any properties or premises
other than the Real Property.
(b) The improvements and fixtures situated on the Real Property
are in good working condition and repair, having regard to
their use and age, normal wear and tear excepted.
(c) Each of the Companies has such rights of entry and exit to and
from the Real Property as are reasonably necessary to carry on
its business upon the Real Property as it is currently carried
on.
(d) No Person has any right to purchase any of the Real Property,
and no Person other than the Companies are using or has any
right to use, as tenant, or is in possession or occupancy of,
any part of such Real Property.
(e) Except for the Permitted Encumbrances, the Companies have not
granted any option, right of first refusal or other
contractual rights with respect to the encumbrancing,
acquisition or disposition of any of the Real Property or any
interest therein.
(f) Except for the Permitted Encumbrances, the Companies have not
entered into any agreement to sell, transfer, encumber, or
otherwise dispose of or impair the right, title and interest
of the Companies in and to the Real Property.
(g) No part of the Real Property is subject to any building or use
restriction that restricts or would restrict in any material
respect or prevent the use and operation of the Real Property
as it has been used or operated in the ordinary course in the
past by the Companies.
(h) All accounts for work and services performed or materials
placed or furnished upon or in respect of the construction and
completion of any of the buildings, improvements or other
structures constructed on the Real Property have been fully
paid and no one is entitled to claim a lien under the
Construction Lien Act (Ontario) or other similar legislation
in other provinces for such work performed by or on behalf of
the Companies.
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(i) There are no matters affecting the right, title and interest
of the Companies in and to the Real Property which, in the
aggregate, would materially adversely affect the ability of
any of the Companies after the Closing Date, to carry on its
business upon the Real Property as it has been carried on in
the ordinary course in the past.
(j) To the knowledge of the Vendor, (i) the buildings and other
structures located on the Owned Real Properties and the
operation and maintenance of those buildings and structures,
as now operated and maintained, comply in all material
respects with all applicable laws and regulations, municipal
or otherwise or constitute legal non-conforming uses, (ii)
none of those buildings or other structures encroaches in a
material respect upon any land not owned or leased by the
Companies, and (iii) there are no restrictive covenants,
municipal by-laws or other laws or regulations other than the
Permitted Encumbrances which in any way restrict or prohibit
the use in any material respect of those Owned Properties,
buildings or structures for the purposes for which they are
currently used in connection with the business of the
Companies.
(k) There are no expropriation or similar proceedings, actual or
threatened, of which the Vendor or any of the Companies has
received written notice against any of the Owned Real
Properties or any part thereof.
(l) The Companies manage the Owned Real Properties themselves and
at the Closing Time and thereafter there will be no Persons
employed by the Vendor or any agent thereof in respect of the
Owned Real Properties or their maintenance, operation or
leasing, for which the Purchaser or the Companies will or may
have responsibility or liability, whether under any applicable
legislation or otherwise at law or equity.
(m) There are no material outstanding obligations relating to any
written notice or order issued by any Governmental Authority
in respect of the Owned Real Properties alleging any
deficiency, non-compliance with any municipal agreements
(including any development or site plan agreements) building
restrictions, zoning or building laws or by-laws, building
codes or fire codes of which the Vendor or the Companies have
received written notice.
4.23 ENVIRONMENTAL MATTERS
Except as disclosed in any of the environmental reports or other materials
listed in Schedule 4.23:
(a) All operations of the Companies conducted on the Real Property
and the Real Property itself while occupied by the Companies
have been and are now in compliance with all Environmental
Laws and any Release by the Companies of any Hazardous
Substance into the Environment complied and complies with all
Environmental Laws, except for any non-compliance that would
not result in a Material Adverse Effect on the Companies.
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(b) All material Environmental Approvals have been obtained, are
valid and in full force and effect, have been and are being
complied with in all material respects and there have been and
are no proceedings commenced or threatened to revoke or amend
any material Environmental Approval.
(c) None of the Companies or any of their operations has been or
is now the subject of any Remediation Order, nor, to the
knowledge of the Vendor, has any threat of any such
Remediation Order been made.
(d) None of the Companies has been prosecuted for or convicted of
any offence under any Environmental Law, nor have any of the
Companies been found liable in any proceeding to pay any fine,
penalty, damages, amount or judgment to any Person as a result
of any Release or threatened Release or as a result of the
breach of any Environmental Law and, to the knowledge of the
Vendor, there is no basis for any such proceeding or action.
There are no Claims, investigations, written complaints or
proceedings, including appeals and applications for review, in
progress, pending or, to the knowledge of the Vendor,
threatened against or relating to the Companies before any
Governmental Authority with respect to environmental matters;
(e) To the knowledge of the Vendor, except in compliance with
Environmental Laws, no part of the Real Property or any other
assets of the Companies has been used by any other Person as a
landfill or for the disposal of waste.
(f) To the knowledge of the Vendor, except in material compliance
with Environmental Laws, no asbestos or asbestos containing
materials are used, stored or otherwise present in or on the
Real Property or any other assets of the Companies and no
equipment, waste or other material containing polychlorinated
biphenyls (PCBs) are used, stored or otherwise present in or
on the Real Property or any other assets of the Companies.
(g) All environmental data and studies (including the results of
any environmental audit assessment or environmental management
system) in the possession of the Vendor which may disclose a
condition that could result in a Material Adverse Effect on
any of the Companies have been delivered or made available to
the Purchaser.
(h) To the knowledge of the Vendor, no Hazardous Substance is in,
on or under the Real Property or any other assets of the
Companies at concentrations which exceed any applicable
standards under Environmental Law.
(i) To the knowledge of the Vendor, there are no underground
storage tanks on the Real Property.
(j) To the knowledge of the Vendor, there is no Hazardous
Substance originating from any neighbouring or adjoining
properties which has migrated onto, into or under or is
migrating towards any of the Real Property or any other assets
of the
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Companies at concentrations which exceed any applicable
standards under Environmental Law.
(k) To the knowledge of the Vendor, there is no Hazardous
Substance originating from any of the Real Property or any
other assets of the Companies which has migrated onto, or is
migrating towards any neighbouring and/or adjoining properties
at concentrations which exceed any applicable standards under
Environmental Law.
(l) Except for the Real Property, there are no other real
properties currently owned, leased, occupied or operated by or
on behalf of the Companies or over which the Companies have
charge, management or control.
Notwithstanding anything else in this Agreement, the representations and
warranties made in this Section 4.23 are the exclusive and only representations
and warranties made to the Purchaser pertaining to the Environment or compliance
with Environmental Laws.
4.24 EMPLOYMENT MATTERS
(a) A complete list of the Employees together with their titles,
service dates and base salaries and copies of all employment
agreements with the Employees for annual compensation in
excess of $100,000 have been made available to the Purchaser.
Schedule 4.24 sets forth a complete list of all such
employment agreements with Employees. There are no written
employment agreements with any of the publishers of the
Companies' newspapers. Except as disclosed in Schedule 4.24,
no Employee is on short-term or long-term disability leave,
parental leave or receiving benefits pursuant to the Workplace
Safety and Insurance Act (Ontario) or similar workers'
compensation legislation in other jurisdictions.
(b) There are no contracts of employment which are not terminable
on the giving of reasonable notice in accordance with
applicable Law, nor are there any Employees with contracts of
employment providing for cash or other compensation or
benefits upon, or in connection with the termination or
resignation of an Employee as a result of or following the
consummation of the transactions contemplated by this
Agreement.
(c) Except for the Benefit Plans or as disclosed in Schedule 4.24,
there are no material employment policies or plans, which are
binding upon any of the Companies.
(d) The Companies have been and are being operated in material
compliance with all Laws relating to employees, including
employment standards, Occupational Health and Safety Laws,
workers compensation, human rights, labour relations, and pay
equity. Except as disclosed in Schedule 4.24, there have been
no Claims nor, to the knowledge of the Vendor, are there any
threatened complaints under such employment-related Laws
against the Companies.
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(e) All current assessments under the Workplace Safety and
Insurance Act (Ontario) and any similar workers compensation
legislation in other provinces in relation to the Companies
and all of their respective contractors and subcontractors
have been paid or accrued and the Companies have not been
subject to any special or penalty assessment under such
legislation which has not been paid.
4.25 COLLECTIVE AGREEMENTS
(a) Schedule 4.25 sets forth a complete list of the Collective
Agreements.
(b) Current and complete copies of all Collective Agreements have
been made available to the Purchaser.
(c) Except as disclosed in Schedule 4.25, there are no outstanding
or, to the knowledge of the Vendor, threatened unfair labour
practices or complaints or applications of any kind, including
any proceedings which could result in certification of a trade
union as bargaining agent for any Employees of the Companies,
not already covered by the Collective Agreements.
(d) There is no strike or lock out occurring or, to the knowledge
of the Vendor, threatened, affecting any of the Companies
which could have a Material Adverse Effect on any of the
Companies.
(e) The Companies do not have any pending arbitration cases that
might materially affect the value of any of the Companies or
lead to an interruption of its operations at any location.
4.26 PENSION AND OTHER BENEFITS
(a) Schedule 4.26 sets forth a complete list of the Benefit Plans.
(b) Current and complete copies of all written Benefit Plans have
been delivered or made available to the Purchaser together
with current and complete copies of the following documents
relating to the Benefit Plans:
(i) the most recent trust agreements and funding
agreements;
(ii) the most recent insurance contracts, investment
management agreements, subscription and participation
agreements;
(iii) the most recent financial statements and actuarial
reports;
(iv) the most recent annual information returns or other
filings and material correspondence with any
regulatory authority with whom the Benefit Plan is
registered; and
(v) all booklets, summaries and manuals distributed to
any Employees or former employees concerning any
Benefit Plans.
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(c) Except as disclosed in Schedule 4.26, each Benefit Plan is,
and has been, established, registered (where required),
qualified, administered and invested, in material compliance
with the terms of such Benefit Plan, any applicable Collective
Agreement and all Laws.
(d) Except as disclosed in Schedule 4.26, (i) there have been no
improvements, increases or changes to, or promised
improvements, increases or changes to, the benefits provided
under any Benefit Plan; and (ii) none of the Benefit Plans
provide for benefit increases or the acceleration of, or an
increase in, funding obligations that are contingent upon or
will be triggered by the entering into of this Agreement or
the completion of the transactions contemplated herein.
(e) All employer or employee payments, contributions or premiums
required to be remitted, paid to or in respect of each Benefit
Plan have been paid or remitted in a timely fashion in
accordance with its terms, any applicable Collective Agreement
and all Laws, and no Taxes, penalties or fees are owing or
exigible under any Benefit Plan.
(f) There is no investigation by a Governmental Authority, or
Claim by any Person (other than routine claims for payment of
benefits) pending or, to the knowledge of the Vendor,
threatened involving any Benefit Plan or their assets.
(g) The Companies have not received, or applied for, any payment
of surplus out of any Benefit Plan.
(h) All Employee data necessary to administer each Benefit Plan is
in the possession of the Companies and is complete, correct
and in a form which is sufficient for the proper
administration of the Benefit Plan in accordance with its
terms and all Laws.
(i) Other than the two Vendor's Retained Pension Plans (as defined
in the Pension and Employee Benefits Plans Agreement attached
as Exhibit B hereto), none of the Benefits Plans are defined
benefit Pension Plans.
4.27 INSURANCE
The Vendor on behalf of the Companies maintains such policies of insurance
(including policies covering all physical assets of the Companies against fire
and other risk and defamation insurance), issued by responsible insurers, as are
appropriate to its operations, property and assets, in such amounts and against
such risks as are customarily carried and insured against by prudent owners of
comparable businesses, properties and assets; and (b) all such policies of
insurance are in full force and effect and the Vendor and the Companies are not
in default, as to the payment of premium or otherwise, under the terms of any
such policy.
4.28 MATERIAL CONTRACTS
Schedule 4.28 sets forth a complete list of the Material Contracts which have
not been listed on any other schedules. The Material Contracts are all in full
force and effect unamended and there
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are no outstanding defaults or violations, nor are there any events that with
notice or the lapse of time, or both, could constitute a default or violation
under any Material Contracts on the part of any of the Companies or to the
knowledge of the Vendor on the part of any other party to such Contracts, except
for any default or violation which would not result in a Material Adverse Effect
on any of the Companies.
4.29 LITIGATION
Except as disclosed in Schedule 4.29, there are no Claims, investigations,
complaints, grievances or proceedings, including appeals and applications for
review, in progress, pending or, to the knowledge of the Vendor, threatened
against or relating to any of the Companies before any Governmental Authority,
which, if determined adversely to any of the Companies, would,
(a) have a Material Adverse Effect on any of the Companies,
(b) enjoin, restrict or prohibit the transfer of all or any part
of the Purchased Shares as contemplated by this Agreement, or
(c) prevent the Vendor or any of the Companies from fulfilling any
of its obligations set out in this Agreement or arising from
this Agreement.
4.30 TAX MATTERS
(a) Each of the Companies has duly and timely filed (or if a Tax
Return was not timely filed, all late filing penalties
relating to the Tax Return were paid) its Tax Returns with the
appropriate Governmental Authority for all fiscal periods
ending prior to the date hereof and has duly, completely and
correctly reported all revenue and other amounts and
information required to be reported thereon. No extension of
time in which to file any such Tax Return is in effect. All
Taxes shown on all such Tax Returns, or in any assessments or
reassessments in respect of any such Tax Returns, have been
paid in full.
(b) There are no proceedings, investigations, audits or claims now
pending, or to the knowledge of the Vendor, threatened against
any of the Companies in respect of any Taxes and there are no
matters under discussion, audit or appeal with any
Governmental Authority relating to Taxes. Each of the
Companies has not executed or filed with any Governmental
Authority any agreement or waiver extending the period for
assessment, reassessment or collection of any Taxes.
(c) Each of the Companies has made adequate provision for Taxes
payable by it for the current period and any previous period
for which Tax Returns are not yet required to be filed. Each
of the Companies has no material liability for Taxes in excess
of reserves for Taxes (other than any reserve for future Taxes
established to reflect temporary differences between book and
tax income) set forth on its Financial Statements.
(d) There are no liens or other security interests on any of the
assets of the Companies that arose in connection with any
failure (or alleged failure) to pay any Tax.
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(e) Each of the Companies has duly and timely withheld from any
amount paid or credited by it to or for the benefit or account
of any Person, including any Employees, officers or directors
and any non-resident Person, the amount of all Taxes and other
deductions required by any Laws to be withheld from such
amount and has duly and timely remitted the same to the
appropriate Governmental Authority.
(f) None of Sections 78, 80, 80.01, 80.02, 80.3 or 80.04 of the
Income Tax Act (Canada), or any equivalent provision of the
Tax legislation of any province or any other jurisdiction,
have applied or will apply to the Companies at any time up to
and including the Closing Date.
(g) None of the Companies has claimed, nor will any Company claim,
any reserve under any one or more of subparagraph
40(1)(a)(iii), or paragraphs 20(1)(m) or 20(1)(n) of the
Income Tax Act (Canada) or any equivalent provincial
provision, if any such amount could be included in the income
of such Company for any period ending after the Closing Date.
(h) The Companies have not acquired property from a non-arm's
length person, within the meaning of the Income Tax Act
(Canada), for consideration, the value of which is less than
the fair market value of the property acquired in
circumstances which could subject it to a liability under
Section 160 of the Income Tax Act (Canada).
(i) Each Company is a registrant for the purposes of Part IX of
the Excise Tax Act (Canada) whose number is set out in
Schedule 4.30.
4.31 TRADE ALLOWANCES
Except for contra transactions with Affiliates of the Vendor (which have not
been reflected in the Financial Statements and will not be reflected on the
Closing Statement), no customers of the Companies are entitled to or customarily
receive discounts, allowances, volume rebates or similar reductions in price or
other trade terms including contra transactions except in accordance with the
Companies' past practices. There are no such arrangements which cannot be
terminated on 30 days' notice or less or which are not reflected in the
Financial Statements or will not be reflected on the Closing Statement.
4.32 NO SUBSIDIARIES
None of the Companies owns or is a party to any agreement of any nature to
acquire, directly or indirectly, any shares in the capital of, or other equity
or proprietary interests in, any Person.
4.33 CORPORATE RECORDS
As at the Closing Time, the corporate records and minute books of each of the
Companies will contain complete and accurate minutes of all meetings and written
resolutions of directors and committees of directors and shareholders held since
their respective dates of incorporation, and all those meetings will have been
duly called and held and all those written resolutions will have
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been duly passed. The share certificate books, register of shareholders,
register of transfers and register of directors of each of the Companies will,
as at the Closing Time, be complete and accurate in all material respects.
4.34 BOOKS OF ACCOUNT
The books and records of each of the Companies fairly present and disclose the
financial position of each of the Companies as at the relevant dates in all
material respects and all material financial transactions of each of the
Companies have been accurately recorded in those books and records except that
in certain instances, inter-Affiliate accounts payable and receivable have been
off-set and contra transactions with Affiliates of the Vendor have not been
recorded.
4.35 CUSTOMERS AND SUPPLIERS
Since August 31, 2002, there has been no termination or cancellation of, and no
material modification or change in, the business relationship with any
significant customer or group of customers of any of the Companies (including
the commercial print customers set out in Schedule 4.35). The Vendor has no
reason to believe that the benefits of any relationship with the customers or
suppliers of any of the Companies (including the commercial print customers set
out in Schedule 4.35) will not continue after the Closing Date in substantially
the same manner as prior to the date of this Agreement, assuming the completion
on the Closing Date of the transaction contemplated by this Agreement. Schedule
4.35 sets out the 10 largest commercial print customers of the Companies for the
financial year ended August 31, 2002.
4.36 NON-ARM'S LENGTH TRANSACTIONS
Other than contracts of employment and advances to Employees in an aggregate
amount of $25,000 or less, as at the Closing Date, none of the Companies will be
party to any agreement with any officer, director or employee of the Company,
CanWest or its other Affiliates. Schedule 4.36 lists and briefly describes the
services provided by the Vendor and its Affiliates to the Companies during the
financial year ended August 31, 2002 and as at the date of this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Vendor and acknowledges and
agrees that the Vendor is relying on such representations and warranties in
entering into this Agreement, as follows:
5.1 INCORPORATION
The Purchaser is a corporation validly existing under the laws of the Province
of Ontario.
5.2 DUE AUTHORIZATION
The Purchaser has all necessary corporate power, authority and capacity to enter
into this Agreement and to carry out its obligations under this Agreement. The
execution and delivery of
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this Agreement and the consummation of the transaction contemplated under this
Agreement have been duly authorized by all necessary corporate action of the
Purchaser.
5.3 ENFORCEABILITY OF OBLIGATIONS
This Agreement constitutes a valid and binding obligation of the Purchaser
enforceable against it in accordance with its terms.
5.4 ABSENCE OF CONFLICTING AGREEMENTS
The Purchaser is not a party to, bound or affected by or subject to any
indenture, mortgage, lease, agreement, obligation, instrument, charter or by-law
provision, statute, regulation, order, judgment, decree, license, permit or law
which would be violated, contravened or breached by, or under which any default
would occur or a Claim, restriction or Encumbrance would be created as a result
of the execution and delivery by it of this Agreement or the performance by it
of any of the terms of this Agreement.
5.5 INVESTMENT CANADA
The Purchaser is Canadian within the meaning of the Investment Canada Act
(Canada).
5.6 LITIGATION
There are no Claims, investigations, complaints or proceedings in progress or,
to the knowledge of the Purchaser, pending or threatened against or relating to
the Purchaser, before any Governmental Authority, which, if determined adversely
to the Purchaser, would:
(a) prevent the Purchaser from paying the Aggregate Consideration
to the Vendor;
(b) enjoin, restrict or prohibit the transfer of all or any part
of the Purchased Shares as contemplated by this Agreement; or
(c) prevent the Purchaser from fulfilling any of its obligations
set out in this Agreement or arising from this Agreement,
and the Purchaser has no knowledge of any existing ground on which any such
action, suit, litigation or proceeding might be commenced with any reasonable
likelihood of success.
5.7 FINANCING
The Purchaser has provided to both its prospective lenders and its shareholders
all financial and operational information concerning the Companies which they
have requested. The Purchaser has received a binding commitment in respect of
the financing for the transactions contemplated by this Agreement from both its
prospective lenders and its shareholders unqualified except for standard
conditions for similar transactions. The Purchaser's prospective lenders and its
shareholders have each provided a comfort letter to the Vendor confirming the
foregoing and provided extracts of all of the conditions set forth in such
binding commitment letters.
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5.8 COMPETITION ACT APPROVAL
The Purchaser received Competition Act Approval on November 7, 2002 and such
Competition Act Approval remains in full force and effect.
ARTICLE 6
NON-WAIVER; SURVIVAL
6.1 NON-WAIVER
(a) Except as expressly provided in this Agreement, no
investigations made by or on behalf of the Purchaser at any
time shall have the effect of waiving, diminishing the scope
of or otherwise affecting any representation or warranty made
by the Vendor in or pursuant to this Agreement and no waiver
of any condition or other provision, in whole or in part,
shall constitute a waiver of any other condition or provision
(whether or not similar) nor shall such waiver constitute a
continuing waiver.
(b) Except as expressly provided in this Agreement, no
investigations made by or on behalf of the Vendor at any time
shall have the effect of waiving, diminishing the scope or
otherwise affecting any representation or warranty made by the
Purchaser in or pursuant to this Agreement.
6.2 NATURE AND SURVIVAL
(a) Subject to subsection (b), all representations and warranties
contained in this Agreement on the part of each of the Parties
shall survive the Closing, the execution and delivery under
this Agreement of any share or security transfer instruments
or other documents of title to any of the Purchased Shares and
the payment of the Aggregate Consideration.
(b) Representations and warranties relating to or impacted by tax
matters including those set out in Section 4.30 (Tax Matters)
shall survive for a period of ninety (90) days after the
relevant authorities shall no longer be entitled to assess
liability for tax against any of the Companies for any
particular taxation year ended on or prior to the Closing
Date, provided that the survival of such representations and
warranties shall not be extended by virtue only of any waiver
given by any of the Companies after the Closing Date without
the consent of the Vendor, such consent not to be unreasonably
withheld. The representations and warranties set out in
Section 4.23 (Environmental Matters) shall not survive the
Closing Date. The representations and warranties set out in
Section 4.3 (Right to Sell) shall survive indefinitely. All
other representations and warranties shall only survive for a
period of two (2) years from the Closing Date. If no claim
shall have been made under this Agreement against a Party for
any incorrectness in or breach of any representation or
warranty made in this Agreement prior to the expiry of these
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survival periods, such Party shall have no further liability
under this Agreement with respect to such representation or
warranty.
ARTICLE 7
PURCHASER'S CONDITIONS PRECEDENT
The obligation of the Purchaser to complete the purchase of the Purchased Shares
under this Agreement shall be subject to the satisfaction of, or compliance
with, at or before the Closing Time, each of the following conditions precedent
(each of which is acknowledged to be inserted for the exclusive benefit of the
Purchaser and may be waived by it in whole or in part).
7.1 TRUTH AND ACCURACY OF REPRESENTATIONS OF VENDOR AT THE CLOSING TIME
The representations and warranties of the Vendor made in or pursuant to this
Agreement which are qualified by "Material Adverse Effect", "material", "in all
material respects" and words or phrases of similar import, shall be true and
correct and any other representations and warranties which are not qualified by
"Material Adverse Effect", "material", "in all material respects" and words and
phrases of similar import shall be true and correct in all material respects, in
all cases as at the Closing Time and with the same effect as if made at and as
of the Closing Time (except as such representations and warranties may be
affected by the occurrence of events or transactions expressly contemplated and
permitted by this Agreement) and the Purchaser shall have received a certificate
from a senior officer of the Vendor confirming, to his or her knowledge (after
due enquiry) and without personal liability, the truth and correctness of the
representations and warranties of the Vendor as set forth above. Notwithstanding
the foregoing, if this condition shall not be satisfied at the Closing Time,
unless the failure to satisfy this condition results in a Material Adverse
Effect on the Companies as a whole, the Purchaser will be required to complete
the purchase of the Purchased Shares under this Agreement, if the Vendor so
elects, and in such event the Purchaser shall have recourse only to a Claim for
Losses and related Claims for Losses under Article 10.
7.2 PERFORMANCE OF OBLIGATIONS
The Vendor shall have performed or complied with all of its obligations and
covenants under this Agreement and the Purchaser shall have received a
certificate from a senior officer of the Vendor confirming, to his or her
knowledge (after due enquiry) and without personal liability, the performance of
such obligations and covenants. Notwithstanding the foregoing, if this condition
shall not be satisfied at the Closing Time because there has been a breach of
Section 9.1(a); (b)(viii), (ix), (xi), (xii) or (xiii); (c); (f)(i) or (ii);
(i); or (j)(ii), unless such breach is material and adverse, the Purchaser will
be required to complete the purchase of the Purchased Shares under this
Agreement, if the Vendor so elects, and in such event the Purchaser shall have
recourse only to a Claim for Losses and related Claims for Losses under Article
10.
7.3 RECEIPT OF CLOSING DOCUMENTATION
All documentation relating to the due authorization and completion of the sale
and purchase of the Purchased Shares and the advance of funds to the Companies
for the repayment of the Shareholder Loans under this Agreement and all actions
and proceedings taken on or prior to the Closing in connection with the
performance by the Vendor of its obligations under this
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Agreement, shall be satisfactory to the Purchaser, acting reasonably, and the
Purchaser shall have received copies of all such documentation or other evidence
as it may reasonably request in order to establish the consummation of the
transactions contemplated by this Agreement and the taking of all corporate
proceedings in connection with such transactions in compliance with these
conditions, in form (as to certification and otherwise) and substance
satisfactory to the Purchaser, acting reasonably.
7.4 OPINION OF COUNSEL FOR VENDOR
The Purchaser shall have received an opinion dated the Closing Date from counsel
for the Vendor on terms usual and customary for transactions of this nature and
otherwise satisfactory to the Purchaser, acting reasonably.
7.5 CONSENTS, AUTHORIZATIONS AND REGISTRATIONS
All consents, approvals, orders and authorizations of any Person (and
registrations, declarations, filings or recordings with any Governmental
Authority) required in connection with the completion of any of the transactions
contemplated by this Agreement (other than with respect to the Pension Plans or
Benefit Plans), the execution of this Agreement, the Closing or the performance
of any of the terms and conditions of this Agreement, and any consents or
approvals required under Material Contracts in each case, the absence of which
would constitute a Material Adverse Effect on the Companies, shall have been
obtained at or before the Closing Time on terms acceptable to the Purchaser,
acting reasonably.
7.6 NO PROCEEDINGS
There shall be no injunction or restraining order issued preventing, and no
pending or threatened Claim, or proceeding, judicial or administrative or
investigation against any Party by any Person, for the purpose of enjoining or
preventing the consummation of the transactions contemplated by this Agreement
or otherwise claiming that this Agreement or the consummation of such
transactions is improper or would give rise to proceedings under any Laws.
7.7 ENCUMBRANCES
The Purchaser shall have received an opinion of the Companies' U.S. Counsel,
Xxxx Xxxxxxx LLP, in the form of Exhibit E, as to the release of the Guarantees.
The Purchaser shall have received evidence reasonably satisfactory to it that
the Permitted Encumbrances listed in section A(2) of Schedule 1.1(b), have been
discharged, or received an undertaking to discharge the Permitted Encumbrances
listed in section A(2) of Schedule 1.1(b), immediately after Closing in form and
substance reasonably satisfactory to it.
7.8 DIRECTORS AND OFFICERS
The Board of Directors of each of the Companies at the Closing Time shall
consist of individuals nominated by the Purchaser and there shall have been
delivered to the Purchaser on or before the Closing Time the resignations of all
individuals who are prior to the Closing Time directors or officers of each of
the Companies and duly executed comprehensive releases (in mutual form) from
each such individual of any claims, against the Companies.
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7.9 CLOSING AGREEMENTS
The Vendor and/or CanWest or its Affiliates and/or each of the Companies, as the
case may be, and the Purchaser shall have executed and delivered the Closing
Agreements to which it is a party. The Purchaser shall have received, in form
and substance satisfactory to the Purchaser, acting reasonably, a letter from
EMP Environmental Management & Protection Corporation permitting the Purchaser,
the relevant Companies and the lenders to the Purchaser to rely on the reports
of EMP Environmental Management & Protection Corporation.
7.10 XXXXXXXXX ROFR
The Vendor shall have delivered evidence to the Purchaser that Xxxxxxxxx
International Inc. has waived its rights under the Xxxxxxxxx ROFR or that such
rights have terminated.
7.11 NO ADVERSE LEGISLATION
No legislation (whether by statute, regulation, order-in-council, notice of ways
and means motion, by law or otherwise) will have been enacted, introduced or
tabled, which in the reasonable opinion of the Purchaser, would have a Material
Adverse Effect on the Companies.
7.12 OPERATIONAL SERVICES AGREEMENTS
The Operational Services Agreements shall have been amended and restated in the
forms attached as Exhibits F, G, H, and I; and the agreements between Xxxxxx.xxx
New Media Inc. and each of the Companies shall have been terminated, if so
requested by the Purchaser.
Except as provided in Section 7.1, if any of the foregoing conditions in this
Article has not been fulfilled by Closing, the Purchaser may terminate this
Agreement by notice in writing to the Vendor, in which event the Purchaser is
released from all obligations under this Agreement, and unless the Purchaser can
show that the condition relied upon could reasonably have been performed by the
Vendor, the Vendor is also released from all obligations under this Agreement.
However, the Purchaser may waive compliance with any condition in whole or in
part if it sees fit to do so, without prejudice to its rights of termination in
the event of non-fulfilment of any other condition, in whole or in part, or to
its rights to recover damages for the breach of any representation, warranty,
covenant or condition contained in this Agreement.
ARTICLE 8
VENDOR'S CONDITIONS PRECEDENT
The obligations of the Vendor to complete the sale of the Purchased Shares under
this Agreement shall be subject to the satisfaction of or compliance with, at or
before the Closing Time, each of the following conditions precedent (each of
which is acknowledged to be inserted for the exclusive benefit of the Vendor and
may be waived by it in whole or in part).
8.1 TRUTH AND ACCURACY OF REPRESENTATIONS OF THE PURCHASER AT CLOSING TIME
All of the representations and warranties of the Purchaser made in or pursuant
to this Agreement shall be true and correct as at the Closing Time and with the
same effect as if made at and as of the Closing Time and the Vendor shall have
received a certificate from a senior officer of the
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Purchaser confirming, to his or her knowledge (after due enquiry) and without
personal liability, the truth and correctness of such representations and
warranties.
8.2 PERFORMANCE OF OBLIGATIONS
The Purchaser shall have performed or complied with all of its obligations and
covenants under this Agreement and the Vendor shall have received a certificate
from a senior officer of the Purchaser confirming, to his or her knowledge
(after due enquiry) and without personal liability, the performance of such
covenants.
8.3 RECEIPT OF CLOSING DOCUMENTATION
All documentation relating to the due authorization and completion of the sale
and purchase of the Purchased Shares and the advance of funds to the Companies
for the repayment of the Shareholder Loans under this Agreement and all actions
and proceedings taken on or prior to the Closing in connection with the
performance by the Purchaser of its obligations under this Agreement, shall be
satisfactory to the Vendor, acting reasonably, and the Vendor shall have
received copies of all such documentation or other evidence as it may reasonably
request in order to establish the consummation of the transactions contemplated
by this Agreement and the taking of all corporate proceedings in connection with
such transactions in compliance with these conditions, in form (as to
certification and otherwise) and substance satisfactory to the Vendor, acting
reasonably.
8.4 OPINION OF COUNSEL FOR PURCHASER
The Vendor shall have received an opinion dated the Closing Date, from counsel
for the Purchaser, on terms usual and customary for transactions of this nature
and otherwise reasonably satisfactory to the Vendor, acting reasonably.
8.5 CONSENTS, AUTHORIZATIONS AND REGISTRATIONS
All consents, approvals, orders and authorizations of any Person (and
registrations, declarations, filings or recordings with any Governmental
Authority), required in connection with the completion of any of the
transactions contemplated by this Agreement (other than with respect to the
Pension Plans or Benefit Plans), the execution of this Agreement, the Closing or
the performance of any of the terms and conditions of this Agreement, and any
consents required under Material Contracts shall have been obtained at or before
the Closing Time on terms acceptable to the Vendor, acting reasonably.
8.6 NO PROCEEDINGS
There shall be no injunction or restraining order issued preventing, and no
pending or threatened Claim, or proceeding, judicial or administrative or
investigation against any Party by any Person, for the purpose of enjoining or
preventing the consummation of the transactions contemplated by this Agreement
or otherwise claiming that this Agreement or the consummation of such
transactions is improper or would give rise to proceedings under any Laws.
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8.7 CLOSING AGREEMENTS
The Purchaser shall have executed and delivered the Closing Agreements to which
it is a party.
8.8 XXXXXXXXX ROFR
Xxxxxxxxx International Inc. shall have waived its rights under the Xxxxxxxxx
ROFR or such rights shall have terminated.
8.9 OPERATIONAL SERVICES AGREEMENTS
The Operational Services Agreements shall have been amended and restated in the
forms attached as Exhibits F, G, H, and I (including as to the guarantee of the
Purchaser of the obligations of the Companies).
8.10 PURCHASER'S CERTIFICATE
The Vendor shall have received a certificate from each of Xxxxxxx Xxxxxx and
Xxxx Xxxxxx on behalf of the Purchaser (in form and substance reasonably
satisfactory to the Vendor) certifying that, as at the Closing Time, to the best
of his current actual knowledge, information and belief, without independent
enquiry and without personal liability, he is not aware of any information, fact
or circumstance which constitutes or would cause or result in any representation
or warranty on the part of the Vendor in this Agreement which is qualified by
"Material Adverse Effect", "material", "in all material respects" and words or
phrases of similar import, not being true and correct and any other
representation or warranty on the part of the Vendor in this Agreement which is
not qualified by "Material Adverse Effect", "material", "in all material
respects" and words or phrases of similar import not being true and correct in
all material respects.
If any of the foregoing conditions in this Article has not been fulfilled by
Closing, the Vendor may terminate this Agreement by notice in writing to the
Purchaser, in which event the Vendor is released from all obligations under this
Agreement, and unless the Vendor can show that the condition relied upon could
reasonably have been performed by the Purchaser, the Purchaser is also released
from all obligations under this Agreement. However, the Vendor may waive
compliance with any condition in whole or in part if it sees fit to do so,
without prejudice to its rights of termination in the event of non-fulfilment of
any other condition in whole or in part or to its rights to recover damages for
the breach of any representation, warranty, covenant or condition contained in
this Agreement.
ARTICLE 9
OTHER COVENANTS OF THE PARTIES
9.1 CONDUCT OF BUSINESS PRIOR TO CLOSING
The Vendor shall cause each Company (except as expressly contemplated by this
Agreement, or as is reasonably necessary in connection with the transactions
contemplated hereby and has been disclosed to the Purchaser, or to the extent
that the Purchaser shall otherwise consent, which, consent shall not be
unreasonably withheld), from the date hereof to the Closing Date, to carry on
business only in the usual course consistent with past practice and to:
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(a) except in the ordinary course of business and consistent with
past practice, not enter into, amend or modify existing
agreements, commitments or contracts which, individually or in
the aggregate, are material to such Company;
(b) not directly or indirectly do or permit to occur any of the
following: (i) issue, sell, pledge, lease, dispose of,
encumber or agree to issue, sell, pledge, lease, dispose of,
encumber any additional shares of, or any options, warrants,
calls, conversion privileges or rights of any kind to acquire
any shares of, any shares or other securities of such Company;
(ii) amend or propose to amend the constating documents of
such Company; (iii) 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 of such Company; (iv)
redeem, purchase or offer to purchase any shares or other
securities of such Company; (v) reorganize, amalgamate or
merge such Company with any other person, company, partnership
or other business organization whatsoever; (vi) reduce the
stated capital of such Company; (vii) acquire or agree to
acquire (by merger, amalgamation, acquisition of shares or
assets, lease or otherwise) any person, company, partnership
or other business organization or division or make any
investment, whether by purchase of shares or securities,
contribution of capital, property transfer or purchase of any
property or assets, in any other person, company, partnership
or other business organization which individually or in the
aggregate is in excess of $50,000 (other than purchases of
Inventories in the ordinary course of business); (viii) sell,
transfer or assign any interest in any intellectual property
of such Company except in the ordinary course of business and
consistent with past practice; (ix) incur or commit to incur
any indebtedness or issue any debt securities, except for the
borrowing of working capital in the ordinary course of
business and consistent with past practice; (x) adopt a plan
of liquidation or resolutions providing for the liquidation or
dissolution of such Company; (xi) pay, discharge or satisfy
any material claims, liabilities or obligations, other than
the payment, discharge or satisfaction, in the ordinary course
of business and consistent with past practice, of liabilities
reflected or reserved against in the Financial Statements or
incurred in the ordinary course of business and consistent
with past practice; (xii) authorize, recommend, propose or
agree to any release or relinquishment of any material
contractual right under any of the Material Contracts or other
material right under any licence or permit or (xiii) waive,
release, grant or transfer any rights of value or modify or
change in any material respect any existing licence, lease,
permit, Material Contract or other material document other
than in the ordinary course of business and consistent with
past practice;
(c) not enter into or modify in a manner that is materially
adverse to such Company any employment, severance, or similar
agreements or arrangements with, or grant any bonuses, salary
increases, severance or termination pay to, any officers or
directors, or, in the case of employees who are not officers
or directors, take any action other than in the ordinary
course of business and consistent with past practice (none of
which actions shall be unreasonable or unusual) with respect
to the grant of any bonuses, salary increases, severance or
termination pay or with
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respect to any increase of benefits payable in effect on the
date hereof, except as required by the terms of any Collective
Agreement;
(d) not adopt or amend any Benefit Plans;
(e) use its reasonable best efforts to cause its current insurance
(or reinsurance) policies not to be cancelled or terminated or
any of the coverage thereunder to lapse unless, simultaneously
with such termination, cancellation or lapse, replacement
policies underwritten by insurance and reinsurance companies
of nationally recognized standing providing coverage equal to
or greater than the coverage under the cancelled, terminated
or lapsed policies for substantially similar premiums are in
full force and effect;
(f) (i) duly and timely file all tax returns required to be filed
by it on or after the date hereof and ensure that all such tax
returns are true, complete and correct in all material
respects; (ii) timely pay all taxes which are due and payable
(other than those which are being contested in good faith);
(iii) not make or rescind any material expressed or deemed
election relating to taxes; (iv) not make a request for a tax
ruling or enter into a closing agreement with any taxing
authorities; (v) not settle or compromise any claim, action,
suit, litigation, proceeding, arbitration, investigation,
audit or controversy in excess of $25,000 or that would
otherwise have a Material Adverse Effect on such Company; and
(vi) not change in any material respect any of its methods of
reporting income, deductions or accounting for income tax
purposes from those employed in the preparation of its income
tax return for the last completed taxation year, except as may
be required by applicable Law;
(g) use its commercially reasonable efforts to obtain all
necessary consents, approvals and authorizations as are
required to be obtained by it under any applicable Law;
(h) use its commercially reasonable efforts to preserve intact its
business organizations and goodwill and to keep available the
services of its officers and employees other than the Excluded
Employee as a group and to maintain satisfactory relationships
with persons with whom it has business relationships;
(i) promptly advise the Purchaser orally and, if then requested,
in writing: (i) of any fact or any change in the business,
operations, affairs, assets, liabilities, capitalization,
financial condition or prospects of such Company that could
have a Material Adverse Effect on such Company; (ii) of any
breach by such Company of any covenant or agreement contained
in this Agreement; and (iii) of any death, disability,
resignation, termination of employment or other departure of
any senior officer of such Company, other than the Excluded
Employee;
(j) not enter into any transaction or perform any act which might
(i) interfere or be inconsistent with the successful
completion of the transactions contemplated hereby, (ii)
render inaccurate any of the representations and warranties
set forth herein if such representations and warranties were
made at a date subsequent to such transaction or act and all
references to the date hereof were to such later date,
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or (iii) adversely affect its ability to perform and comply
with its covenants and agreements under this Agreement;
(k) cooperate with Purchaser to oppose, lift or rescind any
injunction or restraining order or other order or action
seeking to stop, or otherwise adversely affect the Purchaser's
ability to consummate the transaction contemplated hereby; and
(l) make or cooperate as necessary in the making of all necessary
filings and applications under all applicable Laws required in
connection with the transactions contemplated herein and take
all reasonable action necessary to be in compliance with such
Laws.
9.2 ACCESS FOR INVESTIGATION
(a) The Vendor shall permit the Purchaser and its representatives,
between the date of this Agreement and the Closing Time,
without interference to the ordinary conduct of business, to
have reasonable access during normal business hours to the
management, books and records of the Companies and the
properties and assets used by the Companies, provided that the
Vendor shall not be required to disclose any information,
records, files or other data to the Purchaser where prohibited
by any Laws or to provide access for the purposes of
conducting intrusive tests. The Purchaser shall provide not
less than two (2) Business Days' Notice of its desire for such
access.
(b) If any consent of any Person or Governmental Authority is
required to permit the Vendor to release any information to
the Purchaser, the Vendor shall make all reasonable efforts to
obtain such consent.
9.3 ACTIONS TO SATISFY CLOSING CONDITIONS
(a) The Parties shall cooperate and each of the Parties shall take
all such commercially reasonable actions as are within its
power to control, and use commercially reasonable efforts to
cause other actions to be taken which are not within its power
to control, so as to ensure compliance with each of the
conditions and covenants set forth in Article 7, Article 8 or
Article 9 which are for the benefit of any other Party.
(b) Each Party shall notify the other Party's counsel of any
communication it receives from the Competition Bureau and each
Party shall provide copies of all correspondence with the
Competition Bureau (except those containing competitively
sensitive information) to the other Party's counsel.
9.4 PRESERVATION OF RECORDS AND ACCESS TO PERSONNEL
The Purchaser shall take all reasonable steps to preserve and keep the records
of the Companies delivered to it in connection with the completion of the
transactions contemplated by this Agreement for a period of six (6) years from
the Closing Date, or for any longer period as may be required by any Laws or
Governmental Authority, and shall make such records and the
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employees of the Companies available to the Vendor as may be reasonably required
by the Vendor, including in connection with a Claim by the Purchaser against the
Vendor under this Agreement. The Vendor acknowledges that the Purchaser shall
not be liable to the Vendor in the event of any accidental destruction of such
records, caused otherwise than by the negligence of the Purchaser.
9.5 ACCOUNTS RECEIVABLE/ALLOWANCE FOR DOUBTFUL ACCOUNTS
In the event that the Closing Statement includes any write down of Accounts
Receivable which in the view of the Purchaser's auditors are not collectible,
the Purchaser shall cause the Companies to assign and transfer such Accounts
Receivable to the Vendor for no consideration.
9.6 STUB PERIOD RETURNS
The Vendor shall cause to be prepared and Purchaser shall cause to be filed on a
timely basis, all Tax Returns for the Companies for any period which ends on or
before the Closing Date and for which Tax Returns have not been filed as of such
date. The Vendor shall also cause to be prepared and filed on a timely basis,
all Tax Returns of the Companies for periods beginning before the Closing Date.
The Vendor and the Purchaser shall cooperate fully with each other and make
available to each other in a timely fashion such data and other information as
may reasonably be required for the preparation of any Tax Return of the
Companies for a period ending on, prior to or including the Closing Date and
shall preserve such data and other information until the expiration of any
applicable limitation period under any applicable Law with respect to Taxes.
9.7 PURCHASER'S OPTION IF DAMAGE, ETC.
If the assets of any of the Companies, or a portion of them are damaged or
destroyed or appropriated, expropriated or seized by any Person, on or prior to
the Closing Date, the Vendor shall give the Purchaser notice thereof forthwith
after such action comes to its attention and the Purchaser shall have the
option:
(a) to reduce the Share Purchase Price by an amount equal to the
deductible amounts of the relevant insurance policies and to
complete the purchase, in which event, all proceeds of
insurance paid to the Companies or the Vendor and all right
and claims of the Companies or the Vendor to any such amounts
not paid by the Closing Date shall be assigned to the
Purchaser; or
(b) to reduce the Share Purchase Price by the amount of the damage
and to complete the purchase, in which event the Vendor shall
have sole entitlement to the proceeds of insurance and the
Purchaser shall release its interest (if any) therein.
Notwithstanding the foregoing, if there is damage or destruction in respect of
which the repair or replacement cost would be $1 million or more to the property
of any one Company, then the Purchaser may delete that Company from the list of
Companies set forth in Exhibit A, and complete the purchase of the shares of the
remaining Companies and the Share Purchase Price shall be reduced by an amount
equal to the product of: (i) the Aggregate Consideration; and (ii) a fraction,
the numerator of which is the EBITDA of the Company to be deleted and the
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denominator of which is the total EBITDA of all of the Companies, where EBITDA
shall, in each case, be derived from the Financial Statements and, if there is
damage or destruction in respect of which the repair or replacement cost would
be $3 million or more to the property of the Companies in the aggregate, then
the Purchaser may terminate this Agreement.
9.8 CONSENT TO JURISDICTION
Each of the Parties irrevocably attorns and submits to the exclusive
jurisdiction of any Ontario court sitting in Toronto in any action or proceeding
arising out of or related to this Agreement and irrevocably agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such Ontario court. Each of the Parties irrevocably waives, to the fullest
extent it may effectively do so, the defence of an inconvenient forum to the
maintenance of such action or proceeding. The Vendor agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. The Purchaser agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
9.9 DEFAMATION INSURANCE
The Vendor shall be responsible for any and all defamation claims against any of
the Companies and any of its Employees in respect of an occurrence on or prior
to the Closing Date. The Purchaser shall be responsible for any and all
defamation claims made or brought against any of the Companies and any of its
Employees in respect of an occurrence after the Closing Date. The Purchaser
shall make available to the Vendor and its insurers and their respective counsel
the services of the Employees necessary to defend any such defamation action
together with all relevant books and records.
9.10 CHANGE OF WEBSITE ADDRESS AND MASTHEAD
Forthwith after Closing, the Purchaser shall cause each of the Companies to
change the name of its website to reflect a name that does not include the name
"Southam", "CanWest", or other CanWest/Southam Intellectual Property and shall
cause each of the Companies to change the masthead references on its
publications to reflect the new publisher.
9.11 LTD EMPLOYEES
(a) Following the Closing Date, the LTD Employees will continue to
receive payments and benefits under the Vendor's non-pension
benefits plans and the Purchaser will have no liability for
any benefits, liabilities or claims in respect of the LTD
Employees. If an LTD Employee returns to work following the
Closing Date, the Purchaser may, at its option: (a) cause the
relevant Company to offer the LTD Employee employment on
substantially the same terms and conditions as those
previously applicable; or (b) cause the relevant Company to
terminate the employment of the LTD Employee, in which event
the Vendor shall reimburse the Purchaser for the reasonable
amounts of compensation paid in connection with the severance
of the LTD Employee, provided that no punitive or aggravated
damages shall be payable.
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(b) All Employees other than the LTD Employees who are receiving
payments and benefits under a Benefit Plan that is a long-term
disability plan as at the Closing Date shall continue to
receive payments and benefits under the Vendor's long-term
disability plan until they return to work.
9.12 EXCLUDED EMPLOYEE
Prior to Closing, the Vendor or an Affiliate shall offer employment to the
Excluded Employee and the Purchaser and the Companies shall have no liability
following Closing to the Excluded Employee.
9.13 INACTIVE ST. CATHARINES EMPLOYEES
The Purchaser shall administer the payment of post-retirement benefits in
respect of the Inactive St. Catharines Employees, upon receipt of funds from
Xxxxxxxxx Inc. in respect thereof. The Vendor shall indemnify the Purchaser in
the event of any non-payment of such funds by Xxxxxxxxx Inc.
9.14 MUTUAL UNDERSTANDING REGARDING AMENDMENTS
The Parties will continue from and after the date hereof and through and
including the Closing Date, to use all reasonable efforts to maximize present
and future financial and planning opportunities for the Vendor, the Companies
and the Purchaser as and to the extent that the same not prejudice the Vendor,
the Companies or the Purchaser. The Parties will ensure that such planning
activities do not impede the progress of the transactions contemplated hereby.
The Parties agree that if a Party proposes any amendments to this Agreement, the
other Party will act reasonably in considering such amendment and if the other
Party or the Companies are not prejudiced by reason of any such amendment the
other Party will cooperate in a reasonable fashion with the Party proposing the
amendment so that such amendment can be effected subject to applicable Laws.
9.15 INTER-AFFILIATE ACCOUNTS
(a) Notwithstanding any other provision of this Agreement, CanWest
and the Vendor shall complete a transaction or series of
transactions effective on or before Closing so as to reduce or
eliminate the accounts between the Companies and their
Affiliates and/or Xxxxxxxxx Inc. and its Affiliates
("Inter-Affiliate Accounts") and, in connection therewith,
CanWest and the Vendor may cause the Companies to declare and
pay such dividends, repay such portion of the principal of the
Shareholder Loans, effect such set-off of the Inter-Affiliate
Accounts and/or complete such other transactions as may be
necessary or desirable to effect the reduction or elimination
of the Inter-Affiliate Accounts. The Purchaser agrees to do
all such things and provide all such reasonable assurances as
may be required to implement the foregoing transaction or
series of transactions, having regard to the fact that the
CanWest and the Vendor may not be in a position to finalize
the amounts of the Inter-Affiliate Accounts until up to 30
days following the Closing.
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(c) CanWest shall ensure that all Inter-Affiliate Accounts
remaining after the completion of the foregoing transactions
are current and relate only to those goods and/or services
which are the subject of the Operational Services Agreements
or the Closing Agreements.
ARTICLE 10
INDEMNIFICATION
10.1 INDEMNIFICATION FOR BREACHES OF COVENANTS AND WARRANTY, ETC.
The Vendor and CanWest, on a joint and several basis, shall indemnify and save
harmless the Purchaser, on its behalf and on behalf of its directors, officers,
employees, agents and shareholders, and the Purchaser shall indemnify and save
harmless the Vendor, its directors, officers, employees, agents and shareholders
(the Party or Parties so covenanting and agreeing to indemnify another Party
being referred to in this Section as the "Indemnifying Party" and the Party to
be indemnified being called the "Indemnified Party") on an after-tax basis to
the Indemnified Party, from and against all Claims and any Remediation Order
which may be made or brought against the Indemnified Party, and Losses in
respect of such Claims or Remediation Orders, directly or indirectly as a result
of or in connection with: (i) any non-fulfilment of any covenant or agreement on
the part of the Indemnifying Party under this Agreement; (ii) any incorrectness
in or breach of any representation or warranty of the Indemnifying Party
contained in this Agreement or in any certificate or other document furnished by
the Indemnifying Party pursuant to this Agreement, other than any breach of
Section 4.23 (Environmental Matters); or (iii) any Environmental Condition. The
foregoing obligation of indemnification in respect of such Claims or Remediation
Orders shall be subject to:
(a) the limitation contained in Section 6.2 respecting the
survival of the representations and warranties of the Parties;
(b) the requirement that the Indemnifying Party shall, in respect
of any Claim made by any third Person or a Remediation Order,
be afforded an opportunity to resist, defend, settle and
compromise such Claim or Remediation Order and, in respect of
any Claim or Remediation Order made in connection with an
Environmental Condition, be afforded an opportunity to
implement any Remediation necessary to address such
Environmental Condition in a commercially reasonable manner
and in accordance with generally accepted engineering and
environmental practices, provided, however, that such
Remediation results in the full satisfaction of the Claim or
Remediation Order;
(c) the limitation that, for Losses in respect of Claims made in
connection with: (i) any representation or warranty; and (ii)
Section 9.1(a); (b)(viii), (ix), (xi), (xii) or (xiii); (c);
(f)(i) or (ii); (i) or (j)(ii), the Indemnifying Party shall:
(A) not be required to pay any such amount until the aggregate
of the Losses in respect of such Claims exceeds $500,000 and
upon the aggregate of the Losses in respect of such Claims
exceeding $500,000, the Indemnifying Party shall be required
to pay the amount owing in respect of all Losses in respect of
such Claims including the initial $500,000, provided, however,
that in the event of any Losses in respect of Claim made for a
breach of Section 4.11 (Absence of Undisclosed Liabilities),
the
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Purchaser's Loss in respect of such breach for the purposes of
this Section 10.1 shall be deemed to be the entire amount of
the undisclosed liabilities; and (B) not be liable for an
amount exceeding the Aggregate Consideration;
(d) the limitation that for Losses in respect of any Claims or
Remediation Orders made in connection with an Environmental
Condition, the Indemnifying Party shall: (i) not be required
to pay any amount until and unless the aggregate of all Losses
in respect of such Claims or Remediation Orders exceeds
$500,000 (the "Environmental Deductible") and shall only be
required to pay for amounts which exceed the Environmental
Deductible; and (ii) not be liable for an amount exceeding the
Aggregate Consideration;
(e) the limitation that the Vendor shall not be liable for any
special, indirect, consequential, punitive or aggravated
damages, including damages for loss of profit;
(f) the limitation that no claim for indemnity hereunder may be
brought in respect of an Environmental Condition more than
four (4) years after the Closing Date;
10.2 INDEMNIFICATION PROCEDURES FOR THIRD PARTY CLAIMS AND GOVERNMENTAL
ORDERS
(a) In the case of Claims made by a third party with respect to
which indemnification is sought or may be sought (including
Claims made by a Governmental Authority in respect of an
Environmental Condition), the Party seeking indemnification
(in this Section, the "Indemnified Party") shall give prompt
Notice, and in any event within 20 days (or as soon as is
practical where the appeal period for an order of a
Governmental Authority is less than 20 days after the date the
Claim is received), to the other Party (in this Section, the
"Indemnifying Party") of any such Claims made upon it. If the
Indemnified Party fails to give such Notice, such failure
shall not preclude the Indemnified Party from obtaining such
indemnification, but its right to indemnification may be
reduced to the extent that such delay prejudiced the defence
of the Claim or increased the amount of liability or cost of
defence and provided that no Claim for indemnity in respect of
the breach of any representation or warranty contained in this
Agreement may be made unless Notice of such Claim has been
given prior to the expiry of the survival period applicable to
such representation and warranty pursuant to Section 6.2 and
no Claim for indemnity in respect of an Environmental
Condition may be made unless Notice of such Claim has been
given prior to the expiry of the four year limitation period
pursuant to Section 10.1(f).
(b) The Indemnifying Party shall have the right, by Notice to the
Indemnified Party given not later than 30 days after receipt
of the Notice described in subsection (a), to assume the
control of the defence, compromise or settlement of the Claim.
(c) Upon the assumption of control of any Claim by the
Indemnifying Party as set out in subsection (b), the
Indemnifying Party shall diligently proceed with the defence,
compromise or settlement of the Claim and, if necessary, the
Indemnifying Party shall employ counsel and, in the case of an
Environmental
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Condition, consultants and contractors reasonably satisfactory
to the Indemnified Party.
(d) If the Indemnifying Party assumes control of the Claim, the
costs and expenses of the Indemnifying Party in connection
with any Claims other than Claims in connection with an
Environmental Condition shall be for the account of and paid
by the Indemnifying Party. If the Indemnifying Party assumes
control of any Claims made in connection with an Environmental
Condition or the proceedings with respect to a Remediation
Order, the costs and expenses of the Indemnifying Party
(including Remediation Costs) shall be paid by the
Indemnifying Party, provided that the Indemnified Party shall
reimburse the Indemnifying Party for all costs and expenses
(including Remediation Costs) incurred by the Indemnifying
Party in defence, compromise or settlement of the Claim or
Remediation Order relating to the Environmental Condition up
to the amount of the Environmental Deductible.
(e) The final determination of any Claim pursuant to this Section,
including all related costs and expenses, shall be binding and
conclusive upon the Parties as to the validity or invalidity,
as the case may be of such Claim against the Indemnifying
Party.
(f) If the Indemnifying Party does not assume control of the Claim
as permitted in subsection (b), the Indemnified Party shall
not be entitled to any indemnity from the Indemnifying Party
in respect of such Claim if the Indemnified Party settles such
Claim without the consent of the Indemnifying Party.
10.3 ADDITIONAL INDEMNIFICATION PROCEDURES FOR REMEDIATION ORDERS AND
REMEDIATION
In the event that:
(a) any Remediation Order is issued against CanWest, the Vendor or
any of their Affiliates or the Purchaser or any of the
Companies with respect to any Environmental Condition;
(b) the Purchaser, any of the Companies, CanWest or the Vendor or
any of their Affiliates is otherwise required by Environmental
Laws to Remediate any Environmental Condition; or
(c) the Parties agree that any Environmental Condition should be
Remediated in order to avoid the issuance of any potential
Claim or Remediation Order,
then:
(d) the Party that receives the Remediation Order or a notice of
Remediation Order shall give prompt Notice and in any event
within 20 days (or as soon as is practical if the appeal
period is 15 days or less) to the other Party of the existence
of same, together with such other information which is in the
possession or
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control of the Party as may be required to properly understand
the context of the situation;
(e) each Party shall have the right to fully participate in any
discussions with any Governmental Authority with respect to
the Environmental Condition;
(f) the Vendor shall have the right, by notice to the Purchaser
given not later than 30 days after receipt of the Notice
described in subsection (d), to assume control of the
proceedings and actions taken with respect to the Remediation
Order and the Remediation, failing which the Purchaser shall
assume control of the proceedings and actions taken with
respect to the Remediation Order and the Remediation;
(g) each Party shall provide the other with all consultants' and
contractors' reports, monitoring or sampling reports or
results, correspondence and all other data, documents or
information which may be materially relevant to the
Remediation Order or the Remediation;
(h) each Party shall provide the other with all reasonable
co-operation and assistance which is reasonably requested by
the other, including providing access to employees for
interviews and questions and making such employees reasonably
available as witnesses;
(i) the Party undertaking any Remediation with respect to matters
covered by this Section shall:
(i) always proceed in compliance with Environmental Laws
and in a commercially reasonable manner in accordance
with generally accepted engineering and environmental
practices;
(ii) retain a properly qualified consultant to develop a
Remediation Plan to address the Environmental
Condition and, no later than 15 days prior to the
date upon which the Remediation Plan is finalised,
provide the other Party with a copy of such plan in
draft form;
(iii) instruct such consultant to amend the draft
Remediation Plan to address any reasonable
suggestions or comments which are received from the
other Party;
(iv) during the Remediation, provide the other Party, or
its representatives or consultants, with:
(A) such information as may be reasonably
requested by the other Party;
(B) the opportunity to observe the work being
undertaken and to take such samples and to
undertake such tests as the other Party may
reasonably request,
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provided that the other Party shall do so at its own
expense and the Party undertaking the Remediation
will not accept any responsibility or liability for
any personal injury or any other damage that may be
caused to the other Party or its representatives or
consultants during such observations, howsoever
caused. If the other Party or its consultants or
representatives do attend to observe the work, then
they shall first execute a written waiver of
liability in favour of the Party undertaking the
Remediation in a form satisfactory to the Party
undertaking the Remediation, acting reasonably; and
(v) provide the other Party, as soon as is practicable
and in any event no later than 30 days after the
Remediation is completed, with a Completion Report
from the consultant;
(j) the Remediation Costs shall be paid as provided in Section
10.2(d); and
(k) in the event that the Party undertaking the Remediation is the
Vendor, the Purchaser shall provide the Vendor with such
access to the Real Property as may be required by the Vendor
to properly undertake such Remediation, provided that the
Vendor shall take all reasonable steps to avoid any
unreasonable interference with the business operations at the
Real Property.
The foregoing obligations and agreements apply only in respect of notices of
Remediation Orders or notices of requirements under Environmental Laws that are
delivered pursuant to paragraph (d) above within four years of the Closing Date.
10.4 GOOD FAITH
The Parties shall at all times act:
(a) in good faith in matters relating to Sections 10.3 or 10.4 of
this Agreement;
(b) to reduce the likelihood of a Remediation Order being issued;
(c) to reduce or minimize the likelihood of a Claim being made,
the amount of any such Claim and the costs or expenses payable
under this Agreement where Remediation is to be undertaken;
and
(d) always in a manner consistent with reasonableness and sound
business and environmental practices.
10.5 DISPUTES
In the event that any dispute or disagreement shall arise between the Parties
regarding any matter pursuant to Sections 10.3 or 10.4 (including the content of
any Remediation Plan, the conduct of any Remediation and the payment of any
amounts), such dispute or disagreement shall be resolved in accordance with the
Arbitration Procedures.
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ARTICLE 11
GENERAL
11.1 PUBLIC NOTICES
All public notices to third parties and all other publicity concerning the
transactions contemplated by this Agreement shall be jointly planned and
coordinated by the Vendor and the Purchaser and no Party shall act unilaterally
in this regard without the prior approval of the other Party, such approval not
to be unreasonably withheld, except where required to do so by law or by the
applicable regulations or policies of any provincial or Canadian or other
regulatory agency of competent jurisdiction or any stock exchange in
circumstances where prior consultation with the other Party is not practicable.
11.2 EXPENSES
Each of the Parties shall pay their respective legal, accounting, and other
professional advisory fees, costs and expenses incurred in connection with the
transactions contemplated hereby and the preparation, execution and delivery of
this Agreement and all documents and instruments executed pursuant to this
Agreement and any other costs and expenses incurred. In particular, the Vendor
shall be responsible for any fees and expenses of any broker or investment
advisor retained in connection with the transactions contemplated hereby and
such fees and expenses shall not constitute an obligation of the Companies or
the Purchaser.
11.3 NOTICES
Any notice, consent or approval required or permitted to be given in connection
with this Agreement (in this Section referred to as a "Notice") shall be in
writing and shall be sufficiently given if delivered (whether in person, by
courier service or other personal method of delivery), or if transmitted by
facsimile or e-mail:
(a) in the case of a Notice to the Vendor at:
x/x XxxXxxx Xxxxxx Xxxxxxxxxxxxxx Xxxxxxx
00xx Xxxxx, Xxxxxxx-Xxxxxxxx Centre
000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx X0X 0X0
Attention: Vice-President and General Counsel
with a copy to the Director, Corporate Development
E-mail: xxxxxxxx@xxxxxxx.xxx
c: xxxxxxxxx@xxxxxxx.xxx
Facsimile: (000) 000-0000
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(b) in the case of a Notice to the Purchaser at:
Osprey Media Holdings Inc.
00 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: President and Chief Executive Officer
with a copy to the Vice President, Finance
E-mail: xxxxxxx@xxxxxxxxxxx.xx
c: xxxxxxx@xxxxxxxxxxx.xx
Facsimile: (000) 000-0000
Any Notice delivered or transmitted to a Party as provided above shall be deemed
to have been given and received on the day it is delivered or transmitted,
provided that it is delivered or transmitted on a Business Day prior to 5:00
p.m. local time in the place of delivery or receipt. However, if the Notice is
delivered or transmitted after 5:00 p.m. local time or if such day is not a
Business Day then the Notice shall be deemed to have been given and received on
the next Business Day.
Any Party may, from time to time, change its address by giving Notice to the
other Parties in accordance with the provisions of this Section.
11.4 ASSIGNMENT
Neither this Agreement nor any benefits or burdens under this Agreement shall be
assignable by any Party without the prior written consent of the other Party,
which consent may be withheld in the sole discretion of the consenting Party,
except that the Purchaser may assign by way of security its rights under this
Agreement to one or more financial institutions providing bank financing to the
Purchaser or its Affiliates. Subject to the foregoing, this Agreement shall
enure to the benefit of and be binding upon the Parties and their respective
successors (including any successor by reason of amalgamation of any Party) and
permitted assigns.
11.5 ARBITRATION
In the event that the Parties are unable to settle any dispute relating to
construction or application of any provisions of the Agreement, or the rights,
duties or obligations of any Party associated therewith or derived therefrom,
the dispute shall forthwith be referred to arbitration in accordance with the
Arbitration Procedures, provided that nothing in this Section 11.5 will preclude
a Party from seeking interim relief by way of an injunction (mandatory or
otherwise) or other interim equitable relief in the Ontario Superior Court in
connection with this Agreement which court will have exclusive jurisdiction in
respect of all such matters.
11.6 AMENDMENT
No amendment, supplement, modification or waiver or termination of this
Agreement and, unless otherwise specified, no consent or approval by any Party,
shall be binding unless executed in writing by the Party to be bound thereby.
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11.7 FURTHER ASSURANCES
The Parties shall, with reasonable diligence, do all such things and provide all
such reasonable assurances as may be required to consummate the transactions
contemplated by this Agreement, and each Party shall provide such further
documents or instruments required by any other Party as may be reasonably
necessary or desirable to effect the purpose of this Agreement and carry out its
provisions, whether before or after the Closing.
11.8 EXECUTION AND COUNTERPARTS
This Agreement may be executed by the Parties in counterparts and may be
executed and delivered by facsimile and all such counterparts and facsimiles
shall together constitute one and the same agreement.
IN WITNESS OF WHICH the Parties have executed this Share Purchase Agreement.
GLOBAL COMMUNICATIONS LIMITED
By: /S/ XXXXXXX X. XXXXXXX
------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
CANWEST GLOBAL
COMMUNICATIONS CORP.
By: /S/ XXXXXXX X. XXXXXXX
------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President and
General Counsel
OSPREY MEDIA HOLDINGS INC.
By: /S/ XXXXXXX X. XXXXXX
-------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and
Chief Executive Officer
LIST OF SCHEDULES
SCHEDULE/EXHIBITS DESCRIPTION
----------------- -----------
Exhibit A List of Companies and Publications/Operations
Exhibit B Form of Pension and Employee Benefits Plans Agreement
Exhibit C Form of Transitional Services Agreement
Exhibit D Form of Non-Competition Agreement
Exhibit E Form of Opinion of Xxxx Xxxxxxx LLP
Exhibit F Form of Advertising Representation Agreement
Exhibit G Form of CanWest News Services Agreement
Exhibit H Form of CanWest Editorial Services Agreement
Exhibit I Form of Electronic Distribution Agreement
Schedule 1.1(a) Arbitration Procedures
Schedule 1.1(b) Permitted Encumbrances
Schedule 3.4 Net Working Capital Calculation
Schedule 3.6 Allocation of Share Purchase Price
Schedule 4.4 Capitalization
Schedule 4.10(a) Financial Statements
Schedule 4.10(b) Interim Financial Statements
Schedule 4.12 Changes and Unusual Transactions
Schedule 4.18 Governmental Authorizations
Schedule 4.19 Intellectual Property
Schedule 4.20 Owned Real Property
Schedule 4.21 Leased Real Property
Schedule 4.23 Environmental Matters
Schedule 4.24 Employment Matters
Schedule 4.25 Collective Agreements
Schedule 4.26 Pension and Benefit Plans
Schedule 4.28 Material Contracts
Schedule 4.29 Litigation
Schedule 4.30 Tax Matters
Schedule 4.35 Commercial Print Customers
Schedule 4.36 Services Provided to the Companies
Schedule 9.12 Inactive St. Catharines Employees
EXHIBIT A
PURCHASED COMPANIES
COMPANY PUBLICATIONS/OPERATIONS
------- -----------------------
1. BRANTFORD EXPOSITOR GROUP INC. (a) The Expositor (Brantford, Daily, Paid)
(b) Midweek (Brantford, Weekly, Free)
(c) Weekender (Brantford, Weekly, Free)
(d) TV Times (Brantford, Weekly, Free)
(e) Homes (Brantford, Weekly, Free)
(f) Life Matters (Brantford, 8 times/year, Free)
2. FLAMBOROUGH REVIEW NEWSPAPER INC. (a) Flamborough Review (Flamborough, Weekly, Free)
3. HAMILTON PRINTING GROUP INC. (a) Printing Operation
4. NIAGARA NEWSPAPER GROUP INC. (a) The Dunnville Chronicle (Dunnville, Weekly, Paid)
(b) Niagara Falls Review (Niagara Falls, Daily, Paid)
(c) Weekend Update (Niagara Falls, Weekly, Free)
(d) The Tribune (Welland, Daily, Paid)
(e) The Tribune Extra (Welland, Weekly, Free)
(f) In Port (Welland, Weekly, Free)
(g) Pelham News (Welland, Weekly, Free)
5. PENINSULA NEWSPAPER GROUP INC. (a) Xxxxxx Group
(i) Weekend Edition (Grimsby, Weekly, Free)
(ii) Niagara Advance (Niagara Lake, Weekly, Free)
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COMPANY PUBLICATIONS/OPERATIONS
------- -----------------------
(iii) The Times (Fort Erie, Weekly, Free)
(iv) The Fort Erie Shopping Times (Fort Erie, Weekly, Free)
(v) Niagara Shopping News (Niagara Falls, Bi-Weekly, Free)
(vi) Welland Regional Shopping News (Welland, Weekly, Free)
(vii) St. Catharines Shopping News (St. Catharines, Weekly, Free)
(b) Xxxxxx Publications Group
(i) Lincoln Post Express (Weekly, Free)
(ii) West Lincoln Review (Weekly, Free)
(iii) Grimsby Independent (Grimsby, Weekly, Free)
6. SOUTHERN ONTARIO COMMUNITY (a) The Brabant Group
NEWSPAPER GROUP INC.
(i) Ancaster News (Weekly, Voluntary Pay)
(ii) Dundas Star News (Weekly, Free)
(iii) Hamilton News - Mountain Edition (Weekly, Free)
(iv) Stoney Creek News (Weekly, Free)
(v) Real Estate News & Business Guide (Weekly, Free)
(vi) New Homes News (Weekly, Free)
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COMPANY PUBLICATIONS/OPERATIONS
------- -----------------------
(b) The Fairway Group
(i) New Hamburg Independent (Weekly, Paid)
(ii) Cambridge Times (Bi-Weekly, Voluntary Pay)
(iii) The Guelph Tribune (Bi-Weekly, Voluntary Pay)
(iv) Waterloo Chronicle (Weekly, Voluntary Pay)
(v) Forever Young (Monthly, Free)
7. ST. CATHARINES STANDARD GROUP INC. (a) The Standard (St. Catharines, Daily, Paid)
8. CANWEST ST. CATHARINES R.P. (a) No Publications (holding company for real
HOLDINGS INC. property used by St. Catharines Standard)
SCHEDULE 1.1(a)
ARBITRATION PROCEDURES
1. DEFINITIONS AND INTERPRETATION
(a) DEFINITIONS - Unless otherwise defined in this Schedule, all
capitalized terms defined in the Agreement which are used in
this Schedule have the same meaning as provided for those
terms in the Agreement. Where used in this Schedule, unless
the context or subject matter otherwise requires, the
following words and phrases will have the meaning set forth
below:
"Approved Arbitrator" means a retired judge of the Ontario
Superior Court or a comparably qualified individual.
"Arbitrator" means the Arbitrator appointed pursuant to
Section 2 of this Schedule.
"Dispute" means any matter which a Party, in accordance with
the terms of the Agreement, submits to arbitration in
accordance with the terms of this Schedule.
"Procedures" means the arbitration procedures described in
this Schedule.
"Schedule" means this schedule of arbitration procedures and
all exhibits attached hereto.
(b) GOVERNING LAW AND JURISDICTION - All Disputes referred to
arbitration (including the scope of the agreement to
arbitrate, the law relating to the enforcement of the
agreement to arbitrate, any relevant limitation periods, the
law governing the procedure of the arbitration, the law
relating to available remedies, set-off claims, conflict of
laws rules and claims to costs and interest) shall be governed
by the laws of the Province of Ontario. Except as expressly
provided otherwise in this Schedule or the Agreement, the
provisions of the Arbitration Act, 1991 S.O. 1991 c.17
(Ontario) (the "Arbitration Act") shall apply in respect of
any arbitration conducted pursuant to this Schedule.
(c) TIME - In the computation of time under the Procedures or an
order or direction given by the Arbitrator pursuant to this
Schedule, except where a contrary intention appears or the
Parties otherwise agree:
(i) where there is a reference to a number of days
between two events, those days shall be counted by
excluding the day on which the first event happens
and including the day on which the second event
happens, even if they are described as clear days or
the words "at least" are used;
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(ii) where the time for doing any act under this Schedule
or any order or direction given by the Arbitrator
expires on a day which is not a Business Day, the act
may be done on the next day that is not a Business
Day; and
(iii) delivery of a document or notice provided for in this
Schedule or any order or direction given by the
Arbitrator made after 4:00 p.m. (Toronto time) or at
any time on a day which is not a Business Day, shall
be deemed to have been made on the next Business Day.
2. COMMENCEMENT OF ARBITRATION - Any Party to the Agreement (the
"Applicant") may commence arbitration for a Dispute by delivering a
written notice (a "Complaint") to the Party against whom the Applicant
seeks a remedy (the "Respondent"). In the Complaint, the Applicant
shall describe the substance of the Dispute and name three (3) persons
whom the Applicant is prepared to appoint as arbitrator, each of such
persons to be an Approved Arbitrator. Within 10 days of the receipt of
the Complaint, the Respondent shall by written Notice to the Applicant
appoint one of the three (3) persons named by the Applicant or provide
the Applicant with a list of three (3) persons who are Approved
Arbitrators. Within 10 days of receipt of the Respondent's list, by
written Notice to the Respondent, the Applicant shall appoint one (1)
of such persons, or provide a further list of (3) three Approved
Arbitrators. The Parties shall continue to exchange lists of three (3)
Approved Arbitrators in this fashion until an Approved Arbitrator is
appointed. If an Arbitrator is not appointed within 30 days of the
initial receipt by the Respondent of the Complaint, either Party may
apply to a judge of the Ontario Superior Court of Justice to appoint
the Arbitrator on behalf of the Parties.
3. ARBITRATION PROCEDURES - The following procedures shall apply to the
arbitration of any Dispute, except as the Parties may otherwise agree
or as the Arbitrator otherwise directs:
(a) Within 10 days of the appointment of the Arbitrator, the
Applicant shall deliver to the Respondent and the Arbitrator a
written statement (the "Claim") concerning the Dispute setting
forth, with particularity, the full names, descriptions and
addresses of the Parties, the nature of the Claim, the
allegations of fact supporting the Dispute submitted for
arbitration and the relief or remedy sought.
(b) Within 20 days after the delivery of the Claim, the Respondent
shall deliver to the Applicant and the Arbitrator a written
response (the "Answer") to the Claim setting forth, with
particularity, its position on the Dispute and the allegations
of fact supporting the Answer.
(c) If any Respondent fails to deliver an Answer within the time
limit referred to in subsection 3(b) of this Schedule, that
Respondent shall, subject to subsection 3(f), be deemed to
have admitted the allegations of fact alleged in the Claim and
have accepted the Applicant's entitlement to the relief and
remedy set out in the Claim.
(d) Within 7 days after the delivery of any Answer, the Applicant
may deliver to the Respondent and the Arbitrator a written
reply (the "Reply") to that Answer, setting forth, with
particularity, its response, if any, to the Answer.
-3-
(e) If the Respondent wants to submit any other Dispute to the
Arbitrator it may, within the time provided for the delivery
of the Answer to the Claim, also deliver to the Applicant and
the Arbitrator a counter-complaint (the "Counter-Complaint")
setting forth, with particularity, the nature of the
Counter-Complaint, the allegations of fact supporting the
Counter-Complaint and the relief or remedy sought, for the
Arbitrator to decide. Within 15 days of the delivery of a
Counter-Complaint, the Applicant shall deliver to the
Respondent making a Counter-Complaint and the Arbitrator an
Answer to such Counter-Complaint setting forth, with
particularity, its position on the Counter-Complaint and the
allegations of fact supporting the Counter-Complaint. If the
Applicant fails to deliver an Answer to the Counter-Complaint
within such 15-day period, the Applicant will be deemed,
subject to subsection (f) to have admitted the allegations of
fact alleged in the Counter-Complaint, and have accepted the
Respondent's entitlement to the relief and remedy set out in
the Counter-Complaint. Within 7 days after the delivery of an
Answer to the Counter-Complaint, the Respondent may deliver to
the Applicant and the Arbitrator a Reply to such Answer
setting forth, with particularity, its response to such
Answer. Any Dispute submitted to arbitration in accordance
with this subsection 3(e) shall be governed by, and dealt with
as if it were the subject of a Complaint, that shall be
determined by the same Arbitrator as part of the same
arbitration proceeding as the Complaint.
(f) The time limits set for the delivery of the documents referred
to in subsections 3(a) to (e) inclusive may be extended by
agreement of the Parties to the Agreement or by the Arbitrator
for such period, on such terms, and for such reasons as he or
she in his or her discretion may determine upon application
made to the Arbitrator in writing by either the Applicant or
the Respondent on notice to the other, either before the
expiry of the time limit in issue or within 2 days thereafter,
and the Arbitrator may relieve the applying Party of the
consequences of its failure to comply with the time limit in
issue, provided, however, that the other Party shall be given
an opportunity to make submissions on the application.
(g) Within 7 days following the completion of the steps set out in
subsections 3(a) to (e) of this Schedule, a Party may, upon
written notice to the other Party and to the Arbitrator,
request the Arbitrator to give directions and make any order
which is, in the discretion of the Arbitrator, reasonable
regarding any procedural matters which properly should be
resolved before the arbitration proceeds further, including:
the amendment of any Claim, Counter-Complaint, Answer or
Reply; the provision of particulars; the production of
documents and the need for examinations for discoveries in
connection with the arbitration, either by way of oral
examination or written interrogatories and a determination as
to the manner in which evidence shall be presented to the
Arbitrator (by way of agreed statement of facts, affidavit
evidence and transcripts of cross-examinations on such
affidavit evidence or viva voce, or some combination thereof).
In making any order or giving any direction in respect of any
procedural matter the Arbitrator may impose such terms as are
reasonable in order to ensure the completion of the
arbitration in a timely manner. The notice requesting any
direction or order pursuant to this subsection shall state the
direction or order
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sought and set out the reasons for seeking such direction or
order. Nothing in this subsection shall be taken to limit the
jurisdiction of the Arbitrator to deal with procedural matters
in accordance with the Arbitration Act.
(h) Within 14 days of the delivery of the last of the statements
described in Section 3 (each a "Statement") to the Arbitrator,
or the expiry of the time for delivery of the last of such
Statements, each Party may, at its option, make a reply to any
Statement (a "Reply Statement").
(i) In the case where no Party has requested directions in
accordance with paragraph 3(g), the Parties shall have an
opportunity to make oral submissions to the Arbitrator
following the delivery of the Statements provided for in
paragraph 3(h). Such oral submissions shall be made at a
hearing ("Hearing") to be scheduled for a date within 30 days
of the delivery of the Reply Statements provided for in
subparagraph 3(h).
(j) Unless the time for making an award is extended by agreement
of the Parties or by court order, the Arbitrator shall make an
award within 60 days after completion of any Hearing. The
award shall be in writing and shall state the reasons on which
it is based. Executed copies of all awards shall be delivered
by the Arbitrator to each Party as soon as is reasonably
possible.
4. AGREEMENT TO BE BOUND - Notwithstanding the provisions of Section 2 of
this Schedule, no individual shall be appointed as Arbitrator unless he
or she agrees in writing to be bound by the provisions of this
Schedule.
5. ARBITRATOR DISCRETION - Subject to the Arbitration Act, the Agreement
and this Schedule, the Arbitrator may conduct the arbitration in such
manner as the Arbitrator considers appropriate.
6. INTERIM RELIEF - At the request of any Party, the Arbitrator may take
such interim measures as the Arbitrator considers necessary in respect
of the Dispute, including measures for the preservation of assets, the
conservation of goods or the sale of perishable goods. The Arbitrator
may require security for the costs of such measures.
7. REMEDIES - The Arbitrator may make final, interim, interlocutory and
partial awards. An award may grant any remedy or relief which the
Arbitrator considers just and equitable and consistent with the
intention of the Parties under the Agreement. The Arbitrator shall
state in the award whether or not the Arbitrator views the award as
final or interim, for purposes of any judicial proceedings in
connection with such award.
8. DECISION OF ARBITRATOR OR PANEL FINAL AND BINDING - Any award rendered
or determination made by the Arbitrator or by the Panel, as applicable,
including any determination relating to interim or interlocutory
matters, shall be final and binding and there shall be no appeal
therefrom, subject only to the provisions for putting aside an award
contained in Section 46 of the Arbitration Act. Except as specifically
provided herein, all issues arising in connection with the Dispute and
the resolution thereof, including issues relating to interlocutory and
interim matters, shall be resolved by the
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Arbitrator or by the Panel pursuant to the procedures set forth herein
and shall not be resolved by application to the Ontario Superior Court
of Justice or any other court.
9. COSTS OF ARBITRATION - The fees and expenses of the Arbitrator and
costs of the arbitration facilities shall be billed to and paid in
equal proportions by the Parties to the Arbitration. The Arbitrator
shall have the power to award costs, including the fees and expenses of
the Arbitrator and costs of the arbitration facilities, in whole or in
part where it is fair and reasonable, upon hearing submissions by any
Party to the Arbitration requesting same, and any responding
submissions from the other Party to the Arbitration. Unless otherwise
specifically ordered by the Arbitrator, any costs awarded shall be on a
party and party scale and not on a solicitor and client scale, or
substantial indemnity scale.
10. NOTICES - All Notices and all other documents required or permitted by
this Schedule to be given by any Party to the arbitration to any other
of them shall be given in accordance with Section 11.3 of the
Agreement. All Notices and all other documents required or permitted by
this Schedule to be given by any Party to the arbitration to the
Arbitrator shall be given in accordance with the Arbitrator's
instructions.
11. EXCLUSIONS - Section 45 of the Arbitration Act shall be excluded in
relation to any Arbitration pursuant to the provisions of this
Schedule.
12. CONFIDENTIALITY - The Parties shall keep confidential and not disclose
to any Person the existence of the Arbitration and any element of the
Arbitration (including submissions and any evidence or documents
presented or exchanged and any awards thereunder), except to the
Arbitrator, the Parties' shareholders, auditors and insurers, legal
counsel to the Parties and any other Person necessary to the conduct of
the Arbitration and except to the extent required by law, the rules of
a stock exchange or securities regulatory authority having jurisdiction
over a Party or required to enforce any award or decision made pursuant
thereto. No individual shall be appointed as an Arbitrator unless he or
she agrees in writing to be bound by a confidentiality provision
similar in form and substance to this Section 12.
13. EXPERTS - The Arbitrator shall not, without the written consent of all
the parties to the arbitration, appoint any expert or other consultant
or retain any counsel to advise him or her.
14. PLACE AND LANGUAGE - Unless otherwise agreed by the Parties to the
Arbitration, the place of the arbitration shall be Toronto, Ontario and
any hearing in the course of the arbitration shall take place in
Toronto, Ontario in the English language. The Arbitrator may hold
hearings at a location other than the place of the arbitration if the
parties to the arbitration agree.
SCHEDULE 1.1(b)
PERMITTED ENCUMBRANCES
"PERMITTED ENCUMBRANCES" means:
SECTION A
1. Xxxxxxxxx ROFR
2. Encumbrances granted in favour of The Bank of Nova Scotia, as
administrative agent for a syndicate of Lenders, which encumbrances
will be released on Closing, and any registrations in respect of which
will be discharged forthwith after Closing.
3. Encumbrances with respect to the Guarantees to be discharged or
extinguished as contemplated by this Agreement.
SECTION B
4. Applicable municipal by-laws, development agreements, subdivision
agreements, site plan agreements and building restrictions which do not
in the aggregate materially adversely affect the current use or value
of the Real Property affected thereby and provided the same have been
complied with in all material respects to the Closing Date including
the posting of any required security for performance of obligations
thereunder.
5. Any easements, servitudes, rights-of-way, licenses, restrictions that
run with the land and other minor Encumbrances (including easements,
rights-of-way and agreements for sewers, drains, gas and water mains or
electric light and power or telephone, telecommunications or cable
conduits, poles, wires and cables) which do not materially adversely
affect the current use or value of the Real Property affected thereby
and provided the same have been complied with in all material respects
to the Closing Date.
6. Defects or irregularities in title to the Real Property which are of a
minor nature and do not materially adversely affect the current use or
value of the Real Property affected thereby and provided the same have
been complied with in all material respects to the Closing Date.
7. Inchoate liens for taxes, assessments, governmental charges or levies
not due as at the Closing Date.
8. Inchoate liens for public utilities not due as at the Closing Date.
9. Rights of equipment lessors under Equipment Contracts provided the
terms of such Equipment Contracts have been fully performed to the
Closing Date.
10. The reservations in any original grants from the Crown of any land or
interests therein and statutory exceptions to title.
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11. Any privilege in favour of any lessor, licensor or permitter for rent
to become due or for other obligations or acts, the performance of
which is required under Contracts, or Real Property Leases, so long as
the payment of such or the performance of such other obligation or act
is not delinquent and provided that such liens or privileges do not
materially adversely effect the use or value of the assets of the
Company affected thereby.
