1
Exhibit 99.2.K (iii)
FORWARD PURCHASE AGREEMENT
THIS AGREEMENT is made as of this ___ day of October, 1997 between
[Selling Shareholder] ("Seller" and, together with the Other Sellers (as
defined below), "Sellers"), Corporate Seller Control Person (as defined below),
and DECS Trust II, a business trust organized under the laws of the State of
Delaware under and by virtue of an Amended and Restated Declaration of Trust,
dated as of October 22, 1997 (the "Declaration of Trust") (such trust and the
trustees thereof acting in their capacity as such being referred to herein as
"Purchaser").
WHEREAS, Seller owns either Subordinate Voting Shares, without par value
(the "Subordinate Voting Shares"), of Royal Group Technologies Limited, a
corporation organized under the law of Canada (including its successors, the
"Company"), or Multiple Voting Shares, without par value (the "Multiple Voting
Shares" and, together with the Subordinate Voting Shares, "Voting Shares"), of
the Company that are convertible into Subordinate Voting Shares;
WHEREAS, Purchaser has filed with the U.S. Securities and Exchange
Commission a registration statement contemplating the offering of up to
3,577,500 DECS (the "DECS"), the terms of which contemplate delivery by
Purchaser to the holders thereof of a number of Subordinate Voting Shares (or,
if some or all of the Sellers exercise their cash settlement option, cash in
lieu of part or all thereof), on November 15, 2000 (the "Sale Date");
WHEREAS, in exchange for certain consideration to be paid by Purchaser
hereunder and under other similar agreements, Purchaser and Sellers desire to
provide for the future acquisition, sale and delivery of the aggregate number
of Subordinate Voting Shares contemplated to be delivered by Purchaser in
respect of the DECS on the Sale Date, at a price to be established under this
Agreement and such other agreements;
WHEREAS, Seller has agreed to enter into a Collateral Agreement (the
"Collateral Agreement") among Seller, Purchaser and The Bank of New York, as
collateral agent (the "Collateral Agent"), substantially in the form of Exhibit
A hereto, pursuant to which Seller will grant Purchaser a security interest in
the Subordinate Voting Shares or Multiple Voting Shares specified therein and
in certain other circumstances certain other collateral to secure the
obligations of Seller hereunder;
[WHEREAS, Seller has agreed to enter into a Collateral Agency Agreement
(the "Collateral Agency Agreement") among Seller, Purchaser, the Collateral
Agent, the Company
This is a form of Forward Purchase Agreement. A substantially identical
agreement will be entered into by each Seller. Text surrounded by "[ ]" will
appear only in the Forward Purchase Agreements for the Sellers selling
Additional Shares. Text surrounded by "{ }" will appear only in the other
Forward Purchase Agreements.
1
2
and CIBC Mellon Trust Company, as sub-collateral agent (the "Sub-Collateral
Agent"), relating to the Multiple Voting Shares pledged by Seller as
collateral;]
WHEREAS, Purchaser has agreed, pursuant to an underwriting agreement,
dated ___________, 1997 (the "Underwriting Agreement"), among Purchaser,
Seller, the other entities named as "Sellers" therein (collectively, the "Other
Sellers"), the Company, Salomon Brothers Inc (the "Underwriter") and certain
other persons named therein, to issue and sell to the Underwriter an aggregate
of 3,150,000 DECS (the "Initial DECS") and, at the Underwriter's option, up to
427,500 additional DECS (the "Additional DECS") to cover over-allotments, if
any;
WHEREAS, Seller is a corporation organized under the laws of the Province
of Ontario or of Canada, as the case may be, and is, directly or indirectly,
wholly owned by an individual named on the signature page of this Agreement
("Corporate Seller Control Person");
NOW, THEREFORE, in consideration of their mutual covenants herein
contained, the parties hereto, intending to be legally bound, hereby mutually
covenant and agree as follows:
DEFINITIONS
As used herein, the following words and phrases shall have the following
meanings:
"Acceleration Date" has the meaning provided in Article VII.
"Acceleration Value" has the meaning provided in Article VII.
["Additional Closing Date" means the settlement date for the Additional
DECS under Section 5 of the Underwriting Agreement.]
["Additional DECS" has the meaning provided in the recitals of this
Agreement.]
["Additional Purchase Price" has the meaning provided in Section 1.2(b).]
["Additional Share Base Amount" means a number equal to the number of
Additional DECS that the Underwriter elects to purchase under the Underwriting
Agreement.]
["Additional Shares" has the meaning provided in Section 1.1(b).]
["Additional STRIPS" means the U.S. Treasury obligations purchased by
Purchaser for settlement on the Additional Closing Date.]
"Adjustment Event" has the meaning provided in Section 6.2.
2
3
"Administrator" means The Bank of New York, administrator for Purchaser
under the Administration Agreement, to be dated as of the Advance Payment Date,
or any successor thereto.
"Advance Payment Date" has the meaning provided in Section 1.3(a).
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a partner in, or a director or officer of, such Person. For
purposes of this definition, "control" (including the terms "controlled by" or
"under common control with") means, as to any Person, the possession, direct or
indirect, of the power to vote ten percent or more of the securities having
ordinary voting power for the election of directors of such Person or the power
to direct or cause the direction of the management and policies of such Person,
whether through ownership of voting securities or by contract or otherwise.
"Associate" when used to indicate a relationship with any Person means (i)
a corporation or organization of which such Person is an officer, director or
partner or is, directly or indirectly, the beneficial owner of ten percent or
more of any class of equity securities, (ii) any trust or other estate in which
such Person serves as trustee or in a similar capacity, and (iii) any relative
or spouse of such Person, or any relative of such spouse, who has the same home
as such Person.
"Business Day" means any day that is not a Saturday, a Sunday or a day on
which the NYSE or banking institutions or trust companies in The City of New
York are authorized or obligated by law or executive order to close.
"Calculation Period" means any period of Trading Days for which an average
security price must be determined pursuant to this Agreement.
"Canadian Business Day" means any day that is not a Saturday, a Sunday or
a day on which The Toronto Stock Exchange or banking institutions or trust
companies in The City of Toronto are authorized or obligated by law or
executive order to close.
"Cash Delivery Option" has the meaning provided in Section 1.3(d).
"Closing Price" means, for any security on any date of determination, (i)
the closing sale price (or, if no closing price is reported, the last reported
sale price) of such security (regular way) on the NYSE on such date, (ii) if
such security is not listed for trading on the NYSE on any such date, the
closing sale price (or, if no closing price is reported, the last reported sale
price) of such security (regular way) on the principal Canadian securities
exchange on which such security is listed, (iii) if such security is not listed
for trading on a Canadian securities exchange on any such date, as reported in
the composite transactions for the principal United States securities exchange
on which such security is so listed, (iv) if such security is not so listed on
a United States national or regional securities exchange, as reported by The
Nasdaq Stock Market, (v) if such security is not so reported, the last quoted
bid price for such security in the over-the-counter market as reported by the
National Quotation Bureau or similar organization
3
4
or (vi) if such security is not so quoted, the average of the mid-point of the
last bid and ask prices for such security from at least three nationally
recognized U.S. investment banking firms selected by the Administrator for such
purpose. The Closing Price will be expressed in U.S. dollars. In the event
that the Closing Price is determined on the basis of prices in Canadian dollars,
the Closing Price will be translated into U.S. dollars at the noon buying rate
in The City of New York for cable transfers in Canadian dollars as certified for
customs purposes by the Federal Reserve Bank of New York on the date of
determination. The Closing Price as determined pursuant to the foregoing shall
be subject to adjustment in certain circumstances as provided in Section 6.1(c).
"Collateral Agent" has the meaning provided in the recitals of this
Agreement.
"Collateral Agreement" has the meaning provided in the recitals of this
Agreement.
"Company" has the meaning provided in the recitals of this Agreement.
"Contract Shares" has the meaning provided in Section 1.1.
"Corporate Seller Control Person" has the meaning provided in the recitals
of this Agreement.
"Custodian" means The Bank of New York, custodian for Purchaser under the
Custodian Agreement dated as of October 8, 1997, or any successor thereto.
"Declaration of Trust" has the meaning provided in the introductory
paragraph of this Agreement.
"DECS" has the meaning provided in the recitals of this Agreement.
"Dilution Adjustment" means any fraction or number by which the Exchange
Rate shall be multiplied pursuant to Section 6.1(a) or (b) or by which Closing
Prices may be divided pursuant to Section 6.1(c).
"Event of Default" has the meaning provided in Article VII.
"Exchange Date" has the same meaning as "Sale Date."
"Exchange Price" means the average Closing Price per Subordinate Voting
Share on the 20 Trading Days immediately prior to (but not including) the Sale
Date; provided, however, that if there are not 20 Trading Days for the
Subordinate Voting Shares occurring later than the 60th calendar day
immediately prior to, but not including, the Sale Date, Exchange Price shall
mean the market value per Subordinate Voting Share as of the Sale Date as
determined by a nationally recognized independent U.S. investment banking firm
retained for this purpose by the Administrator. The Exchange Price as
determined pursuant to the foregoing shall be subject to adjustment in certain
circumstances as provided in Section 6.1(c).
4
5
"Exchange Rate" has the meaning provided in Section 1.1(c).
"Firm Purchase Price" has the same meaning as "[Initial] Purchase Price."
"Forward Purchase Contract Characterization" has the meaning provided in
Section 5.2(a).
"Independent Dealers" has the meaning provided in Article VII.
"Independent Director" has the meaning provided in Section 2(b)(i).
"Independent Officer" has the meaning provided in Section 2(b)(i).
"Initial DECS" has the meaning provided in the recitals of this Agreement.
"Initial Price" has the meaning provided in Section 1.1(c).
["Initial Purchase Price" has the meaning provided in Section 1.2(a).]
["Initial Share Base Amount" has the meaning provided in Section 1.1(a).]
["Initial Shares" has the meaning provided in Section 1.1(a).]
"Market Price" means, as of any date of determination, the average Closing
Price per Subordinate Voting Share on the 20 Trading Days immediately prior to
(but not including) the date of determination; provided, however, that if there
are not 20 Trading Days for the Subordinate Voting Shares occurring later than
the 60th calendar day immediately prior to, but not including, such date, the
Market Price shall mean the market value per Subordinate Voting Share as of
such date as determined by a nationally recognized U.S. investment banking firm
retained for such purpose by the Administrator.
"Multiple Voting Shares" has the meaning provided in the recitals of this
Agreement.
"NYSE" means the New York Stock Exchange Inc.
"Ordinary Cash Dividend" means, with respect to any consecutive 365-day
period, any dividend with respect to Subordinate Voting Shares paid in cash to
the extent that the amount of such dividend, together with the aggregate amount
of all other dividends on the Subordinate Voting Shares paid in cash during
such 365-day period, does not exceed on a per share basis 10% of the average of
the Closing Prices of the Subordinate Voting Shares over such 365-day period;
provided that, for purposes of the foregoing definition, the amount of cash
dividends paid on a per share basis shall be appropriately adjusted to reflect
the occurrence during such period of any event described in Article VI.
"Other Sellers" has the meaning provided in the recitals of this
Agreement.
5
6
"Parent" has the meaning provided in Section 2(b)(i).
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
limited liability company, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Purchase Price" has the meaning provided in Section 1.2.
"Purchaser" has the meaning provided in the introductory paragraph of this
Agreement.
"Reimbursement Agreement" means the reimbursement agreement, to be dated
as of the Advance Payment Date, among the Underwriter and the Sellers,
substantially in the form of Exhibit [B] {C} hereto.
"Reported Securities" has the meaning provided in Section 6.2.
"Sale Date" has the meaning provided in the recitals of this Agreement.
"Seller" and "Sellers" have the meaning provided in the introductory
paragraph of this Agreement.
{"Share Base Amount" has the meaning provided in Section 1.1(a).}
"Subordinate Voting Shares" has the meaning provided in the recitals of
this Agreement.
"Threshold Appreciation Price" has the meaning provided in Section 1.1(c).
"Trading Day" means, with respect to any security the Closing Price of
which is being determined, a day on which such security (A) is not suspended
from trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (B) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of such
security; provided, however, that with respect to any security the Closing
Price of which is determined pursuant to clause (ii) of the definition of
"Closing Price," the references to "national or regional securities exchange or
association" shall be deemed to refer to such exchanges or associations in
Canada.
"Transaction Value" has the meaning provided in Section 6.2.
"U.S. Bankruptcy Code" has the meaning provided in Section 8.7.
"Underwriter" has the meaning provided in the recitals of this Agreement.
"Underwriting Agreement" has the meaning provided in the recitals of this
Agreement.
6
7
ARTICLE I
SALE AND PURCHASE
1.1 Sale and Purchase.
(a) [Initial] {Contract} Shares. Upon the terms and subject to the
conditions of this Agreement, Seller agrees to sell to Purchaser, and Purchaser
agrees to purchase and acquire from Seller, on the Sale Date, the number of
Subordinate Voting Shares (the "[Initial] {Contract} Shares") equal to the
product of ________ (the "[Initial] Share Base Amount") and the Exchange Rate.
(b) {Intentionally left blank.} [Additional Shares. Upon the terms and
subject to the conditions of this Agreement, Seller agrees to sell to
Purchaser, and Purchaser agrees to purchase and acquire from Seller, on the
Sale Date, a number of additional Subordinate Voting Shares (the "Additional
Shares") equal to the product of the Additional Share Base Amount and the
Exchange Rate. In addition to the other conditions set forth herein, such
purchase and sale shall be conditioned on the Underwriter's purchase of the
Additional Share Base Amount of Additional DECS pursuant to the Underwriting
Agreement on the Additional Closing Date. Promptly after receipt by Purchaser
of notice that the Underwriter is exercising its option to purchase Additional
DECS, Purchaser will provide Seller with written notice of such exercise by the
Underwriter, stating the related Additional Share Base Amount and the date on
which Purchaser shall deliver the purchase price for the Additional Shares,
which shall be the Additional Closing Date for the Additional DECS. The
Initial Shares and the Additional Shares (if any) are collectively referred to
herein as the "Contract Shares."]
(c) Exchange Rate. The "Exchange Rate" shall be determined in accordance
with the following formula, subject to adjustment as a result of certain events
as provided in Article VI: (i) if the Exchange Price is greater than
US$________ (the "Threshold Appreciation Price"), _____ , (ii) if the Exchange
Price is less than or equal to the Threshold Appreciation Price but greater
than US$______ (the "Initial Price"), a fraction (rounded upward or downward to
the nearest 1/10,000th or, if there is not a nearest 1/10,000th, to the next
higher 1/10,000th) equal to the Initial Price divided by the Exchange Price and
(iii) if the Exchange Price is less than or equal to the Initial Price, 1.
1.2 Purchase Price.
[(a) Initial Purchase Price.] The purchase price for the [Initial]
{Contract} Shares (the "[Initial] Purchase Price") shall be US$_______ in cash.
[(b) Additional Purchase Price. The purchase price for the Additional
Shares (the "Additional Purchase Price") shall be an amount equal to (i) the
difference between (1) the aggregate proceeds to Purchaser from the sale of the
Additional DECS and (2) the aggregate cost to Purchaser, as notified by
Purchaser to Seller on the Additional Closing Date for the Additional
7
8
DECS, of the Additional STRIPS. The Initial Purchase Price and the Additional
Purchase Price (if applicable) are collectively referred to herein
as the "Purchase Price."]
1.3 Payment for and Delivery of Contract Shares.
(a) Advance Payment Date. Upon the terms and subject to the conditions of
this Agreement, Purchaser shall deliver to Seller the [Initial] Purchase Price
on ____________, 1997 (the "Advance Payment Date") at the offices of Cleary,
Gottlieb, Xxxxx & Xxxxxxxx, Xxx Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at
such other place as shall be agreed upon by Purchaser and Seller, paid by wire
transfer of Federal (immediately available) funds to an account designated by
Seller.
(b) {Intentionally left blank.} [Additional Closing Date. Upon the terms
and subject to the conditions of this Agreement, Purchaser shall deliver to
Seller the Additional Purchase Price on the Additional Closing Date at the
offices of Cleary, Gottlieb, Xxxxx & Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at
such other place as shall be agreed upon by Purchaser and Seller, paid by wire
transfer of Federal (immediately available) funds to an account designated by
Seller.]
(c) Delivery of Contract Shares.
(i) On the Sale Date, Seller will deliver the Contract Shares to
Purchaser. Seller shall be deemed to have instructed the Collateral
Agent to deliver to the Custodian, for the account of Purchaser,
Subordinate Voting Shares then held by the Collateral Agent as collateral
under the Collateral Agreement [(with any Multiple Voting Shares held by
any agent of the Collateral Agent being first converted on or immediately
prior to the Sale Date into Subordinate Voting Shares and delivered to
the Collateral Agent at such time)], in an amount equal to the number of
Contract Shares, rounded down to the nearest whole number. Instead of
any fractional Subordinate Voting Shares that would otherwise be
deliverable (prior to rounding) to Purchaser at the Sale Date, Seller
agrees to make a cash payment in respect of such fractional Subordinate
Voting Shares in an amount equal to the value thereof at the Exchange
Price. Notwithstanding the foregoing, if an Adjustment Event shall have
occurred prior to the Sale Date then, in lieu of the foregoing, Seller
shall be deemed to have instructed: (A) in the case of any cash required
to be delivered on the Sale Date as provided in Section 6.2, the
Collateral Agent to wire transfer Federal (immediately available) funds
to an account designated by Purchaser; and (B) in the case of any
Reported Securities required to be delivered by Seller in lieu of cash as
provided in Section 6.2, the Collateral Agent to deliver to the
Custodian, for the account of Purchaser, a specified number of Reported
Securities then held as collateral under the Collateral Agreement, as
provided in Section 6(g) of the Collateral Agreement.
(ii) In the event that by the Sale Date any substitute collateral
has not been replaced by Subordinate Voting Shares (and/or, after an
Adjustment Event, cash or Reported Securities) sufficient to meet
Seller's obligations hereunder, delivery shall be effected by delivery by
the Collateral Agent to the Custodian, for the account of Purchaser, of
the market value of the Subordinate Voting Shares required to be
delivered
8
9
hereunder, in the form of any Voting Shares then pledged by Seller [(with
any Multiple Voting Shares pledged by Seller first being converted into
Subordinate Voting Shares)] plus cash generated from the liquidation of
U.S. Government obligations then pledged by Seller (or, after an
Adjustment Event, the market value of the alternative consideration
required to be delivered hereunder, in the form of any Reported
Securities then pledged, plus any cash then pledged, plus cash generated
from the liquidation of U.S. Government obligations then pledged). In
such event, Seller shall be deemed to have instructed the Collateral
Agent to liquidate and turn into cash the U.S. Government obligations
then pledged by Seller to the extent necessary to satisfy Seller's
obligations hereunder.
(iii) Certificates representing [Subordinate Voting Shares] [Voting
Shares ](or Reported Securities) in registered form that are part of the
Contract Shares shall be registered in Purchaser's name or in the name of
a depositary or a nominee of a depositary as requested by Purchaser,
unless such [Subordinate Voting Shares] [Voting Shares] (and/or Reported
Securities) are represented by one or more global certificates registered
in the name of a depositary or a nominee of a depositary or are book
entry securities, in which event Purchaser's interest in such securities
shall be noted in a manner satisfactory to Purchaser and its counsel.
(iv) Seller's right to deliver (or cause to be delivered) to
Purchaser hereunder Subordinate Voting Shares and Reported Securities
shall be conditioned upon such Subordinate Voting Shares and Reported
Securities to be so delivered being transferable by Purchaser, following
receipt from Seller, without any restrictions not generally applicable to
all holders of such Subordinate Voting Shares or Reported Securities, as
the case may be. If the condition set forth in the preceding sentence
shall not be satisfied with respect to any Subordinate Voting Shares or
Reported Securities to be delivered by Seller, then, notwithstanding the
provisions hereof, Seller shall exercise the Cash Delivery Option.
(d) Cash Delivery Option. At its option, Seller may deliver to Purchaser
on the Sale Date, in lieu of the Contract Shares, an amount in cash (U.S.
dollars) equal to, subject to adjustment as provided in Section 6.2, the
Exchange Price of the Contract Shares (the "Cash Delivery Option"), paid by
wire transfer to an account designated by Purchaser, in Federal (immediately
available) funds. Seller may elect the Cash Delivery Option in respect of all,
but not less than all, Contract Shares and may do so by notice to Purchaser,
the Collateral Agent and the Custodian not less than 25 Business Days prior to
the Sale Date. If Seller elects the Cash Delivery Option and so notifies
Purchaser, Purchaser shall promptly notify The Depository Trust Company and
publish a notice in a daily newspaper of national circulation stating whether
the holders of DECS will receive Subordinate Voting Shares, cash or a
combination thereof and, if a combination of Subordinate Voting Shares and
cash, the relative proportion of cash. In no event will Multiple Voting Shares
be distributed to holders of DECS.
(e) Seller represents, and Purchaser acknowledges, that it is Seller's
current intention to deliver Contract Shares to Purchaser on the Sale Date and
not to exercise the Cash Delivery Option; however, Seller intends to consider
all relevant economic and market factors in
9
10
ultimately determining whether to deliver Contract Shares on the Sale Date or
to exercise the Cash Delivery Option.
(f) Purchaser agrees to comply with the provisions of Section 2.7(d) of
the Trust Agreement and to follow the procedures set forth in Section 2.7(f)(3)
of the Trust Agreement in connection with the delivery of Subordinate Voting
Shares to holders of DECS and not to amend either of such provisions without
the prior written consent of Seller.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER AND
CORPORATE SELLER CONTROL PERSON
(a) Seller represents and warrants to Purchaser that each representation
and warranty made by Seller in Section 3 of the Underwriting Agreement is true
and correct on the date hereof.
(b) Seller further represents and warrants to Purchaser that:
(i) At least one member of its Board of Directors (herein referred
to as the "Independent Director") and at least one officer (herein
referred to as the "Independent Officer") is an individual who is not
related by blood or marriage to any holder, directly, indirect or
beneficial, of any class of equity securities of Seller, and is not a
direct, indirect or beneficial holder of two percent or more of any class
of equity securities, director, officer or employee of any Affiliate of
any Person that directly or indirectly through one or more intermediaries
controls Seller (each such Person, a "Parent"). The same person may
serve both as an Independent Director and as an Independent Officer.
(ii) Seller maintains its registered office at a location separate
and apart from those of any Affiliate or Associate of Seller or the
Company or any of its subsidiaries.
(iii) Seller holds itself out, and its Parent or Parents holds or
hold Seller out, to the public (including any Affiliate's creditors) as a
separate and distinct entity operating under Seller's own name, and
Seller acts solely under its own corporate name and through its
authorized officers and agents.
(iv) Seller separately identifies and segregates its funds and other
assets. Seller maintains its financial statements and accounting records
separate from those of, and does not commingle its funds or other assets
with those of, any Affiliate or any other person or entity. Seller
maintains its own separate bank accounts, payroll and books of account.
All of Seller's assets are held by or on behalf of Seller and, when held
on behalf of Seller by another entity, are kept identifiable (in
accordance with customary usages) as assets owned by Seller. None of
Seller's assets are held on its behalf by an Affiliate.
10
11
(v) Seller pays out of its own funds fees, if any, for its directors
and salaries, if any, of its officers and employees.
(vi) Seller observes all customary formalities regarding the
corporate existence of Seller, including without limitation holding
regular meetings of its board of directors and its shareholders and
maintenance of current minute books.
(vii) Seller has paid from its assets all obligations of any kind
incurred by Seller (other than organizational expenses) and has promptly
reimbursed any Affiliate for any service provided to Seller by such
Affiliate (including those provided pursuant to any lease or any
management services agreement between Seller and any Affiliate). Seller
has sufficient assets to pay its obligations as they become due.
(viii) Seller has advised its creditors in connection with any
financial disclosure made thereto of the separation and segregation of
its business assets and accounts and that none of the assets and accounts
of an Affiliate are available to satisfy payment of any such debt.
(ix) Seller does not, directly or indirectly, engage in any business
in any jurisdiction and has not incurred or undertaken to incur any
obligations (including debt) other than entering into this Agreement, the
Collateral Agreement, the Underwriting Agreement and the Reimbursement
Agreement and performing its obligations hereunder and thereunder, does
not own any property or assets other than the Voting Shares subject to
this Agreement and the Collateral Agreement and does not have any
subsidiaries.
(x) Seller has not, directly or indirectly, been named or entered
into an agreement to be named as a direct or contingent beneficiary or
loss payee on any insurance policy covering the property of any of its
Affiliates.
(xi) Seller has not guaranteed the debts or obligations of any of
its Affiliates, nor has it loaned money or otherwise provided financial
assistance to any of its Affiliates, nor has it pledged, granted a
security interest in or lien upon its assets for the benefit of any of
its Affiliates, nor held itself out to be responsible for the debts or
obligations of any of its Affiliates or the decisions or actions
respecting the daily business and affairs of any of its Affiliates.
(xii) Seller has not permitted any of its Affiliates to guarantee or
undertake to guarantee the debts or obligations of Seller (other than the
guarantee by Corporate Seller Control Person of Seller's obligations
under the Underwriting Agreement and the Reimbursement Agreement), nor
has it permitted any of its Affiliates to loan money or otherwise provide
financial assistance to Seller, nor has it permitted any of its
Affiliates to pledge, grant a security interest in or lien upon such
Affiliate's assets for the benefit of Seller, nor has it permitted any
Affiliate to hold itself out to be responsible for the debts or
obligations of Seller or the decisions or actions respecting the daily
business and affairs of Seller.
11
12
(c) Corporate Seller Control Person represents and warrants to Purchaser
that each representation and warranty made by Corporate Seller Control Person
in Section 3(b) of the Underwriting Agreement is true and correct on the date
hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller that each representation
and warranty made by Purchaser in Section 1 of the Underwriting Agreement is
true and correct on the date hereof.
ARTICLE IV
CONDITIONS TO PURCHASER'S OBLIGATIONS
[(a)] The obligation of Purchaser to deliver the [Initial] Purchase
Price on the Advance Payment Date is subject to the satisfaction of the
following conditions:
(i) the purchase by the Underwriter of the Initial DECS pursuant to
the Underwriting Agreement shall have been consummated as contemplated
under the Underwriting Agreement;
(ii) the representations and warranties of Seller contained in
Article II hereof shall be true and correct as of the Advance Payment
Date;
(iii) the representations and warranties of Corporate Seller Control
Person contained in Article II hereof shall be true and correct as of the
Advance Payment Date;
(iv) the Collateral Agreement shall have been executed by Seller and
the delivery of the Collateral thereunder shall have been made; and
(v) the Reimbursement Agreement shall have been executed by Seller.
[(b) The obligation of Purchaser to deliver the Additional Purchase
Price on the Additional Closing Date is subject to the satisfaction of the
following conditions:
(i) the purchase by the Underwriter of the Additional DECS pursuant
to the Underwriting Agreement shall have been consummated as contemplated
under the Underwriting Agreement;
(ii) the representations and warranties of Seller contained in
Article II hereof shall be true and correct as of the Additional Closing
Date;
12
13
(iii) the representations and warranties of Corporate Seller Control
Person contained in Article II hereof shall be true and correct as of the
Advance Payment Date; and
(iv) the delivery of any additional collateral under the Collateral
Agreement shall have been made.]
ARTICLE V
COVENANTS
5.1 Taxes. Seller shall pay any and all documentary, stamp,
transfer or similar taxes and charges that may be payable in respect of the
entry into this Agreement and the transfer and delivery of the Contract Shares,
cash or Reported Securities pursuant hereto.
5.2 Forward Purchase Contract. Each of Purchaser and Seller hereby
agrees that:
(a) it will treat this Agreement in its entirety as a forward
purchase contract for the delivery of Subordinate Voting Shares on the Sale Date
(including as a result of acceleration or otherwise) (the "Forward Purchase
Contract Characterization"), under the terms of which contract (i) at the time
of issuance of the DECS Purchaser deposits irrevocably with Seller a fixed
amount of cash equal to the Purchase Price to assure the fulfillment of
Purchaser's purchase obligation described in clause (ii) below, which deposit
will unconditionally and irrevocably be applied at the Sale Date to satisfy such
obligation and (ii) at the Sale Date such cash deposit unconditionally and
irrevocably will be applied by Seller in full satisfaction of Purchaser's
obligation under the forward purchase contract, and Seller will deliver to
Purchaser the number of Subordinate Voting Shares that Purchaser is entitled to
receive at that time pursuant to the terms of this Agreement (subject to
Seller's right to deliver cash in lieu of the Subordinate Voting Shares);
(b) it will treat, consistent with the above characterization,
amounts paid to Seller in respect of this Agreement as allocable in their
entirety to the amount of the cash deposit attributable to such Agreement;
(c) it will not treat this Agreement, any portion of this Agreement
or any obligation hereunder as giving rise to any interest income or other
inclusions of ordinary income (in the case of Purchaser) or as giving rise to
any interest expense or other deductions of ordinary expense (in the case of
Seller);
(d) it will not treat the delivery of any portion of the Contract
Shares, cash or Reported Securities to be delivered pursuant to this Agreement
as the payment of interest or ordinary income; and
13
14
(e) it will not take any action (including filing any tax return or
form or taking any position in any tax proceeding) that is inconsistent with the
obligations contained in clauses (a) through (d), unless such action or position
is required by an applicable taxing authority or unless such action or position
is required by a change in statutory law or regulation or by a judicial or other
authoritative interpretation of the law enacted, promulgated or published after
the date of this Agreement.
5.3 Limitations on Trading During Certain Days. Seller hereby
agrees that he will not, and will cause each of its Affiliates that is under its
control not to, buy or sell Voting Shares or Reported Securities for its own
account during the 60 days prior to the Sale Date.
5.4 Notices. Seller will cause to be delivered to Purchaser:
(a) Immediately upon the occurrence of any Event of Default
hereunder or under the Collateral Agreement, or upon Seller's obtaining
knowledge that any of the conditions or events described in paragraph (a) or (b)
of Article VII shall have occurred with respect to the Company, notice of such
occurrence; and
(b) In case at any time prior to the Sale Date Seller receives
notice, or otherwise obtains knowledge, that any event requiring that an
adjustment be effected pursuant to Article VI hereof shall have occurred or be
pending, then Seller shall promptly cause to be delivered to Purchaser a notice
identifying such event and stating, if known to Seller, the date on which such
event is to occur and, if applicable, the record date relating to such event.
Seller shall cause further notices to be delivered to Purchaser if Seller shall
subsequently receive notice, or shall otherwise obtain knowledge, of any further
or revised information regarding the terms or timing of such event or any record
date relating thereto.
5.5 Affirmative Covenants of Seller. During the term of this
Agreement, Seller covenants and agrees that it will:
(a) Comply in all material respects with all applicable laws, rules,
regulations and orders to the extent noncompliance would have a material adverse
effect on the ability of Seller to perform its obligations hereunder or under
the Collateral Agreement, such compliance to include, without limitation, paying
before the same become delinquent all taxes, assessments and governmental
charges imposed upon him or upon its property, including the collateral pledged
under the Collateral Agreement, except to the extent contested in good faith.
(b) Furnish to Purchaser as soon as possible and in any event within
20 calendar days after Seller shall become aware of the occurrence of any
failure by such Seller to comply with or perform any agreement or obligation
contained in this Agreement or the Collateral Agreement, a statement of Seller
describing such failure and setting forth details of such failure and the action
which Seller has taken and proposes to take with respect thereto.
(c) Continue to be validly existing as a corporation under the laws
of its jurisdiction of incorporation and will continue to be wholly owned,
directly or indirectly, by its Corporate Seller Control Person.
14
15
(d) Comply in all respects with the requirements and limitations of
its corporate powers set forth in its certificate of incorporation.
(e) At any given time, have at least one Independent Director and at
least one Independent Officer, each of whom shall be an individual who is not
related by blood or marriage to any holder, direct, indirect or beneficial, of
any class of equity securities of Seller, and is not a direct, indirect or
beneficial holder of two percent or more of any class of equity securities,
director, officer or employee of any Affiliate of any Parent. The same
individual may serve both as an Independent Director and an Independent Officer.
(f) At all times maintain its registered office at a location
separate and apart from those of any Affiliate or Associate of Seller or the
Company or any of its subsidiaries.
(g) At all times hold itself out, and its Corporate Seller Control
Person will at all times hold Seller out, to the public (including any
Affiliate's creditors) as a separate and distinct entity operating under
Seller's own name and Seller will act solely under its own corporate name and
through its authorized officers and agents.
(h) Separately identify and segregate funds and other assets of
Seller. Seller will maintain its financial statements and accounting records
separate from those of, and will not commingle its funds or other assets with
those of, any Affiliate or any other Person or entity. Seller will maintain its
own separate bank accounts, payroll and books of account. All of Seller's
assets will at all times be held by or on behalf of Seller and, when held on
behalf of Seller by another entity, will at all times be kept identifiable (in
accordance with customary usages) as assets owned by Seller. In no event will
any of Seller's assets be held on its behalf by an Affiliate.
(i) Pay out of its own funds fees, if any, for its directors and
salaries, if any, of its officers and employees.
(j) Observe all customary formalities regarding the corporate
existence of Seller, including without limitation holding regular meetings of
its board of directors and its shareholders and maintenance of current minute
books.
(k) Only enter into business transactions with an Affiliate that
will be on terms and conditions that are not more or less favorable to Seller
than the terms and conditions that would be expected to have been obtained,
under similar circumstances, from unaffiliated persons or entities.
(l) Disclose in its annual financial statements (or any consolidated
annual financial statements of any Parent), to the extent required by generally
accepted accounting principles, any transactions between Seller and any
Affiliate. Any consolidated annual financial statements of such Parent will
contain detailed notes clearly stating that (i) all of Seller's assets are owned
by Seller and (ii) Seller is a separate corporate entity with its own separate
creditors and such creditors.
15
16
(m) Pay from its assets all obligations of any kind incurred by
Seller (other than organizational expenses) and shall promptly reimburse any
Affiliate for any service provided to Seller by such Affiliate (including those
to be provided pursuant to any lease or any management services agreement
between Seller and any Affiliate). Seller expects to have sufficient assets to
pay its obligations as they become due.
(n) Advise its creditors in connection with any financial disclosure
made thereto of the separation and segregation of its business, assets and
accounts and that none of its assets and accounts shall be available to satisfy
payment of any such debt. Seller shall also ensure that the terms and
conditions applicable to any such debt do not include a cross-default to any
Affiliate, unless, prior to the inclusion of such provision in any such debt,
Seller receives an acknowledgment from the creditor of the matters specified in
this Section 5.5(n).
5.6 Negative Covenants of Seller. During the term of this
Agreement, Seller covenants and agrees that Seller will not:
(a) Directly or indirectly, incur any obligations (including debt)
other than pursuant to or necessary to comply with the terms and obligations
imposed by this Forward Purchase Agreement, the Collateral Agreement, the
Underwriting Agreement or the Reimbursement Agreement and obligations imposed by
law, statutory or otherwise.
(b) Acquire or own any property or assets nor engage in any business
other than entering into this Forward Purchase Agreement, the Collateral
Agreement, the Underwriting Agreement and the Reimbursement Agreement and those
necessary to comply with the terms and obligations imposed by this Forward
Purchase Agreement, the Collateral Agreement, the Underwriting Agreement or the
Reimbursement Agreement.
(c) Directly or indirectly, be named and shall not enter into an
agreement to be named as a direct or contingent beneficiary or loss payee on any
insurance policy covering the property of any of its Affiliates.
(d) Guarantee the debts or obligations of any of its Affiliates, nor
loan money or otherwise provide financial assistance to any of its Affiliates,
nor will it pledge, grant a security interest in or lien upon its assets for the
benefit of any of its Affiliates, nor will it hold itself out to be responsible
for the debts or obligations of any of its Affiliates or the decisions or
actions respecting the daily business and affairs of any of its Affiliates.
(e) Permit any of its Affiliates to guarantee the debts or
obligations of Seller (other than the guarantee by Corporate Seller Control
Person of Seller's obligations under the Underwriting Agreement and the
Reimbursement Agreement), nor will it permit any of its Affiliates to loan money
or otherwise provide financial assistance to Seller, nor will it permit any of
its Affiliates to pledge, grant a security interest in or lien upon such
Affiliate's assets for the benefit of Seller, nor will it permit any Affiliate
to hold itself out to be responsible for the debts or obligations of Seller or
the decisions or actions respecting the daily business and affairs of Seller.
16
17
5.7 Covenants of Corporate Seller Control Person. During the term of
this Agreement, Corporate Seller Control Person covenants and agrees that
Seller:
(a) Will cause, in his capacity as a direct or indirect shareholder,
Seller to comply with its obligations under this Agreement and the Collateral
Agreement.
(b) Will not, and will cause each of his Affiliates (other than the
Company) that is under his control not to, buy or sell Voting Shares or
Reported Securities for his own account during the 60 days prior to the Sale
Date.
[(c) Will not, and will cause each of his Affiliates that is under
his control not to, approve or permit any change to the terms of the Multiple
Voting Shares unless similar changes are made to the terms of the Subordinate
Voting Shares.]
5.8 Further Assurances. From time to time on and after the date
hereof through the Sale Date (or, if later, the date on which this Agreement has
been fully performed), each of the parties hereto shall use its reasonable best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper and advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement in accordance with the terms and conditions hereof, including (i)
using reasonable best efforts to remove any legal impediment to the consummation
of such transactions and (ii) the execution and delivery of all such deeds,
agreements, assignments and further instruments of transfer and conveyance
necessary, proper or advisable to consummate and make effective the transactions
contemplated by the Agreement in accordance with the terms and conditions
hereof.
ARTICLE VI
ADJUSTMENT OF EXCHANGE RATE, EXCHANGE PRICE AND CLOSING PRICE
6.1 Dilution Adjustments. The Exchange Rate, Exchange Price and
Closing Price shall be subject to adjustment successively from time to time as
follows:
(a) Stock Dividends, Splits, Reclassifications, Etc. If the Company
shall, after the date hereof,
(i) pay a stock dividend or make a distribution, in either case,
with respect to Subordinate Voting Shares in shares of such stock;
(ii) subdivide or split its outstanding Subordinate Voting Shares
into a greater number of shares;
(iii) combine its outstanding Subordinate Voting Shares into a
smaller number of shares; or
17
18
(iv) issue by reclassification (other than a reclassification
pursuant to clause (b), (c), (d) or (e) of the definition of Adjustment
Event) of its Subordinate Voting Shares any other equity securities of
the Company;
then, in each such case, the Exchange Rate shall be multiplied by a Dilution
Adjustment equal to the number of Subordinate Voting Shares (or the fraction
thereof) that a holder who held one Subordinate Voting Share immediately prior
to such event would be entitled solely by reason of such event to hold
immediately after such event. In the case of the reclassification of any
Subordinate Voting Shares into any other equity securities of the Company other
than the Subordinate Voting Shares, such other equity securities shall be
deemed Subordinate Voting Shares for all purposes hereunder. The Exchange
Price and Closing Price shall also be adjusted in the manner described in
paragraph (c).
(b) Rights or Warrants Issuances. If the Company shall, after the
date hereof, issue, or declare a record date in respect of an issuance of,
rights or warrants (other than rights to purchase Subordinate Voting Shares
pursuant to a plan for the reinvestment of dividends or interest) to all holders
of Subordinate Voting Shares entitling them to subscribe for or purchase
Subordinate Voting Shares at a price per share less than the Market Price of the
Subordinate Voting Shares on the Business Day next following the record date for
the determination of holders of Subordinate Voting Shares entitled to receive
such rights or warrants, then, in each such case, the Exchange Rate shall be
multiplied by the following Dilution Adjustment: a fraction, of which the
numerator shall be (A) the number of Subordinate Voting Shares outstanding on
the record date for the issuance of such rights or warrants plus (B) the number
of additional Subordinate Voting Shares offered for subscription or purchase
pursuant to such rights or warrants, and of which the denominator shall be (x)
the number of Subordinate Voting Shares outstanding on the record date for the
issuance of such rights or warrants plus (y) the number specified in clause (B)
above multiplied by the quotient of the exercise price of such rights or
warrants divided by the Market Price of the Subordinate Voting Shares on the
Business Day next following the record date for the determination of holders of
Subordinate Voting Shares entitled to receive such rights or warrants. To the
extent that such rights or warrants expire prior to the Sale Date and
Subordinate Voting Shares are delivered with respect to less than all of such
rights or warrants prior to such expiration, the Exchange Rate shall be
readjusted to the Exchange Rate which would then be in effect had such
adjustments for the issuance of such rights or warrants been made upon the basis
of delivery of only the number of Subordinate Voting Shares actually delivered
pursuant to such rights or warrants. The Exchange Price and Closing Price shall
also be adjusted in the manner described in paragraph (c).
(c) Corresponding Adjustments to Exchange Price; Adjustment of
Closing Price in Certain Circumstances.
(i) If any adjustment is made to the Exchange Rate pursuant to
paragraph (a) or (b) of this Section 6.1, an adjustment shall also be
made to the Exchange Price as such term is used throughout the definition
of Exchange Rate. The required adjustment to the Exchange Price shall be
made at the Sale Date by multiplying the Exchange Price by the cumulative
Dilution Adjustment.
18
19
(ii) If, during any Calculation Period used in calculating the
Exchange Price, the Market Price or the Transaction Value, there shall
occur any event requiring an adjustment to be effected pursuant to this
Section 6.1, then the Closing Price for each Trading Day in the
Calculation Period occurring prior to the day on which such adjustment is
effected shall be adjusted by being divided by the relevant Dilution
Adjustment.
(d) Timing of Dilution Adjustments. Each Dilution Adjustment shall
be effected:
(i) in the case of any dividend, distribution, or issuance of rights
or warrants, at the opening of business on the Business Day next following
the record date for determination of holders of Subordinate Voting Shares
entitled to receive such dividend, distribution or issuance or, if the
announcement of any such dividend, distribution or issuance is after such
record date, at the time such dividend, distribution or issuance shall be
announced by the Company; and
(ii) in the case of any subdivision, split, combination or
reclassification, on the effective date of such transaction.
(e) General; Failure of Dilution Event to Occur. All Dilution
Adjustments shall be rounded upward or downward to the nearest 1/10,000th (or if
there is not a nearest 1/10,000th, to the next higher 1/10,000th). No
adjustment in the Exchange Rate shall be required unless such adjustment would
require an increase or decrease of at least one percent therein; provided,
however, that any adjustments which by reason of this sentence are not required
to be made shall be carried forward and taken into account in any subsequent
adjustment. If any announcement or declaration of a record date in respect of a
dividend, distribution or issuance requiring an adjustment pursuant to this
Section 6.1 shall subsequently be canceled by the Company, or such dividend,
distribution or issuance shall fail to receive requisite approvals or shall fail
to occur for any other reason, then, upon such cancellation, failure of approval
or failure to occur, the Exchange Rate shall be readjusted to the Exchange Rate
which would then have been in effect had adjustment for such event not been
made. If an Adjustment Event shall occur after the occurrence of one or more
events requiring an adjustment pursuant to this Section 6.1, the Dilution
Adjustments previously applied to the Exchange Rate in respect of such events
shall not be rescinded but shall be applied to the new Exchange Rate provided
for under Section 6.2.
6.2 Adjustment for Consolidation, Merger or Other Adjustment Event.
In the event of (a) any dividend or distribution by the Company to all holders
of Subordinate Voting Shares of evidences of its indebtedness or other assets
(excluding any dividends or distributions referred to in Section 6.1(a)(i), any
other equity securities issued pursuant to a reclassification referred to in
Section 6.1(a)(iv) and any Ordinary Cash Dividends) or any issuance by the
Company to all holders of Subordinate Voting Shares of rights or warrants to
subscribe for or purchase any of its securities (other than rights or warrants
referred to in Section 6.1(b)), (b) any consolidation, merger, amalgamation or
plan of arrangement of the Company with or into another entity (other than a
merger, consolidation, amalgamation or plan of arrangement in
19
20
which the Company is the continuing corporation or is not one of the
amalgamating corporations and in which the Subordinate Voting Shares outstanding
immediately prior to the merger, consolidation, amalgamation or plan of
arrangement are not exchanged for cash, securities or other property of the
Company, another corporation or the corporation continuing from such
amalgamation or plan of arrangement), (c) any sale, transfer, lease or
conveyance to another corporation of the property of the Company as an entirety
or substantially as an entirety, (d) any statutory exchange of securities of the
Company with another corporation (other than in connection with a merger or
acquisition) or (e) any liquidation, dissolution or winding up of the Company
(any such event described in clause (a), (b), (c), (d) or (e), an "Adjustment
Event"), the Exchange Rate shall be adjusted so that on the Sale Date Seller
shall deliver to Purchaser, in lieu of or (in the case of an Adjustment Event
described in clause (a) above) in addition to, the Contract Shares, cash in an
amount equal to the product of the number of Contract Shares and the Transaction
Value (as defined below). Following an Adjustment Event, the Exchange Price, as
such term is used throughout the definition of Exchange Rate, shall be deemed to
equal (A) if Subordinate Voting Shares are outstanding at the Sale Date, the
Exchange Price of the Subordinate Voting Shares, as adjusted pursuant to Section
6.1(c), otherwise zero, plus (B) the Transaction Value.
Notwithstanding the foregoing, with respect to any Reported Securities (as
defined below), received by holders of Subordinate Voting Shares in an
Adjustment Event, Seller shall, in lieu of delivering cash in respect of such
Reported Securities as described above, deliver a number of such Reported
Securities with a value, as determined in accordance with clause (ii) of the
definition of Transaction Value, equal to all cash amounts that would otherwise
be deliverable in respect of Reported Securities received in such Adjustment
Event, unless Seller has made an election to exercise the Cash Delivery Option
or such Reported Securities have not yet been delivered to the holders entitled
thereto following such Adjustment Event or any record date with respect thereto.
If, following any Adjustment Event, any Reported Security ceases to qualify as a
Reported Security, then (x) Seller shall not deliver such Reported Security but
instead shall deliver of an equivalent amount of cash and (y) notwithstanding
clause (ii) of the definition of Transaction Value, the Transaction Value of
such Reported Security shall mean the fair market value of such Reported
Security on the date such security ceases to qualify as a Reported Security, as
determined by a nationally recognized investment banking firm retained for this
purpose by the Administrator.
"Transaction Value" means (i) for any cash received in any Adjustment
Event, the amount of cash received per Subordinate Voting Share, (ii) for any
Reported Securities received in any Adjustment Event, an amount equal to (x)
the average Closing Price per security of such Reported Securities on the 20
Trading Days immediately prior to (but not including) the Sale Date multiplied
by (y) the number of such Reported Securities (as adjusted pursuant to the
definition thereof) received per Subordinate Voting Share and (iii) for any
property received in any Adjustment Event other than cash or Reported
Securities, an amount equal to the fair market value of the property received
per Subordinate Voting Share on the date such property is received, as
determined by a nationally recognized U.S. investment banking firm retained for
this purpose by the Administrator; provided, however, that in the case of
clause (ii), (x) with respect to securities that are Reported Securities by
virtue of only clause (iv) of the definition of
20
21
Reported Securities, Transaction Value with respect to any such Reported
Security means the average of the mid-point of the last bid and ask prices for
such Reported Security as of the Sale Date from each of at least three
nationally recognized investment banking firms retained for such purpose by the
Administrator multiplied by the number of such Reported Securities (as adjusted
pursuant to the definition thereof) received per Subordinate Voting Share and
(y) with respect to all other Reported Securities, if there are not 20 Trading
Days for any particular Reported Security occurring after the 60th calendar day
immediately prior to, but not including, the Sale Date, Transaction Value with
respect to such Reported Security means the fair market value per security of
such Reported Security as of the Sale Date as determined by a nationally
recognized investment banking firm retained for such purpose by the
Administrator multiplied by the number of such Reported Securities (as adjusted
pursuant to the definition thereof) received per Subordinate Voting Share. For
purposes of calculating the Transaction Value, any cash, Reported Securities or
other property receivable in an Adjustment Event shall be deemed to have been
received immediately prior to the close of business on the record date for such
Adjustment Event or, if there is no record date for such Adjustment Event,
immediately prior to the close of business on the effective date of such
Adjustment Event.
"Reported Securities" means any securities received in an Adjustment Event
that (A) are (i) listed on a Canadian or United States national securities
exchange, (ii) reported on a United States national securities system subject
to last sale reporting, (iii) traded in the over-the-counter market and
reported on the National Quotation Bureau or similar organization or (iv) for
which bid and ask prices are available from at least three nationally
recognized investment banking firms and (B) are either (x) perpetual equity
securities or (y) non-perpetual equity or debt securities with a stated
maturity after the Sale Date. The number of shares of any Reported Securities
included in the calculation of Transaction Value pursuant to clause (ii) of the
definition thereof shall be subject to adjustment if any event that would, had
it occurred with respect to the Subordinate Voting Shares or the Company, have
required an adjustment pursuant to Section 6.1 or 6.2, shall occur with respect
to such Reported Securities or the issuer thereof subsequent to the date the
Adjustment Event is consummated. Adjustment for such subsequent events shall
be as nearly equivalent as practicable to the adjustments provided for in
Section 6.1 or 6.2, as applicable.
ARTICLE VII
ACCELERATION
If one or more of the following events (each an "Event of Default")
shall occur:
(A) Seller shall commence a voluntary case or other proceeding
seeking a liquidation, reorganization or other relief with respect to
himself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of him or any
substantial part of its property, or shall consent to any such relief or
to the appointment of or taking possession by any such official in an
involuntary case or other
21
22
proceeding commenced against him, or shall take any action to authorize
any of the foregoing;
(B) an involuntary case or other proceeding shall be commenced
against Seller seeking liquidation, reorganization or other relief with
respect to him or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of him
or any substantial part of its property; or an order for relief shall be
entered against Seller under any bankruptcy, insolvency or other similar
law as now or hereafter in effect; or
(C) a Collateral Event of Default within the meaning of the
Collateral Agreement;
then an "Acceleration Date" shall occur, Seller's rights under Section 1.3(d)
shall terminate immediately and
(x) in the case of clause (C), Seller shall become obligated to the
extent permitted by law to deliver to Purchaser (and shall be deemed to
instruct the Collateral Agent to deliver to the Custodian, for the
account of Purchaser, and to liquidate and turn into cash the U.S.
Government obligations then pledged by Seller to the extent necessary to
satisfy such obligation) the Contract Shares, in the form of the
Subordinate Voting Shares then pledged by Seller [(any Multiple Voting
Shares then pledged by Seller being converted into Subordinate Voting
Shares before any such delivery)], or cash generated from the liquidation
of U.S. Government obligations then pledged by Seller, or a combination
thereof (or, after an Adjustment Event, the alternate consideration to be
delivered, in the form of Reported Securities then pledged, cash then
pledged, cash generated from the liquidation of U.S. Government
obligations then pledged, or a combination thereof); or
(y) in the case of clause (A) or (B), Seller shall become obligated
to the extent permitted by law to deliver to Purchaser (and shall be
deemed to instruct the Collateral Agent to deliver to the Custodian, for
the account of Purchaser, and to liquidate and turn into cash the U.S.
Government obligations then pledged by Seller to the extent necessary to
satisfy such obligation) a number of Subordinate Voting Shares, in the
form of the Subordinate Voting Shares then pledged by Seller [(any
Multiple Voting Shares then pledged by Seller being converted into
Subordinate Voting Shares before any such delivery)], or cash generated
from the liquidation of U.S. Government obligations then pledged by
Seller, or a combination thereof (or, after an Adjustment Event, the
alternate consideration to be delivered, in the form of Reported
Securities then pledged, cash then pledged, cash generated from the
liquidation of U.S. Government obligations then pledged, or a combination
thereof), with an aggregate value (based on the Closing Price on the
Acceleration Date) equal to the Acceleration Value (as defined below).
"Acceleration Value" means an amount determined by the Administrator
on the basis of quotations from Independent Dealers (as defined below). Each
quotation will be for an amount that would be paid to the relevant Independent
Dealer in consideration of an agreement
22
23
between Purchaser and such Independent Dealer that would have the effect of
preserving for Purchaser the economic equivalent of the payments and deliveries
that Purchaser would, but for the occurrence of the Acceleration Date, have
been entitled to receive after the Acceleration Date hereunder (taking into
account any adjustments to the Exchange Rate that may have been effected on or
prior to the Acceleration Date). On or as soon as reasonably practicable
following the Acceleration Date, the Administrator will request each
Independent Dealer to provide its quotation as soon as reasonably practicable,
but in any event within two Business Days. The Administrator shall compute the
Acceleration Value upon receipt of each Independent Dealer's quotation,
provided that if, at the close of business on the fourth Business Day following
the Acceleration Date, the Administrator shall have received quotations from
fewer than four of the Independent Dealers, the Administrator shall compute the
Acceleration Value using the quotations, if any, it shall have received at or
prior to such time. If four quotations are provided, the Acceleration Value
will be the arithmetic mean of the two quotations remaining after disregarding
the highest and lowest quotations. (For this purpose, if more than one
quotation has the same highest or lowest value, then one of such quotations
shall be disregarded.) If two or three quotations are provided, the
Acceleration Value will be the arithmetic mean of such quotations. If one
quotation is provided, the Acceleration Value will be equal to such quotation.
If no quotations are provided, the Acceleration Value will be the aggregate
value (based on the Closing Price on the Acceleration Date) of the number of
Subordinate Voting Shares (or, after an Adjustment Event, Reported Securities,
cash or a combination thereof) that would be required to be delivered hereunder
on the Acceleration Date if the Sale Date were redefined to be the Acceleration
Date.
"Independent Dealers" means four nationally recognized independent
U.S. investment banking firms selected in good faith by the Administrator.
As promptly as reasonably practicable after receipt of the quotations
on which the Acceleration Value is based (or, as the case may be, after failure
to receive any such quotations within the time period prescribed above),
Purchaser shall deliver to Seller and the Collateral Agent a notice specifying
the number of Subordinate Voting Shares (or, after an Adjustment Event, the
alternate consideration) required to be delivered by Seller. Purchaser and
Seller agree that the obligations contained in clauses (x) and (y) above are a
reasonable pre-estimate of loss and not a penalty. Such amount is payable for
the loss of bargain and Purchaser will not be entitled to recover additional
damage as a consequence of loss resulting from an Event of Default.
ARTICLE VIII
MISCELLANEOUS
8.1 Adjustments; Selection of Independent Investment Banking Firm.
Purchaser shall be responsible for the effectuation and calculation of any
adjustment pursuant to Article VI hereof and shall furnish Seller notice of any
such adjustment and shall provide Seller reasonable opportunity to review the
calculations pertaining to any such adjustment. If, pursuant
23
24
to the terms and conditions hereof, the Administrator shall be required to
retain a nationally recognized independent U.S. investment banking firm for any
purpose provided herein, such nationally recognized independent U.S. investment
banking firm shall be selected and retained by the Administrator only after
consultation with Seller; provided, however, that Seller shall be deemed to
have waived its right to consult if Seller fails to consult within five
Business Days of notice being sent by the Administrator to Seller seeking
consultation. Purchaser may delegate the effectuation and calculation of any
such adjustments to its Administrator.
8.2 Notices. Notices to Purchaser shall be directed to it in care of
the Administrator for Purchaser, The Bank of New York, at 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Telephone: 000-000-0000, Telecopier: 000-000-0000,
Attention: Xxxx Xxxxx; notices to Seller shall be directed to it
at______________________, with a copy to ____________; and notices to Corporate
Seller Control Person shall be directed to it at______________________, with a
copy to ____________. Notwithstanding the foregoing, notices to a party shall
be directed to such other address for such party as shall be specified by such
party in a like notice given pursuant to this Section 8.2. All notices and
other communications hereunder shall be in writing and shall be deemed to have
been duly given if either (i) personally delivered (including delivery by
courier service or by Federal Express or any other nationally recognized
overnight delivery service for next day delivery) to the offices specified in
the preceding sentence, in which case they shall be deemed received on the first
Business Day by which delivery shall have been made to said offices, or the
first Canadian Business Day by which delivery shall have been made to said
offices if such delivery is made in Canada; or (ii) sent by certified mail,
return receipt requested, in accordance with the preceding sentence, in which
case they shall be deemed received when receipted for unless acknowledgment is
refused (in which case delivery shall be deemed to have been received on the
first Business Day on which such acknowledgment is refused (or the first
Canadian Business Day on which acknowledgment is refused if such refusal occurs
in Canada)). Any notice, demand or other communication to be provided by or on
behalf of Purchaser pursuant to this Agreement shall be sent to the address of
Seller or Corporate Seller Control Person provided in this Section 8.2
notwithstanding the death of Corporate Seller Control Person, the adjudication
of Seller or Corporate Seller Control Person as incompetent or the appointment
of a guardian with respect to the affairs of Seller or Corporate Seller Control
Person. Any failure by Seller or Corporate Seller Control Person or any
guardian, conservator, executor, administrator or other similarly appointed
person to receive any such notice, demand or communication shall in no way
abrogate, invalidate or otherwise affect the validity or enforceability of the
notice, demand or communication or the matters set forth therein.
8.3 Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
8.4 Entire Agreement. Except as expressly set forth herein, this
Agreement constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all prior agreements, understandings
and negotiations, both written and oral, among the parties with respect to the
subject matter of this Agreement.
24
25
8.5 Amendments; Waivers. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Purchaser, Seller and Corporate Seller
Control Person or, in the case of a waiver, by the party against whom the waiver
is to be effective. No failure or delay by either party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
8.6 No Third Party Rights; Successors and Assigns. This Agreement is
not intended and shall not be construed to create any rights in any person other
than Seller and Purchaser and their respective successors and assigns and no
person shall assert any rights as third party beneficiary hereunder. Whenever
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and permitted assigns of such party.
8.7 Application of U.S. Bankruptcy Code. The parties hereto
acknowledge and agree that the Collateral Agent is a "financial institution"
within the meaning of Section 101(22) of Title 11 of the United States Code (the
"U.S. Bankruptcy Code") and is acting as agent and custodian for Purchaser in
connection with this Agreement and that Purchaser is a "customer" of the
Collateral Agent within the meaning of said Section 101(22). The parties hereto
further acknowledge and agree that this Agreement is a "securities contract," as
such term is defined in Section 741(7) of the U.S. Bankruptcy Code, entitled to
the protection of Section 555 of the U.S. Bankruptcy Code.
8.8 Application of Canadian Insolvency Laws. The parties hereto
further acknowledge and agree that this Agreement is an "eligible financial
contract" as defined in Subsection 65.1(8) of the Bankruptcy and Insolvency Act
(Canada) and Subsection 11.1(1) of the Companies' Creditors Arrangement Act
(Canada) and is therefore exempt from the provisions of Subsection 65.1(1) of
the Bankruptcy and Insolvency Act (Canada) and is entitled to the benefit of
Subsections 11.1(2) and (3) of the Companies' Creditors Arrangement Act
(Canada).
8.9 Governing Law; Jurisdiction; Severability; Waiver of Jury Trial.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York. For the purpose of any suit, action or proceeding
arising out of or relating to this Agreement, the parties hereto hereby
expressly and irrevocably consent and submit to the non-exclusive jurisdiction
of any United States Federal or New York State court sitting in the Borough of
Manhattan, City and State of New York, and expressly and irrevocably waive, to
the extent permitted under applicable law, any immunity from the jurisdiction
thereof and any claim or defense in such suit, action or proceeding based on a
claim of improper venue, forum non conveniens or any similar basis to which it
or he might otherwise be entitled. To the extent permitted by law, the
unenforceability or invalidity of any provision or provisions of this Agreement
shall not render any other provision or provisions herein contained
unenforceable or invalid. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
PARTIES HERETO HEREBY WAIVE AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
25
26
ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR
TORT OR OTHERWISE. EACH PARTY HERETO ACKNOWLEDGES THAT IT OR HE HAS BEEN
INFORMED BY THE OTHER PARTIES HERETO THAT THE PROVISIONS OF THIS SECTION
CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH SUCH OTHER PARTIES HERETO HAVE
RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT AND ANY
DOCUMENT RELATED THERETO. EACH PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART
OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH OF
THE OTHER PARTIES HERETO TO THE WAIVER OF ITS OR HIS RIGHTS TO TRIAL BY JURY.
Each of Seller and Corporate Seller Control Person hereby irrevocably
appoints Novo Industries L.P. (the "Process Agent"), with an office on the date
hereof at 0000 Xxxxxxxx Xxxx, Xxxxxxx, Xxxxx 00000, Xxxxxx Xxxxxx, as its or
his agent to receive on behalf of Seller and Corporate Seller Control Person
and their respective property service of copies of the summons and complaint
and any other process which may be served in any such action or proceeding.
Such service may be made (A) by delivering a copy of such process to Seller or
Corporate Seller Control Person, as the case may be, in care of the Process
Agent at the Process Agent's above address, and each of Seller and Corporate
Seller Control Person hereby irrevocably authorizes and directs the Process
Agent to accept such service on its behalf, or (B) by the mailing of copies of
such process to Seller or Corporate Seller Control Person, as the case may be,
at its or his address specified in Section 8.2. Each of Seller and Corporate
Seller Control Person agrees that a final and nonappealable 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.
Nothing in this Section 8.9 shall affect the right of Purchaser to serve legal
process in any other manner permitted by law or affect the right of Purchaser
to bring any action or proceeding against Seller or Corporate Seller Control
Person or their respective property in the courts of any other jurisdictions.
To the extent that either Seller or Corporate Seller Control Person has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, each of Seller and Corporate Seller Control Person hereby
irrevocably waives, to the fullest extent it may legally do so, such immunity
in respect of its obligations under this Forward Purchase Agreement and,
without limiting the generality of the foregoing, agrees that the waivers set
forth in this subsection shall have the fullest scope permitted under the
Foreign Sovereign Immunities Act of 1976 of the United States, as amended, and
are intended to be irrevocable for purposes of such Act.
8.10 Judgment Currency Indemnity. If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due hereunder in United
States dollars into another currency, the parties hereto agree, to the fullest
extent that they may effectively do so, that the rate of exchange used shall be
that at which in accordance with normal banking procedures the Collateral Agent
could purchase United States dollars with such other currency in the New York
City foreign exchange market at or about 11:00 A.M. (New York City time) on the
Business Day preceding that on which final judgment is given for delivery on
the following Business Day.
26
27
The obligation of Seller in respect of any sum due from it to Purchaser or
the Collateral Agent hereunder shall, notwithstanding any judgment in a
currency other than United States dollars, be discharged only to the extent
that on the Business Day following receipt by Purchaser or the Collateral Agent
of any sum adjudged to be so due in such other currency the Collateral Agent
may in accordance with normal banking procedures purchase United States dollars
with such other currency; if the United States dollars so purchased are less
than the sum originally due to Purchaser or the Collateral Agent in United
States dollars, Seller agrees as a separate obligation and notwithstanding any
such judgment, to indemnify Purchaser or the Collateral Agent against such loss
and if the United States dollars so purchased exceed the sum originally due to
Purchaser or the Collateral Agent in United States dollars, Purchaser and the
Collateral Agent agree to remit to Seller such excess.
27
28
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date and year first above written.
PURCHASER: SELLER:
DECS TRUST II [Seller]
By: _______________________________ By: _______________________________
Name: Name:
Title: Title:
CORPORATE SELLER CONTROL
PERSON:
___________________________________
Name:
28
29
EXHIBIT A
FORM OF COLLATERAL AGREEMENT
29
30
[EXHIBIT B
FORM OF COLLATERAL AGENCY AGREEMENT]
30
31
EXHIBIT [B] {C}
FORM OF REIMBURSEMENT AGREEMENT
31
