PRE-AMALGAMATION AGREEMENT
A M O N G:
XXXXXXX INC., a corporation amalgamated under the laws
of Quebec,
("Xxxxxxx")
- and -
TRIBUNE COMPANY, a company incorporated under the
laws of Delaware,
("Tribune")
- and -
QUNO CORPORATION, a corporation amalgamated under
the laws of Quebec,
(the "Corporation")
WHEREAS:
A. the authorized capital of the Corporation consists of 50,000,000
Common Shares and 585,146 Non-Voting Shares, of which 22,298,056 Common Shares
and 332,274 Non-Voting Shares are issued and outstanding as fully paid and
non-assessable;
B. Tribune is the legal and beneficial owner of 7,214,854 of the
outstanding Common Shares and all of the 332,274 outstanding Non-Voting Shares
and the Convertible Debenture;
C. there are also outstanding as at the date hereof the Existing Options;
D. Tribune has expressed its interest in disposing of the Tribune's
Securities and has agreed with the Corporation to attempt to do so in a manner
that is consistent with the interests of the other holders of the Common Shares;
E. in this context, the Corporation, with the concurrence of Tribune,
engaged the Financial Advisors to assist them;
F. as a result of consultation with the Financial Advisors, the
Corporation and Tribune established a process through which those persons that
might be interested in acquiring the Tribune's Securities and all of the other
outstanding Shares were solicited;
G. as a result of that solicitation and the submission of expressions
of interest by various persons, a limited number of persons were requested
to submit firm and final offers for the acquisition of the Tribune's Securities
and all of the other outstanding Common Shares;
X. Xxxxxxx is prepared to acquire all of the outstanding Common Shares
and Non-Voting Shares and all the Common Shares that are issuable pursuant to
the Existing Options and Convertible Debenture pursuant to the Transaction
provided for in this agreement;
I. Tribune is prepared to vote in favour of the Transaction in accordance
with this agreement;
J. the board of directors of the Corporation has appointed the
Independent Committee to consider the Transaction and make a recommendation to
the board of directors of the Corporation with respect thereto;
K. the Independent Committee has retained the Independent Financial
Advisor and the Independent Legal Advisor to assist the Independent Committee in
connection with its deliberations;
L. the Independent Financial Advisor has determined that the Transaction
is fair from a financial point of view to the shareholders of the Corporation,
other than Tribune, and has so advised the Independent Committee;
M. the Financial Advisors have determined that the Transaction is fair
from a financial point of view to the shareholders of the Corporation;
N. the Independent Committee, based on the advice of the Independent
Financial Advisor and the Independent Legal Advisor and having considered
such other matters as it has considered appropriate, has recommended to the
board of directors of the Corporation that the Corporation enter into this
agreement and that the board of directors recommend that in the absence
of a superior opportunity for shareholders of the Corporation to realize upon
their investment the shareholders of the Corporation vote in favour of the
Transaction; and
O. the board of directors of the Corporation, based on the advice
of the Financial Advisors, has accepted the recommendation of the
Independent Committee, has authorized the Corporation to enter into this
agreement and has determined to recommend that in the absence of a superior
opportunity for shareholders of the Corporation to realize upon their
investment the shareholders of the Corporation vote in favour of the
Transaction.
NOW THEREFORE in consideration of the mutual covenants set out in this
agreement and other good and valuable consideration, the receipt and sufficiency
of which is acknowledged, Xxxxxxx, Tribune and the Corporation agree as follows:
1. The Transaction and its Announcement
------------------------------------
A. Process.
Subject to the terms and conditions of this agreement:
(a) as soon as reasonably practicable after the execution of this
agreement, the parties shall use reasonable efforts to cause
the Corporation to call and hold the Special Meeting on or
before February 29, 1996;
(b) in connection with the Special Meeting, Xxxxxxx, Tribune and
the Corporation shall work together to prepare a management
information circular, an amalgamation agreement and such other
documents as may be necessary or desirable; and
(c) if the Transaction is approved at the Special Meeting in
compliance with the Legislation, as soon as reasonably
practicable thereafter and subject to the fulfilment or the
waiver of each of the conditions set out in Section 2 of this
agreement, the Corporation and Xxxxxxx shall file or cause to
be filed articles of amalgamation to give effect to the
Transaction pursuant to section 123.118 of the Companies Act.
B. Compliance with Legislation.
Xxxxxxx, Tribune and the Corporation shall cause the
Transaction to be implemented in compliance with the Legislation.
C. Public Announcement.
Immediately after the execution of this agreement, Xxxxxxx,
Tribune and the Corporation shall issue a joint public announcement,
substantially in the form attached as Schedule C.
2. Conditions of Transaction
-------------------------
A. Conditions in Favour of Xxxxxxx.
The obligations of Xxxxxxx to complete the Transaction shall
be subject to the fulfilment, or the waiver by Xxxxxxx, of the conditions set
out in Schedule D, each of which is for the exclusive benefit of Xxxxxxx and may
be waived by Xxxxxxx at any time, in whole or in part, in its sole discretion
without prejudice to any other rights that it may have.
B. Conditions in Favour of the Corporation.
The obligations of the Corporation to complete the Transaction
shall be subject to the fulfilment, or the waiver by the Corporation, of the
conditions set out in Schedule E, each of which is for the exclusive benefit of
the Corporation and may be waived by the Corporation at any time, in whole or in
part, in its sole discretion without prejudice to any other rights that it may
have.
C. Conditions in Favour of Tribune.
The obligations of Tribune to complete the Transaction shall
be subject to the fulfilment, or the waiver by Tribune, of the conditions set
out in Schedule F, each of which is for the exclusive benefit of Tribune and may
be waived by Tribune at any time, in whole or in part, in its sole discretion
without prejudice to any other rights that it may have.
D. Satisfaction, Waiver and Release of Conditions.
The conditions provided for in this section shall be deemed
conclusively to have been satisfied, waived or released when articles of
amalgamation are filed as contemplated by this agreement and a certificate of
amalgamation is issued.
3. Representations and Warranties
------------------------------
A. Representations and Warranties of Tribune.
Tribune represents and warrants to Xxxxxxx as to those matters
set forth in Schedule G.
B. Representations and Warranties of the Corporation.
The Corporation represents and warrants to Xxxxxxx as to those
matters set forth in Schedule H.
C. Representations and Warranties of Xxxxxxx.
Xxxxxxx represents and warrants to each of Tribune and the
Corporation as to those matters set forth in Schedule I.
D. Survival of Representations, Warranties and Covenants.
Except where otherwise indicated, the representations,
warranties and covenants contained in this agreement shall survive its execution
and delivery and the closing of the transactions contemplated herein for a
period of three years from the date hereof except for the representations and
warranties set forth in the first full paragraph of paragraph (b) and in
paragraphs (c) and (d) of Schedule G, the first full paragraph of paragraph (d)
of Schedule H and the first full paragraph of paragraph (d), and in paragraphs
(j) and (k) of Schedule I, which will survive indefinitely. No investigation by
or on behalf of any party shall mitigate, diminish or affect the representations
and warranties made by any other party.
4. Implementation of the Transaction
---------------------------------
A. General.
Each of Xxxxxxx, Tribune and the Corporation shall, and shall
cause its Subsidiaries to, use all reasonable efforts to satisfy each of the
conditions precedent to be satisfied by it and to take, or cause to be taken,
all other action and to do, or cause to be done, all other things necessary,
proper or advisable to permit the completion of the Transaction in accordance
with this agreement and to cooperate with each other in connection therewith,
including using all reasonable efforts to :
(a) provide notice regarding the Transaction to, and obtain all
necessary waivers, consents and approvals or releases
regarding the Transaction from, other parties to
agreements, understandings or other documents to which it
is a party or by which it is or its properties are bound or
affected (including, without limitation, loan agreements,
leases, pledges, guarantees and security), the failure of
which to obtain would prevent the implementation of the
Transaction or, individually or in the aggregate, could, as
a result of completion of the Transaction, reasonably be
expected to be Materially Adverse to either the Corporation,
Tribune or Xxxxxxx and their respective Subsidiaries, in each
case taken as a whole; provided that the foregoing shall not
apply with respect to the credit facilities of the
Corporation with its bankers and in respect of the
US$150,000,000 of 9-1/8% Senior Notes of the Corporation due
2005;
(b) obtain the approval of the shareholders of the Corporation
at the Special Meeting in compliance with the Legislation;
(c) effect or cause to be effected all necessary registrations and
filings (including filings required by the Competition Act
(Canada) and the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976 (United States)) and submissions of information
requested of it by Agencies, the failure of which to effect
would prevent the implementation of the Transaction or could,
as a result of completion of the Transaction, reasonably be
expected to be Materially Adverse to either the Corporation or
Xxxxxxx and their respective Subsidiaries, in each case taken
as a whole;
(d) obtain, prior to the Effective Date, all licences, consents,
approvals, authorizations and orders of Agencies as may be
necessary or desirable for the consummation of the Transaction
and the failure of which to obtain could reasonably be
expected to be Materially Adverse to either the Corporation or
Xxxxxxx and their respective Subsidiaries, in each case taken
as a whole;
(e) cooperate with each other on a timely basis in connection with
the preparation of, and shall furnish to each other such
information as may be reasonably necessary for inclusion in,
the management information circular and any amendment thereto
to be mailed to holders of Shares in connection with the
Special Meeting; and
(f) ensure that the Corporation maintains a Canadian operating
credit facility of at least U.S.$40 million on terms and
conditions substantially the same as those of the existing
Canadian operating credit facility.
B. Defense of Proceedings.
Each of Xxxxxxx, Tribune and the Corporation shall vigorously
defend, or cause to be defended, any lawsuits or other legal proceedings brought
against it or any of its affiliates challenging this agreement or the completion
of the Transaction. None of Xxxxxxx, Tribune or the Corporation shall settle or
compromise any claim brought in connection with the Transaction prior to the
Effective Date by persons that are or purport to be holders of any of its
securities without prior consultation with the others.
C. Conversion of Debenture and Vote.
Provided that the Corporation and Xxxxxxx are in compliance
with their respective material obligations hereunder, Tribune shall take all
such steps as may be required of Tribune to convert the Convertible Debenture
before the Special Meeting and Tribune shall vote all of its Shares in favour of
the Transaction at the Special Meeting. The board of directors of the
Corporation shall take all steps necessary on the part of the Corporation to
enable Tribune to convert the Convertible Debenture and vote the Common Shares
issued upon conversion of the Convertible Debenture at the Special Meeting. For
greater certainty, nothing herein shall limit or be deemed to limit the right
that Tribune otherwise would have to convert the Convertible Debenture in
accordance with its terms.
D. Registrar and Transfer Agent.
The Corporation shall instruct its transfer agent to furnish
promptly to Xxxxxxx such information and documents as it may reasonably request,
including updated or additional lists of security holders, mailing labels and
lists of securities positions, and provide to Xxxxxxx such other assistance as
it may reasonably request to be able to communicate the Transaction to holders
of the Common Shares and to such other persons as are entitled to receive
materials relating to the Transaction under the Legislation, provided that
Xxxxxxx shall not communicate in writing with the holders of Common Shares
without prior consultation with the Corporation.
E. Option Plans.
The Corporation shall not amend the 1993 Long Term Incentive
Plan or the Director Share Compensation Plan pursuant to which the Existing
Options have been issued and are governed, without the prior written consent of
Xxxxxxx.
F. Business in the Ordinary Course.
Prior to the Effective Date, unless Xxxxxxx shall otherwise
agree in writing (such agreement not to be unreasonably withheld) or as
otherwise expressly contemplated or permitted by this agreement, the Corporation
shall (and shall cause each of its
Subsidiaries to) conduct its and their respective businesses in the ordinary
course of business consistent with past practice. Without limitation, the
Corporation shall:
(a) not, and shall cause each of its Subsidiaries to not, do or
permit to occur any of the following (directly or indirectly)
outside of the ordinary course of business consistent with
past practice, except to the extent necessary to give effect
to obligations under this agreement or otherwise existing at
the date of this agreement:
(i) issue, sell, pledge, lease, dispose of, encumber or
agree to issue, sell, pledge, dispose of or encumber:
(a) any securities, including, for greater
certainty, additional options or stock
appreciation rights (other than the issuance
of Common Shares upon the exercise of the
Existing Options or conversion of the
Convertible Debenture or under the Stock
Purchase Plan provided that the Corporation
shall forthwith take all action reasonably
necessary and available to suspend operation
of the Stock Purchase Plan); or
(b) any material assets;
(ii) amend or propose to amend articles or by-laws
of the Corporation or any of its Subsidiaries;
(iii) declare or make any distribution (in cash, securities
or other property) in respect of any securities,
other than payments required to be made in respect of
the Convertible Debenture, the Corporation's 9-1/8%
Senior Notes due 2005 and existing credit facilities;
(iv) redeem, purchase or offer to purchase any securities;
(v) reorganize, amalgamate or merge with any other
person;
(vi) reduce its stated capital;
(vii) acquire or agree to acquire (by a merger,
amalgamation, acquisition of stock or assets or
otherwise) any person;
(viii) incur, or commit to incur, otherwise than under
current operating lines of credit, (i) any
indebtedness for borrowed money or (ii) any
obligations for capital expenditures other than for
projects already authorized as listed in either the
1996 Capital Plan Spending Projections dated December
14, 1995 (in the aggregate amount of $25,272,000 for
1996 or such greater amount with the written approval
of Xxxxxxx which approval shall not be unreasonably
withheld) or in the 1995 Capital Spending
Projections; nothwithstanding the foregoing, the
Corporation may proceed with unforeseen capital
expenditures which may be required as a result of
the failure of existing equipment to resume
operations in the normal course of business, provided
that no such expenditure in excess of $5,000,000
shall be made without the prior written consent of
Xxxxxxx, which shall not be unreasonably withheld; or
(ix) enter into or modify any contract, agreement,
commitment or arrangement with respect to any of the
matters set forth in this subsection 4F(a);
(b) not, and shall cause each of its Subsidiaries to not, except
in the ordinary course of business and consistent with past
practice or as contemplated herein:
(i) enter into or modify any employment, severance,
collective bargaining or similar agreements or
arrangements with, or grant any salary increases,
severance or termination pay to, any officers or
directors other than pursuant to agreements in effect
on the date of this agreement or pursuant to ongoing
labour negotiations;
(ii) in the case of employees who are not officers or
directors, take any action with respect to the grant
of any bonuses, salary increases, severance or
termination pay other than pursuant to agreements and
policies in effect on the date of this agreement; or
(iii) adopt or amend any bonus, profit sharing
compensation, stock option, pension, retirement,
deferred compensation, employment or other employee
benefit plan, agreement, trust, fund or arrangement
for the benefit or welfare of any employee except to
enable Common Shares issued or issuable thereunder to
vest and be voted at the Special Meeting and except
for the implementation of funding arrangements, not
to exceed $7,800,000, for the Corporation's
supplementary pension plan.
Notwithstanding the foregoing, the Corporation may pay bonuses
based on the Corporation's 1995 fiscal year's plan and
performance in an amount not to exceed $2,750,000 in the
aggregate;
(c) use its reasonable efforts to cause the current insurance
policies of it and its Subsidiaries not to be cancelled or
terminated or any other coverage thereunder to lapse, unless
simultaneously with such termination, cancellation or lapse,
replacement policies underwritten by insurance companies of
nationally recognized standing providing coverage
substantially equal to or greater than the coverage under the
cancelled, terminated or lapsed policies for substantially
similar premiums are in full force and effect; and
(d) use its reasonable efforts, and cause each of its Subsidiaries
to use its reasonable efforts to preserve intact their
respective business organizations and goodwill, to keep
available the services of their respective officers and
employees as a group and to maintain satisfactory
relationships with suppliers, distributors, customers and
others with whom they have business relationships.
G. Access to Information.
1. Corporation Access.
The Corporation shall, and shall cause its Subsidiaries and
the officers, directors, employees and agents of it and its Subsidiaries to,
provide to Xxxxxxx and its officers, employees, agents and bankers complete
access at all reasonable times and on reasonable notice to their respective
businesses, properties, assets, officers, employees, agents, books and records
(including all financial, operating, personnel, compensation, tax and other data
and information as Xxxxxxx through its officers, employees or agents, may
reasonably request). In the event of the termination of this agreement without
the Transaction being completed, Xxxxxxx will hold such information in
confidence to the extent and as provided in the confidentiality agreement dated
September 13, 1995 entered into between Xxxxxxx and the Corporation, which
agreement shall survive the termination of this agreement. Notwithstanding the
foregoing, the Corporation shall not provide Xxxxxxx with information relating
to (i) customer lists, (ii) flotation technology and (iii) the Baie Xxxxxx study
on paper machine upgrades, unless and until the Transaction is completed.
2. Xxxxxxx and Tribune Access.
Xxxxxxx shall provide Tribune and the Corporation with a copy
of the commitment letter and term sheet entered into with the Chemical Bank in
respect of this Transaction (except for the fee letter and Annex II entitled
Pricing Grid), the response of its legal counsel to the audit enquiry letter
furnished in respect of the year ended on December 31, 1994 and the latest
certificate provided to the bankers of Xxxxxxx'x Subsidiaries in connection with
certain environmental matters. In addition, Xxxxxxx shall cause its Chief
Financial Officer, its Vice President, Environment, one other senior officer,
one representative of its auditors and one representative of its legal counsel
to attend, at Xxxxxxx'x offices in Montreal on December 28, 1995, at an oral due
diligence session and respond to a list of oral due diligence questions prepared
and provided to them in advance by Tribune and the Corporation and their
respective advisors. Xxxxxxx shall also ensure that its Chief Executive Officer
is available on or prior to December 29, 1995 to respond to any inquiries made
by the Independent Financial Advisor. Tribune and the Corporation will hold such
information in confidence on the same basis as Xxxxxxx is required to hold in
confidence information relating to the Corporation pursuant to the
confidentiality agreement referred to in Section 4G1. Following completion of
the Transaction, Xxxxxxx shall cause the Corporation to provide Tribune with
such reasonable information as may be required for United States taxation and
other regulatory purposes, and for no other purposes.
H. Employment Policies.
Xxxxxxx (i) acknowledges and agrees that the Corporation is
bound by, and (ii) agrees to ensure that following completion of the Transaction
the Corporation complies
with, its normal and usual severance policies and practices as described in
Schedule J, its other normal and usual written employment policies and practices
and the following employment and severance agreements and policies, copies of
which have been provided to Xxxxxxx: Supplemental Retirement Plan, Agreement
Relating to Temporary Assignment of Miles Xxxxxx; Confirmation of Employment
Agreement with Xxxxx Xxxxxxxxx and Employment Agreements as Amended with Xxxxx
Xxxxxxxxx; Excerpt from Standard Practice Instructions Manual - Vacations and
Holidays - Salaried Employees; Transitional Compensation Agreement made on
September 14, 1995 between the Corporation and Xxxxxxx X. XxXxxxx; Transitional
Compensation Agreement made on October 6, 1995 between the Corporation and
Xxxxxxx Xxxxxxxx; Transitional Compensation Agreement between the Corporation
and Xxxxxx X. Xxxxx; Transitional Compensation Agreement between the Corporation
and Xxxxx X. Xxxxxx; Transitional Compensation Agreement made on October 3, 1995
between the Corporation and Xxxxxxx X. Xxxxx; Transitional Compensation
Agreement made on October 10, 1995 between the Corporation and Miles X. Xxxxxx;
Transitional Compensation Agreement made on October 12, 1995 between the
Corporation and Xxxxx X. Lawn; Transitional Compensation Agreement made on
September 6, 1995 between the Corporation and Xxxxxxx X. Xxxxxxx; Transitional
Compensation Agreement between the Corporation and Xxxx Xxxxxxx; and the Special
Consulting Agreements between the Corporation and each of X. Xxxxx-Xxxxxxx, X.X.
Xxxxxx, Xxxx Xxxxxxxx and W.E.R. Xxxxxxxx as described in writing to Xxxxxxx.
For greater certainty, all employees severed within 18 months of the Effective
Date, other than under the Transitional Compensation Agreements referred to
above, will be provided with severance no less than in accordance with Schedule
J.
5. Commitment to the Transaction
-----------------------------
A. Non-Solicitation.
None of Tribune, the Corporation or its Subsidiaries shall,
directly or indirectly, through any insider, investment banker, agent or
otherwise, solicit, initiate or encourage inquiries or submission of proposals
or offers from any person relating to any liquidation, dissolution,
recapitalization, merger, amalgamation, acquisition or purchase of all or a
material portion of the assets of, or any equity interest in (including the
Common Shares of) the Corporation or any of its Subsidiaries or other similar
transaction or business combination involving the Corporation or any of its
Subsidiaries; provided, however, that nothing shall prevent the board of
directors of the Corporation and the Corporation from taking actions required to
permit the directors of the Corporation to discharge their fiduciary obligations
upon receipt of a written legal opinion advising that such action should be
sanctioned or taken by the directors of the Corporation to discharge their
fiduciary duties. Each of the Corporation and Tribune shall promptly notify
Xxxxxxx if any proposal or offer is made and shall promptly provide Xxxxxxx with
the identity of the party making the proposal and the terms thereof.
B. Restriction on Trades.
Except as expressly permitted by this agreement or with the
prior written consent of Xxxxxxx, Tribune shall not acquire (except as a result
of the conversion of the Convertible Debenture), dispose of (except upon the
conversion of the Convertible
Debenture), vote or withhold from voting (other than in a manner not
inconsistent with the terms and conditions of this agreement) any securities (or
any right relating to any such securities) in the capital of any of Xxxxxxx, the
Corporation or any of their respective Subsidiaries or enter into any agreement,
undertaking or commitment to do so.
C. Mechanics Relating to Competing Offer.
If, before the Special Meeting, a Competing Offer has been
received by the Corporation, the Corporation shall provide a written notice to
that effect to Xxxxxxx. Within three business days after receiving such a
notice, Xxxxxxx may agree to increase the consideration to be given in exchange
for each Share pursuant to the Transaction to an amount having a combined cash
and cash equivalent value equivalent to or greater than the combined cash and
cash equivalent value of the consideration offered under the Competing Offer
(and at the same time may otherwise amend the method of implementation of the
Transaction), and the Corporation and Tribune shall agree to such increase (and
amendment provided that such amendment to the method of implementation is no
less favourable to the shareholders of the Corporation that the Competing
Offer). If Xxxxxxx does not advise the Corporation in writing before the end of
the third business day after receiving such notice that it will increase the
consideration as provided for in the preceding sentence, the Corporation may
terminate this agreement upon payment of the fee provided in Section 6. In such
event, Tribune shall pay to Xxxxxxx forthwith upon receipt by Tribune of the
consideration payable under the Competing Offer, an amount (in cash) equal to
50% of the product of (i) 19,213,817 and (ii) the excess of the combined cash
and cash equivalent value of the consideration received by Tribune or as it may
direct per Share pursuant to the Competing Offer over the combined cash and cash
equivalent value of the consideration that Xxxxxxx agreed to pay per Share. If
Tribune subsequently receives additional consideration pursuant to the Competing
Offer for any of its Shares (including the Common Shares that may be issued upon
conversion of the Convertible Debenture), it shall promptly pay to Xxxxxxx
forthwith upon receipt by Tribune an amount (in cash) equal to 50% of the cash
and the cash equivalent value of the additional consideration it receives. If
Xxxxxxx agrees to increase the consideration as provided in this Section,
Xxxxxxx and the Corporation shall promptly publicly disclose such increase. If,
within five business days before the Special Meeting, the Corporation receives a
Competing Offer, the Corporation and Tribune shall, if Xxxxxxx so requests, take
such actions as may be required of each of them to postpone the Special Meeting
in accordance with applicable Legislation, but only so as to permit Xxxxxxx to
increase the consideration in accordance with the provisions of this paragraph
5C; if, however, Xxxxxxx does not request a postponement, Xxxxxxx may only
increase the consideration in accordance with the provision of this paragraph 5C
before the Special Meeting.
D. Cash Equivalence.
The cash equivalent value of any non-cash consideration of a
Competing Offer or under the Transaction shall be valued as of the close of
business on the date that the Competing Offer is received by the Corporation and
shall be mutually agreed upon by CIBC Wood Gundy Securities Inc. (or at the
Corporation's option, another member of either the XXX or the NASD) on behalf of
the Corporation and by Toronto Dominion Securities Inc. (or, at Xxxxxxx'x
option, another member of the XXX or NASD) on behalf of Xxxxxxx, each acting
reasonably. If the two members are unable to mutually agree on the cash
equivalent value of such non-cash consideration by 2:00 p.m. on the second day
following the date on which the Competing Offer is received by the Corporation,
the Corporation and Xxxxxxx shall request a third member of the XXX or NASD to
determine the cash equivalent value of the non-cash consideration by 12:00 noon
on the following day. If that member does not make such determination by such
time, each of the initial members shall advise the Corporation and Xxxxxxx of
their respective professional judgement of the cash equivalent value of such
non-cash consideration and the cash equivalent value of such non-cash
consideration shall be the average of the amounts reflected in such judgements.
Any such determination made in accordance with the foregoing provisions shall be
binding on the parties.
E. Post-Amalgamation Matters.
Xxxxxxx covenants and agrees that forthwith following the
Effective Date it will cause the holders of Shares to receive cash, Class A
shares and Notes in amounts and in accordance with the procedure set forth in
Schedule B.
6. Expenses
--------
If, prior to the Effective Date:
(a) this agreement is to be terminated by the Corporation pursuant
to Section 5C; or
(b) the board of directors of the Corporation has not recommended
or has withdrawn its recommendation that holders of Common
Shares vote in favour of the Transaction or recommends that
holders of Common Shares accept or vote in favour of another
transaction at any time prior to March 31, 1996, unless such
failure to recommend, withdrawal of recommendation or
recommendation is the result of the termination of this
agreement in accordance with the provisions of Section 8 other
than 8B(e);
the Corporation shall immediately pay or cause to be paid to Xxxxxxx (or as it
may direct) a fee of $20,000,000 by bank draft in full and final satisfaction of
all direct and indirect costs and expenses paid or accrued by Xxxxxxx in
connection with the Transaction and all ancillary matters including, without
limitation, all costs, fees and expenses incurred in connection with financing
arrangements pertaining to the Transaction and for its investment advisors and
counsel and upon payment of such fee, this agreement shall terminate.
7. Tax Certificates
----------------
Prior to the disposition to Xxxxxxx of the exchangeable shares
of MiddleCo as described in Schedule B, Tribune shall deliver to Xxxxxxx
certificates under Subsection 116(2) of the Income Tax Act (Canada) and Section
1098 of the Taxation Act (Quebec) in respect of the disposition to Xxxxxxx of
the exchangeable shares to be issued to Tribune for the non-voting shares of the
Corporation held by Tribune with certificate limits equal to the total proceeds
to be received by Tribune upon the disposition to Xxxxxxx of such
exchangeable shares, failing which the amounts required to be withheld pursuant
to Subsection 116(5) of the Income Tax Act (Canada) and Section 1101 of the
Taxation Act (Quebec) shall be withheld from the proceeds to be paid to Tribune
upon the disposition to Xxxxxxx of such exchangeable shares. No withholding will
be made in respect of the disposition of the Shares held by Tribune on the
amalgamation, the disposition to Xxxxxxx of the exchangeable shares to be issued
to Tribune for the voting shares of the Corporation and, provided the
above-mentioned certificates are delivered, the disposition to Xxxxxxx of the
exchangeable shares to be issued to Tribune for the non-voting shares of the
Corporation.
8. Termination of Agreement
------------------------
A. Termination by Xxxxxxx.
This agreement may be terminated by Xxxxxxx at any time before
the Effective Date:
(a) with the written agreement of the Corporation and Tribune;
(b) if the Transaction has not been completed by March 31, 1996;
(c) if the Transaction is not approved at the Special Meeting in
compliance with the Legislation; or
(d) if it becomes apparent that one or more of the conditions for
the benefit of Xxxxxxx in Schedule D cannot be satisfied or
will not be waived by Xxxxxxx prior to March 31, 1996.
B. Termination by Corporation.
This agreement may be terminated by the Corporation at any
time before the Effective Date:
(a) with the written agreement of Xxxxxxx and Tribune;
(b) if the Transaction has not been completed by March 31, 1996;
(c) if the Transaction is not approved at the Special Meeting in
compliance with the Legislation;
(d) if it becomes apparent that one or more of the conditions for
the benefit of the Corporation in Schedule E cannot be
satisfied or will not be waived by the Corporation prior to
March 31, 1996; or
(e) in accordance with Section 5C.
C. Termination by Tribune.
This agreement may be terminated by Tribune at any time before
the Effective Date:
(a) with the written agreement of Xxxxxxx and the Corporation;
(b) if the Transaction has not been completed by March 31, 1996;
(c) if the Transaction is not approved at the Special Meeting in
compliance with the Legislation; or
(d) if it becomes apparent that one or more of the conditions for
the benefit of Tribune in Schedule F cannot be satisfied or
will not be waived by Tribune prior to March 31, 1996.
D. Notice of Termination.
If any party proposes to terminate this agreement pursuant to
8A(d), in the case of Xxxxxxx, 8B(d), in the case of the Corporation, or 8C(d),
in the case of Tribune, it shall provide five days prior notice to the other
parties of its intention to do so so as to permit those parties the opportunity
to provide reasonable satisfaction to such party that the specified condition
precedent can be satisfied.
E. Obligations upon Termination.
In the event of the termination of this agreement hereunder,
this agreement, except for Section 9, the payment obligations in Section 5C and
Section 6 (in the event the agreement is terminated pursuant to Section 8B(e))
the and the confidentiality obligations of the parties contained in this
agreement or in the confidentiality agreement referred to in Section 4G1, shall
become void and of no further force and effect and there shall be no liability
on the part of any party hereto or their respective officers and directors,
except to the extent that any such party is in default of any of its obligations
hereunder.
9. Confidentiality and Public Disclosure
-------------------------------------
Except as required by Section 1C of this agreement or the
Legislation, this agreement shall be kept strictly confidential and none of
Xxxxxxx, Tribune or the Corporation shall make any public announcement or
statement with respect to this agreement or the Transaction without the approval
of each other party hereto, which approval:
(a) shall not be unreasonably withheld;
(b) may be oral; and
(c) may be given on behalf of a party by its counsel.
The parties shall consult with the others as to the timing and wording of press
releases or other disclosure required by the Legislation relating to the
Transaction. Notwithstanding the foregoing, the parties shall be entitled to
describe this agreement and provide copies thereof to Agencies, their respective
boards of directors and to those employees, bankers and professional advisors
that need to know details about this agreement in order for the parties to
perform their covenants or satisfy the conditions set out in this agreement.
10. Assignment
----------
A. Assignment by Xxxxxxx.
Xxxxxxx may assign its rights and obligations under this agreement to one or
more affiliates but in such event Xxxxxxx shall continue to be fully liable in
all respects hereunder. This agreement shall not otherwise be assignable by any
party hereto. The agreements by Xxxxxxx in Sections 4H and 16 are for the
benefit not only of the other parties hereto but also the persons who are the
beneficiaries of the agreements, policies and insurance referred to therein, who
may rely thereon.
B. Binding Effect.
This agreement shall be binding upon and shall enure to the
benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns.
11. Expenses
--------
Except as otherwise expressly provided in this agreement, each
party to this agreement shall pay its own expenses incurred in connection with
this agreement and the completion of the transactions contemplated hereby. For
greater certainty, the Corporation is obligated to pay the fees and expenses of
the Financial Advisors, the Independent Financial Advisor, the Independent Legal
Counsel and the legal counsel for the Corporation in connection with the
Transaction, which fees and expenses are not expected to exceed $8,000,000 in
the aggregate.
12. Time
----
Time shall be of the essence of this agreement in each and
every matter or thing herein provided.
13. Notices
-------
A. Each party shall give prompt notice to the other of:
(a) the occurrence or failure to occur of any event, which
occurrence or failure causes, or could reasonably be expected
to cause any representation or warranty on its part contained
in this agreement to be untrue or inaccurate
in any respect at any time from the date of this agreement to the Effective
Date; and
(b) any failure of such party, or any officer, director, employee
or agent thereof to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it
under this agreement.
X. Xxxxxxx agrees that any notice given by it to shareholders of
the Corporation pursuant to or in connection with the Transaction shall
concurrently be provided to the Corporation, Tribune and their respective
counsel.
C. Any notice or other communication required or permitted to be
given hereunder shall be sufficiently given if delivered in person or if
sent by facsimile transmission (provided such transmission is confirmed):
(a) in the case of Xxxxxxx, to the following address:
Xxxxxxx Inc.
000, xxxxxx Xx-Xxxxx
Xxxxxx, Xxxxxx
X0X 0X0
Facsimile No.: (000) 000-0000
Attention: Xx. Xxxxxx Xxxxx
----------------------------
with a copy to
Xxxxxx Xxxxxxx
0000 XxXxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Facsimile No.: (000) 000-0000
Attention: Xx. Xxxxxx X. Xxxxxx
--------------------------------
(b) in the case of Tribune, to the following address:
Tribune Company
000 X. Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
XXX
Facsimile No.: (000) 000-0000
Attention: Xx. Xxxxxx X. Xxxxxxxx
---------------------------------
with a copy to
Fasken Xxxxxxxx Xxxxxxx
Toronto Dominion Bank Tower
X.X. Xxx 00, Xxxxxxx-Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Facsimile No.: (000) 000-0000
Attention: Xx. Xxxxxx X. Xxxxxx, Xx.
------------------------------------
(c) in the case of the Corporation, to the following address:
QUNO Corporation
00 Xxxx Xxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx
X0X 0X0
Facsimile No.: (000) 000-0000
Attention: Xx. Xxxxxxx X. XxXxxxx
---------------------------------
with a copy to
Blake, Xxxxxxx & Xxxxxxx
Xxx 00, Xxxxxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Facsimile No.: (000) 000-0000
Attention: Mr. J. Xxxxx X. Xxxxxxx
----------------------------------
or at such other address as the party to which such notice or other
communication is to be given has last notified the party giving the same in the
manner provided in this section, and if so given the same shall be deemed to
have been received on the date of such delivery or sending.
14. Governing Law
-------------
This agreement shall be governed by and construed in
accordance with the laws of the Province of Quebec and the laws of Canada
applicable therein (excluding any conflict of laws, rule or principle which
might refer such construction to the laws of another jurisdiction). Each party
hereto irrevocably submits to the non-exclusive jurisdiction of the Courts of
Quebec with respect to any matter arising hereunder or related hereto.
15. Injunctive Relief
-----------------
The parties hereto agree that the remedy at law for any breach
of the provisions of this agreement will be inadequate and that the party that
is not in breach, on
any application to a court, shall be entitled to temporary and permanent
injunctive relief, specific performance and any other equitable relief against
the other party.
16. Directors' and Officers' Insurance
----------------------------------
Xxxxxxx covenants and agrees that for a period of three years
after the Effective Date, it will cause the Corporation and its successor
companies to maintain directors' and officers' insurance containing terms and
conditions no less advantageous to the directors and officers of the Corporation
than those contained in the directors' and officers' insurance policy of the
Corporation in effect on the date hereof (which insurance will cover claims made
against the directors and officers of the Corporation within three years
following the Effective Date); it is understood that the current premium for
such insurance amounts to approximately $135,000.
17. Currency
--------
Except as expressly indicated otherwise, all sums of money
referred to in this agreement are expressed and shall be payable in Canadian
dollars. All payments shall be in immediately available funds.
18. Definitions
-----------
For the purposes of this agreement, those terms defined in
Schedule A shall have the meanings attributed to them in that Schedule.
19. Entire Agreement
----------------
The Schedules form an integral part of this agreement. This
agreement and the documents referred to herein, and the confidentiality
agreement previously executed by Xxxxxxx and the Corporation, constitute the
entire obligation of the parties hereto with respect to the subject matter
hereof and shall supersede any prior expression of interest or understandings
with respect to the subject matter hereof and shall supersede any prior
expression of interest or understandings with respect to the transactions
contemplated hereby. For greater certainty, none of the parties makes any
representation or warranty, express or implied, except as set forth herein. This
agreement may be amended only by an instrument in writing signed by the parties
hereto.
20. Further Assurances
------------------
Each of the parties shall do all acts and things (including
executing appropriate documents) reasonably necessary to give full effect to the
transactions contemplated in this agreement. In addition, Xxxxxxx agrees to
ensure that sufficient funds will be made available to give effect to the
Transaction.
21. Counterparts
------------
This agreement may be signed in any number of counterparts.
IN WITNESS WHEREOF the parties have signed this agreement on
the date set out besides their respective name.
December 22, 1995 XXXXXXX INC.
By:/s/ Xxxxxx Xxxxxxxx
-------------------
By:/s/ Xxxxxx Xxxxx
----------------
December 22, 1995 TRIBUNE COMPANY
By:/s/ Xxxxx Xxxxxx
----------------
By:/s/ Xxxxx Xxxxxx
----------------
December 22, 1995 QUNO CORPORATION
By:/s/ Xxxxx McCamus
-----------------
By:
SCHEDULE A
----------
DEFINITIONS
"affiliate" shall have the meaning attributed to it under the Securities Act
(Ontario).
"Agency" means any domestic or foreign court or tribunal or governmental agency
or other regulatory authority or administrative agency or commission or any
elected or appointed public official.
"business day" means any day other than a Saturday, Sunday or Canadian federal
holiday or a day on which banks are not open for business in Xxxxxxxx, Xxxxxx,
Xxxxxxx, Xxxxxxx and Chicago, Illinois.
"Class A shares" means the Class A subordinate voting shares in the share
capital of Xxxxxxx.
"Common Shares" means voting common shares in the capital of the Corporation.
"Companies Act" means the Companies Act (Quebec).
"Competing Offer" means an unsolicited offer made (i) to purchase or otherwise
acquire all of the Shares (other than an issuer bid or an offer made by Tribune,
a director, officer or employee (or former director, officer or employee) of the
Corporation or any person that is acting jointly or in concert with Tribune, the
Corporation or a director, officer or employee (or former director, officer or
employee) of the Corporation), (ii) for a consideration per Share having a
combined cash and cash equivalent value greater than the combined cash and cash
equivalent value offered by Xxxxxxx for each Share pursuant to the Transaction
or otherwise pursuant to xxxxxxx 0X, (xxx) by means of a take-over bid,
amalgamation, plan of arrangement or otherwise and available to all holders of
Shares, (iv) the financing of which is committed at least to the same extent as
Xxxxxxx'x financing is then committed, (v) with conditions no more beneficial,
taken as a whole, to the person making the offer than those contained in this
agreement for the benefit of Xxxxxxx and (vi) which the board of directors of
the Corporation determines to be more favourable to the shareholders of the
Corporation than the Transaction and intends to recommend to the shareholders of
the Corporation.
"Convertible Debenture" means the subordinated convertible debenture of the
Corporation in the principal amount of US$138,757,000 that, by its terms, is
convertible into 11,666,689 Common Shares.
"Corporation" means QUNO Corporation, a corporation amalgamated under the laws
of Quebec and its successors.
"date of the agreement" or "date of this agreement" means the latest of the
dates on which all the parties shall have executed this agreement.
"Xxxxxxx" means Xxxxxxx Inc., a corporation amalgamated under the laws of
Quebec.
"Effective Date" means the date on which articles of amalgamation giving effect
to the Transaction become effective.
"Existing Options" means options granted by the Corporation in favour of certain
directors, officers and employees of the Corporation to purchase, in the
aggregate, 1,879,729 Common Shares.
"Financial Advisors" means CIBC Wood Gundy Securities Inc. and Xxxxxxx Xxxxx &
Co.
"XXX" means the Investment Dealers Association of Canada.
"Independent Committee" means the committee of directors of the Corporation who
are independent of Tribune.
"Independent Financial Advisor" means Xxxxxxxxxx Xxxxxxxxxxxx of Canada Limited.
"Independent Legal Advisor" means Stikeman, Xxxxxxx (Toronto).
"Legislation" means the Companies Act and the securities legislation, rules and
regulations made pursuant thereto and published policies, or waivers therefrom,
of each province in Canada in which holders of securities of the Corporation are
resident, applicable securities legislation in the United States and the rules
and regulations of any stock exchange.
"Materially Adverse" means, with respect to a person, any change, condition,
event or occurrence which, when considered either individually or together with
all other changes, conditions, events or occurrences, could reasonably be
expected to materially and adversely affect the financial condition, results of
operations, business, assets, capital or prospects of that person.
"NASD" means the National Association of Securities Dealers.
"Non-Voting Shares" means non-voting common shares in the capital of the
Corporation.
"Notes" means the notes of Xxxxxxx to be issued pursuant to the Transaction in
partial consideration for the Common Shares and Non-Voting Shares.
"person" means an individual, corporation, incorporated or unincorporated
association, syndicate or organization, partnership, trust, trustee, executor,
administrator or other legal representative.
"Shares" means the Common Shares and the Non-Voting Shares.
"Special Meeting" means the meeting of the shareholders of the Corporation
called to consider and approve the Transaction.
"Stock Purchase Plan" means the Corporation's Employee Share Purchase Plan which
took effect from the 1st day of October 1993, as amended.
"Subsidiaries" means, in respect of a person, each of the corporate entities,
partnerships and other entities over which it exercises direction or control.
"Taxes" means all taxes, duties, levies, withholding charges, assessments,
reassessments and fees (including interest and penalties).
"Transaction" means the transaction outlined in Schedule B.
"Tribune" means Tribune Company, a company incorporated under the laws of
Delaware.
"Tribune's Securities" means the 7,214,854 Common Shares, the 332,274 Non-Voting
Shares and the Convertible Debenture (or the Common Shares into which it is
converted) owned beneficially and of record by Tribune.
SCHEDULE B
----------
THE TRANSACTION
Price: $30.50 per Share based on an agreed price
of $17.00 per Class A share.
Consideration: The consideration, which represents a
total value of $1,103,390,814 based on
36,176,748 Shares outstanding on a
fully-diluted basis, will consist of:
(i) cash in the amount of $20.31 per Share
for a total of $734,749,752
(representing 67% of total
consideration),
(ii) 0.29 Class A share per Share having a
value of $4.93 based on an agreed price
of $17.00 per Class A share, for a total
of 10,491,257 Class A shares having an
aggregate value of $178,351,369
(representing 16% of total
consideration), and
(iii) $5.26 per Share in Notes, in two equal
tranches, in the aggregate principal
amount of $190,289,693 (representing 17%
of total consideration).
Adjustments will be made to avoid fractions of
Class A shares or fractional denominations of
notes.
Notes: o Senior Unsecured Notes;
o $100 per Note;
o tranche A matures 365 days from the
Effective Date and tranche B matures
730 days from the Effective Date;
o 8% interest, payable semi-annually;
o pari passu with other unsecured senior
debt securities of Xxxxxxx;
o to be qualified under MJDS and to be
freely tradeable;
o covenants to include negative pledge
(subject to any pledge of the shares of
Subsidiaries of Xxxxxxx in connection
with the financing for the Transaction),
and standard events of default, including
a cross-default to any default under the
Transaction financing referred to above.
Manner of Implementation: Amalgamation pursuant to section 123.122
of the Companies Act.
Parties: The parties to the amalgamation will be:
o the Corporation,
o Xxxxxxx,
x x newly created, wholly-owned
subsidiary of Xxxxxxx ("MiddleCo"),
and
o a newly created, wholly-owned
subsidiary of MiddleCo ("Newco").
Convertible Debenture: Tribune shall convert the Convertible
Debenture into 11,666,689 Common Shares
prior to the Special Meeting.
Mechanics: Pursuant to the amalgamation:
o Newco and the Corporation will be
amalgamated and, upon that
amalgamation, MiddleCo (as the
sole shareholder of Newco) will
receive common shares of the
amalgamated corporation and the
holders of the Common Shares and
the Non-Voting Shares will receive
exchangeable shares of MiddleCo to
be held in escrow by a trustee
under an exchange agreement, and
o immediately upon the isuance of the
exchangeable shares, those shares
will be exchanged in accordance
with their terms for cash, Class A
shares and Notes, as described
above.
Shareholders' Approvals: The implementation of the
Transaction will be conditional
upon (i) its approval by at least
66-2/3% of the votes cast by the
holders of the Common Shares and
the Non-Voting Shares represented
in person or by proxy at the
Special Meeting; and (ii) minority
approval (within the meaning of
Policy Statements 9.1 of the
Ontario Securities Commission
and Q-27 of the Quebec Securities
Commission).
Canadian Tax Treatment: The exchange of the exchangeable
shares will be structured so that
the holders of such shares will not
be entitled to a rollover under
Section 85 or Section 85.1 of the
Income Tax Act (Canada). The
holders of such shares will be
entitled to claim a Reserve for the
Note portion of the consideration.
SCHEDULE C
----------
NEWS RELEASE
XXXXXXX INC. QUNO CORPORATION TRIBUNE COMPANY
Montreal, Quebec December 22, 1995
XXXXXXX, QUNO AND TRIBUNE ANNOUNCE A
$1.1 BILLION TRANSACTION
Xxxxxxx Inc., QUNO Corporation and Tribune Company jointly announced today that
Xxxxxxx has agreed with QUNO and Tribune, the largest single shareholder of
QUNO, to acquire all of the outstanding common shares and non-voting common
shares of QUNO pursuant to an amalgamation for a price equal to $30.50 per share
(based on an agreed price of $17.00 per Xxxxxxx Class A subordinate voting
share) or $1.1 billion in the aggregate. This transaction is the result of an
extensive joint process undertaken by QUNO and Tribune Company.
Pursuant to the transaction, QUNO shareholders will receive $20.31 cash, $5.26
principal amount of 8% Notes payable as to one half the principal amount at the
end of each of the two years following the effective date, and 0.29 Class A
subordinate voting shares of Xxxxxxx for each QUNO common share and non-voting
share.
Tribune, which holds 7,214,854 common shares and 332,274 non-voting shares of
QUNO, will acquire an additional 11,666,689 common shares upon the conversion of
the debenture that it holds. Tribune, which will then hold approximately 53% of
the shares of QUNO on a fully-diluted basis, has agreed to vote all of its
shares in favour of the transaction.
The board of directors of QUNO has accepted the recommendation of a committee of
independent directors established to consider the proposed transaction and,
based on advice received from its financial advisors, stated that in the absence
of a superior opportunity for shareholders of QUNO to realize upon their
investment, it intends to recommend that shareholders vote in favour of the
transaction.
QUNO has agreed to pay to Xxxxxxx an amount of $20 million for costs and
expenses in the event that QUNO terminates the agreement with Xxxxxxx as a
result of a competing offer or if the board of directors of QUNO withdraws its
recommendation in respect of the transaction. Should Tribune accept a competing
offer, it will pay to Xxxxxxx an amount equal to 50% of the difference between
$30.50 per share and the consideration per share paid to Tribune under the
competing offer.
It is expected that a special meeting of the holders of the common shares and
non-voting common shares of QUNO will be held on or before February 29, 1996 to
approve the transaction and that the information circular and related materials
for that meeting will be mailed to shareholders of QUNO on or before January 31,
1996. The implementation of the transaction will be conditional, among other
things, upon shareholder approval, including
minority approval, completion of due diligence no later than December 29, 1995
and receipt of certain regulatory and other approvals.
Xxxxxxx does not presently own, or exercise direction or control over, any
shares of QUNO.
QUNO Corporation is North America's seventh largest newsprint manufacturer, with
fully integrated pulp and paper xxxxx in Thorold, Ontario and Baie-Xxxxxx,
Quebec. QUNO owns and operates Scierie des Outardes sawmill and has a 60 per
cent interest in and operates a hydro power generating station in Baie-Xxxxxx.
It also owns and operates QUNO Recycling Corporation of Toronto, one of Canada's
largest paper recycling operations. QUNO is a leading supplier of recycled
content newsprint. The company's common shares are listed on The Montreal
Exchange and The Toronto Stock Exchange.
Xxxxxxx Inc. is a major Canadian integrated forest products company engaged
in the managing and harvesting of timber resources and the production and sale
of newsprint, market pulp and lumber. Its production facilities are among the
most modern in the Canadian forest products industry. The Class A subordinate
voting shares and the Class B shares of the Company are listed on The Montreal
Exchange and on The Toronto Stock Exchange. Xxxxxxx Inc. is a subsidiary of
Quebecor Inc.
Tribune is a leading newspaper publishing, information and entertainment company
headquartered in Chicago, Illinois.
For information: Xxxxxxx
-------
Xxxxxx Xxxxx
Vice-President and Chief Financial Officer
(000) 000-0000
QUNO
----
Xxxxx X. Lawn
Chief Financial Officer
(000) 000-0000
Tribune
-------
Xxxxxx X. Xxxxxxxx
Chief Financial Officer
(000) 000-0000
SCHEDULE D
----------
CONDITIONS FOR THE BENEFIT OF XXXXXXX
The obligations of Xxxxxxx to complete the Transaction shall
be subject to the fulfilment, or the waiver by Xxxxxxx, of the following
conditions, each of which is for the exclusive benefit of Xxxxxxx and may be
waived by Xxxxxxx at any time, in whole or in part, in its sole discretion
without prejudice to any other rights that it may have:
(a) all necessary corporate action shall have been taken by
Tribune and the Corporation to authorize the execution and
delivery of this agreement and the consummation of the
Transaction;
(b) the Transaction, as proposed or with any amendment acceptable
to Xxxxxxx, shall have been approved by the holders of Shares
at the Special Meeting in compliance with the Legislation;
(c) all material approvals that are necessary or desirable in
connection with the Transaction shall have been obtained on
terms that could not reasonably be expected to be Materially
Adverse to either Xxxxxxx or the Corporation or their
respective Subsidiaries, in each case taken as a whole;
(d) each of Tribune and the Corporation shall have
performed in all material respects the obligations to be
performed by it under this agreement on or before the
Effective Date;
(e) the representations and warranties of each of Tribune and the
Corporation set forth in this agreement shall be true and
correct in all material respects on and as of the Effective
Date (as if made on and as of that date) except as affected by
transactions contemplated or permitted by this agreement and
except to the extent that any such representation or warranty
is made as of a specified date, in which case such
representation or warranty shall have been true and correct as
of such date;
(f) no judgment or order shall have been issued by any Agency, no
action, suit or proceeding shall have been threatened or taken
by any person, and no law, regulation or policy shall have
been proposed, enacted, or promulgated or applied,
(i) which could reasonably be expected to have the effect
to cease trade, enjoin, prohibit or impose material
limitations or conditions on the completion of the
Transaction, or
(ii) that, if the Transaction were completed, could
reasonably be expected to be Materially Adverse to
either Xxxxxxx or the Corporation or their respective
Subsidiaries, in each case taken as a whole;
(g) Xxxxxxx shall have received a legal opinion from legal counsel
to each of the Corporation and Tribune, in form and substance
acceptable to Xxxxxxx and its legal counsel, acting
reasonably;
(h) an amalgamation agreement shall have been entered into in
form and substance acceptable to Xxxxxxx, acting reasonably;
(i) Tribune shall have confirmed that:
(i) the contract for the period running from January 1,
1993 to December 31, 2007 to which it and the
Corporation are a party and which provides for the
supply of newsprint by the Corporation to Tribune at
market-based prices shall continue in effect,
unaffected by the Transaction; and
(ii) Tribune has waived any rights to modify or terminate
that contract as a result of the Transaction;
(j) without limiting (c), the Director of Investigation and
Research appointed under the Competition Act (Canada) or
any person authorized to exercise the powers and perform the
duties of the Director shall have issued a certificate under
Section 102(1) of that Act to the effect that he is satisfied
that he would not have sufficient grounds on which to
apply to the Competition Tribunal established pursuant to
that Act under Section 92 of that Act in respect of the
Transaction or the appropriate time period specified in
Section 123 of that Act shall have expired and the Director
shall have indicated in writing that he does not intend to
take any action under Section 92 of that Act whether
before or after the completion of the Transaction, which
could materially interfere with or detrimentally affect the
transactions contemplated thereby;
(k) Xxxxxxx shall be satisfied, acting reasonably, that the Phase
I environmental review made available to it by counsel to the
Corporation does not reveal any problems of an environmental
nature affecting the Corporation that have not already been
disclosed in writing to Xxxxxxx and which are Materially
Adverse to the Corporation and its Subsidiaries, taken as a
whole; provided that Xxxxxxx shall notify the Corporation
prior to 5:00 p.m. Friday, December 29, 1995, if it is not so
satisfied, and otherwise it shall be deemed to be satisfied;
(l) Xxxxxxx'x bankers providing the financing in respect of the
Transaction shall be satisfied, acting reasonably, with their
due diligence investigation of the Corporation and its
Subsidiaries; provided that Xxxxxxx shall notify the
Corporation prior to 5:00 p.m. Friday, December 29, 1995, if
its bankers are not so satisfied, and otherwise they shall be
deemed to be satisfied;
(m) there shall not have been any change, condition, event or
occurrence that, individually or in the aggregate, has been,
or could reasonably be expected to be, Materially Adverse to
the Corporation and its Subsidiaries, taken as a
whole (including any decision to implement such a change made
by the board of directors of the Corporation or any of its
Subsidiaries or senior management of the Corporation or any of
its Subsidiaries who believe that confirmation of the decision
by the board of directors of the Corporation is probable);
(n) there shall not have occurred, developed or come into effect
or existence any event, action, state, condition or financial
occurrence of national or international consequence or any
law, regulation, action, government regulation, inquiry or
other occurrence of any nature whatsoever that is or could
reasonably be expected to be Materially Adverse to the
financial, banking or capital markets conditions in Canada
or the United States generally, or the financial condition,
business, operations, assets, affairs or prospects of the
Corporation and its Subsidiaries, taken as a whole; provided
that this paragraph shall not apply to any increase in export
taxes, duties or stumpage fees unless materially in excess of
those already indicated by the Minister of Natural Resources
of the Province of Quebec prior to the date of execution
hereof; and
(o) any applicable waiting periods under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976 shall have expired or been
earlier terminated.
SCHEDULE E
----------
CONDITIONS FOR THE BENEFIT OF THE CORPORATION
The obligations of the Corporation to complete the Transaction
shall be subject to the fulfilment, or the waiver by the Corporation, of the
following conditions, each of which is for the exclusive benefit of the
Corporation and may be waived by the Corporation at any time, in whole or in
part, in its sole discretion without prejudice to any other rights that it may
have:
(a) all necessary corporate action shall have been taken by
Xxxxxxx and Tribune to authorize the execution and
delivery of this agreement and the consummation of the
Transaction;
(b) the Transaction, as proposed or with any amendment acceptable
to the Corporation, shall have been approved by holders of
Shares at the Special Meeting in compliance with the
Legislation;
(c) all material approvals or consents that are necessary or
desirable in connection with the Transaction shall have been
obtained on terms that could not reasonably be expected to be
Materially Adverse to either Xxxxxxx or the Corporation or
their respective Subsidiaries, in each case taken as a whole;
(d) Xxxxxxx shall have performed in all material respects the
obligations to be performed by it under this agreement on or
before the Effective Date;
(e) the representations and warranties of Xxxxxxx set forth in
this agreement shall be true and correct in all material
respects on and as of the Effective Date (as if made on and as
of such date) except as affected by the transactions
contemplated or permitted by this agreement and except to the
extent that any such representation or warranty is made as of
a specified date, in which case such representation or
warranty shall have been true and correct as of such date;
(f) no judgment or order shall have been issued by any Agency, no
action, suit or proceeding shall have been threatened or taken
by any person, and no law, regulation or policy shall have
been proposed, enacted, or promulgated or applied,
(i) which could reasonably be expected to have the effect
to cease trade, enjoin, prohibit or impose material
limitations or conditions on the completion of the
Transaction, or
(ii) that, if the Transaction were completed, could
reasonably be expected to be Materially Adverse to
either Xxxxxxx or the Corporation or their respective
Subsidiaries, in each case taken as a whole;
(g) the Corporation shall have received a legal opinion from legal
counsel to Xxxxxxx, in form and substance acceptable to the
Corporation and its legal counsel, acting reasonably;
(h) an amalgamation agreement shall have been entered into in
form and substance acceptable to the Corporation, acting
reasonably;
(i) the Corporation shall have conducted a due diligence
investigation of Xxxxxxx in accordance with Section 4G2 and
shall have been satisfied with the results of such
investigation in all material respects; provided that the
Corporation shall notify Xxxxxxx prior to 5:00 p.m. on
December 29, 1995 if it is not so satisfied, and otherwise
shall be deemed to be satisfied;
(j) without limiting (c), the Director of Investigation and
Research appointed under the Competition Act (Canada) or
any person authorized to exercise the powers and perform the
duties of the Director shall have issued a certificate under
Section 102(1) of that Act to the effect that he is satisfied
that he would not have sufficient grounds on which to
apply to the Competition Tribunal established pursuant to
that Act under Section 92 of that Act in respect of the
Transaction or the appropriate time period specified in
Section 123 of that Act shall have expired and the Director
shall have indicated in writing that he does not intend to
take any action under Section 92 of that Act whether
before or after the completion of the Transaction, which
could materially interfere with or detrimentally affect the
transactions contemplated thereby;
(k) the indenture pursuant to which the Notes are to be issued and
the exchange agreement referred to in Schedule B shall be
executed and delivered by Xxxxxxx in form and substance
acceptable to the Corporation, acting reasonably, and such
indenture shall contain representations and warranties
comparable to those contained herein and the covenants and
events of default described in Schedule B;
(l) there shall not have been any change, condition, event or
occurrence that, individually or in the aggregate, has been,
or could reasonably be expected to be, Materially Adverse to
Xxxxxxx and its Subsidiaries, taken as a whole (including any
decision to implement such a change made by the board of
directors of Xxxxxxx or any of its Subsidiaries or senior
management of Xxxxxxx or any of its Subsidiaries who believe
that confirmation of the decision by the board of directors of
Xxxxxxx is probable);
(m) there shall not have occurred, developed or come into effect
or existence any event, action, state, condition or financial
occurrence of national or international consequence or any
law, regulation, action, government regulation, inquiry or
other occurrence of any nature whatsoever that is or could
reasonably be expected to be Materially Adverse to the
financial, banking or capital markets conditions in Canada or
the United States generally, or the financial condition,
business, operations, assets, affairs or prospects of Xxxxxxx
and its Subsidiaries, taken as a whole; provided that
this paragraph shall not apply to any increase in export
taxes, duties or stumpage fees unless materially in excess of
those already indicated by the Minister of Natural Resources
of the Province of Quebec prior to the date of execution
hereof; and
(n) any applicable waiting periods under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976 shall have expired or been
earlier terminated.
SCHEDULE F
----------
CONDITIONS FOR THE BENEFIT OF TRIBUNE
The obligations of Tribune to complete the Transaction shall
be subject to the fulfilment, or the waiver by Tribune, of the following
conditions, each of which is for the exclusive benefit of Tribune and may be
waived by Tribune at any time, in whole or in part, in its sole discretion
without prejudice to any other rights that it may have:
(a) all necessary corporate action shall have been taken by
Xxxxxxx and the Corporation to authorize the execution and
delivery of this agreement and the consummation of the
Transaction;
(b) the Transaction, as proposed or with any amendment acceptable
to Tribune, shall have been approved by holders of Shares at
the Special Meeting in compliance with the Legislation;
(c) all material approvals or consents that are necessary or
desirable in connection with the Transaction shall have been
obtained on terms that could not reasonably be expected to be
Materially Adverse to either Xxxxxxx or Tribune or their
respective Subsidiaries, in each case taken as a whole;
(d) Xxxxxxx shall have performed in all material respects the
obligations to be performed by it under this agreement on or
before the Effective Date;
(e) the representations and warranties of Xxxxxxx set forth in
this agreement shall be true and correct in all material
respects on and as of the Effective Date (as if made on and as
of such date) except as affected by the transactions
contemplated or permitted by this agreement and except to the
extent that any such representation or warranty is made as of
a specified date, in which case such representation or
warranty shall have been true and correct as of such date;
(f) no judgment or order shall have been issued by any Agency, no
action, suit or proceeding shall have been threatened or taken
by any person, and no law, regulation or policy shall have
been proposed, enacted, or promulgated or applied,
(i) which could reasonably be expected to have the effect
to cease trade, enjoin, prohibit or impose material
limitations or conditions on the completion of the
Transaction, or
(ii) that, if the Transaction were completed, could
reasonably be expected to be Materially Adverse to
either Xxxxxxx or Tribune or their respective
Subsidiaries, in each case taken as a whole;
(g) Tribune shall have received a legal opinion from legal counsel
to Xxxxxxx, in form and substance acceptable to Tribune and
its legal counsel, acting reasonably;
(h) an amalgamation agreement shall have been entered into in
form and substance acceptable to Tribune, acting reasonably;
(i) Tribune shall have conducted a due diligence investigation of
Xxxxxxx in accordance with Section 4G2 and shall have been
satisfied with the results of such investigation in all
material respects; provided that Tribune shall notify Xxxxxxx
prior to 5:00 p.m. on December 29, if it is not so satisfied,
and otherwise shall be deemed to be satisfied;
(j) without limiting (c), the Director of Investigation and
Research appointed under the Competition Act (Canada) or
any person authorized to exercise the powers and perform the
duties of the Director shall have issued a certificate under
Section 102(1) of that Act to the effect that he is satisfied
that he would not have sufficient grounds on which to
apply to the Competition Tribunal established pursuant to
that Act under Section 92 of that Act in respect of the
Transaction or the appropriate time period specified in
Section 123 of that Act shall have expired and the Director
shall have indicated in writing that he does not intend to
take any action under Section 92 of that Act whether
before or after the completion of the Transaction, which
could materially interfere with or detrimentally affect the
transactions contemplated thereby;
(k) the indenture pursuant to which the Notes are to be issued and
the exchange agreement referred to in Schedule B shall be
executed and delivered by Xxxxxxx in form and substance
acceptable to Tribune, acting reasonably, and the said
indenture shall contain representations and warranties
comparable to those contained herein and the covenants and
events of default described in Schedule B;
(l) there shall not have been any change, condition, event or
occurrence that, individually or in the aggregate, has been,
or could reasonably be expected to be, Materially Adverse to
Xxxxxxx and its Subsidiaries, taken as a whole (including any
decision to implement such a change made by the board of
directors of Xxxxxxx or any of its Subsidiaries or senior
management of Xxxxxxx or any of its Subsidiaries who believe
that confirmation of the decision by the board of directors of
Xxxxxxx is probable);
(m) there shall not have occurred, developed or come into effect
or existence any event, action, state, condition or financial
occurrence of national or international consequence or any
law, regulation, action, government regulation, inquiry or
other occurrence of any nature whatsoever that is or could
reasonably be expected to be Materially Adverse to the
financial, banking or capital markets conditions in Canada or
the United States generally, or the financial condition,
business, operations, assets, affairs or prospects of Xxxxxxx
and its Subsidiaries, taken as a whole; provided that
this paragraph shall not apply to any increase in export
taxes, duties or stumpage fees unless materially in excess of
those already indicated by the Minister of Natural Resources
of the Province of Quebec prior to the date of execution
hereof; and
(n) any applicable waiting periods under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976 shall have expired or been
earlier terminated.
SCHEDULE G
----------
REPRESENTATIONS AND WARRANTIES OF TRIBUNE
(a) Organization and Qualification. Tribune has been duly
incorporated and organized, and is validly existing as a company, under the
laws of Delaware.
(b) Authority Relative to this Agreement. Tribune has the
requisite corporate power and authority to enter into this agreement and to
perform its obligations hereunder. The execution and delivery of this agreement
by Tribune and the consummation by Tribune of the transactions contemplated by
this agreement have been duly authorized by the board of directors of Tribune
and no other corporate proceedings on the part of Tribune are necessary to
authorize this agreement and the transactions contemplated hereby. This
agreement has been duly executed and delivered by Tribune and constitutes a
valid and binding obligation of Tribune, enforceable by Xxxxxxx against Tribune
in accordance with its terms. The execution and delivery by Tribune of this
agreement and performance by it of its obligations hereunder will not:
(i) result in a violation or breach of any provision of:
(A) its certificate or articles of
incorporation or its by-laws; or
(B) any applicable law or, to its
knowledge, any regulation, order,
judgment or decree (subject to
obtaining the consents referred to
below),
(ii) result in the imposition of any encumbrance, charge
or lien upon any of Tribune's Securities or its
assets.
Other than in connection with or in compliance with the provisions of the
Competition Act (Canada), the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976 (United States), the Legislation and the requirements of The Toronto Stock
Exchange and The Montreal Exchange and the Crown Forest Sustainability Act
(Ontario), no authorization, consent or approval of, or filing with, any Agency
is necessary for the consummation by Tribune of its obligations, except for such
authorizations, consents, approvals and filings as to which the failure by any
party to obtain or make would not, individually or in the aggregate, prevent or
materially delay the consummation of the transactions contemplated by this
agreement.
(c) Ownership. Each of Tribune's Securities is owned by Tribune
as the sole legal and beneficial owner with a good and marketable title thereto;
Tribune's title to each of Tribune's Securities is free and clear of any and all
mortgages, liens, charges, restrictions, security interests, adverse claims,
pledges, encumbrances and demands of any nature or kind whatsoever.
(d) No Agreements or Options. No person has any agreement or
option, or any right or privilege (whether by law, pre-emptive or contractual)
capable of becoming an
agreement or option, for the purchase, acquisition or transfer from Tribune of
any of Tribune's Securities except pursuant to this agreement.
(e) Allocation of Expenses. The Corporation has not paid and is
not liable (contingently or otherwise) for any costs or expenses that have been
incurred by or for the benefit of Tribune in connection with the Transaction
other than with respect to the Financial Advisors.
(f) Arm's Length Negotiation. Tribune had full knowledge and
access to information concerning the Corporation such that the underlying value
of the Corporation was a material factor considered by Tribune in arriving at
the price to be paid for Shares pursuant to the Transaction. There are no
non-financial factors or factors peculiar to Tribune, known to Tribune, which
Tribune has considered relevant in assessing such price. Tribune has no
knowledge of any prior event in the affairs of the Corporation undisclosed on
the date of this agreement which has occurred and which, if disclosed, could
reasonably be expected to have affected that price, and no intervening event has
occurred which would reasonably be expected to increase the value of the Shares.
SCHEDULE H
----------
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
(a) Organization and Qualification. The Corporation has been duly
amalgamated under the Companies Act, is validly existing and has full corporate
power and authority to own its property and conduct its businesses as presently
owned and conducted.
(b) Capitalization. The authorized and issued capital of the
Corporation as of the date hereof is as set forth in the recitals to this
agreement. Except as described in such recitals and except for the rights of
Xxxxxxx under this agreement, there are no options, warrants, conversion
privileges, calls or other rights, agreements, arrangements, commitments or
obligations of the Corporation to issue or sell any securities of the
Corporation or securities or obligations of any kind convertible into or
exchangeable for any securities of the Corporation or any other person, nor are
there outstanding any stock appreciation rights, phantom equity or similar
rights, agreements, arrangements or commitments based upon the book value,
income or any other attribute of the Corporation, except for the Convertible
Debenture, the Existing Options and the Stock Purchase Plan.
(c) Subsidiaries. Each of the Subsidiaries of the Corporation has been
duly incorporated under applicable law, is validly existing and has full
corporate or legal power and authority to own its property and conduct its
businesses as presently owned and conducted. All of the outstanding shares of
the capital stock and other ownership interests of the Subsidiaries which are
owned by the Corporation are validly issued, fully paid and non-assessable and
are owned free and clear of all material liens or encumbrances. There are no
options, warrants, conversion privileges or other rights, agreements,
arrangements or commitments obligating the Corporation or any of its
Subsidiaries to issue or sell any securities of any of those Subsidiaries or
securities or obligations of any kind convertible into or exchangeable for
securities or other ownership interests of any of those Subsidiaries or any
other person. There are no outstanding stock appreciation rights, equity or
similar rights, agreements, arrangements or commitments based on the book value,
income or any other attribute of any of the Subsidiaries of the Corporation.
(d) Authority Relative to this Agreement. The Corporation has the
requisite corporate power and authority to enter into this agreement and to
perform its obligations hereunder. The execution and delivery of this agreement
by the Corporation have been duly authorized by the board of directors of the
Corporation and, except for obtaining approval of its shareholders at the
Special Meeting, no other corporate proceedings on the part of the Corporation
are necessary to authorize this agreement and the transactions contemplated
hereby, except as may be required by any Agency or the Legislation. This
agreement has been duly executed and delivered by the Corporation and
constitutes a legal, valid and binding obligation of the Corporation,
enforceable by Xxxxxxx against the Corporation in accordance with its terms. The
execution and delivery by the Corporation of this agreement and performance by
it of its obligations hereunder will not result in:
(i) a material violation or breach of any provision of or
constitute a material default (or an event that with
notice or lapse of time or both would become a
material default) under,
(A) its certificate or articles of incorporation
or by-laws or those of any of its
Subsidiaries,
(B) any applicable law or, to its knowledge, any
regulation, order, judgment or decree
(subject to obtaining the consents referred
to below), or
(C) any agreement, arrangement or understanding
to which it or any of its Subsidiaries is a
party or by which any of them or their
properties is bound or affected, except that
an amalgamation is not permitted and a
change of control could constitute a default
under the existing Canadian credit
facilities of the Corporation,
(ii) the imposition of any encumbrance, charge or lien
upon any of its assets or the assets of any of its
Subsidiaries that, individually or in the aggregate,
could reasonably be expected to be Materially Adverse
to the Corporation and its Subsidiaries taken as a
whole, except as may result from the consequences of
the amalgamation or change of control as referred to
in subparagraph (i) (C) above.
Other than in connection with or in compliance with the provisions of the
Competition Act (Canada), the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976 (United States), the Legislation, the requirements of The Toronto Stock
Exchange and The Montreal Exchange and the Crown Forest Sustainability Act
(Ontario), no authorization, consent or approval of, or filing with, any Agency
is necessary for the consummation by the Corporation of its obligations under
this agreement, except for such authorizations, consents, approvals and filings
as to which the failure by any party to obtain or make would not, individually
or in the aggregate, prevent or materially delay the consummation of the
transactions contemplated by this agreement.
(e) Financial Statements and Disclosure Documents. The audited
financial statements of the Corporation prepared on a consolidated basis, for
and as at the year ended December 25, 1994, together with the interim unaudited
financial statement of the Corporation for the nine-month period ended September
26, 1995, have been prepared in accordance with generally accepted accounting
principles as recommended in the handbook of the Canadian Institute of Chartered
Accountants applied on a consistent basis and fairly present the consolidated
financial position of the Corporation and its Subsidiaries as at the respective
dates thereof and the consolidated results of their operations and cashflows for
the periods indicated therein. The most recent annual information form and
management information circular filed by the Corporation with the Ontario
Securities Commission are, as of their respective dates, in compliance in all
material respects with the Legislation and did not as at such dates contain any
"misrepresentation" within the meaning of the Securities Act (Ontario). The
Corporation is in compliance with all timely disclosure obligations applicable
to it under the Legislation.
(f) Absence of Certain Changes or Events. Since September 26, 1995,
except as has as been publicly disclosed in documents filed with the Ontario
Securities Commission:
(i) except in connection with the Transaction, the
Corporation and its Subsidiaries have conducted their
respective businesses only in the ordinary course;
(ii) the Corporation and its Subsidiaries have not declared
or made any distributions (in cash, securities or other
property) to securityholders and have not entered into
any agreement, disposed of any of their assets or
incurred any indebtedness which, either individually or
in the aggregate, is material to the Corporation and
its Subsidiaries, taken as a whole, other than in the
ordinary course of business, except with respect to the
9-1/8% Senior Notes of the Corporation due 2005 and the
Convertible Debenture; and
(iii) there has not been any change, condition, event or
occurrence that, individually or in the aggregate, has
been, or could reasonably be expected to be, Materially
Adverse to the Corporation and its Subsidiaries, taken
as a whole (including any decision to implement such a
change made by the board of directors of the
Corporation or any of its Subsidiaries or senior
management of the Corporation or any of its
Subsidiaries who believe that confirmation of the
decision by the board of directors of the Corporation
is probable).
(g) Severance and Employment Agreements. Other than as referred to in
Schedule J, there are no severance and employment agreements with any
individual, except as disclosed to Xxxxxxx in writing, providing for severance
or termination payments to any such individual in excess of $100,000.
(h) Litigation. Except as disclosed in the financial statements of the
Corporation referred to in (e) or except as otherwise disclosed to Xxxxxxx in
writing, there are no claims, actions, proceedings, suits, investigations or
reviews pending or, to the best of the knowledge of the Corporation, threatened
in writing against the Corporation or any of its Subsidiaries or any of their
properties before any Agency that, either individually or in the aggregate, if
adversely determined would be Materially Adverse to the Corporation and its
Subsidiaries, taken as a whole.
(i) No Material Adverse Judgment, Order or Decree. Neither the
Corporation or any of its Subsidiaries nor any of their properties is the
subject of any judgment, order or decree that is, or could reasonably be
expected to be, Materially Adverse to the Corporation and its Subsidiaries,
taken as a whole.
(j) Compliance. Except for any conflicts, defaults or violations that
could not, individually or in the aggregate (taking into account the impact of
any cross-defaults), reasonably be expected to be Materially Adverse to the
Corporation and its Subsidiaries taken as a whole, none of the Corporation or
any of its Subsidiaries in the operation of their respective businesses is in
conflict with, or in default (including cross defaults) under or violation of:
(i) its articles or by-laws or equivalent organizational
documents;
(ii) any law, rule, regulation, order, permit, judgement or
decree (including those relating to environmental
matters) applicable to it or by which any of its
properties is bound or affected, including the
Legislation; or
(iii) any agreement, arrangement or understanding of it or
by which any of its properties is bound or affected.
(k) Property. Each of the Corporation and its Subsidiaries has good
and marketable title to all of its properties and assets (real and personal,
tangible and intangible, including leasehold interests) including all the
properties and assets reflected in the balance sheet forming part of the
financial statements referred to in (e), except as indicated in the notes
thereto, together with all additions thereto and less all dispositions thereof
in the ordinary course of business. In each case, such property is subject to no
lien of any kind except those liens expressly permitted by the terms of any
financing or security agreement to which the Corporation or any of its
Subsidiaries is a party or as is reflected in the balance sheets forming part of
the said financial statements, except where the failure to have such title,
individually or in the aggregate, would not be Materially Adverse to the
Corporation and its Subsidiaries, taken as a whole.
(l) Tax Matters. Each of the Corporation and its Subsidiaries has
correctly prepared and duly and timely filed all tax returns required to be
filed by it (except if not yet due), has paid all Taxes that are imposed under
any laws or by any relevant taxing authority that are due and payable and has
made adequate provision in the financial statements referred to in (e) for the
payment of all Taxes not then due and payable. Each of the Corporation and its
Subsidiaries has made adequate and timely instalments of the Taxes for the
taxation period ending on or immediately before the Effective Date and all tax
returns filed by it have been duly and accurately completed as required by
applicable law. With respect to any taxation period up to and including the
Effective Date for which tax returns have not yet been filed or for which Taxes
are not yet due and payable, each of them has only incurred liabilities for
Taxes in the ordinary course of its business. All tax returns have been filed
through and including the financial year ended December 25, 1994 and, except as
disclosed in writing to Xxxxxxx, there are no outstanding waivers of any
limitation periods or agreements providing for an extension of time for the
filing of any tax return or the payment of any Tax. None of the Corporation or
any of its Subsidiaries is subject to any assessments, levies, penalties or
interest with respect to Taxes that will result in any liability on its part in
respect of any period ending on or before the Effective Date in excess of the
amount provided for, and reserved against, in the financial statements referred
to in (e).
(m) Environmental Matters. Without limiting the generality of
paragraph (j) above, the Corporation and its Subsidiaries (and their respective
businesses and operations):
(i) are in material compliance with any applicable
environmental laws (including environmental permits) in
Canada and in other applicable foreign jurisdictions
with environmental regulatory jurisdiction over the
Corporation or any of its Subsidiaries; and
(ii) have obtained all environmental permits that are
required to carry on their respective businesses and
operations under all applicable and environmental laws,
where non-compliance or failure to obtain those permits
could reasonably be expected to be, individually or in
the aggregate, Materially Adverse to the Corporation
and its Subsidiaries, taken as a whole.
None of the Corporation or any of its Subsidiaries has, with respect to its
businesses and operations, at any time received any written notice, written
notice of default, orders, summons, or notice of judgment or commencement of
proceedings of any nature related to any breach, liability or remedial action
(or alleged material breach, liability or remedial action) of or arising under
environmental laws (including environmental permits) that could reasonably be
expected to be, individually or in the aggregate, Materially Adverse to the
Corporation and its Subsidiaries, taken as a whole. Further, none of the
Corporation or its Subsidiaries has (with respect to such businesses and
operations) at any time given any written undertakings with respect to remedying
any breach of, or liability under, environmental laws that have not been duly
performed, which breach or liability could reasonably be expected to be,
individually or in the aggregate, Materially Adverse to the Corporation and its
Subsidiaries, taken as a whole.
(n) Determinations.
(i) The Independent Committee, based on the advice of the
Independent Financial Advisor and the Independent Legal
Advisor and having considered such other matters as it
has considered appropriate, has recommended to the
board of directors of the Corporation that the
Corporation enter into this agreement and that the
board of directors recommend that in the absence of a
superior opportunity for shareholders of the
Corporation to realize upon their investment the
shareholders of the Corporation vote in favour of the
Transaction; and
(ii) the board of directors of the Corporation, based on the
advice of the Financial Advisors, has accepted the
recommendation of the Independent Committee, has
authorized the Corporation to enter into this agreement
and has determined to recommend that in the absence of
a superior opportunity for shareholders of the
Corporation to realize upon their investment the
shareholders of the Corporation vote in favour of the
Transaction.
(o) Reporting Issuer. The Corporation is a reporting issuer under the
Securities Act (Ontario) and is not in default of any requirement of such Act
and is in compliance with the rules and regulations of The Toronto Stock
Exchange and The Montreal Exchange. No order ceasing or suspending trading in
securities of the Corporation or prohibiting the transactions contemplated
hereby has been issued and no proceedings for such purpose are pending or
threatened.
SCHEDULE I
----------
REPRESENTATIONS AND WARRANTIES OF XXXXXXX
(a) Organization and Qualification. Xxxxxxx has been duly amalgamated
under the Companies Act, is validly existing and has full corporate power and
authority to own its property and conduct its businesses as presently owned and
conducted.
(b) Capitalization. The authorized capital of Xxxxxxx consists of
260,000 6% cumulative, retractable preferred shares, 1988 series; 155,200 6 1/4%
cumulative, redeemable preferred shares, 1967 series; an unlimited number of
serial preferred shares without nominal value, non-voting and ranking after the
preferred shares, series 1967 and 1988; an unlimited number of Class A
subordinate voting shares without nominal value; and an unlimited number of
Class B shares without nominal value, carrying 20 votes per share and each
convertible into one Class A subordinate voting share at the option of the
holder. As at November 30, 1995, the issued capital of Xxxxxxx consists of
73,333 preferred shares, 1988 series, 109,800 preferred shares, 1967 series,
69,643,703 Class A subordinate voting shares, and 8,863,487 Class B shares. All
the outstanding shares of capital stock are validly issued, fully paid and
non-assessable. The Class A subordinate voting shares are listed on The Montreal
Exchange and The Toronto Stock Exchange.
(c) Subsidiaries. Each of the Subsidiaries of Xxxxxxx has been duly
incorporated under applicable law, is validly existing and has full corporate or
legal power and authority to own its property and conduct its businesses as
presently owned and conducted. All of the outstanding shares of the capital
stock and other ownership interests of the Subsidiaries which are owned by
Xxxxxxx are validly issued, fully paid and non-assessable and are owned free and
clear of all material liens or encumbrances except under credit facilities
established to facilitate the Transaction. There are no options, warrants,
conversion privileges or other rights, agreements, arrangements or commitments
obligating Xxxxxxx or any of its Subsidiaries to issue or sell any shares of any
of those Subsidiaries or securities or obligations of any kind convertible into
or exchangeable for shares of any of those Subsidiaries or any other person.
(d) Authority Relative to this Agreement. Xxxxxxx has the requisite
corporate power and authority to enter into this agreement and to perform its
obligations hereunder. The execution and delivery of this agreement by Xxxxxxx
have been duly authorized by the board of directors of Xxxxxxx and no other
corporate proceedings on the part of Xxxxxxx are necessary to authorize this
agreement and the transactions contemplated hereby, except as may be required by
any Agency or the Legislation. This agreement has been duly executed and
delivered by Xxxxxxx and constitutes a legal, valid and binding obligation of
Xxxxxxx, enforceable by the Corporation and Tribune against Xxxxxxx in
accordance with its terms. The execution and delivery by Xxxxxxx of this
agreement and performance by it of its obligations hereunder will not result in:
(i) a material violation or breach of any provision of or
constitute a material default (or an event that with
notice or lapse of time or both would become a
material default) under,
(A) its certificate or articles of incorporation
or by-laws or those of any of its
Subsidiaries,
(B) any applicable law or, to its knowledge,
any regulation, order, judgment or
decree (subject to obtaining the consents
referred to below), or
(C) any agreement, arrangement or understanding
to which it or any of its Subsidiaries is a
party or by which any of them or their
properties is bound or affected,
(ii) the imposition of any encumbrance, charge or lien
upon any of its assets or the assets of any of its
Subsidiaries that, individually or in the aggregate,
could reasonably be expected to be Materially Adverse
to Xxxxxxx and its Subsidiaries taken as a whole.
Other than in connection with or in compliance with the provisions of the
Competition Act (Canada), the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976 (United States), the Legislation and the requirements of The Toronto Stock
Exchange and The Montreal Exchange, no authorization, consent or approval of, or
filing with, any Agency is necessary for the consummation by Xxxxxxx of its
obligations under this agreement, except for such authorizations, consents,
approvals and filings as to which the failure by any party to obtain or make
would not, individually or in the aggregate, prevent or materially delay the
consummation of the transactions contemplated by this agreement.
(e) Financial Statements and Disclosure Documents. The audited
financial statements of Xxxxxxx prepared on a consolidated basis, for and as at
the year ended December 31, 1994, together with the interim unaudited financial
statement of Xxxxxxx for the nine-month period ended September 30, 1995, have
been prepared in accordance with generally accepted accounting principles as
recommended in the handbook of the Canadian Institute of Chartered Accountants
applied on a consistent basis and fairly present the consolidated financial
position of Xxxxxxx and its Subsidiaries as at the respective dates thereof and
the consolidated results of their operations and cashflows for the periods
indicated therein. The most recent annual information form and management
information circular filed by Xxxxxxx with the Ontario Securities Commission
are, as of their respective dates, in compliance in all material respects with
the Legislation and did not as at such dates contain any "misrepresentation"
within the meaning of the Securities Act (Ontario). Xxxxxxx is in compliance
with all timely disclosure obligations applicable to it under the Legislation.
(f) Absence of Certain Changes or Events. Since September 30, 1995,
except as has as been publicly disclosed in documents filed with the Ontario
Securities Commission, there has not been any change, condition, event or
occurrence that, individually or in the aggregate, has been, or could reasonably
be expected to be, Materially Adverse to Xxxxxxx and its Subsidiaries, taken as
a whole (including any decision to implement such a change made by the board of
directors of Xxxxxxx or any of its Subsidiaries or senior management of Xxxxxxx
or any of its Subsidiaries who believe that confirmation of the decision by the
board of directors of Xxxxxxx is probable).
(g) Litigation. Except as disclosed in the financial statements of
Xxxxxxx referred to in (e) or except as otherwise disclosed to the Corporation
in writing, there are no claims, actions, proceedings, suits, investigations or
reviews pending or, to the best of the knowledge of Xxxxxxx, threatened in
writing against Xxxxxxx or any of its Subsidiaries or any of their properties
before any Agency that, either individually or in the aggregate, if adversely
determined would be Materially Adverse to Xxxxxxx and its Subsidiaries, taken as
a whole.
(h) Compliance. Except for any conflicts, defaults or violations that
could not, individually or in the aggregate (taking into account the impact of
any cross-defaults), reasonably be expected to be Materially Adverse to Xxxxxxx
and its Subsidiaries taken as a whole, none of Xxxxxxx or any of its
Subsidiaries in the operation of their respective businesses is in conflict
with, or in default (including cross defaults) under or violation of:
(i) its articles or by-laws or equivalent organizational
documents;
(ii) any law, rule, regulation, order, permit, judgement or
decree (including those relating to environmental
matters) applicable to it or by which any of its
properties is bound or affected, including the
Legislation; or
(iii) any agreement, arrangement or understanding of it or
by which any of its properties is bound or affected.
(i) Property. Except for title defects or encumbrances that are not
material, each of Xxxxxxx and its Subsidiaries has good and marketable title to
all of its material properties and assets (real and personal, tangible and
intangible, including leasehold interests) including all the properties and
assets reflected in the balance sheet forming part of the financial statements
referred to in (e), except as indicated in the notes thereto, together with all
additions thereto and less all dispositions thereof in the ordinary course of
business. In each case, such property is subject to no lien of any kind except
under credit facilities established to facilitate the Transaction, those liens
expressly permitted by the terms of any financing or security agreement to which
Xxxxxxx or any of its Subsidiaries is a party or as is reflected in the balance
sheets forming part of the said financial statements, except where the failure
to have such title, individually or in the aggregate, would not be Materially
Adverse to Xxxxxxx and its Subsidiaries, taken as a whole.
(j) Class A Shares. On completion of the Transaction, the 10,491,257
Class A shares to be issued in connection therewith will be validly authorized
and issued to holders of Shares entitled to receive Class A shares pursuant to
the Transaction.
(k) Notes. On completion of the Transaction, the Notes will be validly
authorized and created pursuant to a trust indenture and issued to holders of
Shares entitled to receive Notes pursuant to the Transaction and the Notes and
such trust indenture will be valid and binding obligations of Xxxxxxx,
enforceable against Xxxxxxx in accordance with their terms.
(l) No Restriction. On completion of the Transaction, the
Class A shares and the Notes will be issued to holders of Shares in compliance
with the Legislation. When
issued, the Class A shares and the Notes will be freely tradeable by the holders
thereof without any restriction or hold period, subject to control block
restrictions.
(m) Listing. On completion of the Transaction, the Class A shares will
be listed and posted for trading on The Toronto Stock Exchange and The Montreal
Exchange.
(n) Share Certificate. The definitive form of certificate for the
Class A shares will be in proper form under the Legislation and will comply
in all respects with the requirements of The Toronto Stock Exchange and The
Montreal Exchange.
(o) Note Certificate. The definitive form of certificate for
the Notes will be in proper form under the Legislation and will accurately
describe the material terms and conditions of the trust indenture creating
such Notes.
(p) Reporting Issuer. Xxxxxxx is a reporting issuer under the
Securities Act (Ontario) and is not in default of any requirement of such Act
and is in compliance with the rules and regulations of The Toronto Stock
Exchange and The Montreal Exchange. No order ceasing or suspending trading in
securities of Xxxxxxx or prohibiting the transactions contemplated hereby has
been issued and no proceedings for such purpose are pending or threatened.
(q) Residency of Middleco. Middleco will be a corporation
resident in Quebec and not situate in Ontario for purposes of the Corporations
Tax Act (Ontario).
SCHEDULE J
----------
EMPLOYMENT AND SEVERANCE
POLICIES AND PRACTICES
TERMINATION PROVISIONS
PROPOSED SEVERANCE GRID
Service Xxxxx X Xxxxx X Xxxxx X
0 to 5 years 4 weeks/year 3 weeks/year 2 weeks/year
6 to 15 years 3 weeks/year 2 weeks/year 2 weeks/year
6-15 6-15 6-15
Beyond 15 years 2 weeks/year 2 weeks/year 2 weeks/year
>15 >15 >15
Minimum: 38 weeks 26 weeks 10 weeks
Maximum: 78 weeks 65 weeks 52 weeks
Partial years count as full years for the purpose of calculating severance
payments.
Severance payments would cease as of employee's 65th birthday.
OUTPLACEMENT:
Group A: Group seminar, resume preparation plus eight (8)
hours of individual counseling.
Group C: Six (6) months program.
Group D: Twelve (12) months program.
Executive: Full executive program (no limit)
(May select provider)
EMPLOYEE BENEFITS:
(All employees)
Medical and dental: Continue during earlier of period of severance
or when new employment obtained/retirement
begins.
Life Insurance: Conversion privilege to extend to 30 days
beyond date of severance. QUNO pays
conversion charge.
EAP: Continue during severance period.
Company Car: Financial contribution towards lease
continues during earlier of severance period
or when new employment/retirement commences.
Should a lease expire during severance period,
no new lease will be granted. Residual
benefit will be paid in cash. (Applied to
Group "D" only for whom car is a perquisite;
does not apply to sales managers).
All other benefits cease as of date of termination.
RELOCATION EXPENSES:
(Applicable to Group "D")
Where, in order to accept alternate employment, an employee relocates to at
least 50k closer to new workplace, the company will reimburse moving
expenses including real estate and legal fees, land transfer tax and the
cost of transporting personal effects to a maximum of $10,000. To be
eligible for relocation expense reimbursement, a move must take place
within one year of termination.
5. PENSION
Prereq. # Funding
------- - --------
o Immediate unreduced) Rule of 80) 24 $1.100MM
and bridge) 58 & 20 )
o Unreduced @ age 55 >50 18 .500MM
o Deferred 68 -
o SERP - Special Early Retirement Plan 110 $1.600MM
(Escalated deferred for 30 would add another $.500MM)
PENSION
Past practice for employees 55 and 20 years of service - to eliminate
actuarial reduction and pay bridge.
PENSION ARRANGEMENT
o 58-20: No Actuarial Reduction
o Severance Pay
o RRSP
o Improve Bridge Benefit (OAS - CPP)
o Rule of 80: No Actuarial Reduction
(Age and Service)
o Cost Absorbed by Company
o Severance Pay
o RRSP
o Improve Bridge Benefit (OAS - CPP)
o Grow in Rule: Partial termination
Partial wind up
o Age and Service = 55
o Accrued Pension to date of lay-off
o Unreduced Pension from age 58-20
o Reduced Pension at 55 (to 58-20)
o Commuted Value of Deferred Pension can be transferred to a
locked in retirement saving plan
o Severance Pay
o RRSP
o Possible Issue of Partial wind up
o If surplus in the plan laid-off employees could be entitled to
surplus.
JUSTIFICATION FOR MINIMUM PAYMENTS
o 29% of professionals have short service with QUNO but are at senior level.
o 13% of professionals were "enticed", i.e. left stable employment within
the past 5 years.
o 10% persons relocated (from Xxxxxxx Xxxxxxx Xxxx) in order to accept
employment.
o As there is a death of head offices in the Niagara region, more than 50%
will likely relocate in order to mitigate damages.
o Compared with past downsizings (closures of business, etc), only 18% are
eligible for retirement.
DECISION PROCESS
STEP 1:
Identify affected employees at Corbloc and Optech.
STEP 2:
Identify qualified Corbloc/Optech personnel for Thorold vacancies and
other jobs. Offer enhanced retirement/severance packages to "identified"
Thorold employees.
STEP 3:
Apply severance/retirement package to remaining affected Corbloc/Optech
personnel.
QUNO CORPORATION
STAFF EMPLOYEES INCLUDE LOCAL 416
Division/Dept. Job Categories
-------------- -------------- No. 55
& older
D C A B Total 1/1/96
-- -- -- -- ----- ------
Corporate
Admin 14 56 16 - 86
Optech 7 19 4 - 30
-- -- -- -- ---
21 75 20 - 116 20
-- -- -- -- --- ---
Thorold 8 89 35 38 170 36
Baie-Xxxxxx 8 76 15 61 160 19
S.D.O. 9 61 9 39 118 5
-- -- -- -- --- --
Sub-Total 46 301 29 138 564 80
QUNO Recycling 10 4 4 18 0
Union Local 416BC - 75 - 75 N.A. Union
-- -- -- -- --- ----------
Total 46 311 158 142 657 80
-- --- --- --- --- --
+9 executives
